Exhibit 10.1
SOUND COMMUNITY BANK
AMENDED AND RESTATED SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN AGREEMENT
This Amended and Restated Supplemental Executive Retirement Plan Agreement
(the “
Agreement
”) is entered into as of this 23
rd
day November 2015 (the “
Effective Date
”) by and between Sound Community Bank (the “
Employer
”), and Laura Lee Stewart (the “
Executive
”), and amends and restates the Sound Community Bank Supplemental Executive Retirement Plan f/b/o Laura Lee Stewart (the “
Plan
”). This Agreement amends and restates the Supplemental Executive Retirement Plan Agreement between the Employer and the Executive as originally adopted effective December 30, 2011 and amended on June 30, 2014 (the “Prior Agreement”).
WHEREAS,
the Executive has contributed substantially to the success of the Employer and the Employer desires that the Executive continue in its employ;
WHEREAS,
the Employer desires to provide certain supplemental nonqualified pension benefits to the Executive;
WHEREAS,
the Employer and the Executive desire to enter into this Agreement to provide a retirement benefit under this Plan and to be paid to the Executive upon Separation from Service as provided herein;
WHEREAS
, because the Executive has reached her Normal Retirement Age of 65 under the Agreement and is fully vested in her Retirement Benefit, the provisions regarding the amount of benefits payable under the Prior Agreement in the event her employment was terminated prior to Normal Retirement Age are no longer applicable, including those provisions regarding disability, early retirement or vesting upon a change in control;
WHEREAS
, the Bank and the Executive desire to amend and restate the Prior Agreement in order to (1) revise Section 3.1 to expressly set forth the dollar amount of benefits to be payable to the Executive under this Agreement; and (2) make certain other changes;
WHEREAS
, the parties hereto intend that this Agreement shall be an unfunded arrangement maintained primarily to provide supplemental retirement benefits for the Executive, and shall be considered a plan described in Section 301(a)(3) of the Employee Retirement Income Security Act of 1974, as amended (“
ERISA
”); and
WHEREAS,
this Plan is intended to comply with the requirements of Section 409A of the Internal Revenue Code of 1986, as amended (the “
Code
”) and, accordingly, the intent of the parties hereto is that the Plan shall be operated and interpreted consistent with the requirements thereof;
NOW THEREFORE,
in consideration of the foregoing premises and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows.
ARTICLE 1
DEFINITIONS
Whenever used in this Agreement, the following terms have the meanings specified:
1.1.
“
Annuity
” means the annuity product provided under the Annuity Contract.
1.2.
“
Annuity Contract
” means the American Valor 10 Fixed-Index Annuity issued by Great American Life Insurance Company, contract form 1195053889 , with the following endorsements: Income Rider.
1.3.
“
Beneficiary
” means each designated person, or the estate of the deceased Executive, entitled to benefits, if any, upon the death of the Executive, determined according to Article 4.
1.4.
“
Beneficiary Designation Form
” means the form established from time to time by the Plan Administrator that the Executive completes, signs, and returns to the Plan Administrator to designate one or more Beneficiaries.
1.5.
“
Board
” means the Board of Directors of the Employer.
1.6.
“
Change in Control
” shall be deemed to have taken place if:
(a)
any person or entity, including a “group” as defined in Section 13(d)(3) of the Securities Exchange Act of 1934, other than the Employer, a wholly-owned subsidiary thereof, the Company or any employee benefit plan of the Employer or any of its parent holding company or subsidiaries becomes the beneficial owner of securities of the Company having fifty percent (50%) or more of the combined voting power of the then outstanding securities of the Company that may be cast for the election of directors of the Company (other than as a result of the issuance of securities initiated by the Company in the ordinary course of business); or
(b)
as the result of, or in connection with, any cash tender or exchange offer, merger or other business combination, sale of assets or contested election, or any combination of the foregoing transactions, the holders of all securities of the Company entitled to vote generally in the election of directors of the Company immediately prior to such transaction constitute, following such transaction, less than a majority of the combined voting power of the then-outstanding securities of the Company or any successor corporation or entity entitled to vote generally in the election of the directors of the Company or such other corporation or entity after such transactions; or
(c)
such other change of ownership or control event as defined in Treasury Regulation §1.409A-3(i)(5) or any subsequent, applicable Treasury Regulation.
1.7.
“Company”
shall mean Sound Financial Bancorp, Inc., the parent holding company of the Employer.
1.8.
“Disability”
shall mean the Executive (i) is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expect to result in death or can be expected to last for a continuous period of not less than twelve (12) months or (ii) is, by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than twelve (12) months, receiving income replacement benefits for a period of not less than three (3) months under an accident and health plan covering employees of the Employer. Medical determination of Disability may be made by either the Social Security Administration or by the provider of an accident or health plan covering employees of the Employer, provided that the definition of Disability applied under such Disability insurance program complies with the requirements of Section 409A. Upon the request of the Plan Administrator, the Executive must submit proof to the Plan Administrator of Social Security Administration’s or the provider’s determination. The said monthly payments shall begin the first day of the third month following the month that the Executive becomes Disabled.
1.9.
“
ERISA
” means the Employee Retirement Income Security Act of 1974.
1.10.
“
Rider
” means the Income Rider attached to the Annuity Contract as an endorsement.
1.11.
“
Normal Retirement Age
” means age sixty-five (65).
1.12.
“
Plan Administrator
” means the plan administrator described in Article 8.
1.13.
“
Separation from Service
” means a termination of the Executive’s employment with the Employer (and all corporations, entities or organizations with whom the Employer would be considered a single employer pursuant to subsections (b) and (c) of Section 414 of the Code), in each case as determined in accordance with Section 409A of the Code and Treasury Regulation §1.409A-1(h). In determining whether a Separation from Service has occurred, the Employer shall take into account all of the facts and circumstances, special rules and presumptions set forth in the above regulation.
ARTICLE 2
DEFERRED COMPENSATION AND VALUATION OF ACCOUNT
2.1.
Annuity Contract
. The Annuity Contract shall be a mere accounting device and the Employer shall have no obligation to actually purchase Annuity. With respect to the Annuity purchased by the Employer, a
ll right, title, and interest in and to the Annuity (or any other assets which may be purchased by Employer) shall at all times be the sole property of the Employer and shall in no event be deemed to constitute a fund or collateral security for the payments under the Agreement. The Annuity and any other asset purchased by the Employer shall for all purposes be a part of the general funds of the Employer. To the extent that the Executive or the Executive’s Beneficiary acquires rights to receive payments under the Plan, such rights shall be no greater than the rights of any unsecured general creditor of the Employer. The Annuity Contract shall merely be the mechanism for tracking the benefits owed to the Executive under the Agreement.
2.2.
No Requirement to Purchase Annuity Contract
. While the Employer is not required to acquire and maintain any Annuity Contract, it may do so, and if the Employer does acquire any Annuity Contract, then the Executive consents thereto and agrees to assist the Employer in making application for the Annuity Contract by submitting to any required physical examination and providing any information necessary for the completion of such application.
2.3.
Rabbi Trust
. Employer may establish a “rabbi trust” to which contributions may be made to provide the Employer with a source of funds for purposes of satisfying the obligations of the Employer under the Plan. The trust shall constitute an unfunded arrangement and shall not affect the status of the Plan as an unfunded plan. The Executive and her Beneficiaries shall have no beneficial ownership interest in any assets held in the trust.
ARTICLE 3
RETIREMENT AND OTHER BENEFITS
3.1.
Retirement Benefit
. Upon the Executive’s Separation from Service on or after Normal Retirement Age for any reason other than death, the Executive will be entitled to the monthly benefit payment described in this Section. Assuming the Executive has a Separation from Service prior to her 70
th
birthday as expected, the benefit will commence on the first (1
st
) day of the month following the Executive’s 70
th
Birthday (the “
Commencement Date
”). In the unlikely event the Executive’s Separation from Service is subsequent to her 70
th
birthday, then the Commencement Date shall be the first (1
st
) day of the month following the Executive’s Separation from Service. The amount of the monthly benefit will equal one-twelfth of the Executive’s vested benefit of $78,030 per year and shall be paid on the first day of each month starting with the Commencement Date and continuing until the Executive’s death (the “
Retirement Benefit
”). This shall be the Executive’s benefit in lieu of any other benefit under this Agreement.
3.2.
Early Retirement
. Upon the Executive’s Separation from Service prior to Normal Retirement Age for any reason other than death, the Executive will be entitled to the amount accrued for the Retirement Benefit by the Employer as of the early retirement date, payable on the first (1
st
) day of the second month following the date of the early retirement in 180 equal monthly installments. The discount rate used by the Plan Administrator for determining the early retirement benefit will be based on the yield on a 20-year corporate bond rated Aa by Moody’s, rounded to the nearest ¼%, or as otherwise determined by the governing regulatory body. The initial discount rate is 5.00%. In its sole discretion, the Plan Administrator may adjust the discount rate to maintain the rate within reasonable standards according to GAAP and consistent with the Interagency Advisory on Accounting for Deferred Compensation Agreements which states that the “cost of those benefits shall be accrued over that period of the employee’s service in a systematic and rational manner.”
3.3.
