<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1999
-------------
COMMISSION FILE NUMBER 1-13157
JSB FINANCIAL, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED ON ITS CHARTER)
DELAWARE 11-3000874
- ------------------------------ ------------------
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
303 MERRICK ROAD, LYNBROOK, NEW YORK 11563
------------------------------------------
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
(516) 887-7000
--------------
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
[X] YES [ ] NO
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
CLASS OF COMMON STOCK OUTSTANDING AT AUGUST 5, 1999
- --------------------- -----------------------------
$.01 PAR VALUE 9,286,897
<PAGE> 2
<TABLE>
INDEX
PART I - FINANCIAL INFORMATION
<CAPTION>
Page
Number
------
<S> <C> <C>
ITEM 1. Financial Statements - Unaudited
--------------------------------
Consolidated Statements of Financial Condition
at June 30, 1999 and December 31, 1998 3
Consolidated Statements of Operations for the Three
Months and Six Months Ended June 30, 1999
and June 30, 1998 4
Consolidated Statements of Stockholders' Equity for the
Six Months ended June 30, 1999 5
Consolidated Statements of Cash Flows for
the Six Months Ended June 30, 1999 and June 30, 1998 6 - 7
Notes to the Consolidated Financial Statements 8 - 9
ITEM 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 10 - 19
----------------------------------------------
ITEM 3. Quantitative and Qualitative Disclosures About Market Risk 20 - 22
----------------------------------------------------------
PART II - OTHER INFORMATION
ITEM 1. Legal Proceedings 23
ITEM 2. Changes in Securities and Use of Proceeds 23
ITEM 3. Defaults Upon Senior Securities 23
ITEM 4. Submission of Matters to a Vote of Security Holders 23
ITEM 5. Other Information 23
ITEM 6. Exhibits and Reports on Form 8-K 24
Signatures 25
Exhibit Index 26
</TABLE>
<PAGE> 3
<TABLE>
JSB FINANCIAL, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
<CAPTION>
JUNE 30, DECEMBER 31,
1999 1998
----------- -------------
<S> <C> <C>
ASSETS
- ------
Cash and due from banks $ 14,393 $ 13,849
Federal funds sold 64,500 99,000
---------- ----------
Cash and cash equivalents 78,893 112,849
Securities available-for-sale, at estimated fair value 86,697 83,592
Securities held-to-maturity, net (estimated fair value of
$220,883 and $208,906, respectively) 221,364 208,457
Other investments 10,833 8,922
Mortgage loans, net 1,164,041 1,146,915
Other loans, net 20,147 22,744
Premises and equipment, net 18,702 18,340
Interest due and accrued 9,005 8,773
Real estate held for sale and other real estate ("ORE") 266 785
Other assets 10,073 10,272
---------- ----------
Total Assets $1,620,021 $1,621,649
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
- ------------------------------------
Deposits $1,110,116 $1,124,166
Federal Home Loan Bank of New York ("FHLB-NY") advances 50,000 50,000
Advance payments for real estate taxes and insurance 14,654 13,993
Official bank checks outstanding 27,893 11,604
Deferred tax liability, net 27,533 25,476
Accrued expenses and other liabilities 14,910 13,934
---------- -----------
Total Liabilities 1,245,106 1,239,173
---------- -----------
Commitments and Contingencies
STOCKHOLDERS' EQUITY
- --------------------
Preferred stock ($.01 par value, 15,000,000 shares authorized;
none issued) -- --
Common stock ($.01 par value, 65,000,000 shares authorized;
16,000,000 issued; 9,273,842 and 9,505,923 outstanding,
respectively) 160 160
Additional paid-in capital 170,072 168,663
Retained income, substantially restricted 342,633 337,474
Common stock held by Benefit Restoration Plan Trust, at cost
(196,823 and 193,723 shares, respectively) (4,758) (4,477)
Common stock held in treasury, at cost (6,726,158 and 6,494,077
shares, respectively) (175,809) (160,215)
Accumulated other comprehensive income:
Net unrealized gain on securities available-for-sale, net of tax 42,617 40,871
---------- ----------
Total Stockholders' Equity 374,915 382,476
---------- ----------
Total Liabilities and Stockholders' Equity $1,620,021 $1,621,649
========== ==========
<FN>
See accompanying notes to the consolidated financial statements.
</FN>
</TABLE>
<PAGE> 4
<TABLE>
JSB FINANCIAL, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
----------------------------------------------------------------
1999 1998 1999 1998
----------------------------------------------------------------
<S> <C> <C> <C> <C>
Interest Income
- ---------------
Mortgage loans, net $22,800 $21,820 $45,757 $42,361
Debt & equity securities, net 1,867 3,076 3,795 6,681
Collateralized mortgage obligations ("CMOs") and
mortgage-backed securities ("MBS"), net 1,752 1,706 3,295 3,245
Other loans, net 350 502 720 1,010
Federal funds sold 709 1,173 1,585 2,378
------- ------- ------- -------
Total Interest Income 27,478 28,277 55,152 55,675
------- ------- ------- -------
Interest Expense
- ----------------
Deposits 8,629 9,742 17,348 19,384
FHLB-NY advances 700 - 1,393 -
------- ------- -------- -------
Total Interest Expense 9,329 9,742 18,741 19,384
------- ------- -------- --------
Net Interest Income 18,149 18,535 36,411 36,291
Provision for Loan Losses 5 14 12 28
------- ------- ------- -------
Net Interest Income After Provision for
Loan Losses 18,144 18,521 36,399 36,263
------- ------- ------- -------
Non-Interest Income
- -------------------
Real estate operations, net 544 38 1,119 115
Loan fees and service charges 583 2,065 1,970 2,592
Recovery of prior period expenses for troubled loans - 3,346 - 4,346
Miscellaneous (loss)/income (30) 355 (13) 407
------- ------- ------- -------
Total Non-Interest Income 1,097 5,804 3,076 7,460
------- ------- ------- -------
Non-Interest Expense
- --------------------
Compensation and benefits 3,942 3,980 8,038 7,774
Occupancy and equipment expenses, net 1,335 1,217 2,714 2,503
Federal deposit insurance premiums 35 36 70 72
Other general and administrative 1,774 1,648 3,490 3,318
------- ------- ------- -------
Total Non-Interest Expense 7,086 6,881 14,312 13,667
------- ------- ------- -------
Income Before Provision for Income Taxes 12,155 17,444 25,163 30,056
Provision for Income Taxes 5,262 2,258 10,791 7,206
------- ------- ------- -------
Net Income $ 6,893 $15,186 $14,372 $22,850
======= ======= ======= =======
Earnings and Cash Dividends Per Common Share:
- --------------------------------------------
Basic earnings per common share $ .74 $ 1.54 $ 1.54 $ 2.31
======= ======= ======= =======
Diluted earnings per common share $ .73 $ 1.49 $ 1.51 $ 2.24
======= ======= ======= =======
Basic weighted average common shares 9,288 9,878 9,337 9,882
======= ======= ======= =======
Diluted weighted average common & dilutive
potential shares 9,470 10,184 9,540 10,193
======= ======= ======= =======
Cash dividends per common share $ .45 $ .40 $ .90 $ .80
======= ======= ======= =======
Comprehensive Income:
- --------------------
Net Income $ 6,893 $15,186 $14,372 $22,850
Other comprehensive income, net of tax:
Net unrealized appreciation in securities 3,654 881 1,746 5,443
------- ------- -------- -------
Comprehensive Income $10,547 $16,067 $16,118 $28,293
======= ======= ======= =======
<FN>
See accompanying notes to the consolidated financial statements.
</FN>
</TABLE>
<PAGE> 5
<TABLE>
JSB FINANCIAL, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<CAPTION>
SIX MONTHS ENDED
JUNE 30, 1999
-------------
<S> <C>
Common Stock (Par value: $.01)
- ------------------------------
Balance at beginning and end of period $ 160
-------------
Additional Paid-in Capital
- --------------------------
Balance at beginning of period 168,663
Net allocation of common stock for Benefit Restoration Plan 281
Tax benefit for stock plans 1,079
Issuance of common stock for Director's compensation 49
-------------
Balance at end of period 170,072
Retained Income, Substantially Restricted
- -----------------------------------------
Balance at beginning of period 337,474
Net income 14,372
Loss on reissuance of treasury stock (751)
Cash dividends on common stock ($.90) (8,462)
-------------
Balance at end of period 342,633
Common Stock Held by Benefit Restoration Plan Trust, at Cost
- ------------------------------------------------------------
Balance at beginning of period (4,477)
Common stock acquired (359)
Common stock distributed 78
-------------
Balance at end of period (4,758)
Common Stock Held in Treasury, at Cost
- --------------------------------------
Balance at beginning of period (160,215)
Common stock reacquired (17,995)
Common stock reissued for options exercised 2,359
Common stock reissued for Director's compensation 42
-------------
Balance at end of period (175,809)
Accumulated Other Comprehensive Income:
- ---------------------------------------
Balance at beginning of period 40,871
Net unrealized appreciation on securities
available-for-sale, net of tax effect of $1,360 1,746
-------------
Balance at end of period 42,617
-------------
Total Stockholders' Equity $ 374,915
=============
<FN>
See accompanying notes to the consolidated financial statements.
</FN>
</TABLE>
<PAGE> 6
<TABLE>
JSB FINANCIAL, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<CAPTION>
SIX MONTHS ENDED
JUNE 30,
------------------------------
1999 1998
------------------------------
<S> <C> <C>
Cash flows from operating activities
- ------------------------------------
Net income $ 14,372 $ 22,850
Adjustments to reconcile net income to net cash provided by
operating activities:
Provision for loan losses 12 28
Decrease in deferred loan fees and discounts, net (365) (480)
Accretion of discount less than (in excess of) amortization
of premium on MBS and CMOs 73 (38)
Accretion of discount in excess of amortization of
premium on debt securities (4) (78)
Depreciation and amortization on premises and equipment 1,244 978
Mortgage loans originated for sale (274) (1,199)
Proceeds from sale of mortgage loans originated for sale 369 1,192
Gains on sale of mortgage and other loans (2) (58)
Tax benefit for stock plans credited to capital 1,079 2,082
(Increase) decrease in interest due and accrued (232) 304
Increase in official bank checks outstanding 16,289 5,688
Other, net 1,964 (1,260)
-------- --------
Net cash provided by operating activities 34,525 30,009
-------- --------
Cash flows from investing activities
- ------------------------------------
Loans originated:
Mortgage loans (62,639) (135,904)
Other loans (5,014) (8,990)
Purchases of CMOs held-to-maturity (50,244) (34,987)
Purchases of debt securities held-to-maturity and securities
available-for-sale (225,000) (154,000)
Principal payments on:
Mortgage loans 45,783 48,348
Other loans 7,508 9,033
CMOs 26,665 35,593
MBS 603 724
Proceeds from maturities of U.S. Government and
federal agency securities 235,000 270,000
Proceeds from sale of other loans 93 5,043
Purchases of FHLB-NY stock (1,911) (1,277)
Purchases of premises and equipment, net of disposals (1,606) (1,942)
Net decrease in investment in real estate holdings 519 1,214
-------- --------
Net cash (used by) provided by investing activities (30,243) 32,855
-------- --------
<FN>
(CONTINUED)
</FN>
</TABLE>
<PAGE> 7
<TABLE>
JSB FINANCIAL, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS, CONTINUED
(IN THOUSANDS)
<CAPTION>
SIX MONTHS ENDED
JUNE 30,
------------------------------
1999 1998
------------------------------
<S> <C> <C>
Cash flow from financing activities
- -----------------------------------
Net (decrease) increase in deposits (14,050) 493
Increase in advance payments for real estate
taxes and insurance 661 5,174
Proceeds from common stock option exercises 1,608 1,302
Cash dividends paid to common stockholders (8,462) (7,921)
Payments to repurchase common stock (17,995) (11,510)
--------- --------
Net cash used by financing activities (38,238) (12,462)
--------- --------
Net (decrease) increase in cash and cash equivalents (33,956) 50,402
Cash and cash equivalents at beginning of year 112,849 74,924
--------- --------
Cash and cash equivalents at end of quarter $ 78,893 $125,326
========= ========
<FN>
See accompanying notes to the consolidated financial statements.
</FN>
</TABLE>
<PAGE> 8
JSB FINANCIAL, INC. AND SUBSIDIARY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1. Basis of Presentation
- -------------------------
The financial information for JSB Financial, Inc. (the "Company") as
consolidated with its wholly owned subsidiary Jamaica Savings Bank FSB (the
"Bank") is prepared in conformity with generally accepted accounting principles
for interim financial statements and with instructions to Form 10-Q and Article
10 of Regulation S-X. Such principles are applied on a basis consistent with
those reflected in the 1998 Annual Report filed with the Securities and Exchange
Commission. The financial information included herein, other than the
consolidated statement of financial condition as of December 31, 1998, has been
prepared by management without an audit by independent certified public
accountants who do not express an opinion thereon. The consolidated statement of
financial condition as of December 31, 1998, has been derived from, but does not
include all the disclosures contained in, the audited consolidated financial
statements for the year ended December 31, 1998. The information furnished
includes all adjustments and accruals consisting only of normal recurring
accrual adjustments which are in the opinion of management, necessary for a fair
presentation of results for the interim periods. The foregoing interim results
are not necessarily indicative of the results of operations for the full year
ending December 31, 1999.
These consolidated financial statements should be read in conjunction with the
audited consolidated financial statements and notes thereto, included in the
Annual Report to Stockholders for JSB Financial, Inc. for the year ended
December 31, 1998.
2. Impact of New Accounting Standard Not Yet Adopted
- -----------------------------------------------------
In June of 1998, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards No. 133, "Accounting for Derivative
Instruments and Hedging Activities" ("Statement 133"). Statement 133 establishes
accounting and reporting standards for derivative instruments, including certain
derivative instruments embedded in other contracts, (collectively referred to as
derivatives) and for hedging activities. Statement 133 requires that an entity
recognize all derivatives as either assets or liabilities in the statement of
financial position and measure those instruments at fair value. The accounting
for changes in the fair value of a derivative depends on the intended use of the
derivative and the resulting designation. If certain conditions are met, a
derivative may be specifically designated as (a) a hedge of the exposure to
changes in the fair value of a recognized asset or liability or an unrecognized
firm commitment, (b) a hedge of the exposure to variable cash flows of a
forecasted transaction, or (c) a hedge of the foreign currency exposure of a net
investment in a foreign operation, an unrecognized firm commitment, an
available-for-sale security, or a foreign-currency-denominated forecasted
transaction.
The issuance of Statement No. 137, "Accounting for Derivative Instruments and
Hedging Activities-Deferral of the Effective Date of FASB Statement No. 133",
delayed the effective date of Statement 133 to all fiscal quarters beginning
after June 15, 2000. Earlier application of all of the provisions of Statement
133 is encouraged, but it is permitted only as of the beginning of any fiscal
quarter that begins after the issuance of this Statement. Statement 133 should
not be applied retroactively to financial statements of prior periods. Upon
implementation of Statement 133, hedging relationships must be designated anew
and documented pursuant to the provisions of Statement 133. The Company does not
expect the adoption of Statement 133 to have a material affect on its financial
condition or results of operations.
<PAGE> 9
3. Debt and Equity Securities
- ------------------------------
<TABLE>
The following tables set forth information regarding the Company's debt and
equity securities as of:
<CAPTION>
June 30, 1999 December 31, 1998
------------------------------ ------------------------
Amortized Cost/ Estimated Amortized Cost/ Estimated
Carrying Value Fair Value Carrying Value Fair Value
-------------- ---------- -------------- ----------
Held-to-Maturity (In Thousands)
- ----------------
<S> <C> <C> <C> <C>
U.S. Government and federal
agency securities $100,000 $ 99,963 $109,996 $110,026
CMOs, net 119,295 118,699 95,790 95,997
MBS, net 2,069 2,221 2,671 2,883
-------- -------- -------- --------
Total Securities held-to-maturity $221,364 $220,883 $208,457 $208,906
======== ======== ======== ========
Estimated Estimated
Fair Value/ Fair Value/
Cost Carrying Value Cost Carrying Value
---- -------------- ---- --------------
Available-for-Sale (In Thousands)
- ------------------
Marketable equity securities $ 10,869 $ 86,697 $ 10,869 $ 83,592
======== ======== ======== ========
</TABLE>
4. Subsequent Events
- ---------------------
On July 20, 1999, the Company's Board of Directors declared a $.45 per share
dividend on its common stock. The dividend, which is estimated to total $4.2
million, will be paid on August 18, 1999, to stockholders of record on August 4,
1999.
<PAGE> 10
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
---------------------------------------------------------------
General/Financial Condition
- ---------------------------
JSB Financial, Inc. is a Delaware-chartered savings and loan holding company,
which owns 100% of the outstanding common stock of Jamaica Savings Bank FSB. The
Company's assets, including the assets of the Bank, totaled $1.62 billion at
June 30, 1999. In addition to the Company's investment in the Bank, at June 30,
1999, the Company had $19.5 million in money market investments and $15.0
million in short-term federal agency securities.
Asset Quality
- -------------
The Bank's non-performing assets may include: (1) loans which are 90 days or
more in arrears; (2) loans which have been placed on non-accrual status; (3)
ORE; and (4) any other investments on which the collection of contractual
principal and interest is questionable. At June 30, 1999, the Bank's
non-performing assets, which totaled $674,000, included: non-performing loans of
$485,000 and ORE of $189,000, representing 27 cooperative apartments. The ratio
of non-performing assets to total assets was .04% at both June 30, 1999 and
December 31, 1998, respectively. The ratio of non-performing loans to total
loans at both June 30, 1999 and December 31, 1998 was .04%, well below industry
averages. (See Non-performing/Non-accrual Table, herein.)
Year 2000 Issues
- ----------------
The following discussion and tables contain certain forward-looking statements
and information with respect to management's expectations for implementation and
compliance with year 2000 ("Y2K") issues and requirements. Management has
inventoried and analyzed the Company's internal and outsourced computer
hardware, operating systems and applications, including both information
technology systems and non-information technology systems, such as telephone,
air conditioning, electrical, etc. The actual readiness of these systems may
differ materially from what is presented herein. Factors that may cause
differences between anticipated Y2K readiness and actual Y2K readiness include
failure of outside vendors to provide upgrades on a timely basis, and/or failure
of the Bank's hardware, operating systems and applications to meet Y2K readiness
requirements as planned. In addition, the actions of depositors and borrowers in
anticipation of Y2K complications may adversely impact the Company, regardless
of the Company's actual state of Y2K readiness.
The Company completed its assessment of all of its critical computer systems by
September 30, 1997, which included both information technology systems and
non-information technology systems. In January 1999, for reasons unrelated to
Y2K, the Bank substantially replaced its mainframe system with a Windows NT(R)
Client/Server system. This new system had Y2K capabilities built into its
design. All of the Bank's system upgrades and/or programming changes have been
made within the normal course of business, therefore, no material costs specific
to attaining Y2K capability have been incurred. In accordance with Y2K
disclosure requirements, the Company has analyzed the cost impact of Y2K
compliance issues and does not expect related future costs to be material to the
Company's future results of operations or financial condition.
Management has contacted all outside vendors inquiring as to the status of Y2K
compliance and is not aware of any vendor who does not expect to be Y2K
compliant. Management will continue to require updates from all vendors who are
not yet Y2K compliant. The Bank has many non-critical applications, which will
be tested for Y2K compliance during 1999, encompassing the majority of the dates
outlined by the Federal Financial Institutions Examination Council.
The Company believes the required upgrades and testing will ensure completion of
the Y2K project by September 1999. However, given the broad spectrum of
potential Y2K problems, including the ultimate state of readiness of the
Company's local utilities and other third parties, including governmental and
quasi-governmental agencies on which the Company relies, an amount of
<PAGE> 11
uncertainty remains with respect to the actual affect of Y2K. Like all other
financial institutions, a failure to correct a material Y2K problem could result
in an interruption in, or a failure of, certain normal business activities or
operations of the Company. Such failures could materially and adversely affect
the Company's results of operations and financial condition. In addition, the
long term effect of poorly managing Y2K problems that may arise, or failure of
critical computer systems to be Y2K compliant could result in a decline in
business, depositors and confidence in the Company. The Company's Y2K project
was designed and is expected to significantly reduce the Company's level of
uncertainty about internal and external Y2K implications.
As of June 30, 1999 the Company had renovated and tested all of its critical
computer systems. The following table presents the Company's Y2K contingency
plan for the Bank's systems which are identified as critical, should they fail
to meet Y2K compliance deadlines, or ultimately fail to be Y2K compliant in the
future.
System Contingency Plan
- ------ ----------------
Relational Data Base No contingency plan is considered necessary
Local Area Network No contingency plan is considered necessary
Accounting system Use system in prior date mode
Check Processing Manual processing
ATMs Customers to use branches
NYCE Customers to use the Bank's ATM's or branches
Loan Delinquency Table
- ----------------------
<TABLE>
At June 30, 1999 and December 31, 1998, delinquencies in the loan portfolios
were as follows:
<CAPTION>
61-90 Days 90 Days and Over
---------- ----------------
Number Principal Number Principal
of balance of balance
loans of loans loans of loans
----- -------- ----- --------
(Dollars in Thousands)
<S> <C> <C> <C> <C> <C> <C>
At June 30, 1999:
- -----------------
Delinquent loans:
Guaranteed(1) 8 $ 215 11 $ 271
Non-guaranteed 2 46 3 214
-- ------ -- -------
10 $ 261 14 $ 485
== ====== =======
Ratio of delinquent loans
to total loans .02% .04%
At December 31, 1998:
- ---------------------
Delinquent loans
Guaranteed(1) 11 $ 212 10 $ 233
Non-guaranteed 5 63 5 216
-- ------ -- -------
16 $ 275 15 $ 449
== ====== == =======
Ratio of delinquent loans
to total loans .02% .04%
<FN>
(1) Loans which are Federal Housing Administration ("FHA"), Veterans
Administration ("VA") or New York State Higher Education Services
Corporation guaranteed.
</FN>
</TABLE>
<PAGE> 12
Non-performing/Non-accrual Table
- --------------------------------
<TABLE>
The following table sets forth information regarding non-accrual loans and loans
which were delinquent 90 days or more on which the Bank continued to accrue
interest at the dates indicated:
<CAPTION>
June 30, December 31,
1999 1998
---- ----
(In Thousands)
<S> <C> <C>
Mortgage loans:
- ---------------
Non-accrual loans $ 213 $ 213
Accruing loans 90 or more days overdue (1) 271 233
--------- ---------
Total 484 446
--------- ---------
Other loans: (2)
- ----------------
Accruing loans 90 or more days overdue:
Consumer loans 1 3
--------- --------
Total 1 3
--------- --------
Total non-performing loans:
- ---------------------------
Non-accrual 213 213
Accruing loans 90 days or more overdue 272 236
--------- --------
Total $ 485 $ 449
========= ========
Non-accrual loans to total loans .02% .02%
Accruing loans 90 or more days overdue
to total loans .02 .02
Non-performing loans to total loans .04 .04
<FN>
(1) Represents seasoned FHA and VA loans, which are guaranteed. Management
does not believe that these loans, including those in arrears, present
any significant collection risk to the Bank.
(2) There were no non-accrual loans in the other loan portfolio at June 30, 1999 or December 31, 1998.
</FN>
</TABLE>
<TABLE>
Information regarding impaired loans at or for the year to date periods
indicated is as follows:
<CAPTION>
June 30, December 31, June 30,
1999 1998 1998
----------------------------------------
(Dollars in Thousands)
Impaired loans
- --------------
<S> <C> <C> <C>
Number of loans 1 1 -
Balance of impaired loans 213 213 -
Average balance for the year to date period ended 213 5,491 10,358
Interest income recorded for the year to date periods ended 0 397 387
Unrecorded interest on impaired loans 9 509 -
</TABLE>
There were no loans included in the above table that were modified in a trouble
debt restructure ("TDRs"). TDRs other than those classified as impaired and/or
non-accrual loans, were $557,000 and $1,842,000 at June 30, 1999 and December
31, 1998, respectively. Interest forfeited attributable to these loans was
$12,000 and $33,000 for the six months ended June 30, 1999 and 1998,
respectively.
<PAGE> 13
Loan Loss Activity Table
- ------------------------
<TABLE>
Activity in the allowance for loan losses for the mortgage loan portfolio and
the other loan portfolio are summarized for the six months ended June 30, 1999
and the year ended December 31, 1998, as follows:
<CAPTION>
June 30, December 31,
1999 1998
---- ----
(Dollars in Thousands)
<S> <C> <C>
Mortgage Portfolio Loan Loss Allowance:
- ---------------------------------------
Balance at beginning of period $5,741 $5,741
Provision for loan losses - -
Loans charged off - -
Recoveries of loans previously charged off - -
------ ------
Balance at end of period $5,741 $5,741
====== ======
Ratios for Mortgage Portfolio:
- ------------------------------
Net charge-offs to average mortgages -% -%
Allowance for loan losses to net mortgage loans .49 .50
Allowance for loan losses to mortgage loans
delinquent 90 days or more 11.86x 12.87x
Other Loan Portfolio Loss Allowance:
- ------------------------------------
Balance at beginning of period $ 183 $ 139
Provision for loan losses 12 51
Loans charged off (13) (25)
Recoveries of loans previously charged off 20 18
------ ------
Balance at end of period $ 202 $ 183
====== ======
Ratios for Other Loan Portfolio:
- --------------------------------
Net (recoveries) charge-offs to average other loans (.04)% .03%
Allowance for loan losses to net other loans 1.00% .80%
Allowance for loan losses to other loans
delinquent 90 days or more 202.00x 61.00x
</TABLE>
<PAGE> 14
Liquidity and Capital Resources
- -------------------------------
The Company's funds are primarily obtained through dividends paid by the Bank.
The Bank's primary source of funds is deposits. Cash flow is provided by
proceeds from maturities of and interest payments on debt securities, principal
and interest payments on mortgage loans, CMOs and other loans. In accordance
with the Company's policy, there were no sales of investments designated as
held-to-maturity during the periods presented. Overall liquidity is affected by
the Company's operating, financing and investing activities, as well as the
interest rate environment, economic conditions and competition.
The Company's overall asset/liability structure and level of non-performing
assets affects interest rate spreads and margins, which are considered key
measures of the Company's financial performance. As deposits continue to
decrease and migrate into higher cost term accounts, interest rate spreads and
margins are likely to decline. Should the Bank take additional advances
available from the FHLB-NY, the change in liability structure would likely
increase the Company's cost of funds, further narrowing future net interest
margins and interest rate spreads. In determining whether additional advances
will be taken, management will assess deposit levels and trends, loan demand,
the Company's overall liquidity and other market conditions in the future.
During the six months ended June 30, 1999, the $225.0 million of purchases of
U.S. Government and federal agency securities represented the most significant
use of funds in investing activities. Mortgage originations for the portfolio,
substantially all of which were at fixed rates, for the six months ended June
30, 1999 totaled $62.6 million, compared to $135.9 million for the six months
ended June 30, 1998. The decrease in mortgage origination activity can be
attributed to the increase in market interest rates. CMO purchases for the six
months ended June 30, 1999 were $50.2 million, compared to $35.0 million for the
six months ended June 30, 1998. During the first half of 1999, maturities of
U.S. Government and federal agency securities generated $235.0 million, the most
significant source of funds from investment activities, followed by principal
payments on mortgage loans and CMOs of $45.8 million and $26.7 million,
respectively. The $18.0 million cost of repurchasing the Company's common stock
represented the most significant use of funds in financing activities for the
first half of 1999. The increase in cash used for dividend payments reflected
the increase in dividends paid per share to $.90 for the first half of 1999,
compared to $.80 per share for the first half of 1998.
Management monitors deposit levels and interest rates in conjunction with asset
structure and has evaluated and implemented various strategies aimed at
achieving targeted objectives in various interest rate scenarios. Interest rate
spread, net interest margin, liquidity, and related asset quality are some of
the key factors that management considers in determining its investment strategy
and underwriting standards. The Bank's assets are structured such that the
gradual changes in deposits has not materially affected the Company. The Bank's
liquidity ratios continue to exceed all short and long term minimum regulatory
requirements. Management remains focused on providing quality customer service
as its primary strategy for maintaining its relationships with its depositors.
The Bank aims to influence deposit levels and composition through its interest
rate structure. Management believes that the relatively low level of interest
rates and the strong performance and growth of the capital markets sparked and
continues to be the primary cause of deposit runoff over the past several years.
Management decided to allow deposits to decline, rather than offer rates that
would result in lowering net income or necessitate modifying the Bank's existing
investment structure and credit quality standards. Rates offered on the Bank's
deposit accounts are competitive with rates offered by other financial
institutions in its market area. Historically the highest percentage of the
Bank's deposits has been in passbook accounts; however, deposits have continued
to migrate from passbook accounts to certificate of deposit accounts ("CDs"). At
June 30, 1999, deposits were comprised as follows: passbook accounts 45.8%, CDs
39.4%, money market accounts 6.4%, non-interest bearing checking accounts 3.4%,
negotiable order of withdrawal ("NOW") accounts 3.1% and lease security accounts
1.9%. While the Company cannot predict the future direction of deposits,
management expects the current trend to continue provided that, among other
factors, the low interest rate environment continues.
<PAGE> 15
The net decrease in deposits of $14.1 million to $1.110 billion at June 30,
1999, from $1.124 billion at December 31, 1998, reflected decreases of $14.1
million in passbook accounts, $9.2 million in non-interest bearing checking
accounts and $3.1 million in NOW accounts, partially offset by increases in
money market accounts, CDs and lease security accounts of $8.6 million, $3.3
million and $468,000, respectively.
The Company repurchased 326,600 shares of its common stock during the six months
ended June 30, 1999, pursuant to its eleventh stock repurchase program (the
"Eleventh Program"), which began on October 16, 1998. Under the Eleventh
Program, 461,700 shares of the 900,000 shares targeted for repurchase were
acquired at an aggregate cost of $25.1 million, or an average price of $54.33
per share through June 30, 1999. The Company reissued 92,863 shares of treasury
stock for common stock options exercised and reissued 1,656 shares of treasury
stock for Director's compensation during the six months ended June 30, 1999.
On April 13, 1999, the Company's Board of Directors declared a cash dividend of
$.45 per share to stockholders of record on May 5, 1999. The dividend payment,
which totaled $4.2 million, was made on May 19, 1999.
Regulations
- -----------
<TABLE>
As a condition of deposit account insurance, Office of Thrift Supervision
("OTS") regulations require that the Bank calculate three regulatory net worth
requirements on a quarterly basis, and satisfy each requirement at the
calculation date and throughout the ensuing quarter. The three requirements are:
tangible capital ratio of 1.50%, leverage ratio (or "core capital") of 3.00%
(4.00%, pursuant to the OTS Prompt Corrective Action Regulations), and a
risk-based assets capital ratio of 8.00%. The Bank's capital ratios at June 30,
1999 were as follows:
<CAPTION>
Percentage Dollars
---------- -------
(In Thousands)
<S> <C> <C>
TANGIBLE CAPITAL
Required 1.50% $ 23,038
Actual 19.12 293,613
----- --------
Excess 17.62% $270,575
===== ========
CORE CAPITAL
Required 3.00% $ 46,075
Actual 19.12 293,613
----- --------
Excess 16.12% $247,538
===== ========
RISK BASED CAPITAL
Required 8.00% $ 99,867
Actual 25.78 321,779
----- --------
Excess 17.78% $221,912
===== ========
</TABLE>
<PAGE> 16
Comparison of Operating Results for the Three Months
Ended June 30, 1999 and 1998
- --------------------------------------------------------------------------------
Net income for the three months ended June 30, 1999, was $6.9 million, or $.74
per basic share ($.73 per diluted share), compared with $15.2 million, or $1.54
per basic share ($1.49 per diluted share), for the three months ended June 30,
1998.
Earnings for the second quarter ended June 30, 1998 were significantly improved
by non-recurring items. The Company recognized additional pre-tax income of $3.3
million for the three months ended June 30, 1998 in connection with the final
settlement on a $12.8 million non-performing underlying cooperative mortgage
loan, whereby all contractual principal, interest, legal and other fees were
received. In addition, the Company experienced a lower effective tax rate
attributable to the realignment of an operating subsidiary of the Bank, which
resulted in tax savings of $5.0 million for the quarter ended June 30, 1998.
Net interest income for the three months ended June 30, 1999, was $18.1 million,
compared to $18.5 million for the three months ended June 30, 1998. This
decrease reflects a $799,000 decrease in interest income partially offset by a
$413,000 decrease in interest expense. Comparing the quarter ended June 30, 1999
to the quarter ended June 30, 1998, the annualized yield on interest earning
assets decreased to 7.33%, from 7.74%; average interest earning assets increased
by $38.0 million; the cost of funds decreased to 3.32% from 3.58%. The interest
rate spread decreased to 4.02%, from 4.16% for the quarters ended June 30, 1999
and 1998, respectively and the net interest margin decreased to 4.84% from 5.07%
for the same periods, respectively.
Income earned on mortgage loans increased by 4.5%, to $22.8 million for the
three months ended June 30, 1999, compared to $21.8 million for the quarter
ended June 30, 1998. The net increase reflects the continued growth in the
mortgage loan portfolio, partially offset by a decrease in the mortgage
portfolio yield to 7.88% for the quarter ended June 30, 1999, from 8.38% for the
quarter ended June 30, 1998.
For the three months ended June 30, 1999, income from debt and equity securities
decreased by $1.2 million, or 39.3%, to $1.9 million from $3.1 million for the
three months ended June 30, 1998. This decrease resulted from a decline in the
average investment in U.S. Government and federal agency securities and other
investments of $57.9 million, or 29.5%, to $138.4 million, compared to $196.3
million for the three months ended June 30, 1998. The annualized yield on the
debt and equity securities portfolio decreased to 5.39% for the three months
ended June 30, 1999 from 6.27% for the three months ended June 30, 1998. The
debt and equity securities portfolio activity for the current period included
purchases of $100.0 million and maturities of $125.0 million, compared with
purchases of $79.0 million and maturities of $160.0 million for the quarter
ended June 30, 1998.
For the quarter ended June 30, 1999 income on CMOs increased by 4.9%, to $1.7
million, with an annualized yield of 5.72%, from income of $1.6 million with an
annualized yield of 6.17% for the quarter ended June 30, 1998. During the second
quarter of 1999, the Bank received principal payments of $9.6 million on CMOs,
compared with principal payments of $14.4 million for the quarter ended June 30,
1998. CMO purchases during the quarter ended June 30, 1999 totaled $10.0
million, compared to purchases of $15.0 million for the quarter ended June 30,
1998. Income on MBS declined by $33,000 to $51,000 for the quarter ended June
30, 1999, from income of $84,000 for the quarter ended June 30, 1998, reflecting
the amortizing portfolio.
Income on federal funds sold decreased by $464,000, or 39.6% to $709,000 for the
quarter ended June 30, 1999 from $1.2 million for the quarter ended June 30,
1998. This decrease resulted from a decrease in the average investment in
federal funds of $25.8 million to $60.6 million for the current period, compared
with $86.4 million for the quarter ended June 30, 1998. In addition, the
annualized yield on federal funds sold decreased to 4.67% for the current
quarter, compared to 5.43% for the quarter ended June 30, 1998.
Interest expense on deposits decreased by $1.1 million to $8.6 million for the
quarter ended June 30, 1999, compared to $9.7 million for the quarter ended June
30, 1998. Average interest bearing deposits decreased by $12.8 million, to
$1.076 billion for the three months ended June 30, 1999, compared to $1.088
billion for the three months ended June 30, 1998. Further, the cost of interest
bearing deposits decreased to 3.21% from 3.58% for the comparative quarter in
1998.
<PAGE> 17
On December 8, 1998, the Bank borrowed $50.0 million from the FHLB-NY, at a
fixed rate of 5.62%. Interest expense on this advance for the second quarter of
1999 totaled $700,000. The advance will mature on December 7, 2008, at which
time the entire $50.0 million is due. The Bank did not have any borrowed funds
during the second quarter of 1998.
The provision for loan losses for the quarter ended June 30, 1999 was $5,000,
compared to $14,000 for the quarter ended June 30, 1998, comprised entirely of
provisions against the other loan portfolio. Based on management's internal loan
review analysis, no adjustments have been made to the mortgage allowance since
January of 1998. Management will continue to monitor the performance of the loan
portfolios and may adjust allowances accordingly.
Non-interest income for the three months ended June 30, 1999, decreased by $4.7
million to $1.1 million from $5.8 million for the three months ended June 30,
1998. This decrease primarily reflects the impact of non-recurring items. The
second quarter of 1998 included a $3.3 million recovery on the settlement on a
$12.8 million underlying cooperative mortgage loan. Pursuant to the settlement,
all past due interest, legal and other fees were recovered by the Bank. For the
second quarter of 1999, the Company realized $120,000 in prepayment penalties on
investor type mortgages compared to $1.6 million for the second quarter of 1998,
when prepayment activity soared as borrowers sought to benefit from lower
interest rates then available. The Company reported a miscellaneous net loss of
$30,000 for the second quarter of 1999, compared to miscellaneous income of
$355,000 for the second quarter of 1998. Included in the $355,000 miscellaneous
income was a $264,000 refund of real estate taxes on the Company's headquarters
and $60,000 of gains on sales of student loans. These comparative decreases in
components of non-interest income were slightly offset by a $506,000 increase in
income from real estate operations, which increased to $544,000 for the second
quarter of 1999 from $38,000 for the second quarter of 1998. This increase
primarily reflects gains of $426,000 realized on the sale of condominium and
cooperative apartments owned by the Bank's real estate subsidiaries. At June 30,
1999, the real estate subsidiaries held 121 cooperative apartments, which are
carried at zero value, and no condominium apartments.
Non-interest expense increased to $7.1 million, or 3.0%, during the quarter
ended June 30, 1999, from $6.9 million for the quarter ended June 30, 1998. This
increase primarily reflects the $126,000 increase in other general and
administrative expense, which was almost substantially comprised of increases in
professional fees, and the $118,000 increase in occupancy and equipment expense,
which was related to a new computer system.
The provision for income taxes increased by $3.0 million, to $5.3 million for
the three months ended June 30, 1999, from $2.3 million for the three months
ended June 30, 1998. This increase reflected an increase in the Company's
effective tax rate to 43.3% for the quarter ended June 30, 1999, from 12.9% for
the quarter ended June 30, 1998. During 1998, the Company realized tax benefits
in connection with an operating subsidiary, which were not realized during the
second quarter of 1999, as the subsidiary was liquidated during the first
quarter of 1999.
<PAGE> 18
Comparison of Operating Results for the Six Months Ended June 30, 1999 and 1998
- --------------------------------------------------------------------------------
Net income for the six months ended June 30, 1999, was $14.4 million, or $1.54
per basic share ($1.51 per diluted share), compared with $22.9 million, or $2.31
per basic share ($2.24 per diluted share), for the six months ended June 30,
1998.
Earnings for the six months ended June 30, 1998 were significantly improved by
non-recurring items. The Company recognized additional pre-tax income of $4.3
million for the six months ended June 30, 1998 in connection with the settlement
on a $12.8 million non-performing underlying cooperative mortgage loan, whereby
all contractual principal, interest and legal and other fees were received. In
addition, the Company experienced a lower effective tax rate attributable to the
realignment of an operating subsidiary of the Bank, which resulted in tax
savings of $5.0 million for the six months ended June 30, 1998.
Net interest income for the six months ended June 30, 1999, increased slightly
to $36.4 million, compared to $36.3 million for the six months ended June 30,
1998. The increase in net interest income reflects a $643,000 decrease in
interest expense partially offset by a $523,000 decrease in interest income.
Comparing the six months ended June 30, 1999 to the six months ended June 30,
1998, the annualized yield on interest earning assets decreased to 7.37%,
compared to 7.67%. Average interest earning assets increased by $44.7 million
while the cost of funds decreased to 3.33% from 3.56%. Average interest bearing
deposits were $1.074 billion for the six months ended June 30, 1999 compared to
$1.088 billion for the six months ended June 30, 1998. For the six months ended
June 30, 1999, the interest rate spread decreased to 4.04%, compared to 4.11%
and the net interest margin decreased to 4.87% compared to 5.00%.
Income earned on mortgage loans increased by $3.4 million, or 8.0%, to $45.8
million for the six months ended June 30, 1999, compared to $42.4 million for
the six months ended June 30, 1998, reflecting continued growth in the mortgage
loan portfolio. This increase was partially offset by a decrease in the mortgage
portfolio yield to 7.94% for the six months ended June 30, 1999, from 8.33% for
the six months ended June 30, 1998, reflecting originations at the lower market
rates.
For the six months ended June 30, 1999, income on debt and equity securities
decreased by $2.9 million, or 43.2%, to $3.8 million from $6.7 million for the
six months ended June 30, 1998. This decrease resulted from a decline in the
average investment in U.S. Government and federal agency securities and other
investments of $74.7 million, or 34.7%, to $140.8 million for the first half of
1999, compared to $215.5 million for the first half of 1998. The annualized
yield on the debt and equity security portfolio decreased to 5.39% from 6.20%
for the comparative six month periods. The debt and equity securities portfolio
activity for the current period included purchases of $225.0 million and
maturities of $235.0 million, compared with purchases of $154.0 million and
maturities of $270.0 million for the six months ended June 30, 1998.
For the six months ended June 30, 1999, income on CMOs increased slightly by
3.8%, to $3.2 million, with an annualized yield of 5.72%, from income of $3.1
million with an annualized yield of 6.17% for the six months ended June 30,
1998. This increase is reflective of the increase in the average investment in
the CMO portfolio of $11.9 million, or 12.0% for the comparative six month
period. During the six months ended June 30, 1999, the Bank received principal
payments of $26.7 million on CMOs, compared with $35.6 million for the six
months ended June 30, 1998. CMO purchases during the first six months of 1999
totaled $50.2 million, compared to $35.0 million for the first half of 1998.
Income on MBS declined by $66,000 to $111,000 for the six months ended June 30,
1999, from income of $177,000 for the six months ended June 30, 1998, reflecting
the amortizing portfolio.
Income on federal funds decreased by $793,000, or 33.3%, to $1.6 million for the
six months ended June 30, 1999, from $2.4 million for the six months ended June
30, 1998. This decrease resulted from a decrease in the average investment in
federal funds of $20.2 million, to $67.8 million for the current period,
compared with $88.0 million for the six months ended June 30, 1998. The
annualized yield on federal funds sold decreased to 4.67% for the current six
month period, compared to 5.40% for the six month period ended June 30, 1998.
Interest expense on deposits decreased by 10.5%, to $17.3 million for the six
months ended June 30, 1999, compared to $19.4 million for the six months ended
June 30, 1998. Average interest bearing deposits decreased by $13.7 million, or
1.3%, to $1.074 billion for the six months ended June 30, 1999, compared to
$1.088 billion for the six months ended June 30, 1998, and the average rate paid
on interest bearing deposits decreased to 3.23% from 3.56% for the comparative
six month periods.
<PAGE> 19
Interest expense on the $50.0 million FHLB-NY advance for the six months ended
June 30, 1999 was $1.4 million, reflecting interest at the fixed rate of 5.62%.
The Bank did not have any borrowed funds during the six months ended June 30,
1998.
The provision for loan losses for the six months ended June 30, 1999 was
$12,000, compared to $28,000 for the six months ended June 30, 1998, comprised
entirely of provisions against the other loan portfolio. Based on management's
internal loan review analysis, no adjustments to the mortgage allowance were
made during the first six months of 1999 or during calendar 1998. Management
will continue to monitor the performance and characteristics of the loan
portfolios and may adjust future loan loss provisions accordingly.
Total non-interest income for the six months ended June 30, 1999, decreased by
$4.4 million, to $3.1 million from $7.5 million for the six months ended June
30, 1998. Non-interest income for the 1998 period included a $4.3 million
recovery of prior period expenses in accordance with the settlement of a $12.8
million underlying cooperative mortgage loan. Real estate operations increased
by $1.0 million, primarily reflecting gains of $920,000 on the sale of
condominium and cooperative apartments. Loan fees and service charges decreased
by $622,000, primarily reflecting the $478,000 decrease in mortgage loan
prepayment penalties. Miscellaneous income decreased by $420,000 as the 1998
period included a refund of $264,000 for real estate taxes from prior years on
the Company's headquarters and $64,000 in profits realized on sales of student
loans.
Non-interest expense increased by $645,000, or 4.7%, to $14.3 million for the
first six months of 1999, compared to $13.7 million for the first six months of
1998. Compensation and benefits expense increased by $264,000, reflecting salary
adjustments and increases in the cost of benefits, partially offset by a
$318,000 increase in income earned on excess pension fund assets. The $211,000
increase in occupancy and equipment expense reflects an increase in computer
depreciation, related to the new computer system installed in January 1999. The
$172,000 increase in other general and administrative expense primarily reflects
an increase in professional fees.
The provision for income taxes increased by $3.6 million, or 49.8%, to $10.8
million for the six months ended June 30, 1999, from $7.2 million for the six
months ended June 30, 1998. During 1998, the Company realized tax benefits in
connection with an operating subsidiary, which were not realized during the
first half of 1999, as the subsidiary had been liquidated during the first
quarter of 1999. As a result, the Company's effective tax rate was 42.9% for the
six months ended June 30, 1999, compared to 24.0% for the six months ended June
30, 1998.
<PAGE> 20
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
- -------------------------------------------------------------------
Interest Rate Sensitivity Analysis
The matching of assets and liabilities may be analyzed by examining the extent
to which such assets and liabilities are "interest rate sensitive" and by
monitoring the Company's interest rate sensitivity "gap". An asset or liability
is said to be interest rate sensitive within a specific time period if it will
mature or reprice within that time period. The interest rate sensitivity gap is
defined as the difference between the amount of interest earning assets maturing
or repricing within a specific time period and the amount of interest bearing
liabilities maturing or repricing within that time period. A gap is considered
positive when the amount of interest rate sensitive assets exceeds the amount of
interest rate sensitive liabilities. A gap is considered negative when the
amount of interest rate sensitive liabilities exceeds the amount of interest
rate sensitive assets. During a period of rising interest rates, a negative gap
would tend to adversely affect net interest income while a positive gap would
tend to result in an increase in net interest income. During a period of
declining interest rates, a negative gap would tend to result in an increase in
net interest income while a positive gap would tend to adversely affect net
interest income.
The following table sets forth, as of June 30, 1999, repricing information on
earning assets and interest bearing liabilities. The data reflects estimated
principal amortization and prepayments on mortgage loans based on historical
performance. Approximate prepayment rate assumptions for fixed rate one-to
four-family mortgage loans and MBS are based upon the remaining term to
contractual maturity as follows: (a) 26% if less than six months; (b) 11% if six
months to one year, three to five years and for five to ten years; (c) 8% if one
to three years; (d) 9% if ten to twenty years; and (e) 17% if beyond 20 years.
Adjustable-rate mortgages are assumed to prepay at 15% and second mortgages at
18%. All other fixed rate first mortgage loans are assumed to prepay at 3%. All
deposit accounts, which are subject to immediate withdrawal/repricing, except
CDs, are assumed to reprice in the earliest period presented. Marketable equity
securities and other investments which do not have a fixed maturity date or a
stated yield, are reflected as repricing in the more than five years category.
The table does not necessarily indicate the impact of general interest rate
movements on the Company's net interest income because the repricing of certain
categories of assets and liabilities, is beyond the Company's control. As a
result, certain assets and liabilities indicated as repricing within a stated
period may in fact reprice at different times and at different rate levels.
While management regularly reviews the Company's gap analysis, the gap is
considered an analytical tool, which has limited value.
<PAGE> 21
<TABLE>
At June 30, 1999
----------------
<CAPTION>
More More More More
Than Than Than Than
1 Year 2 Years 3 Years 4 Years More
1 Year to to to to Than
or Less 2 Years 3 Years 4 Years 5 Years 5 Years Total
-----------------------------------------------------------------------------------
(Dollars in Thousands)
<S> <C> <C> <C> <C> <C> <C> <C>
Interest earning assets:
Mortgage loans, net 1 $ 48,400 $ 61,715 $ 72,982 $ 99,447 $ 101,466 $ 785,772 $1,169,782
Average interest rate 8.59% 8.54% 8.72% 8.08% 8.01% 7.85%
U.S. Government and federal
agency securities, net 100,000 - - - - - 100,000
Average interest rate 4.79% - - - - -
Marketable equity securities
and other investments, net 2 - - - - - 97,530 97,530
Average interest rate - - - - - N/A
CMOs, net - - - - 3,958 115,337 119,295
Average interest rate - - - - 5.75% 5.95%
MBS, net - 297 - - - 1,772 2,069
Average interest rate - 10.50% - - - 9.68%
Other loans, net 1 8,326 1,157 1,543 1,535 968 6,820 20,349
Average interest rate 4.50% 8.04% 8.15% 7.74% 7.84% 8.14%
Federal funds sold 64,500 - - - - - 64,500
Average interest rate 5.16% - - - - -
-----------------------------------------------------------------------------------
Total interest earning assets 221,226 63,169 74,525 100,982 106,392 1,007,231 1,573,525
-----------------------------------------------------------------------------------
Interest bearing deposit accounts:
Passbook 508,542 - - - - - 508,542
Average interest rate 2.22% - - - - -
Lease security accounts 21,499 - - - - - 21,499
Average interest rate 2.22% - - - - -
CDs 365,804 40,370 11,871 8,697 10,130 - 436,872
Average interest rate 4.62% 5.17% 5.68% 5.75% 5.26% -
Money market accounts 71,366 - - - - - 71,366
Average interest rate 2.32% - - - - -
NOW accounts 33,868 - - - - - 33,868
Average interest rate 1.24% - - - - -
FHLB-NY advances - - - - - 50,000 50,000
Average interest rate - - - - - 5.62%
-----------------------------------------------------------------------------------
Interest bearing liabilities 1,001,079 40,370 11,871 8,697 10,130 50,000 1,122,147
-----------------------------------------------------------------------------------
Interest sensitivity gap
per period $ (779,853) $ 22,799 $ 62,654 $ 92,285 $ 96,262 $ 957,231 $ 451,378
===================================================================================
Cumulative interest
sensitivity gap $ (779,853) $ (757,054) $ (694,400) $(602,115) $(505,853) $ 451,378 $ -
===================================================================================
Percentage of gap per period
to total assets (48.14%) 1.41% 3.87% 5.70% 5.94% 59.09%
Percentage of cumulative gap
to total assets (48.14%) (46.73%) (42.86%) (37.16%) (31.22%) 27.87%
<FN>
N/A - Does not apply, as none of the securities in the marketable equity securities portfolio carry a stated rate of return.
1 Balance includes non-performing loans, as amount is immaterial and is not reduced for the allowance for loan losses.
2 Securities available-for-sale are shown including the market value appreciation of $75.8 million, before tax.
</FN>
</TABLE>
<PAGE> 22
The Company's interest rate sensitivity is also monitored by management through
the use of a model which internally generates estimates of the net portfolio
value ("NPV") over a range of interest rate change scenarios. NPV is the present
value of expected cash flows from assets, liabilities and off-balance sheet
contracts. The NPV ratio, under any interest rate scenario, is defined as the
NPV in that scenario divided by the market value of assets in the same scenario.
Based upon data submitted on the Bank's quarterly Thrift Financial Reports,
which does not include the assets, liabilities or off-balance sheet contracts of
the Company, the OTS produces a similar analysis using its own model and
assumptions. Due to differences in assumptions applied in the Bank's internal
model and the OTS model, including estimated loan prepayment rates, reinvestment
rates and deposit decay rates, the results of the OTS model may vary from the
Bank's internal model. For purposes of the NPV table, the Company applied
prepayment speeds similar to those used in the Gap table. Reinvestment rates
applied were rates offered for similar products at the time the NPV was
calculated. The discount rates applied for CDs and borrowings were based on
rates that approximate the rates offered by the Bank for deposits and borrowings
of similar remaining maturities. The following table sets forth the Company's
NPV as of June 30, 1999, as calculated by the Company.
<TABLE>
Net Portfolio Value Portfolio Value of Assets
Rate Changes in ------------------- -------------------------
Basis Points Dollar Dollar Percent NPV Percent
(Rate Shock) Amount Change Change Ratio Change1
- ------------ ------ ------ ------ ----- -------
(Dollars in Thousands)
<CAPTION>
<S> <C> <C> <C> <C> <C>
+200 $352,720 $(59,012) (14.33)% 22.25% (4.24)%
+100 380,570 (31,162) (7.57) 23.51 (2.24)
0 411,732 - - 24.87 -
-100 456,501 44,769 10.87 26.74 3.11
-200 507,286 95,554 23.21 28.73 6.63
<FN>
1 Reflects the percentage change in the portfolio value of the Company's assets
for each rate shock compared to the portfolio value of the Company's assets
under the zero rate change scenario.
Note: As in the case with the Gap table, certain shortcomings are inherent in
the methodology used in the above interest rate risk measurements. Modeling
changes in NPV require certain assumptions which may or may not reflect the
manner in which actual yields and costs respond to changes in market interest
rates. In this regard, the NPV model presented assumes that the composition of
the Company's interest sensitive assets and liabilities existing at the
beginning of a period remains constant over the period being measured and also
assumes that a particular change in interest rates is reflected uniformly across
the yield curve regardless of the duration to maturity or repricing of specific
assets and liabilities. Accordingly, although the NPV measurements and net
interest income models provide an indication of the Company's interest rate risk
exposure at a particular point in time, such measurements are not intended to
and do not provide a precise forecast of the effect of changes in market
interest rates on the Company's net interest income, as actual results will
differ.
</FN>
</TABLE>
Private Securities Litigation Reform Act Safe Harbor Statement
- --------------------------------------------------------------
In addition to historical information, this Form 10-Q may contain certain
forward looking statements and may be identified by the use of such words as
"believe(s)", "expect(s)", "anticipate(s)", "should", "planned", "estimated" and
"potential". The Company's discussion regarding the anticipated future direction
of its net interest margin and interest rate spread are considered forward
looking statements, which are subject to various factors which could cause
actual results to differ materially from those statements made. These factors
include, but are not limited to: general economic conditions; changes in
interest rates; deposit flows; loan demand; real estate values; the actual
impact of Y2K; and other economic; competitive; governmental; regulatory and
technological factors affecting the Company's operations, pricing, products and
services. Further description of the risks and uncertainties to the business are
included in detail in Item 1, BUSINESS, in the Company's 1998 Form 10-K.
<PAGE> 23
PART II - OTHER INFORMATION
ITEM 1. Legal proceedings
The Bank is a defendant in several lawsuits arising out of the normal
conduct of business. In the opinion of management, after consultation
with legal counsel, the ultimate outcome of these matters is not
expected to have a material adverse effect on the Company's results of
operations, business operations or the consolidated financial condition
of the Company.
ITEM 2. Changes in securities and Use of Proceeds (Not Applicable)
ITEM 3. Defaults upon Senior Securities (Not Applicable)
ITEM 4. Submission of Matters to a Vote of Security Holders
At the Annual Meeting of Stockholders held on May 11, 1999, present in
person or by proxy were 8,420,667 of 9,288,963 shares of Common Stock
of JSB Financial, Inc. entitled to vote at such meeting.
<TABLE>
Resolution I. All nominees to serve as a Director on the Company's
Board were elected as follows*:
<CAPTION>
For Withheld
--------- --------
<S> <C> <C>
Joseph C. Cantwell 8,190,948 229,719
James E. Gibbons, Jr. 8,175,609 245,058
Edward P. Henson 8,155,328 265,339
*There were no broker non-votes.
The continuing directors were: Park T. Adikes, Richard M. Cummins,
Howard J. Dirkes, Jr., Cynthia Gibbons, Alfred F. Kelly, Richard W.
Meyer and Arnold B. Pritcher.
Resolution II. Ratification of the appointment of KPMG LLP, as
independent auditors for the year ending December 31, 1999, as
follows*:
For: 8,310,411
Against: 95,901
Abstain: 14,355
*There were no broker non-votes.
</TABLE>
ITEM 5. Other information (Not Applicable)
<PAGE> 24
<TABLE>
ITEM 6. Exhibits and Reports on Form 8-K
<CAPTION>
Page Number
-----------
<S> <C> <C> <C>
(a) Exhibits
3.01 Articles of Incorporation (1)
3.02 By-laws (2)
Employment Agreement, filed herewith, between the Company and
-------------------------------------------------------------
10.01 Park T. Adikes 27- 45
10.02 Edward P. Henson 46- 64
10.03 John F. Bennett 65- 83
10.04 Jack Connors 84-102
10.05 John J. Conroy 103-121
10.06 Joanne Corrigan 122-140
10.07 Teresa Covello 141-159
10.08 Bernice Glaz 160-178
10.09 Joseph J. Hennessy 179-197
10.10 Daniel J. Huber 198-216
10.11 Lawrence J. Kane 217-235
10.12 Thomas R. Lehmann 236-254
10.13 Philip Pepe 255-273
10.14 Laurel M. Romito 274-292
Employment Agreement, filed herewith, between the Bank and
----------------------------------------------------------
10.15 Park T. Adikes 293-311
10.16 Edward P. Henson 312-330
10.17 John F. Bennett 331-349
10.18 Jack Connors 350-368
10.19 John J. Conroy 369-387
10.20 Joanne Corrigan 388-406
10.21 Teresa Covello 407-425
10.22 Bernice Glaz 426-444
10.23 Joseph J. Hennessy 445-463
10.24 Daniel J. Huber 464-482
10.25 Lawrence J. Kane 483-501
10.26 Thomas R. Lehmann 502-520
10.27 Philip Pepe 521-539
10.28 Laurel M. Romito 540-558
11.00 Statement Re: Computation of Earnings Per Share 559
27.00 Financial Data Schedule for the Six Months Ended June 30, 1999 560
<FN>
(1) Incorporated herein by reference to Exhibits filed with the Registration Statement
on Form S-1, Registration No. 33-33821.
(2) Incorporated herein by reference to Exhibits filed with the Form 10-K for the
Year Ended December 31, 1997.
</FN>
</TABLE>
<PAGE> 25
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this Quarterly Report on the Form
10-Q for the quarter ended June 30, 1999, to be signed on its behalf by the
undersigned, thereunto duly authorized.
JSB Financial, Inc.
(By)
/s/ Park T. Adikes
--------------
Park T. Adikes
Chairman of the Board and
Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the Registrant and
in the capacities and on the dates indicated.
DATE: August 6, 1999 /s/ Park T. Adikes
-------------- --------------
Park T. Adikes
Chairman of the Board and
Chief Executive Officer
DATE: August 6, 1999 /s/ Thomas R. Lehmann
-------------- -----------------
Thomas R. Lehmann
Chief Financial Officer
Executive Vice President
(Principal Accounting Officer)
<PAGE> 26
Exhibit Index
-------------
Exhibit No. Identification of Exhibit
10.01 Employment Agreement between the Company and Park T. Adikes
10.02 Employment Agreement between the Company and Edward P. Henson
10.03 Employment Agreement between the Company and John F. Bennett
10.04 Employment Agreement between the Company and Jack Connors
10.05 Employment Agreement between the Company and John J. Conroy
10.06 Employment Agreement between the Company and Joanne Corrigan
10.07 Employment Agreement between the Company and Teresa Covello
10.08 Employment Agreement between the Company and Bernice Glaz
10.09 Employment Agreement between the Company and Joseph J. Hennessy
10.10 Employment Agreement between the Company and Daniel J. Huber
10.11 Employment Agreement between the Company and Lawrence J. Kane
10.12 Employment Agreement between the Company and Thomas R. Lehmann
10.13 Employment Agreement between the Company and Philip Pepe
10.14 Employment Agreement between the Company and Laurel M. Romito
10.15 Employment Agreement between the Bank and Park T. Adikes
10.16 Employment Agreement between the Bank and Edward P. Henson
10.17 Employment Agreement between the Bank and John F. Bennett
10.18 Employment Agreement between the Bank and Jack Connors
10.19 Employment Agreement between the Bank and John J. Conroy
10.20 Employment Agreement between the Bank and Joanne Corrigan
10.21 Employment Agreement between the Bank and Teresa Covello
10.22 Employment Agreement between the Bank and Bernice Glaz
10.23 Employment Agreement between the Bank and Joseph J. Hennessy
10.24 Employment Agreement between the Bank and Daniel J. Huber
10.25 Employment Agreement between the Bank and Lawrence J. Kane
10.26 Employment Agreement between the Bank and Thomas R. Lehmann
10.27 Employment Agreement between the Bank and Philip Pepe
10.28 Employment Agreement between the Bank and Laurel M. Romito
11.00 Statement Re: Computation of Per Share Earnings
27.00 Financial Data Schedule for the Six Months Ended June 30, 1999
JSB FINANCIAL, INC.
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT ("Agreement") is made and entered
into as of June 22, 1999 by and between JSB FINANCIAL, INC., a business
corporation organized and operating under the laws of the State of Delaware and
having its principal office at 303 Merrick Road, Lynbrook, New York 11563
("Company"), and Park T. Adikes, an individual residing at (address omitted)
("Executive"). This Agreement amends, restates and supersedes the Employment
Agreement dated as of June 27, 1990 and the Supplemental Employment Agreement
dated as of July 9, 1996 by and between the Company and the Executive. Any
reference to the "Bank" in this Agreement shall mean Jamaica Savings Bank FSB
and any successor thereto.
W I T N E S S E T H :
WHEREAS, the Executive is currently serving as Chairman and
Chief Executive Officer of the Company, and the Company wishes to assure itself
of the services of the Executive for the period provided in this Agreement; and
WHEREAS, the Executive is willing to serve in the employ of
the Company on the terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the premises and the
mutual covenants and conditions hereinafter set forth, the Company and the
Executive hereby agree as follows:
1. POSITION AND RESPONSIBILITIES.
During the period of his employment hereunder, the Executive
agrees to serve as Chairman and Chief Executive Officer of the Company. The
Executive shall render administrative and management services to the Company
such as are customarily performed by persons situated in a similar executive
capacity and shall perform such other duties not inconsistent with his title and
office as may be assigned to him by or under the authority of the Board of
Directors of the Company (the "Board"). The Executive shall have such authority
as is necessary or appropriate to carry out his assigned duties. Failure to
re-elect the Executive as Chairman and Chief Executive Officer of the Company or
re-nominate the Executive as a Director of the Company without the consent of
the Executive shall constitute a breach of this Agreement.
2. TERMS.
(a) The period of the Executive's employment under this
Agreement shall be deemed to have commenced as of the date first above written
(the "Effective Date") and shall continue for a period of 36 full calendar
months thereafter. Commencing with the Effective Date, the term of this
Agreement shall be extended for one additional day each day until such time as
the Board or the Executive elects not to extend the term of the Agreement
further by giving written notice to the other party in accordance with Section
10, in which case the term of this Agreement shall become fixed and shall end on
the third anniversary of the date of such written notice. For purposes of this
Agreement, the term "Employment Period" shall mean the term of this Agreement
plus such extensions as are provided herein.
(b) During the period of his employment hereunder, except for
periods of absence occasioned by illness, disability, holidays, reasonable
vacation periods and reasonable leaves of absence, the Executive shall devote
substantially all of his business time, attention, skill and efforts to the
faithful performance of his duties hereunder including (i) service as Chairman
and Chief Executive Officer of the Company, and, if duly elected, a Director of
the Company, (ii) performance of such duties not inconsistent with his title and
office as may be assigned to him by or under the authority of the Board and
(iii) such other activities and services related to the organization, operation
and management of the Company. During the Employment Period it shall not be a
violation of this Agreement for the Executive to (A) serve on corporate, civic,
industry or charitable boards or committees, (B) deliver lectures, fulfill
speaking engagements or teach at educational institutions and (C) manage
personal investments, so long as such activities do not significantly interfere
with the performance of the Executive's responsibilities as an employee of the
Company in accordance with this Agreement. It is expressly understood and agreed
that to the extent that any such activities have been conducted by the Executive
prior to the Effective Date, the continued conduct of such activities (or the
conduct of activities similar in nature and scope thereto) subsequent to the
Effective Date shall not thereafter be deemed to interfere with the performance
of the Executive's responsibilities to the Company. It is also expressly agreed
that the Executive may conduct activities subsequent to the Effective Date that
are generally accepted for an executive in his position, regardless of whether
conducted by the Executive prior to the Effective Date.
(c) Notwithstanding anything herein contained to the contrary:
(i) the Executive's employment with the Company may be terminated by the Company
or the Executive during the term of this Agreement, subject to the terms and
conditions of this Agreement; and (ii) nothing in this Agreement shall mandate
or prohibit a continuation of the Executive's employment following the
expiration of the term of this Agreement upon such terms and conditions as the
Board and the Executive may mutually agree.
(d) Upon the termination of the Executive's employment with
the Company, the daily extensions provided pursuant to Section 2(a) shall cease
(if such extensions have not previously ceased), and, if such termination is
under circumstances described in Section 4(a) or Section 5(b), the term
"Unexpired Employment Period" shall mean the period of time commencing from the
date of such termination and ending on the last day of the Employment Period
computed with reference to all extensions prior to such termination.
(e) In the event that the Executive's duties and
responsibilities with respect to the Bank are temporarily or permanently
terminated pursuant to Section 9 of the Employment Agreement dated June 22,
1999, as it may be amended from time to time, between the Executive and the Bank
("Bank Agreement") and the course of conduct upon which such termination is
based would not constitute grounds for Termination for Cause under Section 9,
then the Executive shall, to the extent practicable, assume such duties and
responsibilities formerly performed at the Bank as part of his duties and
responsibilities as Chairman and Chief Executive Officer of the Company. Nothing
in this provision shall be interpreted as restricting the Company's right to
remove the Executive for Cause in accordance with Section 9.
3. COMPENSATION AND REIMBURSEMENT.
(a) The compensation specified under this Agreement shall
constitute the salary and benefits paid for the duties described in Section 1.
The Company shall pay the Executive as compensation a salary at an annual rate
of not less than (salary omitted) per year or such higher rate as may be
prescribed by or under the authority of the Board ("Base Salary"). The Base
Salary payable under this Section 3 shall be paid in approximately equal
installments in accordance with the Company's customary payroll practices.
During the period of this Agreement, the Executive's Base Salary shall be
reviewed at least annually; the first such review will be made no later than one
year from the date of this Agreement. Such review shall be conducted by a
Committee designated by the Board, and the Board may increase the Executive's
Base Salary, which increased amount shall be considered the Executive's "Base
Salary" for purposes of this Agreement. In no event shall the Executive's annual
rate of Base Salary under this Agreement in effect at a particular time be
reduced without his prior written consent. In addition to the Base Salary
provided in this Section 3(a), the Company shall provide the Executive at no
cost to the Executive with all such other benefits as are provided uniformly to
permanent full-time employees of the Bank.
(b) The Company will provide the Executive with employee
benefit plans, arrangements and perquisites substantially equivalent to those in
which the Executive was participating or otherwise deriving benefit from
immediately prior to the beginning of the term of this Agreement, and the
Company will not, without the Executive's prior written consent, make any
changes in such plans, arrangements or perquisites which would adversely affect
the Executive's rights or benefits thereunder. Without limiting the generality
of the foregoing provisions of this Subsection (b), the Executive will be
entitled to participate in or receive benefits under any employee benefit plans
with respect to which the Executive satisfies the eligibility requirements,
including, but not limited to, the Retirement Plan of Jamaica Savings Bank FSB
("RP"), the Incentive Savings Plan of Jamaica Savings Bank FSB ("ISP"), the
Jamaica Savings Bank FSB Employee Stock Ownership Plan ("ESOP"), the Benefit
Restoration Plan of Jamaica Savings Bank FSB ("BRP"), the JSB Financial, Inc.
1990 Stock Option Plan, the JSB Financial, Inc. 1996 Stock Option Plan,
retirement plans, supplemental retirement plans, pension plans, profit-sharing
plans, group life, health (including hospitalization, medical and major
medical), dental, accidental death and dismemberment, travel accident and
short-term disability insurance plans, or any other employee benefit plan or
arrangement made available by the Company in the future to its senior executives
and key management employees, subject to and on a basis consistent with the
terms, conditions and overall administration of such plans and arrangements. The
Executive will be entitled to incentive compensation and bonuses as provided in
any plan of the Company in which the Executive is eligible to participate.
Nothing paid to the Executive under any such plan or arrangement will be deemed
to be in lieu of other compensation to which the Executive is entitled under
this Agreement.
(c) The Executive's principal place of employment shall be at
the Company's executive offices at the address first above written, or at such
other location in New York City or in Nassau County or Suffolk County at which
the Company shall maintain its principal executive offices, or at such other
location as the Board and the Executive may mutually agree upon. The Company
shall provide the Executive, at his principal place of employment with support
services and facilities suitable to his position with the Company and necessary
or appropriate in connection with the performance of his assigned duties under
this Agreement. The Company or the Bank shall provide the Executive with an
automobile suitable to the position of Chairman and Chief Executive Officer of
the Company, in accordance with prior practice, and such automobile may be used
by the Executive in carrying out his duties under the Agreement, including
commuting between his residence and his principal place of employment, and other
personal use. The Company shall reimburse the Executive for his ordinary and
necessary business expenses, including, without limitation, fees for memberships
in such clubs and organizations as the Executive and the Board shall mutually
agree are necessary and appropriate for business purposes, and travel and
entertainment expenses, incurred in connection with the performance of his
duties under this Agreement, upon presentation to the Company of an itemized
account of such expenses in such form as the Company may reasonably require.
(d) In the event that the Executive assumes additional duties
and responsibilities pursuant to Section 2(e) by reason of one of the
circumstances contained in Section 2(e), and the Executive receives or will
receive less than the full amount of compensation and benefits formerly entitled
to him under the Bank Agreement, the Company shall assume the obligation to
provide the Executive with his compensation and benefits in accordance with the
Bank Agreement less any compensation and benefits received from the Bank,
subject to the terms and conditions of this Agreement including the Termination
for Cause provisions in Section 9.
4. PAYMENTS TO THE EXECUTIVE UPON AN EVENT OF TERMINATION.
The provisions of this Section shall in all respects be
subject to the terms and conditions stated in Sections 9 and 29.
(a) Upon the occurrence of an Event of Termination (as herein
defined) during the Executive's term of employment under this Agreement, the
provisions of this Section shall apply. As used in this Agreement, an "Event of
Termination" shall mean and include any one or more of the following: (i) the
termination by the Bank or the Company of the Executive's full-time employment
hereunder for any reason other than: following a Change in Control, as defined
in Section 5; for Disability, as defined in Section 6; for Retirement, as
defined in Section 8; for Cause, as defined in Section 9; or upon the
Executive's death; or (ii) unless consented to by the Executive, the Executive's
voluntary resignation from the Company's employ, upon any: (A) failure to elect
or re-elect or to appoint or re-appoint the Executive as Chairman and Chief
Executive Officer of the Company or to nominate or re-nominate the Executive as
a Director of the Bank or the Company, (B) material adverse change in the
Executive's function, duties, or responsibilities, which change would cause the
Executive's position to become one of lesser responsibility, importance, or
scope from the position and attributes thereof described in Section 1, above
(and any such material change shall be deemed a continuing breach of this
Agreement), (C) relocation of the Executive's principal place of employment by
more than 30 miles from its location at the Effective Date of this Agreement, or
a material reduction in the benefits and perquisites to the Executive from those
being provided as of the Effective Date of this Agreement, (D) liquidation or
dissolution of the Bank or Company, or (E) material breach of this Agreement by
the Company. Upon the occurrence of any event described in clauses (A), (B),
(C), (D) or (E), above, the Executive shall have the right to elect to terminate
his employment under this Agreement by resignation upon written notice pursuant
to Section 10 given within a reasonable period of time not to exceed, except in
case of a continuing breach, four calendar months after the event giving rise to
said right to elect.
(b) Upon the occurrence of an Event of Termination as set
forth in Section 4(a), on the Date of Termination, as defined in Section 10, the
Company shall be obligated to pay, or to provide, the Executive, or, in the
event of his subsequent death, to his surviving spouse or such other beneficiary
or beneficiaries as the Executive may designate in writing, or if neither his
estate, as severance pay or liquidated damages, or both, the benefits provided
below and a payment equal to the sum of the payments set forth below:
(i) payment of the sum of (A) the Executive's annual Base
Salary through the Date of Termination to the extent not theretofore
paid and (B) any compensation previously deferred by the Executive
(together with any accrued interest or earnings thereon) and any
accrued vacation pay, in each case to the extent not theretofore paid
(the sum of the amounts described in clauses (A) and (B) shall be
hereinafter referred to as the "Accrued Obligations");
(ii) the benefits, if any, to which the Executive is entitled
as a former employee under the Bank's or Company's employee benefit
plans and programs and compensation plans and programs;
(iii) continued group life, health (including hospitalization,
medical and major medical), dental, accidental death and dismemberment,
travel accident and short-term disability insurance benefits as
provided by the Bank or the Company, in addition to that provided
pursuant to Section 4(b)(ii), if and to the extent necessary to provide
for the Executive, for the remaining Unexpired Employment Period,
coverage equivalent to the coverage to which he would have been
entitled if he had continued working for the Company during the
remaining Unexpired Employment Period at the highest annual rate of
salary achieved during the Employment Period; provided, however, if the
Executive has obtained group life, health (including hospitalization,
medical and major medical), dental, accidental death and dismemberment,
travel accident and/or short-term disability insurance benefits
coverage from another source, the Executive may, as of any month, make
an irrevocable election to forego the continued coverage that would
otherwise be provided hereunder for the remaining Unexpired Employment
Period, or any portion thereof, in which case the Bank or the Company,
upon receipt of the Executive's irrevocable election, shall pay the
Executive an amount equal to the estimated cost to the Bank or the
Company of providing such coverage during such period;
(iv) if and to the extent not already provided under Sections
4(b)(ii) and 4(b)(iii), continued health (including hospitalization,
medical and major medical) and dental insurance benefits to the extent
maintained by the Bank or the Company for its employees or retirees
during the remainder of the Executive's lifetime and the lifetime of
his spouse, if any, for so long as the Executive continues to reimburse
the Bank for the cost of such continued coverage;
(v) a lump sum payment, as liquidated damages, in an amount
equal to the Base Salary and the bonus or other incentive compensation
that the Executive would have earned if the Executive had continued
working for the Bank and the Company during the remaining Unexpired
Employment Period (A) at the highest annual rate of Base Salary and
bonus or other incentive compensation achieved by the Executive during
the three-year period immediately preceding the Executive's Date of
Termination, except that (B) in the case of a Change in Control, such
lump sum shall be determined based upon the Base Salary and the bonus
or other incentive compensation, respectively, that the Executive would
have been paid during the remaining Unexpired Employment Period
including the assumed increases referred to in clauses (i) and (ii) of
Section 5(b);
(vi) a lump sum payment in an amount equal to the excess, if
any, of: (A) the present value of the pension benefits to which the
Executive would be entitled under the RP and the BRP (and under any
other qualified and non-qualified defined benefit plans maintained by
the Company or the Bank covering the Executive) as if he had continued
working for the Company during the remaining Unexpired Employment
Period (x) at the highest annual rate of Base Salary and, if
applicable, the highest bonus or other incentive compensation,
respectively, achieved by the Executive during the three-year period
immediately preceding the Executive's Date of Termination, except that
(y) in the case of a Change in Control, such lump sum shall be
determined based upon the Base Salary and, if applicable, the bonus or
other incentive compensation, respectively, that the Executive would
have been paid during the remaining Unexpired Employment Period
including the assumed increases referred to in clauses (i) and (ii) of
Section 5(b), and (z) in the case of a Change in Control, as if three
additional years are added to the Executive's age and years of
creditable service under the RP and the BRP and after taking into
account any other compensation required to be taken into account under
the RP and the BRP (and any other qualified and non-qualified defined
benefit plans of the Company or the Bank, as applicable), over (B) the
present value of the pension benefits to which he is actually entitled
under the RP and the BRP (and any other qualified and non-qualified
defined benefit plans) as of his Date of Termination, where such
present values are to be determined using a discount rate of 6% and the
mortality tables prescribed under section 72 of the Internal Revenue
Code of 1986, as amended ("Code"); and
(vii) a lump sum payment in an amount equal to the
contributions that would have been made by the Company or the Bank on
the Executive's behalf to the ISP and the ESOP and to the BRP with
respect to such ISP and ESOP contributions (and to any other qualified
and non-qualified defined contribution plans maintained by the Company
or the Bank covering the Executive) as if the Executive had continued
working for the Bank and the Company during the remaining Unexpired
Employment Period making the maximum amount of employee contributions
required or permitted, if any, under such plan or plans and earning (A)
the highest annual rate of Base Salary and, if applicable, the highest
bonus or other incentive compensation, respectively, achieved by the
Executive during the three-year period immediately preceding the
Executive's Date of Termination, except that (B) in the case of a
Change in Control, such lump sum shall be determined based upon the
Base Salary and, if applicable, the bonus or other incentive
compensation, respectively, that the Executive would have been paid
during the remaining Unexpired Employment Period including the assumed
increases referred to in clauses (i) and (ii) of Section 5(b).
The benefits to be provided under, and the amounts payable pursuant to, this
Section 4 shall be provided and be payable without regard to proof of damages
and without regard to the Executive's efforts, if any, to mitigate damages. The
Company and the Executive hereby stipulate that the damages which may be
incurred by the Executive following any such termination of employment are not
capable of accurate measurement as of the date first above written and that such
liquidated damages constitute reasonable damages under the circumstances.
(c) Payments to the Executive under Section 4 shall be made
within ten days of the Executive's Date of Termination.
(d) In the event payments are made under Section 4 or Section
5, the Executive may select an individual or firm to provide him with reasonable
outplacement counseling services, and the Company shall pay for the costs of
such services; provided, however, that the cost to the Company of such
outplacement counseling services shall not exceed 25% of the Executive's Base
Salary.
5. CHANGE IN CONTROL.
(a) No benefit shall be payable under this Section 5 unless
there shall have been a Change in Control of the Bank or Company, as set forth
below. For purposes of this Agreement, a "Change in Control" of the Bank or
Company shall mean any one or more of the following:
(i) An event of a nature that would be required to be reported
in response to Item l(a) of the current report on Form 8-K, as in
effect on the date hereof, pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act");
(ii) An event of a nature that results in a Change in Control
of the Bank or the Company within the meaning of the Home Owners' Loan
Act of 1933, as amended, or the Change in Bank Control Act of 1978, as
amended, as applicable, and the Rules and Regulations promulgated by
the Office of Thrift Supervision ("OTS") or its predecessor agency, the
Federal Deposit Insurance Corporation ("FDIC") or the Board of
Governors of the Federal Reserve System ("FRB"), as the case may be, as
in effect on the date hereof, but excluding any such Change in Control
resulting from the purchase of securities by the Company or the
Company's or the Bank's tax-qualified employee benefit plans and
trusts;
(iii) If any "person" (as the term is used in Sections 13(d)
and 14(d) of the Exchange Act) is or becomes the "beneficial owner" (as
defined in Rule 13d-3 under the Exchange Act), directly or indirectly,
of securities of the Bank or the Company representing 20% or more of
the Bank's or the Company's outstanding securities except for any
securities of the Bank purchased by the Company in connection with the
initial conversion of the Bank from mutual to stock form (the
"Conversion") and any securities purchased by the Company or the
Company's or the Bank's tax-qualified employee benefit plans and
trusts;
(iv) If the individuals who constitute the Board on the date
hereof (the "Incumbent Board") cease for any reason to constitute at
least a majority of the Board, provided, however, that any person
becoming a director subsequent to the date hereof whose election or
nomination for election by the Company's stockholders, was approved by
a vote of at least three-quarters of the directors then comprising the
Incumbent Board shall be considered as though he were a member of the
Incumbent Board, but excluding, for this purpose, any such person whose
initial assumption of office occurs as a result of an actual or
threatened election contest with respect to the election or removal of
directors or other actual or threatened solicitation of proxies or
consents by or on behalf of a person other than the Board;
(v) A merger, consolidation, reorganization, sale of all or
substantially all the assets of the Bank or the Company or similar
transaction occurs in which the Bank or Company is not the resulting
entity, other than a transaction following which (A) at least 51% of
the equity ownership interests of the entity resulting from such
transaction are beneficially owned (within the meaning of Rule 13d-3
promulgated under Exchange Act) in substantially the same relative
proportions by persons who, immediately prior to such transaction,
beneficially owned (within the meaning of Rule 13d-3 promulgated under
the Exchange Act) at least 51% of the outstanding equity ownership
interests in the Bank or Company and (B) at least 51% of the securities
entitled to vote generally in the election of directors of the entity
resulting from such transaction are beneficially owned (within the
meaning of Rule 13d-3 promulgated under the Exchange Act) in
substantially the same relative proportions by persons who, immediately
prior to such transaction, beneficially owned (within the meaning of
Rule 13d-3 promulgated under the Exchange Act) at least 51% of the
securities entitled to vote generally in the election of directors of
the Bank or Company;
(vi) A proxy statement shall be distributed soliciting proxies
from stockholders of the Company, by someone other than the current
management of the Company, seeking stockholder approval of a plan of
reorganization, merger or consolidation of the Company or Bank or
similar transaction with one or more corporations as a result of which
the outstanding shares of the class of securities then subject to such
plan or transaction are exchanged for or converted into cash or
property or securities not issued by the Bank or the Company; or
(vii) A tender offer is completed for 20% or more of the
voting securities of the Bank or Company then outstanding.
The "Change in Control Date" shall mean the date during the Employment Period on
which a Change in Control occurs. Anything in this Agreement to the contrary
notwithstanding, if the Executive's employment with the Company is terminated
and if it is reasonably demonstrated by the Executive that such termination of
employment (1) was at the request of a third party who has taken steps
reasonably calculated to effect a Change in Control or (2) otherwise arose in
connection with or anticipation of a Change in Control, then for all purposes of
this Agreement the "Change in Control Date" shall mean the date immediately
prior to the date of such termination of employment.
(b) If any of the events described in Section 5(a)
constituting a Change in Control have occurred or the Board has determined that
a Change in Control has occurred, the Executive shall be entitled to the
payments and the benefits provided below on the Change in Control Date. The
amounts payable and the benefits to be provided under this Section 5(b) to the
Executive shall consist of the payments and benefits that would be due to the
Executive and the Executive's family under Section 4(b) as if an Event of
Termination under Section 4(a) had occurred on the Change in Control Date and
that for purposes of this Section 5(b), the term Unexpired Employment Period
shall mean three years from the Change in Control Date. For purposes of
determining the payments and benefits due under this Section 5(b), when
calculating the payments due and benefits to be provided for the Unexpired
Employment Period, it shall be assumed that for each year of the remaining term
of this Agreement, the Executive would have received (i) an annual increase in
Base Salary equal to the average percentage increase in Base Salary received by
the Executive for the three-year period ending with the earlier of (x) the year
in which the Change in Control Date occurs or (y) the year during which a
definitive agreement, if any, governing the Change in Control is executed, with
the first such increase effective as of the January 1st next following such
three-year period and the second and third such increases effective as of the
next two anniversaries of such January 1st, (ii) a bonus or other incentive
compensation equal to the highest percentage rate of bonus or incentive
compensation paid to the Executive during the three-year period referred to in
clause (i) of this Section 5(b) times the Base Salary that the Executive would
have been paid during the remaining term of this Agreement including the assumed
increases referred to in clause (i) of this Section 5(b), (iii) the maximum
contributions that could be made by or on behalf of the Executive with respect
to any employee benefit plans and programs maintained by the Company and the
Bank based upon the Base Salary and, if applicable, the bonus or other incentive
compensation, respectively, that the Executive would have been paid during the
remaining term of this Agreement including the assumed increases referred to in
clauses (i) and (ii) of this Section 5(b), and (iv) the present value of the
pension benefits to which the Executive is entitled under Section 4(b)(vi) with
respect to the RP and the BRP (and under any other qualified and non-qualified
defined benefit plans maintained by the Bank or the Company covering the
Executive) determined as if he had continued working for the Bank during the
remaining Unexpired Employment Period and based upon the Base Salary and, if
applicable, the bonus or other incentive compensation, respectively, that the
Executive would have been paid during the remaining term of this Agreement
including the assumed increases referred to in clauses (i) and (ii) of this
Section 5(b). The benefits to be provided under, and the amounts payable
pursuant to, this Section 5 shall be provided and be payable without regard to
proof of damages and without regard to the Executive's efforts, if any, to
mitigate damages. The Company and the Executive hereby stipulate that the
damages which may be incurred by the Executive following any Change in Control
are not capable of accurate measurement as of the date first above written and
that such liquidated damages constitute reasonable damages under the
circumstances.
(c) Payments to the Executive under Section 5(b) shall be made
on the Change in Control Date. Such payments shall be made regardless of whether
the Executive's employment terminates.
6. TERMINATION FOR DISABILITY.
(a) In the event of Termination for Disability, the Executive
shall receive the benefits provided in Section 6(b); provided, however, that the
benefits provided under Section 6(b) shall not be deemed to be in lieu of the
benefits he is otherwise entitled as a former employee under the Bank or
Company's employee plans and programs. For purposes of this Agreement, the
Executive may be terminated for disability only if (i) the Executive shall have
been absent from his duties with the Company on a full-time basis for at least
six consecutive months, or (ii) a majority of the members of the Board acting in
good faith determine that, based upon competent and independent medical evidence
presented by a physician or physicians agreed upon by the parties, the
Executive's physical or mental condition is such that he is totally and
permanently incapable of engaging in any substantial gainful employment based
upon his education, training and experience; provided, however, that on and
after the earliest date on which a Change in Control of the Bank or Company as
defined in Section 5 occurs, such a determination shall require the affirmative
vote of at least three-fourths of the members of the Board acting in good faith
and such vote shall not be made prior to the expiration of a 60-day period
following the date on which the Board shall, by written notice to the Executive,
furnish him a statement of its grounds for proposing to make such determination,
during which period the Executive shall be afforded a reasonable opportunity to
make oral and written presentations to the members of the Board, and to be
represented by his legal counsel at such presentations, to refute the grounds
for the proposed determination.
(b) The Company will pay the Executive as Disability pay, a
bi-weekly payment equal to 100% of the Executive's bi-weekly annual rate of Base
Salary in effect on the date of the Executive's Termination for Disability. In
addition, the Company will cause to be continued insurance coverage, including
group life, health (including hospitalization, medical and major medical),
dental, accidental death and dismemberment, travel accident and short-term
disability coverage substantially identical to the coverage maintained by the
Bank or the Company for the Executive prior to his Termination for Disability.
The Disability pay and coverages shall commence on the effective date of the
Executive's termination and shall cease upon the earliest to occur of: (i) the
date the Executive returns to the full-time employment of the Company, in the
same capacity as he was employed prior to his Termination for Disability and
pursuant to an employment agreement between the Executive and the Company; (ii)
the Executive's full-time employment by another employer; (iii) the Executive's
attaining the normal age of retirement or receiving benefits under the RP or
other defined benefit pension plan of the Bank or the Company; (iv) the
Executive's death; (v) the Executive's eligibility to collect payments under the
disability provision of the RP or other defined benefit pension plan of the Bank
or the Company; or (vi) the expiration of the term of this Agreement.
(c) Notwithstanding the foregoing, there will be no reduction
in the compensation otherwise payable to the Executive during any period during
which the Executive is incapable of performing his duties hereunder by reason of
temporary disability.
7. TERMINATION UPON DEATH.
The Executive's employment shall terminate automatically upon
the Executive's death during the Employment Period. In such event, the Executive
and the Executive's legal representatives shall be entitled to the following:
(i) payment of the Executive's "Accrued Obligations;"
(ii) the continuation of all benefits to the Executive's
family and dependents that would have been provided if the Executive
had been entitled to the benefits under Section 4(b)(ii), (iii) and
(iv); and
(iii) the timely payment of any other amounts or benefits
required to be paid or provided or which the Executive is eligible to
receive under any plan, program, policy or practice or contract or
agreement of the Company and its affiliated companies (all such other
amounts and benefits shall be hereinafter referred to as the "Other
Benefits");
provided, however, that if the Executive dies while in the employment of the
Company, the amount of life insurance provided to the Executive by the Company
shall not be less than the lesser of $200,000 or three times the Executive's
then annual Base Salary. Accrued Obligations shall be paid to the Executive's
estate or beneficiary, as applicable, in a lump sum cash payment within ten days
of the Date of Termination. With respect to the provision of Other Benefits
after the Change of Control Date, the term Other Benefits as utilized in this
Section 7 shall include, without limitation, that the Executive's estate and/or
beneficiaries shall be entitled to receive, benefits at least equal to the most
favorable benefits provided by the Company and affiliated companies to the
estates and beneficiaries of peer executives of the Company and such affiliates
companies under such plans, programs, practices and policies relating to death
benefits, if any, as in effect with respect to other peer executives and their
beneficiaries at any time during the 120-day period immediately preceding the
Change in Control Date.
8. TERMINATION UPON RETIREMENT.
Termination by the Company of the Executive based on
"Retirement" shall mean termination in accordance with the Company's or the
Bank's retirement policy or in accordance with any retirement arrangement
established with the Executive's consent with respect to him. Upon termination
of the Executive upon Retirement, the Executive shall be entitled to all
benefits under the RP and any other retirement plan of the Bank or the Company
and other plans to which the Executive is a party, and the Executive shall be
entitled to the benefits, if any, that would be payable to him as a former
employee under the Bank's or the Company's employee benefit plans and programs
and compensation plans and programs.
9. TERMINATION FOR CAUSE.
The terms "Termination for Cause" or "Cause" shall mean
termination because of the Executive's personal dishonesty, willful misconduct,
any breach of fiduciary duty involving personal profit, intentional failure to
perform stated duties, conviction of a felony with respect to the Bank or the
Company or any material breach of this Agreement. For purposes of this Section,
no act, or the failure to act, on the Executive's part shall be "willful" unless
done, or omitted to be done, in bad faith and without reasonable belief that the
action or omission was in the best interest of the Company or its affiliates.
Any act, or failure to act, based upon authority given pursuant to a resolution
duly adopted by the Board or based upon the written advice of counsel for the
Company shall be conclusively presumed to be done, or omitted to be done, by the
Executive in good faith and in the best interests of the Company.
Notwithstanding the foregoing, the Executive shall not be deemed to have been
terminated for Cause unless and until there shall have been delivered to him a
Notice of Termination which shall include a copy of a resolution duly adopted by
the affirmative vote of not less than three-fourths of the members of the Board
at a meeting of the Board called and held for that purpose (after reasonable
notice to the Executive and an opportunity for him, together with counsel, to be
heard before the Board), finding that in the good faith opinion of the Board,
the Executive was guilty of conduct justifying Termination for Cause and
specifying the particulars thereof in detail. The Executive shall not have the
right to receive compensation or other benefits for any period after Termination
for Cause.
10. NOTICE.
(a) Any purported termination by the Company or by the
Executive shall be communicated by a Notice of Termination to the other party
hereto. For purposes of this Agreement, a "Notice of Termination" shall mean a
written notice which shall indicate the specific termination provision in this
Agreement relied upon and shall set forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of the Executive's
employment under the provision so indicated.
(b) Subject to Section 10(c), "Date of Termination" shall mean
(A) if the Executive's employment is terminated for Disability, 30 days after a
Notice of Termination is given (provided that he shall not have returned to the
performance of his duties on a full-time basis during such 30-day period), and
(B) if his employment is terminated for any other reason, the date specified in
the Notice of Termination (which, in the case of a Termination for Cause, shall
be immediate).
(c) If, within 30 days after any Notice of Termination is
given, the party receiving such Notice of Termination notifies the other party
that a dispute exists concerning the termination, then, except upon the
occurrence of a Change in Control and voluntary termination by the Executive in
which case the Date of Termination shall be the date specified in the Notice,
the Date of Termination shall be the date on which the dispute is finally
determined, either by mutual written agreement of the parties, by a binding
arbitration award, or by a final judgment, order or decree of a court of
competent jurisdiction (the time for appeal therefrom having expired and no
appeal having been perfected) and provided further that the Date of Termination
shall be extended by a notice of dispute only if such notice is given in good
faith and the party giving such notice pursues the resolution of such dispute
with reasonable diligence. Notwithstanding the pendency of any such dispute, the
Company will continue to pay the Executive his full compensation in effect when
the notice giving rise to the dispute was given (including, but not limited to,
Base Salary) and continue him as a participant in all compensation, benefit and
insurance plans in which he was participating when the notice of dispute was
given, until the dispute is finally resolved in accordance with this Agreement.
Amounts paid under this Section are in addition to all other amounts due under
this Agreement and shall not be offset against or reduce any other amounts due
under this Agreement.
(d) The Company may terminate the Executive's employment at
any time, but any termination by the Company, other than Termination for Cause,
shall not prejudice the Executive's right to compensation or other benefits
under this Agreement or under any other benefit or compensation plans or
programs maintained by the Bank or the Company from time to time. The Executive
shall not have the right to receive compensation or other benefits for any
period after a Termination for Cause as defined in Section 9 hereinabove.
(e) Any communication to a party required or permitted under
this Agreement, including any notice, direction, designation, consent,
instruction, objection or waiver, shall be in writing and shall be deemed to
have been given at such time as it is delivered personally, or five days after
mailing if mailed, postage prepaid, by registered or certified mail, return
receipt requested, addressed to such party at the address listed below or at
such other address as one such party may by written notice specify to the other
party, as follows. If to the Executive, (address omitted); if to the Company,
JSB Financial, Inc., 303 Merrick Road, Lynbrook, New York 11563, Attention:
President, with a copy to Thacher Proffitt & Wood, Two World Trade Center, New
York, New York 10048, Attention: Douglas J. McClintock, Esq.
11. POST-TERMINATION OBLIGATIONS.
(a) All payments and benefits to the Executive under this
Agreement shall be subject to the Executive's compliance with paragraph (b) of
this Section 11 during the term of this Agreement and for one full year after
the expiration or termination hereof.
(b) The Executive shall, upon reasonable notice, furnish such
information and assistance to the Company as may reasonably be required by the
Company in connection with any litigation in which it or any of its subsidiaries
or affiliates is, or may become, a party; provided, that the Company reimburses
the Executive for the reasonable value of his time in connection therewith and
for any out-of-pocket costs attributable thereto.
12. COVENANT NOT TO COMPETE.
The Executive hereby covenants and agrees that for a period of
one year following his Date of Termination, if such termination occurs prior to
the end of the term of the Agreement, he shall not, without the written consent
of the Board, become an officer, employee, consultant, director or trustee of
any savings bank, savings and loan association, savings and loan holding
company, bank or bank holding company if such position (a) entails working in
(or providing services in) New York City, Nassau or Suffolk counties or (b)
entails working in (or providing services in) any other county that is both (i)
within the Bank's primary trade (or operating) area at the time in question,
which shall be determined by reference to the Bank's business plan as in effect
from time to time, and (ii) in which the Bank engages in material or substantial
deposit-taking functions or lending activities at such time; provided, however,
that this Section 12 shall not apply if the Executive's employment is terminated
for the reasons set forth in any of Sections 4, 5, 6 or 8.
13. SOURCE OF PAYMENTS.
All payments provided in this Agreement shall be timely paid
in cash or check from the general funds of the Company.
14. EFFECT ON PRIOR AGREEMENTS.
This Agreement contains the entire understanding between the
parties hereto and supersedes any prior employment agreement between the Company
or any predecessor of the Company and the Executive, including the Employment
Agreement dated June 27, 1990 and the Supplemental Employment Agreement dated
July 9, 1996, except that this Agreement shall not affect or operate to reduce
any benefit or compensation inuring to the Executive of a kind elsewhere
provided. No provisions of this Agreement shall be interpreted to mean that the
Executive is subject to receiving fewer benefits than those available to him
without reference to this Agreement.
15. EFFECT OF ACTION UNDER BANK AGREEMENT.
Notwithstanding any provision herein to the contrary, to the
extent that full compensation payments and benefits are paid to or received by
the Executive under the Bank Agreement, such compensation payments and benefits
paid by the Bank will be deemed to satisfy the corresponding obligations of the
Company under this Agreement.
16. NO ATTACHMENT.
Except as required by law, no right to receive payments under
this Agreement shall be subject to anticipation, commutation, alienation, sale,
assignment, encumbrance, charge, pledge, or hypothecation, or to execution,
attachment, levy, or similar process or assignment by operation of law, and any
attempt, voluntary or involuntary, to affect any such action shall be null,
void, and of no effect.
17. MODIFICATION AND WAIVER.
(a) This Agreement may not be modified or amended except by an
instrument in writing signed by the parties hereto.
(b) No term or condition of this Agreement shall be deemed to
have been waived, nor shall there be any estoppel against the enforcement of any
provision of this Agreement, except by written instrument of the party charged
with such waiver or estoppel. No such written waiver shall be deemed a
continuing waiver unless specifically stated therein, and each such waiver shall
operate only as to the specific term or condition waived and shall not
constitute a waiver of such term or condition for the future as to any act other
than that specifically waived.
18. SUCCESSOR AND ASSIGNS.
This Agreement will inure to the benefit of and be binding
upon the Executive, his legal representatives and testate or intestate
distributees, and the Company, its successors and assigns, including any
successor by purchase, merger, consolidation or otherwise or a statutory
receiver or any other person or firm or corporation to which all or
substantially all of the assets and business of the Company may be sold or
otherwise transferred. Any such successor of the Company shall be deemed to have
assumed this Agreement and to have become obligated hereunder to the same extent
as the Company and the Executive's obligations hereunder shall continue in favor
of such successor.
19. SEVERABILITY.
If, for any reason, any provision of this Agreement, or any
part of any provision, is held invalid, such invalidity shall not affect any
other provision of this Agreement or any part of such provision not held so
invalid, and each such other provision and part thereof shall to the full extent
consistent with law continue in full force and effect.
20. HEADINGS FOR REFERENCE ONLY.
The headings of Sections and paragraphs herein are included
solely for convenience of reference and shall not control the meaning or
interpretation of any of the provisions of this Agreement. Any reference in this
Agreement to a Section or Subsection shall refer to a Section or Subsection of
this Agreement, except as otherwise specified.
21. GOVERNING LAW.
This Agreement shall be governed by the laws of the State of
New York, without reference to conflicts of law principles.
22. INDEMNIFICATION AND ATTORNEYS' FEES.
(a) The Company shall indemnify, hold harmless and defend the
Executive against reasonable costs, including legal fees, incurred by him in
connection with his consultation with legal counsel or arising out of any
action, suit or proceeding in which he may be involved, as a result of his
efforts, in good faith, to defend or enforce the terms of this Agreement. The
Company agrees to pay all such costs as they are incurred by the Executive, to
the full extent permitted by law, and without regard to whether the Company
believes that it has a defense to any action, suit or proceeding by the
Executive or that it is not obligated for any payments under this Agreement.
(b) In the event any dispute or controversy arising under or
in connection with the Executive's termination is resolved in favor of the
Executive, whether by judgment, arbitration or settlement, the Executive shall
be entitled to the payment of all back-pay, including salary, bonuses and any
other cash compensation, fringe benefits and any compensation and benefits due
the Executive under this Agreement.
(c) The Company shall indemnify, hold harmless and defend the
Executive for any act taken or not taken, or any omission or failure to act, by
him in good faith while performing services for the Company or the Bank to the
same extent and upon the same terms and conditions as other similarly situated
officers and directors of the Company or the Bank. If and to the extent that the
Company or the Bank, maintains, at any time during the Employment Period, an
insurance policy covering the other officers and directors of the Company or the
Bank against lawsuits, the Company or the Bank shall use its best efforts to
cause the Executive to be covered under such policy upon the same terms and
conditions as other similarly situated officers and directors.
23. TAX INDEMNIFICATION.
(a) This Section 23 shall apply if 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 occurs within the meaning of section 280G
of the Code. If this Section 23 applies, then with respect to any taxable year
in which the Executive shall be liable for the payment of an excise tax under
section 4999 of the Code with respect to any payment in the nature of
compensation made by the Company, the Bank or any direct or indirect subsidiary
or affiliate of the Company to (or for the benefit of) the Executive, the
Company shall pay to the Executive an amount equal to X determined under the
following formula:
X = E x P
-------------------------------------------------
1 - [(FI x (1 - SLI)) + SLI + E + M]
where
E = the rate at which the excise tax is assessed under
section 4999 of the Code;
P = the amount with respect to which such excise tax is
assessed, determined without regard to this Section
23;
FI = the highest effective marginal rate of income tax
applicable to the Executive under the Code for the
taxable year in question (taking into account any
phase-out or loss of deductions, personal exemptions
and other similar adjustments);
SLI = the sum of the highest effective marginal rates of
income tax applicable to the Executive under all
applicable state and local laws for the taxable year
in question (taking into account any phase-out or
loss of deductions, personal exemptions and other
similar adjustments); and
M = the highest marginal rate of Medicare tax
applicable to the Executive under the Code for the
taxable year in question.
Attached as Appendix A to this Agreement is an example that illustrates
application of this Section 23. Any payment under this Section 23 shall be
adjusted so as to fully indemnify the Executive on an after-tax basis so that
the Executive would be in the same after-tax financial position in which he
would have been if no excise tax under section 4999 of the Code had been
imposed. With respect to any payment in the nature of compensation that is made
to (or for the benefit of) the Executive under the terms of this Agreement or
otherwise and on which an excise tax under section 4999 of the Code will be
assessed, the payment determined under this Section 23(a) shall be made to the
Executive on the earlier of (i) the date the Company, the Bank or any direct or
indirect subsidiary or affiliate of the Company is required to withhold such
tax, or (ii) the date the tax is required to be paid by the Executive.
(b) Notwithstanding anything in this Section 23 to the
contrary, in the event that the Executive's liability for the excise tax under
section 4999 of the Code for a taxable year is subsequently determined to be
different than the amount determined by the formula (X + P) x E, where X, P and
E have the meanings provided in Section 23(a), the Executive or the Company, as
the case may be, shall pay to the other party at the time that the amount of
such excise tax is finally determined, an appropriate amount, plus interest,
such that the payment made under Section 23(a), when increased by the amount of
the payment made to the Executive under this Section 23(b) by the Company, or
when reduced by the amount of the payment made to the Company under this Section
23(b) by the Executive, equals the amount that, it is finally determined, should
have properly been paid to the Executive under Section 23(a). The interest paid
under this Section 23(b) shall be determined at the rate provided under section
1274(b)(2)(B) of the Code. To confirm that the proper amount, if any, was paid
to the Executive under this Section 23, the Executive shall furnish to the
Company a copy of each tax return which reflects a liability for an excise tax
payment made by the Company, at least 20 days before the date on which such
return is required to be filed with the Internal Revenue Service.
24. NON-EXCLUSIVITY OF RIGHTS.
Except as otherwise provided herein, nothing in this Agreement
shall prevent or limit the Executive's continuing or future participation in any
plan, program, policy or practice provided by the Company or any of its
affiliated companies and for which the Executive may qualify, nor shall anything
herein limit or otherwise affect such rights as the Executive may have under any
contract or agreement with the Company or any of its affiliated companies.
Amounts which are vested benefits or which the Executive is otherwise entitled
to receive under any plan, policy, practice or program of or any contract or
agreement with the Company or any of its affiliated companies at or subsequent
to the Date of Termination shall be payable in accordance with such plan,
policy, practice or program or contract or agreement except as explicitly
modified by this Agreement. Notwithstanding the foregoing, in the event of a
termination of employment, the amounts provided in Section 4 or Section 5, as
applicable, shall be the Executive's sole remedy for any purported breach of
this Agreement by the Company.
25. MITIGATION; OTHER CLAIMS.
The Company's obligation to make the payments provided for in
this Agreement and otherwise to perform its obligations hereunder shall not be
affected by any set-off, counterclaim, recoupment, defense or other claim, right
or action which the Company may have against the Executive or others. In no
event shall the Executive be obligated to seek other employment or take any
other action by way of mitigation of the amounts payable to the Executive under
any of the provisions of this Agreement and such amounts shall not be reduced
whether or not the Executive obtains other employment.
26. CONFIDENTIAL INFORMATION.
The Executive shall hold in a fiduciary capacity for the
benefit of the Company all secret or confidential information, knowledge or data
relating to the Company or any of its affiliated companies, and their respective
businesses, which shall have been obtained by the Executive during the
Executive's employment by the Company or any of its affiliated companies and
which shall not be or become public knowledge (other than by acts by the
Executive or representatives of the Executive in violation of this Agreement).
After termination of the Executive's employment with the Company, the Executive
shall not, without the prior written consent of the Company or as may otherwise
be required by law or legal process, communicate or divulge any such
information, knowledge or data to anyone other than the Company and those
designated by it. For purposes of this Agreement, secret and confidential
information, knowledge or data relating to the Company or any of its affiliates,
and their respective business, shall not include any information that is public,
publicly available or available through trade association sources.
Notwithstanding any other provision of this Agreement to the contrary, the
Executive acknowledges and agrees that in the event of a violation or threatened
violation of any of the provisions of this Section 26, the Company shall have no
adequate remedy at law and shall therefore be entitled to enforce each such
provision by temporary or permanent injunction or mandatory relief obtained in
any court of competent jurisdiction without the necessity of proving damages or
posting any bond or other security, and without prejudice to any other remedies
that may be available at law or in equity.
27. ACCESS TO DOCUMENTS.
The Executive shall have the right to obtain copies of any
Company or Bank documents that the Executive reasonably believes, in good faith,
are necessary or appropriate in determining his entitlement to, and the amount
of, payments and benefits under this Agreement.
28. GUARANTEE.
The Company hereby agrees to guarantee the payment by the Bank
of any benefits and compensation to which the Executive is or may be entitled to
under the terms and conditions of the Bank Agreement.
29. REQUIRED REGULATORY PROVISIONS.
Notwithstanding anything herein contained to the contrary, any
payments to the Executive by the Company, whether pursuant to this Agreement or
otherwise, are subject to and conditioned upon their compliance with section
18(k) of the Federal Deposit Insurance Act, as amended, 12 U.S.C. ss.1828(k),
and any regulations promulgated thereunder.
<PAGE>
SIGNATURES
IN WITNESS WHEREOF, JSB FINANCIAL, INC. has caused this
Agreement to be executed and its seal to be affixed hereunto by its duly
authorized officer, and the Executive has signed this Agreement, on the 22nd day
of June, 1999.
ATTEST: JSB FINANCIAL, INC.
Joanne Corrigan By: Edward P. Henson
- --------------- ----------------
Joanne Corrigan Edward P. Henson
Secretary President
[Seal]
WITNESS:
Park T. Adikes
--------------
Park T. Adikes
<PAGE>
STATE OF NEW YORK )
: ss.:
COUNTY OF NASSAU )
On this 22nd day of June, 1999, before me personally came
Edward P. Henson, to me known, who, being by me duly sworn, did depose and say
that he is the President of JSB Financial, Inc., the Delaware corporation
described in and which executed the foregoing instrument; that he knows the seal
of said corporation; that the seal affixed to said instrument is such seal; that
it was so affixed by order of the Board of Directors of said corporation; and
that he signed his name thereto by like order.
Name:
Notary Public
STATE OF NEW YORK )
: ss.:
COUNTY OF NASSAU )
On this 22nd day of June, 1999, before me personally came Park
T. Adikes, to me known, and known to me to be the individual described in the
foregoing instrument, who, being by me duly sworn, did depose and say that he
resides at the address set forth in said instrument, and that he signed his name
to the foregoing instrument.
Name:
Notary Public
<PAGE>
APPENDIX A
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1. INTRODUCTION. Sections 280G and 4999 of the Internal Revenue Code of
1986, as amended ("Code"), impose a 20% non-deductible federal excise tax on a
person if the payments and benefits in the nature of compensation to or for the
benefit of that person that are contingent on a change in the ownership or
effective control of the Company or the Bank or in the ownership of a
substantial portion of the assets of the Company or the Bank (such payments and
benefits are considered "parachute payments" under section 280G) exceed three
times the person's "base amount" under section 280G. Section 23 of the Agreement
provides for the Executive to receive a tax indemnification payment (sometimes
referred to as a "gross-up" payment) if the payments and benefits in the nature
of compensation to or for the benefit of the Executive that are considered
parachute payments cause the imposition of an excise tax under section 4999 of
the Code. Capitalized terms in this Appendix A that are not defined in this
Appendix A have the meaning used in the Employment Agreement with the Executive.
2. PURPOSE. The purpose of this Appendix A is to illustrate how the tax
indemnification or gross-up payment would be computed. The amounts, figures and
rates used in this example are meant to be illustrative and do not reflect the
actual payments and benefits that would be made to the Executive under this
Agreement. For purposes of this example, it is assumed that a change in control
within the meaning of section 280G of the Code has occurred and that:
(a) The value of the insurance benefits required to be provided to a
hypothetical employee "Z" under sections 4(b)(iii) and 5(b) of the
Agreement for medical, dental, life and other insurance benefits
during the unexpired employment period is $23,000.
(b) The annual rate of Z's salary covered by the Agreement is $100,000,
and Z received annual salary increases of 4%, 5% and 6% (i.e., a
three-year average of 5%) for each of the prior three years. Hence,
the amount payable under sections 4(b)(v) and 5(b) of the Agreement
for salary during the unexpired employment period would be $331,013
[$105,000 + $110, 250 + $115,763].
(c) Z received annual bonuses equal to 20% of his salary in each of the
prior three years. Hence, the amount payable under sections 4(b)(v)
and 5(b) of the Agreement for bonuses during the unexpired employment
period would be $66,203 [20% x ($105,000 + $110,250 + $115,763)].
(d) The amount payable under sections 4(b)(vi) and 5(b) of the Agreement
for the present value of the additional RP and BRP accruals during the
unexpired employment period would be $45,000.
(e) The amount payable under sections 4(b)(vii) and 5(b) of the Agreement
for additional contributions to the ESOP, 401(k) Plan and BRP during
the unexpired employment period would be $20,000.
(f) Z's base amount (i.e., average W-2 wages for the five-year period
preceding the change in control) is $87,000.
3. DETERMINE IF Z IS SUBJECT TO AN EXCISE TAX. Z's parachute payments would
total $485,216 [$23,000 + $331,013 + $66,203 + $45,000 + $20,000]. Three times
Z's base amount is $261,000 [3 x $87,000]; accordingly, Z is subject to an
excise tax because $485,216 exceeds $261,000. Z's "excess parachute payments"
under section 280G of the Code are equal to Z's total parachute payments minus
one times Z's base amount, or $398,216 [$485,216 - $87,000]. If Z were not
protected by section 23 of the Agreement, Z would be subjected to an excise tax
of $79,643 [$398,216 x 20%], in addition to ordinary income taxes.
4. Compute Z's Tax Indemnification Payment. Z's tax indemnification payment
under section 23 of the Agreement would be computed pursuant to the following
formula:
E x P .2 x $398,216
X = ------------------------------------ = ----------------------------------
1 - [(FI x (1 - SLI)) + SLI + E + M] 1 - [.368874 + .0685 + .2 + .0145]
where
E = excise tax rate under section 4999 of the Code [20%];
P = the amount with respect to which such excise tax is
assessed determined without regard to section 23 of
the Agreement [$398,216];
FI = the highest effective marginal rate of income tax
applicable to Z under the Code for the taxable year
in question [assumed to be 39.6% in this example, but
in actuality, the rate is adjusted to take into
account any phase-out or loss of deductions, personal
exemptions and other similar adjustments];
SLI = the sum of the highest effective marginal rates of
income tax applicable to Z under applicable state and
local laws for the taxable year in question [assumed
to be 6.85% in this example, but in actuality, the
rate is adjusted to take into account any phase-out
or loss of deductions, personal exemptions and other
similar adjustments]; and
M = the highest marginal rate of Medicare tax applicable
to Z under the Code for the year in question [1.45%].
In this example, the amount of tax indemnification payment due to Z under
section 23 of the Agreement would be $79,643 [.2 x $398,216] divided by 0.348126
[1 - (.368874 + .0685 + .2 + .0145)], or $228,777. Such amount would be payable
in addition to the other amounts payable under the Agreement in order to put Z
in approximately the same after-tax position that Z would have been in if there
were no excise tax imposed under sections 280G and 4999 of the Code. The tax
indemnification to Z of $228,777 would in turn be a parachute payment subject to
excise tax under sections 280G and 4999. Accordingly, Z's actual excess
parachute payment would be $626,993 [$485,216 - $87,000) + $228,777)] resulting
in an excise tax of $125,399 [$626,993 x 20%]. The difference between the
indemnification. payment and the excise tax [$103,378] is an amount equal to the
sum of the income and other applicable taxes due on the indemnification payment
[($228,777 x .368874) + ($228,777 x .0685) + ($228,777 x .0145)], confirming
that the amount of the tax indemnification payment is sufficient to satisfy all
of Z's tax liability resulting from the excess parachute payment.
JSB FINANCIAL, INC.
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT ("Agreement") is made and entered
into as of June 22, 1999 by and between JSB FINANCIAL, INC., a business
corporation organized and operating under the laws of the State of Delaware and
having its principal office at 303 Merrick Road, Lynbrook, New York 11563
("Company"), and Edward P. Henson, an individual residing at (address omitted)
("Executive"). This Agreement amends, restates and supersedes the Employment
Agreement dated as of June 27, 1990 and the Supplemental Employment Agreement
dated as of July 9, 1996 by and between the Company and the Executive. Any
reference to the "Bank" in this Agreement shall mean Jamaica Savings Bank FSB
and any successor thereto.
W I T N E S S E T H :
WHEREAS, the Executive is currently serving as President of
the Company, and the Company wishes to assure itself of the services of the
Executive for the period provided in this Agreement; and
WHEREAS, the Executive is willing to serve in the employ of
the Company on the terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the premises and the
mutual covenants and conditions hereinafter set forth, the Company and the
Executive hereby agree as follows:
1. POSITION AND RESPONSIBILITIES.
During the period of his employment hereunder, the Executive
agrees to serve as President of the Company. The Executive shall render
administrative and management services to the Company such as are customarily
performed by persons situated in a similar executive capacity and shall perform
such other duties not inconsistent with his title and office as may be assigned
to him by or under the authority of the Board of Directors of the Company (the
"Board"). The Executive shall have such authority as is necessary or appropriate
to carry out his assigned duties. Failure to re-elect the Executive as President
of the Company (or a more senior position) or re-nominate the Executive as a
Director of the Company without the consent of the Executive shall constitute a
breach of this Agreement.
2. TERMS.
(a) The period of the Executive's employment under this
Agreement shall be deemed to have commenced as of the date first above written
(the "Effective Date") and shall continue for a period of 36 full calendar
months thereafter. Commencing with the Effective Date, the term of this
Agreement shall be extended for one additional day each day until such time as
the Board or the Executive elects not to extend the term of the Agreement
further by giving written notice to the other party in accordance with Section
10, in which case the term of this Agreement shall become fixed and shall end on
the third anniversary of the date of such written notice. For purposes of this
Agreement, the term "Employment Period" shall mean the term of this Agreement
plus such extensions as are provided herein.
(b) During the period of his employment hereunder, except for
periods of absence occasioned by illness, disability, holidays, reasonable
vacation periods and reasonable leaves of absence, the Executive shall devote
substantially all of his business time, attention, skill and efforts to the
faithful performance of his duties hereunder including (i) service as President
of the Company, and, if duly elected, a Director of the Company, (ii)
performance of such duties not inconsistent with his title and office as may be
assigned to him by or under the authority of the Board or a more senior
executive officer, and (iii) such other activities and services related to the
organization, operation and management of the Company. During the Employment
Period it shall not be a violation of this Agreement for the Executive to (A)
serve on corporate, civic, industry or charitable boards or committees, (B)
deliver lectures, fulfill speaking engagements or teach at educational
institutions and (C) manage personal investments, so long as such activities do
not significantly interfere with the performance of the Executive's
responsibilities as an employee of the Company in accordance with this
Agreement. It is expressly understood and agreed that to the extent that any
such activities have been conducted by the Executive prior to the Effective
Date, the continued conduct of such activities (or the conduct of activities
similar in nature and scope thereto) subsequent to the Effective Date shall not
thereafter be deemed to interfere with the performance of the Executive's
responsibilities to the Company. It is also expressly agreed that the Executive
may conduct activities subsequent to the Effective Date that are generally
accepted for an executive in his position, regardless of whether conducted by
the Executive prior to the Effective Date.
(c) Notwithstanding anything herein contained to the contrary:
(i) the Executive's employment with the Company may be terminated by the Company
or the Executive during the term of this Agreement, subject to the terms and
conditions of this Agreement; and (ii) nothing in this Agreement shall mandate
or prohibit a continuation of the Executive's employment following the
expiration of the term of this Agreement upon such terms and conditions as the
Board and the Executive may mutually agree.
(d) Upon the termination of the Executive's employment with
the Company, the daily extensions provided pursuant to Section 2(a) shall cease
(if such extensions have not previously ceased), and, if such termination is
under circumstances described in Section 4(a) or Section 5(b), the term
"Unexpired Employment Period" shall mean the period of time commencing from the
date of such termination and ending on the last day of the Employment Period
computed with reference to all extensions prior to such termination.
(e) In the event that the Executive's duties and
responsibilities with respect to the Bank are temporarily or permanently
terminated pursuant to Section 9 of the Employment Agreement dated June 22,
1999, as it may be amended from time to time, between the Executive and the Bank
("Bank Agreement") and the course of conduct upon which such termination is
based would not constitute grounds for Termination for Cause under Section 9,
then the Executive shall, to the extent practicable, assume such duties and
responsibilities formerly performed at the Bank as part of his duties and
responsibilities as President of the Company. Nothing in this provision shall be
interpreted as restricting the Company's right to remove the Executive for Cause
in accordance with Section 9.
3. COMPENSATION AND REIMBURSEMENT.
(a) The compensation specified under this Agreement shall
constitute the salary and benefits paid for the duties described in Section 1.
The Company shall pay the Executive as compensation a salary at an annual rate
of not less than (salary omitted) per year or such higher rate as may be
prescribed by or under the authority of the Board ("Base Salary"). The Base
Salary payable under this Section 3 shall be paid in approximately equal
installments in accordance with the Company's customary payroll practices.
During the period of this Agreement, the Executive's Base Salary shall be
reviewed at least annually; the first such review will be made no later than one
year from the date of this Agreement. Such review shall be conducted by a
Committee designated by the Board, and the Board may increase the Executive's
Base Salary, which increased amount shall be considered the Executive's "Base
Salary" for purposes of this Agreement. In no event shall the Executive's annual
rate of Base Salary under this Agreement in effect at a particular time be
reduced without his prior written consent. In addition to the Base Salary
provided in this Section 3(a), the Company shall provide the Executive at no
cost to the Executive with all such other benefits as are provided uniformly to
permanent full-time employees of the Bank.
(b) The Company will provide the Executive with employee
benefit plans, arrangements and perquisites substantially equivalent to those in
which the Executive was participating or otherwise deriving benefit from
immediately prior to the beginning of the term of this Agreement, and the
Company will not, without the Executive's prior written consent, make any
changes in such plans, arrangements or perquisites which would adversely affect
the Executive's rights or benefits thereunder. Without limiting the generality
of the foregoing provisions of this Subsection (b), the Executive will be
entitled to participate in or receive benefits under any employee benefit plans
with respect to which the Executive satisfies the eligibility requirements,
including, but not limited to, the Retirement Plan of Jamaica Savings Bank FSB
("RP"), the Incentive Savings Plan of Jamaica Savings Bank FSB ("ISP"), the
Jamaica Savings Bank FSB Employee Stock Ownership Plan ("ESOP"), the Benefit
Restoration Plan of Jamaica Savings Bank FSB ("BRP"), the JSB Financial, Inc.
1990 Stock Option Plan, the JSB Financial, Inc. 1996 Stock Option Plan,
retirement plans, supplemental retirement plans, pension plans, profit-sharing
plans, group life, health (including hospitalization, medical and major
medical), dental, accidental death and dismemberment, travel accident and
short-term disability insurance plans, or any other employee benefit plan or
arrangement made available by the Company in the future to its senior executives
and key management employees, subject to and on a basis consistent with the
terms, conditions and overall administration of such plans and arrangements. The
Executive will be entitled to incentive compensation and bonuses as provided in
any plan of the Company in which the Executive is eligible to participate.
Nothing paid to the Executive under any such plan or arrangement will be deemed
to be in lieu of other compensation to which the Executive is entitled under
this Agreement.
(c) The Executive's principal place of employment shall be at
the Company's executive offices at the address first above written, or at such
other location in New York City or in Nassau County or Suffolk County at which
the Company shall maintain its principal executive offices, or at such other
location as the Board and the Executive may mutually agree upon. The Company
shall provide the Executive, at his principal place of employment with support
services and facilities suitable to his position with the Company and necessary
or appropriate in connection with the performance of his assigned duties under
this Agreement. The Company or the Bank shall provide the Executive with an
automobile suitable to the position of President of the Company, in accordance
with prior practice, and such automobile may be used by the Executive in
carrying out his duties under the Agreement, including commuting between his
residence and his principal place of employment, and other personal use. The
Company shall reimburse the Executive for his ordinary and necessary business
expenses, including, without limitation, fees for memberships in such clubs and
organizations as the Executive and the Board shall mutually agree are necessary
and appropriate for business purposes, and travel and entertainment expenses,
incurred in connection with the performance of his duties under this Agreement,
upon presentation to the Company of an itemized account of such expenses in such
form as the Company may reasonably require.
(d) In the event that the Executive assumes additional duties
and responsibilities pursuant to Section 2(e) by reason of one of the
circumstances contained in Section 2(e), and the Executive receives or will
receive less than the full amount of compensation and benefits formerly entitled
to him under the Bank Agreement, the Company shall assume the obligation to
provide the Executive with his compensation and benefits in accordance with the
Bank Agreement less any compensation and benefits received from the Bank,
subject to the terms and conditions of this Agreement including the Termination
for Cause provisions in Section 9.
4. PAYMENTS TO THE EXECUTIVE UPON AN EVENT OF TERMINATION.
The provisions of this Section shall in all respects be
subject to the terms and conditions stated in Sections 9 and 29.
(a) Upon the occurrence of an Event of Termination (as herein
defined) during the Executive's term of employment under this Agreement, the
provisions of this Section shall apply. As used in this Agreement, an "Event of
Termination" shall mean and include any one or more of the following: (i) the
termination by the Bank or the Company of the Executive's full-time employment
hereunder for any reason other than: following a Change in Control, as defined
in Section 5; for Disability, as defined in Section 6; for Retirement, as
defined in Section 8; for Cause, as defined in Section 9; or upon the
Executive's death; or (ii) unless consented to by the Executive, the Executive's
voluntary resignation from the Company's employ, upon any: (A) failure to elect
or re-elect or to appoint or re-appoint the Executive as President of the
Company or to nominate or re-nominate the Executive as a Director of the Bank or
the Company, (B) material adverse change in the Executive's function, duties, or
responsibilities, which change would cause the Executive's position to become
one of lesser responsibility, importance, or scope from the position and
attributes thereof described in Section 1, above (and any such material change
shall be deemed a continuing breach of this Agreement), (C) relocation of the
Executive's principal place of employment by more than 30 miles from its
location at the Effective Date of this Agreement, or a material reduction in the
benefits and perquisites to the Executive from those being provided as of the
Effective Date of this Agreement, (D) liquidation or dissolution of the Bank or
Company, or (E) material breach of this Agreement by the Company. Upon the
occurrence of any event described in clauses (A), (B), (C), (D) or (E), above,
the Executive shall have the right to elect to terminate his employment under
this Agreement by resignation upon written notice pursuant to Section 10 given
within a reasonable period of time not to exceed, except in case of a continuing
breach, four calendar months after the event giving rise to said right to elect.
(b) Upon the occurrence of an Event of Termination as set
forth in Section 4(a), on the Date of Termination, as defined in Section 10, the
Company shall be obligated to pay, or to provide, the Executive, or, in the
event of his subsequent death, to his surviving spouse or such other beneficiary
or beneficiaries as the Executive may designate in writing, or if neither his
estate, as severance pay or liquidated damages, or both, the benefits provided
below and a payment equal to the sum of the payments set forth below:
(i) payment of the sum of (A) the Executive's annual Base Salary
through the Date of Termination to the extent not theretofore paid and (B)
any compensation previously deferred by the Executive (together with any
accrued interest or earnings thereon) and any accrued vacation pay, in each
case to the extent not theretofore paid (the sum of the amounts described
in clauses (A) and (B) shall be hereinafter referred to as the "Accrued
Obligations");
(ii) the benefits, if any, to which the Executive is entitled as a
former employee under the Bank's or Company's employee benefit plans and
programs and compensation plans and programs;
(iii) continued group life, health (including hospitalization, medical
and major medical), dental, accidental death and dismemberment, travel
accident and short-term disability insurance benefits as provided by the
Bank or the Company, in addition to that provided pursuant to Section
4(b)(ii), if and to the extent necessary to provide for the Executive, for
the remaining Unexpired Employment Period, coverage equivalent to the
coverage to which he would have been entitled if he had continued working
for the Company during the remaining Unexpired Employment Period at the
highest annual rate of salary achieved during the Employment Period;
provided, however, if the Executive has obtained group life, health
(including hospitalization, medical and major medical), dental, accidental
death and dismemberment, travel accident and/or short-term disability
insurance benefits coverage from another source, the Executive may, as of
any month, make an irrevocable election to forego the continued coverage
that would otherwise be provided hereunder for the remaining Unexpired
Employment Period, or any portion thereof, in which case the Bank or the
Company, upon receipt of the Executive's irrevocable election, shall pay
the Executive an amount equal to the estimated cost to the Bank or the
Company of providing such coverage during such period;
(iv) if and to the extent not already provided under Sections 4(b)(ii)
and 4(b)(iii), continued health (including hospitalization, medical and
major medical) and dental insurance benefits to the extent maintained by
the Bank or the Company for its employees or retirees during the remainder
of the Executive's lifetime and the lifetime of his spouse, if any, for so
long as the Executive continues to reimburse the Bank for the cost of such
continued coverage;
(v) a lump sum payment, as liquidated damages, in an amount equal to
the Base Salary and the bonus or other incentive compensation that the
Executive would have earned if the Executive had continued working for the
Bank and the Company during the remaining Unexpired Employment Period (A)
at the highest annual rate of Base Salary and bonus or other incentive
compensation achieved by the Executive during the three-year period
immediately preceding the Executive's Date of Termination, except that (B)
in the case of a Change in Control, such lump sum shall be determined based
upon the Base Salary and the bonus or other incentive compensation,
respectively, that the Executive would have been paid during the remaining
Unexpired Employment Period including the assumed increases referred to in
clauses (i) and (ii) of Section 5(b);
(vi) a lump sum payment in an amount equal to the excess, if any, of:
(A) the present value of the pension benefits to which the Executive would
be entitled under the RP and the BRP (and under any other qualified and
non-qualified defined benefit plans maintained by the Company or the Bank
covering the Executive) as if he had continued working for the Company
during the remaining Unexpired Employment Period (x) at the highest annual
rate of Base Salary and, if applicable, the highest bonus or other
incentive compensation, respectively, achieved by the Executive during the
three-year period immediately preceding the Executive's Date of
Termination, except that (y) in the case of a Change in Control, such lump
sum shall be determined based upon the Base Salary and, if applicable, the
bonus or other incentive compensation, respectively, that the Executive
would have been paid during the remaining Unexpired Employment Period
including the assumed increases referred to in clauses (i) and (ii) of
Section 5(b), and (z) in the case of a Change in Control, as if three
additional years are added to the Executive's age and years of creditable
service under the RP and the BRP and after taking into account any other
compensation required to be taken into account under the RP and the BRP
(and any other qualified and non-qualified defined benefit plans of the
Company or the Bank, as applicable), over (B) the present value of the
pension benefits to which he is actually entitled under the RP and the BRP
(and any other qualified and non-qualified defined benefit plans) as of his
Date of Termination, where such present values are to be determined using a
discount rate of 6% and the mortality tables prescribed under section 72 of
the Internal Revenue Code of 1986, as amended ("Code"); and
(vii) a lump sum payment in an amount equal to the contributions that
would have been made by the Company or the Bank on the Executive's behalf
to the ISP and the ESOP and to the BRP with respect to such ISP and ESOP
contributions (and to any other qualified and non-qualified defined
contribution plans maintained by the Company or the Bank covering the
Executive) as if the Executive had continued working for the Bank and the
Company during the remaining Unexpired Employment Period making the maximum
amount of employee contributions required or permitted, if any, under such
plan or plans and earning (A) the highest annual rate of Base Salary and,
if applicable, the highest bonus or other incentive compensation,
respectively, achieved by the Executive during the three-year period
immediately preceding the Executive's Date of Termination, except that (B)
in the case of a Change in Control, such lump sum shall be determined based
upon the Base Salary and, if applicable, the bonus or other incentive
compensation, respectively, that the Executive would have been paid during
the remaining Unexpired Employment Period including the assumed increases
referred to in clauses (i) and (ii) of Section 5(b).
The benefits to be provided under, and the amounts payable pursuant to, this
Section 4 shall be provided and be payable without regard to proof of damages
and without regard to the Executive's efforts, if any, to mitigate damages. The
Company and the Executive hereby stipulate that the damages which may be
incurred by the Executive following any such termination of employment are not
capable of accurate measurement as of the date first above written and that such
liquidated damages constitute reasonable damages under the circumstances.
(c) Payments to the Executive under Section 4 shall be made
within ten days of the Executive's Date of Termination.
(d) In the event payments are made under Section 4 or Section
5, the Executive may select an individual or firm to provide him with reasonable
outplacement counseling services, and the Company shall pay for the costs of
such services; provided, however, that the cost to the Company of such
outplacement counseling services shall not exceed 25% of the Executive's Base
Salary.
5. CHANGE IN CONTROL.
(a) No benefit shall be payable under this Section 5 unless
there shall have been a Change in Control of the Bank or Company, as set forth
below. For purposes of this Agreement, a "Change in Control" of the Bank or
Company shall mean any one or more of the following:
(i) An event of a nature that would be required to be reported in
response to Item l(a) of the current report on Form 8-K, as in effect on
the date hereof, pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934, as amended (the "Exchange Act");
(ii) An event of a nature that results in a Change in Control of the
Bank or the Company within the meaning of the Home Owners' Loan Act of
1933, as amended, or the Change in Bank Control Act of 1978, as amended, as
applicable, and the Rules and Regulations promulgated by the Office of
Thrift Supervision ("OTS") or its predecessor agency, the Federal Deposit
Insurance Corporation ("FDIC") or the Board of Governors of the Federal
Reserve System ("FRB"), as the case may be, as in effect on the date
hereof, but excluding any such Change in Control resulting from the
purchase of securities by the Company or the Company's or the Bank's
tax-qualified employee benefit plans and trusts;
(iii) If any "person" (as the term is used in Sections 13(d) and 14(d)
of the Exchange Act) is or becomes the "beneficial owner" (as defined in
Rule 13d-3 under the Exchange Act), directly or indirectly, of securities
of the Bank or the Company representing 20% or more of the Bank's or the
Company's outstanding securities except for any securities of the Bank
purchased by the Company in connection with the initial conversion of the
Bank from mutual to stock form (the "Conversion") and any securities
purchased by the Company or the Company's or the Bank's tax-qualified
employee benefit plans and trusts;
(iv) If the individuals who constitute the Board on the date hereof
(the "Incumbent Board") cease for any reason to constitute at least a
majority of the Board, provided, however, that any person becoming a
director subsequent to the date hereof whose election or nomination for
election by the Company's stockholders, was approved by a vote of at least
three-quarters of the directors then comprising the Incumbent Board shall
be considered as though he were a member of the Incumbent Board, but
excluding, for this purpose, any such person whose initial assumption of
office occurs as a result of an actual or threatened election contest with
respect to the election or removal of directors or other actual or
threatened solicitation of proxies or consents by or on behalf of a person
other than the Board;
(v) A merger, consolidation, reorganization, sale of all or
substantially all the assets of the Bank or the Company or similar
transaction occurs in which the Bank or Company is not the resulting
entity, other than a transaction following which (A) at least 51% of the
equity ownership interests of the entity resulting from such transaction
are beneficially owned (within the meaning of Rule 13d-3 promulgated under
Exchange Act) in substantially the same relative proportions by persons
who, immediately prior to such transaction, beneficially owned (within the
meaning of Rule 13d-3 promulgated under the Exchange Act) at least 51% of
the outstanding equity ownership interests in the Bank or Company and (B)
at least 51% of the securities entitled to vote generally in the election
of directors of the entity resulting from such transaction are beneficially
owned (within the meaning of Rule 13d-3 promulgated under the Exchange Act)
in substantially the same relative proportions by persons who, immediately
prior to such transaction, beneficially owned (within the meaning of Rule
13d-3 promulgated under the Exchange Act) at least 51% of the securities
entitled to vote generally in the election of directors of the Bank or
Company;
(vi) A proxy statement shall be distributed soliciting proxies from
stockholders of the Company, by someone other than the current management
of the Company, seeking stockholder approval of a plan of reorganization,
merger or consolidation of the Company or Bank or similar transaction with
one or more corporations as a result of which the outstanding shares of the
class of securities then subject to such plan or transaction are exchanged
for or converted into cash or property or securities not issued by the Bank
or the Company; or
(vii) A tender offer is completed for 20% or more of the voting
securities of the Bank or Company then outstanding.
The "Change in Control Date" shall mean the date during the Employment Period on
which a Change in Control occurs. Anything in this Agreement to the contrary
notwithstanding, if the Executive's employment with the Company is terminated
and if it is reasonably demonstrated by the Executive that such termination of
employment (1) was at the request of a third party who has taken steps
reasonably calculated to effect a Change in Control or (2) otherwise arose in
connection with or anticipation of a Change in Control, then for all purposes of
this Agreement the "Change in Control Date" shall mean the date immediately
prior to the date of such termination of employment.
(b) If any of the events described in Section 5(a)
constituting a Change in Control have occurred or the Board has determined that
a Change in Control has occurred, the Executive shall be entitled to the
payments and the benefits provided below on the Change in Control Date. The
amounts payable and the benefits to be provided under this Section 5(b) to the
Executive shall consist of the payments and benefits that would be due to the
Executive and the Executive's family under Section 4(b) as if an Event of
Termination under Section 4(a) had occurred on the Change in Control Date and
that for purposes of this Section 5(b), the term Unexpired Employment Period
shall mean three years from the Change in Control Date. For purposes of
determining the payments and benefits due under this Section 5(b), when
calculating the payments due and benefits to be provided for the Unexpired
Employment Period, it shall be assumed that for each year of the remaining term
of this Agreement, the Executive would have received (i) an annual increase in
Base Salary equal to the average percentage increase in Base Salary received by
the Executive for the three-year period ending with the earlier of (x) the year
in which the Change in Control Date occurs or (y) the year during which a
definitive agreement, if any, governing the Change in Control is executed, with
the first such increase effective as of the January 1st next following such
three-year period and the second and third such increases effective as of the
next two anniversaries of such January 1st, (ii) a bonus or other incentive
compensation equal to the highest percentage rate of bonus or incentive
compensation paid to the Executive during the three-year period referred to in
clause (i) of this Section 5(b) times the Base Salary that the Executive would
have been paid during the remaining term of this Agreement including the assumed
increases referred to in clause (i) of this Section 5(b), (iii) the maximum
contributions that could be made by or on behalf of the Executive with respect
to any employee benefit plans and programs maintained by the Company and the
Bank based upon the Base Salary and, if applicable, the bonus or other incentive
compensation, respectively, that the Executive would have been paid during the
remaining term of this Agreement including the assumed increases referred to in
clauses (i) and (ii) of this Section 5(b), and (iv) the present value of the
pension benefits to which the Executive is entitled under Section 4(b)(vi) with
respect to the RP and the BRP (and under any other qualified and non-qualified
defined benefit plans maintained by the Bank or the Company covering the
Executive) determined as if he had continued working for the Bank during the
remaining Unexpired Employment Period and based upon the Base Salary and, if
applicable, the bonus or other incentive compensation, respectively, that the
Executive would have been paid during the remaining term of this Agreement
including the assumed increases referred to in clauses (i) and (ii) of this
Section 5(b). The benefits to be provided under, and the amounts payable
pursuant to, this Section 5 shall be provided and be payable without regard to
proof of damages and without regard to the Executive's efforts, if any, to
mitigate damages. The Company and the Executive hereby stipulate that the
damages which may be incurred by the Executive following any Change in Control
are not capable of accurate measurement as of the date first above written and
that such liquidated damages constitute reasonable damages under the
circumstances.
(c) Payments to the Executive under Section 5(b) shall be made
on the Change in Control Date. Such payments shall be made regardless of whether
the Executive's employment terminates.
6. TERMINATION FOR DISABILITY.
(a) In the event of Termination for Disability, the Executive
shall receive the benefits provided in Section 6(b); provided, however, that the
benefits provided under Section 6(b) shall not be deemed to be in lieu of the
benefits he is otherwise entitled as a former employee under the Bank or
Company's employee plans and programs. For purposes of this Agreement, the
Executive may be terminated for disability only if (i) the Executive shall have
been absent from his duties with the Company on a full-time basis for at least
six consecutive months, or (ii) a majority of the members of the Board acting in
good faith determine that, based upon competent and independent medical evidence
presented by a physician or physicians agreed upon by the parties, the
Executive's physical or mental condition is such that he is totally and
permanently incapable of engaging in any substantial gainful employment based
upon his education, training and experience; provided, however, that on and
after the earliest date on which a Change in Control of the Bank or Company as
defined in Section 5 occurs, such a determination shall require the affirmative
vote of at least three-fourths of the members of the Board acting in good faith
and such vote shall not be made prior to the expiration of a 60-day period
following the date on which the Board shall, by written notice to the Executive,
furnish him a statement of its grounds for proposing to make such determination,
during which period the Executive shall be afforded a reasonable opportunity to
make oral and written presentations to the members of the Board, and to be
represented by his legal counsel at such presentations, to refute the grounds
for the proposed determination.
(b) The Company will pay the Executive as Disability pay, a
bi-weekly payment equal to 100% of the Executive's bi-weekly annual rate of Base
Salary in effect on the date of the Executive's Termination for Disability. In
addition, the Company will cause to be continued insurance coverage, including
group life, health (including hospitalization, medical and major medical),
dental, accidental death and dismemberment, travel accident and short-term
disability coverage substantially identical to the coverage maintained by the
Bank or the Company for the Executive prior to his Termination for Disability.
The Disability pay and coverages shall commence on the effective date of the
Executive's termination and shall cease upon the earliest to occur of: (i) the
date the Executive returns to the full-time employment of the Company, in the
same capacity as he was employed prior to his Termination for Disability and
pursuant to an employment agreement between the Executive and the Company; (ii)
the Executive's full-time employment by another employer; (iii) the Executive's
attaining the normal age of retirement or receiving benefits under the RP or
other defined benefit pension plan of the Bank or the Company; (iv) the
Executive's death; (v) the Executive's eligibility to collect payments under the
disability provision of the RP or other defined benefit pension plan of the Bank
or the Company; or (vi) the expiration of the term of this Agreement.
(c) Notwithstanding the foregoing, there will be no reduction
in the compensation otherwise payable to the Executive during any period during
which the Executive is incapable of performing his duties hereunder by reason of
temporary disability.
7. TERMINATION UPON DEATH.
The Executive's employment shall terminate automatically upon
the Executive's death during the Employment Period. In such event, the Executive
and the Executive's legal representatives shall be entitled to the following:
(i) payment of the Executive's "Accrued Obligations;"
(ii) the continuation of all benefits to the Executive's family and
dependents that would have been provided if the Executive had been entitled
to the benefits under Section 4(b)(ii), (iii) and (iv); and
(iii) the timely payment of any other amounts or benefits required to
be paid or provided or which the Executive is eligible to receive under any
plan, program, policy or practice or contract or agreement of the Company
and its affiliated companies (all such other amounts and benefits shall be
hereinafter referred to as the "Other Benefits");
provided, however, that if the Executive dies while in the employment of the
Company, the amount of life insurance provided to the Executive by the Company
shall not be less than the lesser of $200,000 or three times the Executive's
then annual Base Salary. Accrued Obligations shall be paid to the Executive's
estate or beneficiary, as applicable, in a lump sum cash payment within ten days
of the Date of Termination. With respect to the provision of Other Benefits
after the Change of Control Date, the term Other Benefits as utilized in this
Section 7 shall include, without limitation, that the Executive's estate and/or
beneficiaries shall be entitled to receive, benefits at least equal to the most
favorable benefits provided by the Company and affiliated companies to the
estates and beneficiaries of peer executives of the Company and such affiliates
companies under such plans, programs, practices and policies relating to death
benefits, if any, as in effect with respect to other peer executives and their
beneficiaries at any time during the 120-day period immediately preceding the
Change in Control Date.
8. TERMINATION UPON RETIREMENT.
Termination by the Company of the Executive based on
"Retirement" shall mean termination in accordance with the Company's or the
Bank's retirement policy or in accordance with any retirement arrangement
established with the Executive's consent with respect to him. Upon termination
of the Executive upon Retirement, the Executive shall be entitled to all
benefits under the RP and any other retirement plan of the Bank or the Company
and other plans to which the Executive is a party, and the Executive shall be
entitled to the benefits, if any, that would be payable to him as a former
employee under the Bank's or the Company's employee benefit plans and programs
and compensation plans and programs.
9. TERMINATION FOR CAUSE.
The terms "Termination for Cause" or "Cause" shall mean
termination because of the Executive's personal dishonesty, willful misconduct,
any breach of fiduciary duty involving personal profit, intentional failure to
perform stated duties, conviction of a felony with respect to the Bank or the
Company or any material breach of this Agreement. For purposes of this Section,
no act, or the failure to act, on the Executive's part shall be "willful" unless
done, or omitted to be done, in bad faith and without reasonable belief that the
action or omission was in the best interest of the Company or its affiliates.
Any act, or failure to act, based upon authority given pursuant to a resolution
duly adopted by the Board or based upon the written advice of counsel for the
Company shall be conclusively presumed to be done, or omitted to be done, by the
Executive in good faith and in the best interests of the Company.
Notwithstanding the foregoing, the Executive shall not be deemed to have been
terminated for Cause unless and until there shall have been delivered to him a
Notice of Termination which shall include a copy of a resolution duly adopted by
the affirmative vote of not less than three-fourths of the members of the Board
at a meeting of the Board called and held for that purpose (after reasonable
notice to the Executive and an opportunity for him, together with counsel, to be
heard before the Board), finding that in the good faith opinion of the Board,
the Executive was guilty of conduct justifying Termination for Cause and
specifying the particulars thereof in detail. The Executive shall not have the
right to receive compensation or other benefits for any period after Termination
for Cause.
10. NOTICE.
(a) Any purported termination by the Company or by the
Executive shall be communicated by a Notice of Termination to the other party
hereto. For purposes of this Agreement, a "Notice of Termination" shall mean a
written notice which shall indicate the specific termination provision in this
Agreement relied upon and shall set forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of the Executive's
employment under the provision so indicated.
(b) Subject to Section 10(c), "Date of Termination" shall mean
(A) if the Executive's employment is terminated for Disability, 30 days after a
Notice of Termination is given (provided that he shall not have returned to the
performance of his duties on a full-time basis during such 30-day period), and
(B) if his employment is terminated for any other reason, the date specified in
the Notice of Termination (which, in the case of a Termination for Cause, shall
be immediate).
(c) If, within 30 days after any Notice of Termination is
given, the party receiving such Notice of Termination notifies the other party
that a dispute exists concerning the termination, then, except upon the
occurrence of a Change in Control and voluntary termination by the Executive in
which case the Date of Termination shall be the date specified in the Notice,
the Date of Termination shall be the date on which the dispute is finally
determined, either by mutual written agreement of the parties, by a binding
arbitration award, or by a final judgment, order or decree of a court of
competent jurisdiction (the time for appeal therefrom having expired and no
appeal having been perfected) and provided further that the Date of Termination
shall be extended by a notice of dispute only if such notice is given in good
faith and the party giving such notice pursues the resolution of such dispute
with reasonable diligence. Notwithstanding the pendency of any such dispute, the
Company will continue to pay the Executive his full compensation in effect when
the notice giving rise to the dispute was given (including, but not limited to,
Base Salary) and continue him as a participant in all compensation, benefit and
insurance plans in which he was participating when the notice of dispute was
given, until the dispute is finally resolved in accordance with this Agreement.
Amounts paid under this Section are in addition to all other amounts due under
this Agreement and shall not be offset against or reduce any other amounts due
under this Agreement.
(d) The Company may terminate the Executive's employment at
any time, but any termination by the Company, other than Termination for Cause,
shall not prejudice the Executive's right to compensation or other benefits
under this Agreement or under any other benefit or compensation plans or
programs maintained by the Bank or the Company from time to time. The Executive
shall not have the right to receive compensation or other benefits for any
period after a Termination for Cause as defined in Section 9 hereinabove.
(e) Any communication to a party required or permitted under
this Agreement, including any notice, direction, designation, consent,
instruction, objection or waiver, shall be in writing and shall be deemed to
have been given at such time as it is delivered personally, or five days after
mailing if mailed, postage prepaid, by registered or certified mail, return
receipt requested, addressed to such party at the address listed below or at
such other address as one such party may by written notice specify to the other
party, as follows. If to the Executive, (address omitted), if to the Company,
JSB Financial, Inc., 303 Merrick Road, Lynbrook, New York 11563, Attention:
Chief Executive Officer, with a copy to Thacher Proffitt & Wood, Two World Trade
Center, New York, New York 10048, Attention: Douglas J. McClintock, Esq.
11. POST-TERMINATION OBLIGATIONS.
(a) All payments and benefits to the Executive under this
Agreement shall be subject to the Executive's compliance with paragraph (b) of
this Section 11 during the term of this Agreement and for one full year after
the expiration or termination hereof.
(b) The Executive shall, upon reasonable notice, furnish such
information and assistance to the Company as may reasonably be required by the
Company in connection with any litigation in which it or any of its subsidiaries
or affiliates is, or may become, a party; provided, that the Company reimburses
the Executive for the reasonable value of his time in connection therewith and
for any out-of-pocket costs attributable thereto.
12. COVENANT NOT TO COMPETE.
The Executive hereby covenants and agrees that for a period of
one year following his Date of Termination, if such termination occurs prior to
the end of the term of the Agreement, he shall not, without the written consent
of the Board, become an officer, employee, consultant, director or trustee of
any savings bank, savings and loan association, savings and loan holding
company, bank or bank holding company if such position (a) entails working in
(or providing services in) New York City, Nassau or Suffolk counties or (b)
entails working in (or providing services in) any other county that is both (i)
within the Bank's primary trade (or operating) area at the time in question,
which shall be determined by reference to the Bank's business plan as in effect
from time to time, and (ii) in which the Bank engages in material or substantial
deposit-taking functions or lending activities at such time; provided, however,
that this Section 12 shall not apply if the Executive's employment is terminated
for the reasons set forth in any of Sections 4, 5, 6 or 8.
13. SOURCE OF PAYMENTS.
All payments provided in this Agreement shall be timely paid
in cash or check from the general funds of the Company.
14. EFFECT ON PRIOR AGREEMENTS.
This Agreement contains the entire understanding between the
parties hereto and supersedes any prior employment agreement between the Company
or any predecessor of the Company and the Executive, including the Employment
Agreement dated June 27, 1990 and the Supplemental Employment Agreement dated
July 9, 1996, except that this Agreement shall not affect or operate to reduce
any benefit or compensation inuring to the Executive of a kind elsewhere
provided. No provisions of this Agreement shall be interpreted to mean that the
Executive is subject to receiving fewer benefits than those available to him
without reference to this Agreement.
15. EFFECT OF ACTION UNDER BANK AGREEMENT.
Notwithstanding any provision herein to the contrary, to the
extent that full compensation payments and benefits are paid to or received by
the Executive under the Bank Agreement, such compensation payments and benefits
paid by the Bank will be deemed to satisfy the corresponding obligations of the
Company under this Agreement.
16. NO ATTACHMENT.
Except as required by law, no right to receive payments under
this Agreement shall be subject to anticipation, commutation, alienation, sale,
assignment, encumbrance, charge, pledge, or hypothecation, or to execution,
attachment, levy, or similar process or assignment by operation of law, and any
attempt, voluntary or involuntary, to affect any such action shall be null,
void, and of no effect.
17. MODIFICATION AND WAIVER.
(a) This Agreement may not be modified or amended except by an
instrument in writing signed by the parties hereto.
(b) No term or condition of this Agreement shall be deemed to
have been waived, nor shall there be any estoppel against the enforcement of any
provision of this Agreement, except by written instrument of the party charged
with such waiver or estoppel. No such written waiver shall be deemed a
continuing waiver unless specifically stated therein, and each such waiver shall
operate only as to the specific term or condition waived and shall not
constitute a waiver of such term or condition for the future as to any act other
than that specifically waived.
18. SUCCESSOR AND ASSIGNS.
This Agreement will inure to the benefit of and be binding
upon the Executive, his legal representatives and testate or intestate
distributees, and the Company, its successors and assigns, including any
successor by purchase, merger, consolidation or otherwise or a statutory
receiver or any other person or firm or corporation to which all or
substantially all of the assets and business of the Company may be sold or
otherwise transferred. Any such successor of the Company shall be deemed to have
assumed this Agreement and to have become obligated hereunder to the same extent
as the Company and the Executive's obligations hereunder shall continue in favor
of such successor.
19. SEVERABILITY.
If, for any reason, any provision of this Agreement, or any
part of any provision, is held invalid, such invalidity shall not affect any
other provision of this Agreement or any part of such provision not held so
invalid, and each such other provision and part thereof shall to the full extent
consistent with law continue in full force and effect.
20. HEADINGS FOR REFERENCE ONLY.
The headings of Sections and paragraphs herein are included
solely for convenience of reference and shall not control the meaning or
interpretation of any of the provisions of this Agreement. Any reference in this
Agreement to a Section or Subsection shall refer to a Section or Subsection of
this Agreement, except as otherwise specified.
21. GOVERNING LAW.
This Agreement shall be governed by the laws of the State of
New York, without reference to conflicts of law principles.
22. INDEMNIFICATION AND ATTORNEYS' FEES.
(a) The Company shall indemnify, hold harmless and defend the
Executive against reasonable costs, including legal fees, incurred by him in
connection with his consultation with legal counsel or arising out of any
action, suit or proceeding in which he may be involved, as a result of his
efforts, in good faith, to defend or enforce the terms of this Agreement. The
Company agrees to pay all such costs as they are incurred by the Executive, to
the full extent permitted by law, and without regard to whether the Company
believes that it has a defense to any action, suit or proceeding by the
Executive or that it is not obligated for any payments under this Agreement.
(b) In the event any dispute or controversy arising under or
in connection with the Executive's termination is resolved in favor of the
Executive, whether by judgment, arbitration or settlement, the Executive shall
be entitled to the payment of all back-pay, including salary, bonuses and any
other cash compensation, fringe benefits and any compensation and benefits due
the Executive under this Agreement.
(c) The Company shall indemnify, hold harmless and defend the
Executive for any act taken or not taken, or any omission or failure to act, by
him in good faith while performing services for the Company or the Bank to the
same extent and upon the same terms and conditions as other similarly situated
officers and directors of the Company or the Bank. If and to the extent that the
Company or the Bank, maintains, at any time during the Employment Period, an
insurance policy covering the other officers and directors of the Company or the
Bank against lawsuits, the Company or the Bank shall use its best efforts to
cause the Executive to be covered under such policy upon the same terms and
conditions as other similarly situated officers and directors.
23. TAX INDEMNIFICATION.
(a) This Section 23 shall apply if 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 occurs within the meaning of section 280G
of the Code. If this Section 23 applies, then with respect to any taxable year
in which the Executive shall be liable for the payment of an excise tax under
section 4999 of the Code with respect to any payment in the nature of
compensation made by the Company, the Bank or any direct or indirect subsidiary
or affiliate of the Company to (or for the benefit of) the Executive, the
Company shall pay to the Executive an amount equal to X determined under the
following formula:
X = E x P
-------------------------------------------------
1 - [(FI x (1 - SLI)) + SLI + E + M]
where
E = the rate at which the excise tax is assessed under
section 4999 of the Code;
P = the amount with respect to which such excise tax is
assessed, determined without regard to this Section
23;
FI = the highest effective marginal rate of income tax
applicable to the Executive under the Code for the
taxable year in question (taking into account any
phase-out or loss of deductions, personal exemptions
and other similar adjustments);
SLI = the sum of the highest effective marginal rates of
income tax applicable to the Executive under all
applicable state and local laws for the taxable year
in question (taking into account any phase-out or
loss of deductions, personal exemptions and other
similar adjustments); and
M = the highest marginal rate of Medicare tax
applicable to the Executive under the Code for the
taxable year in question.
Attached as Appendix A to this Agreement is an example that illustrates
application of this Section 23. Any payment under this Section 23 shall be
adjusted so as to fully indemnify the Executive on an after-tax basis so that
the Executive would be in the same after-tax financial position in which he
would have been if no excise tax under section 4999 of the Code had been
imposed. With respect to any payment in the nature of compensation that is made
to (or for the benefit of) the Executive under the terms of this Agreement or
otherwise and on which an excise tax under section 4999 of the Code will be
assessed, the payment determined under this Section 23(a) shall be made to the
Executive on the earlier of (i) the date the Company, the Bank or any direct or
indirect subsidiary or affiliate of the Company is required to withhold such
tax, or (ii) the date the tax is required to be paid by the Executive.
(b) Notwithstanding anything in this Section 23 to the
contrary, in the event that the Executive's liability for the excise tax under
section 4999 of the Code for a taxable year is subsequently determined to be
different than the amount determined by the formula (X + P) x E, where X, P and
E have the meanings provided in Section 23(a), the Executive or the Company, as
the case may be, shall pay to the other party at the time that the amount of
such excise tax is finally determined, an appropriate amount, plus interest,
such that the payment made under Section 23(a), when increased by the amount of
the payment made to the Executive under this Section 23(b) by the Company, or
when reduced by the amount of the payment made to the Company under this Section
23(b) by the Executive, equals the amount that, it is finally determined, should
have properly been paid to the Executive under Section 23(a). The interest paid
under this Section 23(b) shall be determined at the rate provided under section
1274(b)(2)(B) of the Code. To confirm that the proper amount, if any, was paid
to the Executive under this Section 23, the Executive shall furnish to the
Company a copy of each tax return which reflects a liability for an excise tax
payment made by the Company, at least 20 days before the date on which such
return is required to be filed with the Internal Revenue Service.
24. NON-EXCLUSIVITY OF RIGHTS.
Except as otherwise provided herein, nothing in this Agreement
shall prevent or limit the Executive's continuing or future participation in any
plan, program, policy or practice provided by the Company or any of its
affiliated companies and for which the Executive may qualify, nor shall anything
herein limit or otherwise affect such rights as the Executive may have under any
contract or agreement with the Company or any of its affiliated companies.
Amounts which are vested benefits or which the Executive is otherwise entitled
to receive under any plan, policy, practice or program of or any contract or
agreement with the Company or any of its affiliated companies at or subsequent
to the Date of Termination shall be payable in accordance with such plan,
policy, practice or program or contract or agreement except as explicitly
modified by this Agreement. Notwithstanding the foregoing, in the event of a
termination of employment, the amounts provided in Section 4 or Section 5, as
applicable, shall be the Executive's sole remedy for any purported breach of
this Agreement by the Company.
25. MITIGATION; OTHER CLAIMS.
The Company's obligation to make the payments provided for in
this Agreement and otherwise to perform its obligations hereunder shall not be
affected by any set-off, counterclaim, recoupment, defense or other claim, right
or action which the Company may have against the Executive or others. In no
event shall the Executive be obligated to seek other employment or take any
other action by way of mitigation of the amounts payable to the Executive under
any of the provisions of this Agreement and such amounts shall not be reduced
whether or not the Executive obtains other employment.
26. CONFIDENTIAL INFORMATION.
The Executive shall hold in a fiduciary capacity for the
benefit of the Company all secret or confidential information, knowledge or data
relating to the Company or any of its affiliated companies, and their respective
businesses, which shall have been obtained by the Executive during the
Executive's employment by the Company or any of its affiliated companies and
which shall not be or become public knowledge (other than by acts by the
Executive or representatives of the Executive in violation of this Agreement).
After termination of the Executive's employment with the Company, the Executive
shall not, without the prior written consent of the Company or as may otherwise
be required by law or legal process, communicate or divulge any such
information, knowledge or data to anyone other than the Company and those
designated by it. For purposes of this Agreement, secret and confidential
information, knowledge or data relating to the Company or any of its affiliates,
and their respective business, shall not include any information that is public,
publicly available or available through trade association sources.
Notwithstanding any other provision of this Agreement to the contrary, the
Executive acknowledges and agrees that in the event of a violation or threatened
violation of any of the provisions of this Section 26, the Company shall have no
adequate remedy at law and shall therefore be entitled to enforce each such
provision by temporary or permanent injunction or mandatory relief obtained in
any court of competent jurisdiction without the necessity of proving damages or
posting any bond or other security, and without prejudice to any other remedies
that may be available at law or in equity.
27. ACCESS TO DOCUMENTS.
The Executive shall have the right to obtain copies of any
Company or Bank documents that the Executive reasonably believes, in good faith,
are necessary or appropriate in determining his entitlement to, and the amount
of, payments and benefits under this Agreement.
1. GUARANTEE.
The Company hereby agrees to guarantee the payment by the Bank of any
benefits and compensation to which the Executive is or may be entitled to under
the terms and conditions of the Bank Agreement.
1. REQUIRED REGULATORY PROVISIONS.
Notwithstanding anything herein contained to the contrary, any payments
to the Executive by the Company, whether pursuant to this Agreement or
otherwise, are subject to and conditioned upon their compliance with section
18(k) of the Federal Deposit Insurance Act, as amended, 12 U.S.C. ss.1828(k),
and any regulations promulgated thereunder.
<PAGE>
SIGNATURES
IN WITNESS WHEREOF, JSB FINANCIAL, INC. has caused this
Agreement to be executed and its seal to be affixed hereunto by its duly
authorized officer, and the Executive has signed this Agreement, on the 22nd day
of June, 1999.
ATTEST: JSB FINANCIAL, INC.
Joanne Corrigan By: Park T. Adikes
- --------------- --------------
Joanne Corrigan Park T. Adikes
Secretary Chairman and Chief Executive Officer
[Seal]
WITNESS:
Edward P. Henson
----------------
Edward P. Henson
<PAGE>
STATE OF NEW YORK )
: ss.:
COUNTY OF NASSAU )
On this 22nd day of June, 1999, before me personally came Park T.
Adikes, to me known, who, being by me duly sworn, did depose and say that he is
the Chairman and Chief Executive Officer of JSB Financial, Inc., the Delaware
corporation described in and which executed the foregoing instrument; that he
knows the seal of said corporation; that the seal affixed to said instrument is
such seal; that it was so affixed by order of the Board of Directors of said
corporation; and that he signed his name thereto by like order.
Name:
Notary Public
STATE OF NEW YORK )
: ss.:
COUNTY OF NASSAU )
On this 22nd day of June, 1999, before me personally came Edward P.
Henson, to me known, and known to me to be the individual described in the
foregoing instrument, who, being by me duly sworn, did depose and say that he
resides at the address set forth in said instrument, and that he signed his name
to the foregoing instrument.
Name:
Notary Public
<PAGE>
APPENDIX A
----------
1. INTRODUCTION. Sections 280G and 4999 of the Internal Revenue Code of
1986, as amended ("Code"), impose a 20% non-deductible federal excise tax on a
person if the payments and benefits in the nature of compensation to or for the
benefit of that person that are contingent on a change in the ownership or
effective control of the Company or the Bank or in the ownership of a
substantial portion of the assets of the Company or the Bank (such payments and
benefits are considered "parachute payments" under section 280G) exceed three
times the person's "base amount" under section 280G. Section 23 of the Agreement
provides for the Executive to receive a tax indemnification payment (sometimes
referred to as a "gross-up" payment) if the payments and benefits in the nature
of compensation to or for the benefit of the Executive that are considered
parachute payments cause the imposition of an excise tax under section 4999 of
the Code. Capitalized terms in this Appendix A that are not defined in this
Appendix A have the meaning used in the Employment Agreement with the Executive.
2. PURPOSE. The purpose of this Appendix A is to illustrate how the tax
indemnification or gross-up payment would be computed. The amounts, figures and
rates used in this example are meant to be illustrative and do not reflect the
actual payments and benefits that would be made to the Executive under this
Agreement. For purposes of this example, it is assumed that a change in control
within the meaning of section 280G of the Code has occurred and that:
(a) The value of the insurance benefits required to be provided to a
hypothetical employee "Z" under sections 4(b)(iii) and 5(b) of the
Agreement for medical, dental, life and other insurance benefits
during the unexpired employment period is $23,000.
