LOAN AGREEMENT

Exhibit 10.11

LOAN AGREEMENT

by and between

EMPLOYEE STOCK OWNERSHIP PLAN TRUST

of

WESTFIELD FINANCIAL, INC.

and

NEW WESTFIELD FINANCIAL, INC.

Made and Entered Into as of January 3, 2007

TABLE OF CONTENTS

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LOAN AGREEMENT

This LOAN AGREEMENT ("Loan Agreement") is made and entered into as of the 3 ^rd day of January, 2007, by and between the EMPLOYEE STOCK OWNERSHIP PLAN TRUST OF WESTFIELD FINANCIAL, INC. ("Borrower"), a trust forming part of the Employee Stock Ownership Plan of Westfield Financial, Inc. ("ESOP"), acting through and by its Trustee, FIRST BANKERS TRUST SERVICES, INC. ("Trustee"), a corporation having an office at 2321 Kochs Lane, P.O. Box 4005, Quincy, Illinois 62305-4005; and NEW WESTFIELD FINANCIAL, INC. ("Lender"), a Massachusetts-chartered corporation, having an office at 141 Elm Street, Westfield, Massachusetts 01085.

W I T N E S S E T H :

W HEREAS , the ESOP Committee of the Lender ("Committee") has authorized the Borrower to purchase shares of common stock of New Westfield Financial, Inc. ("Common Stock"), either directly from New Westfield Financial, Inc. or in open market purchases in an amount not to exceed 736,000 shares of commons stock (i.e., four percent (4%) of the total number of shares of Common Stock sold in the offering in connection with the Amended and Restated Plan of Conversion and Stock Issuance (the "Reorganization"));

W HEREAS , the Committee has further authorized the Borrower to borrow funds from the Lender for the purpose of financing authorized purchases of Common Stock; and

W HEREAS , the Lender is willing to make a loan to the Borrower for such purpose;

N OW , T HEREFORE , the parties hereto agree as follows:

ARTICLE I

DEFINITIONS

The following definitions shall apply for purposes of this Loan Agreement, except to the extent that a different meaning is plainly indicated by the context:

Section 1.1      Business Day means any day other than a Saturday, Sunday or other day on which banks are authorized or required to close under federal law or the laws of the Commonwealth of Massachusetts.

Section 1.2      Code means the Internal Revenue Code of 1986 (including the corresponding provisions of any succeeding law).

Section 1.3      Default means an event or condition which would constitute an Event of Default. The determination as to whether an event or condition would constitute an Event of Default shall be determined without regard to any applicable requirement of notice or lapse of time.

Section 1.4      ERISA means the Employee Retirement Income Security Act of 1974, as amended (including the corresponding provisions of any succeeding law).

Section 1.5      Event of Default means an event or condition described in Article V.

Section 1.6      Fiscal Year means the fiscal year of New Westfield Financial, Inc.

Section 1.7      Independent Counsel means Thacher Proffitt & Wood LLP or other counsel mutually satisfactory to both the Lender and the Borrower.

Section 1.8      Loan means the loan described in section 2.1.

Section 1.9      Loan Documents means, collectively, this Loan Agreement, the Promissory Note and the Pledge Agreement and all other documents now or hereafter executed and delivered in connection with such documents, including all amendments, modifications and supplements of or to all such documents.

Section 1.10      Pledge Agreement means the agreement described in section 2.8(a).

Section 1.11      Principal Amount means the face amount of the Promissory Note, determined as set forth in section 2.1(c).

Section 1.12      Promissory Note means the promissory note described in section 2.3.

Section 1.13      Register means the register described in section 2.9.

ARTICLE II

THE LOAN; PRINCIPAL AMOUNT;

INTEREST; SECURITY; INDEMNIFICATION

Section 2.1      The Loan; Principal Amount .

(a) The Lender hereby agrees to lend to the Borrower such amounts, and at such times, as shall be determined under this section 2.1; provided, however, that in no event shall the aggregate amount lent under this Loan Agreement from time to time exceed the aggregate amount paid by the Borrower, exclusive of commissions, fees and other charges, to purchase a number of shares of Common Stock not to exceed 736,000 shares of Common Stock (i.e., four percent (4%) of the shares of Common Stock sold in connection with the Reorganization).

