Document:

ex10-1.htm

    
      Exhibit
10.1

      

      Naugatuck
Valley Financial Corporation and Naugatuck Valley Savings

      Employment
Agreement with John C. Roman

    

     

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
 

    EMPLOYMENT
AGREEMENT

    

    

    THIS AGREEMENT (the
“Agreement”), as amended and restated, is hereby entered into as of November 20,
2007 (the “Effective Date”), by and between NAUGATUCK VALLEY FINANCIAL
CORPORATION, a federally chartered corporation (the “Company”), NAUGATUCK VALLEY SAVINGS AND LOAN,
a federally chartered savings bank (the “Bank”), and JOHN C. ROMAN (the
“Executive”).

    

    WHEREAS, the parties to this
Agreement originally entered into an employment agreement as of September 30,
2004; and

    

    WHEREAS, Executive serves in a
position of substantial responsibility; and

    

    WHEREAS, the Company and the
Bank wish to continue to assure the services of Executive for the period
provided in this Agreement; and

    

    WHEREAS, Executive is willing
to continue to serve in the employ of the Bank on a full-time basis for said
period; and

    

    WHEREAS, Executive and the
Boards of Directors of the Company and the Bank desire to enter into an amended
and restated employment agreement setting forth the terms and conditions of the
continuing employment of Executive 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 mutual covenants herein contained, and upon the other terms
and conditions hereinafter provided, the parties hereby agree as
follows:

    

    1.           
Employment.  Executive is
employed as President and Chief Executive Officer of the Company and the
Bank.  Executive shall perform all duties and shall have all powers
which are commonly incident to the offices of President and Chief Executive
Officer or which, consistent with those offices, are delegated to him by the
Boards of Directors.  During the term of this Agreement, Executive
also agrees to serve, if elected, as an officer and/or director of any
subsidiary of the Company and the Bank and in such capacity will carry out such
duties and responsibilities as are reasonably appropriate to that
office.

    

    2.           
Location
and Facilities.  Executive will be
furnished with the working facilities and staff customary for executive officers
with the title and duties set forth in Section 1 and as are necessary for him to
perform his duties.  The location of such facilities and staff shall
be at the principal administrative offices of the Company and the Bank, or at
such other site or sites customary for such offices.

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    3.           
Term.

    

    
      	
               

            	
              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 second anniversary of the Effective Date, plus (ii) any and all
      extensions of the initial term made pursuant to this Section 3.
      

            

    

    

    
      	
               

            	
              b.

            	
              No
      later than October 1, 2008, and continuing on each anniversary thereafter,
      the disinterested members of the boards of directors of the Bank and the
      Company may extend the Agreement an additional year (as of the anniversary
      date of the Effective Date) such that the remaining term of the Agreement
      shall be twenty-four (24) months, unless Executive elects not to extend
      the term of this Agreement by giving written notice in accordance with
      Section 19 of this Agreement. The Boards of Directors of the Bank and the
      Company will review the Agreement and Executive’s performance annually
      prior to each anniversary date for purposes of determining whether to
      extend the Agreement and the rationale and results thereof shall be
      included in the minutes of the meetings of the Boards of
      Directors.  The Boards of Directors shall give notice to
      Executive as soon as possible after such review as to whether the
      Agreement is to be extended. 

            

    

    

    4.           
Base
Compensation.

    

    
      	
               

            	
              a.

            	
              The
      Company and the Bank agree to pay Executive a base salary at the rate of
      $171,393 per year, payable in accordance with customary payroll practices.
      

            

    

    

    
      	
               

            	
              b.

            	
              The
      Boards of Directors shall review annually the rate of Executive’s base
      salary based upon factors they deem relevant, and may maintain or increase
      his base salary, provided that no such action shall reduce the rate of
      base salary below the rate in effect on the Effective Date.
    

            

    

    

    
      	
               

            	
              c.

            	
              In
      the absence of action by the Boards of Directors, Executive shall continue
      to receive his base salary at the annual rate specified on the Effective
      Date or, if another rate has been established under the provisions of this
      Section 4, the rate last properly established by action of the Boards of
      Directors under the provisions of this Section 4.
  

            

    

    

    5.           
Bonuses.  Executive shall
be entitled to participate in discretionary bonuses or other incentive
compensation programs that the Company and the Bank may award from time to time
to senior management employees pursuant to bonus plans or
otherwise.