(b) The annual rate of Z's salary covered by the Agreement is $100,000,
and Z received annual salary increases of 4%, 5% and 6% (i.e., a
three-year average of 5%) for each of the prior three years. Hence,
the amount payable under sections 4(b)(v) and 5(b) of the Agreement
for salary during the unexpired employment period would be $331,013
[$105,000 + $110, 250 + $115,763].
(c) Z received annual bonuses equal to 20% of his salary in each of the
prior three years. Hence, the amount payable under sections 4(b)(v)
and 5(b) of the Agreement for bonuses during the unexpired employment
period would be $66,203 [20% x ($105,000 + $110,250 + $115,763)].
(d) The amount payable under sections 4(b)(vi) and 5(b) of the Agreement
for the present value of the additional RP and BRP accruals during the
unexpired employment period would be $45,000.
(e) The amount payable under sections 4(b)(vii) and 5(b) of the Agreement
for additional contributions to the ESOP, 401(k) Plan and BRP during
the unexpired employment period would be $20,000.
(f) Z's base amount (i.e., average W-2 wages for the five-year period
preceding the change in control) is $87,000.
3. DETERMINE IF Z IS SUBJECT TO AN EXCISE TAX. Z's parachute payments would
total $485,216 [$23,000 + $331,013 + $66,203 + $45,000 + $20,000]. Three times
Z's base amount is $261,000 [3 x $87,000]; accordingly, Z is subject to an
excise tax because $485,216 exceeds $261,000. Z's "excess parachute payments"
under section 280G of the Code are equal to Z's total parachute payments minus
one times Z's base amount, or $398,216 [$485,216 - $87,000]. If Z were not
protected by section 23 of the Agreement, Z would be subjected to an excise tax
of $79,643 [$398,216 x 20%], in addition to ordinary income taxes.
4. Compute Z's Tax Indemnification Payment. Z's tax indemnification payment
under section 23 of the Agreement would be computed pursuant to the following
formula:
E x P .2 x $398,216
X = ------------------------------------ = ----------------------------------
1 - [(FI x (1 - SLI)) + SLI + E + M] 1 - [.368874 + .0685 + .2 + .0145]
where
E = excise tax rate under section 4999 of the Code [20%];
P = the amount with respect to which such excise tax is
assessed determined without regard to section 23 of
the Agreement [$398,216];
FI = the highest effective marginal rate of income tax
applicable to Z under the Code for the taxable year
in question [assumed to be 39.6% in this example, but
in actuality, the rate is adjusted to take into
account any phase-out or loss of deductions, personal
exemptions and other similar adjustments];
SLI = the sum of the highest effective marginal rates of
income tax applicable to Z under applicable state and
local laws for the taxable year in question [assumed
to be 6.85% in this example, but in actuality, the
rate is adjusted to take into account any phase-out
or loss of deductions, personal exemptions and other
similar adjustments]; and
M = the highest marginal rate of Medicare tax applicable
to Z under the Code for the year in question [1.45%].
In this example, the amount of tax indemnification payment due to Z under
section 23 of the Agreement would be $79,643 [.2 x $398,216] divided by 0.348126
[1 - (.368874 + .0685 + .2 + .0145)], or $228,777. Such amount would be payable
in addition to the other amounts payable under the Agreement in order to put Z
in approximately the same after-tax position that Z would have been in if there
were no excise tax imposed under sections 280G and 4999 of the Code. The tax
indemnification to Z of $228,777 would in turn be a parachute payment subject to
excise tax under sections 280G and 4999. Accordingly, Z's actual excess
parachute payment would be $626,993 [$485,216 - $87,000) + $228,777)] resulting
in an excise tax of $125,399 [$626,993 x 20%]. The difference between the
indemnification. payment and the excise tax [$103,378] is an amount equal to the
sum of the income and other applicable taxes due on the indemnification payment
[($228,777 x .368874) + ($228,777 x .0685) + ($228,777 x .0145)], confirming
that the amount of the tax indemnification payment is sufficient to satisfy all
of Z's tax liability resulting from the excess parachute payment.
JSB FINANCIAL, INC.
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT ("Agreement") is made and entered
into as of June 22, 1999 by and between JSB FINANCIAL, INC., a business
corporation organized and operating under the laws of the State of Delaware and
having its principal office at 303 Merrick Road, Lynbrook, New York 11563
("Company"), and John F. Bennett, an individual residing at (address omitted)
("Executive"). Any reference to the "Bank" in this Agreement shall mean Jamaica
Savings Bank FSB and any successor thereto.
W I T N E S S E T H :
WHEREAS, the Executive is currently serving as Senior Vice
President of the Company, and the Company wishes to assure itself of the
services of the Executive for the period provided in this Agreement; and
WHEREAS, the Executive is willing to serve in the employ of
the Company on the terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the premises and the
mutual covenants and conditions hereinafter set forth, the Company and the
Executive hereby agree as follows:
1. POSITION AND RESPONSIBILITIES.
During the period of his employment hereunder, the Executive
agrees to serve as Senior Vice President of the Company. The Executive shall
render administrative and management services to the Company such as are
customarily performed by persons situated in a similar executive capacity and
shall perform such other duties not inconsistent with his title and office as
may be assigned to him by or under the authority of the Board of Directors of
the Company (the "Board"). The Executive shall have such authority as is
necessary or appropriate to carry out his assigned duties. Failure to re-elect
the Executive as Senior Vice President of the Company (or a more senior
position) without the consent of the Executive shall constitute a breach of this
Agreement.
2. TERMS.
(a) The period of the Executive's employment under this
Agreement shall be deemed to have commenced as of the date first above written
(the "Effective Date") and shall continue for a period of 36 full calendar
months thereafter. Commencing with the Effective Date, the term of this
Agreement shall be extended for one additional day each day until such time as
the Board or the Executive elects not to extend the term of the Agreement
further by giving written notice to the other party in accordance with Section
10, in which case the term of this Agreement shall become fixed and shall end on
the third anniversary of the date of such written notice. For purposes of this
Agreement, the term "Employment Period" shall mean the term of this Agreement
plus such extensions as are provided herein.
(b) During the period of his employment hereunder, except for
periods of absence occasioned by illness, disability, holidays, reasonable
vacation periods and reasonable leaves of absence, the Executive shall devote
substantially all of his business time, attention, skill and efforts to the
faithful performance of his duties hereunder including (i) service as Senior
Vice President of the Company, and, if duly elected, a Director of the Company,
(ii) performance of such duties not inconsistent with his title and office as
may be assigned to him by or under the authority of the Board or a more senior
executive officer, and (iii) such other activities and services related to the
organization, operation and management of the Company. During the Employment
Period it shall not be a violation of this Agreement for the Executive to (A)
serve on corporate, civic, industry or charitable boards or committees, (B)
deliver lectures, fulfill speaking engagements or teach at educational
institutions and (C) manage personal investments, so long as such activities do
not significantly interfere with the performance of the Executive's
responsibilities as an employee of the Company in accordance with this
Agreement. It is expressly understood and agreed that to the extent that any
such activities have been conducted by the Executive prior to the Effective
Date, the continued conduct of such activities (or the conduct of activities
similar in nature and scope thereto) subsequent to the Effective Date shall not
thereafter be deemed to interfere with the performance of the Executive's
responsibilities to the Company. It is also expressly agreed that the Executive
may conduct activities subsequent to the Effective Date that are generally
accepted for an executive in his position, regardless of whether conducted by
the Executive prior to the Effective Date.
(c) Notwithstanding anything herein contained to the contrary:
(i) the Executive's employment with the Company may be terminated by the Company
or the Executive during the term of this Agreement, subject to the terms and
conditions of this Agreement; and (ii) nothing in this Agreement shall mandate
or prohibit a continuation of the Executive's employment following the
expiration of the term of this Agreement upon such terms and conditions as the
Board and the Executive may mutually agree.
(d) Upon the termination of the Executive's employment with
the Company, the daily extensions provided pursuant to Section 2(a) shall cease
(if such extensions have not previously ceased), and, if such termination is
under circumstances described in Section 4(a) or Section 5(b), the term
"Unexpired Employment Period" shall mean the period of time commencing from the
date of such termination and ending on the last day of the Employment Period
computed with reference to all extensions prior to such termination.
(e) In the event that the Executive's duties and
responsibilities with respect to the Bank are temporarily or permanently
terminated pursuant to Section 9 of the Employment Agreement dated June 22,
1999, as it may be amended from time to time, between the Executive and the Bank
("Bank Agreement") and the course of conduct upon which such termination is
based would not constitute grounds for Termination for Cause under Section 9,
then the Executive shall, to the extent practicable, assume such duties and
responsibilities formerly performed at the Bank as part of his duties and
responsibilities as Senior Vice President of the Company. Nothing in this
provision shall be interpreted as restricting the Company's right to remove the
Executive for Cause in accordance with Section 9.
3. COMPENSATION AND REIMBURSEMENT.
(a) The compensation specified under this Agreement shall
constitute the salary and benefits paid for the duties described in Section 1.
The Company shall pay the Executive as compensation a salary at an annual rate
of not less than (salary omitted) per year or such higher rate as may be
prescribed by or under the authority of the Board ("Base Salary"). The Base
Salary payable under this Section 3 shall be paid in approximately equal
installments in accordance with the Company's customary payroll practices.
During the period of this Agreement, the Executive's Base Salary shall be
reviewed at least annually; the first such review will be made no later than one
year from the date of this Agreement. Such review shall be conducted by a
Committee designated by the Board, and the Board may increase the Executive's
Base Salary, which increased amount shall be considered the Executive's "Base
Salary" for purposes of this Agreement. In no event shall the Executive's annual
rate of Base Salary under this Agreement in effect at a particular time be
reduced without his prior written consent. In addition to the Base Salary
provided in this Section 3(a), the Company shall provide the Executive at no
cost to the Executive with all such other benefits as are provided uniformly to
permanent full-time employees of the Bank.
(b) The Company will provide the Executive with employee
benefit plans, arrangements and perquisites substantially equivalent to those in
which the Executive was participating or otherwise deriving benefit from
immediately prior to the beginning of the term of this Agreement, and the
Company will not, without the Executive's prior written consent, make any
changes in such plans, arrangements or perquisites which would adversely affect
the Executive's rights or benefits thereunder. Without limiting the generality
of the foregoing provisions of this Subsection (b), the Executive will be
entitled to participate in or receive benefits under any employee benefit plans
with respect to which the Executive satisfies the eligibility requirements,
including, but not limited to, the Retirement Plan of Jamaica Savings Bank FSB
("RP"), the Incentive Savings Plan of Jamaica Savings Bank FSB ("ISP"), the
Jamaica Savings Bank FSB Employee Stock Ownership Plan ("ESOP"), the Benefit
Restoration Plan of Jamaica Savings Bank FSB ("BRP"), the JSB Financial, Inc.
1990 Stock Option Plan, the JSB Financial, Inc. 1996 Stock Option Plan,
retirement plans, supplemental retirement plans, pension plans, profit-sharing
plans, group life, health (including hospitalization, medical and major
medical), dental, accidental death and dismemberment, travel accident and
short-term disability insurance plans, or any other employee benefit plan or
arrangement made available by the Company in the future to its senior executives
and key management employees, subject to and on a basis consistent with the
terms, conditions and overall administration of such plans and arrangements. The
Executive will be entitled to incentive compensation and bonuses as provided in
any plan of the Company in which the Executive is eligible to participate.
Nothing paid to the Executive under any such plan or arrangement will be deemed
to be in lieu of other compensation to which the Executive is entitled under
this Agreement.
(c) The Executive's principal place of employment shall be at
the Company's executive offices at the address first above written, or at such
other location in New York City or in Nassau County or Suffolk County at which
the Company shall maintain its principal executive offices, or at such other
location as the Board and the Executive may mutually agree upon. The Company
shall provide the Executive, at his principal place of employment with support
services and facilities suitable to his position with the Company and necessary
or appropriate in connection with the performance of his assigned duties under
this Agreement. The Company shall reimburse the Executive for his ordinary and
necessary business expenses, including, without limitation, fees for memberships
in such clubs and organizations as the Executive and the Board shall mutually
agree are necessary and appropriate for business purposes, and travel and
entertainment expenses, incurred in connection with the performance of his
duties under this Agreement, upon presentation to the Company of an itemized
account of such expenses in such form as the Company may reasonably require.
(d) In the event that the Executive assumes additional duties
and responsibilities pursuant to Section 2(e) by reason of one of the
circumstances contained in Section 2(e), and the Executive receives or will
receive less than the full amount of compensation and benefits formerly entitled
to him under the Bank Agreement, the Company shall assume the obligation to
provide the Executive with his compensation and benefits in accordance with the
Bank Agreement less any compensation and benefits received from the Bank,
subject to the terms and conditions of this Agreement including the Termination
for Cause provisions in Section 9.
4. PAYMENTS TO THE EXECUTIVE UPON AN EVENT OF TERMINATION.
The provisions of this Section shall in all respects be subject
to the terms and conditions stated in Sections 9 and 29.
(a) Upon the occurrence of an Event of Termination (as herein
defined) during the Executive's term of employment under this Agreement, the
provisions of this Section shall apply. As used in this Agreement, an "Event of
Termination" shall mean and include any one or more of the following: (i) the
termination by the Bank or the Company of the Executive's full-time employment
hereunder for any reason other than: following a Change in Control, as defined
in Section 5; for Disability, as defined in Section 6; for Retirement, as
defined in Section 8; for Cause, as defined in Section 9; or upon the
Executive's death; or (ii) unless consented to by the Executive, the Executive's
voluntary resignation from the Company's employ, upon any: (A) failure to elect
or re-elect or to appoint or re-appoint the Executive as Senior Vice President
of the Company, (B) material adverse change in the Executive's function, duties,
or responsibilities, which change would cause the Executive's position to become
one of lesser responsibility, importance, or scope from the position and
attributes thereof described in Section 1, above (and any such material change
shall be deemed a continuing breach of this Agreement), (C) relocation of the
Executive's principal place of employment by more than 30 miles from its
location at the Effective Date of this Agreement, or a material reduction in the
benefits and perquisites to the Executive from those being provided as of the
Effective Date of this Agreement, (D) liquidation or dissolution of the Bank or
Company, or (E) material breach of this Agreement by the Company. Upon the
occurrence of any event described in clauses (A), (B), (C), (D) or (E), above,
the Executive shall have the right to elect to terminate his employment under
this Agreement by resignation upon written notice pursuant to Section 10 given
within a reasonable period of time not to exceed, except in case of a continuing
breach, four calendar months after the event giving rise to said right to elect.
(b) Upon the occurrence of an Event of Termination as set
forth in Section 4(a), on the Date of Termination, as defined in Section 10, the
Company shall be obligated to pay, or to provide, the Executive, or, in the
event of his subsequent death, to his surviving spouse or such other beneficiary
or beneficiaries as the Executive may designate in writing, or if neither his
estate, as severance pay or liquidated damages, or both, the benefits provided
below and a payment equal to the sum of the payments set forth below:
(i) payment of the sum of (A) the Executive's annual Base Salary
through the Date of Termination to the extent not theretofore paid and (B)
any compensation previously deferred by the Executive (together with any
accrued interest or earnings thereon) and any accrued vacation pay, in each
case to the extent not theretofore paid (the sum of the amounts described
in clauses (A) and (B) shall be hereinafter referred to as the "Accrued
Obligations");
(ii) the benefits, if any, to which the Executive is entitled as a
former employee under the Bank's or Company's employee benefit plans and
programs and compensation plans and programs;
(iii) continued group life, health (including hospitalization, medical
and major medical), dental, accidental death and dismemberment, travel
accident and short-term disability insurance benefits as provided by the
Bank or the Company, in addition to that provided pursuant to Section
4(b)(ii), if and to the extent necessary to provide for the Executive, for
the remaining Unexpired Employment Period, coverage equivalent to the
coverage to which he would have been entitled if he had continued working
for the Company during the remaining Unexpired Employment Period at the
highest annual rate of salary achieved during the Employment Period;
provided, however, if the Executive has obtained group life, health
(including hospitalization, medical and major medical), dental, accidental
death and dismemberment, travel accident and/or short-term disability
insurance benefits coverage from another source, the Executive may, as of
any month, make an irrevocable election to forego the continued coverage
that would otherwise be provided hereunder for the remaining Unexpired
Employment Period, or any portion thereof, in which case the Bank or the
Company, upon receipt of the Executive's irrevocable election, shall pay
the Executive an amount equal to the estimated cost to the Bank or the
Company of providing such coverage during such period;
(iv) if and to the extent not already provided under Sections 4(b)(ii)
and 4(b)(iii), continued health (including hospitalization, medical and
major medical) and dental insurance benefits to the extent maintained by
the Bank or the Company for its employees or retirees during the remainder
of the Executive's lifetime and the lifetime of his spouse, if any, for so
long as the Executive continues to reimburse the Bank for the cost of such
continued coverage;
(v) a lump sum payment, as liquidated damages, in an amount equal to
the Base Salary and the bonus or other incentive compensation that the
Executive would have earned if the Executive had continued working for the
Bank and the Company during the remaining Unexpired Employment Period (A)
at the highest annual rate of Base Salary and bonus or other incentive
compensation achieved by the Executive during the three-year period
immediately preceding the Executive's Date of Termination, except that (B)
in the case of a Change in Control, such lump sum shall be determined based
upon the Base Salary and the bonus or other incentive compensation,
respectively, that the Executive would have been paid during the remaining
Unexpired Employment Period including the assumed increases referred to in
clauses (i) and (ii) of Section 5(b);
(vi) a lump sum payment in an amount equal to the excess, if any, of:
(A) the present value of the pension benefits to which the Executive would
be entitled under the RP and the BRP (and under any other qualified and
non-qualified defined benefit plans maintained by the Company or the Bank
covering the Executive) as if he had continued working for the Company
during the remaining Unexpired Employment Period (x) at the highest annual
rate of Base Salary and, if applicable, the highest bonus or other
incentive compensation, respectively, achieved by the Executive during the
three-year period immediately preceding the Executive's Date of
Termination, except that (y) in the case of a Change in Control, such lump
sum shall be determined based upon the Base Salary and, if applicable, the
bonus or other incentive compensation, respectively, that the Executive
would have been paid during the remaining Unexpired Employment Period
including the assumed increases referred to in clauses (i) and (ii) of
Section 5(b), and (z) in the case of a Change in Control, as if three
additional years are added to the Executive's age and years of creditable
service under the RP and the BRP and after taking into account any other
compensation required to be taken into account under the RP and the BRP
(and any other qualified and non-qualified defined benefit plans of the
Company or the Bank, as applicable), over (B) the present value of the
pension benefits to which he is actually entitled under the RP and the BRP
(and any other qualified and non-qualified defined benefit plans) as of his
Date of Termination, where such present values are to be determined using a
discount rate of 6% and the mortality tables prescribed under section 72 of
the Internal Revenue Code of 1986, as amended ("Code"); and
(vii) a lump sum payment in an amount equal to the contributions that
would have been made by the Company or the Bank on the Executive's behalf
to the ISP and the ESOP and to the BRP with respect to such ISP and ESOP
contributions (and to any other qualified and non-qualified defined
contribution plans maintained by the Company or the Bank covering the
Executive) as if the Executive had continued working for the Bank and the
Company during the remaining Unexpired Employment Period making the maximum
amount of employee contributions required or permitted, if any, under such
plan or plans and earning (A) the highest annual rate of Base Salary and,
if applicable, the highest bonus or other incentive compensation,
respectively, achieved by the Executive during the three-year period
immediately preceding the Executive's Date of Termination, except that (B)
in the case of a Change in Control, such lump sum shall be determined based
upon the Base Salary and, if applicable, the bonus or other incentive
compensation, respectively, that the Executive would have been paid during
the remaining Unexpired Employment Period including the assumed increases
referred to in clauses (i) and (ii) of Section 5(b).
The benefits to be provided under, and the amounts payable pursuant to, this
Section 4 shall be provided and be payable without regard to proof of damages
and without regard to the Executive's efforts, if any, to mitigate damages. The
Company and the Executive hereby stipulate that the damages which may be
incurred by the Executive following any such termination of employment are not
capable of accurate measurement as of the date first above written and that such
liquidated damages constitute reasonable damages under the circumstances.
(c) Payments to the Executive under Section 4 shall be made
within ten days of the Executive's Date of Termination.
(d) In the event payments are made under Section 4 or Section
5, the Executive may select an individual or firm to provide him with reasonable
outplacement counseling services, and the Company shall pay for the costs of
such services; provided, however, that the cost to the Company of such
outplacement counseling services shall not exceed 25% of the Executive's Base
Salary.
5. CHANGE IN CONTROL.
(a) No benefit shall be payable under this Section 5 unless
there shall have been a Change in Control of the Bank or Company, as set forth
below. For purposes of this Agreement, a "Change in Control" of the Bank or
Company shall mean any one or more of the following:
(i) An event of a nature that would be required to be reported in
response to Item l(a) of the current report on Form 8-K, as in effect on
the date hereof, pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934, as amended (the "Exchange Act");
(ii) An event of a nature that results in a Change in Control of the
Bank or the Company within the meaning of the Home Owners' Loan Act of
1933, as amended, or the Change in Bank Control Act of 1978, as amended, as
applicable, and the Rules and Regulations promulgated by the Office of
Thrift Supervision ("OTS") or its predecessor agency, the Federal Deposit
Insurance Corporation ("FDIC") or the Board of Governors of the Federal
Reserve System ("FRB"), as the case may be, as in effect on the date
hereof, but excluding any such Change in Control resulting from the
purchase of securities by the Company or the Company's or the Bank's
tax-qualified employee benefit plans and trusts;
(iii) If any "person" (as the term is used in Sections 13(d) and 14(d)
of the Exchange Act) is or becomes the "beneficial owner" (as defined in
Rule 13d-3 under the Exchange Act), directly or indirectly, of securities
of the Bank or the Company representing 20% or more of the Bank's or the
Company's outstanding securities except for any securities of the Bank
purchased by the Company in connection with the initial conversion of the
Bank from mutual to stock form (the "Conversion") and any securities
purchased by the Company or the Company's or the Bank's tax-qualified
employee benefit plans and trusts;
(iv) If the individuals who constitute the Board on the date hereof
(the "Incumbent Board") cease for any reason to constitute at least a
majority of the Board, provided, however, that any person becoming a
director subsequent to the date hereof whose election or nomination for
election by the Company's stockholders, was approved by a vote of at least
three-quarters of the directors then comprising the Incumbent Board shall
be considered as though he were a member of the Incumbent Board, but
excluding, for this purpose, any such person whose initial assumption of
office occurs as a result of an actual or threatened election contest with
respect to the election or removal of directors or other actual or
threatened solicitation of proxies or consents by or on behalf of a person
other than the Board;
(v) A merger, consolidation, reorganization, sale of all or
substantially all the assets of the Bank or the Company or similar
transaction occurs in which the Bank or Company is not the resulting
entity, other than a transaction following which (A) at least 51% of the
equity ownership interests of the entity resulting from such transaction
are beneficially owned (within the meaning of Rule 13d-3 promulgated under
Exchange Act) in substantially the same relative proportions by persons
who, immediately prior to such transaction, beneficially owned (within the
meaning of Rule 13d-3 promulgated under the Exchange Act) at least 51% of
the outstanding equity ownership interests in the Bank or Company and (B)
at least 51% of the securities entitled to vote generally in the election
of directors of the entity resulting from such transaction are beneficially
owned (within the meaning of Rule 13d-3 promulgated under the Exchange Act)
in substantially the same relative proportions by persons who, immediately
prior to such transaction, beneficially owned (within the meaning of Rule
13d-3 promulgated under the Exchange Act) at least 51% of the securities
entitled to vote generally in the election of directors of the Bank or
Company;
(vi) A proxy statement shall be distributed soliciting proxies from
stockholders of the Company, by someone other than the current management
of the Company, seeking stockholder approval of a plan of reorganization,
merger or consolidation of the Company or Bank or similar transaction with
one or more corporations as a result of which the outstanding shares of the
class of securities then subject to such plan or transaction are exchanged
for or converted into cash or property or securities not issued by the Bank
or the Company; or
(vii) A tender offer is completed for 20% or more of the voting
securities of the Bank or Company then outstanding. The "Change in Control Date"
shall mean the date during the Employment Period on which a Change in Control
occurs. Anything in this Agreement to the contrary notwithstanding, if the
Executive's employment with the Company is terminated and if it is reasonably
demonstrated by the Executive that such termination of employment (1) was at the
request of a third party who has taken steps reasonably calculated to effect a
Change in Control or (2) otherwise arose in connection with or anticipation of a
Change in Control, then for all purposes of this Agreement the "Change in
Control Date" shall mean the date immediately prior to the date of such
termination of employment.
(b) If any of the events described in Section 5(a)
constituting a Change in Control have occurred or the Board has determined that
a Change in Control has occurred, the Executive shall be entitled to the
payments and the benefits provided below on the Change in Control Date. The
amounts payable and the benefits to be provided under this Section 5(b) to the
Executive shall consist of the payments and benefits that would be due to the
Executive and the Executive's family under Section 4(b) as if an Event of
Termination under Section 4(a) had occurred on the Change in Control Date and
that for purposes of this Section 5(b), the term Unexpired Employment Period
shall mean three years from the Change in Control Date. For purposes of
determining the payments and benefits due under this Section 5(b), when
calculating the payments due and benefits to be provided for the Unexpired
Employment Period, it shall be assumed that for each year of the remaining term
of this Agreement, the Executive would have received (i) an annual increase in
Base Salary equal to the average percentage increase in Base Salary received by
the Executive for the three-year period ending with the earlier of (x) the year
in which the Change in Control Date occurs or (y) the year during which a
definitive agreement, if any, governing the Change in Control is executed, with
the first such increase effective as of the January 1st next following such
three-year period and the second and third such increases effective as of the
next two anniversaries of such January 1st, (ii) a bonus or other incentive
compensation equal to the highest percentage rate of bonus or incentive
compensation paid to the Executive during the three-year period referred to in
clause (i) of this Section 5(b) times the Base Salary that the Executive would
have been paid during the remaining term of this Agreement including the assumed
increases referred to in clause (i) of this Section 5(b), (iii) the maximum
contributions that could be made by or on behalf of the Executive with respect
to any employee benefit plans and programs maintained by the Company and the
Bank based upon the Base Salary and, if applicable, the bonus or other incentive
compensation, respectively, that the Executive would have been paid during the
remaining term of this Agreement including the assumed increases referred to in
clauses (i) and (ii) of this Section 5(b), and (iv) the present value of the
pension benefits to which the Executive is entitled under Section 4(b)(vi) with
respect to the RP and the BRP (and under any other qualified and non-qualified
defined benefit plans maintained by the Bank or the Company covering the
Executive) determined as if he had continued working for the Bank during the
remaining Unexpired Employment Period and based upon the Base Salary and, if
applicable, the bonus or other incentive compensation, respectively, that the
Executive would have been paid during the remaining term of this Agreement
including the assumed increases referred to in clauses (i) and (ii) of this
Section 5(b). The benefits to be provided under, and the amounts payable
pursuant to, this Section 5 shall be provided and be payable without regard to
proof of damages and without regard to the Executive's efforts, if any, to
mitigate damages. The Company and the Executive hereby stipulate that the
damages which may be incurred by the Executive following any Change in Control
are not capable of accurate measurement as of the date first above written and
that such liquidated damages constitute reasonable damages under the
circumstances.
(c) Payments to the Executive under Section 5(b) shall be made
on the Change in Control Date. Such payments shall be made regardless of whether
the Executive's employment terminates.
6. TERMINATION FOR DISABILITY.
(a) In the event of Termination for Disability, the Executive
shall receive the benefits provided in Section 6(b); provided, however, that the
benefits provided under Section 6(b) shall not be deemed to be in lieu of the
benefits he is otherwise entitled as a former employee under the Bank or
Company's employee plans and programs. For purposes of this Agreement, the
Executive may be terminated for disability only if (i) the Executive shall have
been absent from his duties with the Company on a full-time basis for at least
six consecutive months, or (ii) a majority of the members of the Board acting in
good faith determine that, based upon competent and independent medical evidence
presented by a physician or physicians agreed upon by the parties, the
Executive's physical or mental condition is such that he is totally and
permanently incapable of engaging in any substantial gainful employment based
upon his education, training and experience; provided, however, that on and
after the earliest date on which a Change in Control of the Bank or Company as
defined in Section 5 occurs, such a determination shall require the affirmative
vote of at least three-fourths of the members of the Board acting in good faith
and such vote shall not be made prior to the expiration of a 60-day period
following the date on which the Board shall, by written notice to the Executive,
furnish him a statement of its grounds for proposing to make such determination,
during which period the Executive shall be afforded a reasonable opportunity to
make oral and written presentations to the members of the Board, and to be
represented by his legal counsel at such presentations, to refute the grounds
for the proposed determination.
(b) The Company will pay the Executive as Disability pay, a
bi-weekly payment equal to 100% of the Executive's bi-weekly annual rate of Base
Salary in effect on the date of the Executive's Termination for Disability. In
addition, the Company will cause to be continued insurance coverage, including
group life, health (including hospitalization, medical and major medical),
dental, accidental death and dismemberment, travel accident and short-term
disability coverage substantially identical to the coverage maintained by the
Bank or the Company for the Executive prior to his Termination for Disability.
The Disability pay and coverages shall commence on the effective date of the
Executive's termination and shall cease upon the earliest to occur of: (i) the
date the Executive returns to the full-time employment of the Company, in the
same capacity as he was employed prior to his Termination for Disability and
pursuant to an employment agreement between the Executive and the Company; (ii)
the Executive's full-time employment by another employer; (iii) the Executive's
attaining the normal age of retirement or receiving benefits under the RP or
other defined benefit pension plan of the Bank or the Company; (iv) the
Executive's death; (v) the Executive's eligibility to collect payments under the
disability provision of the RP or other defined benefit pension plan of the Bank
or the Company; or (vi) the expiration of the term of this Agreement.
(c) Notwithstanding the foregoing, there will be no reduction
in the compensation otherwise payable to the Executive during any period during
which the Executive is incapable of performing his duties hereunder by reason of
temporary disability.
7. TERMINATION UPON DEATH.
The Executive's employment shall terminate automatically upon
the Executive's death during the Employment Period. In such event, the Executive
and the Executive's legal representatives shall be entitled to the following:
(i) payment of the Executive's "Accrued Obligations;"
(ii) the continuation of all benefits to the Executive's family and
dependents that would have been provided if the Executive had been entitled
to the benefits under Section 4(b)(ii), (iii) and (iv); and
(iii) the timely payment of any other amounts or benefits required to
be paid or provided or which the Executive is eligible to receive under any
plan, program, policy or practice or contract or agreement of the Company
and its affiliated companies (all such other amounts and benefits shall be
hereinafter referred to as the "Other Benefits");
provided, however, that if the Executive dies while in the employment of the
Company, the amount of life insurance provided to the Executive by the Company
shall not be less than the lesser of $200,000 or three times the Executive's
then annual Base Salary. Accrued Obligations shall be paid to the Executive's
estate or beneficiary, as applicable, in a lump sum cash payment within ten days
of the Date of Termination. With respect to the provision of Other Benefits
after the Change of Control Date, the term Other Benefits as utilized in this
Section 7 shall include, without limitation, that the Executive's estate and/or
beneficiaries shall be entitled to receive, benefits at least equal to the most
favorable benefits provided by the Company and affiliated companies to the
estates and beneficiaries of peer executives of the Company and such affiliates
companies under such plans, programs, practices and policies relating to death
benefits, if any, as in effect with respect to other peer executives and their
beneficiaries at any time during the 120-day period immediately preceding the
Change in Control Date.
8. TERMINATION UPON RETIREMENT.
Termination by the Company of the Executive based on
"Retirement" shall mean termination in accordance with the Company's or the
Bank's retirement policy or in accordance with any retirement arrangement
established with the Executive's consent with respect to him. Upon termination
of the Executive upon Retirement, the Executive shall be entitled to all
benefits under the RP and any other retirement plan of the Bank or the Company
and other plans to which the Executive is a party, and the Executive shall be
entitled to the benefits, if any, that would be payable to him as a former
employee under the Bank's or the Company's employee benefit plans and programs
and compensation plans and programs.
9. TERMINATION FOR CAUSE.
The terms "Termination for Cause" or "Cause" shall mean
termination because of the Executive's personal dishonesty, willful misconduct,
any breach of fiduciary duty involving personal profit, intentional failure to
perform stated duties, conviction of a felony with respect to the Bank or the
Company or any material breach of this Agreement. For purposes of this Section,
no act, or the failure to act, on the Executive's part shall be "willful" unless
done, or omitted to be done, in bad faith and without reasonable belief that the
action or omission was in the best interest of the Company or its affiliates.
Any act, or failure to act, based upon authority given pursuant to a resolution
duly adopted by the Board or based upon the written advice of counsel for the
Company shall be conclusively presumed to be done, or omitted to be done, by the
Executive in good faith and in the best interests of the Company.
Notwithstanding the foregoing, the Executive shall not be deemed to have been
terminated for Cause unless and until there shall have been delivered to him a
Notice of Termination which shall include a copy of a resolution duly adopted by
the affirmative vote of not less than three-fourths of the members of the Board
at a meeting of the Board called and held for that purpose (after reasonable
notice to the Executive and an opportunity for him, together with counsel, to be
heard before the Board), finding that in the good faith opinion of the Board,
the Executive was guilty of conduct justifying Termination for Cause and
specifying the particulars thereof in detail. The Executive shall not have the
right to receive compensation or other benefits for any period after Termination
for Cause.
10. NOTICE.
(a) Any purported termination by the Company or by the
Executive shall be communicated by a Notice of Termination to the other party
hereto. For purposes of this Agreement, a "Notice of Termination" shall mean a
written notice which shall indicate the specific termination provision in this
Agreement relied upon and shall set forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of the Executive's
employment under the provision so indicated.
(b) Subject to Section 10(c), "Date of Termination" shall mean
(A) if the Executive's employment is terminated for Disability, 30 days after a
Notice of Termination is given (provided that he shall not have returned to the
performance of his duties on a full-time basis during such 30-day period), and
(B) if his employment is terminated for any other reason, the date specified in
the Notice of Termination (which, in the case of a Termination for Cause, shall
be immediate).
(c) If, within 30 days after any Notice of Termination is
given, the party receiving such Notice of Termination notifies the other party
that a dispute exists concerning the termination, then, except upon the
occurrence of a Change in Control and voluntary termination by the Executive in
which case the Date of Termination shall be the date specified in the Notice,
the Date of Termination shall be the date on which the dispute is finally
determined, either by mutual written agreement of the parties, by a binding
arbitration award, or by a final judgment, order or decree of a court of
competent jurisdiction (the time for appeal therefrom having expired and no
appeal having been perfected) and provided further that the Date of Termination
shall be extended by a notice of dispute only if such notice is given in good
faith and the party giving such notice pursues the resolution of such dispute
with reasonable diligence. Notwithstanding the pendency of any such dispute, the
Company will continue to pay the Executive his full compensation in effect when
the notice giving rise to the dispute was given (including, but not limited to,
Base Salary) and continue him as a participant in all compensation, benefit and
insurance plans in which he was participating when the notice of dispute was
given, until the dispute is finally resolved in accordance with this Agreement.
Amounts paid under this Section are in addition to all other amounts due under
this Agreement and shall not be offset against or reduce any other amounts due
under this Agreement.
(d) The Company may terminate the Executive's employment at
any time, but any termination by the Company, other than Termination for Cause,
shall not prejudice the Executive's right to compensation or other benefits
under this Agreement or under any other benefit or compensation plans or
programs maintained by the Bank or the Company from time to time. The Executive
shall not have the right to receive compensation or other benefits for any
period after a Termination for Cause as defined in Section 9 hereinabove.
(e) Any communication to a party required or permitted under
this Agreement, including any notice, direction, designation, consent,
instruction, objection or waiver, shall be in writing and shall be deemed to
have been given at such time as it is delivered personally, or five days after
mailing if mailed, postage prepaid, by registered or certified mail, return
receipt requested, addressed to such party at the address listed below or at
such other address as one such party may by written notice specify to the other
party, as follows. If to the Executive, (address omitted); if to the Company,
JSB Financial, Inc., 303 Merrick Road, Lynbrook, New York 11563, Attention:
President, with a copy to Thacher Proffitt & Wood, Two World Trade Center, New
York, New York 10048, Attention: Douglas J. McClintock, Esq.
11. POST-TERMINATION OBLIGATIONS.
(a) All payments and benefits to the Executive under this
Agreement shall be subject to the Executive's compliance with paragraph (b) of
this Section 11 during the term of this Agreement and for one full year after
the expiration or termination hereof.
(b) The Executive shall, upon reasonable notice, furnish such
information and assistance to the Company as may reasonably be required by the
Company in connection with any litigation in which it or any of its subsidiaries
or affiliates is, or may become, a party; provided, that the Company reimburses
the Executive for the reasonable value of his time in connection therewith and
for any out-of-pocket costs attributable thereto.
12. COVENANT NOT TO COMPETE.
The Executive hereby covenants and agrees that for a period of
one year following his Date of Termination, if such termination occurs prior to
the end of the term of the Agreement, he shall not, without the written consent
of the Board, become an officer, employee, consultant, director or trustee of
any savings bank, savings and loan association, savings and loan holding
company, bank or bank holding company if such position (a) entails working in
(or providing services in) New York City, Nassau or Suffolk counties or (b)
entails working in (or providing services in) any other county that is both (i)
within the Bank's primary trade (or operating) area at the time in question,
which shall be determined by reference to the Bank's business plan as in effect
from time to time, and (ii) in which the Bank engages in material or substantial
deposit-taking functions or lending activities at such time; provided, however,
that this Section 12 shall not apply if the Executive's employment is terminated
for the reasons set forth in any of Sections 4, 5, 6 or 8.
13. SOURCE OF PAYMENTS.
All payments provided in this Agreement shall be timely paid in
cash or check from the general funds of the Company.
14. EFFECT ON PRIOR AGREEMENTS.
This Agreement contains the entire understanding between the
parties hereto and supersedes any prior employment agreement between the Company
or any predecessor of the Company and the Executive, except that this Agreement
shall not affect or operate to reduce any benefit or compensation inuring to the
Executive of a kind elsewhere provided. No provisions of this Agreement shall be
interpreted to mean that the Executive is subject to receiving fewer benefits
than those available to him without reference to this Agreement.
15. EFFECT OF ACTION UNDER BANK AGREEMENT.
Notwithstanding any provision herein to the contrary, to the
extent that full compensation payments and benefits are paid to or received by
the Executive under the Bank Agreement, such compensation payments and benefits
paid by the Bank will be deemed to satisfy the corresponding obligations of the
Company under this Agreement.
16. NO ATTACHMENT.
Except as required by law, no right to receive payments under
this Agreement shall be subject to anticipation, commutation, alienation, sale,
assignment, encumbrance, charge, pledge, or hypothecation, or to execution,
attachment, levy, or similar process or assignment by operation of law, and any
attempt, voluntary or involuntary, to affect any such action shall be null,
void, and of no effect.
17. MODIFICATION AND WAIVER.
(a) This Agreement may not be modified or amended except by an
instrument in writing signed by the parties hereto.
(b) No term or condition of this Agreement shall be deemed to
have been waived, nor shall there be any estoppel against the enforcement of any
provision of this Agreement, except by written instrument of the party charged
with such waiver or estoppel. No such written waiver shall be deemed a
continuing waiver unless specifically stated therein, and each such waiver shall
operate only as to the specific term or condition waived and shall not
constitute a waiver of such term or condition for the future as to any act other
than that specifically waived.
18. SUCCESSOR AND ASSIGNS.
This Agreement will inure to the benefit of and be binding
upon the Executive, his legal representatives and testate or intestate
distributees, and the Company, its successors and assigns, including any
successor by purchase, merger, consolidation or otherwise or a statutory
receiver or any other person or firm or corporation to which all or
substantially all of the assets and business of the Company may be sold or
otherwise transferred. Any such successor of the Company shall be deemed to have
assumed this Agreement and to have become obligated hereunder to the same extent
as the Company and the Executive's obligations hereunder shall continue in favor
of such successor.
19. SEVERABILITY.
If, for any reason, any provision of this Agreement, or any
part of any provision, is held invalid, such invalidity shall not affect any
other provision of this Agreement or any part of such provision not held so
invalid, and each such other provision and part thereof shall to the full extent
consistent with law continue in full force and effect.
20. HEADINGS FOR REFERENCE ONLY.
The headings of Sections and paragraphs herein are included
solely for convenience of reference and shall not control the meaning or
interpretation of any of the provisions of this Agreement. Any reference in this
Agreement to a Section or Subsection shall refer to a Section or Subsection of
this Agreement, except as otherwise specified.
21. GOVERNING LAW.
This Agreement shall be governed by the laws of the State of
New York, without reference to conflicts of law principles.
22. INDEMNIFICATION AND ATTORNEYS' FEES.
(a) The Company shall indemnify, hold harmless and defend the
Executive against reasonable costs, including legal fees, incurred by him in
connection with his consultation with legal counsel or arising out of any
action, suit or proceeding in which he may be involved, as a result of his
efforts, in good faith, to defend or enforce the terms of this Agreement. The
Company agrees to pay all such costs as they are incurred by the Executive, to
the full extent permitted by law, and without regard to whether the Company
believes that it has a defense to any action, suit or proceeding by the
Executive or that it is not obligated for any payments under this Agreement.
(b) In the event any dispute or controversy arising under or
in connection with the Executive's termination is resolved in favor of the
Executive, whether by judgment, arbitration or settlement, the Executive shall
be entitled to the payment of all back-pay, including salary, bonuses and any
other cash compensation, fringe benefits and any compensation and benefits due
the Executive under this Agreement.
(c) The Company shall indemnify, hold harmless and defend the
Executive for any act taken or not taken, or any omission or failure to act, by
him in good faith while performing services for the Company or the Bank to the
same extent and upon the same terms and conditions as other similarly situated
officers and directors of the Company or the Bank. If and to the extent that the
Company or the Bank, maintains, at any time during the Employment Period, an
insurance policy covering the other officers and directors of the Company or the
Bank against lawsuits, the Company or the Bank shall use its best efforts to
cause the Executive to be covered under such policy upon the same terms and
conditions as other similarly situated officers and directors.
23. TAX INDEMNIFICATION.
(a) This Section 23 shall apply if 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 occurs within the meaning of section 280G
of the Code. If this Section 23 applies, then with respect to any taxable year
in which the Executive shall be liable for the payment of an excise tax under
section 4999 of the Code with respect to any payment in the nature of
compensation made by the Company, the Bank or any direct or indirect subsidiary
or affiliate of the Company to (or for the benefit of) the Executive, the
Company shall pay to the Executive an amount equal to X determined under the
following formula:
X = E x P
-------------------------------------------------
1 - [(FI x (1 - SLI)) + SLI + E + M]
where
E = the rate at which the excise tax is assessed under
section 4999 of the Code;
P = the amount with respect to which such excise tax is
assessed, determined without regard to this Section
23;
FI = the highest effective marginal rate of income tax
applicable to the Executive under the Code for the
taxable year in question (taking into account any
phase-out or loss of deductions, personal exemptions
and other similar adjustments);
SLI = the sum of the highest effective marginal rates of
income tax applicable to the Executive under all
applicable state and local laws for the taxable year
in question (taking into account any phase-out or
loss of deductions, personal exemptions and other
similar adjustments); and
M = the highest marginal rate of Medicare tax
applicable to the Executive under the Code for the
taxable year in question.
Attached as Appendix A to this Agreement is an example that illustrates
application of this Section 23. Any payment under this Section 23 shall be
adjusted so as to fully indemnify the Executive on an after-tax basis so that
the Executive would be in the same after-tax financial position in which he
would have been if no excise tax under section 4999 of the Code had been
imposed. With respect to any payment in the nature of compensation that is made
to (or for the benefit of) the Executive under the terms of this Agreement or
otherwise and on which an excise tax under section 4999 of the Code will be
assessed, the payment determined under this Section 23(a) shall be made to the
Executive on the earlier of (i) the date the Company, the Bank or any direct or
indirect subsidiary or affiliate of the Company is required to withhold such
tax, or (ii) the date the tax is required to be paid by the Executive.
(b) Notwithstanding anything in this Section 23 to the
contrary, in the event that the Executive's liability for the excise tax under
section 4999 of the Code for a taxable year is subsequently determined to be
different than the amount determined by the formula (X + P) x E, where X, P and
E have the meanings provided in Section 23(a), the Executive or the Company, as
the case may be, shall pay to the other party at the time that the amount of
such excise tax is finally determined, an appropriate amount, plus interest,
such that the payment made under Section 23(a), when increased by the amount of
the payment made to the Executive under this Section 23(b) by the Company, or
when reduced by the amount of the payment made to the Company under this Section
23(b) by the Executive, equals the amount that, it is finally determined, should
have properly been paid to the Executive under Section 23(a). The interest paid
under this Section 23(b) shall be determined at the rate provided under section
1274(b)(2)(B) of the Code. To confirm that the proper amount, if any, was paid
to the Executive under this Section 23, the Executive shall furnish to the
Company a copy of each tax return which reflects a liability for an excise tax
payment made by the Company, at least 20 days before the date on which such
return is required to be filed with the Internal Revenue Service.
24. NON-EXCLUSIVITY OF RIGHTS.
Except as otherwise provided herein, nothing in this Agreement
shall prevent or limit the Executive's continuing or future participation in any
plan, program, policy or practice provided by the Company or any of its
affiliated companies and for which the Executive may qualify, nor shall anything
herein limit or otherwise affect such rights as the Executive may have under any
contract or agreement with the Company or any of its affiliated companies.
Amounts which are vested benefits or which the Executive is otherwise entitled
to receive under any plan, policy, practice or program of or any contract or
agreement with the Company or any of its affiliated companies at or subsequent
to the Date of Termination shall be payable in accordance with such plan,
policy, practice or program or contract or agreement except as explicitly
modified by this Agreement. Notwithstanding the foregoing, in the event of a
termination of employment, the amounts provided in Section 4 or Section 5, as
applicable, shall be the Executive's sole remedy for any purported breach of
this Agreement by the Company.
25. MITIGATION; OTHER CLAIMS.
The Company's obligation to make the payments provided for in
this Agreement and otherwise to perform its obligations hereunder shall not be
affected by any set-off, counterclaim, recoupment, defense or other claim, right
or action which the Company may have against the Executive or others. In no
event shall the Executive be obligated to seek other employment or take any
other action by way of mitigation of the amounts payable to the Executive under
any of the provisions of this Agreement and such amounts shall not be reduced
whether or not the Executive obtains other employment.
26. CONFIDENTIAL INFORMATION.
The Executive shall hold in a fiduciary capacity for the
benefit of the Company all secret or confidential information, knowledge or data
relating to the Company or any of its affiliated companies, and their respective
businesses, which shall have been obtained by the Executive during the
Executive's employment by the Company or any of its affiliated companies and
which shall not be or become public knowledge (other than by acts by the
Executive or representatives of the Executive in violation of this Agreement).
After termination of the Executive's employment with the Company, the Executive
shall not, without the prior written consent of the Company or as may otherwise
be required by law or legal process, communicate or divulge any such
information, knowledge or data to anyone other than the Company and those
designated by it. For purposes of this Agreement, secret and confidential
information, knowledge or data relating to the Company or any of its affiliates,
and their respective business, shall not include any information that is public,
publicly available or available through trade association sources.
Notwithstanding any other provision of this Agreement to the contrary, the
Executive acknowledges and agrees that in the event of a violation or threatened
violation of any of the provisions of this Section 26, the Company shall have no
adequate remedy at law and shall therefore be entitled to enforce each such
provision by temporary or permanent injunction or mandatory relief obtained in
any court of competent jurisdiction without the necessity of proving damages or
posting any bond or other security, and without prejudice to any other remedies
that may be available at law or in equity.
27. ACCESS TO DOCUMENTS.
The Executive shall have the right to obtain copies of any
Company or Bank documents that the Executive reasonably believes, in good faith,
are necessary or appropriate in determining his entitlement to, and the amount
of, payments and benefits under this Agreement.
1. GUARANTEE.
The Company hereby agrees to guarantee the payment by the Bank of any
benefits and compensation to which the Executive is or may be entitled to under
the terms and conditions of the Bank Agreement.
1. REQUIRED REGULATORY PROVISIONS.
Notwithstanding anything herein contained to the contrary, any
payments to the Executive by the Company, whether pursuant to this Agreement
or otherwise, are subject to and conditioned upon their compliance with
section 18(k) of the Federal Deposit Insurance Act, as amended, 12 U.S.C.
ss.1828(k), and any regulations promulgated thereunder.
<PAGE>
SIGNATURES
IN WITNESS WHEREOF, JSB FINANCIAL, INC. has caused this
Agreement to be executed and its seal to be affixed hereunto by its duly
authorized officer, and the Executive has signed this Agreement, on the 22nd day
of June, 1999.
ATTEST: JSB FINANCIAL, INC.
Joanne Corrigan Edward P. Henson
- --------------- ----------------
Joanne Corrigan Edward P. Henson
Secretary President
[Seal]
WITNESS:
John F. Bennett
---------------
John F. Bennett
<PAGE>
STATE OF NEW YORK )
: ss.:
COUNTY OF NASSAU )
On this 22nd day of June, 1999, before me personally came Edward P.
Henson, to me known, who, being by me duly sworn, did depose and say that he is
the President of JSB Financial, Inc., the Delaware corporation described in and
which executed the foregoing instrument; that he knows the seal of said
corporation; that the seal affixed to said instrument is such seal; that it was
so affixed by order of the Board of Directors of said corporation; and that he
signed his name thereto by like order.
Name:
Notary Public
STATE OF NEW YORK )
: ss.:
COUNTY OF NASSAU )
On this 22nd day of June, 1999, before me personally came John F.
Bennett, to me known, and known to me to be the individual described in the
foregoing instrument, who, being by me duly sworn, did depose and say that he
resides at the address set forth in said instrument, and that he signed his name
to the foregoing instrument.
Name:
Notary Public
<PAGE>
APPENDIX A
----------
1. INTRODUCTION. Sections 280G and 4999 of the Internal Revenue Code of
1986, as amended ("Code"), impose a 20% non-deductible federal excise tax on a
person if the payments and benefits in the nature of compensation to or for the
benefit of that person that are contingent on a change in the ownership or
effective control of the Company or the Bank or in the ownership of a
substantial portion of the assets of the Company or the Bank (such payments and
benefits are considered "parachute payments" under section 280G) exceed three
times the person's "base amount" under section 280G. Section 23 of the Agreement
provides for the Executive to receive a tax indemnification payment (sometimes
referred to as a "gross-up" payment) if the payments and benefits in the nature
of compensation to or for the benefit of the Executive that are considered
parachute payments cause the imposition of an excise tax under section 4999 of
the Code. Capitalized terms in this Appendix A that are not defined in this
Appendix A have the meaning used in the Employment Agreement with the Executive.
2. PURPOSE. The purpose of this Appendix A is to illustrate how the tax
indemnification or gross-up payment would be computed. The amounts, figures and
rates used in this example are meant to be illustrative and do not reflect the
actual payments and benefits that would be made to the Executive under this
Agreement. For purposes of this example, it is assumed that a change in control
within the meaning of section 280G of the Code has occurred and that:
(a) The value of the insurance benefits required to be provided to a
hypothetical employee "Z" under sections 4(b)(iii) and 5(b) of the
Agreement for medical, dental, life and other insurance benefits
during the unexpired employment period is $23,000.
(b) The annual rate of Z's salary covered by the Agreement is $100,000,
and Z received annual salary increases of 4%, 5% and 6% (i.e., a
three-year average of 5%) for each of the prior three years. Hence,
the amount payable under sections 4(b)(v) and 5(b) of the Agreement
for salary during the unexpired employment period would be $331,013
[$105,000 + $110, 250 + $115,763].
(c) Z received annual bonuses equal to 20% of his salary in each of the
prior three years. Hence, the amount payable under sections 4(b)(v)
and 5(b) of the Agreement for bonuses during the unexpired employment
period would be $66,203 [20% x ($105,000 + $110,250 + $115,763)].
(d) The amount payable under sections 4(b)(vi) and 5(b) of the Agreement
for the present value of the additional RP and BRP accruals during the
unexpired employment period would be $45,000.
(e) The amount payable under sections 4(b)(vii) and 5(b) of the Agreement
for additional contributions to the ESOP, 401(k) Plan and BRP during
the unexpired employment period would be $20,000.
(f) Z's base amount (i.e., average W-2 wages for the five-year period
preceding the change in control) is $87,000.
3. DETERMINE IF Z IS SUBJECT TO AN EXCISE TAX. Z's parachute payments would
total $485,216 [$23,000 + $331,013 + $66,203 + $45,000 + $20,000]. Three times
Z's base amount is $261,000 [3 x $87,000]; accordingly, Z is subject to an
excise tax because $485,216 exceeds $261,000. Z's "excess parachute payments"
under section 280G of the Code are equal to Z's total parachute payments minus
one times Z's base amount, or $398,216 [$485,216 - $87,000]. If Z were not
protected by section 23 of the Agreement, Z would be subjected to an excise tax
of $79,643 [$398,216 x 20%], in addition to ordinary income taxes.
4. Compute Z's Tax Indemnification Payment. Z's tax indemnification payment
under section 23 of the Agreement would be computed pursuant to the following
formula:
E x P .2 x $398,216
X = ------------------------------------ = ----------------------------------
1 - [(FI x (1 - SLI)) + SLI + E + M] 1 - [.368874 + .0685 + .2 + .0145]
where
E = excise tax rate under section 4999 of the Code [20%];
P = the amount with respect to which such excise tax is
assessed determined without regard to section 23 of
the Agreement [$398,216];
FI = the highest effective marginal rate of income tax
applicable to Z under the Code for the taxable year
in question [assumed to be 39.6% in this example, but
in actuality, the rate is adjusted to take into
account any phase-out or loss of deductions, personal
exemptions and other similar adjustments];
SLI = the sum of the highest effective marginal rates of
income tax applicable to Z under applicable state and
local laws for the taxable year in question [assumed
to be 6.85% in this example, but in actuality, the
rate is adjusted to take into account any phase-out
or loss of deductions, personal exemptions and other
similar adjustments]; and
M = the highest marginal rate of Medicare tax applicable
to Z under the Code for the year in question [1.45%].
In this example, the amount of tax indemnification payment due to Z under
section 23 of the Agreement would be $79,643 [.2 x $398,216] divided by 0.348126
[1 - (.368874 + .0685 + .2 + .0145)], or $228,777. Such amount would be payable
in addition to the other amounts payable under the Agreement in order to put Z
in approximately the same after-tax position that Z would have been in if there
were no excise tax imposed under sections 280G and 4999 of the Code. The tax
indemnification to Z of $228,777 would in turn be a parachute payment subject to
excise tax under sections 280G and 4999. Accordingly, Z's actual excess
parachute payment would be $626,993 [$485,216 - $87,000) + $228,777)] resulting
in an excise tax of $125,399 [$626,993 x 20%]. The difference between the
indemnification. payment and the excise tax [$103,378] is an amount equal to the
sum of the income and other applicable taxes due on the indemnification payment
[($228,777 x .368874) + ($228,777 x .0685) + ($228,777 x .0145)], confirming
that the amount of the tax indemnification payment is sufficient to satisfy all
of Z's tax liability resulting from the excess parachute payment.
JSB FINANCIAL, INC.
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT ("Agreement") is made and entered
into as of June 22, 1999 by and between JSB FINANCIAL, INC., a business
corporation organized and operating under the laws of the State of Delaware and
having its principal office at 303 Merrick Road, Lynbrook, New York 11563
("Company"), and Jack Connors, an individual residing at (address omitted)
("Executive"). Any reference to the "Bank" in this Agreement shall mean Jamaica
Savings Bank FSB and any successor thereto.
W I T N E S S E T H :
WHEREAS, the Executive is currently serving as Senior Vice
President of the Company, and the Company wishes to assure itself of the
services of the Executive for the period provided in this Agreement; and
WHEREAS, the Executive is willing to serve in the employ of
the Company on the terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the premises and the
mutual covenants and conditions hereinafter set forth, the Company and the
Executive hereby agree as follows:
1. POSITION AND RESPONSIBILITIES.
During the period of his employment hereunder, the Executive
agrees to serve as Senior Vice President of the Company. The Executive shall
render administrative and management services to the Company such as are
customarily performed by persons situated in a similar executive capacity and
shall perform such other duties not inconsistent with his title and office as
may be assigned to him by or under the authority of the Board of Directors of
the Company (the "Board"). The Executive shall have such authority as is
necessary or appropriate to carry out his assigned duties. Failure to re-elect
the Executive as Senior Vice President of the Company (or a more senior
position) without the consent of the Executive shall constitute a breach of this
Agreement.
2. TERMS.
(a) The period of the Executive's employment under this
Agreement shall be deemed to have commenced as of the date first above written
(the "Effective Date") and shall continue for a period of 36 full calendar
months thereafter. Commencing with the Effective Date, the term of this
Agreement shall be extended for one additional day each day until such time as
the Board or the Executive elects not to extend the term of the Agreement
further by giving written notice to the other party in accordance with Section
10, in which case the term of this Agreement shall become fixed and shall end on
the third anniversary of the date of such written notice. For purposes of this
Agreement, the term "Employment Period" shall mean the term of this Agreement
plus such extensions as are provided herein.
(b) During the period of his employment hereunder, except for
periods of absence occasioned by illness, disability, holidays, reasonable
vacation periods and reasonable leaves of absence, the Executive shall devote
substantially all of his business time, attention, skill and efforts to the
faithful performance of his duties hereunder including (i) service as Senior
Vice President of the Company, and, if duly elected, a Director of the Company,
(ii) performance of such duties not inconsistent with his title and office as
may be assigned to him by or under the authority of the Board or a more senior
executive officer, and (iii) such other activities and services related to the
organization, operation and management of the Company. During the Employment
Period it shall not be a violation of this Agreement for the Executive to (A)
serve on corporate, civic, industry or charitable boards or committees, (B)
deliver lectures, fulfill speaking engagements or teach at educational
institutions and (C) manage personal investments, so long as such activities do
not significantly interfere with the performance of the Executive's
responsibilities as an employee of the Company in accordance with this
Agreement. It is expressly understood and agreed that to the extent that any
such activities have been conducted by the Executive prior to the Effective
Date, the continued conduct of such activities (or the conduct of activities
similar in nature and scope thereto) subsequent to the Effective Date shall not
thereafter be deemed to interfere with the performance of the Executive's
responsibilities to the Company. It is also expressly agreed that the Executive
may conduct activities subsequent to the Effective Date that are generally
accepted for an executive in his position, regardless of whether conducted by
the Executive prior to the Effective Date.
(c) Notwithstanding anything herein contained to the contrary:
(i) the Executive's employment with the Company may be terminated by the Company
or the Executive during the term of this Agreement, subject to the terms and
conditions of this Agreement; and (ii) nothing in this Agreement shall mandate
or prohibit a continuation of the Executive's employment following the
expiration of the term of this Agreement upon such terms and conditions as the
Board and the Executive may mutually agree.
(d) Upon the termination of the Executive's employment with
the Company, the daily extensions provided pursuant to Section 2(a) shall cease
(if such extensions have not previously ceased), and, if such termination is
under circumstances described in Section 4(a) or Section 5(b), the term
"Unexpired Employment Period" shall mean the period of time commencing from the
date of such termination and ending on the last day of the Employment Period
computed with reference to all extensions prior to such termination.
(e) In the event that the Executive's duties and
responsibilities with respect to the Bank are temporarily or permanently
terminated pursuant to Section 9 of the Employment Agreement dated June 22,
1999, as it may be amended from time to time, between the Executive and the Bank
("Bank Agreement") and the course of conduct upon which such termination is
based would not constitute grounds for Termination for Cause under Section 9,
then the Executive shall, to the extent practicable, assume such duties and
responsibilities formerly performed at the Bank as part of his duties and
responsibilities as Senior Vice President of the Company. Nothing in this
provision shall be interpreted as restricting the Company's right to remove the
Executive for Cause in accordance with Section 9.
3. COMPENSATION AND REIMBURSEMENT.
(a) The compensation specified under this Agreement shall
constitute the salary and benefits paid for the duties described in Section 1.
The Company shall pay the Executive as compensation a salary at an annual rate
of not less than (salary omitted) per year or such higher rate as may be
prescribed by or under the authority of the Board ("Base Salary"). The Base
Salary payable under this Section 3 shall be paid in approximately equal
installments in accordance with the Company's customary payroll practices.
During the period of this Agreement, the Executive's Base Salary shall be
reviewed at least annually; the first such review will be made no later than one
year from the date of this Agreement. Such review shall be conducted by a
Committee designated by the Board, and the Board may increase the Executive's
Base Salary, which increased amount shall be considered the Executive's "Base
Salary" for purposes of this Agreement. In no event shall the Executive's annual
rate of Base Salary under this Agreement in effect at a particular time be
reduced without his prior written consent. In addition to the Base Salary
provided in this Section 3(a), the Company shall provide the Executive at no
cost to the Executive with all such other benefits as are provided uniformly to
permanent full-time employees of the Bank.
(b) The Company will provide the Executive with employee
benefit plans, arrangements and perquisites substantially equivalent to those in
which the Executive was participating or otherwise deriving benefit from
immediately prior to the beginning of the term of this Agreement, and the
Company will not, without the Executive's prior written consent, make any
changes in such plans, arrangements or perquisites which would adversely affect
the Executive's rights or benefits thereunder. Without limiting the generality
of the foregoing provisions of this Subsection (b), the Executive will be
entitled to participate in or receive benefits under any employee benefit plans
with respect to which the Executive satisfies the eligibility requirements,
including, but not limited to, the Retirement Plan of Jamaica Savings Bank FSB
("RP"), the Incentive Savings Plan of Jamaica Savings Bank FSB ("ISP"), the
Jamaica Savings Bank FSB Employee Stock Ownership Plan ("ESOP"), the Benefit
Restoration Plan of Jamaica Savings Bank FSB ("BRP"), the JSB Financial, Inc.
1990 Stock Option Plan, the JSB Financial, Inc. 1996 Stock Option Plan,
retirement plans, supplemental retirement plans, pension plans, profit-sharing
plans, group life, health (including hospitalization, medical and major
medical), dental, accidental death and dismemberment, travel accident and
short-term disability insurance plans, or any other employee benefit plan or
arrangement made available by the Company in the future to its senior executives
and key management employees, subject to and on a basis consistent with the
terms, conditions and overall administration of such plans and arrangements. The
Executive will be entitled to incentive compensation and bonuses as provided in
any plan of the Company in which the Executive is eligible to participate.
Nothing paid to the Executive under any such plan or arrangement will be deemed
to be in lieu of other compensation to which the Executive is entitled under
this Agreement.
(c) The Executive's principal place of employment shall be at
the Company's executive offices at the address first above written, or at such
other location in New York City or in Nassau County or Suffolk County at which
the Company shall maintain its principal executive offices, or at such other
location as the Board and the Executive may mutually agree upon. The Company
shall provide the Executive, at his principal place of employment with support
services and facilities suitable to his position with the Company and necessary
or appropriate in connection with the performance of his assigned duties under
this Agreement. The Company or the Bank shall provide the Executive with an
automobile suitable to the position of Senior Vice President of the Company, in
accordance with prior practice, and such automobile may be used by the Executive
in carrying out his duties under the Agreement, including commuting between his
residence and his principal place of employment, and other personal use. The
Company shall reimburse the Executive for his ordinary and necessary business
expenses, including, without limitation, fees for memberships in such clubs and
organizations as the Executive and the Board shall mutually agree are necessary
and appropriate for business purposes, and travel and entertainment expenses,
incurred in connection with the performance of his duties under this Agreement,
upon presentation to the Company of an itemized account of such expenses in such
form as the Company may reasonably require.
(d) In the event that the Executive assumes additional duties
and responsibilities pursuant to Section 2(e) by reason of one of the
circumstances contained in Section 2(e), and the Executive receives or will
receive less than the full amount of compensation and benefits formerly entitled
to him under the Bank Agreement, the Company shall assume the obligation to
provide the Executive with his compensation and benefits in accordance with the
Bank Agreement less any compensation and benefits received from the Bank,
subject to the terms and conditions of this Agreement including the Termination
for Cause provisions in Section 9.
4. PAYMENTS TO THE EXECUTIVE UPON AN EVENT OF TERMINATION.
The provisions of this Section shall in all respects be
subject to the terms and conditions stated in Sections 9 and 29.
(a) Upon the occurrence of an Event of Termination (as herein
defined) during the Executive's term of employment under this Agreement, the
provisions of this Section shall apply. As used in this Agreement, an "Event of
Termination" shall mean and include any one or more of the following: (i) the
termination by the Bank or the Company of the Executive's full-time employment
hereunder for any reason other than: following a Change in Control, as defined
in Section 5; for Disability, as defined in Section 6; for Retirement, as
defined in Section 8; for Cause, as defined in Section 9; or upon the
Executive's death; or (ii) unless consented to by the Executive, the Executive's
voluntary resignation from the Company's employ, upon any: (A) failure to elect
or re-elect or to appoint or re-appoint the Executive as Senior Vice President
of the Company, (B) material adverse change in the Executive's function, duties,
or responsibilities, which change would cause the Executive's position to become
one of lesser responsibility, importance, or scope from the position and
attributes thereof described in Section 1, above (and any such material change
shall be deemed a continuing breach of this Agreement), (C) relocation of the
Executive's principal place of employment by more than 30 miles from its
location at the Effective Date of this Agreement, or a material reduction in the
benefits and perquisites to the Executive from those being provided as of the
Effective Date of this Agreement, (D) liquidation or dissolution of the Bank or
Company, or (E) material breach of this Agreement by the Company. Upon the
occurrence of any event described in clauses (A), (B), (C), (D) or (E), above,
the Executive shall have the right to elect to terminate his employment under
this Agreement by resignation upon written notice pursuant to Section 10 given
within a reasonable period of time not to exceed, except in case of a continuing
breach, four calendar months after the event giving rise to said right to elect.
(b) Upon the occurrence of an Event of Termination as set
forth in Section 4(a), on the Date of Termination, as defined in Section 10, the
Company shall be obligated to pay, or to provide, the Executive, or, in the
event of his subsequent death, to his surviving spouse or such other beneficiary
or beneficiaries as the Executive may designate in writing, or if neither his
estate, as severance pay or liquidated damages, or both, the benefits provided
below and a payment equal to the sum of the payments set forth below:
(i) payment of the sum of (A) the Executive's annual Base Salary
through the Date of Termination to the extent not theretofore paid and (B)
any compensation previously deferred by the Executive (together with any
accrued interest or earnings thereon) and any accrued vacation pay, in each
case to the extent not theretofore paid (the sum of the amounts described
in clauses (A) and (B) shall be hereinafter referred to as the "Accrued
Obligations");
(ii) the benefits, if any, to which the Executive is entitled as a
former employee under the Bank's or Company's employee benefit plans and
programs and compensation plans and programs;
(iii) continued group life, health (including hospitalization, medical
and major medical), dental, accidental death and dismemberment, travel
accident and short-term disability insurance benefits as provided by the
Bank or the Company, in addition to that provided pursuant to Section
4(b)(ii), if and to the extent necessary to provide for the Executive, for
the remaining Unexpired Employment Period, coverage equivalent to the
coverage to which he would have been entitled if he had continued working
for the Company during the remaining Unexpired Employment Period at the
highest annual rate of salary achieved during the Employment Period;
provided, however, if the Executive has obtained group life, health
(including hospitalization, medical and major medical), dental, accidental
death and dismemberment, travel accident and/or short-term disability
insurance benefits coverage from another source, the Executive may, as of
any month, make an irrevocable election to forego the continued coverage
that would otherwise be provided hereunder for the remaining Unexpired
Employment Period, or any portion thereof, in which case the Bank or the
Company, upon receipt of the Executive's irrevocable election, shall pay
the Executive an amount equal to the estimated cost to the Bank or the
Company of providing such coverage during such period;
(iv) if and to the extent not already provided under Sections 4(b)(ii)
and 4(b)(iii), continued health (including hospitalization, medical and
major medical) and dental insurance benefits to the extent maintained by
the Bank or the Company for its employees or retirees during the remainder
of the Executive's lifetime and the lifetime of his spouse, if any, for so
long as the Executive continues to reimburse the Bank for the cost of such
continued coverage;
(v) a lump sum payment, as liquidated damages, in an amount equal to
the Base Salary and the bonus or other incentive compensation that the
Executive would have earned if the Executive had continued working for the
Bank and the Company during the remaining Unexpired Employment Period (A)
at the highest annual rate of Base Salary and bonus or other incentive
compensation achieved by the Executive during the three-year period
immediately preceding the Executive's Date of Termination, except that (B)
in the case of a Change in Control, such lump sum shall be determined based
upon the Base Salary and the bonus or other incentive compensation,
respectively, that the Executive would have been paid during the remaining
Unexpired Employment Period including the assumed increases referred to in
clauses (i) and (ii) of Section 5(b);
(vi) a lump sum payment in an amount equal to the excess, if any, of:
(A) the present value of the pension benefits to which the Executive would
be entitled under the RP and the BRP (and under any other qualified and
non-qualified defined benefit plans maintained by the Company or the Bank
covering the Executive) as if he had continued working for the Company
during the remaining Unexpired Employment Period (x) at the highest annual
rate of Base Salary and, if applicable, the highest bonus or other
incentive compensation, respectively, achieved by the Executive during the
three-year period immediately preceding the Executive's Date of
Termination, except that (y) in the case of a Change in Control, such lump
sum shall be determined based upon the Base Salary and, if applicable, the
bonus or other incentive compensation, respectively, that the Executive
would have been paid during the remaining Unexpired Employment Period
including the assumed increases referred to in clauses (i) and (ii) of
Section 5(b), and (z) in the case of a Change in Control, as if three
additional years are added to the Executive's age and years of creditable
service under the RP and the BRP and after taking into account any other
compensation required to be taken into account under the RP and the BRP
(and any other qualified and non-qualified defined benefit plans of the
Company or the Bank, as applicable), over (B) the present value of the
pension benefits to which he is actually entitled under the RP and the BRP
(and any other qualified and non-qualified defined benefit plans) as of his
Date of Termination, where such present values are to be determined using a
discount rate of 6% and the mortality tables prescribed under section 72 of
the Internal Revenue Code of 1986, as amended ("Code"); and
(vii) a lump sum payment in an amount equal to the contributions that
would have been made by the Company or the Bank on the Executive's behalf
to the ISP and the ESOP and to the BRP with respect to such ISP and ESOP
contributions (and to any other qualified and non-qualified defined
contribution plans maintained by the Company or the Bank covering the
Executive) as if the Executive had continued working for the Bank and the
Company during the remaining Unexpired Employment Period making the maximum
amount of employee contributions required or permitted, if any, under such
plan or plans and earning (A) the highest annual rate of Base Salary and,
if applicable, the highest bonus or other incentive compensation,
respectively, achieved by the Executive during the three-year period
immediately preceding the Executive's Date of Termination, except that (B)
in the case of a Change in Control, such lump sum shall be determined based
upon the Base Salary and, if applicable, the bonus or other incentive
compensation, respectively, that the Executive would have been paid during
the remaining Unexpired Employment Period including the assumed increases
referred to in clauses (i) and (ii) of Section 5(b).
The benefits to be provided under, and the amounts payable pursuant to, this
Section 4 shall be provided and be payable without regard to proof of damages
and without regard to the Executive's efforts, if any, to mitigate damages. The
Company and the Executive hereby stipulate that the damages which may be
incurred by the Executive following any such termination of employment are not
capable of accurate measurement as of the date first above written and that such
liquidated damages constitute reasonable damages under the circumstances.
(c) Payments to the Executive under Section 4 shall be made
within ten days of the Executive's Date of Termination.
(d) In the event payments are made under Section 4 or Section
5, the Executive may select an individual or firm to provide him with reasonable
outplacement counseling services, and the Company shall pay for the costs of
such services; provided, however, that the cost to the Company of such
outplacement counseling services shall not exceed 25% of the Executive's Base
Salary.
5. CHANGE IN CONTROL.
(a) No benefit shall be payable under this Section 5 unless
there shall have been a Change in Control of the Bank or Company, as set forth
below. For purposes of this Agreement, a "Change in Control" of the Bank or
Company shall mean any one or more of the following:
(i) An event of a nature that would be required to be reported in
response to Item l(a) of the current report on Form 8-K, as in effect on
the date hereof, pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934, as amended (the "Exchange Act");
(ii) An event of a nature that results in a Change in Control of the
Bank or the Company within the meaning of the Home Owners' Loan Act of
1933, as amended, or the Change in Bank Control Act of 1978, as amended, as
applicable, and the Rules and Regulations promulgated by the Office of
Thrift Supervision ("OTS") or its predecessor agency, the Federal Deposit
Insurance Corporation ("FDIC") or the Board of Governors of the Federal
Reserve System ("FRB"), as the case may be, as in effect on the date
hereof, but excluding any such Change in Control resulting from the
purchase of securities by the Company or the Company's or the Bank's
tax-qualified employee benefit plans and trusts;
(iii) If any "person" (as the term is used in Sections 13(d) and 14(d)
of the Exchange Act) is or becomes the "beneficial owner" (as defined in
Rule 13d-3 under the Exchange Act), directly or indirectly, of securities
of the Bank or the Company representing 20% or more of the Bank's or the
Company's outstanding securities except for any securities of the Bank
purchased by the Company in connection with the initial conversion of the
Bank from mutual to stock form (the "Conversion") and any securities
purchased by the Company or the Company's or the Bank's tax-qualified
employee benefit plans and trusts;
(iv) If the individuals who constitute the Board on the date hereof
(the "Incumbent Board") cease for any reason to constitute at least a
majority of the Board, provided, however, that any person becoming a
director subsequent to the date hereof whose election or nomination for
election by the Company's stockholders, was approved by a vote of at least
three-quarters of the directors then comprising the Incumbent Board shall
be considered as though he were a member of the Incumbent Board, but
excluding, for this purpose, any such person whose initial assumption of
office occurs as a result of an actual or threatened election contest with
respect to the election or removal of directors or other actual or
threatened solicitation of proxies or consents by or on behalf of a person
other than the Board;
(v) A merger, consolidation, reorganization, sale of all or
substantially all the assets of the Bank or the Company or similar
transaction occurs in which the Bank or Company is not the resulting
entity, other than a transaction following which (A) at least 51% of the
equity ownership interests of the entity resulting from such transaction
are beneficially owned (within the meaning of Rule 13d-3 promulgated under
Exchange Act) in substantially the same relative proportions by persons
who, immediately prior to such transaction, beneficially owned (within the
meaning of Rule 13d-3 promulgated under the Exchange Act) at least 51% of
the outstanding equity ownership interests in the Bank or Company and (B)
at least 51% of the securities entitled to vote generally in the election
of directors of the entity resulting from such transaction are beneficially
owned (within the meaning of Rule 13d-3 promulgated under the Exchange Act)
in substantially the same relative proportions by persons who, immediately
prior to such transaction, beneficially owned (within the meaning of Rule
13d-3 promulgated under the Exchange Act) at least 51% of the securities
entitled to vote generally in the election of directors of the Bank or
Company;
(vi) A proxy statement shall be distributed soliciting proxies from
stockholders of the Company, by someone other than the current management
of the Company, seeking stockholder approval of a plan of reorganization,
merger or consolidation of the Company or Bank or similar transaction with
one or more corporations as a result of which the outstanding shares of the
class of securities then subject to such plan or transaction are exchanged
for or converted into cash or property or securities not issued by the Bank
or the Company; or
(vii) A tender offer is completed for 20% or more of the voting
securities of the Bank or Company then outstanding.
The "Change in Control Date" shall mean the date during the Employment Period on
which a Change in Control occurs. Anything in this Agreement to the contrary
notwithstanding, if the Executive's employment with the Company is terminated
and if it is reasonably demonstrated by the Executive that such termination of
employment (1) was at the request of a third party who has taken steps
reasonably calculated to effect a Change in Control or (2) otherwise arose in
connection with or anticipation of a Change in Control, then for all purposes of
this Agreement the "Change in Control Date" shall mean the date immediately
prior to the date of such termination of employment.
(b) If any of the events described in Section 5(a)
constituting a Change in Control have occurred or the Board has determined that
a Change in Control has occurred, the Executive shall be entitled to the
payments and the benefits provided below on the Change in Control Date. The
amounts payable and the benefits to be provided under this Section 5(b) to the
Executive shall consist of the payments and benefits that would be due to the
Executive and the Executive's family under Section 4(b) as if an Event of
Termination under Section 4(a) had occurred on the Change in Control Date and
that for purposes of this Section 5(b), the term Unexpired Employment Period
shall mean three years from the Change in Control Date. For purposes of
determining the payments and benefits due under this Section 5(b), when
calculating the payments due and benefits to be provided for the Unexpired
Employment Period, it shall be assumed that for each year of the remaining term
of this Agreement, the Executive would have received (i) an annual increase in
Base Salary equal to the average percentage increase in Base Salary received by
the Executive for the three-year period ending with the earlier of (x) the year
in which the Change in Control Date occurs or (y) the year during which a
definitive agreement, if any, governing the Change in Control is executed, with
the first such increase effective as of the January 1st next following such
three-year period and the second and third such increases effective as of the
next two anniversaries of such January 1st, (ii) a bonus or other incentive
compensation equal to the highest percentage rate of bonus or incentive
compensation paid to the Executive during the three-year period referred to in
clause (i) of this Section 5(b) times the Base Salary that the Executive would
have been paid during the remaining term of this Agreement including the assumed
increases referred to in clause (i) of this Section 5(b), (iii) the maximum
contributions that could be made by or on behalf of the Executive with respect
to any employee benefit plans and programs maintained by the Company and the
Bank based upon the Base Salary and, if applicable, the bonus or other incentive
compensation, respectively, that the Executive would have been paid during the
remaining term of this Agreement including the assumed increases referred to in
clauses (i) and (ii) of this Section 5(b), and (iv) the present value of the
pension benefits to which the Executive is entitled under Section 4(b)(vi) with
respect to the RP and the BRP (and under any other qualified and non-qualified
defined benefit plans maintained by the Bank or the Company covering the
Executive) determined as if he had continued working for the Bank during the
remaining Unexpired Employment Period and based upon the Base Salary and, if
applicable, the bonus or other incentive compensation, respectively, that the
Executive would have been paid during the remaining term of this Agreement
including the assumed increases referred to in clauses (i) and (ii) of this
Section 5(b). The benefits to be provided under, and the amounts payable
pursuant to, this Section 5 shall be provided and be payable without regard to
proof of damages and without regard to the Executive's efforts, if any, to
mitigate damages. The Company and the Executive hereby stipulate that the
damages which may be incurred by the Executive following any Change in Control
are not capable of accurate measurement as of the date first above written and
that such liquidated damages constitute reasonable damages under the
circumstances.
(c) Payments to the Executive under Section 5(b) shall be made
on the Change in Control Date. Such payments shall be made regardless of whether
the Executive's employment terminates.
6. TERMINATION FOR DISABILITY.
(a) In the event of Termination for Disability, the Executive
shall receive the benefits provided in Section 6(b); provided, however, that the
benefits provided under Section 6(b) shall not be deemed to be in lieu of the
benefits he is otherwise entitled as a former employee under the Bank or
Company's employee plans and programs. For purposes of this Agreement, the
Executive may be terminated for disability only if (i) the Executive shall have
been absent from his duties with the Company on a full-time basis for at least
six consecutive months, or (ii) a majority of the members of the Board acting in
good faith determine that, based upon competent and independent medical evidence
presented by a physician or physicians agreed upon by the parties, the
Executive's physical or mental condition is such that he is totally and
permanently incapable of engaging in any substantial gainful employment based
upon his education, training and experience; provided, however, that on and
after the earliest date on which a Change in Control of the Bank or Company as
defined in Section 5 occurs, such a determination shall require the affirmative
vote of at least three-fourths of the members of the Board acting in good faith
and such vote shall not be made prior to the expiration of a 60-day period
following the date on which the Board shall, by written notice to the Executive,
furnish him a statement of its grounds for proposing to make such determination,
during which period the Executive shall be afforded a reasonable opportunity to
make oral and written presentations to the members of the Board, and to be
represented by his legal counsel at such presentations, to refute the grounds
for the proposed determination.
(b) The Company will pay the Executive as Disability pay, a
bi-weekly payment equal to 100% of the Executive's bi-weekly annual rate of Base
Salary in effect on the date of the Executive's Termination for Disability. In
addition, the Company will cause to be continued insurance coverage, including
group life, health (including hospitalization, medical and major medical),
dental, accidental death and dismemberment, travel accident and short-term
disability coverage substantially identical to the coverage maintained by the
Bank or the Company for the Executive prior to his Termination for Disability.
The Disability pay and coverages shall commence on the effective date of the
Executive's termination and shall cease upon the earliest to occur of: (i) the
date the Executive returns to the full-time employment of the Company, in the
same capacity as he was employed prior to his Termination for Disability and
pursuant to an employment agreement between the Executive and the Company; (ii)
the Executive's full-time employment by another employer; (iii) the Executive's
attaining the normal age of retirement or receiving benefits under the RP or
other defined benefit pension plan of the Bank or the Company; (iv) the
Executive's death; (v) the Executive's eligibility to collect payments under the
disability provision of the RP or other defined benefit pension plan of the Bank
or the Company; or (vi) the expiration of the term of this Agreement.
(c) Notwithstanding the foregoing, there will be no reduction
in the compensation otherwise payable to the Executive during any period during
which the Executive is incapable of performing his duties hereunder by reason of
temporary disability.
7. TERMINATION UPON DEATH.
The Executive's employment shall terminate automatically upon
the Executive's death during the Employment Period. In such event, the Executive
and the Executive's legal representatives shall be entitled to the following:
(i) payment of the Executive's "Accrued Obligations;"
(ii) the continuation of all benefits to the Executive's family and
dependents that would have been provided if the Executive had been entitled
to the benefits under Section 4(b)(ii), (iii) and (iv); and
(iii) the timely payment of any other amounts or benefits required to
be paid or provided or which the Executive is eligible to receive under any
plan, program, policy or practice or contract or agreement of the Company
and its affiliated companies (all such other amounts and benefits shall be
hereinafter referred to as the "Other Benefits");
provided, however, that if the Executive dies while in the employment of the
Company, the amount of life insurance provided to the Executive by the Company
shall not be less than the lesser of $200,000 or three times the Executive's
then annual Base Salary. Accrued Obligations shall be paid to the Executive's
estate or beneficiary, as applicable, in a lump sum cash payment within ten days
of the Date of Termination. With respect to the provision of Other Benefits
after the Change of Control Date, the term Other Benefits as utilized in this
Section 7 shall include, without limitation, that the Executive's estate and/or
beneficiaries shall be entitled to receive, benefits at least equal to the most
favorable benefits provided by the Company and affiliated companies to the
estates and beneficiaries of peer executives of the Company and such affiliates
companies under such plans, programs, practices and policies relating to death
benefits, if any, as in effect with respect to other peer executives and their
beneficiaries at any time during the 120-day period immediately preceding the
Change in Control Date.
8. TERMINATION UPON RETIREMENT.
Termination by the Company of the Executive based on
"Retirement" shall mean termination in accordance with the Company's or the
Bank's retirement policy or in accordance with any retirement arrangement
established with the Executive's consent with respect to him. Upon termination
of the Executive upon Retirement, the Executive shall be entitled to all
benefits under the RP and any other retirement plan of the Bank or the Company
and other plans to which the Executive is a party, and the Executive shall be
entitled to the benefits, if any, that would be payable to him as a former
employee under the Bank's or the Company's employee benefit plans and programs
and compensation plans and programs.
9. TERMINATION FOR CAUSE.
The terms "Termination for Cause" or "Cause" shall mean
termination because of the Executive's personal dishonesty, willful misconduct,
any breach of fiduciary duty involving personal profit, intentional failure to
perform stated duties, conviction of a felony with respect to the Bank or the
Company or any material breach of this Agreement. For purposes of this Section,
no act, or the failure to act, on the Executive's part shall be "willful" unless
done, or omitted to be done, in bad faith and without reasonable belief that the
action or omission was in the best interest of the Company or its affiliates.
Any act, or failure to act, based upon authority given pursuant to a resolution
duly adopted by the Board or based upon the written advice of counsel for the
Company shall be conclusively presumed to be done, or omitted to be done, by the
Executive in good faith and in the best interests of the Company.
Notwithstanding the foregoing, the Executive shall not be deemed to have been
terminated for Cause unless and until there shall have been delivered to him a
Notice of Termination which shall include a copy of a resolution duly adopted by
the affirmative vote of not less than three-fourths of the members of the Board
at a meeting of the Board called and held for that purpose (after reasonable
notice to the Executive and an opportunity for him, together with counsel, to be
heard before the Board), finding that in the good faith opinion of the Board,
the Executive was guilty of conduct justifying Termination for Cause and
specifying the particulars thereof in detail. The Executive shall not have the
right to receive compensation or other benefits for any period after Termination
for Cause.
10. NOTICE.
(a) Any purported termination by the Company or by the
Executive shall be communicated by a Notice of Termination to the other party
hereto. For purposes of this Agreement, a "Notice of Termination" shall mean a
written notice which shall indicate the specific termination provision in this
Agreement relied upon and shall set forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of the Executive's
employment under the provision so indicated.
(b) Subject to Section 10(c), "Date of Termination" shall mean
(A) if the Executive's employment is terminated for Disability, 30 days after a
Notice of Termination is given (provided that he shall not have returned to the
performance of his duties on a full-time basis during such 30-day period), and
(B) if his employment is terminated for any other reason, the date specified in
the Notice of Termination (which, in the case of a Termination for Cause, shall
be immediate).
(c) If, within 30 days after any Notice of Termination is
given, the party receiving such Notice of Termination notifies the other party
that a dispute exists concerning the termination, then, except upon the
occurrence of a Change in Control and voluntary termination by the Executive in
which case the Date of Termination shall be the date specified in the Notice,
the Date of Termination shall be the date on which the dispute is finally
determined, either by mutual written agreement of the parties, by a binding
arbitration award, or by a final judgment, order or decree of a court of
competent jurisdiction (the time for appeal therefrom having expired and no
appeal having been perfected) and provided further that the Date of Termination
shall be extended by a notice of dispute only if such notice is given in good
faith and the party giving such notice pursues the resolution of such dispute
with reasonable diligence. Notwithstanding the pendency of any such dispute, the
Company will continue to pay the Executive his full compensation in effect when
the notice giving rise to the dispute was given (including, but not limited to,
Base Salary) and continue him as a participant in all compensation, benefit and
insurance plans in which he was participating when the notice of dispute was
given, until the dispute is finally resolved in accordance with this Agreement.
Amounts paid under this Section are in addition to all other amounts due under
this Agreement and shall not be offset against or reduce any other amounts due
under this Agreement.
(d) The Company may terminate the Executive's employment at
any time, but any termination by the Company, other than Termination for Cause,
shall not prejudice the Executive's right to compensation or other benefits
under this Agreement or under any other benefit or compensation plans or
programs maintained by the Bank or the Company from time to time. The Executive
shall not have the right to receive compensation or other benefits for any
period after a Termination for Cause as defined in Section 9 hereinabove.
(e) Any communication to a party required or permitted under
this Agreement, including any notice, direction, designation, consent,
instruction, objection or waiver, shall be in writing and shall be deemed to
have been given at such time as it is delivered personally, or five days after
mailing if mailed, postage prepaid, by registered or certified mail, return
receipt requested, addressed to such party at the address listed below or at
such other address as one such party may by written notice specify to the other
party, as follows. If to the Executive, (address omitted); if to the Company,
JSB Financial, Inc., 303 Merrick Road, Lynbrook, New York 11563, Attention:
President, with a copy to Thacher Proffitt & Wood, Two World Trade Center, New
York, New York 10048, Attention: Douglas J. McClintock, Esq.
11. POST-TERMINATION OBLIGATIONS.
(a) All payments and benefits to the Executive under this
Agreement shall be subject to the Executive's compliance with paragraph (b) of
this Section 11 during the term of this Agreement and for one full year after
the expiration or termination hereof.
(b) The Executive shall, upon reasonable notice, furnish such
information and assistance to the Company as may reasonably be required by the
Company in connection with any litigation in which it or any of its subsidiaries
or affiliates is, or may become, a party; provided, that the Company reimburses
the Executive for the reasonable value of his time in connection therewith and
for any out-of-pocket costs attributable thereto.
12. COVENANT NOT TO COMPETE.
The Executive hereby covenants and agrees that for a period of
one year following his Date of Termination, if such termination occurs prior to
the end of the term of the Agreement, he shall not, without the written consent
of the Board, become an officer, employee, consultant, director or trustee of
any savings bank, savings and loan association, savings and loan holding
company, bank or bank holding company if such position (a) entails working in
(or providing services in) New York City, Nassau or Suffolk counties or (b)
entails working in (or providing services in) any other county that is both (i)
within the Bank's primary trade (or operating) area at the time in question,
which shall be determined by reference to the Bank's business plan as in effect
from time to time, and (ii) in which the Bank engages in material or substantial
deposit-taking functions or lending activities at such time; provided, however,
that this Section 12 shall not apply if the Executive's employment is terminated
for the reasons set forth in any of Sections 4, 5, 6 or 8.
13. SOURCE OF PAYMENTS.
All payments provided in this Agreement shall be timely paid
in cash or check from the general funds of the Company.
14. EFFECT ON PRIOR AGREEMENTS.
This Agreement contains the entire understanding between the
parties hereto and supersedes any prior employment agreement between the Company
or any predecessor of the Company and the Executive, except that this Agreement
shall not affect or operate to reduce any benefit or compensation inuring to the
Executive of a kind elsewhere provided. No provisions of this Agreement shall be
interpreted to mean that the Executive is subject to receiving fewer benefits
than those available to him without reference to this Agreement.
15. EFFECT OF ACTION UNDER BANK AGREEMENT.
Notwithstanding any provision herein to the contrary, to the
extent that full compensation payments and benefits are paid to or received by
the Executive under the Bank Agreement, such compensation payments and benefits
paid by the Bank will be deemed to satisfy the corresponding obligations of the
Company under this Agreement.
16. NO ATTACHMENT.
Except as required by law, no right to receive payments under
this Agreement shall be subject to anticipation, commutation, alienation, sale,
assignment, encumbrance, charge, pledge, or hypothecation, or to execution,
attachment, levy, or similar process or assignment by operation of law, and any
attempt, voluntary or involuntary, to affect any such action shall be null,
void, and of no effect.
17. MODIFICATION AND WAIVER.
(a) This Agreement may not be modified or amended except by an
instrument in writing signed by the parties hereto.
(b) No term or condition of this Agreement shall be deemed to
have been waived, nor shall there be any estoppel against the enforcement of any
provision of this Agreement, except by written instrument of the party charged
with such waiver or estoppel. No such written waiver shall be deemed a
continuing waiver unless specifically stated therein, and each such waiver shall
operate only as to the specific term or condition waived and shall not
constitute a waiver of such term or condition for the future as to any act other
than that specifically waived.
18. SUCCESSOR AND ASSIGNS.
This Agreement will inure to the benefit of and be binding
upon the Executive, his legal representatives and testate or intestate
distributees, and the Company, its successors and assigns, including any
successor by purchase, merger, consolidation or otherwise or a statutory
receiver or any other person or firm or corporation to which all or
substantially all of the assets and business of the Company may be sold or
otherwise transferred. Any such successor of the Company shall be deemed to have
assumed this Agreement and to have become obligated hereunder to the same extent
as the Company and the Executive's obligations hereunder shall continue in favor
of such successor.
19. SEVERABILITY.
If, for any reason, any provision of this Agreement, or any
part of any provision, is held invalid, such invalidity shall not affect any
other provision of this Agreement or any part of such provision not held so
invalid, and each such other provision and part thereof shall to the full extent
consistent with law continue in full force and effect.
20. HEADINGS FOR REFERENCE ONLY.
The headings of Sections and paragraphs herein are included
solely for convenience of reference and shall not control the meaning or
interpretation of any of the provisions of this Agreement. Any reference in this
Agreement to a Section or Subsection shall refer to a Section or Subsection of
this Agreement, except as otherwise specified.
21. GOVERNING LAW.
This Agreement shall be governed by the laws of the State of
New York, without reference to conflicts of law principles.
22. INDEMNIFICATION AND ATTORNEYS' FEES.
(a) The Company shall indemnify, hold harmless and defend the
Executive against reasonable costs, including legal fees, incurred by him in
connection with his consultation with legal counsel or arising out of any
action, suit or proceeding in which he may be involved, as a result of his
efforts, in good faith, to defend or enforce the terms of this Agreement. The
Company agrees to pay all such costs as they are incurred by the Executive, to
the full extent permitted by law, and without regard to whether the Company
believes that it has a defense to any action, suit or proceeding by the
Executive or that it is not obligated for any payments under this Agreement.
(b) In the event any dispute or controversy arising under or
in connection with the Executive's termination is resolved in favor of the
Executive, whether by judgment, arbitration or settlement, the Executive shall
be entitled to the payment of all back-pay, including salary, bonuses and any
other cash compensation, fringe benefits and any compensation and benefits due
the Executive under this Agreement.
(c) The Company shall indemnify, hold harmless and defend the
Executive for any act taken or not taken, or any omission or failure to act, by
him in good faith while performing services for the Company or the Bank to the
same extent and upon the same terms and conditions as other similarly situated
officers and directors of the Company or the Bank. If and to the extent that the
Company or the Bank, maintains, at any time during the Employment Period, an
insurance policy covering the other officers and directors of the Company or the
Bank against lawsuits, the Company or the Bank shall use its best efforts to
cause the Executive to be covered under such policy upon the same terms and
conditions as other similarly situated officers and directors.
23. TAX INDEMNIFICATION.
(a) This Section 23 shall apply if 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 occurs within the meaning of section 280G
of the Code. If this Section 23 applies, then with respect to any taxable year
in which the Executive shall be liable for the payment of an excise tax under
section 4999 of the Code with respect to any payment in the nature of
compensation made by the Company, the Bank or any direct or indirect subsidiary
or affiliate of the Company to (or for the benefit of) the Executive, the
Company shall pay to the Executive an amount equal to X determined under the
following formula:
X = E x P
-------------------------------------------------
1 - [(FI x (1 - SLI)) + SLI + E + M]
where
E = the rate at which the excise tax is assessed under
section 4999 of the Code;
P = the amount with respect to which such excise tax is
assessed, determined without regard to this Section
23;
FI = the highest effective marginal rate of income tax
applicable to the Executive under the Code for the
taxable year in question (taking into account any
phase-out or loss of deductions, personal exemptions
and other similar adjustments);
SLI = the sum of the highest effective marginal rates of
income tax applicable to the Executive under all
applicable state and local laws for the taxable year
in question (taking into account any phase-out or
loss of deductions, personal exemptions and other
similar adjustments); and
M = the highest marginal rate of Medicare tax
applicable to the Executive under the Code for the
taxable year in question.
Attached as Appendix A to this Agreement is an example that illustrates
application of this Section 23. Any payment under this Section 23 shall be
adjusted so as to fully indemnify the Executive on an after-tax basis so that
the Executive would be in the same after-tax financial position in which he
would have been if no excise tax under section 4999 of the Code had been
imposed. With respect to any payment in the nature of compensation that is made
to (or for the benefit of) the Executive under the terms of this Agreement or
otherwise and on which an excise tax under section 4999 of the Code will be
assessed, the payment determined under this Section 23(a) shall be made to the
Executive on the earlier of (i) the date the Company, the Bank or any direct or
indirect subsidiary or affiliate of the Company is required to withhold such
tax, or (ii) the date the tax is required to be paid by the Executive.
(b) Notwithstanding anything in this Section 23 to the
contrary, in the event that the Executive's liability for the excise tax under
section 4999 of the Code for a taxable year is subsequently determined to be
different than the amount determined by the formula (X + P) x E, where X, P and
E have the meanings provided in Section 23(a), the Executive or the Company, as
the case may be, shall pay to the other party at the time that the amount of
such excise tax is finally determined, an appropriate amount, plus interest,
such that the payment made under Section 23(a), when increased by the amount of
the payment made to the Executive under this Section 23(b) by the Company, or
when reduced by the amount of the payment made to the Company under this Section
23(b) by the Executive, equals the amount that, it is finally determined, should
have properly been paid to the Executive under Section 23(a). The interest paid
under this Section 23(b) shall be determined at the rate provided under section
1274(b)(2)(B) of the Code. To confirm that the proper amount, if any, was paid
to the Executive under this Section 23, the Executive shall furnish to the
Company a copy of each tax return which reflects a liability for an excise tax
payment made by the Company, at least 20 days before the date on which such
return is required to be filed with the Internal Revenue Service.
24. NON-EXCLUSIVITY OF RIGHTS.
Except as otherwise provided herein, nothing in this Agreement
shall prevent or limit the Executive's continuing or future participation in any
plan, program, policy or practice provided by the Company or any of its
affiliated companies and for which the Executive may qualify, nor shall anything
herein limit or otherwise affect such rights as the Executive may have under any
contract or agreement with the Company or any of its affiliated companies.
Amounts which are vested benefits or which the Executive is otherwise entitled
to receive under any plan, policy, practice or program of or any contract or
agreement with the Company or any of its affiliated companies at or subsequent
to the Date of Termination shall be payable in accordance with such plan,
policy, practice or program or contract or agreement except as explicitly
modified by this Agreement. Notwithstanding the foregoing, in the event of a
termination of employment, the amounts provided in Section 4 or Section 5, as
applicable, shall be the Executive's sole remedy for any purported breach of
this Agreement by the Company.
25. MITIGATION; OTHER CLAIMS.
The Company's obligation to make the payments provided for in
this Agreement and otherwise to perform its obligations hereunder shall not be
affected by any set-off, counterclaim, recoupment, defense or other claim, right
or action which the Company may have against the Executive or others. In no
event shall the Executive be obligated to seek other employment or take any
other action by way of mitigation of the amounts payable to the Executive under
any of the provisions of this Agreement and such amounts shall not be reduced
whether or not the Executive obtains other employment.
26. CONFIDENTIAL INFORMATION.
The Executive shall hold in a fiduciary capacity for the
benefit of the Company all secret or confidential information, knowledge or data
relating to the Company or any of its affiliated companies, and their respective
businesses, which shall have been obtained by the Executive during the
Executive's employment by the Company or any of its affiliated companies and
which shall not be or become public knowledge (other than by acts by the
Executive or representatives of the Executive in violation of this Agreement).
After termination of the Executive's employment with the Company, the Executive
shall not, without the prior written consent of the Company or as may otherwise
be required by law or legal process, communicate or divulge any such
information, knowledge or data to anyone other than the Company and those
designated by it. For purposes of this Agreement, secret and confidential
information, knowledge or data relating to the Company or any of its affiliates,
and their respective business, shall not include any information that is public,
publicly available or available through trade association sources.
Notwithstanding any other provision of this Agreement to the contrary, the
Executive acknowledges and agrees that in the event of a violation or threatened
violation of any of the provisions of this Section 26, the Company shall have no
adequate remedy at law and shall therefore be entitled to enforce each such
provision by temporary or permanent injunction or mandatory relief obtained in
any court of competent jurisdiction without the necessity of proving damages or
posting any bond or other security, and without prejudice to any other remedies
that may be available at law or in equity.
27. ACCESS TO DOCUMENTS.
The Executive shall have the right to obtain copies of any
Company or Bank documents that the Executive reasonably believes, in good faith,
are necessary or appropriate in determining his entitlement to, and the amount
of, payments and benefits under this Agreement.
1. GUARANTEE.
The Company hereby agrees to guarantee the payment by the Bank of any
benefits and compensation to which the Executive is or may be entitled to under
the terms and conditions of the Bank Agreement.
1. REQUIRED REGULATORY PROVISIONS.
Notwithstanding anything herein contained to the contrary, any payments
to the Executive by the Company, whether pursuant to this Agreement or
otherwise, are subject to and conditioned upon their compliance with section
18(k) of the Federal Deposit Insurance Act, as amended, 12 U.S.C. ss.1828(k),
and any regulations promulgated thereunder.
<PAGE>
SIGNATURES
IN WITNESS WHEREOF, JSB FINANCIAL, INC. has caused this
Agreement to be executed and its seal to be affixed hereunto by its duly
authorized officer, and the Executive has signed this Agreement, on the 22nd day
of June, 1999.
ATTEST: JSB FINANCIAL, INC.
By:
Joanne Corrigan Edward P. Henson
- --------------- -----------------
Joanne Corrigan Edward P. Henson
Secretary President
[Seal]
WITNESS:
Jack Connors
------------
Jack Connors
<PAGE>
STATE OF NEW YORK )
: ss.:
COUNTY OF NASSAU )
On this 22nd day of June, 1999, before me personally came Edward P.
Henson, to me known, who, being by me duly sworn, did depose and say that he is
the President of JSB Financial, Inc., the Delaware corporation described in and
which executed the foregoing instrument; that he knows the seal of said
corporation; that the seal affixed to said instrument is such seal; that it was
so affixed by order of the Board of Directors of said corporation; and that he
signed his name thereto by like order.
Name:
Notary Public
STATE OF NEW YORK )
: ss.:
COUNTY OF NASSAU )
On this 22nd day of June, 1999, before me personally came Jack Connors,
to me known, and known to me to be the individual described in the foregoing
instrument, who, being by me duly sworn, did depose and say that he resides at
the address set forth in said instrument, and that he signed his name to the
foregoing instrument.
Name:
Notary Public
<PAGE>
APPENDIX A
----------
1. INTRODUCTION. Sections 280G and 4999 of the Internal Revenue Code of
1986, as amended ("Code"), impose a 20% non-deductible federal excise tax on a
person if the payments and benefits in the nature of compensation to or for the
benefit of that person that are contingent on a change in the ownership or
effective control of the Company or the Bank or in the ownership of a
substantial portion of the assets of the Company or the Bank (such payments and
benefits are considered "parachute payments" under section 280G) exceed three
times the person's "base amount" under section 280G. Section 23 of the Agreement
provides for the Executive to receive a tax indemnification payment (sometimes
referred to as a "gross-up" payment) if the payments and benefits in the nature
of compensation to or for the benefit of the Executive that are considered
parachute payments cause the imposition of an excise tax under section 4999 of
the Code. Capitalized terms in this Appendix A that are not defined in this
Appendix A have the meaning used in the Employment Agreement with the Executive.
2. PURPOSE. The purpose of this Appendix A is to illustrate how the tax
indemnification or gross-up payment would be computed. The amounts, figures and
rates used in this example are meant to be illustrative and do not reflect the
actual payments and benefits that would be made to the Executive under this
Agreement. For purposes of this example, it is assumed that a change in control
within the meaning of section 280G of the Code has occurred and that:
(a) The value of the insurance benefits required to be provided to a
hypothetical employee "Z" under sections 4(b)(iii) and 5(b) of the
Agreement for medical, dental, life and other insurance benefits
during the unexpired employment period is $23,000.
(b) The annual rate of Z's salary covered by the Agreement is $100,000,
and Z received annual salary increases of 4%, 5% and 6% (i.e., a
three-year average of 5%) for each of the prior three years. Hence,
the amount payable under sections 4(b)(v) and 5(b) of the Agreement
for salary during the unexpired employment period would be $331,013
[$105,000 + $110, 250 + $115,763].
(c) Z received annual bonuses equal to 20% of his salary in each of the
prior three years. Hence, the amount payable under sections 4(b)(v)
and 5(b) of the Agreement for bonuses during the unexpired employment
period would be $66,203 [20% x ($105,000 + $110,250 + $115,763)].
(d) The amount payable under sections 4(b)(vi) and 5(b) of the Agreement
for the present value of the additional RP and BRP accruals during the
unexpired employment period would be $45,000.
(e) The amount payable under sections 4(b)(vii) and 5(b) of the Agreement
for additional contributions to the ESOP, 401(k) Plan and BRP during
the unexpired employment period would be $20,000.
(f) Z's base amount (i.e., average W-2 wages for the five-year period
preceding the change in control) is $87,000.
3. DETERMINE IF Z IS SUBJECT TO AN EXCISE TAX. Z's parachute payments would
total $485,216 [$23,000 + $331,013 + $66,203 + $45,000 + $20,000]. Three times
Z's base amount is $261,000 [3 x $87,000]; accordingly, Z is subject to an
excise tax because $485,216 exceeds $261,000. Z's "excess parachute payments"
under section 280G of the Code are equal to Z's total parachute payments minus
one times Z's base amount, or $398,216 [$485,216 - $87,000]. If Z were not
protected by section 23 of the Agreement, Z would be subjected to an excise tax
of $79,643 [$398,216 x 20%], in addition to ordinary income taxes.
4. Compute Z's Tax Indemnification Payment. Z's tax indemnification payment
under section 23 of the Agreement would be computed pursuant to the following
formula:
E x P .2 x $398,216
X = ------------------------------------ = ----------------------------------
1 - [(FI x (1 - SLI)) + SLI + E + M] 1 - [.368874 + .0685 + .2 + .0145]
where
E = excise tax rate under section 4999 of the Code [20%];
P = the amount with respect to which such excise tax is
assessed determined without regard to section 23 of
the Agreement [$398,216];
FI = the highest effective marginal rate of income tax
applicable to Z under the Code for the taxable year
in question [assumed to be 39.6% in this example, but
in actuality, the rate is adjusted to take into
account any phase-out or loss of deductions, personal
exemptions and other similar adjustments];
SLI = the sum of the highest effective marginal rates of
income tax applicable to Z under applicable state and
local laws for the taxable year in question [assumed
to be 6.85% in this example, but in actuality, the
rate is adjusted to take into account any phase-out
or loss of deductions, personal exemptions and other
similar adjustments]; and
M = the highest marginal rate of Medicare tax applicable
to Z under the Code for the year in question [1.45%].
In this example, the amount of tax indemnification payment due to Z under
section 23 of the Agreement would be $79,643 [.2 x $398,216] divided by 0.348126
[1 - (.368874 + .0685 + .2 + .0145)], or $228,777. Such amount would be payable
in addition to the other amounts payable under the Agreement in order to put Z
in approximately the same after-tax position that Z would have been in if there
were no excise tax imposed under sections 280G and 4999 of the Code. The tax
indemnification to Z of $228,777 would in turn be a parachute payment subject to
excise tax under sections 280G and 4999. Accordingly, Z's actual excess
parachute payment would be $626,993 [$485,216 - $87,000) + $228,777)] resulting
in an excise tax of $125,399 [$626,993 x 20%]. The difference between the
indemnification. payment and the excise tax [$103,378] is an amount equal to the
sum of the income and other applicable taxes due on the indemnification payment
[($228,777 x .368874) + ($228,777 x .0685) + ($228,777 x .0145)], confirming
that the amount of the tax indemnification payment is sufficient to satisfy all
of Z's tax liability resulting from the excess parachute payment.
JSB FINANCIAL, INC.
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT ("Agreement") is made and entered
into as of June 22, 1999 by and between JSB FINANCIAL, INC., a business
corporation organized and operating under the laws of the State of Delaware and
having its principal office at 303 Merrick Road, Lynbrook, New York 11563
("Company"), and John J. Conroy, an individual residing at (address omitted)
("Executive"). Any reference to the "Bank" in this Agreement shall mean Jamaica
Savings Bank FSB and any successor thereto.
W I T N E S S E T H :
WHEREAS, the Executive is currently serving as Senior Vice
President of the Company, and the Company wishes to assure itself of the
services of the Executive for the period provided in this Agreement; and
WHEREAS, the Executive is willing to serve in the employ of
the Company on the terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the premises and the
mutual covenants and conditions hereinafter set forth, the Company and the
Executive hereby agree as follows:
1. POSITION AND RESPONSIBILITIES.
During the period of his employment hereunder, the Executive
agrees to serve as Senior Vice President of the Company. The Executive shall
render administrative and management services to the Company such as are
customarily performed by persons situated in a similar executive capacity and
shall perform such other duties not inconsistent with his title and office as
may be assigned to him by or under the authority of the Board of Directors of
the Company (the "Board"). The Executive shall have such authority as is
necessary or appropriate to carry out his assigned duties. Failure to re-elect
the Executive as Senior Vice President of the Company (or a more senior
position) without the consent of the Executive shall constitute a breach of this
Agreement.
2. TERMS.
(a) The period of the Executive's employment under this
Agreement shall be deemed to have commenced as of the date first above written
(the "Effective Date") and shall continue for a period of 36 full calendar
months thereafter. Commencing with the Effective Date, the term of this
Agreement shall be extended for one additional day each day until such time as
the Board or the Executive elects not to extend the term of the Agreement
further by giving written notice to the other party in accordance with Section
10, in which case the term of this Agreement shall become fixed and shall end on
the third anniversary of the date of such written notice. For purposes of this
Agreement, the term "Employment Period" shall mean the term of this Agreement
plus such extensions as are provided herein.
(b) During the period of his employment hereunder, except for
periods of absence occasioned by illness, disability, holidays, reasonable
vacation periods and reasonable leaves of absence, the Executive shall devote
substantially all of his business time, attention, skill and efforts to the
faithful performance of his duties hereunder including (i) service as Senior
Vice President of the Company, and, if duly elected, a Director of the Company,
(ii) performance of such duties not inconsistent with his title and office as
may be assigned to him by or under the authority of the Board or a more senior
executive officer, and (iii) such other activities and services related to the
organization, operation and management of the Company. During the Employment
Period it shall not be a violation of this Agreement for the Executive to (A)
serve on corporate, civic, industry or charitable boards or committees, (B)
deliver lectures, fulfill speaking engagements or teach at educational
institutions and (C) manage personal investments, so long as such activities do
not significantly interfere with the performance of the Executive's
responsibilities as an employee of the Company in accordance with this
Agreement. It is expressly understood and agreed that to the extent that any
such activities have been conducted by the Executive prior to the Effective
Date, the continued conduct of such activities (or the conduct of activities
similar in nature and scope thereto) subsequent to the Effective Date shall not
thereafter be deemed to interfere with the performance of the Executive's
responsibilities to the Company. It is also expressly agreed that the Executive
may conduct activities subsequent to the Effective Date that are generally
accepted for an executive in his position, regardless of whether conducted by
the Executive prior to the Effective Date.
(c) Notwithstanding anything herein contained to the contrary:
(i) the Executive's employment with the Company may be terminated by the Company
or the Executive during the term of this Agreement, subject to the terms and
conditions of this Agreement; and (ii) nothing in this Agreement shall mandate
or prohibit a continuation of the Executive's employment following the
expiration of the term of this Agreement upon such terms and conditions as the
Board and the Executive may mutually agree.
(d) Upon the termination of the Executive's employment with
the Company, the daily extensions provided pursuant to Section 2(a) shall cease
(if such extensions have not previously ceased), and, if such termination is
under circumstances described in Section 4(a) or Section 5(b), the term
"Unexpired Employment Period" shall mean the period of time commencing from the
date of such termination and ending on the last day of the Employment Period
computed with reference to all extensions prior to such termination.
(e) In the event that the Executive's duties and
responsibilities with respect to the Bank are temporarily or permanently
terminated pursuant to Section 9 of the Employment Agreement dated June 22,
1999, as it may be amended from time to time, between the Executive and the Bank
("Bank Agreement") and the course of conduct upon which such termination is
based would not constitute grounds for Termination for Cause under Section 9,
then the Executive shall, to the extent practicable, assume such duties and
responsibilities formerly performed at the Bank as part of his duties and
responsibilities as Senior Vice President of the Company. Nothing in this
provision shall be interpreted as restricting the Company's right to remove the
Executive for Cause in accordance with Section 9.
3. COMPENSATION AND REIMBURSEMENT.
(a) The compensation specified under this Agreement shall
constitute the salary and benefits paid for the duties described in Section 1.
The Company shall pay the Executive as compensation a salary at an annual rate
of not less than (salary omitted) per year or such higher rate as may be
prescribed by or under the authority of the Board ("Base Salary"). The Base
Salary payable under this Section 3 shall be paid in approximately equal
installments in accordance with the Company's customary payroll practices.
During the period of this Agreement, the Executive's Base Salary shall be
reviewed at least annually; the first such review will be made no later than one
year from the date of this Agreement. Such review shall be conducted by a
Committee designated by the Board, and the Board may increase the Executive's
Base Salary, which increased amount shall be considered the Executive's "Base
Salary" for purposes of this Agreement. In no event shall the Executive's annual
rate of Base Salary under this Agreement in effect at a particular time be
reduced without his prior written consent. In addition to the Base Salary
provided in this Section 3(a), the Company shall provide the Executive at no
cost to the Executive with all such other benefits as are provided uniformly to
permanent full-time employees of the Bank.
(b) The Company will provide the Executive with employee
benefit plans, arrangements and perquisites substantially equivalent to those in
which the Executive was participating or otherwise deriving benefit from
immediately prior to the beginning of the term of this Agreement, and the
Company will not, without the Executive's prior written consent, make any
changes in such plans, arrangements or perquisites which would adversely affect
the Executive's rights or benefits thereunder. Without limiting the generality
of the foregoing provisions of this Subsection (b), the Executive will be
entitled to participate in or receive benefits under any employee benefit plans
with respect to which the Executive satisfies the eligibility requirements,
including, but not limited to, the Retirement Plan of Jamaica Savings Bank FSB
("RP"), the Incentive Savings Plan of Jamaica Savings Bank FSB ("ISP"), the
Jamaica Savings Bank FSB Employee Stock Ownership Plan ("ESOP"), the Benefit
Restoration Plan of Jamaica Savings Bank FSB ("BRP"), the JSB Financial, Inc.
1990 Stock Option Plan, the JSB Financial, Inc. 1996 Stock Option Plan,
retirement plans, supplemental retirement plans, pension plans, profit-sharing
plans, group life, health (including hospitalization, medical and major
medical), dental, accidental death and dismemberment, travel accident and
short-term disability insurance plans, or any other employee benefit plan or
arrangement made available by the Company in the future to its senior executives
and key management employees, subject to and on a basis consistent with the
terms, conditions and overall administration of such plans and arrangements. The
Executive will be entitled to incentive compensation and bonuses as provided in
any plan of the Company in which the Executive is eligible to participate.
Nothing paid to the Executive under any such plan or arrangement will be deemed
to be in lieu of other compensation to which the Executive is entitled under
this Agreement.
(c) The Executive's principal place of employment shall be at
the Company's executive offices at the address first above written, or at such
other location in New York City or in Nassau County or Suffolk County at which
the Company shall maintain its principal executive offices, or at such other
location as the Board and the Executive may mutually agree upon. The Company
shall provide the Executive, at his principal place of employment with support
services and facilities suitable to his position with the Company and necessary
or appropriate in connection with the performance of his assigned duties under
this Agreement. The Company or the Bank shall provide the Executive with an
automobile suitable to the position of Senior Vice President of the Company, in
accordance with prior practice, and such automobile may be used by the Executive
in carrying out his duties under the Agreement, including commuting between his
residence and his principal place of employment, and other personal use. The
Company shall reimburse the Executive for his ordinary and necessary business
expenses, including, without limitation, fees for memberships in such clubs and
organizations as the Executive and the Board shall mutually agree are necessary
and appropriate for business purposes, and travel and entertainment expenses,
incurred in connection with the performance of his duties under this Agreement,
upon presentation to the Company of an itemized account of such expenses in such
form as the Company may reasonably require.
(d) In the event that the Executive assumes additional duties
and responsibilities pursuant to Section 2(e) by reason of one of the
circumstances contained in Section 2(e), and the Executive receives or will
receive less than the full amount of compensation and benefits formerly entitled
to him under the Bank Agreement, the Company shall assume the obligation to
provide the Executive with his compensation and benefits in accordance with the
Bank Agreement less any compensation and benefits received from the Bank,
subject to the terms and conditions of this Agreement including the Termination
for Cause provisions in Section 9.
4. PAYMENTS TO THE EXECUTIVE UPON AN EVENT OF TERMINATION.
The provisions of this Section shall in all respects be
subject to the terms and conditions stated in Sections 9 and 29.
(a) Upon the occurrence of an Event of Termination (as herein
defined) during the Executive's term of employment under this Agreement, the
provisions of this Section shall apply. As used in this Agreement, an "Event of
Termination" shall mean and include any one or more of the following: (i) the
termination by the Bank or the Company of the Executive's full-time employment
hereunder for any reason other than: following a Change in Control, as defined
in Section 5; for Disability, as defined in Section 6; for Retirement, as
defined in Section 8; for Cause, as defined in Section 9; or upon the
Executive's death; or (ii) unless consented to by the Executive, the Executive's
voluntary resignation from the Company's employ, upon any: (A) failure to elect
or re-elect or to appoint or re-appoint the Executive as Senior Vice President
of the Company, (B) material adverse change in the Executive's function, duties,
or responsibilities, which change would cause the Executive's position to become
one of lesser responsibility, importance, or scope from the position and
attributes thereof described in Section 1, above (and any such material change
shall be deemed a continuing breach of this Agreement), (C) relocation of the
Executive's principal place of employment by more than 30 miles from its
location at the Effective Date of this Agreement, or a material reduction in the
benefits and perquisites to the Executive from those being provided as of the
Effective Date of this Agreement, (D) liquidation or dissolution of the Bank or
Company, or (E) material breach of this Agreement by the Company. Upon the
occurrence of any event described in clauses (A), (B), (C), (D) or (E), above,
the Executive shall have the right to elect to terminate his employment under
this Agreement by resignation upon written notice pursuant to Section 10 given
within a reasonable period of time not to exceed, except in case of a continuing
breach, four calendar months after the event giving rise to said right to elect.
(b) Upon the occurrence of an Event of Termination as set
forth in Section 4(a), on the Date of Termination, as defined in Section 10, the
Company shall be obligated to pay, or to provide, the Executive, or, in the
event of his subsequent death, to his surviving spouse or such other beneficiary
or beneficiaries as the Executive may designate in writing, or if neither his
estate, as severance pay or liquidated damages, or both, the benefits provided
below and a payment equal to the sum of the payments set forth below:
(i) payment of the sum of (A) the Executive's annual Base Salary
through the Date of Termination to the extent not theretofore paid and (B)
any compensation previously deferred by the Executive (together with any
accrued interest or earnings thereon) and any accrued vacation pay, in each
case to the extent not theretofore paid (the sum of the amounts described
in clauses (A) and (B) shall be hereinafter referred to as the "Accrued
Obligations");
(ii) the benefits, if any, to which the Executive is entitled as a
former employee under the Bank's or Company's employee benefit plans and
programs and compensation plans and programs;
(iii) continued group life, health (including hospitalization, medical
and major medical), dental, accidental death and dismemberment, travel
accident and short-term disability insurance benefits as provided by the
Bank or the Company, in addition to that provided pursuant to Section
4(b)(ii), if and to the extent necessary to provide for the Executive, for
the remaining Unexpired Employment Period, coverage equivalent to the
coverage to which he would have been entitled if he had continued working
for the Company during the remaining Unexpired Employment Period at the
highest annual rate of salary achieved during the Employment Period;
provided, however, if the Executive has obtained group life, health
(including hospitalization, medical and major medical), dental, accidental
death and dismemberment, travel accident and/or short-term disability
insurance benefits coverage from another source, the Executive may, as of
any month, make an irrevocable election to forego the continued coverage
that would otherwise be provided hereunder for the remaining Unexpired
Employment Period, or any portion thereof, in which case the Bank or the
Company, upon receipt of the Executive's irrevocable election, shall pay
the Executive an amount equal to the estimated cost to the Bank or the
Company of providing such coverage during such period;
(iv) if and to the extent not already provided under Sections 4(b)(ii)
and 4(b)(iii), continued health (including hospitalization, medical and
major medical) and dental insurance benefits to the extent maintained by
the Bank or the Company for its employees or retirees during the remainder
of the Executive's lifetime and the lifetime of his spouse, if any, for so
long as the Executive continues to reimburse the Bank for the cost of such
continued coverage;
(v) a lump sum payment, as liquidated damages, in an amount equal to
the Base Salary and the bonus or other incentive compensation that the
Executive would have earned if the Executive had continued working for the
Bank and the Company during the remaining Unexpired Employment Period (A)
at the highest annual rate of Base Salary and bonus or other incentive
compensation achieved by the Executive during the three-year period
immediately preceding the Executive's Date of Termination, except that (B)
in the case of a Change in Control, such lump sum shall be determined based
upon the Base Salary and the bonus or other incentive compensation,
respectively, that the Executive would have been paid during the remaining
Unexpired Employment Period including the assumed increases referred to in
clauses (i) and (ii) of Section 5(b);
(vi) a lump sum payment in an amount equal to the excess, if any, of:
(A) the present value of the pension benefits to which the Executive would
be entitled under the RP and the BRP (and under any other qualified and
non-qualified defined benefit plans maintained by the Company or the Bank
covering the Executive) as if he had continued working for the Company
during the remaining Unexpired Employment Period (x) at the highest annual
rate of Base Salary and, if applicable, the highest bonus or other
incentive compensation, respectively, achieved by the Executive during the
three-year period immediately preceding the Executive's Date of
Termination, except that (y) in the case of a Change in Control, such lump
sum shall be determined based upon the Base Salary and, if applicable, the
bonus or other incentive compensation, respectively, that the Executive
would have been paid during the remaining Unexpired Employment Period
including the assumed increases referred to in clauses (i) and (ii) of
Section 5(b), and (z) in the case of a Change in Control, as if three
additional years are added to the Executive's age and years of creditable
service under the RP and the BRP and after taking into account any other
compensation required to be taken into account under the RP and the BRP
(and any other qualified and non-qualified defined benefit plans of the
Company or the Bank, as applicable), over (B) the present value of the
pension benefits to which he is actually entitled under the RP and the BRP
(and any other qualified and non-qualified defined benefit plans) as of his
Date of Termination, where such present values are to be determined using a
discount rate of 6% and the mortality tables prescribed under section 72 of
the Internal Revenue Code of 1986, as amended ("Code"); and
(vii) a lump sum payment in an amount equal to the contributions that
would have been made by the Company or the Bank on the Executive's behalf
to the ISP and the ESOP and to the BRP with respect to such ISP and ESOP
contributions (and to any other qualified and non-qualified defined
contribution plans maintained by the Company or the Bank covering the
Executive) as if the Executive had continued working for the Bank and the
Company during the remaining Unexpired Employment Period making the maximum
amount of employee contributions required or permitted, if any, under such
plan or plans and earning (A) the highest annual rate of Base Salary and,
if applicable, the highest bonus or other incentive compensation,
respectively, achieved by the Executive during the three-year period
immediately preceding the Executive's Date of Termination, except that (B)
in the case of a Change in Control, such lump sum shall be determined based
upon the Base Salary and, if applicable, the bonus or other incentive
compensation, respectively, that the Executive would have been paid during
the remaining Unexpired Employment Period including the assumed increases
referred to in clauses (i) and (ii) of Section 5(b).
The benefits to be provided under, and the amounts payable pursuant to, this
Section 4 shall be provided and be payable without regard to proof of damages
and without regard to the Executive's efforts, if any, to mitigate damages. The
Company and the Executive hereby stipulate that the damages which may be
incurred by the Executive following any such termination of employment are not
capable of accurate measurement as of the date first above written and that such
liquidated damages constitute reasonable damages under the circumstances.
(c) Payments to the Executive under Section 4 shall be made
within ten days of the Executive's Date of Termination.
(d) In the event payments are made under Section 4 or Section
5, the Executive may select an individual or firm to provide him with reasonable
outplacement counseling services, and the Company shall pay for the costs of
such services; provided, however, that the cost to the Company of such
outplacement counseling services shall not exceed 25% of the Executive's Base
Salary.
5. CHANGE IN CONTROL.
(a) No benefit shall be payable under this Section 5 unless
there shall have been a Change in Control of the Bank or Company, as set forth
below. For purposes of this Agreement, a "Change in Control" of the Bank or
Company shall mean any one or more of the following:
(i) An event of a nature that would be required to be reported in
response to Item l(a) of the current report on Form 8-K, as in effect on
the date hereof, pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934, as amended (the "Exchange Act");
(ii) An event of a nature that results in a Change in Control of the
Bank or the Company within the meaning of the Home Owners' Loan Act of
1933, as amended, or the Change in Bank Control Act of 1978, as amended, as
applicable, and the Rules and Regulations promulgated by the Office of
Thrift Supervision ("OTS") or its predecessor agency, the Federal Deposit
Insurance Corporation ("FDIC") or the Board of Governors of the Federal
Reserve System ("FRB"), as the case may be, as in effect on the date
hereof, but excluding any such Change in Control resulting from the
purchase of securities by the Company or the Company's or the Bank's
tax-qualified employee benefit plans and trusts;
(iii) If any "person" (as the term is used in Sections 13(d) and 14(d)
of the Exchange Act) is or becomes the "beneficial owner" (as defined in
Rule 13d-3 under the Exchange Act), directly or indirectly, of securities
of the Bank or the Company representing 20% or more of the Bank's or the
Company's outstanding securities except for any securities of the Bank
purchased by the Company in connection with the initial conversion of the
Bank from mutual to stock form (the "Conversion") and any securities
purchased by the Company or the Company's or the Bank's tax-qualified
employee benefit plans and trusts;
(iv) If the individuals who constitute the Board on the date hereof
(the "Incumbent Board") cease for any reason to constitute at least a
majority of the Board, provided, however, that any person becoming a
director subsequent to the date hereof whose election or nomination for
election by the Company's stockholders, was approved by a vote of at least
three-quarters of the directors then comprising the Incumbent Board shall
be considered as though he were a member of the Incumbent Board, but
excluding, for this purpose, any such person whose initial assumption of
office occurs as a result of an actual or threatened election contest with
respect to the election or removal of directors or other actual or
threatened solicitation of proxies or consents by or on behalf of a person
other than the Board;
(v) A merger, consolidation, reorganization, sale of all or
substantially all the assets of the Bank or the Company or similar
transaction occurs in which the Bank or Company is not the resulting
entity, other than a transaction following which (A) at least 51% of the
equity ownership interests of the entity resulting from such transaction
are beneficially owned (within the meaning of Rule 13d-3 promulgated under
Exchange Act) in substantially the same relative proportions by persons
who, immediately prior to such transaction, beneficially owned (within the
meaning of Rule 13d-3 promulgated under the Exchange Act) at least 51% of
the outstanding equity ownership interests in the Bank or Company and (B)
at least 51% of the securities entitled to vote generally in the election
of directors of the entity resulting from such transaction are beneficially
owned (within the meaning of Rule 13d-3 promulgated under the Exchange Act)
in substantially the same relative proportions by persons who, immediately
prior to such transaction, beneficially owned (within the meaning of Rule
13d-3 promulgated under the Exchange Act) at least 51% of the securities
entitled to vote generally in the election of directors of the Bank or
Company;
(vi) A proxy statement shall be distributed soliciting proxies from
stockholders of the Company, by someone other than the current management
of the Company, seeking stockholder approval of a plan of reorganization,
merger or consolidation of the Company or Bank or similar transaction with
one or more corporations as a result of which the outstanding shares of the
class of securities then subject to such plan or transaction are exchanged
for or converted into cash or property or securities not issued by the Bank
or the Company; or
(vii) A tender offer is completed for 20% or more of the voting
securities of the Bank or Company then outstanding.
The "Change in Control Date" shall mean the date during the Employment Period on
which a Change in Control occurs. Anything in this Agreement to the contrary
notwithstanding, if the Executive's employment with the Company is terminated
and if it is reasonably demonstrated by the Executive that such termination of
employment (1) was at the request of a third party who has taken steps
reasonably calculated to effect a Change in Control or (2) otherwise arose in
connection with or anticipation of a Change in Control, then for all purposes of
this Agreement the "Change in Control Date" shall mean the date immediately
prior to the date of such termination of employment.
(b) If any of the events described in Section 5(a)
constituting a Change in Control have occurred or the Board has determined that
a Change in Control has occurred, the Executive shall be entitled to the
payments and the benefits provided below on the Change in Control Date. The
amounts payable and the benefits to be provided under this Section 5(b) to the
Executive shall consist of the payments and benefits that would be due to the
Executive and the Executive's family under Section 4(b) as if an Event of
Termination under Section 4(a) had occurred on the Change in Control Date and
that for purposes of this Section 5(b), the term Unexpired Employment Period
shall mean three years from the Change in Control Date. For purposes of
determining the payments and benefits due under this Section 5(b), when
calculating the payments due and benefits to be provided for the Unexpired
Employment Period, it shall be assumed that for each year of the remaining term
of this Agreement, the Executive would have received (i) an annual increase in
Base Salary equal to the average percentage increase in Base Salary received by
the Executive for the three-year period ending with the earlier of (x) the year
in which the Change in Control Date occurs or (y) the year during which a
definitive agreement, if any, governing the Change in Control is executed, with
the first such increase effective as of the January 1st next following such
three-year period and the second and third such increases effective as of the
next two anniversaries of such January 1st, (ii) a bonus or other incentive
compensation equal to the highest percentage rate of bonus or incentive
compensation paid to the Executive during the three-year period referred to in
clause (i) of this Section 5(b) times the Base Salary that the Executive would
have been paid during the remaining term of this Agreement including the assumed
increases referred to in clause (i) of this Section 5(b), (iii) the maximum
contributions that could be made by or on behalf of the Executive with respect
to any employee benefit plans and programs maintained by the Company and the
Bank based upon the Base Salary and, if applicable, the bonus or other incentive
compensation, respectively, that the Executive would have been paid during the
remaining term of this Agreement including the assumed increases referred to in
clauses (i) and (ii) of this Section 5(b), and (iv) the present value of the
pension benefits to which the Executive is entitled under Section 4(b)(vi) with
respect to the RP and the BRP (and under any other qualified and non-qualified
defined benefit plans maintained by the Bank or the Company covering the
Executive) determined as if he had continued working for the Bank during the
remaining Unexpired Employment Period and based upon the Base Salary and, if
applicable, the bonus or other incentive compensation, respectively, that the
Executive would have been paid during the remaining term of this Agreement
including the assumed increases referred to in clauses (i) and (ii) of this
Section 5(b). The benefits to be provided under, and the amounts payable
pursuant to, this Section 5 shall be provided and be payable without regard to
proof of damages and without regard to the Executive's efforts, if any, to
mitigate damages. The Company and the Executive hereby stipulate that the
damages which may be incurred by the Executive following any Change in Control
are not capable of accurate measurement as of the date first above written and
that such liquidated damages constitute reasonable damages under the
circumstances.
(c) Payments to the Executive under Section 5(b) shall be made
on the Change in Control Date. Such payments shall be made regardless of whether
the Executive's employment terminates.
6. TERMINATION FOR DISABILITY.
(a) In the event of Termination for Disability, the Executive
shall receive the benefits provided in Section 6(b); provided, however, that the
benefits provided under Section 6(b) shall not be deemed to be in lieu of the
benefits he is otherwise entitled as a former employee under the Bank or
Company's employee plans and programs. For purposes of this Agreement, the
Executive may be terminated for disability only if (i) the Executive shall have
been absent from his duties with the Company on a full-time basis for at least
six consecutive months, or (ii) a majority of the members of the Board acting in
good faith determine that, based upon competent and independent medical evidence
presented by a physician or physicians agreed upon by the parties, the
Executive's physical or mental condition is such that he is totally and
permanently incapable of engaging in any substantial gainful employment based
upon his education, training and experience; provided, however, that on and
after the earliest date on which a Change in Control of the Bank or Company as
defined in Section 5 occurs, such a determination shall require the affirmative
vote of at least three-fourths of the members of the Board acting in good faith
and such vote shall not be made prior to the expiration of a 60-day period
following the date on which the Board shall, by written notice to the Executive,
furnish him a statement of its grounds for proposing to make such determination,
during which period the Executive shall be afforded a reasonable opportunity to
make oral and written presentations to the members of the Board, and to be
represented by his legal counsel at such presentations, to refute the grounds
for the proposed determination.
(b) The Company will pay the Executive as Disability pay, a
bi-weekly payment equal to 100% of the Executive's bi-weekly annual rate of Base
Salary in effect on the date of the Executive's Termination for Disability. In
addition, the Company will cause to be continued insurance coverage, including
group life, health (including hospitalization, medical and major medical),
dental, accidental death and dismemberment, travel accident and short-term
disability coverage substantially identical to the coverage maintained by the
Bank or the Company for the Executive prior to his Termination for Disability.
The Disability pay and coverages shall commence on the effective date of the
Executive's termination and shall cease upon the earliest to occur of: (i) the
date the Executive returns to the full-time employment of the Company, in the
same capacity as he was employed prior to his Termination for Disability and
pursuant to an employment agreement between the Executive and the Company; (ii)
the Executive's full-time employment by another employer; (iii) the Executive's
attaining the normal age of retirement or receiving benefits under the RP or
other defined benefit pension plan of the Bank or the Company; (iv) the
Executive's death; (v) the Executive's eligibility to collect payments under the
disability provision of the RP or other defined benefit pension plan of the Bank
or the Company; or (vi) the expiration of the term of this Agreement.
(c) Notwithstanding the foregoing, there will be no reduction
in the compensation otherwise payable to the Executive during any period during
which the Executive is incapable of performing his duties hereunder by reason of
temporary disability.
7. TERMINATION UPON DEATH.
The Executive's employment shall terminate automatically upon
the Executive's death during the Employment Period. In such event, the Executive
and the Executive's legal representatives shall be entitled to the following:
(i) payment of the Executive's "Accrued Obligations;"
(ii) the continuation of all benefits to the Executive's family and
dependents that would have been provided if the Executive had been entitled
to the benefits under Section 4(b)(ii), (iii) and (iv); and
(iii) the timely payment of any other amounts or benefits required to
be paid or provided or which the Executive is eligible to receive under any
plan, program, policy or practice or contract or agreement of the Company
and its affiliated companies (all such other amounts and benefits shall be
hereinafter referred to as the "Other Benefits");
provided, however, that if the Executive dies while in the employment of the
Company, the amount of life insurance provided to the Executive by the Company
shall not be less than the lesser of $200,000 or three times the Executive's
then annual Base Salary. Accrued Obligations shall be paid to the Executive's
estate or beneficiary, as applicable, in a lump sum cash payment within ten days
of the Date of Termination. With respect to the provision of Other Benefits
after the Change of Control Date, the term Other Benefits as utilized in this
Section 7 shall include, without limitation, that the Executive's estate and/or
beneficiaries shall be entitled to receive, benefits at least equal to the most
favorable benefits provided by the Company and affiliated companies to the
estates and beneficiaries of peer executives of the Company and such affiliates
companies under such plans, programs, practices and policies relating to death
benefits, if any, as in effect with respect to other peer executives and their
beneficiaries at any time during the 120-day period immediately preceding the
Change in Control Date.
8. TERMINATION UPON RETIREMENT.
Termination by the Company of the Executive based on
"Retirement" shall mean termination in accordance with the Company's or the
Bank's retirement policy or in accordance with any retirement arrangement
established with the Executive's consent with respect to him. Upon termination
of the Executive upon Retirement, the Executive shall be entitled to all
benefits under the RP and any other retirement plan of the Bank or the Company
and other plans to which the Executive is a party, and the Executive shall be
entitled to the benefits, if any, that would be payable to him as a former
employee under the Bank's or the Company's employee benefit plans and programs
and compensation plans and programs.
9. TERMINATION FOR CAUSE.
The terms "Termination for Cause" or "Cause" shall mean
termination because of the Executive's personal dishonesty, willful misconduct,
any breach of fiduciary duty involving personal profit, intentional failure to
perform stated duties, conviction of a felony with respect to the Bank or the
Company or any material breach of this Agreement. For purposes of this Section,
no act, or the failure to act, on the Executive's part shall be "willful" unless
done, or omitted to be done, in bad faith and without reasonable belief that the
action or omission was in the best interest of the Company or its affiliates.
Any act, or failure to act, based upon authority given pursuant to a resolution
duly adopted by the Board or based upon the written advice of counsel for the
Company shall be conclusively presumed to be done, or omitted to be done, by the
Executive in good faith and in the best interests of the Company.
Notwithstanding the foregoing, the Executive shall not be deemed to have been
terminated for Cause unless and until there shall have been delivered to him a
Notice of Termination which shall include a copy of a resolution duly adopted by
the affirmative vote of not less than three-fourths of the members of the Board
at a meeting of the Board called and held for that purpose (after reasonable
notice to the Executive and an opportunity for him, together with counsel, to be
heard before the Board), finding that in the good faith opinion of the Board,
the Executive was guilty of conduct justifying Termination for Cause and
specifying the particulars thereof in detail. The Executive shall not have the
right to receive compensation or other benefits for any period after Termination
for Cause.
10. NOTICE.
(a) Any purported termination by the Company or by the
Executive shall be communicated by a Notice of Termination to the other party
hereto. For purposes of this Agreement, a "Notice of Termination" shall mean a
written notice which shall indicate the specific termination provision in this
Agreement relied upon and shall set forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of the Executive's
employment under the provision so indicated.
(b) Subject to Section 10(c), "Date of Termination" shall mean
(A) if the Executive's employment is terminated for Disability, 30 days after a
Notice of Termination is given (provided that he shall not have returned to the
performance of his duties on a full-time basis during such 30-day period), and
(B) if his employment is terminated for any other reason, the date specified in
the Notice of Termination (which, in the case of a Termination for Cause, shall
be immediate).
(c) If, within 30 days after any Notice of Termination is
given, the party receiving such Notice of Termination notifies the other party
that a dispute exists concerning the termination, then, except upon the
occurrence of a Change in Control and voluntary termination by the Executive in
which case the Date of Termination shall be the date specified in the Notice,
the Date of Termination shall be the date on which the dispute is finally
determined, either by mutual written agreement of the parties, by a binding
arbitration award, or by a final judgment, order or decree of a court of
competent jurisdiction (the time for appeal therefrom having expired and no
appeal having been perfected) and provided further that the Date of Termination
shall be extended by a notice of dispute only if such notice is given in good
faith and the party giving such notice pursues the resolution of such dispute
with reasonable diligence. Notwithstanding the pendency of any such dispute, the
Company will continue to pay the Executive his full compensation in effect when
the notice giving rise to the dispute was given (including, but not limited to,
Base Salary) and continue him as a participant in all compensation, benefit and
insurance plans in which he was participating when the notice of dispute was
given, until the dispute is finally resolved in accordance with this Agreement.
Amounts paid under this Section are in addition to all other amounts due under
this Agreement and shall not be offset against or reduce any other amounts due
under this Agreement.
(d) The Company may terminate the Executive's employment at
any time, but any termination by the Company, other than Termination for Cause,
shall not prejudice the Executive's right to compensation or other benefits
under this Agreement or under any other benefit or compensation plans or
programs maintained by the Bank or the Company from time to time. The Executive
shall not have the right to receive compensation or other benefits for any
period after a Termination for Cause as defined in Section 9 hereinabove.
(e) Any communication to a party required or permitted under
this Agreement, including any notice, direction, designation, consent,
instruction, objection or waiver, shall be in writing and shall be deemed to
have been given at such time as it is delivered personally, or five days after
mailing if mailed, postage prepaid, by registered or certified mail, return
receipt requested, addressed to such party at the address listed below or at
such other address as one such party may by written notice specify to the other
party, as follows. If to the Executive, (address omitted); if to the Company,
JSB Financial, Inc., 303 Merrick Road, Lynbrook, New York 11563, Attention:
President, with a copy to Thacher Proffitt & Wood, Two World Trade Center, New
York, New York 10048, Attention: Douglas J. McClintock, Esq.
11. POST-TERMINATION OBLIGATIONS.
(a) All payments and benefits to the Executive under this
Agreement shall be subject to the Executive's compliance with paragraph (b) of
this Section 11 during the term of this Agreement and for one full year after
the expiration or termination hereof.
(b) The Executive shall, upon reasonable notice, furnish such
information and assistance to the Company as may reasonably be required by the
Company in connection with any litigation in which it or any of its subsidiaries
or affiliates is, or may become, a party; provided, that the Company reimburses
the Executive for the reasonable value of his time in connection therewith and
for any out-of-pocket costs attributable thereto.
12. COVENANT NOT TO COMPETE.
The Executive hereby covenants and agrees that for a period of
one year following his Date of Termination, if such termination occurs prior to
the end of the term of the Agreement, he shall not, without the written consent
of the Board, become an officer, employee, consultant, director or trustee of
any savings bank, savings and loan association, savings and loan holding
company, bank or bank holding company if such position (a) entails working in
(or providing services in) New York City, Nassau or Suffolk counties or (b)
entails working in (or providing services in) any other county that is both (i)
within the Bank's primary trade (or operating) area at the time in question,
which shall be determined by reference to the Bank's business plan as in effect
from time to time, and (ii) in which the Bank engages in material or substantial
deposit-taking functions or lending activities at such time; provided, however,
that this Section 12 shall not apply if the Executive's employment is terminated
for the reasons set forth in any of Sections 4, 5, 6 or 8.
13. SOURCE OF PAYMENTS.
All payments provided in this Agreement shall be timely paid
in cash or check from the general funds of the Company.
14. EFFECT ON PRIOR AGREEMENTS.
This Agreement contains the entire understanding between the
parties hereto and supersedes any prior employment agreement between the Company
or any predecessor of the Company and the Executive, except that this Agreement
shall not affect or operate to reduce any benefit or compensation inuring to the
Executive of a kind elsewhere provided. No provisions of this Agreement shall be
interpreted to mean that the Executive is subject to receiving fewer benefits
than those available to him without reference to this Agreement.
15. EFFECT OF ACTION UNDER BANK AGREEMENT.
Notwithstanding any provision herein to the contrary, to the
extent that full compensation payments and benefits are paid to or received by
the Executive under the Bank Agreement, such compensation payments and benefits
paid by the Bank will be deemed to satisfy the corresponding obligations of the
Company under this Agreement.
16. NO ATTACHMENT.
Except as required by law, no right to receive payments under
this Agreement shall be subject to anticipation, commutation, alienation, sale,
assignment, encumbrance, charge, pledge, or hypothecation, or to execution,
attachment, levy, or similar process or assignment by operation of law, and any
attempt, voluntary or involuntary, to affect any such action shall be null,
void, and of no effect.
17. MODIFICATION AND WAIVER.
(a) This Agreement may not be modified or amended except by an
instrument in writing signed by the parties hereto.
(b) No term or condition of this Agreement shall be deemed to
have been waived, nor shall there be any estoppel against the enforcement of any
provision of this Agreement, except by written instrument of the party charged
with such waiver or estoppel. No such written waiver shall be deemed a
continuing waiver unless specifically stated therein, and each such waiver shall
operate only as to the specific term or condition waived and shall not
constitute a waiver of such term or condition for the future as to any act other
than that specifically waived.
18. SUCCESSOR AND ASSIGNS.
This Agreement will inure to the benefit of and be binding
upon the Executive, his legal representatives and testate or intestate
distributees, and the Company, its successors and assigns, including any
successor by purchase, merger, consolidation or otherwise or a statutory
receiver or any other person or firm or corporation to which all or
substantially all of the assets and business of the Company may be sold or
otherwise transferred. Any such successor of the Company shall be deemed to have
assumed this Agreement and to have become obligated hereunder to the same extent
as the Company and the Executive's obligations hereunder shall continue in favor
of such successor.
19. SEVERABILITY.
If, for any reason, any provision of this Agreement, or any
part of any provision, is held invalid, such invalidity shall not affect any
other provision of this Agreement or any part of such provision not held so
invalid, and each such other provision and part thereof shall to the full extent
consistent with law continue in full force and effect.
20. HEADINGS FOR REFERENCE ONLY.
The headings of Sections and paragraphs herein are included
solely for convenience of reference and shall not control the meaning or
interpretation of any of the provisions of this Agreement. Any reference in this
Agreement to a Section or Subsection shall refer to a Section or Subsection of
this Agreement, except as otherwise specified.
21. GOVERNING LAW.
This Agreement shall be governed by the laws of the State of
New York, without reference to conflicts of law principles.
22. INDEMNIFICATION AND ATTORNEYS' FEES.
(a) The Company shall indemnify, hold harmless and defend the
Executive against reasonable costs, including legal fees, incurred by him in
connection with his consultation with legal counsel or arising out of any
action, suit or proceeding in which he may be involved, as a result of his
efforts, in good faith, to defend or enforce the terms of this Agreement. The
Company agrees to pay all such costs as they are incurred by the Executive, to
the full extent permitted by law, and without regard to whether the Company
believes that it has a defense to any action, suit or proceeding by the
Executive or that it is not obligated for any payments under this Agreement.
(b) In the event any dispute or controversy arising under or
in connection with the Executive's termination is resolved in favor of the
Executive, whether by judgment, arbitration or settlement, the Executive shall
be entitled to the payment of all back-pay, including salary, bonuses and any
other cash compensation, fringe benefits and any compensation and benefits due
the Executive under this Agreement.
(c) The Company shall indemnify, hold harmless and defend the
Executive for any act taken or not taken, or any omission or failure to act, by
him in good faith while performing services for the Company or the Bank to the
same extent and upon the same terms and conditions as other similarly situated
officers and directors of the Company or the Bank. If and to the extent that the
Company or the Bank, maintains, at any time during the Employment Period, an
insurance policy covering the other officers and directors of the Company or the
Bank against lawsuits, the Company or the Bank shall use its best efforts to
cause the Executive to be covered under such policy upon the same terms and
conditions as other similarly situated officers and directors.
23. TAX INDEMNIFICATION.
(a) This Section 23 shall apply if 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 occurs within the meaning of section 280G
of the Code. If this Section 23 applies, then with respect to any taxable year
in which the Executive shall be liable for the payment of an excise tax under
section 4999 of the Code with respect to any payment in the nature of
compensation made by the Company, the Bank or any direct or indirect subsidiary
or affiliate of the Company to (or for the benefit of) the Executive, the
Company shall pay to the Executive an amount equal to X determined under the
following formula:
X = E x P
-------------------------------------------------
1 - [(FI x (1 - SLI)) + SLI + E + M]
where
E = the rate at which the excise tax is assessed under
section 4999 of the Code;
P = the amount with respect to which such excise tax is
assessed, determined without regard to this Section
23;
FI = the highest effective marginal rate of income tax
applicable to the Executive under the Code for the
taxable year in question (taking into account any
phase-out or loss of deductions, personal exemptions
and other similar adjustments);
SLI = the sum of the highest effective marginal rates of
income tax applicable to the Executive under all
applicable state and local laws for the taxable year
in question (taking into account any phase-out or
loss of deductions, personal exemptions and other
similar adjustments); and
M = the highest marginal rate of Medicare tax
applicable to the Executive under the Code for the
taxable year in question.
Attached as Appendix A to this Agreement is an example that illustrates
application of this Section 23. Any payment under this Section 23 shall be
adjusted so as to fully indemnify the Executive on an after-tax basis so that
the Executive would be in the same after-tax financial position in which he
would have been if no excise tax under section 4999 of the Code had been
imposed. With respect to any payment in the nature of compensation that is made
to (or for the benefit of) the Executive under the terms of this Agreement or
otherwise and on which an excise tax under section 4999 of the Code will be
assessed, the payment determined under this Section 23(a) shall be made to the
Executive on the earlier of (i) the date the Company, the Bank or any direct or
indirect subsidiary or affiliate of the Company is required to withhold such
tax, or (ii) the date the tax is required to be paid by the Executive.
(b) Notwithstanding anything in this Section 23 to the
contrary, in the event that the Executive's liability for the excise tax under
section 4999 of the Code for a taxable year is subsequently determined to be
different than the amount determined by the formula (X + P) x E, where X, P and
E have the meanings provided in Section 23(a), the Executive or the Company, as
the case may be, shall pay to the other party at the time that the amount of
such excise tax is finally determined, an appropriate amount, plus interest,
such that the payment made under Section 23(a), when increased by the amount of
the payment made to the Executive under this Section 23(b) by the Company, or
when reduced by the amount of the payment made to the Company under this Section
23(b) by the Executive, equals the amount that, it is finally determined, should
have properly been paid to the Executive under Section 23(a). The interest paid
under this Section 23(b) shall be determined at the rate provided under section
1274(b)(2)(B) of the Code. To confirm that the proper amount, if any, was paid
to the Executive under this Section 23, the Executive shall furnish to the
Company a copy of each tax return which reflects a liability for an excise tax
payment made by the Company, at least 20 days before the date on which such
return is required to be filed with the Internal Revenue Service.
24. NON-EXCLUSIVITY OF RIGHTS.
Except as otherwise provided herein, nothing in this Agreement
shall prevent or limit the Executive's continuing or future participation in any
plan, program, policy or practice provided by the Company or any of its
affiliated companies and for which the Executive may qualify, nor shall anything
herein limit or otherwise affect such rights as the Executive may have under any
contract or agreement with the Company or any of its affiliated companies.
Amounts which are vested benefits or which the Executive is otherwise entitled
to receive under any plan, policy, practice or program of or any contract or
agreement with the Company or any of its affiliated companies at or subsequent
to the Date of Termination shall be payable in accordance with such plan,
policy, practice or program or contract or agreement except as explicitly
modified by this Agreement. Notwithstanding the foregoing, in the event of a
termination of employment, the amounts provided in Section 4 or Section 5, as
applicable, shall be the Executive's sole remedy for any purported breach of
this Agreement by the Company.
25. MITIGATION; OTHER CLAIMS.
The Company's obligation to make the payments provided for in
this Agreement and otherwise to perform its obligations hereunder shall not be
affected by any set-off, counterclaim, recoupment, defense or other claim, right
or action which the Company may have against the Executive or others. In no
event shall the Executive be obligated to seek other employment or take any
other action by way of mitigation of the amounts payable to the Executive under
any of the provisions of this Agreement and such amounts shall not be reduced
whether or not the Executive obtains other employment.
26. CONFIDENTIAL INFORMATION.
The Executive shall hold in a fiduciary capacity for the
benefit of the Company all secret or confidential information, knowledge or data
relating to the Company or any of its affiliated companies, and their respective
businesses, which shall have been obtained by the Executive during the
Executive's employment by the Company or any of its affiliated companies and
which shall not be or become public knowledge (other than by acts by the
Executive or representatives of the Executive in violation of this Agreement).
After termination of the Executive's employment with the Company, the Executive
shall not, without the prior written consent of the Company or as may otherwise
be required by law or legal process, communicate or divulge any such
information, knowledge or data to anyone other than the Company and those
designated by it. For purposes of this Agreement, secret and confidential
information, knowledge or data relating to the Company or any of its affiliates,
and their respective business, shall not include any information that is public,
publicly available or available through trade association sources.
Notwithstanding any other provision of this Agreement to the contrary, the
Executive acknowledges and agrees that in the event of a violation or threatened
violation of any of the provisions of this Section 26, the Company shall have no
adequate remedy at law and shall therefore be entitled to enforce each such
provision by temporary or permanent injunction or mandatory relief obtained in
any court of competent jurisdiction without the necessity of proving damages or
posting any bond or other security, and without prejudice to any other remedies
that may be available at law or in equity.
27. ACCESS TO DOCUMENTS.
The Executive shall have the right to obtain copies of any
Company or Bank documents that the Executive reasonably believes, in good faith,
are necessary or appropriate in determining his entitlement to, and the amount
of, payments and benefits under this Agreement.
1. GUARANTEE.
The Company hereby agrees to guarantee the payment by the Bank of any
benefits and compensation to which the Executive is or may be entitled to under
the terms and conditions of the Bank Agreement.
1. REQUIRED REGULATORY PROVISIONS.
Notwithstanding anything herein contained to the contrary, any payments
to the Executive by the Company, whether pursuant to this Agreement or
otherwise, are subject to and conditioned upon their compliance with section
18(k) of the Federal Deposit Insurance Act, as amended, 12 U.S.C. ss.1828(k),
and any regulations promulgated thereunder.
<PAGE>
SIGNATURES
IN WITNESS WHEREOF, JSB FINANCIAL, INC. has caused this
Agreement to be executed and its seal to be affixed hereunto by its duly
authorized officer, and the Executive has signed this Agreement, on the 22nd day
of June, 1999.
ATTEST: JSB FINANCIAL, INC.
By:
Joanne Corrigan Edward P. Henson
- --------------- ----------------
Joanne Corrigan Edward P. Henson
Secretary President
[Seal]
WITNESS:
John J. Conroy
--------------
John J. Conroy
<PAGE>
STATE OF NEW YORK )
: ss.:
COUNTY OF NASSAU )
On this 22nd day of June, 1999, before me personally came Edward P.
Henson, to me known, who, being by me duly sworn, did depose and say that he is
the President of JSB Financial, Inc., the Delaware corporation described in and
which executed the foregoing instrument; that he knows the seal of said
corporation; that the seal affixed to said instrument is such seal; that it was
so affixed by order of the Board of Directors of said corporation; and that he
signed his name thereto by like order.
Name:
Notary Public
STATE OF NEW YORK )
: ss.:
COUNTY OF NASSAU )
On this 22nd day of June, 1999, before me personally came John J.
Conroy, to me known, and known to me to be the individual described in the
foregoing instrument, who, being by me duly sworn, did depose and say that he
resides at the address set forth in said instrument, and that he signed his name
to the foregoing instrument.
Name:
Notary Public
<PAGE>
APPENDIX A
----------
1. INTRODUCTION. Sections 280G and 4999 of the Internal Revenue Code of
1986, as amended ("Code"), impose a 20% non-deductible federal excise tax on a
person if the payments and benefits in the nature of compensation to or for the
benefit of that person that are contingent on a change in the ownership or
effective control of the Company or the Bank or in the ownership of a
substantial portion of the assets of the Company or the Bank (such payments and
benefits are considered "parachute payments" under section 280G) exceed three
times the person's "base amount" under section 280G. Section 23 of the Agreement
provides for the Executive to receive a tax indemnification payment (sometimes
referred to as a "gross-up" payment) if the payments and benefits in the nature
of compensation to or for the benefit of the Executive that are considered
parachute payments cause the imposition of an excise tax under section 4999 of
the Code. Capitalized terms in this Appendix A that are not defined in this
Appendix A have the meaning used in the Employment Agreement with the Executive.
2. PURPOSE. The purpose of this Appendix A is to illustrate how the tax
indemnification or gross-up payment would be computed. The amounts, figures and
rates used in this example are meant to be illustrative and do not reflect the
actual payments and benefits that would be made to the Executive under this
Agreement. For purposes of this example, it is assumed that a change in control
within the meaning of section 280G of the Code has occurred and that:
(a) The value of the insurance benefits required to be provided to a
hypothetical employee "Z" under sections 4(b)(iii) and 5(b) of the
Agreement for medical, dental, life and other insurance benefits
during the unexpired employment period is $23,000.
(b) The annual rate of Z's salary covered by the Agreement is $100,000,
and Z received annual salary increases of 4%, 5% and 6% (i.e., a
three-year average of 5%) for each of the prior three years. Hence,
the amount payable under sections 4(b)(v) and 5(b) of the Agreement
for salary during the unexpired employment period would be $331,013
[$105,000 + $110, 250 + $115,763].
(c) Z received annual bonuses equal to 20% of his salary in each of the
prior three years. Hence, the amount payable under sections 4(b)(v)
and 5(b) of the Agreement for bonuses during the unexpired employment
period would be $66,203 [20% x ($105,000 + $110,250 + $115,763)].
(d) The amount payable under sections 4(b)(vi) and 5(b) of the Agreement
for the present value of the additional RP and BRP accruals during the
unexpired employment period would be $45,000.
(e) The amount payable under sections 4(b)(vii) and 5(b) of the Agreement
for additional contributions to the ESOP, 401(k) Plan and BRP during
the unexpired employment period would be $20,000.
(f) Z's base amount (i.e., average W-2 wages for the five-year period
preceding the change in control) is $87,000.
3. DETERMINE IF Z IS SUBJECT TO AN EXCISE TAX. Z's parachute payments would
total $485,216 [$23,000 + $331,013 + $66,203 + $45,000 + $20,000]. Three times
Z's base amount is $261,000 [3 x $87,000]; accordingly, Z is subject to an
excise tax because $485,216 exceeds $261,000. Z's "excess parachute payments"
under section 280G of the Code are equal to Z's total parachute payments minus
one times Z's base amount, or $398,216 [$485,216 - $87,000]. If Z were not
protected by section 23 of the Agreement, Z would be subjected to an excise tax
of $79,643 [$398,216 x 20%], in addition to ordinary income taxes.
4. Compute Z's Tax Indemnification Payment. Z's tax indemnification payment
under section 23 of the Agreement would be computed pursuant to the following
formula:
E x P .2 x $398,216
X = ------------------------------------ = ----------------------------------
1 - [(FI x (1 - SLI)) + SLI + E + M] 1 - [.368874 + .0685 + .2 + .0145]
where
E = excise tax rate under section 4999 of the Code [20%];
P = the amount with respect to which such excise tax is
assessed determined without regard to section 23 of
the Agreement [$398,216];
FI = the highest effective marginal rate of income tax
applicable to Z under the Code for the taxable year
in question [assumed to be 39.6% in this example, but
in actuality, the rate is adjusted to take into
account any phase-out or loss of deductions, personal
exemptions and other similar adjustments];
SLI = the sum of the highest effective marginal rates of
income tax applicable to Z under applicable state and
local laws for the taxable year in question [assumed
to be 6.85% in this example, but in actuality, the
rate is adjusted to take into account any phase-out
or loss of deductions, personal exemptions and other
similar adjustments]; and
M = the highest marginal rate of Medicare tax applicable
to Z under the Code for the year in question [1.45%].
In this example, the amount of tax indemnification payment due to Z under
section 23 of the Agreement would be $79,643 [.2 x $398,216] divided by 0.348126
[1 - (.368874 + .0685 + .2 + .0145)], or $228,777. Such amount would be payable
in addition to the other amounts payable under the Agreement in order to put Z
in approximately the same after-tax position that Z would have been in if there
were no excise tax imposed under sections 280G and 4999 of the Code. The tax
indemnification to Z of $228,777 would in turn be a parachute payment subject to
excise tax under sections 280G and 4999. Accordingly, Z's actual excess
parachute payment would be $626,993 [$485,216 - $87,000) + $228,777)] resulting
in an excise tax of $125,399 [$626,993 x 20%]. The difference between the
indemnification. payment and the excise tax [$103,378] is an amount equal to the
sum of the income and other applicable taxes due on the indemnification payment
[($228,777 x .368874) + ($228,777 x .0685) + ($228,777 x .0145)], confirming
that the amount of the tax indemnification payment is sufficient to satisfy all
of Z's tax liability resulting from the excess parachute payment.
JSB FINANCIAL, INC.
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT ("Agreement") is made and entered
into as of June 22, 1999 by and between JSB FINANCIAL, INC., a business
corporation organized and operating under the laws of the State of Delaware and
having its principal office at 303 Merrick Road, Lynbrook, New York 11563
("Company"), and Joanne Corrigan, an individual residing at (address omitted)
("Executive"). This Agreement amends, restates and supersedes the Employment
Agreement dated as of June 27, 1990 and the Supplemental Employment Agreement
dated as of July 9, 1996 by and between the Company and the Executive. Any
reference to the "Bank" in this Agreement shall mean Jamaica Savings Bank FSB
and any successor thereto.
W I T N E S S E T H :
WHEREAS, the Executive is currently serving as Corporate
Secretary of the Company, and the Company wishes to assure itself of the
services of the Executive for the period provided in this Agreement; and
WHEREAS, the Executive is willing to serve in the employ of
the Company on the terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the premises and the
mutual covenants and conditions hereinafter set forth, the Company and the
Executive hereby agree as follows:
1. POSITION AND RESPONSIBILITIES.
During the period of her employment hereunder, the Executive
agrees to serve as Corporate Secretary of the Company. The Executive shall
render administrative and management services to the Company such as are
customarily performed by persons situated in a similar executive capacity and
shall perform such other duties not inconsistent with her title and office as
may be assigned to her by or under the authority of the Board of Directors of
the Company (the "Board"). The Executive shall have such authority as is
necessary or appropriate to carry out her assigned duties. Failure to re-elect
the Executive as Corporate Secretary of the Company (or a more senior position)
without the consent of the Executive shall constitute a breach of this
Agreement.
2. TERMS.
(a) The period of the Executive's employment under this
Agreement shall be deemed to have commenced as of the date first above written
(the "Effective Date") and shall continue for a period of 36 full calendar
months thereafter. Commencing with the Effective Date, the term of this
Agreement shall be extended for one additional day each day until such time as
the Board or the Executive elects not to extend the term of the Agreement
further by giving written notice to the other party in accordance with Section
10, in which case the term of this Agreement shall become fixed and shall end on
the third anniversary of the date of such written notice. For purposes of this
Agreement, the term "Employment Period" shall mean the term of this Agreement
plus such extensions as are provided herein.
