AMENDED AND RESTATED
NON-QUALIFIED SUPPLEMENTAL EXECUTIVE
RETIREMENT AGREEMENT
SOUND FEDERAL SAVINGS
White Plains, New York
Originally Effective January 1, 2004
As Amended and Restated January 1, 2005
AMENDED AND RESTATED
NON-QUALIFIED SUPPLEMENTAL EXECUTIVE RETIREMENT AGREEMENT
This Amended and Restated Non-qualified Supplemental Executive Retirement
Agreement (the "Agreement"), which was originally effective as of the 1st day of
January, 2004, formalizes the agreements by and between SOUND FEDERAL SAVINGS
(the "Association"), a federally chartered savings association, and certain key
employees, hereinafter referred to as "Executive(s)," who shall be selected and
approved by the Association to participate in this Agreement by execution of a
Non-qualified Supplemental Executive Retirement Joinder Agreement ("Joinder
Agreement") in a form provided by the Association. SOUND FEDERAL BANCORP, INC.
(the "Holding Company") is a party to this Agreement for the sole purpose of
guaranteeing the Association's performance hereunder. This Agreement is hereby
amended and restated effective as of January 1, 2005, in accordance with the
terms set forth herein.
W I T N E S S E T H :
WHEREAS, the Association originally adopted this Non-Qualified Supplemental
Executive Retirement Agreement effective as of January 1, 2004, for the benefit
of certain of its key Executives; and
WHEREAS, the Association recognizes the valuable services heretofore
performed for it by such Executives and wishes to encourage their continued
employment and to provide them with additional incentive to achieve corporate
objectives; and
WHEREAS, the Association wishes to provide the terms and conditions upon
which the Association shall pay additional retirement benefits to the
Executives; and
WHEREAS, the Association intends this Agreement to be considered an
unfunded arrangement, maintained primarily to provide supplemental retirement
income for its Executives, members of a select group of management or highly
compensated employees of the Association, for tax purposes and for purposes of
the Employee Retirement Income Security Act of 1974, as amended; and
WHEREAS, Section 409A of the Internal Revenue Code of 1986, as amended (the
"Code") requires that certain types of nonqualified deferred compensation
arrangements comply with its terms or be subject to current taxes and penalties;
and
WHEREAS, the Board of Directors of the Association (the "Board") now
desires to amend and restate the Agreement effective as of January 1, 2005, in
order to comply with Code Section 409A, and for certain other purposes.
NOW, THEREFORE, in consideration of the premises and of the mutual promises
herein contained, the Association and the Executive agree as follows:
SECTION I
DEFINITIONS
When used herein, the following words and phrases shall have the meanings
below unless the context clearly indicates otherwise:
1.1 "Accrued Benefit" means that portion of the Supplemental Retirement Benefit
which is required to be expensed and accrued under generally accepted
accounting principles (GAAP).
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1.2 "Act" means the Employee Retirement Income Security Act of 1974, as amended
from time to time.
1.3 "Administrator" means the Association and/or its Board.
1.4 "Association" means Sound Federal Savings and any successor thereto.
1.5 "Beneficiary" means the person or persons (and their heirs) designated as
Beneficiary by the Executive to whom the deceased Executive's benefits are
payable. If no Beneficiary is so designated, then the Executive's Spouse,
if living, will be deemed the Beneficiary. If the Executive's Spouse is not
living, then the Children of the Executive will be deemed the Beneficiaries
and will take on a per stirpes basis. If there are no living Children, then
the Estate of the Executive will be deemed the Beneficiary.
1.7 "Benefit Eligibility Date" shall mean, unless otherwise set forth herein,
the later of (i) the 1st day of the month following the month in which the
Executive attains the Normal Retirement Age, or (ii) the 1st day of the
month following the month in which the Executive actually retires.
1.8 "Board" shall mean the Board of Directors of the Association, unless
specifically noted otherwise.
1.9 "Cause" means the Executive's personal dishonesty, incompetence, willful
misconduct, breach of fiduciary duty involving personal profit, intentional
failure to perform stated duties, willful violation of any law rule, or
regulation (other than traffic violations or similar offenses) or final
cease-and-desist order, or material breach of any provision of this
Agreement.
