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EXHIBIT 10.2
FINANCIAL INSTITUTION EXECUTIVE'S AGREEMENT
AGREEMENT
AGREEMENT made this 31st day of December, 1997, by and between SOUND FEDERAL
SAVINGS AND LOAN ASSOCIATION, which has its principal office at 000 Xxxxxxxxxx
Xxxxxx, Xxxxxxxxxx, Xxx Xxxx (hereinafter referred to as the "Bank") and XXXXXXX
X. XxXXXXXXXX of 00 Xxxxx Xxxx, Xxxxxxxxx, Xxxxxxxxxxx (hereinafter referred to
as the "Employee").
WITNESSETH:
WHEREAS, the Employee is President and Chief Executive Officer of the Bank and
has developed an intimate and thorough knowledge of the Bank's business methods
and operations; and
WHEREAS, the retention of the Employee's services for and on behalf of the
Bank is of material importance to the preservation and enhancement of the value
of the Bank's business.
NOW, THEREFORE, in consideration of the mutual covenants set forth in this
Agreement, the Bank and the Employee agree as follows:
Section 1. EMPLOYMENT TERM. The Bank employs the Employee as President and
Chief Executive Officer and the Employee accepts this employment and agrees to
render services to the Bank on the terms and conditions set forth in this
Agreement. The initial term of employment shall commence on January 1, 1998 and
shall terminate on December 31, 2000, unless further extended or sooner
terminated in accordance with this Agreement. Employment shall be subject to
renewal for additional three (3) year terms by action of the Board of Directors
(the "Board") of the Bank and by agreement of the Employee at any time after the
twenty-fourth month of the then existing term, as said Board shall in its sole
and exclusive judgment, determine. References to this Agreement's term shall
mean the initial term and any successive terms.
Section 2. DUTIES. The Employee shall perform executive services for the Bank
as may be consistent with the Employee's title, along with those other duties
that may be assigned from time to time by the Bank's Board of Directors. During
this Agreement's term, the Employee's full business time and best efforts shall
be devoted to the affairs and business of the Bank, as is customarily required
for the position of President and Chief Executive Officer. The services of the
Employee shall be rendered principally in Mamaroneck, New York but the Employee
shall do any traveling and render services at such other present or future
offices on behalf of the Bank as may be reasonably required.
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Section 3. RESTRICTED ACTIVITIES. The Employee agrees that during employment,
except with the express consent of the Bank's Board of Directors, the Employee
will not, directly or indirectly, engage or participate in, become a director
of, or render advisory or other services for, or in connection with, or become
interested in, or make any financial investment in any firm, corporation,
business entity or business enterprise competitive with any business of the
Bank; provided, however, that the Employee shall not be precluded or prohibited
from owning passive investments, including investments in the securities of
other financial institutions, so long as ownership does not require the Employee
to devote substantial time to management or control of the other business or
activities in which the Employee has invested.
Section 4. REMEDIES. The Employee agrees and acknowledges that by virtue of
this employment, the Employee will obtain and maintain an intimate knowledge of
the Bank's activities and affairs, including trade secrets and other
confidential matters. As a result, and also because of the special, unique and
extraordinary services that the Employee is capable of performing for the Bank
or one of its competitors, the Employee recognizes that the services to be
rendered are of a character giving them a peculiar value, the loss of which
cannot be adequately or reasonably compensated for by damages. The Employee
agrees that if the Employee fails to render to the Bank the services required,
the Bank shall be entitled to immediate injunctive or other equitable relief to
restrain the Employee, in addition to any other remedies to which the Bank may
be entitled under law.
Section 5. COMPENSATION. The Bank will compensate and pay the Employee for the
Employee's services during this Agreement's term a minimum base salary of One
Hundred Thirty Thousand (130,000.00) Dollars for the year ending December 31,
1998. Subsequent annual salary in amounts determined by the Bank's Board of
Directors from year to year during the original term or during any renewal term
hereof, shall be memorialized by a duly executed Addendum to be appended hereto.
Section 6. VACATION. The Employee shall be entitled to a vacation of four (4)
weeks per calendar year, arranged to coordinate with the Employee's duties. If
for any reason the Employee's full entitlement is not taken in any calendar
year, the unused portion thereof shall be lost or deemed waived. The Employee
shall also be entitled to observe holidays on which the Bank is closed.