Disability
. In the event the Executive should become Disabled while actively employed by the Employer any time after the original effective date of the Prior Agreement but prior to Normal Retirement Age or early retirement, the Executive will be entitled to the amount accrued for the Retirement Benefit by the Employer as of the date of Disability, payable on the first (1
st
) day of the second month following the date of the Disability in 180 equal monthly installments. The discount rate used by the Plan Administrator for determining the Disability benefit will be based on the yield on a 20-year corporate bond rated Aa by Moody’s, rounded to the nearest ¼%, or as otherwise determined by the governing Regulatory body. The initial discount rate is 5.00%. In its sole discretion, the Plan Administrator may adjust the discount rate to maintain the rate within reasonable standards according to GAAP and consistent with the Interagency Advisory on Accounting for Deferred Compensation Agreements which states that the “cost of those benefits shall be accrued over that period of the employee’s service in a systematic and rational manner.”
3.4.
Restriction on Timing of Distributions
. Notwithstanding the applicable provisions of this Agreement regarding timing of payments, the following special rules shall apply if the stock of the Company is publicly traded at the time of the Executive’s termination of employment in order for this Agreement to comply with Section 409A of the Code: (i) to the extent the Executive is a “specified employee” (as defined under Section 409A of the Code) at the time of a distribution and to the extent such applicable provisions of Section 409A of the Code and the regulations thereunder require a delay of such distributions by a six-month period after the date of such Executive’s Separation from Service with the Employer, no such distribution shall be made prior to the date that is six months after the date of the Executive’s Separation from Service with the Employer, and (ii) any such delayed payments shall be paid to the Executive in a single lump sum within five (5) business days after the end of the six (6) month delay.
3.5.
Death Benefits
. Upon death of the Executive, the Beneficiary will be entitled to a single sum payment, payable within ninety (90) days of the date of death (with the beneficiary having no right to designate the taxable year of the payment) equal to the amount accrued for the Retirement Benefit by the Employer as of the date of death.
3.6.
Change in Control Benefit
. Upon a Change in Control, the Executive will be 100% vested in the Retirement Benefit as provided for in paragraph 3.1, which benefit shall be payable in accordance with paragraph 3.1.
ARTICLE 4
BENEFICIARIES
4.1.
Beneficiary Designations
. The Executive shall have the right to designate at any time a Beneficiary to receive any benefits payable under this Agreement upon the death of the Executive. The Beneficiary designated under this Agreement may be the same as or different from the Beneficiary designation under any other benefit plan of the Employer in which the Executive participates.
4.2.
Beneficiary Designation; Changes
. The Executive shall designate a Beneficiary by completing and signing the Beneficiary Designation Form and delivering it to the Plan Administrator or its designated agent. The Executive’s Beneficiary designation shall be deemed automatically revoked if the Beneficiary predeceases the Executive or if the Executive names a spouse as Beneficiary and the marriage is subsequently dissolved. The Executive shall have the right to change a Beneficiary by completing, signing, and otherwise complying with the terms of the Beneficiary Designation Form and the Plan Administrator’s rules and procedures, as in effect from time to time. Upon the acceptance by the Plan Administrator of a new Beneficiary Designation Form, all Beneficiary designations previously filed shall be cancelled. The Plan Administrator shall be entitled to rely on the last Beneficiary Designation Form filed by the Executive and accepted by the Plan Administrator before the Executive’s death.
4.3.
Acknowledgment
. No designation or change in designation of a Beneficiary shall be effective until received in writing by the Plan Administrator or its designated agent.
4.4.
No Beneficiary Designation
. If the Executive dies without a valid Beneficiary designation, or if all designated Beneficiaries predecease the Executive, then the Executive’s spouse shall be the designated Beneficiary. If the Executive has no surviving spouse, the benefits shall be distributed to the personal representative of the Executive’s estate on behalf of the estate.
4.5.
Facility of Payment
. If a benefit is payable to a minor, to a person declared incapacitated, or to a person incapable of handling the disposition of his or her property, the Employer may pay such benefit to the guardian, legal representative, or person having the care or custody of the minor, incapacitated person, or incapable person. The Employer may require proof of incapacity, minority, or guardianship as it may deem appropriate before distribution of the benefit. Distribution shall completely discharge the Employer from all liability for the benefit.
ARTICLE 5
GENERAL LIMITATIONS
5.1.
Limits on Payments
. It is the intention of the parties that none of the payments to which the Executive is entitled under this Agreement will constitute a “golden parachute payment” within the meaning of 12 USC Section 1828(k)(3) or implementing regulations of the FDIC, the payment of which is prohibited. Notwithstanding any other provision of this Agreement to the contrary, any payments due to be made by Employer for the benefit of the Executive pursuant to this Agreement, or otherwise, are subject to and conditioned on compliance with 12 USC Section 1828(k) and any regulations promulgated thereunder including the receipt of all required approvals thereof by Employer’s primary banking regulator and/or the FDIC.
In addition, Employer and its successors retain the legal right to demand the return of any payment made hereunder which constitutes a “golden parachute payment” within the meaning of 12 USC Section 1828(k)(3) or implementing regulations of the FDIC should Employer or its successors later obtain information indicating that the Executive committed, is substantially responsible for, or has violated, the respective acts or omissions, conditions, or offenses outlined under 12 C.F.R. 359.4(a)(4).
ARTICLE 6
CLAIMS AND REVIEW PROCEDURES
6.1.
Claims Procedure
. A person or Beneficiary (a “
claimant
”) who has not received benefits under the Agreement that he or she believes should be paid shall make a claim for such benefits as follows:
(a)
Initiation - Written Claim
. The claimant initiates a claim by submitting to the Plan Administrator a written claim for the benefits. If the claim relates to the contents of a notice received by the claimant, the claim must be made within sixty (60) days after the notice was received by the claimant. All other claims must be made within one hundred eighty (180) days after the date of the event that caused the claim to arise. The claim must state with particularity the determination desired by the claimant.
(b)
Timing of Plan Administrator Response
. The Plan Administrator shall respond to such claimant within ninety (90) days after receiving the claim. If the Plan Administrator determines that special circumstances require additional time for processing the claim, the Plan Administrator can extend the response period by an additional ninety (90) days by notifying the claimant in writing, prior to the end of the initial ninety (90)-day period, that an additional period is required. The notice of extension must set forth the special circumstances and the date by which the Plan Administrator expects to render its decision.
(c)
Notice of Decision
. If the Plan Administrator denies part or all of the claim, the Plan Administrator shall notify the claimant in writing of such denial. The Plan Administrator shall write the notification in a manner calculated to be understood by the claimant. The notification shall set forth:
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(i)
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The specific reasons for the denial,
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(ii)
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A reference to the specific provisions of the Agreement on which the denial is based,
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(iii)
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A description of any additional information or material necessary for the claimant to perfect the claim and an explanation of why it is needed,
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(iv)
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An explanation of the Agreement’s review procedures and the time limits applicable to such procedures, and
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(v)
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A statement of the claimant’s right to bring a civil action under ERISA section 502(a) following an adverse benefit determination on review.
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6.2.
Review Procedure
. If the Plan Administrator denies part or all of the claim, the claimant shall have the opportunity for a full and fair review by the Plan Administrator of the denial, as follows:
(a)
Initiation - Written Request
. To initiate the review, the claimant, within 60 days after receiving the Plan Administrator’s notice of denial, must file with the Plan Administrator a written request for review.
(b)
Additional Submissions - Information Access
. The claimant shall then have the opportunity to submit written comments, documents, records and other information relating to the claim. The Plan Administrator shall also provide the claimant, upon request and free of charge, reasonable access to, and copies of, all documents, records and other information relevant (as defined in applicable ERISA regulations) to the claimant’s claim for benefits.
(c)
Considerations on Review
. In considering the review, the Plan Administrator shall take into account all materials and information the claimant submits relating to the claim, without regard to whether such information was submitted or considered in the initial benefit determination.
(d)
Timing of Plan Administrator Response
. The Plan Administrator shall respond in writing to such claimant within sixty (60) days after receiving the request for review. If the Plan Administrator determines that special circumstances require additional time for processing the claim, the Plan Administrator can extend the response period by an additional sixty (60) days by notifying the claimant in writing, prior to the end of the initial sixty (60)-day period, that an additional period is required. The notice of extension must set forth the special circumstances and the date by which the Plan Administrator expects to render its decision.
(e)
Notice of Decision
. The Plan Administrator shall notify the claimant in writing of its decision on review. The Plan Administrator shall write the notification in a manner calculated to be understood by the claimant. The notification shall set forth:
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(i)
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The specific reasons for the denial,
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(ii)
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A reference to the specific provisions of the Agreement on which the denial is based,
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(iii)
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A statement that the claimant is entitled to receive, upon request and free of charge, reasonable access to, and copies of, all documents, records and other information relevant (as defined in applicable ERISA regulations) to the claimant’s claim for benefits, and
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(iv)
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A statement of the claimant’s right to bring a civil action under ERISA Section 502(a).
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ARTICLE 7
MISCELLANEOUS
7.1.
Amendments and Termination
. Subject to Section 7.13 of this Agreement, (a) this Agreement may be amended solely by a written agreement signed by the Employer and by the Executive, and (b) except as otherwise provided herein, this Agreement may be terminated solely by a written agreement signed by the Employer and by the Executive.
7.2.
Binding Effect
. This Agreement shall bind the Executive and the Employer and their beneficiaries, survivors, executors, successors, administrators, legal representatives, and transferees.
7.3.
No Guarantee of Employment
. This Agreement is not an employment policy or contract. It does not give the Executive the right to remain an employee of the Employer, nor does it interfere with the Employer’s right to discharge the Executive. It also does not require the Executive to remain an employee nor interfere with the Executive’s right to terminate employment at any time.
7.4.