(b) During the period of her employment hereunder, except for
periods of absence occasioned by illness, disability, holidays, reasonable
vacation periods and reasonable leaves of absence, the Executive shall devote
substantially all of her business time, attention, skill and efforts to the
faithful performance of her duties hereunder including (i) service as Corporate
Secretary of the Company, and, if duly elected, a Director of the Company, (ii)
performance of such duties not inconsistent with her title and office as may be
assigned to her by or under the authority of the Board or a more senior
executive officer, and (iii) such other activities and services related to the
organization, operation and management of the Company. During the Employment
Period it shall not be a violation of this Agreement for the Executive to (A)
serve on corporate, civic, industry or charitable boards or committees, (B)
deliver lectures, fulfill speaking engagements or teach at educational
institutions and (C) manage personal investments, so long as such activities do
not significantly interfere with the performance of the Executive's
responsibilities as an employee of the Company in accordance with this
Agreement. It is expressly understood and agreed that to the extent that any
such activities have been conducted by the Executive prior to the Effective
Date, the continued conduct of such activities (or the conduct of activities
similar in nature and scope thereto) subsequent to the Effective Date shall not
thereafter be deemed to interfere with the performance of the Executive's
responsibilities to the Company. It is also expressly agreed that the Executive
may conduct activities subsequent to the Effective Date that are generally
accepted for an executive in her position, regardless of whether conducted by
the Executive prior to the Effective Date.
(c) Notwithstanding anything herein contained to the contrary:
(i) the Executive's employment with the Company may be terminated by the Company
or the Executive during the term of this Agreement, subject to the terms and
conditions of this Agreement; and (ii) nothing in this Agreement shall mandate
or prohibit a continuation of the Executive's employment following the
expiration of the term of this Agreement upon such terms and conditions as the
Board and the Executive may mutually agree.
(d) Upon the termination of the Executive's employment with
the Company, the daily extensions provided pursuant to Section 2(a) shall cease
(if such extensions have not previously ceased), and, if such termination is
under circumstances described in Section 4(a) or Section 5(b), the term
"Unexpired Employment Period" shall mean the period of time commencing from the
date of such termination and ending on the last day of the Employment Period
computed with reference to all extensions prior to such termination.
(e) In the event that the Executive's duties and
responsibilities with respect to the Bank are temporarily or permanently
terminated pursuant to Section 9 of the Employment Agreement dated June 22,
1999, as it may be amended from time to time, between the Executive and the Bank
("Bank Agreement") and the course of conduct upon which such termination is
based would not constitute grounds for Termination for Cause under Section 9,
then the Executive shall, to the extent practicable, assume such duties and
responsibilities formerly performed at the Bank as part of her duties and
responsibilities as Corporate Secretary of the Company. Nothing in this
provision shall be interpreted as restricting the Company's right to remove the
Executive for Cause in accordance with Section 9.
3. COMPENSATION AND REIMBURSEMENT.
(a) The compensation specified under this Agreement shall
constitute the salary and benefits paid for the duties described in Section 1.
The Company shall pay the Executive as compensation a salary at an annual rate
of not less than (salary omitted) per year or such higher rate as may be
prescribed by or under the authority of the Board ("Base Salary"). The Base
Salary payable under this Section 3 shall be paid in approximately equal
installments in accordance with the Company's customary payroll practices.
During the period of this Agreement, the Executive's Base Salary shall be
reviewed at least annually; the first such review will be made no later than one
year from the date of this Agreement. Such review shall be conducted by a
Committee designated by the Board, and the Board may increase the Executive's
Base Salary, which increased amount shall be considered the Executive's "Base
Salary" for purposes of this Agreement. In no event shall the Executive's annual
rate of Base Salary under this Agreement in effect at a particular time be
reduced without her prior written consent. In addition to the Base Salary
provided in this Section 3(a), the Company shall provide the Executive at no
cost to the Executive with all such other benefits as are provided uniformly to
permanent full-time employees of the Bank.
(b) The Company will provide the Executive with employee
benefit plans, arrangements and perquisites substantially equivalent to those in
which the Executive was participating or otherwise deriving benefit from
immediately prior to the beginning of the term of this Agreement, and the
Company will not, without the Executive's prior written consent, make any
changes in such plans, arrangements or perquisites which would adversely affect
the Executive's rights or benefits thereunder. Without limiting the generality
of the foregoing provisions of this Subsection (b), the Executive will be
entitled to participate in or receive benefits under any employee benefit plans
with respect to which the Executive satisfies the eligibility requirements,
including, but not limited to, the Retirement Plan of Jamaica Savings Bank FSB
("RP"), the Incentive Savings Plan of Jamaica Savings Bank FSB ("ISP"), the
Jamaica Savings Bank FSB Employee Stock Ownership Plan ("ESOP"), the Benefit
Restoration Plan of Jamaica Savings Bank FSB ("BRP"), the JSB Financial, Inc.
1990 Stock Option Plan, the JSB Financial, Inc. 1996 Stock Option Plan,
retirement plans, supplemental retirement plans, pension plans, profit-sharing
plans, group life, health (including hospitalization, medical and major
medical), dental, accidental death and dismemberment, travel accident and
short-term disability insurance plans, or any other employee benefit plan or
arrangement made available by the Company in the future to its senior executives
and key management employees, subject to and on a basis consistent with the
terms, conditions and overall administration of such plans and arrangements. The
Executive will be entitled to incentive compensation and bonuses as provided in
any plan of the Company in which the Executive is eligible to participate.
Nothing paid to the Executive under any such plan or arrangement will be deemed
to be in lieu of other compensation to which the Executive is entitled under
this Agreement.
(c) The Executive's principal place of employment shall be at
the Company's executive offices at the address first above written, or at such
other location in New York City or in Nassau County or Suffolk County at which
the Company shall maintain its principal executive offices, or at such other
location as the Board and the Executive may mutually agree upon. The Company
shall provide the Executive, at her principal place of employment with support
services and facilities suitable to her position with the Company and necessary
or appropriate in connection with the performance of her assigned duties under
this Agreement. The Company shall reimburse the Executive for her ordinary and
necessary business expenses, including, without limitation, fees for memberships
in such clubs and organizations as the Executive and the Board shall mutually
agree are necessary and appropriate for business purposes, and travel and
entertainment expenses, incurred in connection with the performance of her
duties under this Agreement, upon presentation to the Company of an itemized
account of such expenses in such form as the Company may reasonably require.
(d) In the event that the Executive assumes additional duties
and responsibilities pursuant to Section 2(e) by reason of one of the
circumstances contained in Section 2(e), and the Executive receives or will
receive less than the full amount of compensation and benefits formerly entitled
to her under the Bank Agreement, the Company shall assume the obligation to
provide the Executive with her compensation and benefits in accordance with the
Bank Agreement less any compensation and benefits received from the Bank,
subject to the terms and conditions of this Agreement including the Termination
for Cause provisions in Section 9.
4. PAYMENTS TO THE EXECUTIVE UPON AN EVENT OF TERMINATION.
The provisions of this Section shall in all respects be
subject to the terms and conditions stated in Sections 9 and 29.
(a) Upon the occurrence of an Event of Termination (as herein
defined) during the Executive's term of employment under this Agreement, the
provisions of this Section shall apply. As used in this Agreement, an "Event of
Termination" shall mean and include any one or more of the following: (i) the
termination by the Bank or the Company of the Executive's full-time employment
hereunder for any reason other than: following a Change in Control, as defined
in Section 5; for Disability, as defined in Section 6; for Retirement, as
defined in Section 8; for Cause, as defined in Section 9; or upon the
Executive's death; or (ii) unless consented to by the Executive, the Executive's
voluntary resignation from the Company's employ, upon any: (A) failure to elect
or re-elect or to appoint or re-appoint the Executive as Corporate Secretary of
the Company, (B) material adverse change in the Executive's function, duties, or
responsibilities, which change would cause the Executive's position to become
one of lesser responsibility, importance, or scope from the position and
attributes thereof described in Section 1, above (and any such material change
shall be deemed a continuing breach of this Agreement), (C) relocation of the
Executive's principal place of employment by more than 30 miles from its
location at the Effective Date of this Agreement, or a material reduction in the
benefits and perquisites to the Executive from those being provided as of the
Effective Date of this Agreement, (D) liquidation or dissolution of the Bank or
Company, or (E) material breach of this Agreement by the Company. Upon the
occurrence of any event described in clauses (A), (B), (C), (D) or (E), above,
the Executive shall have the right to elect to terminate her employment under
this Agreement by resignation upon written notice pursuant to Section 10 given
within a reasonable period of time not to exceed, except in case of a continuing
breach, four calendar months after the event giving rise to said right to elect.
(b) Upon the occurrence of an Event of Termination as set
forth in Section 4(a), on the Date of Termination, as defined in Section 10, the
Company shall be obligated to pay, or to provide, the Executive, or, in the
event of her subsequent death, to her surviving spouse or such other beneficiary
or beneficiaries as the Executive may designate in writing, or if neither her
estate, as severance pay or liquidated damages, or both, the benefits provided
below and a payment equal to the sum of the payments set forth below:
(i) payment of the sum of (A) the Executive's annual Base Salary
through the Date of Termination to the extent not theretofore paid and (B)
any compensation previously deferred by the Executive (together with any
accrued interest or earnings thereon) and any accrued vacation pay, in each
case to the extent not theretofore paid (the sum of the amounts described
in clauses (A) and (B) shall be hereinafter referred to as the "Accrued
Obligations");
(ii) the benefits, if any, to which the Executive is entitled as a
former employee under the Bank's or Company's employee benefit plans and
programs and compensation plans and programs;
(iii) continued group life, health (including hospitalization, medical
and major medical), dental, accidental death and dismemberment, travel
accident and short-term disability insurance benefits as provided by the
Bank or the Company, in addition to that provided pursuant to Section
4(b)(ii), if and to the extent necessary to provide for the Executive, for
the remaining Unexpired Employment Period, coverage equivalent to the
coverage to which she would have been entitled if she had continued working
for the Company during the remaining Unexpired Employment Period at the
highest annual rate of salary achieved during the Employment Period;
provided, however, if the Executive has obtained group life, health
(including hospitalization, medical and major medical), dental, accidental
death and dismemberment, travel accident and/or short-term disability
insurance benefits coverage from another source, the Executive may, as of
any month, make an irrevocable election to forego the continued coverage
that would otherwise be provided hereunder for the remaining Unexpired
Employment Period, or any portion thereof, in which case the Bank or the
Company, upon receipt of the Executive's irrevocable election, shall pay
the Executive an amount equal to the estimated cost to the Bank or the
Company of providing such coverage during such period;
(iv) if and to the extent not already provided under Sections 4(b)(ii)
and 4(b)(iii), continued health (including hospitalization, medical and
major medical) and dental insurance benefits to the extent maintained by
the Bank or the Company for its employees or retirees during the remainder
of the Executive's lifetime and the lifetime of her spouse, if any, for so
long as the Executive continues to reimburse the Bank for the cost of such
continued coverage;
(v) a lump sum payment, as liquidated damages, in an amount equal to
the Base Salary and the bonus or other incentive compensation that the
Executive would have earned if the Executive had continued working for the
Bank and the Company during the remaining Unexpired Employment Period (A)
at the highest annual rate of Base Salary and bonus or other incentive
compensation achieved by the Executive during the three-year period
immediately preceding the Executive's Date of Termination, except that (B)
in the case of a Change in Control, such lump sum shall be determined based
upon the Base Salary and the bonus or other incentive compensation,
respectively, that the Executive would have been paid during the remaining
Unexpired Employment Period including the assumed increases referred to in
clauses (i) and (ii) of Section 5(b);
(vi) a lump sum payment in an amount equal to the excess, if any, of:
(A) the present value of the pension benefits to which the Executive would
be entitled under the RP and the BRP (and under any other qualified and
non-qualified defined benefit plans maintained by the Company or the Bank
covering the Executive) as if she had continued working for the Company
during the remaining Unexpired Employment Period (x) at the highest annual
rate of Base Salary and, if applicable, the highest bonus or other
incentive compensation, respectively, achieved by the Executive during the
three-year period immediately preceding the Executive's Date of
Termination, except that (y) in the case of a Change in Control, such lump
sum shall be determined based upon the Base Salary and, if applicable, the
bonus or other incentive compensation, respectively, that the Executive
would have been paid during the remaining Unexpired Employment Period
including the assumed increases referred to in clauses (i) and (ii) of
Section 5(b), and (z) in the case of a Change in Control, as if three
additional years are added to the Executive's age and years of creditable
service under the RP and the BRP and after taking into account any other
compensation required to be taken into account under the RP and the BRP
(and any other qualified and non-qualified defined benefit plans of the
Company or the Bank, as applicable), over (B) the present value of the
pension benefits to which she is actually entitled under the RP and the BRP
(and any other qualified and non-qualified defined benefit plans) as of her
Date of Termination, where such present values are to be determined using a
discount rate of 6% and the mortality tables prescribed under section 72 of
the Internal Revenue Code of 1986, as amended ("Code"); and
(vii) a lump sum payment in an amount equal to the contributions that
would have been made by the Company or the Bank on the Executive's behalf
to the ISP and the ESOP and to the BRP with respect to such ISP and ESOP
contributions (and to any other qualified and non-qualified defined
contribution plans maintained by the Company or the Bank covering the
Executive) as if the Executive had continued working for the Bank and the
Company during the remaining Unexpired Employment Period making the maximum
amount of employee contributions required or permitted, if any, under such
plan or plans and earning (A) the highest annual rate of Base Salary and,
if applicable, the highest bonus or other incentive compensation,
respectively, achieved by the Executive during the three-year period
immediately preceding the Executive's Date of Termination, except that (B)
in the case of a Change in Control, such lump sum shall be determined based
upon the Base Salary and, if applicable, the bonus or other incentive
compensation, respectively, that the Executive would have been paid during
the remaining Unexpired Employment Period including the assumed increases
referred to in clauses (i) and (ii) of Section 5(b).
The benefits to be provided under, and the amounts payable pursuant to, this
Section 4 shall be provided and be payable without regard to proof of damages
and without regard to the Executive's efforts, if any, to mitigate damages. The
Company and the Executive hereby stipulate that the damages which may be
incurred by the Executive following any such termination of employment are not
capable of accurate measurement as of the date first above written and that such
liquidated damages constitute reasonable damages under the circumstances.
(c) Payments to the Executive under Section 4 shall be made
within ten days of the Executive's Date of Termination.
(d) In the event payments are made under Section 4 or Section
5, the Executive may select an individual or firm to provide her with reasonable
outplacement counseling services, and the Company shall pay for the costs of
such services; provided, however, that the cost to the Company of such
outplacement counseling services shall not exceed 25% of the Executive's Base
Salary.
5. CHANGE IN CONTROL.
(a) No benefit shall be payable under this Section 5 unless
there shall have been a Change in Control of the Bank or Company, as set forth
below. For purposes of this Agreement, a "Change in Control" of the Bank or
Company shall mean any one or more of the following:
(i) An event of a nature that would be required to be reported in
response to Item l(a) of the current report on Form 8-K, as in effect on
the date hereof, pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934, as amended (the "Exchange Act");
(ii) An event of a nature that results in a Change in Control of the
Bank or the Company within the meaning of the Home Owners' Loan Act of
1933, as amended, or the Change in Bank Control Act of 1978, as amended, as
applicable, and the Rules and Regulations promulgated by the Office of
Thrift Supervision ("OTS") or its predecessor agency, the Federal Deposit
Insurance Corporation ("FDIC") or the Board of Governors of the Federal
Reserve System ("FRB"), as the case may be, as in effect on the date
hereof, but excluding any such Change in Control resulting from the
purchase of securities by the Company or the Company's or the Bank's
tax-qualified employee benefit plans and trusts;
(iii) If any "person" (as the term is used in Sections 13(d) and 14(d)
of the Exchange Act) is or becomes the "beneficial owner" (as defined in
Rule 13d-3 under the Exchange Act), directly or indirectly, of securities
of the Bank or the Company representing 20% or more of the Bank's or the
Company's outstanding securities except for any securities of the Bank
purchased by the Company in connection with the initial conversion of the
Bank from mutual to stock form (the "Conversion") and any securities
purchased by the Company or the Company's or the Bank's tax-qualified
employee benefit plans and trusts;
(iv) If the individuals who constitute the Board on the date hereof
(the "Incumbent Board") cease for any reason to constitute at least a
majority of the Board, provided, however, that any person becoming a
director subsequent to the date hereof whose election or nomination for
election by the Company's stockholders, was approved by a vote of at least
three-quarters of the directors then comprising the Incumbent Board shall
be considered as though she were a member of the Incumbent Board, but
excluding, for this purpose, any such person whose initial assumption of
office occurs as a result of an actual or threatened election contest with
respect to the election or removal of directors or other actual or
threatened solicitation of proxies or consents by or on behalf of a person
other than the Board;
(v) A merger, consolidation, reorganization, sale of all or
substantially all the assets of the Bank or the Company or similar
transaction occurs in which the Bank or Company is not the resulting
entity, other than a transaction following which (A) at least 51% of the
equity ownership interests of the entity resulting from such transaction
are beneficially owned (within the meaning of Rule 13d-3 promulgated under
Exchange Act) in substantially the same relative proportions by persons
who, immediately prior to such transaction, beneficially owned (within the
meaning of Rule 13d-3 promulgated under the Exchange Act) at least 51% of
the outstanding equity ownership interests in the Bank or Company and (B)
at least 51% of the securities entitled to vote generally in the election
of directors of the entity resulting from such transaction are beneficially
owned (within the meaning of Rule 13d-3 promulgated under the Exchange Act)
in substantially the same relative proportions by persons who, immediately
prior to such transaction, beneficially owned (within the meaning of Rule
13d-3 promulgated under the Exchange Act) at least 51% of the securities
entitled to vote generally in the election of directors of the Bank or
Company;
(vi) A proxy statement shall be distributed soliciting proxies from
stockholders of the Company, by someone other than the current management
of the Company, seeking stockholder approval of a plan of reorganization,
merger or consolidation of the Company or Bank or similar transaction with
one or more corporations as a result of which the outstanding shares of the
class of securities then subject to such plan or transaction are exchanged
for or converted into cash or property or securities not issued by the Bank
or the Company; or
(vii) A tender offer is completed for 20% or more of the voting
securities of the Bank or Company then outstanding.
The "Change in Control Date" shall mean the date during the Employment Period on
which a Change in Control occurs. Anything in this Agreement to the contrary
notwithstanding, if the Executive's employment with the Company is terminated
and if it is reasonably demonstrated by the Executive that such termination of
employment (1) was at the request of a third party who has taken steps
reasonably calculated to effect a Change in Control or (2) otherwise arose in
connection with or anticipation of a Change in Control, then for all purposes of
this Agreement the "Change in Control Date" shall mean the date immediately
prior to the date of such termination of employment.
(b) If any of the events described in Section 5(a)
constituting a Change in Control have occurred or the Board has determined that
a Change in Control has occurred, the Executive shall be entitled to the
payments and the benefits provided below on the Change in Control Date. The
amounts payable and the benefits to be provided under this Section 5(b) to the
Executive shall consist of the payments and benefits that would be due to the
Executive and the Executive's family under Section 4(b) as if an Event of
Termination under Section 4(a) had occurred on the Change in Control Date and
that for purposes of this Section 5(b), the term Unexpired Employment Period
shall mean three years from the Change in Control Date. For purposes of
determining the payments and benefits due under this Section 5(b), when
calculating the payments due and benefits to be provided for the Unexpired
Employment Period, it shall be assumed that for each year of the remaining term
of this Agreement, the Executive would have received (i) an annual increase in
Base Salary equal to the average percentage increase in Base Salary received by
the Executive for the three-year period ending with the earlier of (x) the year
in which the Change in Control Date occurs or (y) the year during which a
definitive agreement, if any, governing the Change in Control is executed, with
the first such increase effective as of the January 1st next following such
three-year period and the second and third such increases effective as of the
next two anniversaries of such January 1st, (ii) a bonus or other incentive
compensation equal to the highest percentage rate of bonus or incentive
compensation paid to the Executive during the three-year period referred to in
clause (i) of this Section 5(b) times the Base Salary that the Executive would
have been paid during the remaining term of this Agreement including the assumed
increases referred to in clause (i) of this Section 5(b), (iii) the maximum
contributions that could be made by or on behalf of the Executive with respect
to any employee benefit plans and programs maintained by the Company and the
Bank based upon the Base Salary and, if applicable, the bonus or other incentive
compensation, respectively, that the Executive would have been paid during the
remaining term of this Agreement including the assumed increases referred to in
clauses (i) and (ii) of this Section 5(b), and (iv) the present value of the
pension benefits to which the Executive is entitled under Section 4(b)(vi) with
respect to the RP and the BRP (and under any other qualified and non-qualified
defined benefit plans maintained by the Bank or the Company covering the
Executive) determined as if she had continued working for the Bank during the
remaining Unexpired Employment Period and based upon the Base Salary and, if
applicable, the bonus or other incentive compensation, respectively, that the
Executive would have been paid during the remaining term of this Agreement
including the assumed increases referred to in clauses (i) and (ii) of this
Section 5(b). The benefits to be provided under, and the amounts payable
pursuant to, this Section 5 shall be provided and be payable without regard to
proof of damages and without regard to the Executive's efforts, if any, to
mitigate damages. The Company and the Executive hereby stipulate that the
damages which may be incurred by the Executive following any Change in Control
are not capable of accurate measurement as of the date first above written and
that such liquidated damages constitute reasonable damages under the
circumstances.
(c) Payments to the Executive under Section 5(b) shall be made
on the Change in Control Date. Such payments shall be made regardless of whether
the Executive's employment terminates.
6. TERMINATION FOR DISABILITY.
(a) In the event of Termination for Disability, the Executive
shall receive the benefits provided in Section 6(b); provided, however, that the
benefits provided under Section 6(b) shall not be deemed to be in lieu of the
benefits she is otherwise entitled as a former employee under the Bank or
Company's employee plans and programs. For purposes of this Agreement, the
Executive may be terminated for disability only if (i) the Executive shall have
been absent from her duties with the Company on a full-time basis for at least
six consecutive months, or (ii) a majority of the members of the Board acting in
good faith determine that, based upon competent and independent medical evidence
presented by a physician or physicians agreed upon by the parties, the
Executive's physical or mental condition is such that she is totally and
permanently incapable of engaging in any substantial gainful employment based
upon her education, training and experience; provided, however, that on and
after the earliest date on which a Change in Control of the Bank or Company as
defined in Section 5 occurs, such a determination shall require the affirmative
vote of at least three-fourths of the members of the Board acting in good faith
and such vote shall not be made prior to the expiration of a 60-day period
following the date on which the Board shall, by written notice to the Executive,
furnish her a statement of its grounds for proposing to make such determination,
during which period the Executive shall be afforded a reasonable opportunity to
make oral and written presentations to the members of the Board, and to be
represented by her legal counsel at such presentations, to refute the grounds
for the proposed determination.
(b) The Company will pay the Executive as Disability pay, a
bi-weekly payment equal to 100% of the Executive's bi-weekly annual rate of Base
Salary in effect on the date of the Executive's Termination for Disability. In
addition, the Company will cause to be continued insurance coverage, including
group life, health (including hospitalization, medical and major medical),
dental, accidental death and dismemberment, travel accident and short-term
disability coverage substantially identical to the coverage maintained by the
Bank or the Company for the Executive prior to her Termination for Disability.
The Disability pay and coverages shall commence on the effective date of the
Executive's termination and shall cease upon the earliest to occur of: (i) the
date the Executive returns to the full-time employment of the Company, in the
same capacity as she was employed prior to her Termination for Disability and
pursuant to an employment agreement between the Executive and the Company; (ii)
the Executive's full-time employment by another employer; (iii) the Executive's
attaining the normal age of retirement or receiving benefits under the RP or
other defined benefit pension plan of the Bank or the Company; (iv) the
Executive's death; (v) the Executive's eligibility to collect payments under the
disability provision of the RP or other defined benefit pension plan of the Bank
or the Company; or (vi) the expiration of the term of this Agreement.
(c) Notwithstanding the foregoing, there will be no reduction
in the compensation otherwise payable to the Executive during any period during
which the Executive is incapable of performing her duties hereunder by reason of
temporary disability.
7. TERMINATION UPON DEATH.
The Executive's employment shall terminate automatically upon
the Executive's death during the Employment Period. In such event, the Executive
and the Executive's legal representatives shall be entitled to the following:
(i) payment of the Executive's "Accrued Obligations;"
(ii) the continuation of all benefits to the Executive's family and
dependents that would have been provided if the Executive had been entitled
to the benefits under Section 4(b)(ii), (iii) and (iv); and
(iii) the timely payment of any other amounts or benefits required to
be paid or provided or which the Executive is eligible to receive under any
plan, program, policy or practice or contract or agreement of the Company
and its affiliated companies (all such other amounts and benefits shall be
hereinafter referred to as the "Other Benefits");
provided, however, that if the Executive dies while in the employment of the
Company, the amount of life insurance provided to the Executive by the Company
shall not be less than the lesser of $200,000 or three times the Executive's
then annual Base Salary. Accrued Obligations shall be paid to the Executive's
estate or beneficiary, as applicable, in a lump sum cash payment within ten days
of the Date of Termination. With respect to the provision of Other Benefits
after the Change of Control Date, the term Other Benefits as utilized in this
Section 7 shall include, without limitation, that the Executive's estate and/or
beneficiaries shall be entitled to receive, benefits at least equal to the most
favorable benefits provided by the Company and affiliated companies to the
estates and beneficiaries of peer executives of the Company and such affiliates
companies under such plans, programs, practices and policies relating to death
benefits, if any, as in effect with respect to other peer executives and their
beneficiaries at any time during the 120-day period immediately preceding the
Change in Control Date.
8. TERMINATION UPON RETIREMENT.
Termination by the Company of the Executive based on
"Retirement" shall mean termination in accordance with the Company's or the
Bank's retirement policy or in accordance with any retirement arrangement
established with the Executive's consent with respect to her. Upon termination
of the Executive upon Retirement, the Executive shall be entitled to all
benefits under the RP and any other retirement plan of the Bank or the Company
and other plans to which the Executive is a party, and the Executive shall be
entitled to the benefits, if any, that would be payable to her as a former
employee under the Bank's or the Company's employee benefit plans and programs
and compensation plans and programs.
9. TERMINATION FOR CAUSE.
The terms "Termination for Cause" or "Cause" shall mean
termination because of the Executive's personal dishonesty, willful misconduct,
any breach of fiduciary duty involving personal profit, intentional failure to
perform stated duties, conviction of a felony with respect to the Bank or the
Company or any material breach of this Agreement. For purposes of this Section,
no act, or the failure to act, on the Executive's part shall be "willful" unless
done, or omitted to be done, in bad faith and without reasonable belief that the
action or omission was in the best interest of the Company or its affiliates.
Any act, or failure to act, based upon authority given pursuant to a resolution
duly adopted by the Board or based upon the written advice of counsel for the
Company shall be conclusively presumed to be done, or omitted to be done, by the
Executive in good faith and in the best interests of the Company.
Notwithstanding the foregoing, the Executive shall not be deemed to have been
terminated for Cause unless and until there shall have been delivered to her a
Notice of Termination which shall include a copy of a resolution duly adopted by
the affirmative vote of not less than three-fourths of the members of the Board
at a meeting of the Board called and held for that purpose (after reasonable
notice to the Executive and an opportunity for her, together with counsel, to be
heard before the Board), finding that in the good faith opinion of the Board,
the Executive was guilty of conduct justifying Termination for Cause and
specifying the particulars thereof in detail. The Executive shall not have the
right to receive compensation or other benefits for any period after Termination
for Cause.
10. NOTICE.
(a) Any purported termination by the Company or by the
Executive shall be communicated by a Notice of Termination to the other party
hereto. For purposes of this Agreement, a "Notice of Termination" shall mean a
written notice which shall indicate the specific termination provision in this
Agreement relied upon and shall set forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of the Executive's
employment under the provision so indicated.
(b) Subject to Section 10(c), "Date of Termination" shall mean
(A) if the Executive's employment is terminated for Disability, 30 days after a
Notice of Termination is given (provided that she shall not have returned to the
performance of her duties on a full-time basis during such 30-day period), and
(B) if her employment is terminated for any other reason, the date specified in
the Notice of Termination (which, in the case of a Termination for Cause, shall
be immediate).
(c) If, within 30 days after any Notice of Termination is
given, the party receiving such Notice of Termination notifies the other party
that a dispute exists concerning the termination, then, except upon the
occurrence of a Change in Control and voluntary termination by the Executive in
which case the Date of Termination shall be the date specified in the Notice,
the Date of Termination shall be the date on which the dispute is finally
determined, either by mutual written agreement of the parties, by a binding
arbitration award, or by a final judgment, order or decree of a court of
competent jurisdiction (the time for appeal therefrom having expired and no
appeal having been perfected) and provided further that the Date of Termination
shall be extended by a notice of dispute only if such notice is given in good
faith and the party giving such notice pursues the resolution of such dispute
with reasonable diligence. Notwithstanding the pendency of any such dispute, the
Company will continue to pay the Executive her full compensation in effect when
the notice giving rise to the dispute was given (including, but not limited to,
Base Salary) and continue her as a participant in all compensation, benefit and
insurance plans in which she was participating when the notice of dispute was
given, until the dispute is finally resolved in accordance with this Agreement.
Amounts paid under this Section are in addition to all other amounts due under
this Agreement and shall not be offset against or reduce any other amounts due
under this Agreement.
(d) The Company may terminate the Executive's employment at
any time, but any termination by the Company, other than Termination for Cause,
shall not prejudice the Executive's right to compensation or other benefits
under this Agreement or under any other benefit or compensation plans or
programs maintained by the Bank or the Company from time to time. The Executive
shall not have the right to receive compensation or other benefits for any
period after a Termination for Cause as defined in Section 9 hereinabove.
(e) Any communication to a party required or permitted under
this Agreement, including any notice, direction, designation, consent,
instruction, objection or waiver, shall be in writing and shall be deemed to
have been given at such time as it is delivered personally, or five days after
mailing if mailed, postage prepaid, by registered or certified mail, return
receipt requested, addressed to such party at the address listed below or at
such other address as one such party may by written notice specify to the other
party, as follows. If to the Executive, (address omitted), if to the Company,
JSB Financial, Inc., 303 Merrick Road, Lynbrook, New York 11563, Attention:
President, with a copy to Thacher Proffitt & Wood, Two World Trade Center, New
York, New York 10048, Attention: Douglas J. McClintock, Esq.
11. POST-TERMINATION OBLIGATIONS.
(a) All payments and benefits to the Executive under this
Agreement shall be subject to the Executive's compliance with paragraph (b) of
this Section 11 during the term of this Agreement and for one full year after
the expiration or termination hereof.
(b) The Executive shall, upon reasonable notice, furnish such
information and assistance to the Company as may reasonably be required by the
Company in connection with any litigation in which it or any of its subsidiaries
or affiliates is, or may become, a party; provided, that the Company reimburses
the Executive for the reasonable value of her time in connection therewith and
for any out-of-pocket costs attributable thereto.
12. COVENANT NOT TO COMPETE.
The Executive hereby covenants and agrees that for a period of
one year following her Date of Termination, if such termination occurs prior to
the end of the term of the Agreement, she shall not, without the written consent
of the Board, become an officer, employee, consultant, director or trustee of
any savings bank, savings and loan association, savings and loan holding
company, bank or bank holding company if such position (a) entails working in
(or providing services in) New York City, Nassau or Suffolk counties or (b)
entails working in (or providing services in) any other county that is both (i)
within the Bank's primary trade (or operating) area at the time in question,
which shall be determined by reference to the Bank's business plan as in effect
from time to time, and (ii) in which the Bank engages in material or substantial
deposit-taking functions or lending activities at such time; provided, however,
that this Section 12 shall not apply if the Executive's employment is terminated
for the reasons set forth in any of Sections 4, 5, 6 or 8.
13. SOURCE OF PAYMENTS.
All payments provided in this Agreement shall be timely paid
in cash or check from the general funds of the Company.
14. EFFECT ON PRIOR AGREEMENTS.
This Agreement contains the entire understanding between the
parties hereto and supersedes any prior employment agreement between the Company
or any predecessor of the Company and the Executive, including the Employment
Agreement dated June 27, 1990 and the Supplemental Employment Agreement dated
July 9, 1996, except that this Agreement shall not affect or operate to reduce
any benefit or compensation inuring to the Executive of a kind elsewhere
provided. No provisions of this Agreement shall be interpreted to mean that the
Executive is subject to receiving fewer benefits than those available to her
without reference to this Agreement.
15. EFFECT OF ACTION UNDER BANK AGREEMENT.
Notwithstanding any provision herein to the contrary, to the
extent that full compensation payments and benefits are paid to or received by
the Executive under the Bank Agreement, such compensation payments and benefits
paid by the Bank will be deemed to satisfy the corresponding obligations of the
Company under this Agreement.
16. NO ATTACHMENT.
Except as required by law, no right to receive payments under
this Agreement shall be subject to anticipation, commutation, alienation, sale,
assignment, encumbrance, charge, pledge, or hypothecation, or to execution,
attachment, levy, or similar process or assignment by operation of law, and any
attempt, voluntary or involuntary, to affect any such action shall be null,
void, and of no effect.
17. MODIFICATION AND WAIVER.
(a) This Agreement may not be modified or amended except by an
instrument in writing signed by the parties hereto.
(b) No term or condition of this Agreement shall be deemed to
have been waived, nor shall there be any estoppel against the enforcement of any
provision of this Agreement, except by written instrument of the party charged
with such waiver or estoppel. No such written waiver shall be deemed a
continuing waiver unless specifically stated therein, and each such waiver shall
operate only as to the specific term or condition waived and shall not
constitute a waiver of such term or condition for the future as to any act other
than that specifically waived.
18. SUCCESSOR AND ASSIGNS.
This Agreement will inure to the benefit of and be binding
upon the Executive, her legal representatives and testate or intestate
distributees, and the Company, its successors and assigns, including any
successor by purchase, merger, consolidation or otherwise or a statutory
receiver or any other person or firm or corporation to which all or
substantially all of the assets and business of the Company may be sold or
otherwise transferred. Any such successor of the Company shall be deemed to have
assumed this Agreement and to have become obligated hereunder to the same extent
as the Company and the Executive's obligations hereunder shall continue in favor
of such successor.
19. SEVERABILITY.
If, for any reason, any provision of this Agreement, or any
part of any provision, is held invalid, such invalidity shall not affect any
other provision of this Agreement or any part of such provision not held so
invalid, and each such other provision and part thereof shall to the full extent
consistent with law continue in full force and effect.
20. HEADINGS FOR REFERENCE ONLY.
The headings of Sections and paragraphs herein are included
solely for convenience of reference and shall not control the meaning or
interpretation of any of the provisions of this Agreement. Any reference in this
Agreement to a Section or Subsection shall refer to a Section or Subsection of
this Agreement, except as otherwise specified.
21. GOVERNING LAW.
This Agreement shall be governed by the laws of the State of
New York, without reference to conflicts of law principles.
22. INDEMNIFICATION AND ATTORNEYS' FEES.
(a) The Company shall indemnify, hold harmless and defend the
Executive against reasonable costs, including legal fees, incurred by her in
connection with her consultation with legal counsel or arising out of any
action, suit or proceeding in which she may be involved, as a result of her
efforts, in good faith, to defend or enforce the terms of this Agreement. The
Company agrees to pay all such costs as they are incurred by the Executive, to
the full extent permitted by law, and without regard to whether the Company
believes that it has a defense to any action, suit or proceeding by the
Executive or that it is not obligated for any payments under this Agreement.
(b) In the event any dispute or controversy arising under or
in connection with the Executive's termination is resolved in favor of the
Executive, whether by judgment, arbitration or settlement, the Executive shall
be entitled to the payment of all back-pay, including salary, bonuses and any
other cash compensation, fringe benefits and any compensation and benefits due
the Executive under this Agreement.
(c) The Company shall indemnify, hold harmless and defend the
Executive for any act taken or not taken, or any omission or failure to act, by
her in good faith while performing services for the Company or the Bank to the
same extent and upon the same terms and conditions as other similarly situated
officers and directors of the Company or the Bank. If and to the extent that the
Company or the Bank, maintains, at any time during the Employment Period, an
insurance policy covering the other officers and directors of the Company or the
Bank against lawsuits, the Company or the Bank shall use its best efforts to
cause the Executive to be covered under such policy upon the same terms and
conditions as other similarly situated officers and directors.
23. TAX INDEMNIFICATION.
(a) This Section 23 shall apply if 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 occurs within the meaning of section 280G
of the Code. If this Section 23 applies, then with respect to any taxable year
in which the Executive shall be liable for the payment of an excise tax under
section 4999 of the Code with respect to any payment in the nature of
compensation made by the Company, the Bank or any direct or indirect subsidiary
or affiliate of the Company to (or for the benefit of) the Executive, the
Company shall pay to the Executive an amount equal to X determined under the
following formula:
X = E x P
-------------------------------------------------
1 - [(FI x (1 - SLI)) + SLI + E + M]
where
E = the rate at which the excise tax is assessed under
section 4999 of the Code;
P = the amount with respect to which such excise tax is
assessed, determined without regard to this Section
23;
FI = the highest effective marginal rate of income tax
applicable to the Executive under the Code for the
taxable year in question (taking into account any
phase-out or loss of deductions, personal exemptions
and other similar adjustments);
SLI = the sum of the highest effective marginal rates of
income tax applicable to the Executive under all
applicable state and local laws for the taxable year
in question (taking into account any phase-out or
loss of deductions, personal exemptions and other
similar adjustments); and
M = the highest marginal rate of Medicare tax
applicable to the Executive under the Code for the
taxable year in question.
Attached as Appendix A to this Agreement is an example that illustrates
application of this Section 23. Any payment under this Section 23 shall be
adjusted so as to fully indemnify the Executive on an after-tax basis so that
the Executive would be in the same after-tax financial position in which she
would have been if no excise tax under section 4999 of the Code had been
imposed. With respect to any payment in the nature of compensation that is made
to (or for the benefit of) the Executive under the terms of this Agreement or
otherwise and on which an excise tax under section 4999 of the Code will be
assessed, the payment determined under this Section 23(a) shall be made to the
Executive on the earlier of (i) the date the Company, the Bank or any direct or
indirect subsidiary or affiliate of the Company is required to withhold such
tax, or (ii) the date the tax is required to be paid by the Executive.
(b) Notwithstanding anything in this Section 23 to the
contrary, in the event that the Executive's liability for the excise tax under
section 4999 of the Code for a taxable year is subsequently determined to be
different than the amount determined by the formula (X + P) x E, where X, P and
E have the meanings provided in Section 23(a), the Executive or the Company, as
the case may be, shall pay to the other party at the time that the amount of
such excise tax is finally determined, an appropriate amount, plus interest,
such that the payment made under Section 23(a), when increased by the amount of
the payment made to the Executive under this Section 23(b) by the Company, or
when reduced by the amount of the payment made to the Company under this Section
23(b) by the Executive, equals the amount that, it is finally determined, should
have properly been paid to the Executive under Section 23(a). The interest paid
under this Section 23(b) shall be determined at the rate provided under section
1274(b)(2)(B) of the Code. To confirm that the proper amount, if any, was paid
to the Executive under this Section 23, the Executive shall furnish to the
Company a copy of each tax return which reflects a liability for an excise tax
payment made by the Company, at least 20 days before the date on which such
return is required to be filed with the Internal Revenue Service.
24. NON-EXCLUSIVITY OF RIGHTS.
Except as otherwise provided herein, nothing in this Agreement
shall prevent or limit the Executive's continuing or future participation in any
plan, program, policy or practice provided by the Company or any of its
affiliated companies and for which the Executive may qualify, nor shall anything
herein limit or otherwise affect such rights as the Executive may have under any
contract or agreement with the Company or any of its affiliated companies.
Amounts which are vested benefits or which the Executive is otherwise entitled
to receive under any plan, policy, practice or program of or any contract or
agreement with the Company or any of its affiliated companies at or subsequent
to the Date of Termination shall be payable in accordance with such plan,
policy, practice or program or contract or agreement except as explicitly
modified by this Agreement. Notwithstanding the foregoing, in the event of a
termination of employment, the amounts provided in Section 4 or Section 5, as
applicable, shall be the Executive's sole remedy for any purported breach of
this Agreement by the Company.
25. MITIGATION; OTHER CLAIMS.
The Company's obligation to make the payments provided for in
this Agreement and otherwise to perform its obligations hereunder shall not be
affected by any set-off, counterclaim, recoupment, defense or other claim, right
or action which the Company may have against the Executive or others. In no
event shall the Executive be obligated to seek other employment or take any
other action by way of mitigation of the amounts payable to the Executive under
any of the provisions of this Agreement and such amounts shall not be reduced
whether or not the Executive obtains other employment.
26. CONFIDENTIAL INFORMATION.
The Executive shall hold in a fiduciary capacity for the
benefit of the Company all secret or confidential information, knowledge or data
relating to the Company or any of its affiliated companies, and their respective
businesses, which shall have been obtained by the Executive during the
Executive's employment by the Company or any of its affiliated companies and
which shall not be or become public knowledge (other than by acts by the
Executive or representatives of the Executive in violation of this Agreement).
After termination of the Executive's employment with the Company, the Executive
shall not, without the prior written consent of the Company or as may otherwise
be required by law or legal process, communicate or divulge any such
information, knowledge or data to anyone other than the Company and those
designated by it. For purposes of this Agreement, secret and confidential
information, knowledge or data relating to the Company or any of its affiliates,
and their respective business, shall not include any information that is public,
publicly available or available through trade association sources.
Notwithstanding any other provision of this Agreement to the contrary, the
Executive acknowledges and agrees that in the event of a violation or threatened
violation of any of the provisions of this Section 26, the Company shall have no
adequate remedy at law and shall therefore be entitled to enforce each such
provision by temporary or permanent injunction or mandatory relief obtained in
any court of competent jurisdiction without the necessity of proving damages or
posting any bond or other security, and without prejudice to any other remedies
that may be available at law or in equity.
27. ACCESS TO DOCUMENTS.
The Executive shall have the right to obtain copies of any
Company or Bank documents that the Executive reasonably believes, in good faith,
are necessary or appropriate in determining her entitlement to, and the amount
of, payments and benefits under this Agreement.
1. GUARANTEE.
The Company hereby agrees to guarantee the payment by the Bank of any
benefits and compensation to which the Executive is or may be entitled to under
the terms and conditions of the Bank Agreement.
1. REQUIRED REGULATORY PROVISIONS.
Notwithstanding anything herein contained to the contrary, any payments
to the Executive by the Company, whether pursuant to this Agreement or
otherwise, are subject to and conditioned upon their compliance with section
18(k) of the Federal Deposit Insurance Act, as amended, 12 U.S.C. ss.1828(k),
and any regulations promulgated thereunder.
<PAGE>
SIGNATURES
IN WITNESS WHEREOF, JSB FINANCIAL, INC. has caused this
Agreement to be executed and its seal to be affixed hereunto by its duly
authorized officer, and the Executive has signed this Agreement, on the 22nd day
of June, 1999.
ATTEST: JSB FINANCIAL, INC.
By:
Lawrence J. Kane Edward P. Henson
- ---------------- ----------------
Lawrence J. Kane Edward P. Henson
Executive Vice President President
[Seal]
WITNESS:
Joanne Corrigan
---------------
Joanne Corrigan
<PAGE>
STATE OF NEW YORK )
: ss.:
COUNTY OF NASSAU )
On this 22nd day of June, 1999, before me personally came Edward P.
Henson, to me known, who, being by me duly sworn, did depose and say that he is
the President of JSB Financial, Inc., the Delaware corporation described in and
which executed the foregoing instrument; that he knows the seal of said
corporation; that the seal affixed to said instrument is such seal; that it was
so affixed by order of the Board of Directors of said corporation; and that he
signed his name thereto by like order.
Name:
Notary Public
STATE OF NEW YORK )
: ss.:
COUNTY OF NASSAU )
On this 22nd day of June, 1999, before me personally came Joanne
Corrigan, to me known, and known to me to be the individual described in the
foregoing instrument, who, being by me duly sworn, did depose and say that she
resides at the address set forth in said instrument, and that she signed her
name to the foregoing instrument.
Name:
Notary Public
<PAGE>
APPENDIX A
----------
1. INTRODUCTION. Sections 280G and 4999 of the Internal Revenue Code of
1986, as amended ("Code"), impose a 20% non-deductible federal excise tax on a
person if the payments and benefits in the nature of compensation to or for the
benefit of that person that are contingent on a change in the ownership or
effective control of the Company or the Bank or in the ownership of a
substantial portion of the assets of the Company or the Bank (such payments and
benefits are considered "parachute payments" under section 280G) exceed three
times the person's "base amount" under section 280G. Section 23 of the Agreement
provides for the Executive to receive a tax indemnification payment (sometimes
referred to as a "gross-up" payment) if the payments and benefits in the nature
of compensation to or for the benefit of the Executive that are considered
parachute payments cause the imposition of an excise tax under section 4999 of
the Code. Capitalized terms in this Appendix A that are not defined in this
Appendix A have the meaning used in the Employment Agreement with the Executive.
2. PURPOSE. The purpose of this Appendix A is to illustrate how the tax
indemnification or gross-up payment would be computed. The amounts, figures and
rates used in this example are meant to be illustrative and do not reflect the
actual payments and benefits that would be made to the Executive under this
Agreement. For purposes of this example, it is assumed that a change in control
within the meaning of section 280G of the Code has occurred and that:
(a) The value of the insurance benefits required to be provided to a
hypothetical employee "Z" under sections 4(b)(iii) and 5(b) of the
Agreement for medical, dental, life and other insurance benefits
during the unexpired employment period is $23,000.
(b) The annual rate of Z's salary covered by the Agreement is $100,000,
and Z received annual salary increases of 4%, 5% and 6% (i.e., a
three-year average of 5%) for each of the prior three years. Hence,
the amount payable under sections 4(b)(v) and 5(b) of the Agreement
for salary during the unexpired employment period would be $331,013
[$105,000 + $110, 250 + $115,763].
(c) Z received annual bonuses equal to 20% of his salary in each of the
prior three years. Hence, the amount payable under sections 4(b)(v)
and 5(b) of the Agreement for bonuses during the unexpired employment
period would be $66,203 [20% x ($105,000 + $110,250 + $115,763)].
(d) The amount payable under sections 4(b)(vi) and 5(b) of the Agreement
for the present value of the additional RP and BRP accruals during the
unexpired employment period would be $45,000.
(e) The amount payable under sections 4(b)(vii) and 5(b) of the Agreement
for additional contributions to the ESOP, 401(k) Plan and BRP during
the unexpired employment period would be $20,000.
(f) Z's base amount (i.e., average W-2 wages for the five-year period
preceding the change in control) is $87,000.
3. DETERMINE IF Z IS SUBJECT TO AN EXCISE TAX. Z's parachute payments would
total $485,216 [$23,000 + $331,013 + $66,203 + $45,000 + $20,000]. Three times
Z's base amount is $261,000 [3 x $87,000]; accordingly, Z is subject to an
excise tax because $485,216 exceeds $261,000. Z's "excess parachute payments"
under section 280G of the Code are equal to Z's total parachute payments minus
one times Z's base amount, or $398,216 [$485,216 - $87,000]. If Z were not
protected by section 23 of the Agreement, Z would be subjected to an excise tax
of $79,643 [$398,216 x 20%], in addition to ordinary income taxes.
4. Compute Z's Tax Indemnification Payment. Z's tax indemnification payment
under section 23 of the Agreement would be computed pursuant to the following
formula:
E x P .2 x $398,216
X = ------------------------------------ = ----------------------------------
1 - [(FI x (1 - SLI)) + SLI + E + M] 1 - [.368874 + .0685 + .2 + .0145]
where
E = excise tax rate under section 4999 of the Code [20%];
P = the amount with respect to which such excise tax is
assessed determined without regard to section 23 of
the Agreement [$398,216];
FI = the highest effective marginal rate of income tax
applicable to Z under the Code for the taxable year
in question [assumed to be 39.6% in this example, but
in actuality, the rate is adjusted to take into
account any phase-out or loss of deductions, personal
exemptions and other similar adjustments];
SLI = the sum of the highest effective marginal rates of
income tax applicable to Z under applicable state and
local laws for the taxable year in question [assumed
to be 6.85% in this example, but in actuality, the
rate is adjusted to take into account any phase-out
or loss of deductions, personal exemptions and other
similar adjustments]; and
M = the highest marginal rate of Medicare tax applicable
to Z under the Code for the year in question [1.45%].
In this example, the amount of tax indemnification payment due to Z under
section 23 of the Agreement would be $79,643 [.2 x $398,216] divided by 0.348126
[1 - (.368874 + .0685 + .2 + .0145)], or $228,777. Such amount would be payable
in addition to the other amounts payable under the Agreement in order to put Z
in approximately the same after-tax position that Z would have been in if there
were no excise tax imposed under sections 280G and 4999 of the Code. The tax
indemnification to Z of $228,777 would in turn be a parachute payment subject to
excise tax under sections 280G and 4999. Accordingly, Z's actual excess
parachute payment would be $626,993 [$485,216 - $87,000) + $228,777)] resulting
in an excise tax of $125,399 [$626,993 x 20%]. The difference between the
indemnification. payment and the excise tax [$103,378] is an amount equal to the
sum of the income and other applicable taxes due on the indemnification payment
[($228,777 x .368874) + ($228,777 x .0685) + ($228,777 x .0145)], confirming
that the amount of the tax indemnification payment is sufficient to satisfy all
of Z's tax liability resulting from the excess parachute payment.
JSB FINANCIAL, INC.
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT ("Agreement") is made and entered
into as of June 22, 1999 by and between JSB FINANCIAL, INC., a business
corporation organized and operating under the laws of the State of Delaware and
having its principal office at 303 Merrick Road, Lynbrook, New York 11563
("Company"), and Teresa Covello, an individual residing at (address omitted)
("Executive"). Any reference to the "Bank" in this Agreement shall mean Jamaica
Savings Bank FSB and any successor thereto.
W I T N E S S E T H :
WHEREAS, the Executive is currently serving as Vice President
of the Company, and the Company wishes to assure itself of the services of the
Executive for the period provided in this Agreement; and
WHEREAS, the Executive is willing to serve in the employ of
the Company on the terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the premises and the
mutual covenants and conditions hereinafter set forth, the Company and the
Executive hereby agree as follows:
1. POSITION AND RESPONSIBILITIES.
During the period of her employment hereunder, the Executive
agrees to serve as Vice President of the Company. The Executive shall render
administrative and management services to the Company such as are customarily
performed by persons situated in a similar executive capacity and shall perform
such other duties not inconsistent with her title and office as may be assigned
to her by or under the authority of the Board of Directors of the Company (the
"Board"). The Executive shall have such authority as is necessary or appropriate
to carry out her assigned duties. Failure to re-elect the Executive as Vice
President of the Company (or a more senior position) without the consent of the
Executive shall constitute a breach of this Agreement.
2. TERMS.
(a) The period of the Executive's employment under this
Agreement shall be deemed to have commenced as of the date first above written
(the "Effective Date") and shall continue for a period of 36 full calendar
months thereafter. Commencing with the Effective Date, the term of this
Agreement shall be extended for one additional day each day until such time as
the Board or the Executive elects not to extend the term of the Agreement
further by giving written notice to the other party in accordance with Section
10, in which case the term of this Agreement shall become fixed and shall end on
the third anniversary of the date of such written notice. For purposes of this
Agreement, the term "Employment Period" shall mean the term of this Agreement
plus such extensions as are provided herein.
(b) During the period of her employment hereunder, except for
periods of absence occasioned by illness, disability, holidays, reasonable
vacation periods and reasonable leaves of absence, the Executive shall devote
substantially all of her business time, attention, skill and efforts to the
faithful performance of her duties hereunder including (i) service as Vice
President of the Company, and, if duly elected, a Director of the Company, (ii)
performance of such duties not inconsistent with her title and office as may be
assigned to her by or under the authority of the Board or a more senior
executive officer, and (iii) such other activities and services related to the
organization, operation and management of the Company. During the Employment
Period it shall not be a violation of this Agreement for the Executive to (A)
serve on corporate, civic, industry or charitable boards or committees, (B)
deliver lectures, fulfill speaking engagements or teach at educational
institutions and (C) manage personal investments, so long as such activities do
not significantly interfere with the performance of the Executive's
responsibilities as an employee of the Company in accordance with this
Agreement. It is expressly understood and agreed that to the extent that any
such activities have been conducted by the Executive prior to the Effective
Date, the continued conduct of such activities (or the conduct of activities
similar in nature and scope thereto) subsequent to the Effective Date shall not
thereafter be deemed to interfere with the performance of the Executive's
responsibilities to the Company. It is also expressly agreed that the Executive
may conduct activities subsequent to the Effective Date that are generally
accepted for an executive in her position, regardless of whether conducted by
the Executive prior to the Effective Date.
(c) Notwithstanding anything herein contained to the contrary:
(i) the Executive's employment with the Company may be terminated by the Company
or the Executive during the term of this Agreement, subject to the terms and
conditions of this Agreement; and (ii) nothing in this Agreement shall mandate
or prohibit a continuation of the Executive's employment following the
expiration of the term of this Agreement upon such terms and conditions as the
Board and the Executive may mutually agree.
(d) Upon the termination of the Executive's employment with
the Company, the daily extensions provided pursuant to Section 2(a) shall cease
(if such extensions have not previously ceased), and, if such termination is
under circumstances described in Section 4(a) or Section 5(b), the term
"Unexpired Employment Period" shall mean the period of time commencing from the
date of such termination and ending on the last day of the Employment Period
computed with reference to all extensions prior to such termination.
(e) In the event that the Executive's duties and
responsibilities with respect to the Bank are temporarily or permanently
terminated pursuant to Section 9 of the Employment Agreement dated June 22,
1999, as it may be amended from time to time, between the Executive and the Bank
("Bank Agreement") and the course of conduct upon which such termination is
based would not constitute grounds for Termination for Cause under Section 9,
then the Executive shall, to the extent practicable, assume such duties and
responsibilities formerly performed at the Bank as part of her duties and
responsibilities as Vice President of the Company. Nothing in this provision
shall be interpreted as restricting the Company's right to remove the Executive
for Cause in accordance with Section 9.
3. COMPENSATION AND REIMBURSEMENT.
(a) The compensation specified under this Agreement shall
constitute the salary and benefits paid for the duties described in Section 1.
The Company shall pay the Executive as compensation a salary at an annual rate
of not less than (salary omitted) per year or such higher rate as may be
prescribed by or under the authority of the Board ("Base Salary"). The Base
Salary payable under this Section 3 shall be paid in approximately equal
installments in accordance with the Company's customary payroll practices.
During the period of this Agreement, the Executive's Base Salary shall be
reviewed at least annually; the first such review will be made no later than one
year from the date of this Agreement. Such review shall be conducted by a
Committee designated by the Board, and the Board may increase the Executive's
Base Salary, which increased amount shall be considered the Executive's "Base
Salary" for purposes of this Agreement. In no event shall the Executive's annual
rate of Base Salary under this Agreement in effect at a particular time be
reduced without her prior written consent. In addition to the Base Salary
provided in this Section 3(a), the Company shall provide the Executive at no
cost to the Executive with all such other benefits as are provided uniformly to
permanent full-time employees of the Bank.
(b) The Company will provide the Executive with employee
benefit plans, arrangements and perquisites substantially equivalent to those in
which the Executive was participating or otherwise deriving benefit from
immediately prior to the beginning of the term of this Agreement, and the
Company will not, without the Executive's prior written consent, make any
changes in such plans, arrangements or perquisites which would adversely affect
the Executive's rights or benefits thereunder. Without limiting the generality
of the foregoing provisions of this Subsection (b), the Executive will be
entitled to participate in or receive benefits under any employee benefit plans
with respect to which the Executive satisfies the eligibility requirements,
including, but not limited to, the Retirement Plan of Jamaica Savings Bank FSB
("RP"), the Incentive Savings Plan of Jamaica Savings Bank FSB ("ISP"), the
Jamaica Savings Bank FSB Employee Stock Ownership Plan ("ESOP"), the Benefit
Restoration Plan of Jamaica Savings Bank FSB ("BRP"), the JSB Financial, Inc.
1990 Stock Option Plan, the JSB Financial, Inc. 1996 Stock Option Plan,
retirement plans, supplemental retirement plans, pension plans, profit-sharing
plans, group life, health (including hospitalization, medical and major
medical), dental, accidental death and dismemberment, travel accident and
short-term disability insurance plans, or any other employee benefit plan or
arrangement made available by the Company in the future to its senior executives
and key management employees, subject to and on a basis consistent with the
terms, conditions and overall administration of such plans and arrangements. The
Executive will be entitled to incentive compensation and bonuses as provided in
any plan of the Company in which the Executive is eligible to participate.
Nothing paid to the Executive under any such plan or arrangement will be deemed
to be in lieu of other compensation to which the Executive is entitled under
this Agreement.
(c) The Executive's principal place of employment shall be at
the Company's executive offices at the address first above written, or at such
other location in New York City or in Nassau County or Suffolk County at which
the Company shall maintain its principal executive offices, or at such other
location as the Board and the Executive may mutually agree upon. The Company
shall provide the Executive, at her principal place of employment with support
services and facilities suitable to her position with the Company and necessary
or appropriate in connection with the performance of her assigned duties under
this Agreement. The Company shall reimburse the Executive for her ordinary and
necessary business expenses, including, without limitation, fees for memberships
in such clubs and organizations as the Executive and the Board shall mutually
agree are necessary and appropriate for business purposes, and travel and
entertainment expenses, incurred in connection with the performance of her
duties under this Agreement, upon presentation to the Company of an itemized
account of such expenses in such form as the Company may reasonably require.
(d) In the event that the Executive assumes additional duties
and responsibilities pursuant to Section 2(e) by reason of one of the
circumstances contained in Section 2(e), and the Executive receives or will
receive less than the full amount of compensation and benefits formerly entitled
to her under the Bank Agreement, the Company shall assume the obligation to
provide the Executive with her compensation and benefits in accordance with the
Bank Agreement less any compensation and benefits received from the Bank,
subject to the terms and conditions of this Agreement including the Termination
for Cause provisions in Section 9.
4. PAYMENTS TO THE EXECUTIVE UPON AN EVENT OF TERMINATION.
The provisions of this Section shall in all respects be
subject to the terms and conditions stated in Sections 9 and 29.
(a) Upon the occurrence of an Event of Termination (as herein
defined) during the Executive's term of employment under this Agreement, the
provisions of this Section shall apply. As used in this Agreement, an "Event of
Termination" shall mean and include any one or more of the following: (i) the
termination by the Bank or the Company of the Executive's full-time employment
hereunder for any reason other than: following a Change in Control, as defined
in Section 5; for Disability, as defined in Section 6; for Retirement, as
defined in Section 8; for Cause, as defined in Section 9; or upon the
Executive's death; or (ii) unless consented to by the Executive, the Executive's
voluntary resignation from the Company's employ, upon any: (A) failure to elect
or re-elect or to appoint or re-appoint the Executive as Vice President of the
Company, (B) material adverse change in the Executive's function, duties, or
responsibilities, which change would cause the Executive's position to become
one of lesser responsibility, importance, or scope from the position and
attributes thereof described in Section 1, above (and any such material change
shall be deemed a continuing breach of this Agreement), (C) relocation of the
Executive's principal place of employment by more than 30 miles from its
location at the Effective Date of this Agreement, or a material reduction in the
benefits and perquisites to the Executive from those being provided as of the
Effective Date of this Agreement, (D) liquidation or dissolution of the Bank or
Company, or (E) material breach of this Agreement by the Company. Upon the
occurrence of any event described in clauses (A), (B), (C), (D) or (E), above,
the Executive shall have the right to elect to terminate her employment under
this Agreement by resignation upon written notice pursuant to Section 10 given
within a reasonable period of time not to exceed, except in case of a continuing
breach, four calendar months after the event giving rise to said right to elect.
(b) Upon the occurrence of an Event of Termination as set
forth in Section 4(a), on the Date of Termination, as defined in Section 10, the
Company shall be obligated to pay, or to provide, the Executive, or, in the
event of her subsequent death, to her surviving spouse or such other beneficiary
or beneficiaries as the Executive may designate in writing, or if neither her
estate, as severance pay or liquidated damages, or both, the benefits provided
below and a payment equal to the sum of the payments set forth below:
(i) payment of the sum of (A) the Executive's annual Base Salary
through the Date of Termination to the extent not theretofore paid and (B)
any compensation previously deferred by the Executive (together with any
accrued interest or earnings thereon) and any accrued vacation pay, in each
case to the extent not theretofore paid (the sum of the amounts described
in clauses (A) and (B) shall be hereinafter referred to as the "Accrued
Obligations");
(ii) the benefits, if any, to which the Executive is entitled as a
former employee under the Bank's or Company's employee benefit plans and
programs and compensation plans and programs;
(iii) continued group life, health (including hospitalization, medical
and major medical), dental, accidental death and dismemberment, travel
accident and short-term disability insurance benefits as provided by the
Bank or the Company, in addition to that provided pursuant to Section
4(b)(ii), if and to the extent necessary to provide for the Executive, for
the remaining Unexpired Employment Period, coverage equivalent to the
coverage to which she would have been entitled if she had continued working
for the Company during the remaining Unexpired Employment Period at the
highest annual rate of salary achieved during the Employment Period;
provided, however, if the Executive has obtained group life, health
(including hospitalization, medical and major medical), dental, accidental
death and dismemberment, travel accident and/or short-term disability
insurance benefits coverage from another source, the Executive may, as of
any month, make an irrevocable election to forego the continued coverage
that would otherwise be provided hereunder for the remaining Unexpired
Employment Period, or any portion thereof, in which case the Bank or the
Company, upon receipt of the Executive's irrevocable election, shall pay
the Executive an amount equal to the estimated cost to the Bank or the
Company of providing such coverage during such period;
(iv) if and to the extent not already provided under Sections 4(b)(ii)
and 4(b)(iii), continued health (including hospitalization, medical and
major medical) and dental insurance benefits to the extent maintained by
the Bank or the Company for its employees or retirees during the remainder
of the Executive's lifetime and the lifetime of her spouse, if any, for so
long as the Executive continues to reimburse the Bank for the cost of such
continued coverage;
(v) a lump sum payment, as liquidated damages, in an amount equal to
the Base Salary and the bonus or other incentive compensation that the
Executive would have earned if the Executive had continued working for the
Bank and the Company during the remaining Unexpired Employment Period (A)
at the highest annual rate of Base Salary and bonus or other incentive
compensation achieved by the Executive during the three-year period
immediately preceding the Executive's Date of Termination, except that (B)
in the case of a Change in Control, such lump sum shall be determined based
upon the Base Salary and the bonus or other incentive compensation,
respectively, that the Executive would have been paid during the remaining
Unexpired Employment Period including the assumed increases referred to in
clauses (i) and (ii) of Section 5(b);
(vi) a lump sum payment in an amount equal to the excess, if any, of:
(A) the present value of the pension benefits to which the Executive would
be entitled under the RP and the BRP (and under any other qualified and
non-qualified defined benefit plans maintained by the Company or the Bank
covering the Executive) as if she had continued working for the Company
during the remaining Unexpired Employment Period (x) at the highest annual
rate of Base Salary and, if applicable, the highest bonus or other
incentive compensation, respectively, achieved by the Executive during the
three-year period immediately preceding the Executive's Date of
Termination, except that (y) in the case of a Change in Control, such lump
sum shall be determined based upon the Base Salary and, if applicable, the
bonus or other incentive compensation, respectively, that the Executive
would have been paid during the remaining Unexpired Employment Period
including the assumed increases referred to in clauses (i) and (ii) of
Section 5(b), and (z) in the case of a Change in Control, as if three
additional years are added to the Executive's age and years of creditable
service under the RP and the BRP and after taking into account any other
compensation required to be taken into account under the RP and the BRP
(and any other qualified and non-qualified defined benefit plans of the
Company or the Bank, as applicable), over (B) the present value of the
pension benefits to which she is actually entitled under the RP and the BRP
(and any other qualified and non-qualified defined benefit plans) as of her
Date of Termination, where such present values are to be determined using a
discount rate of 6% and the mortality tables prescribed under section 72 of
the Internal Revenue Code of 1986, as amended ("Code"); and
(vii) a lump sum payment in an amount equal to the contributions that
would have been made by the Company or the Bank on the Executive's behalf
to the ISP and the ESOP and to the BRP with respect to such ISP and ESOP
contributions (and to any other qualified and non-qualified defined
contribution plans maintained by the Company or the Bank covering the
Executive) as if the Executive had continued working for the Bank and the
Company during the remaining Unexpired Employment Period making the maximum
amount of employee contributions required or permitted, if any, under such
plan or plans and earning (A) the highest annual rate of Base Salary and,
if applicable, the highest bonus or other incentive compensation,
respectively, achieved by the Executive during the three-year period
immediately preceding the Executive's Date of Termination, except that (B)
in the case of a Change in Control, such lump sum shall be determined based
upon the Base Salary and, if applicable, the bonus or other incentive
compensation, respectively, that the Executive would have been paid during
the remaining Unexpired Employment Period including the assumed increases
referred to in clauses (i) and (ii) of Section 5(b).
The benefits to be provided under, and the amounts payable pursuant to, this
Section 4 shall be provided and be payable without regard to proof of damages
and without regard to the Executive's efforts, if any, to mitigate damages. The
Company and the Executive hereby stipulate that the damages which may be
incurred by the Executive following any such termination of employment are not
capable of accurate measurement as of the date first above written and that such
liquidated damages constitute reasonable damages under the circumstances.
(c) Payments to the Executive under Section 4 shall be made
within ten days of the Executive's Date of Termination.
(d) In the event payments are made under Section 4 or Section
5, the Executive may select an individual or firm to provide her with reasonable
outplacement counseling services, and the Company shall pay for the costs of
such services; provided, however, that the cost to the Company of such
outplacement counseling services shall not exceed 25% of the Executive's Base
Salary.
5. CHANGE IN CONTROL.
(a) No benefit shall be payable under this Section 5 unless
there shall have been a Change in Control of the Bank or Company, as set forth
below. For purposes of this Agreement, a "Change in Control" of the Bank or
Company shall mean any one or more of the following:
(i) An event of a nature that would be required to be reported in
response to Item l(a) of the current report on Form 8-K, as in effect on
the date hereof, pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934, as amended (the "Exchange Act");
(ii) An event of a nature that results in a Change in Control of the
Bank or the Company within the meaning of the Home Owners' Loan Act of
1933, as amended, or the Change in Bank Control Act of 1978, as amended, as
applicable, and the Rules and Regulations promulgated by the Office of
Thrift Supervision ("OTS") or its predecessor agency, the Federal Deposit
Insurance Corporation ("FDIC") or the Board of Governors of the Federal
Reserve System ("FRB"), as the case may be, as in effect on the date
hereof, but excluding any such Change in Control resulting from the
purchase of securities by the Company or the Company's or the Bank's
tax-qualified employee benefit plans and trusts;
(iii) If any "person" (as the term is used in Sections 13(d) and 14(d)
of the Exchange Act) is or becomes the "beneficial owner" (as defined in
Rule 13d-3 under the Exchange Act), directly or indirectly, of securities
of the Bank or the Company representing 20% or more of the Bank's or the
Company's outstanding securities except for any securities of the Bank
purchased by the Company in connection with the initial conversion of the
Bank from mutual to stock form (the "Conversion") and any securities
purchased by the Company or the Company's or the Bank's tax-qualified
employee benefit plans and trusts;
(iv) If the individuals who constitute the Board on the date hereof
(the "Incumbent Board") cease for any reason to constitute at least a
majority of the Board, provided, however, that any person becoming a
director subsequent to the date hereof whose election or nomination for
election by the Company's stockholders, was approved by a vote of at least
three-quarters of the directors then comprising the Incumbent Board shall
be considered as though she were a member of the Incumbent Board, but
excluding, for this purpose, any such person whose initial assumption of
office occurs as a result of an actual or threatened election contest with
respect to the election or removal of directors or other actual or
threatened solicitation of proxies or consents by or on behalf of a person
other than the Board;
(v) A merger, consolidation, reorganization, sale of all or
substantially all the assets of the Bank or the Company or similar
transaction occurs in which the Bank or Company is not the resulting
entity, other than a transaction following which (A) at least 51% of the
equity ownership interests of the entity resulting from such transaction
are beneficially owned (within the meaning of Rule 13d-3 promulgated under
Exchange Act) in substantially the same relative proportions by persons
who, immediately prior to such transaction, beneficially owned (within the
meaning of Rule 13d-3 promulgated under the Exchange Act) at least 51% of
the outstanding equity ownership interests in the Bank or Company and (B)
at least 51% of the securities entitled to vote generally in the election
of directors of the entity resulting from such transaction are beneficially
owned (within the meaning of Rule 13d-3 promulgated under the Exchange Act)
in substantially the same relative proportions by persons who, immediately
prior to such transaction, beneficially owned (within the meaning of Rule
13d-3 promulgated under the Exchange Act) at least 51% of the securities
entitled to vote generally in the election of directors of the Bank or
Company;
(vi) A proxy statement shall be distributed soliciting proxies from
stockholders of the Company, by someone other than the current management
of the Company, seeking stockholder approval of a plan of reorganization,
merger or consolidation of the Company or Bank or similar transaction with
one or more corporations as a result of which the outstanding shares of the
class of securities then subject to such plan or transaction are exchanged
for or converted into cash or property or securities not issued by the Bank
or the Company; or
(vii) A tender offer is completed for 20% or more of the voting
securities of the Bank or Company then outstanding.
The "Change in Control Date" shall mean the date during the Employment Period on
which a Change in Control occurs. Anything in this Agreement to the contrary
notwithstanding, if the Executive's employment with the Company is terminated
and if it is reasonably demonstrated by the Executive that such termination of
employment (1) was at the request of a third party who has taken steps
reasonably calculated to effect a Change in Control or (2) otherwise arose in
connection with or anticipation of a Change in Control, then for all purposes of
this Agreement the "Change in Control Date" shall mean the date immediately
prior to the date of such termination of employment.
(b) If any of the events described in Section 5(a)
constituting a Change in Control have occurred or the Board has determined that
a Change in Control has occurred, the Executive shall be entitled to the
payments and the benefits provided below on the Change in Control Date. The
amounts payable and the benefits to be provided under this Section 5(b) to the
Executive shall consist of the payments and benefits that would be due to the
Executive and the Executive's family under Section 4(b) as if an Event of
Termination under Section 4(a) had occurred on the Change in Control Date and
that for purposes of this Section 5(b), the term Unexpired Employment Period
shall mean three years from the Change in Control Date. For purposes of
determining the payments and benefits due under this Section 5(b), when
calculating the payments due and benefits to be provided for the Unexpired
Employment Period, it shall be assumed that for each year of the remaining term
of this Agreement, the Executive would have received (i) an annual increase in
Base Salary equal to the average percentage increase in Base Salary received by
the Executive for the three-year period ending with the earlier of (x) the year
in which the Change in Control Date occurs or (y) the year during which a
definitive agreement, if any, governing the Change in Control is executed, with
the first such increase effective as of the January 1st next following such
three-year period and the second and third such increases effective as of the
next two anniversaries of such January 1st, (ii) a bonus or other incentive
compensation equal to the highest percentage rate of bonus or incentive
compensation paid to the Executive during the three-year period referred to in
clause (i) of this Section 5(b) times the Base Salary that the Executive would
have been paid during the remaining term of this Agreement including the assumed
increases referred to in clause (i) of this Section 5(b), (iii) the maximum
contributions that could be made by or on behalf of the Executive with respect
to any employee benefit plans and programs maintained by the Company and the
Bank based upon the Base Salary and, if applicable, the bonus or other incentive
compensation, respectively, that the Executive would have been paid during the
remaining term of this Agreement including the assumed increases referred to in
clauses (i) and (ii) of this Section 5(b), and (iv) the present value of the
pension benefits to which the Executive is entitled under Section 4(b)(vi) with
respect to the RP and the BRP (and under any other qualified and non-qualified
defined benefit plans maintained by the Bank or the Company covering the
Executive) determined as if she had continued working for the Bank during the
remaining Unexpired Employment Period and based upon the Base Salary and, if
applicable, the bonus or other incentive compensation, respectively, that the
Executive would have been paid during the remaining term of this Agreement
including the assumed increases referred to in clauses (i) and (ii) of this
Section 5(b). The benefits to be provided under, and the amounts payable
pursuant to, this Section 5 shall be provided and be payable without regard to
proof of damages and without regard to the Executive's efforts, if any, to
mitigate damages. The Company and the Executive hereby stipulate that the
damages which may be incurred by the Executive following any Change in Control
are not capable of accurate measurement as of the date first above written and
that such liquidated damages constitute reasonable damages under the
circumstances.
(c) Payments to the Executive under Section 5(b) shall be made
on the Change in Control Date. Such payments shall be made regardless of whether
the Executive's employment terminates.
6. TERMINATION FOR DISABILITY.
(a) In the event of Termination for Disability, the Executive
shall receive the benefits provided in Section 6(b); provided, however, that the
benefits provided under Section 6(b) shall not be deemed to be in lieu of the
benefits she is otherwise entitled as a former employee under the Bank or
Company's employee plans and programs. For purposes of this Agreement, the
Executive may be terminated for disability only if (i) the Executive shall have
been absent from her duties with the Company on a full-time basis for at least
six consecutive months, or (ii) a majority of the members of the Board acting in
good faith determine that, based upon competent and independent medical evidence
presented by a physician or physicians agreed upon by the parties, the
Executive's physical or mental condition is such that she is totally and
permanently incapable of engaging in any substantial gainful employment based
upon her education, training and experience; provided, however, that on and
after the earliest date on which a Change in Control of the Bank or Company as
defined in Section 5 occurs, such a determination shall require the affirmative
vote of at least three-fourths of the members of the Board acting in good faith
and such vote shall not be made prior to the expiration of a 60-day period
following the date on which the Board shall, by written notice to the Executive,
furnish her a statement of its grounds for proposing to make such determination,
during which period the Executive shall be afforded a reasonable opportunity to
make oral and written presentations to the members of the Board, and to be
represented by her legal counsel at such presentations, to refute the grounds
for the proposed determination.
(b) The Company will pay the Executive as Disability pay, a
bi-weekly payment equal to 100% of the Executive's bi-weekly annual rate of Base
Salary in effect on the date of the Executive's Termination for Disability. In
addition, the Company will cause to be continued insurance coverage, including
group life, health (including hospitalization, medical and major medical),
dental, accidental death and dismemberment, travel accident and short-term
disability coverage substantially identical to the coverage maintained by the
Bank or the Company for the Executive prior to her Termination for Disability.
The Disability pay and coverages shall commence on the effective date of the
Executive's termination and shall cease upon the earliest to occur of: (i) the
date the Executive returns to the full-time employment of the Company, in the
same capacity as she was employed prior to her Termination for Disability and
pursuant to an employment agreement between the Executive and the Company; (ii)
the Executive's full-time employment by another employer; (iii) the Executive's
attaining the normal age of retirement or receiving benefits under the RP or
other defined benefit pension plan of the Bank or the Company; (iv) the
Executive's death; (v) the Executive's eligibility to collect payments under the
disability provision of the RP or other defined benefit pension plan of the Bank
or the Company; or (vi) the expiration of the term of this Agreement.
(c) Notwithstanding the foregoing, there will be no reduction
in the compensation otherwise payable to the Executive during any period during
which the Executive is incapable of performing her duties hereunder by reason of
temporary disability.
7. TERMINATION UPON DEATH.
The Executive's employment shall terminate automatically upon
the Executive's death during the Employment Period. In such event, the Executive
and the Executive's legal representatives shall be entitled to the following:
(i) payment of the Executive's "Accrued Obligations;"
(ii) the continuation of all benefits to the Executive's family and
dependents that would have been provided if the Executive had been entitled
to the benefits under Section 4(b)(ii), (iii) and (iv); and
(iii) the timely payment of any other amounts or benefits required to
be paid or provided or which the Executive is eligible to receive under any
plan, program, policy or practice or contract or agreement of the Company
and its affiliated companies (all such other amounts and benefits shall be
hereinafter referred to as the "Other Benefits");
provided, however, that if the Executive dies while in the employment of the
Company, the amount of life insurance provided to the Executive by the Company
shall not be less than the lesser of $200,000 or three times the Executive's
then annual Base Salary. Accrued Obligations shall be paid to the Executive's
estate or beneficiary, as applicable, in a lump sum cash payment within ten days
of the Date of Termination. With respect to the provision of Other Benefits
after the Change of Control Date, the term Other Benefits as utilized in this
Section 7 shall include, without limitation, that the Executive's estate and/or
beneficiaries shall be entitled to receive, benefits at least equal to the most
favorable benefits provided by the Company and affiliated companies to the
estates and beneficiaries of peer executives of the Company and such affiliates
companies under such plans, programs, practices and policies relating to death
benefits, if any, as in effect with respect to other peer executives and their
beneficiaries at any time during the 120-day period immediately preceding the
Change in Control Date.
8. TERMINATION UPON RETIREMENT.
Termination by the Company of the Executive based on
"Retirement" shall mean termination in accordance with the Company's or the
Bank's retirement policy or in accordance with any retirement arrangement
established with the Executive's consent with respect to him. Upon termination
of the Executive upon Retirement, the Executive shall be entitled to all
benefits under the RP and any other retirement plan of the Bank or the Company
and other plans to which the Executive is a party, and the Executive shall be
entitled to the benefits, if any, that would be payable to her as a former
employee under the Bank's or the Company's employee benefit plans and programs
and compensation plans and programs.
9. TERMINATION FOR CAUSE.
The terms "Termination for Cause" or "Cause" shall mean
termination because of the Executive's personal dishonesty, willful misconduct,
any breach of fiduciary duty involving personal profit, intentional failure to
perform stated duties, conviction of a felony with respect to the Bank or the
Company or any material breach of this Agreement. For purposes of this Section,
no act, or the failure to act, on the Executive's part shall be "willful" unless
done, or omitted to be done, in bad faith and without reasonable belief that the
action or omission was in the best interest of the Company or its affiliates.
Any act, or failure to act, based upon authority given pursuant to a resolution
duly adopted by the Board or based upon the written advice of counsel for the
Company shall be conclusively presumed to be done, or omitted to be done, by the
Executive in good faith and in the best interests of the Company.
Notwithstanding the foregoing, the Executive shall not be deemed to have been
terminated for Cause unless and until there shall have been delivered to her a
Notice of Termination which shall include a copy of a resolution duly adopted by
the affirmative vote of not less than three-fourths of the members of the Board
at a meeting of the Board called and held for that purpose (after reasonable
notice to the Executive and an opportunity for him, together with counsel, to be
heard before the Board), finding that in the good faith opinion of the Board,
the Executive was guilty of conduct justifying Termination for Cause and
specifying the particulars thereof in detail. The Executive shall not have the
right to receive compensation or other benefits for any period after Termination
for Cause.
10. NOTICE.
(a) Any purported termination by the Company or by the
Executive shall be communicated by a Notice of Termination to the other party
hereto. For purposes of this Agreement, a "Notice of Termination" shall mean a
written notice which shall indicate the specific termination provision in this
Agreement relied upon and shall set forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of the Executive's
employment under the provision so indicated.
(b) Subject to Section 10(c), "Date of Termination" shall mean
(A) if the Executive's employment is terminated for Disability, 30 days after a
Notice of Termination is given (provided that she shall not have returned to the
performance of her duties on a full-time basis during such 30-day period), and
(B) if her employment is terminated for any other reason, the date specified in
the Notice of Termination (which, in the case of a Termination for Cause, shall
be immediate).
(c) If, within 30 days after any Notice of Termination is
given, the party receiving such Notice of Termination notifies the other party
that a dispute exists concerning the termination, then, except upon the
occurrence of a Change in Control and voluntary termination by the Executive in
which case the Date of Termination shall be the date specified in the Notice,
the Date of Termination shall be the date on which the dispute is finally
determined, either by mutual written agreement of the parties, by a binding
arbitration award, or by a final judgment, order or decree of a court of
competent jurisdiction (the time for appeal therefrom having expired and no
appeal having been perfected) and provided further that the Date of Termination
shall be extended by a notice of dispute only if such notice is given in good
faith and the party giving such notice pursues the resolution of such dispute
with reasonable diligence. Notwithstanding the pendency of any such dispute, the
Company will continue to pay the Executive her full compensation in effect when
the notice giving rise to the dispute was given (including, but not limited to,
Base Salary) and continue her as a participant in all compensation, benefit and
insurance plans in which she was participating when the notice of dispute was
given, until the dispute is finally resolved in accordance with this Agreement.
Amounts paid under this Section are in addition to all other amounts due under
this Agreement and shall not be offset against or reduce any other amounts due
under this Agreement.
(d) The Company may terminate the Executive's employment at
any time, but any termination by the Company, other than Termination for Cause,
shall not prejudice the Executive's right to compensation or other benefits
under this Agreement or under any other benefit or compensation plans or
programs maintained by the Bank or the Company from time to time. The Executive
shall not have the right to receive compensation or other benefits for any
period after a Termination for Cause as defined in Section 9 hereinabove.
(e) Any communication to a party required or permitted under
this Agreement, including any notice, direction, designation, consent,
instruction, objection or waiver, shall be in writing and shall be deemed to
have been given at such time as it is delivered personally, or five days after
mailing if mailed, postage prepaid, by registered or certified mail, return
receipt requested, addressed to such party at the address listed below or at
such other address as one such party may by written notice specify to the other
party, as follows. If to the Executive, (address omitted); if to the Company,
JSB Financial, Inc., 303 Merrick Road, Lynbrook, New York 11563, Attention:
President, with a copy to Thacher Proffitt & Wood, Two World Trade Center, New
York, New York 10048, Attention: Douglas J. McClintock, Esq.
11. POST-TERMINATION OBLIGATIONS.
(a) All payments and benefits to the Executive under this
Agreement shall be subject to the Executive's compliance with paragraph (b) of
this Section 11 during the term of this Agreement and for one full year after
the expiration or termination hereof.
(b) The Executive shall, upon reasonable notice, furnish such
information and assistance to the Company as may reasonably be required by the
Company in connection with any litigation in which it or any of its subsidiaries
or affiliates is, or may become, a party; provided, that the Company reimburses
the Executive for the reasonable value of her time in connection therewith and
for any out-of-pocket costs attributable thereto.
12. COVENANT NOT TO COMPETE.
The Executive hereby covenants and agrees that for a period of
one year following her Date of Termination, if such termination occurs prior to
the end of the term of the Agreement, she shall not, without the written consent
of the Board, become an officer, employee, consultant, director or trustee of
any savings bank, savings and loan association, savings and loan holding
company, bank or bank holding company if such position (a) entails working in
(or providing services in) New York City, Nassau or Suffolk counties or (b)
entails working in (or providing services in) any other county that is both (i)
within the Bank's primary trade (or operating) area at the time in question,
which shall be determined by reference to the Bank's business plan as in effect
from time to time, and (ii) in which the Bank engages in material or substantial
deposit-taking functions or lending activities at such time; provided, however,
that this Section 12 shall not apply if the Executive's employment is terminated
for the reasons set forth in any of Sections 4, 5, 6 or 8.
13. SOURCE OF PAYMENTS.
All payments provided in this Agreement shall be timely paid
in cash or check from the general funds of the Company.
14. EFFECT ON PRIOR AGREEMENTS.
This Agreement contains the entire understanding between the
parties hereto and supersedes any prior employment agreement between the Company
or any predecessor of the Company and the Executive, except that this Agreement
shall not affect or operate to reduce any benefit or compensation inuring to the
Executive of a kind elsewhere provided. No provisions of this Agreement shall be
interpreted to mean that the Executive is subject to receiving fewer benefits
than those available to her without reference to this Agreement.
15. EFFECT OF ACTION UNDER BANK AGREEMENT.
Notwithstanding any provision herein to the contrary, to the
extent that full compensation payments and benefits are paid to or received by
the Executive under the Bank Agreement, such compensation payments and benefits
paid by the Bank will be deemed to satisfy the corresponding obligations of the
Company under this Agreement.
16. NO ATTACHMENT.
Except as required by law, no right to receive payments under
this Agreement shall be subject to anticipation, commutation, alienation, sale,
assignment, encumbrance, charge, pledge, or hypothecation, or to execution,
attachment, levy, or similar process or assignment by operation of law, and any
attempt, voluntary or involuntary, to affect any such action shall be null,
void, and of no effect.
17. MODIFICATION AND WAIVER.
(a) This Agreement may not be modified or amended except by an
instrument in writing signed by the parties hereto.
(b) No term or condition of this Agreement shall be deemed to
have been waived, nor shall there be any estoppel against the enforcement of any
provision of this Agreement, except by written instrument of the party charged
with such waiver or estoppel. No such written waiver shall be deemed a
continuing waiver unless specifically stated therein, and each such waiver shall
operate only as to the specific term or condition waived and shall not
constitute a waiver of such term or condition for the future as to any act other
than that specifically waived.
18. SUCCESSOR AND ASSIGNS.
This Agreement will inure to the benefit of and be binding
upon the Executive, her legal representatives and testate or intestate
distributees, and the Company, its successors and assigns, including any
successor by purchase, merger, consolidation or otherwise or a statutory
receiver or any other person or firm or corporation to which all or
substantially all of the assets and business of the Company may be sold or
otherwise transferred. Any such successor of the Company shall be deemed to have
assumed this Agreement and to have become obligated hereunder to the same extent
as the Company and the Executive's obligations hereunder shall continue in favor
of such successor.
19. SEVERABILITY.
If, for any reason, any provision of this Agreement, or any
part of any provision, is held invalid, such invalidity shall not affect any
other provision of this Agreement or any part of such provision not held so
invalid, and each such other provision and part thereof shall to the full extent
consistent with law continue in full force and effect.
20. HEADINGS FOR REFERENCE ONLY.
The headings of Sections and paragraphs herein are included
solely for convenience of reference and shall not control the meaning or
interpretation of any of the provisions of this Agreement. Any reference in this
Agreement to a Section or Subsection shall refer to a Section or Subsection of
this Agreement, except as otherwise specified.
21. GOVERNING LAW.
This Agreement shall be governed by the laws of the State of
New York, without reference to conflicts of law principles.
22. INDEMNIFICATION AND ATTORNEYS' FEES.
(a) The Company shall indemnify, hold harmless and defend the
Executive against reasonable costs, including legal fees, incurred by her in
connection with her consultation with legal counsel or arising out of any
action, suit or proceeding in which she may be involved, as a result of her
efforts, in good faith, to defend or enforce the terms of this Agreement. The
Company agrees to pay all such costs as they are incurred by the Executive, to
the full extent permitted by law, and without regard to whether the Company
believes that it has a defense to any action, suit or proceeding by the
Executive or that it is not obligated for any payments under this Agreement.
(b) In the event any dispute or controversy arising under or
in connection with the Executive's termination is resolved in favor of the
Executive, whether by judgment, arbitration or settlement, the Executive shall
be entitled to the payment of all back-pay, including salary, bonuses and any
other cash compensation, fringe benefits and any compensation and benefits due
the Executive under this Agreement.
(c) The Company shall indemnify, hold harmless and defend the
Executive for any act taken or not taken, or any omission or failure to act, by
her in good faith while performing services for the Company or the Bank to the
same extent and upon the same terms and conditions as other similarly situated
officers and directors of the Company or the Bank. If and to the extent that the
Company or the Bank, maintains, at any time during the Employment Period, an
insurance policy covering the other officers and directors of the Company or the
Bank against lawsuits, the Company or the Bank shall use its best efforts to
cause the Executive to be covered under such policy upon the same terms and
conditions as other similarly situated officers and directors.
23. TAX INDEMNIFICATION.
(a) This Section 23 shall apply if 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 occurs within the meaning of section 280G
of the Code. If this Section 23 applies, then with respect to any taxable year
in which the Executive shall be liable for the payment of an excise tax under
section 4999 of the Code with respect to any payment in the nature of
compensation made by the Company, the Bank or any direct or indirect subsidiary
or affiliate of the Company to (or for the benefit of) the Executive, the
Company shall pay to the Executive an amount equal to X determined under the
following formula:
X = E x P
-------------------------------------------------
1 - [(FI x (1 - SLI)) + SLI + E + M]
where
E = the rate at which the excise tax is assessed under
section 4999 of the Code;
P = the amount with respect to which such excise tax is
assessed, determined without regard to this Section
23;
FI = the highest effective marginal rate of income tax
applicable to the Executive under the Code for the
taxable year in question (taking into account any
phase-out or loss of deductions, personal exemptions
and other similar adjustments);
SLI = the sum of the highest effective marginal rates of
income tax applicable to the Executive under all
applicable state and local laws for the taxable year
in question (taking into account any phase-out or
loss of deductions, personal exemptions and other
similar adjustments); and
M = the highest marginal rate of Medicare tax
applicable to the Executive under the Code for the
taxable year in question.
Attached as Appendix A to this Agreement is an example that illustrates
application of this Section 23. Any payment under this Section 23 shall be
adjusted so as to fully indemnify the Executive on an after-tax basis so that
the Executive would be in the same after-tax financial position in which she
would have been if no excise tax under section 4999 of the Code had been
imposed. With respect to any payment in the nature of compensation that is made
to (or for the benefit of) the Executive under the terms of this Agreement or
otherwise and on which an excise tax under section 4999 of the Code will be
assessed, the payment determined under this Section 23(a) shall be made to the
Executive on the earlier of (i) the date the Company, the Bank or any direct or
indirect subsidiary or affiliate of the Company is required to withhold such
tax, or (ii) the date the tax is required to be paid by the Executive.
(b) Notwithstanding anything in this Section 23 to the
contrary, in the event that the Executive's liability for the excise tax under
section 4999 of the Code for a taxable year is subsequently determined to be
different than the amount determined by the formula (X + P) x E, where X, P and
E have the meanings provided in Section 23(a), the Executive or the Company, as
the case may be, shall pay to the other party at the time that the amount of
such excise tax is finally determined, an appropriate amount, plus interest,
such that the payment made under Section 23(a), when increased by the amount of
the payment made to the Executive under this Section 23(b) by the Company, or
when reduced by the amount of the payment made to the Company under this Section
23(b) by the Executive, equals the amount that, it is finally determined, should
have properly been paid to the Executive under Section 23(a). The interest paid
under this Section 23(b) shall be determined at the rate provided under section
1274(b)(2)(B) of the Code. To confirm that the proper amount, if any, was paid
to the Executive under this Section 23, the Executive shall furnish to the
Company a copy of each tax return which reflects a liability for an excise tax
payment made by the Company, at least 20 days before the date on which such
return is required to be filed with the Internal Revenue Service.
24. NON-EXCLUSIVITY OF RIGHTS.
Except as otherwise provided herein, nothing in this Agreement
shall prevent or limit the Executive's continuing or future participation in any
plan, program, policy or practice provided by the Company or any of its
affiliated companies and for which the Executive may qualify, nor shall anything
herein limit or otherwise affect such rights as the Executive may have under any
contract or agreement with the Company or any of its affiliated companies.
Amounts which are vested benefits or which the Executive is otherwise entitled
to receive under any plan, policy, practice or program of or any contract or
agreement with the Company or any of its affiliated companies at or subsequent
to the Date of Termination shall be payable in accordance with such plan,
policy, practice or program or contract or agreement except as explicitly
modified by this Agreement. Notwithstanding the foregoing, in the event of a
termination of employment, the amounts provided in Section 4 or Section 5, as
applicable, shall be the Executive's sole remedy for any purported breach of
this Agreement by the Company.
25. MITIGATION; OTHER CLAIMS.
The Company's obligation to make the payments provided for in
this Agreement and otherwise to perform its obligations hereunder shall not be
affected by any set-off, counterclaim, recoupment, defense or other claim, right
or action which the Company may have against the Executive or others. In no
event shall the Executive be obligated to seek other employment or take any
other action by way of mitigation of the amounts payable to the Executive under
any of the provisions of this Agreement and such amounts shall not be reduced
whether or not the Executive obtains other employment.
26. CONFIDENTIAL INFORMATION.
The Executive shall hold in a fiduciary capacity for the
benefit of the Company all secret or confidential information, knowledge or data
relating to the Company or any of its affiliated companies, and their respective
businesses, which shall have been obtained by the Executive during the
Executive's employment by the Company or any of its affiliated companies and
which shall not be or become public knowledge (other than by acts by the
Executive or representatives of the Executive in violation of this Agreement).
After termination of the Executive's employment with the Company, the Executive
shall not, without the prior written consent of the Company or as may otherwise
be required by law or legal process, communicate or divulge any such
information, knowledge or data to anyone other than the Company and those
designated by it. For purposes of this Agreement, secret and confidential
information, knowledge or data relating to the Company or any of its affiliates,
and their respective business, shall not include any information that is public,
publicly available or available through trade association sources.
Notwithstanding any other provision of this Agreement to the contrary, the
Executive acknowledges and agrees that in the event of a violation or threatened
violation of any of the provisions of this Section 26, the Company shall have no
adequate remedy at law and shall therefore be entitled to enforce each such
provision by temporary or permanent injunction or mandatory relief obtained in
any court of competent jurisdiction without the necessity of proving damages or
posting any bond or other security, and without prejudice to any other remedies
that may be available at law or in equity.
27. ACCESS TO DOCUMENTS.
The Executive shall have the right to obtain copies of any
Company or Bank documents that the Executive reasonably believes, in good faith,
are necessary or appropriate in determining her entitlement to, and the amount
of, payments and benefits under this Agreement.
1. GUARANTEE.
The Company hereby agrees to guarantee the payment by the Bank of any
benefits and compensation to which the Executive is or may be entitled to under
the terms and conditions of the Bank Agreement.
1. REQUIRED REGULATORY PROVISIONS.
Notwithstanding anything herein contained to the contrary, any
payments to the Executive by the Company, whether pursuant to this Agreement
or otherwise, are subject to and conditioned upon their compliance with
section 18(k) of the Federal Deposit Insurance Act, as amended, 12 U.S.C.
ss.1828(k), and any regulations promulgated thereunder.
<PAGE>
SIGNATURES
IN WITNESS WHEREOF, JSB FINANCIAL, INC. has caused this
Agreement to be executed and its seal to be affixed hereunto by its duly
authorized officer, and the Executive has signed this Agreement, on the 22nd day
of June, 1999.
ATTEST: JSB FINANCIAL, INC.
By:
Joanne Corrigan Edward P. Henson
- --------------- ----------------
Joanne Corrigan Edward P. Henson
Secretary President
[Seal]
WITNESS:
Teresa Covello
--------------
Teresa Covello
<PAGE>
STATE OF NEW YORK )
: ss.:
COUNTY OF NASSAU )
On this 22nd day of June, 1999, before me personally came Edward P.
Henson, to me known, who, being by me duly sworn, did depose and say that he is
the President of JSB Financial, Inc., the Delaware corporation described in and
which executed the foregoing instrument; that he knows the seal of said
corporation; that the seal affixed to said instrument is such seal; that it was
so affixed by order of the Board of Directors of said corporation; and that he
signed his name thereto by like order.
Name:
Notary Public
STATE OF NEW YORK )
: ss.:
COUNTY OF NASSAU )
On this 22nd day of June, 1999, before me personally came Teresa
Covello, to me known, and known to me to be the individual described in the
foregoing instrument, who, being by me duly sworn, did depose and say that she
resides at the address set forth in said instrument, and that she signed her
name to the foregoing instrument.
Name:
Notary Public
<PAGE>
APPENDIX A
----------
1. INTRODUCTION. Sections 280G and 4999 of the Internal Revenue Code of
1986, as amended ("Code"), impose a 20% non-deductible federal excise tax on a
person if the payments and benefits in the nature of compensation to or for the
benefit of that person that are contingent on a change in the ownership or
effective control of the Company or the Bank or in the ownership of a
substantial portion of the assets of the Company or the Bank (such payments and
benefits are considered "parachute payments" under section 280G) exceed three
times the person's "base amount" under section 280G. Section 23 of the Agreement
provides for the Executive to receive a tax indemnification payment (sometimes
referred to as a "gross-up" payment) if the payments and benefits in the nature
of compensation to or for the benefit of the Executive that are considered
parachute payments cause the imposition of an excise tax under section 4999 of
the Code. Capitalized terms in this Appendix A that are not defined in this
Appendix A have the meaning used in the Employment Agreement with the Executive.
2. PURPOSE. The purpose of this Appendix A is to illustrate how the tax
indemnification or gross-up payment would be computed. The amounts, figures and
rates used in this example are meant to be illustrative and do not reflect the
actual payments and benefits that would be made to the Executive under this
Agreement. For purposes of this example, it is assumed that a change in control
within the meaning of section 280G of the Code has occurred and that:
(a) The value of the insurance benefits required to be provided to a
hypothetical employee "Z" under sections 4(b)(iii) and 5(b) of the
Agreement for medical, dental, life and other insurance benefits
during the unexpired employment period is $23,000.
(b) The annual rate of Z's salary covered by the Agreement is $100,000,
and Z received annual salary increases of 4%, 5% and 6% (i.e., a
three-year average of 5%) for each of the prior three years. Hence,
the amount payable under sections 4(b)(v) and 5(b) of the Agreement
for salary during the unexpired employment period would be $331,013
[$105,000 + $110, 250 + $115,763].
(c) Z received annual bonuses equal to 20% of his salary in each of the
prior three years. Hence, the amount payable under sections 4(b)(v)
and 5(b) of the Agreement for bonuses during the unexpired employment
period would be $66,203 [20% x ($105,000 + $110,250 + $115,763)].
(d) The amount payable under sections 4(b)(vi) and 5(b) of the Agreement
for the present value of the additional RP and BRP accruals during the
unexpired employment period would be $45,000.
(e) The amount payable under sections 4(b)(vii) and 5(b) of the Agreement
for additional contributions to the ESOP, 401(k) Plan and BRP during
the unexpired employment period would be $20,000.
(f) Z's base amount (i.e., average W-2 wages for the five-year period
preceding the change in control) is $87,000.
3. DETERMINE IF Z IS SUBJECT TO AN EXCISE TAX. Z's parachute payments would
total $485,216 [$23,000 + $331,013 + $66,203 + $45,000 + $20,000]. Three times
Z's base amount is $261,000 [3 x $87,000]; accordingly, Z is subject to an
excise tax because $485,216 exceeds $261,000. Z's "excess parachute payments"
under section 280G of the Code are equal to Z's total parachute payments minus
one times Z's base amount, or $398,216 [$485,216 - $87,000]. If Z were not
protected by section 23 of the Agreement, Z would be subjected to an excise tax
of $79,643 [$398,216 x 20%], in addition to ordinary income taxes.
4. Compute Z's Tax Indemnification Payment. Z's tax indemnification payment
under section 23 of the Agreement would be computed pursuant to the following
formula:
E x P .2 x $398,216
X = ------------------------------------ = ----------------------------------
1 - [(FI x (1 - SLI)) + SLI + E + M] 1 - [.368874 + .0685 + .2 + .0145]
where
E = excise tax rate under section 4999 of the Code [20%];
P = the amount with respect to which such excise tax is
assessed determined without regard to section 23 of
the Agreement [$398,216];
FI = the highest effective marginal rate of income tax
applicable to Z under the Code for the taxable year
in question [assumed to be 39.6% in this example, but
in actuality, the rate is adjusted to take into
account any phase-out or loss of deductions, personal
exemptions and other similar adjustments];
SLI = the sum of the highest effective marginal rates of
income tax applicable to Z under applicable state and
local laws for the taxable year in question [assumed
to be 6.85% in this example, but in actuality, the
rate is adjusted to take into account any phase-out
or loss of deductions, personal exemptions and other
similar adjustments]; and
M = the highest marginal rate of Medicare tax applicable
to Z under the Code for the year in question [1.45%].
In this example, the amount of tax indemnification payment due to Z under
section 23 of the Agreement would be $79,643 [.2 x $398,216] divided by 0.348126
[1 - (.368874 + .0685 + .2 + .0145)], or $228,777. Such amount would be payable
in addition to the other amounts payable under the Agreement in order to put Z
in approximately the same after-tax position that Z would have been in if there
were no excise tax imposed under sections 280G and 4999 of the Code. The tax
indemnification to Z of $228,777 would in turn be a parachute payment subject to
excise tax under sections 280G and 4999. Accordingly, Z's actual excess
parachute payment would be $626,993 [$485,216 - $87,000) + $228,777)] resulting
in an excise tax of $125,399 [$626,993 x 20%]. The difference between the
indemnification. payment and the excise tax [$103,378] is an amount equal to the
sum of the income and other applicable taxes due on the indemnification payment
[($228,777 x .368874) + ($228,777 x .0685) + ($228,777 x .0145)], confirming
that the amount of the tax indemnification payment is sufficient to satisfy all
of Z's tax liability resulting from the excess parachute payment.
JSB FINANCIAL, INC.
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT ("Agreement") is made and entered
into as of June 22, 1999 by and between JSB FINANCIAL, INC., a business
corporation organized and operating under the laws of the State of Delaware and
having its principal office at 303 Merrick Road, Lynbrook, New York 11563
("Company"), and Bernice Glaz, an individual residing at (address omitted)
("Executive"). Any reference to the "Bank" in this Agreement shall mean Jamaica
Savings Bank FSB and any successor thereto.
W I T N E S S E T H :
WHEREAS, the Executive is currently serving as Senior Vice
President of the Company, and the Company wishes to assure itself of the
services of the Executive for the period provided in this Agreement; and
WHEREAS, the Executive is willing to serve in the employ of
the Company on the terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the premises and the
mutual covenants and conditions hereinafter set forth, the Company and the
Executive hereby agree as follows:
1. POSITION AND RESPONSIBILITIES.
During the period of her employment hereunder, the Executive
agrees to serve as Senior Vice President of the Company. The Executive shall
render administrative and management services to the Company such as are
customarily performed by persons situated in a similar executive capacity and
shall perform such other duties not inconsistent with her title and office as
may be assigned to her by or under the authority of the Board of Directors of
the Company (the "Board"). The Executive shall have such authority as is
necessary or appropriate to carry out her assigned duties. Failure to re-elect
the Executive as Senior Vice President of the Company (or a more senior
position) without the consent of the Executive shall constitute a breach of this
Agreement.
2. TERMS.
(a) The period of the Executive's employment under this
Agreement shall be deemed to have commenced as of the date first above written
(the "Effective Date") and shall continue for a period of 36 full calendar
months thereafter. Commencing with the Effective Date, the term of this
Agreement shall be extended for one additional day each day until such time as
the Board or the Executive elects not to extend the term of the Agreement
further by giving written notice to the other party in accordance with Section
10, in which case the term of this Agreement shall become fixed and shall end on
the third anniversary of the date of such written notice. For purposes of this
Agreement, the term "Employment Period" shall mean the term of this Agreement
plus such extensions as are provided herein.
(b) During the period of her employment hereunder, except for
periods of absence occasioned by illness, disability, holidays, reasonable
vacation periods and reasonable leaves of absence, the Executive shall devote
substantially all of her business time, attention, skill and efforts to the
faithful performance of her duties hereunder including (i) service as Senior
Vice President of the Company, and, if duly elected, a Director of the Company,
(ii) performance of such duties not inconsistent with her title and office as
may be assigned to her by or under the authority of the Board or a more senior
executive officer, and (iii) such other activities and services related to the
organization, operation and management of the Company. During the Employment
Period it shall not be a violation of this Agreement for the Executive to (A)
serve on corporate, civic, industry or charitable boards or committees, (B)
deliver lectures, fulfill speaking engagements or teach at educational
institutions and (C) manage personal investments, so long as such activities do
not significantly interfere with the performance of the Executive's
responsibilities as an employee of the Company in accordance with this
Agreement. It is expressly understood and agreed that to the extent that any
such activities have been conducted by the Executive prior to the Effective
Date, the continued conduct of such activities (or the conduct of activities
similar in nature and scope thereto) subsequent to the Effective Date shall not
thereafter be deemed to interfere with the performance of the Executive's
responsibilities to the Company. It is also expressly agreed that the Executive
may conduct activities subsequent to the Effective Date that are generally
accepted for an executive in her position, regardless of whether conducted by
the Executive prior to the Effective Date.
(c) Notwithstanding anything herein contained to the contrary:
(i) the Executive's employment with the Company may be terminated by the Company
or the Executive during the term of this Agreement, subject to the terms and
conditions of this Agreement; and (ii) nothing in this Agreement shall mandate
or prohibit a continuation of the Executive's employment following the
expiration of the term of this Agreement upon such terms and conditions as the
Board and the Executive may mutually agree.
(d) Upon the termination of the Executive's employment with
the Company, the daily extensions provided pursuant to Section 2(a) shall cease
(if such extensions have not previously ceased), and, if such termination is
under circumstances described in Section 4(a) or Section 5(b), the term
"Unexpired Employment Period" shall mean the period of time commencing from the
date of such termination and ending on the last day of the Employment Period
computed with reference to all extensions prior to such termination.
(e) In the event that the Executive's duties and
responsibilities with respect to the Bank are temporarily or permanently
terminated pursuant to Section 9 of the Employment Agreement dated June 22,
1999, as it may be amended from time to time, between the Executive and the Bank
("Bank Agreement") and the course of conduct upon which such termination is
based would not constitute grounds for Termination for Cause under Section 9,
then the Executive shall, to the extent practicable, assume such duties and
responsibilities formerly performed at the Bank as part of her duties and
responsibilities as Senior Vice President of the Company. Nothing in this
provision shall be interpreted as restricting the Company's right to remove the
Executive for Cause in accordance with Section 9.
3. COMPENSATION AND REIMBURSEMENT.
(a) The compensation specified under this Agreement shall
constitute the salary and benefits paid for the duties described in Section 1.
The Company shall pay the Executive as compensation a salary at an annual rate
of not less than (salary omitted) per year or such higher rate as may be
prescribed by or under the authority of the Board ("Base Salary"). The Base
Salary payable under this Section 3 shall be paid in approximately equal
installments in accordance with the Company's customary payroll practices.
During the period of this Agreement, the Executive's Base Salary shall be
reviewed at least annually; the first such review will be made no later than one
year from the date of this Agreement. Such review shall be conducted by a
Committee designated by the Board, and the Board may increase the Executive's
Base Salary, which increased amount shall be considered the Executive's "Base
Salary" for purposes of this Agreement. In no event shall the Executive's annual
rate of Base Salary under this Agreement in effect at a particular time be
reduced without her prior written consent. In addition to the Base Salary
provided in this Section 3(a), the Company shall provide the Executive at no
cost to the Executive with all such other benefits as are provided uniformly to
permanent full-time employees of the Bank.
(b) The Company will provide the Executive with employee
benefit plans, arrangements and perquisites substantially equivalent to those in
which the Executive was participating or otherwise deriving benefit from
immediately prior to the beginning of the term of this Agreement, and the
Company will not, without the Executive's prior written consent, make any
changes in such plans, arrangements or perquisites which would adversely affect
the Executive's rights or benefits thereunder. Without limiting the generality
of the foregoing provisions of this Subsection (b), the Executive will be
entitled to participate in or receive benefits under any employee benefit plans
with respect to which the Executive satisfies the eligibility requirements,
including, but not limited to, the Retirement Plan of Jamaica Savings Bank FSB
("RP"), the Incentive Savings Plan of Jamaica Savings Bank FSB ("ISP"), the
Jamaica Savings Bank FSB Employee Stock Ownership Plan ("ESOP"), the Benefit
Restoration Plan of Jamaica Savings Bank FSB ("BRP"), the JSB Financial, Inc.
1990 Stock Option Plan, the JSB Financial, Inc. 1996 Stock Option Plan,
retirement plans, supplemental retirement plans, pension plans, profit-sharing
plans, group life, health (including hospitalization, medical and major
medical), dental, accidental death and dismemberment, travel accident and
short-term disability insurance plans, or any other employee benefit plan or
arrangement made available by the Company in the future to its senior executives
and key management employees, subject to and on a basis consistent with the
terms, conditions and overall administration of such plans and arrangements. The
Executive will be entitled to incentive compensation and bonuses as provided in
any plan of the Company in which the Executive is eligible to participate.
Nothing paid to the Executive under any such plan or arrangement will be deemed
to be in lieu of other compensation to which the Executive is entitled under
this Agreement.
(c) The Executive's principal place of employment shall be at
the Company's executive offices at the address first above written, or at such
other location in New York City or in Nassau County or Suffolk County at which
the Company shall maintain its principal executive offices, or at such other
location as the Board and the Executive may mutually agree upon. The Company
shall provide the Executive, at her principal place of employment with support
services and facilities suitable to her position with the Company and necessary
or appropriate in connection with the performance of her assigned duties under
this Agreement. The Company or the Bank shall provide the Executive with an
automobile suitable to the position of Senior Vice President of the Company, in
accordance with prior practice, and such automobile may be used by the Executive
in carrying out her duties under the Agreement, including commuting between her
residence and her principal place of employment, and other personal use. The
Company shall reimburse the Executive for her ordinary and necessary business
expenses, including, without limitation, fees for memberships in such clubs and
organizations as the Executive and the Board shall mutually agree are necessary
and appropriate for business purposes, and travel and entertainment expenses,
incurred in connection with the performance of her duties under this Agreement,
upon presentation to the Company of an itemized account of such expenses in such
form as the Company may reasonably require.
(d) In the event that the Executive assumes additional duties
and responsibilities pursuant to Section 2(e) by reason of one of the
circumstances contained in Section 2(e), and the Executive receives or will
receive less than the full amount of compensation and benefits formerly entitled
to her under the Bank Agreement, the Company shall assume the obligation to
provide the Executive with her compensation and benefits in accordance with the
Bank Agreement less any compensation and benefits received from the Bank,
subject to the terms and conditions of this Agreement including the Termination
for Cause provisions in Section 9.
4. PAYMENTS TO THE EXECUTIVE UPON AN EVENT OF TERMINATION.
The provisions of this Section shall in all respects be subject to the terms and
conditions stated in Sections 9 and 29.
(a) Upon the occurrence of an Event of Termination (as herein
defined) during the Executive's term of employment under this Agreement, the
provisions of this Section shall apply. As used in this Agreement, an "Event of
Termination" shall mean and include any one or more of the following: (i) the
termination by the Bank or the Company of the Executive's full-time employment
hereunder for any reason other than: following a Change in Control, as defined
in Section 5; for Disability, as defined in Section 6; for Retirement, as
defined in Section 8; for Cause, as defined in Section 9; or upon the
Executive's death; or (ii) unless consented to by the Executive, the Executive's
voluntary resignation from the Company's employ, upon any: (A) failure to elect
or re-elect or to appoint or re-appoint the Executive as Senior Vice President
of the Company, (B) material adverse change in the Executive's function, duties,
or responsibilities, which change would cause the Executive's position to become
one of lesser responsibility, importance, or scope from the position and
attributes thereof described in Section 1, above (and any such material change
shall be deemed a continuing breach of this Agreement), (C) relocation of the
Executive's principal place of employment by more than 30 miles from its
location at the Effective Date of this Agreement, or a material reduction in the
benefits and perquisites to the Executive from those being provided as of the
Effective Date of this Agreement, (D) liquidation or dissolution of the Bank or
Company, or (E) material breach of this Agreement by the Company. Upon the
occurrence of any event described in clauses (A), (B), (C), (D) or (E), above,
the Executive shall have the right to elect to terminate her employment under
this Agreement by resignation upon written notice pursuant to Section 10 given
within a reasonable period of time not to exceed, except in case of a continuing
breach, four calendar months after the event giving rise to said right to elect.
(b) Upon the occurrence of an Event of Termination as set
forth in Section 4(a), on the Date of Termination, as defined in Section 10, the
Company shall be obligated to pay, or to provide, the Executive, or, in the
event of her subsequent death, to her surviving spouse or such other beneficiary
or beneficiaries as the Executive may designate in writing, or if neither her
estate, as severance pay or liquidated damages, or both, the benefits provided
below and a payment equal to the sum of the payments set forth below:
(i) payment of the sum of (A) the Executive's annual Base Salary
through the Date of Termination to the extent not theretofore paid and (B)
any compensation previously deferred by the Executive (together with any
accrued interest or earnings thereon) and any accrued vacation pay, in each
case to the extent not theretofore paid (the sum of the amounts described
in clauses (A) and (B) shall be hereinafter referred to as the "Accrued
Obligations");
(ii) the benefits, if any, to which the Executive is entitled as a
former employee under the Bank's or Company's employee benefit plans and
programs and compensation plans and programs;
(iii) continued group life, health (including hospitalization, medical
and major medical), dental, accidental death and dismemberment, travel
accident and short-term disability insurance benefits as provided by the
Bank or the Company, in addition to that provided pursuant to Section
4(b)(ii), if and to the extent necessary to provide for the Executive, for
the remaining Unexpired Employment Period, coverage equivalent to the
coverage to which she would have been entitled if she had continued working
for the Company during the remaining Unexpired Employment Period at the
highest annual rate of salary achieved during the Employment Period;
provided, however, if the Executive has obtained group life, health
(including hospitalization, medical and major medical), dental, accidental
death and dismemberment, travel accident and/or short-term disability
insurance benefits coverage from another source, the Executive may, as of
any month, make an irrevocable election to forego the continued coverage
that would otherwise be provided hereunder for the remaining Unexpired
Employment Period, or any portion thereof, in which case the Bank or the
Company, upon receipt of the Executive's irrevocable election, shall pay
the Executive an amount equal to the estimated cost to the Bank or the
Company of providing such coverage during such period;
(iv) if and to the extent not already provided under Sections 4(b)(ii)
and 4(b)(iii), continued health (including hospitalization, medical and
major medical) and dental insurance benefits to the extent maintained by
the Bank or the Company for its employees or retirees during the remainder
of the Executive's lifetime and the lifetime of her spouse, if any, for so
long as the Executive continues to reimburse the Bank for the cost of such
continued coverage;
(v) a lump sum payment, as liquidated damages, in an amount equal to
the Base Salary and the bonus or other incentive compensation that the
Executive would have earned if the Executive had continued working for the
Bank and the Company during the remaining Unexpired Employment Period (A)
at the highest annual rate of Base Salary and bonus or other incentive
compensation achieved by the Executive during the three-year period
immediately preceding the Executive's Date of Termination, except that (B)
in the case of a Change in Control, such lump sum shall be determined based
upon the Base Salary and the bonus or other incentive compensation,
respectively, that the Executive would have been paid during the remaining
Unexpired Employment Period including the assumed increases referred to in
clauses (i) and (ii) of Section 5(b);
(vi) a lump sum payment in an amount equal to the excess, if any, of:
(A) the present value of the pension benefits to which the Executive would
be entitled under the RP and the BRP (and under any other qualified and
non-qualified defined benefit plans maintained by the Company or the Bank
covering the Executive) as if she had continued working for the Company
during the remaining Unexpired Employment Period (x) at the highest annual
rate of Base Salary and, if applicable, the highest bonus or other
incentive compensation, respectively, achieved by the Executive during the
three-year period immediately preceding the Executive's Date of
Termination, except that (y) in the case of a Change in Control, such lump
sum shall be determined based upon the Base Salary and, if applicable, the
bonus or other incentive compensation, respectively, that the Executive
would have been paid during the remaining Unexpired Employment Period
including the assumed increases referred to in clauses (i) and (ii) of
Section 5(b), and (z) in the case of a Change in Control, as if three
additional years are added to the Executive's age and years of creditable
service under the RP and the BRP and after taking into account any other
compensation required to be taken into account under the RP and the BRP
(and any other qualified and non-qualified defined benefit plans of the
Company or the Bank, as applicable), over (B) the present value of the
pension benefits to which she is actually entitled under the RP and the BRP
(and any other qualified and non-qualified defined benefit plans) as of her
Date of Termination, where such present values are to be determined using a
discount rate of 6% and the mortality tables prescribed under section 72 of
the Internal Revenue Code of 1986, as amended ("Code"); and
(vii) a lump sum payment in an amount equal to the contributions that
would have been made by the Company or the Bank on the Executive's behalf
to the ISP and the ESOP and to the BRP with respect to such ISP and ESOP
contributions (and to any other qualified and non-qualified defined
contribution plans maintained by the Company or the Bank covering the
Executive) as if the Executive had continued working for the Bank and the
Company during the remaining Unexpired Employment Period making the maximum
amount of employee contributions required or permitted, if any, under such
plan or plans and earning (A) the highest annual rate of Base Salary and,
if applicable, the highest bonus or other incentive compensation,
respectively, achieved by the Executive during the three-year period
immediately preceding the Executive's Date of Termination, except that (B)
in the case of a Change in Control, such lump sum shall be determined based
upon the Base Salary and, if applicable, the bonus or other incentive
compensation, respectively, that the Executive would have been paid during
the remaining Unexpired Employment Period including the assumed increases
referred to in clauses (i) and (ii) of Section 5(b).
The benefits to be provided under, and the amounts payable pursuant to, this
Section 4 shall be provided and be payable without regard to proof of damages
and without regard to the Executive's efforts, if any, to mitigate damages. The
Company and the Executive hereby stipulate that the damages which may be
incurred by the Executive following any such termination of employment are not
capable of accurate measurement as of the date first above written and that such
liquidated damages constitute reasonable damages under the circumstances.
(c) Payments to the Executive under Section 4 shall be made
within ten days of the Executive's Date of Termination.
(d) In the event payments are made under Section 4 or Section
5, the Executive may select an individual or firm to provide her with reasonable
outplacement counseling services, and the Company shall pay for the costs of
such services; provided, however, that the cost to the Company of such
outplacement counseling services shall not exceed 25% of the Executive's Base
Salary.
5. CHANGE IN CONTROL.
(a) No benefit shall be payable under this Section 5 unless
there shall have been a Change in Control of the Bank or Company, as set forth
below. For purposes of this Agreement, a "Change in Control" of the Bank or
Company shall mean any one or more of the following:
(i) An event of a nature that would be required to be reported in
response to Item l(a) of the current report on Form 8-K, as in effect on
the date hereof, pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934, as amended (the "Exchange Act");
(ii) An event of a nature that results in a Change in Control of the
Bank or the Company within the meaning of the Home Owners' Loan Act of
1933, as amended, or the Change in Bank Control Act of 1978, as amended, as
applicable, and the Rules and Regulations promulgated by the Office of
Thrift Supervision ("OTS") or its predecessor agency, the Federal Deposit
Insurance Corporation ("FDIC") or the Board of Governors of the Federal
Reserve System ("FRB"), as the case may be, as in effect on the date
hereof, but excluding any such Change in Control resulting from the
purchase of securities by the Company or the Company's or the Bank's
tax-qualified employee benefit plans and trusts;
(iii) If any "person" (as the term is used in Sections 13(d) and 14(d)
of the Exchange Act) is or becomes the "beneficial owner" (as defined in
Rule 13d-3 under the Exchange Act), directly or indirectly, of securities
of the Bank or the Company representing 20% or more of the Bank's or the
Company's outstanding securities except for any securities of the Bank
purchased by the Company in connection with the initial conversion of the
Bank from mutual to stock form (the "Conversion") and any securities
purchased by the Company or the Company's or the Bank's tax-qualified
employee benefit plans and trusts;
(iv) If the individuals who constitute the Board on the date hereof
(the "Incumbent Board") cease for any reason to constitute at least a
majority of the Board, provided, however, that any person becoming a
director subsequent to the date hereof whose election or nomination for
election by the Company's stockholders, was approved by a vote of at least
three-quarters of the directors then comprising the Incumbent Board shall
be considered as though she were a member of the Incumbent Board, but
excluding, for this purpose, any such person whose initial assumption of
office occurs as a result of an actual or threatened election contest with
respect to the election or removal of directors or other actual or
threatened solicitation of proxies or consents by or on behalf of a person
other than the Board;
(v) A merger, consolidation, reorganization, sale of all or
substantially all the assets of the Bank or the Company or similar
transaction occurs in which the Bank or Company is not the resulting
entity, other than a transaction following which (A) at least 51% of the
equity ownership interests of the entity resulting from such transaction
are beneficially owned (within the meaning of Rule 13d-3 promulgated under
Exchange Act) in substantially the same relative proportions by persons
who, immediately prior to such transaction, beneficially owned (within the
meaning of Rule 13d-3 promulgated under the Exchange Act) at least 51% of
the outstanding equity ownership interests in the Bank or Company and (B)
at least 51% of the securities entitled to vote generally in the election
of directors of the entity resulting from such transaction are beneficially
owned (within the meaning of Rule 13d-3 promulgated under the Exchange Act)
in substantially the same relative proportions by persons who, immediately
prior to such transaction, beneficially owned (within the meaning of Rule
13d-3 promulgated under the Exchange Act) at least 51% of the securities
entitled to vote generally in the election of directors of the Bank or
Company;
(vi) A proxy statement shall be distributed soliciting proxies from
stockholders of the Company, by someone other than the current management
of the Company, seeking stockholder approval of a plan of reorganization,
merger or consolidation of the Company or Bank or similar transaction with
one or more corporations as a result of which the outstanding shares of the
class of securities then subject to such plan or transaction are exchanged
for or converted into cash or property or securities not issued by the Bank
or the Company; or
(vii) A tender offer is completed for 20% or more of the voting
securities of the Bank or Company then outstanding.
The "Change in Control Date" shall mean the date during the Employment Period on
which a Change in Control occurs. Anything in this Agreement to the contrary
notwithstanding, if the Executive's employment with the Company is terminated
and if it is reasonably demonstrated by the Executive that such termination of
employment (1) was at the request of a third party who has taken steps
reasonably calculated to effect a Change in Control or (2) otherwise arose in
connection with or anticipation of a Change in Control, then for all purposes of
this Agreement the "Change in Control Date" shall mean the date immediately
prior to the date of such termination of employment.
(b) If any of the events described in Section 5(a)
constituting a Change in Control have occurred or the Board has determined that
a Change in Control has occurred, the Executive shall be entitled to the
payments and the benefits provided below on the Change in Control Date. The
amounts payable and the benefits to be provided under this Section 5(b) to the
Executive shall consist of the payments and benefits that would be due to the
Executive and the Executive's family under Section 4(b) as if an Event of
Termination under Section 4(a) had occurred on the Change in Control Date and
that for purposes of this Section 5(b), the term Unexpired Employment Period
shall mean three years from the Change in Control Date. For purposes of
determining the payments and benefits due under this Section 5(b), when
calculating the payments due and benefits to be provided for the Unexpired
Employment Period, it shall be assumed that for each year of the remaining term
of this Agreement, the Executive would have received (i) an annual increase in
Base Salary equal to the average percentage increase in Base Salary received by
the Executive for the three-year period ending with the earlier of (x) the year
in which the Change in Control Date occurs or (y) the year during which a
definitive agreement, if any, governing the Change in Control is executed, with
the first such increase effective as of the January 1st next following such
three-year period and the second and third such increases effective as of the
next two anniversaries of such January 1st, (ii) a bonus or other incentive
compensation equal to the highest percentage rate of bonus or incentive
compensation paid to the Executive during the three-year period referred to in
clause (i) of this Section 5(b) times the Base Salary that the Executive would
have been paid during the remaining term of this Agreement including the assumed
increases referred to in clause (i) of this Section 5(b), (iii) the maximum
contributions that could be made by or on behalf of the Executive with respect
to any employee benefit plans and programs maintained by the Company and the
Bank based upon the Base Salary and, if applicable, the bonus or other incentive
compensation, respectively, that the Executive would have been paid during the
remaining term of this Agreement including the assumed increases referred to in
clauses (i) and (ii) of this Section 5(b), and (iv) the present value of the
pension benefits to which the Executive is entitled under Section 4(b)(vi) with
respect to the RP and the BRP (and under any other qualified and non-qualified
defined benefit plans maintained by the Bank or the Company covering the
Executive) determined as if she had continued working for the Bank during the
remaining Unexpired Employment Period and based upon the Base Salary and, if
applicable, the bonus or other incentive compensation, respectively, that the
Executive would have been paid during the remaining term of this Agreement
including the assumed increases referred to in clauses (i) and (ii) of this
Section 5(b). The benefits to be provided under, and the amounts payable
pursuant to, this Section 5 shall be provided and be payable without regard to
proof of damages and without regard to the Executive's efforts, if any, to
mitigate damages. The Company and the Executive hereby stipulate that the
damages which may be incurred by the Executive following any Change in Control
are not capable of accurate measurement as of the date first above written and
that such liquidated damages constitute reasonable damages under the
circumstances.
(c) Payments to the Executive under Section 5(b) shall be made
on the Change in Control Date. Such payments shall be made regardless of whether
the Executive's employment terminates.
6. TERMINATION FOR DISABILITY.
(a) In the event of Termination for Disability, the Executive
shall receive the benefits provided in Section 6(b); provided, however, that the
benefits provided under Section 6(b) shall not be deemed to be in lieu of the
benefits she is otherwise entitled as a former employee under the Bank or
Company's employee plans and programs. For purposes of this Agreement, the
Executive may be terminated for disability only if (i) the Executive shall have
been absent from her duties with the Company on a full-time basis for at least
six consecutive months, or (ii) a majority of the members of the Board acting in
good faith determine that, based upon competent and independent medical evidence
presented by a physician or physicians agreed upon by the parties, the
Executive's physical or mental condition is such that she is totally and
permanently incapable of engaging in any substantial gainful employment based
upon her education, training and experience; provided, however, that on and
after the earliest date on which a Change in Control of the Bank or Company as
defined in Section 5 occurs, such a determination shall require the affirmative
vote of at least three-fourths of the members of the Board acting in good faith
and such vote shall not be made prior to the expiration of a 60-day period
following the date on which the Board shall, by written notice to the Executive,
furnish her a statement of its grounds for proposing to make such determination,
during which period the Executive shall be afforded a reasonable opportunity to
make oral and written presentations to the members of the Board, and to be
represented by her legal counsel at such presentations, to refute the grounds
for the proposed determination.
(b) The Company will pay the Executive as Disability pay, a
bi-weekly payment equal to 100% of the Executive's bi-weekly annual rate of Base
Salary in effect on the date of the Executive's Termination for Disability. In
addition, the Company will cause to be continued insurance coverage, including
group life, health (including hospitalization, medical and major medical),
dental, accidental death and dismemberment, travel accident and short-term
disability coverage substantially identical to the coverage maintained by the
Bank or the Company for the Executive prior to her Termination for Disability.
The Disability pay and coverages shall commence on the effective date of the
Executive's termination and shall cease upon the earliest to occur of: (i) the
date the Executive returns to the full-time employment of the Company, in the
same capacity as she was employed prior to her Termination for Disability and
pursuant to an employment agreement between the Executive and the Company; (ii)
the Executive's full-time employment by another employer; (iii) the Executive's
attaining the normal age of retirement or receiving benefits under the RP or
other defined benefit pension plan of the Bank or the Company; (iv) the
Executive's death; (v) the Executive's eligibility to collect payments under the
disability provision of the RP or other defined benefit pension plan of the Bank
or the Company; or (vi) the expiration of the term of this Agreement.
(c) Notwithstanding the foregoing, there will be no reduction
in the compensation otherwise payable to the Executive during any period during
which the Executive is incapable of performing her duties hereunder by reason of
temporary disability.
7. TERMINATION UPON DEATH.
The Executive's employment shall terminate automatically upon
the Executive's death during the Employment Period. In such event, the Executive
and the Executive's legal representatives shall be entitled to the following:
(i) payment of the Executive's "Accrued Obligations;"
(ii) the continuation of all benefits to the Executive's family and
dependents that would have been provided if the Executive had been entitled
to the benefits under Section 4(b)(ii), (iii) and (iv); and
(iii) the timely payment of any other amounts or benefits required to
be paid or provided or which the Executive is eligible to receive under any
plan, program, policy or practice or contract or agreement of the Company
and its affiliated companies (all such other amounts and benefits shall be
hereinafter referred to as the "Other Benefits");
provided, however, that if the Executive dies while in the employment of the
Company, the amount of life insurance provided to the Executive by the Company
shall not be less than the lesser of $200,000 or three times the Executive's
then annual Base Salary. Accrued Obligations shall be paid to the Executive's
estate or beneficiary, as applicable, in a lump sum cash payment within ten days
of the Date of Termination. With respect to the provision of Other Benefits
after the Change of Control Date, the term Other Benefits as utilized in this
Section 7 shall include, without limitation, that the Executive's estate and/or
beneficiaries shall be entitled to receive, benefits at least equal to the most
favorable benefits provided by the Company and affiliated companies to the
estates and beneficiaries of peer executives of the Company and such affiliates
companies under such plans, programs, practices and policies relating to death
benefits, if any, as in effect with respect to other peer executives and their
beneficiaries at any time during the 120-day period immediately preceding the
Change in Control Date.
8. TERMINATION UPON RETIREMENT.
Termination by the Company of the Executive based on
"Retirement" shall mean termination in accordance with the Company's or the
Bank's retirement policy or in accordance with any retirement arrangement
established with the Executive's consent with respect to him. Upon termination
of the Executive upon Retirement, the Executive shall be entitled to all
benefits under the RP and any other retirement plan of the Bank or the Company
and other plans to which the Executive is a party, and the Executive shall be
entitled to the benefits, if any, that would be payable to her as a former
employee under the Bank's or the Company's employee benefit plans and programs
and compensation plans and programs.
9. TERMINATION FOR CAUSE.
The terms "Termination for Cause" or "Cause" shall mean
termination because of the Executive's personal dishonesty, willful misconduct,
any breach of fiduciary duty involving personal profit, intentional failure to
perform stated duties, conviction of a felony with respect to the Bank or the
Company or any material breach of this Agreement. For purposes of this Section,
no act, or the failure to act, on the Executive's part shall be "willful" unless
done, or omitted to be done, in bad faith and without reasonable belief that the
action or omission was in the best interest of the Company or its affiliates.
Any act, or failure to act, based upon authority given pursuant to a resolution
duly adopted by the Board or based upon the written advice of counsel for the
Company shall be conclusively presumed to be done, or omitted to be done, by the
Executive in good faith and in the best interests of the Company.
Notwithstanding the foregoing, the Executive shall not be deemed to have been
terminated for Cause unless and until there shall have been delivered to her a
Notice of Termination which shall include a copy of a resolution duly adopted by
the affirmative vote of not less than three-fourths of the members of the Board
at a meeting of the Board called and held for that purpose (after reasonable
notice to the Executive and an opportunity for him, together with counsel, to be
heard before the Board), finding that in the good faith opinion of the Board,
the Executive was guilty of conduct justifying Termination for Cause and
specifying the particulars thereof in detail. The Executive shall not have the
right to receive compensation or other benefits for any period after Termination
for Cause.
10. NOTICE.
(a) Any purported termination by the Company or by the
Executive shall be communicated by a Notice of Termination to the other party
hereto. For purposes of this Agreement, a "Notice of Termination" shall mean a
written notice which shall indicate the specific termination provision in this
Agreement relied upon and shall set forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of the Executive's
employment under the provision so indicated.
(b) Subject to Section 10(c), "Date of Termination" shall mean
(A) if the Executive's employment is terminated for Disability, 30 days after a
Notice of Termination is given (provided that she shall not have returned to the
performance of her duties on a full-time basis during such 30-day period), and
(B) if her employment is terminated for any other reason, the date specified in
the Notice of Termination (which, in the case of a Termination for Cause, shall
be immediate).
(c) If, within 30 days after any Notice of Termination is
given, the party receiving such Notice of Termination notifies the other party
that a dispute exists concerning the termination, then, except upon the
occurrence of a Change in Control and voluntary termination by the Executive in
which case the Date of Termination shall be the date specified in the Notice,
the Date of Termination shall be the date on which the dispute is finally
determined, either by mutual written agreement of the parties, by a binding
arbitration award, or by a final judgment, order or decree of a court of
competent jurisdiction (the time for appeal therefrom having expired and no
appeal having been perfected) and provided further that the Date of Termination
shall be extended by a notice of dispute only if such notice is given in good
faith and the party giving such notice pursues the resolution of such dispute
with reasonable diligence. Notwithstanding the pendency of any such dispute, the
Company will continue to pay the Executive her full compensation in effect when
the notice giving rise to the dispute was given (including, but not limited to,
Base Salary) and continue her as a participant in all compensation, benefit and
insurance plans in which she was participating when the notice of dispute was
given, until the dispute is finally resolved in accordance with this Agreement.
Amounts paid under this Section are in addition to all other amounts due under
this Agreement and shall not be offset against or reduce any other amounts due
under this Agreement.
(d) The Company may terminate the Executive's employment at
any time, but any termination by the Company, other than Termination for Cause,
shall not prejudice the Executive's right to compensation or other benefits
under this Agreement or under any other benefit or compensation plans or
programs maintained by the Bank or the Company from time to time. The Executive
shall not have the right to receive compensation or other benefits for any
period after a Termination for Cause as defined in Section 9 hereinabove.
(e) Any communication to a party required or permitted under
this Agreement, including any notice, direction, designation, consent,
instruction, objection or waiver, shall be in writing and shall be deemed to
have been given at such time as it is delivered personally, or five days after
mailing if mailed, postage prepaid, by registered or certified mail, return
receipt requested, addressed to such party at the address listed below or at
such other address as one such party may by written notice specify to the other
party, as follows. If to the Executive, (address omitted); if to the Company,
JSB Financial, Inc., 303 Merrick Road, Lynbrook, New York 11563, Attention:
President, with a copy to Thacher Proffitt & Wood, Two World Trade Center, New
York, New York 10048, Attention: Douglas J. McClintock, Esq.
11. POST-TERMINATION OBLIGATIONS.
(a) All payments and benefits to the Executive under this
Agreement shall be subject to the Executive's compliance with paragraph (b) of
this Section 11 during the term of this Agreement and for one full year after
the expiration or termination hereof.
(b) The Executive shall, upon reasonable notice, furnish such
information and assistance to the Company as may reasonably be required by the
Company in connection with any litigation in which it or any of its subsidiaries
or affiliates is, or may become, a party; provided, that the Company reimburses
the Executive for the reasonable value of her time in connection therewith and
for any out-of-pocket costs attributable thereto.
12. COVENANT NOT TO COMPETE.
The Executive hereby covenants and agrees that for a period of
one year following her Date of Termination, if such termination occurs prior to
the end of the term of the Agreement, she shall not, without the written consent
of the Board, become an officer, employee, consultant, director or trustee of
any savings bank, savings and loan association, savings and loan holding
company, bank or bank holding company if such position (a) entails working in
(or providing services in) New York City, Nassau or Suffolk counties or (b)
entails working in (or providing services in) any other county that is both (i)
within the Bank's primary trade (or operating) area at the time in question,
which shall be determined by reference to the Bank's business plan as in effect
from time to time, and (ii) in which the Bank engages in material or substantial
deposit-taking functions or lending activities at such time; provided, however,
that this Section 12 shall not apply if the Executive's employment is terminated
for the reasons set forth in any of Sections 4, 5, 6 or 8.
13. SOURCE OF PAYMENTS.
All payments provided in this Agreement shall be timely paid
in cash or check from the general funds of the Company.
14. EFFECT ON PRIOR AGREEMENTS.
This Agreement contains the entire understanding between the
parties hereto and supersedes any prior employment agreement between the Company
or any predecessor of the Company and the Executive, except that this Agreement
shall not affect or operate to reduce any benefit or compensation inuring to the
Executive of a kind elsewhere provided. No provisions of this Agreement shall be
interpreted to mean that the Executive is subject to receiving fewer benefits
than those available to her without reference to this Agreement.
15. EFFECT OF ACTION UNDER BANK AGREEMENT.
Notwithstanding any provision herein to the contrary, to the
extent that full compensation payments and benefits are paid to or received by
the Executive under the Bank Agreement, such compensation payments and benefits
paid by the Bank will be deemed to satisfy the corresponding obligations of the
Company under this Agreement.
16. NO ATTACHMENT.
Except as required by law, no right to receive payments under
this Agreement shall be subject to anticipation, commutation, alienation, sale,
assignment, encumbrance, charge, pledge, or hypothecation, or to execution,
attachment, levy, or similar process or assignment by operation of law, and any
attempt, voluntary or involuntary, to affect any such action shall be null,
void, and of no effect.
17. MODIFICATION AND WAIVER.
(a) This Agreement may not be modified or amended except by
an instrument in writing signed by the parties hereto.
(b) No term or condition of this Agreement shall be deemed to
have been waived, nor shall there be any estoppel against the enforcement of any
provision of this Agreement, except by written instrument of the party charged
with such waiver or estoppel. No such written waiver shall be deemed a
continuing waiver unless specifically stated therein, and each such waiver shall
operate only as to the specific term or condition waived and shall not
constitute a waiver of such term or condition for the future as to any act other
than that specifically waived.
18. SUCCESSOR AND ASSIGNS.
This Agreement will inure to the benefit of and be binding
upon the Executive, her legal representatives and testate or intestate
distributees, and the Company, its successors and assigns, including any
successor by purchase, merger, consolidation or otherwise or a statutory
receiver or any other person or firm or corporation to which all or
substantially all of the assets and business of the Company may be sold or
otherwise transferred. Any such successor of the Company shall be deemed to have
assumed this Agreement and to have become obligated hereunder to the same extent
as the Company and the Executive's obligations hereunder shall continue in favor
of such successor.
19. SEVERABILITY.
If, for any reason, any provision of this Agreement, or any
part of any provision, is held invalid, such invalidity shall not affect any
other provision of this Agreement or any part of such provision not held so
invalid, and each such other provision and part thereof shall to the full extent
consistent with law continue in full force and effect.
20. HEADINGS FOR REFERENCE ONLY.
The headings of Sections and paragraphs herein are included
solely for convenience of reference and shall not control the meaning or
interpretation of any of the provisions of this Agreement. Any reference in this
Agreement to a Section or Subsection shall refer to a Section or Subsection of
this Agreement, except as otherwise specified.
21. GOVERNING LAW.
This Agreement shall be governed by the laws of the State of
New York, without reference to conflicts of law principles.
22. INDEMNIFICATION AND ATTORNEYS' FEES.
(a) The Company shall indemnify, hold harmless and defend the
Executive against reasonable costs, including legal fees, incurred by her in
connection with her consultation with legal counsel or arising out of any
action, suit or proceeding in which she may be involved, as a result of her
efforts, in good faith, to defend or enforce the terms of this Agreement. The
Company agrees to pay all such costs as they are incurred by the Executive, to
the full extent permitted by law, and without regard to whether the Company
believes that it has a defense to any action, suit or proceeding by the
Executive or that it is not obligated for any payments under this Agreement.
(b) In the event any dispute or controversy arising under or
in connection with the Executive's termination is resolved in favor of the
Executive, whether by judgment, arbitration or settlement, the Executive shall
be entitled to the payment of all back-pay, including salary, bonuses and any
other cash compensation, fringe benefits and any compensation and benefits due
the Executive under this Agreement.
(c) The Company shall indemnify, hold harmless and defend the
Executive for any act taken or not taken, or any omission or failure to act, by
her in good faith while performing services for the Company or the Bank to the
same extent and upon the same terms and conditions as other similarly situated
officers and directors of the Company or the Bank. If and to the extent that the
Company or the Bank, maintains, at any time during the Employment Period, an
insurance policy covering the other officers and directors of the Company or the
Bank against lawsuits, the Company or the Bank shall use its best efforts to
cause the Executive to be covered under such policy upon the same terms and
conditions as other similarly situated officers and directors.
23. TAX INDEMNIFICATION.
(a) This Section 23 shall apply if 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 occurs within the meaning of section 280G
of the Code. If this Section 23 applies, then with respect to any taxable year
in which the Executive shall be liable for the payment of an excise tax under
section 4999 of the Code with respect to any payment in the nature of
compensation made by the Company, the Bank or any direct or indirect subsidiary
or affiliate of the Company to (or for the benefit of) the Executive, the
Company shall pay to the Executive an amount equal to X determined under the
following formula:
X = E x P
-------------------------------------------------
1 - [(FI x (1 - SLI)) + SLI + E + M]
where
E = the rate at which the excise tax is assessed under
section 4999 of the Code;
P = the amount with respect to which such excise tax
is assessed, determined without regard to this
Section 23;
FI = the highest effective marginal rate of income tax
applicable to the Executive under the Code for the
taxable year in question (taking into account any
phase-out or loss of deductions, personal exemptions
and other similar adjustments);
SLI = the sum of the highest effective marginal rates of
income tax applicable to the Executive under all
applicable state and local laws for the taxable year
in question (taking into account any phase-out or
loss of deductions, personal exemptions and other
similar adjustments); and
M = the highest marginal rate of Medicare tax
applicable to the Executive under the Code for the
taxable year in question.
Attached as Appendix A to this Agreement is an example that illustrates
application of this Section 23. Any payment under this Section 23 shall be
adjusted so as to fully indemnify the Executive on an after-tax basis so that
the Executive would be in the same after-tax financial position in which she
would have been if no excise tax under section 4999 of the Code had been
imposed. With respect to any payment in the nature of compensation that is made
to (or for the benefit of) the Executive under the terms of this Agreement or
otherwise and on which an excise tax under section 4999 of the Code will be
assessed, the payment determined under this Section 23(a) shall be made to the
Executive on the earlier of (i) the date the Company, the Bank or any direct or
indirect subsidiary or affiliate of the Company is required to withhold such
tax, or (ii) the date the tax is required to be paid by the Executive.
(b) Notwithstanding anything in this Section 23 to the
contrary, in the event that the Executive's liability for the excise tax under
section 4999 of the Code for a taxable year is subsequently determined to be
different than the amount determined by the formula (X + P) x E, where X, P and
E have the meanings provided in Section 23(a), the Executive or the Company, as
the case may be, shall pay to the other party at the time that the amount of
such excise tax is finally determined, an appropriate amount, plus interest,
such that the payment made under Section 23(a), when increased by the amount of
the payment made to the Executive under this Section 23(b) by the Company, or
when reduced by the amount of the payment made to the Company under this Section
23(b) by the Executive, equals the amount that, it is finally determined, should
have properly been paid to the Executive under Section 23(a). The interest paid
under this Section 23(b) shall be determined at the rate provided under section
1274(b)(2)(B) of the Code. To confirm that the proper amount, if any, was paid
to the Executive under this Section 23, the Executive shall furnish to the
Company a copy of each tax return which reflects a liability for an excise tax
payment made by the Company, at least 20 days before the date on which such
return is required to be filed with the Internal Revenue Service.
24. NON-EXCLUSIVITY OF RIGHTS.
Except as otherwise provided herein, nothing in this Agreement
shall prevent or limit the Executive's continuing or future participation in any
plan, program, policy or practice provided by the Company or any of its
affiliated companies and for which the Executive may qualify, nor shall anything
herein limit or otherwise affect such rights as the Executive may have under any
contract or agreement with the Company or any of its affiliated companies.
Amounts which are vested benefits or which the Executive is otherwise entitled
to receive under any plan, policy, practice or program of or any contract or
agreement with the Company or any of its affiliated companies at or subsequent
to the Date of Termination shall be payable in accordance with such plan,
policy, practice or program or contract or agreement except as explicitly
modified by this Agreement. Notwithstanding the foregoing, in the event of a
termination of employment, the amounts provided in Section 4 or Section 5, as
applicable, shall be the Executive's sole remedy for any purported breach of
this Agreement by the Company.
25. MITIGATION; OTHER CLAIMS.
The Company's obligation to make the payments provided for in
this Agreement and otherwise to perform its obligations hereunder shall not be
affected by any set-off, counterclaim, recoupment, defense or other claim, right
or action which the Company may have against the Executive or others. In no
event shall the Executive be obligated to seek other employment or take any
other action by way of mitigation of the amounts payable to the Executive under
any of the provisions of this Agreement and such amounts shall not be reduced
whether or not the Executive obtains other employment.
26. CONFIDENTIAL INFORMATION.
The Executive shall hold in a fiduciary capacity for the
benefit of the Company all secret or confidential information, knowledge or data
relating to the Company or any of its affiliated companies, and their respective
businesses, which shall have been obtained by the Executive during the
Executive's employment by the Company or any of its affiliated companies and
which shall not be or become public knowledge (other than by acts by the
Executive or representatives of the Executive in violation of this Agreement).
After termination of the Executive's employment with the Company, the Executive
shall not, without the prior written consent of the Company or as may otherwise
be required by law or legal process, communicate or divulge any such
information, knowledge or data to anyone other than the Company and those
designated by it. For purposes of this Agreement, secret and confidential
information, knowledge or data relating to the Company or any of its affiliates,
and their respective business, shall not include any information that is public,
publicly available or available through trade association sources.
Notwithstanding any other provision of this Agreement to the contrary, the
Executive acknowledges and agrees that in the event of a violation or threatened
violation of any of the provisions of this Section 26, the Company shall have no
adequate remedy at law and shall therefore be entitled to enforce each such
provision by temporary or permanent injunction or mandatory relief obtained in
any court of competent jurisdiction without the necessity of proving damages or
posting any bond or other security, and without prejudice to any other remedies
that may be available at law or in equity.
27. ACCESS TO DOCUMENTS.
The Executive shall have the right to obtain copies of any
Company or Bank documents that the Executive reasonably believes, in good faith,
are necessary or appropriate in determining her entitlement to, and the amount
of, payments and benefits under this Agreement.
1. GUARANTEE.
The Company hereby agrees to guarantee the payment by the Bank of any
benefits and compensation to which the Executive is or may be entitled to under
the terms and conditions of the Bank Agreement.
1. REQUIRED REGULATORY PROVISIONS.
Notwithstanding anything herein contained to the contrary, any payments
to the Executive by the Company, whether pursuant to this Agreement or
otherwise, are subject to and conditioned upon their compliance with section
18(k) of the Federal Deposit Insurance Act, as amended, 12 U.S.C. ss.1828(k),
and any regulations promulgated thereunder.
<PAGE>
SIGNATURES
IN WITNESS WHEREOF, JSB FINANCIAL, INC. has caused this
Agreement to be executed and its seal to be affixed hereunto by its duly
authorized officer, and the Executive has signed this Agreement, on the 22nd day
of June, 1999.
ATTEST: JSB FINANCIAL, INC.
Joanne Corrigan By: Edward P. Henson
- --------------- ----------------
Joanne Corrigan Edward P. Henson
Secretary President
[Seal]
WITNESS:
Bernice Glaz
------------
Bernice Glaz
<PAGE>
STATE OF NEW YORK )
: ss.:
COUNTY OF NASSAU )
On this 22nd day of June, 1999, before me personally came Edward P.
Henson, to me known, who, being by me duly sworn, did depose and say that he is
the President of JSB Financial, Inc., the Delaware corporation described in and
which executed the foregoing instrument; that he knows the seal of said
corporation; that the seal affixed to said instrument is such seal; that it was
so affixed by order of the Board of Directors of said corporation; and that he
signed his name thereto by like order.
Name:
Notary Public
STATE OF NEW YORK )
: ss.:
COUNTY OF NASSAU )
On this 22nd day of June, 1999, before me personally came Bernice Glaz,
to me known, and known to me to be the individual described in the foregoing
instrument, who, being by me duly sworn, did depose and say that she resides at
the address set forth in said instrument, and that she signed her name to the
foregoing instrument.
Name:
Notary Public
<PAGE>
APPENDIX A
----------
1. INTRODUCTION. Sections 280G and 4999 of the Internal Revenue Code of
1986, as amended ("Code"), impose a 20% non-deductible federal excise tax on a
person if the payments and benefits in the nature of compensation to or for the
benefit of that person that are contingent on a change in the ownership or
effective control of the Company or the Bank or in the ownership of a
substantial portion of the assets of the Company or the Bank (such payments and
benefits are considered "parachute payments" under section 280G) exceed three
times the person's "base amount" under section 280G. Section 23 of the Agreement
provides for the Executive to receive a tax indemnification payment (sometimes
referred to as a "gross-up" payment) if the payments and benefits in the nature
of compensation to or for the benefit of the Executive that are considered
parachute payments cause the imposition of an excise tax under section 4999 of
the Code. Capitalized terms in this Appendix A that are not defined in this
Appendix A have the meaning used in the Employment Agreement with the Executive.
2. PURPOSE. The purpose of this Appendix A is to illustrate how the tax
indemnification or gross-up payment would be computed. The amounts, figures and
rates used in this example are meant to be illustrative and do not reflect the
actual payments and benefits that would be made to the Executive under this
Agreement. For purposes of this example, it is assumed that a change in control
within the meaning of section 280G of the Code has occurred and that:
(a) The value of the insurance benefits required to be provided to a
hypothetical employee "Z" under sections 4(b)(iii) and 5(b) of the
Agreement for medical, dental, life and other insurance benefits
during the unexpired employment period is $23,000.
(b) The annual rate of Z's salary covered by the Agreement is $100,000,
and Z received annual salary increases of 4%, 5% and 6% (i.e., a
three-year average of 5%) for each of the prior three years. Hence,
the amount payable under sections 4(b)(v) and 5(b) of the Agreement
for salary during the unexpired employment period would be $331,013
[$105,000 + $110, 250 + $115,763].
(c) Z received annual bonuses equal to 20% of his salary in each of the
prior three years. Hence, the amount payable under sections 4(b)(v)
and 5(b) of the Agreement for bonuses during the unexpired employment
period would be $66,203 [20% x ($105,000 + $110,250 + $115,763)].
(d) The amount payable under sections 4(b)(vi) and 5(b) of the Agreement
for the present value of the additional RP and BRP accruals during the
unexpired employment period would be $45,000.
(e) The amount payable under sections 4(b)(vii) and 5(b) of the Agreement
for additional contributions to the ESOP, 401(k) Plan and BRP during
the unexpired employment period would be $20,000.
(f) Z's base amount (i.e., average W-2 wages for the five-year period
preceding the change in control) is $87,000.
3. DETERMINE IF Z IS SUBJECT TO AN EXCISE TAX. Z's parachute payments would
total $485,216 [$23,000 + $331,013 + $66,203 + $45,000 + $20,000]. Three times
Z's base amount is $261,000 [3 x $87,000]; accordingly, Z is subject to an
excise tax because $485,216 exceeds $261,000. Z's "excess parachute payments"
under section 280G of the Code are equal to Z's total parachute payments minus
one times Z's base amount, or $398,216 [$485,216 - $87,000]. If Z were not
protected by section 23 of the Agreement, Z would be subjected to an excise tax
of $79,643 [$398,216 x 20%], in addition to ordinary income taxes.
4. Compute Z's Tax Indemnification Payment. Z's tax indemnification payment
under section 23 of the Agreement would be computed pursuant to the following
formula:
E x P .2 x $398,216
X = ------------------------------------ = ----------------------------------
1 - [(FI x (1 - SLI)) + SLI + E + M] 1 - [.368874 + .0685 + .2 + .0145]
where
E = excise tax rate under section 4999 of the Code [20%];
P = the amount with respect to which such excise tax is
assessed determined without regard to section 23 of
the Agreement [$398,216];
FI = the highest effective marginal rate of income tax
applicable to Z under the Code for the taxable year
in question [assumed to be 39.6% in this example, but
in actuality, the rate is adjusted to take into
account any phase-out or loss of deductions, personal
exemptions and other similar adjustments];
SLI = the sum of the highest effective marginal rates of
income tax applicable to Z under applicable state and
local laws for the taxable year in question [assumed
to be 6.85% in this example, but in actuality, the
rate is adjusted to take into account any phase-out
or loss of deductions, personal exemptions and other
similar adjustments]; and
M = the highest marginal rate of Medicare tax applicable
to Z under the Code for the year in question [1.45%].
In this example, the amount of tax indemnification payment due to Z under
section 23 of the Agreement would be $79,643 [.2 x $398,216] divided by 0.348126
[1 - (.368874 + .0685 + .2 + .0145)], or $228,777. Such amount would be payable
in addition to the other amounts payable under the Agreement in order to put Z
in approximately the same after-tax position that Z would have been in if there
were no excise tax imposed under sections 280G and 4999 of the Code. The tax
indemnification to Z of $228,777 would in turn be a parachute payment subject to
excise tax under sections 280G and 4999. Accordingly, Z's actual excess
parachute payment would be $626,993 [$485,216 - $87,000) + $228,777)] resulting
in an excise tax of $125,399 [$626,993 x 20%]. The difference between the
indemnification. payment and the excise tax [$103,378] is an amount equal to the
sum of the income and other applicable taxes due on the indemnification payment
[($228,777 x .368874) + ($228,777 x .0685) + ($228,777 x .0145)], confirming
that the amount of the tax indemnification payment is sufficient to satisfy all
of Z's tax liability resulting from the excess parachute payment.
JSB FINANCIAL, INC.
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT ("Agreement") is made and entered
into as of June 22, 1999 by and between JSB FINANCIAL, INC., a business
corporation organized and operating under the laws of the State of Delaware and
having its principal office at 303 Merrick Road, Lynbrook, New York 11563
("Company"), and Joseph J. Hennessy, an individual residing at (address omitted)
("Executive"). Any reference to the "Bank" in this Agreement shall mean Jamaica
Savings Bank FSB and any successor thereto.
W I T N E S S E T H :
WHEREAS, the Executive is currently serving as Vice President
of the Company, and the Company wishes to assure itself of the services of the
Executive for the period provided in this Agreement; and
WHEREAS, the Executive is willing to serve in the employ of
the Company on the terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the premises and the
mutual covenants and conditions hereinafter set forth, the Company and the
Executive hereby agree as follows:
1. POSITION AND RESPONSIBILITIES.
During the period of his employment hereunder, the Executive
agrees to serve as Vice President of the Company. The Executive shall render
administrative and management services to the Company such as are customarily
performed by persons situated in a similar executive capacity and shall perform
such other duties not inconsistent with his title and office as may be assigned
to him by or under the authority of the Board of Directors of the Company (the
"Board"). The Executive shall have such authority as is necessary or appropriate
to carry out his assigned duties. Failure to re-elect the Executive as Vice
President of the Company (or a more senior position) without the consent of the
Executive shall constitute a breach of this Agreement.
2. TERMS.
(a) The period of the Executive's employment under this
Agreement shall be deemed to have commenced as of the date first above written
(the "Effective Date") and shall continue for a period of 36 full calendar
months thereafter. Commencing with the Effective Date, the term of this
Agreement shall be extended for one additional day each day until such time as
the Board or the Executive elects not to extend the term of the Agreement
further by giving written notice to the other party in accordance with Section
10, in which case the term of this Agreement shall become fixed and shall end on
the third anniversary of the date of such written notice. For purposes of this
Agreement, the term "Employment Period" shall mean the term of this Agreement
plus such extensions as are provided herein.
(b) During the period of his employment hereunder, except for
periods of absence occasioned by illness, disability, holidays, reasonable
vacation periods and reasonable leaves of absence, the Executive shall devote
substantially all of his business time, attention, skill and efforts to the
faithful performance of his duties hereunder including (i) service as Vice
President of the Company, and, if duly elected, a Director of the Company, (ii)
performance of such duties not inconsistent with his title and office as may be
assigned to him by or under the authority of the Board or a more senior
executive officer, and (iii) such other activities and services related to the
organization, operation and management of the Company. During the Employment
Period it shall not be a violation of this Agreement for the Executive to (A)
serve on corporate, civic, industry or charitable boards or committees, (B)
deliver lectures, fulfill speaking engagements or teach at educational
institutions and (C) manage personal investments, so long as such activities do
not significantly interfere with the performance of the Executive's
responsibilities as an employee of the Company in accordance with this
Agreement. It is expressly understood and agreed that to the extent that any
such activities have been conducted by the Executive prior to the Effective
Date, the continued conduct of such activities (or the conduct of activities
similar in nature and scope thereto) subsequent to the Effective Date shall not
thereafter be deemed to interfere with the performance of the Executive's
responsibilities to the Company. It is also expressly agreed that the Executive
may conduct activities subsequent to the Effective Date that are generally
accepted for an executive in his position, regardless of whether conducted by
the Executive prior to the Effective Date.
(c) Notwithstanding anything herein contained to the contrary:
(i) the Executive's employment with the Company may be terminated by the Company
or the Executive during the term of this Agreement, subject to the terms and
conditions of this Agreement; and (ii) nothing in this Agreement shall mandate
or prohibit a continuation of the Executive's employment following the
expiration of the term of this Agreement upon such terms and conditions as the
Board and the Executive may mutually agree.
(d) Upon the termination of the Executive's employment with
the Company, the daily extensions provided pursuant to Section 2(a) shall cease
(if such extensions have not previously ceased), and, if such termination is
under circumstances described in Section 4(a) or Section 5(b), the term
"Unexpired Employment Period" shall mean the period of time commencing from the
date of such termination and ending on the last day of the Employment Period
computed with reference to all extensions prior to such termination.
(e) In the event that the Executive's duties and
responsibilities with respect to the Bank are temporarily or permanently
terminated pursuant to Section 9 of the Employment Agreement dated June 22,
1999, as it may be amended from time to time, between the Executive and the Bank
("Bank Agreement") and the course of conduct upon which such termination is
based would not constitute grounds for Termination for Cause under Section 9,
then the Executive shall, to the extent practicable, assume such duties and
responsibilities formerly performed at the Bank as part of his duties and
responsibilities as Vice President of the Company. Nothing in this provision
shall be interpreted as restricting the Company's right to remove the Executive
for Cause in accordance with Section 9.
3. COMPENSATION AND REIMBURSEMENT.
(a) The compensation specified under this Agreement shall
constitute the salary and benefits paid for the duties described in Section 1.
The Company shall pay the Executive as compensation a salary at an annual rate
of not less than (salary omitted) per year or such higher rate as may be
prescribed by or under the authority of the Board ("Base Salary"). The Base
Salary payable under this Section 3 shall be paid in approximately equal
installments in accordance with the Company's customary payroll practices.
During the period of this Agreement, the Executive's Base Salary shall be
reviewed at least annually; the first such review will be made no later than one
year from the date of this Agreement. Such review shall be conducted by a
Committee designated by the Board, and the Board may increase the Executive's
Base Salary, which increased amount shall be considered the Executive's "Base
Salary" for purposes of this Agreement. In no event shall the Executive's annual
rate of Base Salary under this Agreement in effect at a particular time be
reduced without his prior written consent. In addition to the Base Salary
provided in this Section 3(a), the Company shall provide the Executive at no
cost to the Executive with all such other benefits as are provided uniformly to
permanent full-time employees of the Bank.
(b) The Company will provide the Executive with employee
benefit plans, arrangements and perquisites substantially equivalent to those in
which the Executive was participating or otherwise deriving benefit from
immediately prior to the beginning of the term of this Agreement, and the
Company will not, without the Executive's prior written consent, make any
changes in such plans, arrangements or perquisites which would adversely affect
the Executive's rights or benefits thereunder. Without limiting the generality
of the foregoing provisions of this Subsection (b), the Executive will be
entitled to participate in or receive benefits under any employee benefit plans
with respect to which the Executive satisfies the eligibility requirements,
including, but not limited to, the Retirement Plan of Jamaica Savings Bank FSB
("RP"), the Incentive Savings Plan of Jamaica Savings Bank FSB ("ISP"), the
Jamaica Savings Bank FSB Employee Stock Ownership Plan ("ESOP"), the Benefit
Restoration Plan of Jamaica Savings Bank FSB ("BRP"), the JSB Financial, Inc.
1990 Stock Option Plan, the JSB Financial, Inc. 1996 Stock Option Plan,
retirement plans, supplemental retirement plans, pension plans, profit-sharing
plans, group life, health (including hospitalization, medical and major
medical), dental, accidental death and dismemberment, travel accident and
short-term disability insurance plans, or any other employee benefit plan or
arrangement made available by the Company in the future to its senior executives
and key management employees, subject to and on a basis consistent with the
terms, conditions and overall administration of such plans and arrangements. The
Executive will be entitled to incentive compensation and bonuses as provided in
any plan of the Company in which the Executive is eligible to participate.
Nothing paid to the Executive under any such plan or arrangement will be deemed
to be in lieu of other compensation to which the Executive is entitled under
this Agreement.
(c) The Executive's principal place of employment shall be at
the Company's executive offices at the address first above written, or at such
other location in New York City or in Nassau County or Suffolk County at which
the Company shall maintain its principal executive offices, or at such other
location as the Board and the Executive may mutually agree upon. The Company
shall provide the Executive, at his principal place of employment with support
services and facilities suitable to his position with the Company and necessary
or appropriate in connection with the performance of his assigned duties under
this Agreement. The Company shall reimburse the Executive for his ordinary and
necessary business expenses, including, without limitation, fees for memberships
in such clubs and organizations as the Executive and the Board shall mutually
agree are necessary and appropriate for business purposes, and travel and
entertainment expenses, incurred in connection with the performance of his
duties under this Agreement, upon presentation to the Company of an itemized
account of such expenses in such form as the Company may reasonably require.
