2

                           Sound Federal Bancorp, Inc.
                              Employment Agreement

     AGREEMENT  made this 8th day of December 2005, by and between Sound Federal
Bancorp, Inc. (the "Company"), which has its principal office at 1311 Mamaroneck
Avenue,  Suite 190, White Plains,  New York and ANTHONY J. FABIANO  (hereinafter
referred to as the "Employee").  Any reference herein to "Bank" shall mean Sound
Federal  Savings,  a  wholly-owned  subsidiary of the Company,  or any successor
thereto.

                                   Witnesseth:

     WHEREAS,  the  Employee is Chief  Financial  Officer of the Company and the
Bank and has  developed  an intimate and  thorough  knowledge  of the  Company's
business methods and operations; and

     WHEREAS,  the retention of the Employee's services for and on behalf of the
Company is of material  importance to the  preservation  and  enhancement of the
value of the Company's business; and

     WHEREAS, the Employee entered into an Employment Agreement with the Company
on July 14, 2001 (the "Original Agreement"); and

     WHEREAS,  the  Employee  and the  Company  have  agreed to enter  into this
amended  Agreement in order to bring the Agreement into  compliance with Section
409A of the Internal Revenue Code (the "Code").

     NOW, THEREFORE,  in consideration of the mutual covenants set forth in this
Agreement, the Company and the Employee agree as follows:

     Section 1.  Employment  Term.  The Company  employs  the  Employee as Chief
Financial  Officer and the Employee accepts this employment and agrees to render
services to the Company on the terms and conditions set forth in this Agreement.
Commencing  on  January  1,  2006  (the  "Anniversary   Date"  of  the  Original
Agreement),  and continuing at each Anniversary  Date thereafter,  the Agreement
shall renew for an additional  year such that the remaining  term shall be three
(3) years unless  written notice is provided to Executive at least ten (10) days
and not more than sixty (60) days prior to any such  Anniversary  Date, that his
employment  shall  cease at the end of  thirty-six  (36) months  following  such
Anniversary  Date.  Prior to each notice  period for  non-renewal,  the Board of
Directors  ("Board")  of the Company will  conduct a  comprehensive  performance
evaluation  and review of the Executive for purposes of  determining  whether to
extend the Agreement,  and the results  thereof shall be included in the minutes
of the Board's meeting.

<page>

     Section 2. Duties.  The Employee shall perform  executive  services for the
Company and the Bank as may be consistent with the Employee's title,  along with
those other duties that may be assigned from time to time by the Company's Board
of Directors.  During this  Agreement's  term, the Employee's full business time
and best efforts shall be devoted to the affairs and business of the Company, as
is  customarily  required  for the  position  of Chief  Financial  Officer.  The
services of the Employee shall be rendered principally in White Plains, New York
but the  Employee  shall do any  traveling  and  render  services  at such other
present  or  future  offices  on  behalf  of the  Company  as may be  reasonably
required.

     Section  3.  Restricted   Activities.   The  Employee  agrees  that  during
employment, except with the express consent of the Company's Board of Directors,
the Employee will not, directly or indirectly,  engage or participate in, become
a director of, or render advisory or other services for, or in connection  with,
or  become  interested  in,  or  make  any  financial  investment  in any  firm,
corporation,  business  entity  or  business  enterprise  competitive  with  any
business of the  Company;  provided,  however,  that the  Employee  shall not be
precluded or prohibited from owning passive investments,  including  investments
in the securities of other financial institutions, so long as ownership does not
require the Employee to devote  substantial time to management or control of the
other business or activities in which the Employee has invested.

     Section 4. Remedies. The Employee agrees and acknowledges that by virtue of
this employment,  the Employee will obtain and maintain an intimate knowledge of
the  Company's  activities  and  affairs,  including  trade  secrets  and  other
confidential  matters. As a result, and also because of the special,  unique and
extraordinary  services  that the  Employee  is  capable of  performing  for the
Company or one of its competitors,  the Employee recognizes that the services to
be rendered are of a character  giving them a peculiar value,  the loss of which
cannot be  adequately  or reasonably  compensated  for by damages.  The Employee
agrees  that if the  Employee  fails  to  render  to the  Company  the  services
required,  the  Company  shall be  entitled  to  immediate  injunctive  or other
equitable relief to restrain the Employee,  in addition to any other remedies to
which the Company may be entitled under law.

