12
Sound Federal Bancorp, Inc.
Employment Agreement
AGREEMENT made this 8th day of December 2005, by and between Sound Federal
Bancorp, Inc. (the "Company"), which has its principal office at 0000 Xxxxxxxxxx
Xxxxxx, Xxxxx 000, Xxxxx Xxxxxx, Xxx Xxxx and XXXXXXX X. XxXXXXXXXX (hereinafter
referred to as the "Employee"). Any reference herein to "Bank" shall mean Sound
Federal Savings, a wholly-owned subsidiary of the Company, or any successor
thereto.
Witnesseth:
WHEREAS, the Employee is President and Chief Executive Officer of the
Company and the Bank and has developed an intimate and thorough knowledge of the
Company's business methods and operations; and
WHEREAS, the retention of the Employee's services for and on behalf of the
Company is of material importance to the preservation and enhancement of the
value of the Company's business; and
WHEREAS, the Employee entered into an Employment Agreement with the Company
on July 14, 2004 (the "Original Agreement"); and
WHEREAS, the Employee and the Company have agreed to enter into this
amended Agreement in order to bring the Agreement into compliance with Section
409A of the Internal Revenue Code (the "Code").
NOW, THEREFORE, in consideration of the mutual covenants set forth in this
Agreement, the Company and the Employee agree as follows:
Section 1. Employment Term. The Company employs the Employee as President
and Chief Executive Officer and the Employee accepts this employment and agrees
to render services to the Company on the terms and conditions set forth in this
Agreement. Commencing on January 1, 2006 (the "Anniversary Date" of the Original
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 Board of
Directors ("Board") of the Company 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.
Section 2. Duties. The Employee shall perform executive services for the
Company and 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 Company'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 Company, as
is customarily required for the position of President and Chief Executive
Officer. The services of the Employee shall be rendered principally in White
Plains, New York but the Employee shall do any traveling and render services at
such other present or future offices on behalf of the Company as may be
reasonably required.
Section 3. Restricted Activities. The Employee agrees that during
employment, except with the express consent of the Company'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 Company; 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 Company'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
Company 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 Company the services
required, the Company shall be entitled to immediate injunctive or other
equitable relief to restrain the Employee, in addition to any other remedies to
which the Company may be entitled under law.
Section 5. Compensation. The Company will compensate and pay the Employee
(or cause the Bank to pay) for the Employee's services during this Agreement's
term a minimum base salary of Two Hundred Sixty-Five Thousand Dollars ($265,000)
for the year ending December 31, 2006. Subsequent annual salary in amounts
determined by the Company's Board of Directors from year to year 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 Company 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
2
plans that the Company and Bank may adopt for its employees. The Employee shall
be permitted to participate in the Company's and 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 by the Employee
for "good reason" (as defined in Section 11(g) hereof) or by the Company other
than for "just cause" (as defined in Section 11(a) hereof) prior to the
attainment of age 70, he shall be entitled to participate in such plans until
age 70, to the same extent as set forth in Section 11(l) hereof.
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
Chief Financial 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 percent for the first six (6) months, and 60
percent thereafter for this Agreement's remaining term. Upon returning to active
service on a full-time basis, 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 Company'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 Company 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 Company shall continue the program of reimbursement and
payment of premiums as previously conducted.
(c) For purposes of this Agreement, and except to the extent prohibited by
Code Section 409A, 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 Company 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 Company 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 Company's Board of Directors or any Committee
of the Board or of the Company selected for this purpose; and, to the extent the
Employee is otherwise eligible and qualifies, to so participate in and receive
3
these benefits or privileges. The Company 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.
Section 10. Expenses. The Company 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 Company'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 Company's Board of Directors, provided these expenses are deductible by
the Company for federal income taxation purposes. If these expenses are paid in
the first instance by the Employee, the Company will reimburse the Employee.
Section 11. Termination. (a) The Company's Board of Directors may terminate
the Employee's employment at any time, but any termination by the Company's
Board of Directors other than termination for just 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 just cause. Termination for "just 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.
(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 Company 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(i). 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 Company'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 and that otherwise satisfies the
requirements of Section 11(i), 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(g).
4
(d) 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 Company or Bank; 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 Company's or
Bank's operations or when the Company or 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.
(e) If the Company 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 Company 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.