(d) In the event that the Executive assumes additional duties
and responsibilities pursuant to Section 2(e) by reason of one of the
circumstances contained in Section 2(e), and the Executive receives or will
receive less than the full amount of compensation and benefits formerly entitled
to him under the Bank Agreement, the Company shall assume the obligation to
provide the Executive with his compensation and benefits in accordance with the
Bank Agreement less any compensation and benefits received from the Bank,
subject to the terms and conditions of this Agreement including the Termination
for Cause provisions in Section 9.
4. PAYMENTS TO THE EXECUTIVE UPON AN EVENT OF TERMINATION.
The provisions of this Section shall in all respects be
subject to the terms and conditions stated in Sections 9 and 29.
(a) Upon the occurrence of an Event of Termination (as herein
defined) during the Executive's term of employment under this Agreement, the
provisions of this Section shall apply. As used in this Agreement, an "Event of
Termination" shall mean and include any one or more of the following: (i) the
termination by the Bank or the Company of the Executive's full-time employment
hereunder for any reason other than: following a Change in Control, as defined
in Section 5; for Disability, as defined in Section 6; for Retirement, as
defined in Section 8; for Cause, as defined in Section 9; or upon the
Executive's death; or (ii) unless consented to by the Executive, the Executive's
voluntary resignation from the Company's employ, upon any: (A) failure to elect
or re-elect or to appoint or re-appoint the Executive as Vice President of the
Company, (B) material adverse change in the Executive's function, duties, or
responsibilities, which change would cause the Executive's position to become
one of lesser responsibility, importance, or scope from the position and
attributes thereof described in Section 1, above (and any such material change
shall be deemed a continuing breach of this Agreement), (C) relocation of the
Executive's principal place of employment by more than 30 miles from its
location at the Effective Date of this Agreement, or a material reduction in the
benefits and perquisites to the Executive from those being provided as of the
Effective Date of this Agreement, (D) liquidation or dissolution of the Bank or
Company, or (E) material breach of this Agreement by the Company. Upon the
occurrence of any event described in clauses (A), (B), (C), (D) or (E), above,
the Executive shall have the right to elect to terminate his employment under
this Agreement by resignation upon written notice pursuant to Section 10 given
within a reasonable period of time not to exceed, except in case of a continuing
breach, four calendar months after the event giving rise to said right to elect.
(b) Upon the occurrence of an Event of Termination as set
forth in Section 4(a), on the Date of Termination, as defined in Section 10, the
Company shall be obligated to pay, or to provide, the Executive, or, in the
event of his subsequent death, to his surviving spouse or such other beneficiary
or beneficiaries as the Executive may designate in writing, or if neither his
estate, as severance pay or liquidated damages, or both, the benefits provided
below and a payment equal to the sum of the payments set forth below:
(i) payment of the sum of (A) the Executive's annual Base Salary
through the Date of Termination to the extent not theretofore paid and (B)
any compensation previously deferred by the Executive (together with any
accrued interest or earnings thereon) and any accrued vacation pay, in each
case to the extent not theretofore paid (the sum of the amounts described
in clauses (A) and (B) shall be hereinafter referred to as the "Accrued
Obligations");
(ii) the benefits, if any, to which the Executive is entitled as a
former employee under the Bank's or Company's employee benefit plans and
programs and compensation plans and programs;
(iii) continued group life, health (including hospitalization, medical
and major medical), dental, accidental death and dismemberment, travel
accident and short-term disability insurance benefits as provided by the
Bank or the Company, in addition to that provided pursuant to Section
4(b)(ii), if and to the extent necessary to provide for the Executive, for
the remaining Unexpired Employment Period, coverage equivalent to the
coverage to which he would have been entitled if he had continued working
for the Company during the remaining Unexpired Employment Period at the
highest annual rate of salary achieved during the Employment Period;
provided, however, if the Executive has obtained group life, health
(including hospitalization, medical and major medical), dental, accidental
death and dismemberment, travel accident and/or short-term disability
insurance benefits coverage from another source, the Executive may, as of
any month, make an irrevocable election to forego the continued coverage
that would otherwise be provided hereunder for the remaining Unexpired
Employment Period, or any portion thereof, in which case the Bank or the
Company, upon receipt of the Executive's irrevocable election, shall pay
the Executive an amount equal to the estimated cost to the Bank or the
Company of providing such coverage during such period;
(iv) if and to the extent not already provided under Sections 4(b)(ii)
and 4(b)(iii), continued health (including hospitalization, medical and
major medical) and dental insurance benefits to the extent maintained by
the Bank or the Company for its employees or retirees during the remainder
of the Executive's lifetime and the lifetime of his spouse, if any, for so
long as the Executive continues to reimburse the Bank for the cost of such
continued coverage;
(v) a lump sum payment, as liquidated damages, in an amount equal to
the Base Salary and the bonus or other incentive compensation that the
Executive would have earned if the Executive had continued working for the
Bank and the Company during the remaining Unexpired Employment Period (A)
at the highest annual rate of Base Salary and bonus or other incentive
compensation achieved by the Executive during the three-year period
immediately preceding the Executive's Date of Termination, except that (B)
in the case of a Change in Control, such lump sum shall be determined based
upon the Base Salary and the bonus or other incentive compensation,
respectively, that the Executive would have been paid during the remaining
Unexpired Employment Period including the assumed increases referred to in
clauses (i) and (ii) of Section 5(b);
(vi) a lump sum payment in an amount equal to the excess, if any, of:
(A) the present value of the pension benefits to which the Executive would
be entitled under the RP and the BRP (and under any other qualified and
non-qualified defined benefit plans maintained by the Company or the Bank
covering the Executive) as if he had continued working for the Company
during the remaining Unexpired Employment Period (x) at the highest annual
rate of Base Salary and, if applicable, the highest bonus or other
incentive compensation, respectively, achieved by the Executive during the
three-year period immediately preceding the Executive's Date of
Termination, except that (y) in the case of a Change in Control, such lump
sum shall be determined based upon the Base Salary and, if applicable, the
bonus or other incentive compensation, respectively, that the Executive
would have been paid during the remaining Unexpired Employment Period
including the assumed increases referred to in clauses (i) and (ii) of
Section 5(b), and (z) in the case of a Change in Control, as if three
additional years are added to the Executive's age and years of creditable
service under the RP and the BRP and after taking into account any other
compensation required to be taken into account under the RP and the BRP
(and any other qualified and non-qualified defined benefit plans of the
Company or the Bank, as applicable), over (B) the present value of the
pension benefits to which he is actually entitled under the RP and the BRP
(and any other qualified and non-qualified defined benefit plans) as of his
Date of Termination, where such present values are to be determined using a
discount rate of 6% and the mortality tables prescribed under section 72 of
the Internal Revenue Code of 1986, as amended ("Code"); and
(vii) a lump sum payment in an amount equal to the contributions that
would have been made by the Company or the Bank on the Executive's behalf
to the ISP and the ESOP and to the BRP with respect to such ISP and ESOP
contributions (and to any other qualified and non-qualified defined
contribution plans maintained by the Company or the Bank covering the
Executive) as if the Executive had continued working for the Bank and the
Company during the remaining Unexpired Employment Period making the maximum
amount of employee contributions required or permitted, if any, under such
plan or plans and earning (A) the highest annual rate of Base Salary and,
if applicable, the highest bonus or other incentive compensation,
respectively, achieved by the Executive during the three-year period
immediately preceding the Executive's Date of Termination, except that (B)
in the case of a Change in Control, such lump sum shall be determined based
upon the Base Salary and, if applicable, the bonus or other incentive
compensation, respectively, that the Executive would have been paid during
the remaining Unexpired Employment Period including the assumed increases
referred to in clauses (i) and (ii) of Section 5(b).
The benefits to be provided under, and the amounts payable pursuant to, this
Section 4 shall be provided and be payable without regard to proof of damages
and without regard to the Executive's efforts, if any, to mitigate damages. The
Company and the Executive hereby stipulate that the damages which may be
incurred by the Executive following any such termination of employment are not
capable of accurate measurement as of the date first above written and that such
liquidated damages constitute reasonable damages under the circumstances.
(c) Payments to the Executive under Section 4 shall be made
within ten days of the Executive's Date of Termination.
(d) In the event payments are made under Section 4 or Section
5, the Executive may select an individual or firm to provide him with reasonable
outplacement counseling services, and the Company shall pay for the costs of
such services; provided, however, that the cost to the Company of such
outplacement counseling services shall not exceed 25% of the Executive's Base
Salary.
5. CHANGE IN CONTROL.
(a) No benefit shall be payable under this Section 5 unless
there shall have been a Change in Control of the Bank or Company, as set forth
below. For purposes of this Agreement, a "Change in Control" of the Bank or
Company shall mean any one or more of the following:
(i) An event of a nature that would be required to be reported in
response to Item l(a) of the current report on Form 8-K, as in effect on
the date hereof, pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934, as amended (the "Exchange Act");
(ii) An event of a nature that results in a Change in Control of the
Bank or the Company within the meaning of the Home Owners' Loan Act of
1933, as amended, or the Change in Bank Control Act of 1978, as amended, as
applicable, and the Rules and Regulations promulgated by the Office of
Thrift Supervision ("OTS") or its predecessor agency, the Federal Deposit
Insurance Corporation ("FDIC") or the Board of Governors of the Federal
Reserve System ("FRB"), as the case may be, as in effect on the date
hereof, but excluding any such Change in Control resulting from the
purchase of securities by the Company or the Company's or the Bank's
tax-qualified employee benefit plans and trusts;
(iii) If any "person" (as the term is used in Sections 13(d) and 14(d)
of the Exchange Act) is or becomes the "beneficial owner" (as defined in
Rule 13d-3 under the Exchange Act), directly or indirectly, of securities
of the Bank or the Company representing 20% or more of the Bank's or the
Company's outstanding securities except for any securities of the Bank
purchased by the Company in connection with the initial conversion of the
Bank from mutual to stock form (the "Conversion") and any securities
purchased by the Company or the Company's or the Bank's tax-qualified
employee benefit plans and trusts;
(iv) If the individuals who constitute the Board on the date hereof
(the "Incumbent Board") cease for any reason to constitute at least a
majority of the Board, provided, however, that any person becoming a
director subsequent to the date hereof whose election or nomination for
election by the Company's stockholders, was approved by a vote of at least
three-quarters of the directors then comprising the Incumbent Board shall
be considered as though he were a member of the Incumbent Board, but
excluding, for this purpose, any such person whose initial assumption of
office occurs as a result of an actual or threatened election contest with
respect to the election or removal of directors or other actual or
threatened solicitation of proxies or consents by or on behalf of a person
other than the Board;
(v) A merger, consolidation, reorganization, sale of all or
substantially all the assets of the Bank or the Company or similar
transaction occurs in which the Bank or Company is not the resulting
entity, other than a transaction following which (A) at least 51% of the
equity ownership interests of the entity resulting from such transaction
are beneficially owned (within the meaning of Rule 13d-3 promulgated under
Exchange Act) in substantially the same relative proportions by persons
who, immediately prior to such transaction, beneficially owned (within the
meaning of Rule 13d-3 promulgated under the Exchange Act) at least 51% of
the outstanding equity ownership interests in the Bank or Company and (B)
at least 51% of the securities entitled to vote generally in the election
of directors of the entity resulting from such transaction are beneficially
owned (within the meaning of Rule 13d-3 promulgated under the Exchange Act)
in substantially the same relative proportions by persons who, immediately
prior to such transaction, beneficially owned (within the meaning of Rule
13d-3 promulgated under the Exchange Act) at least 51% of the securities
entitled to vote generally in the election of directors of the Bank or
Company;
(vi) A proxy statement shall be distributed soliciting proxies from
stockholders of the Company, by someone other than the current management
of the Company, seeking stockholder approval of a plan of reorganization,
merger or consolidation of the Company or Bank or similar transaction with
one or more corporations as a result of which the outstanding shares of the
class of securities then subject to such plan or transaction are exchanged
for or converted into cash or property or securities not issued by the Bank
or the Company; or
(vii) A tender offer is completed for 20% or more of the voting
securities of the Bank or Company then outstanding.
The "Change in Control Date" shall mean the date during the Employment Period on
which a Change in Control occurs. Anything in this Agreement to the contrary
notwithstanding, if the Executive's employment with the Company is terminated
and if it is reasonably demonstrated by the Executive that such termination of
employment (1) was at the request of a third party who has taken steps
reasonably calculated to effect a Change in Control or (2) otherwise arose in
connection with or anticipation of a Change in Control, then for all purposes of
this Agreement the "Change in Control Date" shall mean the date immediately
prior to the date of such termination of employment.
(b) If any of the events described in Section 5(a)
constituting a Change in Control have occurred or the Board has determined that
a Change in Control has occurred, the Executive shall be entitled to the
payments and the benefits provided below on the Change in Control Date. The
amounts payable and the benefits to be provided under this Section 5(b) to the
Executive shall consist of the payments and benefits that would be due to the
Executive and the Executive's family under Section 4(b) as if an Event of
Termination under Section 4(a) had occurred on the Change in Control Date and
that for purposes of this Section 5(b), the term Unexpired Employment Period
shall mean three years from the Change in Control Date. For purposes of
determining the payments and benefits due under this Section 5(b), when
calculating the payments due and benefits to be provided for the Unexpired
Employment Period, it shall be assumed that for each year of the remaining term
of this Agreement, the Executive would have received (i) an annual increase in
Base Salary equal to the average percentage increase in Base Salary received by
the Executive for the three-year period ending with the earlier of (x) the year
in which the Change in Control Date occurs or (y) the year during which a
definitive agreement, if any, governing the Change in Control is executed, with
the first such increase effective as of the January 1st next following such
three-year period and the second and third such increases effective as of the
next two anniversaries of such January 1st, (ii) a bonus or other incentive
compensation equal to the highest percentage rate of bonus or incentive
compensation paid to the Executive during the three-year period referred to in
clause (i) of this Section 5(b) times the Base Salary that the Executive would
have been paid during the remaining term of this Agreement including the assumed
increases referred to in clause (i) of this Section 5(b), (iii) the maximum
contributions that could be made by or on behalf of the Executive with respect
to any employee benefit plans and programs maintained by the Company and the
Bank based upon the Base Salary and, if applicable, the bonus or other incentive
compensation, respectively, that the Executive would have been paid during the
remaining term of this Agreement including the assumed increases referred to in
clauses (i) and (ii) of this Section 5(b), and (iv) the present value of the
pension benefits to which the Executive is entitled under Section 4(b)(vi) with
respect to the RP and the BRP (and under any other qualified and non-qualified
defined benefit plans maintained by the Bank or the Company covering the
Executive) determined as if he had continued working for the Bank during the
remaining Unexpired Employment Period and based upon the Base Salary and, if
applicable, the bonus or other incentive compensation, respectively, that the
Executive would have been paid during the remaining term of this Agreement
including the assumed increases referred to in clauses (i) and (ii) of this
Section 5(b). The benefits to be provided under, and the amounts payable
pursuant to, this Section 5 shall be provided and be payable without regard to
proof of damages and without regard to the Executive's efforts, if any, to
mitigate damages. The Company and the Executive hereby stipulate that the
damages which may be incurred by the Executive following any Change in Control
are not capable of accurate measurement as of the date first above written and
that such liquidated damages constitute reasonable damages under the
circumstances.
(c) Payments to the Executive under Section 5(b) shall be made
on the Change in Control Date. Such payments shall be made regardless of whether
the Executive's employment terminates.
6. TERMINATION FOR DISABILITY.
(a) In the event of Termination for Disability, the Executive
shall receive the benefits provided in Section 6(b); provided, however, that the
benefits provided under Section 6(b) shall not be deemed to be in lieu of the
benefits he is otherwise entitled as a former employee under the Bank or
Company's employee plans and programs. For purposes of this Agreement, the
Executive may be terminated for disability only if (i) the Executive shall have
been absent from his duties with the Company on a full-time basis for at least
six consecutive months, or (ii) a majority of the members of the Board acting in
good faith determine that, based upon competent and independent medical evidence
presented by a physician or physicians agreed upon by the parties, the
Executive's physical or mental condition is such that he is totally and
permanently incapable of engaging in any substantial gainful employment based
upon his education, training and experience; provided, however, that on and
after the earliest date on which a Change in Control of the Bank or Company as
defined in Section 5 occurs, such a determination shall require the affirmative
vote of at least three-fourths of the members of the Board acting in good faith
and such vote shall not be made prior to the expiration of a 60-day period
following the date on which the Board shall, by written notice to the Executive,
furnish him a statement of its grounds for proposing to make such determination,
during which period the Executive shall be afforded a reasonable opportunity to
make oral and written presentations to the members of the Board, and to be
represented by his legal counsel at such presentations, to refute the grounds
for the proposed determination.
(b) The Company will pay the Executive as Disability pay, a
bi-weekly payment equal to 100% of the Executive's bi-weekly annual rate of Base
Salary in effect on the date of the Executive's Termination for Disability. In
addition, the Company will cause to be continued insurance coverage, including
group life, health (including hospitalization, medical and major medical),
dental, accidental death and dismemberment, travel accident and short-term
disability coverage substantially identical to the coverage maintained by the
Bank or the Company for the Executive prior to his Termination for Disability.
The Disability pay and coverages shall commence on the effective date of the
Executive's termination and shall cease upon the earliest to occur of: (i) the
date the Executive returns to the full-time employment of the Company, in the
same capacity as he was employed prior to his Termination for Disability and
pursuant to an employment agreement between the Executive and the Company; (ii)
the Executive's full-time employment by another employer; (iii) the Executive's
attaining the normal age of retirement or receiving benefits under the RP or
other defined benefit pension plan of the Bank or the Company; (iv) the
Executive's death; (v) the Executive's eligibility to collect payments under the
disability provision of the RP or other defined benefit pension plan of the Bank
or the Company; or (vi) the expiration of the term of this Agreement.
(c) Notwithstanding the foregoing, there will be no reduction
in the compensation otherwise payable to the Executive during any period during
which the Executive is incapable of performing his duties hereunder by reason of
temporary disability.
7. TERMINATION UPON DEATH.
The Executive's employment shall terminate automatically upon
the Executive's death during the Employment Period. In such event, the Executive
and the Executive's legal representatives shall be entitled to the following:
(i) payment of the Executive's "Accrued Obligations;"
(ii) the continuation of all benefits to the Executive's family and
dependents that would have been provided if the Executive had been entitled
to the benefits under Section 4(b)(ii), (iii) and (iv); and
(iii) the timely payment of any other amounts or benefits required to
be paid or provided or which the Executive is eligible to receive under any
plan, program, policy or practice or contract or agreement of the Company
and its affiliated companies (all such other amounts and benefits shall be
hereinafter referred to as the "Other Benefits");
provided, however, that if the Executive dies while in the employment of the
Company, the amount of life insurance provided to the Executive by the Company
shall not be less than the lesser of $200,000 or three times the Executive's
then annual Base Salary. Accrued Obligations shall be paid to the Executive's
estate or beneficiary, as applicable, in a lump sum cash payment within ten days
of the Date of Termination. With respect to the provision of Other Benefits
after the Change of Control Date, the term Other Benefits as utilized in this
Section 7 shall include, without limitation, that the Executive's estate and/or
beneficiaries shall be entitled to receive, benefits at least equal to the most
favorable benefits provided by the Company and affiliated companies to the
estates and beneficiaries of peer executives of the Company and such affiliates
companies under such plans, programs, practices and policies relating to death
benefits, if any, as in effect with respect to other peer executives and their
beneficiaries at any time during the 120-day period immediately preceding the
Change in Control Date.
8. TERMINATION UPON RETIREMENT.
Termination by the Company of the Executive based on
"Retirement" shall mean termination in accordance with the Company's or the
Bank's retirement policy or in accordance with any retirement arrangement
established with the Executive's consent with respect to him. Upon termination
of the Executive upon Retirement, the Executive shall be entitled to all
benefits under the RP and any other retirement plan of the Bank or the Company
and other plans to which the Executive is a party, and the Executive shall be
entitled to the benefits, if any, that would be payable to him as a former
employee under the Bank's or the Company's employee benefit plans and programs
and compensation plans and programs.
9. TERMINATION FOR CAUSE.
The terms "Termination for Cause" or "Cause" shall mean
termination because of the Executive's personal dishonesty, willful misconduct,
any breach of fiduciary duty involving personal profit, intentional failure to
perform stated duties, conviction of a felony with respect to the Bank or the
Company or any material breach of this Agreement. For purposes of this Section,
no act, or the failure to act, on the Executive's part shall be "willful" unless
done, or omitted to be done, in bad faith and without reasonable belief that the
action or omission was in the best interest of the Company or its affiliates.
Any act, or failure to act, based upon authority given pursuant to a resolution
duly adopted by the Board or based upon the written advice of counsel for the
Company shall be conclusively presumed to be done, or omitted to be done, by the
Executive in good faith and in the best interests of the Company.
Notwithstanding the foregoing, the Executive shall not be deemed to have been
terminated for Cause unless and until there shall have been delivered to him a
Notice of Termination which shall include a copy of a resolution duly adopted by
the affirmative vote of not less than three-fourths of the members of the Board
at a meeting of the Board called and held for that purpose (after reasonable
notice to the Executive and an opportunity for him, together with counsel, to be
heard before the Board), finding that in the good faith opinion of the Board,
the Executive was guilty of conduct justifying Termination for Cause and
specifying the particulars thereof in detail. The Executive shall not have the
right to receive compensation or other benefits for any period after Termination
for Cause.
10. NOTICE.
(a) Any purported termination by the Company or by the
Executive shall be communicated by a Notice of Termination to the other party
hereto. For purposes of this Agreement, a "Notice of Termination" shall mean a
written notice which shall indicate the specific termination provision in this
Agreement relied upon and shall set forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of the Executive's
employment under the provision so indicated.
(b) Subject to Section 10(c), "Date of Termination" shall mean
(A) if the Executive's employment is terminated for Disability, 30 days after a
Notice of Termination is given (provided that he shall not have returned to the
performance of his duties on a full-time basis during such 30-day period), and
(B) if his employment is terminated for any other reason, the date specified in
the Notice of Termination (which, in the case of a Termination for Cause, shall
be immediate).
(c) If, within 30 days after any Notice of Termination is
given, the party receiving such Notice of Termination notifies the other party
that a dispute exists concerning the termination, then, except upon the
occurrence of a Change in Control and voluntary termination by the Executive in
which case the Date of Termination shall be the date specified in the Notice,
the Date of Termination shall be the date on which the dispute is finally
determined, either by mutual written agreement of the parties, by a binding
arbitration award, or by a final judgment, order or decree of a court of
competent jurisdiction (the time for appeal therefrom having expired and no
appeal having been perfected) and provided further that the Date of Termination
shall be extended by a notice of dispute only if such notice is given in good
faith and the party giving such notice pursues the resolution of such dispute
with reasonable diligence. Notwithstanding the pendency of any such dispute, the
Company will continue to pay the Executive his full compensation in effect when
the notice giving rise to the dispute was given (including, but not limited to,
Base Salary) and continue him as a participant in all compensation, benefit and
insurance plans in which he was participating when the notice of dispute was
given, until the dispute is finally resolved in accordance with this Agreement.
Amounts paid under this Section are in addition to all other amounts due under
this Agreement and shall not be offset against or reduce any other amounts due
under this Agreement.
(d) The Company may terminate the Executive's employment at
any time, but any termination by the Company, other than Termination for Cause,
shall not prejudice the Executive's right to compensation or other benefits
under this Agreement or under any other benefit or compensation plans or
programs maintained by the Bank or the Company from time to time. The Executive
shall not have the right to receive compensation or other benefits for any
period after a Termination for Cause as defined in Section 9 hereinabove.
(e) Any communication to a party required or permitted under
this Agreement, including any notice, direction, designation, consent,
instruction, objection or waiver, shall be in writing and shall be deemed to
have been given at such time as it is delivered personally, or five days after
mailing if mailed, postage prepaid, by registered or certified mail, return
receipt requested, addressed to such party at the address listed below or at
such other address as one such party may by written notice specify to the other
party, as follows. If to the Executive, (address omitted); if to the Company,
JSB Financial, Inc., 303 Merrick Road, Lynbrook, New York 11563, Attention:
President, with a copy to Thacher Proffitt & Wood, Two World Trade Center, New
York, New York 10048, Attention: Douglas J. McClintock, Esq.
11. POST-TERMINATION OBLIGATIONS.
(a) All payments and benefits to the Executive under this
Agreement shall be subject to the Executive's compliance with paragraph (b) of
this Section 11 during the term of this Agreement and for one full year after
the expiration or termination hereof.
(b) The Executive shall, upon reasonable notice, furnish such
information and assistance to the Company as may reasonably be required by the
Company in connection with any litigation in which it or any of its subsidiaries
or affiliates is, or may become, a party; provided, that the Company reimburses
the Executive for the reasonable value of his time in connection therewith and
for any out-of-pocket costs attributable thereto.
12. COVENANT NOT TO COMPETE.
The Executive hereby covenants and agrees that for a period of
one year following his Date of Termination, if such termination occurs prior to
the end of the term of the Agreement, he shall not, without the written consent
of the Board, become an officer, employee, consultant, director or trustee of
any savings bank, savings and loan association, savings and loan holding
company, bank or bank holding company if such position (a) entails working in
(or providing services in) New York City, Nassau or Suffolk counties or (b)
entails working in (or providing services in) any other county that is both (i)
within the Bank's primary trade (or operating) area at the time in question,
which shall be determined by reference to the Bank's business plan as in effect
from time to time, and (ii) in which the Bank engages in material or substantial
deposit-taking functions or lending activities at such time; provided, however,
that this Section 12 shall not apply if the Executive's employment is terminated
for the reasons set forth in any of Sections 4, 5, 6 or 8.
13. SOURCE OF PAYMENTS.
All payments provided in this Agreement shall be timely paid
in cash or check from the general funds of the Company.
14. EFFECT ON PRIOR AGREEMENTS.
This Agreement contains the entire understanding between the
parties hereto and supersedes any prior employment agreement between the Company
or any predecessor of the Company and the Executive, except that this Agreement
shall not affect or operate to reduce any benefit or compensation inuring to the
Executive of a kind elsewhere provided. No provisions of this Agreement shall be
interpreted to mean that the Executive is subject to receiving fewer benefits
than those available to him without reference to this Agreement.
15. EFFECT OF ACTION UNDER BANK AGREEMENT.
Notwithstanding any provision herein to the contrary, to the
extent that full compensation payments and benefits are paid to or received by
the Executive under the Bank Agreement, such compensation payments and benefits
paid by the Bank will be deemed to satisfy the corresponding obligations of the
Company under this Agreement.
16. NO ATTACHMENT.
Except as required by law, no right to receive payments under
this Agreement shall be subject to anticipation, commutation, alienation, sale,
assignment, encumbrance, charge, pledge, or hypothecation, or to execution,
attachment, levy, or similar process or assignment by operation of law, and any
attempt, voluntary or involuntary, to affect any such action shall be null,
void, and of no effect.
17. MODIFICATION AND WAIVER.
(a) This Agreement may not be modified or amended except by an
instrument in writing signed by the parties hereto.
(b) No term or condition of this Agreement shall be deemed to
have been waived, nor shall there be any estoppel against the enforcement of any
provision of this Agreement, except by written instrument of the party charged
with such waiver or estoppel. No such written waiver shall be deemed a
continuing waiver unless specifically stated therein, and each such waiver shall
operate only as to the specific term or condition waived and shall not
constitute a waiver of such term or condition for the future as to any act other
than that specifically waived.
18. SUCCESSOR AND ASSIGNS.
This Agreement will inure to the benefit of and be binding
upon the Executive, his legal representatives and testate or intestate
distributees, and the Company, its successors and assigns, including any
successor by purchase, merger, consolidation or otherwise or a statutory
receiver or any other person or firm or corporation to which all or
substantially all of the assets and business of the Company may be sold or
otherwise transferred. Any such successor of the Company shall be deemed to have
assumed this Agreement and to have become obligated hereunder to the same extent
as the Company and the Executive's obligations hereunder shall continue in favor
of such successor.
19. SEVERABILITY.
If, for any reason, any provision of this Agreement, or any
part of any provision, is held invalid, such invalidity shall not affect any
other provision of this Agreement or any part of such provision not held so
invalid, and each such other provision and part thereof shall to the full extent
consistent with law continue in full force and effect.
20. HEADINGS FOR REFERENCE ONLY.
The headings of Sections and paragraphs herein are included
solely for convenience of reference and shall not control the meaning or
interpretation of any of the provisions of this Agreement. Any reference in this
Agreement to a Section or Subsection shall refer to a Section or Subsection of
this Agreement, except as otherwise specified.
21. GOVERNING LAW.
This Agreement shall be governed by the laws of the State of
New York, without reference to conflicts of law principles.
22. INDEMNIFICATION AND ATTORNEYS' FEES.
(a) The Company shall indemnify, hold harmless and defend the
Executive against reasonable costs, including legal fees, incurred by him in
connection with his consultation with legal counsel or arising out of any
action, suit or proceeding in which he may be involved, as a result of his
efforts, in good faith, to defend or enforce the terms of this Agreement. The
Company agrees to pay all such costs as they are incurred by the Executive, to
the full extent permitted by law, and without regard to whether the Company
believes that it has a defense to any action, suit or proceeding by the
Executive or that it is not obligated for any payments under this Agreement.
(b) In the event any dispute or controversy arising under or
in connection with the Executive's termination is resolved in favor of the
Executive, whether by judgment, arbitration or settlement, the Executive shall
be entitled to the payment of all back-pay, including salary, bonuses and any
other cash compensation, fringe benefits and any compensation and benefits due
the Executive under this Agreement.
(c) The Company shall indemnify, hold harmless and defend the
Executive for any act taken or not taken, or any omission or failure to act, by
him in good faith while performing services for the Company or the Bank to the
same extent and upon the same terms and conditions as other similarly situated
officers and directors of the Company or the Bank. If and to the extent that the
Company or the Bank, maintains, at any time during the Employment Period, an
insurance policy covering the other officers and directors of the Company or the
Bank against lawsuits, the Company or the Bank shall use its best efforts to
cause the Executive to be covered under such policy upon the same terms and
conditions as other similarly situated officers and directors.
23. TAX INDEMNIFICATION.
(a) This Section 23 shall apply if 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 occurs within the meaning of section 280G
of the Code. If this Section 23 applies, then with respect to any taxable year
in which the Executive shall be liable for the payment of an excise tax under
section 4999 of the Code with respect to any payment in the nature of
compensation made by the Company, the Bank or any direct or indirect subsidiary
or affiliate of the Company to (or for the benefit of) the Executive, the
Company shall pay to the Executive an amount equal to X determined under the
following formula:
X = E x P
-------------------------------------------------
1 - [(FI x (1 - SLI)) + SLI + E + M]
where
E = the rate at which the excise tax is assessed under
section 4999 of the Code;
P = the amount with respect to which such excise tax is
assessed, determined without regard to this Section
23;
FI = the highest effective marginal rate of income tax
applicable to the Executive under the Code for the
taxable year in question (taking into account any
phase-out or loss of deductions, personal exemptions
and other similar adjustments);
SLI = the sum of the highest effective marginal rates of
income tax applicable to the Executive under all
applicable state and local laws for the taxable year
in question (taking into account any phase-out or
loss of deductions, personal exemptions and other
similar adjustments); and
M = the highest marginal rate of Medicare tax
applicable to the Executive under the Code for the
taxable year in question.
Attached as Appendix A to this Agreement is an example that illustrates
application of this Section 23. Any payment under this Section 23 shall be
adjusted so as to fully indemnify the Executive on an after-tax basis so that
the Executive would be in the same after-tax financial position in which he
would have been if no excise tax under section 4999 of the Code had been
imposed. With respect to any payment in the nature of compensation that is made
to (or for the benefit of) the Executive under the terms of this Agreement or
otherwise and on which an excise tax under section 4999 of the Code will be
assessed, the payment determined under this Section 23(a) shall be made to the
Executive on the earlier of (i) the date the Company, the Bank or any direct or
indirect subsidiary or affiliate of the Company is required to withhold such
tax, or (ii) the date the tax is required to be paid by the Executive.
(b) Notwithstanding anything in this Section 23 to the
contrary, in the event that the Executive's liability for the excise tax under
section 4999 of the Code for a taxable year is subsequently determined to be
different than the amount determined by the formula (X + P) x E, where X, P and
E have the meanings provided in Section 23(a), the Executive or the Company, as
the case may be, shall pay to the other party at the time that the amount of
such excise tax is finally determined, an appropriate amount, plus interest,
such that the payment made under Section 23(a), when increased by the amount of
the payment made to the Executive under this Section 23(b) by the Company, or
when reduced by the amount of the payment made to the Company under this Section
23(b) by the Executive, equals the amount that, it is finally determined, should
have properly been paid to the Executive under Section 23(a). The interest paid
under this Section 23(b) shall be determined at the rate provided under section
1274(b)(2)(B) of the Code. To confirm that the proper amount, if any, was paid
to the Executive under this Section 23, the Executive shall furnish to the
Company a copy of each tax return which reflects a liability for an excise tax
payment made by the Company, at least 20 days before the date on which such
return is required to be filed with the Internal Revenue Service.
24. NON-EXCLUSIVITY OF RIGHTS.
Except as otherwise provided herein, nothing in this Agreement
shall prevent or limit the Executive's continuing or future participation in any
plan, program, policy or practice provided by the Company or any of its
affiliated companies and for which the Executive may qualify, nor shall anything
herein limit or otherwise affect such rights as the Executive may have under any
contract or agreement with the Company or any of its affiliated companies.
Amounts which are vested benefits or which the Executive is otherwise entitled
to receive under any plan, policy, practice or program of or any contract or
agreement with the Company or any of its affiliated companies at or subsequent
to the Date of Termination shall be payable in accordance with such plan,
policy, practice or program or contract or agreement except as explicitly
modified by this Agreement. Notwithstanding the foregoing, in the event of a
termination of employment, the amounts provided in Section 4 or Section 5, as
applicable, shall be the Executive's sole remedy for any purported breach of
this Agreement by the Company.
25. MITIGATION; OTHER CLAIMS.
The Company's obligation to make the payments provided for in
this Agreement and otherwise to perform its obligations hereunder shall not be
affected by any set-off, counterclaim, recoupment, defense or other claim, right
or action which the Company may have against the Executive or others. In no
event shall the Executive be obligated to seek other employment or take any
other action by way of mitigation of the amounts payable to the Executive under
any of the provisions of this Agreement and such amounts shall not be reduced
whether or not the Executive obtains other employment.
26. CONFIDENTIAL INFORMATION.
The Executive shall hold in a fiduciary capacity for the
benefit of the Company all secret or confidential information, knowledge or data
relating to the Company or any of its affiliated companies, and their respective
businesses, which shall have been obtained by the Executive during the
Executive's employment by the Company or any of its affiliated companies and
which shall not be or become public knowledge (other than by acts by the
Executive or representatives of the Executive in violation of this Agreement).
After termination of the Executive's employment with the Company, the Executive
shall not, without the prior written consent of the Company or as may otherwise
be required by law or legal process, communicate or divulge any such
information, knowledge or data to anyone other than the Company and those
designated by it. For purposes of this Agreement, secret and confidential
information, knowledge or data relating to the Company or any of its affiliates,
and their respective business, shall not include any information that is public,
publicly available or available through trade association sources.
Notwithstanding any other provision of this Agreement to the contrary, the
Executive acknowledges and agrees that in the event of a violation or threatened
violation of any of the provisions of this Section 26, the Company shall have no
adequate remedy at law and shall therefore be entitled to enforce each such
provision by temporary or permanent injunction or mandatory relief obtained in
any court of competent jurisdiction without the necessity of proving damages or
posting any bond or other security, and without prejudice to any other remedies
that may be available at law or in equity.
27. ACCESS TO DOCUMENTS.
The Executive shall have the right to obtain copies of any
Company or Bank documents that the Executive reasonably believes, in good faith,
are necessary or appropriate in determining his entitlement to, and the amount
of, payments and benefits under this Agreement.
1. GUARANTEE.
The Company hereby agrees to guarantee the payment by the Bank of any
benefits and compensation to which the Executive is or may be entitled to under
the terms and conditions of the Bank Agreement.
1. REQUIRED REGULATORY PROVISIONS.
Notwithstanding anything herein contained to the contrary, any
payments to the Executive by the Company, whether pursuant to this Agreement
or otherwise, are subject to and conditioned upon their compliance
with section 18(k) of the Federal Deposit Insurance Act, as amended, 12 U.S.C.
ss.1828(k), and any regulations promulgated thereunder.
<PAGE>
SIGNATURES
IN WITNESS WHEREOF, JSB FINANCIAL, INC. has caused this
Agreement to be executed and its seal to be affixed hereunto by its duly
authorized officer, and the Executive has signed this Agreement, on the 22nd day
of June, 1999.
ATTEST: JSB FINANCIAL, INC.
By:
Joanne Corrigan Edward P. Henson
- --------------- ----------------
Joanne Corrigan Edward P. Henson
Secretary President
[Seal]
WITNESS:
Joseph J. Hennessy
------------------
Jpseph J. Hennessy
<PAGE>
STATE OF NEW YORK )
: ss.:
COUNTY OF NASSAU )
On this 22nd day of June, 1999, before me personally came Edward P.
Henson, to me known, who, being by me duly sworn, did depose and say that he is
the President of JSB Financial, Inc., the Delaware corporation described in and
which executed the foregoing instrument; that he knows the seal of said
corporation; that the seal affixed to said instrument is such seal; that it was
so affixed by order of the Board of Directors of said corporation; and that he
signed his name thereto by like order.
Name:
Notary Public
STATE OF NEW YORK )
: ss.:
COUNTY OF NASSAU )
On this 22nd day of June, 1999, before me personally came Joseph J.
Hennessy, to me known, and known to me to be the individual described in the
foregoing instrument, who, being by me duly sworn, did depose and say that he
resides at the address set forth in said instrument, and that he signed his name
to the foregoing instrument.
Name:
Notary Public
<PAGE>
APPENDIX A
----------
1. INTRODUCTION. Sections 280G and 4999 of the Internal Revenue Code of
1986, as amended ("Code"), impose a 20% non-deductible federal excise tax on a
person if the payments and benefits in the nature of compensation to or for the
benefit of that person that are contingent on a change in the ownership or
effective control of the Company or the Bank or in the ownership of a
substantial portion of the assets of the Company or the Bank (such payments and
benefits are considered "parachute payments" under section 280G) exceed three
times the person's "base amount" under section 280G. Section 23 of the Agreement
provides for the Executive to receive a tax indemnification payment (sometimes
referred to as a "gross-up" payment) if the payments and benefits in the nature
of compensation to or for the benefit of the Executive that are considered
parachute payments cause the imposition of an excise tax under section 4999 of
the Code. Capitalized terms in this Appendix A that are not defined in this
Appendix A have the meaning used in the Employment Agreement with the Executive.
2. PURPOSE. The purpose of this Appendix A is to illustrate how the tax
indemnification or gross-up payment would be computed. The amounts, figures and
rates used in this example are meant to be illustrative and do not reflect the
actual payments and benefits that would be made to the Executive under this
Agreement. For purposes of this example, it is assumed that a change in control
within the meaning of section 280G of the Code has occurred and that:
(a) The value of the insurance benefits required to be provided to a
hypothetical employee "Z" under sections 4(b)(iii) and 5(b) of the
Agreement for medical, dental, life and other insurance benefits
during the unexpired employment period is $23,000.
(b) The annual rate of Z's salary covered by the Agreement is $100,000,
and Z received annual salary increases of 4%, 5% and 6% (i.e., a
three-year average of 5%) for each of the prior three years. Hence,
the amount payable under sections 4(b)(v) and 5(b) of the Agreement
for salary during the unexpired employment period would be $331,013
[$105,000 + $110, 250 + $115,763].
(c) Z received annual bonuses equal to 20% of his salary in each of the
prior three years. Hence, the amount payable under sections 4(b)(v)
and 5(b) of the Agreement for bonuses during the unexpired employment
period would be $66,203 [20% x ($105,000 + $110,250 + $115,763)].
(d) The amount payable under sections 4(b)(vi) and 5(b) of the Agreement
for the present value of the additional RP and BRP accruals during the
unexpired employment period would be $45,000.
(e) The amount payable under sections 4(b)(vii) and 5(b) of the Agreement
for additional contributions to the ESOP, 401(k) Plan and BRP during
the unexpired employment period would be $20,000.
(f) Z's base amount (i.e., average W-2 wages for the five-year period
preceding the change in control) is $87,000.
3. DETERMINE IF Z IS SUBJECT TO AN EXCISE TAX. Z's parachute payments would
total $485,216 [$23,000 + $331,013 + $66,203 + $45,000 + $20,000]. Three times
Z's base amount is $261,000 [3 x $87,000]; accordingly, Z is subject to an
excise tax because $485,216 exceeds $261,000. Z's "excess parachute payments"
under section 280G of the Code are equal to Z's total parachute payments minus
one times Z's base amount, or $398,216 [$485,216 - $87,000]. If Z were not
protected by section 23 of the Agreement, Z would be subjected to an excise tax
of $79,643 [$398,216 x 20%], in addition to ordinary income taxes.
4. Compute Z's Tax Indemnification Payment. Z's tax indemnification payment
under section 23 of the Agreement would be computed pursuant to the following
formula:
E x P .2 x $398,216
X = ------------------------------------ = ----------------------------------
1 - [(FI x (1 - SLI)) + SLI + E + M] 1 - [.368874 + .0685 + .2 + .0145]
where
E = excise tax rate under section 4999 of the Code [20%];
P = the amount with respect to which such excise tax is
assessed determined without regard to section 23 of
the Agreement [$398,216];
FI = the highest effective marginal rate of income tax
applicable to Z under the Code for the taxable year
in question [assumed to be 39.6% in this example, but
in actuality, the rate is adjusted to take into
account any phase-out or loss of deductions, personal
exemptions and other similar adjustments];
SLI = the sum of the highest effective marginal rates of
income tax applicable to Z under applicable state and
local laws for the taxable year in question [assumed
to be 6.85% in this example, but in actuality, the
rate is adjusted to take into account any phase-out
or loss of deductions, personal exemptions and other
similar adjustments]; and
M = the highest marginal rate of Medicare tax applicable
to Z under the Code for the year in question [1.45%].
In this example, the amount of tax indemnification payment due to Z under
section 23 of the Agreement would be $79,643 [.2 x $398,216] divided by 0.348126
[1 - (.368874 + .0685 + .2 + .0145)], or $228,777. Such amount would be payable
in addition to the other amounts payable under the Agreement in order to put Z
in approximately the same after-tax position that Z would have been in if there
were no excise tax imposed under sections 280G and 4999 of the Code. The tax
indemnification to Z of $228,777 would in turn be a parachute payment subject to
excise tax under sections 280G and 4999. Accordingly, Z's actual excess
parachute payment would be $626,993 [$485,216 - $87,000) + $228,777)] resulting
in an excise tax of $125,399 [$626,993 x 20%]. The difference between the
indemnification. payment and the excise tax [$103,378] is an amount equal to the
sum of the income and other applicable taxes due on the indemnification payment
[($228,777 x .368874) + ($228,777 x .0685) + ($228,777 x .0145)], confirming
that the amount of the tax indemnification payment is sufficient to satisfy all
of Z's tax liability resulting from the excess parachute payment.
JSB FINANCIAL, INC.
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT ("Agreement") is made and entered
into as of June 22, 1999 by and between JSB FINANCIAL, INC., a business
corporation organized and operating under the laws of the State of Delaware and
having its principal office at 303 Merrick Road, Lynbrook, New York 11563
("Company"), and Daniel J. Huber, an individual residing at (address omitted)
("Executive"). Any reference to the "Bank" in this Agreement shall mean Jamaica
Savings Bank FSB and any successor thereto.
W I T N E S S E T H :
WHEREAS, the Executive is currently serving as Vice President
of the Company, and the Company wishes to assure itself of the services of the
Executive for the period provided in this Agreement; and
WHEREAS, the Executive is willing to serve in the employ of
the Company on the terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the premises and the
mutual covenants and conditions hereinafter set forth, the Company and the
Executive hereby agree as follows:
1. POSITION AND RESPONSIBILITIES.
During the period of his employment hereunder, the Executive
agrees to serve as Vice President of the Company. The Executive shall render
administrative and management services to the Company such as are customarily
performed by persons situated in a similar executive capacity and shall perform
such other duties not inconsistent with his title and office as may be assigned
to him by or under the authority of the Board of Directors of the Company (the
"Board"). The Executive shall have such authority as is necessary or appropriate
to carry out his assigned duties. Failure to re-elect the Executive as Vice
President of the Company (or a more senior position) without the consent of the
Executive shall constitute a breach of this Agreement.
2. TERMS.
(a) The period of the Executive's employment under this
Agreement shall be deemed to have commenced as of the date first above written
(the "Effective Date") and shall continue for a period of 36 full calendar
months thereafter. Commencing with the Effective Date, the term of this
Agreement shall be extended for one additional day each day until such time as
the Board or the Executive elects not to extend the term of the Agreement
further by giving written notice to the other party in accordance with Section
10, in which case the term of this Agreement shall become fixed and shall end on
the third anniversary of the date of such written notice. For purposes of this
Agreement, the term "Employment Period" shall mean the term of this Agreement
plus such extensions as are provided herein.
(b) During the period of his employment hereunder, except for
periods of absence occasioned by illness, disability, holidays, reasonable
vacation periods and reasonable leaves of absence, the Executive shall devote
substantially all of his business time, attention, skill and efforts to the
faithful performance of his duties hereunder including (i) service as Vice
President of the Company, and, if duly elected, a Director of the Company, (ii)
performance of such duties not inconsistent with his title and office as may be
assigned to him by or under the authority of the Board or a more senior
executive officer, and (iii) such other activities and services related to the
organization, operation and management of the Company. During the Employment
Period it shall not be a violation of this Agreement for the Executive to (A)
serve on corporate, civic, industry or charitable boards or committees, (B)
deliver lectures, fulfill speaking engagements or teach at educational
institutions and (C) manage personal investments, so long as such activities do
not significantly interfere with the performance of the Executive's
responsibilities as an employee of the Company in accordance with this
Agreement. It is expressly understood and agreed that to the extent that any
such activities have been conducted by the Executive prior to the Effective
Date, the continued conduct of such activities (or the conduct of activities
similar in nature and scope thereto) subsequent to the Effective Date shall not
thereafter be deemed to interfere with the performance of the Executive's
responsibilities to the Company. It is also expressly agreed that the Executive
may conduct activities subsequent to the Effective Date that are generally
accepted for an executive in his position, regardless of whether conducted by
the Executive prior to the Effective Date.
(c) Notwithstanding anything herein contained to the contrary:
(i) the Executive's employment with the Company may be terminated by the Company
or the Executive during the term of this Agreement, subject to the terms and
conditions of this Agreement; and (ii) nothing in this Agreement shall mandate
or prohibit a continuation of the Executive's employment following the
expiration of the term of this Agreement upon such terms and conditions as the
Board and the Executive may mutually agree.
(d) Upon the termination of the Executive's employment with
the Company, the daily extensions provided pursuant to Section 2(a) shall cease
(if such extensions have not previously ceased), and, if such termination is
under circumstances described in Section 4(a) or Section 5(b), the term
"Unexpired Employment Period" shall mean the period of time commencing from the
date of such termination and ending on the last day of the Employment Period
computed with reference to all extensions prior to such termination.
(e) In the event that the Executive's duties and
responsibilities with respect to the Bank are temporarily or permanently
terminated pursuant to Section 9 of the Employment Agreement dated June 22,
1999, as it may be amended from time to time, between the Executive and the Bank
("Bank Agreement") and the course of conduct upon which such termination is
based would not constitute grounds for Termination for Cause under Section 9,
then the Executive shall, to the extent practicable, assume such duties and
responsibilities formerly performed at the Bank as part of his duties and
responsibilities as Vice President of the Company. Nothing in this provision
shall be interpreted as restricting the Company's right to remove the Executive
for Cause in accordance with Section 9.
3. COMPENSATION AND REIMBURSEMENT.
(a) The compensation specified under this Agreement shall
constitute the salary and benefits paid for the duties described in Section 1.
The Company shall pay the Executive as compensation a salary at an annual rate
of not less than (salary omitted) per year or such higher rate as may be
prescribed by or under the authority of the Board ("Base Salary"). The Base
Salary payable under this Section 3 shall be paid in approximately equal
installments in accordance with the Company's customary payroll practices.
During the period of this Agreement, the Executive's Base Salary shall be
reviewed at least annually; the first such review will be made no later than one
year from the date of this Agreement. Such review shall be conducted by a
Committee designated by the Board, and the Board may increase the Executive's
Base Salary, which increased amount shall be considered the Executive's "Base
Salary" for purposes of this Agreement. In no event shall the Executive's annual
rate of Base Salary under this Agreement in effect at a particular time be
reduced without his prior written consent. In addition to the Base Salary
provided in this Section 3(a), the Company shall provide the Executive at no
cost to the Executive with all such other benefits as are provided uniformly to
permanent full-time employees of the Bank.
(b) The Company will provide the Executive with employee
benefit plans, arrangements and perquisites substantially equivalent to those in
which the Executive was participating or otherwise deriving benefit from
immediately prior to the beginning of the term of this Agreement, and the
Company will not, without the Executive's prior written consent, make any
changes in such plans, arrangements or perquisites which would adversely affect
the Executive's rights or benefits thereunder. Without limiting the generality
of the foregoing provisions of this Subsection (b), the Executive will be
entitled to participate in or receive benefits under any employee benefit plans
with respect to which the Executive satisfies the eligibility requirements,
including, but not limited to, the Retirement Plan of Jamaica Savings Bank FSB
("RP"), the Incentive Savings Plan of Jamaica Savings Bank FSB ("ISP"), the
Jamaica Savings Bank FSB Employee Stock Ownership Plan ("ESOP"), the Benefit
Restoration Plan of Jamaica Savings Bank FSB ("BRP"), the JSB Financial, Inc.
1990 Stock Option Plan, the JSB Financial, Inc. 1996 Stock Option Plan,
retirement plans, supplemental retirement plans, pension plans, profit-sharing
plans, group life, health (including hospitalization, medical and major
medical), dental, accidental death and dismemberment, travel accident and
short-term disability insurance plans, or any other employee benefit plan or
arrangement made available by the Company in the future to its senior executives
and key management employees, subject to and on a basis consistent with the
terms, conditions and overall administration of such plans and arrangements. The
Executive will be entitled to incentive compensation and bonuses as provided in
any plan of the Company in which the Executive is eligible to participate.
Nothing paid to the Executive under any such plan or arrangement will be deemed
to be in lieu of other compensation to which the Executive is entitled under
this Agreement.
(c) The Executive's principal place of employment shall be at
the Company's executive offices at the address first above written, or at such
other location in New York City or in Nassau County or Suffolk County at which
the Company shall maintain its principal executive offices, or at such other
location as the Board and the Executive may mutually agree upon. The Company
shall provide the Executive, at his principal place of employment with support
services and facilities suitable to his position with the Company and necessary
or appropriate in connection with the performance of his assigned duties under
this Agreement. The Company shall reimburse the Executive for his ordinary and
necessary business expenses, including, without limitation, fees for memberships
in such clubs and organizations as the Executive and the Board shall mutually
agree are necessary and appropriate for business purposes, and travel and
entertainment expenses, incurred in connection with the performance of his
duties under this Agreement, upon presentation to the Company of an itemized
account of such expenses in such form as the Company may reasonably require.
(d) In the event that the Executive assumes additional duties
and responsibilities pursuant to Section 2(e) by reason of one of the
circumstances contained in Section 2(e), and the Executive receives or will
receive less than the full amount of compensation and benefits formerly entitled
to him under the Bank Agreement, the Company shall assume the obligation to
provide the Executive with his compensation and benefits in accordance with the
Bank Agreement less any compensation and benefits received from the Bank,
subject to the terms and conditions of this Agreement including the Termination
for Cause provisions in Section 9.
4. PAYMENTS TO THE EXECUTIVE UPON AN EVENT OF TERMINATION.
The provisions of this Section shall in all respects be
subject to the terms and conditions stated in Sections 9 and 29.
(a) Upon the occurrence of an Event of Termination (as herein
defined) during the Executive's term of employment under this Agreement, the
provisions of this Section shall apply. As used in this Agreement, an "Event of
Termination" shall mean and include any one or more of the following: (i) the
termination by the Bank or the Company of the Executive's full-time employment
hereunder for any reason other than: following a Change in Control, as defined
in Section 5; for Disability, as defined in Section 6; for Retirement, as
defined in Section 8; for Cause, as defined in Section 9; or upon the
Executive's death; or (ii) unless consented to by the Executive, the Executive's
voluntary resignation from the Company's employ, upon any: (A) failure to elect
or re-elect or to appoint or re-appoint the Executive as Vice President of the
Company, (B) material adverse change in the Executive's function, duties, or
responsibilities, which change would cause the Executive's position to become
one of lesser responsibility, importance, or scope from the position and
attributes thereof described in Section 1, above (and any such material change
shall be deemed a continuing breach of this Agreement), (C) relocation of the
Executive's principal place of employment by more than 30 miles from its
location at the Effective Date of this Agreement, or a material reduction in the
benefits and perquisites to the Executive from those being provided as of the
Effective Date of this Agreement, (D) liquidation or dissolution of the Bank or
Company, or (E) material breach of this Agreement by the Company. Upon the
occurrence of any event described in clauses (A), (B), (C), (D) or (E), above,
the Executive shall have the right to elect to terminate his employment under
this Agreement by resignation upon written notice pursuant to Section 10 given
within a reasonable period of time not to exceed, except in case of a continuing
breach, four calendar months after the event giving rise to said right to elect.
(b) Upon the occurrence of an Event of Termination as set
forth in Section 4(a), on the Date of Termination, as defined in Section 10, the
Company shall be obligated to pay, or to provide, the Executive, or, in the
event of his subsequent death, to his surviving spouse or such other beneficiary
or beneficiaries as the Executive may designate in writing, or if neither his
estate, as severance pay or liquidated damages, or both, the benefits provided
below and a payment equal to the sum of the payments set forth below:
(i) payment of the sum of (A) the Executive's annual Base Salary
through the Date of Termination to the extent not theretofore paid and (B)
any compensation previously deferred by the Executive (together with any
accrued interest or earnings thereon) and any accrued vacation pay, in each
case to the extent not theretofore paid (the sum of the amounts described
in clauses (A) and (B) shall be hereinafter referred to as the "Accrued
Obligations");
(ii) the benefits, if any, to which the Executive is entitled as a
former employee under the Bank's or Company's employee benefit plans and
programs and compensation plans and programs;
(iii) continued group life, health (including hospitalization, medical
and major medical), dental, accidental death and dismemberment, travel
accident and short-term disability insurance benefits as provided by the
Bank or the Company, in addition to that provided pursuant to Section
4(b)(ii), if and to the extent necessary to provide for the Executive, for
the remaining Unexpired Employment Period, coverage equivalent to the
coverage to which he would have been entitled if he had continued working
for the Company during the remaining Unexpired Employment Period at the
highest annual rate of salary achieved during the Employment Period;
provided, however, if the Executive has obtained group life, health
(including hospitalization, medical and major medical), dental, accidental
death and dismemberment, travel accident and/or short-term disability
insurance benefits coverage from another source, the Executive may, as of
any month, make an irrevocable election to forego the continued coverage
that would otherwise be provided hereunder for the remaining Unexpired
Employment Period, or any portion thereof, in which case the Bank or the
Company, upon receipt of the Executive's irrevocable election, shall pay
the Executive an amount equal to the estimated cost to the Bank or the
Company of providing such coverage during such period;
(iv) if and to the extent not already provided under Sections 4(b)(ii)
and 4(b)(iii), continued health (including hospitalization, medical and
major medical) and dental insurance benefits to the extent maintained by
the Bank or the Company for its employees or retirees during the remainder
of the Executive's lifetime and the lifetime of his spouse, if any, for so
long as the Executive continues to reimburse the Bank for the cost of such
continued coverage;
(v) a lump sum payment, as liquidated damages, in an amount equal to
the Base Salary and the bonus or other incentive compensation that the
Executive would have earned if the Executive had continued working for the
Bank and the Company during the remaining Unexpired Employment Period (A)
at the highest annual rate of Base Salary and bonus or other incentive
compensation achieved by the Executive during the three-year period
immediately preceding the Executive's Date of Termination, except that (B)
in the case of a Change in Control, such lump sum shall be determined based
upon the Base Salary and the bonus or other incentive compensation,
respectively, that the Executive would have been paid during the remaining
Unexpired Employment Period including the assumed increases referred to in
clauses (i) and (ii) of Section 5(b);
(vi) a lump sum payment in an amount equal to the excess, if any, of:
(A) the present value of the pension benefits to which the Executive would
be entitled under the RP and the BRP (and under any other qualified and
non-qualified defined benefit plans maintained by the Company or the Bank
covering the Executive) as if he had continued working for the Company
during the remaining Unexpired Employment Period (x) at the highest annual
rate of Base Salary and, if applicable, the highest bonus or other
incentive compensation, respectively, achieved by the Executive during the
three-year period immediately preceding the Executive's Date of
Termination, except that (y) in the case of a Change in Control, such lump
sum shall be determined based upon the Base Salary and, if applicable, the
bonus or other incentive compensation, respectively, that the Executive
would have been paid during the remaining Unexpired Employment Period
including the assumed increases referred to in clauses (i) and (ii) of
Section 5(b), and (z) in the case of a Change in Control, as if three
additional years are added to the Executive's age and years of creditable
service under the RP and the BRP and after taking into account any other
compensation required to be taken into account under the RP and the BRP
(and any other qualified and non-qualified defined benefit plans of the
Company or the Bank, as applicable), over (B) the present value of the
pension benefits to which he is actually entitled under the RP and the BRP
(and any other qualified and non-qualified defined benefit plans) as of his
Date of Termination, where such present values are to be determined using a
discount rate of 6% and the mortality tables prescribed under section 72 of
the Internal Revenue Code of 1986, as amended ("Code"); and
(vii) a lump sum payment in an amount equal to the contributions that
would have been made by the Company or the Bank on the Executive's behalf
to the ISP and the ESOP and to the BRP with respect to such ISP and ESOP
contributions (and to any other qualified and non-qualified defined
contribution plans maintained by the Company or the Bank covering the
Executive) as if the Executive had continued working for the Bank and the
Company during the remaining Unexpired Employment Period making the maximum
amount of employee contributions required or permitted, if any, under such
plan or plans and earning (A) the highest annual rate of Base Salary and,
if applicable, the highest bonus or other incentive compensation,
respectively, achieved by the Executive during the three-year period
immediately preceding the Executive's Date of Termination, except that (B)
in the case of a Change in Control, such lump sum shall be determined based
upon the Base Salary and, if applicable, the bonus or other incentive
compensation, respectively, that the Executive would have been paid during
the remaining Unexpired Employment Period including the assumed increases
referred to in clauses (i) and (ii) of Section 5(b).
The benefits to be provided under, and the amounts payable pursuant to, this
Section 4 shall be provided and be payable without regard to proof of damages
and without regard to the Executive's efforts, if any, to mitigate damages. The
Company and the Executive hereby stipulate that the damages which may be
incurred by the Executive following any such termination of employment are not
capable of accurate measurement as of the date first above written and that such
liquidated damages constitute reasonable damages under the circumstances.
(c) Payments to the Executive under Section 4 shall be made
within ten days of the Executive's Date of Termination.
(d) In the event payments are made under Section 4 or Section
5, the Executive may select an individual or firm to provide him with reasonable
outplacement counseling services, and the Company shall pay for the costs of
such services; provided, however, that the cost to the Company of such
outplacement counseling services shall not exceed 25% of the Executive's Base
Salary.
5. CHANGE IN CONTROL.
(a) No benefit shall be payable under this Section 5 unless
there shall have been a Change in Control of the Bank or Company, as set forth
below. For purposes of this Agreement, a "Change in Control" of the Bank or
Company shall mean any one or more of the following:
(i) An event of a nature that would be required to be reported in
response to Item l(a) of the current report on Form 8-K, as in effect on
the date hereof, pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934, as amended (the "Exchange Act");
(ii) An event of a nature that results in a Change in Control of the
Bank or the Company within the meaning of the Home Owners' Loan Act of
1933, as amended, or the Change in Bank Control Act of 1978, as amended, as
applicable, and the Rules and Regulations promulgated by the Office of
Thrift Supervision ("OTS") or its predecessor agency, the Federal Deposit
Insurance Corporation ("FDIC") or the Board of Governors of the Federal
Reserve System ("FRB"), as the case may be, as in effect on the date
hereof, but excluding any such Change in Control resulting from the
purchase of securities by the Company or the Company's or the Bank's
tax-qualified employee benefit plans and trusts;
(iii) If any "person" (as the term is used in Sections 13(d) and 14(d)
of the Exchange Act) is or becomes the "beneficial owner" (as defined in
Rule 13d-3 under the Exchange Act), directly or indirectly, of securities
of the Bank or the Company representing 20% or more of the Bank's or the
Company's outstanding securities except for any securities of the Bank
purchased by the Company in connection with the initial conversion of the
Bank from mutual to stock form (the "Conversion") and any securities
purchased by the Company or the Company's or the Bank's tax-qualified
employee benefit plans and trusts;
(iv) If the individuals who constitute the Board on the date hereof
(the "Incumbent Board") cease for any reason to constitute at least a
majority of the Board, provided, however, that any person becoming a
director subsequent to the date hereof whose election or nomination for
election by the Company's stockholders, was approved by a vote of at least
three-quarters of the directors then comprising the Incumbent Board shall
be considered as though he were a member of the Incumbent Board, but
excluding, for this purpose, any such person whose initial assumption of
office occurs as a result of an actual or threatened election contest with
respect to the election or removal of directors or other actual or
threatened solicitation of proxies or consents by or on behalf of a person
other than the Board;
(v) A merger, consolidation, reorganization, sale of all or
substantially all the assets of the Bank or the Company or similar
transaction occurs in which the Bank or Company is not the resulting
entity, other than a transaction following which (A) at least 51% of the
equity ownership interests of the entity resulting from such transaction
are beneficially owned (within the meaning of Rule 13d-3 promulgated under
Exchange Act) in substantially the same relative proportions by persons
who, immediately prior to such transaction, beneficially owned (within the
meaning of Rule 13d-3 promulgated under the Exchange Act) at least 51% of
the outstanding equity ownership interests in the Bank or Company and (B)
at least 51% of the securities entitled to vote generally in the election
of directors of the entity resulting from such transaction are beneficially
owned (within the meaning of Rule 13d-3 promulgated under the Exchange Act)
in substantially the same relative proportions by persons who, immediately
prior to such transaction, beneficially owned (within the meaning of Rule
13d-3 promulgated under the Exchange Act) at least 51% of the securities
entitled to vote generally in the election of directors of the Bank or
Company;
(vi) A proxy statement shall be distributed soliciting proxies from
stockholders of the Company, by someone other than the current management
of the Company, seeking stockholder approval of a plan of reorganization,
merger or consolidation of the Company or Bank or similar transaction with
one or more corporations as a result of which the outstanding shares of the
class of securities then subject to such plan or transaction are exchanged
for or converted into cash or property or securities not issued by the Bank
or the Company; or
(vii) A tender offer is completed for 20% or more of the voting
securities of the Bank or Company then outstanding.
The "Change in Control Date" shall mean the date during the Employment Period on
which a Change in Control occurs. Anything in this Agreement to the contrary
notwithstanding, if the Executive's employment with the Company is terminated
and if it is reasonably demonstrated by the Executive that such termination of
employment (1) was at the request of a third party who has taken steps
reasonably calculated to effect a Change in Control or (2) otherwise arose in
connection with or anticipation of a Change in Control, then for all purposes of
this Agreement the "Change in Control Date" shall mean the date immediately
prior to the date of such termination of employment.
(b) If any of the events described in Section 5(a)
constituting a Change in Control have occurred or the Board has determined that
a Change in Control has occurred, the Executive shall be entitled to the
payments and the benefits provided below on the Change in Control Date. The
amounts payable and the benefits to be provided under this Section 5(b) to the
Executive shall consist of the payments and benefits that would be due to the
Executive and the Executive's family under Section 4(b) as if an Event of
Termination under Section 4(a) had occurred on the Change in Control Date and
that for purposes of this Section 5(b), the term Unexpired Employment Period
shall mean three years from the Change in Control Date. For purposes of
determining the payments and benefits due under this Section 5(b), when
calculating the payments due and benefits to be provided for the Unexpired
Employment Period, it shall be assumed that for each year of the remaining term
of this Agreement, the Executive would have received (i) an annual increase in
Base Salary equal to the average percentage increase in Base Salary received by
the Executive for the three-year period ending with the earlier of (x) the year
in which the Change in Control Date occurs or (y) the year during which a
definitive agreement, if any, governing the Change in Control is executed, with
the first such increase effective as of the January 1st next following such
three-year period and the second and third such increases effective as of the
next two anniversaries of such January 1st, (ii) a bonus or other incentive
compensation equal to the highest percentage rate of bonus or incentive
compensation paid to the Executive during the three-year period referred to in
clause (i) of this Section 5(b) times the Base Salary that the Executive would
have been paid during the remaining term of this Agreement including the assumed
increases referred to in clause (i) of this Section 5(b), (iii) the maximum
contributions that could be made by or on behalf of the Executive with respect
to any employee benefit plans and programs maintained by the Company and the
Bank based upon the Base Salary and, if applicable, the bonus or other incentive
compensation, respectively, that the Executive would have been paid during the
remaining term of this Agreement including the assumed increases referred to in
clauses (i) and (ii) of this Section 5(b), and (iv) the present value of the
pension benefits to which the Executive is entitled under Section 4(b)(vi) with
respect to the RP and the BRP (and under any other qualified and non-qualified
defined benefit plans maintained by the Bank or the Company covering the
Executive) determined as if he had continued working for the Bank during the
remaining Unexpired Employment Period and based upon the Base Salary and, if
applicable, the bonus or other incentive compensation, respectively, that the
Executive would have been paid during the remaining term of this Agreement
including the assumed increases referred to in clauses (i) and (ii) of this
Section 5(b). The benefits to be provided under, and the amounts payable
pursuant to, this Section 5 shall be provided and be payable without regard to
proof of damages and without regard to the Executive's efforts, if any, to
mitigate damages. The Company and the Executive hereby stipulate that the
damages which may be incurred by the Executive following any Change in Control
are not capable of accurate measurement as of the date first above written and
that such liquidated damages constitute reasonable damages under the
circumstances.
(c) Payments to the Executive under Section 5(b) shall be made
on the Change in Control Date. Such payments shall be made regardless of whether
the Executive's employment terminates.
6. TERMINATION FOR DISABILITY.
(a) In the event of Termination for Disability, the Executive
shall receive the benefits provided in Section 6(b); provided, however, that the
benefits provided under Section 6(b) shall not be deemed to be in lieu of the
benefits he is otherwise entitled as a former employee under the Bank or
Company's employee plans and programs. For purposes of this Agreement, the
Executive may be terminated for disability only if (i) the Executive shall have
been absent from his duties with the Company on a full-time basis for at least
six consecutive months, or (ii) a majority of the members of the Board acting in
good faith determine that, based upon competent and independent medical evidence
presented by a physician or physicians agreed upon by the parties, the
Executive's physical or mental condition is such that he is totally and
permanently incapable of engaging in any substantial gainful employment based
upon his education, training and experience; provided, however, that on and
after the earliest date on which a Change in Control of the Bank or Company as
defined in Section 5 occurs, such a determination shall require the affirmative
vote of at least three-fourths of the members of the Board acting in good faith
and such vote shall not be made prior to the expiration of a 60-day period
following the date on which the Board shall, by written notice to the Executive,
furnish him a statement of its grounds for proposing to make such determination,
during which period the Executive shall be afforded a reasonable opportunity to
make oral and written presentations to the members of the Board, and to be
represented by his legal counsel at such presentations, to refute the grounds
for the proposed determination.
(b) The Company will pay the Executive as Disability pay, a
bi-weekly payment equal to 100% of the Executive's bi-weekly annual rate of Base
Salary in effect on the date of the Executive's Termination for Disability. In
addition, the Company will cause to be continued insurance coverage, including
group life, health (including hospitalization, medical and major medical),
dental, accidental death and dismemberment, travel accident and short-term
disability coverage substantially identical to the coverage maintained by the
Bank or the Company for the Executive prior to his Termination for Disability.
The Disability pay and coverages shall commence on the effective date of the
Executive's termination and shall cease upon the earliest to occur of: (i) the
date the Executive returns to the full-time employment of the Company, in the
same capacity as he was employed prior to his Termination for Disability and
pursuant to an employment agreement between the Executive and the Company; (ii)
the Executive's full-time employment by another employer; (iii) the Executive's
attaining the normal age of retirement or receiving benefits under the RP or
other defined benefit pension plan of the Bank or the Company; (iv) the
Executive's death; (v) the Executive's eligibility to collect payments under the
disability provision of the RP or other defined benefit pension plan of the Bank
or the Company; or (vi) the expiration of the term of this Agreement.
(c) Notwithstanding the foregoing, there will be no reduction
in the compensation otherwise payable to the Executive during any period during
which the Executive is incapable of performing his duties hereunder by reason of
temporary disability.
7. TERMINATION UPON DEATH.
The Executive's employment shall terminate automatically upon
the Executive's death during the Employment Period. In such event, the Executive
and the Executive's legal representatives shall be entitled to the following:
(i) payment of the Executive's "Accrued Obligations;"
(ii) the continuation of all benefits to the Executive's family and
dependents that would have been provided if the Executive had been entitled
to the benefits under Section 4(b)(ii), (iii) and (iv); and
(iii) the timely payment of any other amounts or benefits required to
be paid or provided or which the Executive is eligible to receive under any
plan, program, policy or practice or contract or agreement of the Company
and its affiliated companies (all such other amounts and benefits shall be
hereinafter referred to as the "Other Benefits");
provided, however, that if the Executive dies while in the employment of the
Company, the amount of life insurance provided to the Executive by the Company
shall not be less than the lesser of $200,000 or three times the Executive's
then annual Base Salary. Accrued Obligations shall be paid to the Executive's
estate or beneficiary, as applicable, in a lump sum cash payment within ten days
of the Date of Termination. With respect to the provision of Other Benefits
after the Change of Control Date, the term Other Benefits as utilized in this
Section 7 shall include, without limitation, that the Executive's estate and/or
beneficiaries shall be entitled to receive, benefits at least equal to the most
favorable benefits provided by the Company and affiliated companies to the
estates and beneficiaries of peer executives of the Company and such affiliates
companies under such plans, programs, practices and policies relating to death
benefits, if any, as in effect with respect to other peer executives and their
beneficiaries at any time during the 120-day period immediately preceding the
Change in Control Date.
8. TERMINATION UPON RETIREMENT.
Termination by the Company of the Executive based on
"Retirement" shall mean termination in accordance with the Company's or the
Bank's retirement policy or in accordance with any retirement arrangement
established with the Executive's consent with respect to him. Upon termination
of the Executive upon Retirement, the Executive shall be entitled to all
benefits under the RP and any other retirement plan of the Bank or the Company
and other plans to which the Executive is a party, and the Executive shall be
entitled to the benefits, if any, that would be payable to him as a former
employee under the Bank's or the Company's employee benefit plans and programs
and compensation plans and programs.
9. TERMINATION FOR CAUSE.
The terms "Termination for Cause" or "Cause" shall mean
termination because of the Executive's personal dishonesty, willful misconduct,
any breach of fiduciary duty involving personal profit, intentional failure to
perform stated duties, conviction of a felony with respect to the Bank or the
Company or any material breach of this Agreement. For purposes of this Section,
no act, or the failure to act, on the Executive's part shall be "willful" unless
done, or omitted to be done, in bad faith and without reasonable belief that the
action or omission was in the best interest of the Company or its affiliates.
Any act, or failure to act, based upon authority given pursuant to a resolution
duly adopted by the Board or based upon the written advice of counsel for the
Company shall be conclusively presumed to be done, or omitted to be done, by the
Executive in good faith and in the best interests of the Company.
Notwithstanding the foregoing, the Executive shall not be deemed to have been
terminated for Cause unless and until there shall have been delivered to him a
Notice of Termination which shall include a copy of a resolution duly adopted by
the affirmative vote of not less than three-fourths of the members of the Board
at a meeting of the Board called and held for that purpose (after reasonable
notice to the Executive and an opportunity for him, together with counsel, to be
heard before the Board), finding that in the good faith opinion of the Board,
the Executive was guilty of conduct justifying Termination for Cause and
specifying the particulars thereof in detail. The Executive shall not have the
right to receive compensation or other benefits for any period after Termination
for Cause.
10. NOTICE.
(a) Any purported termination by the Company or by the
Executive shall be communicated by a Notice of Termination to the other party
hereto. For purposes of this Agreement, a "Notice of Termination" shall mean a
written notice which shall indicate the specific termination provision in this
Agreement relied upon and shall set forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of the Executive's
employment under the provision so indicated.
(b) Subject to Section 10(c), "Date of Termination" shall mean
(A) if the Executive's employment is terminated for Disability, 30 days after a
Notice of Termination is given (provided that he shall not have returned to the
performance of his duties on a full-time basis during such 30-day period), and
(B) if his employment is terminated for any other reason, the date specified in
the Notice of Termination (which, in the case of a Termination for Cause, shall
be immediate).
(c) If, within 30 days after any Notice of Termination is
given, the party receiving such Notice of Termination notifies the other party
that a dispute exists concerning the termination, then, except upon the
occurrence of a Change in Control and voluntary termination by the Executive in
which case the Date of Termination shall be the date specified in the Notice,
the Date of Termination shall be the date on which the dispute is finally
determined, either by mutual written agreement of the parties, by a binding
arbitration award, or by a final judgment, order or decree of a court of
competent jurisdiction (the time for appeal therefrom having expired and no
appeal having been perfected) and provided further that the Date of Termination
shall be extended by a notice of dispute only if such notice is given in good
faith and the party giving such notice pursues the resolution of such dispute
with reasonable diligence. Notwithstanding the pendency of any such dispute, the
Company will continue to pay the Executive his full compensation in effect when
the notice giving rise to the dispute was given (including, but not limited to,
Base Salary) and continue him as a participant in all compensation, benefit and
insurance plans in which he was participating when the notice of dispute was
given, until the dispute is finally resolved in accordance with this Agreement.
Amounts paid under this Section are in addition to all other amounts due under
this Agreement and shall not be offset against or reduce any other amounts due
under this Agreement.
(d) The Company may terminate the Executive's employment at
any time, but any termination by the Company, other than Termination for Cause,
shall not prejudice the Executive's right to compensation or other benefits
under this Agreement or under any other benefit or compensation plans or
programs maintained by the Bank or the Company from time to time. The Executive
shall not have the right to receive compensation or other benefits for any
period after a Termination for Cause as defined in Section 9 hereinabove.
(e) Any communication to a party required or permitted under
this Agreement, including any notice, direction, designation, consent,
instruction, objection or waiver, shall be in writing and shall be deemed to
have been given at such time as it is delivered personally, or five days after
mailing if mailed, postage prepaid, by registered or certified mail, return
receipt requested, addressed to such party at the address listed below or at
such other address as one such party may by written notice specify to the other
party, as follows. If to the Executive, (address omitted); if to the Company,
JSB Financial, Inc., 303 Merrick Road, Lynbrook, New York 11563, Attention:
President, with a copy to Thacher Proffitt & Wood, Two World Trade Center, New
York, New York 10048, Attention: Douglas J. McClintock, Esq.
11. POST-TERMINATION OBLIGATIONS.
(a) All payments and benefits to the Executive under this
Agreement shall be subject to the Executive's compliance with paragraph (b) of
this Section 11 during the term of this Agreement and for one full year after
the expiration or termination hereof.
(b) The Executive shall, upon reasonable notice, furnish such
information and assistance to the Company as may reasonably be required by the
Company in connection with any litigation in which it or any of its subsidiaries
or affiliates is, or may become, a party; provided, that the Company reimburses
the Executive for the reasonable value of his time in connection therewith and
for any out-of-pocket costs attributable thereto.
12. COVENANT NOT TO COMPETE.
The Executive hereby covenants and agrees that for a period of
one year following his Date of Termination, if such termination occurs prior to
the end of the term of the Agreement, he shall not, without the written consent
of the Board, become an officer, employee, consultant, director or trustee of
any savings bank, savings and loan association, savings and loan holding
company, bank or bank holding company if such position (a) entails working in
(or providing services in) New York City, Nassau or Suffolk counties or (b)
entails working in (or providing services in) any other county that is both (i)
within the Bank's primary trade (or operating) area at the time in question,
which shall be determined by reference to the Bank's business plan as in effect
from time to time, and (ii) in which the Bank engages in material or substantial
deposit-taking functions or lending activities at such time; provided, however,
that this Section 12 shall not apply if the Executive's employment is terminated
for the reasons set forth in any of Sections 4, 5, 6 or 8.
13. SOURCE OF PAYMENTS.
All payments provided in this Agreement shall be timely paid
in cash or check from the general funds of the Company.
14. EFFECT ON PRIOR AGREEMENTS.
This Agreement contains the entire understanding between the
parties hereto and supersedes any prior employment agreement between the Company
or any predecessor of the Company and the Executive, except that this Agreement
shall not affect or operate to reduce any benefit or compensation inuring to the
Executive of a kind elsewhere provided. No provisions of this Agreement shall be
interpreted to mean that the Executive is subject to receiving fewer benefits
than those available to him without reference to this Agreement.
15. EFFECT OF ACTION UNDER BANK AGREEMENT.
Notwithstanding any provision herein to the contrary, to the
extent that full compensation payments and benefits are paid to or received by
the Executive under the Bank Agreement, such compensation payments and benefits
paid by the Bank will be deemed to satisfy the corresponding obligations of the
Company under this Agreement.
16. NO ATTACHMENT.
Except as required by law, no right to receive payments under
this Agreement shall be subject to anticipation, commutation, alienation, sale,
assignment, encumbrance, charge, pledge, or hypothecation, or to execution,
attachment, levy, or similar process or assignment by operation of law, and any
attempt, voluntary or involuntary, to affect any such action shall be null,
void, and of no effect.
17. MODIFICATION AND WAIVER.
(a) This Agreement may not be modified or amended except by an
instrument in writing signed by the parties hereto.
(b) No term or condition of this Agreement shall be deemed to
have been waived, nor shall there be any estoppel against the enforcement of any
provision of this Agreement, except by written instrument of the party charged
with such waiver or estoppel. No such written waiver shall be deemed a
continuing waiver unless specifically stated therein, and each such waiver shall
operate only as to the specific term or condition waived and shall not
constitute a waiver of such term or condition for the future as to any act other
than that specifically waived.
18. SUCCESSOR AND ASSIGNS.
This Agreement will inure to the benefit of and be binding
upon the Executive, his legal representatives and testate or intestate
distributees, and the Company, its successors and assigns, including any
successor by purchase, merger, consolidation or otherwise or a statutory
receiver or any other person or firm or corporation to which all or
substantially all of the assets and business of the Company may be sold or
otherwise transferred. Any such successor of the Company shall be deemed to have
assumed this Agreement and to have become obligated hereunder to the same extent
as the Company and the Executive's obligations hereunder shall continue in favor
of such successor.
19. SEVERABILITY.
If, for any reason, any provision of this Agreement, or any
part of any provision, is held invalid, such invalidity shall not affect any
other provision of this Agreement or any part of such provision not held so
invalid, and each such other provision and part thereof shall to the full extent
consistent with law continue in full force and effect.
20. HEADINGS FOR REFERENCE ONLY.
The headings of Sections and paragraphs herein are included
solely for convenience of reference and shall not control the meaning or
interpretation of any of the provisions of this Agreement. Any reference in this
Agreement to a Section or Subsection shall refer to a Section or Subsection of
this Agreement, except as otherwise specified.
21. GOVERNING LAW.
This Agreement shall be governed by the laws of the State of
New York, without reference to conflicts of law principles.
22. INDEMNIFICATION AND ATTORNEYS' FEES.
(a) The Company shall indemnify, hold harmless and defend the
Executive against reasonable costs, including legal fees, incurred by him in
connection with his consultation with legal counsel or arising out of any
action, suit or proceeding in which he may be involved, as a result of his
efforts, in good faith, to defend or enforce the terms of this Agreement. The
Company agrees to pay all such costs as they are incurred by the Executive, to
the full extent permitted by law, and without regard to whether the Company
believes that it has a defense to any action, suit or proceeding by the
Executive or that it is not obligated for any payments under this Agreement.
(b) In the event any dispute or controversy arising under or
in connection with the Executive's termination is resolved in favor of the
Executive, whether by judgment, arbitration or settlement, the Executive shall
be entitled to the payment of all back-pay, including salary, bonuses and any
other cash compensation, fringe benefits and any compensation and benefits due
the Executive under this Agreement.
(c) The Company shall indemnify, hold harmless and defend the
Executive for any act taken or not taken, or any omission or failure to act, by
him in good faith while performing services for the Company or the Bank to the
same extent and upon the same terms and conditions as other similarly situated
officers and directors of the Company or the Bank. If and to the extent that the
Company or the Bank, maintains, at any time during the Employment Period, an
insurance policy covering the other officers and directors of the Company or the
Bank against lawsuits, the Company or the Bank shall use its best efforts to
cause the Executive to be covered under such policy upon the same terms and
conditions as other similarly situated officers and directors.
23. TAX INDEMNIFICATION.
(a) This Section 23 shall apply if 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 occurs within the meaning of section 280G
of the Code. If this Section 23 applies, then with respect to any taxable year
in which the Executive shall be liable for the payment of an excise tax under
section 4999 of the Code with respect to any payment in the nature of
compensation made by the Company, the Bank or any direct or indirect subsidiary
or affiliate of the Company to (or for the benefit of) the Executive, the
Company shall pay to the Executive an amount equal to X determined under the
following formula:
X = E x P
-------------------------------------------------
1 - [(FI x (1 - SLI)) + SLI + E + M]
where
E = the rate at which the excise tax is assessed under
section 4999 of the Code;
P = the amount with respect to which such excise tax is
assessed, determined without regard to this Section
23;
FI = the highest effective marginal rate of income tax
applicable to the Executive under the Code for the
taxable year in question (taking into account any
phase-out or loss of deductions, personal exemptions
and other similar adjustments);
SLI = the sum of the highest effective marginal rates of
income tax applicable to the Executive under all
applicable state and local laws for the taxable year
in question (taking into account any phase-out or
loss of deductions, personal exemptions and other
similar adjustments); and
M = the highest marginal rate of Medicare tax
applicable to the Executive under the Code for the
taxable year in question.
Attached as Appendix A to this Agreement is an example that illustrates
application of this Section 23. Any payment under this Section 23 shall be
adjusted so as to fully indemnify the Executive on an after-tax basis so that
the Executive would be in the same after-tax financial position in which he
would have been if no excise tax under section 4999 of the Code had been
imposed. With respect to any payment in the nature of compensation that is made
to (or for the benefit of) the Executive under the terms of this Agreement or
otherwise and on which an excise tax under section 4999 of the Code will be
assessed, the payment determined under this Section 23(a) shall be made to the
Executive on the earlier of (i) the date the Company, the Bank or any direct or
indirect subsidiary or affiliate of the Company is required to withhold such
tax, or (ii) the date the tax is required to be paid by the Executive.
(b) Notwithstanding anything in this Section 23 to the
contrary, in the event that the Executive's liability for the excise tax under
section 4999 of the Code for a taxable year is subsequently determined to be
different than the amount determined by the formula (X + P) x E, where X, P and
E have the meanings provided in Section 23(a), the Executive or the Company, as
the case may be, shall pay to the other party at the time that the amount of
such excise tax is finally determined, an appropriate amount, plus interest,
such that the payment made under Section 23(a), when increased by the amount of
the payment made to the Executive under this Section 23(b) by the Company, or
when reduced by the amount of the payment made to the Company under this Section
23(b) by the Executive, equals the amount that, it is finally determined, should
have properly been paid to the Executive under Section 23(a). The interest paid
under this Section 23(b) shall be determined at the rate provided under section
1274(b)(2)(B) of the Code. To confirm that the proper amount, if any, was paid
to the Executive under this Section 23, the Executive shall furnish to the
Company a copy of each tax return which reflects a liability for an excise tax
payment made by the Company, at least 20 days before the date on which such
return is required to be filed with the Internal Revenue Service.
24. NON-EXCLUSIVITY OF RIGHTS.
Except as otherwise provided herein, nothing in this Agreement
shall prevent or limit the Executive's continuing or future participation in any
plan, program, policy or practice provided by the Company or any of its
affiliated companies and for which the Executive may qualify, nor shall anything
herein limit or otherwise affect such rights as the Executive may have under any
contract or agreement with the Company or any of its affiliated companies.
Amounts which are vested benefits or which the Executive is otherwise entitled
to receive under any plan, policy, practice or program of or any contract or
agreement with the Company or any of its affiliated companies at or subsequent
to the Date of Termination shall be payable in accordance with such plan,
policy, practice or program or contract or agreement except as explicitly
modified by this Agreement. Notwithstanding the foregoing, in the event of a
termination of employment, the amounts provided in Section 4 or Section 5, as
applicable, shall be the Executive's sole remedy for any purported breach of
this Agreement by the Company.
25. MITIGATION; OTHER CLAIMS.
The Company's obligation to make the payments provided for in
this Agreement and otherwise to perform its obligations hereunder shall not be
affected by any set-off, counterclaim, recoupment, defense or other claim, right
or action which the Company may have against the Executive or others. In no
event shall the Executive be obligated to seek other employment or take any
other action by way of mitigation of the amounts payable to the Executive under
any of the provisions of this Agreement and such amounts shall not be reduced
whether or not the Executive obtains other employment.
26. CONFIDENTIAL INFORMATION.
The Executive shall hold in a fiduciary capacity for the
benefit of the Company all secret or confidential information, knowledge or data
relating to the Company or any of its affiliated companies, and their respective
businesses, which shall have been obtained by the Executive during the
Executive's employment by the Company or any of its affiliated companies and
which shall not be or become public knowledge (other than by acts by the
Executive or representatives of the Executive in violation of this Agreement).
After termination of the Executive's employment with the Company, the Executive
shall not, without the prior written consent of the Company or as may otherwise
be required by law or legal process, communicate or divulge any such
information, knowledge or data to anyone other than the Company and those
designated by it. For purposes of this Agreement, secret and confidential
information, knowledge or data relating to the Company or any of its affiliates,
and their respective business, shall not include any information that is public,
publicly available or available through trade association sources.
Notwithstanding any other provision of this Agreement to the contrary, the
Executive acknowledges and agrees that in the event of a violation or threatened
violation of any of the provisions of this Section 26, the Company shall have no
adequate remedy at law and shall therefore be entitled to enforce each such
provision by temporary or permanent injunction or mandatory relief obtained in
any court of competent jurisdiction without the necessity of proving damages or
posting any bond or other security, and without prejudice to any other remedies
that may be available at law or in equity.
27. ACCESS TO DOCUMENTS.
The Executive shall have the right to obtain copies of any
Company or Bank documents that the Executive reasonably believes, in good faith,
are necessary or appropriate in determining his entitlement to, and the amount
of, payments and benefits under this Agreement.
1. GUARANTEE.
The Company hereby agrees to guarantee the payment by the Bank of any
benefits and compensation to which the Executive is or may be entitled to under
the terms and conditions of the Bank Agreement.
1. REQUIRED REGULATORY PROVISIONS.
Notwithstanding anything herein contained to the contrary, any
payments to the Executive by the Company, whether pursuant to this Agreement
or otherwise, are subject to and conditioned upon their compliance with
section 18(k) of the Federal Deposit Insurance Act, as amended, 12 U.S.C.
ss.1828(k), and any regulations promulgated thereunder.
<PAGE>
SIGNATURES
IN WITNESS WHEREOF, JSB FINANCIAL, INC. has caused this
Agreement to be executed and its seal to be affixed hereunto by its duly
authorized officer, and the Executive has signed this Agreement, on the 22nd day
of June, 1999.
ATTEST: JSB FINANCIAL, INC.
Joanne Corrigan By: Edward P. Henson
- --------------- ----------------
Joanne Corrigan Edward P. Henson
Secretary President
[Seal]
WITNESS:
Daniel J. Huber
---------------
Daniel J. Huber
<PAGE>
STATE OF NEW YORK )
: ss.:
COUNTY OF NASSAU )
On this 22nd day of June, 1999, before me personally came Edward P.
Henson, to me known, who, being by me duly sworn, did depose and say that he is
the President of JSB Financial, Inc., the Delaware corporation described in and
which executed the foregoing instrument; that he knows the seal of said
corporation; that the seal affixed to said instrument is such seal; that it was
so affixed by order of the Board of Directors of said corporation; and that he
signed his name thereto by like order.
Name:
Notary Public
STATE OF NEW YORK )
: ss.:
COUNTY OF NASSAU )
On this 22nd day of June, 1999, before me personally came Daniel J.
Huber, to me known, and known to me to be the individual described in the
foregoing instrument, who, being by me duly sworn, did depose and say that he
resides at the address set forth in said instrument, and that he signed his name
to the foregoing instrument.
Name:
Notary Public
<PAGE>
APPENDIX A
----------
1. INTRODUCTION. Sections 280G and 4999 of the Internal Revenue Code of
1986, as amended ("Code"), impose a 20% non-deductible federal excise tax on a
person if the payments and benefits in the nature of compensation to or for the
benefit of that person that are contingent on a change in the ownership or
effective control of the Company or the Bank or in the ownership of a
substantial portion of the assets of the Company or the Bank (such payments and
benefits are considered "parachute payments" under section 280G) exceed three
times the person's "base amount" under section 280G. Section 23 of the Agreement
provides for the Executive to receive a tax indemnification payment (sometimes
referred to as a "gross-up" payment) if the payments and benefits in the nature
of compensation to or for the benefit of the Executive that are considered
parachute payments cause the imposition of an excise tax under section 4999 of
the Code. Capitalized terms in this Appendix A that are not defined in this
Appendix A have the meaning used in the Employment Agreement with the Executive.
2. PURPOSE. The purpose of this Appendix A is to illustrate how the tax
indemnification or gross-up payment would be computed. The amounts, figures and
rates used in this example are meant to be illustrative and do not reflect the
actual payments and benefits that would be made to the Executive under this
Agreement. For purposes of this example, it is assumed that a change in control
within the meaning of section 280G of the Code has occurred and that:
(a) The value of the insurance benefits required to be provided to a
hypothetical employee "Z" under sections 4(b)(iii) and 5(b) of the
Agreement for medical, dental, life and other insurance benefits
during the unexpired employment period is $23,000.
(b) The annual rate of Z's salary covered by the Agreement is $100,000,
and Z received annual salary increases of 4%, 5% and 6% (i.e., a
three-year average of 5%) for each of the prior three years. Hence,
the amount payable under sections 4(b)(v) and 5(b) of the Agreement
for salary during the unexpired employment period would be $331,013
[$105,000 + $110, 250 + $115,763].
(c) Z received annual bonuses equal to 20% of his salary in each of the
prior three years. Hence, the amount payable under sections 4(b)(v)
and 5(b) of the Agreement for bonuses during the unexpired employment
period would be $66,203 [20% x ($105,000 + $110,250 + $115,763)].
(d) The amount payable under sections 4(b)(vi) and 5(b) of the Agreement
for the present value of the additional RP and BRP accruals during the
unexpired employment period would be $45,000.
(e) The amount payable under sections 4(b)(vii) and 5(b) of the Agreement
for additional contributions to the ESOP, 401(k) Plan and BRP during
the unexpired employment period would be $20,000.
(f) Z's base amount (i.e., average W-2 wages for the five-year period
preceding the change in control) is $87,000.
3. DETERMINE IF Z IS SUBJECT TO AN EXCISE TAX. Z's parachute payments would
total $485,216 [$23,000 + $331,013 + $66,203 + $45,000 + $20,000]. Three times
Z's base amount is $261,000 [3 x $87,000]; accordingly, Z is subject to an
excise tax because $485,216 exceeds $261,000. Z's "excess parachute payments"
under section 280G of the Code are equal to Z's total parachute payments minus
one times Z's base amount, or $398,216 [$485,216 - $87,000]. If Z were not
protected by section 23 of the Agreement, Z would be subjected to an excise tax
of $79,643 [$398,216 x 20%], in addition to ordinary income taxes.
4. Compute Z's Tax Indemnification Payment. Z's tax indemnification payment
under section 23 of the Agreement would be computed pursuant to the following
formula:
E x P .2 x $398,216
X = ------------------------------------ = ----------------------------------
1 - [(FI x (1 - SLI)) + SLI + E + M] 1 - [.368874 + .0685 + .2 + .0145]
where
E = excise tax rate under section 4999 of the Code [20%];
P = the amount with respect to which such excise tax is
assessed determined without regard to section 23 of
the Agreement [$398,216];
FI = the highest effective marginal rate of income tax
applicable to Z under the Code for the taxable year
in question [assumed to be 39.6% in this example, but
in actuality, the rate is adjusted to take into
account any phase-out or loss of deductions, personal
exemptions and other similar adjustments];
SLI = the sum of the highest effective marginal rates of
income tax applicable to Z under applicable state and
local laws for the taxable year in question [assumed
to be 6.85% in this example, but in actuality, the
rate is adjusted to take into account any phase-out
or loss of deductions, personal exemptions and other
similar adjustments]; and
M = the highest marginal rate of Medicare tax applicable
to Z under the Code for the year in question [1.45%].
In this example, the amount of tax indemnification payment due to Z under
section 23 of the Agreement would be $79,643 [.2 x $398,216] divided by 0.348126
[1 - (.368874 + .0685 + .2 + .0145)], or $228,777. Such amount would be payable
in addition to the other amounts payable under the Agreement in order to put Z
in approximately the same after-tax position that Z would have been in if there
were no excise tax imposed under sections 280G and 4999 of the Code. The tax
indemnification to Z of $228,777 would in turn be a parachute payment subject to
excise tax under sections 280G and 4999. Accordingly, Z's actual excess
parachute payment would be $626,993 [$485,216 - $87,000) + $228,777)] resulting
in an excise tax of $125,399 [$626,993 x 20%]. The difference between the
indemnification. payment and the excise tax [$103,378] is an amount equal to the
sum of the income and other applicable taxes due on the indemnification payment
[($228,777 x .368874) + ($228,777 x .0685) + ($228,777 x .0145)], confirming
that the amount of the tax indemnification payment is sufficient to satisfy all
of Z's tax liability resulting from the excess parachute payment.
JSB FINANCIAL, INC.
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT ("Agreement") is made and entered
into as of June 22, 1999 by and between JSB FINANCIAL, INC., a business
corporation organized and operating under the laws of the State of Delaware and
having its principal office at 303 Merrick Road, Lynbrook, New York 11563
("Company"), and Lawrence J. Kane, an individual residing at (address omitted) 6
("Executive"). Any reference to the "Bank" in this Agreement shall mean Jamaica
Savings Bank FSB and any successor thereto.
W I T N E S S E T H :
WHEREAS, the Executive is currently serving as Executive Vice
President of the Company, and the Company wishes to assure itself of the
services of the Executive for the period provided in this Agreement; and
WHEREAS, the Executive is willing to serve in the employ of
the Company on the terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the premises and the
mutual covenants and conditions hereinafter set forth, the Company and the
Executive hereby agree as follows:
1. POSITION AND RESPONSIBILITIES.
During the period of his employment hereunder, the Executive
agrees to serve as Executive Vice President of the Company. The Executive shall
render administrative and management services to the Company such as are
customarily performed by persons situated in a similar executive capacity and
shall perform such other duties not inconsistent with his title and office as
may be assigned to him by or under the authority of the Board of Directors of
the Company (the "Board"). The Executive shall have such authority as is
necessary or appropriate to carry out his assigned duties. Failure to re-elect
the Executive as Executive Vice President of the Company (or a more senior
position) without the consent of the Executive shall constitute a breach of this
Agreement.
2. TERMS.
(a) The period of the Executive's employment under this
Agreement shall be deemed to have commenced as of the date first above written
(the "Effective Date") and shall continue for a period of 36 full calendar
months thereafter. Commencing with the Effective Date, the term of this
Agreement shall be extended for one additional day each day until such time as
the Board or the Executive elects not to extend the term of the Agreement
further by giving written notice to the other party in accordance with Section
10, in which case the term of this Agreement shall become fixed and shall end on
the third anniversary of the date of such written notice. For purposes of this
Agreement, the term "Employment Period" shall mean the term of this Agreement
plus such extensions as are provided herein.
(b) During the period of his employment hereunder, except for
periods of absence occasioned by illness, disability, holidays, reasonable
vacation periods and reasonable leaves of absence, the Executive shall devote
substantially all of his business time, attention, skill and efforts to the
faithful performance of his duties hereunder including (i) service as Executive
Vice President of the Company, and, if duly elected, a Director of the Company,
(ii) performance of such duties not inconsistent with his title and office as
may be assigned to him by or under the authority of the Board or a more senior
executive officer, and (iii) such other activities and services related to the
organization, operation and management of the Company. During the Employment
Period it shall not be a violation of this Agreement for the Executive to (A)
serve on corporate, civic, industry or charitable boards or committees, (B)
deliver lectures, fulfill speaking engagements or teach at educational
institutions and (C) manage personal investments, so long as such activities do
not significantly interfere with the performance of the Executive's
responsibilities as an employee of the Company in accordance with this
Agreement. It is expressly understood and agreed that to the extent that any
such activities have been conducted by the Executive prior to the Effective
Date, the continued conduct of such activities (or the conduct of activities
similar in nature and scope thereto) subsequent to the Effective Date shall not
thereafter be deemed to interfere with the performance of the Executive's
responsibilities to the Company. It is also expressly agreed that the Executive
may conduct activities subsequent to the Effective Date that are generally
accepted for an executive in his position, regardless of whether conducted by
the Executive prior to the Effective Date.
(c) Notwithstanding anything herein contained to the contrary:
(i) the Executive's employment with the Company may be terminated by the Company
or the Executive during the term of this Agreement, subject to the terms and
conditions of this Agreement; and (ii) nothing in this Agreement shall mandate
or prohibit a continuation of the Executive's employment following the
expiration of the term of this Agreement upon such terms and conditions as the
Board and the Executive may mutually agree.
(d) Upon the termination of the Executive's employment with
the Company, the daily extensions provided pursuant to Section 2(a) shall cease
(if such extensions have not previously ceased), and, if such termination is
under circumstances described in Section 4(a) or Section 5(b), the term
"Unexpired Employment Period" shall mean the period of time commencing from the
date of such termination and ending on the last day of the Employment Period
computed with reference to all extensions prior to such termination.
(e) In the event that the Executive's duties and
responsibilities with respect to the Bank are temporarily or permanently
terminated pursuant to Section 9 of the Employment Agreement dated June 22,
1999, as it may be amended from time to time, between the Executive and the Bank
("Bank Agreement") and the course of conduct upon which such termination is
based would not constitute grounds for Termination for Cause under Section 9,
then the Executive shall, to the extent practicable, assume such duties and
responsibilities formerly performed at the Bank as part of his duties and
responsibilities as Executive Vice President of the Company. Nothing in this
provision shall be interpreted as restricting the Company's right to remove the
Executive for Cause in accordance with Section 9.
3. COMPENSATION AND REIMBURSEMENT.
(a) The compensation specified under this Agreement shall
constitute the salary and benefits paid for the duties described in Section 1.
The Company shall pay the Executive as compensation a salary at an annual rate
of not less than (salary omitted) per year or such higher rate as may be
prescribed by or under the authority of the Board ("Base Salary"). The Base
Salary payable under this Section 3 shall be paid in approximately equal
installments in accordance with the Company's customary payroll practices.
During the period of this Agreement, the Executive's Base Salary shall be
reviewed at least annually; the first such review will be made no later than one
year from the date of this Agreement. Such review shall be conducted by a
Committee designated by the Board, and the Board may increase the Executive's
Base Salary, which increased amount shall be considered the Executive's "Base
Salary" for purposes of this Agreement. In no event shall the Executive's annual
rate of Base Salary under this Agreement in effect at a particular time be
reduced without his prior written consent. In addition to the Base Salary
provided in this Section 3(a), the Company shall provide the Executive at no
cost to the Executive with all such other benefits as are provided uniformly to
permanent full-time employees of the Bank.
(b) The Company will provide the Executive with employee
benefit plans, arrangements and perquisites substantially equivalent to those in
which the Executive was participating or otherwise deriving benefit from
immediately prior to the beginning of the term of this Agreement, and the
Company will not, without the Executive's prior written consent, make any
changes in such plans, arrangements or perquisites which would adversely affect
the Executive's rights or benefits thereunder. Without limiting the generality
of the foregoing provisions of this Subsection (b), the Executive will be
entitled to participate in or receive benefits under any employee benefit plans
with respect to which the Executive satisfies the eligibility requirements,
including, but not limited to, the Retirement Plan of Jamaica Savings Bank FSB
("RP"), the Incentive Savings Plan of Jamaica Savings Bank FSB ("ISP"), the
Jamaica Savings Bank FSB Employee Stock Ownership Plan ("ESOP"), the Benefit
Restoration Plan of Jamaica Savings Bank FSB ("BRP"), the JSB Financial, Inc.
1990 Stock Option Plan, the JSB Financial, Inc. 1996 Stock Option Plan,
retirement plans, supplemental retirement plans, pension plans, profit-sharing
plans, group life, health (including hospitalization, medical and major
medical), dental, accidental death and dismemberment, travel accident and
short-term disability insurance plans, or any other employee benefit plan or
arrangement made available by the Company in the future to its senior executives
and key management employees, subject to and on a basis consistent with the
terms, conditions and overall administration of such plans and arrangements. The
Executive will be entitled to incentive compensation and bonuses as provided in
any plan of the Company in which the Executive is eligible to participate.
Nothing paid to the Executive under any such plan or arrangement will be deemed
to be in lieu of other compensation to which the Executive is entitled under
this Agreement.
(c) The Executive's principal place of employment shall be at
the Company's executive offices at the address first above written, or at such
other location in New York City or in Nassau County or Suffolk County at which
the Company shall maintain its principal executive offices, or at such other
location as the Board and the Executive may mutually agree upon. The Company
shall provide the Executive, at his principal place of employment with support
services and facilities suitable to his position with the Company and necessary
or appropriate in connection with the performance of his assigned duties under
this Agreement. The Company shall reimburse the Executive for his ordinary and
necessary business expenses, including, without limitation, fees for memberships
in such clubs and organizations as the Executive and the Board shall mutually
agree are necessary and appropriate for business purposes, and travel and
entertainment expenses, incurred in connection with the performance of his
duties under this Agreement, upon presentation to the Company of an itemized
account of such expenses in such form as the Company may reasonably require.
(d) In the event that the Executive assumes additional duties
and responsibilities pursuant to Section 2(e) by reason of one of the
circumstances contained in Section 2(e), and the Executive receives or will
receive less than the full amount of compensation and benefits formerly entitled
to him under the Bank Agreement, the Company shall assume the obligation to
provide the Executive with his compensation and benefits in accordance with the
Bank Agreement less any compensation and benefits received from the Bank,
subject to the terms and conditions of this Agreement including the Termination
for Cause provisions in Section 9.
4. PAYMENTS TO THE EXECUTIVE UPON AN EVENT OF TERMINATION.
The provisions of this Section shall in all respects be
subject to the terms and conditions stated in Sections 9 and 29.
(a) Upon the occurrence of an Event of Termination (as herein
defined) during the Executive's term of employment under this Agreement, the
provisions of this Section shall apply. As used in this Agreement, an "Event of
Termination" shall mean and include any one or more of the following: (i) the
termination by the Bank or the Company of the Executive's full-time employment
hereunder for any reason other than: following a Change in Control, as defined
in Section 5; for Disability, as defined in Section 6; for Retirement, as
defined in Section 8; for Cause, as defined in Section 9; or upon the
Executive's death; or (ii) unless consented to by the Executive, the Executive's
voluntary resignation from the Company's employ, upon any: (A) failure to elect
or re-elect or to appoint or re-appoint the Executive as Executive Vice
President of the Company, (B) material adverse change in the Executive's
function, duties, or responsibilities, which change would cause the Executive's
position to become one of lesser responsibility, importance, or scope from the
position and attributes thereof described in Section 1, above (and any such
material change shall be deemed a continuing breach of this Agreement), (C)
relocation of the Executive's principal place of employment by more than 30
miles from its location at the Effective Date of this Agreement, or a material
reduction in the benefits and perquisites to the Executive from those being
provided as of the Effective Date of this Agreement, (D) liquidation or
dissolution of the Bank or Company, or (E) material breach of this Agreement by
the Company. Upon the occurrence of any event described in clauses (A), (B),
(C), (D) or (E), above, the Executive shall have the right to elect to terminate
his employment under this Agreement by resignation upon written notice pursuant
to Section 10 given within a reasonable period of time not to exceed, except in
case of a continuing breach, four calendar months after the event giving rise to
said right to elect.
(b) Upon the occurrence of an Event of Termination as set
forth in Section 4(a), on the Date of Termination, as defined in Section 10, the
Company shall be obligated to pay, or to provide, the Executive, or, in the
event of his subsequent death, to his surviving spouse or such other beneficiary
or beneficiaries as the Executive may designate in writing, or if neither his
estate, as severance pay or liquidated damages, or both, the benefits provided
below and a payment equal to the sum of the payments set forth below:
(i) payment of the sum of (A) the Executive's annual Base Salary
through the Date of Termination to the extent not theretofore paid and (B)
any compensation previously deferred by the Executive (together with any
accrued interest or earnings thereon) and any accrued vacation pay, in each
case to the extent not theretofore paid (the sum of the amounts described
in clauses (A) and (B) shall be hereinafter referred to as the "Accrued
Obligations");
(ii) the benefits, if any, to which the Executive is entitled as a
former employee under the Bank's or Company's employee benefit plans and
programs and compensation plans and programs;
(iii) continued group life, health (including hospitalization, medical
and major medical), dental, accidental death and dismemberment, travel
accident and short-term disability insurance benefits as provided by the
Bank or the Company, in addition to that provided pursuant to Section
4(b)(ii), if and to the extent necessary to provide for the Executive, for
the remaining Unexpired Employment Period, coverage equivalent to the
coverage to which he would have been entitled if he had continued working
for the Company during the remaining Unexpired Employment Period at the
highest annual rate of salary achieved during the Employment Period;
provided, however, if the Executive has obtained group life, health
(including hospitalization, medical and major medical), dental, accidental
death and dismemberment, travel accident and/or short-term disability
insurance benefits coverage from another source, the Executive may, as of
any month, make an irrevocable election to forego the continued coverage
that would otherwise be provided hereunder for the remaining Unexpired
Employment Period, or any portion thereof, in which case the Bank or the
Company, upon receipt of the Executive's irrevocable election, shall pay
the Executive an amount equal to the estimated cost to the Bank or the
Company of providing such coverage during such period;
(iv) if and to the extent not already provided under Sections 4(b)(ii)
and 4(b)(iii), continued health (including hospitalization, medical and
major medical) and dental insurance benefits to the extent maintained by
the Bank or the Company for its employees or retirees during the remainder
of the Executive's lifetime and the lifetime of his spouse, if any, for so
long as the Executive continues to reimburse the Bank for the cost of such
continued coverage;
(v) a lump sum payment, as liquidated damages, in an amount equal to
the Base Salary and the bonus or other incentive compensation that the
Executive would have earned if the Executive had continued working for the
Bank and the Company during the remaining Unexpired Employment Period (A)
at the highest annual rate of Base Salary and bonus or other incentive
compensation achieved by the Executive during the three-year period
immediately preceding the Executive's Date of Termination, except that (B)
in the case of a Change in Control, such lump sum shall be determined based
upon the Base Salary and the bonus or other incentive compensation,
respectively, that the Executive would have been paid during the remaining
Unexpired Employment Period including the assumed increases referred to in
clauses (i) and (ii) of Section 5(b);
(vi) a lump sum payment in an amount equal to the excess, if any, of:
(A) the present value of the pension benefits to which the Executive would
be entitled under the RP and the BRP (and under any other qualified and
non-qualified defined benefit plans maintained by the Company or the Bank
covering the Executive) as if he had continued working for the Company
during the remaining Unexpired Employment Period (x) at the highest annual
rate of Base Salary and, if applicable, the highest bonus or other
incentive compensation, respectively, achieved by the Executive during the
three-year period immediately preceding the Executive's Date of
Termination, except that (y) in the case of a Change in Control, such lump
sum shall be determined based upon the Base Salary and, if applicable, the
bonus or other incentive compensation, respectively, that the Executive
would have been paid during the remaining Unexpired Employment Period
including the assumed increases referred to in clauses (i) and (ii) of
Section 5(b), and (z) in the case of a Change in Control, as if three
additional years are added to the Executive's age and years of creditable
service under the RP and the BRP and after taking into account any other
compensation required to be taken into account under the RP and the BRP
(and any other qualified and non-qualified defined benefit plans of the
Company or the Bank, as applicable), over (B) the present value of the
pension benefits to which he is actually entitled under the RP and the BRP
(and any other qualified and non-qualified defined benefit plans) as of his
Date of Termination, where such present values are to be determined using a
discount rate of 6% and the mortality tables prescribed under section 72 of
the Internal Revenue Code of 1986, as amended ("Code"); and
(vii) a lump sum payment in an amount equal to the contributions that
would have been made by the Company or the Bank on the Executive's behalf
to the ISP and the ESOP and to the BRP with respect to such ISP and ESOP
contributions (and to any other qualified and non-qualified defined
contribution plans maintained by the Company or the Bank covering the
Executive) as if the Executive had continued working for the Bank and the
Company during the remaining Unexpired Employment Period making the maximum
amount of employee contributions required or permitted, if any, under such
plan or plans and earning (A) the highest annual rate of Base Salary and,
if applicable, the highest bonus or other incentive compensation,
respectively, achieved by the Executive during the three-year period
immediately preceding the Executive's Date of Termination, except that (B)
in the case of a Change in Control, such lump sum shall be determined based
upon the Base Salary and, if applicable, the bonus or other incentive
compensation, respectively, that the Executive would have been paid during
the remaining Unexpired Employment Period including the assumed increases
referred to in clauses (i) and (ii) of Section 5(b).
The benefits to be provided under, and the amounts payable pursuant to, this
Section 4 shall be provided and be payable without regard to proof of damages
and without regard to the Executive's efforts, if any, to mitigate damages. The
Company and the Executive hereby stipulate that the damages which may be
incurred by the Executive following any such termination of employment are not
capable of accurate measurement as of the date first above written and that such
liquidated damages constitute reasonable damages under the circumstances.
(c) Payments to the Executive under Section 4 shall be made
within ten days of the Executive's Date of Termination.
(d) In the event payments are made under Section 4 or Section
5, the Executive may select an individual or firm to provide him with reasonable
outplacement counseling services, and the Company shall pay for the costs of
such services; provided, however, that the cost to the Company of such
outplacement counseling services shall not exceed 25% of the Executive's Base
Salary.
5. CHANGE IN CONTROL.
(a) No benefit shall be payable under this Section 5 unless
there shall have been a Change in Control of the Bank or Company, as set forth
below. For purposes of this Agreement, a "Change in Control" of the Bank or
Company shall mean any one or more of the following:
(i) An event of a nature that would be required to be reported in
response to Item l(a) of the current report on Form 8-K, as in effect on
the date hereof, pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934, as amended (the "Exchange Act");
(ii) An event of a nature that results in a Change in Control of the
Bank or the Company within the meaning of the Home Owners' Loan Act of
1933, as amended, or the Change in Bank Control Act of 1978, as amended, as
applicable, and the Rules and Regulations promulgated by the Office of
Thrift Supervision ("OTS") or its predecessor agency, the Federal Deposit
Insurance Corporation ("FDIC") or the Board of Governors of the Federal
Reserve System ("FRB"), as the case may be, as in effect on the date
hereof, but excluding any such Change in Control resulting from the
purchase of securities by the Company or the Company's or the Bank's
tax-qualified employee benefit plans and trusts;
(iii) If any "person" (as the term is used in Sections 13(d) and 14(d)
of the Exchange Act) is or becomes the "beneficial owner" (as defined in
Rule 13d-3 under the Exchange Act), directly or indirectly, of securities
of the Bank or the Company representing 20% or more of the Bank's or the
Company's outstanding securities except for any securities of the Bank
purchased by the Company in connection with the initial conversion of the
Bank from mutual to stock form (the "Conversion") and any securities
purchased by the Company or the Company's or the Bank's tax-qualified
employee benefit plans and trusts;
(iv) If the individuals who constitute the Board on the date hereof
(the "Incumbent Board") cease for any reason to constitute at least a
majority of the Board, provided, however, that any person becoming a
director subsequent to the date hereof whose election or nomination for
election by the Company's stockholders, was approved by a vote of at least
three-quarters of the directors then comprising the Incumbent Board shall
be considered as though he were a member of the Incumbent Board, but
excluding, for this purpose, any such person whose initial assumption of
office occurs as a result of an actual or threatened election contest with
respect to the election or removal of directors or other actual or
threatened solicitation of proxies or consents by or on behalf of a person
other than the Board;
(v) A merger, consolidation, reorganization, sale of all or
substantially all the assets of the Bank or the Company or similar
transaction occurs in which the Bank or Company is not the resulting
entity, other than a transaction following which (A) at least 51% of the
equity ownership interests of the entity resulting from such transaction
are beneficially owned (within the meaning of Rule 13d-3 promulgated under
Exchange Act) in substantially the same relative proportions by persons
who, immediately prior to such transaction, beneficially owned (within the
meaning of Rule 13d-3 promulgated under the Exchange Act) at least 51% of
the outstanding equity ownership interests in the Bank or Company and (B)
at least 51% of the securities entitled to vote generally in the election
of directors of the entity resulting from such transaction are beneficially
owned (within the meaning of Rule 13d-3 promulgated under the Exchange Act)
in substantially the same relative proportions by persons who, immediately
prior to such transaction, beneficially owned (within the meaning of Rule
13d-3 promulgated under the Exchange Act) at least 51% of the securities
entitled to vote generally in the election of directors of the Bank or
Company;
(vi) A proxy statement shall be distributed soliciting proxies from
stockholders of the Company, by someone other than the current management
of the Company, seeking stockholder approval of a plan of reorganization,
merger or consolidation of the Company or Bank or similar transaction with
one or more corporations as a result of which the outstanding shares of the
class of securities then subject to such plan or transaction are exchanged
for or converted into cash or property or securities not issued by the Bank
or the Company; or
(vii) A tender offer is completed for 20% or more of the voting
securities of the Bank or Company then outstanding.
The "Change in Control Date" shall mean the date during the Employment Period on
which a Change in Control occurs. Anything in this Agreement to the contrary
notwithstanding, if the Executive's employment with the Company is terminated
and if it is reasonably demonstrated by the Executive that such termination of
employment (1) was at the request of a third party who has taken steps
reasonably calculated to effect a Change in Control or (2) otherwise arose in
connection with or anticipation of a Change in Control, then for all purposes of
this Agreement the "Change in Control Date" shall mean the date immediately
prior to the date of such termination of employment.
(b) If any of the events described in Section 5(a)
constituting a Change in Control have occurred or the Board has determined that
a Change in Control has occurred, the Executive shall be entitled to the
payments and the benefits provided below on the Change in Control Date. The
amounts payable and the benefits to be provided under this Section 5(b) to the
Executive shall consist of the payments and benefits that would be due to the
Executive and the Executive's family under Section 4(b) as if an Event of
Termination under Section 4(a) had occurred on the Change in Control Date and
that for purposes of this Section 5(b), the term Unexpired Employment Period
shall mean three years from the Change in Control Date. For purposes of
determining the payments and benefits due under this Section 5(b), when
calculating the payments due and benefits to be provided for the Unexpired
Employment Period, it shall be assumed that for each year of the remaining term
of this Agreement, the Executive would have received (i) an annual increase in
Base Salary equal to the average percentage increase in Base Salary received by
the Executive for the three-year period ending with the earlier of (x) the year
in which the Change in Control Date occurs or (y) the year during which a
definitive agreement, if any, governing the Change in Control is executed, with
the first such increase effective as of the January 1st next following such
three-year period and the second and third such increases effective as of the
next two anniversaries of such January 1st, (ii) a bonus or other incentive
compensation equal to the highest percentage rate of bonus or incentive
compensation paid to the Executive during the three-year period referred to in
clause (i) of this Section 5(b) times the Base Salary that the Executive would
have been paid during the remaining term of this Agreement including the assumed
increases referred to in clause (i) of this Section 5(b), (iii) the maximum
contributions that could be made by or on behalf of the Executive with respect
to any employee benefit plans and programs maintained by the Company and the
Bank based upon the Base Salary and, if applicable, the bonus or other incentive
compensation, respectively, that the Executive would have been paid during the
remaining term of this Agreement including the assumed increases referred to in
clauses (i) and (ii) of this Section 5(b), and (iv) the present value of the
pension benefits to which the Executive is entitled under Section 4(b)(vi) with
respect to the RP and the BRP (and under any other qualified and non-qualified
defined benefit plans maintained by the Bank or the Company covering the
Executive) determined as if he had continued working for the Bank during the
remaining Unexpired Employment Period and based upon the Base Salary and, if
applicable, the bonus or other incentive compensation, respectively, that the
Executive would have been paid during the remaining term of this Agreement
including the assumed increases referred to in clauses (i) and (ii) of this
Section 5(b). The benefits to be provided under, and the amounts payable
pursuant to, this Section 5 shall be provided and be payable without regard to
proof of damages and without regard to the Executive's efforts, if any, to
mitigate damages. The Company and the Executive hereby stipulate that the
damages which may be incurred by the Executive following any Change in Control
are not capable of accurate measurement as of the date first above written and
that such liquidated damages constitute reasonable damages under the
circumstances.
(c) Payments to the Executive under Section 5(b) shall be made
on the Change in Control Date. Such payments shall be made regardless of whether
the Executive's employment terminates.
6. TERMINATION FOR DISABILITY.
(a) In the event of Termination for Disability, the Executive
shall receive the benefits provided in Section 6(b); provided, however, that the
benefits provided under Section 6(b) shall not be deemed to be in lieu of the
benefits he is otherwise entitled as a former employee under the Bank or
Company's employee plans and programs. For purposes of this Agreement, the
Executive may be terminated for disability only if (i) the Executive shall have
been absent from his duties with the Company on a full-time basis for at least
six consecutive months, or (ii) a majority of the members of the Board acting in
good faith determine that, based upon competent and independent medical evidence
presented by a physician or physicians agreed upon by the parties, the
Executive's physical or mental condition is such that he is totally and
permanently incapable of engaging in any substantial gainful employment based
upon his education, training and experience; provided, however, that on and
after the earliest date on which a Change in Control of the Bank or Company as
defined in Section 5 occurs, such a determination shall require the affirmative
vote of at least three-fourths of the members of the Board acting in good faith
and such vote shall not be made prior to the expiration of a 60-day period
following the date on which the Board shall, by written notice to the Executive,
furnish him a statement of its grounds for proposing to make such determination,
during which period the Executive shall be afforded a reasonable opportunity to
make oral and written presentations to the members of the Board, and to be
represented by his legal counsel at such presentations, to refute the grounds
for the proposed determination.
(b) The Company will pay the Executive as Disability pay, a
bi-weekly payment equal to 100% of the Executive's bi-weekly annual rate of Base
Salary in effect on the date of the Executive's Termination for Disability. In
addition, the Company will cause to be continued insurance coverage, including
group life, health (including hospitalization, medical and major medical),
dental, accidental death and dismemberment, travel accident and short-term
disability coverage substantially identical to the coverage maintained by the
Bank or the Company for the Executive prior to his Termination for Disability.
The Disability pay and coverages shall commence on the effective date of the
Executive's termination and shall cease upon the earliest to occur of: (i) the
date the Executive returns to the full-time employment of the Company, in the
same capacity as he was employed prior to his Termination for Disability and
pursuant to an employment agreement between the Executive and the Company; (ii)
the Executive's full-time employment by another employer; (iii) the Executive's
attaining the normal age of retirement or receiving benefits under the RP or
other defined benefit pension plan of the Bank or the Company; (iv) the
Executive's death; (v) the Executive's eligibility to collect payments under the
disability provision of the RP or other defined benefit pension plan of the Bank
or the Company; or (vi) the expiration of the term of this Agreement.
(c) Notwithstanding the foregoing, there will be no reduction
in the compensation otherwise payable to the Executive during any period during
which the Executive is incapable of performing his duties hereunder by reason of
temporary disability.
7. TERMINATION UPON DEATH.
The Executive's employment shall terminate automatically upon
the Executive's death during the Employment Period. In such event, the Executive
and the Executive's legal representatives shall be entitled to the following:
(i) payment of the Executive's "Accrued Obligations;"
(ii) the continuation of all benefits to the Executive's family and
dependents that would have been provided if the Executive had been entitled
to the benefits under Section 4(b)(ii), (iii) and (iv); and
(iii) the timely payment of any other amounts or benefits required to
be paid or provided or which the Executive is eligible to receive under any
plan, program, policy or practice or contract or agreement of the Company
and its affiliated companies (all such other amounts and benefits shall be
hereinafter referred to as the "Other Benefits");
provided, however, that if the Executive dies while in the employment of the
Company, the amount of life insurance provided to the Executive by the Company
shall not be less than the lesser of $200,000 or three times the Executive's
then annual Base Salary. Accrued Obligations shall be paid to the Executive's
estate or beneficiary, as applicable, in a lump sum cash payment within ten days
of the Date of Termination. With respect to the provision of Other Benefits
after the Change of Control Date, the term Other Benefits as utilized in this
Section 7 shall include, without limitation, that the Executive's estate and/or
beneficiaries shall be entitled to receive, benefits at least equal to the most
favorable benefits provided by the Company and affiliated companies to the
estates and beneficiaries of peer executives of the Company and such affiliates
companies under such plans, programs, practices and policies relating to death
benefits, if any, as in effect with respect to other peer executives and their
beneficiaries at any time during the 120-day period immediately preceding the
Change in Control Date.
8. TERMINATION UPON RETIREMENT.
Termination by the Company of the Executive based on
"Retirement" shall mean termination in accordance with the Company's or the
Bank's retirement policy or in accordance with any retirement arrangement
established with the Executive's consent with respect to him. Upon termination
of the Executive upon Retirement, the Executive shall be entitled to all
benefits under the RP and any other retirement plan of the Bank or the Company
and other plans to which the Executive is a party, and the Executive shall be
entitled to the benefits, if any, that would be payable to him as a former
employee under the Bank's or the Company's employee benefit plans and programs
and compensation plans and programs.
9. TERMINATION FOR CAUSE.
The terms "Termination for Cause" or "Cause" shall mean
termination because of the Executive's personal dishonesty, willful misconduct,
any breach of fiduciary duty involving personal profit, intentional failure to
perform stated duties, conviction of a felony with respect to the Bank or the
Company or any material breach of this Agreement. For purposes of this Section,
no act, or the failure to act, on the Executive's part shall be "willful" unless
done, or omitted to be done, in bad faith and without reasonable belief that the
action or omission was in the best interest of the Company or its affiliates.
Any act, or failure to act, based upon authority given pursuant to a resolution
duly adopted by the Board or based upon the written advice of counsel for the
Company shall be conclusively presumed to be done, or omitted to be done, by the
Executive in good faith and in the best interests of the Company.
Notwithstanding the foregoing, the Executive shall not be deemed to have been
terminated for Cause unless and until there shall have been delivered to him a
Notice of Termination which shall include a copy of a resolution duly adopted by
the affirmative vote of not less than three-fourths of the members of the Board
at a meeting of the Board called and held for that purpose (after reasonable
notice to the Executive and an opportunity for him, together with counsel, to be
heard before the Board), finding that in the good faith opinion of the Board,
the Executive was guilty of conduct justifying Termination for Cause and
specifying the particulars thereof in detail. The Executive shall not have the
right to receive compensation or other benefits for any period after Termination
for Cause.
10. NOTICE.
(a) Any purported termination by the Company or by the
Executive shall be communicated by a Notice of Termination to the other party
hereto. For purposes of this Agreement, a "Notice of Termination" shall mean a
written notice which shall indicate the specific termination provision in this
Agreement relied upon and shall set forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of the Executive's
employment under the provision so indicated.
(b) Subject to Section 10(c), "Date of Termination" shall mean
(A) if the Executive's employment is terminated for Disability, 30 days after a
Notice of Termination is given (provided that he shall not have returned to the
performance of his duties on a full-time basis during such 30-day period), and
(B) if his employment is terminated for any other reason, the date specified in
the Notice of Termination (which, in the case of a Termination for Cause, shall
be immediate).
(c) If, within 30 days after any Notice of Termination is
given, the party receiving such Notice of Termination notifies the other party
that a dispute exists concerning the termination, then, except upon the
occurrence of a Change in Control and voluntary termination by the Executive in
which case the Date of Termination shall be the date specified in the Notice,
the Date of Termination shall be the date on which the dispute is finally
determined, either by mutual written agreement of the parties, by a binding
arbitration award, or by a final judgment, order or decree of a court of
competent jurisdiction (the time for appeal therefrom having expired and no
appeal having been perfected) and provided further that the Date of Termination
shall be extended by a notice of dispute only if such notice is given in good
faith and the party giving such notice pursues the resolution of such dispute
with reasonable diligence. Notwithstanding the pendency of any such dispute, the
Company will continue to pay the Executive his full compensation in effect when
the notice giving rise to the dispute was given (including, but not limited to,
Base Salary) and continue him as a participant in all compensation, benefit and
insurance plans in which he was participating when the notice of dispute was
given, until the dispute is finally resolved in accordance with this Agreement.
Amounts paid under this Section are in addition to all other amounts due under
this Agreement and shall not be offset against or reduce any other amounts due
under this Agreement.
(d) The Company may terminate the Executive's employment at
any time, but any termination by the Company, other than Termination for Cause,
shall not prejudice the Executive's right to compensation or other benefits
under this Agreement or under any other benefit or compensation plans or
programs maintained by the Bank or the Company from time to time. The Executive
shall not have the right to receive compensation or other benefits for any
period after a Termination for Cause as defined in Section 9 hereinabove.
(e) Any communication to a party required or permitted under
this Agreement, including any notice, direction, designation, consent,
instruction, objection or waiver, shall be in writing and shall be deemed to
have been given at such time as it is delivered personally, or five days after
mailing if mailed, postage prepaid, by registered or certified mail, return
receipt requested, addressed to such party at the address listed below or at
such other address as one such party may by written notice specify to the other
party, as follows. If to the Executive, (address omitted); if to the Company,
JSB Financial, Inc., 303 Merrick Road, Lynbrook, New York 11563, Attention:
President, with a copy to Thacher Proffitt & Wood, Two World Trade Center, New
York, New York 10048, Attention: Douglas J. McClintock, Esq.
11. POST-TERMINATION OBLIGATIONS.
(a) All payments and benefits to the Executive under this
Agreement shall be subject to the Executive's compliance with paragraph (b) of
this Section 11 during the term of this Agreement and for one full year after
the expiration or termination hereof.
(b) The Executive shall, upon reasonable notice, furnish such
information and assistance to the Company as may reasonably be required by the
Company in connection with any litigation in which it or any of its subsidiaries
or affiliates is, or may become, a party; provided, that the Company reimburses
the Executive for the reasonable value of his time in connection therewith and
for any out-of-pocket costs attributable thereto.
12. COVENANT NOT TO COMPETE.
The Executive hereby covenants and agrees that for a period of
one year following his Date of Termination, if such termination occurs prior to
the end of the term of the Agreement, he shall not, without the written consent
of the Board, become an officer, employee, consultant, director or trustee of
any savings bank, savings and loan association, savings and loan holding
company, bank or bank holding company if such position (a) entails working in
(or providing services in) New York City, Nassau or Suffolk counties or (b)
entails working in (or providing services in) any other county that is both (i)
within the Bank's primary trade (or operating) area at the time in question,
which shall be determined by reference to the Bank's business plan as in effect
from time to time, and (ii) in which the Bank engages in material or substantial
deposit-taking functions or lending activities at such time; provided, however,
that this Section 12 shall not apply if the Executive's employment is terminated
for the reasons set forth in any of Sections 4, 5, 6 or 8.
13. SOURCE OF PAYMENTS.
All payments provided in this Agreement shall be timely paid
in cash or check from the general funds of the Company.
14. EFFECT ON PRIOR AGREEMENTS.
This Agreement contains the entire understanding between the
parties hereto and supersedes any prior employment agreement between the Company
or any predecessor of the Company and the Executive, except that this Agreement
shall not affect or operate to reduce any benefit or compensation inuring to the
Executive of a kind elsewhere provided. No provisions of this Agreement shall be
interpreted to mean that the Executive is subject to receiving fewer benefits
than those available to him without reference to this Agreement.
15. EFFECT OF ACTION UNDER BANK AGREEMENT.
Notwithstanding any provision herein to the contrary, to the
extent that full compensation payments and benefits are paid to or received by
the Executive under the Bank Agreement, such compensation payments and benefits
paid by the Bank will be deemed to satisfy the corresponding obligations of the
Company under this Agreement.
16. NO ATTACHMENT.
Except as required by law, no right to receive payments under
this Agreement shall be subject to anticipation, commutation, alienation, sale,
assignment, encumbrance, charge, pledge, or hypothecation, or to execution,
attachment, levy, or similar process or assignment by operation of law, and any
attempt, voluntary or involuntary, to affect any such action shall be null,
void, and of no effect.
17. MODIFICATION AND WAIVER.
(a) This Agreement may not be modified or amended except by an
instrument in writing signed by the parties hereto.
(b) No term or condition of this Agreement shall be deemed to
have been waived, nor shall there be any estoppel against the enforcement of any
provision of this Agreement, except by written instrument of the party charged
with such waiver or estoppel. No such written waiver shall be deemed a
continuing waiver unless specifically stated therein, and each such waiver shall
operate only as to the specific term or condition waived and shall not
constitute a waiver of such term or condition for the future as to any act other
than that specifically waived.
18. SUCCESSOR AND ASSIGNS.
This Agreement will inure to the benefit of and be binding
upon the Executive, his legal representatives and testate or intestate
distributees, and the Company, its successors and assigns, including any
successor by purchase, merger, consolidation or otherwise or a statutory
receiver or any other person or firm or corporation to which all or
substantially all of the assets and business of the Company may be sold or
otherwise transferred. Any such successor of the Company shall be deemed to have
assumed this Agreement and to have become obligated hereunder to the same extent
as the Company and the Executive's obligations hereunder shall continue in favor
of such successor.
19. SEVERABILITY.
If, for any reason, any provision of this Agreement, or any
part of any provision, is held invalid, such invalidity shall not affect any
other provision of this Agreement or any part of such provision not held so
invalid, and each such other provision and part thereof shall to the full extent
consistent with law continue in full force and effect.
20. HEADINGS FOR REFERENCE ONLY.
The headings of Sections and paragraphs herein are included
solely for convenience of reference and shall not control the meaning or
interpretation of any of the provisions of this Agreement. Any reference in this
Agreement to a Section or Subsection shall refer to a Section or Subsection of
this Agreement, except as otherwise specified.
21. GOVERNING LAW.
This Agreement shall be governed by the laws of the State of
New York, without reference to conflicts of law principles.
22. INDEMNIFICATION AND ATTORNEYS' FEES.
(a) The Company shall indemnify, hold harmless and defend the
Executive against reasonable costs, including legal fees, incurred by him in
connection with his consultation with legal counsel or arising out of any
action, suit or proceeding in which he may be involved, as a result of his
efforts, in good faith, to defend or enforce the terms of this Agreement. The
Company agrees to pay all such costs as they are incurred by the Executive, to
the full extent permitted by law, and without regard to whether the Company
believes that it has a defense to any action, suit or proceeding by the
Executive or that it is not obligated for any payments under this Agreement.
(b) In the event any dispute or controversy arising under or
in connection with the Executive's termination is resolved in favor of the
Executive, whether by judgment, arbitration or settlement, the Executive shall
be entitled to the payment of all back-pay, including salary, bonuses and any
other cash compensation, fringe benefits and any compensation and benefits due
the Executive under this Agreement.
(c) The Company shall indemnify, hold harmless and defend the
Executive for any act taken or not taken, or any omission or failure to act, by
him in good faith while performing services for the Company or the Bank to the
same extent and upon the same terms and conditions as other similarly situated
officers and directors of the Company or the Bank. If and to the extent that the
Company or the Bank, maintains, at any time during the Employment Period, an
insurance policy covering the other officers and directors of the Company or the
Bank against lawsuits, the Company or the Bank shall use its best efforts to
cause the Executive to be covered under such policy upon the same terms and
conditions as other similarly situated officers and directors.
23. TAX INDEMNIFICATION.
(a) This Section 23 shall apply if 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 occurs within the meaning of section 280G
of the Code. If this Section 23 applies, then with respect to any taxable year
in which the Executive shall be liable for the payment of an excise tax under
section 4999 of the Code with respect to any payment in the nature of
compensation made by the Company, the Bank or any direct or indirect subsidiary
or affiliate of the Company to (or for the benefit of) the Executive, the
Company shall pay to the Executive an amount equal to X determined under the
following formula:
X = E x P
-------------------------------------------------
1 - [(FI x (1 - SLI)) + SLI + E + M]
where
E = the rate at which the excise tax is assessed under
section 4999 of the Code;
P = the amount with respect to which such excise tax is
assessed, determined without regard to this Section
23;
FI = the highest effective marginal rate of income tax
applicable to the Executive under the Code for the
taxable year in question (taking into account any
phase-out or loss of deductions, personal exemptions
and other similar adjustments);
SLI = the sum of the highest effective marginal rates of
income tax applicable to the Executive under all
applicable state and local laws for the taxable year
in question (taking into account any phase-out or
loss of deductions, personal exemptions and other
similar adjustments); and
M = the highest marginal rate of Medicare tax
applicable to the Executive under the Code for the
taxable year in question.
Attached as Appendix A to this Agreement is an example that illustrates
application of this Section 23. Any payment under this Section 23 shall be
adjusted so as to fully indemnify the Executive on an after-tax basis so that
the Executive would be in the same after-tax financial position in which he
would have been if no excise tax under section 4999 of the Code had been
imposed. With respect to any payment in the nature of compensation that is made
to (or for the benefit of) the Executive under the terms of this Agreement or
otherwise and on which an excise tax under section 4999 of the Code will be
assessed, the payment determined under this Section 23(a) shall be made to the
Executive on the earlier of (i) the date the Company, the Bank or any direct or
indirect subsidiary or affiliate of the Company is required to withhold such
tax, or (ii) the date the tax is required to be paid by the Executive.
(b) Notwithstanding anything in this Section 23 to the
contrary, in the event that the Executive's liability for the excise tax under
section 4999 of the Code for a taxable year is subsequently determined to be
different than the amount determined by the formula (X + P) x E, where X, P and
E have the meanings provided in Section 23(a), the Executive or the Company, as
the case may be, shall pay to the other party at the time that the amount of
such excise tax is finally determined, an appropriate amount, plus interest,
such that the payment made under Section 23(a), when increased by the amount of
the payment made to the Executive under this Section 23(b) by the Company, or
when reduced by the amount of the payment made to the Company under this Section
23(b) by the Executive, equals the amount that, it is finally determined, should
have properly been paid to the Executive under Section 23(a). The interest paid
under this Section 23(b) shall be determined at the rate provided under section
1274(b)(2)(B) of the Code. To confirm that the proper amount, if any, was paid
to the Executive under this Section 23, the Executive shall furnish to the
Company a copy of each tax return which reflects a liability for an excise tax
payment made by the Company, at least 20 days before the date on which such
return is required to be filed with the Internal Revenue Service.
24. NON-EXCLUSIVITY OF RIGHTS.
Except as otherwise provided herein, nothing in this Agreement
shall prevent or limit the Executive's continuing or future participation in any
plan, program, policy or practice provided by the Company or any of its
affiliated companies and for which the Executive may qualify, nor shall anything
herein limit or otherwise affect such rights as the Executive may have under any
contract or agreement with the Company or any of its affiliated companies.
Amounts which are vested benefits or which the Executive is otherwise entitled
to receive under any plan, policy, practice or program of or any contract or
agreement with the Company or any of its affiliated companies at or subsequent
to the Date of Termination shall be payable in accordance with such plan,
policy, practice or program or contract or agreement except as explicitly
modified by this Agreement. Notwithstanding the foregoing, in the event of a
termination of employment, the amounts provided in Section 4 or Section 5, as
applicable, shall be the Executive's sole remedy for any purported breach of
this Agreement by the Company.
25. MITIGATION; OTHER CLAIMS.
The Company's obligation to make the payments provided for in
this Agreement and otherwise to perform its obligations hereunder shall not be
affected by any set-off, counterclaim, recoupment, defense or other claim, right
or action which the Company may have against the Executive or others. In no
event shall the Executive be obligated to seek other employment or take any
other action by way of mitigation of the amounts payable to the Executive under
any of the provisions of this Agreement and such amounts shall not be reduced
whether or not the Executive obtains other employment.
26. CONFIDENTIAL INFORMATION.
The Executive shall hold in a fiduciary capacity for the
benefit of the Company all secret or confidential information, knowledge or data
relating to the Company or any of its affiliated companies, and their respective
businesses, which shall have been obtained by the Executive during the
Executive's employment by the Company or any of its affiliated companies and
which shall not be or become public knowledge (other than by acts by the
Executive or representatives of the Executive in violation of this Agreement).
After termination of the Executive's employment with the Company, the Executive
shall not, without the prior written consent of the Company or as may otherwise
be required by law or legal process, communicate or divulge any such
information, knowledge or data to anyone other than the Company and those
designated by it. For purposes of this Agreement, secret and confidential
information, knowledge or data relating to the Company or any of its affiliates,
and their respective business, shall not include any information that is public,
publicly available or available through trade association sources.
Notwithstanding any other provision of this Agreement to the contrary, the
Executive acknowledges and agrees that in the event of a violation or threatened
violation of any of the provisions of this Section 26, the Company shall have no
adequate remedy at law and shall therefore be entitled to enforce each such
provision by temporary or permanent injunction or mandatory relief obtained in
any court of competent jurisdiction without the necessity of proving damages or
posting any bond or other security, and without prejudice to any other remedies
that may be available at law or in equity.
27. ACCESS TO DOCUMENTS.
The Executive shall have the right to obtain copies of any
Company or Bank documents that the Executive reasonably believes, in good faith,
are necessary or appropriate in determining his entitlement to, and the amount
of, payments and benefits under this Agreement.
1. GUARANTEE.
The Company hereby agrees to guarantee the payment by the Bank of any
benefits and compensation to which the Executive is or may be entitled to under
the terms and conditions of the Bank Agreement.
1. REQUIRED REGULATORY PROVISIONS.
Notwithstanding anything herein contained to the contrary, any payments
to the Executive by the Company, whether pursuant to this Agreement or
otherwise, are subject to and conditioned upon their compliance with section
18(k) of the Federal Deposit Insurance Act, as amended, 12 U.S.C. ss.1828(k),
and any regulations promulgated thereunder.
<PAGE>
SIGNATURES
IN WITNESS WHEREOF, JSB FINANCIAL, INC. has caused this
Agreement to be executed and its seal to be affixed hereunto by its duly
authorized officer, and the Executive has signed this Agreement, on the 22nd day
of June, 1999.
ATTEST: JSB FINANCIAL, INC.
By:
Joanne Corrigan Edward P. Henson
- --------------- ----------------
Joanne Corrigan Edward P. Henson
Secretary President
[Seal]
WITNESS:
Lawrence J. Kane
----------------
Lawrence J. Kane
<PAGE>
STATE OF NEW YORK )
: ss.:
COUNTY OF NASSAU )
On this 22nd day of June, 1999, before me personally came Edward P.
Henson, to me known, who, being by me duly sworn, did depose and say that he is
the President of JSB Financial, Inc., the Delaware corporation described in and
which executed the foregoing instrument; that he knows the seal of said
corporation; that the seal affixed to said instrument is such seal; that it was
so affixed by order of the Board of Directors of said corporation; and that he
signed his name thereto by like order.
Name:
Notary Public
STATE OF NEW YORK )
: ss.:
COUNTY OF NASSAU )
On this 22nd day of June, 1999, before me personally came Lawrence J.
Kane, to me known, and known to me to be the individual described in the
foregoing instrument, who, being by me duly sworn, did depose and say that he
resides at the address set forth in said instrument, and that he signed his name
to the foregoing instrument.
Name:
Notary Public
<PAGE>
APPENDIX A
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1. INTRODUCTION. Sections 280G and 4999 of the Internal Revenue Code of
1986, as amended ("Code"), impose a 20% non-deductible federal excise tax on a
person if the payments and benefits in the nature of compensation to or for the
benefit of that person that are contingent on a change in the ownership or
effective control of the Company or the Bank or in the ownership of a
substantial portion of the assets of the Company or the Bank (such payments and
benefits are considered "parachute payments" under section 280G) exceed three
times the person's "base amount" under section 280G. Section 23 of the Agreement
provides for the Executive to receive a tax indemnification payment (sometimes
referred to as a "gross-up" payment) if the payments and benefits in the nature
of compensation to or for the benefit of the Executive that are considered
parachute payments cause the imposition of an excise tax under section 4999 of
the Code. Capitalized terms in this Appendix A that are not defined in this
Appendix A have the meaning used in the Employment Agreement with the Executive.
2. PURPOSE. The purpose of this Appendix A is to illustrate how the tax
indemnification or gross-up payment would be computed. The amounts, figures and
rates used in this example are meant to be illustrative and do not reflect the
actual payments and benefits that would be made to the Executive under this
Agreement. For purposes of this example, it is assumed that a change in control
within the meaning of section 280G of the Code has occurred and that:
(a) The value of the insurance benefits required to be provided to a
hypothetical employee "Z" under sections 4(b)(iii) and 5(b) of the
Agreement for medical, dental, life and other insurance benefits
during the unexpired employment period is $23,000.
(b) The annual rate of Z's salary covered by the Agreement is $100,000,
and Z received annual salary increases of 4%, 5% and 6% (i.e., a
three-year average of 5%) for each of the prior three years. Hence,
the amount payable under sections 4(b)(v) and 5(b) of the Agreement
for salary during the unexpired employment period would be $331,013
[$105,000 + $110, 250 + $115,763].
(c) Z received annual bonuses equal to 20% of his salary in each of the
prior three years. Hence, the amount payable under sections 4(b)(v)
and 5(b) of the Agreement for bonuses during the unexpired employment
period would be $66,203 [20% x ($105,000 + $110,250 + $115,763)].
(d) The amount payable under sections 4(b)(vi) and 5(b) of the Agreement
for the present value of the additional RP and BRP accruals during the
unexpired employment period would be $45,000.
(e) The amount payable under sections 4(b)(vii) and 5(b) of the Agreement
for additional contributions to the ESOP, 401(k) Plan and BRP during
the unexpired employment period would be $20,000.
(f) Z's base amount (i.e., average W-2 wages for the five-year period
preceding the change in control) is $87,000.
3. DETERMINE IF Z IS SUBJECT TO AN EXCISE TAX. Z's parachute payments would
total $485,216 [$23,000 + $331,013 + $66,203 + $45,000 + $20,000]. Three times
Z's base amount is $261,000 [3 x $87,000]; accordingly, Z is subject to an
excise tax because $485,216 exceeds $261,000. Z's "excess parachute payments"
under section 280G of the Code are equal to Z's total parachute payments minus
one times Z's base amount, or $398,216 [$485,216 - $87,000]. If Z were not
protected by section 23 of the Agreement, Z would be subjected to an excise tax
of $79,643 [$398,216 x 20%], in addition to ordinary income taxes.
4. Compute Z's Tax Indemnification Payment. Z's tax indemnification payment
under section 23 of the Agreement would be computed pursuant to the following
formula:
E x P .2 x $398,216
X = ------------------------------------ = ----------------------------------
1 - [(FI x (1 - SLI)) + SLI + E + M] 1 - [.368874 + .0685 + .2 + .0145]
where
E = excise tax rate under section 4999 of the Code [20%];
P = the amount with respect to which such excise tax is
assessed determined without regard to section 23 of
the Agreement [$398,216];
FI = the highest effective marginal rate of income tax
applicable to Z under the Code for the taxable year
in question [assumed to be 39.6% in this example, but
in actuality, the rate is adjusted to take into
account any phase-out or loss of deductions, personal
exemptions and other similar adjustments];
SLI = the sum of the highest effective marginal rates of
income tax applicable to Z under applicable state and
local laws for the taxable year in question [assumed
to be 6.85% in this example, but in actuality, the
rate is adjusted to take into account any phase-out
or loss of deductions, personal exemptions and other
similar adjustments]; and
M = the highest marginal rate of Medicare tax applicable
to Z under the Code for the year in question [1.45%].
In this example, the amount of tax indemnification payment due to Z under
section 23 of the Agreement would be $79,643 [.2 x $398,216] divided by 0.348126
[1 - (.368874 + .0685 + .2 + .0145)], or $228,777. Such amount would be payable
in addition to the other amounts payable under the Agreement in order to put Z
in approximately the same after-tax position that Z would have been in if there
were no excise tax imposed under sections 280G and 4999 of the Code. The tax
indemnification to Z of $228,777 would in turn be a parachute payment subject to
excise tax under sections 280G and 4999. Accordingly, Z's actual excess
parachute payment would be $626,993 [$485,216 - $87,000) + $228,777)] resulting
in an excise tax of $125,399 [$626,993 x 20%]. The difference between the
indemnification. payment and the excise tax [$103,378] is an amount equal to the
sum of the income and other applicable taxes due on the indemnification payment
[($228,777 x .368874) + ($228,777 x .0685) + ($228,777 x .0145)], confirming
that the amount of the tax indemnification payment is sufficient to satisfy all
of Z's tax liability resulting from the excess parachute payment.
JSB FINANCIAL, INC.
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT ("Agreement") is made and entered
into as of June 22, 1999 by and between JSB FINANCIAL, INC., a business
corporation organized and operating under the laws of the State of Delaware and
having its principal office at 303 Merrick Road, Lynbrook, New York 11563
("Company"), and Thomas R. Lehmann, an individual residing at (address omitted)
("Executive"). Any reference to the "Bank" in this Agreement shall mean Jamaica
Savings Bank FSB and any successor thereto.
W I T N E S S E T H :
WHEREAS, the Executive is currently serving as Executive Vice
President of the Company, and the Company wishes to assure itself of the
services of the Executive for the period provided in this Agreement; and
WHEREAS, the Executive is willing to serve in the employ of
the Company on the terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the premises and the
mutual covenants and conditions hereinafter set forth, the Company and the
Executive hereby agree as follows:
1. POSITION AND RESPONSIBILITIES.
During the period of his employment hereunder, the Executive
agrees to serve as Executive Vice President of the Company. The Executive shall
render administrative and management services to the Company such as are
customarily performed by persons situated in a similar executive capacity and
shall perform such other duties not inconsistent with his title and office as
may be assigned to him by or under the authority of the Board of Directors of
the Company (the "Board"). The Executive shall have such authority as is
necessary or appropriate to carry out his assigned duties. Failure to re-elect
the Executive as Executive Vice President of the Company (or a more senior
position) without the consent of the Executive shall constitute a breach of this
Agreement.
2. TERMS.
(a) The period of the Executive's employment under this
Agreement shall be deemed to have commenced as of the date first above written
(the "Effective Date") and shall continue for a period of 36 full calendar
months thereafter. Commencing with the Effective Date, the term of this
Agreement shall be extended for one additional day each day until such time as
the Board or the Executive elects not to extend the term of the Agreement
further by giving written notice to the other party in accordance with Section
10, in which case the term of this Agreement shall become fixed and shall end on
the third anniversary of the date of such written notice. For purposes of this
Agreement, the term "Employment Period" shall mean the term of this Agreement
plus such extensions as are provided herein.
(b) During the period of his employment hereunder, except for
periods of absence occasioned by illness, disability, holidays, reasonable
vacation periods and reasonable leaves of absence, the Executive shall devote
substantially all of his business time, attention, skill and efforts to the
faithful performance of his duties hereunder including (i) service as Executive
Vice President of the Company, and, if duly elected, a Director of the Company,
(ii) performance of such duties not inconsistent with his title and office as
may be assigned to him by or under the authority of the Board or a more senior
executive officer, and (iii) such other activities and services related to the
organization, operation and management of the Company. During the Employment
Period it shall not be a violation of this Agreement for the Executive to (A)
serve on corporate, civic, industry or charitable boards or committees, (B)
deliver lectures, fulfill speaking engagements or teach at educational
institutions and (C) manage personal investments, so long as such activities do
not significantly interfere with the performance of the Executive's
responsibilities as an employee of the Company in accordance with this
Agreement. It is expressly understood and agreed that to the extent that any
such activities have been conducted by the Executive prior to the Effective
Date, the continued conduct of such activities (or the conduct of activities
similar in nature and scope thereto) subsequent to the Effective Date shall not
thereafter be deemed to interfere with the performance of the Executive's
responsibilities to the Company. It is also expressly agreed that the Executive
may conduct activities subsequent to the Effective Date that are generally
accepted for an executive in his position, regardless of whether conducted by
the Executive prior to the Effective Date.
(c) Notwithstanding anything herein contained to the contrary:
(i) the Executive's employment with the Company may be terminated by the Company
or the Executive during the term of this Agreement, subject to the terms and
conditions of this Agreement; and (ii) nothing in this Agreement shall mandate
or prohibit a continuation of the Executive's employment following the
expiration of the term of this Agreement upon such terms and conditions as the
Board and the Executive may mutually agree.
(d) Upon the termination of the Executive's employment with
the Company, the daily extensions provided pursuant to Section 2(a) shall cease
(if such extensions have not previously ceased), and, if such termination is
under circumstances described in Section 4(a) or Section 5(b), the term
"Unexpired Employment Period" shall mean the period of time commencing from the
date of such termination and ending on the last day of the Employment Period
computed with reference to all extensions prior to such termination.
(e) In the event that the Executive's duties and
responsibilities with respect to the Bank are temporarily or permanently
terminated pursuant to Section 9 of the Employment Agreement dated June 22,
1999, as it may be amended from time to time, between the Executive and the Bank
("Bank Agreement") and the course of conduct upon which such termination is
based would not constitute grounds for Termination for Cause under Section 9,
then the Executive shall, to the extent practicable, assume such duties and
responsibilities formerly performed at the Bank as part of his duties and
responsibilities as Executive Vice President of the Company. Nothing in this
provision shall be interpreted as restricting the Company's right to remove the
Executive for Cause in accordance with Section 9.
3. COMPENSATION AND REIMBURSEMENT.
(a) The compensation specified under this Agreement shall
constitute the salary and benefits paid for the duties described in Section 1.
The Company shall pay the Executive as compensation a salary at an annual rate
of not less than (salary omitted) per year or such higher rate as may be
prescribed by or under the authority of the Board ("Base Salary"). The Base
Salary payable under this Section 3 shall be paid in approximately equal
installments in accordance with the Company's customary payroll practices.
During the period of this Agreement, the Executive's Base Salary shall be
reviewed at least annually; the first such review will be made no later than one
year from the date of this Agreement. Such review shall be conducted by a
Committee designated by the Board, and the Board may increase the Executive's
Base Salary, which increased amount shall be considered the Executive's "Base
Salary" for purposes of this Agreement. In no event shall the Executive's annual
rate of Base Salary under this Agreement in effect at a particular time be
reduced without his prior written consent. In addition to the Base Salary
provided in this Section 3(a), the Company shall provide the Executive at no
cost to the Executive with all such other benefits as are provided uniformly to
permanent full-time employees of the Bank.
(b) The Company will provide the Executive with employee
benefit plans, arrangements and perquisites substantially equivalent to those in
which the Executive was participating or otherwise deriving benefit from
immediately prior to the beginning of the term of this Agreement, and the
Company will not, without the Executive's prior written consent, make any
changes in such plans, arrangements or perquisites which would adversely affect
the Executive's rights or benefits thereunder. Without limiting the generality
of the foregoing provisions of this Subsection (b), the Executive will be
entitled to participate in or receive benefits under any employee benefit plans
with respect to which the Executive satisfies the eligibility requirements,
including, but not limited to, the Retirement Plan of Jamaica Savings Bank FSB
("RP"), the Incentive Savings Plan of Jamaica Savings Bank FSB ("ISP"), the
Jamaica Savings Bank FSB Employee Stock Ownership Plan ("ESOP"), the Benefit
Restoration Plan of Jamaica Savings Bank FSB ("BRP"), the JSB Financial, Inc.
1990 Stock Option Plan, the JSB Financial, Inc. 1996 Stock Option Plan,
retirement plans, supplemental retirement plans, pension plans, profit-sharing
plans, group life, health (including hospitalization, medical and major
medical), dental, accidental death and dismemberment, travel accident and
short-term disability insurance plans, or any other employee benefit plan or
arrangement made available by the Company in the future to its senior executives
and key management employees, subject to and on a basis consistent with the
terms, conditions and overall administration of such plans and arrangements. The
Executive will be entitled to incentive compensation and bonuses as provided in
any plan of the Company in which the Executive is eligible to participate.
Nothing paid to the Executive under any such plan or arrangement will be deemed
to be in lieu of other compensation to which the Executive is entitled under
this Agreement.
(c) The Executive's principal place of employment shall be at
the Company's executive offices at the address first above written, or at such
other location in New York City or in Nassau County or Suffolk County at which
the Company shall maintain its principal executive offices, or at such other
location as the Board and the Executive may mutually agree upon. The Company
shall provide the Executive, at his principal place of employment with support
services and facilities suitable to his position with the Company and necessary
or appropriate in connection with the performance of his assigned duties under
this Agreement. The Company shall reimburse the Executive for his ordinary and
necessary business expenses, including, without limitation, fees for memberships
in such clubs and organizations as the Executive and the Board shall mutually
agree are necessary and appropriate for business purposes, and travel and
entertainment expenses, incurred in connection with the performance of his
duties under this Agreement, upon presentation to the Company of an itemized
account of such expenses in such form as the Company may reasonably require.
(d) In the event that the Executive assumes additional duties
and responsibilities pursuant to Section 2(e) by reason of one of the
circumstances contained in Section 2(e), and the Executive receives or will
receive less than the full amount of compensation and benefits formerly entitled
to him under the Bank Agreement, the Company shall assume the obligation to
provide the Executive with his compensation and benefits in accordance with the
Bank Agreement less any compensation and benefits received from the Bank,
subject to the terms and conditions of this Agreement including the Termination
for Cause provisions in Section 9.
4. PAYMENTS TO THE EXECUTIVE UPON AN EVENT OF TERMINATION.
The provisions of this Section shall in all respects be
subject to the terms and conditions stated in Sections 9 and 29.
(a) Upon the occurrence of an Event of Termination (as herein
defined) during the Executive's term of employment under this Agreement, the
provisions of this Section shall apply. As used in this Agreement, an "Event of
Termination" shall mean and include any one or more of the following: (i) the
termination by the Bank or the Company of the Executive's full-time employment
hereunder for any reason other than: following a Change in Control, as defined
in Section 5; for Disability, as defined in Section 6; for Retirement, as
defined in Section 8; for Cause, as defined in Section 9; or upon the
Executive's death; or (ii) unless consented to by the Executive, the Executive's
voluntary resignation from the Company's employ, upon any: (A) failure to elect
or re-elect or to appoint or re-appoint the Executive as Executive Vice
President of the Company, (B) material adverse change in the Executive's
function, duties, or responsibilities, which change would cause the Executive's
position to become one of lesser responsibility, importance, or scope from the
position and attributes thereof described in Section 1, above (and any such
material change shall be deemed a continuing breach of this Agreement), (C)
relocation of the Executive's principal place of employment by more than 30
miles from its location at the Effective Date of this Agreement, or a material
reduction in the benefits and perquisites to the Executive from those being
provided as of the Effective Date of this Agreement, (D) liquidation or
dissolution of the Bank or Company, or (E) material breach of this Agreement by
the Company. Upon the occurrence of any event described in clauses (A), (B),
(C), (D) or (E), above, the Executive shall have the right to elect to terminate
his employment under this Agreement by resignation upon written notice pursuant
to Section 10 given within a reasonable period of time not to exceed, except in
case of a continuing breach, four calendar months after the event giving rise to
said right to elect.
(b) Upon the occurrence of an Event of Termination as set
forth in Section 4(a), on the Date of Termination, as defined in Section 10, the
Company shall be obligated to pay, or to provide, the Executive, or, in the
event of his subsequent death, to his surviving spouse or such other beneficiary
or beneficiaries as the Executive may designate in writing, or if neither his
estate, as severance pay or liquidated damages, or both, the benefits provided
below and a payment equal to the sum of the payments set forth below:
(i) payment of the sum of (A) the Executive's annual Base Salary
through the Date of Termination to the extent not theretofore paid and (B)
any compensation previously deferred by the Executive (together with any
accrued interest or earnings thereon) and any accrued vacation pay, in each
case to the extent not theretofore paid (the sum of the amounts described
in clauses (A) and (B) shall be hereinafter referred to as the "Accrued
Obligations");
(ii) the benefits, if any, to which the Executive is entitled as a
former employee under the Bank's or Company's employee benefit plans and
programs and compensation plans and programs;
(iii) continued group life, health (including hospitalization, medical
and major medical), dental, accidental death and dismemberment, travel
accident and short-term disability insurance benefits as provided by the
Bank or the Company, in addition to that provided pursuant to Section
4(b)(ii), if and to the extent necessary to provide for the Executive, for
the remaining Unexpired Employment Period, coverage equivalent to the
coverage to which he would have been entitled if he had continued working
for the Company during the remaining Unexpired Employment Period at the
highest annual rate of salary achieved during the Employment Period;
provided, however, if the Executive has obtained group life, health
(including hospitalization, medical and major medical), dental, accidental
death and dismemberment, travel accident and/or short-term disability
insurance benefits coverage from another source, the Executive may, as of
any month, make an irrevocable election to forego the continued coverage
that would otherwise be provided hereunder for the remaining Unexpired
Employment Period, or any portion thereof, in which case the Bank or the
Company, upon receipt of the Executive's irrevocable election, shall pay
the Executive an amount equal to the estimated cost to the Bank or the
Company of providing such coverage during such period;
(iv) if and to the extent not already provided under Sections 4(b)(ii)
and 4(b)(iii), continued health (including hospitalization, medical and
major medical) and dental insurance benefits to the extent maintained by
the Bank or the Company for its employees or retirees during the remainder
of the Executive's lifetime and the lifetime of his spouse, if any, for so
long as the Executive continues to reimburse the Bank for the cost of such
continued coverage;
(v) a lump sum payment, as liquidated damages, in an amount equal to
the Base Salary and the bonus or other incentive compensation that the
Executive would have earned if the Executive had continued working for the
Bank and the Company during the remaining Unexpired Employment Period (A)
at the highest annual rate of Base Salary and bonus or other incentive
compensation achieved by the Executive during the three-year period
immediately preceding the Executive's Date of Termination, except that (B)
in the case of a Change in Control, such lump sum shall be determined based
upon the Base Salary and the bonus or other incentive compensation,
respectively, that the Executive would have been paid during the remaining
Unexpired Employment Period including the assumed increases referred to in
clauses (i) and (ii) of Section 5(b);
(vi) a lump sum payment in an amount equal to the excess, if any, of:
(A) the present value of the pension benefits to which the Executive would
be entitled under the RP and the BRP (and under any other qualified and
non-qualified defined benefit plans maintained by the Company or the Bank
covering the Executive) as if he had continued working for the Company
during the remaining Unexpired Employment Period (x) at the highest annual
rate of Base Salary and, if applicable, the highest bonus or other
incentive compensation, respectively, achieved by the Executive during the
three-year period immediately preceding the Executive's Date of
Termination, except that (y) in the case of a Change in Control, such lump
sum shall be determined based upon the Base Salary and, if applicable, the
bonus or other incentive compensation, respectively, that the Executive
would have been paid during the remaining Unexpired Employment Period
including the assumed increases referred to in clauses (i) and (ii) of
Section 5(b), and (z) in the case of a Change in Control, as if three
additional years are added to the Executive's age and years of creditable
service under the RP and the BRP and after taking into account any other
compensation required to be taken into account under the RP and the BRP
(and any other qualified and non-qualified defined benefit plans of the
Company or the Bank, as applicable), over (B) the present value of the
pension benefits to which he is actually entitled under the RP and the BRP
(and any other qualified and non-qualified defined benefit plans) as of his
Date of Termination, where such present values are to be determined using a
discount rate of 6% and the mortality tables prescribed under section 72 of
the Internal Revenue Code of 1986, as amended ("Code"); and
(vii) a lump sum payment in an amount equal to the contributions that
would have been made by the Company or the Bank on the Executive's behalf
to the ISP and the ESOP and to the BRP with respect to such ISP and ESOP
contributions (and to any other qualified and non-qualified defined
contribution plans maintained by the Company or the Bank covering the
Executive) as if the Executive had continued working for the Bank and the
Company during the remaining Unexpired Employment Period making the maximum
amount of employee contributions required or permitted, if any, under such
plan or plans and earning (A) the highest annual rate of Base Salary and,
if applicable, the highest bonus or other incentive compensation,
respectively, achieved by the Executive during the three-year period
immediately preceding the Executive's Date of Termination, except that (B)
in the case of a Change in Control, such lump sum shall be determined based
upon the Base Salary and, if applicable, the bonus or other incentive
compensation, respectively, that the Executive would have been paid during
the remaining Unexpired Employment Period including the assumed increases
referred to in clauses (i) and (ii) of Section 5(b).