1.10 "Change in Control" of the Association shall mean (1) a change in ownership
of the Association under paragraph (i) below, or (2) a change in effective
control of the Association under paragraph (ii) below, or (3) a change in
the ownership of a substantial portion of the assets of the Association
under paragraph (iii) below:
(i) Change in the ownership of the Association. A change in the ownership
of the Association shall occur on the date that any one person, or
more than one person acting as a group (as defined in Proposed
Treasury Regulation Section 1.409A-3(g)(5)(v)(B)), acquires ownership
of stock of the corporation that, together with stock held by such
person or group, constitutes more than 50% of the total fair market
value or total voting power of the stock of such corporation.
(ii) Change in the effective control of the Association. A change in the
effective control of the Association shall occur on the date that
either (i) any one person, or more than one person acting as a group
(as defined in Proposed Treasury Regulation Section
1.409A-3(g)(5)(v)(B)), acquires (or has acquired during the 12-month
period ending on the date of the most recent acquisition by such
person or persons) ownership of stock of the corporation possessing
35% or more of the total voting power of the stock of such
corporation; or (ii) a majority of members of the corporation's board
of Directors is replaced during any 12-month period by Directors whose
appointment or election is not endorsed by a majority of the members
of the corporation's board of Directors prior to the date of the
appointment or election, provided that this sub-section (ii) is
inapplicable where a majority shareholder of the Association is
another corporation.
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(iii) Change in the ownership of a substantial portion of the Association's
assets. A change in the ownership of a substantial portion of the
Association's assets shall occur on the date that any one person, or
more than one person acting as a group (as defined in Proposed
Treasury Regulation Section 1.409A-3(g)(5)(v)(B)), acquires (or has
acquired during the 12-month period ending on the date of the most
recent acquisition by such person or persons) assets from the
corporation that have a total gross fair market value equal to or more
than 40% of the total gross fair market value of (i) all of the assets
of the Association, or (ii) the value of the assets being disposed of,
either of which is determined without regard to any liabilities
associated with such assets.
(iv) For all purposes hereunder, the definition of Change in Control shall
be construed to be consistent with the requirements of Proposed
Treasury Regulation Section 1.409A-3(g), except to the extent that
such proposed regulations are superseded by subsequent guidance. In
addition, for purposes of this Section 1.10 only, "Association" shall
be construed to mean also the Holding Company.
1.11 "Children" means the Executive's children, or the issue of any
deceased Children, then living at the time payments are due the
Children under this Agreement. The term "Children" shall include both
natural and adopted Children.
1.12 "Code" means the Internal Revenue Code of 1986, as amended.
1.13 "Disabled" means any case in which an Executive terminates employment
due to disability within the meaning of Proposed Treasury Regulation
Section 1.409A-3(g)(4).
1.14 "Disability Benefit" means the monthly benefit payable to the
Executive following a determination, in accordance with Subsection
3.6, that he is Disabled. The Disability Benefit shall be equal to the
Accrued Benefit, annuitized using the Interest Factor and paid over
the Payout Period.
1.15 "Estate" means the estate of the Executive.
1.16 "Executive" means the executive officer who is designated by the Board
to participate in the Plan.
1.17 "Holding Company" means Sound Federal Bancorp, Inc.
1.18 "Interest Factor" unless specifically designated otherwise in this
Subsection or in another place in this Agreement, means annual
compounding or discounting, as applicable, at six percent (6%). For
purposes of determining the present value of the amount necessary to
contribute to a rabbi trust to fund the Executive's benefit in the
event of a Change in Control, the Interest Factor shall mean 120% of
the semiannual applicable federal rate (AFR) as determined under Code
Section 1274(d).
1.19 "Joinder Agreement" means the Executive's Non-Qualified Supplemental
Executive Joinder Agreement.
1.20 "Normal Retirement Age" shall be the birthday on which the Executive
attains the age set forth in such Executive's Joinder Agreement.
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1.21 "Payout Period" means the time frame during which benefits payable
hereunder shall be distributed. Payments generally shall be made in
monthly installments commencing within thirty (30) days following the
occurrence of the event which triggers distribution and shall continue
for One Hundred Eighty (180) months. In certain cases set forth in
Section 3.7 herein, an Executive's (or Beneficiary's) benefit may be
paid earlier than the foregoing.
1.22 "Plan Year" means the calendar year.