     Section 5.  Compensation.  The Company will compensate and pay the Employee
(or cause the Bank to pay) for the Employee's  services during this  Agreement's
term a minimum base salary of Two Hundred Fifteen  Thousand  Dollars  ($215,000)
for the year ending  December  31,  2006.  Subsequent  annual  salary in amounts
determined  by the  Company's  Board of  Directors  from  year to year  shall be
memorialized by a duly executed Addendum to be appended hereto.

     Section 6.  Vacation.  The Employee shall be entitled to a vacation of four
(4) weeks per calendar year,  arranged to coordinate with the Employee's duties.
If for any reason the Employee's  full  entitlement is not taken in any calendar
year,  the unused portion  thereof shall be lost or deemed waived.  The Employee
shall also be entitled to observe holidays on which the Company is closed.

     Section 7.  Benefits.  The Employee shall be entitled to participate in any
Bank plan relating to pension,  profit sharing,  or other  retirement  benefits,

                                       2

<Page>
along with any medical,  dental,  and life insurance  coverage or  reimbursement
plans that the Company and Bank may adopt for its employees.  The Employee shall
be permitted to participate  in the Company's and Bank's  medical,  dental,  and
life insurance  coverage and  reimbursement  plans to the extent that such plans
exist and as constituted from time to time until the Employee's death; provided,
however,  that if the  employment  of the Employee is terminated by the Employee
for "good  reason" (as defined in Section  11(g) hereof) or by the Company other
than for  "just  cause"  (as  defined  in  Section  11(a)  hereof)  prior to the
attainment  of age 70, he shall be entitled to  participate  in such plans until
age 70, to the same extent as set forth in Section 11(l) hereof.

     Section  8.  Disability.  (a) If the  Employee  shall  become  disabled  or
incapacitated to the extent that the Employee is unable to perform the duties of
Chief  Financial  Officer,  the Employee shall continue to receive the following
percentages  of  compensation,  exclusive of any benefits which may be in effect
for Bank employees under this Agreement's Section 7 for the following periods of
the  Employee's  disability:  100 percent  for the first six (6) months,  and 60
percent thereafter for this Agreement's remaining term. Upon returning to active
service  on a  full-time  basis,  the  Employee's  full  compensation  shall  be
reinstated  on a "go  forward"  basis.  Should  the  Employee  return  to active
employment on other than a full-time basis, then the Employee's compensation for
the remainder of the then existing term of  employment,  as set forth in Section
5,  shall be reduced on such terms as the  Company's  Board of  Directors  shall
determine.

     (b) There shall be deducted  from the amounts  paid to the  Employee  under
this Section  during any period of disability  any amounts  actually paid to the
Employee pursuant to any disability  insurance,  workers'  compensation or other
similar  program that the Company has  instituted  or may institute on behalf of
its  employees  for the purpose of  compensating  the Employee for a disability,
including  those  payable  under  disability  insurance  policies  covering  the
Employee issued by Commercial Union Insurance Company or any successor issuer(s)
or policies,  but the Company shall  continue the program of  reimbursement  and
payment of premiums as previously conducted.

     (c) For purposes of this Agreement,  and except to the extent prohibited by
Code Section 409A, the Employee shall be deemed disabled or incapacitated if the
Employee,  due to physical or mental illness, shall have been absent from duties
with the Company on a full-time  basis for thirty (30) days  provided,  that, if
the Employee  shall not agree with a  determination  to  terminate  the Employee
because of  disability or  incapacity,  the question of the  Employee's  ability
shall be submitted  to an  impartial  and  reputable  physician  selected by the
parties and such physician's  determination  regarding  disability or incapacity
shall be final and binding.