Non-Transferability
. Benefits under this Agreement cannot be sold, transferred, assigned, pledged, attached, or encumbered in any manner.
7.5.
Tax Withholding
. The Employer shall withhold any taxes that are required to be withheld from the benefits provided under this Agreement.
7.6.
Applicable Law
. Except to the extent preempted by the laws of the United States of America, the validity, interpretation, construction, and performance of this Agreement shall be governed by and construed in accordance with the laws of the State of Washington, without giving effect to the principles of conflict of laws of such state.
7.7.
Unfunded Arrangement
. The Executive and the Executive’s Beneficiary are general unsecured creditors of the Employer for the payment of benefits under this Agreement. The benefits represent the mere promise by the Employer to pay such benefits. The rights to benefits are not subject in any manner to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance, attachment, or garnishment by creditors. Any insurance, annuity contract or other asset purchased by Employer to fund its obligations under this Agreement shall be a general asset of the Employer to which the Executive and Beneficiary have no preferred or secured claim.
7.8.
Severability
. If any provision of this Agreement is held invalid, such invalidity shall not affect any other provision of this Agreement, and each such other provision shall continue in full force and effect to the full extent consistent with law. If any provision of this Agreement is held invalid in part, such invalidity shall not affect the remainder of the provision, and the remainder of such provision together with all other provisions of this Agreement shall continue in full force and effect to the full extent consistent with law.
7.9.
Headings
. The headings of sections herein are included solely for convenience of reference and shall not affect the meaning or interpretation of any provision of this Agreement.
7.10.
Notices
. All notices, requests, demands, and other communications hereunder shall be in writing and shall be deemed to have been duly given if delivered by hand or mailed, certified or registered mail, return receipt requested, with postage prepaid. Unless otherwise changed by notice, notice shall be properly addressed to the Executive if addressed to the address of the Executive on the books and records of the Employer at the time of the delivery of such notice, and properly addressed to the Employer if addressed to the Board of Directors, at 2005 Fifth Avenue, Second Floor, Seattle, Washington 98121.
7.11.
Entire Agreement
. This Agreement constitutes the entire agreement between the Employer and the Executive concerning the subject matter hereof. No rights are granted to the Executive under this Agreement other than those specifically set forth herein.
7.12.
Payment of Legal Fees
. In the event litigation ensues between the parties concerning the enforcement of the obligations of the parties under this Agreement, the Employer shall pay all costs and expenses in connection with such litigation until such time as a final determination (excluding any appeals) is made with respect to the litigation. If the Employer prevails on the substantive merits of each material claim in dispute in such litigation, the Employer shall be entitled to receive from the Executive all reasonable costs and expenses, including without limitation attorneys’ fees, incurred by the Employer on behalf of the Executive in connection with such litigation, and the Executive shall pay such costs and expenses to the Employer promptly upon demand by the Employer.
7.13.
Termination or Modification of Agreement Because of Changes in Law, Rules or Regulations
. The Employer is entering into this Agreement on the assumption that certain existing tax laws, rules, and regulations will continue in effect in their current form. If that assumption materially changes and the change has a material detrimental effect on this Agreement, then the Employer reserves the right to terminate or modify this Agreement accordingly, subject to the written consent of the Executive, which shall not be unreasonably withheld.
ARTICLE 8
ADMINISTRATION OF AGREEMENT
8.1.
Plan Administrator Duties
. This Agreement shall be administered by a Plan Administrator consisting of the Board of Directors of the Employer or such committee or person(s) as the Board of Directors of the Employer shall appoint. The Plan Administrator shall have the sole and absolute discretion and authority to interpret and enforce all appropriate rules and regulations for the administration of this Agreement and the rights of the Executive under this Agreement, to decide or resolve any and all questions or disputes arising under this Agreement, including benefits payable under this Agreement and all other interpretations of this Agreement, as may arise in connection with the Agreement.
8.2.
Agents
. In the administration of this Agreement, the Plan Administrator may employ agents and delegate to them such administrative duties as it sees fit (including acting through a duly appointed representative) and may from time to time consult with counsel, who may be counsel to the Employer.
8.3.
Binding Effect of Decisions
. The decision or action of the Plan Administrator with respect to any question arising out of or in connection with the administration, interpretation, and application of the Agreement and the rules and regulations promulgated hereunder shall be final and conclusive and binding upon all persons having any interest in the Agreement. Without limiting the foregoing, it is acknowledged that the value of the benefits payable hereunder may be difficult to determine in the event the Employer does not actually purchase and maintain the Annuity Contract as contemplated hereunder; therefore, in such event, the Employer shall have the right to make any reasonable assumptions in determining the benefits payable hereunder and any such determination made in good faith shall be binding on the Executive.
8.4.
Indemnity of Plan Administrator
. The Plan Administrator shall not be liable to any person for any action taken or omitted in connection with the interpretation and administration of this Agreement, unless such action or omission is attributable to the willful misconduct of the Plan Administrator or any of its members. The Employer shall indemnify and hold harmless the members of the Plan Administrator against any and all claims, losses, damages, expenses, or liabilities arising from any action or failure to act with respect to this Agreement, except in the case of willful misconduct by the Plan Administrator or any of its members.
8.5.
Employer Information
. To enable the Plan Administrator to perform its functions, the Employer shall supply full and timely information to the Plan Administrator on all matters relating to the date and circumstances of the retirement, Disability, death, or Separation from Service of the Executive and such other pertinent information as the Plan Administrator may reasonably require.
IN WITNESS WHEREOF,
the Executive and a duly authorized Officer of the Employer have signed this Agreement as of the date first written above.
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THE EXECUTIVE:
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SOUND COMMUNITY BANK
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By:
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Its:
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Chairman of the Board
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BENEFICIARY DESIGNATION
SOUND COMMUNITY BANK
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN AGREEMENT
I, Laura Lee Stewart, designate the following as Beneficiary of any death benefits under this Supplemental Executive Retirement Plan Agreement
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Primary:
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The Estate of Laura Lee Stewart
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Contingent:
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None
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Note: To name a trust as Beneficiary, please provide the name of the trustee(s) and the exact name and date of the trust agreement.
I understand that I may change these Beneficiary designations by filing a new written designation with the Employer. I further understand that the designations will be automatically revoked if the Beneficiary predeceases me, or if I have named my spouse as Beneficiary and our marriage is subsequently dissolved.
Accepted by the Employer this 23
rd
day of November 2015.
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By:
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Print Name:
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Tyler Myers
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Title:
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Chairman of the Board
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Exhibit 10.2
Amended and Restated Executive Long Term Compensation Agreement
This Amended and Restated Executive Long Term Compensation Agreement (the “Agreement”) is made and entered into this 23rd day of November 2015 by and between Sound Community Bank, a bank organized and existing under the laws of the State of Washington and with its principal offices in Seattle, Washington, (hereinafter referred to as the “Bank” or “Employer”), and Laura Lee Stewart, an executive of the Bank (hereinafter referred to as the “Executive”). This Agreement amends and restates the Executive Long Term Compensation Agreement between the Bank and the Executive as originally adopted effective August 14, 2007 and amended on December 30, 2011 (the “Prior Agreement”).
R E C I T A L S
WHEREAS, it is the consensus of the Employer and its Board of Directors that the Executive’s employment with the Bank in the past has been of exceptional merit and has constituted an invaluable contribution to the general welfare of the Bank in bringing the Bank to its present status of operating efficiency and present position in its field of activity;
WHEREAS, the Employer adopted the Prior Agreement in order to provide the Executive with certain fringe benefits, on the terms and conditions set forth herein, in order to reasonably induce the Executive to remain in the Bank’s employ during the Executive’s lifetime or until the age of retirement;
WHEREAS, the Prior Agreement was amended on December 30, 2011 to freeze the benefits payable under the Prior Agreement in connection with the adoption of a new Supplemental Executive Retirement Plan Agreement on December 30, 2011 (the “2011 SERP”) and the execution of a Confidentiality, Non-Competition, and Non-Solicitation Agreement between the Bank and the Executive as of December 30, 2011 (the “2011 Non-Competition Agreement”)
WHEREAS, because the Executive has reached her Normal Retirement Age of 66 under the Agreement and is fully vested in her Normal Retirement benefit, the provisions regarding the amount of benefits payable under the Prior Agreement in the event her employment was terminated prior to Normal Retirement are no longer applicable, including those provisions regarding disability, an involuntary termination, a termination in connection with a change in control or a voluntary termination;
WHEREAS, the Bank and the Executive desire to amend and restate the Prior Agreement in order to (1) revise Section 2.1 to expressly set forth the amount of benefits to be payable to the Executive under this Agreement as a result of the freeze amendment previously adopted on December 30, 2011; (2) delete old Paragraph 4.4 regarding a forfeiture of benefits if the Executive’s employment was terminated for Cause (as defined), (3) delete old Section 9 regarding non-competition as such provisions have been superseded by the 2011 Non-Competition Agreement, and (4) make certain other changes;
WHEREAS, the Executive and the Employer wish to specify in writing the terms and conditions upon which this additional compensatory incentive will be provided to the Executive; and
WHEREAS, it is the intent of the parties hereto that this Agreement be considered an unfunded arrangement maintained primarily to provide supplemental retirement benefits for the Executive, and be considered a non-qualified benefit plan for the purposes of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”).
NOW, THEREFORE, in consideration of the past employment performance and the services performed by the Executive, as well as the mutual promises and covenants contained herein, the Executive and the Employer agree as follows:
A G R E E M E N T
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1.0
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Scope, Purpose and Effect
.
