SOUND FEDERAL SAVINGS


              AMENDED AND RESTATED SEVERANCE PLAN FOR KEY EMPLOYEES












                          Effective on January 1, 2005



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                              SOUND FEDERAL SAVINGS

              AMENDED AND RESTATED SEVERANCE PLAN FOR KEY EMPLOYEES

                                    ARTICLE I

                                     PURPOSE

     Section 1.1 Statement of Purpose

     Sound Federal  Savings adopts this Severance Plan for Key Employees for the
benefit of its eligible  employees and those of other  Participating  Employers.
The Bank recognizes that it may be subject to the possibility of a negotiated or
unsolicited  Change of Control which may result in a loss of employment for some
of its Key  Employees.  The purpose of the Plan is to  encourage  the Bank's Key
Employees  and those of other  Participating  Employers to continue  working for
their employers with their full time and attention  devoted to their  employer's
affairs by providing  prescribed income security and benefit continuation in the
event of an Involuntary Severance following a Change of Control.

     Section 1.2 Other Severance Plans, Policies, and Practices Superseded

     As of the Effective  Date,  this Plan  supersedes in its entirety any plan,
policy,  or practice of the Bank for the provision of severance  benefits to Key
Employees  in the  event of  termination  of  employment  following  a Change of
Control,  whether written or oral or formal or informal.  No severance  benefits
shall be provided to any person who incurs a termination of employment  with the
Bank on or after the  Effective  Date  following a Change of Control,  except as
provided under the terms of the Plan or as provided under the terms of a written
executed employment agreement specifically providing for the payment of benefits
following  termination  of  employment  with  the  Bank or  other  Participating
Employer.


                                   ARTICLE II

                                   DEFINITIONS

     For  purposes of the Plan,  the  following  terms  shall have the  meanings
assigned to them below,  unless a different  meaning is plainly indicated by the
context:

     Section 2.1 Affiliated  Employer means the Bank; any corporation which is a
member of a controlled  group of  corporations  (as defined in section 414(b) of
the  Code)  that  includes  the  Bank;  any trade or  business  (whether  or not
incorporated)  that is under common control (as defined in section 414(c) of the
Code) with the Bank; any organization  (whether or not  incorporated)  that is a
member of an affiliated service group (as defined in section 414(m) of the Code)
that includes the Bank; any leasing  organization  (as defined in section 414(n)
of the Code) to the extent that any of its  employees  are required  pursuant to
section 414(n) of the Code to be treated as employees of the Bank; and any other
entity that is required to be aggregated  with the Bank pursuant to  regulations
under section 414(o) of the Code.


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     Section 2.2 Bank means Sound Federal Savings.

     Section  2.3 Base  Salary  means,  for any Key  Employee  as of any date of
reference, the Key Employee's annual rate of base salary.

     Section 2.4 Board means the Board of  Directors of Sound  Federal  Savings.

     Section 2.5 Cause  means,  with respect to the conduct of a Key Employee in
connection  with  his  employment  with  any  Participating  Employer,  personal
dishonesty, incompetence, willful misconduct, breach of fiduciary duty involving
personal  profit,  intentional  failure to  perform  stated  duties,  or willful
violation  of any law,  rule or  regulation  (other than traffic  violations  or
similar offenses) or final cease and desist order, or any material breach of any
material  provision  of this Plan,  in each case as measured  against  standards
generally  prevailing at the relevant time in the  community  banking  industry;
provided,  however,  that, solely for purposes of the Plan, a Key Employee shall
not be deemed to have been  discharged  for Cause unless and until the Committee
determines  (after  reasonable  notice  to the  Key  Employee  and a  reasonable
opportunity for the Key Employee to make oral and written  presentations  to the
Committee, on his own behalf, or through a representative,  who may be his legal
counsel,  to refute the grounds for the  proposed  determination)  that  grounds
exist for discharging the Key Employee for "Cause".  No act or failure to act on
the part of the Key Employee  shall be  considered  "willful"  unless  done,  or
omitted to be done, by the Key Employee not in good faith and without reasonable
belief that the Key  Employee's  action or omission was in the best  interest of
the Bank.