1.23 "Separation from Service" means the Executive's death, retirement or
termination of employment with the Association. No Separation from
Service shall be deemed to occur due to military leave, sick leave or
other bona fide leave of absence if the period of such leave does not
exceed six months or, if longer, so long as the Executive's right to
reemployment is provided by law or contract. If the leave exceeds six
months and the Executive's right to reemployment is not provided by
law or by contract, then the Executive shall be have a Separation from
Service on the first date immediately following such six-month period.
The Executive shall not be treated as having a Separation from Service
if the Executive provides more than insignificant services for the
Association following the Executive's actual or purported termination
of employment with the Association. Services shall be treated as not
being insignificant if such services are performed at an annual rate
that is at least equal to 20% of the services rendered by the
Executive for the Association, on average, during the immediately
preceding three full calendar years of employment (or if employed less
than three years, such shorter period of employment) and the annual
base compensation for such services is at least equal to 20% of the
average base compensation earned during the final three full calendar
years of employment (or if employed less than three years, such
shorter period of employment).
Where the Executive continues to provide services to a previous
employer in a capacity other than as an employee, a Separation from
Service will not be deemed to have occurred if the Executive is
providing services at an annual rate that is 50% or more of the
services rendered, on average, during the immediate preceding three
full calendar years of employment (or if employed less than three
years, such lesser period) and the annual base compensation for such
services is 50% or more of the annual base compensation earned during
the final three full calendar years of employment (or if less, such
lesser period).
1.24 "Specified Employee" means, in the event the Association or any
corporate parent is or becomes publicly traded, a Key Employee as such
term is defined in Code Section 416(i) without regard to paragraph 5
thereof.
1.25 "Spouse" means the individual to whom the Executive is legally married
at the time of the Executive's death, provided, however, that the term
"Spouse" shall not refer to an individual to whom the Executive is
legally married at the time of death if the Executive and such
individual have entered into a formal separation agreement (provided
that such separation agreement does not provide otherwise or state
that such individual is entitled to a portion of the benefit
hereunder) or initiated divorce proceedings.
1.26 "Supplemental Retirement Benefit" means an annual amount (before
taking into account federal and state income taxes), payable to the
Executive in monthly installments throughout the Payout Period
calculated based on certain actuarial assumptions, as the difference
between (i) the benefit the Executive would be entitled to receive
upon retirement at his Normal Retirement Age under the Association's
tax-qualified defined benefit pension plan and employee stock
ownership plan without giving consideration to the limitations imposed
under Code Sections 401(a)(17) and 415 (the "Applicable Limitations")
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on such benefits and contributions and (ii) the amount that the
Executive is actually entitled to receive at such time as the result
of the Applicable Limitations.
1.27 "Survivor's Benefit" means an annual amount payable to the Beneficiary
in monthly installments throughout the Payout Period, equal to the
amount designated in the Executive's Joinder Agreement.
SECTION II
ESTABLISHMENT OF RABBI TRUST
The Association may establish a rabbi trust into which the Association may
contribute assets which shall be held, subject to the claims of the
Association's creditors in the event of the Association's "Insolvency" as
defined in the agreement which establishes such rabbi trust, until the
contributed assets are paid to the Executives and their Beneficiaries in such
manner and at such times as specified in this Agreement. The Association may
make contributions to the rabbi trust to provide the Association with a source
of funds to assist it in meeting the liabilities of this Agreement. The rabbi
trust and any assets held therein shall conform to the terms of the rabbi trust
agreement which may be established in conjunction with this Agreement. To the
extent the language in this Agreement is modified by the language in the rabbi
trust agreement, the rabbi trust agreement shall supersede this Agreement. In
the event of a Change in Control or imminent Change in Control, the Association
shall establish a rabbi trust (if none has been previously established
hereunder) and shall transfer to the rabbi trust prior to such Change in
Control, the present value of an amount sufficient to fully fund the
Supplemental Retirement Benefit for each Executive covered by this Agreement.
SECTION III
BENEFITS
3.1 Retirement Benefit. If the Executive is in service with the Association
until reaching his Normal Retirement Age, the Executive shall be entitled
to the Supplemental Retirement Benefit. Such benefit shall commence on the
Executive's Benefit Eligibility Date and shall be payable in monthly
installments throughout the Payout Period. In the event the Executive dies
at any time after attaining his Normal Retirement Age, but prior to
commencement or completion of all such payments due and owing hereunder,
the Association shall pay to the Executive's Beneficiary a continuation of
the monthly installments for the remainder of the Payout Period.