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1.1
Contract of Employment
.
Although this Agreement is intended to provide the Executive with additional incentive to remain in the employ of the Employer, it shall not be deemed to constitute a contract of employment between the Executive and the Employer, nor shall any provision of this non-qualified Agreement be applied to restrict or expand the right of the Employer to terminate the Executive's Employment with or without cause. This Non-qualified Agreement shall have no impact or effect upon any separate written employment agreement which the Executive may have with the Employer, it being the parties' intention and agreement that unless this non-qualified Agreement is specifically referenced in such employment agreement, the non-qualified Agreement (and the Employer's obligations thereunder) shall stand separate and apart and shall have no effect on or be affected by, the terms and provisions of any employment agreement. Events of termination of Employment shall be characterized, for purposes of interpreting this non-qualified Agreement, in accord with the definitions herein.
1.2
Fringe Benefit
.
The benefits provided by this Agreement are granted by the Employer as a fringe benefit to the Executive and are not a part of any salary reduction plan or any arrangement deferring a bonus or a salary increase. The Executive has no option to take any current payments or bonus in lieu of the benefits provided by this Agreement.
1.3
Internal Revenue Code Section 409A Compliance
.
It is the intent of the parties to comply with all applicable Internal Revenue Code Sections, including, but not limited to, IRC 409A. Thus, for any benefits payable pursuant to this Agreement, if the individual is a “key employee”, as defined by the Internal Revenue Service, and said Company is publicly traded at the time of “separation from service” (as defined by IRC 409A), any such benefit payment described herein shall be withheld for six (6) months following such separation from service in order to comply with IRC 409A. In addition, for any individual affected by this six (6) month delay in payment imposed by IRC 409A, and when applicable, the aggregate amount of the first seven (7) months of installments shall be paid at the beginning of the seventh month following the date of separation from service. Monthly installment payments shall continue thereafter according to form of benefit chosen.
For the purposes of this Plan, the term "Retirement" shall be interpreted in accordance with and in concert with IRC Section 409A and the rules relating to “Separation from Service”. Therefore, in order for the Executive to trigger the receipt of a benefit pursuant to this Agreement under the terms governing payments following Normal Retirement, the Executive must also have “Separated from Service” in accordance with the requirements of IRC 409A.
Notwithstanding any provision existing in this Agreement or any amendment thereto, it is the intent of the Bank and the Executive that any payment or benefit provided pursuant to this Agreement shall be made and paid in a manner, at a time and in a form which complies with the applicable requirements of IRC Section 409A, in order to avoid any unfavorable tax consequences resulting from any such failure to comply. Furthermore, for the purposes of this Agreement, IRC Section 409A shall be read to include any related or relevant IRS Notices (including but not limited to Notice 2006-79) and the regulations thereunder.
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2.0
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Payments Upon Retirement.
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2.1
Payments Upon Normal Retirement
.
In the event the Executive elects to retire on a date which constitutes Normal Retirement as defined in Paragraph 11.10 below, then the Executive shall be entitled to be paid an annual Executive Benefit equal to Fifty-Three Thousand, Three Hundred and Twenty Dollars. This annual amount shall be paid in twelve (12) substantially equal monthly installments, with payments commencing on the first day of the first month following the Executive’s Separation from Service and continuing until the Executive’s death, subject to the provisions of Section 1.3 above.
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3.0
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Payments in the Event of Disability or Death
.
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3.1
Disability
.
In the event the Executive becomes Disabled at any time after the Effective Date of this Agreement but prior to or Normal Retirement, then the Executive shall be entitled to be paid the Accrued Liability Balance in lump sum on the first day of the first month following the determination of Disability.
3.2
Death.
There are no death benefits payable under this Agreement (such benefits are described by a Joint Beneficiary Designation Agreement, if any), nor will Executive Benefit Payments be made after the Executive dies, regardless of whether such death occurs before or after termination, and regardless of whether payments have already begun pursuant to this Agreement.
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4.0
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Payments in the Event Executive Terminates Employment Prior to Retirement, or as Otherwise Described
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The Employer reserves the right to terminate the Executive's Employment, with or without Cause but subject to any written employment agreement which may then exist, at any time prior to the Executive's Retirement. In the event that the Executive’s Employment terminates, other than by reason of Retirement or Disability, then, for the following events of termination, as applicable, the Executive shall be entitled to the benefits described below which correspond to the circumstances surrounding the Executive's termination.
4.1
Involuntary Termination
.
In the event the Executive is Involuntarily Terminated prior to qualifying for Normal Retirement, then she shall be entitled to receive the Accrued Liability Balance. In the event such termination occurs prior to the Executive’s attainment of the Normal Retirement Age, then the Accrued Liability Balance shall be paid out in lump sum within sixty (60) days of the Executive’s Termination (subject to the conditions imposed by Paragraph 11.3 & IRC 409A). An Involuntary Termination after the Executive attains the Normal Retirement Age shall be governed by the provisions of Paragraph 2.1 (and again, the limitations imposed by IRC 409A).
4.2
Termination on Account of or After a Change in Control.
In the event the Executive's Employment with the Employer is terminated by the Employer on Account of or After a Change in Control, or in the event the Executive is Constructively Terminated, then the Executive shall be entitled to be paid the same annual benefit amount she would have received had she retired following the attainment of Normal Retirement Age (as identified in Paragraph 2.1).
4.3
Voluntary Termination by the Executive
.
The Executive agrees that if she Voluntarily Terminates her Employment with the Employer (as defined in Paragraph 11.15) prior to qualifying Normal Retirement, she shall forfeit any and all rights and benefits she may have under the terms of this Agreement and shall have no right to be paid any of the amounts which would otherwise be due or paid to the Executive by the Employer pursuant to the terms of this Agreement.
5.0
IRS Section 280G Issues
.
If all or any portion of the amounts payable to the Executive under this Agreement, either alone or together with other payments which the Executive has the right to receive from the Employer, constitute "excess parachute payments" within the meaning of Section 280G of the Internal Revenue Code of 1986, as amended (the "Code"), that are subject to the excise tax imposed by Section 4999 of the Code (or similar tax and/or assessment), Executive shall be responsible for the payment of such excise tax and Employer (and its successor) shall be responsible for any loss of deductibility related thereto.
6.0
Right to Determine Funding Methods
.
The Employer reserves the right to determine, in its sole and absolute discretion, whether, to what extent and by what method, if any, to provide for the payment of the amounts which may be payable to the Executive, under the terms of this Agreement. In the event that the Employer elects to fund this Agreement, in whole or in part, through the use of life insurance or annuities, or both, the Employer shall determine the ownership and beneficial interests of any such policy of life insurance or annuity. The Employer further reserves the right, in its sole and absolute discretion, to terminate any such policy, and any other device used to fund its obligations under this Agreement, at any time, in whole or in part. Consistent with Paragraph 9 below, the Executive shall have no right, title or interest in or to any funding source or amount utilized by the Employer pursuant to this Agreement, and any such funding source or amount shall not constitute security for the performance of the Employer’s obligations pursuant to this Agreement. In connection with the foregoing, the Executive agrees to execute such documents and undergo such medical examinations or tests which the Employer may request and which may be reasonably necessary to facilitate any funding for this Agreement including, without limitation, the Employer’s acquisition of any policy of insurance or annuity.
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7.0
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Administrative and Claims Provision
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7.1
Named Fiduciary and Plan Administrator
:
The “Named Fiduciary and Plan Administrator” of this Executive Plan shall be the Board of Directors of Sound Community Bank, or a committee designated by the Board of Directors, until their resignation or removal by the Board. As Named Fiduciary and Plan Administrator, the Bank shall be responsible for the management, control and administration of the Executive Plan. The Named Fiduciary may delegate to others certain aspects of the management and operation responsibilities of the Executive Plan including the employment of advisors and the delegation of ministerial duties to qualified individuals
7.2
Claims Procedure and Arbitration:
In the event a dispute arises over benefits under this Executive Plan and benefits are not paid to the Executive (or to the Executive’s beneficiary(ies) in the case of the Executive’s death) and such claimants feel they are entitled to receive such benefits, then a written claim must be made to the Named Fiduciary and Plan Administrator named above within sixty (60) days from the date payments are refused. The Named Fiduciary and Plan Administrator shall review the written claim and if the claim is denied, in whole or in part, they shall provide in writing within sixty (60) days of receipt of such claim the specific reasons for such denial, reference to the provisions of this Executive Plan upon which the denial is based and any additional material or information necessary to perfect the claim. Such written notice shall further indicate the additional steps to be taken by claimants if a further review of the claim denial is desired. A claim shall be deemed denied if the Named Fiduciary and Plan
Administrator fail to take any action within the aforesaid sixty-day period
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If claimants desire a second review they shall notify the Named Fiduciary and Plan Administrator in writing within sixty (60) days of the first claim denial. Claimants may review this Executive Plan or any documents relating thereto and submit any written issues and comments they may feel appropriate. In their sole discretion, the Named Fiduciary and Plan Administrator shall then review the second claim and provide a written decision within sixty (60) days of receipt of such claim. This decision shall likewise state the specific reasons for the decision and shall include reference to specific provisions of the Plan Agreement upon which the decision is based.