Section 7. BENEFITS. The Employee shall be entitled to participate in any Bank
Plan relating to pension, profit sharing, or other retirement benefits, along
with any medical, dental, and life insurance coverage or reimbursement plans
that the Bank may adopt for its employees. The Employee shall be permitted to
participate in the Bank's medical, dental, and life insurance coverage and
reimbursement plans to the extent that such plans exist and as constituted from
time to time until the Employee's death; provided, however, that if the
employment of the Employee is terminated prior to the attainment of age 70, he
shall be entitled to participate in such plans to the extent provided therein
for retired employees.
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Section 8. DISABILITY
(a) If the Employee shall become disabled or incapacitated to the extent that
the Employee is unable to perform the duties of President and Chief Executive
Officer, the Employee shall continue to receive the following percentages of
compensation, exclusive of any benefits which may be in effect for Bank
employees under this Agreement's Section 7 for the following periods of the
Employee's disability: 100% for the first six (6) months, and 60% thereafter for
this Agreement's remaining term. Upon returning to active duties, the Employee's
full compensation shall be reinstated on a "go forward" basis. Should the
Employee return to active employment on other than a full-time basis, then the
Employee's compensation for the remainder of the then existing term of
employment, as set forth in Section 5, shall be reduced on such terms as the
Bank's Board of Directors shall determine.
(b) There shall be deducted from the amounts paid to the Employee under this
Section during any period of disability any amounts actually paid to the
Employee pursuant to any disability insurance, workers' compensation or other
similar program that the Bank has instituted or may institute on behalf of its
employees for the purpose of compensating the Employee for a disability,
including those payable under disability insurance policies covering the
Employee issued by Commercial Union Insurance Company or any successor issuer(s)
or policies, but the Bank shall continue the program of reimbursement and
payment of premiums as previously conducted.
(c) For purposes of this Agreement, the Employee shall be deemed disabled or
incapacitated if the Employee, due to physical or mental illness, shall have
been absent from duties with the Bank on a full-time basis for thirty (30) days
provided, that, if the Employee shall not agree with a determination to
terminate the Employee because of disability or incapacity, the question of the
Employee's ability shall be submitted to an impartial and reputable physician
selected by the parties and such physician's determination regarding disability
or incapacity shall be final and binding.
Section 9. STOCK OPTIONS. During this Agreement's term, the Employee will be
entitled to participate in and receive the benefits of any stock option, profit
sharing, or other plans, benefits, and privileges given to employees and
executives of the Bank or its subsidiaries and affiliates that may come into
existence to the extent commensurate with the Employee's then duties and
responsibilities, as fixed by the Bank's Board of Directors or any Committee of
the Board or of the Bank selected for this purpose; and, to the extent the
Employee is otherwise eligible and qualifies, to so participate in and receive
these benefits or privileges. The Bank shall not make any changes in these
plans, benefits or privileges that would adversely affect the Employee's rights
or benefits unless the change occurs pursuant to a program applicable to all
Bank executive officers and does not result in a proportionately greater adverse
change in the rights of or benefits to the Employee as compared with any other
Bank executive officer. Nothing paid to the Employee under any plan or
arrangement presently in effect or made available in the future shall be deemed
to be in lieu of the salary payable to the Employee pursuant to Section 5.
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Section 10. EXPENSES. The Bank shall reimburse the Employee or otherwise
provide for or pay for all reasonable expenses incurred by the Employee in
furtherance of or in connection with the Bank's business, including, but not by
way of limitation, automobile and traveling expenses and all reasonable
entertainment expenses whether incurred at the Employee's residence, while
traveling, or otherwise, subject to reasonable limitations as may be established
by the Bank's Board of Directors, provided these expenses are deductible by the
Bank for federal income taxation purposes. If these expenses are paid in the
first instance by the Employee, the Bank will reimburse the Employee.
Section 11. TERMINATION.
(a) (1) The Bank's Board of Directors may terminate the Employee's employment
at any time, but any termination by the Bank's Board of Directors other than
termination for cause, shall not prejudice the Employee's right to compensation
or other benefits under the Agreement. The Employee shall have no right to
receive compensation or other benefits for any period after termination for
cause. Termination for cause shall include termination because of the Employee'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.