     Section 2.6 Change of Control shall be deemed to have occurred at such time
as (a) any  "person"  (as the term is used in  Sections  13(d)  and l4(d) of the
Securities  Exchange Act of 1934 ("Exchange Act")) is or becomes the "beneficial
owner"  (as  defined  in  Rule  l3d-3  under  the  Exchange  Act),  directly  or
indirectly,  of  securities  of the  Company  representing  25% or  more  of the
combined  voting power of the Company's  outstanding  securities  except for any
securities  purchased by the Bank's  employee stock  ownership plan or trust; or
(b)  individuals  who  constitute  the Board on the date hereof (the  "Incumbent
Board") cease for any reason to constitute at least a majority thereof, provided
that any person becoming a director subsequent to the date hereof whose election
was approved by a vote of at least  three-quarters  of the directors  comprising
the  Incumbent  Board,  or  whose  nomination  for  election  by  the  Company's
stockholders  was approved by the same  Nominating  Committee  serving  under an
Incumbent Board, shall be, for purposes of this clause (b), considered as though
he were a  member  of the  Incumbent  Board;  or (c)  consummation  of a plan of
reorganization,  merger,  consolidation,  sale of all or  substantially  all the
assets of the Bank or the  Company or similar  transaction  unless,  immediately
following such  transaction,  at least a majority of the members of the board of
directors or other  governing  body of the  resulting  or  surviving  entity are
individuals who were members of the Board  immediately  prior to the transaction
and equity interests representing at least a majority of the voting power in the
election  of  directors  or other  members  of the board of  directors  or other
governing  board of the  resulting  or surviving  entity are owned,  immediately
following  such  transaction,  by persons who owned  common stock of the Company
immediately  prior to such  transaction and in  substantially  the same relative
proportions as their ownership of common stock of the Company  immediately prior
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to such transaction; or (d) consummation of a tender offer pursuant to which the
shareholders  owning  beneficially  or of record 25% or more of the  outstanding
securities  of the Company have  tendered  their shares  pursuant to such tender
offer and such tendered shares have been accepted by the tender offeror;  or (e)
consummation  of a  dissolution  or  complete  liquidation  of the  Bank  or the
Company,  or  shareholder  approval  of a plan for the  dissolution  or complete
liquidation of the Bank or the Company.

     Section 2.7 Code Section 409A Key Employee  means a "key  employee"  within
the meaning of section 409A of the Internal Revenue Code of 1986.

     Section 2.8  Committee  means the  Benefits  Committee  of the Bank or such
other  person or entity as the Board may  specify to  perform  the duties of the
Committee under the Plan; provided,  however, that following a Change of Control
the Committee  shall consist  exclusively  of those  individuals  serving on the
Committee  immediately prior to the Change of Control and such other individuals
as may be appointed by the incumbent members of the Committee.

     Section 2.9 Company means Sound Federal Bancorp, Inc.

     Section 2.10 Effective Date means January 1, 2005.

     Section 2.11 Key Employee means an employee of a Participating  Employer at
the level of Assistant Vice President or above,  other than: (a) a person who is
classified as an "independent  contractor" by a  Participating  Employer even if
considered an employee under applicable law; (b) an employee receiving long-term
disability  benefits;  (c) a person who is  employed on a  temporary,  seasonal,
"peak-period"  or other  irregular  basis; or (d) a person who has an employment
contract,  change of control agreement,  special termination  agreement or other
agreement or arrangement with the Bank or who is covered by other programs which
provide  severance  benefits as a multiple of  compensation or base salary or by
their terms exclude such person from participation in this Plan.

     Section 2.12 FDI Act means the Federal  Deposit  Insurance Act, as the same
may be  amended  from  time to time,  and the  corresponding  provisions  of any
successor statute.

     Section 2.13 Involuntary  Severance means (a) the discharge or dismissal of
a Key  Employee  by a  Participating  Employer  other  than  for  Cause;  or (b)
termination  of  employment  at a  Key  Employee's  election  after  any  action
following  a Change of  Control  which,  either  alone or  together  with  other
actions,  results in: (i) the  material  reduction  of the Key  Employee's  base
compensation  or benefits;  (ii) the relocation of the Key Employee's  principal
place of employment by more than 30 miles from its location immediately prior to
the Change in Control;  or (iii) a material adverse change in the Key Employee's
title, position or responsibilities at a Participating Employer.

     Section  2.14  Participating  Employer  means the Bank and its wholly owned
subsidiaries and any successor thereto and any other Affiliated  Employer which,
with the prior  written  approval  of the Board and  subject  to such  terms and
conditions as may be imposed by the Board, shall adopt this Plan.

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     Section  2.15 Plan means this Sound  Federal  Savings  Amended and Restated
Severance Plan for Key Employees, as the same may be amended from time to time.

     Section 2.16 Separation  from Service means  separation from service within
the meaning of section 409A of the Internal Revenue Code of 1986.

     Section 2.17  Severance  Period means (a) in the case of a Key Employee who
is a Vice  President,  a  number  of  months  equal  to the  number  of the  Key
Employee's  Years of  Service,  but in no event less than  twelve (12) months or
more than twenty-four (24) months;  and (b) in the case of a Key Employee who is
an Assistant Vice  President,  a number of months equal to the number of the Key
Employee's  Years of  Service,  but in no event less than six (6) months or more
than twenty four (24) months.

     Section 2.18 Years of Service  means years of service as an employee of the
Bank or any other Participating Employer. For all purposes of the Plan, Years of
Service shall be measured in whole years,  and partial years shall be rounded up
or down, as applicable.

                                   ARTICLE III

                                    BENEFITS

     Section 3.1 Severance Benefits for Key Employees.

