SOUND FEDERAL SAVINGS
AMENDED AND RESTATED SEVERANCE PLAN FOR KEY EMPLOYEES
Effective on January 1, 2005
SOUND FEDERAL SAVINGS
AMENDED AND RESTATED SEVERANCE PLAN FOR KEY EMPLOYEES
ARTICLE I
PURPOSE
Section 1.1 Statement of Purpose
Sound Federal Savings adopts this Severance Plan for Key Employees for the
benefit of its eligible employees and those of other Participating Employers.
The Bank recognizes that it may be subject to the possibility of a negotiated or
unsolicited Change of Control which may result in a loss of employment for some
of its Key Employees. The purpose of the Plan is to encourage the Bank's Key
Employees and those of other Participating Employers to continue working for
their employers with their full time and attention devoted to their employer's
affairs by providing prescribed income security and benefit continuation in the
event of an Involuntary Severance following a Change of Control.
Section 1.2 Other Severance Plans, Policies, and Practices Superseded
As of the Effective Date, this Plan supersedes in its entirety any plan,
policy, or practice of the Bank for the provision of severance benefits to Key
Employees in the event of termination of employment following a Change of
Control, whether written or oral or formal or informal. No severance benefits
shall be provided to any person who incurs a termination of employment with the
Bank on or after the Effective Date following a Change of Control, except as
provided under the terms of the Plan or as provided under the terms of a written
executed employment agreement specifically providing for the payment of benefits
following termination of employment with the Bank or other Participating
Employer.
ARTICLE II
DEFINITIONS
For purposes of the Plan, the following terms shall have the meanings
assigned to them below, unless a different meaning is plainly indicated by the
context:
Section 2.1 Affiliated Employer means the Bank; any corporation which is a
member of a controlled group of corporations (as defined in section 414(b) of
the Code) that includes the Bank; any trade or business (whether or not
incorporated) that is under common control (as defined in section 414(c) of the
Code) with the Bank; any organization (whether or not incorporated) that is a
member of an affiliated service group (as defined in section 414(m) of the Code)
that includes the Bank; any leasing organization (as defined in section 414(n)
of the Code) to the extent that any of its employees are required pursuant to
section 414(n) of the Code to be treated as employees of the Bank; and any other
entity that is required to be aggregated with the Bank pursuant to regulations
under section 414(o) of the Code.
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Section 2.2 Bank means Sound Federal Savings.
Section 2.3 Base Salary means, for any Key Employee as of any date of
reference, the Key Employee's annual rate of base salary.
Section 2.4 Board means the Board of Directors of Sound Federal Savings.
Section 2.5 Cause means, with respect to the conduct of a Key Employee in
connection with his employment with any Participating Employer, personal
dishonesty, incompetence, willful misconduct, breach of fiduciary duty involving
personal profit, intentional failure to perform stated duties, or willful
violation of any law, rule or regulation (other than traffic violations or
similar offenses) or final cease and desist order, or any material breach of any
material provision of this Plan, in each case as measured against standards
generally prevailing at the relevant time in the community banking industry;
provided, however, that, solely for purposes of the Plan, a Key Employee shall
not be deemed to have been discharged for Cause unless and until the Committee
determines (after reasonable notice to the Key Employee and a reasonable
opportunity for the Key Employee to make oral and written presentations to the
Committee, on his own behalf, or through a representative, who may be his legal
counsel, to refute the grounds for the proposed determination) that grounds
exist for discharging the Key Employee for "Cause". No act or failure to act on
the part of the Key Employee shall be considered "willful" unless done, or
omitted to be done, by the Key Employee not in good faith and without reasonable
belief that the Key Employee's action or omission was in the best interest of
the Bank.