The benefits to be provided under, and the amounts payable pursuant to, this
Section 4 shall be provided and be payable without regard to proof of damages
and without regard to the Executive's efforts, if any, to mitigate damages. The
Company and the Executive hereby stipulate that the damages which may be
incurred by the Executive following any such termination of employment are not
capable of accurate measurement as of the date first above written and that such
liquidated damages constitute reasonable damages under the circumstances.
(c) Payments to the Executive under Section 4 shall be made
within ten days of the Executive's Date of Termination.
(d) In the event payments are made under Section 4 or Section
5, the Executive may select an individual or firm to provide him with reasonable
outplacement counseling services, and the Company shall pay for the costs of
such services; provided, however, that the cost to the Company of such
outplacement counseling services shall not exceed 25% of the Executive's Base
Salary.
5. CHANGE IN CONTROL.
(a) No benefit shall be payable under this Section 5 unless
there shall have been a Change in Control of the Bank or Company, as set forth
below. For purposes of this Agreement, a "Change in Control" of the Bank or
Company shall mean any one or more of the following:
(i) An event of a nature that would be required to be reported in
response to Item l(a) of the current report on Form 8-K, as in effect on
the date hereof, pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934, as amended (the "Exchange Act");
(ii) An event of a nature that results in a Change in Control of the
Bank or the Company within the meaning of the Home Owners' Loan Act of
1933, as amended, or the Change in Bank Control Act of 1978, as amended, as
applicable, and the Rules and Regulations promulgated by the Office of
Thrift Supervision ("OTS") or its predecessor agency, the Federal Deposit
Insurance Corporation ("FDIC") or the Board of Governors of the Federal
Reserve System ("FRB"), as the case may be, as in effect on the date
hereof, but excluding any such Change in Control resulting from the
purchase of securities by the Company or the Company's or the Bank's
tax-qualified employee benefit plans and trusts;
(iii) If any "person" (as the term is used in Sections 13(d) and 14(d)
of the Exchange Act) is or becomes the "beneficial owner" (as defined in
Rule 13d-3 under the Exchange Act), directly or indirectly, of securities
of the Bank or the Company representing 20% or more of the Bank's or the
Company's outstanding securities except for any securities of the Bank
purchased by the Company in connection with the initial conversion of the
Bank from mutual to stock form (the "Conversion") and any securities
purchased by the Company or the Company's or the Bank's tax-qualified
employee benefit plans and trusts;
(iv) If the individuals who constitute the Board on the date hereof
(the "Incumbent Board") cease for any reason to constitute at least a
majority of the Board, provided, however, that any person becoming a
director subsequent to the date hereof whose election or nomination for
election by the Company's stockholders, was approved by a vote of at least
three-quarters of the directors then comprising the Incumbent Board shall
be considered as though he were a member of the Incumbent Board, but
excluding, for this purpose, any such person whose initial assumption of
office occurs as a result of an actual or threatened election contest with
respect to the election or removal of directors or other actual or
threatened solicitation of proxies or consents by or on behalf of a person
other than the Board;
(v) A merger, consolidation, reorganization, sale of all or
substantially all the assets of the Bank or the Company or similar
transaction occurs in which the Bank or Company is not the resulting
entity, other than a transaction following which (A) at least 51% of the
equity ownership interests of the entity resulting from such transaction
are beneficially owned (within the meaning of Rule 13d-3 promulgated under
Exchange Act) in substantially the same relative proportions by persons
who, immediately prior to such transaction, beneficially owned (within the
meaning of Rule 13d-3 promulgated under the Exchange Act) at least 51% of
the outstanding equity ownership interests in the Bank or Company and (B)
at least 51% of the securities entitled to vote generally in the election
of directors of the entity resulting from such transaction are beneficially
owned (within the meaning of Rule 13d-3 promulgated under the Exchange Act)
in substantially the same relative proportions by persons who, immediately
prior to such transaction, beneficially owned (within the meaning of Rule
13d-3 promulgated under the Exchange Act) at least 51% of the securities
entitled to vote generally in the election of directors of the Bank or
Company;
(vi) A proxy statement shall be distributed soliciting proxies from
stockholders of the Company, by someone other than the current management
of the Company, seeking stockholder approval of a plan of reorganization,
merger or consolidation of the Company or Bank or similar transaction with
one or more corporations as a result of which the outstanding shares of the
class of securities then subject to such plan or transaction are exchanged
for or converted into cash or property or securities not issued by the Bank
or the Company; or
(vii) A tender offer is completed for 20% or more of the voting
securities of the Bank or Company then outstanding.
The "Change in Control Date" shall mean the date during the Employment Period on
which a Change in Control occurs. Anything in this Agreement to the contrary
notwithstanding, if the Executive's employment with the Company is terminated
and if it is reasonably demonstrated by the Executive that such termination of
employment (1) was at the request of a third party who has taken steps
reasonably calculated to effect a Change in Control or (2) otherwise arose in
connection with or anticipation of a Change in Control, then for all purposes of
this Agreement the "Change in Control Date" shall mean the date immediately
prior to the date of such termination of employment.
(b) If any of the events described in Section 5(a)
constituting a Change in Control have occurred or the Board has determined that
a Change in Control has occurred, the Executive shall be entitled to the
payments and the benefits provided below on the Change in Control Date. The
amounts payable and the benefits to be provided under this Section 5(b) to the
Executive shall consist of the payments and benefits that would be due to the
Executive and the Executive's family under Section 4(b) as if an Event of
Termination under Section 4(a) had occurred on the Change in Control Date and
that for purposes of this Section 5(b), the term Unexpired Employment Period
shall mean three years from the Change in Control Date. For purposes of
determining the payments and benefits due under this Section 5(b), when
calculating the payments due and benefits to be provided for the Unexpired
Employment Period, it shall be assumed that for each year of the remaining term
of this Agreement, the Executive would have received (i) an annual increase in
Base Salary equal to the average percentage increase in Base Salary received by
the Executive for the three-year period ending with the earlier of (x) the year
in which the Change in Control Date occurs or (y) the year during which a
definitive agreement, if any, governing the Change in Control is executed, with
the first such increase effective as of the January 1st next following such
three-year period and the second and third such increases effective as of the
next two anniversaries of such January 1st, (ii) a bonus or other incentive
compensation equal to the highest percentage rate of bonus or incentive
compensation paid to the Executive during the three-year period referred to in
clause (i) of this Section 5(b) times the Base Salary that the Executive would
have been paid during the remaining term of this Agreement including the assumed
increases referred to in clause (i) of this Section 5(b), (iii) the maximum
contributions that could be made by or on behalf of the Executive with respect
to any employee benefit plans and programs maintained by the Company and the
Bank based upon the Base Salary and, if applicable, the bonus or other incentive
compensation, respectively, that the Executive would have been paid during the
remaining term of this Agreement including the assumed increases referred to in
clauses (i) and (ii) of this Section 5(b), and (iv) the present value of the
pension benefits to which the Executive is entitled under Section 4(b)(vi) with
respect to the RP and the BRP (and under any other qualified and non-qualified
defined benefit plans maintained by the Bank or the Company covering the
Executive) determined as if he had continued working for the Bank during the
remaining Unexpired Employment Period and based upon the Base Salary and, if
applicable, the bonus or other incentive compensation, respectively, that the
Executive would have been paid during the remaining term of this Agreement
including the assumed increases referred to in clauses (i) and (ii) of this
Section 5(b). The benefits to be provided under, and the amounts payable
pursuant to, this Section 5 shall be provided and be payable without regard to
proof of damages and without regard to the Executive's efforts, if any, to
mitigate damages. The Company and the Executive hereby stipulate that the
damages which may be incurred by the Executive following any Change in Control
are not capable of accurate measurement as of the date first above written and
that such liquidated damages constitute reasonable damages under the
circumstances.
(c) Payments to the Executive under Section 5(b) shall be made
on the Change in Control Date. Such payments shall be made regardless of whether
the Executive's employment terminates.
6. TERMINATION FOR DISABILITY.
(a) In the event of Termination for Disability, the Executive
shall receive the benefits provided in Section 6(b); provided, however, that the
benefits provided under Section 6(b) shall not be deemed to be in lieu of the
benefits he is otherwise entitled as a former employee under the Bank or
Company's employee plans and programs. For purposes of this Agreement, the
Executive may be terminated for disability only if (i) the Executive shall have
been absent from his duties with the Company on a full-time basis for at least
six consecutive months, or (ii) a majority of the members of the Board acting in
good faith determine that, based upon competent and independent medical evidence
presented by a physician or physicians agreed upon by the parties, the
Executive's physical or mental condition is such that he is totally and
permanently incapable of engaging in any substantial gainful employment based
upon his education, training and experience; provided, however, that on and
after the earliest date on which a Change in Control of the Bank or Company as
defined in Section 5 occurs, such a determination shall require the affirmative
vote of at least three-fourths of the members of the Board acting in good faith
and such vote shall not be made prior to the expiration of a 60-day period
following the date on which the Board shall, by written notice to the Executive,
furnish him a statement of its grounds for proposing to make such determination,
during which period the Executive shall be afforded a reasonable opportunity to
make oral and written presentations to the members of the Board, and to be
represented by his legal counsel at such presentations, to refute the grounds
for the proposed determination.
(b) The Company will pay the Executive as Disability pay, a
bi-weekly payment equal to 100% of the Executive's bi-weekly annual rate of Base
Salary in effect on the date of the Executive's Termination for Disability. In
addition, the Company will cause to be continued insurance coverage, including
group life, health (including hospitalization, medical and major medical),
dental, accidental death and dismemberment, travel accident and short-term
disability coverage substantially identical to the coverage maintained by the
Bank or the Company for the Executive prior to his Termination for Disability.
The Disability pay and coverages shall commence on the effective date of the
Executive's termination and shall cease upon the earliest to occur of: (i) the
date the Executive returns to the full-time employment of the Company, in the
same capacity as he was employed prior to his Termination for Disability and
pursuant to an employment agreement between the Executive and the Company; (ii)
the Executive's full-time employment by another employer; (iii) the Executive's
attaining the normal age of retirement or receiving benefits under the RP or
other defined benefit pension plan of the Bank or the Company; (iv) the
Executive's death; (v) the Executive's eligibility to collect payments under the
disability provision of the RP or other defined benefit pension plan of the Bank
or the Company; or (vi) the expiration of the term of this Agreement.
(c) Notwithstanding the foregoing, there will be no reduction
in the compensation otherwise payable to the Executive during any period during
which the Executive is incapable of performing his duties hereunder by reason of
temporary disability.
7. TERMINATION UPON DEATH.
The Executive's employment shall terminate automatically upon
the Executive's death during the Employment Period. In such event, the Executive
and the Executive's legal representatives shall be entitled to the following:
(i) payment of the Executive's "Accrued Obligations;"
(ii) the continuation of all benefits to the Executive's family and
dependents that would have been provided if the Executive had been entitled
to the benefits under Section 4(b)(ii), (iii) and (iv); and
(iii) the timely payment of any other amounts or benefits required to
be paid or provided or which the Executive is eligible to receive under any
plan, program, policy or practice or contract or agreement of the Company
and its affiliated companies (all such other amounts and benefits shall be
hereinafter referred to as the "Other Benefits");
provided, however, that if the Executive dies while in the employment of the
Company, the amount of life insurance provided to the Executive by the Company
shall not be less than the lesser of $200,000 or three times the Executive's
then annual Base Salary. Accrued Obligations shall be paid to the Executive's
estate or beneficiary, as applicable, in a lump sum cash payment within ten days
of the Date of Termination. With respect to the provision of Other Benefits
after the Change of Control Date, the term Other Benefits as utilized in this
Section 7 shall include, without limitation, that the Executive's estate and/or
beneficiaries shall be entitled to receive, benefits at least equal to the most
favorable benefits provided by the Company and affiliated companies to the
estates and beneficiaries of peer executives of the Company and such affiliates
companies under such plans, programs, practices and policies relating to death
benefits, if any, as in effect with respect to other peer executives and their
beneficiaries at any time during the 120-day period immediately preceding the
Change in Control Date.
8. TERMINATION UPON RETIREMENT.
Termination by the Company of the Executive based on
"Retirement" shall mean termination in accordance with the Company's or the
Bank's retirement policy or in accordance with any retirement arrangement
established with the Executive's consent with respect to him. Upon termination
of the Executive upon Retirement, the Executive shall be entitled to all
benefits under the RP and any other retirement plan of the Bank or the Company
and other plans to which the Executive is a party, and the Executive shall be
entitled to the benefits, if any, that would be payable to him as a former
employee under the Bank's or the Company's employee benefit plans and programs
and compensation plans and programs.
9. TERMINATION FOR CAUSE.
The terms "Termination for Cause" or "Cause" shall mean
termination because of the Executive's personal dishonesty, willful misconduct,
any breach of fiduciary duty involving personal profit, intentional failure to
perform stated duties, conviction of a felony with respect to the Bank or the
Company or any material breach of this Agreement. For purposes of this Section,
no act, or the failure to act, on the Executive's part shall be "willful" unless
done, or omitted to be done, in bad faith and without reasonable belief that the
action or omission was in the best interest of the Company or its affiliates.
Any act, or failure to act, based upon authority given pursuant to a resolution
duly adopted by the Board or based upon the written advice of counsel for the
Company shall be conclusively presumed to be done, or omitted to be done, by the
Executive in good faith and in the best interests of the Company.
Notwithstanding the foregoing, the Executive shall not be deemed to have been
terminated for Cause unless and until there shall have been delivered to him a
Notice of Termination which shall include a copy of a resolution duly adopted by
the affirmative vote of not less than three-fourths of the members of the Board
at a meeting of the Board called and held for that purpose (after reasonable
notice to the Executive and an opportunity for him, together with counsel, to be
heard before the Board), finding that in the good faith opinion of the Board,
the Executive was guilty of conduct justifying Termination for Cause and
specifying the particulars thereof in detail. The Executive shall not have the
right to receive compensation or other benefits for any period after Termination
for Cause.
10. NOTICE.
(a) Any purported termination by the Company or by the
Executive shall be communicated by a Notice of Termination to the other party
hereto. For purposes of this Agreement, a "Notice of Termination" shall mean a
written notice which shall indicate the specific termination provision in this
Agreement relied upon and shall set forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of the Executive's
employment under the provision so indicated.
(b) Subject to Section 10(c), "Date of Termination" shall mean
(A) if the Executive's employment is terminated for Disability, 30 days after a
Notice of Termination is given (provided that he shall not have returned to the
performance of his duties on a full-time basis during such 30-day period), and
(B) if his employment is terminated for any other reason, the date specified in
the Notice of Termination (which, in the case of a Termination for Cause, shall
be immediate).
(c) If, within 30 days after any Notice of Termination is
given, the party receiving such Notice of Termination notifies the other party
that a dispute exists concerning the termination, then, except upon the
occurrence of a Change in Control and voluntary termination by the Executive in
which case the Date of Termination shall be the date specified in the Notice,
the Date of Termination shall be the date on which the dispute is finally
determined, either by mutual written agreement of the parties, by a binding
arbitration award, or by a final judgment, order or decree of a court of
competent jurisdiction (the time for appeal therefrom having expired and no
appeal having been perfected) and provided further that the Date of Termination
shall be extended by a notice of dispute only if such notice is given in good
faith and the party giving such notice pursues the resolution of such dispute
with reasonable diligence. Notwithstanding the pendency of any such dispute, the
Company will continue to pay the Executive his full compensation in effect when
the notice giving rise to the dispute was given (including, but not limited to,
Base Salary) and continue him as a participant in all compensation, benefit and
insurance plans in which he was participating when the notice of dispute was
given, until the dispute is finally resolved in accordance with this Agreement.
Amounts paid under this Section are in addition to all other amounts due under
this Agreement and shall not be offset against or reduce any other amounts due
under this Agreement.
(d) The Company may terminate the Executive's employment at
any time, but any termination by the Company, other than Termination for Cause,
shall not prejudice the Executive's right to compensation or other benefits
under this Agreement or under any other benefit or compensation plans or
programs maintained by the Bank or the Company from time to time. The Executive
shall not have the right to receive compensation or other benefits for any
period after a Termination for Cause as defined in Section 9 hereinabove.
(e) Any communication to a party required or permitted under
this Agreement, including any notice, direction, designation, consent,
instruction, objection or waiver, shall be in writing and shall be deemed to
have been given at such time as it is delivered personally, or five days after
mailing if mailed, postage prepaid, by registered or certified mail, return
receipt requested, addressed to such party at the address listed below or at
such other address as one such party may by written notice specify to the other
party, as follows. If to the Executive, (address omitted), if to the Company,
JSB Financial, Inc., 303 Merrick Road, Lynbrook, New York 11563, Attention:
President, with a copy to Thacher Proffitt & Wood, Two World Trade Center, New
York, New York 10048, Attention: Douglas J. McClintock, Esq.
11. POST-TERMINATION OBLIGATIONS.
(a) All payments and benefits to the Executive under this
Agreement shall be subject to the Executive's compliance with paragraph (b) of
this Section 11 during the term of this Agreement and for one full year after
the expiration or termination hereof.
(b) The Executive shall, upon reasonable notice, furnish such
information and assistance to the Company as may reasonably be required by the
Company in connection with any litigation in which it or any of its subsidiaries
or affiliates is, or may become, a party; provided, that the Company reimburses
the Executive for the reasonable value of his time in connection therewith and
for any out-of-pocket costs attributable thereto.
12. COVENANT NOT TO COMPETE.
The Executive hereby covenants and agrees that for a period of
one year following his Date of Termination, if such termination occurs prior to
the end of the term of the Agreement, he shall not, without the written consent
of the Board, become an officer, employee, consultant, director or trustee of
any savings bank, savings and loan association, savings and loan holding
company, bank or bank holding company if such position (a) entails working in
(or providing services in) New York City, Nassau or Suffolk counties or (b)
entails working in (or providing services in) any other county that is both (i)
within the Bank's primary trade (or operating) area at the time in question,
which shall be determined by reference to the Bank's business plan as in effect
from time to time, and (ii) in which the Bank engages in material or substantial
deposit-taking functions or lending activities at such time; provided, however,
that this Section 12 shall not apply if the Executive's employment is terminated
for the reasons set forth in any of Sections 4, 5, 6 or 8.
13. SOURCE OF PAYMENTS.
All payments provided in this Agreement shall be timely paid
in cash or check from the general funds of the Company.
14. EFFECT ON PRIOR AGREEMENTS.
This Agreement contains the entire understanding between the
parties hereto and supersedes any prior employment agreement between the Company
or any predecessor of the Company and the Executive, except that this Agreement
shall not affect or operate to reduce any benefit or compensation inuring to the
Executive of a kind elsewhere provided. No provisions of this Agreement shall be
interpreted to mean that the Executive is subject to receiving fewer benefits
than those available to him without reference to this Agreement.
15. EFFECT OF ACTION UNDER BANK AGREEMENT.
Notwithstanding any provision herein to the contrary, to the
extent that full compensation payments and benefits are paid to or received by
the Executive under the Bank Agreement, such compensation payments and benefits
paid by the Bank will be deemed to satisfy the corresponding obligations of the
Company under this Agreement.
16. NO ATTACHMENT.
Except as required by law, no right to receive payments under
this Agreement shall be subject to anticipation, commutation, alienation, sale,
assignment, encumbrance, charge, pledge, or hypothecation, or to execution,
attachment, levy, or similar process or assignment by operation of law, and any
attempt, voluntary or involuntary, to affect any such action shall be null,
void, and of no effect.
17. MODIFICATION AND WAIVER.
(a) This Agreement may not be modified or amended except by an
instrument in writing signed by the parties hereto.
(b) No term or condition of this Agreement shall be deemed to
have been waived, nor shall there be any estoppel against the enforcement of any
provision of this Agreement, except by written instrument of the party charged
with such waiver or estoppel. No such written waiver shall be deemed a
continuing waiver unless specifically stated therein, and each such waiver shall
operate only as to the specific term or condition waived and shall not
constitute a waiver of such term or condition for the future as to any act other
than that specifically waived.
18. SUCCESSOR AND ASSIGNS.
This Agreement will inure to the benefit of and be binding
upon the Executive, his legal representatives and testate or intestate
distributees, and the Company, its successors and assigns, including any
successor by purchase, merger, consolidation or otherwise or a statutory
receiver or any other person or firm or corporation to which all or
substantially all of the assets and business of the Company may be sold or
otherwise transferred. Any such successor of the Company shall be deemed to have
assumed this Agreement and to have become obligated hereunder to the same extent
as the Company and the Executive's obligations hereunder shall continue in favor
of such successor.
19. SEVERABILITY.
If, for any reason, any provision of this Agreement, or any
part of any provision, is held invalid, such invalidity shall not affect any
other provision of this Agreement or any part of such provision not held so
invalid, and each such other provision and part thereof shall to the full extent
consistent with law continue in full force and effect.
20. HEADINGS FOR REFERENCE ONLY.
The headings of Sections and paragraphs herein are included
solely for convenience of reference and shall not control the meaning or
interpretation of any of the provisions of this Agreement. Any reference in this
Agreement to a Section or Subsection shall refer to a Section or Subsection of
this Agreement, except as otherwise specified.
21. GOVERNING LAW.
This Agreement shall be governed by the laws of the State of
New York, without reference to conflicts of law principles.
22. INDEMNIFICATION AND ATTORNEYS' FEES.
(a) The Company shall indemnify, hold harmless and defend the
Executive against reasonable costs, including legal fees, incurred by him in
connection with his consultation with legal counsel or arising out of any
action, suit or proceeding in which he may be involved, as a result of his
efforts, in good faith, to defend or enforce the terms of this Agreement. The
Company agrees to pay all such costs as they are incurred by the Executive, to
the full extent permitted by law, and without regard to whether the Company
believes that it has a defense to any action, suit or proceeding by the
Executive or that it is not obligated for any payments under this Agreement.
(b) In the event any dispute or controversy arising under or
in connection with the Executive's termination is resolved in favor of the
Executive, whether by judgment, arbitration or settlement, the Executive shall
be entitled to the payment of all back-pay, including salary, bonuses and any
other cash compensation, fringe benefits and any compensation and benefits due
the Executive under this Agreement.
(c) The Company shall indemnify, hold harmless and defend the
Executive for any act taken or not taken, or any omission or failure to act, by
him in good faith while performing services for the Company or the Bank to the
same extent and upon the same terms and conditions as other similarly situated
officers and directors of the Company or the Bank. If and to the extent that the
Company or the Bank, maintains, at any time during the Employment Period, an
insurance policy covering the other officers and directors of the Company or the
Bank against lawsuits, the Company or the Bank shall use its best efforts to
cause the Executive to be covered under such policy upon the same terms and
conditions as other similarly situated officers and directors.
23. TAX INDEMNIFICATION.
(a) This Section 23 shall apply if 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 occurs within the meaning of section 280G
of the Code. If this Section 23 applies, then with respect to any taxable year
in which the Executive shall be liable for the payment of an excise tax under
section 4999 of the Code with respect to any payment in the nature of
compensation made by the Company, the Bank or any direct or indirect subsidiary
or affiliate of the Company to (or for the benefit of) the Executive, the
Company shall pay to the Executive an amount equal to X determined under the
following formula:
X = E x P
-------------------------------------------------
1 - [(FI x (1 - SLI)) + SLI + E + M]
where
E = the rate at which the excise tax is assessed under
section 4999 of the Code;
P = the amount with respect to which such excise tax is
assessed, determined without regard to this Section
23;
FI = the highest effective marginal rate of income tax
applicable to the Executive under the Code for the
taxable year in question (taking into account any
phase-out or loss of deductions, personal exemptions
and other similar adjustments);
SLI = the sum of the highest effective marginal rates of
income tax applicable to the Executive under all
applicable state and local laws for the taxable year
in question (taking into account any phase-out or
loss of deductions, personal exemptions and other
similar adjustments); and
M = the highest marginal rate of Medicare tax
applicable to the Executive under the Code for the
taxable year in question.
Attached as Appendix A to this Agreement is an example that illustrates
application of this Section 23. Any payment under this Section 23 shall be
adjusted so as to fully indemnify the Executive on an after-tax basis so that
the Executive would be in the same after-tax financial position in which he
would have been if no excise tax under section 4999 of the Code had been
imposed. With respect to any payment in the nature of compensation that is made
to (or for the benefit of) the Executive under the terms of this Agreement or
otherwise and on which an excise tax under section 4999 of the Code will be
assessed, the payment determined under this Section 23(a) shall be made to the
Executive on the earlier of (i) the date the Company, the Bank or any direct or
indirect subsidiary or affiliate of the Company is required to withhold such
tax, or (ii) the date the tax is required to be paid by the Executive.
(b) Notwithstanding anything in this Section 23 to the
contrary, in the event that the Executive's liability for the excise tax under
section 4999 of the Code for a taxable year is subsequently determined to be
different than the amount determined by the formula (X + P) x E, where X, P and
E have the meanings provided in Section 23(a), the Executive or the Company, as
the case may be, shall pay to the other party at the time that the amount of
such excise tax is finally determined, an appropriate amount, plus interest,
such that the payment made under Section 23(a), when increased by the amount of
the payment made to the Executive under this Section 23(b) by the Company, or
when reduced by the amount of the payment made to the Company under this Section
23(b) by the Executive, equals the amount that, it is finally determined, should
have properly been paid to the Executive under Section 23(a). The interest paid
under this Section 23(b) shall be determined at the rate provided under section
1274(b)(2)(B) of the Code. To confirm that the proper amount, if any, was paid
to the Executive under this Section 23, the Executive shall furnish to the
Company a copy of each tax return which reflects a liability for an excise tax
payment made by the Company, at least 20 days before the date on which such
return is required to be filed with the Internal Revenue Service.
24. NON-EXCLUSIVITY OF RIGHTS.
Except as otherwise provided herein, nothing in this Agreement
shall prevent or limit the Executive's continuing or future participation in any
plan, program, policy or practice provided by the Company or any of its
affiliated companies and for which the Executive may qualify, nor shall anything
herein limit or otherwise affect such rights as the Executive may have under any
contract or agreement with the Company or any of its affiliated companies.
Amounts which are vested benefits or which the Executive is otherwise entitled
to receive under any plan, policy, practice or program of or any contract or
agreement with the Company or any of its affiliated companies at or subsequent
to the Date of Termination shall be payable in accordance with such plan,
policy, practice or program or contract or agreement except as explicitly
modified by this Agreement. Notwithstanding the foregoing, in the event of a
termination of employment, the amounts provided in Section 4 or Section 5, as
applicable, shall be the Executive's sole remedy for any purported breach of
this Agreement by the Company.
25. MITIGATION; OTHER CLAIMS.
The Company's obligation to make the payments provided for in
this Agreement and otherwise to perform its obligations hereunder shall not be
affected by any set-off, counterclaim, recoupment, defense or other claim, right
or action which the Company may have against the Executive or others. In no
event shall the Executive be obligated to seek other employment or take any
other action by way of mitigation of the amounts payable to the Executive under
any of the provisions of this Agreement and such amounts shall not be reduced
whether or not the Executive obtains other employment.
26. CONFIDENTIAL INFORMATION.
The Executive shall hold in a fiduciary capacity for the
benefit of the Company all secret or confidential information, knowledge or data
relating to the Company or any of its affiliated companies, and their respective
businesses, which shall have been obtained by the Executive during the
Executive's employment by the Company or any of its affiliated companies and
which shall not be or become public knowledge (other than by acts by the
Executive or representatives of the Executive in violation of this Agreement).
After termination of the Executive's employment with the Company, the Executive
shall not, without the prior written consent of the Company or as may otherwise
be required by law or legal process, communicate or divulge any such
information, knowledge or data to anyone other than the Company and those
designated by it. For purposes of this Agreement, secret and confidential
information, knowledge or data relating to the Company or any of its affiliates,
and their respective business, shall not include any information that is public,
publicly available or available through trade association sources.
Notwithstanding any other provision of this Agreement to the contrary, the
Executive acknowledges and agrees that in the event of a violation or threatened
violation of any of the provisions of this Section 26, the Company shall have no
adequate remedy at law and shall therefore be entitled to enforce each such
provision by temporary or permanent injunction or mandatory relief obtained in
any court of competent jurisdiction without the necessity of proving damages or
posting any bond or other security, and without prejudice to any other remedies
that may be available at law or in equity.
27. ACCESS TO DOCUMENTS.
The Executive shall have the right to obtain copies of any
Company or Bank documents that the Executive reasonably believes, in good faith,
are necessary or appropriate in determining his entitlement to, and the amount
of, payments and benefits under this Agreement.
1. GUARANTEE.
The Company hereby agrees to guarantee the payment by the Bank of any
benefits and compensation to which the Executive is or may be entitled to under
the terms and conditions of the Bank Agreement.
1. REQUIRED REGULATORY PROVISIONS.
Notwithstanding anything herein contained to the contrary, any
payments to the Executive by the Company, whether pursuant to this Agreement
or otherwise, are subject to and conditioned upon their compliance with section
18(k) of the Federal Deposit Insurance Act, as amended, 12 U.S.C. ss.1828(k),
and any regulations promulgated thereunder.
<PAGE>
SIGNATURES
IN WITNESS WHEREOF, JSB FINANCIAL, INC. has caused this
Agreement to be executed and its seal to be affixed hereunto by its duly
authorized officer, and the Executive has signed this Agreement, on the 22nd day
of June, 1999.
ATTEST: JSB FINANCIAL, INC.
By:
Joanne Corrigan Edward P. Henson
- --------------- ----------------
Joanne Corrigan Edward P. Henson
Secretary President
[Seal]
WITNESS:
Thomas R. Lehmann
-----------------
Thomas R. Lehmann
<PAGE>
STATE OF NEW YORK )
: ss.:
COUNTY OF NASSAU )
On this 22nd day of June, 1999, before me personally came Edward P.
Henson, to me known, who, being by me duly sworn, did depose and say that he is
the President of JSB Financial, Inc., the Delaware corporation described in and
which executed the foregoing instrument; that he knows the seal of said
corporation; that the seal affixed to said instrument is such seal; that it was
so affixed by order of the Board of Directors of said corporation; and that he
signed his name thereto by like order.
Name:
Notary Public
STATE OF NEW YORK )
: ss.:
COUNTY OF NASSAU )
On this 22nd day of June, 1999, before me personally came Thomas R.
Lehmann, to me known, and known to me to be the individual described in the
foregoing instrument, who, being by me duly sworn, did depose and say that he
resides at the address set forth in said instrument, and that he signed his name
to the foregoing instrument.
Name:
Notary Public
<PAGE>
APPENDIX A
----------
1. INTRODUCTION. Sections 280G and 4999 of the Internal Revenue Code of
1986, as amended ("Code"), impose a 20% non-deductible federal excise tax on a
person if the payments and benefits in the nature of compensation to or for the
benefit of that person that are contingent on a change in the ownership or
effective control of the Company or the Bank or in the ownership of a
substantial portion of the assets of the Company or the Bank (such payments and
benefits are considered "parachute payments" under section 280G) exceed three
times the person's "base amount" under section 280G. Section 23 of the Agreement
provides for the Executive to receive a tax indemnification payment (sometimes
referred to as a "gross-up" payment) if the payments and benefits in the nature
of compensation to or for the benefit of the Executive that are considered
parachute payments cause the imposition of an excise tax under section 4999 of
the Code. Capitalized terms in this Appendix A that are not defined in this
Appendix A have the meaning used in the Employment Agreement with the Executive.
2. PURPOSE. The purpose of this Appendix A is to illustrate how the tax
indemnification or gross-up payment would be computed. The amounts, figures and
rates used in this example are meant to be illustrative and do not reflect the
actual payments and benefits that would be made to the Executive under this
Agreement. For purposes of this example, it is assumed that a change in control
within the meaning of section 280G of the Code has occurred and that:
(a) The value of the insurance benefits required to be provided to a
hypothetical employee "Z" under sections 4(b)(iii) and 5(b) of the
Agreement for medical, dental, life and other insurance benefits
during the unexpired employment period is $23,000.
(b) The annual rate of Z's salary covered by the Agreement is $100,000,
and Z received annual salary increases of 4%, 5% and 6% (i.e., a
three-year average of 5%) for each of the prior three years. Hence,
the amount payable under sections 4(b)(v) and 5(b) of the Agreement
for salary during the unexpired employment period would be $331,013
[$105,000 + $110, 250 + $115,763].
(c) Z received annual bonuses equal to 20% of his salary in each of the
prior three years. Hence, the amount payable under sections 4(b)(v)
and 5(b) of the Agreement for bonuses during the unexpired employment
period would be $66,203 [20% x ($105,000 + $110,250 + $115,763)].
(d) The amount payable under sections 4(b)(vi) and 5(b) of the Agreement
for the present value of the additional RP and BRP accruals during the
unexpired employment period would be $45,000.
(e) The amount payable under sections 4(b)(vii) and 5(b) of the Agreement
for additional contributions to the ESOP, 401(k) Plan and BRP during
the unexpired employment period would be $20,000.
(f) Z's base amount (i.e., average W-2 wages for the five-year period
preceding the change in control) is $87,000.
3. DETERMINE IF Z IS SUBJECT TO AN EXCISE TAX. Z's parachute payments would
total $485,216 [$23,000 + $331,013 + $66,203 + $45,000 + $20,000]. Three times
Z's base amount is $261,000 [3 x $87,000]; accordingly, Z is subject to an
excise tax because $485,216 exceeds $261,000. Z's "excess parachute payments"
under section 280G of the Code are equal to Z's total parachute payments minus
one times Z's base amount, or $398,216 [$485,216 - $87,000]. If Z were not
protected by section 23 of the Agreement, Z would be subjected to an excise tax
of $79,643 [$398,216 x 20%], in addition to ordinary income taxes.
4. Compute Z's Tax Indemnification Payment. Z's tax indemnification payment
under section 23 of the Agreement would be computed pursuant to the following
formula:
E x P .2 x $398,216
X = ------------------------------------ = ----------------------------------
1 - [(FI x (1 - SLI)) + SLI + E + M] 1 - [.368874 + .0685 + .2 + .0145]
where
E = excise tax rate under section 4999 of the Code [20%];
P = the amount with respect to which such excise tax is
assessed determined without regard to section 23 of
the Agreement [$398,216];
FI = the highest effective marginal rate of income tax
applicable to Z under the Code for the taxable year
in question [assumed to be 39.6% in this example, but
in actuality, the rate is adjusted to take into
account any phase-out or loss of deductions, personal
exemptions and other similar adjustments];
SLI = the sum of the highest effective marginal rates of
income tax applicable to Z under applicable state and
local laws for the taxable year in question [assumed
to be 6.85% in this example, but in actuality, the
rate is adjusted to take into account any phase-out
or loss of deductions, personal exemptions and other
similar adjustments]; and
M = the highest marginal rate of Medicare tax applicable
to Z under the Code for the year in question [1.45%].
In this example, the amount of tax indemnification payment due to Z under
section 23 of the Agreement would be $79,643 [.2 x $398,216] divided by 0.348126
[1 - (.368874 + .0685 + .2 + .0145)], or $228,777. Such amount would be payable
in addition to the other amounts payable under the Agreement in order to put Z
in approximately the same after-tax position that Z would have been in if there
were no excise tax imposed under sections 280G and 4999 of the Code. The tax
indemnification to Z of $228,777 would in turn be a parachute payment subject to
excise tax under sections 280G and 4999. Accordingly, Z's actual excess
parachute payment would be $626,993 [$485,216 - $87,000) + $228,777)] resulting
in an excise tax of $125,399 [$626,993 x 20%]. The difference between the
indemnification. payment and the excise tax [$103,378] is an amount equal to the
sum of the income and other applicable taxes due on the indemnification payment
[($228,777 x .368874) + ($228,777 x .0685) + ($228,777 x .0145)], confirming
that the amount of the tax indemnification payment is sufficient to satisfy all
of Z's tax liability resulting from the excess parachute payment.
JSB FINANCIAL, INC.
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT ("Agreement") is made and entered
into as of June 22, 1999 by and between JSB FINANCIAL, INC., a business
corporation organized and operating under the laws of the State of Delaware and
having its principal office at 303 Merrick Road, Lynbrook, New York 11563
("Company"), and Philip Pepe, an individual residing at (address omitted)
("Executive"). Any reference to the "Bank" in this Agreement shall mean Jamaica
Savings Bank FSB and any successor thereto.
W I T N E S S E T H :
WHEREAS, the Executive is currently serving as Vice President
of the Company, and the Company wishes to assure itself of the services of the
Executive for the period provided in this Agreement; and
WHEREAS, the Executive is willing to serve in the employ of
the Company on the terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the premises and the
mutual covenants and conditions hereinafter set forth, the Company and the
Executive hereby agree as follows:
1. POSITION AND RESPONSIBILITIES.
During the period of his employment hereunder, the Executive
agrees to serve as Vice President of the Company. The Executive shall render
administrative and management services to the Company such as are customarily
performed by persons situated in a similar executive capacity and shall perform
such other duties not inconsistent with his title and office as may be assigned
to him by or under the authority of the Board of Directors of the Company (the
"Board"). The Executive shall have such authority as is necessary or appropriate
to carry out his assigned duties. Failure to re-elect the Executive as Vice
President of the Company (or a more senior position) without the consent of the
Executive shall constitute a breach of this Agreement.
2. TERMS.
(a) The period of the Executive's employment under this
Agreement shall be deemed to have commenced as of the date first above written
(the "Effective Date") and shall continue for a period of 36 full calendar
months thereafter. Commencing with the Effective Date, the term of this
Agreement shall be extended for one additional day each day until such time as
the Board or the Executive elects not to extend the term of the Agreement
further by giving written notice to the other party in accordance with Section
10, in which case the term of this Agreement shall become fixed and shall end on
the third anniversary of the date of such written notice. For purposes of this
Agreement, the term "Employment Period" shall mean the term of this Agreement
plus such extensions as are provided herein.
(b) During the period of his employment hereunder, except for
periods of absence occasioned by illness, disability, holidays, reasonable
vacation periods and reasonable leaves of absence, the Executive shall devote
substantially all of his business time, attention, skill and efforts to the
faithful performance of his duties hereunder including (i) service as Vice
President of the Company, and, if duly elected, a Director of the Company, (ii)
performance of such duties not inconsistent with his title and office as may be
assigned to him by or under the authority of the Board or a more senior
executive officer, and (iii) such other activities and services related to the
organization, operation and management of the Company. During the Employment
Period it shall not be a violation of this Agreement for the Executive to (A)
serve on corporate, civic, industry or charitable boards or committees, (B)
deliver lectures, fulfill speaking engagements or teach at educational
institutions and (C) manage personal investments, so long as such activities do
not significantly interfere with the performance of the Executive's
responsibilities as an employee of the Company in accordance with this
Agreement. It is expressly understood and agreed that to the extent that any
such activities have been conducted by the Executive prior to the Effective
Date, the continued conduct of such activities (or the conduct of activities
similar in nature and scope thereto) subsequent to the Effective Date shall not
thereafter be deemed to interfere with the performance of the Executive's
responsibilities to the Company. It is also expressly agreed that the Executive
may conduct activities subsequent to the Effective Date that are generally
accepted for an executive in his position, regardless of whether conducted by
the Executive prior to the Effective Date.
(c) Notwithstanding anything herein contained to the contrary:
(i) the Executive's employment with the Company may be terminated by the Company
or the Executive during the term of this Agreement, subject to the terms and
conditions of this Agreement; and (ii) nothing in this Agreement shall mandate
or prohibit a continuation of the Executive's employment following the
expiration of the term of this Agreement upon such terms and conditions as the
Board and the Executive may mutually agree.
(d) Upon the termination of the Executive's employment with
the Company, the daily extensions provided pursuant to Section 2(a) shall cease
(if such extensions have not previously ceased), and, if such termination is
under circumstances described in Section 4(a) or Section 5(b), the term
"Unexpired Employment Period" shall mean the period of time commencing from the
date of such termination and ending on the last day of the Employment Period
computed with reference to all extensions prior to such termination.
(e) In the event that the Executive's duties and
responsibilities with respect to the Bank are temporarily or permanently
terminated pursuant to Section 9 of the Employment Agreement dated June 22,
1999, as it may be amended from time to time, between the Executive and the Bank
("Bank Agreement") and the course of conduct upon which such termination is
based would not constitute grounds for Termination for Cause under Section 9,
then the Executive shall, to the extent practicable, assume such duties and
responsibilities formerly performed at the Bank as part of his duties and
responsibilities as Vice President of the Company. Nothing in this provision
shall be interpreted as restricting the Company's right to remove the Executive
for Cause in accordance with Section 9.
3. COMPENSATION AND REIMBURSEMENT.
(a) The compensation specified under this Agreement shall
constitute the salary and benefits paid for the duties described in Section 1.
The Company shall pay the Executive as compensation a salary at an annual rate
of not less than (salary omitted) per year or such higher rate as may be
prescribed by or under the authority of the Board ("Base Salary"). The Base
Salary payable under this Section 3 shall be paid in approximately equal
installments in accordance with the Company's customary payroll practices.
During the period of this Agreement, the Executive's Base Salary shall be
reviewed at least annually; the first such review will be made no later than one
year from the date of this Agreement. Such review shall be conducted by a
Committee designated by the Board, and the Board may increase the Executive's
Base Salary, which increased amount shall be considered the Executive's "Base
Salary" for purposes of this Agreement. In no event shall the Executive's annual
rate of Base Salary under this Agreement in effect at a particular time be
reduced without his prior written consent. In addition to the Base Salary
provided in this Section 3(a), the Company shall provide the Executive at no
cost to the Executive with all such other benefits as are provided uniformly to
permanent full-time employees of the Bank.
(b) The Company will provide the Executive with employee
benefit plans, arrangements and perquisites substantially equivalent to those in
which the Executive was participating or otherwise deriving benefit from
immediately prior to the beginning of the term of this Agreement, and the
Company will not, without the Executive's prior written consent, make any
changes in such plans, arrangements or perquisites which would adversely affect
the Executive's rights or benefits thereunder. Without limiting the generality
of the foregoing provisions of this Subsection (b), the Executive will be
entitled to participate in or receive benefits under any employee benefit plans
with respect to which the Executive satisfies the eligibility requirements,
including, but not limited to, the Retirement Plan of Jamaica Savings Bank FSB
("RP"), the Incentive Savings Plan of Jamaica Savings Bank FSB ("ISP"), the
Jamaica Savings Bank FSB Employee Stock Ownership Plan ("ESOP"), the Benefit
Restoration Plan of Jamaica Savings Bank FSB ("BRP"), the JSB Financial, Inc.
1990 Stock Option Plan, the JSB Financial, Inc. 1996 Stock Option Plan,
retirement plans, supplemental retirement plans, pension plans, profit-sharing
plans, group life, health (including hospitalization, medical and major
medical), dental, accidental death and dismemberment, travel accident and
short-term disability insurance plans, or any other employee benefit plan or
arrangement made available by the Company in the future to its senior executives
and key management employees, subject to and on a basis consistent with the
terms, conditions and overall administration of such plans and arrangements. The
Executive will be entitled to incentive compensation and bonuses as provided in
any plan of the Company in which the Executive is eligible to participate.
Nothing paid to the Executive under any such plan or arrangement will be deemed
to be in lieu of other compensation to which the Executive is entitled under
this Agreement.
(c) The Executive's principal place of employment shall be at
the Company's executive offices at the address first above written, or at such
other location in New York City or in Nassau County or Suffolk County at which
the Company shall maintain its principal executive offices, or at such other
location as the Board and the Executive may mutually agree upon. The Company
shall provide the Executive, at his principal place of employment with support
services and facilities suitable to his position with the Company and necessary
or appropriate in connection with the performance of his assigned duties under
this Agreement. The Company shall reimburse the Executive for his ordinary and
necessary business expenses, including, without limitation, fees for memberships
in such clubs and organizations as the Executive and the Board shall mutually
agree are necessary and appropriate for business purposes, and travel and
entertainment expenses, incurred in connection with the performance of his
duties under this Agreement, upon presentation to the Company of an itemized
account of such expenses in such form as the Company may reasonably require.
(d) In the event that the Executive assumes additional duties
and responsibilities pursuant to Section 2(e) by reason of one of the
circumstances contained in Section 2(e), and the Executive receives or will
receive less than the full amount of compensation and benefits formerly entitled
to him under the Bank Agreement, the Company shall assume the obligation to
provide the Executive with his compensation and benefits in accordance with the
Bank Agreement less any compensation and benefits received from the Bank,
subject to the terms and conditions of this Agreement including the Termination
for Cause provisions in Section 9.
4. PAYMENTS TO THE EXECUTIVE UPON AN EVENT OF TERMINATION.
The provisions of this Section shall in all respects be
subject to the terms and conditions stated in Sections 9 and 29.
(a) Upon the occurrence of an Event of Termination (as herein
defined) during the Executive's term of employment under this Agreement, the
provisions of this Section shall apply. As used in this Agreement, an "Event of
Termination" shall mean and include any one or more of the following: (i) the
termination by the Bank or the Company of the Executive's full-time employment
hereunder for any reason other than: following a Change in Control, as defined
in Section 5; for Disability, as defined in Section 6; for Retirement, as
defined in Section 8; for Cause, as defined in Section 9; or upon the
Executive's death; or (ii) unless consented to by the Executive, the Executive's
voluntary resignation from the Company's employ, upon any: (A) failure to elect
or re-elect or to appoint or re-appoint the Executive as Vice President of the
Company, (B) material adverse change in the Executive's function, duties, or
responsibilities, which change would cause the Executive's position to become
one of lesser responsibility, importance, or scope from the position and
attributes thereof described in Section 1, above (and any such material change
shall be deemed a continuing breach of this Agreement), (C) relocation of the
Executive's principal place of employment by more than 30 miles from its
location at the Effective Date of this Agreement, or a material reduction in the
benefits and perquisites to the Executive from those being provided as of the
Effective Date of this Agreement, (D) liquidation or dissolution of the Bank or
Company, or (E) material breach of this Agreement by the Company. Upon the
occurrence of any event described in clauses (A), (B), (C), (D) or (E), above,
the Executive shall have the right to elect to terminate his employment under
this Agreement by resignation upon written notice pursuant to Section 10 given
within a reasonable period of time not to exceed, except in case of a continuing
breach, four calendar months after the event giving rise to said right to elect.
(b) Upon the occurrence of an Event of Termination as set
forth in Section 4(a), on the Date of Termination, as defined in Section 10, the
Company shall be obligated to pay, or to provide, the Executive, or, in the
event of his subsequent death, to his surviving spouse or such other beneficiary
or beneficiaries as the Executive may designate in writing, or if neither his
estate, as severance pay or liquidated damages, or both, the benefits provided
below and a payment equal to the sum of the payments set forth below:
(i) payment of the sum of (A) the Executive's annual Base Salary
through the Date of Termination to the extent not theretofore paid and (B)
any compensation previously deferred by the Executive (together with any
accrued interest or earnings thereon) and any accrued vacation pay, in each
case to the extent not theretofore paid (the sum of the amounts described
in clauses (A) and (B) shall be hereinafter referred to as the "Accrued
Obligations");
(ii) the benefits, if any, to which the Executive is entitled as a
former employee under the Bank's or Company's employee benefit plans and
programs and compensation plans and programs;
(iii) continued group life, health (including hospitalization, medical
and major medical), dental, accidental death and dismemberment, travel
accident and short-term disability insurance benefits as provided by the
Bank or the Company, in addition to that provided pursuant to Section
4(b)(ii), if and to the extent necessary to provide for the Executive, for
the remaining Unexpired Employment Period, coverage equivalent to the
coverage to which he would have been entitled if he had continued working
for the Company during the remaining Unexpired Employment Period at the
highest annual rate of salary achieved during the Employment Period;
provided, however, if the Executive has obtained group life, health
(including hospitalization, medical and major medical), dental, accidental
death and dismemberment, travel accident and/or short-term disability
insurance benefits coverage from another source, the Executive may, as of
any month, make an irrevocable election to forego the continued coverage
that would otherwise be provided hereunder for the remaining Unexpired
Employment Period, or any portion thereof, in which case the Bank or the
Company, upon receipt of the Executive's irrevocable election, shall pay
the Executive an amount equal to the estimated cost to the Bank or the
Company of providing such coverage during such period;
(iv) if and to the extent not already provided under Sections 4(b)(ii)
and 4(b)(iii), continued health (including hospitalization, medical and
major medical) and dental insurance benefits to the extent maintained by
the Bank or the Company for its employees or retirees during the remainder
of the Executive's lifetime and the lifetime of his spouse, if any, for so
long as the Executive continues to reimburse the Bank for the cost of such
continued coverage;
(v) a lump sum payment, as liquidated damages, in an amount equal to
the Base Salary and the bonus or other incentive compensation that the
Executive would have earned if the Executive had continued working for the
Bank and the Company during the remaining Unexpired Employment Period (A)
at the highest annual rate of Base Salary and bonus or other incentive
compensation achieved by the Executive during the three-year period
immediately preceding the Executive's Date of Termination, except that (B)
in the case of a Change in Control, such lump sum shall be determined based
upon the Base Salary and the bonus or other incentive compensation,
respectively, that the Executive would have been paid during the remaining
Unexpired Employment Period including the assumed increases referred to in
clauses (i) and (ii) of Section 5(b);
(vi) a lump sum payment in an amount equal to the excess, if any, of:
(A) the present value of the pension benefits to which the Executive would
be entitled under the RP and the BRP (and under any other qualified and
non-qualified defined benefit plans maintained by the Company or the Bank
covering the Executive) as if he had continued working for the Company
during the remaining Unexpired Employment Period (x) at the highest annual
rate of Base Salary and, if applicable, the highest bonus or other
incentive compensation, respectively, achieved by the Executive during the
three-year period immediately preceding the Executive's Date of
Termination, except that (y) in the case of a Change in Control, such lump
sum shall be determined based upon the Base Salary and, if applicable, the
bonus or other incentive compensation, respectively, that the Executive
would have been paid during the remaining Unexpired Employment Period
including the assumed increases referred to in clauses (i) and (ii) of
Section 5(b), and (z) in the case of a Change in Control, as if three
additional years are added to the Executive's age and years of creditable
service under the RP and the BRP and after taking into account any other
compensation required to be taken into account under the RP and the BRP
(and any other qualified and non-qualified defined benefit plans of the
Company or the Bank, as applicable), over (B) the present value of the
pension benefits to which he is actually entitled under the RP and the BRP
(and any other qualified and non-qualified defined benefit plans) as of his
Date of Termination, where such present values are to be determined using a
discount rate of 6% and the mortality tables prescribed under section 72 of
the Internal Revenue Code of 1986, as amended ("Code"); and
(vii) a lump sum payment in an amount equal to the contributions that
would have been made by the Company or the Bank on the Executive's behalf
to the ISP and the ESOP and to the BRP with respect to such ISP and ESOP
contributions (and to any other qualified and non-qualified defined
contribution plans maintained by the Company or the Bank covering the
Executive) as if the Executive had continued working for the Bank and the
Company during the remaining Unexpired Employment Period making the maximum
amount of employee contributions required or permitted, if any, under such
plan or plans and earning (A) the highest annual rate of Base Salary and,
if applicable, the highest bonus or other incentive compensation,
respectively, achieved by the Executive during the three-year period
immediately preceding the Executive's Date of Termination, except that (B)
in the case of a Change in Control, such lump sum shall be determined based
upon the Base Salary and, if applicable, the bonus or other incentive
compensation, respectively, that the Executive would have been paid during
the remaining Unexpired Employment Period including the assumed increases
referred to in clauses (i) and (ii) of Section 5(b).
The benefits to be provided under, and the amounts payable pursuant to, this
Section 4 shall be provided and be payable without regard to proof of damages
and without regard to the Executive's efforts, if any, to mitigate damages. The
Company and the Executive hereby stipulate that the damages which may be
incurred by the Executive following any such termination of employment are not
capable of accurate measurement as of the date first above written and that such
liquidated damages constitute reasonable damages under the circumstances.
(c) Payments to the Executive under Section 4 shall be made
within ten days of the Executive's Date of Termination.
(d) In the event payments are made under Section 4 or Section
5, the Executive may select an individual or firm to provide him with reasonable
outplacement counseling services, and the Company shall pay for the costs of
such services; provided, however, that the cost to the Company of such
outplacement counseling services shall not exceed 25% of the Executive's Base
Salary.
5. CHANGE IN CONTROL.
(a) No benefit shall be payable under this Section 5 unless
there shall have been a Change in Control of the Bank or Company, as set forth
below. For purposes of this Agreement, a "Change in Control" of the Bank or
Company shall mean any one or more of the following:
(i) An event of a nature that would be required to be reported in
response to Item l(a) of the current report on Form 8-K, as in effect on
the date hereof, pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934, as amended (the "Exchange Act");
(ii) An event of a nature that results in a Change in Control of the
Bank or the Company within the meaning of the Home Owners' Loan Act of
1933, as amended, or the Change in Bank Control Act of 1978, as amended, as
applicable, and the Rules and Regulations promulgated by the Office of
Thrift Supervision ("OTS") or its predecessor agency, the Federal Deposit
Insurance Corporation ("FDIC") or the Board of Governors of the Federal
Reserve System ("FRB"), as the case may be, as in effect on the date
hereof, but excluding any such Change in Control resulting from the
purchase of securities by the Company or the Company's or the Bank's
tax-qualified employee benefit plans and trusts;
(iii) If any "person" (as the term is used in Sections 13(d) and 14(d)
of the Exchange Act) is or becomes the "beneficial owner" (as defined in
Rule 13d-3 under the Exchange Act), directly or indirectly, of securities
of the Bank or the Company representing 20% or more of the Bank's or the
Company's outstanding securities except for any securities of the Bank
purchased by the Company in connection with the initial conversion of the
Bank from mutual to stock form (the "Conversion") and any securities
purchased by the Company or the Company's or the Bank's tax-qualified
employee benefit plans and trusts;
(iv) If the individuals who constitute the Board on the date hereof
(the "Incumbent Board") cease for any reason to constitute at least a
majority of the Board, provided, however, that any person becoming a
director subsequent to the date hereof whose election or nomination for
election by the Company's stockholders, was approved by a vote of at least
three-quarters of the directors then comprising the Incumbent Board shall
be considered as though he were a member of the Incumbent Board, but
excluding, for this purpose, any such person whose initial assumption of
office occurs as a result of an actual or threatened election contest with
respect to the election or removal of directors or other actual or
threatened solicitation of proxies or consents by or on behalf of a person
other than the Board;
(v) A merger, consolidation, reorganization, sale of all or
substantially all the assets of the Bank or the Company or similar
transaction occurs in which the Bank or Company is not the resulting
entity, other than a transaction following which (A) at least 51% of the
equity ownership interests of the entity resulting from such transaction
are beneficially owned (within the meaning of Rule 13d-3 promulgated under
Exchange Act) in substantially the same relative proportions by persons
who, immediately prior to such transaction, beneficially owned (within the
meaning of Rule 13d-3 promulgated under the Exchange Act) at least 51% of
the outstanding equity ownership interests in the Bank or Company and (B)
at least 51% of the securities entitled to vote generally in the election
of directors of the entity resulting from such transaction are beneficially
owned (within the meaning of Rule 13d-3 promulgated under the Exchange Act)
in substantially the same relative proportions by persons who, immediately
prior to such transaction, beneficially owned (within the meaning of Rule
13d-3 promulgated under the Exchange Act) at least 51% of the securities
entitled to vote generally in the election of directors of the Bank or
Company;
(vi) A proxy statement shall be distributed soliciting proxies from
stockholders of the Company, by someone other than the current management
of the Company, seeking stockholder approval of a plan of reorganization,
merger or consolidation of the Company or Bank or similar transaction with
one or more corporations as a result of which the outstanding shares of the
class of securities then subject to such plan or transaction are exchanged
for or converted into cash or property or securities not issued by the Bank
or the Company; or
(vii) A tender offer is completed for 20% or more of the voting
securities of the Bank or Company then outstanding.
The "Change in Control Date" shall mean the date during the Employment Period on
which a Change in Control occurs. Anything in this Agreement to the contrary
notwithstanding, if the Executive's employment with the Company is terminated
and if it is reasonably demonstrated by the Executive that such termination of
employment (1) was at the request of a third party who has taken steps
reasonably calculated to effect a Change in Control or (2) otherwise arose in
connection with or anticipation of a Change in Control, then for all purposes of
this Agreement the "Change in Control Date" shall mean the date immediately
prior to the date of such termination of employment.
(b) If any of the events described in Section 5(a)
constituting a Change in Control have occurred or the Board has determined that
a Change in Control has occurred, the Executive shall be entitled to the
payments and the benefits provided below on the Change in Control Date. The
amounts payable and the benefits to be provided under this Section 5(b) to the
Executive shall consist of the payments and benefits that would be due to the
Executive and the Executive's family under Section 4(b) as if an Event of
Termination under Section 4(a) had occurred on the Change in Control Date and
that for purposes of this Section 5(b), the term Unexpired Employment Period
shall mean three years from the Change in Control Date. For purposes of
determining the payments and benefits due under this Section 5(b), when
calculating the payments due and benefits to be provided for the Unexpired
Employment Period, it shall be assumed that for each year of the remaining term
of this Agreement, the Executive would have received (i) an annual increase in
Base Salary equal to the average percentage increase in Base Salary received by
the Executive for the three-year period ending with the earlier of (x) the year
in which the Change in Control Date occurs or (y) the year during which a
definitive agreement, if any, governing the Change in Control is executed, with
the first such increase effective as of the January 1st next following such
three-year period and the second and third such increases effective as of the
next two anniversaries of such January 1st, (ii) a bonus or other incentive
compensation equal to the highest percentage rate of bonus or incentive
compensation paid to the Executive during the three-year period referred to in
clause (i) of this Section 5(b) times the Base Salary that the Executive would
have been paid during the remaining term of this Agreement including the assumed
increases referred to in clause (i) of this Section 5(b), (iii) the maximum
contributions that could be made by or on behalf of the Executive with respect
to any employee benefit plans and programs maintained by the Company and the
Bank based upon the Base Salary and, if applicable, the bonus or other incentive
compensation, respectively, that the Executive would have been paid during the
remaining term of this Agreement including the assumed increases referred to in
clauses (i) and (ii) of this Section 5(b), and (iv) the present value of the
pension benefits to which the Executive is entitled under Section 4(b)(vi) with
respect to the RP and the BRP (and under any other qualified and non-qualified
defined benefit plans maintained by the Bank or the Company covering the
Executive) determined as if he had continued working for the Bank during the
remaining Unexpired Employment Period and based upon the Base Salary and, if
applicable, the bonus or other incentive compensation, respectively, that the
Executive would have been paid during the remaining term of this Agreement
including the assumed increases referred to in clauses (i) and (ii) of this
Section 5(b). The benefits to be provided under, and the amounts payable
pursuant to, this Section 5 shall be provided and be payable without regard to
proof of damages and without regard to the Executive's efforts, if any, to
mitigate damages. The Company and the Executive hereby stipulate that the
damages which may be incurred by the Executive following any Change in Control
are not capable of accurate measurement as of the date first above written and
that such liquidated damages constitute reasonable damages under the
circumstances.
(c) Payments to the Executive under Section 5(b) shall be made
on the Change in Control Date. Such payments shall be made regardless of whether
the Executive's employment terminates.
6. TERMINATION FOR DISABILITY.
(a) In the event of Termination for Disability, the Executive
shall receive the benefits provided in Section 6(b); provided, however, that the
benefits provided under Section 6(b) shall not be deemed to be in lieu of the
benefits he is otherwise entitled as a former employee under the Bank or
Company's employee plans and programs. For purposes of this Agreement, the
Executive may be terminated for disability only if (i) the Executive shall have
been absent from his duties with the Company on a full-time basis for at least
six consecutive months, or (ii) a majority of the members of the Board acting in
good faith determine that, based upon competent and independent medical evidence
presented by a physician or physicians agreed upon by the parties, the
Executive's physical or mental condition is such that he is totally and
permanently incapable of engaging in any substantial gainful employment based
upon his education, training and experience; provided, however, that on and
after the earliest date on which a Change in Control of the Bank or Company as
defined in Section 5 occurs, such a determination shall require the affirmative
vote of at least three-fourths of the members of the Board acting in good faith
and such vote shall not be made prior to the expiration of a 60-day period
following the date on which the Board shall, by written notice to the Executive,
furnish him a statement of its grounds for proposing to make such determination,
during which period the Executive shall be afforded a reasonable opportunity to
make oral and written presentations to the members of the Board, and to be
represented by his legal counsel at such presentations, to refute the grounds
for the proposed determination.
(b) The Company will pay the Executive as Disability pay, a
bi-weekly payment equal to 100% of the Executive's bi-weekly annual rate of Base
Salary in effect on the date of the Executive's Termination for Disability. In
addition, the Company will cause to be continued insurance coverage, including
group life, health (including hospitalization, medical and major medical),
dental, accidental death and dismemberment, travel accident and short-term
disability coverage substantially identical to the coverage maintained by the
Bank or the Company for the Executive prior to his Termination for Disability.
The Disability pay and coverages shall commence on the effective date of the
Executive's termination and shall cease upon the earliest to occur of: (i) the
date the Executive returns to the full-time employment of the Company, in the
same capacity as he was employed prior to his Termination for Disability and
pursuant to an employment agreement between the Executive and the Company; (ii)
the Executive's full-time employment by another employer; (iii) the Executive's
attaining the normal age of retirement or receiving benefits under the RP or
other defined benefit pension plan of the Bank or the Company; (iv) the
Executive's death; (v) the Executive's eligibility to collect payments under the
disability provision of the RP or other defined benefit pension plan of the Bank
or the Company; or (vi) the expiration of the term of this Agreement.
(c) Notwithstanding the foregoing, there will be no reduction
in the compensation otherwise payable to the Executive during any period during
which the Executive is incapable of performing his duties hereunder by reason of
temporary disability.
7. TERMINATION UPON DEATH.
The Executive's employment shall terminate automatically upon
the Executive's death during the Employment Period. In such event, the Executive
and the Executive's legal representatives shall be entitled to the following:
(i) payment of the Executive's "Accrued Obligations;"
(ii) the continuation of all benefits to the Executive's family and
dependents that would have been provided if the Executive had been entitled
to the benefits under Section 4(b)(ii), (iii) and (iv); and
(iii) the timely payment of any other amounts or benefits required to
be paid or provided or which the Executive is eligible to receive under any
plan, program, policy or practice or contract or agreement of the Company
and its affiliated companies (all such other amounts and benefits shall be
hereinafter referred to as the "Other Benefits");
provided, however, that if the Executive dies while in the employment of the
Company, the amount of life insurance provided to the Executive by the Company
shall not be less than the lesser of $200,000 or three times the Executive's
then annual Base Salary. Accrued Obligations shall be paid to the Executive's
estate or beneficiary, as applicable, in a lump sum cash payment within ten days
of the Date of Termination. With respect to the provision of Other Benefits
after the Change of Control Date, the term Other Benefits as utilized in this
Section 7 shall include, without limitation, that the Executive's estate and/or
beneficiaries shall be entitled to receive, benefits at least equal to the most
favorable benefits provided by the Company and affiliated companies to the
estates and beneficiaries of peer executives of the Company and such affiliates
companies under such plans, programs, practices and policies relating to death
benefits, if any, as in effect with respect to other peer executives and their
beneficiaries at any time during the 120-day period immediately preceding the
Change in Control Date.
8. TERMINATION UPON RETIREMENT.
Termination by the Company of the Executive based on
"Retirement" shall mean termination in accordance with the Company's or the
Bank's retirement policy or in accordance with any retirement arrangement
established with the Executive's consent with respect to him. Upon termination
of the Executive upon Retirement, the Executive shall be entitled to all
benefits under the RP and any other retirement plan of the Bank or the Company
and other plans to which the Executive is a party, and the Executive shall be
entitled to the benefits, if any, that would be payable to him as a former
employee under the Bank's or the Company's employee benefit plans and programs
and compensation plans and programs.
9. TERMINATION FOR CAUSE.
The terms "Termination for Cause" or "Cause" shall mean
termination because of the Executive's personal dishonesty, willful misconduct,
any breach of fiduciary duty involving personal profit, intentional failure to
perform stated duties, conviction of a felony with respect to the Bank or the
Company or any material breach of this Agreement. For purposes of this Section,
no act, or the failure to act, on the Executive's part shall be "willful" unless
done, or omitted to be done, in bad faith and without reasonable belief that the
action or omission was in the best interest of the Company or its affiliates.
Any act, or failure to act, based upon authority given pursuant to a resolution
duly adopted by the Board or based upon the written advice of counsel for the
Company shall be conclusively presumed to be done, or omitted to be done, by the
Executive in good faith and in the best interests of the Company.
Notwithstanding the foregoing, the Executive shall not be deemed to have been
terminated for Cause unless and until there shall have been delivered to him a
Notice of Termination which shall include a copy of a resolution duly adopted by
the affirmative vote of not less than three-fourths of the members of the Board
at a meeting of the Board called and held for that purpose (after reasonable
notice to the Executive and an opportunity for him, together with counsel, to be
heard before the Board), finding that in the good faith opinion of the Board,
the Executive was guilty of conduct justifying Termination for Cause and
specifying the particulars thereof in detail. The Executive shall not have the
right to receive compensation or other benefits for any period after Termination
for Cause.
10. NOTICE.
(a) Any purported termination by the Company or by the
Executive shall be communicated by a Notice of Termination to the other party
hereto. For purposes of this Agreement, a "Notice of Termination" shall mean a
written notice which shall indicate the specific termination provision in this
Agreement relied upon and shall set forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of the Executive's
employment under the provision so indicated.
(b) Subject to Section 10(c), "Date of Termination" shall mean
(A) if the Executive's employment is terminated for Disability, 30 days after a
Notice of Termination is given (provided that he shall not have returned to the
performance of his duties on a full-time basis during such 30-day period), and
(B) if his employment is terminated for any other reason, the date specified in
the Notice of Termination (which, in the case of a Termination for Cause, shall
be immediate).
(c) If, within 30 days after any Notice of Termination is
given, the party receiving such Notice of Termination notifies the other party
that a dispute exists concerning the termination, then, except upon the
occurrence of a Change in Control and voluntary termination by the Executive in
which case the Date of Termination shall be the date specified in the Notice,
the Date of Termination shall be the date on which the dispute is finally
determined, either by mutual written agreement of the parties, by a binding
arbitration award, or by a final judgment, order or decree of a court of
competent jurisdiction (the time for appeal therefrom having expired and no
appeal having been perfected) and provided further that the Date of Termination
shall be extended by a notice of dispute only if such notice is given in good
faith and the party giving such notice pursues the resolution of such dispute
with reasonable diligence. Notwithstanding the pendency of any such dispute, the
Company will continue to pay the Executive his full compensation in effect when
the notice giving rise to the dispute was given (including, but not limited to,
Base Salary) and continue him as a participant in all compensation, benefit and
insurance plans in which he was participating when the notice of dispute was
given, until the dispute is finally resolved in accordance with this Agreement.
Amounts paid under this Section are in addition to all other amounts due under
this Agreement and shall not be offset against or reduce any other amounts due
under this Agreement.
(d) The Company may terminate the Executive's employment at
any time, but any termination by the Company, other than Termination for Cause,
shall not prejudice the Executive's right to compensation or other benefits
under this Agreement or under any other benefit or compensation plans or
programs maintained by the Bank or the Company from time to time. The Executive
shall not have the right to receive compensation or other benefits for any
period after a Termination for Cause as defined in Section 9 hereinabove.
(e) Any communication to a party required or permitted under
this Agreement, including any notice, direction, designation, consent,
instruction, objection or waiver, shall be in writing and shall be deemed to
have been given at such time as it is delivered personally, or five days after
mailing if mailed, postage prepaid, by registered or certified mail, return
receipt requested, addressed to such party at the address listed below or at
such other address as one such party may by written notice specify to the other
party, as follows. If to the Executive, (address omitted); if to the Company,
JSB Financial, Inc., 303 Merrick Road, Lynbrook, New York 11563, Attention:
President, with a copy to Thacher Proffitt & Wood, Two World Trade Center, New
York, New York 10048, Attention: Douglas J. McClintock, Esq.
11. POST-TERMINATION OBLIGATIONS.
(a) All payments and benefits to the Executive under this
Agreement shall be subject to the Executive's compliance with paragraph (b) of
this Section 11 during the term of this Agreement and for one full year after
the expiration or termination hereof.
(b) The Executive shall, upon reasonable notice, furnish such
information and assistance to the Company as may reasonably be required by the
Company in connection with any litigation in which it or any of its subsidiaries
or affiliates is, or may become, a party; provided, that the Company reimburses
the Executive for the reasonable value of his time in connection therewith and
for any out-of-pocket costs attributable thereto.
12. COVENANT NOT TO COMPETE.
The Executive hereby covenants and agrees that for a period of
one year following his Date of Termination, if such termination occurs prior to
the end of the term of the Agreement, he shall not, without the written consent
of the Board, become an officer, employee, consultant, director or trustee of
any savings bank, savings and loan association, savings and loan holding
company, bank or bank holding company if such position (a) entails working in
(or providing services in) New York City, Nassau or Suffolk counties or (b)
entails working in (or providing services in) any other county that is both (i)
within the Bank's primary trade (or operating) area at the time in question,
which shall be determined by reference to the Bank's business plan as in effect
from time to time, and (ii) in which the Bank engages in material or substantial
deposit-taking functions or lending activities at such time; provided, however,
that this Section 12 shall not apply if the Executive's employment is terminated
for the reasons set forth in any of Sections 4, 5, 6 or 8.
13. SOURCE OF PAYMENTS.
All payments provided in this Agreement shall be timely paid
in cash or check from the general funds of the Company.
14. EFFECT ON PRIOR AGREEMENTS.
This Agreement contains the entire understanding between the
parties hereto and supersedes any prior employment agreement between the Company
or any predecessor of the Company and the Executive, except that this Agreement
shall not affect or operate to reduce any benefit or compensation inuring to the
Executive of a kind elsewhere provided. No provisions of this Agreement shall be
interpreted to mean that the Executive is subject to receiving fewer benefits
than those available to him without reference to this Agreement.
15. EFFECT OF ACTION UNDER BANK AGREEMENT.
Notwithstanding any provision herein to the contrary, to the
extent that full compensation payments and benefits are paid to or received by
the Executive under the Bank Agreement, such compensation payments and benefits
paid by the Bank will be deemed to satisfy the corresponding obligations of the
Company under this Agreement.
16. NO ATTACHMENT.
Except as required by law, no right to receive payments under
this Agreement shall be subject to anticipation, commutation, alienation, sale,
assignment, encumbrance, charge, pledge, or hypothecation, or to execution,
attachment, levy, or similar process or assignment by operation of law, and any
attempt, voluntary or involuntary, to affect any such action shall be null,
void, and of no effect.
17. MODIFICATION AND WAIVER.
(a) This Agreement may not be modified or amended except by an
instrument in writing signed by the parties hereto.
(b) No term or condition of this Agreement shall be deemed to
have been waived, nor shall there be any estoppel against the enforcement of any
provision of this Agreement, except by written instrument of the party charged
with such waiver or estoppel. No such written waiver shall be deemed a
continuing waiver unless specifically stated therein, and each such waiver shall
operate only as to the specific term or condition waived and shall not
constitute a waiver of such term or condition for the future as to any act other
than that specifically waived.
18. SUCCESSOR AND ASSIGNS.
This Agreement will inure to the benefit of and be binding
upon the Executive, his legal representatives and testate or intestate
distributees, and the Company, its successors and assigns, including any
successor by purchase, merger, consolidation or otherwise or a statutory
receiver or any other person or firm or corporation to which all or
substantially all of the assets and business of the Company may be sold or
otherwise transferred. Any such successor of the Company shall be deemed to have
assumed this Agreement and to have become obligated hereunder to the same extent
as the Company and the Executive's obligations hereunder shall continue in favor
of such successor.
19. SEVERABILITY.
If, for any reason, any provision of this Agreement, or any
part of any provision, is held invalid, such invalidity shall not affect any
other provision of this Agreement or any part of such provision not held so
invalid, and each such other provision and part thereof shall to the full extent
consistent with law continue in full force and effect.
20. HEADINGS FOR REFERENCE ONLY.
The headings of Sections and paragraphs herein are included
solely for convenience of reference and shall not control the meaning or
interpretation of any of the provisions of this Agreement. Any reference in this
Agreement to a Section or Subsection shall refer to a Section or Subsection of
this Agreement, except as otherwise specified.
21. GOVERNING LAW.
This Agreement shall be governed by the laws of the State of
New York, without reference to conflicts of law principles.
22. INDEMNIFICATION AND ATTORNEYS' FEES.
(a) The Company shall indemnify, hold harmless and defend the
Executive against reasonable costs, including legal fees, incurred by him in
connection with his consultation with legal counsel or arising out of any
action, suit or proceeding in which he may be involved, as a result of his
efforts, in good faith, to defend or enforce the terms of this Agreement. The
Company agrees to pay all such costs as they are incurred by the Executive, to
the full extent permitted by law, and without regard to whether the Company
believes that it has a defense to any action, suit or proceeding by the
Executive or that it is not obligated for any payments under this Agreement.
(b) In the event any dispute or controversy arising under or
in connection with the Executive's termination is resolved in favor of the
Executive, whether by judgment, arbitration or settlement, the Executive shall
be entitled to the payment of all back-pay, including salary, bonuses and any
other cash compensation, fringe benefits and any compensation and benefits due
the Executive under this Agreement.
(c) The Company shall indemnify, hold harmless and defend the
Executive for any act taken or not taken, or any omission or failure to act, by
him in good faith while performing services for the Company or the Bank to the
same extent and upon the same terms and conditions as other similarly situated
officers and directors of the Company or the Bank. If and to the extent that the
Company or the Bank, maintains, at any time during the Employment Period, an
insurance policy covering the other officers and directors of the Company or the
Bank against lawsuits, the Company or the Bank shall use its best efforts to
cause the Executive to be covered under such policy upon the same terms and
conditions as other similarly situated officers and directors.
23. TAX INDEMNIFICATION.
(a) This Section 23 shall apply if 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 occurs within the meaning of section 280G
of the Code. If this Section 23 applies, then with respect to any taxable year
in which the Executive shall be liable for the payment of an excise tax under
section 4999 of the Code with respect to any payment in the nature of
compensation made by the Company, the Bank or any direct or indirect subsidiary
or affiliate of the Company to (or for the benefit of) the Executive, the
Company shall pay to the Executive an amount equal to X determined under the
following formula:
X = E x P
-------------------------------------------------
1 - [(FI x (1 - SLI)) + SLI + E + M]
where
E = the rate at which the excise tax is assessed under
section 4999 of the Code;
P = the amount with respect to which such excise tax is
assessed, determined without regard to this Section
23;
FI = the highest effective marginal rate of income tax
applicable to the Executive under the Code for the
taxable year in question (taking into account any
phase-out or loss of deductions, personal exemptions
and other similar adjustments);
SLI = the sum of the highest effective marginal rates of
income tax applicable to the Executive under all
applicable state and local laws for the taxable year
in question (taking into account any phase-out or
loss of deductions, personal exemptions and other
similar adjustments); and
M = the highest marginal rate of Medicare tax
applicable to the Executive under the Code for the
taxable year in question.
Attached as Appendix A to this Agreement is an example that illustrates
application of this Section 23. Any payment under this Section 23 shall be
adjusted so as to fully indemnify the Executive on an after-tax basis so that
the Executive would be in the same after-tax financial position in which he
would have been if no excise tax under section 4999 of the Code had been
imposed. With respect to any payment in the nature of compensation that is made
to (or for the benefit of) the Executive under the terms of this Agreement or
otherwise and on which an excise tax under section 4999 of the Code will be
assessed, the payment determined under this Section 23(a) shall be made to the
Executive on the earlier of (i) the date the Company, the Bank or any direct or
indirect subsidiary or affiliate of the Company is required to withhold such
tax, or (ii) the date the tax is required to be paid by the Executive.
(b) Notwithstanding anything in this Section 23 to the
contrary, in the event that the Executive's liability for the excise tax under
section 4999 of the Code for a taxable year is subsequently determined to be
different than the amount determined by the formula (X + P) x E, where X, P and
E have the meanings provided in Section 23(a), the Executive or the Company, as
the case may be, shall pay to the other party at the time that the amount of
such excise tax is finally determined, an appropriate amount, plus interest,
such that the payment made under Section 23(a), when increased by the amount of
the payment made to the Executive under this Section 23(b) by the Company, or
when reduced by the amount of the payment made to the Company under this Section
23(b) by the Executive, equals the amount that, it is finally determined, should
have properly been paid to the Executive under Section 23(a). The interest paid
under this Section 23(b) shall be determined at the rate provided under section
1274(b)(2)(B) of the Code. To confirm that the proper amount, if any, was paid
to the Executive under this Section 23, the Executive shall furnish to the
Company a copy of each tax return which reflects a liability for an excise tax
payment made by the Company, at least 20 days before the date on which such
return is required to be filed with the Internal Revenue Service.
24. NON-EXCLUSIVITY OF RIGHTS.
Except as otherwise provided herein, nothing in this Agreement
shall prevent or limit the Executive's continuing or future participation in any
plan, program, policy or practice provided by the Company or any of its
affiliated companies and for which the Executive may qualify, nor shall anything
herein limit or otherwise affect such rights as the Executive may have under any
contract or agreement with the Company or any of its affiliated companies.
Amounts which are vested benefits or which the Executive is otherwise entitled
to receive under any plan, policy, practice or program of or any contract or
agreement with the Company or any of its affiliated companies at or subsequent
to the Date of Termination shall be payable in accordance with such plan,
policy, practice or program or contract or agreement except as explicitly
modified by this Agreement. Notwithstanding the foregoing, in the event of a
termination of employment, the amounts provided in Section 4 or Section 5, as
applicable, shall be the Executive's sole remedy for any purported breach of
this Agreement by the Company.
25. MITIGATION; OTHER CLAIMS.
The Company's obligation to make the payments provided for in
this Agreement and otherwise to perform its obligations hereunder shall not be
affected by any set-off, counterclaim, recoupment, defense or other claim, right
or action which the Company may have against the Executive or others. In no
event shall the Executive be obligated to seek other employment or take any
other action by way of mitigation of the amounts payable to the Executive under
any of the provisions of this Agreement and such amounts shall not be reduced
whether or not the Executive obtains other employment.
26. CONFIDENTIAL INFORMATION.
The Executive shall hold in a fiduciary capacity for the
benefit of the Company all secret or confidential information, knowledge or data
relating to the Company or any of its affiliated companies, and their respective
businesses, which shall have been obtained by the Executive during the
Executive's employment by the Company or any of its affiliated companies and
which shall not be or become public knowledge (other than by acts by the
Executive or representatives of the Executive in violation of this Agreement).
After termination of the Executive's employment with the Company, the Executive
shall not, without the prior written consent of the Company or as may otherwise
be required by law or legal process, communicate or divulge any such
information, knowledge or data to anyone other than the Company and those
designated by it. For purposes of this Agreement, secret and confidential
information, knowledge or data relating to the Company or any of its affiliates,
and their respective business, shall not include any information that is public,
publicly available or available through trade association sources.
Notwithstanding any other provision of this Agreement to the contrary, the
Executive acknowledges and agrees that in the event of a violation or threatened
violation of any of the provisions of this Section 26, the Company shall have no
adequate remedy at law and shall therefore be entitled to enforce each such
provision by temporary or permanent injunction or mandatory relief obtained in
any court of competent jurisdiction without the necessity of proving damages or
posting any bond or other security, and without prejudice to any other remedies
that may be available at law or in equity.
27. ACCESS TO DOCUMENTS.
The Executive shall have the right to obtain copies of any
Company or Bank documents that the Executive reasonably believes, in good faith,
are necessary or appropriate in determining his entitlement to, and the amount
of, payments and benefits under this Agreement.
1. GUARANTEE.
The Company hereby agrees to guarantee the payment by the Bank of any
benefits and compensation to which the Executive is or may be entitled to under
the terms and conditions of the Bank Agreement.
1. REQUIRED REGULATORY PROVISIONS.
Notwithstanding anything herein contained to the contrary, any
payments to the Executive by the Company, whether pursuant to this Agreement
or otherwise, are subject to and conditioned upon their compliance with section
18(k) of the Federal Deposit Insurance Act, as amended, 12 U.S.C. ss.1828(k),
and any regulations promulgated thereunder.
<PAGE>
SIGNATURES
IN WITNESS WHEREOF, JSB FINANCIAL, INC. has caused this
Agreement to be executed and its seal to be affixed hereunto by its duly
authorized officer, and the Executive has signed this Agreement, on the 22nd day
of June, 1999.
ATTEST: JSB FINANCIAL, INC.
By:
Joanne Corrigan Edward P. Henson
- --------------- ----------------
Joanne Corrigan Edward P. Henson
Secretary President
[Seal]
WITNESS:
Philip Pepe
-----------
Philip Pepe
<PAGE>
STATE OF NEW YORK )
: ss.:
COUNTY OF NASSAU )
On this 22nd day of June, 1999, before me personally came Edward P.
Henson, to me known, who, being by me duly sworn, did depose and say that he is
the President of JSB Financial, Inc., the Delaware corporation described in and
which executed the foregoing instrument; that he knows the seal of said
corporation; that the seal affixed to said instrument is such seal; that it was
so affixed by order of the Board of Directors of said corporation; and that he
signed his name thereto by like order.
Name:
Notary Public
STATE OF NEW YORK )
: ss.:
COUNTY OF NASSAU )
On this 22nd day of June, 1999, before me personally came Philip Pepe,
to me known, and known to me to be the individual described in the foregoing
instrument, who, being by me duly sworn, did depose and say that he resides at
the address set forth in said instrument, and that he signed his name to the
foregoing instrument.
Name:
Notary Public
<PAGE>
APPENDIX A
----------
1. INTRODUCTION. Sections 280G and 4999 of the Internal Revenue Code of
1986, as amended ("Code"), impose a 20% non-deductible federal excise tax on a
person if the payments and benefits in the nature of compensation to or for the
benefit of that person that are contingent on a change in the ownership or
effective control of the Company or the Bank or in the ownership of a
substantial portion of the assets of the Company or the Bank (such payments and
benefits are considered "parachute payments" under section 280G) exceed three
times the person's "base amount" under section 280G. Section 23 of the Agreement
provides for the Executive to receive a tax indemnification payment (sometimes
referred to as a "gross-up" payment) if the payments and benefits in the nature
of compensation to or for the benefit of the Executive that are considered
parachute payments cause the imposition of an excise tax under section 4999 of
the Code. Capitalized terms in this Appendix A that are not defined in this
Appendix A have the meaning used in the Employment Agreement with the Executive.
2. PURPOSE. The purpose of this Appendix A is to illustrate how the tax
indemnification or gross-up payment would be computed. The amounts, figures and
rates used in this example are meant to be illustrative and do not reflect the
actual payments and benefits that would be made to the Executive under this
Agreement. For purposes of this example, it is assumed that a change in control
within the meaning of section 280G of the Code has occurred and that:
(a) The value of the insurance benefits required to be provided to a
hypothetical employee "Z" under sections 4(b)(iii) and 5(b) of the
Agreement for medical, dental, life and other insurance benefits
during the unexpired employment period is $23,000.
(b) The annual rate of Z's salary covered by the Agreement is $100,000,
and Z received annual salary increases of 4%, 5% and 6% (i.e., a
three-year average of 5%) for each of the prior three years. Hence,
the amount payable under sections 4(b)(v) and 5(b) of the Agreement
for salary during the unexpired employment period would be $331,013
[$105,000 + $110, 250 + $115,763].
(c) Z received annual bonuses equal to 20% of his salary in each of the
prior three years. Hence, the amount payable under sections 4(b)(v)
and 5(b) of the Agreement for bonuses during the unexpired employment
period would be $66,203 [20% x ($105,000 + $110,250 + $115,763)].
(d) The amount payable under sections 4(b)(vi) and 5(b) of the Agreement
for the present value of the additional RP and BRP accruals during the
unexpired employment period would be $45,000.
(e) The amount payable under sections 4(b)(vii) and 5(b) of the Agreement
for additional contributions to the ESOP, 401(k) Plan and BRP during
the unexpired employment period would be $20,000.
(f) Z's base amount (i.e., average W-2 wages for the five-year period
preceding the change in control) is $87,000.
3. DETERMINE IF Z IS SUBJECT TO AN EXCISE TAX. Z's parachute payments would
total $485,216 [$23,000 + $331,013 + $66,203 + $45,000 + $20,000]. Three times
Z's base amount is $261,000 [3 x $87,000]; accordingly, Z is subject to an
excise tax because $485,216 exceeds $261,000. Z's "excess parachute payments"
under section 280G of the Code are equal to Z's total parachute payments minus
one times Z's base amount, or $398,216 [$485,216 - $87,000]. If Z were not
protected by section 23 of the Agreement, Z would be subjected to an excise tax
of $79,643 [$398,216 x 20%], in addition to ordinary income taxes.
4. Compute Z's Tax Indemnification Payment. Z's tax indemnification payment
under section 23 of the Agreement would be computed pursuant to the following
formula:
E x P .2 x $398,216
X = ------------------------------------ = ----------------------------------
1 - [(FI x (1 - SLI)) + SLI + E + M] 1 - [.368874 + .0685 + .2 + .0145]
where
E = excise tax rate under section 4999 of the Code [20%];
P = the amount with respect to which such excise tax is
assessed determined without regard to section 23 of
the Agreement [$398,216];
FI = the highest effective marginal rate of income tax
applicable to Z under the Code for the taxable year
in question [assumed to be 39.6% in this example, but
in actuality, the rate is adjusted to take into
account any phase-out or loss of deductions, personal
exemptions and other similar adjustments];
SLI = the sum of the highest effective marginal rates of
income tax applicable to Z under applicable state and
local laws for the taxable year in question [assumed
to be 6.85% in this example, but in actuality, the
rate is adjusted to take into account any phase-out
or loss of deductions, personal exemptions and other
similar adjustments]; and
M = the highest marginal rate of Medicare tax applicable
to Z under the Code for the year in question [1.45%].
In this example, the amount of tax indemnification payment due to Z under
section 23 of the Agreement would be $79,643 [.2 x $398,216] divided by 0.348126
[1 - (.368874 + .0685 + .2 + .0145)], or $228,777. Such amount would be payable
in addition to the other amounts payable under the Agreement in order to put Z
in approximately the same after-tax position that Z would have been in if there
were no excise tax imposed under sections 280G and 4999 of the Code. The tax
indemnification to Z of $228,777 would in turn be a parachute payment subject to
excise tax under sections 280G and 4999. Accordingly, Z's actual excess
parachute payment would be $626,993 [$485,216 - $87,000) + $228,777)] resulting
in an excise tax of $125,399 [$626,993 x 20%]. The difference between the
indemnification. payment and the excise tax [$103,378] is an amount equal to the
sum of the income and other applicable taxes due on the indemnification payment
[($228,777 x .368874) + ($228,777 x .0685) + ($228,777 x .0145)], confirming
that the amount of the tax indemnification payment is sufficient to satisfy all
of Z's tax liability resulting from the excess parachute payment.
JSB FINANCIAL, INC.
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT ("Agreement") is made and entered
into as of June 22, 1999 by and between JSB FINANCIAL, INC., a business
corporation organized and operating under the laws of the State of Delaware and
having its principal office at 303 Merrick Road, Lynbrook, New York 11563
("Company"), and Laurel M. Romito, an individual residing at (address omitted)
("Executive"). Any reference to the "Bank" in this Agreement shall mean Jamaica
Savings Bank FSB and any successor thereto.
W I T N E S S E T H :
WHEREAS, the Executive is currently serving as Vice President
of the Company, and the Company wishes to assure itself of the services of the
Executive for the period provided in this Agreement; and
WHEREAS, the Executive is willing to serve in the employ of
the Company on the terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the premises and the
mutual covenants and conditions hereinafter set forth, the Company and the
Executive hereby agree as follows:
1. POSITION AND RESPONSIBILITIES.
During the period of her employment hereunder, the Executive
agrees to serve as Vice President of the Company. The Executive shall render
administrative and management services to the Company such as are customarily
performed by persons situated in a similar executive capacity and shall perform
such other duties not inconsistent with her title and office as may be assigned
to her by or under the authority of the Board of Directors of the Company (the
"Board"). The Executive shall have such authority as is necessary or appropriate
to carry out her assigned duties. Failure to re-elect the Executive as Vice
President of the Company (or a more senior position) without the consent of the
Executive shall constitute a breach of this Agreement.
2. TERMS.
(a) The period of the Executive's employment under this
Agreement shall be deemed to have commenced as of the date first above written
(the "Effective Date") and shall continue for a period of 36 full calendar
months thereafter. Commencing with the Effective Date, the term of this
Agreement shall be extended for one additional day each day until such time as
the Board or the Executive elects not to extend the term of the Agreement
further by giving written notice to the other party in accordance with Section
10, in which case the term of this Agreement shall become fixed and shall end on
the third anniversary of the date of such written notice. For purposes of this
Agreement, the term "Employment Period" shall mean the term of this Agreement
plus such extensions as are provided herein.
(b) During the period of her employment hereunder, except for
periods of absence occasioned by illness, disability, holidays, reasonable
vacation periods and reasonable leaves of absence, the Executive shall devote
substantially all of her business time, attention, skill and efforts to the
faithful performance of her duties hereunder including (i) service as Vice
President of the Company, and, if duly elected, a Director of the Company, (ii)
performance of such duties not inconsistent with her title and office as may be
assigned to her by or under the authority of the Board or a more senior
executive officer, and (iii) such other activities and services related to the
organization, operation and management of the Company. During the Employment
Period it shall not be a violation of this Agreement for the Executive to (A)
serve on corporate, civic, industry or charitable boards or committees, (B)
deliver lectures, fulfill speaking engagements or teach at educational
institutions and (C) manage personal investments, so long as such activities do
not significantly interfere with the performance of the Executive's
responsibilities as an employee of the Company in accordance with this
Agreement. It is expressly understood and agreed that to the extent that any
such activities have been conducted by the Executive prior to the Effective
Date, the continued conduct of such activities (or the conduct of activities
similar in nature and scope thereto) subsequent to the Effective Date shall not
thereafter be deemed to interfere with the performance of the Executive's
responsibilities to the Company. It is also expressly agreed that the Executive
may conduct activities subsequent to the Effective Date that are generally
accepted for an executive in her position, regardless of whether conducted by
the Executive prior to the Effective Date.
(c) Notwithstanding anything herein contained to the contrary:
(i) the Executive's employment with the Company may be terminated by the Company
or the Executive during the term of this Agreement, subject to the terms and
conditions of this Agreement; and (ii) nothing in this Agreement shall mandate
or prohibit a continuation of the Executive's employment following the
expiration of the term of this Agreement upon such terms and conditions as the
Board and the Executive may mutually agree.
(d) Upon the termination of the Executive's employment with
the Company, the daily extensions provided pursuant to Section 2(a) shall cease
(if such extensions have not previously ceased), and, if such termination is
under circumstances described in Section 4(a) or Section 5(b), the term
"Unexpired Employment Period" shall mean the period of time commencing from the
date of such termination and ending on the last day of the Employment Period
computed with reference to all extensions prior to such termination.
(e) In the event that the Executive's duties and
responsibilities with respect to the Bank are temporarily or permanently
terminated pursuant to Section 9 of the Employment Agreement dated June 22,
1999, as it may be amended from time to time, between the Executive and the Bank
("Bank Agreement") and the course of conduct upon which such termination is
based would not constitute grounds for Termination for Cause under Section 9,
then the Executive shall, to the extent practicable, assume such duties and
responsibilities formerly performed at the Bank as part of her duties and
responsibilities as Vice President of the Company. Nothing in this provision
shall be interpreted as restricting the Company's right to remove the Executive
for Cause in accordance with Section 9.
3. COMPENSATION AND REIMBURSEMENT.
(a) The compensation specified under this Agreement shall
constitute the salary and benefits paid for the duties described in Section 1.
The Company shall pay the Executive as compensation a salary at an annual rate
of not less than (salary omitted) per year or such higher rate as may be
prescribed by or under the authority of the Board ("Base Salary"). The Base
Salary payable under this Section 3 shall be paid in approximately equal
installments in accordance with the Company's customary payroll practices.
During the period of this Agreement, the Executive's Base Salary shall be
reviewed at least annually; the first such review will be made no later than one
year from the date of this Agreement. Such review shall be conducted by a
Committee designated by the Board, and the Board may increase the Executive's
Base Salary, which increased amount shall be considered the Executive's "Base
Salary" for purposes of this Agreement. In no event shall the Executive's annual
rate of Base Salary under this Agreement in effect at a particular time be
reduced without her prior written consent. In addition to the Base Salary
provided in this Section 3(a), the Company shall provide the Executive at no
cost to the Executive with all such other benefits as are provided uniformly to
permanent full-time employees of the Bank.
(b) The Company will provide the Executive with employee
benefit plans, arrangements and perquisites substantially equivalent to those in
which the Executive was participating or otherwise deriving benefit from
immediately prior to the beginning of the term of this Agreement, and the
Company will not, without the Executive's prior written consent, make any
changes in such plans, arrangements or perquisites which would adversely affect
the Executive's rights or benefits thereunder. Without limiting the generality
of the foregoing provisions of this Subsection (b), the Executive will be
entitled to participate in or receive benefits under any employee benefit plans
with respect to which the Executive satisfies the eligibility requirements,
including, but not limited to, the Retirement Plan of Jamaica Savings Bank FSB
("RP"), the Incentive Savings Plan of Jamaica Savings Bank FSB ("ISP"), the
Jamaica Savings Bank FSB Employee Stock Ownership Plan ("ESOP"), the Benefit
Restoration Plan of Jamaica Savings Bank FSB ("BRP"), the JSB Financial, Inc.
1990 Stock Option Plan, the JSB Financial, Inc. 1996 Stock Option Plan,
retirement plans, supplemental retirement plans, pension plans, profit-sharing
plans, group life, health (including hospitalization, medical and major
medical), dental, accidental death and dismemberment, travel accident and
short-term disability insurance plans, or any other employee benefit plan or
arrangement made available by the Company in the future to its senior executives
and key management employees, subject to and on a basis consistent with the
terms, conditions and overall administration of such plans and arrangements. The
Executive will be entitled to incentive compensation and bonuses as provided in
any plan of the Company in which the Executive is eligible to participate.
Nothing paid to the Executive under any such plan or arrangement will be deemed
to be in lieu of other compensation to which the Executive is entitled under
this Agreement.
(c) The Executive's principal place of employment shall be at
the Company's executive offices at the address first above written, or at such
other location in New York City or in Nassau County or Suffolk County at which
the Company shall maintain its principal executive offices, or at such other
location as the Board and the Executive may mutually agree upon. The Company
shall provide the Executive, at her principal place of employment with support
services and facilities suitable to her position with the Company and necessary
or appropriate in connection with the performance of her assigned duties under
this Agreement. The Company shall reimburse the Executive for her ordinary and
necessary business expenses, including, without limitation, fees for memberships
in such clubs and organizations as the Executive and the Board shall mutually
agree are necessary and appropriate for business purposes, and travel and
entertainment expenses, incurred in connection with the performance of her
duties under this Agreement, upon presentation to the Company of an itemized
account of such expenses in such form as the Company may reasonably require.
(d) In the event that the Executive assumes additional duties
and responsibilities pursuant to Section 2(e) by reason of one of the
circumstances contained in Section 2(e), and the Executive receives or will
receive less than the full amount of compensation and benefits formerly entitled
to her under the Bank Agreement, the Company shall assume the obligation to
provide the Executive with her compensation and benefits in accordance with the
Bank Agreement less any compensation and benefits received from the Bank,
subject to the terms and conditions of this Agreement including the Termination
for Cause provisions in Section 9.
4. PAYMENTS TO THE EXECUTIVE UPON AN EVENT OF TERMINATION.
The provisions of this Section shall in all respects be
subject to the terms and conditions stated in Sections 9 and 29.
(a) Upon the occurrence of an Event of Termination (as herein
defined) during the Executive's term of employment under this Agreement, the
provisions of this Section shall apply. As used in this Agreement, an "Event of
Termination" shall mean and include any one or more of the following: (i) the
termination by the Bank or the Company of the Executive's full-time employment
hereunder for any reason other than: following a Change in Control, as defined
in Section 5; for Disability, as defined in Section 6; for Retirement, as
defined in Section 8; for Cause, as defined in Section 9; or upon the
Executive's death; or (ii) unless consented to by the Executive, the Executive's
voluntary resignation from the Company's employ, upon any: (A) failure to elect
or re-elect or to appoint or re-appoint the Executive as Vice President of the
Company, (B) material adverse change in the Executive's function, duties, or
responsibilities, which change would cause the Executive's position to become
one of lesser responsibility, importance, or scope from the position and
attributes thereof described in Section 1, above (and any such material change
shall be deemed a continuing breach of this Agreement), (C) relocation of the
Executive's principal place of employment by more than 30 miles from its
location at the Effective Date of this Agreement, or a material reduction in the
benefits and perquisites to the Executive from those being provided as of the
Effective Date of this Agreement, (D) liquidation or dissolution of the Bank or
Company, or (E) material breach of this Agreement by the Company. Upon the
occurrence of any event described in clauses (A), (B), (C), (D) or (E), above,
the Executive shall have the right to elect to terminate her employment under
this Agreement by resignation upon written notice pursuant to Section 10 given
within a reasonable period of time not to exceed, except in case of a continuing
breach, four calendar months after the event giving rise to said right to elect.
(b) Upon the occurrence of an Event of Termination as set
forth in Section 4(a), on the Date of Termination, as defined in Section 10, the
Company shall be obligated to pay, or to provide, the Executive, or, in the
event of her subsequent death, to her surviving spouse or such other beneficiary
or beneficiaries as the Executive may designate in writing, or if neither her
estate, as severance pay or liquidated damages, or both, the benefits provided
below and a payment equal to the sum of the payments set forth below:
(i) payment of the sum of (A) the Executive's annual Base Salary
through the Date of Termination to the extent not theretofore paid and (B)
any compensation previously deferred by the Executive (together with any
accrued interest or earnings thereon) and any accrued vacation pay, in each
case to the extent not theretofore paid (the sum of the amounts described
in clauses (A) and (B) shall be hereinafter referred to as the "Accrued
Obligations");
(ii) the benefits, if any, to which the Executive is entitled as a
former employee under the Bank's or Company's employee benefit plans and
programs and compensation plans and programs;
(iii) continued group life, health (including hospitalization, medical
and major medical), dental, accidental death and dismemberment, travel
accident and short-term disability insurance benefits as provided by the
Bank or the Company, in addition to that provided pursuant to Section
4(b)(ii), if and to the extent necessary to provide for the Executive, for
the remaining Unexpired Employment Period, coverage equivalent to the
coverage to which she would have been entitled if she had continued working
for the Company during the remaining Unexpired Employment Period at the
highest annual rate of salary achieved during the Employment Period;
provided, however, if the Executive has obtained group life, health
(including hospitalization, medical and major medical), dental, accidental
death and dismemberment, travel accident and/or short-term disability
insurance benefits coverage from another source, the Executive may, as of
any month, make an irrevocable election to forego the continued coverage
that would otherwise be provided hereunder for the remaining Unexpired
Employment Period, or any portion thereof, in which case the Bank or the
Company, upon receipt of the Executive's irrevocable election, shall pay
the Executive an amount equal to the estimated cost to the Bank or the
Company of providing such coverage during such period;
(iv) if and to the extent not already provided under Sections 4(b)(ii)
and 4(b)(iii), continued health (including hospitalization, medical and
major medical) and dental insurance benefits to the extent maintained by
the Bank or the Company for its employees or retirees during the remainder
of the Executive's lifetime and the lifetime of her spouse, if any, for so
long as the Executive continues to reimburse the Bank for the cost of such
continued coverage;
(v) a lump sum payment, as liquidated damages, in an amount equal to
the Base Salary and the bonus or other incentive compensation that the
Executive would have earned if the Executive had continued working for the
Bank and the Company during the remaining Unexpired Employment Period (A)
at the highest annual rate of Base Salary and bonus or other incentive
compensation achieved by the Executive during the three-year period
immediately preceding the Executive's Date of Termination, except that (B)
in the case of a Change in Control, such lump sum shall be determined based
upon the Base Salary and the bonus or other incentive compensation,
respectively, that the Executive would have been paid during the remaining
Unexpired Employment Period including the assumed increases referred to in
clauses (i) and (ii) of Section 5(b);
(vi) a lump sum payment in an amount equal to the excess, if any, of:
(A) the present value of the pension benefits to which the Executive would
be entitled under the RP and the BRP (and under any other qualified and
non-qualified defined benefit plans maintained by the Company or the Bank
covering the Executive) as if she had continued working for the Company
during the remaining Unexpired Employment Period (x) at the highest annual
rate of Base Salary and, if applicable, the highest bonus or other
incentive compensation, respectively, achieved by the Executive during the
three-year period immediately preceding the Executive's Date of
Termination, except that (y) in the case of a Change in Control, such lump
sum shall be determined based upon the Base Salary and, if applicable, the
bonus or other incentive compensation, respectively, that the Executive
would have been paid during the remaining Unexpired Employment Period
including the assumed increases referred to in clauses (i) and (ii) of
Section 5(b), and (z) in the case of a Change in Control, as if three
additional years are added to the Executive's age and years of creditable
service under the RP and the BRP and after taking into account any other
compensation required to be taken into account under the RP and the BRP
(and any other qualified and non-qualified defined benefit plans of the
Company or the Bank, as applicable), over (B) the present value of the
pension benefits to which she is actually entitled under the RP and the BRP
(and any other qualified and non-qualified defined benefit plans) as of her
Date of Termination, where such present values are to be determined using a
discount rate of 6% and the mortality tables prescribed under section 72 of
the Internal Revenue Code of 1986, as amended ("Code"); and
(vii) a lump sum payment in an amount equal to the contributions that
would have been made by the Company or the Bank on the Executive's behalf
to the ISP and the ESOP and to the BRP with respect to such ISP and ESOP
contributions (and to any other qualified and non-qualified defined
contribution plans maintained by the Company or the Bank covering the
Executive) as if the Executive had continued working for the Bank and the
Company during the remaining Unexpired Employment Period making the maximum
amount of employee contributions required or permitted, if any, under such
plan or plans and earning (A) the highest annual rate of Base Salary and,
if applicable, the highest bonus or other incentive compensation,
respectively, achieved by the Executive during the three-year period
immediately preceding the Executive's Date of Termination, except that (B)
in the case of a Change in Control, such lump sum shall be determined based
upon the Base Salary and, if applicable, the bonus or other incentive
compensation, respectively, that the Executive would have been paid during
the remaining Unexpired Employment Period including the assumed increases
referred to in clauses (i) and (ii) of Section 5(b).
The benefits to be provided under, and the amounts payable pursuant to, this
Section 4 shall be provided and be payable without regard to proof of damages
and without regard to the Executive's efforts, if any, to mitigate damages. The
Company and the Executive hereby stipulate that the damages which may be
incurred by the Executive following any such termination of employment are not
capable of accurate measurement as of the date first above written and that such
liquidated damages constitute reasonable damages under the circumstances.
(c) Payments to the Executive under Section 4 shall be made
within ten days of the Executive's Date of Termination.
(d) In the event payments are made under Section 4 or Section
5, the Executive may select an individual or firm to provide her with reasonable
outplacement counseling services, and the Company shall pay for the costs of
such services; provided, however, that the cost to the Company of such
outplacement counseling services shall not exceed 25% of the Executive's Base
Salary.
5. CHANGE IN CONTROL.
(a) No benefit shall be payable under this Section 5 unless
there shall have been a Change in Control of the Bank or Company, as set forth
below. For purposes of this Agreement, a "Change in Control" of the Bank or
Company shall mean any one or more of the following:
(i) An event of a nature that would be required to be reported in
response to Item l(a) of the current report on Form 8-K, as in effect on
the date hereof, pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934, as amended (the "Exchange Act");
(ii) An event of a nature that results in a Change in Control of the
Bank or the Company within the meaning of the Home Owners' Loan Act of
1933, as amended, or the Change in Bank Control Act of 1978, as amended, as
applicable, and the Rules and Regulations promulgated by the Office of
Thrift Supervision ("OTS") or its predecessor agency, the Federal Deposit
Insurance Corporation ("FDIC") or the Board of Governors of the Federal
Reserve System ("FRB"), as the case may be, as in effect on the date
hereof, but excluding any such Change in Control resulting from the
purchase of securities by the Company or the Company's or the Bank's
tax-qualified employee benefit plans and trusts;
(iii) If any "person" (as the term is used in Sections 13(d) and 14(d)
of the Exchange Act) is or becomes the "beneficial owner" (as defined in
Rule 13d-3 under the Exchange Act), directly or indirectly, of securities
of the Bank or the Company representing 20% or more of the Bank's or the
Company's outstanding securities except for any securities of the Bank
purchased by the Company in connection with the initial conversion of the
Bank from mutual to stock form (the "Conversion") and any securities
purchased by the Company or the Company's or the Bank's tax-qualified
employee benefit plans and trusts;
(iv) If the individuals who constitute the Board on the date hereof
(the "Incumbent Board") cease for any reason to constitute at least a
majority of the Board, provided, however, that any person becoming a
director subsequent to the date hereof whose election or nomination for
election by the Company's stockholders, was approved by a vote of at least
three-quarters of the directors then comprising the Incumbent Board shall
be considered as though she were a member of the Incumbent Board, but
excluding, for this purpose, any such person whose initial assumption of
office occurs as a result of an actual or threatened election contest with
respect to the election or removal of directors or other actual or
threatened solicitation of proxies or consents by or on behalf of a person
other than the Board;
(v) A merger, consolidation, reorganization, sale of all or
substantially all the assets of the Bank or the Company or similar
transaction occurs in which the Bank or Company is not the resulting
entity, other than a transaction following which (A) at least 51% of the
equity ownership interests of the entity resulting from such transaction
are beneficially owned (within the meaning of Rule 13d-3 promulgated under
Exchange Act) in substantially the same relative proportions by persons
who, immediately prior to such transaction, beneficially owned (within the
meaning of Rule 13d-3 promulgated under the Exchange Act) at least 51% of
the outstanding equity ownership interests in the Bank or Company and (B)
at least 51% of the securities entitled to vote generally in the election
of directors of the entity resulting from such transaction are beneficially
owned (within the meaning of Rule 13d-3 promulgated under the Exchange Act)
in substantially the same relative proportions by persons who, immediately
prior to such transaction, beneficially owned (within the meaning of Rule
13d-3 promulgated under the Exchange Act) at least 51% of the securities
entitled to vote generally in the election of directors of the Bank or
Company;
(vi) A proxy statement shall be distributed soliciting proxies from
stockholders of the Company, by someone other than the current management
of the Company, seeking stockholder approval of a plan of reorganization,
merger or consolidation of the Company or Bank or similar transaction with
one or more corporations as a result of which the outstanding shares of the
class of securities then subject to such plan or transaction are exchanged
for or converted into cash or property or securities not issued by the Bank
or the Company; or
(vii) A tender offer is completed for 20% or more of the voting
securities of the Bank or Company then outstanding.
The "Change in Control Date" shall mean the date during the Employment Period on
which a Change in Control occurs. Anything in this Agreement to the contrary
notwithstanding, if the Executive's employment with the Company is terminated
and if it is reasonably demonstrated by the Executive that such termination of
employment (1) was at the request of a third party who has taken steps
reasonably calculated to effect a Change in Control or (2) otherwise arose in
connection with or anticipation of a Change in Control, then for all purposes of
this Agreement the "Change in Control Date" shall mean the date immediately
prior to the date of such termination of employment.
(b) If any of the events described in Section 5(a)
constituting a Change in Control have occurred or the Board has determined that
a Change in Control has occurred, the Executive shall be entitled to the
payments and the benefits provided below on the Change in Control Date. The
amounts payable and the benefits to be provided under this Section 5(b) to the
Executive shall consist of the payments and benefits that would be due to the
Executive and the Executive's family under Section 4(b) as if an Event of
Termination under Section 4(a) had occurred on the Change in Control Date and
that for purposes of this Section 5(b), the term Unexpired Employment Period
shall mean three years from the Change in Control Date. For purposes of
determining the payments and benefits due under this Section 5(b), when
calculating the payments due and benefits to be provided for the Unexpired
Employment Period, it shall be assumed that for each year of the remaining term
of this Agreement, the Executive would have received (i) an annual increase in
Base Salary equal to the average percentage increase in Base Salary received by
the Executive for the three-year period ending with the earlier of (x) the year
in which the Change in Control Date occurs or (y) the year during which a
definitive agreement, if any, governing the Change in Control is executed, with
the first such increase effective as of the January 1st next following such
three-year period and the second and third such increases effective as of the
next two anniversaries of such January 1st, (ii) a bonus or other incentive
compensation equal to the highest percentage rate of bonus or incentive
compensation paid to the Executive during the three-year period referred to in
clause (i) of this Section 5(b) times the Base Salary that the Executive would
have been paid during the remaining term of this Agreement including the assumed
increases referred to in clause (i) of this Section 5(b), (iii) the maximum
contributions that could be made by or on behalf of the Executive with respect
to any employee benefit plans and programs maintained by the Company and the
Bank based upon the Base Salary and, if applicable, the bonus or other incentive
compensation, respectively, that the Executive would have been paid during the
remaining term of this Agreement including the assumed increases referred to in
clauses (i) and (ii) of this Section 5(b), and (iv) the present value of the
pension benefits to which the Executive is entitled under Section 4(b)(vi) with
respect to the RP and the BRP (and under any other qualified and non-qualified
defined benefit plans maintained by the Bank or the Company covering the
Executive) determined as if she had continued working for the Bank during the
remaining Unexpired Employment Period and based upon the Base Salary and, if
applicable, the bonus or other incentive compensation, respectively, that the
Executive would have been paid during the remaining term of this Agreement
including the assumed increases referred to in clauses (i) and (ii) of this
Section 5(b). The benefits to be provided under, and the amounts payable
pursuant to, this Section 5 shall be provided and be payable without regard to
proof of damages and without regard to the Executive's efforts, if any, to
mitigate damages. The Company and the Executive hereby stipulate that the
damages which may be incurred by the Executive following any Change in Control
are not capable of accurate measurement as of the date first above written and
that such liquidated damages constitute reasonable damages under the
circumstances.
(c) Payments to the Executive under Section 5(b) shall be made
on the Change in Control Date. Such payments shall be made regardless of whether
the Executive's employment terminates.
6. TERMINATION FOR DISABILITY.
(a) In the event of Termination for Disability, the Executive
shall receive the benefits provided in Section 6(b); provided, however, that the
benefits provided under Section 6(b) shall not be deemed to be in lieu of the
benefits she is otherwise entitled as a former employee under the Bank or
Company's employee plans and programs. For purposes of this Agreement, the
Executive may be terminated for disability only if (i) the Executive shall have
been absent from her duties with the Company on a full-time basis for at least
six consecutive months, or (ii) a majority of the members of the Board acting in
good faith determine that, based upon competent and independent medical evidence
presented by a physician or physicians agreed upon by the parties, the
Executive's physical or mental condition is such that she is totally and
permanently incapable of engaging in any substantial gainful employment based
upon her education, training and experience; provided, however, that on and
after the earliest date on which a Change in Control of the Bank or Company as
defined in Section 5 occurs, such a determination shall require the affirmative
vote of at least three-fourths of the members of the Board acting in good faith
and such vote shall not be made prior to the expiration of a 60-day period
following the date on which the Board shall, by written notice to the Executive,
furnish her a statement of its grounds for proposing to make such determination,
during which period the Executive shall be afforded a reasonable opportunity to
make oral and written presentations to the members of the Board, and to be
represented by her legal counsel at such presentations, to refute the grounds
for the proposed determination.
(b) The Company will pay the Executive as Disability pay, a
bi-weekly payment equal to 100% of the Executive's bi-weekly annual rate of Base
Salary in effect on the date of the Executive's Termination for Disability. In
addition, the Company will cause to be continued insurance coverage, including
group life, health (including hospitalization, medical and major medical),
dental, accidental death and dismemberment, travel accident and short-term
disability coverage substantially identical to the coverage maintained by the
Bank or the Company for the Executive prior to her Termination for Disability.
The Disability pay and coverages shall commence on the effective date of the
Executive's termination and shall cease upon the earliest to occur of: (i) the
date the Executive returns to the full-time employment of the Company, in the
same capacity as she was employed prior to her Termination for Disability and
pursuant to an employment agreement between the Executive and the Company; (ii)
the Executive's full-time employment by another employer; (iii) the Executive's
attaining the normal age of retirement or receiving benefits under the RP or
other defined benefit pension plan of the Bank or the Company; (iv) the
Executive's death; (v) the Executive's eligibility to collect payments under the
disability provision of the RP or other defined benefit pension plan of the Bank
or the Company; or (vi) the expiration of the term of this Agreement.
(c) Notwithstanding the foregoing, there will be no reduction
in the compensation otherwise payable to the Executive during any period during
which the Executive is incapable of performing her duties hereunder by reason of
temporary disability.
7. TERMINATION UPON DEATH.
The Executive's employment shall terminate automatically upon
the Executive's death during the Employment Period. In such event, the Executive
and the Executive's legal representatives shall be entitled to the following:
(i) payment of the Executive's "Accrued Obligations;"
(ii) the continuation of all benefits to the Executive's family and
dependents that would have been provided if the Executive had been entitled
to the benefits under Section 4(b)(ii), (iii) and (iv); and
(iii) the timely payment of any other amounts or benefits required to
be paid or provided or which the Executive is eligible to receive under any
plan, program, policy or practice or contract or agreement of the Company
and its affiliated companies (all such other amounts and benefits shall be
hereinafter referred to as the "Other Benefits");
provided, however, that if the Executive dies while in the employment of the
Company, the amount of life insurance provided to the Executive by the Company
shall not be less than the lesser of $200,000 or three times the Executive's
then annual Base Salary. Accrued Obligations shall be paid to the Executive's
estate or beneficiary, as applicable, in a lump sum cash payment within ten days
of the Date of Termination. With respect to the provision of Other Benefits
after the Change of Control Date, the term Other Benefits as utilized in this
Section 7 shall include, without limitation, that the Executive's estate and/or
beneficiaries shall be entitled to receive, benefits at least equal to the most
favorable benefits provided by the Company and affiliated companies to the
estates and beneficiaries of peer executives of the Company and such affiliates
companies under such plans, programs, practices and policies relating to death
benefits, if any, as in effect with respect to other peer executives and their
beneficiaries at any time during the 120-day period immediately preceding the
Change in Control Date.
8. TERMINATION UPON RETIREMENT.
Termination by the Company of the Executive based on
"Retirement" shall mean termination in accordance with the Company's or the
Bank's retirement policy or in accordance with any retirement arrangement
established with the Executive's consent with respect to him. Upon termination
of the Executive upon Retirement, the Executive shall be entitled to all
benefits under the RP and any other retirement plan of the Bank or the Company
and other plans to which the Executive is a party, and the Executive shall be
entitled to the benefits, if any, that would be payable to her as a former
employee under the Bank's or the Company's employee benefit plans and programs
and compensation plans and programs.
9. TERMINATION FOR CAUSE.
The terms "Termination for Cause" or "Cause" shall mean
termination because of the Executive's personal dishonesty, willful misconduct,
any breach of fiduciary duty involving personal profit, intentional failure to
perform stated duties, conviction of a felony with respect to the Bank or the
Company or any material breach of this Agreement. For purposes of this Section,
no act, or the failure to act, on the Executive's part shall be "willful" unless
done, or omitted to be done, in bad faith and without reasonable belief that the
action or omission was in the best interest of the Company or its affiliates.
Any act, or failure to act, based upon authority given pursuant to a resolution
duly adopted by the Board or based upon the written advice of counsel for the
Company shall be conclusively presumed to be done, or omitted to be done, by the
Executive in good faith and in the best interests of the Company.
Notwithstanding the foregoing, the Executive shall not be deemed to have been
terminated for Cause unless and until there shall have been delivered to her a
Notice of Termination which shall include a copy of a resolution duly adopted by
the affirmative vote of not less than three-fourths of the members of the Board
at a meeting of the Board called and held for that purpose (after reasonable
notice to the Executive and an opportunity for him, together with counsel, to be
heard before the Board), finding that in the good faith opinion of the Board,
the Executive was guilty of conduct justifying Termination for Cause and
specifying the particulars thereof in detail. The Executive shall not have the
right to receive compensation or other benefits for any period after Termination
for Cause.
10. NOTICE.
(a) Any purported termination by the Company or by the
Executive shall be communicated by a Notice of Termination to the other party
hereto. For purposes of this Agreement, a "Notice of Termination" shall mean a
written notice which shall indicate the specific termination provision in this
Agreement relied upon and shall set forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of the Executive's
employment under the provision so indicated.
(b) Subject to Section 10(c), "Date of Termination" shall mean
(A) if the Executive's employment is terminated for Disability, 30 days after a
Notice of Termination is given (provided that she shall not have returned to the
performance of her duties on a full-time basis during such 30-day period), and
(B) if her employment is terminated for any other reason, the date specified in
the Notice of Termination (which, in the case of a Termination for Cause, shall
be immediate).
(c) If, within 30 days after any Notice of Termination is
given, the party receiving such Notice of Termination notifies the other party
that a dispute exists concerning the termination, then, except upon the
occurrence of a Change in Control and voluntary termination by the Executive in
which case the Date of Termination shall be the date specified in the Notice,
the Date of Termination shall be the date on which the dispute is finally
determined, either by mutual written agreement of the parties, by a binding
arbitration award, or by a final judgment, order or decree of a court of
competent jurisdiction (the time for appeal therefrom having expired and no
appeal having been perfected) and provided further that the Date of Termination
shall be extended by a notice of dispute only if such notice is given in good
faith and the party giving such notice pursues the resolution of such dispute
with reasonable diligence. Notwithstanding the pendency of any such dispute, the
Company will continue to pay the Executive her full compensation in effect when
the notice giving rise to the dispute was given (including, but not limited to,
Base Salary) and continue her as a participant in all compensation, benefit and
insurance plans in which she was participating when the notice of dispute was
given, until the dispute is finally resolved in accordance with this Agreement.
Amounts paid under this Section are in addition to all other amounts due under
this Agreement and shall not be offset against or reduce any other amounts due
under this Agreement.
(d) The Company may terminate the Executive's employment at
any time, but any termination by the Company, other than Termination for Cause,
shall not prejudice the Executive's right to compensation or other benefits
under this Agreement or under any other benefit or compensation plans or
programs maintained by the Bank or the Company from time to time. The Executive
shall not have the right to receive compensation or other benefits for any
period after a Termination for Cause as defined in Section 9 hereinabove.
(e) Any communication to a party required or permitted under
this Agreement, including any notice, direction, designation, consent,
instruction, objection or waiver, shall be in writing and shall be deemed to
have been given at such time as it is delivered personally, or five days after
mailing if mailed, postage prepaid, by registered or certified mail, return
receipt requested, addressed to such party at the address listed below or at
such other address as one such party may by written notice specify to the other
party, as follows. If to the Executive, (address omitted); if to the Company,
JSB Financial, Inc., 303 Merrick Road, Lynbrook, New York 11563, Attention:
President, with a copy to Thacher Proffitt & Wood, Two World Trade Center, New
York, New York 10048, Attention: Douglas J. McClintock, Esq.
11. POST-TERMINATION OBLIGATIONS.
(a) All payments and benefits to the Executive under this
Agreement shall be subject to the Executive's compliance with paragraph (b) of
this Section 11 during the term of this Agreement and for one full year after
the expiration or termination hereof.
(b) The Executive shall, upon reasonable notice, furnish such
information and assistance to the Company as may reasonably be required by the
Company in connection with any litigation in which it or any of its subsidiaries
or affiliates is, or may become, a party; provided, that the Company reimburses
the Executive for the reasonable value of her time in connection therewith and
for any out-of-pocket costs attributable thereto.
12. COVENANT NOT TO COMPETE.
The Executive hereby covenants and agrees that for a period of
one year following her Date of Termination, if such termination occurs prior to
the end of the term of the Agreement, she shall not, without the written consent
of the Board, become an officer, employee, consultant, director or trustee of
any savings bank, savings and loan association, savings and loan holding
company, bank or bank holding company if such position (a) entails working in
(or providing services in) New York City, Nassau or Suffolk counties or (b)
entails working in (or providing services in) any other county that is both (i)
within the Bank's primary trade (or operating) area at the time in question,
which shall be determined by reference to the Bank's business plan as in effect
from time to time, and (ii) in which the Bank engages in material or substantial
deposit-taking functions or lending activities at such time; provided, however,
that this Section 12 shall not apply if the Executive's employment is terminated
for the reasons set forth in any of Sections 4, 5, 6 or 8.
13. SOURCE OF PAYMENTS.
All payments provided in this Agreement shall be timely paid
in cash or check from the general funds of the Company.
14. EFFECT ON PRIOR AGREEMENTS.
This Agreement contains the entire understanding between the
parties hereto and supersedes any prior employment agreement between the Company
or any predecessor of the Company and the Executive, except that this Agreement
shall not affect or operate to reduce any benefit or compensation inuring to the
Executive of a kind elsewhere provided. No provisions of this Agreement shall be
interpreted to mean that the Executive is subject to receiving fewer benefits
than those available to her without reference to this Agreement.
15. EFFECT OF ACTION UNDER BANK AGREEMENT.
Notwithstanding any provision herein to the contrary, to the
extent that full compensation payments and benefits are paid to or received by
the Executive under the Bank Agreement, such compensation payments and benefits
paid by the Bank will be deemed to satisfy the corresponding obligations of the
Company under this Agreement.
16. NO ATTACHMENT.
Except as required by law, no right to receive payments under
this Agreement shall be subject to anticipation, commutation, alienation, sale,
assignment, encumbrance, charge, pledge, or hypothecation, or to execution,
attachment, levy, or similar process or assignment by operation of law, and any
attempt, voluntary or involuntary, to affect any such action shall be null,
void, and of no effect.
17. MODIFICATION AND WAIVER.
(a) This Agreement may not be modified or amended except by an
instrument in writing signed by the parties hereto.
(b) No term or condition of this Agreement shall be deemed to
have been waived, nor shall there be any estoppel against the enforcement of any
provision of this Agreement, except by written instrument of the party charged
with such waiver or estoppel. No such written waiver shall be deemed a
continuing waiver unless specifically stated therein, and each such waiver shall
operate only as to the specific term or condition waived and shall not
constitute a waiver of such term or condition for the future as to any act other
than that specifically waived.
18. SUCCESSOR AND ASSIGNS.
This Agreement will inure to the benefit of and be binding
upon the Executive, her legal representatives and testate or intestate
distributees, and the Company, its successors and assigns, including any
successor by purchase, merger, consolidation or otherwise or a statutory
receiver or any other person or firm or corporation to which all or
substantially all of the assets and business of the Company may be sold or
otherwise transferred. Any such successor of the Company shall be deemed to have
assumed this Agreement and to have become obligated hereunder to the same extent
as the Company and the Executive's obligations hereunder shall continue in favor
of such successor.
19. SEVERABILITY.
If, for any reason, any provision of this Agreement, or any
part of any provision, is held invalid, such invalidity shall not affect any
other provision of this Agreement or any part of such provision not held so
invalid, and each such other provision and part thereof shall to the full extent
consistent with law continue in full force and effect.
20. HEADINGS FOR REFERENCE ONLY.
The headings of Sections and paragraphs herein are included
solely for convenience of reference and shall not control the meaning or
interpretation of any of the provisions of this Agreement. Any reference in this
Agreement to a Section or Subsection shall refer to a Section or Subsection of
this Agreement, except as otherwise specified.
21. GOVERNING LAW.
This Agreement shall be governed by the laws of the State of
New York, without reference to conflicts of law principles.
22. INDEMNIFICATION AND ATTORNEYS' FEES.
(a) The Company shall indemnify, hold harmless and defend the
Executive against reasonable costs, including legal fees, incurred by her in
connection with her consultation with legal counsel or arising out of any
action, suit or proceeding in which she may be involved, as a result of her
efforts, in good faith, to defend or enforce the terms of this Agreement. The
Company agrees to pay all such costs as they are incurred by the Executive, to
the full extent permitted by law, and without regard to whether the Company
believes that it has a defense to any action, suit or proceeding by the
Executive or that it is not obligated for any payments under this Agreement.
(b) In the event any dispute or controversy arising under or
in connection with the Executive's termination is resolved in favor of the
Executive, whether by judgment, arbitration or settlement, the Executive shall
be entitled to the payment of all back-pay, including salary, bonuses and any
other cash compensation, fringe benefits and any compensation and benefits due
the Executive under this Agreement.
(c) The Company shall indemnify, hold harmless and defend the
Executive for any act taken or not taken, or any omission or failure to act, by
her in good faith while performing services for the Company or the Bank to the
same extent and upon the same terms and conditions as other similarly situated
officers and directors of the Company or the Bank. If and to the extent that the
Company or the Bank, maintains, at any time during the Employment Period, an
insurance policy covering the other officers and directors of the Company or the
Bank against lawsuits, the Company or the Bank shall use its best efforts to
cause the Executive to be covered under such policy upon the same terms and
conditions as other similarly situated officers and directors.
23. TAX INDEMNIFICATION.
(a) This Section 23 shall apply if 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 occurs within the meaning of section 280G
of the Code. If this Section 23 applies, then with respect to any taxable year
in which the Executive shall be liable for the payment of an excise tax under
section 4999 of the Code with respect to any payment in the nature of
compensation made by the Company, the Bank or any direct or indirect subsidiary
or affiliate of the Company to (or for the benefit of) the Executive, the
Company shall pay to the Executive an amount equal to X determined under the
following formula:
X = E x P
-------------------------------------------------
1 - [(FI x (1 - SLI)) + SLI + E + M]
where
E = the rate at which the excise tax is assessed under
section 4999 of the Code;
P = the amount with respect to which such excise tax is
assessed, determined without regard to this Section
23;
FI = the highest effective marginal rate of income tax
applicable to the Executive under the Code for the
taxable year in question (taking into account any
phase-out or loss of deductions, personal exemptions
and other similar adjustments);
SLI = the sum of the highest effective marginal rates of
income tax applicable to the Executive under all
applicable state and local laws for the taxable year
in question (taking into account any phase-out or
loss of deductions, personal exemptions and other
similar adjustments); and
M = the highest marginal rate of Medicare tax
applicable to the Executive under the Code for the
taxable year in question.
Attached as Appendix A to this Agreement is an example that illustrates
application of this Section 23. Any payment under this Section 23 shall be
adjusted so as to fully indemnify the Executive on an after-tax basis so that
the Executive would be in the same after-tax financial position in which she
would have been if no excise tax under section 4999 of the Code had been
imposed. With respect to any payment in the nature of compensation that is made
to (or for the benefit of) the Executive under the terms of this Agreement or
otherwise and on which an excise tax under section 4999 of the Code will be
assessed, the payment determined under this Section 23(a) shall be made to the
Executive on the earlier of (i) the date the Company, the Bank or any direct or
indirect subsidiary or affiliate of the Company is required to withhold such
tax, or (ii) the date the tax is required to be paid by the Executive.
(b) Notwithstanding anything in this Section 23 to the
contrary, in the event that the Executive's liability for the excise tax under
section 4999 of the Code for a taxable year is subsequently determined to be
different than the amount determined by the formula (X + P) x E, where X, P and
E have the meanings provided in Section 23(a), the Executive or the Company, as
the case may be, shall pay to the other party at the time that the amount of
such excise tax is finally determined, an appropriate amount, plus interest,
such that the payment made under Section 23(a), when increased by the amount of
the payment made to the Executive under this Section 23(b) by the Company, or
when reduced by the amount of the payment made to the Company under this Section
23(b) by the Executive, equals the amount that, it is finally determined, should
have properly been paid to the Executive under Section 23(a). The interest paid
under this Section 23(b) shall be determined at the rate provided under section
1274(b)(2)(B) of the Code. To confirm that the proper amount, if any, was paid
to the Executive under this Section 23, the Executive shall furnish to the
Company a copy of each tax return which reflects a liability for an excise tax
payment made by the Company, at least 20 days before the date on which such
return is required to be filed with the Internal Revenue Service.
24. NON-EXCLUSIVITY OF RIGHTS.
Except as otherwise provided herein, nothing in this Agreement
shall prevent or limit the Executive's continuing or future participation in any
plan, program, policy or practice provided by the Company or any of its
affiliated companies and for which the Executive may qualify, nor shall anything
herein limit or otherwise affect such rights as the Executive may have under any
contract or agreement with the Company or any of its affiliated companies.
Amounts which are vested benefits or which the Executive is otherwise entitled
to receive under any plan, policy, practice or program of or any contract or
agreement with the Company or any of its affiliated companies at or subsequent
to the Date of Termination shall be payable in accordance with such plan,
policy, practice or program or contract or agreement except as explicitly
modified by this Agreement. Notwithstanding the foregoing, in the event of a
termination of employment, the amounts provided in Section 4 or Section 5, as
applicable, shall be the Executive's sole remedy for any purported breach of
this Agreement by the Company.
25. MITIGATION; OTHER CLAIMS.
The Company's obligation to make the payments provided for in
this Agreement and otherwise to perform its obligations hereunder shall not be
affected by any set-off, counterclaim, recoupment, defense or other claim, right
or action which the Company may have against the Executive or others. In no
event shall the Executive be obligated to seek other employment or take any
other action by way of mitigation of the amounts payable to the Executive under
any of the provisions of this Agreement and such amounts shall not be reduced
whether or not the Executive obtains other employment.
26. CONFIDENTIAL INFORMATION.
The Executive shall hold in a fiduciary capacity for the
benefit of the Company all secret or confidential information, knowledge or data
relating to the Company or any of its affiliated companies, and their respective
businesses, which shall have been obtained by the Executive during the
Executive's employment by the Company or any of its affiliated companies and
which shall not be or become public knowledge (other than by acts by the
Executive or representatives of the Executive in violation of this Agreement).
After termination of the Executive's employment with the Company, the Executive
shall not, without the prior written consent of the Company or as may otherwise
be required by law or legal process, communicate or divulge any such
information, knowledge or data to anyone other than the Company and those
designated by it. For purposes of this Agreement, secret and confidential
information, knowledge or data relating to the Company or any of its affiliates,
and their respective business, shall not include any information that is public,
publicly available or available through trade association sources.
Notwithstanding any other provision of this Agreement to the contrary, the
Executive acknowledges and agrees that in the event of a violation or threatened
violation of any of the provisions of this Section 26, the Company shall have no
adequate remedy at law and shall therefore be entitled to enforce each such
provision by temporary or permanent injunction or mandatory relief obtained in
any court of competent jurisdiction without the necessity of proving damages or
posting any bond or other security, and without prejudice to any other remedies
that may be available at law or in equity.
27. ACCESS TO DOCUMENTS.
The Executive shall have the right to obtain copies of any
Company or Bank documents that the Executive reasonably believes, in good faith,
are necessary or appropriate in determining her entitlement to, and the amount
of, payments and benefits under this Agreement.
1. GUARANTEE.
The Company hereby agrees to guarantee the payment by the Bank of any
benefits and compensation to which the Executive is or may be entitled to under
the terms and conditions of the Bank Agreement.
1. REQUIRED REGULATORY PROVISIONS.
Notwithstanding anything herein contained to the contrary, any
payments to the Executive by the Company, whether pursuant to this Agreement
or otherwise, are subject to and conditioned upon their compliance
with section 18(k) of the Federal Deposit Insurance Act, as amended, 12 U.S.C.
ss.1828(k), and any regulations promulgated thereunder.
<PAGE>
SIGNATURES
IN WITNESS WHEREOF, JSB FINANCIAL, INC. has caused this
Agreement to be executed and its seal to be affixed hereunto by its duly
authorized officer, and the Executive has signed this Agreement, on the 22nd day
of June, 1999.
ATTEST: JSB FINANCIAL, INC.
By:
Joanne Corrigan Edward P. Henson
- --------------- ----------------
Joanne Corrigan Edward P. Henson
Secretary President
[Seal]
WITNESS:
Laurel M. Romito
----------------
Laurel M. Romito
<PAGE>
STATE OF NEW YORK )
: ss.:
COUNTY OF NASSAU )
On this 22nd day of June, 1999, before me personally came Edward P.
Henson, to me known, who, being by me duly sworn, did depose and say that he is
the President of JSB Financial, Inc., the Delaware corporation described in and
which executed the foregoing instrument; that he knows the seal of said
corporation; that the seal affixed to said instrument is such seal; that it was
so affixed by order of the Board of Directors of said corporation; and that he
signed his name thereto by like order.
Name:
Notary Public
STATE OF NEW YORK )
: ss.:
COUNTY OF NASSAU )
On this 22nd day of June, 1999, before me personally came Laurel M.
Romito, to me known, and known to me to be the individual described in the
foregoing instrument, who, being by me duly sworn, did depose and say that she
resides at the address set forth in said instrument, and that she signed her
name to the foregoing instrument.
Name:
Notary Public
<PAGE>
APPENDIX A
----------
1. INTRODUCTION. Sections 280G and 4999 of the Internal Revenue Code of
1986, as amended ("Code"), impose a 20% non-deductible federal excise tax on a
person if the payments and benefits in the nature of compensation to or for the
benefit of that person that are contingent on a change in the ownership or
effective control of the Company or the Bank or in the ownership of a
substantial portion of the assets of the Company or the Bank (such payments and
benefits are considered "parachute payments" under section 280G) exceed three
times the person's "base amount" under section 280G. Section 23 of the Agreement
provides for the Executive to receive a tax indemnification payment (sometimes
referred to as a "gross-up" payment) if the payments and benefits in the nature
of compensation to or for the benefit of the Executive that are considered
parachute payments cause the imposition of an excise tax under section 4999 of
the Code. Capitalized terms in this Appendix A that are not defined in this
Appendix A have the meaning used in the Employment Agreement with the Executive.
2. PURPOSE. The purpose of this Appendix A is to illustrate how the tax
indemnification or gross-up payment would be computed. The amounts, figures and
rates used in this example are meant to be illustrative and do not reflect the
actual payments and benefits that would be made to the Executive under this
Agreement. For purposes of this example, it is assumed that a change in control
within the meaning of section 280G of the Code has occurred and that:
(a) The value of the insurance benefits required to be provided to a
hypothetical employee "Z" under sections 4(b)(iii) and 5(b) of the
Agreement for medical, dental, life and other insurance benefits
during the unexpired employment period is $23,000.
(b) The annual rate of Z's salary covered by the Agreement is $100,000,
and Z received annual salary increases of 4%, 5% and 6% (i.e., a
three-year average of 5%) for each of the prior three years. Hence,
the amount payable under sections 4(b)(v) and 5(b) of the Agreement
for salary during the unexpired employment period would be $331,013
[$105,000 + $110, 250 + $115,763].
(c) Z received annual bonuses equal to 20% of his salary in each of the
prior three years. Hence, the amount payable under sections 4(b)(v)
and 5(b) of the Agreement for bonuses during the unexpired employment
period would be $66,203 [20% x ($105,000 + $110,250 + $115,763)].
(d) The amount payable under sections 4(b)(vi) and 5(b) of the Agreement
for the present value of the additional RP and BRP accruals during the
unexpired employment period would be $45,000.
(e) The amount payable under sections 4(b)(vii) and 5(b) of the Agreement
for additional contributions to the ESOP, 401(k) Plan and BRP during
the unexpired employment period would be $20,000.
(f) Z's base amount (i.e., average W-2 wages for the five-year period
preceding the change in control) is $87,000.
3. DETERMINE IF Z IS SUBJECT TO AN EXCISE TAX. Z's parachute payments would
total $485,216 [$23,000 + $331,013 + $66,203 + $45,000 + $20,000]. Three times
Z's base amount is $261,000 [3 x $87,000]; accordingly, Z is subject to an
excise tax because $485,216 exceeds $261,000. Z's "excess parachute payments"
under section 280G of the Code are equal to Z's total parachute payments minus
one times Z's base amount, or $398,216 [$485,216 - $87,000]. If Z were not
protected by section 23 of the Agreement, Z would be subjected to an excise tax
of $79,643 [$398,216 x 20%], in addition to ordinary income taxes.
4. Compute Z's Tax Indemnification Payment. Z's tax indemnification payment
under section 23 of the Agreement would be computed pursuant to the following
formula:
E x P .2 x $398,216
X = ------------------------------------ = ----------------------------------
1 - [(FI x (1 - SLI)) + SLI + E + M] 1 - [.368874 + .0685 + .2 + .0145]
where
E = excise tax rate under section 4999 of the Code [20%];
P = the amount with respect to which such excise tax is
assessed determined without regard to section 23 of
the Agreement [$398,216];
FI = the highest effective marginal rate of income tax
applicable to Z under the Code for the taxable year
in question [assumed to be 39.6% in this example, but
in actuality, the rate is adjusted to take into
account any phase-out or loss of deductions, personal
exemptions and other similar adjustments];
SLI = the sum of the highest effective marginal rates of
income tax applicable to Z under applicable state and
local laws for the taxable year in question [assumed
to be 6.85% in this example, but in actuality, the
rate is adjusted to take into account any phase-out
or loss of deductions, personal exemptions and other
similar adjustments]; and
M = the highest marginal rate of Medicare tax applicable
to Z under the Code for the year in question [1.45%].
In this example, the amount of tax indemnification payment due to Z under
section 23 of the Agreement would be $79,643 [.2 x $398,216] divided by 0.348126
[1 - (.368874 + .0685 + .2 + .0145)], or $228,777. Such amount would be payable
in addition to the other amounts payable under the Agreement in order to put Z
in approximately the same after-tax position that Z would have been in if there
were no excise tax imposed under sections 280G and 4999 of the Code. The tax
indemnification to Z of $228,777 would in turn be a parachute payment subject to
excise tax under sections 280G and 4999. Accordingly, Z's actual excess
parachute payment would be $626,993 [$485,216 - $87,000) + $228,777)] resulting
in an excise tax of $125,399 [$626,993 x 20%]. The difference between the
indemnification. payment and the excise tax [$103,378] is an amount equal to the
sum of the income and other applicable taxes due on the indemnification payment
[($228,777 x .368874) + ($228,777 x .0685) + ($228,777 x .0145)], confirming
that the amount of the tax indemnification payment is sufficient to satisfy all
of Z's tax liability resulting from the excess parachute payment.
JAMAICA SAVINGS BANK FSB
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT ("Agreement") is made and entered
into as of June 22, 1999 by and between JAMAICA SAVINGS BANK FSB, a federally
chartered savings bank, having its principal office at 303 Merrick Road,
Lynbrook, New York 11563 ("Bank"), and Park T. Adikes, an individual residing at
(address omitted) ("Executive"). This Agreement amends, restates and supersedes
the Employment Agreement dated as of June 27, 1990 and the Supplemental
Employment Agreement dated as of July 9, 1996 by and between the Bank and the
Executive. Any reference to the "Company" in this Agreement shall mean JSB
Financial, Inc. and any successor thereto.
W I T N E S S E T H :
WHEREAS, the Executive is currently serving as Chairman and
Chief Executive Officer of the Bank, and the Bank wishes to assure itself of the
services of the Executive for the period provided in this Agreement; and
WHEREAS, the Executive is willing to serve in the employ of
the Bank on the terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the premises and the
mutual covenants and conditions hereinafter set forth, the Bank and the
Executive hereby agree as follows:
1. POSITION AND RESPONSIBILITIES.
During the period of his employment hereunder, the Executive
agrees to serve as Chairman and Chief Executive Officer of the Bank. The
Executive shall render administrative and management services to the Bank such
as are customarily performed by persons situated in a similar executive capacity
and shall perform such other duties not inconsistent with his title and office
as may be assigned to him by or under the authority of the Board of Directors of
the Bank (the "Board"). The Executive shall have such authority as is necessary
or appropriate to carry out his assigned duties. Failure to re-elect the
Executive as Chairman and Chief Executive Officer of the Bank or re-nominate the
Executive as a Director of the Bank without the consent of the Executive shall
constitute a breach of this Agreement.
2. TERMS.
(a) The period of the Executive's employment under this
Agreement shall be deemed to have commenced as of the date first above written
(the "Effective Date") and shall be for an initial term of three years. Prior to
the first anniversary of the Effective Date of this Agreement and on each
anniversary date thereafter (each, an "Anniversary Date"), the Board shall
review the terms of this Agreement and the Executive's performance of services
hereunder and may, in the absence of objection from the Executive, approve an
extension of the Employment Agreement. In such event, the Employment Agreement
shall be extended to the third anniversary of the relevant Anniversary Date. For
purposes of this Agreement, the term "Employment Period" shall mean the term of
this Agreement plus such extensions as are provided herein.
(b) During the period of his employment hereunder, except for
periods of absence occasioned by illness, disability, holidays, reasonable
vacation periods and reasonable leaves of absence, the Executive shall devote
substantially all of his business time, attention, skill and efforts to the
faithful performance of his duties hereunder including (i) service as Chairman
and Chief Executive Officer of the Bank, and, if duly elected, a Director of the
Bank, (ii) performance of such duties not inconsistent with his title and office
as may be assigned to him by or under the authority of the Board, and (iii) such
other activities and services related to the organization, operation and
management of the Bank. During the Employment Period it shall not be a violation
of this Agreement for the Executive to (A) serve on corporate, civic, industry
or charitable boards or committees, (B) deliver lectures, fulfill speaking
engagements or teach at educational institutions and (C) manage personal
investments, so long as such activities do not significantly interfere with the
performance of the Executive's responsibilities as an employee of the Bank in
accordance with this Agreement. It is expressly understood and agreed that to
the extent that any such activities have been conducted by the Executive prior
to the Effective Date, the continued conduct of such activities (or the conduct
of activities similar in nature and scope thereto) subsequent to the Effective
Date shall not thereafter be deemed to interfere with the performance of the
Executive's responsibilities to the Bank. It is also expressly agreed that the
Executive may conduct activities subsequent to the Effective Date that are
generally accepted for an executive in his position, regardless of whether
conducted by the Executive prior to the Effective Date.
(c) Notwithstanding anything herein contained to the contrary:
(i) the Executive's employment with the Bank may be terminated by the Bank or
the Executive during the term of this Agreement, subject to the terms and
conditions of this Agreement; and (ii) nothing in this Agreement shall mandate
or prohibit a continuation of the Executive's employment following the
expiration of the term of this Agreement upon such terms and conditions as the
Board and the Executive may mutually agree.
(d) For all purposes of this Agreement, the term "Unexpired
Employment Period" as of any date shall mean the period beginning on such date
and ending on the Anniversary Date on which the Employment Period (as extended
pursuant to Section 2(a) of this Agreement) is then scheduled to expire.
3. COMPENSATION AND REIMBURSEMENT.
(a) The compensation specified under this Agreement shall
constitute the salary and benefits paid for the duties described in Section 1.
The Bank shall pay the Executive as compensation a salary at an annual rate of
not less than (salary omitted) per year or such higher rate as may be prescribed
by or under the authority of the Board ("Base Salary"). The Base Salary payable
under this Section 3 shall be paid in approximately equal installments in
accordance with the Bank's customary payroll practices. During the period of
this Agreement, the Executive's Base Salary shall be reviewed at least annually;
the first such review will be made no later than one year from the date of this
Agreement. Such review shall be conducted by a Committee designated by the
Board, and the Board may increase the Executive's Base Salary, which increased
amount shall be considered the Executive's "Base Salary" for purposes of this
Agreement. In no event shall the Executive's annual rate of Base Salary under
this Agreement in effect at a particular time be reduced without his prior
written consent. In addition to the Base Salary provided in this Section 3(a),
the Bank shall provide the Executive at no cost to the Executive with all such
other benefits as are provided uniformly to permanent full-time employees of the
Bank.
(b) The Bank will provide the Executive with employee benefit
plans, arrangements and perquisites substantially equivalent to those in which
the Executive was participating or otherwise deriving benefit from immediately
prior to the beginning of the term of this Agreement, and the Bank will not,
without the Executive's prior written consent, make any changes in such plans,
arrangements or perquisites which would adversely affect the Executive's rights
or benefits thereunder. Without limiting the generality of the foregoing
provisions of this Subsection (b), the Executive will be entitled to participate
in or receive benefits under any employee benefit plans with respect to which
the Executive satisfies the eligibility requirements, including, but not limited
to, the Retirement Plan of Jamaica Savings Bank FSB ("RP"), the Incentive
Savings Plan of Jamaica Savings Bank FSB ("ISP"), the Jamaica Savings Bank FSB
Employee Stock Ownership Plan ("ESOP"), the Benefit Restoration Plan of Jamaica
Savings Bank FSB ("BRP"), the JSB Financial, Inc. 1990 Stock Option Plan, the
JSB Financial, Inc. 1996 Stock Option Plan, retirement plans, supplemental
retirement plans, pension plans, profit-sharing plans, group life, health
(including hospitalization, medical and major medical), dental, accidental death
and dismemberment, travel accident and short-term disability insurance plans, or
any other employee benefit plan or arrangement made available by the Bank in the
future to its senior executives and key management employees, subject to and on
a basis consistent with the terms, conditions and overall administration of such
plans and arrangements. The Executive will be entitled to incentive compensation
and bonuses as provided in any plan of the Bank in which the Executive is
eligible to participate. Nothing paid to the Executive under any such plan or
arrangement will be deemed to be in lieu of other compensation to which the
Executive is entitled under this Agreement.
(c) The Executive's principal place of employment shall be at
the Bank's executive offices at the address first above written, or at such
other location in New York City or in Nassau County or Suffolk County at which
the Bank shall maintain its principal executive offices, or at such other
location as the Board and the Executive may mutually agree upon. The Bank shall
provide the Executive, at his principal place of employment with support
services and facilities suitable to his position with the Bank and necessary or
appropriate in connection with the performance of his assigned duties under this
Agreement. The Bank shall provide the Executive with an automobile suitable to
the position of Chairman and Chief Executive Officer of the Bank, in accordance
with prior practice, and such automobile may be used by the Executive in
carrying out his duties under the Agreement, including commuting between his
residence and his principal place of employment, and other personal use. The
Bank shall reimburse the Executive for his ordinary and necessary business
expenses, including, without limitation, fees for memberships in such clubs and
organizations as the Executive and the Board shall mutually agree are necessary
and appropriate for business purposes, and travel and entertainment expenses,
incurred in connection with the performance of his duties under this Agreement,
upon presentation to the Bank of an itemized account of such expenses in such
form as the Bank may reasonably require.
4. PAYMENTS TO THE EXECUTIVE UPON AN EVENT OF TERMINATION.
The provisions of this Section shall in all respects be subject
to the terms and conditions stated in Sections 9 and 28.
(a) Upon the occurrence of an Event of Termination (as herein
defined) during the Executive's term of employment under this Agreement, the
provisions of this Section shall apply. As used in this Agreement, an "Event of
Termination" shall mean and include any one or more of the following: (i) the
termination by the Bank or the Company of the Executive's full-time employment
hereunder for any reason other than: following a Change in Control, as defined
in Section 5; for Disability, as defined in Section 6; for Retirement, as
defined in Section 8; for Cause, as defined in Section 9; or upon the
Executive's death; or (ii) unless consented to by the Executive, the Executive's
voluntary resignation from the Bank's employ, upon any: (A) failure to elect or
re-elect or to appoint or re-appoint the Executive as Chairman and Chief
Executive Officer of the Bank or to nominate or re-nominate the Executive as a
Director of the Bank or the Company, (B) material adverse change in the
Executive's function, duties, or responsibilities, which change would cause the
Executive's position to become one of lesser responsibility, importance, or
scope from the position and attributes thereof described in Section 1, above
(and any such material change shall be deemed a continuing breach of this
Agreement), (C) relocation of the Executive's principal place of employment by
more than 30 miles from its location at the Effective Date of this Agreement, or
a material reduction in the benefits and perquisites to the Executive from those
being provided as of the Effective Date of this Agreement, (D) liquidation or
dissolution of the Bank or the Company, or (E) material breach of this Agreement
by the Bank. Upon the occurrence of any event described in clauses (A), (B),
(C), (D) or (E), above, the Executive shall have the right to elect to terminate
his employment under this Agreement by resignation upon written notice pursuant
to Section 10 given within a reasonable period of time not to exceed, except in
case of a continuing breach, four calendar months after the event giving rise to
said right to elect.
(b) Upon the occurrence of an Event of Termination as set
forth in Section 4(a), on the Date of Termination, as defined in Section 10, the
Bank shall be obligated to pay, or to provide, the Executive, or, in the event
of his subsequent death, to his surviving spouse or such other beneficiary or
beneficiaries as the Executive may designate in writing, or if neither his
estate, as severance pay or liquidated damages, or both, the benefits provided
below and a payment equal to the sum of the payments set forth below:
(i) payment of the sum of (A) the Executive's annual Base Salary
through the Date of Termination to the extent not theretofore paid and (B)
any compensation previously deferred by the Executive (together with any
accrued interest or earnings thereon) and any accrued vacation pay, in each
case to the extent not theretofore paid (the sum of the amounts described
in clauses (A) and (B) shall be hereinafter referred to as the "Accrued
Obligations");
(ii) the benefits, if any, to which the Executive is entitled as a
former employee under the Bank's or the Company's employee benefit plans
and programs and compensation plans and programs;
(iii) continued group life, health (including hospitalization, medical
and major medical), dental, accidental death and dismemberment, travel
accident and short-term disability insurance benefits as provided by the
Bank or the Company, in addition to that provided pursuant to Section
4(b)(ii), if and to the extent necessary to provide for the Executive, for
the remaining Unexpired Employment Period, coverage equivalent to the
coverage to which he would have been entitled if he had continued working
for the Bank during the remaining Unexpired Employment Period at the
highest annual rate of salary achieved during the Employment Period;
provided, however, if the Executive has obtained group life, health
(including hospitalization, medical and major medical), dental, accidental
death and dismemberment, travel accident and/or short-term disability
insurance benefits coverage from another source, the Executive may, as of
any month, make an irrevocable election to forego the continued coverage
that would otherwise be provided hereunder for the remaining Unexpired
Employment Period, or any portion thereof, in which case the Bank or the
Company, upon receipt of the Executive's irrevocable election, shall pay
the Executive an amount equal to the estimated cost to the Bank or the
Company of providing such coverage during such period;
(iv) if and to the extent not already provided under Sections 4(b)(ii)
and 4(b)(iii), continued health (including hospitalization, medical and
major medical) and dental insurance benefits to the extent maintained by
the Bank or the Company for its employees or retirees during the remainder
of the Executive's lifetime and the lifetime of his spouse, if any, for so
long as the Executive continues to reimburse the Bank for the cost of such
continued coverage;
(v) a lump sum payment, as liquidated damages, in an amount equal to
the Base Salary and bonus or other incentive compensation that the
Executive would have earned if the Executive had continued working for the
Bank and the Company during the remaining Unexpired Employment Period (A)
at the highest annual rate of Base Salary and bonus or other incentive
compensation achieved by the Executive during the three-year period
immediately preceding the Executive's Date of Termination, except that (B)
in the case of a Change in Control, such lump sum shall be determined based
upon the Base Salary and the bonus or other incentive compensation,
respectively, that the Executive would have been paid during the remaining
Unexpired Employment Period including the assumed increases referred to in
clauses (i) and (ii) of Section 5(b);
(vi) a lump sum payment in an amount equal to the excess, if any, of:
(A) the present value of the pension benefits to which the Executive would
be entitled under the RP and the BRP (and under any other qualified and
non-qualified defined benefit plans maintained by the Bank or the Company
covering the Executive) as if he had continued working for the Bank during
the remaining Unexpired Employment Period (x) at the highest annual rate of
Base Salary and, if applicable, the highest bonus or other incentive
compensation, respectively, achieved by the Executive during the three-year
period immediately preceding the Executive's Date of Termination, except
that (y) in the case of a Change in Control, such lump sum shall be
determined based upon the Base Salary and, if applicable, the highest bonus
or other incentive compensation, respectively, that the Executive would
have been paid during the remaining Unexpired Employment Period including
the assumed increases referred to in clauses (i) and (ii) of Section 5(b),
and (z) in the case of a Change in Control, as if three additional years
are added to the Executive's age and years of creditable service under the
RP and the BRP and after taking into account any other compensation
required to be taken into account under the RP and the BRP (and any other
qualified and non-qualified defined benefit plans of the Bank or the
Company, as applicable), over (B) the present value of the pension benefits
to which he is actually entitled under the RP and the BRP (and any other
qualified and non-qualified defined benefit plans) as of his Date of
Termination, where such present values are to be determined using a
discount rate of 6% and the mortality tables prescribed under section 72 of
the Internal Revenue Code of 1986, as amended ("Code"); and
(vii) a lump sum payment in an amount equal to the contributions that
would have been made by the Bank or the Company on the Executive's behalf
to the ISP and the ESOP and to the BRP with respect to such ISP and ESOP
contributions (and to any other qualified and non-qualified defined
contribution plans maintained by the Bank or the Company covering the
Executive) as if the Executive had continued working for the Bank and the
Company during the remaining Unexpired Employment Period making the maximum
amount of employee contributions required, if any, under such plan or plans
and earning (A) the highest annual rate of Base Salary and, if applicable,
the highest bonus or other incentive compensation, respectively, achieved
by the Executive during the three-year period immediately preceding the
Executive's Date of Termination, except that (B) in the case of a Change in
Control, such lump sum shall be determined based upon the Base Salary and,
if applicable, the bonus or other incentive compensation, respectively,
that the Executive would have been paid during the remaining Unexpired
Employment Period including the assumed increases referred to in clauses
(i) and (ii) of Section 5(b).
The benefits to be provided under, and the amounts payable pursuant to, this
Section 4 shall be provided and be payable without regard to proof of damages
and without regard to the Executive's efforts, if any, to mitigate damages. The
Bank and the Executive hereby stipulate that the damages which may be incurred
by the Executive following any such termination of employment are not capable of
accurate measurement as of the date first above written and that such liquidated
damages constitute reasonable damages under the circumstances.
(c) Payments to the Executive under Section 4 shall be
made within ten days of the Executive's Date of Termination.
(d) In the event payments are made under Section 4 or Section
5, the Executive may select an individual or firm to provide him with reasonable
outplacement counseling services, and the Bank shall pay for the costs of such
services; provided, however, that the cost to the Bank of such outplacement
counseling services shall not exceed 25% of the Executive's Base Salary.
5. CHANGE IN CONTROL.
(a) No benefit shall be payable under this Section 5 unless
there shall have been a Change in Control of the Bank or the Company, as set
forth below. For purposes of this Agreement, a "Change in Control" of the Bank
or the Company shall mean any one or more of the following:
(i) An event of a nature that would be required to be reported in
response to Item l(a) of the current report on Form 8-K, as in effect on
the date hereof, pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934, as amended (the "Exchange Act");
(ii) An event of a nature that results in a Change in Control of the
Bank or the Company within the meaning of the Home Owners' Loan Act of
1933, as amended, or the Change in Bank Control Act of 1978, as amended, as
applicable, and the Rules and Regulations promulgated by the Office of
Thrift Supervision ("OTS") or its predecessor agency, the Federal Deposit
Insurance Corporation ("FDIC") or the Board of Governors of the Federal
Reserve System ("FRB"), as the case may be, as in effect on the date
hereof, but excluding any such Change in Control resulting from the
purchase of securities by the Company or the Bank's or the Company's
tax-qualified employee benefit plans and trusts;
(iii) If any "person" (as the term is used in Sections 13(d) and 14(d)
of the Exchange Act) is or becomes the "beneficial owner" (as defined in
Rule 13d-3 under the Exchange Act), directly or indirectly, of securities
of the Bank or the Company representing 20% or more of the Bank's or the
Company's outstanding securities except for any securities of the Bank
purchased by the Company in connection with the initial conversion of the
Bank from mutual to stock form (the "Conversion") and any securities
purchased by the Company or the Bank's or the Company's tax-qualified
employee benefit plans and trusts;
(iv) If the individuals who constitute the Board on the date hereof
(the "Incumbent Board") cease for any reason to constitute at least a
majority of the Board, provided, however, that any person becoming a
director subsequent to the date hereof whose election or nomination for
election by the Company's stockholders, was approved by a vote of at least
three-quarters of the directors then comprising the Incumbent Board shall
be considered as though he were a member of the Incumbent Board, but
excluding, for this purpose, any such person whose initial assumption of
office occurs as a result of an actual or threatened election contest with
respect to the election or removal of directors or other actual or
threatened solicitation of proxies or consents by or on behalf of a person
other than the Board;
(v) A merger, consolidation, reorganization, sale of all or
substantially all the assets of the Bank or the Company or similar
transaction occurs in which the Bank or the Company is not the resulting
entity, other than a transaction following which (A) at least 51% of the
equity ownership interests of the entity resulting from such transaction
are beneficially owned (within the meaning of Rule 13d-3 promulgated under
Exchange Act) in substantially the same relative proportions by persons
who, immediately prior to such transaction, beneficially owned (within the
meaning of Rule 13d-3 promulgated under the Exchange Act) at least 51% of
the outstanding equity ownership interests in the Bank or the Company and
(B) at least 51% of the securities entitled to vote generally in the
election of directors of the entity resulting from such transaction are
beneficially owned (within the meaning of Rule 13d-3 promulgated under the
Exchange Act) in substantially the same relative proportions by persons
who, immediately prior to such transaction, beneficially owned (within the
meaning of Rule 13d-3 promulgated under the Exchange Act) at least 51% of
the securities entitled to vote generally in the election of directors of
the Bank or the Company;
(vi) A proxy statement shall be distributed soliciting proxies from
stockholders of the Company, by someone other than the current management
of the Company, seeking stockholder approval of a plan of reorganization,
merger or consolidation of the Company or the Bank or similar transaction
with one or more corporations as a result of which the outstanding shares
of the class of securities then subject to such plan or transaction are
exchanged for or converted into cash or property or securities not issued
by the Bank or the Company; or
(vii) A tender offer is completed for 20% or more of the voting
securities of the Bank or Company then outstanding.
The "Change in Control Date" shall mean the date during the Employment Period on
which a Change in Control occurs. Anything in this Agreement to the contrary
notwithstanding, if the Executive's employment with the Company is terminated
and if it is reasonably demonstrated by the Executive that such termination of
employment (1) was at the request of a third party who has taken steps
reasonably calculated to effect a Change in Control or (2) otherwise arose in
connection with or anticipation of a Change in Control, then for all purposes of
this Agreement the "Change in Control Date" shall mean the date immediately
prior to the date of such termination of employment.