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(b) Subject to the limitations of section 2.1(a), the Borrower shall determine the amounts borrowed under this Agreement, and the times at which such borrowings are effected. Each such determination shall be evidenced in a writing which shall set forth the amount to be borrowed and the date on which the Lender shall disburse such amount, and such writing shall be furnished to the Lender by notice from the Borrower. The Lender shall disburse to the Borrower the amount specified in each such notice on the date specified therein or, if later, as promptly as practicable following the Lender’s receipt of such notice; provided, however, that the Lender shall have no obligation to disburse funds pursuant to this Agreement (i) following the occurrence of a Default or an Event of Default until such time as such Default or Event of Default shall have been cured and (ii) on and after the earliest date on which Common Stock is listed or admitted to trading on an established market (including but not limited to the American Stock Exchange), while the Borrower is in possession of funds previously advanced under this Agreement that have not been used to purchase Common Stock.

(c) For all purposes of this Loan Agreement, the Principal Amount on any date shall be equal to the excess, if any, of:

• • • (i) the aggregate amount disbursed by the Lender pursuant to section 2.1(b) on or before such date; over

      (ii) the aggregate amount of any repayments of such amounts made before such date.

The Lender shall maintain on the Register a record of, and shall record on the Promissory Note, the Principal Amount, any changes in the Principal Amount and the effective date of any changes in the Principal Amount.

Section 2.2      Interest .

(a) The Borrower shall pay to the Lender interest on the Principal Amount, for the period commencing on the date of this Loan Agreement and continuing until the Principal Amount shall be paid in full, at the rate of eight percent (8%) per annum. Interest payable under this Agreement shall be computed on the basis of a year of 360 days and months consisting of 30 days each and actual days elapsed (including the first day but excluding the last) occurring in the period to which the computation relates.

(b) Except as otherwise provided in this section 2.2(b), accrued interest on the Principal Amount shall be payable by the Borrower annually in arrears commencing on the last Business Day of the calendar year following the date of this Agreement and continuing on the last Business Day of each calendar year thereafter and upon the payment or prepayment of such Loan. All interest on the Principal Amount shall be paid by the Borrower in immediately available funds. The Lender shall remit to the Borrower, at least three (3) Business Days before the end of each calendar year, a statement of the interest payment due under section 2.2(a) for such year; provided, however, that a delay or failure by the Lender in providing the Borrower with such statement shall not alter the Borrower’s obligation to make such payment.

(c) Anything in this Loan Agreement or the Promissory Note to the contrary notwithstanding, the obligation of the Borrower to make payments of interest shall be subject to

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the limitation that payments of interest shall not be required to be made to the Lender to the extent that the Lender’s receipt thereof would not be permissible under the law or laws applicable to the Lender limiting rates of interest which may be charged or collected by the Lender. Any such payment referred to in the preceding sentence shall be made by the Borrower to the Lender on the earliest interest payment date or dates on which the receipt thereof would be permissible under the laws applicable to the Lender limiting rates of interest which may be charged or collected by the Lender. Such deferred interest shall not bear interest.

Section 2.3      Promissory Note .

The Loan shall be evidenced by a Promissory Note of the Borrower in substantially the form of Exhibit A attached hereto, dated the date hereof, payable to the order of the Lender in the Principal Amount and otherwise duly completed.

Section 2.4      Payment of Trust Loan .

(a) The Principal Amount of the Loan shall be repaid in annual installments payable on the last Business Day of each December ending after the date of this Agreement. The amount of each such annual installment shall be that portion of the lesser of (i) that portion of the Principal Amount which will result in the release for allocation to participants in the ESOP, pursuant to the Pledge Agreement, of a cumulative fraction of the Collateral (within the meaning of the Pledge Agreement and determined as of the last Business Day of December, 2007) equal to the percentage set forth in Column II below and (ii) that portion of the Principal Amount which will result in the release for allocation to participants in the ESOP, pursuant to the Pledge Agreement, of Collateral (within the meaning of the Pledge Agreement and valued as of the date of payment) having a value equal to twenty-five percent (25%) of the compensation taken into account under the ESOP for each person entitled to share in such allocation taking into account all loans under the ESOP:

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; provided, however, that the Borrower shall not be required to make any payment of principal due to be made in any Fiscal Year to the extent that such payment would not be deductible from federal income tax purposes for such Fiscal Year under Section 404 of the Code. Principal payments may be deferred to the extent that such payments would be in excess of the amount described above or otherwise would be nondeductible for federal income tax purposes. Any payment not required to be made pursuant to clause (ii) of the above provision shall be deferred to and be payable on the earlier of the thirtieth (30th) anniversary of the loan origination date or the last day of the first Plan Year in which such proviso would not apply to alleviate a requirement of payment; and payment not required to be made pursuant to the immediately preceding sentence shall be deferred to and be payable on the last day of the first Plan Year in which such payment may be made on a tax deductible basis.

Section 2.5     Prepayment .

The Borrower shall be entitled to prepay the Loan in whole or in part, at any time and from time to time; provided, however, that the Borrower shall give notice to the Lender of any such prepayment. Any such prepayment shall be: (a) permanent and irrevocable: (b) accompanied by all accrued interest through the date of such prepayment; (c) made without premium or penalty; and (d) applied first to the installment of principal due and payable in the Fiscal Year in which the prepayment is made and second in the order of the maturity of the

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remaining installments thereof unless the Lender and the Borrower agree to apply such prepayments in some other order.

Section 2.6     Method of Payments .

(a) All payments of principal, interest, other charges (including indemnities) and other amounts payable by the Borrower hereunder shall be made in lawful money of the United States, in immediately available funds, to the Lender at the address specified in or pursuant to this Loan Agreement for notices to the Lender, not later than 3:00 P.M., Eastern Standard time, on the date on which such payment shall become due. Any such payment made on such date but after such time shall, if the amount paid bears interest, and except as expressly provided to the contrary herein, be deemed to have been made on, and interest shall continue to accrue and be payable thereon until, the next succeeding Business Day. If any payment of principal or interest becomes due on a day other than a Business Day, such payment may be made on the next succeeding Business Day, and when paid, such payment shall include interest to the day on which such payment is in fact made.

(b) Notwithstanding anything to the contrary contained in this Loan Agreement or the Promissory Note, neither the Borrower nor the Trustee shall be obligated to make any payment, repayment or prepayment on the Promissory Note or take or refrain from taking any other action hereunder or under the Promissory Note if doing so would cause the ESOP to cease to be an employee stock ownership plan within the meaning of section 4975(e)(7) of the Code or qualified under section 401(a) of the Code or cause the Borrower to cease to be a tax exempt trust under section 501(a) of the Code or if such act or failure to act would cause the Borrower or the Trustee to engage in any "prohibited transaction" as such term is defined in section 4975(c) of the Code and the regulations promulgated thereunder which is not exempted by section 4975(c)(2) or (d) of the Code and the regulations promulgated thereunder or in section 406 of ERISA and the regulations promulgated thereunder which is not exempted by section 408(b) of ERISA and the regulations promulgated thereunder; provided, however, that in each case, the Borrower or the Trustee or both, as the case may be, may act or refrain from acting pursuant to this section 2.6(b) on the basis of an opinion of Independent Counsel. The Borrower and the Trustee may consult with Independent Counsel, and any opinion of such Independent Counsel shall be full and complete authorization and protection in respect of any action taken or suffered or omitted by it hereunder in good faith and in accordance with such opinion of Independent Counsel. Nothing contained in this section 2.6(b) shall be construed as imposing a duty on either the Borrower or the Trustee to consult with Independent Counsel. Any obligation of the Borrower or the Trustee to make any payment, repayment or prepayment on the Promissory Note or to take or refrain from taking any other act hereunder or under the Promissory Note which is excused pursuant to this section 2.6(b) shall be considered a binding obligation of the Borrower or the Trustee, or both, as the case may be, for the purposes of determining whether a Default or Event of Default has occurred hereunder or under the Promissory Note and nothing in this section 2.6(b) shall be construed as providing a defense to any remedies otherwise available upon a Default or an Event of Default hereunder (other than the remedy of specific performance).