    

    6.           
Benefit
Plans.  Executive shall
be entitled to receive life insurance coverage with a death benefit equal to
three (3) times his base salary.  Executive shall also be entitled to
participate in such medical, dental, pension, profit sharing, retirement and
stock-based compensation plans and other programs and arrangements as may be
approved from time to time by the Company and the Bank for the benefit of their
employees.

    
      
        
        

      

      
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              7.

            	
              Vacation and
      Leave. 

            

    

    

    
      	
               

            	
              a.

            	
              Executive
      shall be entitled to vacations and other leave in accordance with the
      Bank’s policy for senior executives, or otherwise as approved by the Board
      of Directors of the Bank. 

            

    

    

    
      	
               

            	
              b.

            	
              In
      addition to paid vacations and other leave, Executive shall be entitled,
      without loss of pay, to absent himself voluntarily from the performance of
      his employment for such additional periods of time and for such valid and
      legitimate reasons as the Board of Directors of the Bank may, in its
      discretion, determine. Further, the Boards of Directors may grant to
      Executive a leave or leaves of absence, with or without pay, at such time
      or times and upon such terms and conditions as the Boards of Directors in
      its discretion may determine. 

            

    

    

    8.           
Expense
Payments and Reimbursements.  Executive shall
be reimbursed for all
reasonable out-of-pocket business expenses that he shall incur in connection
with his services under this Agreement upon substantiation of such expenses in
accordance with applicable policies of the Company and the Bank.

    

    9.           
Automobile
Allowance.  During the term of this Agreement, the Company or
the Bank shall provide Executive with a new automobile to be selected by
Executive, subject to approval by the Chairman of the Board of Directors of the
Bank.  Executive shall have exclusive use of the automobile for
himself and his family.  The Company or the Bank shall annually
include on Executive’s Form W-2 any amount of income attributable to Executive’s
personal use of the automobile.  The Company or the Bank shall
maintain minimum liability insurance coverage on the automobile of $1,000,000
and shall have Executive named as additional insured on the automobile insurance
policy.  Upon termination of Executive’s employment hereunder (other
than a termination for Cause, as defined in Section 11(c) hereof), he shall have
the option of purchasing the vehicle from the Company or the Bank for an amount
equal to its fair market value.  Executive agrees to maintain the
vehicle in accordance with any applicable warranty provisions, and the Company
and the Bank agree to reimburse Executive for maintenance and upkeep, including
gasoline, subject to submission of such documentation as may be reasonably
required by the Company and the Bank.

    

    10.           
Loyalty and
Confidentiality.

    

    
      	
               

            	
              a.

            	
              During
      the term of this Agreement, Executive: (i) shall devote all his time,
      attention, skill, and efforts to the faithful performance of his duties
      hereunder; provided, however, that from time to time, Executive may serve
      on the boards of directors of, and hold any other offices or positions in,
      companies or organizations which will not present any conflict of interest
      with the Company and the Bank or any of their subsidiaries or affiliates,
      unfavorably affect the performance of Executive’s duties pursuant to this
      Agreement, or violate any applicable statute or regulation and (ii) shall
      not engage in any business or activity contrary to the business affairs or
      interests of the Company and the Bank.

            

    

    
      
        
        

      

      
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              b.

            	
              Nothing
      contained in this Agreement shall prevent or limit Executive’s right to
      invest in the capital stock or other securities of any business dissimilar
      from that of the Company and the Bank, or, solely as a passive, minority
      investor, in any business. 

            

    

    

    
      	
               

            	
              c.

            	
              Executive
      agrees to maintain the confidentiality of any and all information
      concerning the operation or financial status of the Company and the Bank;
      the names or addresses of any of its borrowers, depositors and other
      customers; any information concerning or obtained from such customers; and
      any other information concerning the Company and the Bank to which he may
      be exposed during the course of his employment. Executive further agrees
      that, unless required by law or specifically permitted by the Board of
      Directors of the Bank in writing, he will not disclose to any person or
      entity, either during or subsequent to his employment, any of the
      above-mentioned information which is not generally known to the public,
      nor shall he employ such information in any way other than for the benefit
      of the Company and the Bank. 

            

    

    

    11.           
Termination
and Termination Pay.  Subject to
Section 12 of this Agreement, Executive’s employment under this Agreement may be
terminated in the following circumstances:

    

    
      	
               

            	
              a.

            	
              Death.  Executive’s
      employment under this Agreement shall terminate upon his death during the
      term of this Agreement, in which event Executive’s estate shall be
      entitled to receive the compensation due to Executive through the last day
      of the calendar month in which his death occurred.
  

