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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 1311 Mamaroneck
Avenue, Suite 190, White Plains, New York
and RICHARD P. McSTRAVICK (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.
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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
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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
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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).
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(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