     (a) A Key Employee whose  employment  with all  Participating  Employers is
terminated under circumstances  constituting an Involuntary  Severance and whose
termination  occurs  upon or within  twelve  (12)  months  following a Change of
Control  shall be entitled to the following  benefits:  a lump sum payment in an
amount equal to one twelfth of the Key Employee's Base Salary at the time of the
Change of Control or Involuntary Severance,  whichever is higher,  multiplied by
the number of the Key Employee's Years of Service; provided, however, that in no
event shall any Key Employee who is a Vice  President  receive as severance  pay
under this Plan a lump sum payment  representing  less than one hundred  percent
(100%) of Base Salary or more than two hundred  percent  (200%) of Base  Salary,
and in no event  shall  any Key  Employee  who is an  Assistant  Vice  President
receive as severance  pay under this Plan a lump sum payment  representing  less
than fifty percent (50%) of Base Salary or more than two hundred  percent (200%)
of Base Salary. Except as provided in section 3.4, the lump sum shall be due and
payable on the date of the Key Employee's Involuntary Severance. Notwithstanding
anything  in the  Plan  to the  contrary:  (a) if a Key  Employee's  Involuntary
Severance  occurs prior to his Separation  from Service,  his severance  benefit
shall be deferred until and shall be payable on the date of his Separation  from
Service and (b) if a Key Employee is also a Code Section 409A Key Employee,  his
severance  benefit shall be deferred until and shall be payable in a lump sum on
the  six-month  anniversary  of the later of his  Involuntary  Severance  or his
Separation from Service.  Any severance  benefit that is not paid in full within
eight (8) calendar days following the  recipient's  Involuntary  Severance shall
accrue  interest  at the rate of 6% per  annum,  credited  daily and  compounded
annually, from the date of Involuntary Severance to the actual date of payment.

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     (b)  Notwithstanding  the  preceding  paragraphs of this section 3.1, in no
event shall the benefits payable hereunder,  when aggregated with other benefits
subject to Section 280G of the  Internal  Revenue  Code of 1986,  constitute  an
"excess  parachute  payment" under Section 280G of the Internal  Revenue Code of
1986 or any successor thereto, and in order to avoid such a result, the benefits
payable  hereunder  will be reduced,  if necessary,  to an amount,  the value of
which is one dollar  ($1.00) less than the amount which would be  considered  an
excess parachute payment.

     Section 3.2 Insurance Benefits.

     A Key Employee who is eligible for  severance  benefits  under  section 3.1
shall also be  eligible  for  continuation  of  coverage  under any group  life,
medical,  dental and other plans which  constitute  "group health plans" (within
the meaning of section 607(1) of ERISA) for a period equal to the Key Employee's
Severance Period.  Such coverage shall be substantially  comparable and on terms
and  conditions  (including,  but  not  limited  to,  coverage  of  spouses  and
dependents and any  premium-sharing  arrangements)  no less favorable to the Key
Employee than those in effect immediately prior to his Involuntary Severance. If
the Key Employee is eligible for a  continuation  of coverage under this section
3.2 and a continuation of coverage under applicable federal, state or local law,
the periods of coverage shall run concurrently.

     Section 3.3 Vesting.

     The benefits to be provided under sections 3.1 and 3.2 of the Plan shall be
completely vested and nonforfeitable upon the occurrence of a Change of Control.

     Section 3.4 Benefits  Contingent on Execution of Release.  The provision of
severance  benefits  under the Plan to any Key Employee  shall be subject to the
condition  that  the Key  Employee  execute  and  deliver  to the  Committee  an
instrument, in such form as the Committee shall prescribe, which shall include a
release in favor of the Participating  Employers and their officers,  employees,
agents,  owners,  heirs,  successors and assigns for certain  employment-related
claims.  Such  release  shall  include,  but not be limited to, a release of any
claims which the Key Employee may have against any Participating  Employer under
the Age  Discrimination  in Employment  Act of 1967, as amended;  the Fair Labor
Standards Act, as amended;  the Worker  Adjustment  Retraining and  Notification
Act,  as amended;  the Civil  Rights Act of 1866,  as amended;  Title VII of the
Civil Rights Act of 1964, as amended; and any other federal, state or local law,
rule or regulation  under which the Key Employee may have a claim arising out of
his  employment  with a  Participating  Employer  or  the  termination  of  such
employment.  No  Participating  Employer  shall have any  obligation  to provide
benefits  under this Plan to any Key  Employee  who fails or refuses,  following
request in writing made within five (5) business  days after the Key  Employee's
Involuntary  Severance or the  occurrence  of a Change of Control  (whichever is
later) to sign and deliver such a release.  If a request for a release is timely
made, the Participating Employers' obligation to provide benefits under the Plan
shall be deferred  until such release has been executed and delivered by the Key
Employee  and any period  during  which the Key  Employee  has a legal  right to
revoke the release has expired.
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     Section 3.5 Withholding.

     Payments from this Plan shall be subject to all applicable  federal,  state
and local income withholding taxes.


                                   ARTICLE IV

                                 ADMINISTRATION

     Section 4.1 Named Fiduciaries.

     The term  "Named  Fiduciary"  shall  mean  (but  only to the  extent of the
responsibilities of each of them) the Plan Administrator,  the Committee and any
person or entity  named as a fiduciary  pursuant  to the  written  documentation
pertaining  to the Plan.  This  Article IV is intended to allocate to each Named
Fiduciary the responsibility for the prudent execution of the functions assigned
to him or it,  and none of such  responsibilities  or any  other  responsibility
shall be shared by two or more of such  Named  Fiduciaries.  Whenever  one Named
Fiduciary  is required  by the Plan to follow the  directions  of another  Named
Fiduciary, the two Named Fiduciaries shall not be deemed to have been assigned a
shared responsibility,  but the responsibility of the Named Fiduciary giving the
directions shall be deemed his sole  responsibility,  and the  responsibility of
the Named Fiduciary  receiving those  directions shall be to follow them insofar
as such instructions are on their face proper under applicable law.