     Section 9. Stock Options.  During this Agreement's  term, the Employee will
be entitled to  participate  in and  receive the  benefits of any stock  option,
profit sharing, or other plans,  benefits, and privileges given to employees and
executives of the Company or its  subsidiaries and affiliates that may come into
existence  to the  extent  commensurate  with the  Employee's  then  duties  and
responsibilities,  as fixed by the Company's Board of Directors or any Committee
of the Board or of the Company selected for this purpose; and, to the extent the
Employee is otherwise  eligible and qualifies,  to so participate in and receive

                                       3
<page>

these  benefits or  privileges.  The Company shall not make any changes in these
plans,  benefits or privileges that would adversely affect the Employee's rights
or benefits  unless the change  occurs  pursuant to a program  applicable to all
Bank executive officers and does not result in a proportionately greater adverse
change in the rights of or benefits to the  Employee as compared  with any other
Bank  executive  officer.  Nothing  paid  to the  Employee  under  any  plan  or
arrangement  presently in effect or made available in the future shall be deemed
to be in lieu of the salary payable to the Employee pursuant to Section 5.

     Section 10. Expenses. The Company shall reimburse the Employee or otherwise
provide  for or pay for all  reasonable  expenses  incurred  by the  Employee in
furtherance of, or in connection with, the Company's  business,  including,  but
not by way of limitation,  automobile and traveling  expenses and all reasonable
entertainment  expenses  whether  incurred at the  Employee's  residence,  while
traveling, or otherwise, subject to reasonable limitations as may be established
by the Company's  Board of Directors,  provided these expenses are deductible by
the Company for federal income taxation purposes.  If these expenses are paid in
the first instance by the Employee, the Company will reimburse the Employee.

     Section 11. Termination. (a) The Company's Board of Directors may terminate
the  Employee's  employment at any time,  but any  termination  by the Company's
Board of Directors other than  termination  for just cause,  shall not prejudice
the Employee's right to compensation or other benefits under the Agreement.  The
Employee shall have no right to receive  compensation  or other benefits for any
period  after  termination  for just cause.  Termination  for "just cause" shall
include termination because of the Employee's personal dishonesty, incompetence,
willful  misconduct,   breach  of  fiduciary  duty  involving  personal  profit,
intentional  failure to perform  stated  duties,  willful  violation of any law,
rule, or regulation (other than traffic violations or similar offenses) or final
cease-and-desist order, or material breach of any provision of this Agreement.

     (b) In the event  employment  is  terminated  for just  cause  pursuant  to
Section  11(a),  the  Employee  shall  have no  right to  compensation  or other
benefits  for  any  period  after  the  termination  date.  If the  Employee  is
terminated  by the Company  other than for just cause  pursuant to Section 11(a)
the Employee's right to compensation and other benefits shall be as set forth in
Section 11(i).  If employment is terminated  for just cause,  the Employee shall
have the right, at the Employee's  sole option,  to appear at the next scheduled
regular or special meeting of the Company's Board of Directors at which a quorum
of the Board is present so that the Board may hear argument from the Employee or
counsel or both and reconsider  the  termination.  The Board of Directors  shall
deliver to the Employee its reconsidered  determination in writing within twenty
(20) days after the meeting.  This  procedure  shall not prejudice the rights of
either party under Section 20.

     (c) The  Employee  shall  have the  right,  upon  prior  written  Notice of
Termination of not less than thirty (30) days and that  otherwise  satisfies the
requirements of Section 11(i), to terminate  employment,  but in this event, the
Employee shall have no right after the termination date to compensation or other
benefits as  provided  in this  Agreement,  unless the  termination  is for good
reason, as defined, pursuant to Section 11(g).

                                       4
<Page>
     (d) All obligations under this Agreement may be terminated: (i) by the FDIC
or successor or other  regulatory  agency at the time such agency enters into an
agreement to provide assistance to or on behalf of the Company or Bank; and (ii)
by the OTS or successor or other regulatory  agency at the time that such agency
approves a supervisory  merger to resolve  problems  related to the Company's or
Bank's  operations or when the Company or Bank is determined by the OTS or other
agency to be in an unsafe or unsound  condition,  but the  Employee's  rights to
compensation earned as of that date shall not be affected.