(2) If the Employee is suspended and/or temporarily prohibited from
participating in the conduct of the Bank's affairs by a notice served under
section 8(e)(3) or (g)(1) of the Federal Deposit Insurance Act (12 U.S.C.
1818(e)(3) and (g)(l) the Bank's obligations under this Agreement 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 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.
(3) If the 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) or (g)(1) of the Federal Deposit Insurance Act (12 U.S.C.
1818(e)(4) or (g)(l), all obligations of the Bank under this Agreement shall
terminate as of the effective date of the order, but vested rights of the
contracting parties shall not be affected.
(4) If the Bank is in default (as defined in section 3(x)(1) of the
Federal Deposit Insurance Act), all obligations under this Agreement shall
terminate as of the date of default, but this paragraph (b)(4) shall not affect
any vested rights of the contracting parties.
(5) All obligations under this Agreement shall be terminated, except to
the extent determined that continuation of this Agreement is necessary for the
continued operation of the Bank:
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(i) by the Director or his or her designee, at the time the Federal
Deposit Insurance Corporation or the Resolution Trust Corporation enters into an
agreement to provide assistance to or on behalf of the Bank under the authority
contained in section 13(c) of the Federal Deposit Insurance Act; 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 hereto that have already vested, however, shall not be
affected by such action.
(b) In the event employment is terminated for just cause pursuant to Section
11(a), the Employee shall have no right to compensation or other benefits for
any period after the termination date. If the Employee is terminated by the Bank
other than for just cause pursuant to Section 11(a) the Employee's right to
compensation and other benefits shall be as set forth in Section 11(1). If
employment is terminated for just cause, the Employee shall have the right, at
the Employee's sole option, to appear at the next scheduled regular or special
meeting of the Bank's Board of Directors at which a quorum of the Board is
present so that the Board may hear argument from the Employee or counsel or
both and reconsider the termination. The Board of Directors shall deliver to the
Employee its reconsidered determination in writing within twenty (20) days
after the meeting. This procedure shall not prejudice the rights of either party
under Section 20.
(c) The Employee shall have the right, upon prior written Notice of Termination
of not less than thirty (30) days satisfying the requirements of Section 11(k),
to terminate employment, but in this event, the Employee shall have no right
after the termination date to compensation or other benefits as provided in this
Agreement, unless the termination is for good reason, as defined, pursuant to
Section 11(i). If the Employee provides a Notice of Termination for good reason,
as defined, the termination date shall be the date on which a Notice of
Termination was given.
(d) If the Employee is suspended and/or temporarily prohibited from
participating in the conduct of the Bank's affairs by a notice served under
Section 8(e)(3) or (g)(i) of the Federal Deposit Insurance Act (12 U.S.C. 1818
(e)(3) and (g)(1) the Bank's obligations under this Agreement 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 Employee all or part of the compensation withheld while its contractual
obligations were suspended and (ii) reinstate (in whole or in part) any of its
obligations which were suspended.
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(e) All obligations under this Agreement may be terminated: (i) by the FDIC or
successor or other regulatory agency at the time such agency enters into an
agreement to provide assistance to or on behalf of the Bank under the authority
contained In Section 406(f) of the National Housing Act; and (ii) by the OTS or
successor or other regulatory agency at the time that such agency' approves a
supervisory merger to resolve problems related to the Bank's operations or when
the Bank is determined by the OTS or other agency to be in an unsafe or unsound
condition, but the Employee's rights to compensation earned as of that date
shall not be affected.
(f) If the Bank is in default, as defined to mean an adjudication or other
official determination by a court of competent jurisdiction or other public
authority pursuant to which a conservator, receiver, or other legal custodian is
appointed for the Bank for liquidation purposes, all obligations under this
Agreement shall terminate as of the date of default, but the Employee's rights
to compensation earned as of the termination date shall not be affected.