     Section 4.2 Benefits Committee.

     (a) There  shall be a  Benefits  Committee,  consisting  of not less than 3
individuals  who shall be appointed by the Chief  Executive  Officer of the Bank
and who shall accept such  appointment  by  delivering a written  notice of such
acceptance to the Chief  Executive  Officer as hereinafter  provided;  provided,
however,  that  following the  occurrence  of a Change of Control,  the Benefits
Committee  shall consist solely of those  individuals  serving as members of the
Committee immediately prior to the Change in Control who consent to so serve and
any additional  individuals appointed from time to time by the incumbent members
of the  Committee.  The  Committee  shall have the  powers and  responsibilities
enumerated in section  4.2(c).  The Committee  shall elect a Chairman who shall,
and may appoint a  Secretary  who need not,  be a member of the  Committee.  Any
filing  which is required or permitted  to be made with the  Committee  shall be
deemed to be  satisfactorily  made upon mailing or delivering such filing to the
Secretary of the Committee, or, if a Secretary is not appointed, to the Chairman
of the  Committee.  A member of the Committee may resign only by giving at least
thirty (30) days' prior written  notice of  resignation  to the Committee and to
the Chairman of the Board, and such  resignation  shall be effective on the date
specified in such notice.

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     (b) The  Committee  shall  hold  meetings  at such  times and may make such
administrative  rules as it may deem  proper.  Except  as  provided  in the last
sentence of this  section  4.2(b),  any action of the  Committee  shall be taken
pursuant to a majority  vote taken at a meeting,  or  pursuant to the  unanimous
consent of its members without a meeting,  and such action shall  constitute the
action  of the  Committee  and  shall be  binding  in the same  manner as if all
members of the  Committee had joined  therein.  A majority of the members of the
Committee shall  constitute a quorum.  The Committee shall record minutes of any
actions taken at its meetings or of any other  official  action of the Committee
and  shall  report to the Board at least  once each year on its  activities.  No
member of the Committee who would be affected by a particular  matter upon which
the  Committee is scheduled  to act shall be  permitted  to  participate  in the
Committee's  action with  respect to such matter,  nor shall he be  considered a
member of the Committee for purposes of determining the existence of a quorum or
a majority or  unanimous  vote with  respect to such  action,  unless all of the
members of the  Committee  are  affected  thereby.  Any person  dealing with the
Committee  shall  be  fully  protected  in  relying  upon  any  written  notice,
instruction,  direction or other  communication  signed by the  Secretary of the
Committee or by two (2) of the members of the  Committee or by a  representative
of the Committee authorized by the Committee to sign the same in its behalf.

     (c) The Committee shall,  subject to the  responsibilities of the Board and
the terms and conditions of the Plan, have the following responsibilities:

     (i)  To review the performance of the Plan Administrator;

     (ii) To hear and decide appeals, pursuant to the claims procedure contained
          in  Article  V of the  Plan,  taken  from  the  decisions  of the Plan
          Administrator;

     (iii) To hear and decide questions,  including  interpretation of the Plan,
          as may be referred to the Committee by the Plan Administrator;

     (iv) To report and make  recommendations  to the Board regarding changes in
          the Plan,  including  changes in the operation  and  management of the
          Plan;

     (v)  To  designate an alternate  Plan  Administrator  to serve in the event
          that the  Administrator is absent or otherwise unable to discharge his
          responsibilities;

     (vi) To remove and replace the Plan Administrator or alternate,  or both of
          them, and to fill a vacancy in either office;

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     (vii) To discharge such other responsibilities or follow such directions as
          may be  assigned or given by the Board,  consistent  with the terms of
          the Plan; and

     (viii) To perform  any duty or take any action  which is  allocated  to the
          Committee under the Plan.

The Committee  shall have the power and authority  necessary or  appropriate  to
carry out its responsibilities.

     Section 4.3 Plan Administrator.

     There shall be a Plan  Administrator,  who shall be the Committee,  or such
person,  committee  or entity as shall be appointed  by the  Committee,  and who
shall,  subject to the responsibilities of the Committee and the Board, have the
responsibility   for  the   day-to-day   control,   management,   operation  and
administration of the Plan (except trust duties).  The Plan Administrator  shall
have the following responsibilities:

               (a)  To  maintain  records   necessary  or  appropriate  for  the
          administration of the Plan;

               (b) To give and receive such instructions,  notices, information,
          materials,   reports  and   certifications  as  may  be  necessary  or
          appropriate in the administration of the Plan;

               (c) To prescribe forms and make rules and regulations  consistent
          with the  terms of the Plan  and with the  interpretations  and  other
          actions of the Committee;

               (d) To require  such proof or other  evidence as to any matter as
          may be necessary or appropriate in the administration of the Plan;

               (e) To prepare and file,  distribute or furnish all reports, plan
          descriptions,  and other information  concerning the Plan,  including,
          without  limitation,  communications  with  Key  Employees  and  other
          persons;