            

    

    

    b.           
Disability.

    

    
      	
               

            	
              i.

            	
              The
      Boards of Directors or Executive may terminate Executive’s employment
      after having determined Executive has a Disability.  For
      purposes of this Agreement, “Disability” means Executive is unable to
      engage in any substantial gainful activity by reason of any medically
      determinable physical or mental impairment that can be expected to result
      in death or can be expected to last for a continuous period of not less
      than twelve (12) months.  The Board of Directors of the Bank
      shall determine whether or not Executive is and continues to be
      permanently disabled for purposes of this Agreement in good faith, based
      upon competent medical advice and other factors that they reasonably
      believe to be relevant.  As a condition to any benefits, the
      Board may require Executive to submit to such physical or mental
      evaluations and tests as it deems reasonably appropriate.
  

            

    

    

    
      	
               

            	
              ii.

            	
              In
      the event of such Disability, Executive’s obligation to perform services
      under this Agreement will terminate.  The Bank or the Company
      will pay Executive, as Disability pay, seventy-five percent (75%) of
      Executive’s annual base salary in effect as of the date of his termination
      of employment due to Disability.  Disability payments will be
      made in equal installments on 

            

    

    
      
        
        

      

      
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    a monthly
basis, commencing on the first day of the month following the effective date of
Executive’s termination of employment for Disability and ending on the earlier
of: (A) the date he returns to full-time employment at the Bank in the same
capacity as he was employed prior to his termination for Disability; (B) his
death; or (C) upon his attainment of age 65.  Disability payments
shall be reduced by the amount of any short- or long-term disability benefits
payable to Executive under any other disability programs sponsored by the
Company and the Bank.  In addition, during any period of Executive’s
Disability, Executive and his dependents shall, to the greatest extent possible,
continue to be covered under all benefit plans (including, without limitation,
retirement plans and medical, dental and life insurance plans) of the Company
and the Bank, in which Executive participated prior to his Disability on the
same terms as if Executive were actively employed by the Company and the
Bank.

    

    
      	
               

            	
              c.

            	
              Termination for
      Cause. 

            

    

    

    
      	
               

            	
              i.

            	
              The
      Boards of Directors may, by written notice to Executive in the form and
      manner specified in this paragraph, immediately terminate his employment
      at any time for “Cause.”  Executive shall have no right to
      receive compensation or other benefits for any period after termination
      for Cause except for vested benefits.  Termination for Cause
      shall mean termination because of, in the good faith determination of the
      Boards of Directors, Executive’s: 

            

    

    

    
      	
               

            	
              (1)

            	
              Personal
      dishonesty; 

            

    

    

    
      	
               

            	
              (2)

            	
              Incompetence;
      

            

    

    

    
      	
               

            	
              (3)

            	
              Willful
      misconduct; 

            

    

    

    
      	
               

            	
              (4)

            	
              Breach
      of fiduciary duty involving personal profit;

            

    

    

    
      	
               

            	
              (5)

            	
              Intentional
      failure to perform stated duties under this Agreement;
  

            

    

    

    
      	
               

            	
              (6)

            	
              Willful
      violation of any law, rule or regulation (other than traffic violations or
      similar offenses) that reflects adversely on the reputation of the Company
      and the Bank, any felony conviction, any violation of law involving moral
      turpitude, or any violation of a final cease-and-desist order; or
      

            

    

    

    
      	
               

            	
              (7)

            	
              Material
      breach by Executive of any provision of this Agreement.
  

            

    

    

    
      	
               

            	
              ii.

            	
              Notwithstanding
      the foregoing, Executive shall not be deemed to have been terminated for
      Cause by the Company and the Bank unless there shall have been delivered
      to Executive a copy of a resolution duly adopted by the
  

            

    

    
      
        
        

      

      
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    affirmative
vote of a majority of the entire membership of the Boards of Directors at a
meeting of such Board called and held for the purpose (after reasonable notice
to Executive and an opportunity for Executive to be heard before the Boards of
Directors with counsel), of finding that, in the good faith opinion of the
Boards of Directors, Executive was guilty of the conduct described above and
specifying the particulars thereof.

    

    
      	
               

            	
              d.

            	
              Voluntary Termination
      by Executive.  In addition to his other rights to
      terminate under this Agreement, Executive may voluntarily terminate
      employment during the term of this Agreement upon at least sixty (60) days
      prior written notice to the Boards of Directors, in which case Executive
      shall receive only his compensation, vested rights and employee benefits
      up to the date of his termination. 