(b) If any of the events described in Section 5(a)
constituting a Change in Control have occurred or the Board has determined that
a Change in Control has occurred, the Executive shall be entitled to the
payments and the benefits provided below on the Change in Control Date. The
amounts payable and the benefits to be provided under this Section 5(b) to the
Executive shall consist of the payments and benefits that would be due to the
Executive and the Executive's family under Section 4(b) for the Unexpired
Employment Period as if an Event of Termination under Section 4(a) had occurred
on the Change in Control Date. For purposes of determining the payments and
benefits due under this Section 5(b), when calculating the payments due and
benefits to be provided for the Unexpired Employment Period, it shall be assumed
that for each year of the remaining term of this Agreement, the Executive would
have received (i) an annual increase in Base Salary equal to the average
percentage increase in Base Salary received by the Executive for the three-year
period ending with the earlier of (x) the year in which the Change in Control
Date occurs or (y) the year during which a definitive agreement, if any,
governing the Change in Control is executed, with the first such increase
effective as of the January 1st next following such three-year period and the
second and third such increases effective as of the next two anniversaries of
such January 1st, (ii) a bonus or other incentive compensation equal to the
highest percentage rate of bonus or incentive compensation paid to the Executive
during the three-year period referred to in clause (i) of this Section 5(b)
times the Base Salary that the Executive would have been paid during the
remaining term of this Agreement including the assumed increases referred to in
clause (i) of this Section 5(b), (iii) the maximum contributions that could be
made by or on behalf of the Executive with respect to any employee benefit plans
and programs maintained by the Company and the Bank based upon the Base Salary
and, if applicable, the bonus or other incentive compensation, respectively,
that the Executive would have been paid during the remaining term of this
Agreement including the assumed increases referred to in clauses (i) and (ii) of
this Section 5(b), and (iv) the present value of the pension benefits to which
the Executive is entitled under Section 4(b)(vi) with respect to the RP and the
BRP (and under any other qualified and non-qualified defined benefit plans
maintained by the Bank or the Company covering the Executive) shall be
determined as if he had continued working for the Bank during the remaining
Unexpired Employment Period and shall be based upon the Base Salary and, if
applicable, the bonus or other incentive compensation, respectively, that the
Executive would have been paid during the remaining term of this Agreement
including the assumed increases referred to in clauses (i) and (ii) of this
Section 5(b). The benefits to be provided under, and the amounts payable
pursuant to, this Section 5 shall be provided and be payable without regard to
proof of damages and without regard to the Executive's efforts, if any, to
mitigate damages. The Bank and the Executive hereby stipulate that the damages
which may be incurred by the Executive following any Change in Control are not
capable of accurate measurement as of the date first above written and that such
liquidated damages constitute reasonable damages under the circumstances.
(c) Payments under Section 5(b) shall be made to the Executive
on the Change in Control Date. Such payments shall be made regardless of whether
the Executive's employment terminates.
6. TERMINATION FOR DISABILITY.
(a) In the event of Termination for Disability, the Executive
shall receive the benefits provided in Section 6(b); provided, however, that the
benefits provided under Section 6(b) shall not be deemed to be in lieu of the
benefits he is otherwise entitled as a former employee under the Bank or the
Company's employee plans and programs. For purposes of this Agreement, the
Executive may be terminated for disability only if (i) the Executive shall have
been absent from his duties with the Bank on a full-time basis for at least six
consecutive months, or (ii) a majority of the members of the Board acting in
good faith determine that, based upon competent and independent medical evidence
presented by a physician or physicians agreed upon by the parties, the
Executive's physical or mental condition is such that he is totally and
permanently incapable of engaging in any substantial gainful employment based
upon his education, training and experience; provided, however, that on and
after the earliest date on which a Change in Control of the Bank or the Company
as defined in Section 5 occurs, such a determination shall require the
affirmative vote of at least three-fourths of the members of the Board acting in
good faith and such vote shall not be made prior to the expiration of a 60-day
period following the date on which the Board shall, by written notice to the
Executive, furnish him a statement of its grounds for proposing to make such
determination, during which period the Executive shall be afforded a reasonable
opportunity to make oral and written presentations to the members of the Board,
and to be represented by his legal counsel at such presentations, to refute the
grounds for the proposed determination.
(b) The Bank will pay the Executive as Disability pay, a
bi-weekly payment equal to 100% of the Executive's bi-weekly annual rate of Base
Salary in effect on the date of the Executive's Termination for Disability. In
addition, the Bank will cause to be continued insurance coverage, including
group life, health (including hospitalization, medical and major medical),
dental, accidental death and dismemberment, travel accident and short-term
disability coverage substantially identical to the coverage maintained by the
Bank or the Company for the Executive prior to his Termination for Disability.
The Disability pay and coverages shall commence on the effective date of the
Executive's termination and shall cease upon the earliest to occur of: (i) the
date the Executive returns to the full-time employment of the Bank, in the same
capacity as he was employed prior to his Termination for Disability and pursuant
to an employment agreement between the Executive and the Bank; (ii) the
Executive's full-time employment by another employer; (iii) the Executive's
attaining the normal age of retirement or receiving benefits under the RP or
other defined benefit pension plan of the Bank or the Company; (iv) the
Executive's death; (v) the Executive's eligibility to collect payments under the
disability provision of the RP or other defined benefit pension plan of the Bank
or the Company; or (vi) the expiration of the term of this Agreement.
(c) Notwithstanding the foregoing, there will be no reduction
in the compensation otherwise payable to the Executive during any period during
which the Executive is incapable of performing his duties hereunder by reason of
temporary disability.
7. TERMINATION UPON DEATH.
The Executive's employment shall terminate automatically upon
the Executive's death during the Employment Period. In such event, the Executive
and the Executive's legal representatives shall be entitled to the following:
(i) payment of the Executive's "Accrued Obligations;"
(ii) the continuation of all benefits to the Executive's family and
dependents that would have been provided if the Executive had been entitled
to the benefits under Section 4(b)(ii), (iii) and (iv), and
(iii) the timely payment of any other amounts or benefits required to
be paid or provided or which the Executive is eligible to receive under any
plan, program, policy or practice or contract or agreement of the Bank and
its affiliated companies (all such other amounts and benefits shall be
hereinafter referred to as the "Other Benefits");
provided, however, that if the Executive dies while in the employment of the
Bank, the amount of life insurance provided to the Executive by the Bank shall
not be less than the lesser of $200,000 or three times the Executive's then
annual Base Salary. Accrued Obligations shall be paid to the Executive's estate
or beneficiary, as applicable, in a lump sum cash payment within ten days of the
Date of Termination. With respect to the provision of Other Benefits after the
Change in Control Date, the term Other Benefits as utilized in this Section 7
shall include, without limitation, that the Executive's estate and/or
beneficiaries shall be entitled to receive, benefits at least equal to the most
favorable benefits provided by the Bank and affiliated companies to the estates
and beneficiaries of peer executives of the Bank and such affiliates companies
under such plans, programs, practices and policies relating to death benefits,
if any, as in effect with respect to other peer executives and their
beneficiaries at any time during the 120-day period immediately preceding the
Change in Control Date.
8. TERMINATION UPON RETIREMENT.
Termination by the Bank of the Executive based on "Retirement"
shall mean termination in accordance with the Company's or the Bank's retirement
policy or in accordance with any retirement arrangement established with the
Executive's consent with respect to him. Upon termination of the Executive upon
Retirement, the Executive shall be entitled to all benefits under the RP and any
other retirement plan of the Bank or the Company and other plans to which the
Executive is a party, and the Executive shall be entitled to the benefits, if
any, that would be payable to him as a former employee under the Bank's or the
Company's employee benefit plans and programs and compensation plans and
programs.
9. TERMINATION FOR CAUSE.
The terms "Termination for Cause" or "Cause" shall mean
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 any material breach of
this Agreement, in such case as measured against standards generally prevailing
at the relevant time in the savings and community banking industry. For purposes
of this Section, no act, or the failure to act, on the Executive's part shall be
"willful" unless done, or omitted to be done, in bad faith and without
reasonable belief that the action or omission was in the best interest of the
Bank or its affiliates. Any act, or failure to act, based upon authority given
pursuant to a resolution duly adopted by the Board or based upon the written
advice of counsel for the Bank shall be conclusively presumed to be done, or
omitted to be done, by the Executive in good faith and in the best interests of
the Bank. Notwithstanding the foregoing, the Executive shall not be deemed to
have been terminated for Cause unless and until there shall have been delivered
to him a Notice of Termination which shall include a copy of a resolution duly
adopted by the affirmative vote of not less than three-fourths of the members of
the Board at a meeting of the Board called and held for that purpose (after
reasonable notice to the Executive and an opportunity for him, together with
counsel, to be heard before the Board), finding that in the good faith opinion
of the Board, the Executive was guilty of conduct justifying Termination for
Cause and specifying the particulars thereof in detail. The Executive shall not
have the right to receive compensation or other benefits for any period after
Termination for Cause.
10. NOTICE.
(a) Any purported termination by the Bank or by the Executive
shall be communicated by a Notice of Termination to the other party hereto. For
purposes of this Agreement, a "Notice of Termination" shall mean a written
notice which shall indicate the specific termination provision in this Agreement
relied upon and shall set forth in reasonable detail the facts and circumstances
claimed to provide a basis for termination of the Executive's employment under
the provision so indicated.
(b) Subject to Section 10(c), "Date of Termination" shall mean
(A) if the Executive's employment is terminated for Disability, 30 days after a
Notice of Termination is given (provided that he shall not have returned to the
performance of his duties on a full-time basis during such 30-day period), and
(B) if his employment is terminated for any other reason, the date specified in
the Notice of Termination (which, in the case of a Termination for Cause, shall
be immediate).
(c) If, within 30 days after any Notice of Termination is
given, the party receiving such Notice of Termination notifies the other party
that a dispute exists concerning the termination, then, except upon the
occurrence of a Change in Control and voluntary termination by the Executive in
which case the Date of Termination shall be the date specified in the Notice,
the Date of Termination shall be the date on which the dispute is finally
determined, either by mutual written agreement of the parties, by a binding
arbitration award, or by a final judgment, order or decree of a court of
competent jurisdiction (the time for appeal therefrom having expired and no
appeal having been perfected) and provided further that the Date of Termination
shall be extended by a notice of dispute only if such notice is given in good
faith and the party giving such notice pursues the resolution of such dispute
with reasonable diligence. Notwithstanding the pendency of any such dispute, the
Bank will continue to pay the Executive his full compensation in effect when the
notice giving rise to the dispute was given (including, but not limited to, Base
Salary) and continue him as a participant in all compensation, benefit and
insurance plans in which he was participating when the notice of dispute was
given, until the dispute is finally resolved in accordance with this Agreement.
Amounts paid under this Section are in addition to all other amounts due under
this Agreement and shall not be offset against or reduce any other amounts due
under this Agreement.
(d) The Bank may terminate the Executive's employment at any
time, but any termination by the Bank, other than Termination for Cause, shall
not prejudice the Executive's right to compensation or other benefits under this
Agreement or under any other benefit or compensation plans or programs
maintained by the Bank or the Company from time to time. The Executive shall not
have the right to receive compensation or other benefits for any period after a
Termination for Cause as defined in Section 9 hereinabove.
(e) Any communication to a party required or permitted under
this Agreement, including any notice, direction, designation, consent,
instruction, objection or waiver, shall be in writing and shall be deemed to
have been given at such time as it is delivered personally, or five days after
mailing if mailed, postage prepaid, by registered or certified mail, return
receipt requested, addressed to such party at the address listed below or at
such other address as one such party may by written notice specify to the other
party, as follows. If to the Executive, (address omitted); if to the Bank,
Jamaica Savings Bank FSB, 303 Merrick Road, Lynbrook, New York 11563, Attention:
President, with a copy to Thacher Proffitt & Wood, Two World Trade Center, New
York, New York 10048, Attention: Douglas J. McClintock, Esq.
11. POST-TERMINATION OBLIGATIONS.
(a) All payments and benefits to the Executive under this
Agreement shall be subject to the Executive's compliance with paragraph (b) of
this Section 11 during the term of this Agreement and for one full year after
the expiration or termination hereof.
(b) The Executive shall, upon reasonable notice, furnish such
information and assistance to the Bank as may reasonably be required by the Bank
in connection with any litigation in which it or any of its subsidiaries or
affiliates is, or may become, a party; provided, that the Bank reimburses the
Executive for the reasonable value of his time in connection therewith and for
any out-of-pocket costs attributable thereto.
12. COVENANT NOT TO COMPETE.
The Executive hereby covenants and agrees that for a period of
one year following his Date of Termination, if such termination occurs prior to
the end of the term of the Agreement, he shall not, without the written consent
of the Board, become an officer, employee, consultant, director or trustee of
any savings bank, savings and loan association, savings and loan holding
company, bank or bank holding company if such position (a) entails working in
(or providing services in) New York City, Nassau or Suffolk counties or (b)
entails working in (or providing services in) any other county that is both (i)
within the Bank's primary trade (or operating) area at the time in question,
which shall be determined by reference to the Bank's business plan as in effect
from time to time, and (ii) in which the Bank engages in material or substantial
deposit-taking functions or lending activities at such time; provided, however,
that this Section 12 shall not apply if the Executive's employment is terminated
for the reasons set forth in any of Sections 4, 5, 6 or 8. 13. SOURCE OF
PAYMENTS.
All payments provided in this Agreement shall be timely paid
in cash or check from the general funds of the Bank.
14. EFFECT ON PRIOR AGREEMENTS.
This Agreement contains the entire understanding between the
parties hereto and supersedes any prior employment agreement between the Bank or
any predecessor of the Bank and the Executive, including the Employment
Agreement dated June 27, 1990 and the Supplemental Employment Agreement dated
July 9, 1996, except that this Agreement shall not affect or operate to reduce
any benefit or compensation inuring to the Executive of a kind elsewhere
provided. No provisions of this Agreement shall be interpreted to mean that the
Executive is subject to receiving fewer benefits than those available to him
without reference to this Agreement.
15. EFFECT OF ACTION UNDER COMPANY AGREEMENT.
Notwithstanding any provision herein to the contrary, to the
extent that full compensation payments and benefits are paid to or received by
the Executive under the Employment Agreement, dated June 22, 1999, as it may be
amended from time to time, between the Executive and the Company, such
compensation payments and benefits paid by the Company will be deemed to satisfy
the corresponding obligations of the Bank under this Agreement.
16. NO ATTACHMENT.
Except as required by law, no right to receive payments under
this Agreement shall be subject to anticipation, commutation, alienation, sale,
assignment, encumbrance, charge, pledge, or hypothecation, or to execution,
attachment, levy, or similar process or assignment by operation of law, and any
attempt, voluntary or involuntary, to affect any such action shall be null,
void, and of no effect.
17. MODIFICATION AND WAIVER.
(a) This Agreement may not be modified or amended except by
an instrument in writing signed by the parties hereto.
(b) No term or condition of this Agreement shall be deemed to
have been waived, nor shall there be any estoppel against the enforcement of any
provision of this Agreement, except by written instrument of the party charged
with such waiver or estoppel. No such written waiver shall be deemed a
continuing waiver unless specifically stated therein, and each such waiver shall
operate only as to the specific term or condition waived and shall not
constitute a waiver of such term or condition for the future as to any act other
than that specifically waived.
18. SUCCESSOR AND ASSIGNS.
This Agreement will inure to the benefit of and be binding
upon the Executive, his legal representatives and testate or intestate
distributees, and the Bank, its successors and assigns, including any successor
by purchase, merger, consolidation or otherwise or a statutory receiver or any
other person or firm or corporation to which all or substantially all of the
assets and business of the Bank may be sold or otherwise transferred. Any such
successor of the Bank shall be deemed to have assumed this Agreement and to have
become obligated hereunder to the same extent as the Bank and the Executive's
obligations hereunder shall continue in favor of such successor.
19. SEVERABILITY.
If, for any reason, any provision of this Agreement, or any
part of any provision, is held invalid, such invalidity shall not affect any
other provision of this Agreement or any part of such provision not held so
invalid, and each such other provision and part thereof shall to the full extent
consistent with law continue in full force and effect.
20. HEADINGS FOR REFERENCE ONLY.
The headings of Sections and paragraphs herein are included
solely for convenience of reference and shall not control the meaning or
interpretation of any of the provisions of this Agreement. Any reference in this
Agreement to a Section or Subsection shall refer to a Section or Subsection of
this Agreement, except as otherwise specified.
21. GOVERNING LAW.
This Agreement shall be governed by the laws of the State of
New York, without reference to conflicts of law principles.
22. INDEMNIFICATION AND ATTORNEYS' FEES.
(a) The Bank shall indemnify, hold harmless and defend the
Executive against reasonable costs, including legal fees, incurred by him in
connection with his consultation with legal counsel or arising out of any
action, suit or proceeding in which he may be involved, as a result of his
efforts, in good faith, to defend or enforce the terms of this Agreement. The
Bank agrees to pay all such costs as they are incurred by the Executive, to the
full extent permitted by law, and without regard to whether the Bank believes
that it has a defense to any action, suit or proceeding by the Executive or that
it is not obligated for any payments under this Agreement.
(b) In the event any dispute or controversy arising under or
in connection with the Executive's termination is resolved in favor of the
Executive, whether by judgment, arbitration or settlement, the Executive shall
be entitled to the payment of all back-pay, including salary, bonuses and any
other cash compensation, fringe benefits and any compensation and benefits due
the Executive under this Agreement.
(c) The Bank shall indemnify, hold harmless and defend the
Executive for any act taken or not taken, or any omission or failure to act, by
him in good faith while performing services for the Bank or the Company to the
same extent and upon the same terms and conditions as other similarly situated
officers and directors of the Bank or the Company. If and to the extent that the
Bank or the Company, maintains, at any time during the Employment Period, an
insurance policy covering the other officers and directors of the Bank or the
Company against lawsuits, the Bank or the Company shall use its best efforts to
cause the Executive to be covered under such policy upon the same terms and
conditions as other similarly situated officers and directors.
23. TAX INDEMNIFICATION.
(a) Subject to the provisions of Section 28 hereof, this
Section 23 shall apply if a change "in the ownership or effective control" of
the Bank or "in the ownership of a substantial portion of the assets" of the
Bank occurs within the meaning of section 280G of the Code. If this Section 23
applies, then with respect to any taxable year in which the Executive shall be
liable for the payment of an excise tax under section 4999 of the Code with
respect to any payment in the nature of compensation made by the Bank, the
Company or any direct or indirect subsidiary or affiliate of the Bank to (or for
the benefit of) the Executive, the Bank shall pay to the Executive an amount
equal to X determined under the following formula:
X = E x P
-------------------------------------------------
1 - [(FI x (1 - SLI)) + SLI + E + M]
where
E = the rate at which the excise tax is assessed under
section 4999 of the Code;
P = the amount with respect to which such excise
tax is assessed, determined without regard to this
Section 23;
FI = the highest effective marginal rate of income tax
applicable to the Executive under the Code for the
taxable year in question (taking into account any
phase-out or loss of deductions, personal exemptions
and other similar adjustments);
SLI = the sum of the highest effective marginal rates of
income tax applicable to the Executive under all
applicable state and local laws for the taxable year
in question (taking into account any phase-out or
loss of deductions, personal exemptions and other
similar adjustments); and
M = the highest marginal rate of Medicare tax
applicable to the Executive under the Code for the
taxable year in question.
Attached as Appendix A to this Agreement is an example that illustrates
application of this Section 23. Any payment under this Section 23 shall be
adjusted so as to fully indemnify the Executive on an after-tax basis so that
the Executive would be in the same after-tax financial position in which he
would have been if no excise tax under section 4999 of the Code had been
imposed. With respect to any payment in the nature of compensation that is made
to (or for the benefit of) the Executive under the terms of this Agreement or
otherwise and on which an excise tax under section 4999 of the Code will be
assessed, the payment determined under this Section 23(a) shall be made to the
Executive on the earlier of (i) the date the Bank, the Company or any direct or
indirect subsidiary or affiliate of the Bank is required to withhold such tax,
or (ii) the date the tax is required to be paid by the Executive.
(b) Notwithstanding anything in this Section 23 to the
contrary, in the event that the Executive's liability for the excise tax under
section 4999 of the Code for a taxable year is subsequently determined to be
different than the amount determined by the formula (X + P) x E, where X, P and
E have the meanings provided in Section 23(a), the Executive or the Bank, as the
case may be, shall pay to the other party at the time that the amount of such
excise tax is finally determined, an appropriate amount, plus interest, such
that the payment made under Section 23(a), when increased by the amount of the
payment made to the Executive under this Section 23(b) by the Bank, or when
reduced by the amount of the payment made to the Bank under this Section 23(b)
by the Executive, equals the amount that, it is finally determined, should have
properly been paid to the Executive under Section 23(a). The interest paid under
this Section 23(b) shall be determined at the rate provided under section
1274(b)(2)(B) of the Code. To confirm that the proper amount, if any, was paid
to the Executive under this Section 23, the Executive shall furnish to the Bank
a copy of each tax return which reflects a liability for an excise tax payment
made by the Bank, at least 20 days before the date on which such return is
required to be filed with the Internal Revenue Service.
24. NON-EXCLUSIVITY OF RIGHTS.
Except as otherwise provided herein, nothing in this Agreement
shall prevent or limit the Executive's continuing or future participation in any
plan, program, policy or practice provided by the Bank or any of its affiliated
companies and for which the Executive may qualify, nor shall anything herein
limit or otherwise affect such rights as the Executive may have under any
contract or agreement with the Bank or any of its affiliated companies. Amounts
which are vested benefits or which the Executive is otherwise entitled to
receive under any plan, policy, practice or program of or any contract or
agreement with the Bank or any of its affiliated companies at or subsequent
to the Date of Termination shall be payable in accordance with such plan,
policy, practice or program or contract or agreement except as explicitly
modified by this Agreement. Notwithstanding the foregoing, in the event of a
termination of employment, the amounts provided in Section 4 or Section 5, as
applicable, shall be th e Executive's sole remedy for any purported breach of
this Agreement by the Bank.
25. MITIGATION; OTHER CLAIMS.
The Bank's obligation to make the payments provided for in
this Agreement and otherwise to perform its obligations hereunder shall not be
affected by any set-off, counterclaim, recoupment, defense or other claim, right
or action which the Bank may have against the Executive or others. In no event
shall the Executive be obligated to seek other employment or take any other
action by way of mitigation of the amounts payable to the Executive under any of
the provisions of this Agreement and such amounts shall not be reduced whether
or not the Executive obtains other employment.
26. CONFIDENTIAL INFORMATION.
The Executive shall hold in a fiduciary capacity for the
benefit of the Bank all secret or confidential information, knowledge or data
relating to the Bank or any of its affiliated companies, and their respective
businesses, which shall have been obtained by the Executive during the
Executive's employment by the Bank or any of its affiliated companies and which
shall not be or become public knowledge (other than by acts by the Executive or
representatives of the Executive in violation of this Agreement). After
termination of the Executive's employment with the Bank, the Executive shall
not, without the prior written consent of the Bank or as may otherwise be
required by law or legal process, communicate or divulge any such information,
knowledge or data to anyone other than the Bank and those designated by it. For
purposes of this Agreement, secret and confidential information, knowledge or
data relating to the Bank or any of its affiliates, and their respective
business, shall not include any information that is public, publicly available
or available through trade association sources. Notwithstanding any other
provision of this Agreement to the contrary, the Executive acknowledges and
agrees that in the event of a violation or threatened violation of any of the
provisions of this Section 26, the Bank shall have no adequate remedy at law and
shall therefore be entitled to enforce each such provision by temporary or
permanent injunction or mandatory relief obtained in any court of competent
jurisdiction without the necessity of proving damages or posting any bond or
other security, and without prejudice to any other remedies that may be
available at law or in equity.
27. ACCESS TO DOCUMENTS.
The Executive shall have the right to obtain copies of any
Bank or Bank documents that the Executive reasonably believes, in good faith,
are necessary or appropriate in determining his entitlement to, and the amount
of, payments and benefits under this Agreement.
1. REQUIRED REGULATORY PROVISIONS.
The following provisions are included for the purpose of complying with
various laws, rules and regulations applicable to the Bank:
(a) Notwithstanding anything herein contained to the contrary, in no
event shall the aggregate amount of compensation payable to the
Executive under Section 4(b) hereof (exclusive of amounts described in
Sections 4(b)(i) and (ii)) exceed three times the Executive's average
annual total compensation for the last five consecutive calendar years
to end prior to his termination of employment with the Bank (or for his
entire period of employment with the Bank if less than five calendar
years).
(b) Notwithstanding anything herein contained to the contrary, any
payments to the Executive by the Bank, whether pursuant to this
Agreement or otherwise, are subject to and conditioned upon their
compliance with Section 18(k) of the Federal Deposit Insurance Act
("FDI Act"), 12 U.S.C. ss.1828(k), and any regulations promulgated
thereunder.
(c) Notwithstanding anything herein contained to the contrary, if the
Executive is suspended from office and/or temporarily prohibited from
participating in the conduct of the affairs of the Bank pursuant to a
notice served under Section 8(e)(3) or 8(g)(1) of the FDI Act, 12
U.S.C. ss.1818(e)(3) or 1818(g)(1), the Bank's obligations under this
Agreement shall be suspended as of the date of service of such notice,
unless stayed by appropriate proceedings. If the charges in such notice
are dismissed, the Bank, in its discretion, may (i) pay to the
Executive all or part of the compensation withheld while the Bank's
obligations hereunder were suspended and (ii) reinstate, in whole or in
part, any of the obligations which were suspended.
(d) Notwithstanding anything herein contained to the contrary, if the
Executive 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) or 8(g)(1) of the FDI Act, 12 U.S.C. ss.1818(e)(4) or (g)(1),
all prospective obligations of the Bank under this Agreement shall
terminate as of the effective date of the order, but vested rights and
obligations of the Bank and the Executive shall not be affected.
(e) Notwithstanding anything herein contained to the contrary, if the
Bank is in default (within the meaning of Section 3(x)(1) of the FDI
Act, 12 U.S.C. ss.1813(x)(1), all prospective obligations of the Bank
under this Agreement shall terminate as of the date of default, but
vested rights and obligations of the Bank and the Executive shall not
be affected.
(f) Notwithstanding anything herein contained to the contrary, all
prospective obligations of the Bank hereunder shall be terminated,
except to the extent that a continuation of this Agreement is necessary
for the continued operation of the Bank: (i) by the Director of the OTS
or his or her designee or the FDIC, at the time the FDIC enters into an
agreement to provide assistance to or on behalf of the Bank under the
authority contained in Section 13(c) of the FDI Act, 12 U.S.C.
ss.1823(c); (ii) by the Director of the OTS or his or her designee at
the time such Director or designee approves a supervisory merger to
resolve problems related to the operation of the Bank or when the Bank
is determined by such Director to be in an unsafe or unsound condition.
The vested rights and obligations of the parties shall not be affected.
If and to the extent that any of the foregoing provisions shall cease to be
required by applicable law, rule or regulation, the same shall become
inoperative as though eliminated by formal amendment of this Agreement.
<PAGE>
SIGNATURES
IN WITNESS WHEREOF, JAMAICA SAVINGS BANK FSB. has caused this
Agreement to be executed and its seal to be affixed hereunto by its duly
authorized officer, and the Executive has signed this Agreement, on the 22nd day
of June, 1999.
ATTEST: JAMAICA SAVINGS BANK FSB
Joanne Corrigan By: Edward P. Henson
- --------------- ----------------
Joanne Corrigan Edward P. Henson
Secretary President
[Seal]
WITNESS:
Park T. Adikes
--------------
Park T. Adikes
<PAGE>
STATE OF NEW YORK )
: ss.:
COUNTY OF NASSAU )
On this 22nd day of June, 1999, before me personally came Edward P.
Henson, to me known, who, being by me duly sworn, did depose and say that he is
President of Jamaica Savings Bank FSB, the federally chartered savings bank
described in and which executed the foregoing instrument; that he knows the seal
of said bank; that the seal affixed to said instrument is such seal; that it was
so affixed by order of the Board of Directors of said bank; and that he signed
his name thereto by like order.
Name:
Notary Public
STATE OF NEW YORK )
: ss.:
COUNTY OF NASSAU )
On this 22nd day of June, 1999, before me personally came Park T.
Adikes, to me known, and known to me to be the individual described in the
foregoing instrument, who, being by me duly sworn, did depose and say that he
resides at the address set forth in said instrument, and that he signed his name
to the foregoing instrument.
Name:
Notary Public
<PAGE>
APPENDIX A
----------
1. INTRODUCTION. Sections 280G and 4999 of the Internal Revenue Code of
1986, as amended ("Code"), impose a 20% non-deductible federal excise tax on a
person if the payments and benefits in the nature of compensation to or for the
benefit of that person that are contingent on a change in the ownership or
effective control of the Company or the Bank or in the ownership of a
substantial portion of the assets of the Company or the Bank (such payments and
benefits are considered "parachute payments" under section 280G) exceed three
times the person's "base amount" under section 280G. Section 23 of the Agreement
provides for the Executive to receive a tax indemnification payment (sometimes
referred to as a "gross-up" payment) if the payments and benefits in the nature
of compensation to or for the benefit of the Executive that are considered
parachute payments cause the imposition of an excise tax under section 4999 of
the Code. Capitalized terms in this Appendix A that are not defined in this
Appendix A have the meaning used in the Employment Agreement with the Executive.
2. PURPOSE. The purpose of this Appendix A is to illustrate how the tax
indemnification or gross-up payment would be computed. The amounts, figures and
rates used in this example are meant to be illustrative and do not reflect the
actual payments and benefits that would be made to the Executive under this
Agreement. For purposes of this example, it is assumed that a change in control
within the meaning of section 280G of the Code has occurred and that:
(a) The value of the insurance benefits required to be provided to a
hypothetical employee "Z" under sections 4(b)(iii) and 5(b) of the
Agreement for medical, dental, life and other insurance benefits
during the unexpired employment period is $23,000.
(b) The annual rate of Z's salary covered by the Agreement is $100,000,
and Z received annual salary increases of 4%, 5% and 6% (i.e., a
three-year average of 5%) for each of the prior three years. Hence,
the amount payable under sections 4(b)(v) and 5(b) of the Agreement
for salary during the unexpired employment period would be $331,013
[$105,000 + $110, 250 + $115,763].
(c) Z received annual bonuses equal to 20% of his salary in each of the
prior three years. Hence, the amount payable under sections 4(b)(v)
and 5(b) of the Agreement for bonuses during the unexpired employment
period would be $66,203 [20% x ($105,000 + $110,250 + $115,763)].
(d) The amount payable under sections 4(b)(vi) and 5(b) of the Agreement
for the present value of the additional RP and BRP accruals during the
unexpired employment period would be $45,000.
(e) The amount payable under sections 4(b)(vii) and 5(b) of the Agreement
for additional contributions to the ESOP, 401(k) Plan and BRP during
the unexpired employment period would be $20,000.
(f) Z's base amount (i.e., average W-2 wages for the five-year period
preceding the change in control) is $87,000.
3. DETERMINE IF Z IS SUBJECT TO AN EXCISE TAX. Z's parachute payments would
total $485,216 [$23,000 + $331,013 + $66,203 + $45,000 + $20,000]. Three times
Z's base amount is $261,000 [3 x $87,000]; accordingly, Z is subject to an
excise tax because $485,216 exceeds $261,000. Z's "excess parachute payments"
under section 280G of the Code are equal to Z's total parachute payments minus
one times Z's base amount, or $398,216 [$485,216 - $87,000]. If Z were not
protected by section 23 of the Agreement, Z would be subjected to an excise tax
of $79,643 [$398,216 x 20%], in addition to ordinary income taxes.
4. Compute Z's Tax Indemnification Payment. Z's tax indemnification payment
under section 23 of the Agreement would be computed pursuant to the following
formula:
E x P .2 x $398,216
X = ------------------------------------ = ----------------------------------
1 - [(FI x (1 - SLI)) + SLI + E + M] 1 - [.368874 + .0685 + .2 + .0145]
where
E = excise tax rate under section 4999 of the Code [20%];
P = the amount with respect to which such excise tax is
assessed determined without regard to section 23 of
the Agreement [$398,216];
FI = the highest effective marginal rate of income tax
applicable to Z under the Code for the taxable year
in question [assumed to be 39.6% in this example, but
in actuality, the rate is adjusted to take into
account any phase-out or loss of deductions, personal
exemptions and other similar adjustments];
SLI = the sum of the highest effective marginal rates of
income tax applicable to Z under applicable state and
local laws for the taxable year in question [assumed
to be 6.85% in this example, but in actuality, the
rate is adjusted to take into account any phase-out
or loss of deductions, personal exemptions and other
similar adjustments]; and
M = the highest marginal rate of Medicare tax applicable
to Z under the Code for the year in question [1.45%].
In this example, the amount of tax indemnification payment due to Z under
section 23 of the Agreement would be $79,643 [.2 x $398,216] divided by 0.348126
[1 - (.368874 + .0685 + .2 + .0145)], or $228,777. Such amount would be payable
in addition to the other amounts payable under the Agreement in order to put Z
in approximately the same after-tax position that Z would have been in if there
were no excise tax imposed under sections 280G and 4999 of the Code. The tax
indemnification to Z of $228,777 would in turn be a parachute payment subject to
excise tax under sections 280G and 4999. Accordingly, Z's actual excess
parachute payment would be $626,993 [$485,216 - $87,000) + $228,777)] resulting
in an excise tax of $125,399 [$626,993 x 20%]. The difference between the
indemnification. payment and the excise tax [$103,378] is an amount equal to the
sum of the income and other applicable taxes due on the indemnification payment
[($228,777 x .368874) + ($228,777 x .0685) + ($228,777 x .0145)], confirming
that the amount of the tax indemnification payment is sufficient to satisfy all
of Z's tax liability resulting from the excess parachute payment.
JAMAICA SAVINGS BANK FSB
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT ("Agreement") is made and entered
into as of June 22, 1999 by and between JAMAICA SAVINGS BANK FSB, a federally
chartered savings bank, having its principal office at 303 Merrick Road,
Lynbrook, New York 11563 ("Bank"), and Edward P. Henson, an individual residing
at (address omitted) ("Executive"). This Agreement amends, restates and
supersedes the Employment Agreement dated as of June 27, 1990 and the
Supplemental Employment Agreement dated as of July 9, 1996 by and between the
Bank and the Executive. Any reference to the "Company" in this Agreement shall
mean JSB Financial, Inc. and any successor thereto.
W I T N E S S E T H :
WHEREAS, the Executive is currently serving as President of
the Bank, and the Bank wishes to assure itself of the services of the Executive
for the period provided in this Agreement; and
WHEREAS, the Executive is willing to serve in the employ of
the Bank on the terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the premises and the
mutual covenants and conditions hereinafter set forth, the Bank and the
Executive hereby agree as follows:
1. POSITION AND RESPONSIBILITIES.
During the period of his employment hereunder, the Executive
agrees to serve as President of the Bank. The Executive shall render
administrative and management services to the Bank such as are customarily
performed by persons situated in a similar executive capacity and shall perform
such other duties not inconsistent with his title and office as may be assigned
to him by or under the authority of the Board of Directors of the Bank (the
"Board"). The Executive shall have such authority as is necessary or appropriate
to carry out his assigned duties. Failure to re-elect the Executive as President
of the Bank (or a more senior position) or re-nominate the Executive as a
Director of the Bank without the consent of the Executive shall constitute a
breach of this Agreement.
2. TERMS.
(a) The period of the Executive's employment under this
Agreement shall be deemed to have commenced as of the date first above written
(the "Effective Date") and shall be for an initial term of three years. Prior to
the first anniversary of the Effective Date of this Agreement and on each
anniversary date thereafter (each, an "Anniversary Date"), the Board shall
review the terms of this Agreement and the Executive's performance of services
hereunder and may, in the absence of objection from the Executive, approve an
extension of the Employment Agreement. In such event, the Employment Agreement
shall be extended to the third anniversary of the relevant Anniversary Date. For
purposes of this Agreement, the term "Employment Period" shall mean the term of
this Agreement plus such extensions as are provided herein.
(b) During the period of his employment hereunder, except for
periods of absence occasioned by illness, disability, holidays, reasonable
vacation periods and reasonable leaves of absence, the Executive shall devote
substantially all of his business time, attention, skill and efforts to the
faithful performance of his duties hereunder including (i) service as President
of the Bank, and, if duly elected, a Director of the Bank, (ii) performance of
such duties not inconsistent with his title and office as may be assigned to him
by or under the authority of the Board or a more senior executive officer, and
(iii) such other activities and services related to the organization, operation
and management of the Bank. During the Employment Period it shall not be a
violation of this Agreement for the Executive to (A) serve on corporate, civic,
industry or charitable boards or committees, (B) deliver lectures, fulfill
speaking engagements or teach at educational institutions and (C) manage
personal investments, so long as such activities do not significantly interfere
with the performance of the Executive's responsibilities as an employee of the
Bank in accordance with this Agreement. It is expressly understood and agreed
that to the extent that any such activities have been conducted by the Executive
prior to the Effective Date, the continued conduct of such activities (or the
conduct of activities similar in nature and scope thereto) subsequent to the
Effective Date shall not thereafter be deemed to interfere with the performance
of the Executive's responsibilities to the Bank. It is also expressly agreed
that the Executive may conduct activities subsequent to the Effective Date that
are generally accepted for an executive in his position, regardless of whether
conducted by the Executive prior to the Effective Date.
(c) Notwithstanding anything herein contained to the contrary:
(i) the Executive's employment with the Bank may be terminated by the Bank or
the Executive during the term of this Agreement, subject to the terms and
conditions of this Agreement; and (ii) nothing in this Agreement shall mandate
or prohibit a continuation of the Executive's employment following the
expiration of the term of this Agreement upon such terms and conditions as the
Board and the Executive may mutually agree.
(d) For all purposes of this Agreement, the term "Unexpired
Employment Period" as of any date shall mean the period beginning on such date
and ending on the Anniversary Date on which the Employment Period (as extended
pursuant to Section 2(a) of this Agreement) is then scheduled to expire.
3. COMPENSATION AND REIMBURSEMENT.
(a) The compensation specified under this Agreement shall
constitute the salary and benefits paid for the duties described in Section 1.
The Bank shall pay the Executive as compensation a salary at an annual rate of
not less than (salary omitted) per year or such higher rate as may be prescribed
by or under the authority of the Board ("Base Salary"). The Base Salary payable
under this Section 3 shall be paid in approximately equal installments in
accordance with the Bank's customary payroll practices. During the period of
this Agreement, the Executive's Base Salary shall be reviewed at least annually;
the first such review will be made no later than one year from the date of this
Agreement. Such review shall be conducted by a Committee designated by the
Board, and the Board may increase the Executive's Base Salary, which increased
amount shall be considered the Executive's "Base Salary" for purposes of this
Agreement. In no event shall the Executive's annual rate of Base Salary under
this Agreement in effect at a particular time be reduced without his prior
written consent. In addition to the Base Salary provided in this Section 3(a),
the Bank shall provide the Executive at no cost to the Executive with all such
other benefits as are provided uniformly to permanent full-time employees of the
Bank.
(b) The Bank will provide the Executive with employee benefit
plans, arrangements and perquisites substantially equivalent to those in which
the Executive was participating or otherwise deriving benefit from immediately
prior to the beginning of the term of this Agreement, and the Bank will not,
without the Executive's prior written consent, make any changes in such plans,
arrangements or perquisites which would adversely affect the Executive's rights
or benefits thereunder. Without limiting the generality of the foregoing
provisions of this Subsection (b), the Executive will be entitled to participate
in or receive benefits under any employee benefit plans with respect to which
the Executive satisfies the eligibility requirements, including, but not limited
to, the Retirement Plan of Jamaica Savings Bank FSB ("RP"), the Incentive
Savings Plan of Jamaica Savings Bank FSB ("ISP"), the Jamaica Savings Bank FSB
Employee Stock Ownership Plan ("ESOP"), the Benefit Restoration Plan of Jamaica
Savings Bank FSB ("BRP"), the JSB Financial, Inc. 1990 Stock Option Plan, the
JSB Financial, Inc. 1996 Stock Option Plan, retirement plans, supplemental
retirement plans, pension plans, profit-sharing plans, group life, health
(including hospitalization, medical and major medical), dental, accidental death
and dismemberment, travel accident and short-term disability insurance plans, or
any other employee benefit plan or arrangement made available by the Bank in the
future to its senior executives and key management employees, subject to and on
a basis consistent with the terms, conditions and overall administration of such
plans and arrangements. The Executive will be entitled to incentive compensation
and bonuses as provided in any plan of the Bank in which the Executive is
eligible to participate. Nothing paid to the Executive under any such plan or
arrangement will be deemed to be in lieu of other compensation to which the
Executive is entitled under this Agreement.
(c) The Executive's principal place of employment shall be at
the Bank's executive offices at the address first above written, or at such
other location in New York City or in Nassau County or Suffolk County at which
the Bank shall maintain its principal executive offices, or at such other
location as the Board and the Executive may mutually agree upon. The Bank shall
provide the Executive, at his principal place of employment with support
services and facilities suitable to his position with the Bank and necessary or
appropriate in connection with the performance of his assigned duties under this
Agreement. The Bank shall provide the Executive with an automobile suitable to
the position of President of the Bank, in accordance with prior practice, and
such automobile may be used by the Executive in carrying out his duties under
the Agreement, including commuting between his residence and his principal place
of employment, and other personal use. The Bank shall reimburse the Executive
for his ordinary and necessary business expenses, including, without limitation,
fees for memberships in such clubs and organizations as the Executive and the
Board shall mutually agree are necessary and appropriate for business purposes,
and travel and entertainment expenses, incurred in connection with the
performance of his duties under this Agreement, upon presentation to the Bank of
an itemized account of such expenses in such form as the Bank may reasonably
require.
4. PAYMENTS TO THE EXECUTIVE UPON AN EVENT OF TERMINATION.
The provisions of this Section shall in all respects be
subject to the terms and conditions stated in Sections 9 and 28.
(a) Upon the occurrence of an Event of Termination (as herein
defined) during the Executive's term of employment under this Agreement, the
provisions of this Section shall apply. As used in this Agreement, an "Event of
Termination" shall mean and include any one or more of the following: (i) the
termination by the Bank or the Company of the Executive's full-time employment
hereunder for any reason other than: following a Change in Control, as defined
in Section 5; for Disability, as defined in Section 6; for Retirement, as
defined in Section 8; for Cause, as defined in Section 9; or upon the
Executive's death; or (ii) unless consented to by the Executive, the Executive's
voluntary resignation from the Bank's employ, upon any: (A) failure to elect or
re-elect or to appoint or re-appoint the Executive as President of the Bank or
to nominate or re-nominate the Executive as a Director of the Bank or the
Company, (B) material adverse change in the Executive's function, duties, or
responsibilities, which change would cause the Executive's position to become
one of lesser responsibility, importance, or scope from the position and
attributes thereof described in Section 1, above (and any such material change
shall be deemed a continuing breach of this Agreement), (C) relocation of the
Executive's principal place of employment by more than 30 miles from its
location at the Effective Date of this Agreement, or a material reduction in the
benefits and perquisites to the Executive from those being provided as of the
Effective Date of this Agreement, (D) liquidation or dissolution of the Bank or
the Company, or (E) material breach of this Agreement by the Bank. Upon the
occurrence of any event described in clauses (A), (B), (C), (D) or (E), above,
the Executive shall have the right to elect to terminate his employment under
this Agreement by resignation upon written notice pursuant to Section 10 given
within a reasonable period of time not to exceed, except in case of a continuing
breach, four calendar months after the event giving rise to said right to elect.
(b) Upon the occurrence of an Event of Termination as set
forth in Section 4(a), on the Date of Termination, as defined in Section 10, the
Bank shall be obligated to pay, or to provide, the Executive, or, in the event
of his subsequent death, to his surviving spouse or such other beneficiary or
beneficiaries as the Executive may designate in writing, or if neither his
estate, as severance pay or liquidated damages, or both, the benefits provided
below and a payment equal to the sum of the payments set forth below:
(i) payment of the sum of (A) the Executive's annual Base
Salary through the Date of Termination to the extent not theretofore
paid and (B) any compensation previously deferred by the Executive
(together with any accrued interest or earnings thereon) and any
accrued vacation pay, in each case to the extent not theretofore paid
(the sum of the amounts described in clauses (A) and (B) shall be
hereinafter referred to as the "Accrued Obligations");
(ii) the benefits, if any, to which the Executive is entitled
as a former employee under the Bank's or the Company's employee benefit
plans and programs and compensation plans and programs;
(iii) continued group life, health (including hospitalization,
medical and major medical), dental, accidental death and dismemberment,
travel accident and short-term disability insurance benefits as
provided by the Bank or the Company, in addition to that provided
pursuant to Section 4(b)(ii), if and to the extent necessary to provide
for the Executive, for the remaining Unexpired Employment Period,
coverage equivalent to the coverage to which he would have been
entitled if he had continued working for the Bank during the remaining
Unexpired Employment Period at the highest annual rate of salary
achieved during the Employment Period; provided, however, if the
Executive has obtained group life, health (including hospitalization,
medical and major medical), dental, accidental death and dismemberment,
travel accident and/or short-term disability insurance benefits
coverage from another source, the Executive may, as of any month, make
an irrevocable election to forego the continued coverage that would
otherwise be provided hereunder for the remaining Unexpired Employment
Period, or any portion thereof, in which case the Bank or the Company,
upon receipt of the Executive's irrevocable election, shall pay the
Executive an amount equal to the estimated cost to the Bank or the
Company of providing such coverage during such period;
(iv) if and to the extent not already provided under Sections
4(b)(ii) and 4(b)(iii), continued health (including hospitalization,
medical and major medical) and dental insurance benefits to the extent
maintained by the Bank or the Company for its employees or retirees
during the remainder of the Executive's lifetime and the lifetime of
his spouse, if any, for so long as the Executive continues to reimburse
the Bank for the cost of such continued coverage;
(v) a lump sum payment, as liquidated damages, in an amount
equal to the Base Salary and bonus or other incentive compensation that
the Executive would have earned if the Executive had continued working
for the Bank and the Company during the remaining Unexpired Employment
Period (A) at the highest annual rate of Base Salary and bonus or other
incentive compensation achieved by the Executive during the three-year
period immediately preceding the Executive's Date of Termination,
except that (B) in the case of a Change in Control, such lump sum shall
be determined based upon the Base Salary and the bonus or other
incentive compensation, respectively, that the Executive would have
been paid during the remaining Unexpired Employment Period including
the assumed increases referred to in clauses (i) and (ii) of Section
5(b);
(vi) a lump sum payment in an amount equal to the excess, if
any, of: (A) the present value of the pension benefits to which the
Executive would be entitled under the RP and the BRP (and under any
other qualified and non-qualified defined benefit plans maintained by
the Bank or the Company covering the Executive) as if he had continued
working for the Bank during the remaining Unexpired Employment Period
(x) at the highest annual rate of Base Salary and, if applicable, the
highest bonus or other incentive compensation, respectively, achieved
by the Executive during the three-year period immediately preceding the
Executive's Date of Termination, except that (y) in the case of a
Change in Control, such lump sum shall be determined based upon the
Base Salary and, if applicable, the highest bonus or other incentive
compensation, respectively, that the Executive would have been paid
during the remaining Unexpired Employment Period including the assumed
increases referred to in clauses (i) and (ii) of Section 5(b), and (z)
in the case of a Change in Control, as if three additional years are
added to the Executive's age and years of creditable service under the
RP and the BRP and after taking into account any other compensation
required to be taken into account under the RP and the BRP (and any
other qualified and non-qualified defined benefit plans of the Bank or
the Company, as applicable), over (B) the present value of the pension
benefits to which he is actually entitled under the RP and the BRP (and
any other qualified and non-qualified defined benefit plans) as of his
Date of Termination, where such present values are to be determined
using a discount rate of 6% and the mortality tables prescribed under
section 72 of the Internal Revenue Code of 1986, as amended ("Code");
and
(vii) a lump sum payment in an amount equal to the
contributions that would have been made by the Bank or the Company on
the Executive's behalf to the ISP and the ESOP and to the BRP with
respect to such ISP and ESOP contributions (and to any other qualified
and non-qualified defined contribution plans maintained by the Bank or
the Company covering the Executive) as if the Executive had continued
working for the Bank and the Company during the remaining Unexpired
Employment Period making the maximum amount of employee contributions
required, if any, under such plan or plans and earning (A) the highest
annual rate of Base Salary and, if applicable, the highest bonus or
other incentive compensation, respectively, achieved by the Executive
during the three-year period immediately preceding the Executive's Date
of Termination, except that (B) in the case of a Change in Control,
such lump sum shall be determined based upon the Base Salary and, if
applicable, the bonus or other incentive compensation, respectively,
that the Executive would have been paid during the remaining Unexpired
Employment Period including the assumed increases referred to in
clauses (i) and (ii) of Section 5(b).
The benefits to be provided under, and the amounts payable pursuant to, this
Section 4 shall be provided and be payable without regard to proof of damages
and without regard to the Executive's efforts, if any, to mitigate damages. The
Bank and the Executive hereby stipulate that the damages which may be incurred
by the Executive following any such termination of employment are not capable of
accurate measurement as of the date first above written and that such liquidated
damages constitute reasonable damages under the circumstances.
(c) Payments to the Executive under Section 4 shall be made
within ten days of the Executive's Date of Termination.
(d) In the event payments are made under Section 4 or Section
5, the Executive may select an individual or firm to provide him with reasonable
outplacement counseling services, and the Bank shall pay for the costs of such
services; provided, however, that the cost to the Bank of such outplacement
counseling services shall not exceed 25% of the Executive's Base Salary.
5. CHANGE IN CONTROL.
(a) No benefit shall be payable under this Section 5 unless
there shall have been a Change in Control of the Bank or the Company, as set
forth below. For purposes of this Agreement, a "Change in Control" of the Bank
or the Company shall mean any one or more of the following:
(i) An event of a nature that would be required to be reported
in response to Item l(a) of the current report on Form 8-K, as in
effect on the date hereof, pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act");
(ii) An event of a nature that results in a Change in Control
of the Bank or the Company within the meaning of the Home Owners' Loan
Act of 1933, as amended, or the Change in Bank Control Act of 1978, as
amended, as applicable, and the Rules and Regulations promulgated by
the Office of Thrift Supervision ("OTS") or its predecessor agency, the
Federal Deposit Insurance Corporation ("FDIC") or the Board of
Governors of the Federal Reserve System ("FRB"), as the case may be, as
in effect on the date hereof, but excluding any such Change in Control
resulting from the purchase of securities by the Company or the Bank's
or the Company's tax-qualified employee benefit plans and trusts;
(iii) If any "person" (as the term is used in Sections 13(d)
and 14(d) of the Exchange Act) is or becomes the "beneficial owner" (as
defined in Rule 13d-3 under the Exchange Act), directly or indirectly,
of securities of the Bank or the Company representing 20% or more of
the Bank's or the Company's outstanding securities except for any
securities of the Bank purchased by the Company in connection with the
initial conversion of the Bank from mutual to stock form (the
"Conversion") and any securities purchased by the Company or the Bank's
or the Company's tax-qualified employee benefit plans and trusts;
(iv) If the individuals who constitute the Board on the date
hereof (the "Incumbent Board") cease for any reason to constitute at
least a majority of the Board, provided, however, that any person
becoming a director subsequent to the date hereof whose election or
nomination for election by the Company's stockholders, was approved by
a vote of at least three-quarters of the directors then comprising the
Incumbent Board shall be considered as though he were a member of the
Incumbent Board, but excluding, for this purpose, any such person whose
initial assumption of office occurs as a result of an actual or
threatened election contest with respect to the election or removal of
directors or other actual or threatened solicitation of proxies or
consents by or on behalf of a person other than the Board;
(v) A merger, consolidation, reorganization, sale of all or
substantially all the assets of the Bank or the Company or similar
transaction occurs in which the Bank or the Company is not the
resulting entity, other than a transaction following which (A) at least
51% of the equity ownership interests of the entity resulting from such
transaction are beneficially owned (within the meaning of Rule 13d-3
promulgated under Exchange Act) in substantially the same relative
proportions by persons who, immediately prior to such transaction,
beneficially owned (within the meaning of Rule 13d-3 promulgated under
the Exchange Act) at least 51% of the outstanding equity ownership
interests in the Bank or the Company and (B) at least 51% of the
securities entitled to vote generally in the election of directors of
the entity resulting from such transaction are beneficially owned
(within the meaning of Rule 13d-3 promulgated under the Exchange Act)
in substantially the same relative proportions by persons who,
immediately prior to such transaction, beneficially owned (within the
meaning of Rule 13d-3 promulgated under the Exchange Act) at least 51%
of the securities entitled to vote generally in the election of
directors of the Bank or the Company;
(vi) A proxy statement shall be distributed soliciting proxies
from stockholders of the Company, by someone other than the current
management of the Company, seeking stockholder approval of a plan of
reorganization, merger or consolidation of the Company or the Bank or
similar transaction with one or more corporations as a result of which
the outstanding shares of the class of securities then subject to such
plan or transaction are exchanged for or converted into cash or
property or securities not issued by the Bank or the Company; or
(vii) A tender offer is completed for 20% or more of the
voting securities of the Bank or Company then outstanding.
The "Change in Control Date" shall mean the date during the Employment Period on
which a Change in Control occurs. Anything in this Agreement to the contrary
notwithstanding, if the Executive's employment with the Company is terminated
and if it is reasonably demonstrated by the Executive that such termination of
employment (1) was at the request of a third party who has taken steps
reasonably calculated to effect a Change in Control or (2) otherwise arose in
connection with or anticipation of a Change in Control, then for all purposes of
this Agreement the "Change in Control Date" shall mean the date immediately
prior to the date of such termination of employment.
(b) If any of the events described in Section 5(a)
constituting a Change in Control have occurred or the Board has determined that
a Change in Control has occurred, the Executive shall be entitled to the
payments and the benefits provided below on the Change in Control Date. The
amounts payable and the benefits to be provided under this Section 5(b) to the
Executive shall consist of the payments and benefits that would be due to the
Executive and the Executive's family under Section 4(b) for the Unexpired
Employment Period as if an Event of Termination under Section 4(a) had occurred
on the Change in Control Date. For purposes of determining the payments and
benefits due under this Section 5(b), when calculating the payments due and
benefits to be provided for the Unexpired Employment Period, it shall be assumed
that for each year of the remaining term of this Agreement, the Executive would
have received (i) an annual increase in Base Salary equal to the average
percentage increase in Base Salary received by the Executive for the three-year
period ending with the earlier of (x) the year in which the Change in Control
Date occurs or (y) the year during which a definitive agreement, if any,
governing the Change in Control is executed, with the first such increase
effective as of the January 1st next following such three-year period and the
second and third such increases effective as of the next two anniversaries of
such January 1st, (ii) a bonus or other incentive compensation equal to the
highest percentage rate of bonus or incentive compensation paid to the Executive
during the three-year period referred to in clause (i) of this Section 5(b)
times the Base Salary that the Executive would have been paid during the
remaining term of this Agreement including the assumed increases referred to in
clause (i) of this Section 5(b), (iii) the maximum contributions that could be
made by or on behalf of the Executive with respect to any employee benefit plans
and programs maintained by the Company and the Bank based upon the Base Salary
and, if applicable, the bonus or other incentive compensation, respectively,
that the Executive would have been paid during the remaining term of this
Agreement including the assumed increases referred to in clauses (i) and (ii) of
this Section 5(b), and (iv) the present value of the pension benefits to which
the Executive is entitled under Section 4(b)(vi) with respect to the RP and the
BRP (and under any other qualified and non-qualified defined benefit plans
maintained by the Bank or the Company covering the Executive) shall be
determined as if he had continued working for the Bank during the remaining
Unexpired Employment Period and shall be based upon the Base Salary and, if
applicable, the bonus or other incentive compensation, respectively, that the
Executive would have been paid during the remaining term of this Agreement
including the assumed increases referred to in clauses (i) and (ii) of this
Section 5(b). The benefits to be provided under, and the amounts payable
pursuant to, this Section 5 shall be provided and be payable without regard to
proof of damages and without regard to the Executive's efforts, if any, to
mitigate damages. The Bank and the Executive hereby stipulate that the damages
which may be incurred by the Executive following any Change in Control are not
capable of accurate measurement as of the date first above written and that such
liquidated damages constitute reasonable damages under the circumstances.
(c) Payments under Section 5(b) shall be made to the Executive
on the Change in Control Date. Such payments shall be made regardless of whether
the Executive's employment terminates.
6. TERMINATION FOR DISABILITY.
(a) In the event of Termination for Disability, the Executive
shall receive the benefits provided in Section 6(b); provided, however, that the
benefits provided under Section 6(b) shall not be deemed to be in lieu of the
benefits he is otherwise entitled as a former employee under the Bank or the
Company's employee plans and programs. For purposes of this Agreement, the
Executive may be terminated for disability only if (i) the Executive shall have
been absent from his duties with the Bank on a full-time basis for at least six
consecutive months, or (ii) a majority of the members of the Board acting in
good faith determine that, based upon competent and independent medical evidence
presented by a physician or physicians agreed upon by the parties, the
Executive's physical or mental condition is such that he is totally and
permanently incapable of engaging in any substantial gainful employment based
upon his education, training and experience; provided, however, that on and
after the earliest date on which a Change in Control of the Bank or the Company
as defined in Section 5 occurs, such a determination shall require the
affirmative vote of at least three-fourths of the members of the Board acting in
good faith and such vote shall not be made prior to the expiration of a 60-day
period following the date on which the Board shall, by written notice to the
Executive, furnish him a statement of its grounds for proposing to make such
determination, during which period the Executive shall be afforded a reasonable
opportunity to make oral and written presentations to the members of the Board,
and to be represented by his legal counsel at such presentations, to refute the
grounds for the proposed determination.
(b) The Bank will pay the Executive as Disability pay, a
bi-weekly payment equal to 100% of the Executive's bi-weekly annual rate of Base
Salary in effect on the date of the Executive's Termination for Disability. In
addition, the Bank will cause to be continued insurance coverage, including
group life, health (including hospitalization, medical and major medical),
dental, accidental death and dismemberment, travel accident and short-term
disability coverage substantially identical to the coverage maintained by the
Bank or the Company for the Executive prior to his Termination for Disability.
The Disability pay and coverages shall commence on the effective date of the
Executive's termination and shall cease upon the earliest to occur of: (i) the
date the Executive returns to the full-time employment of the Bank, in the same
capacity as he was employed prior to his Termination for Disability and pursuant
to an employment agreement between the Executive and the Bank; (ii) the
Executive's full-time employment by another employer; (iii) the Executive's
attaining the normal age of retirement or receiving benefits under the RP or
other defined benefit pension plan of the Bank or the Company; (iv) the
Executive's death; (v) the Executive's eligibility to collect payments under the
disability provision of the RP or other defined benefit pension plan of the Bank
or the Company; or (vi) the expiration of the term of this Agreement.
(c) Notwithstanding the foregoing, there will be no reduction
in the compensation otherwise payable to the Executive during any period during
which the Executive is incapable of performing his duties hereunder by reason of
temporary disability.
7. TERMINATION UPON DEATH.
The Executive's employment shall terminate automatically upon
the Executive's death during the Employment Period. In such event, the Executive
and the Executive's legal representatives shall be entitled to the following:
(i) payment of the Executive's "Accrued Obligations;"
(ii) the continuation of all benefits to the Executive's
family and dependents that would have been provided if the Executive
had been entitled to the benefits under Section 4(b)(ii), (iii) and
(iv), and
(iii) the timely payment of any other amounts or benefits
required to be paid or provided or which the Executive is eligible to
receive under any plan, program, policy or practice or contract or
agreement of the Bank and its affiliated companies (all such other
amounts and benefits shall be hereinafter referred to as the "Other
Benefits");
provided, however, that if the Executive dies while in the employment of the
Bank, the amount of life insurance provided to the Executive by the Bank shall
not be less than the lesser of $200,000 or three times the Executive's then
annual Base Salary. Accrued Obligations shall be paid to the Executive's estate
or beneficiary, as applicable, in a lump sum cash payment within ten days of the
Date of Termination. With respect to the provision of Other Benefits after the
Change in Control Date, the term Other Benefits as utilized in this Section 7
shall include, without limitation, that the Executive's estate and/or
beneficiaries shall be entitled to receive, benefits at least equal to the most
favorable benefits provided by the Bank and affiliated companies to the estates
and beneficiaries of peer executives of the Bank and such affiliates companies
under such plans, programs, practices and policies relating to death benefits,
if any, as in effect with respect to other peer executives and their
beneficiaries at any time during the 120-day period immediately preceding the
Change in Control Date.
8. TERMINATION UPON RETIREMENT.
Termination by the Bank of the Executive based on "Retirement"
shall mean termination in accordance with the Company's or the Bank's retirement
policy or in accordance with any retirement arrangement established with the
Executive's consent with respect to him. Upon termination of the Executive upon
Retirement, the Executive shall be entitled to all benefits under the RP and any
other retirement plan of the Bank or the Company and other plans to which the
Executive is a party, and the Executive shall be entitled to the benefits, if
any, that would be payable to him as a former employee under the Bank's or the
Company's employee benefit plans and programs and compensation plans and
programs.
9. TERMINATION FOR CAUSE.
The terms "Termination for Cause" or "Cause" shall mean
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 any material breach of
this Agreement, in such case as measured against standards generally prevailing
at the relevant time in the savings and community banking industry. For purposes
of this Section, no act, or the failure to act, on the Executive's part shall be
"willful" unless done, or omitted to be done, in bad faith and without
reasonable belief that the action or omission was in the best interest of the
Bank or its affiliates. Any act, or failure to act, based upon authority given
pursuant to a resolution duly adopted by the Board or based upon the written
advice of counsel for the Bank shall be conclusively presumed to be done, or
omitted to be done, by the Executive in good faith and in the best interests of
the Bank. Notwithstanding the foregoing, the Executive shall not be deemed to
have been terminated for Cause unless and until there shall have been delivered
to him a Notice of Termination which shall include a copy of a resolution duly
adopted by the affirmative vote of not less than three-fourths of the members of
the Board at a meeting of the Board called and held for that purpose (after
reasonable notice to the Executive and an opportunity for him, together with
counsel, to be heard before the Board), finding that in the good faith opinion
of the Board, the Executive was guilty of conduct justifying Termination for
Cause and specifying the particulars thereof in detail. The Executive shall not
have the right to receive compensation or other benefits for any period after
Termination for Cause.
10. NOTICE.
(a) Any purported termination by the Bank or by the Executive
shall be communicated by a Notice of Termination to the other party hereto. For
purposes of this Agreement, a "Notice of Termination" shall mean a written
notice which shall indicate the specific termination provision in this Agreement
relied upon and shall set forth in reasonable detail the facts and circumstances
claimed to provide a basis for termination of the Executive's employment under
the provision so indicated.
(b) Subject to Section 10(c), "Date of Termination" shall mean
(A) if the Executive's employment is terminated for Disability, 30 days after a
Notice of Termination is given (provided that he shall not have returned to the
performance of his duties on a full-time basis during such 30-day period), and
(B) if his employment is terminated for any other reason, the date specified in
the Notice of Termination (which, in the case of a Termination for Cause, shall
be immediate).
(c) If, within 30 days after any Notice of Termination is
given, the party receiving such Notice of Termination notifies the other party
that a dispute exists concerning the termination, then, except upon the
occurrence of a Change in Control and voluntary termination by the Executive in
which case the Date of Termination shall be the date specified in the Notice,
the Date of Termination shall be the date on which the dispute is finally
determined, either by mutual written agreement of the parties, by a binding
arbitration award, or by a final judgment, order or decree of a court of
competent jurisdiction (the time for appeal therefrom having expired and no
appeal having been perfected) and provided further that the Date of Termination
shall be extended by a notice of dispute only if such notice is given in good
faith and the party giving such notice pursues the resolution of such dispute
with reasonable diligence. Notwithstanding the pendency of any such dispute, the
Bank will continue to pay the Executive his full compensation in effect when the
notice giving rise to the dispute was given (including, but not limited to, Base
Salary) and continue him as a participant in all compensation, benefit and
insurance plans in which he was participating when the notice of dispute was
given, until the dispute is finally resolved in accordance with this Agreement.
Amounts paid under this Section are in addition to all other amounts due under
this Agreement and shall not be offset against or reduce any other amounts due
under this Agreement.
(d) The Bank may terminate the Executive's employment at any
time, but any termination by the Bank, other than Termination for Cause, shall
not prejudice the Executive's right to compensation or other benefits under this
Agreement or under any other benefit or compensation plans or programs
maintained by the Bank or the Company from time to time. The Executive shall not
have the right to receive compensation or other benefits for any period after a
Termination for Cause as defined in Section 9 hereinabove.
(e) Any communication to a party required or permitted under
this Agreement, including any notice, direction, designation, consent,
instruction, objection or waiver, shall be in writing and shall be deemed to
have been given at such time as it is delivered personally, or five days after
mailing if mailed, postage prepaid, by registered or certified mail, return
receipt requested, addressed to such party at the address listed below or at
such other address as one such party may by written notice specify to the other
party, as follows. If to the Executive, (address omitted); if to the Bank,
Jamaica Savings Bank FSB, 303 Merrick Road, Lynbrook, New York 11563, Attention:
Chief Executive Officer, with a copy to Thacher Proffitt & Wood, Two World Trade
Center, New York, New York 10048, Attention: Douglas J. McClintock, Esq.
11. POST-TERMINATION OBLIGATIONS.
(a) All payments and benefits to the Executive under this
Agreement shall be subject to the Executive's compliance with paragraph (b) of
this Section 11 during the term of this Agreement and for one full year after
the expiration or termination hereof.
(b) The Executive shall, upon reasonable notice, furnish such
information and assistance to the Bank as may reasonably be required by the Bank
in connection with any litigation in which it or any of its subsidiaries or
affiliates is, or may become, a party; provided, that the Bank reimburses the
Executive for the reasonable value of his time in connection therewith and for
any out-of-pocket costs attributable thereto.
12. COVENANT NOT TO COMPETE.
The Executive hereby covenants and agrees that for a period of
one year following his Date of Termination, if such termination occurs prior to
the end of the term of the Agreement, he shall not, without the written consent
of the Board, become an officer, employee, consultant, director or trustee of
any savings bank, savings and loan association, savings and loan holding
company, bank or bank holding company if such position (a) entails working in
(or providing services in) New York City, Nassau or Suffolk counties or (b)
entails working in (or providing services in) any other county that is both (i)
within the Bank's primary trade (or operating) area at the time in question,
which shall be determined by reference to the Bank's business plan as in effect
from time to time, and (ii) in which the Bank engages in material or substantial
deposit-taking functions or lending activities at such time; provided, however,
that this Section 12 shall not apply if the Executive's employment is terminated
for the reasons set forth in any of Sections 4, 5, 6 or 8.
13. SOURCE OF PAYMENTS.
All payments provided in this Agreement shall be timely paid
in cash or check from the general funds of the Bank.
14. EFFECT ON PRIOR AGREEMENTS.
This Agreement contains the entire understanding between the
parties hereto and supersedes any prior employment agreement between the Bank or
any predecessor of the Bank and the Executive, including the Employment
Agreement dated June 27, 1990 and the Supplemental Employment Agreement dated
July 9, 1996, except that this Agreement shall not affect or operate to reduce
any benefit or compensation inuring to the Executive of a kind elsewhere
provided. No provisions of this Agreement shall be interpreted to mean that the
Executive is subject to receiving fewer benefits than those available to him
without reference to this Agreement.
15. EFFECT OF ACTION UNDER COMPANY AGREEMENT.
Notwithstanding any provision herein to the contrary, to the
extent that full compensation payments and benefits are paid to or received by
the Executive under the Employment Agreement, dated June 22, 1999, as it may be
amended from time to time, between the Executive and the Company, such
compensation payments and benefits paid by the Company will be deemed to satisfy
the corresponding obligations of the Bank under this Agreement.
16. NO ATTACHMENT.
Except as required by law, no right to receive payments under
this Agreement shall be subject to anticipation, commutation, alienation, sale,
assignment, encumbrance, charge, pledge, or hypothecation, or to execution,
attachment, levy, or similar process or assignment by operation of law, and any
attempt, voluntary or involuntary, to affect any such action shall be null,
void, and of no effect.
17. MODIFICATION AND WAIVER.
(a) This Agreement may not be modified or amended except by an
instrument in writing signed by the parties hereto.
(b) No term or condition of this Agreement shall be deemed to
have been waived, nor shall there be any estoppel against the enforcement of any
provision of this Agreement, except by written instrument of the party charged
with such waiver or estoppel. No such written waiver shall be deemed a
continuing waiver unless specifically stated therein, and each such waiver shall
operate only as to the specific term or condition waived and shall not
constitute a waiver of such term or condition for the future as to any act other
than that specifically waived.
18. SUCCESSOR AND ASSIGNS.
This Agreement will inure to the benefit of and be binding
upon the Executive, his legal representatives and testate or intestate
distributees, and the Bank, its successors and assigns, including any successor
by purchase, merger, consolidation or otherwise or a statutory receiver or any
other person or firm or corporation to which all or substantially all of the
assets and business of the Bank may be sold or otherwise transferred. Any such
successor of the Bank shall be deemed to have assumed this Agreement and to have
become obligated hereunder to the same extent as the Bank and the Executive's
obligations hereunder shall continue in favor of such successor.
19. SEVERABILITY.
If, for any reason, any provision of this Agreement, or any
part of any provision, is held invalid, such invalidity shall not affect any
other provision of this Agreement or any part of such provision not held so
invalid, and each such other provision and part thereof shall to the full extent
consistent with law continue in full force and effect.
20. HEADINGS FOR REFERENCE ONLY.
The headings of Sections and paragraphs herein are included
solely for convenience of reference and shall not control the meaning or
interpretation of any of the provisions of this Agreement. Any reference in this
Agreement to a Section or Subsection shall refer to a Section or Subsection of
this Agreement, except as otherwise specified.
21. GOVERNING LAW.
This Agreement shall be governed by the laws of the State of
New York, without reference to conflicts of law principles.
22. INDEMNIFICATION AND ATTORNEYS' FEES.
(a) The Bank shall indemnify, hold harmless and defend the
Executive against reasonable costs, including legal fees, incurred by him in
connection with his consultation with legal counsel or arising out of any
action, suit or proceeding in which he may be involved, as a result of his
efforts, in good faith, to defend or enforce the terms of this Agreement. The
Bank agrees to pay all such costs as they are incurred by the Executive, to the
full extent permitted by law, and without regard to whether the Bank believes
that it has a defense to any action, suit or proceeding by the Executive or that
it is not obligated for any payments under this Agreement.
(b) In the event any dispute or controversy arising under or
in connection with the Executive's termination is resolved in favor of the
Executive, whether by judgment, arbitration or settlement, the Executive shall
be entitled to the payment of all back-pay, including salary, bonuses and any
other cash compensation, fringe benefits and any compensation and benefits due
the Executive under this Agreement.
(c) The Bank shall indemnify, hold harmless and defend the
Executive for any act taken or not taken, or any omission or failure to act, by
him in good faith while performing services for the Bank or the Company to the
same extent and upon the same terms and conditions as other similarly situated
officers and directors of the Bank or the Company. If and to the extent that the
Bank or the Company, maintains, at any time during the Employment Period, an
insurance policy covering the other officers and directors of the Bank or the
Company against lawsuits, the Bank or the Company shall use its best efforts to
cause the Executive to be covered under such policy upon the same terms and
conditions as other similarly situated officers and directors.
<PAGE>
23. TAX INDEMNIFICATION.
(a) Subject to the provisions of Section 28 hereof, this
Section 23 shall apply if a change "in the ownership or effective control" of
the Bank or "in the ownership of a substantial portion of the assets" of the
Bank occurs within the meaning of section 280G of the Code. If this Section 23
applies, then with respect to any taxable year in which the Executive shall be
liable for the payment of an excise tax under section 4999 of the Code with
respect to any payment in the nature of compensation made by the Bank, the
Company or any direct or indirect subsidiary or affiliate of the Bank to (or for
the benefit of) the Executive, the Bank shall pay to the Executive an amount
equal to X determined under the following formula:
X = E x P
-------------------------------------------------
1 - [(FI x (1 - SLI)) + SLI + E + M]
where
E = the rate at which the excise tax is assessed under
section 4999 of the Code;
P = the amount with respect to which such excise tax is
assessed, determined without regard to this Section
23;
FI = the highest effective marginal rate of income tax
applicable to the Executive under the Code for the
taxable year in question (taking into account any
phase-out or loss of deductions, personal exemptions
and other similar adjustments);
SLI = the sum of the highest effective marginal rates of
income tax applicable to the Executive under all
applicable state and local laws for the taxable year
in question (taking into account any phase-out or
loss of deductions, personal exemptions and other
similar adjustments); and
M = the highest marginal rate of Medicare tax
applicable to the Executive under the Code for the
taxable year in question.
Attached as Appendix A to this Agreement is an example that illustrates
application of this Section 23. Any payment under this Section 23 shall be
adjusted so as to fully indemnify the Executive on an after-tax basis so that
the Executive would be in the same after-tax financial position in which he
would have been if no excise tax under section 4999 of the Code had been
imposed. With respect to any payment in the nature of compensation that is made
to (or for the benefit of) the Executive under the terms of this Agreement or
otherwise and on which an excise tax under section 4999 of the Code will be
assessed, the payment determined under this Section 23(a) shall be made to the
Executive on the earlier of (i) the date the Bank, the Company or any direct or
indirect subsidiary or affiliate of the Bank is required to withhold such tax,
or (ii) the date the tax is required to be paid by the Executive.
(b) Notwithstanding anything in this Section 23 to the
contrary, in the event that the Executive's liability for the excise tax under
section 4999 of the Code for a taxable year is subsequently determined to be
different than the amount determined by the formula (X + P) x E, where X, P and
E have the meanings provided in Section 23(a), the Executive or the Bank, as the
case may be, shall pay to the other party at the time that the amount of such
excise tax is finally determined, an appropriate amount, plus interest, such
that the payment made under Section 23(a), when increased by the amount of the
payment made to the Executive under this Section 23(b) by the Bank, or when
reduced by the amount of the payment made to the Bank under this Section 23(b)
by the Executive, equals the amount that, it is finally determined, should have
properly been paid to the Executive under Section 23(a). The interest paid under
this Section 23(b) shall be determined at the rate provided under section
1274(b)(2)(B) of the Code. To confirm that the
<PAGE>
proper amount, if any, was paid to the Executive under this Section 23, the
Executive shall furnish to the Bank a copy of each tax return which reflects a
liability for an excise tax payment made by the Bank, at least 20 days before
the date on which such return is required to be filed with the Internal Revenue
Service.
24. NON-EXCLUSIVITY OF RIGHTS.
Except as otherwise provided herein, nothing in this Agreement
shall prevent or limit the Executive's continuing or future participation in any
plan, program, policy or practice provided by the Bank or any of its affiliated
companies and for which the Executive may qualify, nor shall anything herein
limit or otherwise affect such rights as the Executive may have under any
contract or agreement with the Bank or any of its affiliated companies. Amounts
which are vested benefits or which the Executive is otherwise entitled to
receive under any plan, policy, practice or program of or any contract or
agreement with the Bank or any of its affiliated companies at or subsequent to
the Date of Termination shall be payable in accordance with such plan, policy,
practice or program or contract or agreement except as explicitly modified by
this Agreement. Notwithstanding the foregoing, in the event of a termination of
employment, the amounts provided in Section 4 or Section 5, as applicable, shall
be the Executive's sole remedy for any purported breach of this Agreement by the
Bank.
25. MITIGATION; OTHER CLAIMS.
The Bank's obligation to make the payments provided for in
this Agreement and otherwise to perform its obligations hereunder shall not be
affected by any set-off, counterclaim, recoupment, defense or other claim, right
or action which the Bank may have against the Executive or others. In no event
shall the Executive be obligated to seek other employment or take any other
action by way of mitigation of the amounts payable to the Executive under any of
the provisions of this Agreement and such amounts shall not be reduced whether
or not the Executive obtains other employment.
26. CONFIDENTIAL INFORMATION.
The Executive shall hold in a fiduciary capacity for the
benefit of the Bank all secret or confidential information, knowledge or data
relating to the Bank or any of its affiliated companies, and their respective
businesses, which shall have been obtained by the Executive during the
Executive's employment by the Bank or any of its affiliated companies and which
shall not be or become public knowledge (other than by acts by the Executive or
representatives of the Executive in violation of this Agreement). After
termination of the Executive's employment with the Bank, the Executive shall
not, without the prior written consent of the Bank or as may otherwise be
required by law or legal process, communicate or divulge any such information,
knowledge or data to anyone other than the Bank and those designated by it. For
purposes of this Agreement, secret and confidential information, knowledge or
data relating to the Bank or any of its affiliates, and their respective
business, shall not include any information that is public, publicly available
or available through trade association sources. Notwithstanding any other
provision of this Agreement to the contrary, the Executive acknowledges and
agrees that in the event of a violation or threatened violation of any of the
provisions of this Section 26, the Bank shall have no adequate remedy at law and
shall therefore be entitled to enforce each such provision by temporary or
permanent injunction or mandatory relief obtained in any court of competent
jurisdiction without the necessity of proving damages or posting any bond or
other security, and without prejudice to any other remedies that may be
available at law or in equity.
27. ACCESS TO DOCUMENTS.
The Executive shall have the right to obtain copies of any
Bank or Bank documents that the Executive reasonably believes, in good faith,
are necessary or appropriate in determining his entitlement to, and the amount
of, payments and benefits under this Agreement.
28. REQUIRED REGULATORY PROVISIONS.
The following provisions are included for the purpose of
complying with various laws, rules and regulations applicable to the Bank:
(a) Notwithstanding anything herein contained to the contrary,
in no event shall the aggregate amount of compensation payable to the
Executive under Section 4(b) hereof (exclusive of amounts described in
Sections 4(b)(i) and (ii)) exceed three times the Executive's average
annual total compensation for the last five consecutive calendar years
to end prior to his termination of employment with the Bank (or for his
entire period of employment with the Bank if less than five calendar
years).
(b) Notwithstanding anything herein contained to the contrary,
any payments to the Executive by the Bank, whether pursuant to this
Agreement or otherwise, are subject to and conditioned upon their
compliance with Section 18(k) of the Federal Deposit Insurance Act
("FDI Act"), 12 U.S.C. ss.1828(k), and any regulations promulgated
thereunder.
(c) Notwithstanding anything herein contained to the contrary,
if the Executive is suspended from office and/or temporarily prohibited
from participating in the conduct of the affairs of the Bank pursuant
to a notice served under Section 8(e)(3) or 8(g)(1) of the FDI Act, 12
U.S.C. ss.1818(e)(3) or 1818(g)(1), the Bank's obligations under this
Agreement shall be suspended as of the date of service of such notice,
unless stayed by appropriate proceedings. If the charges in such notice
are dismissed, the Bank, in its discretion, may (i) pay to the
Executive all or part of the compensation withheld while the Bank's
obligations hereunder were suspended and (ii) reinstate, in whole or in
part, any of the obligations which were suspended.
(d) Notwithstanding anything herein contained to the contrary,
if the Executive 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) or 8(g)(1) of the FDI Act, 12 U.S.C.
ss.1818(e)(4) or (g)(1), all prospective obligations of the Bank under
this Agreement shall terminate as of the effective date of the order,
but vested rights and obligations of the Bank and the Executive shall
not be affected.
(e) Notwithstanding anything herein contained to the contrary,
if the Bank is in default (within the meaning of Section 3(x)(1) of the
FDI Act, 12 U.S.C. ss.1813(x)(1), all prospective obligations of the
Bank under this Agreement shall terminate as of the date of default,
but vested rights and obligations of the Bank and the Executive shall
not be affected.
(f) Notwithstanding anything herein contained to the contrary,
all prospective obligations of the Bank hereunder shall be terminated,
except to the extent that a continuation of this Agreement is necessary
for the continued operation of the Bank: (i) by the Director of the OTS
or his or her designee or the FDIC, at the time the FDIC enters into an
agreement to provide assistance to or on behalf of the Bank under the
authority contained in Section 13(c) of the FDI Act, 12 U.S.C.
ss.1823(c); (ii) by the Director of the OTS or his or her designee at
the time such Director or designee approves a supervisory merger to
resolve problems related to the operation of the Bank or when the Bank
is determined by such Director to be in an unsafe or unsound condition.
The vested rights and obligations of the parties shall not be affected.
If and to the extent that any of the foregoing provisions shall cease to be
required by applicable law, rule or regulation, the same shall become
inoperative as though eliminated by formal amendment of this Agreement.
<PAGE>
SIGNATURES
IN WITNESS WHEREOF, JAMAICA SAVINGS BANK FSB. has caused this
Agreement to be executed and its seal to be affixed hereunto by its duly
authorized officer, and the Executive has signed this Agreement, on the 22nd day
of June, 1999.
ATTEST: JAMAICA SAVINGS BANK FSB
Joanne Corrigan By: Park T. Adikes
- --------------- --------------
Joanne Corrigan Park T. Adikes
Secretary Chairman and Chief Executive Officer
[Seal]
WITNESS:
Edward P. Henson
----------------
Edward P. Henson
<PAGE>
STATE OF NEW YORK )
: ss.:
COUNTY OF NASSAU )
On this 22nd day of June, 1999, before me personally came Park
T. Adikes, to me known, who, being by me duly sworn, did depose and say that he
is Chairman and Chief Executive Officer of Jamaica Savings Bank FSB, the
federally chartered savings bank described in and which executed the foregoing
instrument; that he knows the seal of said bank; that the seal affixed to said
instrument is such seal; that it was so affixed by order of the Board of
Directors of said bank; and that he signed his name thereto by like order.
Name:
Notary Public
STATE OF NEW YORK )
: ss.:
COUNTY OF NASSAU )
On this 22nd day of June, 1999, before me personally came
Edward P. Henson, to me known, and known to me to be the individual described in
the foregoing instrument, who, being by me duly sworn, did depose and say that
he resides at the address set forth in said instrument, and that he signed his
name to the foregoing instrument.
Name:
Notary Public
<PAGE>
APPENDIX A
----------
1. INTRODUCTION. Sections 280G and 4999 of the Internal Revenue Code of
1986, as amended ("Code"), impose a 20% non-deductible federal excise tax on a
person if the payments and benefits in the nature of compensation to or for the
benefit of that person that are contingent on a change in the ownership or
effective control of the Company or the Bank or in the ownership of a
substantial portion of the assets of the Company or the Bank (such payments and
benefits are considered "parachute payments" under section 280G) exceed three
times the person's "base amount" under section 280G. Section 23 of the Agreement
provides for the Executive to receive a tax indemnification payment (sometimes
referred to as a "gross-up" payment) if the payments and benefits in the nature
of compensation to or for the benefit of the Executive that are considered
parachute payments cause the imposition of an excise tax under section 4999 of
the Code. Capitalized terms in this Appendix A that are not defined in this
Appendix A have the meaning used in the Employment Agreement with the Executive.
2. PURPOSE. The purpose of this Appendix A is to illustrate how the tax
indemnification or gross-up payment would be computed. The amounts, figures and
rates used in this example are meant to be illustrative and do not reflect the
actual payments and benefits that would be made to the Executive under this
Agreement. For purposes of this example, it is assumed that a change in control
within the meaning of section 280G of the Code has occurred and that:
(a) The value of the insurance benefits required to be provided to a
hypothetical employee "Z" under sections 4(b)(iii) and 5(b) of the
Agreement for medical, dental, life and other insurance benefits
during the unexpired employment period is $23,000.
(b) The annual rate of Z's salary covered by the Agreement is $100,000,
and Z received annual salary increases of 4%, 5% and 6% (i.e., a
three-year average of 5%) for each of the prior three years. Hence,
the amount payable under sections 4(b)(v) and 5(b) of the Agreement
for salary during the unexpired employment period would be $331,013
[$105,000 + $110, 250 + $115,763].
(c) Z received annual bonuses equal to 20% of his salary in each of the
prior three years. Hence, the amount payable under sections 4(b)(v)
and 5(b) of the Agreement for bonuses during the unexpired employment
period would be $66,203 [20% x ($105,000 + $110,250 + $115,763)].
(d) The amount payable under sections 4(b)(vi) and 5(b) of the Agreement
for the present value of the additional RP and BRP accruals during the
unexpired employment period would be $45,000.
(e) The amount payable under sections 4(b)(vii) and 5(b) of the Agreement
for additional contributions to the ESOP, 401(k) Plan and BRP during
the unexpired employment period would be $20,000.
(f) Z's base amount (i.e., average W-2 wages for the five-year period
preceding the change in control) is $87,000.
3. DETERMINE IF Z IS SUBJECT TO AN EXCISE TAX. Z's parachute payments would
total $485,216 [$23,000 + $331,013 + $66,203 + $45,000 + $20,000]. Three times
Z's base amount is $261,000 [3 x $87,000]; accordingly, Z is subject to an
excise tax because $485,216 exceeds $261,000. Z's "excess parachute payments"
under section 280G of the Code are equal to Z's total parachute payments minus
one times Z's base amount, or $398,216 [$485,216 - $87,000]. If Z were not
protected by section 23 of the Agreement, Z would be subjected to an excise tax
of $79,643 [$398,216 x 20%], in addition to ordinary income taxes.
4. Compute Z's Tax Indemnification Payment. Z's tax indemnification payment
under section 23 of the Agreement would be computed pursuant to the following
formula:
E x P .2 x $398,216
X = ------------------------------------ = ----------------------------------
1 - [(FI x (1 - SLI)) + SLI + E + M] 1 - [.368874 + .0685 + .2 + .0145]
where
E = excise tax rate under section 4999 of the Code [20%];
P = the amount with respect to which such excise tax is
assessed determined without regard to section 23 of
the Agreement [$398,216];
FI = the highest effective marginal rate of income tax
applicable to Z under the Code for the taxable year
in question [assumed to be 39.6% in this example, but
in actuality, the rate is adjusted to take into
account any phase-out or loss of deductions, personal
exemptions and other similar adjustments];
SLI = the sum of the highest effective marginal rates of
income tax applicable to Z under applicable state and
local laws for the taxable year in question [assumed
to be 6.85% in this example, but in actuality, the
rate is adjusted to take into account any phase-out
or loss of deductions, personal exemptions and other
similar adjustments]; and
M = the highest marginal rate of Medicare tax applicable
to Z under the Code for the year in question [1.45%].
In this example, the amount of tax indemnification payment due to Z under
section 23 of the Agreement would be $79,643 [.2 x $398,216] divided by 0.348126
[1 - (.368874 + .0685 + .2 + .0145)], or $228,777. Such amount would be payable
in addition to the other amounts payable under the Agreement in order to put Z
in approximately the same after-tax position that Z would have been in if there
were no excise tax imposed under sections 280G and 4999 of the Code. The tax
indemnification to Z of $228,777 would in turn be a parachute payment subject to
excise tax under sections 280G and 4999. Accordingly, Z's actual excess
parachute payment would be $626,993 [$485,216 - $87,000) + $228,777)] resulting
in an excise tax of $125,399 [$626,993 x 20%]. The difference between the
indemnification. payment and the excise tax [$103,378] is an amount equal to the
sum of the income and other applicable taxes due on the indemnification payment
[($228,777 x .368874) + ($228,777 x .0685) + ($228,777 x .0145)], confirming
that the amount of the tax indemnification payment is sufficient to satisfy all
of Z's tax liability resulting from the excess parachute payment.
JAMAICA SAVINGS BANK FSB
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT ("Agreement") is made and entered
into as of June 22, 1999 by and between JAMAICA SAVINGS BANK FSB, a federally
chartered savings bank, having its principal office at 303 Merrick Road,
Lynbrook, New York 11563 ("Bank"), and John F. Bennett, an individual residing
at (address omitted) ("Executive"). This Agreement amends, restates and
supersedes the Employment Agreement dated as of June 27, 1990 and the
Supplemental Employment Agreement dated as of July 9, 1996 by and between the
Bank and the Executive. Any reference to the "Company" in this Agreement shall
mean JSB Financial, Inc. and any successor thereto.
W I T N E S S E T H :
WHEREAS, the Executive is currently serving as Senior Vice
President of the Bank, and the Bank wishes to assure itself of the services of
the Executive for the period provided in this Agreement; and
WHEREAS, the Executive is willing to serve in the employ of
the Bank on the terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the premises and the
mutual covenants and conditions hereinafter set forth, the Bank and the
Executive hereby agree as follows:
1. POSITION AND RESPONSIBILITIES.
During the period of his employment hereunder, the Executive
agrees to serve as Senior Vice President of the Bank. The Executive shall render
administrative and management services to the Bank such as are customarily
performed by persons situated in a similar executive capacity and shall perform
such other duties not inconsistent with his title and office as may be assigned
to him by or under the authority of the Board of Directors of the Bank (the
"Board"). The Executive shall have such authority as is necessary or appropriate
to carry out his assigned duties. Failure to re-elect the Executive as Senior
Vice President of the Bank (or a more senior position) without the consent of
the Executive shall constitute a breach of this Agreement.
2. TERMS.
(a) The period of the Executive's employment under this
Agreement shall be deemed to have commenced as of the date first above written
(the "Effective Date") and shall be for an initial term of three years. Prior to
the first anniversary of the Effective Date of this Agreement and on each
anniversary date thereafter (each, an "Anniversary Date"), the Board shall
review the terms of this Agreement and the Executive's performance of services
hereunder and may, in the absence of objection from the Executive, approve an
extension of the Employment Agreement. In such event, the Employment Agreement
shall be extended to the third anniversary of the relevant Anniversary Date. For
purposes of this Agreement, the term "Employment Period" shall mean the term of
this Agreement plus such extensions as are provided herein.
(b) During the period of his employment hereunder, except for
periods of absence occasioned by illness, disability, holidays, reasonable
vacation periods and reasonable leaves of absence, the Executive shall devote
substantially all of his business time, attention, skill and efforts to the
faithful performance of his duties hereunder including (i) service as Senior
Vice President of the Bank, and, if duly elected, a Director of the Bank, (ii)
performance of such duties not inconsistent with his title and office as may be
assigned to him by or under the authority of the Board or a more senior
executive officer, and (iii) such other activities and services related to the
organization, operation and management of the Bank. During the Employment Period
it shall not be a violation of this Agreement for the Executive to (A) serve on
corporate, civic, industry or charitable boards or committees, (B) deliver
lectures, fulfill speaking engagements or teach at educational institutions and
(C) manage personal investments, so long as such activities do not significantly
interfere with the performance of the Executive's responsibilities as an
employee of the Bank in accordance with this Agreement. It is expressly
understood and agreed that to the extent that any such activities have been
conducted by the Executive prior to the Effective Date, the continued conduct of
such activities (or the conduct of activities similar in nature and scope
thereto) subsequent to the Effective Date shall not thereafter be deemed to
interfere with the performance of the Executive's responsibilities to the Bank.
It is also expressly agreed that the Executive may conduct activities subsequent
to the Effective Date that are generally accepted for an executive in his
position, regardless of whether conducted by the Executive prior to the
Effective Date.
(c) Notwithstanding anything herein contained to the contrary:
(i) the Executive's employment with the Bank may be terminated by the Bank or
the Executive during the term of this Agreement, subject to the terms and
conditions of this Agreement; and (ii) nothing in this Agreement shall mandate
or prohibit a continuation of the Executive's employment following the
expiration of the term of this Agreement upon such terms and conditions as the
Board and the Executive may mutually agree.
(d) For all purposes of this Agreement, the term "Unexpired
Employment Period" as of any date shall mean the period beginning on such date
and ending on the Anniversary Date on which the Employment Period (as extended
pursuant to Section 2(a) of this Agreement) is then scheduled to expire.
3. COMPENSATION AND REIMBURSEMENT.
(a) The compensation specified under this Agreement shall
constitute the salary and benefits paid for the duties described in Section 1.
The Bank shall pay the Executive as compensation a salary at an annual rate of
not less than (salary omitted) per year or such higher rate as may be prescribed
by or under the authority of the Board ("Base Salary"). The Base Salary payable
under this Section 3 shall be paid in approximately equal installments in
accordance with the Bank's customary payroll practices. During the period of
this Agreement, the Executive's Base Salary shall be reviewed at least annually;
the first such review will be made no later than one year from the date of this
Agreement. Such review shall be conducted by a Committee designated by the
Board, and the Board may increase the Executive's Base Salary, which increased
amount shall be considered the Executive's "Base Salary" for purposes of this
Agreement. In no event shall the Executive's annual rate of Base Salary under
this Agreement in effect at a particular time be reduced without his prior
written consent. In addition to the Base Salary provided in this Section 3(a),
the Bank shall provide the Executive at no cost to the Executive with all such
other benefits as are provided uniformly to permanent full-time employees of the
Bank.
(b) The Bank will provide the Executive with employee benefit
plans, arrangements and perquisites substantially equivalent to those in which
the Executive was participating or otherwise deriving benefit from immediately
prior to the beginning of the term of this Agreement, and the Bank will not,
without the Executive's prior written consent, make any changes in such plans,
arrangements or perquisites which would adversely affect the Executive's rights
or benefits thereunder. Without limiting the generality of the foregoing
provisions of this Subsection (b), the Executive will be entitled to participate
in or receive benefits under any employee benefit plans with respect to which
the Executive satisfies the eligibility requirements, including, but not limited
to, the Retirement Plan of Jamaica Savings Bank FSB ("RP"), the Incentive
Savings Plan of Jamaica Savings Bank FSB ("ISP"), the Jamaica Savings Bank FSB
Employee Stock Ownership Plan ("ESOP"), the Benefit Restoration Plan of Jamaica
Savings Bank FSB ("BRP"), the JSB Financial, Inc. 1990 Stock Option Plan, the
JSB Financial, Inc. 1996 Stock Option Plan, retirement plans, supplemental
retirement plans, pension plans, profit-sharing plans, group life, health
(including hospitalization, medical and major medical), dental, accidental death
and dismemberment, travel accident and short-term disability insurance plans, or
any other employee benefit plan or arrangement made available by the Bank in the
future to its senior executives and key management employees, subject to and on
a basis consistent with the terms, conditions and overall administration of such
plans and arrangements. The Executive will be entitled to incentive compensation
and bonuses as provided in any plan of the Bank in which the Executive is
eligible to participate. Nothing paid to the Executive under any such plan or
arrangement will be deemed to be in lieu of other compensation to which the
Executive is entitled under this Agreement.
(c) The Executive's principal place of employment shall be at
the Bank's executive offices at the address first above written, or at such
other location in New York City or in Nassau County or Suffolk County at which
the Bank shall maintain its principal executive offices, or at such other
location as the Board and the Executive may mutually agree upon. The Bank shall
provide the Executive, at his principal place of employment with support
services and facilities suitable to his position with the Bank and necessary or
appropriate in connection with the performance of his assigned duties under this
Agreement. The Bank shall reimburse the Executive for his ordinary and necessary
business expenses, including, without limitation, fees for memberships in such
clubs and organizations as the Executive and the Board shall mutually agree are
necessary and appropriate for business purposes, and travel and entertainment
expenses, incurred in connection with the performance of his duties under this
Agreement, upon presentation to the Bank of an itemized account of such expenses
in such form as the Bank may reasonably require.
4. PAYMENTS TO THE EXECUTIVE UPON AN EVENT OF TERMINATION.
The provisions of this Section shall in all respects be
subject to the terms and conditions stated in Sections 9 and 28.
(a) Upon the occurrence of an Event of Termination (as herein
defined) during the Executive's term of employment under this Agreement, the
provisions of this Section shall apply. As used in this Agreement, an "Event of
Termination" shall mean and include any one or more of the following: (i) the
termination by the Bank or the Company of the Executive's full-time employment
hereunder for any reason other than: following a Change in Control, as defined
in Section 5; for Disability, as defined in Section 6; for Retirement, as
defined in Section 8; for Cause, as defined in Section 9; or upon the
Executive's death; or (ii) unless consented to by the Executive, the Executive's
voluntary resignation from the Bank's employ, upon any: (A) failure to elect or
re-elect or to appoint or re-appoint the Executive as Senior Vice President of
the Bank, (B) material adverse change in the Executive's function, duties, or
responsibilities, which change would cause the Executive's position to become
one of lesser responsibility, importance, or scope from the position and
attributes thereof described in Section 1, above (and any such material change
shall be deemed a continuing breach of this Agreement), (C) relocation of the
Executive's principal place of employment by more than 30 miles from its
location at the Effective Date of this Agreement, or a material reduction in the
benefits and perquisites to the Executive from those being provided as of the
Effective Date of this Agreement, (D) liquidation or dissolution of the Bank or
the Company, or (E) material breach of this Agreement by the Bank. Upon the
occurrence of any event described in clauses (A), (B), (C), (D) or (E), above,
the Executive shall have the right to elect to terminate his employment under
this Agreement by resignation upon written notice pursuant to Section 10 given
within a reasonable period of time not to exceed, except in case of a continuing
breach, four calendar months after the event giving rise to said right to elect.
(b) Upon the occurrence of an Event of Termination as set
forth in Section 4(a), on the Date of Termination, as defined in Section 10, the
Bank shall be obligated to pay, or to provide, the Executive, or, in the event
of his subsequent death, to his surviving spouse or such other beneficiary or
beneficiaries as the Executive may designate in writing, or if neither his
estate, as severance pay or liquidated damages, or both, the benefits provided
below and a payment equal to the sum of the payments set forth below:
(i) payment of the sum of (A) the Executive's annual Base
Salary through the Date of Termination to the extent not theretofore
paid and (B) any compensation previously deferred by the Executive
(together with any accrued interest or earnings thereon) and any
accrued vacation pay, in each case to the extent not theretofore paid
(the sum of the amounts described in clauses (A) and (B) shall be
hereinafter referred to as the "Accrued Obligations");
(ii) the benefits, if any, to which the Executive is entitled
as a former employee under the Bank's or the Company's employee benefit
plans and programs and compensation plans and programs;
(iii) continued group life, health (including hospitalization,
medical and major medical), dental, accidental death and dismemberment,
travel accident and short-term disability insurance benefits as
provided by the Bank or the Company, in addition to that provided
pursuant to Section 4(b)(ii), if and to the extent necessary to provide
for the Executive, for the remaining Unexpired Employment Period,
coverage equivalent to the coverage to which he would have been
entitled if he had continued working for the Bank during the remaining
Unexpired Employment Period at the highest annual rate of salary
achieved during the Employment Period; provided, however, if the
Executive has obtained group life, health (including hospitalization,
medical and major medical), dental, accidental death and dismemberment,
travel accident and/or short-term disability insurance benefits
coverage from another source, the Executive may, as of any month, make
an irrevocable election to forego the continued coverage that would
otherwise be provided hereunder for the remaining Unexpired Employment
Period, or any portion thereof, in which case the Bank or the Company,
upon receipt of the Executive's irrevocable election, shall pay the
Executive an amount equal to the estimated cost to the Bank or the
Company of providing such coverage during such period;
(iv) if and to the extent not already provided under Sections
4(b)(ii) and 4(b)(iii), continued health (including hospitalization,
medical and major medical) and dental insurance benefits to the extent
maintained by the Bank or the Company for its employees or retirees
during the remainder of the Executive's lifetime and the lifetime of
his spouse, if any, for so long as the Executive continues to reimburse
the Bank for the cost of such continued coverage;
(v) a lump sum payment, as liquidated damages, in an amount
equal to the Base Salary and bonus or other incentive compensation that
the Executive would have earned if the Executive had continued working
for the Bank and the Company during the remaining Unexpired Employment
Period (A) at the highest annual rate of Base Salary and bonus or other
incentive compensation achieved by the Executive during the three-year
period immediately preceding the Executive's Date of Termination,
except that (B) in the case of a Change in Control, such lump sum shall
be determined based upon the Base Salary and the bonus or other
incentive compensation, respectively, that the Executive would have
been paid during the remaining Unexpired Employment Period including
the assumed increases referred to in clauses (i) and (ii) of Section
5(b);
(vi) a lump sum payment in an amount equal to the excess, if
any, of: (A) the present value of the pension benefits to which the
Executive would be entitled under the RP and the BRP (and under any
other qualified and non-qualified defined benefit plans maintained by
the Bank or the Company covering the Executive) as if he had continued
working for the Bank during the remaining Unexpired Employment Period
(x) at the highest annual rate of Base Salary and, if applicable, the
highest bonus or other incentive compensation, respectively, achieved
by the Executive during the three-year period immediately preceding the
Executive's Date of Termination, except that (y) in the case of a
Change in Control, such lump sum shall be determined based upon the
Base Salary and, if applicable, the highest bonus or other incentive
compensation, respectively, that the Executive would have been paid
during the remaining Unexpired Employment Period including the assumed
increases referred to in clauses (i) and (ii) of Section 5(b), and (z)
in the case of a Change in Control, as if three additional years are
added to the Executive's age and years of creditable service under the
RP and the BRP and after taking into account any other compensation
required to be taken into account under the RP and the BRP (and any
other qualified and non-qualified defined benefit plans of the Bank or
the Company, as applicable), over (B) the present value of the pension
benefits to which he is actually entitled under the RP and the BRP (and
any other qualified and non-qualified defined benefit plans) as of his
Date of Termination, where such present values are to be determined
using a discount rate of 6% and the mortality tables prescribed under
section 72 of the Internal Revenue Code of 1986, as amended ("Code");
and
(vii) a lump sum payment in an amount equal to the
contributions that would have been made by the Bank or the Company on
the Executive's behalf to the ISP and the ESOP and to the BRP with
respect to such ISP and ESOP contributions (and to any other qualified
and non-qualified defined contribution plans maintained by the Bank or
the Company covering the Executive) as if the Executive had continued
working for the Bank and the Company during the remaining Unexpired
Employment Period making the maximum amount of employee contributions
required, if any, under such plan or plans and earning (A) the highest
annual rate of Base Salary and, if applicable, the highest bonus or
other incentive compensation, respectively, achieved by the Executive
during the three-year period immediately preceding the Executive's Date
of Termination, except that (B) in the case of a Change in Control,
such lump sum shall be determined based upon the Base Salary and, if
applicable, the bonus or other incentive compensation, respectively,
that the Executive would have been paid during the remaining Unexpired
Employment Period including the assumed increases referred to in
clauses (i) and (ii) of Section 5(b).
The benefits to be provided under, and the amounts payable pursuant to, this
Section 4 shall be provided and be payable without regard to proof of damages
and without regard to the Executive's efforts, if any, to mitigate damages. The
Bank and the Executive hereby stipulate that the damages which may be incurred
by the Executive following any such termination of employment are not capable of
accurate measurement as of the date first above written and that such liquidated
damages constitute reasonable damages under the circumstances.
(c) Payments to the Executive under Section 4 shall be made
within ten days of the Executive's Date of Termination.
(d) In the event payments are made under Section 4 or Section
5, the Executive may select an individual or firm to provide him with reasonable
outplacement counseling services, and the Bank shall pay for the costs of such
services; provided, however, that the cost to the Bank of such outplacement
counseling services shall not exceed 25% of the Executive's Base Salary.
5. CHANGE IN CONTROL.
(a) No benefit shall be payable under this Section 5 unless
there shall have been a Change in Control of the Bank or the Company, as set
forth below. For purposes of this Agreement, a "Change in Control" of the Bank
or the Company shall mean any one or more of the following:
(i) An event of a nature that would be required to be reported
in response to Item l(a) of the current report on Form 8-K, as in
effect on the date hereof, pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act");
(ii) An event of a nature that results in a Change in Control
of the Bank or the Company within the meaning of the Home Owners' Loan
Act of 1933, as amended, or the Change in Bank Control Act of 1978, as
amended, as applicable, and the Rules and Regulations promulgated by
the Office of Thrift Supervision ("OTS") or its predecessor agency, the
Federal Deposit Insurance Corporation ("FDIC") or the Board of
Governors of the Federal Reserve System ("FRB"), as the case may be, as
in effect on the date hereof, but excluding any such Change in Control
resulting from the purchase of securities by the Company or the Bank's
or the Company's tax-qualified employee benefit plans and trusts;
(iii) If any "person" (as the term is used in Sections 13(d)
and 14(d) of the Exchange Act) is or becomes the "beneficial owner" (as
defined in Rule 13d-3 under the Exchange Act), directly or indirectly,
of securities of the Bank or the Company representing 20% or more of
the Bank's or the Company's outstanding securities except for any
securities of the Bank purchased by the Company in connection with the
initial conversion of the Bank from mutual to stock form (the
"Conversion") and any securities purchased by the Company or the Bank's
or the Company's tax-qualified employee benefit plans and trusts;
(iv) If the individuals who constitute the Board on the date
hereof (the "Incumbent Board") cease for any reason to constitute at
least a majority of the Board, provided, however, that any person
becoming a director subsequent to the date hereof whose election or
nomination for election by the Company's stockholders, was approved by
a vote of at least three-quarters of the directors then comprising the
Incumbent Board shall be considered as though he were a member of the
Incumbent Board, but excluding, for this purpose, any such person whose
initial assumption of office occurs as a result of an actual or
threatened election contest with respect to the election or removal of
directors or other actual or threatened solicitation of proxies or
consents by or on behalf of a person other than the Board;
(v) A merger, consolidation, reorganization, sale of all or
substantially all the assets of the Bank or the Company or similar
transaction occurs in which the Bank or the Company is not the
resulting entity, other than a transaction following which (A) at least
51% of the equity ownership interests of the entity resulting from such
transaction are beneficially owned (within the meaning of Rule 13d-3
promulgated under Exchange Act) in substantially the same relative
proportions by persons who, immediately prior to such transaction,
beneficially owned (within the meaning of Rule 13d-3 promulgated under
the Exchange Act) at least 51% of the outstanding equity ownership
interests in the Bank or the Company and (B) at least 51% of the
securities entitled to vote generally in the election of directors of
the entity resulting from such transaction are beneficially owned
(within the meaning of Rule 13d-3 promulgated under the Exchange Act)
in substantially the same relative proportions by persons who,
immediately prior to such transaction, beneficially owned (within the
meaning of Rule 13d-3 promulgated under the Exchange Act) at least 51%
of the securities entitled to vote generally in the election of
directors of the Bank or the Company;
(vi) A proxy statement shall be distributed soliciting proxies
from stockholders of the Company, by someone other than the current
management of the Company, seeking stockholder approval of a plan of
reorganization, merger or consolidation of the Company or the Bank or
similar transaction with one or more corporations as a result of which
the outstanding shares of the class of securities then subject to such
plan or transaction are exchanged for or converted into cash or
property or securities not issued by the Bank or the Company; or
(vii) A tender offer is completed for 20% or more of the
voting securities of the Bank or Company then outstanding.
The "Change in Control Date" shall mean the date during the Employment Period on
which a Change in Control occurs. Anything in this Agreement to the contrary
notwithstanding, if the Executive's employment with the Company is terminated
and if it is reasonably demonstrated by the Executive that such termination of
employment (1) was at the request of a third party who has taken steps
reasonably calculated to effect a Change in Control or (2) otherwise arose in
connection with or anticipation of a Change in Control, then for all purposes of
this Agreement the "Change in Control Date" shall mean the date immediately
prior to the date of such termination of employment.
(b) If any of the events described in Section 5(a)
constituting a Change in Control have occurred or the Board has determined that
a Change in Control has occurred, the Executive shall be entitled to the
payments and the benefits provided below on the Change in Control Date. The
amounts payable and the benefits to be provided under this Section 5(b) to the
Executive shall consist of the payments and benefits that would be due to the
Executive and the Executive's family under Section 4(b) for the Unexpired
Employment Period as if an Event of Termination under Section 4(a) had occurred
on the Change in Control Date. For purposes of determining the payments and
benefits due under this Section 5(b), when calculating the payments due and
benefits to be provided for the Unexpired Employment Period, it shall be assumed
that for each year of the remaining term of this Agreement, the Executive would
have received (i) an annual increase in Base Salary equal to the average
percentage increase in Base Salary received by the Executive for the three-year
period ending with the earlier of (x) the year in which the Change in Control
Date occurs or (y) the year during which a definitive agreement, if any,
governing the Change in Control is executed, with the first such increase
effective as of the January 1st next following such three-year period and the
second and third such increases effective as of the next two anniversaries of
such January 1st, (ii) a bonus or other incentive compensation equal to the
highest percentage rate of bonus or incentive compensation paid to the Executive
during the three-year period referred to in clause (i) of this Section 5(b)
times the Base Salary that the Executive would have been paid during the
remaining term of this Agreement including the assumed increases referred to in
clause (i) of this Section 5(b), (iii) the maximum contributions that could be
made by or on behalf of the Executive with respect to any employee benefit plans
and programs maintained by the Company and the Bank based upon the Base Salary
and, if applicable, the bonus or other incentive compensation, respectively,
that the Executive would have been paid during the remaining term of this
Agreement including the assumed increases referred to in clauses (i) and (ii) of
this Section 5(b), and (iv) the present value of the pension benefits to which
the Executive is entitled under Section 4(b)(vi) with respect to the RP and the
BRP (and under any other qualified and non-qualified defined benefit plans
maintained by the Bank or the Company covering the Executive) shall be
determined as if he had continued working for the Bank during the remaining
Unexpired Employment Period and shall be based upon the Base Salary and, if
applicable, the bonus or other incentive compensation, respectively, that the
Executive would have been paid during the remaining term of this Agreement
including the assumed increases referred to in clauses (i) and (ii) of this
Section 5(b). The benefits to be provided under, and the amounts payable
pursuant to, this Section 5 shall be provided and be payable without regard to
proof of damages and without regard to the Executive's efforts, if any, to
mitigate damages. The Bank and the Executive hereby stipulate that the damages
which may be incurred by the Executive following any Change in Control are not
capable of accurate measurement as of the date first above written and that such
liquidated damages constitute reasonable damages under the circumstances.
(c) Payments under Section 5(b) shall be made to the Executive
on the Change in Control Date. Such payments shall be made regardless of whether
the Executive's employment terminates.
6. TERMINATION FOR DISABILITY.
(a) In the event of Termination for Disability, the Executive
shall receive the benefits provided in Section 6(b); provided, however, that the
benefits provided under Section 6(b) shall not be deemed to be in lieu of the
benefits he is otherwise entitled as a former employee under the Bank or the
Company's employee plans and programs. For purposes of this Agreement, the
Executive may be terminated for disability only if (i) the Executive shall have
been absent from his duties with the Bank on a full-time basis for at least six
consecutive months, or (ii) a majority of the members of the Board acting in
good faith determine that, based upon competent and independent medical evidence
presented by a physician or physicians agreed upon by the parties, the
Executive's physical or mental condition is such that he is totally and
permanently incapable of engaging in any substantial gainful employment based
upon his education, training and experience; provided, however, that on and
after the earliest date on which a Change in Control of the Bank or the Company
as defined in Section 5 occurs, such a determination shall require the
affirmative vote of at least three-fourths of the members of the Board acting in
good faith and such vote shall not be made prior to the expiration of a 60-day
period following the date on which the Board shall, by written notice to the
Executive, furnish him a statement of its grounds for proposing to make such
determination, during which period the Executive shall be afforded a reasonable
opportunity to make oral and written presentations to the members of the Board,
and to be represented by his legal counsel at such presentations, to refute the
grounds for the proposed determination.
(b) The Bank will pay the Executive as Disability pay, a
bi-weekly payment equal to 100% of the Executive's bi-weekly annual rate of Base
Salary in effect on the date of the Executive's Termination for Disability. In
addition, the Bank will cause to be continued insurance coverage, including
group life, health (including hospitalization, medical and major medical),
dental, accidental death and dismemberment, travel accident and short-term
disability coverage substantially identical to the coverage maintained by the
Bank or the Company for the Executive prior to his Termination for Disability.
The Disability pay and coverages shall commence on the effective date of the
Executive's termination and shall cease upon the earliest to occur of: (i) the
date the Executive returns to the full-time employment of the Bank, in the same
capacity as he was employed prior to his Termination for Disability and pursuant
to an employment agreement between the Executive and the Bank; (ii) the
Executive's full-time employment by another employer; (iii) the Executive's
attaining the normal age of retirement or receiving benefits under the RP or
other defined benefit pension plan of the Bank or the Company; (iv) the
Executive's death; (v) the Executive's eligibility to collect payments under the
disability provision of the RP or other defined benefit pension plan of the Bank
or the Company; or (vi) the expiration of the term of this Agreement.
(c) Notwithstanding the foregoing, there will be no reduction
in the compensation otherwise payable to the Executive during any period during
which the Executive is incapable of performing his duties hereunder by reason of
temporary disability.
7. TERMINATION UPON DEATH.
The Executive's employment shall terminate automatically upon
the Executive's death during the Employment Period. In such event, the Executive
and the Executive's legal representatives shall be entitled to the following:
(i) payment of the Executive's "Accrued Obligations;"
(ii) the continuation of all benefits to the Executive's
family and dependents that would have been provided if the Executive
had been entitled to the benefits under Section 4(b)(ii), (iii) and
(iv), and
(iii) the timely payment of any other amounts or benefits
required to be paid or provided or which the Executive is eligible to
receive under any plan, program, policy or practice or contract or
agreement of the Bank and its affiliated companies (all such other
amounts and benefits shall be hereinafter referred to as the "Other
Benefits");
provided, however, that if the Executive dies while in the employment of the
Bank, the amount of life insurance provided to the Executive by the Bank shall
not be less than the lesser of $200,000 or three times the Executive's then
annual Base Salary. Accrued Obligations shall be paid to the Executive's estate
or beneficiary, as applicable, in a lump sum cash payment within ten days of the
Date of Termination. With respect to the provision of Other Benefits after the
Change in Control Date, the term Other Benefits as utilized in this Section 7
shall include, without limitation, that the Executive's estate and/or
beneficiaries shall be entitled to receive, benefits at least equal to the most
favorable benefits provided by the Bank and affiliated companies to the estates
and beneficiaries of peer executives of the Bank and such affiliates companies
under such plans, programs, practices and policies relating to death benefits,
if any, as in effect with respect to other peer executives and their
beneficiaries at any time during the 120-day period immediately preceding the
Change in Control Date.
8. TERMINATION UPON RETIREMENT.
Termination by the Bank of the Executive based on "Retirement"
shall mean termination in accordance with the Company's or the Bank's retirement
policy or in accordance with any retirement arrangement established with the
Executive's consent with respect to him. Upon termination of the Executive upon
Retirement, the Executive shall be entitled to all benefits under the RP and any
other retirement plan of the Bank or the Company and other plans to which the
Executive is a party, and the Executive shall be entitled to the benefits, if
any, that would be payable to him as a former employee under the Bank's or the
Company's employee benefit plans and programs and compensation plans and
programs.
9. TERMINATION FOR CAUSE.
The terms "Termination for Cause" or "Cause" shall mean
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 any material breach of
this Agreement, in such case as measured against standards generally prevailing
at the relevant time in the savings and community banking industry. For purposes
of this Section, no act, or the failure to act, on the Executive's part shall be
"willful" unless done, or omitted to be done, in bad faith and without
reasonable belief that the action or omission was in the best interest of the
Bank or its affiliates. Any act, or failure to act, based upon authority given
pursuant to a resolution duly adopted by the Board or based upon the written
advice of counsel for the Bank shall be conclusively presumed to be done, or
omitted to be done, by the Executive in good faith and in the best interests of
the Bank. Notwithstanding the foregoing, the Executive shall not be deemed to
have been terminated for Cause unless and until there shall have been delivered
to him a Notice of Termination which shall include a copy of a resolution duly
adopted by the affirmative vote of not less than three-fourths of the members of
the Board at a meeting of the Board called and held for that purpose (after
reasonable notice to the Executive and an opportunity for him, together with
counsel, to be heard before the Board), finding that in the good faith opinion
of the Board, the Executive was guilty of conduct justifying Termination for
Cause and specifying the particulars thereof in detail. The Executive shall not
have the right to receive compensation or other benefits for any period after
Termination for Cause.
10. NOTICE.
(a) Any purported termination by the Bank or by the Executive
shall be communicated by a Notice of Termination to the other party hereto. For
purposes of this Agreement, a "Notice of Termination" shall mean a written
notice which shall indicate the specific termination provision in this Agreement
relied upon and shall set forth in reasonable detail the facts and circumstances
claimed to provide a basis for termination of the Executive's employment under
the provision so indicated.
(b) Subject to Section 10(c), "Date of Termination" shall mean
(A) if the Executive's employment is terminated for Disability, 30 days after a
Notice of Termination is given (provided that he shall not have returned to the
performance of his duties on a full-time basis during such 30-day period), and
(B) if his employment is terminated for any other reason, the date specified in
the Notice of Termination (which, in the case of a Termination for Cause, shall
be immediate).
(c) If, within 30 days after any Notice of Termination is
given, the party receiving such Notice of Termination notifies the other party
that a dispute exists concerning the termination, then, except upon the
occurrence of a Change in Control and voluntary termination by the Executive in
which case the Date of Termination shall be the date specified in the Notice,
the Date of Termination shall be the date on which the dispute is finally
determined, either by mutual written agreement of the parties, by a binding
arbitration award, or by a final judgment, order or decree of a court of
competent jurisdiction (the time for appeal therefrom having expired and no
appeal having been perfected) and provided further that the Date of Termination
shall be extended by a notice of dispute only if such notice is given in good
faith and the party giving such notice pursues the resolution of such dispute
with reasonable diligence. Notwithstanding the pendency of any such dispute, the
Bank will continue to pay the Executive his full compensation in effect when the
notice giving rise to the dispute was given (including, but not limited to, Base
Salary) and continue him as a participant in all compensation, benefit and
insurance plans in which he was participating when the notice of dispute was
given, until the dispute is finally resolved in accordance with this Agreement.
Amounts paid under this Section are in addition to all other amounts due under
this Agreement and shall not be offset against or reduce any other amounts due
under this Agreement.
(d) The Bank may terminate the Executive's employment at any
time, but any termination by the Bank, other than Termination for Cause, shall
not prejudice the Executive's right to compensation or other benefits under this
Agreement or under any other benefit or compensation plans or programs
maintained by the Bank or the Company from time to time. The Executive shall not
have the right to receive compensation or other benefits for any period after a
Termination for Cause as defined in Section 9 hereinabove.
(e) Any communication to a party required or permitted under
this Agreement, including any notice, direction, designation, consent,
instruction, objection or waiver, shall be in writing and shall be deemed to
have been given at such time as it is delivered personally, or five days after
mailing if mailed, postage prepaid, by registered or certified mail, return
receipt requested, addressed to such party at the address listed below or at
such other address as one such party may by written notice specify to the other
party, as follows. If to the Executive, (address omitted); if to the Bank,
Jamaica Savings Bank FSB, 303 Merrick Road, Lynbrook, New York 11563, Attention:
President, with a copy to Thacher Proffitt & Wood, Two World Trade Center, New
York, New York 10048, Attention: Douglas J. McClintock, Esq.
11. POST-TERMINATION OBLIGATIONS.
(a) All payments and benefits to the Executive under this
Agreement shall be subject to the Executive's compliance with paragraph (b) of
this Section 11 during the term of this Agreement and for one full year after
the expiration or termination hereof.
(b) The Executive shall, upon reasonable notice, furnish such
information and assistance to the Bank as may reasonably be required by the Bank
in connection with any litigation in which it or any of its subsidiaries or
affiliates is, or may become, a party; provided, that the Bank reimburses the
Executive for the reasonable value of his time in connection therewith and for
any out-of-pocket costs attributable thereto.
12. COVENANT NOT TO COMPETE.
The Executive hereby covenants and agrees that for a period of
one year following his Date of Termination, if such termination occurs prior to
the end of the term of the Agreement, he shall not, without the written consent
of the Board, become an officer, employee, consultant, director or trustee of
any savings bank, savings and loan association, savings and loan holding
company, bank or bank holding company if such position (a) entails working in
(or providing services in) New York City, Nassau or Suffolk counties or (b)
entails working in (or providing services in) any other county that is both (i)
within the Bank's primary trade (or operating) area at the time in question,
which shall be determined by reference to the Bank's business plan as in effect
from time to time, and (ii) in which the Bank engages in material or substantial
deposit-taking functions or lending activities at such time; provided, however,
that this Section 12 shall not apply if the Executive's employment is terminated
for the reasons set forth in any of Sections 4, 5, 6 or 8.
13. SOURCE OF PAYMENTS.
All payments provided in this Agreement shall be timely paid
in cash or check from the general funds of the Bank.
14. EFFECT ON PRIOR AGREEMENTS.
This Agreement contains the entire understanding between the
parties hereto and supersedes any prior employment agreement between the Bank or
any predecessor of the Bank and the Executive, including the Employment
Agreement dated June 27, 1990 and the Supplemental Employment Agreement dated
July 9, 1996, except that this Agreement shall not affect or operate to reduce
any benefit or compensation inuring to the Executive of a kind elsewhere
provided. No provisions of this Agreement shall be interpreted to mean that the
Executive is subject to receiving fewer benefits than those available to him
without reference to this Agreement.
15. EFFECT OF ACTION UNDER COMPANY AGREEMENT.
Notwithstanding any provision herein to the contrary, to the
extent that full compensation payments and benefits are paid to or received by
the Executive under the Employment Agreement, dated June 22, 1999, as it may be
amended from time to time, between the Executive and the Company, such
compensation payments and benefits paid by the Company will be deemed to satisfy
the corresponding obligations of the Bank under this Agreement.
16. NO ATTACHMENT.
Except as required by law, no right to receive payments under
this Agreement shall be subject to anticipation, commutation, alienation, sale,
assignment, encumbrance, charge, pledge, or hypothecation, or to execution,
attachment, levy, or similar process or assignment by operation of law, and any
attempt, voluntary or involuntary, to affect any such action shall be null,
void, and of no effect.
17. MODIFICATION AND WAIVER.
(a) This Agreement may not be modified or amended except by an
instrument in writing signed by the parties hereto.
(b) No term or condition of this Agreement shall be deemed to
have been waived, nor shall there be any estoppel against the enforcement of any
provision of this Agreement, except by written instrument of the party charged
with such waiver or estoppel. No such written waiver shall be deemed a
continuing waiver unless specifically stated therein, and each such waiver shall
operate only as to the specific term or condition waived and shall not
constitute a waiver of such term or condition for the future as to any act other
than that specifically waived.
18. SUCCESSOR AND ASSIGNS.
This Agreement will inure to the benefit of and be binding
upon the Executive, his legal representatives and testate or intestate
distributees, and the Bank, its successors and assigns, including any successor
by purchase, merger, consolidation or otherwise or a statutory receiver or any
other person or firm or corporation to which all or substantially all of the
assets and business of the Bank may be sold or otherwise transferred. Any such
successor of the Bank shall be deemed to have assumed this Agreement and to have
become obligated hereunder to the same extent as the Bank and the Executive's
obligations hereunder shall continue in favor of such successor.
19. SEVERABILITY.
If, for any reason, any provision of this Agreement, or any
part of any provision, is held invalid, such invalidity shall not affect any
other provision of this Agreement or any part of such provision not held so
invalid, and each such other provision and part thereof shall to the full extent
consistent with law continue in full force and effect.
20. HEADINGS FOR REFERENCE ONLY.
The headings of Sections and paragraphs herein are included
solely for convenience of reference and shall not control the meaning or
interpretation of any of the provisions of this Agreement. Any reference in this
Agreement to a Section or Subsection shall refer to a Section or Subsection of
this Agreement, except as otherwise specified.
21. GOVERNING LAW.
This Agreement shall be governed by the laws of the State of
New York, without reference to conflicts of law principles.
22. INDEMNIFICATION AND ATTORNEYS' FEES.
(a) The Bank shall indemnify, hold harmless and defend the
Executive against reasonable costs, including legal fees, incurred by him in
connection with his consultation with legal counsel or arising out of any
action, suit or proceeding in which he may be involved, as a result of his
efforts, in good faith, to defend or enforce the terms of this Agreement. The
Bank agrees to pay all such costs as they are incurred by the Executive, to the
full extent permitted by law, and without regard to whether the Bank believes
that it has a defense to any action, suit or proceeding by the Executive or that
it is not obligated for any payments under this Agreement.
(b) In the event any dispute or controversy arising under or
in connection with the Executive's termination is resolved in favor of the
Executive, whether by judgment, arbitration or settlement, the Executive shall
be entitled to the payment of all back-pay, including salary, bonuses and any
other cash compensation, fringe benefits and any compensation and benefits due
the Executive under this Agreement.
(c) The Bank shall indemnify, hold harmless and defend the
Executive for any act taken or not taken, or any omission or failure to act, by
him in good faith while performing services for the Bank or the Company to the
same extent and upon the same terms and conditions as other similarly situated
officers and directors of the Bank or the Company. If and to the extent that the
Bank or the Company, maintains, at any time during the Employment Period, an
insurance policy covering the other officers and directors of the Bank or the
Company against lawsuits, the Bank or the Company shall use its best efforts to
cause the Executive to be covered under such policy upon the same terms and
conditions as other similarly situated officers and directors.
<PAGE>
23. TAX INDEMNIFICATION.
(a) Subject to the provisions of Section 28 hereof, this
Section 23 shall apply if a change "in the ownership or effective control" of
the Bank or "in the ownership of a substantial portion of the assets" of the
Bank occurs within the meaning of section 280G of the Code. If this Section 23
applies, then with respect to any taxable year in which the Executive shall be
liable for the payment of an excise tax under section 4999 of the Code with
respect to any payment in the nature of compensation made by the Bank, the
Company or any direct or indirect subsidiary or affiliate of the Bank to (or for
the benefit of) the Executive, the Bank shall pay to the Executive an amount
equal to X determined under the following formula:
X = E x P
-------------------------------------------------
1 - [(FI x (1 - SLI)) + SLI + E + M]
where
E = the rate at which the excise tax is assessed under
section 4999 of the Code;
P = the amount with respect to which such excise tax is
assessed, determined without regard to this Section
23;
FI = the highest effective marginal rate of income tax
applicable to the Executive under the Code for the
taxable year in question (taking into account any
phase-out or loss of deductions, personal exemptions
and other similar adjustments);
SLI = the sum of the highest effective marginal rates of
income tax applicable to the Executive under all
applicable state and local laws for the taxable year
in question (taking into account any phase-out or
loss of deductions, personal exemptions and other
similar adjustments); and
M = the highest marginal rate of Medicare tax
applicable to the Executive under the Code for the
taxable year in question.
Attached as Appendix A to this Agreement is an example that illustrates
application of this Section 23. Any payment under this Section 23 shall be
adjusted so as to fully indemnify the Executive on an after-tax basis so that
the Executive would be in the same after-tax financial position in which he
would have been if no excise tax under section 4999 of the Code had been
imposed. With respect to any payment in the nature of compensation that is made
to (or for the benefit of) the Executive under the terms of this Agreement or
otherwise and on which an excise tax under section 4999 of the Code will be
assessed, the payment determined under this Section 23(a) shall be made to the
Executive on the earlier of (i) the date the Bank, the Company or any direct or
indirect subsidiary or affiliate of the Bank is required to withhold such tax,
or (ii) the date the tax is required to be paid by the Executive.
(b) Notwithstanding anything in this Section 23 to the
contrary, in the event that the Executive's liability for the excise tax under
section 4999 of the Code for a taxable year is subsequently determined to be
different than the amount determined by the formula (X + P) x E, where X, P and
E have the meanings provided in Section 23(a), the Executive or the Bank, as the
case may be, shall pay to the other party at the time that the amount of such
excise tax is finally determined, an appropriate amount, plus interest, such
that the payment made under Section 23(a), when increased by the amount of the
payment made to the Executive under this Section 23(b) by the Bank, or when
reduced by the amount of the payment made to the Bank under this Section 23(b)
by the Executive, equals the amount that, it is finally determined, should have
properly been paid to the Executive under Section 23(a). The interest paid under
this Section 23(b) shall be determined at the rate provided under section
1274(b)(2)(B) of the Code. To confirm that the proper amount, if any, was paid
to the Executive under this Section 23, the Executive shall furnish to the Bank
a copy of each tax return which reflects a liability for an excise tax payment
made by the Bank, at least 20 days before the date on which such return is
required to be filed with the Internal Revenue Service.
24. NON-EXCLUSIVITY OF RIGHTS.
Except as otherwise provided herein, nothing in this Agreement
shall prevent or limit the Executive's continuing or future participation in any
plan, program, policy or practice provided by the Bank or any of its affiliated
companies and for which the Executive may qualify, nor shall anything herein
limit or otherwise affect such rights as the Executive may have under any
contract or agreement with the Bank or any of its affiliated companies. Amounts
which are vested benefits or which the Executive is otherwise entitled to
receive under any plan, policy, practice or program of or any contract or
agreement with the Bank or any of its affiliated companies at or subsequent to
the Date of Termination shall be payable in accordance with such plan, policy,
practice or program or contract or agreement except as explicitly modified by
this Agreement. Notwithstanding the foregoing, in the event of a termination of
employment, the amounts provided in Section 4 or Section 5, as applicable, shall
be the Executive's sole remedy for any purported breach of this Agreement by the
Bank.
25. MITIGATION; OTHER CLAIMS.
The Bank's obligation to make the payments provided for in
this Agreement and otherwise to perform its obligations hereunder shall not be
affected by any set-off, counterclaim, recoupment, defense or other claim, right
or action which the Bank may have against the Executive or others. In no event
shall the Executive be obligated to seek other employment or take any other
action by way of mitigation of the amounts payable to the Executive under any of
the provisions of this Agreement and such amounts shall not be reduced whether
or not the Executive obtains other employment.
26. CONFIDENTIAL INFORMATION.
The Executive shall hold in a fiduciary capacity for the
benefit of the Bank all secret or confidential information, knowledge or data
relating to the Bank or any of its affiliated companies, and their respective
businesses, which shall have been obtained by the Executive during the
Executive's employment by the Bank or any of its affiliated companies and which
shall not be or become public knowledge (other than by acts by the Executive or
representatives of the Executive in violation of this Agreement). After
termination of the Executive's employment with the Bank, the Executive shall
not, without the prior written consent of the Bank or as may otherwise be
required by law or legal process, communicate or divulge any such information,
knowledge or data to anyone other than the Bank and those designated by it. For
purposes of this Agreement, secret and confidential information, knowledge or
data relating to the Bank or any of its affiliates, and their respective
business, shall not include any information that is public, publicly available
or available through trade association sources. Notwithstanding any other
provision of this Agreement to the contrary, the Executive acknowledges and
agrees that in the event of a violation or threatened violation of any of the
provisions of this Section 26, the Bank shall have no adequate remedy at law and
shall therefore be entitled to enforce each such provision by temporary or
permanent injunction or mandatory relief obtained in any court of competent
jurisdiction without the necessity of proving damages or posting any bond or
other security, and without prejudice to any other remedies that may be
available at law or in equity.
27. ACCESS TO DOCUMENTS.
The Executive shall have the right to obtain copies of any
Bank or Bank documents that the Executive reasonably believes, in good faith,
are necessary or appropriate in determining his entitlement to, and the amount
of, payments and benefits under this Agreement.
28. REQUIRED REGULATORY PROVISIONS.
The following provisions are included for the purpose of
complying with various laws, rules and regulations applicable to the Bank:
(a) Notwithstanding anything herein contained to the contrary,
in no event shall the aggregate amount of compensation payable to the
Executive under Section 4(b) hereof (exclusive of amounts described in
Sections 4(b)(i) and (ii)) exceed three times the Executive's average
annual total compensation for the last five consecutive calendar years
to end prior to his termination of employment with the Bank (or for his
entire period of employment with the Bank if less than five calendar
years).
(b) Notwithstanding anything herein contained to the contrary,
any payments to the Executive by the Bank, whether pursuant to this
Agreement or otherwise, are subject to and conditioned upon their
compliance with Section 18(k) of the Federal Deposit Insurance Act
("FDI Act"), 12 U.S.C.
ss.1828(k), and any regulations promulgated thereunder.
(c) Notwithstanding anything herein contained to the contrary,
if the Executive is suspended from office and/or temporarily prohibited
from participating in the conduct of the affairs of the Bank pursuant
to a notice served under Section 8(e)(3) or 8(g)(1) of the FDI Act, 12
U.S.C. ss.1818(e)(3) or 1818(g)(1), the Bank's obligations under this
Agreement shall be suspended as of the date of service of such notice,
unless stayed by appropriate proceedings. If the charges in such notice
are dismissed, the Bank, in its discretion, may (i) pay to the
Executive all or part of the compensation withheld while the Bank's
obligations hereunder were suspended and (ii) reinstate, in whole or in
part, any of the obligations which were suspended.
(d) Notwithstanding anything herein contained to the contrary,
if the Executive 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) or 8(g)(1) of the FDI Act, 12 U.S.C.
ss.1818(e)(4) or (g)(1), all prospective obligations of the Bank under
this Agreement shall terminate as of the effective date of the order,
but vested rights and obligations of the Bank and the Executive shall
not be affected.
(e) Notwithstanding anything herein contained to the contrary,
if the Bank is in default (within the meaning of Section 3(x)(1) of the
FDI Act, 12 U.S.C. ss.1813(x)(1), all prospective obligations of the
Bank under this Agreement shall terminate as of the date of default,
but vested rights and obligations of the Bank and the Executive shall
not be affected.
(f) Notwithstanding anything herein contained to the contrary,
all prospective obligations of the Bank hereunder shall be terminated,
except to the extent that a continuation of this Agreement is necessary
for the continued operation of the Bank: (i) by the Director of the OTS
or his or her designee or the FDIC, at the time the FDIC enters into an
agreement to provide assistance to or on behalf of the Bank under the
authority contained in Section 13(c) of the FDI Act, 12 U.S.C.
ss.1823(c); (ii) by the Director of the OTS or his or her designee at
the time such Director or designee approves a supervisory merger to
resolve problems related to the operation of the Bank or when the Bank
is determined by such Director to be in an unsafe or unsound condition.
The vested rights and obligations of the parties shall not be affected.
If and to the extent that any of the foregoing provisions shall cease to be
required by applicable law, rule or regulation, the same shall become
inoperative as though eliminated by formal amendment of this Agreement.
<PAGE>
SIGNATURES
IN WITNESS WHEREOF, JAMAICA SAVINGS BANK FSB. has caused this
Agreement to be executed and its seal to be affixed hereunto by its duly
authorized officer, and the Executive has signed this Agreement, on the 22nd day
of June, 1999.
ATTEST: JAMAICA SAVINGS BANK FSB
Joanne Corrigan By: Edward P. Henson
- --------------- ----------------
Joanne Corrigan Edward P. Henson
Secretary President
[Seal]
WITNESS:
John F. Bennett
---------------
John F. Bennett
<PAGE>
STATE OF NEW YORK )
: ss.:
COUNTY OF NASSAU )
On this 22nd day of June, 1999, before me personally came
Edward P. Henson, to me known, who, being by me duly sworn, did depose and say
that he is President of Jamaica Savings Bank FSB, the federally chartered
savings bank described in and which executed the foregoing instrument; that he
knows the seal of said bank; that the seal affixed to said instrument is such
seal; that it was so affixed by order of the Board of Directors of said bank;
and that he signed his name thereto by like order.
Name:
Notary Public
STATE OF NEW YORK )
: ss.:
COUNTY OF NASSAU )
On this 22nd day of June, 1999, before me personally came John
F. Bennett, to me known, and known to me to be the individual described in the
foregoing instrument, who, being by me duly sworn, did depose and say that he
resides at the address set forth in said instrument, and that he signed his name
to the foregoing instrument.
Name:
Notary Public
<PAGE>
APPENDIX A
----------
1. INTRODUCTION. Sections 280G and 4999 of the Internal Revenue Code of
1986, as amended ("Code"), impose a 20% non-deductible federal excise tax on a
person if the payments and benefits in the nature of compensation to or for the
benefit of that person that are contingent on a change in the ownership or
effective control of the Company or the Bank or in the ownership of a
substantial portion of the assets of the Company or the Bank (such payments and
benefits are considered "parachute payments" under section 280G) exceed three
times the person's "base amount" under section 280G. Section 23 of the Agreement
provides for the Executive to receive a tax indemnification payment (sometimes
referred to as a "gross-up" payment) if the payments and benefits in the nature
of compensation to or for the benefit of the Executive that are considered
parachute payments cause the imposition of an excise tax under section 4999 of
the Code. Capitalized terms in this Appendix A that are not defined in this
Appendix A have the meaning used in the Employment Agreement with the Executive.
2. PURPOSE. The purpose of this Appendix A is to illustrate how the tax
indemnification or gross-up payment would be computed. The amounts, figures and
rates used in this example are meant to be illustrative and do not reflect the
actual payments and benefits that would be made to the Executive under this
Agreement. For purposes of this example, it is assumed that a change in control
within the meaning of section 280G of the Code has occurred and that:
(a) The value of the insurance benefits required to be provided to a
hypothetical employee "Z" under sections 4(b)(iii) and 5(b) of the
Agreement for medical, dental, life and other insurance benefits
during the unexpired employment period is $23,000.
(b) The annual rate of Z's salary covered by the Agreement is $100,000,
and Z received annual salary increases of 4%, 5% and 6% (i.e., a
three-year average of 5%) for each of the prior three years. Hence,
the amount payable under sections 4(b)(v) and 5(b) of the Agreement
for salary during the unexpired employment period would be $331,013
[$105,000 + $110, 250 + $115,763].
(c) Z received annual bonuses equal to 20% of his salary in each of the
prior three years. Hence, the amount payable under sections 4(b)(v)
and 5(b) of the Agreement for bonuses during the unexpired employment
period would be $66,203 [20% x ($105,000 + $110,250 + $115,763)].
(d) The amount payable under sections 4(b)(vi) and 5(b) of the Agreement
for the present value of the additional RP and BRP accruals during the
unexpired employment period would be $45,000.
(e) The amount payable under sections 4(b)(vii) and 5(b) of the Agreement
for additional contributions to the ESOP, 401(k) Plan and BRP during
the unexpired employment period would be $20,000.
(f) Z's base amount (i.e., average W-2 wages for the five-year period
preceding the change in control) is $87,000.
3. DETERMINE IF Z IS SUBJECT TO AN EXCISE TAX. Z's parachute payments would
total $485,216 [$23,000 + $331,013 + $66,203 + $45,000 + $20,000]. Three times
Z's base amount is $261,000 [3 x $87,000]; accordingly, Z is subject to an
excise tax because $485,216 exceeds $261,000. Z's "excess parachute payments"
under section 280G of the Code are equal to Z's total parachute payments minus
one times Z's base amount, or $398,216 [$485,216 - $87,000]. If Z were not
protected by section 23 of the Agreement, Z would be subjected to an excise tax
of $79,643 [$398,216 x 20%], in addition to ordinary income taxes.
4. Compute Z's Tax Indemnification Payment. Z's tax indemnification payment
under section 23 of the Agreement would be computed pursuant to the following
formula:
E x P .2 x $398,216
X = ------------------------------------ = ----------------------------------
1 - [(FI x (1 - SLI)) + SLI + E + M] 1 - [.368874 + .0685 + .2 + .0145]
where
E = excise tax rate under section 4999 of the Code [20%];
P = the amount with respect to which such excise tax is
assessed determined without regard to section 23 of
the Agreement [$398,216];
FI = the highest effective marginal rate of income tax
applicable to Z under the Code for the taxable year
in question [assumed to be 39.6% in this example, but
in actuality, the rate is adjusted to take into
account any phase-out or loss of deductions, personal
exemptions and other similar adjustments];
SLI = the sum of the highest effective marginal rates of
income tax applicable to Z under applicable state and
local laws for the taxable year in question [assumed
to be 6.85% in this example, but in actuality, the
rate is adjusted to take into account any phase-out
or loss of deductions, personal exemptions and other
similar adjustments]; and
M = the highest marginal rate of Medicare tax applicable
to Z under the Code for the year in question [1.45%].
In this example, the amount of tax indemnification payment due to Z under
section 23 of the Agreement would be $79,643 [.2 x $398,216] divided by 0.348126
[1 - (.368874 + .0685 + .2 + .0145)], or $228,777. Such amount would be payable
in addition to the other amounts payable under the Agreement in order to put Z
in approximately the same after-tax position that Z would have been in if there
were no excise tax imposed under sections 280G and 4999 of the Code. The tax
indemnification to Z of $228,777 would in turn be a parachute payment subject to
excise tax under sections 280G and 4999. Accordingly, Z's actual excess
parachute payment would be $626,993 [$485,216 - $87,000) + $228,777)] resulting
in an excise tax of $125,399 [$626,993 x 20%]. The difference between the
indemnification. payment and the excise tax [$103,378] is an amount equal to the
sum of the income and other applicable taxes due on the indemnification payment
[($228,777 x .368874) + ($228,777 x .0685) + ($228,777 x .0145)], confirming
that the amount of the tax indemnification payment is sufficient to satisfy all
of Z's tax liability resulting from the excess parachute payment.
JAMAICA SAVINGS BANK FSB
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT ("Agreement") is made and entered
into as of June 22, 1999 by and between JAMAICA SAVINGS BANK FSB, a federally
chartered savings bank, having its principal office at 303 Merrick Road,
Lynbrook, New York 11563 ("Bank"), and Jack Connors, an individual residing at
(address omitted) ("Executive"). This Agreement amends, restates and supersedes
the Employment Agreement dated as of June 27, 1995 and the Supplemental
Employment Agreement dated as of July 9, 1996 by and between the Bank and the
Executive. Any reference to the "Company" in this Agreement shall mean JSB
Financial, Inc. and any successor thereto.
W I T N E S S E T H :
WHEREAS, the Executive is currently serving as Senior Vice
President of the Bank, and the Bank wishes to assure itself of the services of
the Executive for the period provided in this Agreement; and
WHEREAS, the Executive is willing to serve in the employ of
the Bank on the terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the premises and the
mutual covenants and conditions hereinafter set forth, the Bank and the
Executive hereby agree as follows:
1. POSITION AND RESPONSIBILITIES.
During the period of his employment hereunder, the Executive
agrees to serve as Senior Vice President of the Bank. The Executive shall render
administrative and management services to the Bank such as are customarily
performed by persons situated in a similar executive capacity and shall perform
such other duties not inconsistent with his title and office as may be assigned
to him by or under the authority of the Board of Directors of the Bank (the
"Board"). The Executive shall have such authority as is necessary or appropriate
to carry out his assigned duties. Failure to re-elect the Executive as Senior
Vice President of the Bank (or a more senior position) without the consent of
the Executive shall constitute a breach of this Agreement.
2. TERMS.
(a) The period of the Executive's employment under this
Agreement shall be deemed to have commenced as of the date first above written
(the "Effective Date") and shall be for an initial term of three years. Prior to
the first anniversary of the Effective Date of this Agreement and on each
anniversary date thereafter (each, an "Anniversary Date"), the Board shall
review the terms of this Agreement and the Executive's performance of services
hereunder and may, in the absence of objection from the Executive, approve an
extension of the Employment Agreement. In such event, the Employment Agreement
shall be extended to the third anniversary of the relevant Anniversary Date. For
purposes of this Agreement, the term "Employment Period" shall mean the term of
this Agreement plus such extensions as are provided herein.
(b) During the period of his employment hereunder, except for
periods of absence occasioned by illness, disability, holidays, reasonable
vacation periods and reasonable leaves of absence, the Executive shall devote
substantially all of his business time, attention, skill and efforts to the
faithful performance of his duties hereunder including (i) service as Senior
Vice President of the Bank, and, if duly elected, a Director of the Bank, (ii)
performance of such duties not inconsistent with his title and office as may be
assigned to him by or under the authority of the Board or a more senior
executive officer, and (iii) such other activities and services related to the
organization, operation and management of the Bank. During the Employment Period
it shall not be a violation of this Agreement for the Executive to (A) serve on
corporate, civic, industry or charitable boards or committees, (B) deliver
lectures, fulfill speaking engagements or teach at educational institutions and
(C) manage personal investments, so long as such activities do not significantly
interfere with the performance of the Executive's responsibilities as an
employee of the Bank in accordance with this Agreement. It is expressly
understood and agreed that to the extent that any such activities have been
conducted by the Executive prior to the Effective Date, the continued conduct of
such activities (or the conduct of activities similar in nature and scope
thereto) subsequent to the Effective Date shall not thereafter be deemed to
interfere with the performance of the Executive's responsibilities to the Bank.
It is also expressly agreed that the Executive may conduct activities subsequent
to the Effective Date that are generally accepted for an executive in his
position, regardless of whether conducted by the Executive prior to the
Effective Date.
(c) Notwithstanding anything herein contained to the contrary:
(i) the Executive's employment with the Bank may be terminated by the Bank or
the Executive during the term of this Agreement, subject to the terms and
conditions of this Agreement; and (ii) nothing in this Agreement shall mandate
or prohibit a continuation of the Executive's employment following the
expiration of the term of this Agreement upon such terms and conditions as the
Board and the Executive may mutually agree.
(d) For all purposes of this Agreement, the term "Unexpired
Employment Period" as of any date shall mean the period beginning on such date
and ending on the Anniversary Date on which the Employment Period (as extended
pursuant to Section 2(a) of this Agreement) is then scheduled to expire.
3. COMPENSATION AND REIMBURSEMENT.
(a) The compensation specified under this Agreement shall
constitute the salary and benefits paid for the duties described in Section 1.
The Bank shall pay the Executive as compensation a salary at an annual rate of
not less than (salary omitted) per year or such higher rate as may be prescribed
by or under the authority of the Board ("Base Salary"). The Base Salary payable
under this Section 3 shall be paid in approximately equal installments in
accordance with the Bank's customary payroll practices. During the period of
this Agreement, the Executive's Base Salary shall be reviewed at least annually;
the first such review will be made no later than one year from the date of this
Agreement. Such review shall be conducted by a Committee designated by the
Board, and the Board may increase the Executive's Base Salary, which increased
amount shall be considered the Executive's "Base Salary" for purposes of this
Agreement. In no event shall the Executive's annual rate of Base Salary under
this Agreement in effect at a particular time be reduced without his prior
written consent. In addition to the Base Salary provided in this Section 3(a),
the Bank shall provide the Executive at no cost to the Executive with all such
other benefits as are provided uniformly to permanent full-time employees of the
Bank.
(b) The Bank will provide the Executive with employee benefit
plans, arrangements and perquisites substantially equivalent to those in which
the Executive was participating or otherwise deriving benefit from immediately
prior to the beginning of the term of this Agreement, and the Bank will not,
without the Executive's prior written consent, make any changes in such plans,
arrangements or perquisites which would adversely affect the Executive's rights
or benefits thereunder. Without limiting the generality of the foregoing
provisions of this Subsection (b), the Executive will be entitled to participate
in or receive benefits under any employee benefit plans with respect to which
the Executive satisfies the eligibility requirements, including, but not limited
to, the Retirement Plan of Jamaica Savings Bank FSB ("RP"), the Incentive
Savings Plan of Jamaica Savings Bank FSB ("ISP"), the Jamaica Savings Bank FSB
Employee Stock Ownership Plan ("ESOP"), the Benefit Restoration Plan of Jamaica
Savings Bank FSB ("BRP"), the JSB Financial, Inc. 1990 Stock Option Plan, the
JSB Financial, Inc. 1996 Stock Option Plan, retirement plans, supplemental
retirement plans, pension plans, profit-sharing plans, group life, health
(including hospitalization, medical and major medical), dental, accidental death
and dismemberment, travel accident and short-term disability insurance plans, or
any other employee benefit plan or arrangement made available by the Bank in the
future to its senior executives and key management employees, subject to and on
a basis consistent with the terms, conditions and overall administration of such
plans and arrangements. The Executive will be entitled to incentive compensation
and bonuses as provided in any plan of the Bank in which the Executive is
eligible to participate. Nothing paid to the Executive under any such plan or
arrangement will be deemed to be in lieu of other compensation to which the
Executive is entitled under this Agreement.
(c) The Executive's principal place of employment shall be at
the Bank's executive offices at the address first above written, or at such
other location in New York City or in Nassau County or Suffolk County at which
the Bank shall maintain its principal executive offices, or at such other
location as the Board and the Executive may mutually agree upon. The Bank shall
provide the Executive, at his principal place of employment with support
services and facilities suitable to his position with the Bank and necessary or
appropriate in connection with the performance of his assigned duties under this
Agreement. The Bank shall provide the Executive with an automobile suitable to
the position of Senior Vice President of the Bank, in accordance with prior
practice, and such automobile may be used by the Executive in carrying out his
duties under the Agreement, including commuting between his residence and his
principal place of employment, and other personal use. The Bank shall reimburse
the Executive for his ordinary and necessary business expenses, including,
without limitation, fees for memberships in such clubs and organizations as the
Executive and the Board shall mutually agree are necessary and appropriate for
business purposes, and travel and entertainment expenses, incurred in connection
with the performance of his duties under this Agreement, upon presentation to
the Bank of an itemized account of such expenses in such form as the Bank may
reasonably require.
4. PAYMENTS TO THE EXECUTIVE UPON AN EVENT OF TERMINATION.
The provisions of this Section shall in all respects be
subject to the terms and conditions stated in Sections 9 and 28.
(a) Upon the occurrence of an Event of Termination (as herein
defined) during the Executive's term of employment under this Agreement, the
provisions of this Section shall apply. As used in this Agreement, an "Event of
Termination" shall mean and include any one or more of the following: (i) the
termination by the Bank or the Company of the Executive's full-time employment
hereunder for any reason other than: following a Change in Control, as defined
in Section 5; for Disability, as defined in Section 6; for Retirement, as
defined in Section 8; for Cause, as defined in Section 9; or upon the
Executive's death; or (ii) unless consented to by the Executive, the Executive's
voluntary resignation from the Bank's employ, upon any: (A) failure to elect or
re-elect or to appoint or re-appoint the Executive as Senior Vice President of
the Bank, (B) material adverse change in the Executive's function, duties, or
responsibilities, which change would cause the Executive's position to become
one of lesser responsibility, importance, or scope from the position and
attributes thereof described in Section 1, above (and any such material change
shall be deemed a continuing breach of this Agreement), (C) relocation of the
Executive's principal place of employment by more than 30 miles from its
location at the Effective Date of this Agreement, or a material reduction in the
benefits and perquisites to the Executive from those being provided as of the
Effective Date of this Agreement, (D) liquidation or dissolution of the Bank or
the Company, or (E) material breach of this Agreement by the Bank. Upon the
occurrence of any event described in clauses (A), (B), (C), (D) or (E), above,
the Executive shall have the right to elect to terminate his employment under
this Agreement by resignation upon written notice pursuant to Section 10 given
within a reasonable period of time not to exceed, except in case of a continuing
breach, four calendar months after the event giving rise to said right to elect.
(b) Upon the occurrence of an Event of Termination as set
forth in Section 4(a), on the Date of Termination, as defined in Section 10, the
Bank shall be obligated to pay, or to provide, the Executive, or, in the event
of his subsequent death, to his surviving spouse or such other beneficiary or
beneficiaries as the Executive may designate in writing, or if neither his
estate, as severance pay or liquidated damages, or both, the benefits provided
below and a payment equal to the sum of the payments set forth below:
(i) payment of the sum of (A) the Executive's annual Base
Salary through the Date of Termination to the extent not theretofore
paid and (B) any compensation previously deferred by the Executive
(together with any accrued interest or earnings thereon) and any
accrued vacation pay, in each case to the extent not theretofore paid
(the sum of the amounts described in clauses (A) and (B) shall be
hereinafter referred to as the "Accrued Obligations");
(ii) the benefits, if any, to which the Executive is entitled
as a former employee under the Bank's or the Company's employee benefit
plans and programs and compensation plans and programs;
(iii) continued group life, health (including hospitalization,
medical and major medical), dental, accidental death and dismemberment,
travel accident and short-term disability insurance benefits as
provided by the Bank or the Company, in addition to that provided
pursuant to Section 4(b)(ii), if and to the extent necessary to provide
for the Executive, for the remaining Unexpired Employment Period,
coverage equivalent to the coverage to which he would have been
entitled if he had continued working for the Bank during the remaining
Unexpired Employment Period at the highest annual rate of salary
achieved during the Employment Period; provided, however, if the
Executive has obtained group life, health (including hospitalization,
medical and major medical), dental, accidental death and dismemberment,
travel accident and/or short-term disability insurance benefits
coverage from another source, the Executive may, as of any month, make
an irrevocable election to forego the continued coverage that would
otherwise be provided hereunder for the remaining Unexpired Employment
Period, or any portion thereof, in which case the Bank or the Company,
upon receipt of the Executive's irrevocable election, shall pay the
Executive an amount equal to the estimated cost to the Bank or the
Company of providing such coverage during such period;
(iv) if and to the extent not already provided under Sections
4(b)(ii) and 4(b)(iii), continued health (including hospitalization,
medical and major medical) and dental insurance benefits to the extent
maintained by the Bank or the Company for its employees or retirees
during the remainder of the Executive's lifetime and the lifetime of
his spouse, if any, for so long as the Executive continues to reimburse
the Bank for the cost of such continued coverage;
(v) a lump sum payment, as liquidated damages, in an amount
equal to the Base Salary and bonus or other incentive compensation that
the Executive would have earned if the Executive had continued working
for the Bank and the Company during the remaining Unexpired Employment
Period (A) at the highest annual rate of Base Salary and bonus or other
incentive compensation achieved by the Executive during the three-year
period immediately preceding the Executive's Date of Termination,
except that (B) in the case of a Change in Control, such lump sum shall
be determined based upon the Base Salary and the bonus or other
incentive compensation, respectively, that the Executive would have
been paid during the remaining Unexpired Employment Period including
the assumed increases referred to in clauses (i) and (ii) of Section
5(b);
(vi) a lump sum payment in an amount equal to the excess, if
any, of: (A) the present value of the pension benefits to which the
Executive would be entitled under the RP and the BRP (and under any
other qualified and non-qualified defined benefit plans maintained by
the Bank or the Company covering the Executive) as if he had continued
working for the Bank during the remaining Unexpired Employment Period
(x) at the highest annual rate of Base Salary and, if applicable, the
highest bonus or other incentive compensation, respectively, achieved
by the Executive during the three-year period immediately preceding the
Executive's Date of Termination, except that (y) in the case of a
Change in Control, such lump sum shall be determined based upon the
Base Salary and, if applicable, the highest bonus or other incentive
compensation, respectively, that the Executive would have been paid
during the remaining Unexpired Employment Period including the assumed
increases referred to in clauses (i) and (ii) of Section 5(b), and (z)
in the case of a Change in Control, as if three additional years are
added to the Executive's age and years of creditable service under the
RP and the BRP and after taking into account any other compensation
required to be taken into account under the RP and the BRP (and any
other qualified and non-qualified defined benefit plans of the Bank or
the Company, as applicable), over (B) the present value of the pension
benefits to which he is actually entitled under the RP and the BRP (and
any other qualified and non-qualified defined benefit plans) as of his
Date of Termination, where such present values are to be determined
using a discount rate of 6% and the mortality tables prescribed under
section 72 of the Internal Revenue Code of 1986, as amended ("Code");
and
(vii) a lump sum payment in an amount equal to the
contributions that would have been made by the Bank or the Company on
the Executive's behalf to the ISP and the ESOP and to the BRP with
respect to such ISP and ESOP contributions (and to any other qualified
and non-qualified defined contribution plans maintained by the Bank or
the Company covering the Executive) as if the Executive had continued
working for the Bank and the Company during the remaining Unexpired
Employment Period making the maximum amount of employee contributions
required, if any, under such plan or plans and earning (A) the highest
annual rate of Base Salary and, if applicable, the highest bonus or
other incentive compensation, respectively, achieved by the Executive
during the three-year period immediately preceding the Executive's Date
of Termination, except that (B) in the case of a Change in Control,
such lump sum shall be determined based upon the Base Salary and, if
applicable, the bonus or other incentive compensation, respectively,
that the Executive would have been paid during the remaining Unexpired
Employment Period including the assumed increases referred to in
clauses (i) and (ii) of Section 5(b).
The benefits to be provided under, and the amounts payable pursuant to, this
Section 4 shall be provided and be payable without regard to proof of damages
and without regard to the Executive's efforts, if any, to mitigate damages. The
Bank and the Executive hereby stipulate that the damages which may be incurred
by the Executive following any such termination of employment are not capable of
accurate measurement as of the date first above written and that such liquidated
damages constitute reasonable damages under the circumstances.
(c) Payments to the Executive under Section 4 shall be made
within ten days of the Executive's Date of Termination.
(d) In the event payments are made under Section 4 or Section
5, the Executive may select an individual or firm to provide him with reasonable
outplacement counseling services, and the Bank shall pay for the costs of such
services; provided, however, that the cost to the Bank of such outplacement
counseling services shall not exceed 25% of the Executive's Base Salary.
5. CHANGE IN CONTROL.
(a) No benefit shall be payable under this Section 5 unless
there shall have been a Change in Control of the Bank or the Company, as set
forth below. For purposes of this Agreement, a "Change in Control" of the Bank
or the Company shall mean any one or more of the following:
(i) An event of a nature that would be required to be reported
in response to Item l(a) of the current report on Form 8-K, as in
effect on the date hereof, pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act");
(ii) An event of a nature that results in a Change in Control
of the Bank or the Company within the meaning of the Home Owners' Loan
Act of 1933, as amended, or the Change in Bank Control Act of 1978, as
amended, as applicable, and the Rules and Regulations promulgated by
the Office of Thrift Supervision ("OTS") or its predecessor agency, the
Federal Deposit Insurance Corporation ("FDIC") or the Board of
Governors of the Federal Reserve System ("FRB"), as the case may be, as
in effect on the date hereof, but excluding any such Change in Control
resulting from the purchase of securities by the Company or the Bank's
or the Company's tax-qualified employee benefit plans and trusts;
(iii) If any "person" (as the term is used in Sections 13(d)
and 14(d) of the Exchange Act) is or becomes the "beneficial owner" (as
defined in Rule 13d-3 under the Exchange Act), directly or indirectly,
of securities of the Bank or the Company representing 20% or more of
the Bank's or the Company's outstanding securities except for any
securities of the Bank purchased by the Company in connection with the
initial conversion of the Bank from mutual to stock form (the
"Conversion") and any securities purchased by the Company or the Bank's
or the Company's tax-qualified employee benefit plans and trusts;
(iv) If the individuals who constitute the Board on the date
hereof (the "Incumbent Board") cease for any reason to constitute at
least a majority of the Board, provided, however, that any person
becoming a director subsequent to the date hereof whose election or
nomination for election by the Company's stockholders, was approved by
a vote of at least three-quarters of the directors then comprising the
Incumbent Board shall be considered as though he were a member of the
Incumbent Board, but excluding, for this purpose, any such person whose
initial assumption of office occurs as a result of an actual or
threatened election contest with respect to the election or removal of
directors or other actual or threatened solicitation of proxies or
consents by or on behalf of a person other than the Board;
(v) A merger, consolidation, reorganization, sale of all or
substantially all the assets of the Bank or the Company or similar
transaction occurs in which the Bank or the Company is not the
resulting entity, other than a transaction following which (A) at least
51% of the equity ownership interests of the entity resulting from such
transaction are beneficially owned (within the meaning of Rule 13d-3
promulgated under Exchange Act) in substantially the same relative
proportions by persons who, immediately prior to such transaction,
beneficially owned (within the meaning of Rule 13d-3 promulgated under
the Exchange Act) at least 51% of the outstanding equity ownership
interests in the Bank or the Company and (B) at least 51% of the
securities entitled to vote generally in the election of directors of
the entity resulting from such transaction are beneficially owned
(within the meaning of Rule 13d-3 promulgated under the Exchange Act)
in substantially the same relative proportions by persons who,
immediately prior to such transaction, beneficially owned (within the
meaning of Rule 13d-3 promulgated under the Exchange Act) at least 51%
of the securities entitled to vote generally in the election of
directors of the Bank or the Company;
(vi) A proxy statement shall be distributed soliciting proxies
from stockholders of the Company, by someone other than the current
management of the Company, seeking stockholder approval of a plan of
reorganization, merger or consolidation of the Company or the Bank or
similar transaction with one or more corporations as a result of which
the outstanding shares of the class of securities then subject to such
plan or transaction are exchanged for or converted into cash or
property or securities not issued by the Bank or the Company; or
(vii) A tender offer is completed for 20% or more of the
voting securities of the Bank or Company then outstanding.
The "Change in Control Date" shall mean the date during the Employment Period on
which a Change in Control occurs. Anything in this Agreement to the contrary
notwithstanding, if the Executive's employment with the Company is terminated
and if it is reasonably demonstrated by the Executive that such termination of
employment (1) was at the request of a third party who has taken steps
reasonably calculated to effect a Change in Control or (2) otherwise arose in
connection with or anticipation of a Change in Control, then for all purposes of
this Agreement the "Change in Control Date" shall mean the date immediately
prior to the date of such termination of employment.