               (f) To determine  any  question  arising in  connection  with the
          Plan,  and the Plan  Administrator's  decision  or action  in  respect
          thereof shall be final and  conclusive  and binding upon the Bank, Key
          Employees,  and any other  person  having an interest  under the Plan;
          provided,  however,  that any question  relating to  inconsistency  or
          omission in the Plan, or interpretation of the provisions of the Plan,
          shall be referred to the Committee by the Plan  Administrator  and the
          decision of the Committee in respect thereof shall be final;

               (g) Subject to the provisions of Article V, to review and dispose
          of claims under the Plan filed pursuant to Article V;

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               (h) If the Plan  Administrator  shall determine that by reason of
          illness,   senility,   insanity,  or  for  any  other  reason,  it  is
          undesirable to make any payment to a Key Employee, or any other person
          entitled  thereto,  to direct the application of any amount so payable
          to the use or  benefit of such  person in any manner  that he may deem
          advisable  or to  direct  in his  discretion  the  withholding  of any
          payment under the Plan due to any person under legal  disability until
          a representative competent to receive such payment in his behalf shall
          be appointed pursuant to law;

               (i) To  discharge  such  other  responsibilities  or follow  such
          directions  as may be assigned or given by the Committee or the Board,
          consistent with the terms of the Plan; and

               (j) To perform any duty or take any action  which is allocated to
          the Plan Administrator under the Plan.

The  Plan  Administrator  shall  have  the  power  and  authority  necessary  or
appropriate to carry out his responsibilities. The Plan Administrator may resign
only by giving at least 30 days'  prior  written  notice of  resignation  to the
Committee, and such resignation shall be effective on the date specified in such
notice.

     Section 4.4  Allocation  of Fiduciary  Responsibilities  and  Employment of
Advisors.

     Any Named Fiduciary may:

               (a)  allocate  any of his or  its  responsibilities  (other  than
          trustee  responsibilities)  under  the Plan to such  other  person  or
          persons as he or it may designate,  provided that such  allocation and
          designation  shall  be  made  in  writing  and  filed  with  the  Plan
          Administrator;

               (b) employ one or more persons to render advice to him or it with
          regard to any of his or its responsibilities under the Plan; and

               (c) consult with counsel, who may be counsel to the Bank.

     Section 4.5 Other Administrative Provisions.

     (a) Any person whose claim has been denied in whole or in part must exhaust
the administrative  review procedures  provided in Article V prior to initiating
any claim for judicial review.

     (b) No bond or other  security  shall be  required  of a member of the Plan
Administrator,  the Committee and/or any officer or employee of the Bank to whom
fiduciary responsibilities are allocated by a Named Fiduciary,  except as may be
required by applicable law.

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     (c) Subject to any  limitation on the  application  of this section  4.5(c)
pursuant to applicable law, neither the Plan Administrator nor any member of the
Committee   nor  any  officer  or  employee  of  the  Bank  to  whom   fiduciary
responsibilities are allocated by a Named Fiduciary, shall be liable for any act
of omission or commission by himself or by another  person,  except each for his
own individual willful and intentional malfeasance.

     (d) The Plan  Administrator  or the Committee  may,  except with respect to
actions under Article V or as otherwise  provided by law, shorten or extend (but
not beyond  sixty (60) days) or waive the time  required  by the Plan for filing
any  notice  or  other  form  with  the  Plan  Administrator  or  Committee,  as
applicable, or taking any other action under the Plan.

     (e) The Plan  Administrator  or the  Committee may direct that the costs of
services provided pursuant to section 4.4, and such other reasonable expenses as
may be  incurred  in the  administration  of the Plan,  shall be paid out of the
funds of the Plan, unless the Bank shall pay them.

     (f) Any person,  group of persons,  committee,  corporation or organization
may serve in more than one fiduciary capacity with respect to the Plan.

     (g) Any action taken or omitted by the Plan  Administrator or the Committee
with respect to the Plan, including any decision, interpretation,  claims denial
or  review  on  appeal,  shall be  conclusive  and  binding  on the Bank and all
interested  parties  and shall be subject to judicial  modification  or reversal
only to the extent  determined  by a court of competent  jurisdiction  that such
action or omission was arbitrary and capricious and contrary to the terms of the
Plan.

     (h) The Participating Employers, jointly and severally, shall indemnify the
Committee,  its members and the Plan Administrator  against, and defend them and
hold them harmless from, any and all losses,  costs,  expenses,  liabilities and
exposures of any name and nature  whatsoever which they may suffer or incur as a
result of service,  including acts or omissions to act, as Plan Administrator or
as  a  member  of  the   Committee.   Following  a  Change  of   Control,   such
indemnification,  defense and hold  harmless  shall be to an extent and on terms
and conditions no less favorable to the Committee members and Plan Administrator
than those in effect immediately prior to the Change of Control.

     (i) The  Participating  Employers  shall  purchase and maintain a customary
policy  of  insurance   insuring  the  Committee,   its  members  and  the  Plan
Administrator against losses, costs, expenses,  liabilities and exposures of any
name and  nature  whatsoever  which  they  may  suffer  or incur as a result  of
service,  including  acts or  omissions  to act, as Plan  Administrator  or as a
member of the Committee.  Following a Change of Control, such insurance coverage
indemnification,  defense and hold  harmless  shall be to an extent and on terms
and conditions no less favorable to the Committee members and Plan Administrator
than those in effect immediately prior to the Change of Control.