If claimants continue to dispute the benefit denial based upon completed performance of this Executive Plan or the meaning and effect of the terms and conditions thereof, then claimants may submit the dispute to an arbitrator for final arbitration. The arbitrator shall be selected by mutual agreement of the Bank and the claimants. The arbitrator shall operate under any generally recognized set of arbitration rules. The parties hereto agree that they and their heirs, personal representatives, successors and assigns shall be bound by the decision of such arbitrator with respect to any controversy properly submitted to it for determination.
8.0
Status as an Unsecured General Creditor and Rabbi Trust
.
Notwithstanding anything contained herein to the contrary: (i) the Executive shall have no legal or equitable rights, interests or claims in or to any specific property or assets of the Employer as a result of this Agreement; (ii) none of the Employer’s assets shall be held in or under any trust for the benefit of the Executive or held in any way as security for the fulfillment of the obligations of the Employer under this Agreement; (iii) all of the Employer’s assets shall be and remain the general unpledged and unrestricted assets of the Employer; (iv) the Employer’s obligation under this Agreement shall be that of an unfunded and unsecured promise by the Employer to pay money in the future; and (v) the Executive shall be an unsecured general creditor with respect to any benefits which may be payable under the terms of this Agreement.
Notwithstanding subparagraphs (i) through (v) above, the Employer and the Executive acknowledge and agree that, in the event of a Change in Control, upon request of the Executive, or in the Employer’s discretion if the Executive does not so request and the Employer nonetheless deems it appropriate, the Employer shall establish, not later than the effective date of the Change in Control, a Rabbi Trust or multiple Rabbi Trusts (the "Trust" or "Trusts") upon such terms and conditions as the Employer, in its sole discretion, deems appropriate and in compliance with applicable provisions of the Code, in order to permit the Employer to make contributions and/or transfer assets to the Trust or Trusts to discharge its obligations pursuant to this Agreement. The principal of the Trust or Trusts and any earnings thereon shall be held separate and apart from other funds of the Employer to be used exclusively for discharge of the Employer’s obligations pursuant to this Agreement and shall continue to be subject to the claims of the Employer’s general creditors until paid to the Executive in such manner and at such times as specified in this Agreement.
9.1
Opportunity to Consult With Independent Advisors
.
The Executive acknowledges that she has been afforded the opportunity to consult with independent advisors of her choosing including, without limitation, accountants or tax advisors and counsel regarding both the benefits granted to her under the terms of this Agreement and the (i) terms and conditions which may affect the Executive's right to these benefits and (ii) personal tax effects of such benefits including, without limitation, the effects of any federal or state taxes, Section 280G of the Code, and any other taxes, costs, expenses or liabilities whatsoever related to such benefits, which in any of the foregoing instances the Executive acknowledges and agrees shall be the sole responsibility of the Executive notwithstanding any other term or provision of this Agreement. The Executive further acknowledges and agrees that the Employer shall have no liability whatsoever related to any such personal tax effects or other personal costs, expenses, or liabilities applicable to the Executive and further specifically waives any right for herself, and her heirs, beneficiaries, legal representatives, agents, successor and assign to claim or assert liability on the part of the Employer related to the matters described above in this Paragraph 9.1. The Executive further acknowledges that she has read, understands and consents to all of the terms and conditions of this Agreement, and that she enters into this Agreement with a full understanding of its terms and conditions.
9.2
Notice
.
Any notice required or permitted of either the Executive or the Employer under this Agreement shall be deemed to have been duly given, if by personal delivery, upon the date received by the party or its authorized representative; if by facsimile, upon transmission to a telephone number previously provided by the party to whom the facsimile is transmitted as reflected in the records of the party transmitting the facsimile and upon reasonable confirmation of such transmission; and if by mail, on the third day after mailing via U.S. first class mail, registered or certified, postage prepaid and return receipt requested, and addressed to the party at the address given below for the receipt of notices, or such changed address as may be requested in writing by a party.
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If to the Employer:
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Sound Community Bank
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2005 Fifth Ave #200
Seattle, WA 98121
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If to the Executive:
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Laura Lee Stewart
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737 Olive Way #1802
Seattle, WA 98101
9.3
Alienability and Assignment Prohibition
.
Neither the Executive, nor the Executive’s surviving spouse, nor any other beneficiary(ies) under this Executive Plan shall have any power or right to transfer, assign, anticipate, hypothecate, mortgage, commute, modify or otherwise encumber in advance any of the benefits payable hereunder, nor, prior to payment in accordance with the terms of this Agreement, shall any portion of such amounts be: (i) subject to seizure by any creditor of the Executive, by a proceeding at law or in equity, for the payment of any debts, judgments, alimony or separate maintenance obligations which may be owed by the Executive or her beneficiary(ies); or (ii) transferable by operation of law in the event of bankruptcy, insolvency or otherwise. In the event the Executive or any beneficiary attempts assignment, commutation, hypothecation, transfer or disposal of the benefits hereunder, any such attempted assignment or transfer shall be void.
9.4
Binding Effect/Merger or Reorganization
.
This Agreement shall be binding upon and inure to the benefit of the Executive and the Employer. Accordingly, the Employer shall not merge or consolidate into or with another bank or corporation, or reorganize or sell substantially all of its assets to another bank, corporation, firm or person, unless and until such succeeding or continuing bank, corporation, firm or person expressly agrees, in writing, to assume and discharge the duties and obligations of the Employer under this Agreement. This Agreement shall be binding upon the parties hereto, their successors, beneficiaries, heirs and personal representatives.
9.5
Nonwaiver
.
The failure of either party to enforce at any time or for any period of time any one or more of the terms or conditions of this Agreement shall not be a waiver of such term(s) or condition(s) or of that party's right thereafter to enforce each and every term and condition of this Agreement.
9.6
Partial Invalidity
.
If any terms, provision, covenant, or condition of this Agreement is determined by an arbitrator or a court, as the case may be, to be invalid, void, or unenforceable, such determination shall not render any other term, provision, covenant or condition invalid, void or unenforceable, and the Agreement shall remain in full force and effect notwithstanding such partial invalidity.
9.7
Entire Agreement
.
This Agreement supersedes any and all other agreements, either oral or in writing, between the parties with respect to the subject matter of this Agreement and contains all of the covenants and agreements between the parties with respect thereto. Each party to this Agreement acknowledges that no other representations, inducements, promises, or agreements, oral or otherwise, have been made by any party, or anyone acting on behalf of any party, which are not set forth herein, and that no other agreement, statement, or promise not contained in this Agreement shall be valid or binding on either party.
9.8
Amendment or Revocation
.
Subject to Paragraph 10.0, it is agreed by and between the parties hereto that, during the lifetime of the Executive, this Agreement may be amended or revoked at any time or times, in whole or in part, by the mutual written consent of the Executive and the Bank. Furthermore, the parties reserve the right to amend this Agreement as necessary in order to comply with IRC Section 409A. Furthermore, this Agreement shall be administered in compliance with IRC Section 409A and the related rules, regulations and notices. Any section of this Agreement which violates the IRC Section 409A and the related rules, regulations and notices shall be void and without effect.
9.9
Paragraph Headings
.
The paragraph headings used in this Agreement are included solely for the convenience of the parties and shall not affect or be used in connection with the interpretation of this Agreement.
9.10
No Strict Construction
.
The language used in this Agreement shall be deemed to be the language chosen by the parties hereto to express their mutual intent, and no rule of strict construction will be applied against any person.
9.11
Governing Law
.
The laws of the State of Washington, other than those laws denominated choice of law rules, and where applicable, the rules and regulations of the Board of Governors of the Federal Reserve System, Federal Deposit Insurance Corporation, the Washington Department of Financial Institutions, or any other regulatory agency or governmental authority having jurisdiction over the Employer, shall govern the validity, interpretation, construction and effect of this Agreement.
10.0
Termination or Modification of Agreement by Reason of Changes in the Law, Rules or Regulations.
The Bank is entering into this Agreement upon the assumption that certain existing tax laws, the Code, rules and regulations will continue in effect in their current form. If any said assumptions should change and said change has a detrimental effect on this Executive plan, then the Bank reserves the right to terminate or modify this Agreement accordingly.
11.0
Terms and Definitions
.
11.1
Accrued Liability Balance
. For the purposes of this Agreement, Accrued Liability Balance means the liability that should be accrued by the Company, under Generally Accepted Accounting Principles (”GAAP”), for the Company’s obligation to the Executive under this Agreement, by applying Accounting Principles Board Opinion Number 12 (“APB 12”) as amended by Statement of Financial Accounting Standards Number 106 (“FAS 106”) and the Discount Rate. Any one of a variety of amortization methods may be used to determine the Accrual Balance. However, once chosen, the method must be consistently applied.
11.2
Board of Directors.
The Board of Directors shall mean the Board of Directors for Sound Community Bank, hereinafter “the Board”.
11.3
Change in Control.
Change in Control shall be defined as follows:
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(A)
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The acquisition of more than fifty percent (50%) of the fair market value of the Company’s common or more than fifty percent (50%) of the voting power of the Company’s common stock by a person or group;
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(B)
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The acquisition in a period of twelve (12) months or less of at least thirty-five percent (35%) of the Company’s common stock (voting power of the stock) by a person or group;
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(C)
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The replacement of a majority of the Company’s board in a period of twelve (12) months or less by directors who were not endorsed by a majority of the board members serving immediately prior to such replacement; or
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(D)
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The acquisition in a period of twelve (12) months or less of forty percent (40%) or more of the total gross fair market value of the Company’s assets (immediately prior to the acquisition) by an unrelated entity.