3.2 Death Prior to Normal Retirement Age. If the Executive dies prior to
attaining his Normal Retirement Age but while employed at the Association,
the Executive's Beneficiary shall be entitled to the Survivor's Benefit.
The Survivor's Benefit shall commence within thirty (30) days of the
Executive's death and shall be payable in monthly installments throughout
the Payout Period.
3.3 Involuntary Termination (Other Than for Cause) or Voluntary Termination of
Employment. If the Executive experiences an involuntary Separation from
Service prior to the attainment of his Normal Retirement Age, for any
reason other than for Cause, the Executive's death, Disability, or
following a Change in Control, or if the Executive experiences a voluntary
Separation from Service, the Executive (or his Beneficiary) shall be
entitled to the Accrued Benefit relating to Executive at the time of the
Executive's Separation from Service. Such benefit shall commence at the
Executive's Normal Retirement Age, shall be annuitized (using the Interest
Factor) and be payable in monthly installments throughout the Payout
Period. In the event the Executive dies prior to commencement or completion
of all such payments due and owing hereunder, the Association shall pay to
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the Executive's Beneficiary a continuation of the monthly installments for
the remainder of the Payout Period.
3.4 Change in Control. If a Change in Control occurs prior to the Executive's
attainment of Normal Retirement Age, the Executive shall be entitled to the
Supplemental Retirement Benefit as if the Executive had remained employed
by the Association (or its successor) until attainment of his Normal
Retirement Age. Such benefit shall commence within thirty (30) days of the
Change in Control and shall be payable in monthly installments throughout
the Payout Period. In the event that the Executive dies prior to
commencement or completion of all such payments due and owing hereunder,
the Association, or its successor, shall pay to the Executive's Beneficiary
a continuation of the monthly installments for the remainder of the Payout
Period. Notwithstanding the foregoing, the Executive may elect to receive
his Supplemental Retirement Benefit following a Change in Control in the
form of a lump sum payment, or in monthly installments over a 5 or 10 year
period (provided, however, that such alternative forms of distribution
shall be the actuarial equivalent of monthly installments over 180 months)
or to defer commencement of his Supplemental Retirement Benefit until
attaining his Normal Retirement Age. The Executive shall make such an
election on the Change in Control Election Form attached hereto as Exhibit
A. Such election, if made, shall be made no later than December 31, 2005.
3.5 Termination for Cause. If the Executive is terminated for Cause, all
benefits under this Agreement shall be forfeited and this Agreement shall
become null and void as to such Executive.
3.6 Disability Benefit. Notwithstanding any other provision hereof, the
Executive shall be entitled to receive the Disability Benefit hereunder, in
any case in which it is determined that the Executive is Disabled. In such
event, the Executive shall receive the Disability Benefit in lieu of any
other benefit available under Section III. The Disability Benefit shall be
paid commencing on the date on which the Executive is determined to be
Disabled. In the event the Executive dies at any time after termination of
employment due to Disability but prior to payment of the Disability
Benefits, the Association shall pay the Survivor's Benefit to the
Executive's Beneficiary.
3.7 Early Distributions. Certain events unrelated to a Separation from Service
or a Change in Control may cause Executive's benefits hereunder to be paid
before Executive's attainment of Normal Retirement Age.
(a) Conflicts of Interest. To the extent necessary to effect compliance
with a certificate of divestiture (within the meaning of Section
1043(b)(2) of the Code), the Administrator may permit a lump sum
payment of all or a portion of the Executive's Supplemental Retirement
Benefit otherwise payable to the Executive or his Beneficiary. Such
lump sum payment shall be in lieu of the benefits that would otherwise
be payable to the Executive or his Beneficiary.
(b) Domestic Relations Order. To the extent required to comply with the
terms of a domestic relations order (within the meaning of Section
414(p) of the Code) directed to and served upon the Agreement, the
Administrator may direct the payment of all or any portion of the
benefit to which an Executive is entitled to at any time or in
accordance with any benefit payment schedule set forth in such order.
Such lump sum payment shall be in lieu of the benefits that would
otherwise be payable to the Executive or his Beneficiary.