Section 2.6 Change of Control shall be deemed to have occurred at such time
as (a) any "person" (as the term is used in Sections 13(d) and l4(d) of the
Securities Exchange Act of 1934 ("Exchange Act")) is or becomes the "beneficial
owner" (as defined in Rule l3d-3 under the Exchange Act), directly or
indirectly, of securities of the Company representing 25% or more of the
combined voting power of the Company's outstanding securities except for any
securities purchased by the Bank's employee stock ownership plan or trust; or
(b) individuals who constitute the Board on the date hereof (the "Incumbent
Board") cease for any reason to constitute at least a majority thereof, provided
that any person becoming a director subsequent to the date hereof whose election
was approved by a vote of at least three-quarters of the directors comprising
the Incumbent Board, or whose nomination for election by the Company's
stockholders was approved by the same Nominating Committee serving under an
Incumbent Board, shall be, for purposes of this clause (b), considered as though
he were a member of the Incumbent Board; or (c) consummation of a plan of
reorganization, merger, consolidation, sale of all or substantially all the
assets of the Bank or the Company or similar transaction unless, immediately
following such transaction, at least a majority of the members of the board of
directors or other governing body of the resulting or surviving entity are
individuals who were members of the Board immediately prior to the transaction
and equity interests representing at least a majority of the voting power in the
election of directors or other members of the board of directors or other
governing board of the resulting or surviving entity are owned, immediately
following such transaction, by persons who owned common stock of the Company
immediately prior to such transaction and in substantially the same relative
proportions as their ownership of common stock of the Company immediately prior
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to such transaction; or (d) consummation of a tender offer pursuant to which the
shareholders owning beneficially or of record 25% or more of the outstanding
securities of the Company have tendered their shares pursuant to such tender
offer and such tendered shares have been accepted by the tender offeror; or (e)
consummation of a dissolution or complete liquidation of the Bank or the
Company, or shareholder approval of a plan for the dissolution or complete
liquidation of the Bank or the Company.
Section 2.7 Code Section 409A Key Employee means a "key employee" within
the meaning of section 409A of the Internal Revenue Code of 1986.
Section 2.8 Committee means the Benefits Committee of the Bank or such
other person or entity as the Board may specify to perform the duties of the
Committee under the Plan; provided, however, that following a Change of Control
the Committee shall consist exclusively of those individuals serving on the
Committee immediately prior to the Change of Control and such other individuals
as may be appointed by the incumbent members of the Committee.
Section 2.9 Company means Sound Federal Bancorp, Inc.
Section 2.10 Effective Date means January 1, 2005.
Section 2.11 Key Employee means an employee of a Participating Employer at
the level of Assistant Vice President or above, other than: (a) a person who is
classified as an "independent contractor" by a Participating Employer even if
considered an employee under applicable law; (b) an employee receiving long-term
disability benefits; (c) a person who is employed on a temporary, seasonal,
"peak-period" or other irregular basis; or (d) a person who has an employment
contract, change of control agreement, special termination agreement or other
agreement or arrangement with the Bank or who is covered by other programs which
provide severance benefits as a multiple of compensation or base salary or by
their terms exclude such person from participation in this Plan.
Section 2.12 FDI Act means the Federal Deposit Insurance Act, as the same
may be amended from time to time, and the corresponding provisions of any
successor statute.
Section 2.13 Involuntary Severance means (a) the discharge or dismissal of
a Key Employee by a Participating Employer other than for Cause; or (b)
termination of employment at a Key Employee's election after any action
following a Change of Control which, either alone or together with other
actions, results in: (i) the material reduction of the Key Employee's base
compensation or benefits; (ii) the relocation of the Key Employee's principal
place of employment by more than 30 miles from its location immediately prior to
the Change in Control; or (iii) a material adverse change in the Key Employee's
title, position or responsibilities at a Participating Employer.
Section 2.14 Participating Employer means the Bank and its wholly owned
subsidiaries and any successor thereto and any other Affiliated Employer which,
with the prior written approval of the Board and subject to such terms and
conditions as may be imposed by the Board, shall adopt this Plan.
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Section 2.15 Plan means this Sound Federal Savings Amended and Restated
Severance Plan for Key Employees, as the same may be amended from time to time.
Section 2.16 Separation from Service means separation from service within
the meaning of section 409A of the Internal Revenue Code of 1986.
Section 2.17 Severance Period means (a) in the case of a Key Employee who
is a Vice President, a number of months equal to the number of the Key
Employee's Years of Service, but in no event less than twelve (12) months or
more than twenty-four (24) months; and (b) in the case of a Key Employee who is
an Assistant Vice President, a number of months equal to the number of the Key
Employee's Years of Service, but in no event less than six (6) months or more
than twenty four (24) months.
Section 2.18 Years of Service means years of service as an employee of the
Bank or any other Participating Employer. For all purposes of the Plan, Years of
Service shall be measured in whole years, and partial years shall be rounded up
or down, as applicable.
ARTICLE III
BENEFITS
Section 3.1 Severance Benefits for Key Employees.