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Section 2.7     Use of Proceeds of Loan .

The entire proceeds of the Loan shall be used solely for acquiring shares of Common Stock, and for no other purpose whatsoever.

Section 2.8     Security .

(a) In order to secure the due payment and performance by the Borrower of all of its obligations under this Loan Agreement, simultaneously with the execution and delivery of this Loan Agreement by the Borrower, the Borrower shall:

• (i) pledge to the Lender as Collateral (as defined in the Pledge Agreement), and grant to the Lender a first priority lien on and security interest in, the Common Stock purchased with the Principal Amount, by the execution and delivery to the Lender of a Pledge Agreement in the form attached hereto as Exhibit B; and

  (ii) execute and deliver, or cause to be executed and delivered, such other agreements, instruments and documents as the Lender may reasonably require in order to effect the purposes of the Pledge Agreement and this Loan Agreement.

(b) The Lender shall release from encumbrance under the Pledge Agreement and transfer to the Borrower, as of the date on which any payment or prepayment of the Principal Amount is made, a number of shares of Common Stock held as Collateral pursuant to section 6.4 of the ESOP.

Section 2.9     Registration of the Promissory Note .

(a) The Lender shall maintain a Register providing for the registration of the Principal Amount and any stated interest and of transfer and exchange of the Promissory Note. Transfer of the Promissory Note may be effected only by the surrender of the old instrument and either the reissuance by the Borrower of the old instrument to the new holder or the issuance by the Borrower of a new instrument to the new holder. The old Promissory Note so surrendered shall be canceled by the Lender and returned to the Borrower after such cancellation.

(b) Any new Promissory Note issued pursuant to section 2.9(a) shall carry the same rights to interest (unpaid and to accrue) carried by the Promissory Note so transferred or exchanged so that there will not be any loss or gain of interest on the note surrendered. Such new Promissory Note shall be subject to all of the provisions and entitled to all of the benefits of this Agreement. Prior to due presentment for registration or transfer, the Borrower may deem and treat the registered holder of any Promissory Note as the holder thereof for purposes of payment and all other purposes. A notation shall be made on each new Promissory Note of the amount of all payments of principal and interest theretofore paid.

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ARTICLE III

REPRESENTATIONS AND WARRANTIES OF THE BORROWER

To the actual knowledge of the Trustee, the Borrower hereby represents and warrants to the Lender as follows:

Section 3.1     Power, Authority, Consents .

The Borrower has the power to execute, deliver and perform this Loan Agreement, the Promissory Note and the Pledge Agreement, all of which have been duly authorized by all necessary and proper corporate or other action.

Section 3.2     Due Execution, Validity, Enforceability .

Each of the Loan Documents, including, without limitation, this Loan Agreement, the Promissory Note and the Pledge Agreement, have been duly executed and delivered by the Borrower; and each constitutes the valid and legally binding obligation of the Borrower, enforceable in accordance with its terms.

Section 3.3     Properties, Priority of Liens .

The liens which have been created and granted by the Pledge Agreement constitute valid, first liens on the properties and assets covered by the Pledge Agreement, subject to no prior or equal lien.

Section 3.4     No Defaults, Compliance with Laws .

The Borrower is not in default in any material respect under any agreement, ordinance, resolution, decree, bond, note, indenture, order or judgment to which it is a party or by which it is bound, or any other agreement or other instrument by which any of the properties or assets owned by it is materially affected.

Section 3.5     Purchases of Common Stock .

Upon consummation of any purchase of Common Stock by the Borrower with the proceeds of the Loan, the Borrower shall acquire valid, legal and marketable title to all of the Common Stock so purchased, free and clear of any liens, other than a pledge to the Lender of the Common Stock so purchased pursuant to the Pledge Agreement. Neither the execution and delivery of the Loan Documents nor the performance of any obligation thereunder violates any provision of law or conflicts with or results in a breach of or creates (with or without the giving of notice or lapse of time, or both) a default under any agreement to which the Borrower is a party or by which it is bound or any of its properties is affected. No consent of any federal, state or local governmental authority, agency or other regulatory body, the absence of which could have a materially adverse effect on the Borr