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                                    ARTICLE V

                           BENEFIT CLAIMS AND APPEALS

     Section 5.1 General Procedures.

     (a) (i) Any claim  relating to benefits  under the Plan shall be filed with
the Plan Administrator on a form prescribed by it. The Plan Administrator  shall
appoint a person to  review  and make a  determination  on the  claim.  The Plan
Administrator  shall  give the  claimant  written  notice of the  determination.
Except as provided in section 5.1(a)(ii),  a notice of determination (whether or
not adverse) on a claim under this section shall be given not later than 90 days
after receipt.

     (ii)  If  the  Plan  Administrator  finds  it  necessary,  due  to  special
circumstances  (for example,  the claimant's  failure to provide all information
required  to process  the claim or the need to hold a  hearing),  to extend this
period and so notifies the claimant in writing,  the decision  shall be rendered
as soon as  practicable,  but in no event later than 180 days after receipt of a
claim. Any notice of such an extension shall be in writing, shall be made within
the initial claim  determination  period,  and shall specify the reasons for the
extension and the date by which a decision on review is expected to be rendered.

     (iii) The notice of determination of a claim filed under this section shall
specifically set forth:

          (A) The reasons for the denial; and

          (B) The pertinent Plan provisions on which the denial was based; and

          (C) Any additional material or information  necessary for the claimant
     to perfect his claim and an explanation of why such material or information
     is needed; and

          (D) An explanation of the Plan's procedure for review of the denial of
     the claim, the time limits  applicable to such procedure and a statement of
     the claimant's right to bring a civil action to recover benefits due to him
     under the terms of the Plan and any other civil action under section 502(a)
     of ERISA following an adverse benefit determination on review.

     If a claimant does not receive a written notice of the determination of the
claim on or before the date prescribed by this section  5.1(a),  the claim shall
be deemed as having been denied on such date for the purpose of  permitting  the
claimant to request review of the claim.

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     (b) (i) Any person  whose claim filed  pursuant to section  5.1(a) has been
denied in whole or in part may  request  review  of the claim by the  Committee,
upon a form prescribed by the Committee.  The review shall not afford  deference
to the initial adverse benefit determination.  The claimant shall file such form
with the  Committee  no later than 60 days after the  claimant's  receipt of the
written notice of denial provided for in section  5.1(a),  or, if such notice is
not  provided,  within 60 days  after such claim is deemed  denied  pursuant  to
section  5.1(a).  The  claimant  may include  with such form  written  comments,
documents,  records,  and other information  relevant to the claim for benefits.
The  claimant  shall be provided,  upon  request and free of charge,  reasonable
access to and copies of all documents, records and other information relevant to
the claims. The review shall take into account the comments,  documents, records
and other  information  submitted  by the  claimant  and  relevant to the claim,
without regard to whether such  information  was submitted or considered as part
of the initial  claim  determination.  A decision on review shall be rendered by
the Committee and  communicated to the claimant by written notice.  Such written
notice  shall be given not later than 60 days after  receipt of the  request for
review.

     (ii) If the Committee finds it necessary, due to special circumstances (for
example, the need to hold a hearing),  to extend this period and so notifies the
claimant in writing, the decision shall be rendered as soon as practicable,  but
in no event  later than 120 days  after  receipt of a request  for  review.  Any
notice  of such an  extension  shall be in  writing,  shall be made  within  the
initial  claim  determination  period,  and shall  specify  the  reasons for the
extension and the date by which a decision on review is expected to be rendered.

     (iii) The notice of determination  contemplated by section  5.1(b)(i) shall
specifically set forth:

          (A) The reasons for the denial; and

          (B) The pertinent Plan provisions on which the denial was based; and

          (C) A statement that the claimant is entitled to receive, upon request
     and free of  charge,  reasonable  access  to,  and  copies  of,  documents,
     records,  and  other  information  relevant  to the  claimant's  claim  for
     benefits; and

          (D) An explanation of any voluntary  appeals process offered under the
     Plan and the claimant's  right to receive  information  concerning any such
     procedures and a statement of the claimant's  right to bring a civil action
     under section 502(a) of ERISA following an adverse benefit determination on
     review.

     Section 5.2 Appointment of Representatives.

     (a) A person filing a claim for benefits,  or filing a request for a review
of an adverse benefit determination,  may appoint a representative to act on the
claimant's behalf in any such proceeding.  Any such appointment shall be made by
written  notice to the Plan  Administrator  which shall  contain  the  following

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information:   the  appointee's  name,  street,   mailing  and  electronic  mail
addresses,   voice  telephone  and  facsimile   telephone   numbers,  a  general
description  of the  matters  in which the  designated  representative  has been
authorized  to act in the  claimant's  behalf  and the  specific  acts which the
designated  representative  is  authorized  to perform in  connection  with such
matter.  The notice shall be signed by the claimant to evidence his agreement to
the   appointment  and  the   representative   to  evidence  his  acceptance  of
appointment,  and each signature shall be  acknowledged  before a notary public.
Following  receipt of such notice,  the Plan  Administrator,  the  Committee and
their designees shall be entitled to rely without further investigation upon the
authority of the designated  representative to act on the claimant's behalf in a
manner  consistent  with the terms of the notice  unless  and until it  receives
subsequent written notice to the contrary.