(g) In the event that the Employee is terminated in a manner that violates the
provisions of Section 11(a), as determined by arbitration in accordance with
Section 20, the Employee shall be entitled to reimbursement for all reasonable
costs, including attorney's fees, in challenging the termination. This
reimbursement shall be in addition to all rights to which the Employee is
otherwise entitled under this Agreement. Notwithstanding the above, the Employee
shall be entitled to indemnification from the Bank consistent with the
indemnification permitted by the OTS Rules and Regulations for Federal
Associations, codified at 12 C.F.R. Sec. 545.121, and to the full extent
contemplated by the Bank's Bylaws. In addition, if the Employee serves as a
director, officer, or employee of any affiliate of the Bank, the Employee shall
be entitled to indemnification and exculpation from liability to the full extent
permitted by applicable law, and the Bank agrees to cause all necessary
provisions to be included in, or changes made to, the Articles of Incorporation
or Bylaws of these affiliates required to accomplish this.
(h) The Employee may terminate employment for good reason. For purposes of this
Agreement, "good reason" shall mean: (i) a failure by the Bank to comply with
any material provision of this Agreement, which failure has not been cured
within ten (10) days after a notice of noncompliance has been given by the
Employee to the Bank; (ii) subsequent to a change in control of the Bank and
without the Employee's express written consent, the assignment to the Employee
of any duties inconsistent with the Employee's positions, duties,
responsibilities, and status with the Bank immediately prior to a change in
control of the Bank; a change in the Employee's reporting responsibilities,
titles, or offices as in effect immediately prior to a change in control of the
Bank; any removal of the Employee from, or any failure to reelect the Employee
to any of these positions, except in connection with an employment termination
for just cause, disability, death, retirement, or pursuant to Sections 11(a) or
11(e); a reduction by the Bank in the Employee's annual salary as in effect
immediately prior to a change in control or as the same may be increased from
time to time; or the failure of the Bank to continue in effect any bonus,
benefit, or
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compensation plan, life insurance plan, health and accident plan. or disability
plan in which the Employee is participating at the time of a change in control
of the Bank, or the taking of any action by the Bank that would adversely affect
the Employee's participation in or materially reduce the Employee's benefits
under any of these plans; or (iii) any purported termination of the Employee's
employment which is not effected pursuant to a Notice of Termination satisfying
the requirements of Section 11(k).
(i) Any termination of the Employee's employment by the Bank or by the Employee
shall be communicated by written Notice of Termination to the other party only
after any applicable grace period's expiration that may be set forth in this
Agreement. For purposes of this Agreement, a "Notice of Termination" shall mean
a dated notice which shall (i) indicate the specific termination provision in
the Agreement relied upon; (ii) set forth in reasonable detail the facts and
circumstances claimed to provide a basis for the Employee's employment
termination under the provision so indicated; (iii) specify a termination date
which shall be not less than fifteen (15) days nor more than thirty (30) days
after a Notice of Termination is given, except in the case of the Bank's
termination of the Employee's employment for just cause pursuant to Section
11(a), for which the Notice of Termination must specify that the termination is
effective immediately; and (iv) be given in the manner specified in Section 14.
(j) If the Employee shall terminate employment for good reason pursuant to
Section 11(i) or if the Bank terminates the Employee other than for just cause,
then in lieu of any further salary payments to the Employee for periods
subsequent to the termination date, the Bank shall pay as severance to the
Employee an amount equal to: (i) three (3) times the Employee's average annual
compensation (computed on the basis of the most recent five (5) taxable years)
paid to the Employee and includable in the Employee's gross income for federal
income tax purposes on the date on which the termination occurs, this payment to
be made in a lump sum on or before the thirtieth (30) day following the
termination date; provided, however, that any payments made to the Employee
pursuant to this Agreement or otherwise, are subject to and conditioned upon
compliance with 12 U.S.C. Section 1828(k) and any regulations promulgated
thereunder. If for any reason the basis for termination of this Agreement or
payment of amounts under this Section is disputed by either party to this
Agreement or any other person or agency, then pending resolution of any
dispute, within three (3) months after the due date of the payment, the Bank
shall deliver the entire amount calculated in accordance with this Section to an
independent trustee to hold in an interest bearing account in trust for the
benefit of the Employee and the Bank, whichever may be ultimately entitled to
the same. The trustee shall be a bank or savings institution other than the
Bank, with deposits of at least $250,000,000, unrelated to any parties in the
dispute, and disinterested in any transaction arising out of or engendering the
dispute. If the parties are unable to agree upon a trustee within this time
period, then either party may seek immediate relief from a court of competent
jurisdiction without the necessity of first resorting to arbitration under
Section 20. In addition, the Bank agrees that the Employee would have no
adequate remedy at law for breach of these obligations, and the Employee shall
be entitled to immediate injunctive and other
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appropriate equitable relief to enforce the same without the necessity of first
resorting to arbitration under Section 20.