     (e) If the Company is in  default,  as defined to mean an  adjudication  or
other  official  determination  by a court of  competent  jurisdiction  or other
public  authority  pursuant  to which a  conservator,  receiver,  or other legal
custodian is appointed for the Company for liquidation purposes, all obligations
under  this  Agreement  shall  terminate  as of the  date  of  default,  but the
Employee's rights to compensation earned as of the termination date shall not be
affected.

     (f) In the event that the Employee is  terminated in a manner that violates
the provisions of Section 11(a), as determined by arbitration in accordance with
Section 20, the Employee shall be entitled to  reimbursement  for all reasonable
costs,   including  attorney's  fees,  in  challenging  the  termination.   This
reimbursement  shall be in  addition  to all  rights  to which the  Employee  is
otherwise entitled under this Agreement. Notwithstanding the above, the Employee
shall be  entitled  to  indemnification  from the  Company  consistent  with the
Company's  Certificate  of  Incorporation,  Bylaws,  and  the  Delaware  General
Corporation Law. In addition, if the Employee serves as a director,  officer, or
employee of any  affiliate  of the Company,  the  Employee  shall be entitled to
indemnification  and exculpation  from liability to the full extent permitted by
applicable  law, and the Company agrees to cause all necessary  provisions to be
included  in, or changes  made to, the  Articles of  Incorporation  or Bylaws of
these affiliates required to accomplish this.

     (g) The Employee may terminate  employment for good reason. For purposes of
this Agreement, "good reason" shall mean: (1) a failure by the Company to comply
with any material provision of this Agreement,  which failure has not been cured
within  ten (10) days  after a notice  of  noncompliance  has been  given by the
Employee to the Company;  or (2) any  purported  termination  of the  Employee's
employment which is not effected pursuant to a Notice of Termination  satisfying
the requirements of Section 11(h).

     (h) Any  termination of the Employee's  employment by the Company or by the
Employee  shall be  communicated  by written  Notice of Termination to the other
party only after any applicable grace period's  expiration that may be set forth
in this  Agreement.  For purposes of this  Agreement,  a "Notice of Termination"
shall mean a dated  notice which  shall:  (1) indicate the specific  termination
provision in the Agreement  relied upon; (2) set forth in reasonable  detail the
facts and circumstances claimed to provide a basis for the Employee's employment
termination  under the  provision so indicated;  (3) specify a termination  date
which  shall be not less than  fifteen  (15) days nor more than thirty (30) days
after a Notice  of  Termination  is given,  except in the case of the  Company's
termination  of the  Employee's  employment  for just cause  pursuant to Section
11(a),  for which the Notice of Termination must specify that the termination is
effective immediately; and (4) be given in the manner specified in Section 14.

                                       5
<Page>

     (i) (1) If the Employee shall terminate employment for good reason pursuant
to 11(g) or if the Company  terminates  the Employee  other than for just cause,
then in  lieu  of any  further  salary  payments  to the  Employee  for  periods
subsequent to the  termination  date,  the Company shall pay as severance to the
Employee  an amount  equal to:  three (3) times the  Employee's  average  annual
compensation  (computed on the basis of the most recent five (5) taxable  years)
paid to the Employee and includable in the  Employee's  gross income for federal
income tax purposes on the date on which the termination occurs, this payment to
be  made in a lump  sum on or  before  the  thirtieth  (30)  day  following  the
termination date.  However,  in the event the Employee is considered a Specified
Employee  as provided in Section  11(o),  this lump sum payment  will be made no
earlier than the first day of the seventh month  following the effective date of
the Employee's Separation from Service as defined in Section 11(n).

     (2) Notwithstanding any other provision of this Agreement,  in the event of
a Change in Control as provided in Section  11(j),  the Company shall pay to the
Employee  an amount  equal to:  three (3) times the  Employee's  average  annual
compensation  (computed on the basis of the most recent five (5) taxable  years)
paid to the Employee and includable in the  Employee's  gross income for federal
income tax purposes  with such payment to be made in a lump sum on the effective
date of the Change in Control.