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For the purpose of this Agreement, transfers made on account of deaths or gifts, transfers between family members or transfers to a qualified retirement plan maintained by the Bank shall not be considered in determining whether there has been a Change in Control.
11.4
Company
. Company shall mean Sound Financial Bancorp, Inc., the parent holding company of the Bank.
11.5
Disability/Disabled
.
For the purpose of this Agreement, the Executive will be considered disabled if:
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(A)
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She is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than twelve (12) months, or
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(B)
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She is, by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than twelve (12) months, receiving income replacement benefits for a period of not less than three (3) months under an accident and health plan covering employees of the Employer.
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11.6
Effective Date
.
The term "Effective Date" shall mean August 14, 2007, the date the Prior Agreement was initially adopted.
11.7
Employment
.
The term “Employment” shall mean salaried employment with the Employer.
11.8
Executive Benefit
.
The term "Executive Benefit” shall mean the annual benefit amounts determined pursuant to Paragraphs 1 through 5 (including sub-paragraphs, as applicable), forfeited, reduced or adjusted to the extent: (a) required under the other provisions of this Agreement, including, but not limited to Paragraphs 3 through 5, as applicable; (b) required by reason of the lawful order of any regulatory agency or body having jurisdiction over the Employer; or (c) required in order for the Employer to comply with any and all applicable state and federal laws, including, but not limited to, income, employment and disability income tax laws (
e.g.
, FICA, FUTA, SDI).
In addition, it is the intent of the parties to comply with all applicable Internal Revenue Code Sections, including, but not limited to, IRC 409A.
11.9
Involuntary Termination.
For the purposes of this Agreement, Involuntary Termination shall be defined as any termination or removal of the Executive by the Bank, which termination or removal is not For Cause, not as a Result of a Change in Control, and not as a result of Disability.
11.10
Normal Retirement
.
The term “Normal Retirement” shall mean the Executive’s separation from service or Termination following the Executive’s attainment of age sixty-six (66) (“Normal Retirement Age”).
11.11
Termination for Cause
.
The term “Termination for Cause” shall mean termination or removal of the Executive by reason of any of the following: (i) gross negligence or neglect, (ii) the commission of a felony or misdemeanor involving moral turpitude, fraud or dishonesty; or (iii) the willful violation of any law, rule or regulation (other than a traffic violation or similar offense)which results in adverse consequences for the bank, (iv) failure to perform stated duties such that the failure adversely impacts the bank or (v) a breach of fiduciary duty involving personal profit. If a dispute arises as to discharge “for Cause”, such dispute shall be resolved by arbitration as set forth in this Executive Plan Agreement.
11.12
Termination of Employment.
The term “Termination of Employment”, as used in this Agreement, shall be read and interpreted consistent with the term “separation from service”, as such term is defined in Internal Revenue Code Section 409A (hereinafter “IRC 409A”) and any related notices, guidance or regulations. Therefore, in order for the Executive to trigger the receipt of a benefit pursuant to this Agreement under the terms governing payments following termination of employment (including Retirement), the Executive must also have “Separated from Service” in accordance with the provisions of IRC 409A.
11.13
Termination in Connection with or After a Change in Control.
A termination shall be deemed to be in Connection with a Change in Control if the Executive is removed or terminated within twenty-four (24) months following a Change in Control and such termination is not a Termination for Cause, or if the Executive is “Constructively Terminated” following a Change in Control. For the purposes of this Agreement, the terms “Constructively Terminated” or “Constructive Termination” are defined as a voluntary election to resign or a forced resignation resulting from (i) Employer actions, in conjunction with, or by reason of a Change in Control, which actions result in any adverse and material change in the scope of the Employee's position, responsibilities, duties, salary, benefits or location of employment; or (ii) any event caused by the Employer which reasonably constitutes or results in a demotion or a significant diminution of Executive’s responsibilities or authority.
11.14
The Code
.
The "Code" shall mean the Internal Revenue Code of 1986, as amended (the “Code").
11.15
Voluntary Termination
. The term “Voluntary Termination” shall mean voluntary resignation of employment by the Executive prior to Normal Retirement Age, but not as a result of any of the events described in sub-paragraphs 11.3 and 11.13 that constitute Termination in Connection With a Change in Control or Constructive Termination.
IN WITNESS WHEREOF, the Employer and the Executive have executed this Agreement on the date first written above in the City of Seattle, Washington.
SOUND COMMUNITY BANK
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By
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Date: November 23, 2015
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Title
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EXECUTIVE
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By
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Date: November 23, 2015
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Witness
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Witness
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Exhibit 10.3
AMENDED AND RESTATED CONFIDENTIALITY, NON-COMPETITION, AND
NON-SOLICITATION AGREEMENT
This Amended and Restated Confidentiality, Non-Competition, and Non-Solicitation Agreement (“Agreement”) is made and entered into this 23rd day of November 2015 by and between Sound Community Bank, a Washington corporation (the “Company”), and Laura Lee Stewart (the “Employee”). This Agreement amends and restates the Confidentiality, Non-Competition, and Non-Solicitation Agreement between the Company and the Executive as originally adopted effective December 30, 2011 (the “Prior Agreement”).
WHEREAS
the Employee is a key member of the management of the Company and has provided guidance, leadership, and direction in the growth, management, and development of the Company and has learned trade secrets, confidential procedures and information, and sensitive business plans of the Company;
WHEREAS
the Company desires to continue to employ the Employee, and the Employee desires to continue employment with the Company;
WHEREAS
the Company desires to restrict, after the Employee’s Separation from Service with the Company, the Employee’s availability to other companies or entities that compete with the Company;
WHEREAS
the Employee agrees to undertake such post-employment restrictions in exchange for the severance payments described herein;
NOW THEREFORE,
in consideration of these premises, the mutual promises and undertakings set forth in this Agreement, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Employee and the Company hereby agree as follows.
1.
DEFINITIONS.
As used in this Agreement, certain terms shall have the following meanings:
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a.
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Affiliate shall mean the Company and any entity that directly, or indirectly through one or more intermediaries, controls, is controlled by, or is under common control with the Company.
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b.
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Cause shall mean and be limited to: (i) willful and gross neglect of duties by the Employee, (ii) an act or acts committed by the Employee constituting a felony and substantially detrimental to the Company or its reputation, (iii) any action or inaction detrimental to the Company or its reputation that results in regulatory enforcement action, whether or not such enforcement action is subject to direct enforcement under 12 U.S.C § 1818(i)(l), by any regulatory authorities having authority over the Company, (iv) any regulatory or other finding, action, or directive requiring Employee’s termination of employment pursuant to any applicable statue, rule, or regulation; and/or (v) any violation of Employee’s obligations under this Agreement, including, without limitation, the obligations set forth in paragraphs 3, 4, 6 and 7.
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c.
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Change in Control shall mean a change in the ownership or effective control of the Company, or in the ownership of a substantial portion of the assets of the Company, as such change is defined under the default definition in Treasury Regulation §1.409A-3(i)(5) or any subsequently applicable Treasury Regulation.
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d.
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Code shall mean the Internal Revenue Code of 1986, as amended, or any successor statute, rule or regulation of similar effect.
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e.
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Customer shall mean any individual, joint venturer, entity of any sort, or other business partner of the Company or its Affiliates with, for, or to whom the Company or its Affiliates have provided financial products or services during the final two years of the Employee’s employment with the Company, or any individual, joint venturer, entity of any sort, or business partner whom the Company or the Bank has identified as a prospective customer of financial products or services within the final year of the Employee’s employment with the Company or the Bank.
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f.
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Disability or Disabled means the Employee: (i) is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than 12 months or (ii) by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, is receiving income replacement benefits for a period of not less than three (3) months under a disability plan covering employees of the Company.
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g.
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Financial products or services shall mean any product or service that a financial institution or a financial holding company could offer by engaging in any activity that is financial in nature or incidental to such a financial activity under Section 4(k) of the Bank Holding Company Act of 1956 and that is offered by the Company or an Affiliate on the date of the Employee’s Separation from Service, including but not limited to banking activities and activities that are closely related and a proper incident to banking, or other products or services of the type in which the Employee was involved during the Employee’s employment with the Company.
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h.
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Good Reason shall mean and be limited to: (i) without the Employee’s express written consent, a material diminution in authority, duties or responsibilities, except as required by any regulatory or other finding, action, or directive pursuant to any applicable statute, rule, or regulation; (ii) any material reduction by the Company in the Employee’s Base Salary; (iii) any failure of the Company to obtain the assumption of, or the agreement to perform, this Agreement by any successor as contemplated in paragraph 15 hereof; (iv) the Company’s material breach of this Agreement; or (v) the Company requiring the Employee to be permanently assigned to a location more than 35 miles from Employee’s current work location, except for required travel on Company business, or, in the event the Employee consents to any relocation, and such relocation is more than 35 miles from the Employee’s previous location, the failure by the Company to pay (or reimburse the Employee) for all reasonable moving expenses incurred by the Employee relating to a change of the Employee’s principal residence in connection with such relocation and to indemnify the Employee against any loss realized on the sale of the Employee’s principal residence in connection with any such change of residence. Good Reason shall be deemed to occur only when Employee provides written notice to the Company of Employee’s judgment that a Good Reason event has occurred within 90 days of such occurrence, and the Company will have at least 30 days during which it may remedy the condition.
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i.