(k) If the Employee shall terminate employment for good reason as defined in
Section 11(i) or if the Employee is terminated by the Bank for other than just
cause pursuant to Section 11(i), then in lieu of any further salary payments to
the Employee for periods subsequent to the termination date, the Bank shall pay
as severance to the Employee an amount equal to the product of (i) the
Employee's current annual base salary in effect as of the termination date,
multiplied by (ii) the number of years, including partial years, remaining in
the employment term, the payment to be made in substantially equal semimonthly
installments on the fifteenth and last days of each month, or if these days are
non business days, the immediately preceding business days, commencing with the
month in which the termination date occurs and continuing for the number of
consecutive semimonthly payment dates including the first date aforesaid,
equal to the product obtained by multiplying the number of years, including
partial years, applicable under (ii) by 24.
(l) The Employee shall not be required to mitigate the amount of any payment
provided for in Section 11(i) by seeking other employment or otherwise. No
other employment or compensation from other sources or employers shall affect or
reduce the amounts or obligations of the Bank to make payments or provide the
benefits or arrangements to the Employee under this Agreement.
(m) Notwithstanding any provision in this Agreement, in the event of
termination by the employee for "good reason" or by the Bank other than for
just cause, all then existing medical, dental, life insurance, and other
applicable benefit plans shall continue in force for the Employee's benefit at
the Bank's sole cost and expense until the employee attains the age of 70
years, provided, however, that if the Employee shall subsequently receive
equivalent medical or dental coverage from a new employer, the Bank shall no
longer be obligated to continue to provide such coverage.
Section 12. OTHER BENEFITS. Notwithstanding anything to the contrary, the
payment or obligation to pay any monies, or granting of any rights or privileges
to the Employee as provided in this Agreement shall not be in lieu or derogation
of the rights and privileges that the Employee now has under any plan or benefit
presently outstanding.
Section 13. AGREEMENT CHANGES. This Agreement may not be modified, changed,
amended, or altered except in writing, signed by the Employee or by the
Employee's duly authorized representative, and by a duly authorized Bank officer
or Chairman of the Bank's Board of Directors.
Section 14. NOTICES. All notices given or required to be given shall be in
writing, sent by United States first-class certified or registered mail, return
receipt requested postage prepaid, to the Employee or to the Employee's spouse
or estate upon the Employee's death at the Employee's last-known address, and
to the Bank at its principal office. All notices
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shall be effective when deposited in the mail in the manner specified in this
Section. Either party by a notice in writing may change or designate the place
for receipt of all notices.
Section 15. WAIVER OF RIGHTS. No course of conduct between the Bank and the
Employee and no delay or omission of the Bank or the Employee to exercise any
right or power given under this Agreement shall: (i) impair the subsequent
exercise of any right or power; or (ii) be construed to be a waiver of any
default or any acquiescence in or consent to the curing of any default while any
other default shall continue to exist, or be construed to be a waiver of a
continuing default or of any other right or power that shall have arisen; and
every power and remedy granted by law and by this Agreement to any party may be
exercised from time to time, and as often as may be deemed expedient. All of the
rights and powers shall be cumulative to the fullest extent permitted by law.
Section 16. PRIOR AGREEMENTS. This Agreement supersedes any and all prior
Employment Agreements written or verbal, between the parties all of which are
canceled.
Section 17. SUCCESSORS. This Agreement shall inure to the benefit of and be
binding upon the Employee, and, to the extent applicable, the Employee's heirs,
assigns, executors, and personal representatives, and upon the Bank, its
successors, and assigns, including, without limitation, any person,
partnership, or corporation that may acquire all or substantially all of the
Bank's assets and business, or with or into which the Bank may be consolidated
or merged. and this provision shall apply, in the event of any subsequent
merger, consolidation, or transfer unless a merger or consolidation or
subsequent merger or consolidation is a transaction of the type that would
result in termination under sections 11(f) and 11(g).
Section 18. ASSIGNMENT. This Agreement is personal to each of the parties and
neither may assign or delegate any of its rights or obligations under this
Agreement without the prior written consent of the other party.