     (3) If for any  reason  the  basis for  termination  of this  Agreement  or
payment  of amounts  under this  Section  is  disputed  by either  party to this
Agreement or any other person or agency, then pending resolution of any dispute,
within  three (3) months after the due date of the  payment,  the Company  shall
deliver the entire  amount  calculated  in  accordance  with this  Section to an
independent  trustee  to hold in an  interest  bearing  account in trust for the
benefit of the Employee and the Company, whichever may be ultimately entitled to
the same.  The  trustee  shall be a bank or savings  institution  other than the
Company, with deposits of at least $250,000,000, unrelated to any parties in the
dispute,  and disinterested in any transaction arising out of or engendering the
dispute.  If the  parties  are unable to agree upon a trustee  within  this time
period,  then either party may seek  immediate  relief from a court of competent
jurisdiction  without the  necessity  of first  resorting to  arbitration  under
Section 20. In  addition,  the Company  agrees that the  Employee  would have no
adequate remedy at law for breach of these  obligations,  and the Employee shall
be entitled to immediate  injunctive and other  appropriate  equitable relief to
enforce the same without the necessity of first  resorting to arbitration  under
Section 20.

     (4) Any  payments  made to the  Employee  pursuant  to  this  Agreement  or
otherwise, are subject to and conditioned upon compliance with 12 U.S.C. Section
1828(k) and any regulations promulgated thereunder.  Notwithstanding anything to
the contrary herein,  the Employee shall only be entitled to a payment under the
first  to  occur  of  (i)(1)  or  (i)(2)  above.  Payments  under  one of  these
alternatives shall preclude any payments under the other.

                                       6
<Page>
     (j) For purposes of this  Agreement,  a Change in Control of the Company or
the Bank shall mean (i) a change in  ownership  of the Company or the Bank under
paragraph (1) below, or (ii) a change in effective control of the Company or the
Bank  under  paragraph  (2)  below,  or (iii) a  change  in the  ownership  of a
substantial portion of the assets of the Company or the Bank under paragraph (3)
below:

     (1) Change in the  ownership  of the  Company or the Bank.  A change in the
ownership  of the  Company  or the Bank  shall  occur  on the date  that any one
person,  or more  than one  person  acting as a group (as  defined  in  Proposed
Treasury  Regulation  Section   1.409A-3(g)(5)(v)(B)  or  subsequent  guidance),
acquires ownership of stock of the corporation that, together with stock held by
such person or group,  constitutes more than 50 percent of the total fair market
value or total voting power of the stock of such corporation.

     (2) Change in the effective control of the Company or the Bank. A change in
the  effective  control of the  Company or the Bank shall occur on the date that
either (i) any one person, or more than one person acting as a group (as defined
in Proposed  Treasury  Regulation  Section  1.409A-3(g)(5)(v)(B)  or  subsequent
guidance),  acquires (or has acquired  during the 12-month  period ending on the
date of the most recent  acquisition  by such person or  persons)  ownership  of
stock of the corporation possessing 35 percent or more of the total voting power
of the  stock  of  such  corporation;  or  (ii) a  majority  of  members  of the
corporation's  Board of  Directors  is replaced  during any  12-month  period by
Directors  whose  appointment  or election is not  endorsed by a majority of the
members  of the  corporation's  Board  of  Directors  prior  to the  date of the
appointment or election,  provided that this  sub-section  (ii) is  inapplicable
where a majority shareholder of the Company or the Bank is another corporation.

     (3) Change in the  ownership of a  substantial  portion of the Company's or
the Bank's  assets.  A change in the ownership of a  substantial  portion of the
Company or the Bank's  assets  shall occur on the date that any one  person,  or
more  than one  person  acting  as a group  (as  defined  in  Proposed  Treasury
Regulation Section  1.409A-3(g)(5)(v)(B)  or subsequent guidance),  acquires (or
has acquired  during the 12-month  period  ending on the date of the most recent
acquisition by such person or persons) assets from the  corporation  that have a
total  gross  fair  market  value  equal to or more than 40 percent of the total
gross fair market value of (i) all of the assets of the Company or Bank, or (ii)
the value of the assets being disposed of, either of which is determined without
regard to any liabilities associated with such assets.

     (4) For all purposes  hereunder,  the definition of Change in Control shall
be  construed  to be  consistent  with the  requirements  of  Proposed  Treasury
Regulation Section 1.409A-3(g) or subsequent guidance, except to the extent that
such proposed regulations are superseded by subsequent guidance.