            

    

    

    
      	
               

            	
              e.

            	
              Without Cause or With
      Good Reason. 

            

    

    

    
      	
               

            	
              i.

            	
              In
      addition to termination pursuant to Sections 11(a) through 11(d), the
      Boards of Directors may, by written notice to Executive, immediately
      terminate his employment at any time for a reason other than Cause (a
      termination “Without Cause”) and Executive may, by written notice to the
      Boards of Directors, immediately terminate this Agreement at any time
      within ninety (90) days following an event constituting “Good Reason,” as
      defined below (a termination “With Good Reason”).
  

            

    

    

    
      	
               

            	
              ii.

            	
              Subject
      to Section 12 of this Agreement, in the event of termination under this
      Section 11(e), Executive shall be entitled to receive the value of his
      base salary for the remaining term of the Agreement plus the value of all
      benefits he would have received during the remaining term of the Agreement
      under any retirement programs (whether tax-qualified or non-qualified) in
      which Executive participated prior to his termination (with the amount of
      the benefits determined by reference to the benefits received by Executive
      or accrued on his behalf under such programs during the twelve (12) months
      preceding his termination). Executive shall receive this payment in a
      single lump sum within ten (10) days of his termination of employment. In
      addition, Executive and his dependents will continue to participate in any
      benefit plans of the Company and the Bank that provide health (including
      medical and dental), life or disability insurance, or similar coverage,
      upon terms no less favorable than the most favorable terms provided to
      senior executives of the Company and the Bank during the remaining term of
      the Agreement. In the event that the Company and the Bank are unable to
      provide such coverage because Executive is no longer an employee, the
      Company and the Bank shall provide Executive with comparable coverage on
      an individual policy basis. 

            

    

    

    
      	
               

            	
              iii.

            	
              “Good
      Reason” shall exist if, without Executive’s express written consent, the
      Company or the Bank materially breach any of their respective
    

            

    

    
      
        
        

      

      
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    obligations
under this Agreement.  Without limitation, such a material breach
shall be deemed to occur upon any of the following:

    

    
      	
               

            	
              (1)

            	
              A
      material reduction in Executive’s responsibilities or authority in
      connection with his employment with the Company or the Bank;
    

            

    

    

    
      	
               

            	
              (2)

            	
              Assignment
      to Executive of duties of a non-executive nature or duties for which he is
      not reasonably equipped by his skills and experience;
  

            

    

    

    
      	
               

            	
              (3)

            	
              Failure
      of Executive to be nominated or renominated to the Boards of Directors of
      the Company or the Bank; 

            

    

    

    
      	
               

            	
              (4)

            	
              A
      material reduction in salary or benefits contrary to the terms of this
      Agreement, or, following a Change in Control as defined in Section 12 of
      this Agreement, any material reduction in salary or benefits below the
      amounts to which Executive was entitled prior to the Change in Control;
      

            

    

    

    
      	
               

            	
              (5)

            	
              Termination
      of incentive and benefit plans, programs or arrangements, or reduction of
      Executive’s participation to such an extent as to materially reduce their
      aggregate value below their aggregate value as of the Effective Date;
      

            

    

    

    
      	
               

            	
              (6)

            	
              A
      relocation of Executive’s principal business office by more than thirty
      (30) miles from its current location; or

            

    

    

    
      	
               

            	
              (7)

            	
              Liquidation
      or dissolution of the Company or the Bank.

            

    

    

    
      	
               

            	
              iv.

            	
              Notwithstanding
      the foregoing, a reduction or elimination of Executive’s benefits under
      one or more benefit plans maintained by the Company or the Bank as part of
      a good faith, overall reduction or elimination of such plans or benefits
      thereunder applicable to all participants in a manner that does not
      discriminate against Executive (except as such discrimination may be
      necessary to comply with law) shall not constitute an event of Good Reason
      or a material breach of this Agreement, provided that benefits of the same
      type or to the same general extent as those offered under such plans are
      not available to other officers of the Company and the Bank, or any
      company that controls either of them, under a plan or plans in or under
      which Executive is not entitled to participate subsequent to such
      reduction or elimination of benefits.

            

    

    

    
      	
               

            	
              v.