(b) If any of the events described in Section 5(a)
constituting a Change in Control have occurred or the Board has determined that
a Change in Control has occurred, the Executive shall be entitled to the
payments and the benefits provided below on the Change in Control Date. The
amounts payable and the benefits to be provided under this Section 5(b) to the
Executive shall consist of the payments and benefits that would be due to the
Executive and the Executive's family under Section 4(b) for the Unexpired
Employment Period as if an Event of Termination under Section 4(a) had occurred
on the Change in Control Date. For purposes of determining the payments and
benefits due under this Section 5(b), when calculating the payments due and
benefits to be provided for the Unexpired Employment Period, it shall be assumed
that for each year of the remaining term of this Agreement, the Executive would
have received (i) an annual increase in Base Salary equal to the average
percentage increase in Base Salary received by the Executive for the three-year
period ending with the earlier of (x) the year in which the Change in Control
Date occurs or (y) the year during which a definitive agreement, if any,
governing the Change in Control is executed, with the first such increase
effective as of the January 1st next following such three-year period and the
second and third such increases effective as of the next two anniversaries of
such January 1st, (ii) a bonus or other incentive compensation equal to the
highest percentage rate of bonus or incentive compensation paid to the Executive
during the three-year period referred to in clause (i) of this Section 5(b)
times the Base Salary that the Executive would have been paid during the
remaining term of this Agreement including the assumed increases referred to in
clause (i) of this Section 5(b), (iii) the maximum contributions that could be
made by or on behalf of the Executive with respect to any employee benefit plans
and programs maintained by the Company and the Bank based upon the Base Salary
and, if applicable, the bonus or other incentive compensation, respectively,
that the Executive would have been paid during the remaining term of this
Agreement including the assumed increases referred to in clauses (i) and (ii) of
this Section 5(b), and (iv) the present value of the pension benefits to which
the Executive is entitled under Section 4(b)(vi) with respect to the RP and the
BRP (and under any other qualified and non-qualified defined benefit plans
maintained by the Bank or the Company covering the Executive) shall be
determined as if he had continued working for the Bank during the remaining
Unexpired Employment Period and shall be based upon the Base Salary and, if
applicable, the bonus or other incentive compensation, respectively, that the
Executive would have been paid during the remaining term of this Agreement
including the assumed increases referred to in clauses (i) and (ii) of this
Section 5(b). The benefits to be provided under, and the amounts payable
pursuant to, this Section 5 shall be provided and be payable without regard to
proof of damages and without regard to the Executive's efforts, if any, to
mitigate damages. The Bank and the Executive hereby stipulate that the damages
which may be incurred by the Executive following any Change in Control are not
capable of accurate measurement as of the date first above written and that such
liquidated damages constitute reasonable damages under the circumstances.
(c) Payments under Section 5(b) shall be made to the Executive
on the Change in Control Date. Such payments shall be made regardless of whether
the Executive's employment terminates.
6. TERMINATION FOR DISABILITY.
(a) In the event of Termination for Disability, the Executive
shall receive the benefits provided in Section 6(b); provided, however, that the
benefits provided under Section 6(b) shall not be deemed to be in lieu of the
benefits he is otherwise entitled as a former employee under the Bank or the
Company's employee plans and programs. For purposes of this Agreement, the
Executive may be terminated for disability only if (i) the Executive shall have
been absent from his duties with the Bank on a full-time basis for at least six
consecutive months, or (ii) a majority of the members of the Board acting in
good faith determine that, based upon competent and independent medical evidence
presented by a physician or physicians agreed upon by the parties, the
Executive's physical or mental condition is such that he is totally and
permanently incapable of engaging in any substantial gainful employment based
upon his education, training and experience; provided, however, that on and
after the earliest date on which a Change in Control of the Bank or the Company
as defined in Section 5 occurs, such a determination shall require the
affirmative vote of at least three-fourths of the members of the Board acting in
good faith and such vote shall not be made prior to the expiration of a 60-day
period following the date on which the Board shall, by written notice to the
Executive, furnish him a statement of its grounds for proposing to make such
determination, during which period the Executive shall be afforded a reasonable
opportunity to make oral and written presentations to the members of the Board,
and to be represented by his legal counsel at such presentations, to refute the
grounds for the proposed determination.
(b) The Bank will pay the Executive as Disability pay, a
bi-weekly payment equal to 100% of the Executive's bi-weekly annual rate of Base
Salary in effect on the date of the Executive's Termination for Disability. In
addition, the Bank will cause to be continued insurance coverage, including
group life, health (including hospitalization, medical and major medical),
dental, accidental death and dismemberment, travel accident and short-term
disability coverage substantially identical to the coverage maintained by the
Bank or the Company for the Executive prior to his Termination for Disability.
The Disability pay and coverages shall commence on the effective date of the
Executive's termination and shall cease upon the earliest to occur of: (i) the
date the Executive returns to the full-time employment of the Bank, in the same
capacity as he was employed prior to his Termination for Disability and pursuant
to an employment agreement between the Executive and the Bank; (ii) the
Executive's full-time employment by another employer; (iii) the Executive's
attaining the normal age of retirement or receiving benefits under the RP or
other defined benefit pension plan of the Bank or the Company; (iv) the
Executive's death; (v) the Executive's eligibility to collect payments under the
disability provision of the RP or other defined benefit pension plan of the Bank
or the Company; or (vi) the expiration of the term of this Agreement.
(c) Notwithstanding the foregoing, there will be no reduction
in the compensation otherwise payable to the Executive during any period during
which the Executive is incapable of performing his duties hereunder by reason of
temporary disability.
7. TERMINATION UPON DEATH.
The Executive's employment shall terminate automatically upon
the Executive's death during the Employment Period. In such event, the Executive
and the Executive's legal representatives shall be entitled to the following:
(i) payment of the Executive's "Accrued Obligations;"
(ii) the continuation of all benefits to the Executive's
family and dependents that would have been provided if the Executive
had been entitled to the benefits under Section 4(b)(ii), (iii) and
(iv), and
(iii) the timely payment of any other amounts or benefits
required to be paid or provided or which the Executive is eligible to
receive under any plan, program, policy or practice or contract or
agreement of the Bank and its affiliated companies (all such other
amounts and benefits shall be hereinafter referred to as the "Other
Benefits");
provided, however, that if the Executive dies while in the employment of the
Bank, the amount of life insurance provided to the Executive by the Bank shall
not be less than the lesser of $200,000 or three times the Executive's then
annual Base Salary. Accrued Obligations shall be paid to the Executive's estate
or beneficiary, as applicable, in a lump sum cash payment within ten days of the
Date of Termination. With respect to the provision of Other Benefits after the
Change in Control Date, the term Other Benefits as utilized in this Section 7
shall include, without limitation, that the Executive's estate and/or
beneficiaries shall be entitled to receive, benefits at least equal to the most
favorable benefits provided by the Bank and affiliated companies to the estates
and beneficiaries of peer executives of the Bank and such affiliates companies
under such plans, programs, practices and policies relating to death benefits,
if any, as in effect with respect to other peer executives and their
beneficiaries at any time during the 120-day period immediately preceding the
Change in Control Date.
8. TERMINATION UPON RETIREMENT.
Termination by the Bank of the Executive based on "Retirement"
shall mean termination in accordance with the Company's or the Bank's retirement
policy or in accordance with any retirement arrangement established with the
Executive's consent with respect to him. Upon termination of the Executive upon
Retirement, the Executive shall be entitled to all benefits under the RP and any
other retirement plan of the Bank or the Company and other plans to which the
Executive is a party, and the Executive shall be entitled to the benefits, if
any, that would be payable to him as a former employee under the Bank's or the
Company's employee benefit plans and programs and compensation plans and
programs.
9. TERMINATION FOR CAUSE.
The terms "Termination for Cause" or "Cause" shall mean
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 any material breach of
this Agreement, in such case as measured against standards generally prevailing
at the relevant time in the savings and community banking industry. For purposes
of this Section, no act, or the failure to act, on the Executive's part shall be
"willful" unless done, or omitted to be done, in bad faith and without
reasonable belief that the action or omission was in the best interest of the
Bank or its affiliates. Any act, or failure to act, based upon authority given
pursuant to a resolution duly adopted by the Board or based upon the written
advice of counsel for the Bank shall be conclusively presumed to be done, or
omitted to be done, by the Executive in good faith and in the best interests of
the Bank. Notwithstanding the foregoing, the Executive shall not be deemed to
have been terminated for Cause unless and until there shall have been delivered
to him a Notice of Termination which shall include a copy of a resolution duly
adopted by the affirmative vote of not less than three-fourths of the members of
the Board at a meeting of the Board called and held for that purpose (after
reasonable notice to the Executive and an opportunity for him, together with
counsel, to be heard before the Board), finding that in the good faith opinion
of the Board, the Executive was guilty of conduct justifying Termination for
Cause and specifying the particulars thereof in detail. The Executive shall not
have the right to receive compensation or other benefits for any period after
Termination for Cause.
10. NOTICE.
(a) Any purported termination by the Bank or by the Executive
shall be communicated by a Notice of Termination to the other party hereto. For
purposes of this Agreement, a "Notice of Termination" shall mean a written
notice which shall indicate the specific termination provision in this Agreement
relied upon and shall set forth in reasonable detail the facts and circumstances
claimed to provide a basis for termination of the Executive's employment under
the provision so indicated.
(b) Subject to Section 10(c), "Date of Termination" shall mean
(A) if the Executive's employment is terminated for Disability, 30 days after a
Notice of Termination is given (provided that he shall not have returned to the
performance of his duties on a full-time basis during such 30-day period), and
(B) if his employment is terminated for any other reason, the date specified in
the Notice of Termination (which, in the case of a Termination for Cause, shall
be immediate).
(c) If, within 30 days after any Notice of Termination is
given, the party receiving such Notice of Termination notifies the other party
that a dispute exists concerning the termination, then, except upon the
occurrence of a Change in Control and voluntary termination by the Executive in
which case the Date of Termination shall be the date specified in the Notice,
the Date of Termination shall be the date on which the dispute is finally
determined, either by mutual written agreement of the parties, by a binding
arbitration award, or by a final judgment, order or decree of a court of
competent jurisdiction (the time for appeal therefrom having expired and no
appeal having been perfected) and provided further that the Date of Termination
shall be extended by a notice of dispute only if such notice is given in good
faith and the party giving such notice pursues the resolution of such dispute
with reasonable diligence. Notwithstanding the pendency of any such dispute, the
Bank will continue to pay the Executive his full compensation in effect when the
notice giving rise to the dispute was given (including, but not limited to, Base
Salary) and continue him as a participant in all compensation, benefit and
insurance plans in which he was participating when the notice of dispute was
given, until the dispute is finally resolved in accordance with this Agreement.
Amounts paid under this Section are in addition to all other amounts due under
this Agreement and shall not be offset against or reduce any other amounts due
under this Agreement.
(d) The Bank may terminate the Executive's employment at any
time, but any termination by the Bank, other than Termination for Cause, shall
not prejudice the Executive's right to compensation or other benefits under this
Agreement or under any other benefit or compensation plans or programs
maintained by the Bank or the Company from time to time. The Executive shall not
have the right to receive compensation or other benefits for any period after a
Termination for Cause as defined in Section 9 hereinabove.
(e) Any communication to a party required or permitted under
this Agreement, including any notice, direction, designation, consent,
instruction, objection or waiver, shall be in writing and shall be deemed to
have been given at such time as it is delivered personally, or five days after
mailing if mailed, postage prepaid, by registered or certified mail, return
receipt requested, addressed to such party at the address listed below or at
such other address as one such party may by written notice specify to the other
party, as follows. If to the Executive, (address omitted); if to the Bank,
Jamaica Savings Bank FSB, 303 Merrick Road, Lynbrook, New York 11563, Attention:
President, with a copy to Thacher Proffitt & Wood, Two World Trade Center, New
York, New York 10048, Attention: Douglas J. McClintock, Esq.
11. POST-TERMINATION OBLIGATIONS.
(a) All payments and benefits to the Executive under this
Agreement shall be subject to the Executive's compliance with paragraph (b) of
this Section 11 during the term of this Agreement and for one full year after
the expiration or termination hereof.
(b) The Executive shall, upon reasonable notice, furnish such
information and assistance to the Bank as may reasonably be required by the Bank
in connection with any litigation in which it or any of its subsidiaries or
affiliates is, or may become, a party; provided, that the Bank reimburses the
Executive for the reasonable value of his time in connection therewith and for
any out-of-pocket costs attributable thereto.
12. COVENANT NOT TO COMPETE.
The Executive hereby covenants and agrees that for a period of
one year following his Date of Termination, if such termination occurs prior to
the end of the term of the Agreement, he shall not, without the written consent
of the Board, become an officer, employee, consultant, director or trustee of
any savings bank, savings and loan association, savings and loan holding
company, bank or bank holding company if such position (a) entails working in
(or providing services in) New York City, Nassau or Suffolk counties or (b)
entails working in (or providing services in) any other county that is both (i)
within the Bank's primary trade (or operating) area at the time in question,
which shall be determined by reference to the Bank's business plan as in effect
from time to time, and (ii) in which the Bank engages in material or substantial
deposit-taking functions or lending activities at such time; provided, however,
that this Section 12 shall not apply if the Executive's employment is terminated
for the reasons set forth in any of Sections 4, 5, 6 or 8.
13. SOURCE OF PAYMENTS.
All payments provided in this Agreement shall be timely paid
in cash or check from the general funds of the Bank.
14. EFFECT ON PRIOR AGREEMENTS.
This Agreement contains the entire understanding between the
parties hereto and supersedes any prior employment agreement between the Bank or
any predecessor of the Bank and the Executive, including the Employment
Agreement dated June 27, 1995 and the Supplemental Employment Agreement dated
July 9, 1996, except that this Agreement shall not affect or operate to reduce
any benefit or compensation inuring to the Executive of a kind elsewhere
provided. No provisions of this Agreement shall be interpreted to mean that the
Executive is subject to receiving fewer benefits than those available to him
without reference to this Agreement.
15. EFFECT OF ACTION UNDER COMPANY AGREEMENT.
Notwithstanding any provision herein to the contrary, to the
extent that full compensation payments and benefits are paid to or received by
the Executive under the Employment Agreement, dated June 22, 1999, as it may be
amended from time to time, between the Executive and the Company, such
compensation payments and benefits paid by the Company will be deemed to satisfy
the corresponding obligations of the Bank under this Agreement.
16. NO ATTACHMENT.
Except as required by law, no right to receive payments under
this Agreement shall be subject to anticipation, commutation, alienation, sale,
assignment, encumbrance, charge, pledge, or hypothecation, or to execution,
attachment, levy, or similar process or assignment by operation of law, and any
attempt, voluntary or involuntary, to affect any such action shall be null,
void, and of no effect.
17. MODIFICATION AND WAIVER.
(a) This Agreement may not be modified or amended except by an
instrument in writing signed by the parties hereto.
(b) No term or condition of this Agreement shall be deemed to
have been waived, nor shall there be any estoppel against the enforcement of any
provision of this Agreement, except by written instrument of the party charged
with such waiver or estoppel. No such written waiver shall be deemed a
continuing waiver unless specifically stated therein, and each such waiver shall
operate only as to the specific term or condition waived and shall not
constitute a waiver of such term or condition for the future as to any act other
than that specifically waived.
18. SUCCESSOR AND ASSIGNS.
This Agreement will inure to the benefit of and be binding
upon the Executive, his legal representatives and testate or intestate
distributees, and the Bank, its successors and assigns, including any successor
by purchase, merger, consolidation or otherwise or a statutory receiver or any
other person or firm or corporation to which all or substantially all of the
assets and business of the Bank may be sold or otherwise transferred. Any such
successor of the Bank shall be deemed to have assumed this Agreement and to have
become obligated hereunder to the same extent as the Bank and the Executive's
obligations hereunder shall continue in favor of such successor.
19. SEVERABILITY.
If, for any reason, any provision of this Agreement, or any
part of any provision, is held invalid, such invalidity shall not affect any
other provision of this Agreement or any part of such provision not held so
invalid, and each such other provision and part thereof shall to the full extent
consistent with law continue in full force and effect.
20. HEADINGS FOR REFERENCE ONLY.
The headings of Sections and paragraphs herein are included
solely for convenience of reference and shall not control the meaning or
interpretation of any of the provisions of this Agreement. Any reference in this
Agreement to a Section or Subsection shall refer to a Section or Subsection of
this Agreement, except as otherwise specified.
21. GOVERNING LAW.
This Agreement shall be governed by the laws of the State of
New York, without reference to conflicts of law principles.
22. INDEMNIFICATION AND ATTORNEYS' FEES.
(a) The Bank shall indemnify, hold harmless and defend the
Executive against reasonable costs, including legal fees, incurred by him in
connection with his consultation with legal counsel or arising out of any
action, suit or proceeding in which he may be involved, as a result of his
efforts, in good faith, to defend or enforce the terms of this Agreement. The
Bank agrees to pay all such costs as they are incurred by the Executive, to the
full extent permitted by law, and without regard to whether the Bank believes
that it has a defense to any action, suit or proceeding by the Executive or that
it is not obligated for any payments under this Agreement.
(b) In the event any dispute or controversy arising under or
in connection with the Executive's termination is resolved in favor of the
Executive, whether by judgment, arbitration or settlement, the Executive shall
be entitled to the payment of all back-pay, including salary, bonuses and any
other cash compensation, fringe benefits and any compensation and benefits due
the Executive under this Agreement.
(c) The Bank shall indemnify, hold harmless and defend the
Executive for any act taken or not taken, or any omission or failure to act, by
him in good faith while performing services for the Bank or the Company to the
same extent and upon the same terms and conditions as other similarly situated
officers and directors of the Bank or the Company. If and to the extent that the
Bank or the Company, maintains, at any time during the Employment Period, an
insurance policy covering the other officers and directors of the Bank or the
Company against lawsuits, the Bank or the Company shall use its best efforts to
cause the Executive to be covered under such policy upon the same terms and
conditions as other similarly situated officers and directors.
23. TAX INDEMNIFICATION.
(a) Subject to the provisions of Section 28 hereof, this
Section 23 shall apply if a change "in the ownership or effective control" of
the Bank or "in the ownership of a substantial portion of the assets" of the
Bank occurs within the meaning of section 280G of the Code. If this Section 23
applies, then with respect to any taxable year in which the Executive shall be
liable for the payment of an excise tax under section 4999 of the Code with
respect to any payment in the nature of compensation made by the Bank, the
Company or any direct or indirect subsidiary or affiliate of the Bank to (or for
the benefit of) the Executive, the Bank shall pay to the Executive an amount
equal to X determined under the following formula:
X = E x P
-------------------------------------------------
1 - [(FI x (1 - SLI)) + SLI + E + M]
where
E = the rate at which the excise tax is assessed under
section 4999 of the Code;
P = the amount with respect to which such excise tax is
assessed, determined without regard to this Section
23;
FI = the highest effective marginal rate of income tax
applicable to the Executive under the Code for the
taxable year in question (taking into account any
phase-out or loss of deductions, personal exemptions
and other similar adjustments);
SLI = the sum of the highest effective marginal rates of
income tax applicable to the Executive under all
applicable state and local laws for the taxable year
in question (taking into account any phase-out or
loss of deductions, personal exemptions and other
similar adjustments); and
M = the highest marginal rate of Medicare tax
applicable to the Executive under the Code for the
taxable year in question.
Attached as Appendix A to this Agreement is an example that illustrates
application of this Section 23. Any payment under this Section 23 shall be
adjusted so as to fully indemnify the Executive on an after-tax basis so that
the Executive would be in the same after-tax financial position in which he
would have been if no excise tax under section 4999 of the Code had been
imposed. With respect to any payment in the nature of compensation that is made
to (or for the benefit of) the Executive under the terms of this Agreement or
otherwise and on which an excise tax under section 4999 of the Code will be
assessed, the payment determined under this Section 23(a) shall be made to the
Executive on the earlier of (i) the date the Bank, the Company or any direct or
indirect subsidiary or affiliate of the Bank is required to withhold such tax,
or (ii) the date the tax is required to be paid by the Executive.
(b) Notwithstanding anything in this Section 23 to the
contrary, in the event that the Executive's liability for the excise tax under
section 4999 of the Code for a taxable year is subsequently determined to be
different than the amount determined by the formula (X + P) x E, where X, P and
E have the meanings provided in Section 23(a), the Executive or the Bank, as the
case may be, shall pay to the other party at the time that the amount of such
excise tax is finally determined, an appropriate amount, plus interest, such
that the payment made under Section 23(a), when increased by the amount of the
payment made to the Executive under this Section 23(b) by the Bank, or when
reduced by the amount of the payment made to the Bank under this Section 23(b)
by the Executive, equals the amount that, it is finally determined, should have
properly been paid to the Executive under Section 23(a). The interest paid under
this Section 23(b) shall be determined at the rate provided under section
1274(b)(2)(B) of the Code. To confirm that the proper amount, if any, was paid
to the Executive under this Section 23, the Executive shall furnish to the
Bank a copy of each tax return which reflects a liability for an excise tax
payment made by the Bank, at least 20 days before the date on which such return
is required to be filed with the Internal Revenue Service.
24. NON-EXCLUSIVITY OF RIGHTS.
Except as otherwise provided herein, nothing in this Agreement
shall prevent or limit the Executive's continuing or future participation in any
plan, program, policy or practice provided by the Bank or any of its affiliated
companies and for which the Executive may qualify, nor shall anything herein
limit or otherwise affect such rights as the Executive may have under any
contract or agreement with the Bank or any of its affiliated companies. Amounts
which are vested benefits or which the Executive is otherwise entitled to
receive under any plan, policy, practice or program of or any contract or
agreement with the Bank or any of its affiliated companies at or subsequent to
the Date of Termination shall be payable in accordance with such plan, policy,
practice or program or contract or agreement except as explicitly modified by
this Agreement. Notwithstanding the foregoing, in the event of a termination of
employment, the amounts provided in Section 4 or Section 5, as applicable, shall
be the Executive's sole remedy for any purported breach of this Agreement by the
Bank.
25. MITIGATION; OTHER CLAIMS.
The Bank's obligation to make the payments provided for in
this Agreement and otherwise to perform its obligations hereunder shall not be
affected by any set-off, counterclaim, recoupment, defense or other claim, right
or action which the Bank may have against the Executive or others. In no event
shall the Executive be obligated to seek other employment or take any other
action by way of mitigation of the amounts payable to the Executive under any of
the provisions of this Agreement and such amounts shall not be reduced whether
or not the Executive obtains other employment.
26. CONFIDENTIAL INFORMATION.
The Executive shall hold in a fiduciary capacity for the
benefit of the Bank all secret or confidential information, knowledge or data
relating to the Bank or any of its affiliated companies, and their respective
businesses, which shall have been obtained by the Executive during the
Executive's employment by the Bank or any of its affiliated companies and which
shall not be or become public knowledge (other than by acts by the Executive or
representatives of the Executive in violation of this Agreement). After
termination of the Executive's employment with the Bank, the Executive shall
not, without the prior written consent of the Bank or as may otherwise be
required by law or legal process, communicate or divulge any such information,
knowledge or data to anyone other than the Bank and those designated by it. For
purposes of this Agreement, secret and confidential information, knowledge or
data relating to the Bank or any of its affiliates, and their respective
business, shall not include any information that is public, publicly available
or available through trade association sources. Notwithstanding any other
provision of this Agreement to the contrary, the Executive acknowledges and
agrees that in the event of a violation or threatened violation of any of the
provisions of this Section 26, the Bank shall have no adequate remedy at law and
shall therefore be entitled to enforce each such provision by temporary or
permanent injunction or mandatory relief obtained in any court of competent
jurisdiction without the necessity of proving damages or posting any bond or
other security, and without prejudice to any other remedies that may be
available at law or in equity.
27. ACCESS TO DOCUMENTS.
The Executive shall have the right to obtain copies of any
Bank or Bank documents that the Executive reasonably believes, in good faith,
are necessary or appropriate in determining his entitlement to, and the amount
of, payments and benefits under this Agreement.
28. REQUIRED REGULATORY PROVISIONS.
The following provisions are included for the purpose of
complying with various laws, rules and regulations applicable to the Bank:
(a) Notwithstanding anything herein contained to the contrary,
in no event shall the aggregate amount of compensation payable to the
Executive under Section 4(b) hereof (exclusive of amounts described in
Sections 4(b)(i) and (ii)) exceed three times the Executive's average
annual total compensation for the last five consecutive calendar years
to end prior to his termination of employment with the Bank (or for his
entire period of employment with the Bank if less than five calendar
years).
(b) Notwithstanding anything herein contained to the contrary,
any payments to the Executive by the Bank, whether pursuant to this
Agreement or otherwise, are subject to and conditioned upon their
compliance with Section 18(k) of the Federal Deposit Insurance Act
("FDI Act"), 12 U.S.C.
ss.1828(k), and any regulations promulgated thereunder.
(c) Notwithstanding anything herein contained to the contrary,
if the Executive is suspended from office and/or temporarily prohibited
from participating in the conduct of the affairs of the Bank pursuant
to a notice served under Section 8(e)(3) or 8(g)(1) of the FDI Act, 12
U.S.C. ss.1818(e)(3) or 1818(g)(1), the Bank's obligations under this
Agreement shall be suspended as of the date of service of such notice,
unless stayed by appropriate proceedings. If the charges in such notice
are dismissed, the Bank, in its discretion, may (i) pay to the
Executive all or part of the compensation withheld while the Bank's
obligations hereunder were suspended and (ii) reinstate, in whole or in
part, any of the obligations which were suspended.
(d) Notwithstanding anything herein contained to the contrary,
if the Executive 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) or 8(g)(1) of the FDI Act, 12 U.S.C.
ss.1818(e)(4) or (g)(1), all prospective obligations of the Bank under
this Agreement shall terminate as of the effective date of the order,
but vested rights and obligations of the Bank and the Executive shall
not be affected.
(e) Notwithstanding anything herein contained to the contrary,
if the Bank is in default (within the meaning of Section 3(x)(1) of the
FDI Act, 12 U.S.C. ss.1813(x)(1), all prospective obligations of the
Bank under this Agreement shall terminate as of the date of default,
but vested rights and obligations of the Bank and the Executive shall
not be affected.
(f) Notwithstanding anything herein contained to the contrary,
all prospective obligations of the Bank hereunder shall be terminated,
except to the extent that a continuation of this Agreement is necessary
for the continued operation of the Bank: (i) by the Director of the OTS
or his or her designee or the FDIC, at the time the FDIC enters into an
agreement to provide assistance to or on behalf of the Bank under the
authority contained in Section 13(c) of the FDI Act, 12 U.S.C.
ss.1823(c); (ii) by the Director of the OTS or his or her designee at
the time such Director or designee approves a supervisory merger to
resolve problems related to the operation of the Bank or when the Bank
is determined by such Director to be in an unsafe or unsound condition.
The vested rights and obligations of the parties shall not be affected.
If and to the extent that any of the foregoing provisions shall cease to be
required by applicable law, rule or regulation, the same shall become
inoperative as though eliminated by formal amendment of this Agreement.
<PAGE>
SIGNATURES
IN WITNESS WHEREOF, JAMAICA SAVINGS BANK FSB. has caused this
Agreement to be executed and its seal to be affixed hereunto by its duly
authorized officer, and the Executive has signed this Agreement, on the 22nd day
of June, 1999.
ATTEST: JAMAICA SAVINGS BANK FSB
By:
Joanne Corrigan Edward P. Henson
- --------------- ----------------
Joanne Corrigan Edward P. Henson
Secretary President
[Seal]
WITNESS:
Jack Connors
------------
Jack Connors
<PAGE>
STATE OF NEW YORK )
: ss.:
COUNTY OF NASSAU )
On this 22nd day of June, 1999, before me personally came
Edward P. Henson, to me known, who, being by me duly sworn, did depose and say
that he is President of Jamaica Savings Bank FSB, the federally chartered
savings bank described in and which executed the foregoing instrument; that he
knows the seal of said bank; that the seal affixed to said instrument is such
seal; that it was so affixed by order of the Board of Directors of said bank;
and that he signed his name thereto by like order.
Name:
Notary Public
STATE OF NEW YORK )
: ss.:
COUNTY OF NASSAU )
On this 22nd day of June, 1999, before me personally came Jack
Connors, to me known, and known to me to be the individual described in the
foregoing instrument, who, being by me duly sworn, did depose and say that he
resides at the address set forth in said instrument, and that he signed his name
to the foregoing instrument.
Name:
Notary Public
<PAGE>
APPENDIX A
----------
1. INTRODUCTION. Sections 280G and 4999 of the Internal Revenue Code of
1986, as amended ("Code"), impose a 20% non-deductible federal excise tax on a
person if the payments and benefits in the nature of compensation to or for the
benefit of that person that are contingent on a change in the ownership or
effective control of the Company or the Bank or in the ownership of a
substantial portion of the assets of the Company or the Bank (such payments and
benefits are considered "parachute payments" under section 280G) exceed three
times the person's "base amount" under section 280G. Section 23 of the Agreement
provides for the Executive to receive a tax indemnification payment (sometimes
referred to as a "gross-up" payment) if the payments and benefits in the nature
of compensation to or for the benefit of the Executive that are considered
parachute payments cause the imposition of an excise tax under section 4999 of
the Code. Capitalized terms in this Appendix A that are not defined in this
Appendix A have the meaning used in the Employment Agreement with the Executive.
2. PURPOSE. The purpose of this Appendix A is to illustrate how the tax
indemnification or gross-up payment would be computed. The amounts, figures and
rates used in this example are meant to be illustrative and do not reflect the
actual payments and benefits that would be made to the Executive under this
Agreement. For purposes of this example, it is assumed that a change in control
within the meaning of section 280G of the Code has occurred and that:
(a) The value of the insurance benefits required to be provided to a
hypothetical employee "Z" under sections 4(b)(iii) and 5(b) of the
Agreement for medical, dental, life and other insurance benefits
during the unexpired employment period is $23,000.
(b) The annual rate of Z's salary covered by the Agreement is $100,000,
and Z received annual salary increases of 4%, 5% and 6% (i.e., a
three-year average of 5%) for each of the prior three years. Hence,
the amount payable under sections 4(b)(v) and 5(b) of the Agreement
for salary during the unexpired employment period would be $331,013
[$105,000 + $110, 250 + $115,763].
(c) Z received annual bonuses equal to 20% of his salary in each of the
prior three years. Hence, the amount payable under sections 4(b)(v)
and 5(b) of the Agreement for bonuses during the unexpired employment
period would be $66,203 [20% x ($105,000 + $110,250 + $115,763)].
(d) The amount payable under sections 4(b)(vi) and 5(b) of the Agreement
for the present value of the additional RP and BRP accruals during the
unexpired employment period would be $45,000.
(e) The amount payable under sections 4(b)(vii) and 5(b) of the Agreement
for additional contributions to the ESOP, 401(k) Plan and BRP during
the unexpired employment period would be $20,000.
(f) Z's base amount (i.e., average W-2 wages for the five-year period
preceding the change in control) is $87,000.
3. DETERMINE IF Z IS SUBJECT TO AN EXCISE TAX. Z's parachute payments would
total $485,216 [$23,000 + $331,013 + $66,203 + $45,000 + $20,000]. Three times
Z's base amount is $261,000 [3 x $87,000]; accordingly, Z is subject to an
excise tax because $485,216 exceeds $261,000. Z's "excess parachute payments"
under section 280G of the Code are equal to Z's total parachute payments minus
one times Z's base amount, or $398,216 [$485,216 - $87,000]. If Z were not
protected by section 23 of the Agreement, Z would be subjected to an excise tax
of $79,643 [$398,216 x 20%], in addition to ordinary income taxes.
4. Compute Z's Tax Indemnification Payment. Z's tax indemnification payment
under section 23 of the Agreement would be computed pursuant to the following
formula:
E x P .2 x $398,216
X = ------------------------------------ = ----------------------------------
1 - [(FI x (1 - SLI)) + SLI + E + M] 1 - [.368874 + .0685 + .2 + .0145]
where
E = excise tax rate under section 4999 of the Code [20%];
P = the amount with respect to which such excise tax is
assessed determined without regard to section 23 of
the Agreement [$398,216];
FI = the highest effective marginal rate of income tax
applicable to Z under the Code for the taxable year
in question [assumed to be 39.6% in this example, but
in actuality, the rate is adjusted to take into
account any phase-out or loss of deductions, personal
exemptions and other similar adjustments];
SLI = the sum of the highest effective marginal rates of
income tax applicable to Z under applicable state and
local laws for the taxable year in question [assumed
to be 6.85% in this example, but in actuality, the
rate is adjusted to take into account any phase-out
or loss of deductions, personal exemptions and other
similar adjustments]; and
M = the highest marginal rate of Medicare tax applicable
to Z under the Code for the year in question [1.45%].
In this example, the amount of tax indemnification payment due to Z under
section 23 of the Agreement would be $79,643 [.2 x $398,216] divided by 0.348126
[1 - (.368874 + .0685 + .2 + .0145)], or $228,777. Such amount would be payable
in addition to the other amounts payable under the Agreement in order to put Z
in approximately the same after-tax position that Z would have been in if there
were no excise tax imposed under sections 280G and 4999 of the Code. The tax
indemnification to Z of $228,777 would in turn be a parachute payment subject to
excise tax under sections 280G and 4999. Accordingly, Z's actual excess
parachute payment would be $626,993 [$485,216 - $87,000) + $228,777)] resulting
in an excise tax of $125,399 [$626,993 x 20%]. The difference between the
indemnification. payment and the excise tax [$103,378] is an amount equal to the
sum of the income and other applicable taxes due on the indemnification payment
[($228,777 x .368874) + ($228,777 x .0685) + ($228,777 x .0145)], confirming
that the amount of the tax indemnification payment is sufficient to satisfy all
of Z's tax liability resulting from the excess parachute payment.
JAMAICA SAVINGS BANK FSB
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT ("Agreement") is made and entered
into as of June 22, 1999 by and between JAMAICA SAVINGS BANK FSB, a federally
chartered savings bank, having its principal office at 303 Merrick Road,
Lynbrook, New York 11563 ("Bank"), and John J. Conroy, an individual residing at
(address omitted) ("Executive"). This Agreement amends, restates and supersedes
the Employment Agreement dated as of June 27, 1995 and the Supplemental
Employment Agreement dated as of July 9, 1996 by and between the Bank and the
Executive. Any reference to the "Company" in this Agreement shall mean JSB
Financial, Inc. and any successor thereto.
W I T N E S S E T H :
WHEREAS, the Executive is currently serving as Senior Vice
President of the Bank, and the Bank wishes to assure itself of the services of
the Executive for the period provided in this Agreement; and
WHEREAS, the Executive is willing to serve in the employ of
the Bank on the terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the premises and the
mutual covenants and conditions hereinafter set forth, the Bank and the
Executive hereby agree as follows:
1. POSITION AND RESPONSIBILITIES.
During the period of his employment hereunder, the Executive
agrees to serve as Senior Vice President of the Bank. The Executive shall render
administrative and management services to the Bank such as are customarily
performed by persons situated in a similar executive capacity and shall perform
such other duties not inconsistent with his title and office as may be assigned
to him by or under the authority of the Board of Directors of the Bank (the
"Board"). The Executive shall have such authority as is necessary or appropriate
to carry out his assigned duties. Failure to re-elect the Executive as Senior
Vice President of the Bank (or a more senior position) without the consent of
the Executive shall constitute a breach of this Agreement.
2. TERMS.
(a) The period of the Executive's employment under this
Agreement shall be deemed to have commenced as of the date first above written
(the "Effective Date") and shall be for an initial term of three years. Prior to
the first anniversary of the Effective Date of this Agreement and on each
anniversary date thereafter (each, an "Anniversary Date"), the Board shall
review the terms of this Agreement and the Executive's performance of services
hereunder and may, in the absence of objection from the Executive, approve an
extension of the Employment Agreement. In such event, the Employment Agreement
shall be extended to the third anniversary of the relevant Anniversary Date. For
purposes of this Agreement, the term "Employment Period" shall mean the term of
this Agreement plus such extensions as are provided herein.
(b) During the period of his employment hereunder, except for
periods of absence occasioned by illness, disability, holidays, reasonable
vacation periods and reasonable leaves of absence, the Executive shall devote
substantially all of his business time, attention, skill and efforts to the
faithful performance of his duties hereunder including (i) service as Senior
Vice President of the Bank, and, if duly elected, a Director of the Bank, (ii)
performance of such duties not inconsistent with his title and office as may be
assigned to him by or under the authority of the Board or a more senior
executive officer, and (iii) such other activities and services related to the
organization, operation and management of the Bank. During the Employment Period
it shall not be a violation of this Agreement for the Executive to (A) serve on
corporate, civic, industry or charitable boards or committees, (B) deliver
lectures, fulfill speaking engagements or teach at educational institutions and
(C) manage personal investments, so long as such activities do not significantly
interfere with the performance of the Executive's responsibilities as an
employee of the Bank in accordance with this Agreement. It is expressly
understood and agreed that to the extent that any such activities have been
conducted by the Executive prior to the Effective Date, the continued conduct of
such activities (or the conduct of activities similar in nature and scope
thereto) subsequent to the Effective Date shall not thereafter be deemed to
interfere with the performance of the Executive's responsibilities to the Bank.
It is also expressly agreed that the Executive may conduct activities subsequent
to the Effective Date that are generally accepted for an executive in his
position, regardless of whether conducted by the Executive prior to the
Effective Date.
(c) Notwithstanding anything herein contained to the contrary:
(i) the Executive's employment with the Bank may be terminated by the Bank or
the Executive during the term of this Agreement, subject to the terms and
conditions of this Agreement; and (ii) nothing in this Agreement shall mandate
or prohibit a continuation of the Executive's employment following the
expiration of the term of this Agreement upon such terms and conditions as the
Board and the Executive may mutually agree.
(d) For all purposes of this Agreement, the term "Unexpired
Employment Period" as of any date shall mean the period beginning on such date
and ending on the Anniversary Date on which the Employment Period (as extended
pursuant to Section 2(a) of this Agreement) is then scheduled to expire.
3. COMPENSATION AND REIMBURSEMENT.
(a) The compensation specified under this Agreement shall
constitute the salary and benefits paid for the duties described in Section 1.
The Bank shall pay the Executive as compensation a salary at an annual rate of
not less than (salary omitted) per year or such higher rate as may be prescribed
by or under the authority of the Board ("Base Salary"). The Base Salary payable
under this Section 3 shall be paid in approximately equal installments in
accordance with the Bank's customary payroll practices. During the period of
this Agreement, the Executive's Base Salary shall be reviewed at least annually;
the first such review will be made no later than one year from the date of this
Agreement. Such review shall be conducted by a Committee designated by the
Board, and the Board may increase the Executive's Base Salary, which increased
amount shall be considered the Executive's "Base Salary" for purposes of this
Agreement. In no event shall the Executive's annual rate of Base Salary under
this Agreement in effect at a particular time be reduced without his prior
written consent. In addition to the Base Salary provided in this Section 3(a),
the Bank shall provide the Executive at no cost to the Executive with all such
other benefits as are provided uniformly to permanent full-time employees of the
Bank.
(b) The Bank will provide the Executive with employee benefit
plans, arrangements and perquisites substantially equivalent to those in which
the Executive was participating or otherwise deriving benefit from immediately
prior to the beginning of the term of this Agreement, and the Bank will not,
without the Executive's prior written consent, make any changes in such plans,
arrangements or perquisites which would adversely affect the Executive's rights
or benefits thereunder. Without limiting the generality of the foregoing
provisions of this Subsection (b), the Executive will be entitled to participate
in or receive benefits under any employee benefit plans with respect to which
the Executive satisfies the eligibility requirements, including, but not limited
to, the Retirement Plan of Jamaica Savings Bank FSB ("RP"), the Incentive
Savings Plan of Jamaica Savings Bank FSB ("ISP"), the Jamaica Savings Bank FSB
Employee Stock Ownership Plan ("ESOP"), the Benefit Restoration Plan of Jamaica
Savings Bank FSB ("BRP"), the JSB Financial, Inc. 1990 Stock Option Plan, the
JSB Financial, Inc. 1996 Stock Option Plan, retirement plans, supplemental
retirement plans, pension plans, profit-sharing plans, group life, health
(including hospitalization, medical and major medical), dental, accidental death
and dismemberment, travel accident and short-term disability insurance plans, or
any other employee benefit plan or arrangement made available by the Bank in the
future to its senior executives and key management employees, subject to and on
a basis consistent with the terms, conditions and overall administration of such
plans and arrangements. The Executive will be entitled to incentive compensation
and bonuses as provided in any plan of the Bank in which the Executive is
eligible to participate. Nothing paid to the Executive under any such plan or
arrangement will be deemed to be in lieu of other compensation to which the
Executive is entitled under this Agreement.
(c) The Executive's principal place of employment shall be at
the Bank's executive offices at the address first above written, or at such
other location in New York City or in Nassau County or Suffolk County at which
the Bank shall maintain its principal executive offices, or at such other
location as the Board and the Executive may mutually agree upon. The Bank shall
provide the Executive, at his principal place of employment with support
services and facilities suitable to his position with the Bank and necessary or
appropriate in connection with the performance of his assigned duties under this
Agreement. The Bank shall provide the Executive with an automobile suitable to
the position of Senior Vice President of the Bank, in accordance with prior
practice, and such automobile may be used by the Executive in carrying out his
duties under the Agreement, including commuting between his residence and his
principal place of employment, and other personal use. The Bank shall reimburse
the Executive for his ordinary and necessary business expenses, including,
without limitation, fees for memberships in such clubs and organizations as the
Executive and the Board shall mutually agree are necessary and appropriate for
business purposes, and travel and entertainment expenses, incurred in connection
with the performance of his duties under this Agreement, upon presentation to
the Bank of an itemized account of such expenses in such form as the Bank may
reasonably require.
4. PAYMENTS TO THE EXECUTIVE UPON AN EVENT OF TERMINATION.
The provisions of this Section shall in all respects be
subject to the terms and conditions stated in Sections 9 and 28.
(a) Upon the occurrence of an Event of Termination (as herein
defined) during the Executive's term of employment under this Agreement, the
provisions of this Section shall apply. As used in this Agreement, an "Event of
Termination" shall mean and include any one or more of the following: (i) the
termination by the Bank or the Company of the Executive's full-time employment
hereunder for any reason other than: following a Change in Control, as defined
in Section 5; for Disability, as defined in Section 6; for Retirement, as
defined in Section 8; for Cause, as defined in Section 9; or upon the
Executive's death; or (ii) unless consented to by the Executive, the Executive's
voluntary resignation from the Bank's employ, upon any: (A) failure to elect or
re-elect or to appoint or re-appoint the Executive as Senior Vice President of
the Bank, (B) material adverse change in the Executive's function, duties, or
responsibilities, which change would cause the Executive's position to become
one of lesser responsibility, importance, or scope from the position and
attributes thereof described in Section 1, above (and any such material change
shall be deemed a continuing breach of this Agreement), (C) relocation of the
Executive's principal place of employment by more than 30 miles from its
location at the Effective Date of this Agreement, or a material reduction in the
benefits and perquisites to the Executive from those being provided as of the
Effective Date of this Agreement, (D) liquidation or dissolution of the Bank or
the Company, or (E) material breach of this Agreement by the Bank. Upon the
occurrence of any event described in clauses (A), (B), (C), (D) or (E), above,
the Executive shall have the right to elect to terminate his employment under
this Agreement by resignation upon written notice pursuant to Section 10 given
within a reasonable period of time not to exceed, except in case of a continuing
breach, four calendar months after the event giving rise to said right to elect.
(b) Upon the occurrence of an Event of Termination as set
forth in Section 4(a), on the Date of Termination, as defined in Section 10, the
Bank shall be obligated to pay, or to provide, the Executive, or, in the event
of his subsequent death, to his surviving spouse or such other beneficiary or
beneficiaries as the Executive may designate in writing, or if neither his
estate, as severance pay or liquidated damages, or both, the benefits provided
below and a payment equal to the sum of the payments set forth below:
(i) payment of the sum of (A) the Executive's annual Base
Salary through the Date of Termination to the extent not theretofore
paid and (B) any compensation previously deferred by the Executive
(together with any accrued interest or earnings thereon) and any
accrued vacation pay, in each case to the extent not theretofore paid
(the sum of the amounts described in clauses (A) and (B) shall be
hereinafter referred to as the "Accrued Obligations");
(ii) the benefits, if any, to which the Executive is entitled
as a former employee under the Bank's or the Company's employee benefit
plans and programs and compensation plans and programs;
(iii) continued group life, health (including hospitalization,
medical and major medical), dental, accidental death and dismemberment,
travel accident and short-term disability insurance benefits as
provided by the Bank or the Company, in addition to that provided
pursuant to Section 4(b)(ii), if and to the extent necessary to provide
for the Executive, for the remaining Unexpired Employment Period,
coverage equivalent to the coverage to which he would have been
entitled if he had continued working for the Bank during the remaining
Unexpired Employment Period at the highest annual rate of salary
achieved during the Employment Period; provided, however, if the
Executive has obtained group life, health (including hospitalization,
medical and major medical), dental, accidental death and dismemberment,
travel accident and/or short-term disability insurance benefits
coverage from another source, the Executive may, as of any month, make
an irrevocable election to forego the continued coverage that would
otherwise be provided hereunder for the remaining Unexpired Employment
Period, or any portion thereof, in which case the Bank or the Company,
upon receipt of the Executive's irrevocable election, shall pay the
Executive an amount equal to the estimated cost to the Bank or the
Company of providing such coverage during such period;
(iv) if and to the extent not already provided under Sections
4(b)(ii) and 4(b)(iii), continued health (including hospitalization,
medical and major medical) and dental insurance benefits to the extent
maintained by the Bank or the Company for its employees or retirees
during the remainder of the Executive's lifetime and the lifetime of
his spouse, if any, for so long as the Executive continues to reimburse
the Bank for the cost of such continued coverage;
(v) a lump sum payment, as liquidated damages, in an amount
equal to the Base Salary and bonus or other incentive compensation that
the Executive would have earned if the Executive had continued working
for the Bank and the Company during the remaining Unexpired Employment
Period (A) at the highest annual rate of Base Salary and bonus or other
incentive compensation achieved by the Executive during the three-year
period immediately preceding the Executive's Date of Termination,
except that (B) in the case of a Change in Control, such lump sum shall
be determined based upon the Base Salary and the bonus or other
incentive compensation, respectively, that the Executive would have
been paid during the remaining Unexpired Employment Period including
the assumed increases referred to in clauses (i) and (ii) of Section
5(b);
(vi) a lump sum payment in an amount equal to the excess, if
any, of: (A) the present value of the pension benefits to which the
Executive would be entitled under the RP and the BRP (and under any
other qualified and non-qualified defined benefit plans maintained by
the Bank or the Company covering the Executive) as if he had continued
working for the Bank during the remaining Unexpired Employment Period
(x) at the highest annual rate of Base Salary and, if applicable, the
highest bonus or other incentive compensation, respectively, achieved
by the Executive during the three-year period immediately preceding the
Executive's Date of Termination, except that (y) in the case of a
Change in Control, such lump sum shall be determined based upon the
Base Salary and, if applicable, the highest bonus or other incentive
compensation, respectively, that the Executive would have been paid
during the remaining Unexpired Employment Period including the assumed
increases referred to in clauses (i) and (ii) of Section 5(b), and (z)
in the case of a Change in Control, as if three additional years are
added to the Executive's age and years of creditable service under the
RP and the BRP and after taking into account any other compensation
required to be taken into account under the RP and the BRP (and any
other qualified and non-qualified defined benefit plans of the Bank or
the Company, as applicable), over (B) the present value of the pension
benefits to which he is actually entitled under the RP and the BRP (and
any other qualified and non-qualified defined benefit plans) as of his
Date of Termination, where such present values are to be determined
using a discount rate of 6% and the mortality tables prescribed under
section 72 of the Internal Revenue Code of 1986, as amended ("Code");
and
(vii) a lump sum payment in an amount equal to the
contributions that would have been made by the Bank or the Company on
the Executive's behalf to the ISP and the ESOP and to the BRP with
respect to such ISP and ESOP contributions (and to any other qualified
and non-qualified defined contribution plans maintained by the Bank or
the Company covering the Executive) as if the Executive had continued
working for the Bank and the Company during the remaining Unexpired
Employment Period making the maximum amount of employee contributions
required, if any, under such plan or plans and earning (A) the highest
annual rate of Base Salary and, if applicable, the highest bonus or
other incentive compensation, respectively, achieved by the Executive
during the three-year period immediately preceding the Executive's Date
of Termination, except that (B) in the case of a Change in Control,
such lump sum shall be determined based upon the Base Salary and, if
applicable, the bonus or other incentive compensation, respectively,
that the Executive would have been paid during the remaining Unexpired
Employment Period including the assumed increases referred to in
clauses (i) and (ii) of Section 5(b).
The benefits to be provided under, and the amounts payable pursuant to, this
Section 4 shall be provided and be payable without regard to proof of damages
and without regard to the Executive's efforts, if any, to mitigate damages. The
Bank and the Executive hereby stipulate that the damages which may be incurred
by the Executive following any such termination of employment are not capable of
accurate measurement as of the date first above written and that such liquidated
damages constitute reasonable damages under the circumstances.
(c) Payments to the Executive under Section 4 shall be made
within ten days of the Executive's Date of Termination.
(d) In the event payments are made under Section 4 or Section
5, the Executive may select an individual or firm to provide him with reasonable
outplacement counseling services, and the Bank shall pay for the costs of such
services; provided, however, that the cost to the Bank of such outplacement
counseling services shall not exceed 25% of the Executive's Base Salary.
5. CHANGE IN CONTROL.
(a) No benefit shall be payable under this Section 5 unless
there shall have been a Change in Control of the Bank or the Company, as set
forth below. For purposes of this Agreement, a "Change in Control" of the Bank
or the Company shall mean any one or more of the following:
(i) An event of a nature that would be required to be reported
in response to Item l(a) of the current report on Form 8-K, as in
effect on the date hereof, pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act");
(ii) An event of a nature that results in a Change in Control
of the Bank or the Company within the meaning of the Home Owners' Loan
Act of 1933, as amended, or the Change in Bank Control Act of 1978, as
amended, as applicable, and the Rules and Regulations promulgated by
the Office of Thrift Supervision ("OTS") or its predecessor agency, the
Federal Deposit Insurance Corporation ("FDIC") or the Board of
Governors of the Federal Reserve System ("FRB"), as the case may be, as
in effect on the date hereof, but excluding any such Change in Control
resulting from the purchase of securities by the Company or the Bank's
or the Company's tax-qualified employee benefit plans and trusts;
(iii) If any "person" (as the term is used in Sections 13(d)
and 14(d) of the Exchange Act) is or becomes the "beneficial owner" (as
defined in Rule 13d-3 under the Exchange Act), directly or indirectly,
of securities of the Bank or the Company representing 20% or more of
the Bank's or the Company's outstanding securities except for any
securities of the Bank purchased by the Company in connection with the
initial conversion of the Bank from mutual to stock form (the
"Conversion") and any securities purchased by the Company or the Bank's
or the Company's tax-qualified employee benefit plans and trusts;
(iv) If the individuals who constitute the Board on the date
hereof (the "Incumbent Board") cease for any reason to constitute at
least a majority of the Board, provided, however, that any person
becoming a director subsequent to the date hereof whose election or
nomination for election by the Company's stockholders, was approved by
a vote of at least three-quarters of the directors then comprising the
Incumbent Board shall be considered as though he were a member of the
Incumbent Board, but excluding, for this purpose, any such person whose
initial assumption of office occurs as a result of an actual or
threatened election contest with respect to the election or removal of
directors or other actual or threatened solicitation of proxies or
consents by or on behalf of a person other than the Board;
(v) A merger, consolidation, reorganization, sale of all or
substantially all the assets of the Bank or the Company or similar
transaction occurs in which the Bank or the Company is not the
resulting entity, other than a transaction following which (A) at least
51% of the equity ownership interests of the entity resulting from such
transaction are beneficially owned (within the meaning of Rule 13d-3
promulgated under Exchange Act) in substantially the same relative
proportions by persons who, immediately prior to such transaction,
beneficially owned (within the meaning of Rule 13d-3 promulgated under
the Exchange Act) at least 51% of the outstanding equity ownership
interests in the Bank or the Company and (B) at least 51% of the
securities entitled to vote generally in the election of directors of
the entity resulting from such transaction are beneficially owned
(within the meaning of Rule 13d-3 promulgated under the Exchange Act)
in substantially the same relative proportions by persons who,
immediately prior to such transaction, beneficially owned (within the
meaning of Rule 13d-3 promulgated under the Exchange Act) at least 51%
of the securities entitled to vote generally in the election of
directors of the Bank or the Company;
(vi) A proxy statement shall be distributed soliciting proxies
from stockholders of the Company, by someone other than the current
management of the Company, seeking stockholder approval of a plan of
reorganization, merger or consolidation of the Company or the Bank or
similar transaction with one or more corporations as a result of which
the outstanding shares of the class of securities then subject to such
plan or transaction are exchanged for or converted into cash or
property or securities not issued by the Bank or the Company; or
(vii) A tender offer is completed for 20% or more of the
voting securities of the Bank or Company then outstanding.
The "Change in Control Date" shall mean the date during the Employment Period on
which a Change in Control occurs. Anything in this Agreement to the contrary
notwithstanding, if the Executive's employment with the Company is terminated
and if it is reasonably demonstrated by the Executive that such termination of
employment (1) was at the request of a third party who has taken steps
reasonably calculated to effect a Change in Control or (2) otherwise arose in
connection with or anticipation of a Change in Control, then for all purposes of
this Agreement the "Change in Control Date" shall mean the date immediately
prior to the date of such termination of employment.
(b) If any of the events described in Section 5(a)
constituting a Change in Control have occurred or the Board has determined that
a Change in Control has occurred, the Executive shall be entitled to the
payments and the benefits provided below on the Change in Control Date. The
amounts payable and the benefits to be provided under this Section 5(b) to the
Executive shall consist of the payments and benefits that would be due to the
Executive and the Executive's family under Section 4(b) for the Unexpired
Employment Period as if an Event of Termination under Section 4(a) had occurred
on the Change in Control Date. For purposes of determining the payments and
benefits due under this Section 5(b), when calculating the payments due and
benefits to be provided for the Unexpired Employment Period, it shall be assumed
that for each year of the remaining term of this Agreement, the Executive would
have received (i) an annual increase in Base Salary equal to the average
percentage increase in Base Salary received by the Executive for the three-year
period ending with the earlier of (x) the year in which the Change in Control
Date occurs or (y) the year during which a definitive agreement, if any,
governing the Change in Control is executed, with the first such increase
effective as of the January 1st next following such three-year period and the
second and third such increases effective as of the next two anniversaries of
such January 1st, (ii) a bonus or other incentive compensation equal to the
highest percentage rate of bonus or incentive compensation paid to the Executive
during the three-year period referred to in clause (i) of this Section 5(b)
times the Base Salary that the Executive would have been paid during the
remaining term of this Agreement including the assumed increases referred to in
clause (i) of this Section 5(b), (iii) the maximum contributions that could be
made by or on behalf of the Executive with respect to any employee benefit plans
and programs maintained by the Company and the Bank based upon the Base Salary
and, if applicable, the bonus or other incentive compensation, respectively,
that the Executive would have been paid during the remaining term of this
Agreement including the assumed increases referred to in clauses (i) and (ii) of
this Section 5(b), and (iv) the present value of the pension benefits to which
the Executive is entitled under Section 4(b)(vi) with respect to the RP and the
BRP (and under any other qualified and non-qualified defined benefit plans
maintained by the Bank or the Company covering the Executive) shall be
determined as if he had continued working for the Bank during the remaining
Unexpired Employment Period and shall be based upon the Base Salary and, if
applicable, the bonus or other incentive compensation, respectively, that the
Executive would have been paid during the remaining term of this Agreement
including the assumed increases referred to in clauses (i) and (ii) of this
Section 5(b). The benefits to be provided under, and the amounts payable
pursuant to, this Section 5 shall be provided and be payable without regard to
proof of damages and without regard to the Executive's efforts, if any, to
mitigate damages. The Bank and the Executive hereby stipulate that the damages
which may be incurred by the Executive following any Change in Control are not
capable of accurate measurement as of the date first above written and that such
liquidated damages constitute reasonable damages under the circumstances.
(c) Payments under Section 5(b) shall be made to the Executive
on the Change in Control Date. Such payments shall be made regardless of whether
the Executive's employment terminates.
6. TERMINATION FOR DISABILITY.
(a) In the event of Termination for Disability, the Executive
shall receive the benefits provided in Section 6(b); provided, however, that the
benefits provided under Section 6(b) shall not be deemed to be in lieu of the
benefits he is otherwise entitled as a former employee under the Bank or the
Company's employee plans and programs. For purposes of this Agreement, the
Executive may be terminated for disability only if (i) the Executive shall have
been absent from his duties with the Bank on a full-time basis for at least six
consecutive months, or (ii) a majority of the members of the Board acting in
good faith determine that, based upon competent and independent medical evidence
presented by a physician or physicians agreed upon by the parties, the
Executive's physical or mental condition is such that he is totally and
permanently incapable of engaging in any substantial gainful employment based
upon his education, training and experience; provided, however, that on and
after the earliest date on which a Change in Control of the Bank or the Company
as defined in Section 5 occurs, such a determination shall require the
affirmative vote of at least three-fourths of the members of the Board acting in
good faith and such vote shall not be made prior to the expiration of a 60-day
period following the date on which the Board shall, by written notice to the
Executive, furnish him a statement of its grounds for proposing to make such
determination, during which period the Executive shall be afforded a reasonable
opportunity to make oral and written presentations to the members of the Board,
and to be represented by his legal counsel at such presentations, to refute the
grounds for the proposed determination.
(b) The Bank will pay the Executive as Disability pay, a
bi-weekly payment equal to 100% of the Executive's bi-weekly annual rate of Base
Salary in effect on the date of the Executive's Termination for Disability. In
addition, the Bank will cause to be continued insurance coverage, including
group life, health (including hospitalization, medical and major medical),
dental, accidental death and dismemberment, travel accident and short-term
disability coverage substantially identical to the coverage maintained by the
Bank or the Company for the Executive prior to his Termination for Disability.
The Disability pay and coverages shall commence on the effective date of the
Executive's termination and shall cease upon the earliest to occur of: (i) the
date the Executive returns to the full-time employment of the Bank, in the same
capacity as he was employed prior to his Termination for Disability and pursuant
to an employment agreement between the Executive and the Bank; (ii) the
Executive's full-time employment by another employer; (iii) the Executive's
attaining the normal age of retirement or receiving benefits under the RP or
other defined benefit pension plan of the Bank or the Company; (iv) the
Executive's death; (v) the Executive's eligibility to collect payments under the
disability provision of the RP or other defined benefit pension plan of the Bank
or the Company; or (vi) the expiration of the term of this Agreement.
(c) Notwithstanding the foregoing, there will be no reduction
in the compensation otherwise payable to the Executive during any period during
which the Executive is incapable of performing his duties hereunder by reason of
temporary disability.
7. TERMINATION UPON DEATH.
The Executive's employment shall terminate automatically upon
the Executive's death during the Employment Period. In such event, the Executive
and the Executive's legal representatives shall be entitled to the following:
(i) payment of the Executive's "Accrued Obligations;"
(ii) the continuation of all benefits to the Executive's
family and dependents that would have been provided if the Executive
had been entitled to the benefits under Section 4(b)(ii), (iii) and
(iv), and
(iii) the timely payment of any other amounts or benefits
required to be paid or provided or which the Executive is eligible to
receive under any plan, program, policy or practice or contract or
agreement of the Bank and its affiliated companies (all such other
amounts and benefits shall be hereinafter referred to as the "Other
Benefits");
provided, however, that if the Executive dies while in the employment of the
Bank, the amount of life insurance provided to the Executive by the Bank shall
not be less than the lesser of $200,000 or three times the Executive's then
annual Base Salary. Accrued Obligations shall be paid to the Executive's estate
or beneficiary, as applicable, in a lump sum cash payment within ten days of the
Date of Termination. With respect to the provision of Other Benefits after the
Change in Control Date, the term Other Benefits as utilized in this Section 7
shall include, without limitation, that the Executive's estate and/or
beneficiaries shall be entitled to receive, benefits at least equal to the most
favorable benefits provided by the Bank and affiliated companies to the estates
and beneficiaries of peer executives of the Bank and such affiliates companies
under such plans, programs, practices and policies relating to death benefits,
if any, as in effect with respect to other peer executives and their
beneficiaries at any time during the 120-day period immediately preceding the
Change in Control Date.
8. TERMINATION UPON RETIREMENT.
Termination by the Bank of the Executive based on "Retirement"
shall mean termination in accordance with the Company's or the Bank's retirement
policy or in accordance with any retirement arrangement established with the
Executive's consent with respect to him. Upon termination of the Executive upon
Retirement, the Executive shall be entitled to all benefits under the RP and any
other retirement plan of the Bank or the Company and other plans to which the
Executive is a party, and the Executive shall be entitled to the benefits, if
any, that would be payable to him as a former employee under the Bank's or the
Company's employee benefit plans and programs and compensation plans and
programs.
9. TERMINATION FOR CAUSE.
The terms "Termination for Cause" or "Cause" shall mean
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 any material breach of
this Agreement, in such case as measured against standards generally prevailing
at the relevant time in the savings and community banking industry. For purposes
of this Section, no act, or the failure to act, on the Executive's part shall be
"willful" unless done, or omitted to be done, in bad faith and without
reasonable belief that the action or omission was in the best interest of the
Bank or its affiliates. Any act, or failure to act, based upon authority given
pursuant to a resolution duly adopted by the Board or based upon the written
advice of counsel for the Bank shall be conclusively presumed to be done, or
omitted to be done, by the Executive in good faith and in the best interests of
the Bank. Notwithstanding the foregoing, the Executive shall not be deemed to
have been terminated for Cause unless and until there shall have been delivered
to him a Notice of Termination which shall include a copy of a resolution duly
adopted by the affirmative vote of not less than three-fourths of the members of
the Board at a meeting of the Board called and held for that purpose (after
reasonable notice to the Executive and an opportunity for him, together with
counsel, to be heard before the Board), finding that in the good faith opinion
of the Board, the Executive was guilty of conduct justifying Termination for
Cause and specifying the particulars thereof in detail. The Executive shall not
have the right to receive compensation or other benefits for any period after
Termination for Cause.
10. NOTICE.
(a) Any purported termination by the Bank or by the Executive
shall be communicated by a Notice of Termination to the other party hereto. For
purposes of this Agreement, a "Notice of Termination" shall mean a written
notice which shall indicate the specific termination provision in this Agreement
relied upon and shall set forth in reasonable detail the facts and circumstances
claimed to provide a basis for termination of the Executive's employment under
the provision so indicated.
(b) Subject to Section 10(c), "Date of Termination" shall mean
(A) if the Executive's employment is terminated for Disability, 30 days after a
Notice of Termination is given (provided that he shall not have returned to the
performance of his duties on a full-time basis during such 30-day period), and
(B) if his employment is terminated for any other reason, the date specified in
the Notice of Termination (which, in the case of a Termination for Cause, shall
be immediate).
(c) If, within 30 days after any Notice of Termination is
given, the party receiving such Notice of Termination notifies the other party
that a dispute exists concerning the termination, then, except upon the
occurrence of a Change in Control and voluntary termination by the Executive in
which case the Date of Termination shall be the date specified in the Notice,
the Date of Termination shall be the date on which the dispute is finally
determined, either by mutual written agreement of the parties, by a binding
arbitration award, or by a final judgment, order or decree of a court of
competent jurisdiction (the time for appeal therefrom having expired and no
appeal having been perfected) and provided further that the Date of Termination
shall be extended by a notice of dispute only if such notice is given in good
faith and the party giving such notice pursues the resolution of such dispute
with reasonable diligence. Notwithstanding the pendency of any such dispute, the
Bank will continue to pay the Executive his full compensation in effect when the
notice giving rise to the dispute was given (including, but not limited to, Base
Salary) and continue him as a participant in all compensation, benefit and
insurance plans in which he was participating when the notice of dispute was
given, until the dispute is finally resolved in accordance with this Agreement.
Amounts paid under this Section are in addition to all other amounts due under
this Agreement and shall not be offset against or reduce any other amounts due
under this Agreement.
(d) The Bank may terminate the Executive's employment at any
time, but any termination by the Bank, other than Termination for Cause, shall
not prejudice the Executive's right to compensation or other benefits under this
Agreement or under any other benefit or compensation plans or programs
maintained by the Bank or the Company from time to time. The Executive shall not
have the right to receive compensation or other benefits for any period after a
Termination for Cause as defined in Section 9 hereinabove.
(e) Any communication to a party required or permitted under
this Agreement, including any notice, direction, designation, consent,
instruction, objection or waiver, shall be in writing and shall be deemed to
have been given at such time as it is delivered personally, or five days after
mailing if mailed, postage prepaid, by registered or certified mail, return
receipt requested, addressed to such party at the address listed below or at
such other address as one such party may by written notice specify to the other
party, as follows. If to the Executive, (address omitted); if to the Bank,
Jamaica Savings Bank FSB, 303 Merrick Road, Lynbrook, New York 11563, Attention:
President, with a copy to Thacher Proffitt & Wood, Two World Trade Center, New
York, New York 10048, Attention: Douglas J. McClintock, Esq.
11. POST-TERMINATION OBLIGATIONS.
(a) All payments and benefits to the Executive under this
Agreement shall be subject to the Executive's compliance with paragraph (b) of
this Section 11 during the term of this Agreement and for one full year after
the expiration or termination hereof.
(b) The Executive shall, upon reasonable notice, furnish such
information and assistance to the Bank as may reasonably be required by the Bank
in connection with any litigation in which it or any of its subsidiaries or
affiliates is, or may become, a party; provided, that the Bank reimburses the
Executive for the reasonable value of his time in connection therewith and for
any out-of-pocket costs attributable thereto.
12. COVENANT NOT TO COMPETE.
The Executive hereby covenants and agrees that for a period of
one year following his Date of Termination, if such termination occurs prior to
the end of the term of the Agreement, he shall not, without the written consent
of the Board, become an officer, employee, consultant, director or trustee of
any savings bank, savings and loan association, savings and loan holding
company, bank or bank holding company if such position (a) entails working in
(or providing services in) New York City, Nassau or Suffolk counties or (b)
entails working in (or providing services in) any other county that is both (i)
within the Bank's primary trade (or operating) area at the time in question,
which shall be determined by reference to the Bank's business plan as in effect
from time to time, and (ii) in which the Bank engages in material or substantial
deposit-taking functions or lending activities at such time; provided, however,
that this Section 12 shall not apply if the Executive's employment is terminated
for the reasons set forth in any of Sections 4, 5, 6 or 8.
13. SOURCE OF PAYMENTS.
All payments provided in this Agreement shall be timely paid
in cash or check from the general funds of the Bank.
14. EFFECT ON PRIOR AGREEMENTS.
This Agreement contains the entire understanding between the
parties hereto and supersedes any prior employment agreement between the Bank or
any predecessor of the Bank and the Executive, including the Employment
Agreement dated June 27, 1995 and the Supplemental Employment Agreement dated
July 9, 1996, except that this Agreement shall not affect or operate to reduce
any benefit or compensation inuring to the Executive of a kind elsewhere
provided. No provisions of this Agreement shall be interpreted to mean that the
Executive is subject to receiving fewer benefits than those available to him
without reference to this Agreement.
15. EFFECT OF ACTION UNDER COMPANY AGREEMENT.
Notwithstanding any provision herein to the contrary, to the
extent that full compensation payments and benefits are paid to or received by
the Executive under the Employment Agreement, dated June 22, 1999, as it may be
amended from time to time, between the Executive and the Company, such
compensation payments and benefits paid by the Company will be deemed to satisfy
the corresponding obligations of the Bank under this Agreement.
16. NO ATTACHMENT.
Except as required by law, no right to receive payments under
this Agreement shall be subject to anticipation, commutation, alienation, sale,
assignment, encumbrance, charge, pledge, or hypothecation, or to execution,
attachment, levy, or similar process or assignment by operation of law, and any
attempt, voluntary or involuntary, to affect any such action shall be null,
void, and of no effect.
17. MODIFICATION AND WAIVER.
(a) This Agreement may not be modified or amended except by an
instrument in writing signed by the parties hereto.
(b) No term or condition of this Agreement shall be deemed to
have been waived, nor shall there be any estoppel against the enforcement of any
provision of this Agreement, except by written instrument of the party charged
with such waiver or estoppel. No such written waiver shall be deemed a
continuing waiver unless specifically stated therein, and each such waiver shall
operate only as to the specific term or condition waived and shall not
constitute a waiver of such term or condition for the future as to any act other
than that specifically waived.
18. SUCCESSOR AND ASSIGNS.
This Agreement will inure to the benefit of and be binding
upon the Executive, his legal representatives and testate or intestate
distributees, and the Bank, its successors and assigns, including any successor
by purchase, merger, consolidation or otherwise or a statutory receiver or any
other person or firm or corporation to which all or substantially all of the
assets and business of the Bank may be sold or otherwise transferred. Any such
successor of the Bank shall be deemed to have assumed this Agreement and to have
become obligated hereunder to the same extent as the Bank and the Executive's
obligations hereunder shall continue in favor of such successor.
19. SEVERABILITY.
If, for any reason, any provision of this Agreement, or any
part of any provision, is held invalid, such invalidity shall not affect any
other provision of this Agreement or any part of such provision not held so
invalid, and each such other provision and part thereof shall to the full extent
consistent with law continue in full force and effect.
20. HEADINGS FOR REFERENCE ONLY.
The headings of Sections and paragraphs herein are included
solely for convenience of reference and shall not control the meaning or
interpretation of any of the provisions of this Agreement. Any reference in this
Agreement to a Section or Subsection shall refer to a Section or Subsection of
this Agreement, except as otherwise specified.
21. GOVERNING LAW.
This Agreement shall be governed by the laws of the State of
New York, without reference to conflicts of law principles.
22. INDEMNIFICATION AND ATTORNEYS' FEES.
(a) The Bank shall indemnify, hold harmless and defend the
Executive against reasonable costs, including legal fees, incurred by him in
connection with his consultation with legal counsel or arising out of any
action, suit or proceeding in which he may be involved, as a result of his
efforts, in good faith, to defend or enforce the terms of this Agreement. The
Bank agrees to pay all such costs as they are incurred by the Executive, to the
full extent permitted by law, and without regard to whether the Bank believes
that it has a defense to any action, suit or proceeding by the Executive or that
it is not obligated for any payments under this Agreement.
(b) In the event any dispute or controversy arising under or
in connection with the Executive's termination is resolved in favor of the
Executive, whether by judgment, arbitration or settlement, the Executive shall
be entitled to the payment of all back-pay, including salary, bonuses and any
other cash compensation, fringe benefits and any compensation and benefits due
the Executive under this Agreement.
(c) The Bank shall indemnify, hold harmless and defend the
Executive for any act taken or not taken, or any omission or failure to act, by
him in good faith while performing services for the Bank or the Company to the
same extent and upon the same terms and conditions as other similarly situated
officers and directors of the Bank or the Company. If and to the extent that the
Bank or the Company, maintains, at any time during the Employment Period, an
insurance policy covering the other officers and directors of the Bank or the
Company against lawsuits, the Bank or the Company shall use its best efforts to
cause the Executive to be covered under such policy upon the same terms and
conditions as other similarly situated officers and directors.
23. TAX INDEMNIFICATION.
(a) Subject to the provisions of Section 28 hereof, this
Section 23 shall apply if a change "in the ownership or effective control" of
the Bank or "in the ownership of a substantial portion of the assets" of the
Bank occurs within the meaning of section 280G of the Code. If this Section 23
applies, then with respect to any taxable year in which the Executive shall be
liable for the payment of an excise tax under section 4999 of the Code with
respect to any payment in the nature of compensation made by the Bank, the
Company or any direct or indirect subsidiary or affiliate of the Bank to (or for
the benefit of) the Executive, the Bank shall pay to the Executive an amount
equal to X determined under the following formula:
X = E x P
-------------------------------------------------
1 - [(FI x (1 - SLI)) + SLI + E + M]
where
E = the rate at which the excise tax is assessed under
section 4999 of the Code;
P = the amount with respect to which such excise tax is
assessed, determined without regard to this Section
23;
FI = the highest effective marginal rate of income tax
applicable to the Executive under the Code for the
taxable year in question (taking into account any
phase-out or loss of deductions, personal exemptions
and other similar adjustments);
SLI = the sum of the highest effective marginal rates of
income tax applicable to the Executive under all
applicable state and local laws for the taxable year
in question (taking into account any phase-out or
loss of deductions, personal exemptions and other
similar adjustments); and
M = the highest marginal rate of Medicare tax
applicable to the Executive under the Code for the
taxable year in question.
Attached as Appendix A to this Agreement is an example that illustrates
application of this Section 23. Any payment under this Section 23 shall be
adjusted so as to fully indemnify the Executive on an after-tax basis so that
the Executive would be in the same after-tax financial position in which he
would have been if no excise tax under section 4999 of the Code had been
imposed. With respect to any payment in the nature of compensation that is made
to (or for the benefit of) the Executive under the terms of this Agreement or
otherwise and on which an excise tax under section 4999 of the Code will be
assessed, the payment determined under this Section 23(a) shall be made to the
Executive on the earlier of (i) the date the Bank, the Company or any direct or
indirect subsidiary or affiliate of the Bank is required to withhold such tax,
or (ii) the date the tax is required to be paid by the Executive.
(b) Notwithstanding anything in this Section 23 to the
contrary, in the event that the Executive's liability for the excise tax under
section 4999 of the Code for a taxable year is subsequently determined to be
different than the amount determined by the formula (X + P) x E, where X, P and
E have the meanings provided in Section 23(a), the Executive or the Bank, as the
case may be, shall pay to the other party at the time that the amount of such
excise tax is finally determined, an appropriate amount, plus interest, such
that the payment made under Section 23(a), when increased by the amount of the
payment made to the Executive under this Section 23(b) by the Bank, or when
reduced by the amount of the payment made to the Bank under this Section 23(b)
by the Executive, equals the amount that, it is finally determined, should have
properly been paid to the Executive under Section 23(a). The interest paid under
this Section 23(b) shall be determined at the rate provided under section
1274(b)(2)(B) of the Code. To confirm that the proper amount, if any, was paid
to the Executive under this Section 23, the Executive shall furnish to the Bank
a copy of each tax return which reflects a liability for an excise tax payment
made by the Bank, at least 20 days before the date on which such return is
required to be filed with the Internal Revenue Service.
24. NON-EXCLUSIVITY OF RIGHTS.
Except as otherwise provided herein, nothing in this Agreement
shall prevent or limit the Executive's continuing or future participation in any
plan, program, policy or practice provided by the Bank or any of its affiliated
companies and for which the Executive may qualify, nor shall anything herein
limit or otherwise affect such rights as the Executive may have under any
contract or agreement with the Bank or any of its affiliated companies. Amounts
which are vested benefits or which the Executive is otherwise entitled to
receive under any plan, policy, practice or program of or any contract or
agreement with the Bank or any of its affiliated companies at or subsequent to
the Date of Termination shall be payable in accordance with such plan, policy,
practice or program or contract or agreement except as explicitly modified by
this Agreement. Notwithstanding the foregoing, in the event of a termination of
employment, the amounts provided in Section 4 or Section 5, as applicable, shall
be the Executive's sole remedy for any purported breach of this Agreement by the
Bank.
25. MITIGATION; OTHER CLAIMS.
The Bank's obligation to make the payments provided for in
this Agreement and otherwise to perform its obligations hereunder shall not be
affected by any set-off, counterclaim, recoupment, defense or other claim, right
or action which the Bank may have against the Executive or others. In no event
shall the Executive be obligated to seek other employment or take any other
action by way of mitigation of the amounts payable to the Executive under any of
the provisions of this Agreement and such amounts shall not be reduced whether
or not the Executive obtains other employment.
26. CONFIDENTIAL INFORMATION.
The Executive shall hold in a fiduciary capacity for the
benefit of the Bank all secret or confidential information, knowledge or data
relating to the Bank or any of its affiliated companies, and their respective
businesses, which shall have been obtained by the Executive during the
Executive's employment by the Bank or any of its affiliated companies and which
shall not be or become public knowledge (other than by acts by the Executive or
representatives of the Executive in violation of this Agreement). After
termination of the Executive's employment with the Bank, the Executive shall
not, without the prior written consent of the Bank or as may otherwise be
required by law or legal process, communicate or divulge any such information,
knowledge or data to anyone other than the Bank and those designated by it. For
purposes of this Agreement, secret and confidential information, knowledge or
data relating to the Bank or any of its affiliates, and their respective
business, shall not include any information that is public, publicly available
or available through trade association sources. Notwithstanding any other
provision of this Agreement to the contrary, the Executive acknowledges and
agrees that in the event of a violation or threatened violation of any of the
provisions of this Section 26, the Bank shall have no adequate remedy at law and
shall therefore be entitled to enforce each such provision by temporary or
permanent injunction or mandatory relief obtained in any court of competent
jurisdiction without the necessity of proving damages or posting any bond or
other security, and without prejudice to any other remedies that may be
available at law or in equity.
27. ACCESS TO DOCUMENTS.
The Executive shall have the right to obtain copies of any
Bank or Bank documents that the Executive reasonably believes, in good faith,
are necessary or appropriate in determining his entitlement to, and the amount
of, payments and benefits under this Agreement.
28. REQUIRED REGULATORY PROVISIONS.
The following provisions are included for the purpose of
complying with various laws, rules and regulations applicable to the Bank:
(a) Notwithstanding anything herein contained to the contrary,
in no event shall the aggregate amount of compensation payable to the
Executive under Section 4(b) hereof (exclusive of amounts described in
Sections 4(b)(i) and (ii)) exceed three times the Executive's average
annual total compensation for the last five consecutive calendar years
to end prior to his termination of employment with the Bank (or for his
entire period of employment with the Bank if less than five calendar
years).
(b) Notwithstanding anything herein contained to the contrary,
any payments to the Executive by the Bank, whether pursuant to this
Agreement or otherwise, are subject to and conditioned upon their
compliance with Section 18(k) of the Federal Deposit Insurance Act
("FDI Act"), 12 U.S.C.
ss.1828(k), and any regulations promulgated thereunder.
(c) Notwithstanding anything herein contained to the contrary,
if the Executive is suspended from office and/or temporarily prohibited
from participating in the conduct of the affairs of the Bank pursuant
to a notice served under Section 8(e)(3) or 8(g)(1) of the FDI Act, 12
U.S.C. ss.1818(e)(3) or 1818(g)(1), the Bank's obligations under this
Agreement shall be suspended as of the date of service of such notice,
unless stayed by appropriate proceedings. If the charges in such notice
are dismissed, the Bank, in its discretion, may (i) pay to the
Executive all or part of the compensation withheld while the Bank's
obligations hereunder were suspended and (ii) reinstate, in whole or in
part, any of the obligations which were suspended.
(d) Notwithstanding anything herein contained to the contrary,
if the Executive 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) or 8(g)(1) of the FDI Act, 12 U.S.C.
ss.1818(e)(4) or (g)(1), all prospective obligations of the Bank under
this Agreement shall terminate as of the effective date of the order,
but vested rights and obligations of the Bank and the Executive shall
not be affected.
(e) Notwithstanding anything herein contained to the contrary,
if the Bank is in default (within the meaning of Section 3(x)(1) of the
FDI Act, 12 U.S.C. ss.1813(x)(1), all prospective obligations of the
Bank under this Agreement shall terminate as of the date of default,
but vested rights and obligations of the Bank and the Executive shall
not be affected.
(f) Notwithstanding anything herein contained to the contrary,
all prospective obligations of the Bank hereunder shall be terminated,
except to the extent that a continuation of this Agreement is necessary
for the continued operation of the Bank: (i) by the Director of the OTS
or his or her designee or the FDIC, at the time the FDIC enters into an
agreement to provide assistance to or on behalf of the Bank under the
authority contained in Section 13(c) of the FDI Act, 12 U.S.C.
ss.1823(c); (ii) by the Director of the OTS or his or her designee at
the time such Director or designee approves a supervisory merger to
resolve problems related to the operation of the Bank or when the Bank
is determined by such Director to be in an unsafe or unsound condition.
The vested rights and obligations of the parties shall not be affected.
If and to the extent that any of the foregoing provisions shall cease to be
required by applicable law, rule or regulation, the same shall become
inoperative as though eliminated by formal amendment of this Agreement.
<PAGE>
SIGNATURES
IN WITNESS WHEREOF, JAMAICA SAVINGS BANK FSB. has caused this
Agreement to be executed and its seal to be affixed hereunto by its duly
authorized officer, and the Executive has signed this Agreement, on the 22nd day
of June, 1999.
ATTEST: JAMAICA SAVINGS BANK FSB
By:
Joane Corrigan Edward P. Henson
- --------------- ----------------
Joanne Corrigan Edward P. Henson
Secretary President
[Seal]
WITNESS:
John J. Conroy
--------------
John J. Conroy
<PAGE>
STATE OF NEW YORK )
: ss.:
COUNTY OF NASSAU )
On this 22nd day of June, 1999, before me personally came
Edward P. Henson, to me known, who, being by me duly sworn, did depose and say
that he is President of Jamaica Savings Bank FSB, the federally chartered
savings bank described in and which executed the foregoing instrument; that he
knows the seal of said bank; that the seal affixed to said instrument is such
seal; that it was so affixed by order of the Board of Directors of said bank;
and that he signed his name thereto by like order.
Name:
Notary Public
STATE OF NEW YORK )
: ss.:
COUNTY OF NASSAU )
On this 22nd day of June, 1999, before me personally came John
J. Conroy, to me known, and known to me to be the individual described in the
foregoing instrument, who, being by me duly sworn, did depose and say that he
resides at the address set forth in said instrument, and that he signed his name
to the foregoing instrument.
Name:
Notary Public
<PAGE>
APPENDIX A
----------
1. INTRODUCTION. Sections 280G and 4999 of the Internal Revenue Code of
1986, as amended ("Code"), impose a 20% non-deductible federal excise tax on a
person if the payments and benefits in the nature of compensation to or for the
benefit of that person that are contingent on a change in the ownership or
effective control of the Company or the Bank or in the ownership of a
substantial portion of the assets of the Company or the Bank (such payments and
benefits are considered "parachute payments" under section 280G) exceed three
times the person's "base amount" under section 280G. Section 23 of the Agreement
provides for the Executive to receive a tax indemnification payment (sometimes
referred to as a "gross-up" payment) if the payments and benefits in the nature
of compensation to or for the benefit of the Executive that are considered
parachute payments cause the imposition of an excise tax under section 4999 of
the Code. Capitalized terms in this Appendix A that are not defined in this
Appendix A have the meaning used in the Employment Agreement with the Executive.
2. PURPOSE. The purpose of this Appendix A is to illustrate how the tax
indemnification or gross-up payment would be computed. The amounts, figures and
rates used in this example are meant to be illustrative and do not reflect the
actual payments and benefits that would be made to the Executive under this
Agreement. For purposes of this example, it is assumed that a change in control
within the meaning of section 280G of the Code has occurred and that:
(a) The value of the insurance benefits required to be provided to a
hypothetical employee "Z" under sections 4(b)(iii) and 5(b) of the
Agreement for medical, dental, life and other insurance benefits
during the unexpired employment period is $23,000.
(b) The annual rate of Z's salary covered by the Agreement is $100,000,
and Z received annual salary increases of 4%, 5% and 6% (i.e., a
three-year average of 5%) for each of the prior three years. Hence,
the amount payable under sections 4(b)(v) and 5(b) of the Agreement
for salary during the unexpired employment period would be $331,013
[$105,000 + $110, 250 + $115,763].
(c) Z received annual bonuses equal to 20% of his salary in each of the
prior three years. Hence, the amount payable under sections 4(b)(v)
and 5(b) of the Agreement for bonuses during the unexpired employment
period would be $66,203 [20% x ($105,000 + $110,250 + $115,763)].
(d) The amount payable under sections 4(b)(vi) and 5(b) of the Agreement
for the present value of the additional RP and BRP accruals during the
unexpired employment period would be $45,000.
(e) The amount payable under sections 4(b)(vii) and 5(b) of the Agreement
for additional contributions to the ESOP, 401(k) Plan and BRP during
the unexpired employment period would be $20,000.
(f) Z's base amount (i.e., average W-2 wages for the five-year period
preceding the change in control) is $87,000.
3. DETERMINE IF Z IS SUBJECT TO AN EXCISE TAX. Z's parachute payments would
total $485,216 [$23,000 + $331,013 + $66,203 + $45,000 + $20,000]. Three times
Z's base amount is $261,000 [3 x $87,000]; accordingly, Z is subject to an
excise tax because $485,216 exceeds $261,000. Z's "excess parachute payments"
under section 280G of the Code are equal to Z's total parachute payments minus
one times Z's base amount, or $398,216 [$485,216 - $87,000]. If Z were not
protected by section 23 of the Agreement, Z would be subjected to an excise tax
of $79,643 [$398,216 x 20%], in addition to ordinary income taxes.
4. Compute Z's Tax Indemnification Payment. Z's tax indemnification payment
under section 23 of the Agreement would be computed pursuant to the following
formula:
E x P .2 x $398,216
X = ------------------------------------ = ----------------------------------
1 - [(FI x (1 - SLI)) + SLI + E + M] 1 - [.368874 + .0685 + .2 + .0145]
where
E = excise tax rate under section 4999 of the Code [20%];
P = the amount with respect to which such excise tax is
assessed determined without regard to section 23 of
the Agreement [$398,216];
FI = the highest effective marginal rate of income tax
applicable to Z under the Code for the taxable year
in question [assumed to be 39.6% in this example, but
in actuality, the rate is adjusted to take into
account any phase-out or loss of deductions, personal
exemptions and other similar adjustments];
SLI = the sum of the highest effective marginal rates of
income tax applicable to Z under applicable state and
local laws for the taxable year in question [assumed
to be 6.85% in this example, but in actuality, the
rate is adjusted to take into account any phase-out
or loss of deductions, personal exemptions and other
similar adjustments]; and
M = the highest marginal rate of Medicare tax applicable
to Z under the Code for the year in question [1.45%].
In this example, the amount of tax indemnification payment due to Z under
section 23 of the Agreement would be $79,643 [.2 x $398,216] divided by 0.348126
[1 - (.368874 + .0685 + .2 + .0145)], or $228,777. Such amount would be payable
in addition to the other amounts payable under the Agreement in order to put Z
in approximately the same after-tax position that Z would have been in if there
were no excise tax imposed under sections 280G and 4999 of the Code. The tax
indemnification to Z of $228,777 would in turn be a parachute payment subject to
excise tax under sections 280G and 4999. Accordingly, Z's actual excess
parachute payment would be $626,993 [$485,216 - $87,000) + $228,777)] resulting
in an excise tax of $125,399 [$626,993 x 20%]. The difference between the
indemnification. payment and the excise tax [$103,378] is an amount equal to the
sum of the income and other applicable taxes due on the indemnification payment
[($228,777 x .368874) + ($228,777 x .0685) + ($228,777 x .0145)], confirming
that the amount of the tax indemnification payment is sufficient to satisfy all
of Z's tax liability resulting from the excess parachute payment.
JAMAICA SAVINGS BANK FSB
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT ("Agreement") is made and entered
into as of June 22, 1999 by and between JAMAICA SAVINGS BANK FSB, a federally
chartered savings bank, having its principal office at 303 Merrick Road,
Lynbrook, New York 11563 ("Bank"), and Joanne Corrigan, an individual residing
at (address omitted) ("Executive"). This Agreement amends, restates and
supersedes the Employment Agreement dated as of June 27, 1990 and the
Supplemental Employment Agreement dated as of July 9, 1996 by and between the
Bank and the Executive. Any reference to the "Company" in this Agreement shall
mean JSB Financial, Inc. and any successor thereto.
W I T N E S S E T H :
WHEREAS, the Executive is currently serving as Corporate
Secretary of the Bank, and the Bank wishes to assure itself of the services of
the Executive for the period provided in this Agreement; and
WHEREAS, the Executive is willing to serve in the employ of
the Bank on the terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the premises and the
mutual covenants and conditions hereinafter set forth, the Bank and the
Executive hereby agree as follows:
1. POSITION AND RESPONSIBILITIES.
During the period of her employment hereunder, the Executive
agrees to serve as Corporate Secretary of the Bank. The Executive shall render
administrative and management services to the Bank such as are customarily
performed by persons situated in a similar executive capacity and shall perform
such other duties not inconsistent with her title and office as may be assigned
to her by or under the authority of the Board of Directors of the Bank (the
"Board"). The Executive shall have such authority as is necessary or appropriate
to carry out her assigned duties. Failure to re-elect the Executive as Corporate
Secretary of the Bank (or a more senior position) without the consent of the
Executive shall constitute a breach of this Agreement.
2. TERMS.
(a) The period of the Executive's employment under this
Agreement shall be deemed to have commenced as of the date first above written
(the "Effective Date") and shall be for an initial term of three years. Prior to
the first anniversary of the Effective Date of this Agreement and on each
anniversary date thereafter (each, an "Anniversary Date"), the Board shall
review the terms of this Agreement and the Executive's performance of services
hereunder and may, in the absence of objection from the Executive, approve an
extension of the Employment Agreement. In such event, the Employment Agreement
shall be extended to the third anniversary of the relevant Anniversary Date. For
purposes of this Agreement, the term "Employment Period" shall mean the term of
this Agreement plus such extensions as are provided herein.
(b) During the period of her employment hereunder, except for
periods of absence occasioned by illness, disability, holidays, reasonable
vacation periods and reasonable leaves of absence, the Executive shall devote
substantially all of her business time, attention, skill and efforts to the
faithful performance of her duties hereunder including (i) service as Corporate
Secretary of the Bank, and, if duly elected, a Director of the Bank, (ii)
performance of such duties not inconsistent with her title and office as may be
assigned to her by or under the authority of the Board or a more senior
executive officer, and (iii) such other activities and services related to the
organization, operation and management of the Bank. During the Employment Period
it shall not be a violation of this Agreement for the Executive to (A) serve on
corporate, civic, industry or charitable boards or committees, (B) deliver
lectures, fulfill speaking engagements or teach at educational institutions and
(C) manage personal investments, so long as such activities do not significantly
interfere with the performance of the Executive's responsibilities as an
employee of the Bank in accordance with this Agreement. It is expressly
understood and agreed that to the extent that any such activities have been
conducted by the Executive prior to the Effective Date, the continued conduct of
such activities (or the conduct of activities similar in nature and scope
thereto) subsequent to the Effective Date shall not thereafter be deemed to
interfere with the performance of the Executive's responsibilities to the Bank.
It is also expressly agreed that the Executive may conduct activities subsequent
to the Effective Date that are generally accepted for an executive in her
position, regardless of whether conducted by the Executive prior to the
Effective Date.
(c) Notwithstanding anything herein contained to the contrary:
(i) the Executive's employment with the Bank may be terminated by the Bank or
the Executive during the term of this Agreement, subject to the terms and
conditions of this Agreement; and (ii) nothing in this Agreement shall mandate
or prohibit a continuation of the Executive's employment following the
expiration of the term of this Agreement upon such terms and conditions as the
Board and the Executive may mutually agree.
(d) For all purposes of this Agreement, the term "Unexpired
Employment Period" as of any date shall mean the period beginning on such date
and ending on the Anniversary Date on which the Employment Period (as extended
pursuant to Section 2(a) of this Agreement) is then scheduled to expire.
3. COMPENSATION AND REIMBURSEMENT.
(a) The compensation specified under this Agreement shall
constitute the salary and benefits paid for the duties described in Section 1.
The Bank shall pay the Executive as compensation a salary at an annual rate of
not less than (salary omitted) per year or such higher rate as may be prescribed
by or under the authority of the Board ("Base Salary"). The Base Salary payable
under this Section 3 shall be paid in approximately equal installments in
accordance with the Bank's customary payroll practices. During the period of
this Agreement, the Executive's Base Salary shall be reviewed at least annually;
the first such review will be made no later than one year from the date of this
Agreement. Such review shall be conducted by a Committee designated by the
Board, and the Board may increase the Executive's Base Salary, which increased
amount shall be considered the Executive's "Base Salary" for purposes of this
Agreement. In no event shall the Executive's annual rate of Base Salary under
this Agreement in effect at a particular time be reduced without her prior
written consent. In addition to the Base Salary provided in this Section 3(a),
the Bank shall provide the Executive at no cost to the Executive with all such
other benefits as are provided uniformly to permanent full-time employees of the
Bank.
(b) The Bank will provide the Executive with employee benefit
plans, arrangements and perquisites substantially equivalent to those in which
the Executive was participating or otherwise deriving benefit from immediately
prior to the beginning of the term of this Agreement, and the Bank will not,
without the Executive's prior written consent, make any changes in such plans,
arrangements or perquisites which would adversely affect the Executive's rights
or benefits thereunder. Without limiting the generality of the foregoing
provisions of this Subsection (b), the Executive will be entitled to participate
in or receive benefits under any employee benefit plans with respect to which
the Executive satisfies the eligibility requirements, including, but not limited
to, the Retirement Plan of Jamaica Savings Bank FSB ("RP"), the Incentive
Savings Plan of Jamaica Savings Bank FSB ("ISP"), the Jamaica Savings Bank FSB
Employee Stock Ownership Plan ("ESOP"), the Benefit Restoration Plan of Jamaica
Savings Bank FSB ("BRP"), the JSB Financial, Inc. 1990 Stock Option Plan, the
JSB Financial, Inc. 1996 Stock Option Plan, retirement plans, supplemental
retirement plans, pension plans, profit-sharing plans, group life, health
(including hospitalization, medical and major medical), dental, accidental death
and dismemberment, travel accident and short-term disability insurance plans, or
any other employee benefit plan or arrangement made available by the Bank in the
future to its senior executives and key management employees, subject to and on
a basis consistent with the terms, conditions and overall administration of such
plans and arrangements. The Executive will be entitled to incentive compensation
and bonuses as provided in any plan of the Bank in which the Executive is
eligible to participate. Nothing paid to the Executive under any such plan or
arrangement will be deemed to be in lieu of other compensation to which the
Executive is entitled under this Agreement.
(c) The Executive's principal place of employment shall be at
the Bank's executive offices at the address first above written, or at such
other location in New York City or in Nassau County or Suffolk County at which
the Bank shall maintain its principal executive offices, or at such other
location as the Board and the Executive may mutually agree upon. The Bank shall
provide the Executive, at her principal place of employment with support
services and facilities suitable to her position with the Bank and necessary or
appropriate in connection with the performance of her assigned duties under this
Agreement. The Bank shall reimburse the Executive for her ordinary and necessary
business expenses, including, without limitation, fees for memberships in such
clubs and organizations as the Executive and the Board shall mutually agree are
necessary and appropriate for business purposes, and travel and entertainment
expenses, incurred in connection with the performance of her duties under this
Agreement, upon presentation to the Bank of an itemized account of such expenses
in such form as the Bank may reasonably require.
4. PAYMENTS TO THE EXECUTIVE UPON AN EVENT OF TERMINATION.
The provisions of this Section shall in all respects be
subject to the terms and conditions stated in Sections 9 and 28.
(a) Upon the occurrence of an Event of Termination (as herein
defined) during the Executive's term of employment under this Agreement, the
provisions of this Section shall apply. As used in this Agreement, an "Event of
Termination" shall mean and include any one or more of the following: (i) the
termination by the Bank or the Company of the Executive's full-time employment
hereunder for any reason other than: following a Change in Control, as defined
in Section 5; for Disability, as defined in Section 6; for Retirement, as
defined in Section 8; for Cause, as defined in Section 9; or upon the
Executive's death; or (ii) unless consented to by the Executive, the Executive's
voluntary resignation from the Bank's employ, upon any: (A) failure to elect or
re-elect or to appoint or re-appoint the Executive as Corporate Secretary of the
Bank, (B) material adverse change in the Executive's function, duties, or
responsibilities, which change would cause the Executive's position to become
one of lesser responsibility, importance, or scope from the position and
attributes thereof described in Section 1, above (and any such material change
shall be deemed a continuing breach of this Agreement), (C) relocation of the
Executive's principal place of employment by more than 30 miles from its
location at the Effective Date of this Agreement, or a material reduction in the
benefits and perquisites to the Executive from those being provided as of the
Effective Date of this Agreement, (D) liquidation or dissolution of the Bank or
the Company, or (E) material breach of this Agreement by the Bank. Upon the
occurrence of any event described in clauses (A), (B), (C), (D) or (E), above,
the Executive shall have the right to elect to terminate her employment under
this Agreement by resignation upon written notice pursuant to Section 10 given
within a reasonable period of time not to exceed, except in case of a continuing
breach, four calendar months after the event giving rise to said right to elect.
(b) Upon the occurrence of an Event of Termination as set
forth in Section 4(a), on the Date of Termination, as defined in Section 10, the
Bank shall be obligated to pay, or to provide, the Executive, or, in the event
of her subsequent death, to her surviving spouse or such other beneficiary or
beneficiaries as the Executive may designate in writing, or if neither her
estate, as severance pay or liquidated damages, or both, the benefits provided
below and a payment equal to the sum of the payments set forth below:
(i) payment of the sum of (A) the Executive's annual Base
Salary through the Date of Termination to the extent not theretofore
paid and (B) any compensation previously deferred by the Executive
(together with any accrued interest or earnings thereon) and any
accrued vacation pay, in each case to the extent not theretofore paid
(the sum of the amounts described in clauses (A) and (B) shall be
hereinafter referred to as the "Accrued Obligations");
(ii) the benefits, if any, to which the Executive is entitled
as a former employee under the Bank's or the Company's employee benefit
plans and programs and compensation plans and programs;
(iii) continued group life, health (including hospitalization,
medical and major medical), dental, accidental death and dismemberment,
travel accident and short-term disability insurance benefits as
provided by the Bank or the Company, in addition to that provided
pursuant to Section 4(b)(ii), if and to the extent necessary to provide
for the Executive, for the remaining Unexpired Employment Period,
coverage equivalent to the coverage to which she would have been
entitled if she had continued working for the Bank during the remaining
Unexpired Employment Period at the highest annual rate of salary
achieved during the Employment Period; provided, however, if the
Executive has obtained group life, health (including hospitalization,
medical and major medical), dental, accidental death and dismemberment,
travel accident and/or short-term disability insurance benefits
coverage from another source, the Executive may, as of any month, make
an irrevocable election to forego the continued coverage that would
otherwise be provided hereunder for the remaining Unexpired Employment
Period, or any portion thereof, in which case the Bank or the Company,
upon receipt of the Executive's irrevocable election, shall pay the
Executive an amount equal to the estimated cost to the Bank or the
Company of providing such coverage during such period;
(iv) if and to the extent not already provided under Sections
4(b)(ii) and 4(b)(iii), continued health (including hospitalization,
medical and major medical) and dental insurance benefits to the extent
maintained by the Bank or the Company for its employees or retirees
during the remainder of the Executive's lifetime and the lifetime of
her spouse, if any, for so long as the Executive continues to reimburse
the Bank for the cost of such continued coverage;
(v) a lump sum payment, as liquidated damages, in an amount
equal to the Base Salary and bonus or other incentive compensation that
the Executive would have earned if the Executive had continued working
for the Bank and the Company during the remaining Unexpired Employment
Period (A) at the highest annual rate of Base Salary and bonus or other
incentive compensation achieved by the Executive during the three-year
period immediately preceding the Executive's Date of Termination,
except that (B) in the case of a Change in Control, such lump sum shall
be determined based upon the Base Salary and the bonus or other
incentive compensation, respectively, that the Executive would have
been paid during the remaining Unexpired Employment Period including
the assumed increases referred to in clauses (i) and (ii) of Section
5(b);
(vi) a lump sum payment in an amount equal to the excess, if
any, of: (A) the present value of the pension benefits to which the
Executive would be entitled under the RP and the BRP (and under any
other qualified and non-qualified defined benefit plans maintained by
the Bank or the Company covering the Executive) as if she had continued
working for the Bank during the remaining Unexpired Employment Period
(x) at the highest annual rate of Base Salary and, if applicable, the
highest bonus or other incentive compensation, respectively, achieved
by the Executive during the three-year period immediately preceding the
Executive's Date of Termination, except that (y) in the case of a
Change in Control, such lump sum shall be determined based upon the
Base Salary and, if applicable, the highest bonus or other incentive
compensation, respectively, that the Executive would have been paid
during the remaining Unexpired Employment Period including the assumed
increases referred to in clauses (i) and (ii) of Section 5(b), and (z)
in the case of a Change in Control, as if three additional years are
added to the Executive's age and years of creditable service under the
RP and the BRP and after taking into account any other compensation
required to be taken into account under the RP and the BRP (and any
other qualified and non-qualified defined benefit plans of the Bank or
the Company, as applicable), over (B) the present value of the pension
benefits to which she is actually entitled under the RP and the BRP
(and any other qualified and non-qualified defined benefit plans) as of
her Date of Termination, where such present values are to be determined
using a discount rate of 6% and the mortality tables prescribed under
section 72 of the Internal Revenue Code of 1986, as amended ("Code");
and
(vii) a lump sum payment in an amount equal to the
contributions that would have been made by the Bank or the Company on
the Executive's behalf to the ISP and the ESOP and to the BRP with
respect to such ISP and ESOP contributions (and to any other qualified
and non-qualified defined contribution plans maintained by the Bank or
the Company covering the Executive) as if the Executive had continued
working for the Bank and the Company during the remaining Unexpired
Employment Period making the maximum amount of employee contributions
required, if any, under such plan or plans and earning (A) the highest
annual rate of Base Salary and, if applicable, the highest bonus or
other incentive compensation, respectively, achieved by the Executive
during the three-year period immediately preceding the Executive's Date
of Termination, except that (B) in the case of a Change in Control,
such lump sum shall be determined based upon the Base Salary and, if
applicable, the bonus or other incentive compensation, respectively,
that the Executive would have been paid during the remaining Unexpired
Employment Period including the assumed increases referred to in
clauses (i) and (ii) of Section 5(b).
The benefits to be provided under, and the amounts payable pursuant to, this
Section 4 shall be provided and be payable without regard to proof of damages
and without regard to the Executive's efforts, if any, to mitigate damages. The
Bank and the Executive hereby stipulate that the damages which may be incurred
by the Executive following any such termination of employment are not capable of
accurate measurement as of the date first above written and that such liquidated
damages constitute reasonable damages under the circumstances.
(c) Payments to the Executive under Section 4 shall be made
within ten days of the Executive's Date of Termination.
(d) In the event payments are made under Section 4 or Section
5, the Executive may select an individual or firm to provide her with reasonable
outplacement counseling services, and the Bank shall pay for the costs of such
services; provided, however, that the cost to the Bank of such outplacement
counseling services shall not exceed 25% of the Executive's Base Salary.
5. CHANGE IN CONTROL.
(a) No benefit shall be payable under this Section 5 unless
there shall have been a Change in Control of the Bank or the Company, as set
forth below. For purposes of this Agreement, a "Change in Control" of the Bank
or the Company shall mean any one or more of the following:
(i) An event of a nature that would be required to be reported
in response to Item l(a) of the current report on Form 8-K, as in
effect on the date hereof, pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act");
(ii) An event of a nature that results in a Change in Control
of the Bank or the Company within the meaning of the Home Owners' Loan
Act of 1933, as amended, or the Change in Bank Control Act of 1978, as
amended, as applicable, and the Rules and Regulations promulgated by
the Office of Thrift Supervision ("OTS") or its predecessor agency, the
Federal Deposit Insurance Corporation ("FDIC") or the Board of
Governors of the Federal Reserve System ("FRB"), as the case may be, as
in effect on the date hereof, but excluding any such Change in Control
resulting from the purchase of securities by the Company or the Bank's
or the Company's tax-qualified employee benefit plans and trusts;
(iii) If any "person" (as the term is used in Sections 13(d)
and 14(d) of the Exchange Act) is or becomes the "beneficial owner" (as
defined in Rule 13d-3 under the Exchange Act), directly or indirectly,
of securities of the Bank or the Company representing 20% or more of
the Bank's or the Company's outstanding securities except for any
securities of the Bank purchased by the Company in connection with the
initial conversion of the Bank from mutual to stock form (the
"Conversion") and any securities purchased by the Company or the Bank's
or the Company's tax-qualified employee benefit plans and trusts;
(iv) If the individuals who constitute the Board on the date
hereof (the "Incumbent Board") cease for any reason to constitute at
least a majority of the Board, provided, however, that any person
becoming a director subsequent to the date hereof whose election or
nomination for election by the Company's stockholders, was approved by
a vote of at least three-quarters of the directors then comprising the
Incumbent Board shall be considered as though he or she were a member
of the Incumbent Board, but excluding, for this purpose, any such
person whose initial assumption of office occurs as a result of an
actual or threatened election contest with respect to the election or
removal of directors or other actual or threatened solicitation of
proxies or consents by or on behalf of a person other than the Board;
(v) A merger, consolidation, reorganization, sale of all or
substantially all the assets of the Bank or the Company or similar
transaction occurs in which the Bank or the Company is not the
resulting entity, other than a transaction following which (A) at least
51% of the equity ownership interests of the entity resulting from such
transaction are beneficially owned (within the meaning of Rule 13d-3
promulgated under Exchange Act) in substantially the same relative
proportions by persons who, immediately prior to such transaction,
beneficially owned (within the meaning of Rule 13d-3 promulgated under
the Exchange Act) at least 51% of the outstanding equity ownership
interests in the Bank or the Company and (B) at least 51% of the
securities entitled to vote generally in the election of directors of
the entity resulting from such transaction are beneficially owned
(within the meaning of Rule 13d-3 promulgated under the Exchange Act)
in substantially the same relative proportions by persons who,
immediately prior to such transaction, beneficially owned (within the
meaning of Rule 13d-3 promulgated under the Exchange Act) at least 51%
of the securities entitled to vote generally in the election of
directors of the Bank or the Company;
(vi) A proxy statement shall be distributed soliciting proxies
from stockholders of the Company, by someone other than the current
management of the Company, seeking stockholder approval of a plan of
reorganization, merger or consolidation of the Company or the Bank or
similar transaction with one or more corporations as a result of which
the outstanding shares of the class of securities then subject to such
plan or transaction are exchanged for or converted into cash or
property or securities not issued by the Bank or the Company; or
(vii) A tender offer is completed for 20% or more of the
voting securities of the Bank or Company then outstanding.
The "Change in Control Date" shall mean the date during the Employment Period on
which a Change in Control occurs. Anything in this Agreement to the contrary
notwithstanding, if the Executive's employment with the Company is terminated
and if it is reasonably demonstrated by the Executive that such termination of
employment (1) was at the request of a third party who has taken steps
reasonably calculated to effect a Change in Control or (2) otherwise arose in
connection with or anticipation of a Change in Control, then for all purposes of
this Agreement the "Change in Control Date" shall mean the date immediately
prior to the date of such termination of employment.
(b) If any of the events described in Section 5(a)
constituting a Change in Control have occurred or the Board has determined that
a Change in Control has occurred, the Executive shall be entitled to the
payments and the benefits provided below on the Change in Control Date. The
amounts payable and the benefits to be provided under this Section 5(b) to the
Executive shall consist of the payments and benefits that would be due to the
Executive and the Executive's family under Section 4(b) for the Unexpired
Employment Period as if an Event of Termination under Section 4(a) had occurred
on the Change in Control Date. For purposes of determining the payments and
benefits due under this Section 5(b), when calculating the payments due and
benefits to be provided for the Unexpired Employment Period, it shall be assumed
that for each year of the remaining term of this Agreement, the Executive would
have received (i) an annual increase in Base Salary equal to the average
percentage increase in Base Salary received by the Executive for the three-year
period ending with the earlier of (x) the year in which the Change in Control
Date occurs or (y) the year during which a definitive agreement, if any,
governing the Change in Control is executed, with the first such increase
effective as of the January 1st next following such three-year period and the
second and third such increases effective as of the next two anniversaries of
such January 1st, (ii) a bonus or other incentive compensation equal to the
highest percentage rate of bonus or incentive compensation paid to the Executive
during the three-year period referred to in clause (i) of this Section 5(b)
times the Base Salary that the Executive would have been paid during the
remaining term of this Agreement including the assumed increases referred to in
clause (i) of this Section 5(b), (iii) the maximum contributions that could be
made by or on behalf of the Executive with respect to any employee benefit plans
and programs maintained by the Company and the Bank based upon the Base Salary
and, if applicable, the bonus or other incentive compensation, respectively,
that the Executive would have been paid during the remaining term of this
Agreement including the assumed increases referred to in clauses (i) and (ii) of
this Section 5(b), and (iv) the present value of the pension benefits to which
the Executive is entitled under Section 4(b)(vi) with respect to the RP and the
BRP (and under any other qualified and non-qualified defined benefit plans
maintained by the Bank or the Company covering the Executive) shall be
determined as if she had continued working for the Bank during the remaining
Unexpired Employment Period and shall be based upon the Base Salary and, if
applicable, the bonus or other incentive compensation, respectively, that the
Executive would have been paid during the remaining term of this Agreement
including the assumed increases referred to in clauses (i) and (ii) of this
Section 5(b). The benefits to be provided under, and the amounts payable
pursuant to, this Section 5 shall be provided and be payable without regard to
proof of damages and without regard to the Executive's efforts, if any, to
mitigate damages. The Bank and the Executive hereby stipulate that the damages
which may be incurred by the Executive following any Change in Control are not
capable of accurate measurement as of the date first above written and that such
liquidated damages constitute reasonable damages under the circumstances.
(c) Payments under Section 5(b) shall be made to the Executive
on the Change in Control Date. Such payments shall be made regardless of whether
the Executive's employment terminates.
6. TERMINATION FOR DISABILITY.
(a) In the event of Termination for Disability, the Executive
shall receive the benefits provided in Section 6(b); provided, however, that the
benefits provided under Section 6(b) shall not be deemed to be in lieu of the
benefits she is otherwise entitled as a former employee under the Bank or the
Company's employee plans and programs. For purposes of this Agreement, the
Executive may be terminated for disability only if (i) the Executive shall have
been absent from her duties with the Bank on a full-time basis for at least six
consecutive months, or (ii) a majority of the members of the Board acting in
good faith determine that, based upon competent and independent medical evidence
presented by a physician or physicians agreed upon by the parties, the
Executive's physical or mental condition is such that she is totally and
permanently incapable of engaging in any substantial gainful employment based
upon her education, training and experience; provided, however, that on and
after the earliest date on which a Change in Control of the Bank or the Company
as defined in Section 5 occurs, such a determination shall require the
affirmative vote of at least three-fourths of the members of the Board acting in
good faith and such vote shall not be made prior to the expiration of a 60-day
period following the date on which the Board shall, by written notice to the
Executive, furnish her a statement of its grounds for proposing to make such
determination, during which period the Executive shall be afforded a reasonable
opportunity to make oral and written presentations to the members of the Board,
and to be represented by her legal counsel at such presentations, to refute the
grounds for the proposed determination.
(b) The Bank will pay the Executive as Disability pay, a
bi-weekly payment equal to 100% of the Executive's bi-weekly annual rate of Base
Salary in effect on the date of the Executive's Termination for Disability. In
addition, the Bank will cause to be continued insurance coverage, including
group life, health (including hospitalization, medical and major medical),
dental, accidental death and dismemberment, travel accident and short-term
disability coverage substantially identical to the coverage maintained by the
Bank or the Company for the Executive prior to her Termination for Disability.
The Disability pay and coverages shall commence on the effective date of the
Executive's termination and shall cease upon the earliest to occur of: (i) the
date the Executive returns to the full-time employment of the Bank, in the same
capacity as she was employed prior to her Termination for Disability and
pursuant to an employment agreement between the Executive and the Bank; (ii) the
Executive's full-time employment by another employer; (iii) the Executive's
attaining the normal age of retirement or receiving benefits under the RP or
other defined benefit pension plan of the Bank or the Company; (iv) the
Executive's death; (v) the Executive's eligibility to collect payments under the
disability provision of the RP or other defined benefit pension plan of the Bank
or the Company; or (vi) the expiration of the term of this Agreement.
(c) Notwithstanding the foregoing, there will be no reduction
in the compensation otherwise payable to the Executive during any period during
which the Executive is incapable of performing her duties hereunder by reason of
temporary disability.
7. TERMINATION UPON DEATH.
The Executive's employment shall terminate automatically upon
the Executive's death during the Employment Period. In such event, the Executive
and the Executive's legal representatives shall be entitled to the following:
(i) payment of the Executive's "Accrued Obligations;"
(ii) the continuation of all benefits to the Executive's
family and dependents that would have been provided if the Executive
had been entitled to the benefits under Section 4(b)(ii), (iii) and
(iv), and
(iii) the timely payment of any other amounts or benefits
required to be paid or provided or which the Executive is eligible to
receive under any plan, program, policy or practice or contract or
agreement of the Bank and its affiliated companies (all such other
amounts and benefits shall be hereinafter referred to as the "Other
Benefits");
provided, however, that if the Executive dies while in the employment of the
Bank, the amount of life insurance provided to the Executive by the Bank shall
not be less than the lesser of $200,000 or three times the Executive's then
annual Base Salary. Accrued Obligations shall be paid to the Executive's estate
or beneficiary, as applicable, in a lump sum cash payment within ten days of the
Date of Termination. With respect to the provision of Other Benefits after the
Change in Control Date, the term Other Benefits as utilized in this Section 7
shall include, without limitation, that the Executive's estate and/or
beneficiaries shall be entitled to receive, benefits at least equal to the most
favorable benefits provided by the Bank and affiliated companies to the estates
and beneficiaries of peer executives of the Bank and such affiliates companies
under such plans, programs, practices and policies relating to death benefits,
if any, as in effect with respect to other peer executives and their
beneficiaries at any time during the 120-day period immediately preceding the
Change in Control Date.
8. TERMINATION UPON RETIREMENT.
Termination by the Bank of the Executive based on "Retirement"
shall mean termination in accordance with the Company's or the Bank's retirement
policy or in accordance with any retirement arrangement established with the
Executive's consent with respect to him. Upon termination of the Executive upon
Retirement, the Executive shall be entitled to all benefits under the RP and any
other retirement plan of the Bank or the Company and other plans to which the
Executive is a party, and the Executive shall be entitled to the benefits, if
any, that would be payable to her as a former employee under the Bank's or the
Company's employee benefit plans and programs and compensation plans and
programs.
9. TERMINATION FOR CAUSE.
The terms "Termination for Cause" or "Cause" shall mean
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 any material breach of
this Agreement, in such case as measured against standards generally prevailing
at the relevant time in the savings and community banking industry. For purposes
of this Section, no act, or the failure to act, on the Executive's part shall be
"willful" unless done, or omitted to be done, in bad faith and without
reasonable belief that the action or omission was in the best interest of the
Bank or its affiliates. Any act, or failure to act, based upon authority given
pursuant to a resolution duly adopted by the Board or based upon the written
advice of counsel for the Bank shall be conclusively presumed to be done, or
omitted to be done, by the Executive in good faith and in the best interests of
the Bank. Notwithstanding the foregoing, the Executive shall not be deemed to
have been terminated for Cause unless and until there shall have been delivered
to her a Notice of Termination which shall include a copy of a resolution duly
adopted by the affirmative vote of not less than three-fourths of the members of
the Board at a meeting of the Board called and held for that purpose (after
reasonable notice to the Executive and an opportunity for him, together with
counsel, to be heard before the Board), finding that in the good faith opinion
of the Board, the Executive was guilty of conduct justifying Termination for
Cause and specifying the particulars thereof in detail. The Executive shall not
have the right to receive compensation or other benefits for any period after
Termination for Cause.
10. NOTICE.
(a) Any purported termination by the Bank or by the Executive
shall be communicated by a Notice of Termination to the other party hereto. For
purposes of this Agreement, a "Notice of Termination" shall mean a written
notice which shall indicate the specific termination provision in this Agreement
relied upon and shall set forth in reasonable detail the facts and circumstances
claimed to provide a basis for termination of the Executive's employment under
the provision so indicated.
(b) Subject to Section 10(c), "Date of Termination" shall mean
(A) if the Executive's employment is terminated for Disability, 30 days after a
Notice of Termination is given (provided that she shall not have returned to the
performance of her duties on a full-time basis during such 30-day period), and
(B) if her employment is terminated for any other reason, the date specified in
the Notice of Termination (which, in the case of a Termination for Cause, shall
be immediate).
(c) If, within 30 days after any Notice of Termination is
given, the party receiving such Notice of Termination notifies the other party
that a dispute exists concerning the termination, then, except upon the
occurrence of a Change in Control and voluntary termination by the Executive in
which case the Date of Termination shall be the date specified in the Notice,
the Date of Termination shall be the date on which the dispute is finally
determined, either by mutual written agreement of the parties, by a binding
arbitration award, or by a final judgment, order or decree of a court of
competent jurisdiction (the time for appeal therefrom having expired and no
appeal having been perfected) and provided further that the Date of Termination
shall be extended by a notice of dispute only if such notice is given in good
faith and the party giving such notice pursues the resolution of such dispute
with reasonable diligence. Notwithstanding the pendency of any such dispute, the
Bank will continue to pay the Executive her full compensation in effect when the
notice giving rise to the dispute was given (including, but not limited to, Base
Salary) and continue her as a participant in all compensation, benefit and
insurance plans in which she was participating when the notice of dispute was
given, until the dispute is finally resolved in accordance with this Agreement.
Amounts paid under this Section are in addition to all other amounts due under
this Agreement and shall not be offset against or reduce any other amounts due
under this Agreement.
(d) The Bank may terminate the Executive's employment at any
time, but any termination by the Bank, other than Termination for Cause, shall
not prejudice the Executive's right to compensation or other benefits under this
Agreement or under any other benefit or compensation plans or programs
maintained by the Bank or the Company from time to time. The Executive shall not
have the right to receive compensation or other benefits for any period after a
Termination for Cause as defined in Section 9 hereinabove.
(e) Any communication to a party required or permitted under
this Agreement, including any notice, direction, designation, consent,
instruction, objection or waiver, shall be in writing and shall be deemed to
have been given at such time as it is delivered personally, or five days after
mailing if mailed, postage prepaid, by registered or certified mail, return
receipt requested, addressed to such party at the address listed below or at
such other address as one such party may by written notice specify to the other
party, as follows. If to the Executive, (address omitted); if to the Bank,
Jamaica Savings Bank FSB, 303 Merrick Road, Lynbrook, New York 11563, Attention:
President, with a copy to Thacher Proffitt & Wood, Two World Trade Center, New
York, New York 10048, Attention: Douglas J. McClintock, Esq.
11. POST-TERMINATION OBLIGATIONS.
(a) All payments and benefits to the Executive under this
Agreement shall be subject to the Executive's compliance with paragraph (b) of
this Section 11 during the term of this Agreement and for one full year after
the expiration or termination hereof.
(b) The Executive shall, upon reasonable notice, furnish such
information and assistance to the Bank as may reasonably be required by the Bank
in connection with any litigation in which it or any of its subsidiaries or
affiliates is, or may become, a party; provided, that the Bank reimburses the
Executive for the reasonable value of her time in connection therewith and for
any out-of-pocket costs attributable thereto.
12. COVENANT NOT TO COMPETE.
The Executive hereby covenants and agrees that for a period of
one year following her Date of Termination, if such termination occurs prior to
the end of the term of the Agreement, she shall not, without the written consent
of the Board, become an officer, employee, consultant, director or trustee of
any savings bank, savings and loan association, savings and loan holding
company, bank or bank holding company if such position (a) entails working in
(or providing services in) New York City, Nassau or Suffolk counties or (b)
entails working in (or providing services in) any other county that is both (i)
within the Bank's primary trade (or operating) area at the time in question,
which shall be determined by reference to the Bank's business plan as in effect
from time to time, and (ii) in which the Bank engages in material or substantial
deposit-taking functions or lending activities at such time; provided, however,
that this Section 12 shall not apply if the Executive's employment is terminated
for the reasons set forth in any of Sections 4, 5, 6 or 8.
13. SOURCE OF PAYMENTS.
All payments provided in this Agreement shall be timely paid
in cash or check from the general funds of the Bank.
14. EFFECT ON PRIOR AGREEMENTS.
This Agreement contains the entire understanding between the
parties hereto and supersedes any prior employment agreement between the Bank or
any predecessor of the Bank and the Executive, including the Employment
Agreement dated June 27, 1990 and the Supplemental Employment Agreement dated
July 9, 1996, except that this Agreement shall not affect or operate to reduce
any benefit or compensation inuring to the Executive of a kind elsewhere
provided. No provisions of this Agreement shall be interpreted to mean that the
Executive is subject to receiving fewer benefits than those available to her
without reference to this Agreement.
15. EFFECT OF ACTION UNDER COMPANY AGREEMENT.
Notwithstanding any provision herein to the contrary, to the
extent that full compensation payments and benefits are paid to or received by
the Executive under the Employment Agreement, dated June 22, 1999, as it may be
amended from time to time, between the Executive and the Company, such
compensation payments and benefits paid by the Company will be deemed to satisfy
the corresponding obligations of the Bank under this Agreement.
16. NO ATTACHMENT.
Except as required by law, no right to receive payments under
this Agreement shall be subject to anticipation, commutation, alienation, sale,
assignment, encumbrance, charge, pledge, or hypothecation, or to execution,
attachment, levy, or similar process or assignment by operation of law, and any
attempt, voluntary or involuntary, to affect any such action shall be null,
void, and of no effect.
17. MODIFICATION AND WAIVER.
(a) This Agreement may not be modified or amended except by an
instrument in writing signed by the parties hereto.
(b) No term or condition of this Agreement shall be deemed to
have been waived, nor shall there be any estoppel against the enforcement of any
provision of this Agreement, except by written instrument of the party charged
with such waiver or estoppel. No such written waiver shall be deemed a
continuing waiver unless specifically stated therein, and each such waiver shall
operate only as to the specific term or condition waived and shall not
constitute a waiver of such term or condition for the future as to any act other
than that specifically waived.
18. SUCCESSOR AND ASSIGNS.
This Agreement will inure to the benefit of and be binding
upon the Executive, her legal representatives and testate or intestate
distributees, and the Bank, its successors and assigns, including any successor
by purchase, merger, consolidation or otherwise or a statutory receiver or any
other person or firm or corporation to which all or substantially all of the
assets and business of the Bank may be sold or otherwise transferred. Any such
successor of the Bank shall be deemed to have assumed this Agreement and to have
become obligated hereunder to the same extent as the Bank and the Executive's
obligations hereunder shall continue in favor of such successor.
19. SEVERABILITY.
If, for any reason, any provision of this Agreement, or any
part of any provision, is held invalid, such invalidity shall not affect any
other provision of this Agreement or any part of such provision not held so
invalid, and each such other provision and part thereof shall to the full extent
consistent with law continue in full force and effect.
20. HEADINGS FOR REFERENCE ONLY.
The headings of Sections and paragraphs herein are included
solely for convenience of reference and shall not control the meaning or
interpretation of any of the provisions of this Agreement. Any reference in this
Agreement to a Section or Subsection shall refer to a Section or Subsection of
this Agreement, except as otherwise specified.
21. GOVERNING LAW.
This Agreement shall be governed by the laws of the State of
New York, without reference to conflicts of law principles.
22. INDEMNIFICATION AND ATTORNEYS' FEES.
(a) The Bank shall indemnify, hold harmless and defend the
Executive against reasonable costs, including legal fees, incurred by her in
connection with her consultation with legal counsel or arising out of any
action, suit or proceeding in which she may be involved, as a result of her
efforts, in good faith, to defend or enforce the terms of this Agreement. The
Bank agrees to pay all such costs as they are incurred by the Executive, to the
full extent permitted by law, and without regard to whether the Bank believes
that it has a defense to any action, suit or proceeding by the Executive or that
it is not obligated for any payments under this Agreement.
(b) In the event any dispute or controversy arising under or
in connection with the Executive's termination is resolved in favor of the
Executive, whether by judgment, arbitration or settlement, the Executive shall
be entitled to the payment of all back-pay, including salary, bonuses and any
other cash compensation, fringe benefits and any compensation and benefits due
the Executive under this Agreement.
(c) The Bank shall indemnify, hold harmless and defend the
Executive for any act taken or not taken, or any omission or failure to act, by
her in good faith while performing services for the Bank or the Company to the
same extent and upon the same terms and conditions as other similarly situated
officers and directors of the Bank or the Company. If and to the extent that the
Bank or the Company, maintains, at any time during the Employment Period, an
insurance policy covering the other officers and directors of the Bank or the
Company against lawsuits, the Bank or the Company shall use its best efforts to
cause the Executive to be covered under such policy upon the same terms and
conditions as other similarly situated officers and directors.
23. TAX INDEMNIFICATION.
(a) Subject to the provisions of Section 28 hereof, this
Section 23 shall apply if a change "in the ownership or effective control" of
the Bank or "in the ownership of a substantial portion of the assets" of the
Bank occurs within the meaning of section 280G of the Code. If this Section 23
applies, then with respect to any taxable year in which the Executive shall be
liable for the payment of an excise tax under section 4999 of the Code with
respect to any payment in the nature of compensation made by the Bank, the
Company or any direct or indirect subsidiary or affiliate of the Bank to (or for
the benefit of) the Executive, the Bank shall pay to the Executive an amount
equal to X determined under the following formula:
X = E x P
-------------------------------------------------
1 - [(FI x (1 - SLI)) + SLI + E + M]
where
E = the rate at which the excise tax is assessed under
section 4999 of the Code;
P = the amount with respect to which such excise tax is
assessed, determined without regard to this Section
23;
FI = the highest effective marginal rate of income tax
applicable to the Executive under the Code for the
taxable year in question (taking into account any
phase-out or loss of deductions, personal exemptions
and other similar adjustments);
SLI = the sum of the highest effective marginal rates of
income tax applicable to the Executive under all
applicable state and local laws for the taxable year
in question (taking into account any phase-out or
loss of deductions, personal exemptions and other
similar adjustments); and
M = the highest marginal rate of Medicare tax
applicable to the Executive under the Code for the
taxable year in question.
Attached as Appendix A to this Agreement is an example that illustrates
application of this Section 23. Any payment under this Section 23 shall be
adjusted so as to fully indemnify the Executive on an after-tax basis so that
the Executive would be in the same after-tax financial position in which she
would have been if no excise tax under section 4999 of the Code had been
imposed. With respect to any payment in the nature of compensation that is made
to (or for the benefit of) the Executive under the terms of this Agreement or
otherwise and on which an excise tax under section 4999 of the Code will be
assessed, the payment determined under this Section 23(a) shall be made to the
Executive on the earlier of (i) the date the Bank, the Company or any direct or
indirect subsidiary or affiliate of the Bank is required to withhold such tax,
or (ii) the date the tax is required to be paid by the Executive.
(b) Notwithstanding anything in this Section 23 to the
contrary, in the event that the Executive's liability for the excise tax under
section 4999 of the Code for a taxable year is subsequently determined to be
different than the amount determined by the formula (X + P) x E, where X, P and
E have the meanings provided in Section 23(a), the Executive or the Bank, as the
case may be, shall pay to the other party at the time that the amount of such
excise tax is finally determined, an appropriate amount, plus interest, such
that the payment made under Section 23(a), when increased by the amount of the
payment made to the Executive under this Section 23(b) by the Bank, or when
reduced by the amount of the payment made to the Bank under this Section 23(b)
by the Executive, equals the amount that, it is finally determined, should have
properly been paid to the Executive under Section 23(a). The interest paid under
this Section 23(b) shall be determined at the rate provided under section
1274(b)(2)(B) of the Code. To confirm that the proper amount, if any, was paid
to the Executive under this Section 23, the Executive shall furnish to the Bank
a copy of each tax return which reflects a liability for an excise tax payment
made by the Bank, at least 20 days before the date on which such return is
required to be filed with the Internal Revenue Service.
24. NON-EXCLUSIVITY OF RIGHTS.
Except as otherwise provided herein, nothing in this Agreement
shall prevent or limit the Executive's continuing or future participation in any
plan, program, policy or practice provided by the Bank or any of its affiliated
companies and for which the Executive may qualify, nor shall anything herein
limit or otherwise affect such rights as the Executive may have under any
contract or agreement with the Bank or any of its affiliated companies. Amounts
which are vested benefits or which the Executive is otherwise entitled to
receive under any plan, policy, practice or program of or any contract or
agreement with the Bank or any of its affiliated companies at or subsequent to
the Date of Termination shall be payable in accordance with such plan, policy,
practice or program or contract or agreement except as explicitly modified by
this Agreement. Notwithstanding the foregoing, in the event of a termination of
employment, the amounts provided in Section 4 or Section 5, as applicable, shall
be the Executive's sole remedy for any purported breach of this Agreement by the
Bank.
25. MITIGATION; OTHER CLAIMS.
The Bank's obligation to make the payments provided for in
this Agreement and otherwise to perform its obligations hereunder shall not be
affected by any set-off, counterclaim, recoupment, defense or other claim, right
or action which the Bank may have against the Executive or others. In no event
shall the Executive be obligated to seek other employment or take any other
action by way of mitigation of the amounts payable to the Executive under any of
the provisions of this Agreement and such amounts shall not be reduced whether
or not the Executive obtains other employment.
26. CONFIDENTIAL INFORMATION.
The Executive shall hold in a fiduciary capacity for the
benefit of the Bank all secret or confidential information, knowledge or data
relating to the Bank or any of its affiliated companies, and their respective
businesses, which shall have been obtained by the Executive during the
Executive's employment by the Bank or any of its affiliated companies and which
shall not be or become public knowledge (other than by acts by the Executive or
representatives of the Executive in violation of this Agreement). After
termination of the Executive's employment with the Bank, the Executive shall
not, without the prior written consent of the Bank or as may otherwise be
required by law or legal process, communicate or divulge any such information,
knowledge or data to anyone other than the Bank and those designated by it. For
purposes of this Agreement, secret and confidential information, knowledge or
data relating to the Bank or any of its affiliates, and their respective
business, shall not include any information that is public, publicly available
or available through trade association sources. Notwithstanding any other
provision of this Agreement to the contrary, the Executive acknowledges and
agrees that in the event of a violation or threatened violation of any of the
provisions of this Section 26, the Bank shall have no adequate remedy at law and
shall therefore be entitled to enforce each such provision by temporary or
permanent injunction or mandatory relief obtained in any court of competent
jurisdiction without the necessity of proving damages or posting any bond or
other security, and without prejudice to any other remedies that may be
available at law or in equity.
27. ACCESS TO DOCUMENTS.
The Executive shall have the right to obtain copies of any
Bank or Bank documents that the Executive reasonably believes, in good faith,
are necessary or appropriate in determining her entitlement to, and the amount
of, payments and benefits under this Agreement.
28. REQUIRED REGULATORY PROVISIONS.
The following provisions are included for the purpose of
complying with various laws, rules and regulations applicable to the Bank:
(a) Notwithstanding anything herein contained to the contrary,
in no event shall the aggregate amount of compensation payable to the
Executive under Section 4(b) hereof (exclusive of amounts described in
Sections 4(b)(i) and (ii)) exceed three times the Executive's average
annual total compensation for the last five consecutive calendar years
to end prior to her termination of employment with the Bank (or for her
entire period of employment with the Bank if less than five calendar
years).
(b) Notwithstanding anything herein contained to the contrary,
any payments to the Executive by the Bank, whether pursuant to this
Agreement or otherwise, are subject to and conditioned upon their
compliance with Section 18(k) of the Federal Deposit Insurance Act
("FDI Act"), 12 U.S.C. ss.1828(k), and any regulations promulgated
thereunder.
(c) Notwithstanding anything herein contained to the contrary,
if the Executive is suspended from office and/or temporarily prohibited
from participating in the conduct of the affairs of the Bank pursuant
to a notice served under Section 8(e)(3) or 8(g)(1) of the FDI Act, 12
U.S.C. ss.1818(e)(3) or 1818(g)(1), the Bank's obligations under this
Agreement shall be suspended as of the date of service of such notice,
unless stayed by appropriate proceedings. If the charges in such notice
are dismissed, the Bank, in its discretion, may (i) pay to the
Executive all or part of the compensation withheld while the Bank's
obligations hereunder were suspended and (ii) reinstate, in whole or in
part, any of the obligations which were suspended.
(d) Notwithstanding anything herein contained to the contrary,
if the Executive 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) or 8(g)(1) of the FDI Act, 12 U.S.C.
ss.1818(e)(4) or (g)(1), all prospective obligations of the Bank under
this Agreement shall terminate as of the effective date of the order,
but vested rights and obligations of the Bank and the Executive shall
not be affected.
(e) Notwithstanding anything herein contained to the contrary,
if the Bank is in default (within the meaning of Section 3(x)(1) of the
FDI Act, 12 U.S.C. ss.1813(x)(1), all prospective obligations of the
Bank under this Agreement shall terminate as of the date of default,
but vested rights and obligations of the Bank and the Executive shall
not be affected.
(f) Notwithstanding anything herein contained to the contrary,
all prospective obligations of the Bank hereunder shall be terminated,
except to the extent that a continuation of this Agreement is necessary
for the continued operation of the Bank: (i) by the Director of the OTS
or his or her designee or the FDIC, at the time the FDIC enters into an
agreement to provide assistance to or on behalf of the Bank under the
authority contained in Section 13(c) of the FDI Act, 12 U.S.C.
ss.1823(c); (ii) by the Director of the OTS or his or her designee at
the time such Director or designee approves a supervisory merger to
resolve problems related to the operation of the Bank or when the Bank
is determined by such Director to be in an unsafe or unsound condition.
The vested rights and obligations of the parties shall not be affected.
If and to the extent that any of the foregoing provisions shall cease to be
required by applicable law, rule or regulation, the same shall become
inoperative as though eliminated by formal amendment of this Agreement.
<PAGE>
SIGNATURES
IN WITNESS WHEREOF, JAMAICA SAVINGS BANK FSB. has caused this
Agreement to be executed and its seal to be affixed hereunto by its duly
authorized officer, and the Executive has signed this Agreement, on the 22nd day
of June, 1999.
ATTEST: JAMAICA SAVINGS BANK FSB
By:
Lawrence J. Kane Edward P. Henson
- ---------------- ----------------
Lawrence J. Kane Edward P. Henson
Executive Vice President President
[Seal]
WITNESS:
Joanne Corrigan
---------------
Joanne Corrigan
<PAGE>
STATE OF NEW YORK )
: ss.:
COUNTY OF NASSAU )
On this 22nd day of June, 1999, before me personally came
Edward P. Henson, to me known, who, being by me duly sworn, did depose and say
that he is President of Jamaica Savings Bank FSB, the federally chartered
savings bank described in and which executed the foregoing instrument; that he
knows the seal of said bank; that the seal affixed to said instrument is such
seal; that it was so affixed by order of the Board of Directors of said bank;
and that he signed his name thereto by like order.
Name:
Notary Public
STATE OF NEW YORK )
: ss.:
COUNTY OF NASSAU )
On this 22nd day of June, 1999, before me personally came
Joanne Corrigan, to me known, and known to me to be the individual described in
the foregoing instrument, who, being by me duly sworn, did depose and say that
she resides at the address set forth in said instrument, and that she signed her
name to the foregoing instrument.
Name:
Notary Public
<PAGE>
APPENDIX A
----------
1. INTRODUCTION. Sections 280G and 4999 of the Internal Revenue Code of
1986, as amended ("Code"), impose a 20% non-deductible federal excise tax on a
person if the payments and benefits in the nature of compensation to or for the
benefit of that person that are contingent on a change in the ownership or
effective control of the Company or the Bank or in the ownership of a
substantial portion of the assets of the Company or the Bank (such payments and
benefits are considered "parachute payments" under section 280G) exceed three
times the person's "base amount" under section 280G. Section 23 of the Agreement
provides for the Executive to receive a tax indemnification payment (sometimes
referred to as a "gross-up" payment) if the payments and benefits in the nature
of compensation to or for the benefit of the Executive that are considered
parachute payments cause the imposition of an excise tax under section 4999 of
the Code. Capitalized terms in this Appendix A that are not defined in this
Appendix A have the meaning used in the Employment Agreement with the Executive.
2. PURPOSE. The purpose of this Appendix A is to illustrate how the tax
indemnification or gross-up payment would be computed. The amounts, figures and
rates used in this example are meant to be illustrative and do not reflect the
actual payments and benefits that would be made to the Executive under this
Agreement. For purposes of this example, it is assumed that a change in control
within the meaning of section 280G of the Code has occurred and that:
(a) The value of the insurance benefits required to be provided to a
hypothetical employee "Z" under sections 4(b)(iii) and 5(b) of the
Agreement for medical, dental, life and other insurance benefits
during the unexpired employment period is $23,000.
(b) The annual rate of Z's salary covered by the Agreement is $100,000,
and Z received annual salary increases of 4%, 5% and 6% (i.e., a
three-year average of 5%) for each of the prior three years. Hence,
the amount payable under sections 4(b)(v) and 5(b) of the Agreement
for salary during the unexpired employment period would be $331,013
[$105,000 + $110, 250 + $115,763].
(c) Z received annual bonuses equal to 20% of his salary in each of the
prior three years. Hence, the amount payable under sections 4(b)(v)
and 5(b) of the Agreement for bonuses during the unexpired employment
period would be $66,203 [20% x ($105,000 + $110,250 + $115,763)].
(d) The amount payable under sections 4(b)(vi) and 5(b) of the Agreement
for the present value of the additional RP and BRP accruals during the
unexpired employment period would be $45,000.
(e) The amount payable under sections 4(b)(vii) and 5(b) of the Agreement
for additional contributions to the ESOP, 401(k) Plan and BRP during
the unexpired employment period would be $20,000.
(f) Z's base amount (i.e., average W-2 wages for the five-year period
preceding the change in control) is $87,000.
3. DETERMINE IF Z IS SUBJECT TO AN EXCISE TAX. Z's parachute payments would
total $485,216 [$23,000 + $331,013 + $66,203 + $45,000 + $20,000]. Three times
Z's base amount is $261,000 [3 x $87,000]; accordingly, Z is subject to an
excise tax because $485,216 exceeds $261,000. Z's "excess parachute payments"
under section 280G of the Code are equal to Z's total parachute payments minus
one times Z's base amount, or $398,216 [$485,216 - $87,000]. If Z were not
protected by section 23 of the Agreement, Z would be subjected to an excise tax
of $79,643 [$398,216 x 20%], in addition to ordinary income taxes.
4. Compute Z's Tax Indemnification Payment. Z's tax indemnification payment
under section 23 of the Agreement would be computed pursuant to the following
formula:
E x P .2 x $398,216
X = ------------------------------------ = ----------------------------------
1 - [(FI x (1 - SLI)) + SLI + E + M] 1 - [.368874 + .0685 + .2 + .0145]
where
E = excise tax rate under section 4999 of the Code [20%];
P = the amount with respect to which such excise tax is
assessed determined without regard to section 23 of
the Agreement [$398,216];
FI = the highest effective marginal rate of income tax
applicable to Z under the Code for the taxable year
in question [assumed to be 39.6% in this example, but
in actuality, the rate is adjusted to take into
account any phase-out or loss of deductions, personal
exemptions and other similar adjustments];
SLI = the sum of the highest effective marginal rates of
income tax applicable to Z under applicable state and
local laws for the taxable year in question [assumed
to be 6.85% in this example, but in actuality, the
rate is adjusted to take into account any phase-out
or loss of deductions, personal exemptions and other
similar adjustments]; and
M = the highest marginal rate of Medicare tax applicable
to Z under the Code for the year in question [1.45%].
In this example, the amount of tax indemnification payment due to Z under
section 23 of the Agreement would be $79,643 [.2 x $398,216] divided by 0.348126
[1 - (.368874 + .0685 + .2 + .0145)], or $228,777. Such amount would be payable
in addition to the other amounts payable under the Agreement in order to put Z
in approximately the same after-tax position that Z would have been in if there
were no excise tax imposed under sections 280G and 4999 of the Code. The tax
indemnification to Z of $228,777 would in turn be a parachute payment subject to
excise tax under sections 280G and 4999. Accordingly, Z's actual excess
parachute payment would be $626,993 [$485,216 - $87,000) + $228,777)] resulting
in an excise tax of $125,399 [$626,993 x 20%]. The difference between the
indemnification. payment and the excise tax [$103,378] is an amount equal to the
sum of the income and other applicable taxes due on the indemnification payment
[($228,777 x .368874) + ($228,777 x .0685) + ($228,777 x .0145)], confirming
that the amount of the tax indemnification payment is sufficient to satisfy all
of Z's tax liability resulting from the excess parachute payment.
JAMAICA SAVINGS BANK FSB
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT ("Agreement") is made and entered
into as of June 22, 1999 by and between JAMAICA SAVINGS BANK FSB, a federally
chartered savings bank, having its principal office at 303 Merrick Road,
Lynbrook, New York 11563 ("Bank"), and Teresa Covello, an individual residing at
(address omitted) ("Executive"). This Agreement amends, restates and supersedes
the Termination Agreement dated as of June 27, 1990 and the Supplemental
Termination Agreement dated as of July 9, 1996 by and between the Bank and the
Executive. Any reference to the "Company" in this Agreement shall mean JSB
Financial, Inc. and any successor thereto.
W I T N E S S E T H :
WHEREAS, the Executive is currently serving as Vice President
of the Bank, and the Bank wishes to assure itself of the services of the
Executive for the period provided in this Agreement; and
WHEREAS, the Executive is willing to serve in the employ of
the Bank on the terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the premises and the
mutual covenants and conditions hereinafter set forth, the Bank and the
Executive hereby agree as follows:
1. POSITION AND RESPONSIBILITIES.
During the period of her employment hereunder, the Executive
agrees to serve as Vice President of the Bank. The Executive shall render
administrative and management services to the Bank such as are customarily
performed by persons situated in a similar executive capacity and shall perform
such other duties not inconsistent with her title and office as may be assigned
to her by or under the authority of the Board of Directors of the Bank (the
"Board"). The Executive shall have such authority as is necessary or appropriate
to carry out her assigned duties. Failure to re-elect the Executive as Vice
President of the Bank (or a more senior position) without the consent of the
Executive shall constitute a breach of this Agreement.
2. TERMS.
(a) The period of the Executive's employment under this
Agreement shall be deemed to have commenced as of the date first above written
(the "Effective Date") and shall be for an initial term of three years. Prior to
the first anniversary of the Effective Date of this Agreement and on each
anniversary date thereafter (each, an "Anniversary Date"), the Board shall
review the terms of this Agreement and the Executive's performance of services
hereunder and may, in the absence of objection from the Executive, approve an
extension of the Employment Agreement. In such event, the Employment Agreement
shall be extended to the third anniversary of the relevant Anniversary Date. For
purposes of this Agreement, the term "Employment Period" shall mean the term of
this Agreement plus such extensions as are provided herein.
(b) During the period of her employment hereunder, except for
periods of absence occasioned by illness, disability, holidays, reasonable
vacation periods and reasonable leaves of absence, the Executive shall devote
substantially all of her business time, attention, skill and efforts to the
faithful performance of her duties hereunder including (i) service as Vice
President of the Bank, and, if duly elected, a Director of the Bank, (ii)
performance of such duties not inconsistent with her title and office as may be
assigned to her by or under the authority of the Board or a more senior
executive officer, and (iii) such other activities and services related to the
organization, operation and management of the Bank. During the Employment Period
it shall not be a violation of this Agreement for the Executive to (A) serve on
corporate, civic, industry or charitable boards or committees, (B) deliver
lectures, fulfill speaking engagements or teach at educational institutions and
(C) manage personal investments, so long as such activities do not significantly
interfere with the performance of the Executive's responsibilities as an
employee of the Bank in accordance with this Agreement. It is expressly
understood and agreed that to the extent that any such activities have been
conducted by the Executive prior to the Effective Date, the continued conduct of
such activities (or the conduct of activities similar in nature and scope
thereto) subsequent to the Effective Date shall not thereafter be deemed to
interfere with the performance of the Executive's responsibilities to the Bank.
It is also expressly agreed that the Executive may conduct activities subsequent
to the Effective Date that are generally accepted for an executive in her
position, regardless of whether conducted by the Executive prior to the
Effective Date.
(c) Notwithstanding anything herein contained to the contrary:
(i) the Executive's employment with the Bank may be terminated by the Bank or
the Executive during the term of this Agreement, subject to the terms and
conditions of this Agreement; and (ii) nothing in this Agreement shall mandate
or prohibit a continuation of the Executive's employment following the
expiration of the term of this Agreement upon such terms and conditions as the
Board and the Executive may mutually agree.
(d) For all purposes of this Agreement, the term "Unexpired
Employment Period" as of any date shall mean the period beginning on such date
and ending on the Anniversary Date on which the Employment Period (as extended
pursuant to Section 2(a) of this Agreement) is then scheduled to expire.
3. COMPENSATION AND REIMBURSEMENT.
(a) The compensation specified under this Agreement shall
constitute the salary and benefits paid for the duties described in Section 1.
The Bank shall pay the Executive as compensation a salary at an annual rate of
not less than (salary omitted) per year or such higher rate as may be prescribed
by or under the authority of the Board ("Base Salary"). The Base Salary payable
under this Section 3 shall be paid in approximately equal installments in
accordance with the Bank's customary payroll practices. During the period of
this Agreement, the Executive's Base Salary shall be reviewed at least annually;
the first such review will be made no later than one year from the date of this
Agreement. Such review shall be conducted by a Committee designated by the
Board, and the Board may increase the Executive's Base Salary, which increased
amount shall be considered the Executive's "Base Salary" for purposes of this
Agreement. In no event shall the Executive's annual rate of Base Salary under
this Agreement in effect at a particular time be reduced without her prior
written consent. In addition to the Base Salary provided in this Section 3(a),
the Bank shall provide the Executive at no cost to the Executive with all such
other benefits as are provided uniformly to permanent full-time employees of the
Bank.
(b) The Bank will provide the Executive with employee benefit
plans, arrangements and perquisites substantially equivalent to those in which
the Executive was participating or otherwise deriving benefit from immediately
prior to the beginning of the term of this Agreement, and the Bank will not,
without the Executive's prior written consent, make any changes in such plans,
arrangements or perquisites which would adversely affect the Executive's rights
or benefits thereunder. Without limiting the generality of the foregoing
provisions of this Subsection (b), the Executive will be entitled to participate
in or receive benefits under any employee benefit plans with respect to which
the Executive satisfies the eligibility requirements, including, but not limited
to, the Retirement Plan of Jamaica Savings Bank FSB ("RP"), the Incentive
Savings Plan of Jamaica Savings Bank FSB ("ISP"), the Jamaica Savings Bank FSB
Employee Stock Ownership Plan ("ESOP"), the Benefit Restoration Plan of Jamaica
Savings Bank FSB ("BRP"), the JSB Financial, Inc. 1990 Stock Option Plan, the
JSB Financial, Inc. 1996 Stock Option Plan, retirement plans, supplemental
retirement plans, pension plans, profit-sharing plans, group life, health
(including hospitalization, medical and major medical), dental, accidental death
and dismemberment, travel accident and short-term disability insurance plans, or
any other employee benefit plan or arrangement made available by the Bank in the
future to its senior executives and key management employees, subject to and on
a basis consistent with the terms, conditions and overall administration of such
plans and arrangements. The Executive will be entitled to incentive compensation
and bonuses as provided in any plan of the Bank in which the Executive is
eligible to participate. Nothing paid to the Executive under any such plan or
arrangement will be deemed to be in lieu of other compensation to which the
Executive is entitled under this Agreement.
(c) The Executive's principal place of employment shall be at
the Bank's executive offices at the address first above written, or at such
other location in New York City or in Nassau County or Suffolk County at which
the Bank shall maintain its principal executive offices, or at such other
location as the Board and the Executive may mutually agree upon. The Bank shall
provide the Executive, at her principal place of employment with support
services and facilities suitable to her position with the Bank and necessary or
appropriate in connection with the performance of her assigned duties under this
Agreement. The Bank shall reimburse the Executive for her ordinary and necessary
business expenses, including, without limitation, fees for memberships in such
clubs and organizations as the Executive and the Board shall mutually agree are
necessary and appropriate for business purposes, and travel and entertainment
expenses, incurred in connection with the performance of her duties under this
Agreement, upon presentation to the Bank of an itemized account of such expenses
in such form as the Bank may reasonably require.
4. PAYMENTS TO THE EXECUTIVE UPON AN EVENT OF TERMINATION.
The provisions of this Section shall in all respects be
subject to the terms and conditions stated in Sections 9 and 28.
(a) Upon the occurrence of an Event of Termination (as herein
defined) during the Executive's term of employment under this Agreement, the
provisions of this Section shall apply. As used in this Agreement, an "Event of
Termination" shall mean and include any one or more of the following: (i) the
termination by the Bank or the Company of the Executive's full-time employment
hereunder for any reason other than: following a Change in Control, as defined
in Section 5; for Disability, as defined in Section 6; for Retirement, as
defined in Section 8; for Cause, as defined in Section 9; or upon the
Executive's death; or (ii) unless consented to by the Executive, the Executive's
voluntary resignation from the Bank's employ, upon any: (A) failure to elect or
re-elect or to appoint or re-appoint the Executive as Vice President of the
Bank, (B) material adverse change in the Executive's function, duties, or
responsibilities, which change would cause the Executive's position to become
one of lesser responsibility, importance, or scope from the position and
attributes thereof described in Section 1, above (and any such material change
shall be deemed a continuing breach of this Agreement), (C) relocation of the
Executive's principal place of employment by more than 30 miles from its
location at the Effective Date of this Agreement, or a material reduction in the
benefits and perquisites to the Executive from those being provided as of the
Effective Date of this Agreement, (D) liquidation or dissolution of the Bank or
the Company, or (E) material breach of this Agreement by the Bank. Upon the
occurrence of any event described in clauses (A), (B), (C), (D) or (E), above,
the Executive shall have the right to elect to terminate her employment under
this Agreement by resignation upon written notice pursuant to Section 10 given
within a reasonable period of time not to exceed, except in case of a continuing
breach, four calendar months after the event giving rise to said right to elect.
(b) Upon the occurrence of an Event of Termination as set
forth in Section 4(a), on the Date of Termination, as defined in Section 10, the
Bank shall be obligated to pay, or to provide, the Executive, or, in the event
of her subsequent death, to her surviving spouse or such other beneficiary or
beneficiaries as the Executive may designate in writing, or if neither her
estate, as severance pay or liquidated damages, or both, the benefits provided
below and a payment equal to the sum of the payments set forth below:
(i) payment of the sum of (A) the Executive's annual Base
Salary through the Date of Termination to the extent not theretofore
paid and (B) any compensation previously deferred by the Executive
(together with any accrued interest or earnings thereon) and any
accrued vacation pay, in each case to the extent not theretofore paid
(the sum of the amounts described in clauses (A) and (B) shall be
hereinafter referred to as the "Accrued Obligations");
(ii) the benefits, if any, to which the Executive is entitled
as a former employee under the Bank's or the Company's employee benefit
plans and programs and compensation plans and programs;
(iii) continued group life, health (including hospitalization,
medical and major medical), dental, accidental death and dismemberment,
travel accident and short-term disability insurance benefits as
provided by the Bank or the Company, in addition to that provided
pursuant to Section 4(b)(ii), if and to the extent necessary to provide
for the Executive, for the remaining Unexpired Employment Period,
coverage equivalent to the coverage to which she would have been
entitled if she had continued working for the Bank during the remaining
Unexpired Employment Period at the highest annual rate of salary
achieved during the Employment Period; provided, however, if the
Executive has obtained group life, health (including hospitalization,
medical and major medical), dental, accidental death and dismemberment,
travel accident and/or short-term disability insurance benefits
coverage from another source, the Executive may, as of any month, make
an irrevocable election to forego the continued coverage that would
otherwise be provided hereunder for the remaining Unexpired Employment
Period, or any portion thereof, in which case the Bank or the Company,
upon receipt of the Executive's irrevocable election, shall pay the
Executive an amount equal to the estimated cost to the Bank or the
Company of providing such coverage during such period;
(iv) if and to the extent not already provided under Sections
4(b)(ii) and 4(b)(iii), continued health (including hospitalization,
medical and major medical) and dental insurance benefits to the extent
maintained by the Bank or the Company for its employees or retirees
during the remainder of the Executive's lifetime and the lifetime of
her spouse, if any, for so long as the Executive continues to reimburse
the Bank for the cost of such continued coverage;
(v) a lump sum payment, as liquidated damages, in an amount
equal to the Base Salary and bonus or other incentive compensation that
the Executive would have earned if the Executive had continued working
for the Bank and the Company during the remaining Unexpired Employment
Period (A) at the highest annual rate of Base Salary and bonus or other
incentive compensation achieved by the Executive during the three-year
period immediately preceding the Executive's Date of Termination,
except that (B) in the case of a Change in Control, such lump sum shall
be determined based upon the Base Salary and the bonus or other
incentive compensation, respectively, that the Executive would have
been paid during the remaining Unexpired Employment Period including
the assumed increases referred to in clauses (i) and (ii) of Section
5(b);
(vi) a lump sum payment in an amount equal to the excess, if
any, of: (A) the present value of the pension benefits to which the
Executive would be entitled under the RP and the BRP (and under any
other qualified and non-qualified defined benefit plans maintained by
the Bank or the Company covering the Executive) as if she had continued
working for the Bank during the remaining Unexpired Employment Period
(x) at the highest annual rate of Base Salary and, if applicable, the
highest bonus or other incentive compensation, respectively, achieved
by the Executive during the three-year period immediately preceding the
Executive's Date of Termination, except that (y) in the case of a
Change in Control, such lump sum shall be determined based upon the
Base Salary and, if applicable, the highest bonus or other incentive
compensation, respectively, that the Executive would have been paid
during the remaining Unexpired Employment Period including the assumed
increases referred to in clauses (i) and (ii) of Section 5(b), and (z)
in the case of a Change in Control, as if three additional years are
added to the Executive's age and years of creditable service under the
RP and the BRP and after taking into account any other compensation
required to be taken into account under the RP and the BRP (and any
other qualified and non-qualified defined benefit plans of the Bank or
the Company, as applicable), over (B) the present value of the pension
benefits to which she is actually entitled under the RP and the BRP
(and any other qualified and non-qualified defined benefit plans) as of
her Date of Termination, where such present values are to be determined
using a discount rate of 6% and the mortality tables prescribed under
section 72 of the Internal Revenue Code of 1986, as amended ("Code");
and
(vii) a lump sum payment in an amount equal to the
contributions that would have been made by the Bank or the Company on
the Executive's behalf to the ISP and the ESOP and to the BRP with
respect to such ISP and ESOP contributions (and to any other qualified
and non-qualified defined contribution plans maintained by the Bank or
the Company covering the Executive) as if the Executive had continued
working for the Bank and the Company during the remaining Unexpired
Employment Period making the maximum amount of employee contributions
required, if any, under such plan or plans and earning (A) the highest
annual rate of Base Salary and, if applicable, the highest bonus or
other incentive compensation, respectively, achieved by the Executive
during the three-year period immediately preceding the Executive's Date
of Termination, except that (B) in the case of a Change in Control,
such lump sum shall be determined based upon the Base Salary and, if
applicable, the bonus or other incentive compensation, respectively,
that the Executive would have been paid during the remaining Unexpired
Employment Period including the assumed increases referred to in
clauses (i) and (ii) of Section 5(b).
The benefits to be provided under, and the amounts payable pursuant to, this
Section 4 shall be provided and be payable without regard to proof of damages
and without regard to the Executive's efforts, if any, to mitigate damages. The
Bank and the Executive hereby stipulate that the damages which may be incurred
by the Executive following any such termination of employment are not capable of
accurate measurement as of the date first above written and that such liquidated
damages constitute reasonable damages under the circumstances.
(c) Payments to the Executive under Section 4 shall be made
within ten days of the Executive's Date of Termination.
(d) In the event payments are made under Section 4 or Section
5, the Executive may select an individual or firm to provide her with reasonable
outplacement counseling services, and the Bank shall pay for the costs of such
services; provided, however, that the cost to the Bank of such outplacement
counseling services shall not exceed 25% of the Executive's Base Salary.
5. CHANGE IN CONTROL.
(a) No benefit shall be payable under this Section 5 unless
there shall have been a Change in Control of the Bank or the Company, as set
forth below. For purposes of this Agreement, a "Change in Control" of the Bank
or the Company shall mean any one or more of the following:
(i) An event of a nature that would be required to be reported
in response to Item l(a) of the current report on Form 8-K, as in
effect on the date hereof, pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act");
(ii) An event of a nature that results in a Change in Control
of the Bank or the Company within the meaning of the Home Owners' Loan
Act of 1933, as amended, or the Change in Bank Control Act of 1978, as
amended, as applicable, and the Rules and Regulations promulgated by
the Office of Thrift Supervision ("OTS") or its predecessor agency, the
Federal Deposit Insurance Corporation ("FDIC") or the Board of
Governors of the Federal Reserve System ("FRB"), as the case may be, as
in effect on the date hereof, but excluding any such Change in Control
resulting from the purchase of securities by the Company or the Bank's
or the Company's tax-qualified employee benefit plans and trusts;
(iii) If any "person" (as the term is used in Sections 13(d)
and 14(d) of the Exchange Act) is or becomes the "beneficial owner" (as
defined in Rule 13d-3 under the Exchange Act), directly or indirectly,
of securities of the Bank or the Company representing 20% or more of
the Bank's or the Company's outstanding securities except for any
securities of the Bank purchased by the Company in connection with the
initial conversion of the Bank from mutual to stock form (the
"Conversion") and any securities purchased by the Company or the Bank's
or the Company's tax-qualified employee benefit plans and trusts;
(iv) If the individuals who constitute the Board on the date
hereof (the "Incumbent Board") cease for any reason to constitute at
least a majority of the Board, provided, however, that any person
becoming a director subsequent to the date hereof whose election or
nomination for election by the Company's stockholders, was approved by
a vote of at least three-quarters of the directors then comprising the
Incumbent Board shall be considered as though he or she were a member
of the Incumbent Board, but excluding, for this purpose, any such
person whose initial assumption of office occurs as a result of an
actual or threatened election contest with respect to the election or
removal of directors or other actual or threatened solicitation of
proxies or consents by or on behalf of a person other than the Board;
(v) A merger, consolidation, reorganization, sale of all or
substantially all the assets of the Bank or the Company or similar
transaction occurs in which the Bank or the Company is not the
resulting entity, other than a transaction following which (A) at least
51% of the equity ownership interests of the entity resulting from such
transaction are beneficially owned (within the meaning of Rule 13d-3
promulgated under Exchange Act) in substantially the same relative
proportions by persons who, immediately prior to such transaction,
beneficially owned (within the meaning of Rule 13d-3 promulgated under
the Exchange Act) at least 51% of the outstanding equity ownership
interests in the Bank or the Company and (B) at least 51% of the
securities entitled to vote generally in the election of directors of
the entity resulting from such transaction are beneficially owned
(within the meaning of Rule 13d-3 promulgated under the Exchange Act)
in substantially the same relative proportions by persons who,
immediately prior to such transaction, beneficially owned (within the
meaning of Rule 13d-3 promulgated under the Exchange Act) at least 51%
of the securities entitled to vote generally in the election of
directors of the Bank or the Company;
(vi) A proxy statement shall be distributed soliciting proxies
from stockholders of the Company, by someone other than the current
management of the Company, seeking stockholder approval of a plan of
reorganization, merger or consolidation of the Company or the Bank or
similar transaction with one or more corporations as a result of which
the outstanding shares of the class of securities then subject to such
plan or transaction are exchanged for or converted into cash or
property or securities not issued by the Bank or the Company; or
(vii) A tender offer is completed for 20% or more of the
voting securities of the Bank or Company then outstanding.
The "Change in Control Date" shall mean the date during the Employment Period on
which a Change in Control occurs. Anything in this Agreement to the contrary
notwithstanding, if the Executive's employment with the Company is terminated
and if it is reasonably demonstrated by the Executive that such termination of
employment (1) was at the request of a third party who has taken steps
reasonably calculated to effect a Change in Control or (2) otherwise arose in
connection with or anticipation of a Change in Control, then for all purposes of
this Agreement the "Change in Control Date" shall mean the date immediately
prior to the date of such termination of employment.