(a) A Key Employee whose employment with all Participating Employers is
terminated under circumstances constituting an Involuntary Severance and whose
termination occurs upon or within twelve (12) months following a Change of
Control shall be entitled to the following benefits: a lump sum payment in an
amount equal to one twelfth of the Key Employee's Base Salary at the time of the
Change of Control or Involuntary Severance, whichever is higher, multiplied by
the number of the Key Employee's Years of Service; provided, however, that in no
event shall any Key Employee who is a Vice President receive as severance pay
under this Plan a lump sum payment representing less than one hundred percent
(100%) of Base Salary or more than two hundred percent (200%) of Base Salary,
and in no event shall any Key Employee who is an Assistant Vice President
receive as severance pay under this Plan a lump sum payment representing less
than fifty percent (50%) of Base Salary or more than two hundred percent (200%)
of Base Salary. Except as provided in section 3.4, the lump sum shall be due and
payable on the date of the Key Employee's Involuntary Severance. Notwithstanding
anything in the Plan to the contrary: (a) if a Key Employee's Involuntary
Severance occurs prior to his Separation from Service, his severance benefit
shall be deferred until and shall be payable on the date of his Separation from
Service and (b) if a Key Employee is also a Code Section 409A Key Employee, his
severance benefit shall be deferred until and shall be payable in a lump sum on
the six-month anniversary of the later of his Involuntary Severance or his
Separation from Service. Any severance benefit that is not paid in full within
eight (8) calendar days following the recipient's Involuntary Severance shall
accrue interest at the rate of 6% per annum, credited daily and compounded
annually, from the date of Involuntary Severance to the actual date of payment.
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(b) Notwithstanding the preceding paragraphs of this section 3.1, in no
event shall the benefits payable hereunder, when aggregated with other benefits
subject to Section 280G of the Internal Revenue Code of 1986, constitute an
"excess parachute payment" under Section 280G of the Internal Revenue Code of
1986 or any successor thereto, and in order to avoid such a result, the benefits
payable hereunder will be reduced, if necessary, to an amount, the value of
which is one dollar ($1.00) less than the amount which would be considered an
excess parachute payment.
Section 3.2 Insurance Benefits.
A Key Employee who is eligible for severance benefits under section 3.1
shall also be eligible for continuation of coverage under any group life,
medical, dental and other plans which constitute "group health plans" (within
the meaning of section 607(1) of ERISA) for a period equal to the Key Employee's
Severance Period. Such coverage shall be substantially comparable and on terms
and conditions (including, but not limited to, coverage of spouses and
dependents and any premium-sharing arrangements) no less favorable to the Key
Employee than those in effect immediately prior to his Involuntary Severance. If
the Key Employee is eligible for a continuation of coverage under this section
3.2 and a continuation of coverage under applicable federal, state or local law,
the periods of coverage shall run concurrently.
Section 3.3 Vesting.
The benefits to be provided under sections 3.1 and 3.2 of the Plan shall be
completely vested and nonforfeitable upon the occurrence of a Change of Control.
Section 3.4 Benefits Contingent on Execution of Release. The provision of
severance benefits under the Plan to any Key Employee shall be subject to the
condition that the Key Employee execute and deliver to the Committee an
instrument, in such form as the Committee shall prescribe, which shall include a
release in favor of the Participating Employers and their officers, employees,
agents, owners, heirs, successors and assigns for certain employment-related
claims. Such release shall include, but not be limited to, a release of any
claims which the Key Employee may have against any Participating Employer under
the Age Discrimination in Employment Act of 1967, as amended; the Fair Labor
Standards Act, as amended; the Worker Adjustment Retraining and Notification
Act, as amended; the Civil Rights Act of 1866, as amended; Title VII of the
Civil Rights Act of 1964, as amended; and any other federal, state or local law,
rule or regulation under which the Key Employee may have a claim arising out of
his employment with a Participating Employer or the termination of such
employment. No Participating Employer shall have any obligation to provide
benefits under this Plan to any Key Employee who fails or refuses, following
request in writing made within five (5) business days after the Key Employee's
Involuntary Severance or the occurrence of a Change of Control (whichever is
later) to sign and deliver such a release. If a request for a release is timely
made, the Participating Employers' obligation to provide benefits under the Plan
shall be deferred until such release has been executed and delivered by the Key
Employee and any period during which the Key Employee has a legal right to
revoke the release has expired.
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Section 3.5 Withholding.
Payments from this Plan shall be subject to all applicable federal, state
and local income withholding taxes.
ARTICLE IV
ADMINISTRATION
Section 4.1 Named Fiduciaries.