(f) 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 Company consistent with the
Company's Certificate of Incorporation, Bylaws, and the Delaware General
Corporation Law. In addition, if the Employee serves as a director, officer, or
employee of any affiliate of the Company, the Employee shall be entitled to
indemnification and exculpation from liability to the full extent permitted by
applicable law, and the Company 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.
(g) The Employee may terminate employment for good reason. For purposes of
this Agreement, "good reason" shall mean: (1) a failure by the Company 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 Company; or (2) any purported termination of the Employee's
employment which is not effected pursuant to a Notice of Termination satisfying
the requirements of Section 11(h).
(h) Any termination of the Employee's employment by the Company 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 (1) indicate the specific termination
provision in the Agreement relied upon; (2) 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; (3) 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 Company'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 (4) be given in the manner specified in Section 14.
5
(i) (1) If the Employee shall terminate employment for good reason pursuant
to 11(g) or if the Company 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 Company shall pay as severance to the
Employee an amount equal to: 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. However, in the event the Employee is considered a Specified
Employee as provided in Section 11(o), this lump sum payment will be made no
earlier than the first day of the seventh month following the effective date of
the Separation from Service as defined in Section 11(n).
(2) Notwithstanding any other provision of this Agreement, in the event of
a Change in Control as provided in Section 11(j), the Company shall pay to the
Employee an amount equal to: 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, with such payment to be made in a lump sum on the effective
date of the Change in Control.
(3) 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 Company 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 Company, whichever may be ultimately entitled to
the same. The trustee shall be a bank or savings institution other than the
Company, 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 Company 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 appropriate equitable relief to
enforce the same without the necessity of first resorting to arbitration under
Section 20.
(4) 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. Notwithstanding anything to
the contrary herein, the Employee shall only be entitled to a payment under the
first to occur of (i)(1) or (i)(2) above. Payments under one of these
alternatives shall preclude any payments under the other.
6
(j) For purposes of this Agreement, a Change in Control of the Company or
the Bank shall mean (i) a change in ownership of the Company or the Bank under
paragraph (1) below, or (ii) a change in effective control of the Company or the
Bank under paragraph (2) below, or (iii) a change in the ownership of a
substantial portion of the assets of the Company or the Bank under paragraph (3)
below:
(1) Change in the ownership of the Company or the Bank. A change in the
ownership of the Company or the Bank 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) or subsequent guidance),
acquires ownership of stock of the corporation that, together with stock held by
such person or group, constitutes more than 50 percent of the total fair market
value or total voting power of the stock of such corporation.
(2) Change in the effective control of the Company or the Bank. A change in
the effective control of the Company or the Bank 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) or subsequent
guidance), 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 percent 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 Company or the Bank is another corporation.
(3) Change in the ownership of a substantial portion of the Company's or
the Bank's assets. A change in the ownership of a substantial portion of the
Company or the Bank'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) or subsequent guidance), 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 percent of the total
gross fair market value of (i) all of the assets of the Company or Bank, or (ii)
the value of the assets being disposed of, either of which is determined without
regard to any liabilities associated with such assets.
(4) 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) or subsequent guidance, except to the extent that
such proposed regulations are superseded by subsequent guidance.
(k) The Employee shall not be required to mitigate the amount of any
payment provided for in Section 11(i)(1) 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 Company to make
payments or provide the benefits or arrangements to the Employee under this
Agreement.
7
(l) Notwithstanding any provision in this Agreement, in the event of
termination by the Employee for "good reason" or by the Company 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 Company'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 Company shall no
longer be obligated to continue to provide such coverage.
(m) Excise Tax Indemnification.
(1) In the event that any payments or benefits provided or to be provided
to the Employee pursuant to this Agreement, in combination with payments or
benefits, if any, from other plans or arrangements maintained by the Company or
any Subsidiaries, constitute "excess parachute payments" under Section 280G of
the Code and are subject to excise tax under Section 4999 of the Code, the
Company shall pay to Employee in cash an additional amount equal to the amount
of the Gross Up Payment as defined below. The "Gross Up Payment" shall be the
amount needed to ensure that the amount of such payments and the value of such
benefits received by Employee (net of such excise tax and any federal, state and
local tax on the Company's payment to him attributable to such excise tax)
equals the amount of such payments and value of such benefits as he would
receive in the absence of such excise tax and any federal, state and local tax
on the Company's payment to him attributable to such excise tax. The Company
shall pay the Gross Up Payment within thirty (30) days after the Date of
Termination subject to Section 11(m)(5).