Section 19. APPLICABLE LAW. This Agreement shall be governed in all respects
and be interpreted by and under the laws of the State of New York, except to the
extent that the law may be preempted by applicable federal law, including
regulations, opinions, or orders duly issued by the OTS or FDIC or successor or
other regulatory agency ("Federal Law"), in which event this Agreement shall be
governed and be interpreted by and under federal law.
Section 20. ARBITRATION. Except as otherwise expressly provided elsewhere in
this Agreement, in the event that any dispute should arise between the parties
as to the meaning, effect, performance, enforcement, or other issue in
connection with this Agreement, which dispute cannot be resolved by the parties,
except the question of Employee's disability under Section 9(c), the dispute
shall be decided by final and binding arbitration of a panel of three
arbitrators who shall be present or former executives of Federal savings
institutions located in the United States. Proceedings in arbitration and its
conduct shall be governed by the rules of the American Arbitration Association
("AAA")
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applicable to commercial arbitrations (the "Rules") except as modified by this
Section. The Employee shall appoint one arbitrator, the Bank shall appoint one
arbitrator, and the third shall be appointed by the two arbitrators appointed by
the parties. The third arbitrator shall be impartial and shall serve as chairman
of the panel. The parties shall appoint their arbitrators within thirty (30)
days after the demand for arbitration is served, failing which the AAA promptly
shall appoint a defaulting party's arbitrator, and the two arbitrators shall
select the third arbitrator within fifteen (15) days after their appointment, or
if they cannot agree or fail to so appoint, then the AAA promptly shall appoint
the third arbitrator. The arbitrators shall render their decision in writing
within thirty (30) days after the close of evidence or other termination of the
proceedings by the panel, and the decision of a majority of the arbitrators
shall be final and binding upon the parties, nonappealable, except in accordance
with the Rules and enforceable in accordance with the Uniform Arbitration Act in
force in the State of New York or any applicable successor legislation. Any
hearings in the arbitration shall be held in the Village of Mamaroneck, New York
unless the parties shall agree upon a different venue, and shall be private and
not open to the public. Each party shall bear the fees and expenses of its
arbitrator, counsel, and witnesses, and the fees and expenses of the third
arbitrator shall be shared equally by the parties. The costs of the
arbitration, including the fees of AAA, shall be borne as directed in the
decision of the panel.
Section 21. SEPARABILITY. If for any reason, any section or portion of this
Agreement shall be held by a court to be invalid or unenforceable, it is agreed
that this shall not affect any other section or portion of this Agreement.
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the day
and year first above written.
ATTEST: SOUND FEDERAL SAVINGS AND
LOAN ASSOCIATION
Witness [SIG] By: [SIG]
------------------------------
Chairman
Witness [SIG] By: [SIG]
------------------------------
Secretary
[SIG]
---------------------------------
Witness [SIG] Employee
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SOUND FEDERAL SAVINGS
AND LOAN ASSOCIATION
with
XXXXXXX X. XxXXXXXXXX
EXECUTIVE'S AGREEMENT
XXXXXXX & XXXXXXX
PROFESSIONAL CORPORATION
COUNSELLORS AT LAW
0000 XXXXXXXXXXX XXXXXX
XXXXX 000
XXXXXXXX, XXX XXXX 00000
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SOUND FEDERAL SAVINGS AND LOAN ASSOCIATION
FIRST AMENDMENT TO EMPLOYMENT AGREEMENT
WHEREAS, the SOUND FEDERAL SAVINGS AND LOAN ASSOCIATION ("Bank") entered
into an Employment Agreement ("Agreement") with XXXXXXX X. XXXXXXXXXX
("Executive") on December 31, 1997; and
WHEREAS, in connection with the reorganization of the Bank into the two
tier mutual holding company structure ("Reorganization"), the parties thereto
wish to amend said Agreement in several respects.
NOW, THEREFORE, in consideration of the mutual covenants herein
contained, and upon the other terms and conditions hereinafter provided, the
parties hereby agree as follows:
1. The first paragraph of said Agreement is amended by adding the following
sentence to the end thereof:
"Any reference herein to "Company" shall mean Sound Federal Bancorp, a
federal stock corporation, or any successor thereto."