The term "Named Fiduciary" shall mean (but only to the extent of the
responsibilities of each of them) the Plan Administrator, the Committee and any
person or entity named as a fiduciary pursuant to the written documentation
pertaining to the Plan. This Article IV is intended to allocate to each Named
Fiduciary the responsibility for the prudent execution of the functions assigned
to him or it, and none of such responsibilities or any other responsibility
shall be shared by two or more of such Named Fiduciaries. Whenever one Named
Fiduciary is required by the Plan to follow the directions of another Named
Fiduciary, the two Named Fiduciaries shall not be deemed to have been assigned a
shared responsibility, but the responsibility of the Named Fiduciary giving the
directions shall be deemed his sole responsibility, and the responsibility of
the Named Fiduciary receiving those directions shall be to follow them insofar
as such instructions are on their face proper under applicable law.
Section 4.2 Benefits Committee.
(a) There shall be a Benefits Committee, consisting of not less than 3
individuals who shall be appointed by the Chief Executive Officer of the Bank
and who shall accept such appointment by delivering a written notice of such
acceptance to the Chief Executive Officer as hereinafter provided; provided,
however, that following the occurrence of a Change of Control, the Benefits
Committee shall consist solely of those individuals serving as members of the
Committee immediately prior to the Change in Control who consent to so serve and
any additional individuals appointed from time to time by the incumbent members
of the Committee. The Committee shall have the powers and responsibilities
enumerated in section 4.2(c). The Committee shall elect a Chairman who shall,
and may appoint a Secretary who need not, be a member of the Committee. Any
filing which is required or permitted to be made with the Committee shall be
deemed to be satisfactorily made upon mailing or delivering such filing to the
Secretary of the Committee, or, if a Secretary is not appointed, to the Chairman
of the Committee. A member of the Committee may resign only by giving at least
thirty (30) days' prior written notice of resignation to the Committee and to
the Chairman of the Board, and such resignation shall be effective on the date
specified in such notice.
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(b) The Committee shall hold meetings at such times and may make such
administrative rules as it may deem proper. Except as provided in the last
sentence of this section 4.2(b), any action of the Committee shall be taken
pursuant to a majority vote taken at a meeting, or pursuant to the unanimous
consent of its members without a meeting, and such action shall constitute the
action of the Committee and shall be binding in the same manner as if all
members of the Committee had joined therein. A majority of the members of the
Committee shall constitute a quorum. The Committee shall record minutes of any
actions taken at its meetings or of any other official action of the Committee
and shall report to the Board at least once each year on its activities. No
member of the Committee who would be affected by a particular matter upon which
the Committee is scheduled to act shall be permitted to participate in the
Committee's action with respect to such matter, nor shall he be considered a
member of the Committee for purposes of determining the existence of a quorum or
a majority or unanimous vote with respect to such action, unless all of the
members of the Committee are affected thereby. Any person dealing with the
Committee shall be fully protected in relying upon any written notice,
instruction, direction or other communication signed by the Secretary of the
Committee or by two (2) of the members of the Committee or by a representative
of the Committee authorized by the Committee to sign the same in its behalf.
(c) The Committee shall, subject to the responsibilities of the Board and
the terms and conditions of the Plan, have the following responsibilities:
(i) To review the performance of the Plan Administrator;
(ii) To hear and decide appeals, pursuant to the claims procedure contained
in Article V of the Plan, taken from the decisions of the Plan
Administrator;
(iii) To hear and decide questions, including interpretation of the Plan,
as may be referred to the Committee by the Plan Administrator;
(iv) To report and make recommendations to the Board regarding changes in
the Plan, including changes in the operation and management of the
Plan;
(v) To designate an alternate Plan Administrator to serve in the event
that the Administrator is absent or otherwise unable to discharge his
responsibilities;
(vi) To remove and replace the Plan Administrator or alternate, or both of
them, and to fill a vacancy in either office;
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(vii) To discharge such other responsibilities or follow such directions as
may be assigned or given by the Board, consistent with the terms of
the Plan; and
(viii) To perform any duty or take any action which is allocated to the
Committee under the Plan.
The Committee shall have the power and authority necessary or appropriate to
carry out its responsibilities.
Section 4.3 Plan Administrator.