     (k) The  Employee  shall not be  required  to  mitigate  the  amount of any
payment  provided  for in  Section  11(i)(1)  by  seeking  other  employment  or
otherwise.  No other employment or compensation  from other sources or employers
shall  affect or reduce  the  amounts  or  obligations  of the  Company  to make
payments or provide the  benefits or  arrangements  to the  Employee  under this
Agreement.

                                       7
<Page>

     (l)  Notwithstanding  any  provision  in this  Agreement,  in the  event of
termination  by the Employee for "good  reason" or by the Company other than for
just cause, or in the event of a Change in Control,  all then existing  medical,
dental,  life insurance,  and other  applicable  benefit plans shall continue in
force for the  Employee's  benefit at the Company's  sole cost and expense until
the  employee  attains  the  age of 70  years,  provided,  however,  that if the
Employee shall subsequently receive equivalent medical or dental coverage from a
new  employer,  the Company  shall no longer be obligated to continue to provide
such coverage.

     (m) Excise Tax Indemnification.

     (1) In the event that any  payments or benefits  provided or to be provided
to the Employee  pursuant to this  Agreement,  in  combination  with payments or
benefits, if any, from other plans or arrangements  maintained by the Company or
any Subsidiaries,  constitute "excess parachute  payments" under Section 280G of
the Code,  and are  subject to excise tax under  Section  4999 of the Code,  the
Company shall pay to Employee in cash an  additional  amount equal to the amount
of the Gross Up Payment as defined  below.  The "Gross Up Payment"  shall be the
amount  needed to ensure that the amount of such  payments and the value of such
benefits received by Employee (net of such excise tax and any federal, state and
local tax on the  Company's  payment to him  attributable  to such  excise  tax)
equals  the  amount  of such  payments  and value of such  benefits  as he would
receive in the absence of such excise tax and any  federal,  state and local tax
on the  Company's  payment to him  attributable  to such excise tax. The Company
shall  pay the  Gross Up  Payment  within  thirty  (30)  days  after the Date of
Termination subject to Section 11(m)(5).

     (2) For  purposes of  determining  the amount of the Gross Up Payment,  the
value of any  non-cash  benefits  and  deferred  payments or  benefits  shall be
determined  by  the  Company's  independent  auditors  in  accordance  with  the
principles of Section 280G(d)(3) and (4) of the Code.

     (3) In the event  that,  after the Gross Up Payment is made,  the amount of
the excise tax  described in Section  11(m)(1)  hereof is  determined to be less
than the amount  calculated in the  determination of the actual Gross Up Payment
made by the Company,  Employee shall repay to the Company, at the time that such
reduction in the amount of excise tax is finally determined,  the portion of the
Gross Up Payment attributable to such reduction,  plus interest on the amount of
such  repayment at the  applicable  federal rate under  Section 1274 of the Code
from the date of the Gross Up Payment to the date of the  repayment.  The amount
of the reduction of the Gross Up Payment shall reflect any subsequent  reduction
in excise taxes resulting from such repayment.

     (4) In the event  that,  after the Gross Up Payment is made,  the amount of
the excise tax described in Section  11(m)(1) hereof is determined to exceed the
amount  anticipated at the time the Gross Up Payment was made, the Company shall
pay to the  Employee,  in  immediately  available  funds,  at the time that such
additional  amount of excise tax is finally  determined,  an additional  payment
("Additional  Gross Up Payment") equal to such  additional  amount of excise tax
and any federal, state and local taxes thereon, plus all interest and penalties,
if any,  owed by the Employee with respect to such  additional  amount of excise
and other tax.

                                       8
<Page>

     (5) The Company  shall have the right to challenge,  on Employee's  behalf,
any excise tax  assessment  against him as to which  Employee is entitled to (or
would be entitled if such assessment is finally determined to be proper) a Gross
Up Payment or Additional Gross Up Payment,  provided that all costs and expenses
incurred in such a challenge shall be borne by the Company and the Company shall
indemnify the Employee and hold him harmless,  on an after-tax  basis,  from any
excise or other tax  (including  interest and  penalties  with respect  thereto)
imposed as a result of such payment of costs and expenses by the Company.