            	
              Upon
      the occurrence of any event described in clauses (iii) (1) through (6),
      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 

            

    

    
      
        
        

      

      
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    the
initial event giving rise to said right to elect; provided, however that the
Bank and the Company 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 or the Company, 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 and this Section 4 by virtue of the fact that
Executive has submitted his resignation but has remained in the employment of
the Bank or the Company and is engaged in good faith discussions to resolve any
occurrence of an event described in clauses (1) through (7) above.

    

    
      	
               

            	
              vi.

            	
              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 Company is a publicly-traded institution or the subsidiary of
      a publicly-traded holding company. 

            

    

    

    
      	
               

            	
              f.

            	
              Continuing Covenant
      Not to Compete or Interfere with
      Relationships.  Regardless of anything herein to the
      contrary, following a termination by the Company and the Bank or Executive
      pursuant to Section 11(e): 

            

    

    

    
      	
               

            	
              i.

            	
              Executive’s
      obligations under Section 10(b) of this Agreement will continue in effect;
      and 

            

    

    
      
        
        

      

      
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              ii.

            	
              During
      the period ending on the first anniversary of such termination, Executive
      shall not serve as an officer, director or employee of any bank holding
      company, bank, savings bank, savings and loan holding company, or mortgage
      company (any of which is referred to herein as a “Financial Institution”)
      which Financial Institution offers products or services competing with
      those offered by the Bank from any office within fifty (50) miles from the
      main office or any branch of the Bank and shall not interfere with the
      relationship of the Company and the Bank and any of its employees, agents,
      or representatives; provided, however, that this clause ii shall not apply
      or otherwise restrict Executive if the Company and the Bank have not
      renewed the term of the Agreement pursuant to Section 3(b) and Executive
      terminates employment at a time when the remaining term of Agreement is
      one year or less. 

            

    

    

    12.           
Termination in
Connection with a Change in Control.

    

    
      	
               

            	
              a.

            	
              For
      purposes of this Agreement, a “Change in Control” means 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 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

            

    

    
      
        
        

      

      
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    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.

    

    
      	
               

            	
              b.

            	
              Termination.  If
      within the period ending three (3) years after a Change in Control, (i)
      the Company and the Bank shall terminate Executive’s employment
      Without  Cause, or (ii) Executive voluntarily terminates his
      employment With Good Reason, the Company and the Bank shall, within ten
      calendar days of the termination of Executive’s employment, make a
      lump-sum cash payment to him equal to three (3) times Executive’s average
      Annual Compensation over the five (5) most recently completed calendar
      years ending with the year immediately preceding the effective date of the
      Change in Control.  In determining Executive’s average Annual
      Compensation, “Annual Compensation” shall include base salary and any
      other taxable income, including, but not limited to, amounts related to
      the granting, vesting or exercise of restricted stock or stock option
      awards, commissions, bonuses (whether paid or accrued for the applicable
      period), as well as, retirement benefits, director or committee fees and
      fringe benefits paid or to be paid to Executive or paid for Executive’s
      benefit during any such year, profit sharing, employee stock ownership
      plan and other retirement contributions or benefits, including to any
      tax-qualified plan or arrangement (whether or not taxable) made or accrued
      on behalf of Executive for such year. The cash payment
      made under this Section 12(b) shall be made in lieu of any payment also
      required under Section 11(e) of this Agreement because of a termination in
      such period.  Executive’s rights under Section 11(e) are not
      otherwise affected by this Section 12.  Also, in such event,
      Executive shall, for a thirty-six (36) month period following his
      termination of employment, receive the benefits he would have received
      over such thirty-six (36) month period under any retirement programs
      (whether tax-qualified or nonqualified) in which Executive participated
      prior to his termination (with the amount of the benefits determined by
      reference to the benefits received by Executive or accrued on his behalf
      under such programs during the twelve (12) months preceding the Change in
      Control) and continue to participate in any benefit plans of the Company
      and the Bank that provide health (including medical and dental), life or
      disability insurance, or similar coverage upon terms no less favorable
      than the most favorable terms provided to senior executives of the Bank
      during such period.  In the event that the Company and the Bank
      are unable to provide such coverage because Executive is no longer an
      employee, the Company and the Bank shall provide Executive with comparable
      coverage under an individual policy.  The parties to this
      Agreement intend for the 

            

    

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

    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 Company is a
publicly-traded institution or the subsidiary of a publicly-traded holding
company.

    

    
      	
               

            	
              c.