     (b) Notwithstanding section 5.2(a), if the Plan Administrator determines to
its satisfaction  that a claimant has been  determined,  by a court of competent
jurisdiction,  to be incapable of attending to his own affairs in respect of his
benefit  entitlements  under the Plan, the Plan  Administrator and the Committee
shall accept as evidence of a third party's  authority to act in the  claimant's
behalf any document or other  evidence or any  customary  document or instrument
issued pursuant to applicable state law.

     Section 5.3 Electronic Communications.

     Any written notice or other written communication  required or permitted to
be given by the Plan  Administrator  or Committee shall be deemed properly given
if given  electronically  to an electronic mail address provided by the claimant
or  his  authorized  representative,  or,  if no  authorized  representative  is
appointed,  to an  electronic  mail  address  provided  to the  claimant  by the
Employer  and  customarily  used to provide  notices to the claimant on employee
relations  matters;  provided,  however,  that:  (a) the Plan  Administrator  or
Committee,  as  applicable,  shall take  appropriate  and necessary  measures to
assure that the system for furnishing electronic  communications  results in the
addressee's  actual receipt of electronically  transmitted  documents;  (b) each
prospective recipient of electronically transmitted documents is provided notice
of the nature of the documents to be furnished electronically,  the significance
of the  documents  and the  recipient's  right to request and  receive,  free of
charge,  a paper  copy of each such  document;  and (c) upon  request,  the Plan
Administrator or Committee,  as applicable,  actually  furnishes a paper copy of
such document.

                                   ARTICLE VI


                  AMENDMENT, TERMINATION AND TAX QUALIFICATION

     Section 6.1 Amendment and Termination.

     The Bank  expects  to  continue  the Plan  indefinitely,  but  specifically
reserves the right, in its sole discretion,  at any time, by appropriate  action
of the Board or its designees or delegates,  to amend,  in whole or in part, any
or all of the  provisions  of the Plan and to  terminate  the Plan at any  time.

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Following the occurrence of a Change in Control,  the Plan may not be amended or
terminated without the prior written consent of the Committee.  Any amendment or
termination of the Plan shall conform to the requirements of section 409A of the
Internal Revenue Code of 1986 and the regulations promulgated thereunder.

     Section 6.2 Amendment or Termination Other than by the Bank.

     In the event that an  Affiliated  Employer  shall  adopt  this  Plan,  such
Affiliated  Employer shall,  by adopting the Plan,  empower the Bank to amend or
terminate  the Plan,  insofar as it shall  cover  employees  of such  Affiliated
Employer,  upon the terms and  conditions  set forth in section  6.1;  provided,
however,  that any such  Affiliated  Employer  may,  by  action  of its board of
directors or other  governing body,  amend or terminate the Plan,  insofar as it
shall cover employees of such Affiliated  Employer,  at different times and in a
different manner. In the event of any such amendment or termination by action of
the board of directors or other  governing body of such Affiliated  Employer,  a
separate plan shall be deemed to have been established for the employees of such
Affiliated Employer.

                                   ARTICLE VII

                            MISCELLANEOUS PROVISIONS

     Section 7.1 Governing Law.

     (a) The Plan shall be construed,  administered,  and enforced  according to
the laws of the State of New York without  giving  effect to the conflict of law
principles thereof, except to the extent that such laws are preempted by federal
law.

     (b) Any dispute or  controversy  arising under or in  connection  with this
Plan shall be settled  exclusively by arbitration,  conducted  before a panel of
three  arbitrators  sitting in a location  selected by the Key  Employee  within
fifty (50) miles from the location of the Bank, in accordance  with the rules of
the American Arbitration  Association then in effect. Judgment may be entered on
the arbitrator's award in any court having jurisdiction; provided, however, that
subject to section  3.2  hereof,  the Key  Employee  shall be  entitled  to seek
specific  performance of his right to be paid during the pendency of any dispute
or controversy arising under or in connection with this Plan.

     Section 7.2 No Right to Continued Employment.

     Neither the  establishment  of the Plan,  nor any  provisions  of the Plan,
shall be held or  construed  to  confer  upon any Key  Employee  any  right to a
continuation  of employment by the Bank.  The Bank reserves the right to dismiss
any Key Employee or  otherwise  deal with any Key Employee to the same extent as
though the Plan had not been adopted.

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     Section 7.3 Construction of Language.

     Wherever appropriate in the Plan, words used in the singular may be read in
the  plural,  words used in the plural  may be read in the  singular,  and words
importing  the  masculine  gender  include  the  feminine  and the  neuter.  Any
reference  to an Article or section  number shall refer to an Article or section
of the Plan, unless otherwise indicated.

     Section 7.4 Headings.

     The headings of Articles and sections are included  solely for  convenience
of reference. If there is any conflict between such headings and the text of the
Plan, the text shall control.

     Section    7.5   Status   as   Welfare    Benefit    Plan   Under    ERISA.