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Specified Employee means an employee who at the time of termination of employment is a key employee of the Company, if any stock of Sound Financial is publicly traded on an established securities market or otherwise. For purposes of this Agreement, an employee is a key employee if the employee meets the requirements of Code Section 416(i)(1)(A)(i), (ii), or (iii) (applied in accordance with the regulations thereunder and disregarding section 416(i)(5)) at any time during the 12-month period ending on December 31 (the “identification period”). If the employee is a key employee during an identification period, the employee is treated as a key employee for purposes of this Agreement during the twelve (12) month period that begins on the first day of January following the close of the identification period.
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j.
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Sound Financial shall mean Sound Financial Bancorp, Inc., the parent holding company of the Company.
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k.
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Voluntary Termination shall mean the termination by Employee of Employee’s employment, which is not the result of Good Reason.
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l.
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By way of clarification, when used in this Agreement, the terms "Separation from Service," "separation from service," "termination of employment," "terminates employment" and similar phrases in each case shall mean a "Separation from Service" as defined in Treasury Regulation §1.409 A-l(h), taking into account all of the accounts and circumstances, special rules and presumptions set forth in such regulation
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2.
TERM.
The term of this Agreement shall commence upon the date the Employee has a Separation from Service and shall continue until the earlier of (a) 36 months following the date of such Separation from Service or (b) the date the Employee commences receiving retirement benefits under the Amended and Restated Supplemental Executive Retirement Plan Agreement between the Bank and the Employee originally adopted December 30, 2011 and most recently amended and restated as of November 23, 2015 (the “2011 SERP”), with such term referred to herein as the “Restricted Period.”
3.
NON-DISCLOSURE OF CONFIDENTIAL INFORMATION.
Except as permitted in writing by the Company, the Employee shall not at any time divulge, furnish or make accessible to anyone, or use in any way other than in the ordinary course of the business of the Company or its Affiliates, any confidential, proprietary, or secret knowledge or information of the Company or its Affiliates that the Employee has acquired or will acquire about the Company or its Affiliates, whether developed by himself or herself or by others, concerning (i) any trade secrets; (ii) any confidential, proprietary, or secret designs, programs, processes, formulae, plans, devices, or material (whether or not patented or patentable) directly or indirectly useful in any aspect of the business of the Company or of its Affiliates; (iii) any customer or supplier lists; (iv) any confidential, proprietary, or secret development or research work; (v) any strategic or other business, marketing, or sales plans; (vi) any financial data or plans; or (viii) any other confidential, proprietary, or secret information about any aspect of the business of the Company or of its Affiliates (collectively “Confidential Information”). The Employee acknowledges that the knowledge and information described above constitutes a unique and valuable asset of the Company and represents a substantial investment of time and expense by the Company and that any disclosure or other use of such knowledge or information other than for the sole benefit of the Company or its Affiliates would be wrongful and would cause irreparable harm to the Company. The Employee shall not intentionally commit any act that would materially reduce the value of such knowledge or information to the Company or its Affiliates. The Employee's obligations under this Agreement to maintain the confidentiality of the Company's confidential, proprietary, and secret information are in addition to any obligations of the Employee under applicable statutory or common law . The obligations of the Employee under this paragraph 3 shall survive the termination of this Agreement and the termination of the Employee’s employment with the Company.
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a.
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Exceptions.
The foregoing obligations of confidentiality shall not apply to any knowledge or information that: (i) is now or subsequently becomes generally publicly known, other than as a direct or indirect result of the breach of this Agreement; (ii) is independently made available to the Employee in good faith by a third party who has not violated a confidential relationship with the Company or its Affiliates or any other entity; or (iii) is required to be disclosed by law or legal process.
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4.
NON-COMPETITION AND NON-SOLICITATION.
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a.
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Non-Competition Obligations.
For and in consideration of the monthly payments described in paragraph 5, the Employee shall not, during the Restricted Period, either separately, jointly, or in association with others, directly or indirectly, as an agent, employee, owner, partner, stockholder, or otherwise, compete with the Company or any of its Affiliates, or establish, engage in, or become interested in any business, trade, or occupation that competes with the Company or any of its Affiliates, in the financial products or services industry. The Company and the Employee acknowledge that, during the term of the Employee’s employment, the Employee has acquired special and confidential knowledge regarding the operations of the Company and its Affiliates. Furthermore, although not a term or condition of this Agreement, the Company and the Employee acknowledge that the Employee’s services have been used and are being used by the Company in executive, managerial, and supervisory capacities throughout the areas in which the Company and its Affiliates conduct business. Employee acknowledges that the non-compete restrictions contained herein are reasonable and fair in scope and necessary to protect the legitimate business interests of the Company.
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b.
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Non-Solicitation Obligations.
For and in consideration of the monthly payments described in paragraph 5, the Employee shall not, during the Restricted Period: (a) directly or indirectly solicit or attempt to solicit any customer of the Company or any of its Affiliates to accept or purchase financial products or services of the same nature, kind or variety currently being provided to the customer by the Company or any of its Affiliates, or being provided to the customer by the Company or any of its Affiliates when the Employee’s Separation from Service occurs; (b) directly or indirectly influence or attempt to influence any customer, joint venturer, or other business partner of the Company or any of its Affiliates to alter that person or entity’s business relationship with the Company or any of its Affiliates in any way; and/or (c) accept the financial products or services business of any customer or provide financial products or services to any customer on behalf of anyone other than the Company or its Affiliates. In addition, the Employee shall not solicit or attempt to solicit and shall not encourage or induce in any way any employee, joint venturer, or business partner of the Company or any of its Affiliates to terminate an employment or contractual relationship with the Company or any of its Affiliates, and shall not hire any person employed by Company or any of its Affiliates during the two (2)-year period immediately before the Employee’s employment termination or any person employed by the Company or any of its Affiliates during the term of this covenant.
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c.
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Duration; no impact on existing obligations under law or contract.
The covenants in this paragraph 4 shall apply throughout the Restricted Period. The Restricted Period referenced herein shall be tolled and shall not run during any period of time the Employee is in breach of this Agreement and/or in violation of any of the covenants contained herein, and once tolled hereunder shall not begin to run again until such time as all such breach and/or violations have ceased. The Employees acknowledges and agrees that nothing in this Agreement is intended to or shall have any impact on the Employee’s obligations as an officer or employee of the Company to refrain from competing against the Company or any of its Affiliates, soliciting customers, officers, or employees of the Company or any of its Affiliates, or disclosing confidential information of the Company or any of its Affiliates while the Employee is serving as an officer or employee of the Company or thereafter, whether the Employee’s obligations arise under applicable statutory or common law, under an employment agreement, or otherwise.
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d.
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Forfeiture of payments under this Agreement.
If the Employee breaches any of the covenants in this paragraph 4, the Employee’s right to any of the payments specified in paragraph 5 after the date of the breach shall be forever forfeited and the right of the Employee’s designated beneficiary or estate to any payments under this Agreement shall likewise be forever forfeited. This forfeiture is in addition to and not instead of any injunctive or other relief that may be available to the Company. The Employee further acknowledges and agrees that any breach of any of the covenants in paragraphs 3, 4, and 7 shall be deemed a material breach by the Employee of this Agreement.
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5.
NON-COMPETITION AND NON-SOLICITATION PAYMENTS
.
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a.
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Payments.
In consideration of the Employee’s non-competition and non-solicitation obligations, as described in paragraph 4, the Company shall pay to the Employee:
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(i)
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Upon the termination of Employee’s employment by the Company for Cause or upon a Voluntary Termination of Employment by the Employee, except for a Termination for Good Reason, a bi-monthly payment, in an amount equal to $3,541.67, which amount shall be paid in equal bi-monthly payments during the Restricted Period beginning on the fifth day of the month following the Employee’s Separation from Service; or
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(ii)
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Except as set forth in paragraph 5(c) below, upon the Employee’s Separation from Service for any reason other than those set forth in subparagraph (a)(i) above, an amount equal to the aggregate of
1.5
times the annual rate of base salary then being paid to the employee,
plus the average of the past three years short term bonus pay,
which amount shall be paid in
12
equal monthly payments beginning on the first day of the month following the Employee’s Separation from Service.
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(iii)
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Notwithstanding (i) and (ii) above, in the event the Employee has an involuntary Separation from Service including Good Reason that occurs within 24 months immediately following a Change in Control, the Employee shall receive an amount equal to the amount determined in (ii) above to be paid in a lump sum.
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b.
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Potential six-month delay under section 409A.
If, when Separation from Service occurs, the Employee is a specified employee within the meaning of Section 409A of the Code, and if the non-competition payments under this paragraph 5 would be considered deferred compensation under Section 409A of the Code, and finally if an exemption from the six-month delay requirement of Section 409A(a)(2)(B)(i) of the Code is not available, the Employee’s non-competition payments for the first six months following Separation from Service shall be paid to the Employee in a single lump sum on the first day of the seventh month after the month in which the Employee’s Separation from Service occurs.
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c.
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Death and Disability.
Notwithstanding anything herein to the contrary, no amounts are payable under this Agreement in the event of the Employee’s Separation from Service as a result of death or Disability. Further, all payments under this Agreement shall cease upon the Employee’s death.
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d.
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Employee’s Ineligibility to Work in Financial Products or Services Industry.
Notwithstanding anything herein to the contrary, no amounts are payable under this Agreement in the event of a regulatory or other finding, action, or directive resulting in the Employee’s ineligibility to work in the financial products or services industry (as defined in paragraph 1(g) above) pursuant to any applicable statute, rule, or regulation.
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6.
CONSULTING AND ADVISORY SERVICES.
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a.