            	
              The
      provisions of Section 12 and Sections 14 through 25, including the defined
      terms used in such sections, shall continue in effect until the later of
      the expiration of this Agreement or three (3) years following a Change in
      Control. 

            

    

    

    
      	
               

            	
              13.

            	
              Indemnification and
      Liability Insurance. 

            

    

    

    
      	
               

            	
              a.

            	
              Indemnification.  The
      Company and the Bank agree to indemnify Executive (and his heirs,
      executors, and administrators), and to advance expenses related thereto,
      to the fullest extent permitted under applicable law and regulations
      against any and 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 his having been a director or executive of
      the Company, the Bank or any of their subsidiaries (whether or not he
      continues to be a director or executive at the time of incurring any such
      expenses or liabilities) such expenses and liabilities to include, but not
      be limited to, judgments, court costs, and attorneys’ fees and the costs
      of reasonable settlements, such settlements to be approved by the Board of
      Directors of the Bank, if such action is brought against Executive in his
      capacity as an executive or director of the Company and the Bank or any of
      their subsidiaries.  Indemnification for expenses shall not
      extend to matters for which Executive has been terminated for
      Cause.  Nothing contained herein shall be deemed to provide
      indemnification prohibited by applicable law or
      regulation.  Notwithstanding

            

    

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

    anything
herein to the contrary, the obligations of this Section 13 shall survive the
term of this Agreement by a period of six (6) years.

    

    
      	
               

            	
              b.

            	
              Insurance.  During
      the period in which indemnification of Executive is required under this
      Section 13, the Company and the Bank shall provide Executive (and his
      heirs, executors, and administrators) with coverage under a directors’ and
      officers’ liability policy at the expense of the Company and the Bank, at
      least equivalent to such coverage provided to directors and senior
      executives of the Company and the Bank.

            

    

    

    14.           
Reimbursement
of Executive’s Expenses to Enforce this Agreement.  The Company and
the Bank shall reimburse Executive for all out-of-pocket expenses, including,
without limitation, reasonable attorneys’ fees, incurred by Executive in
connection with successful enforcement by Executive of the obligations of the
Company and the Bank to Executive under this Agreement.  Successful
enforcement shall mean the grant of an award of money or the requirement that
the Company and the Bank take some action specified by this Agreement: (i) as a
result of court order; or (ii) otherwise by the Company and the Bank following
an initial failure of the Company and the Bank to pay such money or take such
action promptly after written demand therefor from Executive stating the reason
that such money or action was due under this Agreement at or prior to the time
of such demand.

    

    15.           
Limitation
of Benefits Under Certain Circumstances.  If the payments
and benefits pursuant to Section 12 of this Agreement, either alone or together
with other payments and benefits which Executive has the right to receive from
the Company and the Bank, would constitute a “parachute payment” under Section
280G of the Code, the payments and benefits pursuant to Section 12 shall be
reduced or revised, in the manner determined by Executive, by the amount, if
any, which is the minimum necessary to result in no portion of the payments and
benefits under Section 12 being non-deductible to the Company and the Bank
pursuant to Section 280G of the Code and subject to the excise tax imposed under
Section 4999 of the Code.  The determination of any reduction in the
payments and benefits to be made pursuant to Section 12 shall be based upon the
opinion of the Company and the Bank’s independent public accountants and paid
for by the Company and the Bank.  In the event that the Company, the
Bank and/or Executive do not agree with the opinion of such counsel, (i) the
Company and the Bank shall pay to Executive the maximum amount of payments and
benefits pursuant to Section 12, as selected by Executive, which such opinion
indicates there is a high probability do not result in any of such payments and
benefits being non-deductible to the Company and the Bank and subject to the
imposition of the excise tax imposed under Section 4999 of the Code and (ii) the
Company and the Bank may request, and Executive shall have the right to demand
that they request, a ruling from the IRS as to whether the disputed payments and
benefits pursuant to Section 12 have such consequences.  Any such
request for a ruling from the IRS shall be promptly prepared and filed by the
Company and the Bank, but in no event later than thirty (30) days from the date
of the opinion of counsel referred to above, and shall be subject to Executive’s
approval prior to filing, which shall not be unreasonably
withheld.  The Company, the Bank and Executive agree to be bound by
any ruling received from the IRS and to make appropriate payments to each other
to reflect any such rulings, together with interest at the applicable federal
rate provided for in Section 7872(f)(2) of the Code.  Nothing
contained herein shall result in a reduction of any

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

    payments
or benefits to which Executive may be entitled upon termination of employment
other than pursuant to Section 12 hereof, or a reduction in the payments and
benefits specified in Section 12 below zero.