     (n)  "Separation  from Service"  shall mean,  consistent  with Code Section
409A(2)(a)(i),  the Employee's death, retirement,  or termination of employment.
No Separation from Service shall be deemed to occur due to military leave,  sick
leave or other  bona fide  leave of absence if the period of such leave does not
exceed six months or, if longer, so long as the Employee's right to reemployment
is  provided  by law or  contract.  If the  leave  exceeds  six  months  and the
Employee's right to reemployment is not provided by law or by contract, then the
Employee shall be have a Separation  from Service on the first date  immediately
following such six-month  period.  The Employee shall not be treated as having a
Separation  from  Service  if the  Employee  provides  more  than  insignificant
services for the Company and Bank following the  Employee's  actual or purported
termination of employment  with the Company and Bank.  Services shall be treated
as not being insignificant if such services are performed at an annual rate that
is at least equal to 20 percent of the services rendered by the Employee for the
Company  and Bank,  on  average,  during the  immediately  preceding  three full
calendar years of employment (or if employed less than three years, such shorter
period of employment) and the annual base  compensation  for such services is at
least equal to 20 percent of the average  base  compensation  earned  during the
final three full calendar  years of  employment  (or if employed less than three
years,  such shorter  period of  employment).  Where the  Employee  continues to
provide services to a previous employer in a capacity other than as an employee,
a Separation from Service will not be deemed to have occurred if the Employee is
providing  services at an annual rate that is 50 percent or more of the services
rendered,  on average,  during the immediate preceding three full calendar years
of employment (or if employed less than three years, such lesser period) and the
annual base  compensation  for such services is 50 percent or more of the annual
base  compensation  earned  during  the  final  three  full  calendar  years  of
employment (or if less, such lesser period).

     (o) "Specified  Employee"  shall mean a "key employee" of a publicly traded
company, as defined in Code Section 416(i) or, if different,  within the meaning
of Code Section  409A and the  Proposed  Regulations  or other  guidance  issued
thereunder.

                                       9
<page>

     Section 12. Other Benefits.  Notwithstanding  anything to the contrary, the
payment or obligation to pay any monies, or granting of any rights or privileges
to the Employee as provided in this Agreement shall not be in lieu or derogation
of the rights and privileges that the Employee now has under any plan or benefit
presently outstanding.

     Section 13. Agreement Changes. This Agreement may not be modified, changed,
amended,  or  altered  except  in  writing,  signed  by the  Employee  or by the
Employee's duly authorized representative, and by a duly authorized Bank officer
or Chairman of the Company's Board of Directors.

     Section 14. Notices.  All notices given or required to be given shall be in
writing,  sent by United States first-class certified or registered mail, return
receipt requested  postage prepaid,  to the Employee or to the Employee's spouse
or estate upon the Employee's death at the Employee's last known address, and to
the  Company at its  principal  office.  All  notices  shall be  effective  when
deposited in the mail in the manner specified in this Section. Either party by a
notice in writing may change or designate the place for receipt of all notices.

     Section 15. Waiver of Rights.  No course of conduct between the Company and
the Employee and no delay or omission of the Company or the Employee to exercise
any right or power given under this Agreement  shall:  (i) impair the subsequent
exercise  of any  right or  power;  or (ii) be  construed  to be a waiver of any
default or any acquiescence in or consent to the curing of any default while any
other  default  shall  continue to exist,  or be  construed  to be a waiver of a
continuing  default or of any other right or power that shall have  arisen;  and
every power and remedy  granted by law and by this Agreement to any party may be
exercised from time to time, and as often as may be deemed expedient. All of the
rights and powers shall be cumulative to the fullest extent permitted by law.

     Section 16. Prior Agreements.  This Agreement  supersedes any and all prior
Employment  Agreements  written or verbal,  between the parties all of which are
canceled.