3.8 Late Payments. Any payment due and payable under this Agreement that is not
made within thirty (30) days after the date on which it is first due and
payable shall continue to bear interest or other earnings from the date it
is first due through the date of actual payment unless the delay in payment
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results solely from an act or failure to act on the part of the payment
recipient. Where a delay in excess of thirty (30) days has occurred in the
commencement of any series of payments, the first payment made shall also
include any previous installments that are due.
3.9 Cashout of Small Benefits If at any time the total present value of the
payment due and payable to a person under this Agreement equals $10,000 or
less, such entire present value shall be paid to the recipient as soon as
practicable. Any such payment shall be in full settlement of such person's
interest under this Agreement.
3.10 Notwithstanding anything in the Agreement to the contrary, to the extent
required under Section 409A of the Code, no payment to be made to a
Specified Employee shall be made sooner than six (6) months after such
Specified Employee's Separation from Service.
SECTION IV
BENEFICIARY DESIGNATION
The Executive shall make an initial designation of primary and secondary
Beneficiaries upon execution of his Joinder Agreement and shall have the right
to change such designation, at any subsequent time, by submitting to the
Administrator in substantially the form attached as Exhibit A to the Joinder
Agreement, a written designation of primary and secondary Beneficiaries. Any
Beneficiary designation made subsequent to execution of the Joinder Agreement
shall become effective only when receipt thereof is acknowledged in writing by
the Administrator.
SECTION V
EXECUTIVE'S RIGHT TO ASSETS:
ALIENABILITY AND ASSIGNMENT PROHIBITION
At no time shall the Executive be deemed to have any lien, right, title or
interest in or to any specific investment or asset of the Association. The
rights of the Executive, any Beneficiary, or any other person claiming through
the Executive under this Agreement, shall be solely those of an unsecured
general creditor of the Association. The Executive, the Beneficiary, or any
other person claiming through the Executive, shall only have the right to
receive from the Association those payments so specified under this Agreement.
Neither the Executive nor any Beneficiary under this Agreement shall have any
power or right to transfer, assign, anticipate, hypothecate, mortgage, commute,
modify or otherwise encumber in advance any of the benefits payable hereunder,
nor shall any of said benefits be subject to seizure for the payment of any
debts, judgments, alimony or separate maintenance owed by the Executive or his
Beneficiary, nor be transferable by operation of law in the event of bankruptcy,
insolvency or otherwise.
SECTION VI
ACT PROVISIONS
6.1 Named Fiduciary and Administrator. The Association shall be the Named
Fiduciary and Administrator (the "Administrator") of this Agreement. As
Administrator, the Association shall be responsible for the management,
control and administration of the Agreement as established herein. The
Administrator may delegate to others certain aspects of the management and
operational responsibilities of the Agreement, including the employment of
advisors and the delegation of ministerial duties to qualified individuals.
6.2 Claims Procedure and Arbitration. In the event that benefits under this
Agreement are not paid to the Executive (or to his Beneficiary in the case
of the Executive's death) and such claimants feel they are entitled to
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receive such benefits, then a written claim must be made to the
Administrator within sixty (60) days from the date payments are refused.
The Administrator shall review the written claim and, if the claim is
denied, in whole or in part, they shall provide in writing, within thirty
(30) days of receipt of such claim, their specific reasons for such denial,
reference to the provisions of this Agreement or the Joinder Agreement upon
which the denial is based, and any additional material or information
necessary to perfect the claim. Such writing by the Association and its
Board of Directors shall further indicate the additional steps which must
be undertaken by claimants if an additional review of the claim denial is
desired.
If claimants desire a second review, they shall notify the Administrator in
writing within thirty (30) days of the first claim denial. Claimants may
review this Agreement, the Joinder Agreement or any documents relating
thereto and submit any issues and comments, in writing, they may feel
appropriate. In its sole discretion, the Administrator shall then review
the second claim and provide a written decision within thirty (30) days of
receipt of such claim. This decision shall state the specific reasons for
the decision and shall include reference to specific provisions of this
Agreement or the Joinder Agreement upon which the decision is based.
If claimants continue to dispute the benefit denial based upon completed
performance of this Agreement and the Joinder Agreement or the meaning and
effect of the terms and conditions thereof, it shall be settled by
arbitration administered by the AAA under its Commercial Arbitration Rules,
and judgment on the award rendered by the arbitrator(s) may be entered in
any court having jurisdiction thereof.