There shall be a Plan Administrator, who shall be the Committee, or such
person, committee or entity as shall be appointed by the Committee, and who
shall, subject to the responsibilities of the Committee and the Board, have the
responsibility for the day-to-day control, management, operation and
administration of the Plan (except trust duties). The Plan Administrator shall
have the following responsibilities:
(a) To maintain records necessary or appropriate for the
administration of the Plan;
(b) To give and receive such instructions, notices, information,
materials, reports and certifications as may be necessary or
appropriate in the administration of the Plan;
(c) To prescribe forms and make rules and regulations consistent
with the terms of the Plan and with the interpretations and other
actions of the Committee;
(d) To require such proof or other evidence as to any matter as
may be necessary or appropriate in the administration of the Plan;
(e) To prepare and file, distribute or furnish all reports, plan
descriptions, and other information concerning the Plan, including,
without limitation, communications with Key Employees and other
persons;
(f) To determine any question arising in connection with the
Plan, and the Plan Administrator's decision or action in respect
thereof shall be final and conclusive and binding upon the Bank, Key
Employees, and any other person having an interest under the Plan;
provided, however, that any question relating to inconsistency or
omission in the Plan, or interpretation of the provisions of the Plan,
shall be referred to the Committee by the Plan Administrator and the
decision of the Committee in respect thereof shall be final;
(g) Subject to the provisions of Article V, to review and dispose
of claims under the Plan filed pursuant to Article V;
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(h) If the Plan Administrator shall determine that by reason of
illness, senility, insanity, or for any other reason, it is
undesirable to make any payment to a Key Employee, or any other person
entitled thereto, to direct the application of any amount so payable
to the use or benefit of such person in any manner that he may deem
advisable or to direct in his discretion the withholding of any
payment under the Plan due to any person under legal disability until
a representative competent to receive such payment in his behalf shall
be appointed pursuant to law;
(i) To discharge such other responsibilities or follow such
directions as may be assigned or given by the Committee or the Board,
consistent with the terms of the Plan; and
(j) To perform any duty or take any action which is allocated to
the Plan Administrator under the Plan.
The Plan Administrator shall have the power and authority necessary or
appropriate to carry out his responsibilities. The Plan Administrator may resign
only by giving at least 30 days' prior written notice of resignation to the
Committee, and such resignation shall be effective on the date specified in such
notice.
Section 4.4 Allocation of Fiduciary Responsibilities and Employment of
Advisors.
Any Named Fiduciary may:
(a) allocate any of his or its responsibilities (other than
trustee responsibilities) under the Plan to such other person or
persons as he or it may designate, provided that such allocation and
designation shall be made in writing and filed with the Plan
Administrator;
(b) employ one or more persons to render advice to him or it with
regard to any of his or its responsibilities under the Plan; and
(c) consult with counsel, who may be counsel to the Bank.
Section 4.5 Other Administrative Provisions.
(a) Any person whose claim has been denied in whole or in part must exhaust
the administrative review procedures provided in Article V prior to initiating
any claim for judicial review.
(b) No bond or other security shall be required of a member of the Plan
Administrator, the Committee and/or any officer or employee of the Bank to whom
fiduciary responsibilities are allocated by a Named Fiduciary, except as may be
required by applicable law.
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(c) Subject to any limitation on the application of this section 4.5(c)
pursuant to applicable law, neither the Plan Administrator nor any member of the
Committee nor any officer or employee of the Bank to whom fiduciary
responsibilities are allocated by a Named Fiduciary, shall be liable for any act
of omission or commission by himself or by another person, except each for his
own individual willful and intentional malfeasance.
(d) The Plan Administrator or the Committee may, except with respect to
actions under Article V or as otherwise provided by law, shorten or extend (but
not beyond sixty (60) days) or waive the time required by the Plan for filing
any notice or other form with the Plan Administrator or Committee, as
applicable, or taking any other action under the Plan.
(e) The Plan Administrator or the Committee may direct that the costs of
services provided pursuant to section 4.4, and such other reasonable expenses as
may be incurred in the administration of the Plan, shall be paid out of the
funds of the Plan, unless the Bank shall pay them.
(f) Any person, group of persons, committee, corporation or organization
may serve in more than one fiduciary capacity with respect to the Plan.
(g) Any action taken or omitted by the Plan Administrator or the Committee
with respect to the Plan, including any decision, interpretation, claims denial
or review on appeal, shall be conclusive and binding on the Bank and all
interested parties and shall be subject to judicial modification or reversal
only to the extent determined by a court of competent jurisdiction that such
action or omission was arbitrary and capricious and contrary to the terms of the
Plan.