     This Plan is an  "employee  welfare  benefit  plan"  within the  meaning of
section 3(1) of the Employee  Retirement Income Security Act of 1974, as amended
("ERISA") and shall be  construed,  administered  and enforced  according to the
provisions of ERISA.

     Section 7.6 Successors and Assigns.

     The Bank  shall  require  any  successor  or  assignee,  whether  direct or
indirect,  by  purchase,   merger,   consolidation  or  otherwise,   to  all  or
substantially   all  the  business  or  assets  of  the  Bank,   expressly   and
unconditionally to assume and agree to perform the Bank's obligations under this
Plan,  in the same manner and to the same extent that the Bank would be required
to perform if no such succession or assignment had taken place.

     Section 7.7 Source of Payments.

     All payments  provided in this Plan shall be paid in cash or check from the
general  funds  of the  Bank.  The  Company,  however,  guarantees  payment  and
provision  of all amounts and benefits due  hereunder to Key  Employees  and, if
such  amounts and  benefits due from the Bank are not timely paid or provided by
the Bank, such amounts and benefits shall be paid or provided by the Company.

     Section 7.8 Effect on Existing Benefit Plans.

     This Plan shall not affect or operate to reduce any benefit or compensation
inuring to the Key Employee of a kind elsewhere  provided.  No provision of this
Plan shall be  interpreted to mean that the Key Employee is subject to receiving
fewer benefits than those available to him without reference to this Plan.

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     Section 7.9 Required Provisions.

     (a) The Bank may terminate the Key Employee's employment at any time. A Key
Employee shall not have the right to receive  compensation or other benefits for
any period after Termination for Cause as defined in section 2.5 hereinabove.

     (b) If the  Key  Employee  is  suspended  from  office  and/or  temporarily
prohibited from  participating  in the conduct of the Bank's affairs by a notice
served  under  Section  8(e)(3)  (12  USC  ss.1818(e)(3))  or  8(g)(1)  (12  USC
ss.1818(g)(1))  of the FDI Act, the Bank's  obligations under this Plan shall be
suspended as of the date of service,  unless stayed by appropriate  proceedings.
If the charges in the notice are  dismissed,  the Bank may in its discretion (i)
pay the Key Employee all or part of the compensation withheld while its contract
obligations  were  suspended and (ii) reinstate (in whole or in part) any of its
obligations which were suspended.

     (c) If the Key  Employee  is removed  and/or  permanently  prohibited  from
participating  in the  conduct of the Bank's  affairs by an order  issued  under
Section 8(e)(4) (12 USC ss.1818(e)(4)) or 8(g) (1) (12 USC ss.1818(g)(1)) of the
FDI Act, all  obligations of the Bank under this Plan shall  terminate as of the
effective date of the order, but vested rights of the contracting  parties shall
not be affected.

     (d) If the  Bank is in  default  as  defined  in  Section  3(x)(i)  (12 USC
ss.1813(x)(1)) of the FDI Act, all obligations of the Bank under this Plan shall
terminate  as of the date of default,  but this  paragraph  shall not affect any
vested rights of the contracting parties.

     (e) All obligations of the Bank under this Plan shall be terminated, except
to the extent  determined  that  continuation  of the Plan is necessary  for the
continued  operation  of the Bank,  (i) by the  Director of the Office of Thrift
Supervision ("Director") or his or her designee, at the time the Federal Deposit
Insurance  Corporation  enters into an agreement to provide  assistance to or on
behalf of the Bank  under  the  authority  contained  in  Section  13(c) (12 USC
ss.1823(c))  of the FDI Act; or (ii) by the  Director or his or her  designee at
the time the Director or his or her designee  approves a  supervisory  merger to
resolve problems related to operation of the Bank or when the Bank is determined
by the  Director  to be in an unsafe or  unsound  condition.  Any  rights of the
parties that have already vested, however, shall not be affected by such action.

     (f) Notwithstanding anything herein contained to the contrary, any payments
to the Key Employee by the Bank, whether pursuant to this Plan or otherwise, are
subject to and conditioned  upon their  compliance with Section 18(k) of the FDI
Act, 12 U.S.C. Section 1828(k), and the regulations promulgated thereunder in 12
C.F.R. Part 359.

The vested  rights of the parties  shall not be  affected.  If and to the extent
that any of the foregoing  provisions is not, or shall cease to be,  required by
applicable  law, rule or  regulation,  the same shall become  inoperative in the
case of the Bank as though eliminated by formal amendment of this Plan.


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     Section 7.10  Conformity  to Section  409A of the Internal  Revenue Code of
1986.

     The Plan is intended to be a  non-qualified  termination  pay plan to which
Section 409A of the  Internal  Revenue  Code of 1986 is not  applicable.  To the
extent it is subsequently  determined that the Plan is a non-qualified  deferred
compensation  plan to which Section 409A of the Internal Revenue Code of 1986 is
applicable,  the Plan shall be  operated,  administered  and  construed so as to
conform to the  requirements  of Section  409A.  In addition,  the Plan shall be
subject to amendment,  with or without advance notice to Participants  and other
interested parties, and on a prospective or retroactive basis, including but not
limited  to  amendment  in  a  manner  that  adversely  affects  the  rights  of
Participants  and other  interested  parties,  to the extent necessary to effect
such compliance.