SECTION VII
MISCELLANEOUS
7.1 No Effect on Employment Rights. Nothing contained herein will confer upon
the Executive the right to be retained in the service of the Association
nor limit the right of the Association to discharge or otherwise deal with
the Executive without regard to the existence of the Agreement.
7.2 State Law. The Agreement is established under, and will be construed
according to, the laws of the State of New York, to the extent such laws
are not preempted by the Act and valid regulations published thereunder.
7.3 Severability and Interpretation of Provisions. In the event that any of the
provisions of this Agreement or portion hereof, are held to be inoperative
or invalid by any court of competent jurisdiction, or in the event that any
legislation adopted by any governmental body having jurisdiction over the
Association would be retroactively applied to invalidate this Agreement or
any provision hereof or cause the benefits hereunder to be taxable, then:
(1) insofar as is reasonable, effect will be given to the intent manifested
in the provisions held invalid or inoperative, and (2) the validity and
enforceability of the remaining provisions will not be affected thereby. In
the event that the intent of any provision shall need to be construed in a
manner to avoid taxability, such construction shall be made by the
Administrator in a manner that would manifest to the maximum extent
possible the original meaning of such provisions.
7.4 Incapacity of Recipient. In the event the Executive is declared incompetent
and a conservator or other person legally charged with the care of his
person or Estate is appointed, any benefits under the Agreement to which
such Executive is entitled shall be paid to such conservator or other
person legally charged with the care of his person or Estate.
7.5 Unclaimed Benefit. The Executive shall keep the Association informed of his
current address and the current address of his Beneficiaries. If the
location of the Executive is not made known to the Association within three
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years after the date upon which any payment of any benefits may first be
made, the Association shall delay payment of the Executive's benefit
payment(s) until the location of the Executive is made known to the
Association; however, the Association shall only be obligated to hold such
benefit payment(s) for the Executive until the expiration of three (3)
years. Upon expiration of the three (3) year period, the Association may
discharge its obligation by payment to the Executive's Beneficiary. If the
location of the Executive's Beneficiary is not made known to the
Association by the end of an additional two (2) month period following
expiration of the three (3) year period, the Association may discharge its
obligation by payment to the Executive's Estate. If there is no Estate in
existence at such time or if such fact cannot be determined by the
Association, the Executive and his Beneficiary(ies) shall thereupon forfeit
any rights to the balance, if any, of any benefits provided for such
Executive and/or Beneficiary under this Agreement.
7.6 Limitations on Liability. Notwithstanding any of the preceding provisions
of the Agreement, no individual acting as an employee or agent of the
Association or the Holding Company, or as a member of the Board of the
Association or Holding Company shall be personally liable to the Executive
or any other person for any claim, loss, liability or expense incurred in
connection with the Agreement.
7.7 Gender. Whenever in this Agreement words are used in the masculine or
neuter gender, they shall be read and construed as in the masculine,
feminine or neuter gender, whenever they should so apply.
7.8 Effect on Other Corporate Benefit Agreements. Nothing contained in this
Agreement shall affect the right of the Executive to participate in or be
covered by any qualified or non-qualified pension, profit sharing, group,
bonus or other supplemental compensation or fringe benefit agreement
constituting a part of the Association's existing or future compensation
structure.
7.9 Suicide. Notwithstanding anything to the contrary in this Agreement, the
benefits otherwise provided herein shall not be payable and this Agreement
shall become null and void if the Executive's death results from suicide,
whether sane or insane, within twenty-six (26) months after the execution
of his Joinder Agreement.
7.10 Inurement. This Agreement shall be binding upon and shall inure to the
benefit of the Association, its successors and assigns, and the Executive,
his successors, heirs, executors, administrators, and Beneficiaries.
7.11 Tax Withholding. The Association may withhold from any benefits payable
under this Agreement all federal, state, city, or other taxes as shall be
required pursuant to any law or governmental regulation then in effect.
7.12 Headings. Headings and sub-headings in this Agreement are inserted for
reference and convenience only and shall not be deemed a part of this
Agreement.
7.13 Compliance with Section 409A of the Code. The Agreement is intended to be a
non-qualified deferred compensation plan described in Section 409A of the
Code. The Agreement shall be operated, administered and construed to give
effect to such intent. To the extent that a provision of the Agreement
fails to comply with Code Section 409A and a construction consistent with
Code Section 409A is not possible, such provision shall be void ab initio.