    

    16.           
Injunctive
Relief.  If there is a
breach or threatened breach of Section 11(f) of this Agreement or the
prohibitions upon disclosure contained in Section 10(c) of this Agreement, the
parties agree that there is no adequate remedy at law for such breach, and that
the Company and the Bank shall be entitled to injunctive relief restraining
Executive from such breach or threatened breach, but such relief shall not be
the exclusive remedy hereunder for such breach.  The parties hereto
likewise agree that Executive, without limitation, shall be entitled to
injunctive relief to enforce the obligations of the Company and the Bank under
this Agreement.

    

    17.           
Successors and
Assigns.

    

    
      	
               

            	
              a.

            	
              This
      Agreement shall inure to the benefit of and be binding upon any corporate
      or other successor to the Company and the Bank which shall acquire,
      directly or indirectly, by merger, consolidation, purchase or otherwise,
      all or substantially all of the assets or stock of the Company and the
      Bank. 

            

    

    

    
      	
               

            	
              b.

            	
              Since
      the Company and the Bank are contracting for the unique and personal
      skills of Executive, Executive shall be precluded from assigning or
      delegating his rights or duties hereunder without first obtaining the
      written consent of the Company and the Bank.

            

    

    

    18.           
No
Mitigation.  Executive shall
not be required to mitigate the amount of any payment provided for in this
Agreement by seeking other employment or otherwise and no such payment shall be
offset or reduced by the amount of any compensation or benefits provided to
Executive in any subsequent employment.

    

    19.           
Notices.  All notices,
requests, demands and other communications in connection with this Agreement
shall be made in writing and shall be deemed to have been given when delivered
by hand or 48 hours after mailing at any general or branch United States Post
Office, by registered or certified mail, postage prepaid, addressed to the
Company and/or the Bank at their principal business offices and to Executive at
his home address as maintained in the records of the Company and the
Bank.

    

    20.           
No
Plan Created by this Agreement.   Executive, the
Company and the Bank expressly declare and agree that this Agreement was
negotiated among them and that no provision or provisions of this Agreement are
intended to, or shall be deemed to, create any plan for purposes of the Employee
Retirement Income Security Act or any other law or regulation, and each party
expressly waives any right to assert the contrary.  Any assertion in
any judicial or administrative filing, hearing, or process that such a plan was
so created by this Agreement shall be deemed a material breach of this Agreement
by the party making such an assertion.

    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

    

    

    21.           
Amendments.  No amendments or
additions to this Agreement shall be binding unless made in writing and signed
by all of the parties, except as otherwise specifically provided in this
Agreement.

    

    22.           
Applicable
Law.  Except to the
extent preempted by federal law, the laws of the State of Connecticut shall
govern this Agreement in all respects, whether as to its validity, construction,
capacity, performance or otherwise.

    

    23.           
Severability.  The provisions of
this Agreement shall be deemed severable and the invalidity or unenforceability
of any provision shall not affect the validity or enforceability of the other
provisions hereof.

    

    24.           
Headings.  Headings
contained herein are for convenience of reference only.

    

    25.           
Entire
Agreement.  This Agreement,
together with any understanding or modifications thereof as agreed to in writing
by the parties, shall constitute the entire agreement among the parties hereto
with respect to the subject matter hereof, other than written agreements with
respect to specific plans, programs or arrangements as described in Sections 5
and 6.

    

    26.           
Required
Provisions.
 In the event any of the foregoing provisions of this Section 26 are
in conflict with the terms of this Agreement, this Section 26 shall
prevail.

    

    
      	
               

            	
              a.

            	
              The
      Bank may terminate Executive’s employment at any time, but any termination
      by the Bank, other than termination for Cause, shall not prejudice
      Executive’s right to compensation or other benefits under this
      Agreement.  Executive shall not have the right to receive
      compensation or other benefits for any period after termination for Cause
      as defined in Section 11(c) above. 

            

    

    

    
      	
               

            	
              b.

            	
              If
      Executive is suspended from office and/or temporarily prohibited from
      participating in the conduct of the Bank’s affairs by a notice served
      under Section 8(e)(3) or 8(g)(1) of the Federal Deposit Insurance Act, 12
      U.S.C. Section 1818(e)(3) or (g)(1); the Bank’s obligations under this
      contract shall be suspended as of the date of service, unless stayed by
      appropriate proceedings.  If the charges in the notice are
      dismissed, the Bank may, in its discretion:  (i) pay Executive
      all or part of the compensation withheld while its contract obligations
      were suspended; and (ii) reinstate (in whole or in part) any of the
      obligations which were suspended. 