2. The last two sentences in "Section 1. EMPLOYMENT TERM." shall be
deleted and the following substituted therefor:
"Commencing on the first anniversary date of this Agreement, and
continuing at each anniversary date thereafter, the Agreement shall renew for an
additional year such that the remaining term shall be three (3) years unless
written notice is provided to Executive at least ten (10) days and not more than
sixty (60) days prior to any such anniversary date, that his employment shall
cease at the end of thirty-six (36) months following such anniversary date.
Prior to each notice period for non-renewal, the disinterested members of the
Board of Directors ("Board") of the Bank will conduct a comprehensive
performance evaluation and review of the Executive for purposes of determining
whether to extend the Agreement, and the results thereof shall be included in
the minutes of the Board's meeting. The "disinterested" members of the Board of
Directors shall be all directors other than the director who is the "Executive"
under this Agreement."
3. Sub-section (j) of "Section 11. TERMINATION" shall be amended by
replacing the reference to "Section 11(i)" with a reference to "Section 11(h)"
in the first line thereof.
4. Sub-section (k) shall be deleted and shall be replaced with the
following:
"(k) For these purposes, a Change in Control of the Bank or the Company
shall mean a change in control of a nature that: (i) would be required to be
reported in response to Item 1(a) of the current report on Form 8-K, as in
effect on the date hereof, pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 0000 (xxx "Xxxxxxxx Xxx"); or (ii) results in a Change in
Control of the Bank or the Company within the meaning of the Home Owners' Loan
Act and the Rules and Regulations promulgated by the Office of Thrift
Supervision (or its predecessor agency), as in effect
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on the date hereof; or (iii) without limitation such a Change in Control shall
be deemed to have occurred at such time as (a) any "Person" (as the term is used
in Sections 13(d) and 14(d) of the Exchange Act) is or becomes the "beneficial
owner" (as defined in Rule 13d-3 under the Exchange Act), directly or
indirectly, of securities of the Bank or the Company representing 25% or more of
the Bank's or the Company's outstanding securities except for any securities of
the Bank purchased by the Company in connection with the conversion of the Bank
to the stock form and any securities purchased by the Bank's employee stock
ownership plan and 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, however, that this sub-section (b) shall not apply
if the Incumbent Board is replaced by the appointment by a Federal banking
agency of a conservator or receiver for the Bank and, provided further that any
person becoming a director subsequent to the date hereof whose election was
approved by a vote of at least two-thirds 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) a plan of reorganization, merger, consolidation,
sale of all or substantially all the assets of the Bank or the Company; or (d) a
proxy statement soliciting proxies from stockholders of the Company, by someone
other than the current management of the Company, seeking stockholder approval
of a plan of reorganization, merger or consolidation of the Company or Bank or
similar transaction with one or more corporations as a result of which the
outstanding shares of the class of securities then subject to such plan or
transaction are exchanged for or converted into cash or property or securities
not issued by the Bank or the Company shall be distributed and the requisite
number of proxies approving such plan of reorganization, merger or consolidation
of the Company or Bank are received and voted in favor of such transactions; or
(e) a tender offer is made for 25% or more of the outstanding securities of the
Bank or Company and shareholders owning beneficially or of record 25% or more of
the outstanding securities of the Bank or Company have tendered or offered to
sell their shares pursuant to such tender offer and such tendered shares have
been accepted by the tender offeror."
5. New Section 22 entitled "SOURCE OF PAYMENTS" shall be added to the
Agreement and shall read as follows:
"Section 22. SOURCE OF PAYMENTS. All payments provided in this Agreement
shall be timely paid in cash or check from the general funds of the Bank. The
Company, however, guarantees payment and provisions of all amounts and benefits
due hereunder to Executive and, if such amounts and benefits due from the Bank
are not timely paid or provided by the Bank, such amounts and benefits shall be
paid or provided by the Company."
6. In all other respects, the Agreement shall remains in full force and
effect.
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14
WHEREAS, the parties hereto have caused this First Amendment to be
executed on the _____ day of ____________, 1998.
ATTEST: SOUND FEDERAL SAVINGS AND LOAN
ASSOCIATION
By:
------------------ ------------------------------
Secretary
ATTEST:
SOUND FEDERAL BANCORP
By:
------------------ ------------------------------
Secretary
WITNESS: EXECUTIVE:
By:
------------------ ------------------------------
Xxxxxxx X. XxXxxxxxxx
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