(h) The Participating Employers, jointly and severally, shall indemnify the
Committee, its members and the Plan Administrator against, and defend them and
hold them harmless from, any and all losses, costs, expenses, liabilities and
exposures of any name and nature whatsoever which they may suffer or incur as a
result of service, including acts or omissions to act, as Plan Administrator or
as a member of the Committee. Following a Change of Control, such
indemnification, defense and hold harmless shall be to an extent and on terms
and conditions no less favorable to the Committee members and Plan Administrator
than those in effect immediately prior to the Change of Control.
(i) The Participating Employers shall purchase and maintain a customary
policy of insurance insuring the Committee, its members and the Plan
Administrator against losses, costs, expenses, liabilities and exposures of any
name and nature whatsoever which they may suffer or incur as a result of
service, including acts or omissions to act, as Plan Administrator or as a
member of the Committee. Following a Change of Control, such insurance coverage
indemnification, defense and hold harmless shall be to an extent and on terms
and conditions no less favorable to the Committee members and Plan Administrator
than those in effect immediately prior to the Change of Control.
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ARTICLE V
BENEFIT CLAIMS AND APPEALS
Section 5.1 General Procedures.
(a) (i) Any claim relating to benefits under the Plan shall be filed with
the Plan Administrator on a form prescribed by it. The Plan Administrator shall
appoint a person to review and make a determination on the claim. The Plan
Administrator shall give the claimant written notice of the determination.
Except as provided in section 5.1(a)(ii), a notice of determination (whether or
not adverse) on a claim under this section shall be given not later than 90 days
after receipt.
(ii) If the Plan Administrator finds it necessary, due to special
circumstances (for example, the claimant's failure to provide all information
required to process the claim or the need to hold a hearing), to extend this
period and so notifies the claimant in writing, the decision shall be rendered
as soon as practicable, but in no event later than 180 days after receipt of a
claim. Any notice of such an extension shall be in writing, shall be made within
the initial claim determination period, and shall specify the reasons for the
extension and the date by which a decision on review is expected to be rendered.
(iii) The notice of determination of a claim filed under this section shall
specifically set forth:
(A) The reasons for the denial; and
(B) The pertinent Plan provisions on which the denial was based; and
(C) Any additional material or information necessary for the claimant
to perfect his claim and an explanation of why such material or information
is needed; and
(D) An explanation of the Plan's procedure for review of the denial of
the claim, the time limits applicable to such procedure and a statement of
the claimant's right to bring a civil action to recover benefits due to him
under the terms of the Plan and any other civil action under section 502(a)
of ERISA following an adverse benefit determination on review.
If a claimant does not receive a written notice of the determination of the
claim on or before the date prescribed by this section 5.1(a), the claim shall
be deemed as having been denied on such date for the purpose of permitting the
claimant to request review of the claim.
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(b) (i) Any person whose claim filed pursuant to section 5.1(a) has been
denied in whole or in part may request review of the claim by the Committee,
upon a form prescribed by the Committee. The review shall not afford deference
to the initial adverse benefit determination. The claimant shall file such form
with the Committee no later than 60 days after the claimant's receipt of the
written notice of denial provided for in section 5.1(a), or, if such notice is
not provided, within 60 days after such claim is deemed denied pursuant to
section 5.1(a). The claimant may include with such form written comments,
documents, records, and other information relevant to the claim for benefits.
The claimant shall be provided, upon request and free of charge, reasonable
access to and copies of all documents, records and other information relevant to
the claims. The review shall take into account the comments, documents, records
and other information submitted by the claimant and relevant to the claim,
without regard to whether such information was submitted or considered as part
of the initial claim determination. A decision on review shall be rendered by
the Committee and communicated to the claimant by written notice. Such written
notice shall be given not later than 60 days after receipt of the request for
review.
(ii) If the Committee finds it necessary, due to special circumstances (for
example, the need to hold a hearing), to extend this period and so notifies the
claimant in writing, the decision shall be rendered as soon as practicable, but
in no event later than 120 days after receipt of a request for review. Any
notice of such an extension shall be in writing, shall be made within the
initial claim determination period, and shall specify the reasons for the
extension and the date by which a decision on review is expected to be rendered.
(iii) The notice of determination contemplated by section 5.1(b)(i) shall
specifically set forth:
(A) The reasons for the denial; and
(B) The pertinent Plan provisions on which the denial was based; and
(C) A statement that the claimant is entitled to receive, upon request
and free of charge, reasonable access to, and copies of, documents,
records, and other information relevant to the claimant's claim for
benefits; and
(D) An explanation of any voluntary appeals process offered under the
Plan and the claimant's right to receive information concerning any such
procedures and a statement of the claimant's right to bring a civil action
under section 502(a) of ERISA following an adverse benefit determination on
review.