            

    

    

    
      	
               

            	
              c.

            	
              If
      Executive is removed and/or permanently prohibited from participating in
      the conduct of the Bank’s affairs by an order issued under Section 8(e)(4)
      or 8(g)(1) of the Federal Deposit Insurance Act, 12 U.S.C. Section
      1818(e)(4) or (g)(1), all obligations of the Bank under this contract
      shall terminate as of the effective date of the order, but vested rights
      of the contracting parties shall not be affected.
  

            

    

    

    
      	
               

            	
              d.

            	
              If
      the Bank is in default as defined in Section 3(x)(1) of the Federal
      Deposit Insurance Act, 12 U.S.C. Section 1813(x)(1), all obligations of
      the Bank under this 

            

    

    
      
        
        

      

      
        14

        
          

        

      

      
        
        

      

    

    

    
      	
               

            	
              contract
      shall terminate as of the date of default, but this paragraph shall not
      affect any vested rights of the contracting parties.
  

            

    

    

    
      	
               

            	
              e.

            	
              All
      obligations of the Bank under this contract shall be terminated, except to
      the extent it is determined that continuation of the contract is necessary
      for the continued operation of the institution: (i) by the Director of the
      OTS (or his designee), the FDIC or the Resolution Trust Corporation, at
      the time the FDIC enters into an agreement to provide assistance to or on
      behalf of the Bank under the authority contained in Section 13(c) of the
      Federal Deposit Insurance Act, 12 U.S.C. Section 1823(c); or (ii) by the
      Director of the OTS (or his designee) at the time the Director (or his
      designee) approves a supervisory merger to resolve problems related to the
      operations of the Bank or when the Bank is determined by the Director to
      be in an unsafe or unsound condition. Any rights of the parties that have
      already vested, however, shall not be affected by such action.
      

            

    

    

    
      	
               

            	
              f.

            	
              Any
      payments made to Executive pursuant to this Agreement, or otherwise, are
      subject to and conditioned upon compliance with 12 U.S.C. Section 1828(k)
      and 12 C.F.R. Section 545.121 and any rules and regulations promulgated
      thereunder. 

            

    

     

     

     

     

    
 

    
      
        
        

      

      
        15

        
          

        

      

      
        
        

      

    

    

    IN WITNESS WHEREOF, the
parties hereto have executed this Agreement, as amended and restated, on the
date first set forth above.

    

    

    

    
      	
              ATTEST:

            	 	
              NAUGATUCK
      VALLEY FINANCIAL

            
	 	 	
              CORPORATION

            
	 	 	 	 
	 	 	 	 
	
              /s/
      Bernadette A. Mole

            	 	
              By:

            	
              /s/
      Ronald D. Lengyel

            
	
              Corporate
      Secretary

            	 	 	
              For
      the Entire Board of Directors

            
	 	 	 	 
	 	 	 	 
	 	 	 	 
	
              ATTEST:

            	 	
              NAUGATUCK
      VALLEY SAVINGS AND LOAN

            
	 	 	 	 
	 	 	 	 
	
              /s/
      Bernadette A. Mole

            	 	
              By:

            	
              /s/
      Ronald D. Lengyel

            
	
              Corporate
      Secretary

            	 	 	
              For
      the Entire Board of Directors

            
	 	 	 	 
	 	 	 	 
	 	 	 	 
	
              WITNESS:

            	 	
              EXECUTIVE

            
	 	 	 	 
	 	 	 	 
	
              /s/
      Bernadette A. Mole

            	 	
              By:

            	
              /s/
      John C. Roman  

            
	
              Corporate
      Secretary

            	 	 	
              John
      C. Roman

            

    

     

     

    16ex10-2.htm

    
      Exhibit
10.2

      

      Naugatuck
Valley Savings Change in Control Agreement with Dominic J. Alegi,
Jr.

    

     

     

     

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
 

    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, Dominic J. Alegi, Jr.  (“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 September 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 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

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

    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),

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

    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.

    

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

    

    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/
      Dominic
      J. Alegi, Jr. 
	
              Corporate
      Secretary

            	 	
              Dominic
      J. Alegi, Jr.

            

    

    

    

    

    9

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