     Section 17. Successors. This Agreement shall inure to the benefit of and be
binding upon the Employee, and, to the extent applicable,  the Employee's heirs,
assigns,  executors,  and personal  representatives,  and upon the Company,  its
successors, and assigns, including, without limitation, any person, partnership,
or corporation that may acquire all or substantially all of the Company's assets
and business,  or with or into which the Company may be  consolidated or merged,
and  this  provision  shall  apply  in  the  event  of  any  subsequent  merger,
consolidation, or transfer unless a merger or consolidation or subsequent merger
or  consolidation  is a transaction of the type that would result in termination
under sections 11(e) and 11(f).

     Section 18.  Assignment.  This Agreement is personal to each of the parties
and neither party may assign or delegate any of its rights or obligations  under
this Agreement without the prior written consent of the other party.

     Section  19.  Applicable  Law.  This  Agreement  shall be  governed  in all
respects  and be  interpreted  by and  under  the laws of the State of New York,
except to the extent that the law may be  preempted by  applicable  federal law,
including  regulations,  opinions,  or orders  duly issued by the OTS or FDIC or
successor  or other  regulatory  agency  ("Federal  Law"),  in which  event this
Agreement shall be governed and be interpreted by and under Federal Law.

                                       10
<page>

     Section 20.  Arbitration.  Except as otherwise expressly provided elsewhere
in this  Agreement,  in the event that any  dispute  should  arise  between  the
parties as to the meaning, effect,  performance,  enforcement, or other issue in
connection with this Agreement, which dispute cannot be resolved by the parties,
except the question of Employee's  disability  under  Section 8(c),  the dispute
shall  be  decided  by  final  and  binding  arbitration  of a  panel  of  three
arbitrators  who  shall be  present  or former  executives  of  Federal  savings
institutions  located in the United States.  Proceedings in arbitration  and its
conduct shall be governed by the rules of the American  Arbitration  Association
("AAA")  applicable to commercial  arbitrations (the "Rules") except as modified
by this Section.  The Employee shall appoint one  arbitrator,  the Company shall
appoint one arbitrator,  and the third shall be appointed by the two arbitrators
appointed  by the parties.  The third  arbitrator  shall be impartial  and shall
serve as chairman of the panel.  The parties  shall  appoint  their  arbitrators
within  thirty  (30) days after the demand for  arbitration  is served,  failing
which the AAA promptly shall appoint a defaulting  party's  arbitrator,  and the
two arbitrators shall select the third arbitrator within fifteen (15) days after
their appointment,  or if they cannot agree or fail to so appoint,  then the AAA
promptly shall appoint the third arbitrator.  The arbitrators shall render their
decision in writing within thirty (30) days after the close of evidence or other
termination of the  proceedings by the panel,  and the decision of a majority of
the  arbitrators  shall be final and binding  upon the  parties,  nonappealable,
except in  accordance  with the Rules and  enforceable  in  accordance  with the
Uniform  Arbitration  Act in  force in the  State of New York or any  applicable
successor legislation. Any hearings in the arbitration shall be held in the City
of White Plains, New York unless the parties shall agree upon a different venue,
and shall be private and not open to the public.  Each party shall bear the fees
and  expenses  of its  arbitrator,  counsel,  and  witnesses,  and the  fees and
expenses of the third  arbitrator  shall be shared  equally by the parties.  The
costs of the arbitration,  including the fees of AAA, shall be borne as directed
in the decision of the panel.

     Section 21. Separability. If for any reason, any section or portion of this
Agreement shall be held by a court to be invalid or unenforceable,  it is agreed
that this shall not affect any other section or portion of this Agreement.

     Section 22.  Source of payments.  All payments  provided in this  Agreement
shall be timely paid in cash or check from the general  funds of the Company (or
the Company may cause the Bank to make such  payments).  The  Company,  however,
guarantees  payment and  provisions of all amounts and benefits due hereunder to
Employee.

                  [Remainder of Page Intentionally Left Blank]
                                       11


<PAGE>


IN WITNESS WHEREOF,  the parties have duly executed this Agreement as of the day
and year first above written.



ATTEST:                                            SOUND FEDERAL BANCORP, INC.

/s/ Richard P. McStravick                          /a/ Anthony J. Fabiano
--------------------------                         ---------------------------


WITNESS:                                            EMPLOYEE:



/s/ Richard P. McStravick                           /s/ Bruno J. Gioffee
------------------------                            ----------------------------