In addition, the Agreement shall be subject to amendment, with or without
advance notice to Executives and other interested parties, and on a
prospective or retroactive basis, including but not limited to amendment in
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a manner that adversely affects the rights of Executives and other
interested parties, to the extent necessary to effect such compliance.
7.14 Required Regulatory Provisions Applicable to the Association and the
Holding Company. Any payments made to an Executive pursuant to this
Agreement, or otherwise, are subject to and conditioned upon their
compliance with 12 U.S.C. ss. 1828(k) and any regulations promulgated
thereunder.
7.15 Required Regulatory Provisions Applicable to the Association. The following
provisions are included for the purposes of complying with various laws,
rules and regulations applicable to the Association:
(a) Notwithstanding anything herein contained to the contrary, if the
Executive is suspended from office and/or temporarily prohibited from
participating in the conduct of the affairs of the Association
pursuant to a notice served under section 8(e)(3) or 8(g)(1) of the
Federal Deposit Insurance Act (the "FDI Act"), 12 U.S.C. ss.1818(e)(3)
or 1818(g)(1), the Association's obligations under this Agreement
shall be suspended as of the date of service of such notice, unless
stayed by appropriate proceedings. If the charges in such notice are
dismissed, the Association, in its discretion, may (i) pay to the
Executive all or part of the compensation withheld while the
Association's obligations hereunder were suspended and (ii) reinstate,
in whole or in part, any of the obligations which were suspended.
(b) Notwithstanding anything herein contained to the contrary, if the
Executive is removed and/or permanently prohibited from participating
in the conduct of the Association's affairs by an order issued under
section 8(e)(4) or 8(g)(1) of the FDI Act, 12 U.S.C. ss.1818(e)(4) or
(g)(1), all prospective obligations of the Association under this
Agreement shall terminate as of the effective date of the order, but
vested rights and obligations of the Association and the Executive
shall not be affected.
(c) Notwithstanding anything herein contained to the contrary, if the
Association is in default (within the meaning of section 3(x)(1) of
the FDI Act, 12 U.S.C. ss.1813(x)(1), all prospective obligations of
the Association under this Agreement shall terminate as of the date of
default, but vested rights and obligations of the Association and the
Executive shall not be affected.
(d) Notwithstanding anything herein contained to the contrary, all
prospective obligations of the Association hereunder shall be
terminated, except to the extent that a continuation of this Agreement
is necessary for the continued operation of the Association as
determined: (i) by the Director of the OTS or his designee or the
Federal Deposit Insurance Corporation ("FDIC"), at the time the FDIC
enters into an agreement to provide assistance to or on behalf of the
Association under the authority contained in section 13(c) of the FDI
Act, 12 U.S.C. ss.1823(c); or (ii) by the Director of the OTS or his
designee at the time such Director or designee approves a supervisory
merger to resolve problems related to the operation of the Association
or when the Association is determined by such Director to be in an
unsafe or unsound condition. The vested rights and obligations of the
parties shall not be affected.
(e) Any payments made pursuant to this Agreement are subject to and
conditioned upon their compliance with section 18(k) of the FDI Act,
12 U.S.C. ss.1828(k) and any regulations promulgated thereunder.
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If and to the extent that any of the foregoing provisions shall cease to be
required or by applicable law, rule or regulation, the same shall become
inoperative as though eliminated by formal amendment of this Agreement.
SECTION VIII
AMENDMENT, MODIFICATION AND TERMINATION
8.1 Amendment or Modification of the Agreement. This Agreement shall not be
amended or modified at any time, in whole or part, without the mutual
written consent of the Executive and the Association, and such mutual
consent shall be required even if the Executive is no longer employed by
the Association.
8.2 Termination of the Agreement. Subject to the requirements of Code Section
409A, in the event of complete termination of the Agreement, the Agreement
shall cease to operate and the Association shall pay out to the Executive
his benefit as if the Executive had terminated employment as of the
effective date of the complete termination. Such complete termination of
the Agreement shall occur only under the following circumstances and
conditions:
(a) The Board may terminate the Agreement within 12 months of a corporate
dissolution taxed under Code Section 331, or with approval of a
bankruptcy court pursuant to 11 U.S.C. ss.503(b)(1)(A), provided that
the amounts deferred under the Agreement are included in the
Executive's gross income in the latest of (i) the calendar year in
which the Agreement terminates; (ii) the calendar year in which the
amount is no longer subject to a substantial risk of forfeiture; or
(iii) the first calendar year in which the payment is administratively
practicable.