(2) For purposes of determining the amount of the Gross Up Payment, the
value of any non-cash benefits and deferred payments or benefits shall be
determined by the Company's independent auditors in accordance with the
principles of Section 280G(d)(3) and (4) of the Code.
(3) In the event that, after the Gross Up Payment is made, the amount of
the excise tax described in Section 11(m)(1) hereof is determined to be less
than the amount calculated in the determination of the actual Gross Up Payment
made by the Company, Employee shall repay to the Company, at the time that such
reduction in the amount of excise tax is finally determined, the portion of the
Gross Up Payment attributable to such reduction, plus interest on the amount of
such repayment at the applicable federal rate under Section 1274 of the Code
from the date of the Gross Up Payment to the date of the repayment. The amount
of the reduction of the Gross Up Payment shall reflect any subsequent reduction
in excise taxes resulting from such repayment.
(4) In the event that, after the Gross Up Payment is made, the amount of
the excise tax described in Section 11(m)(1) hereof is determined to exceed the
amount anticipated at the time the Gross Up Payment was made, the Company shall
pay to the Employee, in immediately available funds, at the time that such
additional amount of excise tax is finally determined, an additional payment
("Additional Gross Up Payment") equal to such additional amount of excise tax
and any federal, state and local taxes thereon, plus all interest and penalties,
if any, owed by the Employee with respect to such additional amount of excise
and other tax.
8
(5) The Company shall have the right to challenge, on Employee's behalf,
any excise tax assessment against him as to which Employee is entitled to (or
would be entitled if such assessment is finally determined to be proper) a Gross
Up Payment or Additional Gross Up Payment, provided that all costs and expenses
incurred in such a challenge shall be borne by the Company and the Company shall
indemnify the Employee and hold him harmless, on an after-tax basis, from any
excise or other tax (including interest and penalties with respect thereto)
imposed as a result of such payment of costs and expenses by the Company.
(n) "Separation from Service" shall mean, consistent with Code Section
409A(2)(a)(i), the Employee's death, retirement, or termination of employment.
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 Employee's right to reemployment
is provided by law or contract. If the leave exceeds six months and the
Employee's right to reemployment is not provided by law or by contract, then the
Employee shall be have a Separation from Service on the first date immediately
following such six-month period. The Employee shall not be treated as having a
Separation from Service if the Employee provides more than insignificant
services for the Company and Bank following the Employee's actual or purported
termination of employment with the Company and Bank. Services shall be treated
as not being insignificant if such services are performed at an annual rate that
is at least equal to 20 percent of the services rendered by the Employee for the
Company and Bank, 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 percent 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 Employee 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 Employee is
providing services at an annual rate that is 50 percent 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 percent or more of the annual
base compensation earned during the final three full calendar years of
employment (or if less, such lesser period).
(o) "Specified Employee" shall mean a "key employee" of a publicly traded
company, as defined in Code Section 416(i) or, if different, within the meaning
of Code Section 409A and the Proposed Regulations or other guidance issued
thereunder.
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.
9
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 Company'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 Company at its principal office. All notices 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 Company and
the Employee and no delay or omission of the Company 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 Company, its
successors, and assigns, including, without limitation, any person, partnership,
or corporation that may acquire all or substantially all of the Company's assets
and business, or with or into which the Company 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(e) and 11(f).
Section 18. Assignment. This Agreement is personal to each of the parties
and neither party 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.
10
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 8(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") applicable to commercial arbitrations (the "Rules") except as modified
by this Section. The Employee shall appoint one arbitrator, the Company 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 (1 5) 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 City of White Plains, 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.
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 Company (or
the Company may cause the Bank to make such payments). The Company, however,
guarantees payment and provisions of all amounts and benefits due hereunder to
Employee.
[Remainder of Page Intentionally Left Blank]
11
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the day
and year first above written.
ATTEST: SOUND FEDERAL BANCORP, INC.
/s/ Xxxxxxx X. Xxxxxxx /s/ Xxxxx X. Xxxxxxx
---------------------- --------------------
WITNESS: EMPLOYEE:
/s/ Xxxxxxx X. Xxxxxxx /s/ Xxxxxxx X. XxXxxxxxxx
---------------------- --------------------