Section 5.2 Appointment of Representatives.
(a) A person filing a claim for benefits, or filing a request for a review
of an adverse benefit determination, may appoint a representative to act on the
claimant's behalf in any such proceeding. Any such appointment shall be made by
written notice to the Plan Administrator which shall contain the following
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information: the appointee's name, street, mailing and electronic mail
addresses, voice telephone and facsimile telephone numbers, a general
description of the matters in which the designated representative has been
authorized to act in the claimant's behalf and the specific acts which the
designated representative is authorized to perform in connection with such
matter. The notice shall be signed by the claimant to evidence his agreement to
the appointment and the representative to evidence his acceptance of
appointment, and each signature shall be acknowledged before a notary public.
Following receipt of such notice, the Plan Administrator, the Committee and
their designees shall be entitled to rely without further investigation upon the
authority of the designated representative to act on the claimant's behalf in a
manner consistent with the terms of the notice unless and until it receives
subsequent written notice to the contrary.
(b) Notwithstanding section 5.2(a), if the Plan Administrator determines to
its satisfaction that a claimant has been determined, by a court of competent
jurisdiction, to be incapable of attending to his own affairs in respect of his
benefit entitlements under the Plan, the Plan Administrator and the Committee
shall accept as evidence of a third party's authority to act in the claimant's
behalf any document or other evidence or any customary document or instrument
issued pursuant to applicable state law.
Section 5.3 Electronic Communications.
Any written notice or other written communication required or permitted to
be given by the Plan Administrator or Committee shall be deemed properly given
if given electronically to an electronic mail address provided by the claimant
or his authorized representative, or, if no authorized representative is
appointed, to an electronic mail address provided to the claimant by the
Employer and customarily used to provide notices to the claimant on employee
relations matters; provided, however, that: (a) the Plan Administrator or
Committee, as applicable, shall take appropriate and necessary measures to
assure that the system for furnishing electronic communications results in the
addressee's actual receipt of electronically transmitted documents; (b) each
prospective recipient of electronically transmitted documents is provided notice
of the nature of the documents to be furnished electronically, the significance
of the documents and the recipient's right to request and receive, free of
charge, a paper copy of each such document; and (c) upon request, the Plan
Administrator or Committee, as applicable, actually furnishes a paper copy of
such document.
ARTICLE VI
AMENDMENT, TERMINATION AND TAX QUALIFICATION
Section 6.1 Amendment and Termination.
The Bank expects to continue the Plan indefinitely, but specifically
reserves the right, in its sole discretion, at any time, by appropriate action
of the Board or its designees or delegates, to amend, in whole or in part, any
or all of the provisions of the Plan and to terminate the Plan at any time.
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Following the occurrence of a Change in Control, the Plan may not be amended or
terminated without the prior written consent of the Committee. Any amendment or
termination of the Plan shall conform to the requirements of section 409A of the
Internal Revenue Code of 1986 and the regulations promulgated thereunder.
Section 6.2 Amendment or Termination Other than by the Bank.
In the event that an Affiliated Employer shall adopt this Plan, such
Affiliated Employer shall, by adopting the Plan, empower the Bank to amend or
terminate the Plan, insofar as it shall cover employees of such Affiliated
Employer, upon the terms and conditions set forth in section 6.1; provided,
however, that any such Affiliated Employer may, by action of its board of
directors or other governing body, amend or terminate the Plan, insofar as it
shall cover employees of such Affiliated Employer, at different times and in a
different manner. In the event of any such amendment or termination by action of
the board of directors or other governing body of such Affiliated Employer, a
separate plan shall be deemed to have been established for the employees of such
Affiliated Employer.
ARTICLE VII
MISCELLANEOUS PROVISIONS
Section 7.1 Governing Law.
(a) The Plan shall be construed, administered, and enforced according to
the laws of the State of New York without giving effect to the conflict of law
principles thereof, except to the extent that such laws are preempted by federal
law.
(b) Any dispute or controversy arising under or in connection with this
Plan shall be settled exclusively by arbitration, conducted before a panel of
three arbitrators sitting in a location selected by the Key Employee 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
subject to section 3.2 hereof, the Key Employee shall be entitled to seek
specific performance of his right to be paid during the pendency of any dispute
or controversy arising under or in connection with this Plan.
Section 7.2 No Right to Continued Employment.