(b) The Board may terminate the Agreement within the 30 days preceding a
Change in Control (but not following a Change in Control), provided
that the Agreement shall only be treated as terminated if all
substantially similar arrangements sponsored by the Association are
terminated so that the Executive and all participants under
substantially similar arrangements are required to receive all amounts
of compensation deferred under the terminated arrangements within 12
months of the date of the termination of the arrangements.
(c) The Board may terminate the Agreement provided that (i) all
arrangements sponsored by the Association that would be aggregated
with this Agreement under Proposed Regulations Section 1.409A-1(c) if
the Executive covered by this Agreement was also covered by any of
those other arrangements are also terminated; (ii) no payments other
than payments that would be payable under the terms of the arrangement
if the termination had not occurred are made within 12 months of the
termination of the arrangement; (iii) all payments are made within 24
months of the termination of the arrangements; and (iv) the
Association does not adopt a new arrangement that would be aggregated
with any terminated arrangement under Proposed Regulations Section
1.409A-1(c) if the Executive participated in both arrangements, at any
time within five years following the date of termination of the
arrangement.
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SECTION IX
EXECUTION
9.1 This Agreement sets forth the entire understanding of the parties
hereto with respect to the transactions contemplated hereby, and any
previous agreements or understandings between the parties hereto
regarding the subject matter hereof are merged into and superseded by
this Agreement.
9.2 This Agreement shall be executed in triplicate, each copy of which,
when so executed and delivered, shall be an original, but all three
copies shall together constitute one and the same instrument.
[Remainder of Page Intentionally Blank]
13
IN WITNESS WHEREOF, the parties have hereunto set their hands the day
and year first written above.
ATTEST: SOUND FEDERAL SAVINGS
/s/ Linda Lunapiena By: /s/ Bruno J. Gioffre
- ------------------------------------ ------------------------------
Secretary Title: Chairman
ATTEST: SOUND FEDERAL BANCORP, INC.
/s/ Linda Lunapiena By: /s/ Bruno J. Gioffre
- ------------------------------------ ------------------------------
Secretary Title: Chairman
In accordance with Section VIII of the Agreement, I consent to the
amendments made in the Amended and Restated Non-Qualified Supplemental Executive
Retirement Agreement.
/s/ Richard P.McStravick
------------------------
Richard P. McStravick
/s/ Anthony J. Fabiano
----------------------
Anthony J. Fabiano
EXHIBIT A
SOUND FEDERAL SAVINGS
AMENDED AND RESTATED
NON-QUALIFIED SUPPLEMENTAL EXECUTIVE RETIREMENT AGREEMENT
CHANGE IN CONTROL ELECTION FORM
According to the terms of Section 3.4 of this Agreement, I understand that
in the event of a Change in Control, unless I elect below to receive my
Supplemental Retirement Benefit in the form of a lump sum payment, or to defer
commencement of my Supplemental Retirement Benefit until my Normal Retirement
Age, I shall receive my Supplemental Retirement Benefit in installments over the
Payout Period commencing at the time of the Change in Control. I understand that
each form of distribution that I may elect below shall be the actuarial
equivalent of each other form of distribution.
1. Form of Distribution:
I may elect to receive my Supplemental Retirement Benefit in a lump sum, or
to defer commencement of my Supplemental Retirement Benefit to my Normal
Retirement Age, in connection with or following a Change in Control, provided
that such election must be made no later than December 31, 2005.
In the event of a Change in Control of the Association before benefits
commence hereunder, I hereby elect to receive my Supplemental Retirement Benefit
in the following form (check one):
________ Lump Sum Distribution
________ Substantially equal monthly payments over a period of:
__________ 5 Years
__________ 10 Years
__________ 15 Years
2. Timing of Commencement of Distribution:
In the event of a Change in Control prior to my Normal Retirement Age, I
elect to receive my Supplemental Retirement Benefit commencing at the following
time:
________ Commencing immediately
________ Commencing at Normal Retirement Age
Dated: Signature:
----------------------- ----------------------------
Received by the Association this ______ day of _________________, 20___.
By ____________________________________
Title __________________________________