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Services to be Provided by the Employee
. Upon her Separation from Service with the Company and continuing for the Restricted Period, the Employee shall provide consulting and advisory services to the Company and any of its affiliates with regard to the following matters:
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A.
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Shareholder and investor relations;
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B.
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Legislative and regulatory developments impacting the Company;
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C.
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The market area and customers served by the Company;
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D.
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The business of financial institutions and their affiliates generally;
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E.
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Such other matters as may be requested by the President of the
Company from time to time.
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b.
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Time Commitment, Status and Responsibilities the Employee
. The Employee shall make herself available to provide the above consulting services, at the request of the Company, for a maximum of 30 hours per month. Such services shall be provided by the Employee at places and times as the Company and the Employee shall agree. The Employee shall have the status of independent contractor and nothing in this Agreement shall: (i) be construed or interpreted as creating a relationship of employer and employee or principal and agent between the Employee and the Company; (ii) give either party the power to direct and control the day-to-day activities of the other; (iii) constitute the parties as partners, joint venturers or otherwise; or (iv) allow the Employee to create or assume any obligation on behalf of the Company for any purpose whatsoever. The Employee will not be entitled to any employee benefits as a result of this Agreement or the Prior Agreement. The Employee shall be responsible for paying all income taxes and other taxes owed by the Employee on amounts paid to the Employee pursuant to the Prior Agreement. The Employee shall be responsible for keeping third persons appropriately informed of her inability to act in any way on behalf of the Company. During the Restricted Period, the Employee shall adhere to the Code of Business Conduct and Ethics of the Company.
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c.
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Title
. The Company and the Employee shall agree to an appropriate title for the Employee during the Restricted Period.
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d.
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Responsibilities of the Company
. During the Restricted Period, the Company shall provide the Employee, on the premises of the Company, with an office, computer, telephone and appropriate supplies and secretarial assistance necessary or appropriate for the Employee to perform the consulting services enumerated above. The Company shall provide the Employee with an email address utilizing the domain name of the Company.
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e.
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Compensation
. The Employee shall not receive any additional compensation beyond that provided for in the Agreement for performing the consulting services enumerated in this Agreement, it being expressly agreed that her use of office space, a computer, telephone, supplies and secretarial assistance shall constitute adequate consideration for her services hereunder.
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7
.
RETURN OF RECORDS AND PROPERTY.
Upon the Employee's Separation from Service for any reason, or at any time upon the Company's request, the Employee shall promptly deliver to the Company all Company and Affiliate records and all Company and Affiliate property in the Employee’s possession or the Employee’s control, including without limitation manuals, books, blank forms, documents, letters, memoranda, notes, notebooks, reports, printouts, computer disks, computer tapes, source codes, data, tables or calculations, and all copies thereof; documents that in whole or in part contain any Confidential Information of the Company or its Affiliates and all copies thereof; and keys, access cards, access codes, passwords, credit cards, personal or laptop computers, telephones, PDAs, smart phones, and other electronic equipment belonging to the Company or an Affiliate.
8.
REMEDIES.
Employee agrees that if Employee fails to fulfill Employee’s obligations under this Agreement, including, without limitation, the Non-Competition and Non-Solicitation obligations set forth in paragraph 4, the damages to the Company or any of its Affiliates would be very difficult or impossible to determine. Therefore, in addition to any other rights or remedies available to the Company at law, in equity or by statute, Employee hereby consents to the specific enforcement by the Company of this Agreement through an injunction or restraining order issued by an appropriate court, without the necessity of proving actual damages, and Employee hereby waives as a defense to any equitable action the allegation that the Company has an adequate remedy at law. The provisions of this paragraph shall not diminish the right of the Company to claim and recover damages or to obtain any equitable remedy in addition to injunctive relief to which the Company may otherwise be entitled. The Employee understands and agrees that the Employee will also be responsible for all costs and attorney’s fees incurred by the Company in enforcing any of the provisions of this Agreement including, but not limited to, expert witness fees and deposition costs.
9.
SEVERABILITY.
If, for any reason, any paragraph or portion of this Agreement shall be held by a court to be invalid or unenforceable, it is agreed that such holding shall not affect any other section or portion of this Agreement. If the final judgment of a court of competent jurisdiction declares that any term or provision of this Agreement is invalid or unenforceable, the parties agree that the court making the determination of invalidity or unenforceability shall have the power to reduce the scope, duration or area of the term or provision, to delete specific words or phrases, or to replace any invalid or unenforceable term or provision with a term or provision that is valid and enforceable and that comes closest to expressing the intention of the invalid or unenforceable term or provision, and this Agreement shall be enforceable as so modified after the expiration of the time within which the judgment may be appealed.
10.
ENTIRE AGREEMENT.
This Agreement constitutes the entire agreement between Company and the Employee concerning the subject matter of confidentiality, non-competition and non-solicitation and supersedes all prior agreements between the parties with respect to the subject matter hereof, including, without limitation, the Management/Employment Agreement, executed
February 27, 2007
and amended
August 27, 2007,
and the Prior Agreement. For clarification purposes, nothing contained herein shall supersede the 2011 SERP or the Amended and restated Executive Long Term Compensation Agreement between the Company and the Employee originally adopted effective August 14, 2007 and most recently amended and restated as of November 23, 2015. No rights are granted to the Employee under this Agreement other than those specifically set forth herein.
11.
NO EMPLOYMENT AGREEMENT.
This Agreement is not an employment policy or contract. It does not give the Employee the right to remain an employee of the Company, nor does it interfere with the Company’s right to discharge the Employee. It also does not require the Employee to remain an employee or interfere with the Employee’s right to separate from service at any time.
12.
AMENDMENTS.
The parties agree that no modification of the Agreement may be made except by means of a written agreement signed by the parties. However, if the Company determines to its reasonable satisfaction that an alteration or amendment of this Agreement is necessary or advisable so that the Agreement complies with the Code or any other applicable tax law, then, upon written notice to Employee, the Company may unilaterally amend this Agreement in such manner and to such extent as the Company reasonably considers necessary or advisable to ensure compliance with the Code or other applicable tax law. Nothing in this paragraph shall be deemed to limit the Company’s right to terminate this Agreement at any time and without stated cause.
13.
ASSIGNMENT OF RIGHTS; SPENDTHRIFT CLAUSE.
None of the Employee, the Employee’s estate, or the Employee’s beneficiary shall have any right to sell, assign, transfer, pledge, attach, encumber, or otherwise convey the right to receive any payment hereunder. To the extent permitted by law, benefits payable under this Agreement shall not be subject to the claim of any creditor of the Employee, the Employee’s estate, or the Employee’s designated beneficiary or subject to any legal process by any creditor of the Employee, the Employee’s estate, or the Employee’s designated beneficiary.
14.
BINDING EFFECT.
This Agreement shall bind the Employee, the Company, and their beneficiaries, survivors, executors, successors and assigns, administrators, and transferees.
15.
SUCCESSORS; BINDING AGREEMENT.
By an assumption agreement in form and substance satisfactory to the Employee, the Company shall require any successor (whether direct or indirect, by purchase, merger, consolidation, or otherwise) to all or substantially all of the business or assets of the Company to expressly assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform this Agreement had no succession occurred.
16.
TAX WITHHOLDING
. If taxes are required by the Code or other applicable tax law to be withheld by the Company from payments under this Agreement, the Company shall withhold any taxes that are required to be withheld.
17.
GOVERNING LAW.
This Agreement shall be governed by and construed in accordance with the laws of the State of North Dakota.
18.
NOTICES.
All notices, requests and demands given to or made pursuant hereto shall be in writing and shall be delivered or mailed to any such party at its address which:
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a.
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In the case of the Company shall be:
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Sound Community Bank
2005 5
th
Avenue, Second Floor
Seattle, WA 98121
Attention: Human Resources
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b.
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In the case of the Employee shall be:
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Laura Lee Stewart
737 Olive Way #1802
Seattle, WA 98101
Either party may, by notice hereunder, designate a
changed address. Any notice, if mailed properly addressed, postage prepaid, registered or certified mail, shall be deemed to have been given on the registered date or that date stamped on the certified mail receipt.
19.
SEVERABILITY.
In the event that any portion of this Agreement is held to be invalid or unenforceable for any reason, it is hereby agreed that such invalidity or unenforceability shall not affect the other portions of this Agreement and that the remaining covenants, terms and conditions or portions hereof shall remain in full force and effect, and any court of competent jurisdiction may so modify the objectionable provision as to make it valid, reasonable and enforceable.
20.
RELEASE OF CLAIMS.
Notwithstanding the foregoing provisions of this Agreement, the Company will not be obligated to make any payments to the Employee under this Agreement unless the Employee has signed a release of claims in favor of the Company and its Affiliates in a form to be prescribed by the Company, and all applicable consideration and rescission periods provided by law have expired.
21.
COMPLIANCE WITH CODE SECTION 409A
. The Company and the Employee intend that their exercise of authority or discretion under this Agreement shall comply with section 409A of the Code. Notwithstanding anything herein to the contrary in this Agreement, to the extent that any benefit under this Agreement that is nonqualified deferred compensation (within the meaning of section 409A of the Code) payable upon Employee’s termination of employment, such payment(s) shall be made only upon Employee’s “Separation from Service” pursuant to the default definition in Treasury Regulation section 1.409A-1(h).
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year first written above.
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Date: November 23, 2015
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Laura Lee Stewart
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Accepted for Sound Community Bank:
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Date: November 23, 2015
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By:
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Tyler Myers
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Its:
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Chairman of the Board
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