Neither the establishment of the Plan, nor any provisions of the Plan,
shall be held or construed to confer upon any Key Employee any right to a
continuation of employment by the Bank. The Bank reserves the right to dismiss
any Key Employee or otherwise deal with any Key Employee to the same extent as
though the Plan had not been adopted.
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Section 7.3 Construction of Language.
Wherever appropriate in the Plan, words used in the singular may be read in
the plural, words used in the plural may be read in the singular, and words
importing the masculine gender include the feminine and the neuter. Any
reference to an Article or section number shall refer to an Article or section
of the Plan, unless otherwise indicated.
Section 7.4 Headings.
The headings of Articles and sections are included solely for convenience
of reference. If there is any conflict between such headings and the text of the
Plan, the text shall control.
Section 7.5 Status as Welfare Benefit Plan Under ERISA.
This Plan is an "employee welfare benefit plan" within the meaning of
section 3(1) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA") and shall be construed, administered and enforced according to the
provisions of ERISA.
Section 7.6 Successors and Assigns.
The Bank shall require any successor or assignee, whether direct or
indirect, by purchase, merger, consolidation or otherwise, to all or
substantially all the business or assets of the Bank, expressly and
unconditionally to assume and agree to perform the Bank's obligations under this
Plan, in the same manner and to the same extent that the Bank would be required
to perform if no such succession or assignment had taken place.
Section 7.7 Source of Payments.
All payments provided in this Plan shall be paid in cash or check from the
general funds of the Bank. The Company, however, guarantees payment and
provision of all amounts and benefits due hereunder to Key Employees 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.
Section 7.8 Effect on Existing Benefit Plans.
This Plan shall not affect or operate to reduce any benefit or compensation
inuring to the Key Employee of a kind elsewhere provided. No provision of this
Plan shall be interpreted to mean that the Key Employee is subject to receiving
fewer benefits than those available to him without reference to this Plan.
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Section 7.9 Required Provisions.
(a) The Bank may terminate the Key Employee's employment at any time. A Key
Employee shall not have the right to receive compensation or other benefits for
any period after Termination for Cause as defined in section 2.5 hereinabove.
(b) If the Key Employee 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) (12 USC ss.1818(e)(3)) or 8(g)(1) (12 USC
ss.1818(g)(1)) of the FDI Act, the Bank's obligations under this Plan 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 the Key Employee all or part of the compensation withheld while its contract
obligations were suspended and (ii) reinstate (in whole or in part) any of its
obligations which were suspended.
(c) If the Key Employee 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) (12 USC ss.1818(e)(4)) or 8(g) (1) (12 USC ss.1818(g)(1)) of the
FDI Act, all obligations of the Bank under this Plan 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)(i) (12 USC
ss.1813(x)(1)) of the FDI Act, all obligations of the Bank under this Plan 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 Plan shall be terminated, except
to the extent determined that continuation of the Plan is necessary for the
continued operation of the Bank, (i) by the Director of the Office of Thrift
Supervision ("Director") or his or her designee, at the time the Federal Deposit
Insurance Corporation enters into an agreement to provide assistance to or on
behalf of the Bank under the authority contained in Section 13(c) (12 USC
ss.1823(c)) of the FDI Act; or (ii) by the Director or his or her designee at
the time the Director or his or her designee approves a supervisory merger to
resolve problems related to operation 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) Notwithstanding anything herein contained to the contrary, any payments
to the Key Employee by the Bank, whether pursuant to this Plan or otherwise, are
subject to and conditioned upon their compliance with Section 18(k) of the FDI
Act, 12 U.S.C. Section 1828(k), and the regulations promulgated thereunder in 12
C.F.R. Part 359.
The vested rights of the parties shall not be affected. If and to the extent
that any of the foregoing provisions is not, or shall cease to be, required by
applicable law, rule or regulation, the same shall become inoperative in the
case of the Bank as though eliminated by formal amendment of this Plan.
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Section 7.10 Conformity to Section 409A of the Internal Revenue Code of
1986.
The Plan is intended to be a non-qualified termination pay plan to which
Section 409A of the Internal Revenue Code of 1986 is not applicable. To the
extent it is subsequently determined that the Plan is a non-qualified deferred
compensation plan to which Section 409A of the Internal Revenue Code of 1986 is
applicable, the Plan shall be operated, administered and construed so as to
conform to the requirements of Section 409A. In addition, the Plan shall be
subject to amendment, with or without advance notice to Participants and other
interested parties, and on a prospective or retroactive basis, including but not
limited to amendment in a manner that adversely affects the rights of
Participants and other interested parties, to the extent necessary to effect
such compliance.