(b) If any of the events described in Section 5(a)
constituting a Change in Control have occurred or the Board has determined that
a Change in Control has occurred, the Executive shall be entitled to the
payments and the benefits provided below on the Change in Control Date. The
amounts payable and the benefits to be provided under this Section 5(b) to the
Executive shall consist of the payments and benefits that would be due to the
Executive and the Executive's family under Section 4(b) for the Unexpired
Employment Period as if an Event of Termination under Section 4(a) had occurred
on the Change in Control Date. For purposes of determining the payments and
benefits due under this Section 5(b), when calculating the payments due and
benefits to be provided for the Unexpired Employment Period, it shall be assumed
that for each year of the remaining term of this Agreement, the Executive would
have received (i) an annual increase in Base Salary equal to the average
percentage increase in Base Salary received by the Executive for the three-year
period ending with the earlier of (x) the year in which the Change in Control
Date occurs or (y) the year during which a definitive agreement, if any,
governing the Change in Control is executed, with the first such increase
effective as of the January 1st next following such three-year period and the
second and third such increases effective as of the next two anniversaries of
such January 1st, (ii) a bonus or other incentive compensation equal to the
highest percentage rate of bonus or incentive compensation paid to the Executive
during the three-year period referred to in clause (i) of this Section 5(b)
times the Base Salary that the Executive would have been paid during the
remaining term of this Agreement including the assumed increases referred to in
clause (i) of this Section 5(b), (iii) the maximum contributions that could be
made by or on behalf of the Executive with respect to any employee benefit plans
and programs maintained by the Company and the Bank based upon the Base Salary
and, if applicable, the bonus or other incentive compensation, respectively,
that the Executive would have been paid during the remaining term of this
Agreement including the assumed increases referred to in clauses (i) and (ii) of
this Section 5(b), and (iv) the present value of the pension benefits to which
the Executive is entitled under Section 4(b)(vi) with respect to the RP and the
BRP (and under any other qualified and non-qualified defined benefit plans
maintained by the Bank or the Company covering the Executive) shall be
determined as if she had continued working for the Bank during the remaining
Unexpired Employment Period and shall be based upon the Base Salary and, if
applicable, the bonus or other incentive compensation, respectively, that the
Executive would have been paid during the remaining term of this Agreement
including the assumed increases referred to in clauses (i) and (ii) of this
Section 5(b). The benefits to be provided under, and the amounts payable
pursuant to, this Section 5 shall be provided and be payable without regard to
proof of damages and without regard to the Executive's efforts, if any, to
mitigate damages. The Bank and the Executive hereby stipulate that the damages
which may be incurred by the Executive following any Change in Control are not
capable of accurate measurement as of the date first above written and that such
liquidated damages constitute reasonable damages under the circumstances.
(c) Payments under Section 5(b) shall be made to the Executive
on the Change in Control Date. Such payments shall be made regardless of whether
the Executive's employment terminates.
6. TERMINATION FOR DISABILITY.
(a) In the event of Termination for Disability, the Executive
shall receive the benefits provided in Section 6(b); provided, however, that the
benefits provided under Section 6(b) shall not be deemed to be in lieu of the
benefits she is otherwise entitled as a former employee under the Bank or the
Company's employee plans and programs. For purposes of this Agreement, the
Executive may be terminated for disability only if (i) the Executive shall have
been absent from her duties with the Bank on a full-time basis for at least six
consecutive months, or (ii) a majority of the members of the Board acting in
good faith determine that, based upon competent and independent medical evidence
presented by a physician or physicians agreed upon by the parties, the
Executive's physical or mental condition is such that she is totally and
permanently incapable of engaging in any substantial gainful employment based
upon her education, training and experience; provided, however, that on and
after the earliest date on which a Change in Control of the Bank or the Company
as defined in Section 5 occurs, such a determination shall require the
affirmative vote of at least three-fourths of the members of the Board acting in
good faith and such vote shall not be made prior to the expiration of a 60-day
period following the date on which the Board shall, by written notice to the
Executive, furnish her a statement of its grounds for proposing to make such
determination, during which period the Executive shall be afforded a reasonable
opportunity to make oral and written presentations to the members of the Board,
and to be represented by her legal counsel at such presentations, to refute the
grounds for the proposed determination.
(b) The Bank will pay the Executive as Disability pay, a
bi-weekly payment equal to 100% of the Executive's bi-weekly annual rate of Base
Salary in effect on the date of the Executive's Termination for Disability. In
addition, the Bank will cause to be continued insurance coverage, including
group life, health (including hospitalization, medical and major medical),
dental, accidental death and dismemberment, travel accident and short-term
disability coverage substantially identical to the coverage maintained by the
Bank or the Company for the Executive prior to her Termination for Disability.
The Disability pay and coverages shall commence on the effective date of the
Executive's termination and shall cease upon the earliest to occur of: (i) the
date the Executive returns to the full-time employment of the Bank, in the same
capacity as she was employed prior to her Termination for Disability and
pursuant to an employment agreement between the Executive and the Bank; (ii) the
Executive's full-time employment by another employer; (iii) the Executive's
attaining the normal age of retirement or receiving benefits under the RP or
other defined benefit pension plan of the Bank or the Company; (iv) the
Executive's death; (v) the Executive's eligibility to collect payments under the
disability provision of the RP or other defined benefit pension plan of the Bank
or the Company; or (vi) the expiration of the term of this Agreement.
(c) Notwithstanding the foregoing, there will be no reduction
in the compensation otherwise payable to the Executive during any period during
which the Executive is incapable of performing her duties hereunder by reason of
temporary disability.
7. TERMINATION UPON DEATH.
The Executive's employment shall terminate automatically upon
the Executive's death during the Employment Period. In such event, the Executive
and the Executive's legal representatives shall be entitled to the following:
(i) payment of the Executive's "Accrued Obligations;"
(ii) the continuation of all benefits to the Executive's
family and dependents that would have been provided if the Executive
had been entitled to the benefits under Section 4(b)(ii), (iii) and
(iv), and
(iii) the timely payment of any other amounts or benefits
required to be paid or provided or which the Executive is eligible to
receive under any plan, program, policy or practice or contract or
agreement of the Bank and its affiliated companies (all such other
amounts and benefits shall be hereinafter referred to as the "Other
Benefits");
provided, however, that if the Executive dies while in the employment of the
Bank, the amount of life insurance provided to the Executive by the Bank shall
not be less than the lesser of $200,000 or three times the Executive's then
annual Base Salary. Accrued Obligations shall be paid to the Executive's estate
or beneficiary, as applicable, in a lump sum cash payment within ten days of the
Date of Termination. With respect to the provision of Other Benefits after the
Change in Control Date, the term Other Benefits as utilized in this Section 7
shall include, without limitation, that the Executive's estate and/or
beneficiaries shall be entitled to receive, benefits at least equal to the most
favorable benefits provided by the Bank and affiliated companies to the estates
and beneficiaries of peer executives of the Bank and such affiliates companies
under such plans, programs, practices and policies relating to death benefits,
if any, as in effect with respect to other peer executives and their
beneficiaries at any time during the 120-day period immediately preceding the
Change in Control Date.
8. TERMINATION UPON RETIREMENT.
Termination by the Bank of the Executive based on "Retirement"
shall mean termination in accordance with the Company's or the Bank's retirement
policy or in accordance with any retirement arrangement established with the
Executive's consent with respect to him. Upon termination of the Executive upon
Retirement, the Executive shall be entitled to all benefits under the RP and any
other retirement plan of the Bank or the Company and other plans to which the
Executive is a party, and the Executive shall be entitled to the benefits, if
any, that would be payable to her as a former employee under the Bank's or the
Company's employee benefit plans and programs and compensation plans and
programs.
9. TERMINATION FOR CAUSE.
The terms "Termination for Cause" or "Cause" shall mean
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 any material breach of
this Agreement, in such case as measured against standards generally prevailing
at the relevant time in the savings and community banking industry. For purposes
of this Section, no act, or the failure to act, on the Executive's part shall be
"willful" unless done, or omitted to be done, in bad faith and without
reasonable belief that the action or omission was in the best interest of the
Bank or its affiliates. Any act, or failure to act, based upon authority given
pursuant to a resolution duly adopted by the Board or based upon the written
advice of counsel for the Bank shall be conclusively presumed to be done, or
omitted to be done, by the Executive in good faith and in the best interests of
the Bank. Notwithstanding the foregoing, the Executive shall not be deemed to
have been terminated for Cause unless and until there shall have been delivered
to her a Notice of Termination which shall include a copy of a resolution duly
adopted by the affirmative vote of not less than three-fourths of the members of
the Board at a meeting of the Board called and held for that purpose (after
reasonable notice to the Executive and an opportunity for him, together with
counsel, to be heard before the Board), finding that in the good faith opinion
of the Board, the Executive was guilty of conduct justifying Termination for
Cause and specifying the particulars thereof in detail. The Executive shall not
have the right to receive compensation or other benefits for any period after
Termination for Cause.
10. NOTICE.
(a) Any purported termination by the Bank or by the Executive
shall be communicated by a Notice of Termination to the other party hereto. For
purposes of this Agreement, a "Notice of Termination" shall mean a written
notice which shall indicate the specific termination provision in this Agreement
relied upon and shall set forth in reasonable detail the facts and circumstances
claimed to provide a basis for termination of the Executive's employment under
the provision so indicated.
(b) Subject to Section 10(c), "Date of Termination" shall mean
(A) if the Executive's employment is terminated for Disability, 30 days after a
Notice of Termination is given (provided that she shall not have returned to the
performance of her duties on a full-time basis during such 30-day period), and
(B) if her employment is terminated for any other reason, the date specified in
the Notice of Termination (which, in the case of a Termination for Cause, shall
be immediate).
(c) If, within 30 days after any Notice of Termination is
given, the party receiving such Notice of Termination notifies the other party
that a dispute exists concerning the termination, then, except upon the
occurrence of a Change in Control and voluntary termination by the Executive in
which case the Date of Termination shall be the date specified in the Notice,
the Date of Termination shall be the date on which the dispute is finally
determined, either by mutual written agreement of the parties, by a binding
arbitration award, or by a final judgment, order or decree of a court of
competent jurisdiction (the time for appeal therefrom having expired and no
appeal having been perfected) and provided further that the Date of Termination
shall be extended by a notice of dispute only if such notice is given in good
faith and the party giving such notice pursues the resolution of such dispute
with reasonable diligence. Notwithstanding the pendency of any such dispute, the
Bank will continue to pay the Executive her full compensation in effect when the
notice giving rise to the dispute was given (including, but not limited to, Base
Salary) and continue her as a participant in all compensation, benefit and
insurance plans in which she was participating when the notice of dispute was
given, until the dispute is finally resolved in accordance with this Agreement.
Amounts paid under this Section are in addition to all other amounts due under
this Agreement and shall not be offset against or reduce any other amounts due
under this Agreement.
(d) The Bank may terminate the Executive's employment at any
time, but any termination by the Bank, other than Termination for Cause, shall
not prejudice the Executive's right to compensation or other benefits under this
Agreement or under any other benefit or compensation plans or programs
maintained by the Bank or the Company from time to time. The Executive shall not
have the right to receive compensation or other benefits for any period after a
Termination for Cause as defined in Section 9 hereinabove.
(e) Any communication to a party required or permitted under
this Agreement, including any notice, direction, designation, consent,
instruction, objection or waiver, shall be in writing and shall be deemed to
have been given at such time as it is delivered personally, or five days after
mailing if mailed, postage prepaid, by registered or certified mail, return
receipt requested, addressed to such party at the address listed below or at
such other address as one such party may by written notice specify to the other
party, as follows. If to the Executive, (address omitted); if to the Bank,
Jamaica Savings Bank FSB, 303 Merrick Road, Lynbrook, New York 11563, Attention:
President, with a copy to Thacher Proffitt & Wood, Two World Trade Center, New
York, New York 10048, Attention: Douglas J. McClintock, Esq.
11. POST-TERMINATION OBLIGATIONS.
(a) All payments and benefits to the Executive under this
Agreement shall be subject to the Executive's compliance with paragraph (b) of
this Section 11 during the term of this Agreement and for one full year after
the expiration or termination hereof.
(b) The Executive shall, upon reasonable notice, furnish such
information and assistance to the Bank as may reasonably be required by the Bank
in connection with any litigation in which it or any of its subsidiaries or
affiliates is, or may become, a party; provided, that the Bank reimburses the
Executive for the reasonable value of her time in connection therewith and for
any out-of-pocket costs attributable thereto.
12. COVENANT NOT TO COMPETE.
The Executive hereby covenants and agrees that for a period of
one year following her Date of Termination, if such termination occurs prior to
the end of the term of the Agreement, she shall not, without the written consent
of the Board, become an officer, employee, consultant, director or trustee of
any savings bank, savings and loan association, savings and loan holding
company, bank or bank holding company if such position (a) entails working in
(or providing services in) New York City, Nassau or Suffolk counties or (b)
entails working in (or providing services in) any other county that is both (i)
within the Bank's primary trade (or operating) area at the time in question,
which shall be determined by reference to the Bank's business plan as in effect
from time to time, and (ii) in which the Bank engages in material or substantial
deposit-taking functions or lending activities at such time; provided, however,
that this Section 12 shall not apply if the Executive's employment is terminated
for the reasons set forth in any of Sections 4, 5, 6 or 8.
13. SOURCE OF PAYMENTS.
All payments provided in this Agreement shall be timely paid
in cash or check from the general funds of the Bank.
14. EFFECT ON PRIOR AGREEMENTS.
This Agreement contains the entire understanding between the
parties hereto and supersedes any prior employment agreement between the Bank or
any predecessor of the Bank and the Executive, including the Termination
Agreement dated June 27, 1990 and the Supplemental Termination Agreement dated
July 9, 1996, except that this Agreement shall not affect or operate to reduce
any benefit or compensation inuring to the Executive of a kind elsewhere
provided. No provisions of this Agreement shall be interpreted to mean that the
Executive is subject to receiving fewer benefits than those available to her
without reference to this Agreement.
15. EFFECT OF ACTION UNDER COMPANY AGREEMENT.
Notwithstanding any provision herein to the contrary, to the
extent that full compensation payments and benefits are paid to or received by
the Executive under the Employment Agreement, dated June 22, 1999, as it may be
amended from time to time, between the Executive and the Company, such
compensation payments and benefits paid by the Company will be deemed to satisfy
the corresponding obligations of the Bank under this Agreement.
16. NO ATTACHMENT.
Except as required by law, no right to receive payments under
this Agreement shall be subject to anticipation, commutation, alienation, sale,
assignment, encumbrance, charge, pledge, or hypothecation, or to execution,
attachment, levy, or similar process or assignment by operation of law, and any
attempt, voluntary or involuntary, to affect any such action shall be null,
void, and of no effect.
17. MODIFICATION AND WAIVER.
(a) This Agreement may not be modified or amended except by an
instrument in writing signed by the parties hereto.
(b) No term or condition of this Agreement shall be deemed to
have been waived, nor shall there be any estoppel against the enforcement of any
provision of this Agreement, except by written instrument of the party charged
with such waiver or estoppel. No such written waiver shall be deemed a
continuing waiver unless specifically stated therein, and each such waiver shall
operate only as to the specific term or condition waived and shall not
constitute a waiver of such term or condition for the future as to any act other
than that specifically waived.
18. SUCCESSOR AND ASSIGNS.
This Agreement will inure to the benefit of and be binding
upon the Executive, her legal representatives and testate or intestate
distributees, and the Bank, its successors and assigns, including any successor
by purchase, merger, consolidation or otherwise or a statutory receiver or any
other person or firm or corporation to which all or substantially all of the
assets and business of the Bank may be sold or otherwise transferred. Any such
successor of the Bank shall be deemed to have assumed this Agreement and to have
become obligated hereunder to the same extent as the Bank and the Executive's
obligations hereunder shall continue in favor of such successor.
19. SEVERABILITY.
If, for any reason, any provision of this Agreement, or any
part of any provision, is held invalid, such invalidity shall not affect any
other provision of this Agreement or any part of such provision not held so
invalid, and each such other provision and part thereof shall to the full extent
consistent with law continue in full force and effect.
20. HEADINGS FOR REFERENCE ONLY.
The headings of Sections and paragraphs herein are included
solely for convenience of reference and shall not control the meaning or
interpretation of any of the provisions of this Agreement. Any reference in this
Agreement to a Section or Subsection shall refer to a Section or Subsection of
this Agreement, except as otherwise specified.
21. GOVERNING LAW.
This Agreement shall be governed by the laws of the State of
New York, without reference to conflicts of law principles.
22. INDEMNIFICATION AND ATTORNEYS' FEES.
(a) The Bank shall indemnify, hold harmless and defend the
Executive against reasonable costs, including legal fees, incurred by her in
connection with her consultation with legal counsel or arising out of any
action, suit or proceeding in which she may be involved, as a result of her
efforts, in good faith, to defend or enforce the terms of this Agreement. The
Bank agrees to pay all such costs as they are incurred by the Executive, to the
full extent permitted by law, and without regard to whether the Bank believes
that it has a defense to any action, suit or proceeding by the Executive or that
it is not obligated for any payments under this Agreement.
(b) In the event any dispute or controversy arising under or
in connection with the Executive's termination is resolved in favor of the
Executive, whether by judgment, arbitration or settlement, the Executive shall
be entitled to the payment of all back-pay, including salary, bonuses and any
other cash compensation, fringe benefits and any compensation and benefits due
the Executive under this Agreement.
(c) The Bank shall indemnify, hold harmless and defend the
Executive for any act taken or not taken, or any omission or failure to act, by
her in good faith while performing services for the Bank or the Company to the
same extent and upon the same terms and conditions as other similarly situated
officers and directors of the Bank or the Company. If and to the extent that the
Bank or the Company, maintains, at any time during the Employment Period, an
insurance policy covering the other officers and directors of the Bank or the
Company against lawsuits, the Bank or the Company shall use its best efforts to
cause the Executive to be covered under such policy upon the same terms and
conditions as other similarly situated officers and directors.
23. TAX INDEMNIFICATION.
(a) Subject to the provisions of Section 28 hereof, this
Section 23 shall apply if a change "in the ownership or effective control" of
the Bank or "in the ownership of a substantial portion of the assets" of the
Bank occurs within the meaning of section 280G of the Code. If this Section 23
applies, then with respect to any taxable year in which the Executive shall
be liable for the payment of an excise tax under section 4999 of the Code
with respect to any payment in the nature of compensation made by the Bank,
the Company or any direct or indirect subsidiary or affiliate of the Bank to
(or for the benefit of) the Executive, the Bank shall pay to the Executive an
amount equal to X determined under the following formula:
X = E x P
-------------------------------------------------
1 - [(FI x (1 - SLI)) + SLI + E + M]
where
E = the rate at which the excise tax is assessed under
section 4999 of the Code;
P = the amount with respect to which such excise tax is
assessed, determined without regard to this Section
23;
FI = the highest effective marginal rate of income tax
applicable to the Executive under the Code for the
taxable year in question (taking into account any
phase-out or loss of deductions, personal exemptions
and other similar adjustments);
SLI = the sum of the highest effective marginal rates of
income tax applicable to the Executive under all
applicable state and local laws for the taxable year
in question (taking into account any phase-out or
loss of deductions, personal exemptions and other
similar adjustments); and
M = the highest marginal rate of Medicare tax
applicable to the Executive under the Code for the
taxable year in question.
Attached as Appendix A to this Agreement is an example that illustrates
application of this Section 23. Any payment under this Section 23 shall be
adjusted so as to fully indemnify the Executive on an after-tax basis so that
the Executive would be in the same after-tax financial position in which she
would have been if no excise tax under section 4999 of the Code had been
imposed. With respect to any payment in the nature of compensation that is made
to (or for the benefit of) the Executive under the terms of this Agreement or
otherwise and on which an excise tax under section 4999 of the Code will be
assessed, the payment determined under this Section 23(a) shall be made to the
Executive on the earlier of (i) the date the Bank, the Company or any direct or
indirect subsidiary or affiliate of the Bank is required to withhold such tax,
or (ii) the date the tax is required to be paid by the Executive.
(b) Notwithstanding anything in this Section 23 to the
contrary, in the event that the Executive's liability for the excise tax under
section 4999 of the Code for a taxable year is subsequently determined to be
different than the amount determined by the formula (X + P) x E, where X, P and
E have the meanings provided in Section 23(a), the Executive or the Bank, as the
case may be, shall pay to the other party at the time that the amount of such
excise tax is finally determined, an appropriate amount, plus interest, such
that the payment made under Section 23(a), when increased by the amount of the
payment made to the Executive under this Section 23(b) by the Bank, or when
reduced by the amount of the payment made to the Bank under this Section 23(b)
by the Executive, equals the amount that, it is finally determined, should have
properly been paid to the Executive under Section 23(a). The interest paid under
this Section 23(b) shall be determined at the rate provided under section
1274(b)(2)(B) of the Code. To confirm that the proper amount, if any, was paid
to the Executive under this Section 23, the Executive shall furnish to the Bank
a copy of each tax return which reflects a liability for an excise tax payment
made by the Bank, at least 20 days before the date on which such return is
required to be filed with the Internal Revenue Service.
24. NON-EXCLUSIVITY OF RIGHTS.
Except as otherwise provided herein, nothing in this Agreement
shall prevent or limit the Executive's continuing or future participation in any
plan, program, policy or practice provided by the Bank or any of its affiliated
companies and for which the Executive may qualify, nor shall anything herein
limit or otherwise affect such rights as the Executive may have under any
contract or agreement with the Bank or any of its affiliated companies. Amounts
which are vested benefits or which the Executive is otherwise entitled to
receive under any plan, policy, practice or program of or any contract or
agreement with the Bank or any of its affiliated companies at or subsequent to
the Date of Termination shall be payable in accordance with such plan, policy,
practice or program or contract or agreement except as explicitly modified by
this Agreement. Notwithstanding the foregoing, in the event of a termination of
employment, the amounts provided in Section 4 or Section 5, as applicable, shall
be the Executive's sole remedy for any purported breach of this Agreement by the
Bank.
25. MITIGATION; OTHER CLAIMS.
The Bank's obligation to make the payments provided for in
this Agreement and otherwise to perform its obligations hereunder shall not be
affected by any set-off, counterclaim, recoupment, defense or other claim, right
or action which the Bank may have against the Executive or others. In no event
shall the Executive be obligated to seek other employment or take any other
action by way of mitigation of the amounts payable to the Executive under any of
the provisions of this Agreement and such amounts shall not be reduced whether
or not the Executive obtains other employment.
26. CONFIDENTIAL INFORMATION.
The Executive shall hold in a fiduciary capacity for the
benefit of the Bank all secret or confidential information, knowledge or data
relating to the Bank or any of its affiliated companies, and their respective
businesses, which shall have been obtained by the Executive during the
Executive's employment by the Bank or any of its affiliated companies and which
shall not be or become public knowledge (other than by acts by the Executive or
representatives of the Executive in violation of this Agreement). After
termination of the Executive's employment with the Bank, the Executive shall
not, without the prior written consent of the Bank or as may otherwise be
required by law or legal process, communicate or divulge any such information,
knowledge or data to anyone other than the Bank and those designated by it. For
purposes of this Agreement, secret and confidential information, knowledge or
data relating to the Bank or any of its affiliates, and their respective
business, shall not include any information that is public, publicly available
or available through trade association sources. Notwithstanding any other
provision of this Agreement to the contrary, the Executive acknowledges and
agrees that in the event of a violation or threatened violation of any of the
provisions of this Section 26, the Bank shall have no adequate remedy at law and
shall therefore be entitled to enforce each such provision by temporary or
permanent injunction or mandatory relief obtained in any court of competent
jurisdiction without the necessity of proving damages or posting any bond or
other security, and without prejudice to any other remedies that may be
available at law or in equity.
27. ACCESS TO DOCUMENTS.
The Executive shall have the right to obtain copies of any
Bank or Bank documents that the Executive reasonably believes, in good faith,
are necessary or appropriate in determining her entitlement to, and the amount
of, payments and benefits under this Agreement.
28. REQUIRED REGULATORY PROVISIONS.
The following provisions are included for the purpose of
complying with various laws, rules and regulations applicable to the Bank:
(a) Notwithstanding anything herein contained to the contrary,
in no event shall the aggregate amount of compensation payable to the
Executive under Section 4(b) hereof (exclusive of amounts described in
Sections 4(b)(i) and (ii)) exceed three times the Executive's average
annual total compensation for the last five consecutive calendar years
to end prior to her termination of employment with the Bank (or for her
entire period of employment with the Bank if less than five calendar
years).
(b) Notwithstanding anything herein contained to the contrary,
any payments to the Executive by the Bank, whether pursuant to this
Agreement or otherwise, are subject to and conditioned upon their
compliance with Section 18(k) of the Federal Deposit Insurance Act
("FDI Act"), 12 U.S.C. ss.1828(k), and any regulations promulgated
thereunder.
(c) Notwithstanding anything herein contained to the contrary,
if the Executive is suspended from office and/or temporarily prohibited
from participating in the conduct of the affairs of the Bank pursuant
to a notice served under Section 8(e)(3) or 8(g)(1) of the FDI Act, 12
U.S.C. ss.1818(e)(3) or 1818(g)(1), the Bank's obligations under this
Agreement shall be suspended as of the date of service of such notice,
unless stayed by appropriate proceedings. If the charges in such notice
are dismissed, the Bank, in its discretion, may (i) pay to the
Executive all or part of the compensation withheld while the Bank's
obligations hereunder were suspended and (ii) reinstate, in whole or in
part, any of the obligations which were suspended.
(d) Notwithstanding anything herein contained to the contrary,
if the Executive 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) or 8(g)(1) of the FDI Act, 12 U.S.C.
ss.1818(e)(4) or (g)(1), all prospective obligations of the Bank under
this Agreement shall terminate as of the effective date of the order,
but vested rights and obligations of the Bank and the Executive shall
not be affected.
(e) Notwithstanding anything herein contained to the contrary,
if the Bank is in default (within the meaning of Section 3(x)(1) of the
FDI Act, 12 U.S.C. ss.1813(x)(1), all prospective obligations of the
Bank under this Agreement shall terminate as of the date of default,
but vested rights and obligations of the Bank and the Executive shall
not be affected.
(f) Notwithstanding anything herein contained to the contrary,
all prospective obligations of the Bank hereunder shall be terminated,
except to the extent that a continuation of this Agreement is necessary
for the continued operation of the Bank: (i) by the Director of the OTS
or his or her designee or the FDIC, at the time the FDIC enters into an
agreement to provide assistance to or on behalf of the Bank under the
authority contained in Section 13(c) of the FDI Act, 12 U.S.C.
ss.1823(c); (ii) by the Director of the OTS or his or her designee at
the time such Director or designee approves a supervisory merger to
resolve problems related to the operation of the Bank or when the Bank
is determined by such Director to be in an unsafe or unsound condition.
The vested rights and obligations of the parties shall not be affected.
If and to the extent that any of the foregoing provisions shall cease to be
required by applicable law, rule or regulation, the same shall become
inoperative as though eliminated by formal amendment of this Agreement.
<PAGE>
SIGNATURES
IN WITNESS WHEREOF, JAMAICA SAVINGS BANK FSB. has caused this
Agreement to be executed and its seal to be affixed hereunto by its duly
authorized officer, and the Executive has signed this Agreement, on the 22nd day
of June, 1999.
ATTEST: JAMAICA SAVINGS BANK FSB
By:
Joanne Corrigan Edward P. Henson
- --------------- ----------------
Joanne Corrigan Edward P. Henson
Secretary President
[Seal]
WITNESS:
Teresa Covello
--------------
Teresa Covello
<PAGE>
STATE OF NEW YORK )
: ss.:
COUNTY OF NASSAU )
On this 22nd day of June, 1999, before me personally came
Edward P. Henson, to me known, who, being by me duly sworn, did depose and say
that he is President of Jamaica Savings Bank FSB, the federally chartered
savings bank described in and which executed the foregoing instrument; that he
knows the seal of said bank; that the seal affixed to said instrument is such
seal; that it was so affixed by order of the Board of Directors of said bank;
and that he signed his name thereto by like order.
Name:
Notary Public
STATE OF NEW YORK )
: ss.:
COUNTY OF NASSAU )
On this 22nd day of June, 1999, before me personally came
Teresa Covello, to me known, and known to me to be the individual described in
the foregoing instrument, who, being by me duly sworn, did depose and say that
she resides at the address set forth in said instrument, and that she signed her
name to the foregoing instrument.
Name:
Notary Public
<PAGE>
APPENDIX A
----------
1. INTRODUCTION. Sections 280G and 4999 of the Internal Revenue Code of
1986, as amended ("Code"), impose a 20% non-deductible federal excise tax on a
person if the payments and benefits in the nature of compensation to or for the
benefit of that person that are contingent on a change in the ownership or
effective control of the Company or the Bank or in the ownership of a
substantial portion of the assets of the Company or the Bank (such payments and
benefits are considered "parachute payments" under section 280G) exceed three
times the person's "base amount" under section 280G. Section 23 of the Agreement
provides for the Executive to receive a tax indemnification payment (sometimes
referred to as a "gross-up" payment) if the payments and benefits in the nature
of compensation to or for the benefit of the Executive that are considered
parachute payments cause the imposition of an excise tax under section 4999 of
the Code. Capitalized terms in this Appendix A that are not defined in this
Appendix A have the meaning used in the Employment Agreement with the Executive.
2. PURPOSE. The purpose of this Appendix A is to illustrate how the tax
indemnification or gross-up payment would be computed. The amounts, figures and
rates used in this example are meant to be illustrative and do not reflect the
actual payments and benefits that would be made to the Executive under this
Agreement. For purposes of this example, it is assumed that a change in control
within the meaning of section 280G of the Code has occurred and that:
(a) The value of the insurance benefits required to be provided to a
hypothetical employee "Z" under sections 4(b)(iii) and 5(b) of the
Agreement for medical, dental, life and other insurance benefits
during the unexpired employment period is $23,000.
(b) The annual rate of Z's salary covered by the Agreement is $100,000,
and Z received annual salary increases of 4%, 5% and 6% (i.e., a
three-year average of 5%) for each of the prior three years. Hence,
the amount payable under sections 4(b)(v) and 5(b) of the Agreement
for salary during the unexpired employment period would be $331,013
[$105,000 + $110, 250 + $115,763].
(c) Z received annual bonuses equal to 20% of his salary in each of the
prior three years. Hence, the amount payable under sections 4(b)(v)
and 5(b) of the Agreement for bonuses during the unexpired employment
period would be $66,203 [20% x ($105,000 + $110,250 + $115,763)].
(d) The amount payable under sections 4(b)(vi) and 5(b) of the Agreement
for the present value of the additional RP and BRP accruals during the
unexpired employment period would be $45,000.
(e) The amount payable under sections 4(b)(vii) and 5(b) of the Agreement
for additional contributions to the ESOP, 401(k) Plan and BRP during
the unexpired employment period would be $20,000.
(f) Z's base amount (i.e., average W-2 wages for the five-year period
preceding the change in control) is $87,000.
3. DETERMINE IF Z IS SUBJECT TO AN EXCISE TAX. Z's parachute payments would
total $485,216 [$23,000 + $331,013 + $66,203 + $45,000 + $20,000]. Three times
Z's base amount is $261,000 [3 x $87,000]; accordingly, Z is subject to an
excise tax because $485,216 exceeds $261,000. Z's "excess parachute payments"
under section 280G of the Code are equal to Z's total parachute payments minus
one times Z's base amount, or $398,216 [$485,216 - $87,000]. If Z were not
protected by section 23 of the Agreement, Z would be subjected to an excise tax
of $79,643 [$398,216 x 20%], in addition to ordinary income taxes.
4. Compute Z's Tax Indemnification Payment. Z's tax indemnification payment
under section 23 of the Agreement would be computed pursuant to the following
formula:
E x P .2 x $398,216
X = ------------------------------------ = ----------------------------------
1 - [(FI x (1 - SLI)) + SLI + E + M] 1 - [.368874 + .0685 + .2 + .0145]
where
E = excise tax rate under section 4999 of the Code [20%];
P = the amount with respect to which such excise tax is
assessed determined without regard to section 23 of
the Agreement [$398,216];
FI = the highest effective marginal rate of income tax
applicable to Z under the Code for the taxable year
in question [assumed to be 39.6% in this example, but
in actuality, the rate is adjusted to take into
account any phase-out or loss of deductions, personal
exemptions and other similar adjustments];
SLI = the sum of the highest effective marginal rates of
income tax applicable to Z under applicable state and
local laws for the taxable year in question [assumed
to be 6.85% in this example, but in actuality, the
rate is adjusted to take into account any phase-out
or loss of deductions, personal exemptions and other
similar adjustments]; and
M = the highest marginal rate of Medicare tax applicable
to Z under the Code for the year in question [1.45%].
In this example, the amount of tax indemnification payment due to Z under
section 23 of the Agreement would be $79,643 [.2 x $398,216] divided by 0.348126
[1 - (.368874 + .0685 + .2 + .0145)], or $228,777. Such amount would be payable
in addition to the other amounts payable under the Agreement in order to put Z
in approximately the same after-tax position that Z would have been in if there
were no excise tax imposed under sections 280G and 4999 of the Code. The tax
indemnification to Z of $228,777 would in turn be a parachute payment subject to
excise tax under sections 280G and 4999. Accordingly, Z's actual excess
parachute payment would be $626,993 [$485,216 - $87,000) + $228,777)] resulting
in an excise tax of $125,399 [$626,993 x 20%]. The difference between the
indemnification. payment and the excise tax [$103,378] is an amount equal to the
sum of the income and other applicable taxes due on the indemnification payment
[($228,777 x .368874) + ($228,777 x .0685) + ($228,777 x .0145)], confirming
that the amount of the tax indemnification payment is sufficient to satisfy all
of Z's tax liability resulting from the excess parachute payment.
JAMAICA SAVINGS BANK FSB
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT ("Agreement") is made and entered
into as of June 22, 1999 by and between JAMAICA SAVINGS BANK FSB, a federally
chartered savings bank, having its principal office at 303 Merrick Road,
Lynbrook, New York 11563 ("Bank"), and Bernice Glaz, an individual residing at
(address omitted) ("Executive"). This Agreement amends, restates and supersedes
the Employment Agreement dated as of June 27, 1995 and the Supplemental
Employment Agreement dated as of July 9, 1996 by and between the Bank and the
Executive. Any reference to the "Company" in this Agreement shall mean JSB
Financial, Inc. and any successor thereto.
W I T N E S S E T H :
WHEREAS, the Executive is currently serving as Senior Vice
President of the Bank, and the Bank wishes to assure itself of the services of
the Executive for the period provided in this Agreement; and
WHEREAS, the Executive is willing to serve in the employ of
the Bank on the terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the premises and the
mutual covenants and conditions hereinafter set forth, the Bank and the
Executive hereby agree as follows:
1. POSITION AND RESPONSIBILITIES.
During the period of her employment hereunder, the Executive
agrees to serve as Senior Vice President of the Bank. The Executive shall render
administrative and management services to the Bank such as are customarily
performed by persons situated in a similar executive capacity and shall perform
such other duties not inconsistent with her title and office as may be assigned
to her by or under the authority of the Board of Directors of the Bank (the
"Board"). The Executive shall have such authority as is necessary or appropriate
to carry out her assigned duties. Failure to re-elect the Executive as Senior
Vice President of the Bank (or a more senior position) without the consent of
the Executive shall constitute a breach of this Agreement.
2. TERMS.
(a) The period of the Executive's employment under this
Agreement shall be deemed to have commenced as of the date first above written
(the "Effective Date") and shall be for an initial term of three years. Prior to
the first anniversary of the Effective Date of this Agreement and on each
anniversary date thereafter (each, an "Anniversary Date"), the Board shall
review the terms of this Agreement and the Executive's performance of services
hereunder and may, in the absence of objection from the Executive, approve an
extension of the Employment Agreement. In such event, the Employment Agreement
shall be extended to the third anniversary of the relevant Anniversary Date. For
purposes of this Agreement, the term "Employment Period" shall mean the term of
this Agreement plus such extensions as are provided herein.
(b) During the period of her employment hereunder, except for
periods of absence occasioned by illness, disability, holidays, reasonable
vacation periods and reasonable leaves of absence, the Executive shall devote
substantially all of her business time, attention, skill and efforts to the
faithful performance of her duties hereunder including (i) service as Senior
Vice President of the Bank, and, if duly elected, a Director of the Bank, (ii)
performance of such duties not inconsistent with her title and office as may be
assigned to her by or under the authority of the Board or a more senior
executive officer, and (iii) such other activities and services related to the
organization, operation and management of the Bank. During the Employment Period
it shall not be a violation of this Agreement for the Executive to (A) serve on
corporate, civic, industry or charitable boards or committees, (B) deliver
lectures, fulfill speaking engagements or teach at educational institutions and
(C) manage personal investments, so long as such activities do not significantly
interfere with the performance of the Executive's responsibilities as an
employee of the Bank in accordance with this Agreement. It is expressly
understood and agreed that to the extent that any such activities have been
conducted by the Executive prior to the Effective Date, the continued conduct of
such activities (or the conduct of activities similar in nature and scope
thereto) subsequent to the Effective Date shall not thereafter be deemed to
interfere with the performance of the Executive's responsibilities to the Bank.
It is also expressly agreed that the Executive may conduct activities subsequent
to the Effective Date that are generally accepted for an executive in her
position, regardless of whether conducted by the Executive prior to the
Effective Date.
(c) Notwithstanding anything herein contained to the contrary:
(i) the Executive's employment with the Bank may be terminated by the Bank or
the Executive during the term of this Agreement, subject to the terms and
conditions of this Agreement; and (ii) nothing in this Agreement shall mandate
or prohibit a continuation of the Executive's employment following the
expiration of the term of this Agreement upon such terms and conditions as the
Board and the Executive may mutually agree.
(d) For all purposes of this Agreement, the term "Unexpired
Employment Period" as of any date shall mean the period beginning on such date
and ending on the Anniversary Date on which the Employment Period (as extended
pursuant to Section 2(a) of this Agreement) is then scheduled to expire.
3. COMPENSATION AND REIMBURSEMENT.
(a) The compensation specified under this Agreement shall
constitute the salary and benefits paid for the duties described in Section 1.
The Bank shall pay the Executive as compensation a salary at an annual rate of
not less than (salary omitted) per year or such higher rate as may be prescribed
by or under the authority of the Board ("Base Salary"). The Base Salary payable
under this Section 3 shall be paid in approximately equal installments in
accordance with the Bank's customary payroll practices. During the period of
this Agreement, the Executive's Base Salary shall be reviewed at least annually;
the first such review will be made no later than one year from the date of this
Agreement. Such review shall be conducted by a Committee designated by the
Board, and the Board may increase the Executive's Base Salary, which increased
amount shall be considered the Executive's "Base Salary" for purposes of this
Agreement. In no event shall the Executive's annual rate of Base Salary under
this Agreement in effect at a particular time be reduced without her prior
written consent. In addition to the Base Salary provided in this Section 3(a),
the Bank shall provide the Executive at no cost to the Executive with all such
other benefits as are provided uniformly to permanent full-time employees of the
Bank.
(b) The Bank will provide the Executive with employee benefit
plans, arrangements and perquisites substantially equivalent to those in which
the Executive was participating or otherwise deriving benefit from immediately
prior to the beginning of the term of this Agreement, and the Bank will not,
without the Executive's prior written consent, make any changes in such plans,
arrangements or perquisites which would adversely affect the Executive's rights
or benefits thereunder. Without limiting the generality of the foregoing
provisions of this Subsection (b), the Executive will be entitled to participate
in or receive benefits under any employee benefit plans with respect to which
the Executive satisfies the eligibility requirements, including, but not limited
to, the Retirement Plan of Jamaica Savings Bank FSB ("RP"), the Incentive
Savings Plan of Jamaica Savings Bank FSB ("ISP"), the Jamaica Savings Bank FSB
Employee Stock Ownership Plan ("ESOP"), the Benefit Restoration Plan of Jamaica
Savings Bank FSB ("BRP"), the JSB Financial, Inc. 1990 Stock Option Plan, the
JSB Financial, Inc. 1996 Stock Option Plan, retirement plans, supplemental
retirement plans, pension plans, profit-sharing plans, group life, health
(including hospitalization, medical and major medical), dental, accidental death
and dismemberment, travel accident and short-term disability insurance plans, or
any other employee benefit plan or arrangement made available by the Bank in the
future to its senior executives and key management employees, subject to and on
a basis consistent with the terms, conditions and overall administration of such
plans and arrangements. The Executive will be entitled to incentive compensation
and bonuses as provided in any plan of the Bank in which the Executive is
eligible to participate. Nothing paid to the Executive under any such plan or
arrangement will be deemed to be in lieu of other compensation to which the
Executive is entitled under this Agreement.
(c) The Executive's principal place of employment shall be at
the Bank's executive offices at the address first above written, or at such
other location in New York City or in Nassau County or Suffolk County at which
the Bank shall maintain its principal executive offices, or at such other
location as the Board and the Executive may mutually agree upon. The Bank shall
provide the Executive, at her principal place of employment with support
services and facilities suitable to her position with the Bank and necessary or
appropriate in connection with the performance of her assigned duties under this
Agreement. The Bank shall provide the Executive with an automobile suitable to
the position of Senior Vice President of the Bank, in accordance with prior
practice, and such automobile may be used by the Executive in carrying out her
duties under the Agreement, including commuting between her residence and her
principal place of employment, and other personal use. The Bank shall reimburse
the Executive for her ordinary and necessary business expenses, including,
without limitation, fees for memberships in such clubs and organizations as the
Executive and the Board shall mutually agree are necessary and appropriate for
business purposes, and travel and entertainment expenses, incurred in connection
with the performance of her duties under this Agreement, upon presentation to
the Bank of an itemized account of such expenses in such form as the Bank may
reasonably require.
4. PAYMENTS TO THE EXECUTIVE UPON AN EVENT OF TERMINATION.
The provisions of this Section shall in all respects be subject
to the terms and conditions stated in Sections 9 and 28.
(a) Upon the occurrence of an Event of Termination (as herein
defined) during the Executive's term of employment under this Agreement, the
provisions of this Section shall apply. As used in this Agreement, an "Event of
Termination" shall mean and include any one or more of the following: (i) the
termination by the Bank or the Company of the Executive's full-time employment
hereunder for any reason other than: following a Change in Control, as defined
in Section 5; for Disability, as defined in Section 6; for Retirement, as
defined in Section 8; for Cause, as defined in Section 9; or upon the
Executive's death; or (ii) unless consented to by the Executive, the Executive's
voluntary resignation from the Bank's employ, upon any: (A) failure to elect or
re-elect or to appoint or re-appoint the Executive as Senior Vice President of
the Bank, (B) material adverse change in the Executive's function, duties, or
responsibilities, which change would cause the Executive's position to become
one of lesser responsibility, importance, or scope from the position and
attributes thereof described in Section 1, above (and any such material change
shall be deemed a continuing breach of this Agreement), (C) relocation of the
Executive's principal place of employment by more than 30 miles from its
location at the Effective Date of this Agreement, or a material reduction in the
benefits and perquisites to the Executive from those being provided as of the
Effective Date of this Agreement, (D) liquidation or dissolution of the Bank or
the Company, or (E) material breach of this Agreement by the Bank. Upon the
occurrence of any event described in clauses (A), (B), (C), (D) or (E), above,
the Executive shall have the right to elect to terminate her employment under
this Agreement by resignation upon written notice pursuant to Section 10 given
within a reasonable period of time not to exceed, except in case of a continuing
breach, four calendar months after the event giving rise to said right to elect.
(b) Upon the occurrence of an Event of Termination as set
forth in Section 4(a), on the Date of Termination, as defined in Section 10, the
Bank shall be obligated to pay, or to provide, the Executive, or, in the event
of her subsequent death, to her surviving spouse or such other beneficiary or
beneficiaries as the Executive may designate in writing, or if neither her
estate, as severance pay or liquidated damages, or both, the benefits provided
below and a payment equal to the sum of the payments set forth below:
(i) payment of the sum of (A) the Executive's annual Base
Salary through the Date of Termination to the extent not theretofore
paid and (B) any compensation previously deferred by the Executive
(together with any accrued interest or earnings thereon) and any
accrued vacation pay, in each case to the extent not theretofore paid
(the sum of the amounts described in clauses (A) and (B) shall be
hereinafter referred to as the "Accrued Obligations");
(ii) the benefits, if any, to which the Executive is entitled
as a former employee under the Bank's or the Company's employee benefit
plans and programs and compensation plans and programs;
(iii) continued group life, health (including hospitalization,
medical and major medical), dental, accidental death and dismemberment,
travel accident and short-term disability insurance benefits as
provided by the Bank or the Company, in addition to that provided
pursuant to Section 4(b)(ii), if and to the extent necessary to provide
for the Executive, for the remaining Unexpired Employment Period,
coverage equivalent to the coverage to which she would have been
entitled if she had continued working for the Bank during the remaining
Unexpired Employment Period at the highest annual rate of salary
achieved during the Employment Period; provided, however, if the
Executive has obtained group life, health (including hospitalization,
medical and major medical), dental, accidental death and dismemberment,
travel accident and/or short-term disability insurance benefits
coverage from another source, the Executive may, as of any month, make
an irrevocable election to forego the continued coverage that would
otherwise be provided hereunder for the remaining Unexpired Employment
Period, or any portion thereof, in which case the Bank or the Company,
upon receipt of the Executive's irrevocable election, shall pay the
Executive an amount equal to the estimated cost to the Bank or the
Company of providing such coverage during such period;
(iv) if and to the extent not already provided under Sections
4(b)(ii) and 4(b)(iii), continued health (including hospitalization,
medical and major medical) and dental insurance benefits to the extent
maintained by the Bank or the Company for its employees or retirees
during the remainder of the Executive's lifetime and the lifetime of
her spouse, if any, for so long as the Executive continues to reimburse
the Bank for the cost of such continued coverage;
(v) a lump sum payment, as liquidated damages, in an amount
equal to the Base Salary and bonus or other incentive compensation that
the Executive would have earned if the Executive had continued working
for the Bank and the Company during the remaining Unexpired Employment
Period (A) at the highest annual rate of Base Salary and bonus or other
incentive compensation achieved by the Executive during the three-year
period immediately preceding the Executive's Date of Termination,
except that (B) in the case of a Change in Control, such lump sum shall
be determined based upon the Base Salary and the bonus or other
incentive compensation, respectively, that the Executive would have
been paid during the remaining Unexpired Employment Period including
the assumed increases referred to in clauses (i) and (ii) of Section
5(b);
(vi) a lump sum payment in an amount equal to the excess, if
any, of: (A) the present value of the pension benefits to which the
Executive would be entitled under the RP and the BRP (and under any
other qualified and non-qualified defined benefit plans maintained by
the Bank or the Company covering the Executive) as if she had continued
working for the Bank during the remaining Unexpired Employment Period
(x) at the highest annual rate of Base Salary and, if applicable, the
highest bonus or other incentive compensation, respectively, achieved
by the Executive during the three-year period immediately preceding the
Executive's Date of Termination, except that (y) in the case of a
Change in Control, such lump sum shall be determined based upon the
Base Salary and, if applicable, the highest bonus or other incentive
compensation, respectively, that the Executive would have been paid
during the remaining Unexpired Employment Period including the assumed
increases referred to in clauses (i) and (ii) of Section 5(b), and (z)
in the case of a Change in Control, as if three additional years are
added to the Executive's age and years of creditable service under the
RP and the BRP and after taking into account any other compensation
required to be taken into account under the RP and the BRP (and any
other qualified and non-qualified defined benefit plans of the Bank or
the Company, as applicable), over (B) the present value of the pension
benefits to which she is actually entitled under the RP and the BRP
(and any other qualified and non-qualified defined benefit plans) as of
her Date of Termination, where such present values are to be determined
using a discount rate of 6% and the mortality tables prescribed under
section 72 of the Internal Revenue Code of 1986, as amended ("Code");
and
(vii) a lump sum payment in an amount equal to the
contributions that would have been made by the Bank or the Company on
the Executive's behalf to the ISP and the ESOP and to the BRP with
respect to such ISP and ESOP contributions (and to any other qualified
and non-qualified defined contribution plans maintained by the Bank or
the Company covering the Executive) as if the Executive had continued
working for the Bank and the Company during the remaining Unexpired
Employment Period making the maximum amount of employee contributions
required, if any, under such plan or plans and earning (A) the highest
annual rate of Base Salary and, if applicable, the highest bonus or
other incentive compensation, respectively, achieved by the Executive
during the three-year period immediately preceding the Executive's Date
of Termination, except that (B) in the case of a Change in Control,
such lump sum shall be determined based upon the Base Salary and, if
applicable, the bonus or other incentive compensation, respectively,
that the Executive would have been paid during the remaining Unexpired
Employment Period including the assumed increases referred to in
clauses (i) and (ii) of Section 5(b).
The benefits to be provided under, and the amounts payable pursuant to, this
Section 4 shall be provided and be payable without regard to proof of damages
and without regard to the Executive's efforts, if any, to mitigate damages. The
Bank and the Executive hereby stipulate that the damages which may be incurred
by the Executive following any such termination of employment are not capable of
accurate measurement as of the date first above written and that such liquidated
damages constitute reasonable damages under the circumstances.
(c) Payments to the Executive under Section 4 shall
be made within ten days of the Executive's Date of Termination.
(d) In the event payments are made under Section 4 or Section
5, the Executive may select an individual or firm to provide her with reasonable
outplacement counseling services, and the Bank shall pay for the costs of such
services; provided, however, that the cost to the Bank of such outplacement
counseling services shall not exceed 25% of the Executive's Base Salary.
5. CHANGE IN CONTROL.
(a) No benefit shall be payable under this Section 5 unless
there shall have been a Change in Control of the Bank or the Company, as set
forth below. For purposes of this Agreement, a "Change in Control" of the Bank
or the Company shall mean any one or more of the following:
(i) An event of a nature that would be required to be reported
in response to Item l(a) of the current report on Form 8-K, as in
effect on the date hereof, pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act");
(ii) An event of a nature that results in a Change in Control
of the Bank or the Company within the meaning of the Home Owners' Loan
Act of 1933, as amended, or the Change in Bank Control Act of 1978, as
amended, as applicable, and the Rules and Regulations promulgated by
the Office of Thrift Supervision ("OTS") or its predecessor agency, the
Federal Deposit Insurance Corporation ("FDIC") or the Board of
Governors of the Federal Reserve System ("FRB"), as the case may be, as
in effect on the date hereof, but excluding any such Change in Control
resulting from the purchase of securities by the Company or the Bank's
or the Company's tax-qualified employee benefit plans and trusts;
(iii) If any "person" (as the term is used in Sections 13(d)
and 14(d) of the Exchange Act) is or becomes the "beneficial owner" (as
defined in Rule 13d-3 under the Exchange Act), directly or indirectly,
of securities of the Bank or the Company representing 20% or more of
the Bank's or the Company's outstanding securities except for any
securities of the Bank purchased by the Company in connection with the
initial conversion of the Bank from mutual to stock form (the
"Conversion") and any securities purchased by the Company or the Bank's
or the Company's tax-qualified employee benefit plans and trusts;
(iv) If the individuals who constitute the Board on the date
hereof (the "Incumbent Board") cease for any reason to constitute at
least a majority of the Board, provided, however, that any person
becoming a director subsequent to the date hereof whose election or
nomination for election by the Company's stockholders, was approved by
a vote of at least three-quarters of the directors then comprising the
Incumbent Board shall be considered as though he or she were a member
of the Incumbent Board, but excluding, for this purpose, any such
person whose initial assumption of office occurs as a result of an
actual or threatened election contest with respect to the election or
removal of directors or other actual or threatened solicitation of
proxies or consents by or on behalf of a person other than the Board;
(v) A merger, consolidation, reorganization, sale of all or
substantially all the assets of the Bank or the Company or similar
transaction occurs in which the Bank or the Company is not the
resulting entity, other than a transaction following which (A) at least
51% of the equity ownership interests of the entity resulting from such
transaction are beneficially owned (within the meaning of Rule 13d-3
promulgated under Exchange Act) in substantially the same relative
proportions by persons who, immediately prior to such transaction,
beneficially owned (within the meaning of Rule 13d-3 promulgated under
the Exchange Act) at least 51% of the outstanding equity ownership
interests in the Bank or the Company and (B) at least 51% of the
securities entitled to vote generally in the election of directors of
the entity resulting from such transaction are beneficially owned
(within the meaning of Rule 13d-3 promulgated under the Exchange Act)
in substantially the same relative proportions by persons who,
immediately prior to such transaction, beneficially owned (within the
meaning of Rule 13d-3 promulgated under the Exchange Act) at least 51%
of the securities entitled to vote generally in the election of
directors of the Bank or the Company;
(vi) A proxy statement shall be distributed soliciting proxies
from stockholders of the Company, by someone other than the current
management of the Company, seeking stockholder approval of a plan of
reorganization, merger or consolidation of the Company or the Bank or
similar transaction with one or more corporations as a result of which
the outstanding shares of the class of securities then subject to such
plan or transaction are exchanged for or converted into cash or
property or securities not issued by the Bank or the Company; or
(vii) A tender offer is completed for 20% or more of
the voting securities of the Bank or Company then outstanding.
The "Change in Control Date" shall mean the date during the Employment Period on
which a Change in Control occurs. Anything in this Agreement to the contrary
notwithstanding, if the Executive's employment with the Company is terminated
and if it is reasonably demonstrated by the Executive that such termination of
employment (1) was at the request of a third party who has taken steps
reasonably calculated to effect a Change in Control or (2) otherwise arose in
connection with or anticipation of a Change in Control, then for all purposes of
this Agreement the "Change in Control Date" shall mean the date immediately
prior to the date of such termination of employment.
(b) If any of the events described in Section 5(a)
constituting a Change in Control have occurred or the Board has determined that
a Change in Control has occurred, the Executive shall be entitled to the
payments and the benefits provided below on the Change in Control Date. The
amounts payable and the benefits to be provided under this Section 5(b) to the
Executive shall consist of the payments and benefits that would be due to the
Executive and the Executive's family under Section 4(b) for the Unexpired
Employment Period as if an Event of Termination under Section 4(a) had occurred
on the Change in Control Date. For purposes of determining the payments and
benefits due under this Section 5(b), when calculating the payments due and
benefits to be provided for the Unexpired Employment Period, it shall be assumed
that for each year of the remaining term of this Agreement, the Executive would
have received (i) an annual increase in Base Salary equal to the average
percentage increase in Base Salary received by the Executive for the three-year
period ending with the earlier of (x) the year in which the Change in Control
Date occurs or (y) the year during which a definitive agreement, if any,
governing the Change in Control is executed, with the first such increase
effective as of the January 1st next following such three-year period and the
second and third such increases effective as of the next two anniversaries of
such January 1st, (ii) a bonus or other incentive compensation equal to the
highest percentage rate of bonus or incentive compensation paid to the Executive
during the three-year period referred to in clause (i) of this Section 5(b)
times the Base Salary that the Executive would have been paid during the
remaining term of this Agreement including the assumed increases referred to in
clause (i) of this Section 5(b), (iii) the maximum contributions that could be
made by or on behalf of the Executive with respect to any employee benefit plans
and programs maintained by the Company and the Bank based upon the Base Salary
and, if applicable, the bonus or other incentive compensation, respectively,
that the Executive would have been paid during the remaining term of this
Agreement including the assumed increases referred to in clauses (i) and (ii) of
this Section 5(b), and (iv) the present value of the pension benefits to which
the Executive is entitled under Section 4(b)(vi) with respect to the RP and the
BRP (and under any other qualified and non-qualified defined benefit plans
maintained by the Bank or the Company covering the Executive) shall be
determined as if she had continued working for the Bank during the remaining
Unexpired Employment Period and shall be based upon the Base Salary and, if
applicable, the bonus or other incentive compensation, respectively, that the
Executive would have been paid during the remaining term of this Agreement
including the assumed increases referred to in clauses (i) and (ii) of this
Section 5(b). The benefits to be provided under, and the amounts payable
pursuant to, this Section 5 shall be provided and be payable without regard to
proof of damages and without regard to the Executive's efforts, if any, to
mitigate damages. The Bank and the Executive hereby stipulate that the damages
which may be incurred by the Executive following any Change in Control are not
capable of accurate measurement as of the date first above written and that such
liquidated damages constitute reasonable damages under the circumstances.
(c) Payments under Section 5(b) shall be made to the Executive
on the Change in Control Date. Such payments shall be made regardless of whether
the Executive's employment terminates.
6. TERMINATION FOR DISABILITY.
(a) In the event of Termination for Disability, the Executive
shall receive the benefits provided in Section 6(b); provided, however, that the
benefits provided under Section 6(b) shall not be deemed to be in lieu of the
benefits she is otherwise entitled as a former employee under the Bank or the
Company's employee plans and programs. For purposes of this Agreement, the
Executive may be terminated for disability only if (i) the Executive shall have
been absent from her duties with the Bank on a full-time basis for at least six
consecutive months, or (ii) a majority of the members of the Board acting in
good faith determine that, based upon competent and independent medical evidence
presented by a physician or physicians agreed upon by the parties, the
Executive's physical or mental condition is such that she is totally and
permanently incapable of engaging in any substantial gainful employment based
upon her education, training and experience; provided, however, that on and
after the earliest date on which a Change in Control of the Bank or the Company
as defined in Section 5 occurs, such a determination shall require the
affirmative vote of at least three-fourths of the members of the Board acting in
good faith and such vote shall not be made prior to the expiration of a 60-day
period following the date on which the Board shall, by written notice to the
Executive, furnish her a statement of its grounds for proposing to make such
determination, during which period the Executive shall be afforded a reasonable
opportunity to make oral and written presentations to the members of the Board,
and to be represented by her legal counsel at such presentations, to refute the
grounds for the proposed determination.
(b) The Bank will pay the Executive as Disability pay, a
bi-weekly payment equal to 100% of the Executive's bi-weekly annual rate of Base
Salary in effect on the date of the Executive's Termination for Disability. In
addition, the Bank will cause to be continued insurance coverage, including
group life, health (including hospitalization, medical and major medical),
dental, accidental death and dismemberment, travel accident and short-term
disability coverage substantially identical to the coverage maintained by the
Bank or the Company for the Executive prior to her Termination for Disability.
The Disability pay and coverages shall commence on the effective date of the
Executive's termination and shall cease upon the earliest to occur of: (i) the
date the Executive returns to the full-time employment of the Bank, in the same
capacity as she was employed prior to her Termination for Disability and
pursuant to an employment agreement between the Executive and the Bank; (ii) the
Executive's full-time employment by another employer; (iii) the Executive's
attaining the normal age of retirement or receiving benefits under the RP or
other defined benefit pension plan of the Bank or the Company; (iv) the
Executive's death; (v) the Executive's eligibility to collect payments under the
disability provision of the RP or other defined benefit pension plan of the Bank
or the Company; or (vi) the expiration of the term of this Agreement.
(c) Notwithstanding the foregoing, there will be no reduction
in the compensation otherwise payable to the Executive during any period during
which the Executive is incapable of performing her duties hereunder by reason of
temporary disability.
7. TERMINATION UPON DEATH.
The Executive's employment shall terminate automatically upon
the Executive's death during the Employment Period. In such event, the Executive
and the Executive's legal representatives shall be entitled to the following:
(i) payment of the Executive's "Accrued Obligations;"
(ii) the continuation of all benefits to the Executive's
family and dependents that would have been provided if the Executive
had been entitled to the benefits under Section 4(b)(ii), (iii) and
(iv), and
(iii) the timely payment of any other amounts or benefits
required to be paid or provided or which the Executive is eligible to
receive under any plan, program, policy or practice or contract or
agreement of the Bank and its affiliated companies (all such other
amounts and benefits shall be hereinafter referred to as the "Other
Benefits");
provided, however, that if the Executive dies while in the employment of the
Bank, the amount of life insurance provided to the Executive by the Bank shall
not be less than the lesser of $200,000 or three times the Executive's then
annual Base Salary. Accrued Obligations shall be paid to the Executive's estate
or beneficiary, as applicable, in a lump sum cash payment within ten days of the
Date of Termination. With respect to the provision of Other Benefits after the
Change in Control Date, the term Other Benefits as utilized in this Section 7
shall include, without limitation, that the Executive's estate and/or
beneficiaries shall be entitled to receive, benefits at least equal to the most
favorable benefits provided by the Bank and affiliated companies to the estates
and beneficiaries of peer executives of the Bank and such affiliates companies
under such plans, programs, practices and policies relating to death benefits,
if any, as in effect with respect to other peer executives and their
beneficiaries at any time during the 120-day period immediately preceding the
Change in Control Date.
8. TERMINATION UPON RETIREMENT.
Termination by the Bank of the Executive based on "Retirement"
shall mean termination in accordance with the Company's or the Bank's retirement
policy or in accordance with any retirement arrangement established with the
Executive's consent with respect to him. Upon termination of the Executive upon
Retirement, the Executive shall be entitled to all benefits under the RP and any
other retirement plan of the Bank or the Company and other plans to which the
Executive is a party, and the Executive shall be entitled to the benefits, if
any, that would be payable to her as a former employee under the Bank's or the
Company's employee benefit plans and programs and compensation plans and
programs.
9. TERMINATION FOR CAUSE.
The terms "Termination for Cause" or "Cause" shall mean
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 any material breach of
this Agreement, in such case as measured against standards generally prevailing
at the relevant time in the savings and community banking industry. For purposes
of this Section, no act, or the failure to act, on the Executive's part shall be
"willful" unless done, or omitted to be done, in bad faith and without
reasonable belief that the action or omission was in the best interest of the
Bank or its affiliates. Any act, or failure to act, based upon authority given
pursuant to a resolution duly adopted by the Board or based upon the written
advice of counsel for the Bank shall be conclusively presumed to be done, or
omitted to be done, by the Executive in good faith and in the best interests of
the Bank. Notwithstanding the foregoing, the Executive shall not be deemed to
have been terminated for Cause unless and until there shall have been delivered
to her a Notice of Termination which shall include a copy of a resolution duly
adopted by the affirmative vote of not less than three-fourths of the members of
the Board at a meeting of the Board called and held for that purpose (after
reasonable notice to the Executive and an opportunity for him, together with
counsel, to be heard before the Board), finding that in the good faith opinion
of the Board, the Executive was guilty of conduct justifying Termination for
Cause and specifying the particulars thereof in detail. The Executive shall not
have the right to receive compensation or other benefits for any period after
Termination for Cause.
10. NOTICE.
(a) Any purported termination by the Bank or by the Executive
shall be communicated by a Notice of Termination to the other party hereto. For
purposes of this Agreement, a "Notice of Termination" shall mean a written
notice which shall indicate the specific termination provision in this Agreement
relied upon and shall set forth in reasonable detail the facts and circumstances
claimed to provide a basis for termination of the Executive's employment under
the provision so indicated.
(b) Subject to Section 10(c), "Date of Termination" shall mean
(A) if the Executive's employment is terminated for Disability, 30 days after a
Notice of Termination is given (provided that she shall not have returned to the
performance of her duties on a full-time basis during such 30-day period), and
(B) if her employment is terminated for any other reason, the date specified in
the Notice of Termination (which, in the case of a Termination for Cause, shall
be immediate).
(c) If, within 30 days after any Notice of Termination is
given, the party receiving such Notice of Termination notifies the other party
that a dispute exists concerning the termination, then, except upon the
occurrence of a Change in Control and voluntary termination by the Executive in
which case the Date of Termination shall be the date specified in the Notice,
the Date of Termination shall be the date on which the dispute is finally
determined, either by mutual written agreement of the parties, by a binding
arbitration award, or by a final judgment, order or decree of a court of
competent jurisdiction (the time for appeal therefrom having expired and no
appeal having been perfected) and provided further that the Date of Termination
shall be extended by a notice of dispute only if such notice is given in good
faith and the party giving such notice pursues the resolution of such dispute
with reasonable diligence. Notwithstanding the pendency of any such dispute, the
Bank will continue to pay the Executive her full compensation in effect when the
notice giving rise to the dispute was given (including, but not limited to, Base
Salary) and continue her as a participant in all compensation, benefit and
insurance plans in which she was participating when the notice of dispute was
given, until the dispute is finally resolved in accordance with this Agreement.
Amounts paid under this Section are in addition to all other amounts due under
this Agreement and shall not be offset against or reduce any other amounts due
under this Agreement.
(d) The Bank may terminate the Executive's employment at any
time, but any termination by the Bank, other than Termination for Cause, shall
not prejudice the Executive's right to compensation or other benefits under this
Agreement or under any other benefit or compensation plans or programs
maintained by the Bank or the Company from time to time. The Executive shall not
have the right to receive compensation or other benefits for any period after a
Termination for Cause as defined in Section 9 hereinabove.
(e) Any communication to a party required or permitted under
this Agreement, including any notice, direction, designation, consent,
instruction, objection or waiver, shall be in writing and shall be deemed to
have been given at such time as it is delivered personally, or five days after
mailing if mailed, postage prepaid, by registered or certified mail, return
receipt requested, addressed to such party at the address listed below or at
such other address as one such party may by written notice specify to the other
party, as follows. If to the Executive, (address omitted); if to the Bank,
Jamaica Savings Bank FSB, 303 Merrick Road, Lynbrook, New York 11563, Attention:
President, with a copy to Thacher Proffitt & Wood, Two World Trade Center, New
York, New York 10048, Attention: Douglas J. McClintock, Esq.
11. POST-TERMINATION OBLIGATIONS.
(a) All payments and benefits to the Executive under this
Agreement shall be subject to the Executive's compliance with paragraph (b) of
this Section 11 during the term of this Agreement and for one full year after
the expiration or termination hereof.
(b) The Executive shall, upon reasonable notice, furnish such
information and assistance to the Bank as may reasonably be required by the Bank
in connection with any litigation in which it or any of its subsidiaries or
affiliates is, or may become, a party; provided, that the Bank reimburses the
Executive for the reasonable value of her time in connection therewith and for
any out-of-pocket costs attributable thereto.
12. COVENANT NOT TO COMPETE.
The Executive hereby covenants and agrees that for a period of
one year following her Date of Termination, if such termination occurs prior to
the end of the term of the Agreement, she shall not, without the written consent
of the Board, become an officer, employee, consultant, director or trustee of
any savings bank, savings and loan association, savings and loan holding
company, bank or bank holding company if such position (a) entails working in
(or providing services in) New York City, Nassau or Suffolk counties or (b)
entails working in (or providing services in) any other county that is both (i)
within the Bank's primary trade (or operating) area at the time in question,
which shall be determined by reference to the Bank's business plan as in effect
from time to time, and (ii) in which the Bank engages in material or substantial
deposit-taking functions or lending activities at such time; provided, however,
that this Section 12 shall not apply if the Executive's employment is terminated
for the reasons set forth in any of Sections 4, 5, 6 or 8.
13. SOURCE OF PAYMENTS.
All payments provided in this Agreement shall be timely paid
in cash or check from the general funds of the Bank.
14. EFFECT ON PRIOR AGREEMENTS.
This Agreement contains the entire understanding between the
parties hereto and supersedes any prior employment agreement between the Bank or
any predecessor of the Bank and the Executive, including the Employment
Agreement dated June 27, 1995 and the Supplemental Employment Agreement dated
July 9, 1996, except that this Agreement shall not affect or operate to reduce
any benefit or compensation inuring to the Executive of a kind elsewhere
provided. No provisions of this Agreement shall be interpreted to mean that the
Executive is subject to receiving fewer benefits than those available to her
without reference to this Agreement.
15. EFFECT OF ACTION UNDER COMPANY AGREEMENT.
Notwithstanding any provision herein to the contrary, to the
extent that full compensation payments and benefits are paid to or received by
the Executive under the Employment Agreement, dated June 22, 1999, as it may be
amended from time to time, between the Executive and the Company, such
compensation payments and benefits paid by the Company will be deemed to satisfy
the corresponding obligations of the Bank under this Agreement.
16. NO ATTACHMENT.
Except as required by law, no right to receive payments under
this Agreement shall be subject to anticipation, commutation, alienation, sale,
assignment, encumbrance, charge, pledge, or hypothecation, or to execution,
attachment, levy, or similar process or assignment by operation of law, and any
attempt, voluntary or involuntary, to affect any such action shall be null,
void, and of no effect.
17. MODIFICATION AND WAIVER.
(a) This Agreement may not be modified or amended except by
an instrument in writing signed by the parties hereto.
(b) No term or condition of this Agreement shall be deemed to
have been waived, nor shall there be any estoppel against the enforcement of any
provision of this Agreement, except by written instrument of the party charged
with such waiver or estoppel. No such written waiver shall be deemed a
continuing waiver unless specifically stated therein, and each such waiver shall
operate only as to the specific term or condition waived and shall not
constitute a waiver of such term or condition for the future as to any act other
than that specifically waived.
18. SUCCESSOR AND ASSIGNS.
This Agreement will inure to the benefit of and be binding
upon the Executive, her legal representatives and testate or intestate
distributees, and the Bank, its successors and assigns, including any successor
by purchase, merger, consolidation or otherwise or a statutory receiver or any
other person or firm or corporation to which all or substantially all of the
assets and business of the Bank may be sold or otherwise transferred. Any such
successor of the Bank shall be deemed to have assumed this Agreement and to have
become obligated hereunder to the same extent as the Bank and the Executive's
obligations hereunder shall continue in favor of such successor.
19. SEVERABILITY.
If, for any reason, any provision of this Agreement, or any
part of any provision, is held invalid, such invalidity shall not affect any
other provision of this Agreement or any part of such provision not held so
invalid, and each such other provision and part thereof shall to the full extent
consistent with law continue in full force and effect.
20. HEADINGS FOR REFERENCE ONLY.
The headings of Sections and paragraphs herein are included
solely for convenience of reference and shall not control the meaning or
interpretation of any of the provisions of this Agreement. Any reference in this
Agreement to a Section or Subsection shall refer to a Section or Subsection of
this Agreement, except as otherwise specified.
21. GOVERNING LAW.
This Agreement shall be governed by the laws of the State of
New York, without reference to conflicts of law principles.
22. INDEMNIFICATION AND ATTORNEYS' FEES.
(a) The Bank shall indemnify, hold harmless and defend the
Executive against reasonable costs, including legal fees, incurred by her in
connection with her consultation with legal counsel or arising out of any
action, suit or proceeding in which she may be involved, as a result of her
efforts, in good faith, to defend or enforce the terms of this Agreement. The
Bank agrees to pay all such costs as they are incurred by the Executive, to the
full extent permitted by law, and without regard to whether the Bank believes
that it has a defense to any action, suit or proceeding by the Executive or that
it is not obligated for any payments under this Agreement.
(b) In the event any dispute or controversy arising under or
in connection with the Executive's termination is resolved in favor of the
Executive, whether by judgment, arbitration or settlement, the Executive shall
be entitled to the payment of all back-pay, including salary, bonuses and any
other cash compensation, fringe benefits and any compensation and benefits due
the Executive under this Agreement.
(c) The Bank shall indemnify, hold harmless and defend the
Executive for any act taken or not taken, or any omission or failure to act, by
her in good faith while performing services for the Bank or the Company to the
same extent and upon the same terms and conditions as other similarly situated
officers and directors of the Bank or the Company. If and to the extent that the
Bank or the Company, maintains, at any time during the Employment Period, an
insurance policy covering the other officers and directors of the Bank or the
Company against lawsuits, the Bank or the Company shall use its best efforts to
cause the Executive to be covered under such policy upon the same terms and
conditions as other similarly situated officers and directors.
23. TAX INDEMNIFICATION.
(a) Subject to the provisions of Section 28 hereof, this
Section 23 shall apply if a change "in the ownership or effective control" of
the Bank or "in the ownership of a substantial portion of the assets" of the
Bank occurs within the meaning of section 280G of the Code. If this Section 23
applies, then with respect to any taxable year in which the Executive shall be
liable for the payment of an excise tax under section 4999 of the Code with
respect to any payment in the nature of compensation made by the Bank, the
Company or any direct or indirect subsidiary or affiliate of the Bank to (or for
the benefit of) the Executive, the Bank shall pay to the Executive an amount
equal to X determined under the following formula:
X = E x P
-------------------------------------------------
1 - [(FI x (1 - SLI)) + SLI + E + M]
where
E = the rate at which the excise tax is assessed under
section 4999 of the Code;
P = the amount with respect to which such excise tax
is assessed, determined without regard to this
Section 23;
FI = the highest effective marginal rate of income tax
applicable to the Executive under the Code for the
taxable year in question (taking into account any
phase-out or loss of deductions, personal exemptions
and other similar adjustments);
SLI = the sum of the highest effective marginal rates of
income tax applicable to the Executive under all
applicable state and local laws for the taxable year
in question (taking into account any phase-out or
loss of deductions, personal exemptions and other
similar adjustments); and
M = the highest marginal rate of Medicare tax
applicable to the Executive under the Code for the
taxable year in question.
Attached as Appendix A to this Agreement is an example that illustrates
application of this Section 23. Any payment under this Section 23 shall be
adjusted so as to fully indemnify the Executive on an after-tax basis so that
the Executive would be in the same after-tax financial position in which she
would have been if no excise tax under section 4999 of the Code had been
imposed. With respect to any payment in the nature of compensation that is made
to (or for the benefit of) the Executive under the terms of this Agreement or
otherwise and on which an excise tax under section 4999 of the Code will be
assessed, the payment determined under this Section 23(a) shall be made to the
Executive on the earlier of (i) the date the Bank, the Company or any direct or
indirect subsidiary or affiliate of the Bank is required to withhold such tax,
or (ii) the date the tax is required to be paid by the Executive.
(b) Notwithstanding anything in this Section 23 to the
contrary, in the event that the Executive's liability for the excise tax under
section 4999 of the Code for a taxable year is subsequently determined to be
different than the amount determined by the formula (X + P) x E, where X, P and
E have the meanings provided in Section 23(a), the Executive or the Bank, as the
case may be, shall pay to the other party at the time that the amount of such
excise tax is finally determined, an appropriate amount, plus interest, such
that the payment made under Section 23(a), when increased by the amount of the
payment made to the Executive under this Section 23(b) by the Bank, or when
reduced by the amount of the payment made to the Bank under this Section 23(b)
by the Executive, equals the amount that, it is finally determined, should have
properly been paid to the Executive under Section 23(a). The interest paid under
this Section 23(b) shall be determined at the rate provided under section
1274(b)(2)(B) of the Code. To confirm that the proper amount, if any, was paid
to the Executive under this Section 23, the Executive shall furnish to the Bank
a copy of each tax return which reflects a liability for an excise tax payment
made by the Bank, at least 20 days before the date on which such return is
required to be filed with the Internal Revenue Service.
24. NON-EXCLUSIVITY OF RIGHTS.
Except as otherwise provided herein, nothing in this Agreement
shall prevent or limit the Executive's continuing or future participation in any
plan, program, policy or practice provided by the Bank or any of its affiliated
companies and for which the Executive may qualify, nor shall anything herein
limit or otherwise affect such rights as the Executive may have under any
contract or agreement with the Bank or any of its affiliated companies. Amounts
which are vested benefits or which the Executive is otherwise entitled to
receive under any plan, policy, practice or program of or any contract or
agreement with the Bank or any of its affiliated companies at or subsequent to
the Date of Termination shall be payable in accordance with such plan, policy,
practice or program or contract or agreement except as explicitly modified by
this Agreement. Notwithstanding the foregoing, in the event of a termination of
employment, the amounts provided in Section 4 or Section 5, as applicable, shall
be the Executive's sole remedy for any purported breach of this Agreement by the
Bank.
25. MITIGATION; OTHER CLAIMS.
The Bank's obligation to make the payments provided for in
this Agreement and otherwise to perform its obligations hereunder shall not be
affected by any set-off, counterclaim, recoupment, defense or other claim, right
or action which the Bank may have against the Executive or others. In no event
shall the Executive be obligated to seek other employment or take any other
action by way of mitigation of the amounts payable to the Executive under any of
the provisions of this Agreement and such amounts shall not be reduced whether
or not the Executive obtains other employment.
26. CONFIDENTIAL INFORMATION.
The Executive shall hold in a fiduciary capacity for the
benefit of the Bank all secret or confidential information, knowledge or data
relating to the Bank or any of its affiliated companies, and their respective
businesses, which shall have been obtained by the Executive during the
Executive's employment by the Bank or any of its affiliated companies and which
shall not be or become public knowledge (other than by acts by the Executive or
representatives of the Executive in violation of this Agreement). After
termination of the Executive's employment with the Bank, the Executive shall
not, without the prior written consent of the Bank or as may otherwise be
required by law or legal process, communicate or divulge any such information,
knowledge or data to anyone other than the Bank and those designated by it. For
purposes of this Agreement, secret and confidential information, knowledge or
data relating to the Bank or any of its affiliates, and their respective
business, shall not include any information that is public, publicly available
or available through trade association sources. Notwithstanding any other
provision of this Agreement to the contrary, the Executive acknowledges and
agrees that in the event of a violation or threatened violation of any of the
provisions of this Section 26, the Bank shall have no adequate remedy at law and
shall therefore be entitled to enforce each such provision by temporary or
permanent injunction or mandatory relief obtained in any court of competent
jurisdiction without the necessity of proving damages or posting any bond or
other security, and without prejudice to any other remedies that may be
available at law or in equity.
27. ACCESS TO DOCUMENTS.
The Executive shall have the right to obtain copies of any
Bank or Bank documents that the Executive reasonably believes, in good faith,
are necessary or appropriate in determining her entitlement to, and the amount
of, payments and benefits under this Agreement.
28. REQUIRED REGULATORY PROVISIONS.
The following provisions are included for the purpose of
complying with various laws, rules and regulations applicable to the Bank:
(a) Notwithstanding anything herein contained to the contrary,
in no event shall the aggregate amount of compensation payable to the
Executive under Section 4(b) hereof (exclusive of amounts described in
Sections 4(b)(i) and (ii)) exceed three times the Executive's average
annual total compensation for the last five consecutive calendar years
to end prior to her termination of employment with the Bank (or for her
entire period of employment with the Bank if less than five calendar
years).
(b) Notwithstanding anything herein contained to the contrary,
any payments to the Executive by the Bank, whether pursuant to this
Agreement or otherwise, are subject to and conditioned upon their
compliance with Section 18(k) of the Federal Deposit Insurance Act
("FDI Act"), 12 U.S.C. ss.1828(k), and any regulations promulgated
thereunder.
(c) Notwithstanding anything herein contained to the contrary,
if the Executive is suspended from office and/or temporarily prohibited
from participating in the conduct of the affairs of the Bank pursuant
to a notice served under Section 8(e)(3) or 8(g)(1) of the FDI Act, 12
U.S.C. ss.1818(e)(3) or 1818(g)(1), the Bank's obligations under this
Agreement shall be suspended as of the date of service of such notice,
unless stayed by appropriate proceedings. If the charges in such notice
are dismissed, the Bank, in its discretion, may (i) pay to the
Executive all or part of the compensation withheld while the Bank's
obligations hereunder were suspended and (ii) reinstate, in whole or in
part, any of the obligations which were suspended.
(d) Notwithstanding anything herein contained to the contrary,
if the Executive 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) or 8(g)(1) of the FDI Act, 12 U.S.C.
ss.1818(e)(4) or (g)(1), all prospective obligations of the Bank under
this Agreement shall terminate as of the effective date of the order,
but vested rights and obligations of the Bank and the Executive shall
not be affected.
(e) Notwithstanding anything herein contained to the contrary,
if the Bank is in default (within the meaning of Section 3(x)(1) of the
FDI Act, 12 U.S.C. ss.1813(x)(1), all prospective obligations of the
Bank under this Agreement shall terminate as of the date of default,
but vested rights and obligations of the Bank and the Executive shall
not be affected.
(f) Notwithstanding anything herein contained to the contrary,
all prospective obligations of the Bank hereunder shall be terminated,
except to the extent that a continuation of this Agreement is necessary
for the continued operation of the Bank: (i) by the Director of the OTS
or his or her designee or the FDIC, at the time the FDIC enters into an
agreement to provide assistance to or on behalf of the Bank under the
authority contained in Section 13(c) of the FDI Act, 12 U.S.C.
ss.1823(c); (ii) by the Director of the OTS or his or her designee at
the time such Director or designee approves a supervisory merger to
resolve problems related to the operation of the Bank or when the Bank
is determined by such Director to be in an unsafe or unsound condition.
The vested rights and obligations of the parties shall not be affected.
If and to the extent that any of the foregoing provisions shall cease to be
required by applicable law, rule or regulation, the same shall become
inoperative as though eliminated by formal amendment of this Agreement.
<PAGE>
SIGNATURES
IN WITNESS WHEREOF, JAMAICA SAVINGS BANK FSB. has caused this
Agreement to be executed and its seal to be affixed hereunto by its duly
authorized officer, and the Executive has signed this Agreement, on the 22nd day
of June, 1999.
ATTEST: JAMAICA SAVINGS BANK FSB
Joanne Corrigan By: Edward P. Henson
- --------------- ----------------
Joanne Corrigan Edward P. Henson
Secretary President
[Seal]
WITNESS:
Bernice Glaz
------------
Bernice Glaz
<PAGE>
STATE OF NEW YORK )
: ss.:
COUNTY OF NASSAU )
On this 22nd day of June, 1999, before me personally came
Edward P. Henson, to me known, who, being by me duly sworn, did depose and say
that he is President of Jamaica Savings Bank FSB, the federally chartered
savings bank described in and which executed the foregoing instrument; that he
knows the seal of said bank; that the seal affixed to said instrument is such
seal; that it was so affixed by order of the Board of Directors of said bank;
and that he signed his name thereto by like order.
Name:
Notary Public
STATE OF NEW YORK )
: ss.:
COUNTY OF NASSAU )
On this 22nd day of June, 1999, before me personally came
Bernice Glaz, to me known, and known to me to be the individual described in the
foregoing instrument, who, being by me duly sworn, did depose and say that she
resides at the address set forth in said instrument, and that she signed her
name to the foregoing instrument.
Name:
Notary Public
<PAGE>
APPENDIX A
----------
1. INTRODUCTION. Sections 280G and 4999 of the Internal Revenue Code of
1986, as amended ("Code"), impose a 20% non-deductible federal excise tax on a
person if the payments and benefits in the nature of compensation to or for the
benefit of that person that are contingent on a change in the ownership or
effective control of the Company or the Bank or in the ownership of a
substantial portion of the assets of the Company or the Bank (such payments and
benefits are considered "parachute payments" under section 280G) exceed three
times the person's "base amount" under section 280G. Section 23 of the Agreement
provides for the Executive to receive a tax indemnification payment (sometimes
referred to as a "gross-up" payment) if the payments and benefits in the nature
of compensation to or for the benefit of the Executive that are considered
parachute payments cause the imposition of an excise tax under section 4999 of
the Code. Capitalized terms in this Appendix A that are not defined in this
Appendix A have the meaning used in the Employment Agreement with the Executive.
2. PURPOSE. The purpose of this Appendix A is to illustrate how the tax
indemnification or gross-up payment would be computed. The amounts, figures and
rates used in this example are meant to be illustrative and do not reflect the
actual payments and benefits that would be made to the Executive under this
Agreement. For purposes of this example, it is assumed that a change in control
within the meaning of section 280G of the Code has occurred and that:
(a) The value of the insurance benefits required to be provided to a
hypothetical employee "Z" under sections 4(b)(iii) and 5(b) of the
Agreement for medical, dental, life and other insurance benefits
during the unexpired employment period is $23,000.
(b) The annual rate of Z's salary covered by the Agreement is $100,000,
and Z received annual salary increases of 4%, 5% and 6% (i.e., a
three-year average of 5%) for each of the prior three years. Hence,
the amount payable under sections 4(b)(v) and 5(b) of the Agreement
for salary during the unexpired employment period would be $331,013
[$105,000 + $110, 250 + $115,763].
(c) Z received annual bonuses equal to 20% of his salary in each of the
prior three years. Hence, the amount payable under sections 4(b)(v)
and 5(b) of the Agreement for bonuses during the unexpired employment
period would be $66,203 [20% x ($105,000 + $110,250 + $115,763)].
(d) The amount payable under sections 4(b)(vi) and 5(b) of the Agreement
for the present value of the additional RP and BRP accruals during the
unexpired employment period would be $45,000.
(e) The amount payable under sections 4(b)(vii) and 5(b) of the Agreement
for additional contributions to the ESOP, 401(k) Plan and BRP during
the unexpired employment period would be $20,000.
(f) Z's base amount (i.e., average W-2 wages for the five-year period
preceding the change in control) is $87,000.
3. DETERMINE IF Z IS SUBJECT TO AN EXCISE TAX. Z's parachute payments would
total $485,216 [$23,000 + $331,013 + $66,203 + $45,000 + $20,000]. Three times
Z's base amount is $261,000 [3 x $87,000]; accordingly, Z is subject to an
excise tax because $485,216 exceeds $261,000. Z's "excess parachute payments"
under section 280G of the Code are equal to Z's total parachute payments minus
one times Z's base amount, or $398,216 [$485,216 - $87,000]. If Z were not
protected by section 23 of the Agreement, Z would be subjected to an excise tax
of $79,643 [$398,216 x 20%], in addition to ordinary income taxes.
4. Compute Z's Tax Indemnification Payment. Z's tax indemnification payment
under section 23 of the Agreement would be computed pursuant to the following
formula:
E x P .2 x $398,216
X = ------------------------------------ = ----------------------------------
1 - [(FI x (1 - SLI)) + SLI + E + M] 1 - [.368874 + .0685 + .2 + .0145]
where
E = excise tax rate under section 4999 of the Code [20%];
P = the amount with respect to which such excise tax is
assessed determined without regard to section 23 of
the Agreement [$398,216];
FI = the highest effective marginal rate of income tax
applicable to Z under the Code for the taxable year
in question [assumed to be 39.6% in this example, but
in actuality, the rate is adjusted to take into
account any phase-out or loss of deductions, personal
exemptions and other similar adjustments];
SLI = the sum of the highest effective marginal rates of
income tax applicable to Z under applicable state and
local laws for the taxable year in question [assumed
to be 6.85% in this example, but in actuality, the
rate is adjusted to take into account any phase-out
or loss of deductions, personal exemptions and other
similar adjustments]; and
M = the highest marginal rate of Medicare tax applicable
to Z under the Code for the year in question [1.45%].
In this example, the amount of tax indemnification payment due to Z under
section 23 of the Agreement would be $79,643 [.2 x $398,216] divided by 0.348126
[1 - (.368874 + .0685 + .2 + .0145)], or $228,777. Such amount would be payable
in addition to the other amounts payable under the Agreement in order to put Z
in approximately the same after-tax position that Z would have been in if there
were no excise tax imposed under sections 280G and 4999 of the Code. The tax
indemnification to Z of $228,777 would in turn be a parachute payment subject to
excise tax under sections 280G and 4999. Accordingly, Z's actual excess
parachute payment would be $626,993 [$485,216 - $87,000) + $228,777)] resulting
in an excise tax of $125,399 [$626,993 x 20%]. The difference between the
indemnification. payment and the excise tax [$103,378] is an amount equal to the
sum of the income and other applicable taxes due on the indemnification payment
[($228,777 x .368874) + ($228,777 x .0685) + ($228,777 x .0145)], confirming
that the amount of the tax indemnification payment is sufficient to satisfy all
of Z's tax liability resulting from the excess parachute payment.
JAMAICA SAVINGS BANK FSB
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT ("Agreement") is made and entered
into as of June 22, 1999 by and between JAMAICA SAVINGS BANK FSB, a federally
chartered savings bank, having its principal office at 303 Merrick Road,
Lynbrook, New York 11563 ("Bank"), and Joseph J. Hennessy, an individual
residing at (address omitted) ("Executive"). This Agreement amends, restates and
supersedes the Termination Agreement dated as of June 27, 1990 and the
Supplemental Termination Agreement dated as of July 9, 1996 by and between the
Bank and the Executive. Any reference to the "Company" in this Agreement shall
mean JSB Financial, Inc. and any successor thereto.
W I T N E S S E T H :
WHEREAS, the Executive is currently serving as Vice President
of the Bank, and the Bank wishes to assure itself of the services of the
Executive for the period provided in this Agreement; and
WHEREAS, the Executive is willing to serve in the employ of
the Bank on the terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the premises and the
mutual covenants and conditions hereinafter set forth, the Bank and the
Executive hereby agree as follows:
1. POSITION AND RESPONSIBILITIES.
During the period of his employment hereunder, the Executive
agrees to serve as Vice President of the Bank. The Executive shall render
administrative and management services to the Bank such as are customarily
performed by persons situated in a similar executive capacity and shall perform
such other duties not inconsistent with his title and office as may be assigned
to him by or under the authority of the Board of Directors of the Bank (the
"Board"). The Executive shall have such authority as is necessary or appropriate
to carry out his assigned duties. Failure to re-elect the Executive as Vice
President of the Bank (or a more senior position) without the consent of the
Executive shall constitute a breach of this Agreement.
2. TERMS.
(a) The period of the Executive's employment under this
Agreement shall be deemed to have commenced as of the date first above written
(the "Effective Date") and shall be for an initial term of three years. Prior to
the first anniversary of the Effective Date of this Agreement and on each
anniversary date thereafter (each, an "Anniversary Date"), the Board shall
review the terms of this Agreement and the Executive's performance of services
hereunder and may, in the absence of objection from the Executive, approve an
extension of the Employment Agreement. In such event, the Employment Agreement
shall be extended to the third anniversary of the relevant Anniversary Date. For
purposes of this Agreement, the term "Employment Period" shall mean the term of
this Agreement plus such extensions as are provided herein.
(b) During the period of his employment hereunder, except for
periods of absence occasioned by illness, disability, holidays, reasonable
vacation periods and reasonable leaves of absence, the Executive shall devote
substantially all of his business time, attention, skill and efforts to the
faithful performance of his duties hereunder including (i) service as Vice
President of the Bank, and, if duly elected, a Director of the Bank, (ii)
performance of such duties not inconsistent with his title and office as may be
assigned to him by or under the authority of the Board or a more senior
executive officer, and (iii) such other activities and services related to the
organization, operation and management of the Bank. During the Employment Period
it shall not be a violation of this Agreement for the Executive to (A) serve on
corporate, civic, industry or charitable boards or committees, (B) deliver
lectures, fulfill speaking engagements or teach at educational institutions and
(C) manage personal investments, so long as such activities do not significantly
interfere with the performance of the Executive's responsibilities as an
employee of the Bank in accordance with this Agreement. It is expressly
understood and agreed that to the extent that any such activities have been
conducted by the Executive prior to the Effective Date, the continued conduct of
such activities (or the conduct of activities similar in nature and scope
thereto) subsequent to the Effective Date shall not thereafter be deemed to
interfere with the performance of the Executive's responsibilities to the Bank.
It is also expressly agreed that the Executive may conduct activities subsequent
to the Effective Date that are generally accepted for an executive in his
position, regardless of whether conducted by the Executive prior to the
Effective Date.
(c) Notwithstanding anything herein contained to the contrary:
(i) the Executive's employment with the Bank may be terminated by the Bank or
the Executive during the term of this Agreement, subject to the terms and
conditions of this Agreement; and (ii) nothing in this Agreement shall mandate
or prohibit a continuation of the Executive's employment following the
expiration of the term of this Agreement upon such terms and conditions as the
Board and the Executive may mutually agree.
(d) For all purposes of this Agreement, the term "Unexpired
Employment Period" as of any date shall mean the period beginning on such date
and ending on the Anniversary Date on which the Employment Period (as extended
pursuant to Section 2(a) of this Agreement) is then scheduled to expire.
3. COMPENSATION AND REIMBURSEMENT.
(a) The compensation specified under this Agreement shall
constitute the salary and benefits paid for the duties described in Section 1.
The Bank shall pay the Executive as compensation a salary at an annual rate of
not less than (salary omitted) per year or such higher rate as may be prescribed
by or under the authority of the Board ("Base Salary"). The Base Salary payable
under this Section 3 shall be paid in approximately equal installments in
accordance with the Bank's customary payroll practices. During the period of
this Agreement, the Executive's Base Salary shall be reviewed at least annually;
the first such review will be made no later than one year from the date of this
Agreement. Such review shall be conducted by a Committee designated by the
Board, and the Board may increase the Executive's Base Salary, which increased
amount shall be considered the Executive's "Base Salary" for purposes of this
Agreement. In no event shall the Executive's annual rate of Base Salary under
this Agreement in effect at a particular time be reduced without his prior
written consent. In addition to the Base Salary provided in this Section 3(a),
the Bank shall provide the Executive at no cost to the Executive with all such
other benefits as are provided uniformly to permanent full-time employees of the
Bank.
(b) The Bank will provide the Executive with employee benefit
plans, arrangements and perquisites substantially equivalent to those in which
the Executive was participating or otherwise deriving benefit from immediately
prior to the beginning of the term of this Agreement, and the Bank will not,
without the Executive's prior written consent, make any changes in such plans,
arrangements or perquisites which would adversely affect the Executive's rights
or benefits thereunder. Without limiting the generality of the foregoing
provisions of this Subsection (b), the Executive will be entitled to participate
in or receive benefits under any employee benefit plans with respect to which
the Executive satisfies the eligibility requirements, including, but not limited
to, the Retirement Plan of Jamaica Savings Bank FSB ("RP"), the Incentive
Savings Plan of Jamaica Savings Bank FSB ("ISP"), the Jamaica Savings Bank FSB
Employee Stock Ownership Plan ("ESOP"), the Benefit Restoration Plan of Jamaica
Savings Bank FSB ("BRP"), the JSB Financial, Inc. 1990 Stock Option Plan, the
JSB Financial, Inc. 1996 Stock Option Plan, retirement plans, supplemental
retirement plans, pension plans, profit-sharing plans, group life, health
(including hospitalization, medical and major medical), dental, accidental death
and dismemberment, travel accident and short-term disability insurance plans, or
any other employee benefit plan or arrangement made available by the Bank in the
future to its senior executives and key management employees, subject to and on
a basis consistent with the terms, conditions and overall administration of such
plans and arrangements. The Executive will be entitled to incentive compensation
and bonuses as provided in any plan of the Bank in which the Executive is
eligible to participate. Nothing paid to the Executive under any such plan or
arrangement will be deemed to be in lieu of other compensation to which the
Executive is entitled under this Agreement.
(c) The Executive's principal place of employment shall be at
the Bank's executive offices at the address first above written, or at such
other location in New York City or in Nassau County or Suffolk County at which
the Bank shall maintain its principal executive offices, or at such other
location as the Board and the Executive may mutually agree upon. The Bank shall
provide the Executive, at his principal place of employment with support
services and facilities suitable to his position with the Bank and necessary or
appropriate in connection with the performance of his assigned duties under this
Agreement. The Bank shall reimburse the Executive for his ordinary and necessary
business expenses, including, without limitation, fees for memberships in such
clubs and organizations as the Executive and the Board shall mutually agree are
necessary and appropriate for business purposes, and travel and entertainment
expenses, incurred in connection with the performance of his duties under this
Agreement, upon presentation to the Bank of an itemized account of such expenses
in such form as the Bank may reasonably require.
4. PAYMENTS TO THE EXECUTIVE UPON AN EVENT OF TERMINATION.
The provisions of this Section shall in all respects be
subject to the terms and conditions stated in Sections 9 and 28.
(a) Upon the occurrence of an Event of Termination (as herein
defined) during the Executive's term of employment under this Agreement, the
provisions of this Section shall apply. As used in this Agreement, an "Event of
Termination" shall mean and include any one or more of the following: (i) the
termination by the Bank or the Company of the Executive's full-time employment
hereunder for any reason other than: following a Change in Control, as defined
in Section 5; for Disability, as defined in Section 6; for Retirement, as
defined in Section 8; for Cause, as defined in Section 9; or upon the
Executive's death; or (ii) unless consented to by the Executive, the Executive's
voluntary resignation from the Bank's employ, upon any: (A) failure to elect or
re-elect or to appoint or re-appoint the Executive as Vice President of the
Bank, (B) material adverse change in the Executive's function, duties, or
responsibilities, which change would cause the Executive's position to become
one of lesser responsibility, importance, or scope from the position and
attributes thereof described in Section 1, above (and any such material change
shall be deemed a continuing breach of this Agreement), (C) relocation of the
Executive's principal place of employment by more than 30 miles from its
location at the Effective Date of this Agreement, or a material reduction in the
benefits and perquisites to the Executive from those being provided as of the
Effective Date of this Agreement, (D) liquidation or dissolution of the Bank or
the Company, or (E) material breach of this Agreement by the Bank. Upon the
occurrence of any event described in clauses (A), (B), (C), (D) or (E), above,
the Executive shall have the right to elect to terminate his employment under
this Agreement by resignation upon written notice pursuant to Section 10 given
within a reasonable period of time not to exceed, except in case of a continuing
breach, four calendar months after the event giving rise to said right to elect.
(b) Upon the occurrence of an Event of Termination as set
forth in Section 4(a), on the Date of Termination, as defined in Section 10, the
Bank shall be obligated to pay, or to provide, the Executive, or, in the event
of his subsequent death, to his surviving spouse or such other beneficiary or
beneficiaries as the Executive may designate in writing, or if neither his
estate, as severance pay or liquidated damages, or both, the benefits provided
below and a payment equal to the sum of the payments set forth below:
(i) payment of the sum of (A) the Executive's annual Base
Salary through the Date of Termination to the extent not theretofore
paid and (B) any compensation previously deferred by the Executive
(together with any accrued interest or earnings thereon) and any
accrued vacation pay, in each case to the extent not theretofore paid
(the sum of the amounts described in clauses (A) and (B) shall be
hereinafter referred to as the "Accrued Obligations");
(ii) the benefits, if any, to which the Executive is entitled
as a former employee under the Bank's or the Company's employee benefit
plans and programs and compensation plans and programs;
(iii) continued group life, health (including hospitalization,
medical and major medical), dental, accidental death and dismemberment,
travel accident and short-term disability insurance benefits as
provided by the Bank or the Company, in addition to that provided
pursuant to Section 4(b)(ii), if and to the extent necessary to provide
for the Executive, for the remaining Unexpired Employment Period,
coverage equivalent to the coverage to which he would have been
entitled if he had continued working for the Bank during the remaining
Unexpired Employment Period at the highest annual rate of salary
achieved during the Employment Period; provided, however, if the
Executive has obtained group life, health (including hospitalization,
medical and major medical), dental, accidental death and dismemberment,
travel accident and/or short-term disability insurance benefits
coverage from another source, the Executive may, as of any month, make
an irrevocable election to forego the continued coverage that would
otherwise be provided hereunder for the remaining Unexpired Employment
Period, or any portion thereof, in which case the Bank or the Company,
upon receipt of the Executive's irrevocable election, shall pay the
Executive an amount equal to the estimated cost to the Bank or the
Company of providing such coverage during such period;
(iv) if and to the extent not already provided under Sections
4(b)(ii) and 4(b)(iii), continued health (including hospitalization,
medical and major medical) and dental insurance benefits to the extent
maintained by the Bank or the Company for its employees or retirees
during the remainder of the Executive's lifetime and the lifetime of
his spouse, if any, for so long as the Executive continues to reimburse
the Bank for the cost of such continued coverage;
(v) a lump sum payment, as liquidated damages, in an amount
equal to the Base Salary and bonus or other incentive compensation that
the Executive would have earned if the Executive had continued working
for the Bank and the Company during the remaining Unexpired Employment
Period (A) at the highest annual rate of Base Salary and bonus or other
incentive compensation achieved by the Executive during the three-year
period immediately preceding the Executive's Date of Termination,
except that (B) in the case of a Change in Control, such lump sum shall
be determined based upon the Base Salary and the bonus or other
incentive compensation, respectively, that the Executive would have
been paid during the remaining Unexpired Employment Period including
the assumed increases referred to in clauses (i) and (ii) of Section
5(b);
(vi) a lump sum payment in an amount equal to the excess, if
any, of: (A) the present value of the pension benefits to which the
Executive would be entitled under the RP and the BRP (and under any
other qualified and non-qualified defined benefit plans maintained by
the Bank or the Company covering the Executive) as if he had continued
working for the Bank during the remaining Unexpired Employment Period
(x) at the highest annual rate of Base Salary and, if applicable, the
highest bonus or other incentive compensation, respectively, achieved
by the Executive during the three-year period immediately preceding the
Executive's Date of Termination, except that (y) in the case of a
Change in Control, such lump sum shall be determined based upon the
Base Salary and, if applicable, the highest bonus or other incentive
compensation, respectively, that the Executive would have been paid
during the remaining Unexpired Employment Period including the assumed
increases referred to in clauses (i) and (ii) of Section 5(b), and (z)
in the case of a Change in Control, as if three additional years are
added to the Executive's age and years of creditable service under the
RP and the BRP and after taking into account any other compensation
required to be taken into account under the RP and the BRP (and any
other qualified and non-qualified defined benefit plans of the Bank or
the Company, as applicable), over (B) the present value of the pension
benefits to which he is actually entitled under the RP and the BRP (and
any other qualified and non-qualified defined benefit plans) as of his
Date of Termination, where such present values are to be determined
using a discount rate of 6% and the mortality tables prescribed under
section 72 of the Internal Revenue Code of 1986, as amended ("Code");
and
(vii) a lump sum payment in an amount equal to the
contributions that would have been made by the Bank or the Company on
the Executive's behalf to the ISP and the ESOP and to the BRP with
respect to such ISP and ESOP contributions (and to any other qualified
and non-qualified defined contribution plans maintained by the Bank or
the Company covering the Executive) as if the Executive had continued
working for the Bank and the Company during the remaining Unexpired
Employment Period making the maximum amount of employee contributions
required, if any, under such plan or plans and earning (A) the highest
annual rate of Base Salary and, if applicable, the highest bonus or
other incentive compensation, respectively, achieved by the Executive
during the three-year period immediately preceding the Executive's Date
of Termination, except that (B) in the case of a Change in Control,
such lump sum shall be determined based upon the Base Salary and, if
applicable, the bonus or other incentive compensation, respectively,
that the Executive would have been paid during the remaining Unexpired
Employment Period including the assumed increases referred to in
clauses (i) and (ii) of Section 5(b).
The benefits to be provided under, and the amounts payable pursuant to, this
Section 4 shall be provided and be payable without regard to proof of damages
and without regard to the Executive's efforts, if any, to mitigate damages. The
Bank and the Executive hereby stipulate that the damages which may be incurred
by the Executive following any such termination of employment are not capable of
accurate measurement as of the date first above written and that such liquidated
damages constitute reasonable damages under the circumstances.
(c) Payments to the Executive under Section 4 shall be made
within ten days of the Executive's Date of Termination.
(d) In the event payments are made under Section 4 or Section
5, the Executive may select an individual or firm to provide him with reasonable
outplacement counseling services, and the Bank shall pay for the costs of such
services; provided, however, that the cost to the Bank of such outplacement
counseling services shall not exceed 25% of the Executive's Base Salary.
5. CHANGE IN CONTROL.
(a) No benefit shall be payable under this Section 5 unless
there shall have been a Change in Control of the Bank or the Company, as set
forth below. For purposes of this Agreement, a "Change in Control" of the Bank
or the Company shall mean any one or more of the following:
(i) An event of a nature that would be required to be reported
in response to Item l(a) of the current report on Form 8-K, as in
effect on the date hereof, pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act");
(ii) An event of a nature that results in a Change in Control
of the Bank or the Company within the meaning of the Home Owners' Loan
Act of 1933, as amended, or the Change in Bank Control Act of 1978, as
amended, as applicable, and the Rules and Regulations promulgated by
the Office of Thrift Supervision ("OTS") or its predecessor agency, the
Federal Deposit Insurance Corporation ("FDIC") or the Board of
Governors of the Federal Reserve System ("FRB"), as the case may be, as
in effect on the date hereof, but excluding any such Change in Control
resulting from the purchase of securities by the Company or the Bank's
or the Company's tax-qualified employee benefit plans and trusts;
(iii) If any "person" (as the term is used in Sections 13(d)
and 14(d) of the Exchange Act) is or becomes the "beneficial owner" (as
defined in Rule 13d-3 under the Exchange Act), directly or indirectly,
of securities of the Bank or the Company representing 20% or more of
the Bank's or the Company's outstanding securities except for any
securities of the Bank purchased by the Company in connection with the
initial conversion of the Bank from mutual to stock form (the
"Conversion") and any securities purchased by the Company or the Bank's
or the Company's tax-qualified employee benefit plans and trusts;
(iv) If the individuals who constitute the Board on the date
hereof (the "Incumbent Board") cease for any reason to constitute at
least a majority of the Board, provided, however, that any person
becoming a director subsequent to the date hereof whose election or
nomination for election by the Company's stockholders, was approved by
a vote of at least three-quarters of the directors then comprising the
Incumbent Board shall be considered as though he were a member of the
Incumbent Board, but excluding, for this purpose, any such person whose
initial assumption of office occurs as a result of an actual or
threatened election contest with respect to the election or removal of
directors or other actual or threatened solicitation of proxies or
consents by or on behalf of a person other than the Board;
(v) A merger, consolidation, reorganization, sale of all or
substantially all the assets of the Bank or the Company or similar
transaction occurs in which the Bank or the Company is not the
resulting entity, other than a transaction following which (A) at least
51% of the equity ownership interests of the entity resulting from such
transaction are beneficially owned (within the meaning of Rule 13d-3
promulgated under Exchange Act) in substantially the same relative
proportions by persons who, immediately prior to such transaction,
beneficially owned (within the meaning of Rule 13d-3 promulgated under
the Exchange Act) at least 51% of the outstanding equity ownership
interests in the Bank or the Company and (B) at least 51% of the
securities entitled to vote generally in the election of directors of
the entity resulting from such transaction are beneficially owned
(within the meaning of Rule 13d-3 promulgated under the Exchange Act)
in substantially the same relative proportions by persons who,
immediately prior to such transaction, beneficially owned (within the
meaning of Rule 13d-3 promulgated under the Exchange Act) at least 51%
of the securities entitled to vote generally in the election of
directors of the Bank or the Company;
(vi) A proxy statement shall be distributed soliciting proxies
from stockholders of the Company, by someone other than the current
management of the Company, seeking stockholder approval of a plan of
reorganization, merger or consolidation of the Company or the Bank or
similar transaction with one or more corporations as a result of which
the outstanding shares of the class of securities then subject to such
plan or transaction are exchanged for or converted into cash or
property or securities not issued by the Bank or the Company; or
(vii) A tender offer is completed for 20% or more of the
voting securities of the Bank or Company then outstanding.
The "Change in Control Date" shall mean the date during the Employment Period on
which a Change in Control occurs. Anything in this Agreement to the contrary
notwithstanding, if the Executive's employment with the Company is terminated
and if it is reasonably demonstrated by the Executive that such termination of
employment (1) was at the request of a third party who has taken steps
reasonably calculated to effect a Change in Control or (2) otherwise arose in
connection with or anticipation of a Change in Control, then for all purposes of
this Agreement the "Change in Control Date" shall mean the date immediately
prior to the date of such termination of employment.
(b) If any of the events described in Section 5(a)
constituting a Change in Control have occurred or the Board has determined that
a Change in Control has occurred, the Executive shall be entitled to the
payments and the benefits provided below on the Change in Control Date. The
amounts payable and the benefits to be provided under this Section 5(b) to the
Executive shall consist of the payments and benefits that would be due to the
Executive and the Executive's family under Section 4(b) for the Unexpired
Employment Period as if an Event of Termination under Section 4(a) had occurred
on the Change in Control Date. For purposes of determining the payments and
benefits due under this Section 5(b), when calculating the payments due and
benefits to be provided for the Unexpired Employment Period, it shall be assumed
that for each year of the remaining term of this Agreement, the Executive would
have received (i) an annual increase in Base Salary equal to the average
percentage increase in Base Salary received by the Executive for the three-year
period ending with the earlier of (x) the year in which the Change in Control
Date occurs or (y) the year during which a definitive agreement, if any,
governing the Change in Control is executed, with the first such increase
effective as of the January 1st next following such three-year period and the
second and third such increases effective as of the next two anniversaries of
such January 1st, (ii) a bonus or other incentive compensation equal to the
highest percentage rate of bonus or incentive compensation paid to the Executive
during the three-year period referred to in clause (i) of this Section 5(b)
times the Base Salary that the Executive would have been paid during the
remaining term of this Agreement including the assumed increases referred to in
clause (i) of this Section 5(b), (iii) the maximum contributions that could be
made by or on behalf of the Executive with respect to any employee benefit plans
and programs maintained by the Company and the Bank based upon the Base Salary
and, if applicable, the bonus or other incentive compensation, respectively,
that the Executive would have been paid during the remaining term of this
Agreement including the assumed increases referred to in clauses (i) and (ii) of
this Section 5(b), and (iv) the present value of the pension benefits to which
the Executive is entitled under Section 4(b)(vi) with respect to the RP and the
BRP (and under any other qualified and non-qualified defined benefit plans
maintained by the Bank or the Company covering the Executive) shall be
determined as if he had continued working for the Bank during the remaining
Unexpired Employment Period and shall be based upon the Base Salary and, if
applicable, the bonus or other incentive compensation, respectively, that the
Executive would have been paid during the remaining term of this Agreement
including the assumed increases referred to in clauses (i) and (ii) of this
Section 5(b). The benefits to be provided under, and the amounts payable
pursuant to, this Section 5 shall be provided and be payable without regard to
proof of damages and without regard to the Executive's efforts, if any, to
mitigate damages. The Bank and the Executive hereby stipulate that the damages
which may be incurred by the Executive following any Change in Control are not
capable of accurate measurement as of the date first above written and that such
liquidated damages constitute reasonable damages under the circumstances.
(c) Payments under Section 5(b) shall be made to the Executive
on the Change in Control Date. Such payments shall be made regardless of whether
the Executive's employment terminates.
6. TERMINATION FOR DISABILITY.
(a) In the event of Termination for Disability, the Executive
shall receive the benefits provided in Section 6(b); provided, however, that the
benefits provided under Section 6(b) shall not be deemed to be in lieu of the
benefits he is otherwise entitled as a former employee under the Bank or the
Company's employee plans and programs. For purposes of this Agreement, the
Executive may be terminated for disability only if (i) the Executive shall have
been absent from his duties with the Bank on a full-time basis for at least six
consecutive months, or (ii) a majority of the members of the Board acting in
good faith determine that, based upon competent and independent medical evidence
presented by a physician or physicians agreed upon by the parties, the
Executive's physical or mental condition is such that he is totally and
permanently incapable of engaging in any substantial gainful employment based
upon his education, training and experience; provided, however, that on and
after the earliest date on which a Change in Control of the Bank or the Company
as defined in Section 5 occurs, such a determination shall require the
affirmative vote of at least three-fourths of the members of the Board acting in
good faith and such vote shall not be made prior to the expiration of a 60-day
period following the date on which the Board shall, by written notice to the
Executive, furnish him a statement of its grounds for proposing to make such
determination, during which period the Executive shall be afforded a reasonable
opportunity to make oral and written presentations to the members of the Board,
and to be represented by his legal counsel at such presentations, to refute the
grounds for the proposed determination.
(b) The Bank will pay the Executive as Disability pay, a
bi-weekly payment equal to 100% of the Executive's bi-weekly annual rate of Base
Salary in effect on the date of the Executive's Termination for Disability. In
addition, the Bank will cause to be continued insurance coverage, including
group life, health (including hospitalization, medical and major medical),
dental, accidental death and dismemberment, travel accident and short-term
disability coverage substantially identical to the coverage maintained by the
Bank or the Company for the Executive prior to his Termination for Disability.
The Disability pay and coverages shall commence on the effective date of the
Executive's termination and shall cease upon the earliest to occur of: (i) the
date the Executive returns to the full-time employment of the Bank, in the same
capacity as he was employed prior to his Termination for Disability and pursuant
to an employment agreement between the Executive and the Bank; (ii) the
Executive's full-time employment by another employer; (iii) the Executive's
attaining the normal age of retirement or receiving benefits under the RP or
other defined benefit pension plan of the Bank or the Company; (iv) the
Executive's death; (v) the Executive's eligibility to collect payments under the
disability provision of the RP or other defined benefit pension plan of the Bank
or the Company; or (vi) the expiration of the term of this Agreement.
(c) Notwithstanding the foregoing, there will be no reduction
in the compensation otherwise payable to the Executive during any period during
which the Executive is incapable of performing his duties hereunder by reason of
temporary disability.
7. TERMINATION UPON DEATH.
The Executive's employment shall terminate automatically upon
the Executive's death during the Employment Period. In such event, the Executive
and the Executive's legal representatives shall be entitled to the following:
(i) payment of the Executive's "Accrued Obligations;"
(ii) the continuation of all benefits to the Executive's
family and dependents that would have been provided if the Executive
had been entitled to the benefits under Section 4(b)(ii), (iii) and
(iv), and
(iii) the timely payment of any other amounts or benefits
required to be paid or provided or which the Executive is eligible to
receive under any plan, program, policy or practice or contract or
agreement of the Bank and its affiliated companies (all such other
amounts and benefits shall be hereinafter referred to as the "Other
Benefits");
provided, however, that if the Executive dies while in the employment of the
Bank, the amount of life insurance provided to the Executive by the Bank shall
not be less than the lesser of $200,000 or three times the Executive's then
annual Base Salary. Accrued Obligations shall be paid to the Executive's estate
or beneficiary, as applicable, in a lump sum cash payment within ten days of the
Date of Termination. With respect to the provision of Other Benefits after the
Change in Control Date, the term Other Benefits as utilized in this Section 7
shall include, without limitation, that the Executive's estate and/or
beneficiaries shall be entitled to receive, benefits at least equal to the most
favorable benefits provided by the Bank and affiliated companies to the estates
and beneficiaries of peer executives of the Bank and such affiliates companies
under such plans, programs, practices and policies relating to death benefits,
if any, as in effect with respect to other peer executives and their
beneficiaries at any time during the 120-day period immediately preceding the
Change in Control Date.
8. TERMINATION UPON RETIREMENT.
Termination by the Bank of the Executive based on "Retirement"
shall mean termination in accordance with the Company's or the Bank's retirement
policy or in accordance with any retirement arrangement established with the
Executive's consent with respect to him. Upon termination of the Executive upon
Retirement, the Executive shall be entitled to all benefits under the RP and any
other retirement plan of the Bank or the Company and other plans to which the
Executive is a party, and the Executive shall be entitled to the benefits, if
any, that would be payable to him as a former employee under the Bank's or the
Company's employee benefit plans and programs and compensation plans and
programs.
9. TERMINATION FOR CAUSE.
The terms "Termination for Cause" or "Cause" shall mean
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 any material breach of
this Agreement, in such case as measured against standards generally prevailing
at the relevant time in the savings and community banking industry. For purposes
of this Section, no act, or the failure to act, on the Executive's part shall be
"willful" unless done, or omitted to be done, in bad faith and without
reasonable belief that the action or omission was in the best interest of the
Bank or its affiliates. Any act, or failure to act, based upon authority given
pursuant to a resolution duly adopted by the Board or based upon the written
advice of counsel for the Bank shall be conclusively presumed to be done, or
omitted to be done, by the Executive in good faith and in the best interests of
the Bank. Notwithstanding the foregoing, the Executive shall not be deemed to
have been terminated for Cause unless and until there shall have been delivered
to him a Notice of Termination which shall include a copy of a resolution duly
adopted by the affirmative vote of not less than three-fourths of the members of
the Board at a meeting of the Board called and held for that purpose (after
reasonable notice to the Executive and an opportunity for him, together with
counsel, to be heard before the Board), finding that in the good faith opinion
of the Board, the Executive was guilty of conduct justifying Termination for
Cause and specifying the particulars thereof in detail. The Executive shall not
have the right to receive compensation or other benefits for any period after
Termination for Cause.
10. NOTICE.
(a) Any purported termination by the Bank or by the Executive
shall be communicated by a Notice of Termination to the other party hereto. For
purposes of this Agreement, a "Notice of Termination" shall mean a written
notice which shall indicate the specific termination provision in this Agreement
relied upon and shall set forth in reasonable detail the facts and circumstances
claimed to provide a basis for termination of the Executive's employment under
the provision so indicated.
(b) Subject to Section 10(c), "Date of Termination" shall mean
(A) if the Executive's employment is terminated for Disability, 30 days after a
Notice of Termination is given (provided that he shall not have returned to the
performance of his duties on a full-time basis during such 30-day period), and
(B) if his employment is terminated for any other reason, the date specified in
the Notice of Termination (which, in the case of a Termination for Cause, shall
be immediate).
(c) If, within 30 days after any Notice of Termination is
given, the party receiving such Notice of Termination notifies the other party
that a dispute exists concerning the termination, then, except upon the
occurrence of a Change in Control and voluntary termination by the Executive in
which case the Date of Termination shall be the date specified in the Notice,
the Date of Termination shall be the date on which the dispute is finally
determined, either by mutual written agreement of the parties, by a binding
arbitration award, or by a final judgment, order or decree of a court of
competent jurisdiction (the time for appeal therefrom having expired and no
appeal having been perfected) and provided further that the Date of Termination
shall be extended by a notice of dispute only if such notice is given in good
faith and the party giving such notice pursues the resolution of such dispute
with reasonable diligence. Notwithstanding the pendency of any such dispute, the
Bank will continue to pay the Executive his full compensation in effect when the
notice giving rise to the dispute was given (including, but not limited to, Base
Salary) and continue him as a participant in all compensation, benefit and
insurance plans in which he was participating when the notice of dispute was
given, until the dispute is finally resolved in accordance with this Agreement.
Amounts paid under this Section are in addition to all other amounts due under
this Agreement and shall not be offset against or reduce any other amounts due
under this Agreement.
(d) The Bank may terminate the Executive's employment at any
time, but any termination by the Bank, other than Termination for Cause, shall
not prejudice the Executive's right to compensation or other benefits under this
Agreement or under any other benefit or compensation plans or programs
maintained by the Bank or the Company from time to time. The Executive shall not
have the right to receive compensation or other benefits for any period after a
Termination for Cause as defined in Section 9 hereinabove.
(e) Any communication to a party required or permitted under
this Agreement, including any notice, direction, designation, consent,
instruction, objection or waiver, shall be in writing and shall be deemed to
have been given at such time as it is delivered personally, or five days after
mailing if mailed, postage prepaid, by registered or certified mail, return
receipt requested, addressed to such party at the address listed below or at
such other address as one such party may by written notice specify to the other
party, as follows. If to the Executive, (address omitted); if to the Bank,
Jamaica Savings Bank FSB, 303 Merrick Road, Lynbrook, New York 11563, Attention:
President, with a copy to Thacher Proffitt & Wood, Two World Trade Center, New
York, New York 10048, Attention: Douglas J. McClintock, Esq.
11. POST-TERMINATION OBLIGATIONS.
(a) All payments and benefits to the Executive under this
Agreement shall be subject to the Executive's compliance with paragraph (b) of
this Section 11 during the term of this Agreement and for one full year after
the expiration or termination hereof.
(b) The Executive shall, upon reasonable notice, furnish such
information and assistance to the Bank as may reasonably be required by the Bank
in connection with any litigation in which it or any of its subsidiaries or
affiliates is, or may become, a party; provided, that the Bank reimburses the
Executive for the reasonable value of his time in connection therewith and for
any out-of-pocket costs attributable thereto.
12. COVENANT NOT TO COMPETE.
The Executive hereby covenants and agrees that for a period of
one year following his Date of Termination, if such termination occurs prior to
the end of the term of the Agreement, he shall not, without the written consent
of the Board, become an officer, employee, consultant, director or trustee of
any savings bank, savings and loan association, savings and loan holding
company, bank or bank holding company if such position (a) entails working in
(or providing services in) New York City, Nassau or Suffolk counties or (b)
entails working in (or providing services in) any other county that is both (i)
within the Bank's primary trade (or operating) area at the time in question,
which shall be determined by reference to the Bank's business plan as in effect
from time to time, and (ii) in which the Bank engages in material or substantial
deposit-taking functions or lending activities at such time; provided, however,
that this Section 12 shall not apply if the Executive's employment is terminated
for the reasons set forth in any of Sections 4, 5, 6 or 8.
13. SOURCE OF PAYMENTS.
All payments provided in this Agreement shall be timely paid
in cash or check from the general funds of the Bank.
14. EFFECT ON PRIOR AGREEMENTS.
This Agreement contains the entire understanding between the
parties hereto and supersedes any prior employment agreement between the Bank or
any predecessor of the Bank and the Executive, including the Termination
Agreement dated June 27, 1990 and the Supplemental Termination Agreement dated
July 9, 1996, except that this Agreement shall not affect or operate to reduce
any benefit or compensation inuring to the Executive of a kind elsewhere
provided. No provisions of this Agreement shall be interpreted to mean that the
Executive is subject to receiving fewer benefits than those available to him
without reference to this Agreement.
15. EFFECT OF ACTION UNDER COMPANY AGREEMENT.
Notwithstanding any provision herein to the contrary, to the
extent that full compensation payments and benefits are paid to or received by
the Executive under the Employment Agreement, dated June 22, 1999, as it may be
amended from time to time, between the Executive and the Company, such
compensation payments and benefits paid by the Company will be deemed to satisfy
the corresponding obligations of the Bank under this Agreement.
16. NO ATTACHMENT.
Except as required by law, no right to receive payments under
this Agreement shall be subject to anticipation, commutation, alienation, sale,
assignment, encumbrance, charge, pledge, or hypothecation, or to execution,
attachment, levy, or similar process or assignment by operation of law, and any
attempt, voluntary or involuntary, to affect any such action shall be null,
void, and of no effect.
17. MODIFICATION AND WAIVER.
(a) This Agreement may not be modified or amended except by an
instrument in writing signed by the parties hereto.
(b) No term or condition of this Agreement shall be deemed to
have been waived, nor shall there be any estoppel against the enforcement of any
provision of this Agreement, except by written instrument of the party charged
with such waiver or estoppel. No such written waiver shall be deemed a
continuing waiver unless specifically stated therein, and each such waiver shall
operate only as to the specific term or condition waived and shall not
constitute a waiver of such term or condition for the future as to any act other
than that specifically waived.
18. SUCCESSOR AND ASSIGNS.
This Agreement will inure to the benefit of and be binding
upon the Executive, his legal representatives and testate or intestate
distributees, and the Bank, its successors and assigns, including any successor
by purchase, merger, consolidation or otherwise or a statutory receiver or any
other person or firm or corporation to which all or substantially all of the
assets and business of the Bank may be sold or otherwise transferred. Any such
successor of the Bank shall be deemed to have assumed this Agreement and to have
become obligated hereunder to the same extent as the Bank and the Executive's
obligations hereunder shall continue in favor of such successor.
19. SEVERABILITY.
If, for any reason, any provision of this Agreement, or any
part of any provision, is held invalid, such invalidity shall not affect any
other provision of this Agreement or any part of such provision not held so
invalid, and each such other provision and part thereof shall to the full extent
consistent with law continue in full force and effect.
20. HEADINGS FOR REFERENCE ONLY.
The headings of Sections and paragraphs herein are included
solely for convenience of reference and shall not control the meaning or
interpretation of any of the provisions of this Agreement. Any reference in this
Agreement to a Section or Subsection shall refer to a Section or Subsection of
this Agreement, except as otherwise specified.
21. GOVERNING LAW.
This Agreement shall be governed by the laws of the State of
New York, without reference to conflicts of law principles.
22. INDEMNIFICATION AND ATTORNEYS' FEES.
(a) The Bank shall indemnify, hold harmless and defend the
Executive against reasonable costs, including legal fees, incurred by him in
connection with his consultation with legal counsel or arising out of any
action, suit or proceeding in which he may be involved, as a result of his
efforts, in good faith, to defend or enforce the terms of this Agreement. The
Bank agrees to pay all such costs as they are incurred by the Executive, to the
full extent permitted by law, and without regard to whether the Bank believes
that it has a defense to any action, suit or proceeding by the Executive or that
it is not obligated for any payments under this Agreement.
(b) In the event any dispute or controversy arising under or
in connection with the Executive's termination is resolved in favor of the
Executive, whether by judgment, arbitration or settlement, the Executive shall
be entitled to the payment of all back-pay, including salary, bonuses and any
other cash compensation, fringe benefits and any compensation and benefits due
the Executive under this Agreement.
(c) The Bank shall indemnify, hold harmless and defend the
Executive for any act taken or not taken, or any omission or failure to act, by
him in good faith while performing services for the Bank or the Company to the
same extent and upon the same terms and conditions as other similarly situated
officers and directors of the Bank or the Company. If and to the extent that the
Bank or the Company, maintains, at any time during the Employment Period, an
insurance policy covering the other officers and directors of the Bank or the
Company against lawsuits, the Bank or the Company shall use its best efforts to
cause the Executive to be covered under such policy upon the same terms and
conditions as other similarly situated officers and directors.
23. TAX INDEMNIFICATION.
(a) Subject to the provisions of Section 28 hereof, this
Section 23 shall apply if a change "in the ownership or effective control" of
the Bank or "in the ownership of a substantial portion of the assets" of the
Bank occurs within the meaning of section 280G of the Code. If this Section 23
applies, then with respect to any taxable year in which the Executive shall
be liable for the payment of an excise tax under section 4999 of the Code with
respect to any payment in the nature of compensation made by the Bank, the
Company or any direct or indirect subsidiary or affiliate of the Bank to (or
for the benefit of) the Executive, the Bank shall pay to the Executive an amount
equal to X determined under the following formula:
X = E x P
-------------------------------------------------
1 - [(FI x (1 - SLI)) + SLI + E + M]
where
E = the rate at which the excise tax is assessed under
section 4999 of the Code;
P = the amount with respect to which such excise tax is
assessed, determined without regard to this Section
23;
FI = the highest effective marginal rate of income tax
applicable to the Executive under the Code for the
taxable year in question (taking into account any
phase-out or loss of deductions, personal exemptions
and other similar adjustments);
SLI = the sum of the highest effective marginal rates of
income tax applicable to the Executive under all
applicable state and local laws for the taxable year
in question (taking into account any phase-out or
loss of deductions, personal exemptions and other
similar adjustments); and
M = the highest marginal rate of Medicare tax
applicable to the Executive under the Code for the
taxable year in question.
Attached as Appendix A to this Agreement is an example that illustrates
application of this Section 23. Any payment under this Section 23 shall be
adjusted so as to fully indemnify the Executive on an after-tax basis so that
the Executive would be in the same after-tax financial position in which he
would have been if no excise tax under section 4999 of the Code had been
imposed. With respect to any payment in the nature of compensation that is made
to (or for the benefit of) the Executive under the terms of this Agreement or
otherwise and on which an excise tax under section 4999 of the Code will be
assessed, the payment determined under this Section 23(a) shall be made to the
Executive on the earlier of (i) the date the Bank, the Company or any direct or
indirect subsidiary or affiliate of the Bank is required to withhold such tax,
or (ii) the date the tax is required to be paid by the Executive.
(b) Notwithstanding anything in this Section 23 to the
contrary, in the event that the Executive's liability for the excise tax under
section 4999 of the Code for a taxable year is subsequently determined to be
different than the amount determined by the formula (X + P) x E, where X, P and
E have the meanings provided in Section 23(a), the Executive or the Bank, as the
case may be, shall pay to the other party at the time that the amount of such
excise tax is finally determined, an appropriate amount, plus interest, such
that the payment made under Section 23(a), when increased by the amount of the
payment made to the Executive under this Section 23(b) by the Bank, or when
reduced by the amount of the payment made to the Bank under this Section 23(b)
by the Executive, equals the amount that, it is finally determined, should have
properly been paid to the Executive under Section 23(a). The interest paid under
this Section 23(b) shall be determined at the rate provided under section
1274(b)(2)(B) of the Code. To confirm that the proper amount, if any, was paid
to the Executive under this Section 23, the Executive shall furnish to the Bank
a copy of each tax return which reflects a liability for an excise tax payment
made by the Bank, at least 20 days before the date on which such return is
required to be filed with the Internal Revenue Service.
24. NON-EXCLUSIVITY OF RIGHTS.
Except as otherwise provided herein, nothing in this Agreement
shall prevent or limit the Executive's continuing or future participation in any
plan, program, policy or practice provided by the Bank or any of its affiliated
companies and for which the Executive may qualify, nor shall anything herein
limit or otherwise affect such rights as the Executive may have under any
contract or agreement with the Bank or any of its affiliated companies. Amounts
which are vested benefits or which the Executive is otherwise entitled to
receive under any plan, policy, practice or program of or any contract or
agreement with the Bank or any of its affiliated companies at or subsequent to
the Date of Termination shall be payable in accordance with such plan, policy,
practice or program or contract or agreement except as explicitly modified by
this Agreement. Notwithstanding the foregoing, in the event of a termination of
employment, the amounts provided in Section 4 or Section 5, as applicable, shall
be the Executive's sole remedy for any purported breach of this Agreement by the
Bank.
25. MITIGATION; OTHER CLAIMS.
The Bank's obligation to make the payments provided for in
this Agreement and otherwise to perform its obligations hereunder shall not be
affected by any set-off, counterclaim, recoupment, defense or other claim, right
or action which the Bank may have against the Executive or others. In no event
shall the Executive be obligated to seek other employment or take any other
action by way of mitigation of the amounts payable to the Executive under any of
the provisions of this Agreement and such amounts shall not be reduced whether
or not the Executive obtains other employment.
26. CONFIDENTIAL INFORMATION.
The Executive shall hold in a fiduciary capacity for the
benefit of the Bank all secret or confidential information, knowledge or data
relating to the Bank or any of its affiliated companies, and their respective
businesses, which shall have been obtained by the Executive during the
Executive's employment by the Bank or any of its affiliated companies and which
shall not be or become public knowledge (other than by acts by the Executive or
representatives of the Executive in violation of this Agreement). After
termination of the Executive's employment with the Bank, the Executive shall
not, without the prior written consent of the Bank or as may otherwise be
required by law or legal process, communicate or divulge any such information,
knowledge or data to anyone other than the Bank and those designated by it. For
purposes of this Agreement, secret and confidential information, knowledge or
data relating to the Bank or any of its affiliates, and their respective
business, shall not include any information that is public, publicly available
or available through trade association sources. Notwithstanding any other
provision of this Agreement to the contrary, the Executive acknowledges and
agrees that in the event of a violation or threatened violation of any of the
provisions of this Section 26, the Bank shall have no adequate remedy at law and
shall therefore be entitled to enforce each such provision by temporary or
permanent injunction or mandatory relief obtained in any court of competent
jurisdiction without the necessity of proving damages or posting any bond or
other security, and without prejudice to any other remedies that may be
available at law or in equity.
27. ACCESS TO DOCUMENTS.
The Executive shall have the right to obtain copies of any
Bank or Bank documents that the Executive reasonably believes, in good faith,
are necessary or appropriate in determining his entitlement to, and the amount
of, payments and benefits under this Agreement.
28. REQUIRED REGULATORY PROVISIONS.
The following provisions are included for the purpose of
complying with various laws, rules and regulations applicable to the Bank:
(a) Notwithstanding anything herein contained to the contrary,
in no event shall the aggregate amount of compensation payable to the
Executive under Section 4(b) hereof (exclusive of amounts described in
Sections 4(b)(i) and (ii)) exceed three times the Executive's average
annual total compensation for the last five consecutive calendar years
to end prior to his termination of employment with the Bank (or for his
entire period of employment with the Bank if less than five calendar
years).
(b) Notwithstanding anything herein contained to the contrary,
any payments to the Executive by the Bank, whether pursuant to this
Agreement or otherwise, are subject to and conditioned upon their
compliance with Section 18(k) of the Federal Deposit Insurance Act
("FDI Act"), 12 U.S.C. ss.1828(k), and any regulations promulgated
thereunder.
(c) Notwithstanding anything herein contained to the contrary,
if the Executive is suspended from office and/or temporarily prohibited
from participating in the conduct of the affairs of the Bank pursuant
to a notice served under Section 8(e)(3) or 8(g)(1) of the FDI Act, 12
U.S.C. ss.1818(e)(3) or 1818(g)(1), the Bank's obligations under this
Agreement shall be suspended as of the date of service of such notice,
unless stayed by appropriate proceedings. If the charges in such notice
are dismissed, the Bank, in its discretion, may (i) pay to the
Executive all or part of the compensation withheld while the Bank's
obligations hereunder were suspended and (ii) reinstate, in whole or in
part, any of the obligations which were suspended.
(d) Notwithstanding anything herein contained to the contrary,
if the Executive 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) or 8(g)(1) of the FDI Act, 12 U.S.C.
ss.1818(e)(4) or (g)(1), all prospective obligations of the Bank under
this Agreement shall terminate as of the effective date of the order,
but vested rights and obligations of the Bank and the Executive shall
not be affected.
(e) Notwithstanding anything herein contained to the contrary,
if the Bank is in default (within the meaning of Section 3(x)(1) of the
FDI Act, 12 U.S.C. ss.1813(x)(1), all prospective obligations of the
Bank under this Agreement shall terminate as of the date of default,
but vested rights and obligations of the Bank and the Executive shall
not be affected.
(f) Notwithstanding anything herein contained to the contrary,
all prospective obligations of the Bank hereunder shall be terminated,
except to the extent that a continuation of this Agreement is necessary
for the continued operation of the Bank: (i) by the Director of the OTS
or his or her designee or the FDIC, at the time the FDIC enters into an
agreement to provide assistance to or on behalf of the Bank under the
authority contained in Section 13(c) of the FDI Act, 12 U.S.C.
ss.1823(c); (ii) by the Director of the OTS or his or her designee at
the time such Director or designee approves a supervisory merger to
resolve problems related to the operation of the Bank or when the Bank
is determined by such Director to be in an unsafe or unsound condition.
The vested rights and obligations of the parties shall not be affected.
If and to the extent that any of the foregoing provisions shall cease to be
required by applicable law, rule or regulation, the same shall become
inoperative as though eliminated by formal amendment of this Agreement.
<PAGE>
SIGNATURES
IN WITNESS WHEREOF, JAMAICA SAVINGS BANK FSB. has caused this
Agreement to be executed and its seal to be affixed hereunto by its duly
authorized officer, and the Executive has signed this Agreement, on the 22nd day
of June, 1999.
ATTEST: JAMAICA SAVINGS BANK FSB
By:
Joanne Corrigan Edward P. Henson
- --------------- ----------------
Joanne Corrigan Edward P. Henson
Secretary President
[Seal]
WITNESS:
Joseph J. Hennessy
------------------
Joseph J. Hennessy
<PAGE>
STATE OF NEW YORK )
: ss.:
COUNTY OF NASSAU )
On this 22nd day of June, 1999, before me personally came
Edward P. Henson, to me known, who, being by me duly sworn, did depose and say
that he is President of Jamaica Savings Bank FSB, the federally chartered
savings bank described in and which executed the foregoing instrument; that he
knows the seal of said bank; that the seal affixed to said instrument is such
seal; that it was so affixed by order of the Board of Directors of said bank;
and that he signed his name thereto by like order.
Name:
Notary Public
STATE OF NEW YORK )
: ss.:
COUNTY OF NASSAU )
On this 22nd day of June, 1999, before me personally came
Joseph J. Hennessy, to me known, and known to me to be the individual described
in the foregoing instrument, who, being by me duly sworn, did depose and say
that he resides at the address set forth in said instrument, and that he signed
his name to the foregoing instrument.
Name:
Notary Public
<PAGE>
APPENDIX A
----------
1. INTRODUCTION. Sections 280G and 4999 of the Internal Revenue Code of
1986, as amended ("Code"), impose a 20% non-deductible federal excise tax on a
person if the payments and benefits in the nature of compensation to or for the
benefit of that person that are contingent on a change in the ownership or
effective control of the Company or the Bank or in the ownership of a
substantial portion of the assets of the Company or the Bank (such payments and
benefits are considered "parachute payments" under section 280G) exceed three
times the person's "base amount" under section 280G. Section 23 of the Agreement
provides for the Executive to receive a tax indemnification payment (sometimes
referred to as a "gross-up" payment) if the payments and benefits in the nature
of compensation to or for the benefit of the Executive that are considered
parachute payments cause the imposition of an excise tax under section 4999 of
the Code. Capitalized terms in this Appendix A that are not defined in this
Appendix A have the meaning used in the Employment Agreement with the Executive.
2. PURPOSE. The purpose of this Appendix A is to illustrate how the tax
indemnification or gross-up payment would be computed. The amounts, figures and
rates used in this example are meant to be illustrative and do not reflect the
actual payments and benefits that would be made to the Executive under this
Agreement. For purposes of this example, it is assumed that a change in control
within the meaning of section 280G of the Code has occurred and that:
(a) The value of the insurance benefits required to be provided to a
hypothetical employee "Z" under sections 4(b)(iii) and 5(b) of the
Agreement for medical, dental, life and other insurance benefits
during the unexpired employment period is $23,000.
(b) The annual rate of Z's salary covered by the Agreement is $100,000,
and Z received annual salary increases of 4%, 5% and 6% (i.e., a
three-year average of 5%) for each of the prior three years. Hence,
the amount payable under sections 4(b)(v) and 5(b) of the Agreement
for salary during the unexpired employment period would be $331,013
[$105,000 + $110, 250 + $115,763].
(c) Z received annual bonuses equal to 20% of his salary in each of the
prior three years. Hence, the amount payable under sections 4(b)(v)
and 5(b) of the Agreement for bonuses during the unexpired employment
period would be $66,203 [20% x ($105,000 + $110,250 + $115,763)].
(d) The amount payable under sections 4(b)(vi) and 5(b) of the Agreement
for the present value of the additional RP and BRP accruals during the
unexpired employment period would be $45,000.
(e) The amount payable under sections 4(b)(vii) and 5(b) of the Agreement
for additional contributions to the ESOP, 401(k) Plan and BRP during
the unexpired employment period would be $20,000.
(f) Z's base amount (i.e., average W-2 wages for the five-year period
preceding the change in control) is $87,000.
3. DETERMINE IF Z IS SUBJECT TO AN EXCISE TAX. Z's parachute payments would
total $485,216 [$23,000 + $331,013 + $66,203 + $45,000 + $20,000]. Three times
Z's base amount is $261,000 [3 x $87,000]; accordingly, Z is subject to an
excise tax because $485,216 exceeds $261,000. Z's "excess parachute payments"
under section 280G of the Code are equal to Z's total parachute payments minus
one times Z's base amount, or $398,216 [$485,216 - $87,000]. If Z were not
protected by section 23 of the Agreement, Z would be subjected to an excise tax
of $79,643 [$398,216 x 20%], in addition to ordinary income taxes.
4. Compute Z's Tax Indemnification Payment. Z's tax indemnification payment
under section 23 of the Agreement would be computed pursuant to the following
formula:
E x P .2 x $398,216
X = ------------------------------------ = ----------------------------------
1 - [(FI x (1 - SLI)) + SLI + E + M] 1 - [.368874 + .0685 + .2 + .0145]
where
E = excise tax rate under section 4999 of the Code [20%];
P = the amount with respect to which such excise tax is
assessed determined without regard to section 23 of
the Agreement [$398,216];
FI = the highest effective marginal rate of income tax
applicable to Z under the Code for the taxable year
in question [assumed to be 39.6% in this example, but
in actuality, the rate is adjusted to take into
account any phase-out or loss of deductions, personal
exemptions and other similar adjustments];
SLI = the sum of the highest effective marginal rates of
income tax applicable to Z under applicable state and
local laws for the taxable year in question [assumed
to be 6.85% in this example, but in actuality, the
rate is adjusted to take into account any phase-out
or loss of deductions, personal exemptions and other
similar adjustments]; and
M = the highest marginal rate of Medicare tax applicable
to Z under the Code for the year in question [1.45%].
In this example, the amount of tax indemnification payment due to Z under
section 23 of the Agreement would be $79,643 [.2 x $398,216] divided by 0.348126
[1 - (.368874 + .0685 + .2 + .0145)], or $228,777. Such amount would be payable
in addition to the other amounts payable under the Agreement in order to put Z
in approximately the same after-tax position that Z would have been in if there
were no excise tax imposed under sections 280G and 4999 of the Code. The tax
indemnification to Z of $228,777 would in turn be a parachute payment subject to
excise tax under sections 280G and 4999. Accordingly, Z's actual excess
parachute payment would be $626,993 [$485,216 - $87,000) + $228,777)] resulting
in an excise tax of $125,399 [$626,993 x 20%]. The difference between the
indemnification. payment and the excise tax [$103,378] is an amount equal to the
sum of the income and other applicable taxes due on the indemnification payment
[($228,777 x .368874) + ($228,777 x .0685) + ($228,777 x .0145)], confirming
that the amount of the tax indemnification payment is sufficient to satisfy all
of Z's tax liability resulting from the excess parachute payment.
JAMAICA SAVINGS BANK FSB
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT ("Agreement") is made and entered
into as of June 22, 1999 by and between JAMAICA SAVINGS BANK FSB, a federally
chartered savings bank, having its principal office at 303 Merrick Road,
Lynbrook, New York 11563 ("Bank"), and Daniel J. Huber, an individual residing
at (address omitted) ("Executive"). Any reference to the "Company" in this
Agreement shall mean JSB Financial, Inc. and any successor thereto.
W I T N E S S E T H :
WHEREAS, the Executive is currently serving as Vice President
of the Bank, and the Bank wishes to assure itself of the services of the
Executive for the period provided in this Agreement; and
WHEREAS, the Executive is willing to serve in the employ of
the Bank on the terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the premises and the
mutual covenants and conditions hereinafter set forth, the Bank and the
Executive hereby agree as follows:
1. POSITION AND RESPONSIBILITIES.
During the period of his employment hereunder, the Executive
agrees to serve as Vice President of the Bank. The Executive shall render
administrative and management services to the Bank such as are customarily
performed by persons situated in a similar executive capacity and shall perform
such other duties not inconsistent with his title and office as may be assigned
to him by or under the authority of the Board of Directors of the Bank (the
"Board"). The Executive shall have such authority as is necessary or appropriate
to carry out his assigned duties. Failure to re-elect the Executive as Vice
President of the Bank (or a more senior position) without the consent of the
Executive shall constitute a breach of this Agreement.
2. TERMS.
(a) The period of the Executive's employment under this
Agreement shall be deemed to have commenced as of the date first above written
(the "Effective Date") and shall be for an initial term of three years. Prior to
the first anniversary of the Effective Date of this Agreement and on each
anniversary date thereafter (each, an "Anniversary Date"), the Board shall
review the terms of this Agreement and the Executive's performance of services
hereunder and may, in the absence of objection from the Executive, approve an
extension of the Employment Agreement. In such event, the Employment Agreement
shall be extended to the third anniversary of the relevant Anniversary Date. For
purposes of this Agreement, the term "Employment Period" shall mean the term of
this Agreement plus such extensions as are provided herein.
(b) During the period of his employment hereunder, except for
periods of absence occasioned by illness, disability, holidays, reasonable
vacation periods and reasonable leaves of absence, the Executive shall devote
substantially all of his business time, attention, skill and efforts to the
faithful performance of his duties hereunder including (i) service as Vice
President of the Bank, and, if duly elected, a Director of the Bank, (ii)
performance of such duties not inconsistent with his title and office as may be
assigned to him by or under the authority of the Board or a more senior
executive officer, and (iii) such other activities and services related to the
organization, operation and management of the Bank. During the Employment Period
it shall not be a violation of this Agreement for the Executive to (A) serve on
corporate, civic, industry or charitable boards or committees, (B) deliver
lectures, fulfill speaking engagements or teach at educational institutions and
(C) manage personal investments, so long as such activities do not significantly
interfere with the performance of the Executive's responsibilities as an
employee of the Bank in accordance with this Agreement. It is expressly
understood and agreed that to the extent that any such activities have been
conducted by the Executive prior to the Effective Date, the continued conduct of
such activities (or the conduct of activities similar in nature and scope
thereto) subsequent to the Effective Date shall not thereafter be deemed to
interfere with the performance of the Executive's responsibilities to the Bank.
It is also expressly agreed that the Executive may conduct activities subsequent
to the Effective Date that are generally accepted for an executive in his
position, regardless of whether conducted by the Executive prior to the
Effective Date.
(c) Notwithstanding anything herein contained to the contrary:
(i) the Executive's employment with the Bank may be terminated by the Bank or
the Executive during the term of this Agreement, subject to the terms and
conditions of this Agreement; and (ii) nothing in this Agreement shall mandate
or prohibit a continuation of the Executive's employment following the
expiration of the term of this Agreement upon such terms and conditions as the
Board and the Executive may mutually agree.
(d) For all purposes of this Agreement, the term "Unexpired
Employment Period" as of any date shall mean the period beginning on such date
and ending on the Anniversary Date on which the Employment Period (as extended
pursuant to Section 2(a) of this Agreement) is then scheduled to expire.
3. COMPENSATION AND REIMBURSEMENT.
(a) The compensation specified under this Agreement shall
constitute the salary and benefits paid for the duties described in Section 1.
The Bank shall pay the Executive as compensation a salary at an annual rate of
not less than (salary omitted) per year or such higher rate as may be prescribed
by or under the authority of the Board ("Base Salary"). The Base Salary payable
under this Section 3 shall be paid in approximately equal installments in
accordance with the Bank's customary payroll practices. During the period of
this Agreement, the Executive's Base Salary shall be reviewed at least annually;
the first such review will be made no later than one year from the date of this
Agreement. Such review shall be conducted by a Committee designated by the
Board, and the Board may increase the Executive's Base Salary, which increased
amount shall be considered the Executive's "Base Salary" for purposes of this
Agreement. In no event shall the Executive's annual rate of Base Salary under
this Agreement in effect at a particular time be reduced without his prior
written consent. In addition to the Base Salary provided in this Section 3(a),
the Bank shall provide the Executive at no cost to the Executive with all such
other benefits as are provided uniformly to permanent full-time employees of the
Bank.
(b) The Bank will provide the Executive with employee benefit
plans, arrangements and perquisites substantially equivalent to those in which
the Executive was participating or otherwise deriving benefit from immediately
prior to the beginning of the term of this Agreement, and the Bank will not,
without the Executive's prior written consent, make any changes in such plans,
arrangements or perquisites which would adversely affect the Executive's rights
or benefits thereunder. Without limiting the generality of the foregoing
provisions of this Subsection (b), the Executive will be entitled to participate
in or receive benefits under any employee benefit plans with respect to which
the Executive satisfies the eligibility requirements, including, but not limited
to, the Retirement Plan of Jamaica Savings Bank FSB ("RP"), the Incentive
Savings Plan of Jamaica Savings Bank FSB ("ISP"), the Jamaica Savings Bank FSB
Employee Stock Ownership Plan ("ESOP"), the Benefit Restoration Plan of Jamaica
Savings Bank FSB ("BRP"), the JSB Financial, Inc. 1990 Stock Option Plan, the
JSB Financial, Inc. 1996 Stock Option Plan, retirement plans, supplemental
retirement plans, pension plans, profit-sharing plans, group life, health
(including hospitalization, medical and major medical), dental, accidental death
and dismemberment, travel accident and short-term disability insurance plans, or
any other employee benefit plan or arrangement made available by the Bank in the
future to its senior executives and key management employees, subject to and on
a basis consistent with the terms, conditions and overall administration of such
plans and arrangements. The Executive will be entitled to incentive compensation
and bonuses as provided in any plan of the Bank in which the Executive is
eligible to participate. Nothing paid to the Executive under any such plan or
arrangement will be deemed to be in lieu of other compensation to which the
Executive is entitled under this Agreement.
(c) The Executive's principal place of employment shall be at
the Bank's executive offices at the address first above written, or at such
other location in New York City or in Nassau County or Suffolk County at which
the Bank shall maintain its principal executive offices, or at such other
location as the Board and the Executive may mutually agree upon. The Bank shall
provide the Executive, at his principal place of employment with support
services and facilities suitable to his position with the Bank and necessary or
appropriate in connection with the performance of his assigned duties under this
Agreement. The Bank shall reimburse the Executive for his ordinary and necessary
business expenses, including, without limitation, fees for memberships in such
clubs and organizations as the Executive and the Board shall mutually agree are
necessary and appropriate for business purposes, and travel and entertainment
expenses, incurred in connection with the performance of his duties under this
Agreement, upon presentation to the Bank of an itemized account of such expenses
in such form as the Bank may reasonably require.
4. PAYMENTS TO THE EXECUTIVE UPON AN EVENT OF TERMINATION.
The provisions of this Section shall in all respects be
subject to the terms and conditions stated in Sections 9 and 28.
(a) Upon the occurrence of an Event of Termination (as herein
defined) during the Executive's term of employment under this Agreement, the
provisions of this Section shall apply. As used in this Agreement, an "Event of
Termination" shall mean and include any one or more of the following: (i) the
termination by the Bank or the Company of the Executive's full-time employment
hereunder for any reason other than: following a Change in Control, as defined
in Section 5; for Disability, as defined in Section 6; for Retirement, as
defined in Section 8; for Cause, as defined in Section 9; or upon the
Executive's death; or (ii) unless consented to by the Executive, the Executive's
voluntary resignation from the Bank's employ, upon any: (A) failure to elect or
re-elect or to appoint or re-appoint the Executive as Vice President of the
Bank, (B) material adverse change in the Executive's function, duties, or
responsibilities, which change would cause the Executive's position to become
one of lesser responsibility, importance, or scope from the position and
attributes thereof described in Section 1, above (and any such material change
shall be deemed a continuing breach of this Agreement), (C) relocation of the
Executive's principal place of employment by more than 30 miles from its
location at the Effective Date of this Agreement, or a material reduction in the
benefits and perquisites to the Executive from those being provided as of the
Effective Date of this Agreement, (D) liquidation or dissolution of the Bank or
the Company, or (E) material breach of this Agreement by the Bank. Upon the
occurrence of any event described in clauses (A), (B), (C), (D) or (E), above,
the Executive shall have the right to elect to terminate his employment under
this Agreement by resignation upon written notice pursuant to Section 10 given
within a reasonable period of time not to exceed, except in case of a continuing
breach, four calendar months after the event giving rise to said right to elect.
(b) Upon the occurrence of an Event of Termination as set
forth in Section 4(a), on the Date of Termination, as defined in Section 10, the
Bank shall be obligated to pay, or to provide, the Executive, or, in the event
of his subsequent death, to his surviving spouse or such other beneficiary or
beneficiaries as the Executive may designate in writing, or if neither his
estate, as severance pay or liquidated damages, or both, the benefits provided
below and a payment equal to the sum of the payments set forth below:
(i) payment of the sum of (A) the Executive's annual Base
Salary through the Date of Termination to the extent not theretofore
paid and (B) any compensation previously deferred by the Executive
(together with any accrued interest or earnings thereon) and any
accrued vacation pay, in each case to the extent not theretofore paid
(the sum of the amounts described in clauses (A) and (B) shall be
hereinafter referred to as the "Accrued Obligations");
(ii) the benefits, if any, to which the Executive is entitled
as a former employee under the Bank's or the Company's employee benefit
plans and programs and compensation plans and programs;
(iii) continued group life, health (including hospitalization,
medical and major medical), dental, accidental death and dismemberment,
travel accident and short-term disability insurance benefits as
provided by the Bank or the Company, in addition to that provided
pursuant to Section 4(b)(ii), if and to the extent necessary to provide
for the Executive, for the remaining Unexpired Employment Period,
coverage equivalent to the coverage to which he would have been
entitled if he had continued working for the Bank during the remaining
Unexpired Employment Period at the highest annual rate of salary
achieved during the Employment Period; provided, however, if the
Executive has obtained group life, health (including hospitalization,
medical and major medical), dental, accidental death and dismemberment,
travel accident and/or short-term disability insurance benefits
coverage from another source, the Executive may, as of any month, make
an irrevocable election to forego the continued coverage that would
otherwise be provided hereunder for the remaining Unexpired Employment
Period, or any portion thereof, in which case the Bank or the Company,
upon receipt of the Executive's irrevocable election, shall pay the
Executive an amount equal to the estimated cost to the Bank or the
Company of providing such coverage during such period;
(iv) if and to the extent not already provided under Sections
4(b)(ii) and 4(b)(iii), continued health (including hospitalization,
medical and major medical) and dental insurance benefits to the extent
maintained by the Bank or the Company for its employees or retirees
during the remainder of the Executive's lifetime and the lifetime of
his spouse, if any, for so long as the Executive continues to reimburse
the Bank for the cost of such continued coverage;
(v) a lump sum payment, as liquidated damages, in an amount
equal to the Base Salary and bonus or other incentive compensation that
the Executive would have earned if the Executive had continued working
for the Bank and the Company during the remaining Unexpired Employment
Period (A) at the highest annual rate of Base Salary and bonus or other
incentive compensation achieved by the Executive during the three-year
period immediately preceding the Executive's Date of Termination,
except that (B) in the case of a Change in Control, such lump sum shall
be determined based upon the Base Salary and the bonus or other
incentive compensation, respectively, that the Executive would have
been paid during the remaining Unexpired Employment Period including
the assumed increases referred to in clauses (i) and (ii) of Section
5(b);
(vi) a lump sum payment in an amount equal to the excess, if
any, of: (A) the present value of the pension benefits to which the
Executive would be entitled under the RP and the BRP (and under any
other qualified and non-qualified defined benefit plans maintained by
the Bank or the Company covering the Executive) as if he had continued
working for the Bank during the remaining Unexpired Employment Period
(x) at the highest annual rate of Base Salary and, if applicable, the
highest bonus or other incentive compensation, respectively, achieved
by the Executive during the three-year period immediately preceding the
Executive's Date of Termination, except that (y) in the case of a
Change in Control, such lump sum shall be determined based upon the
Base Salary and, if applicable, the highest bonus or other incentive
compensation, respectively, that the Executive would have been paid
during the remaining Unexpired Employment Period including the assumed
increases referred to in clauses (i) and (ii) of Section 5(b), and (z)
in the case of a Change in Control, as if three additional years are
added to the Executive's age and years of creditable service under the
RP and the BRP and after taking into account any other compensation
required to be taken into account under the RP and the BRP (and any
other qualified and non-qualified defined benefit plans of the Bank or
the Company, as applicable), over (B) the present value of the pension
benefits to which he is actually entitled under the RP and the BRP (and
any other qualified and non-qualified defined benefit plans) as of his
Date of Termination, where such present values are to be determined
using a discount rate of 6% and the mortality tables prescribed under
section 72 of the Internal Revenue Code of 1986, as amended ("Code");
and
(vii) a lump sum payment in an amount equal to the
contributions that would have been made by the Bank or the Company on
the Executive's behalf to the ISP and the ESOP and to the BRP with
respect to such ISP and ESOP contributions (and to any other qualified
and non-qualified defined contribution plans maintained by the Bank or
the Company covering the Executive) as if the Executive had continued
working for the Bank and the Company during the remaining Unexpired
Employment Period making the maximum amount of employee contributions
required, if any, under such plan or plans and earning (A) the highest
annual rate of Base Salary and, if applicable, the highest bonus or
other incentive compensation, respectively, achieved by the Executive
during the three-year period immediately preceding the Executive's Date
of Termination, except that (B) in the case of a Change in Control,
such lump sum shall be determined based upon the Base Salary and, if
applicable, the bonus or other incentive compensation, respectively,
that the Executive would have been paid during the remaining Unexpired
Employment Period including the assumed increases referred to in
clauses (i) and (ii) of Section 5(b).
The benefits to be provided under, and the amounts payable pursuant to, this
Section 4 shall be provided and be payable without regard to proof of damages
and without regard to the Executive's efforts, if any, to mitigate damages. The
Bank and the Executive hereby stipulate that the damages which may be incurred
by the Executive following any such termination of employment are not capable of
accurate measurement as of the date first above written and that such liquidated
damages constitute reasonable damages under the circumstances.
(c) Payments to the Executive under Section 4 shall be made
within ten days of the Executive's Date of Termination.
(d) In the event payments are made under Section 4 or Section
5, the Executive may select an individual or firm to provide him with reasonable
outplacement counseling services, and the Bank shall pay for the costs of such
services; provided, however, that the cost to the Bank of such outplacement
counseling services shall not exceed 25% of the Executive's Base Salary.
5. CHANGE IN CONTROL.
(a) No benefit shall be payable under this Section 5 unless
there shall have been a Change in Control of the Bank or the Company, as set
forth below. For purposes of this Agreement, a "Change in Control" of the Bank
or the Company shall mean any one or more of the following:
(i) An event of a nature that would be required to be reported
in response to Item l(a) of the current report on Form 8-K, as in
effect on the date hereof, pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act");
(ii) An event of a nature that results in a Change in Control
of the Bank or the Company within the meaning of the Home Owners' Loan
Act of 1933, as amended, or the Change in Bank Control Act of 1978, as
amended, as applicable, and the Rules and Regulations promulgated by
the Office of Thrift Supervision ("OTS") or its predecessor agency, the
Federal Deposit Insurance Corporation ("FDIC") or the Board of
Governors of the Federal Reserve System ("FRB"), as the case may be, as
in effect on the date hereof, but excluding any such Change in Control
resulting from the purchase of securities by the Company or the Bank's
or the Company's tax-qualified employee benefit plans and trusts;
(iii) If any "person" (as the term is used in Sections 13(d)
and 14(d) of the Exchange Act) is or becomes the "beneficial owner" (as
defined in Rule 13d-3 under the Exchange Act), directly or indirectly,
of securities of the Bank or the Company representing 20% or more of
the Bank's or the Company's outstanding securities except for any
securities of the Bank purchased by the Company in connection with the
initial conversion of the Bank from mutual to stock form (the
"Conversion") and any securities purchased by the Company or the Bank's
or the Company's tax-qualified employee benefit plans and trusts;
(iv) If the individuals who constitute the Board on the date
hereof (the "Incumbent Board") cease for any reason to constitute at
least a majority of the Board, provided, however, that any person
becoming a director subsequent to the date hereof whose election or
nomination for election by the Company's stockholders, was approved by
a vote of at least three-quarters of the directors then comprising the
Incumbent Board shall be considered as though he were a member of the
Incumbent Board, but excluding, for this purpose, any such person whose
initial assumption of office occurs as a result of an actual or
threatened election contest with respect to the election or removal of
directors or other actual or threatened solicitation of proxies or
consents by or on behalf of a person other than the Board;
(v) A merger, consolidation, reorganization, sale of all or
substantially all the assets of the Bank or the Company or similar
transaction occurs in which the Bank or the Company is not the
resulting entity, other than a transaction following which (A) at least
51% of the equity ownership interests of the entity resulting from such
transaction are beneficially owned (within the meaning of Rule 13d-3
promulgated under Exchange Act) in substantially the same relative
proportions by persons who, immediately prior to such transaction,
beneficially owned (within the meaning of Rule 13d-3 promulgated under
the Exchange Act) at least 51% of the outstanding equity ownership
interests in the Bank or the Company and (B) at least 51% of the
securities entitled to vote generally in the election of directors of
the entity resulting from such transaction are beneficially owned
(within the meaning of Rule 13d-3 promulgated under the Exchange Act)
in substantially the same relative proportions by persons who,
immediately prior to such transaction, beneficially owned (within the
meaning of Rule 13d-3 promulgated under the Exchange Act) at least 51%
of the securities entitled to vote generally in the election of
directors of the Bank or the Company;
(vi) A proxy statement shall be distributed soliciting proxies
from stockholders of the Company, by someone other than the current
management of the Company, seeking stockholder approval of a plan of
reorganization, merger or consolidation of the Company or the Bank or
similar transaction with one or more corporations as a result of which
the outstanding shares of the class of securities then subject to such
plan or transaction are exchanged for or converted into cash or
property or securities not issued by the Bank or the Company; or
(vii) A tender offer is completed for 20% or more of the
voting securities of the Bank or Company then outstanding.
The "Change in Control Date" shall mean the date during the Employment Period on
which a Change in Control occurs. Anything in this Agreement to the contrary
notwithstanding, if the Executive's employment with the Company is terminated
and if it is reasonably demonstrated by the Executive that such termination of
employment (1) was at the request of a third party who has taken steps
reasonably calculated to effect a Change in Control or (2) otherwise arose in
connection with or anticipation of a Change in Control, then for all purposes of
this Agreement the "Change in Control Date" shall mean the date immediately
prior to the date of such termination of employment.
(b) If any of the events described in Section 5(a)
constituting a Change in Control have occurred or the Board has determined that
a Change in Control has occurred, the Executive shall be entitled to the
payments and the benefits provided below on the Change in Control Date. The
amounts payable and the benefits to be provided under this Section 5(b) to the
Executive shall consist of the payments and benefits that would be due to the
Executive and the Executive's family under Section 4(b) for the Unexpired
Employment Period as if an Event of Termination under Section 4(a) had occurred
on the Change in Control Date. For purposes of determining the payments and
benefits due under this Section 5(b), when calculating the payments due and
benefits to be provided for the Unexpired Employment Period, it shall be assumed
that for each year of the remaining term of this Agreement, the Executive would
have received (i) an annual increase in Base Salary equal to the average
percentage increase in Base Salary received by the Executive for the three-year
period ending with the earlier of (x) the year in which the Change in Control
Date occurs or (y) the year during which a definitive agreement, if any,
governing the Change in Control is executed, with the first such increase
effective as of the January 1st next following such three-year period and the
second and third such increases effective as of the next two anniversaries of
such January 1st, (ii) a bonus or other incentive compensation equal to the
highest percentage rate of bonus or incentive compensation paid to the Executive
during the three-year period referred to in clause (i) of this Section 5(b)
times the Base Salary that the Executive would have been paid during the
remaining term of this Agreement including the assumed increases referred to in
clause (i) of this Section 5(b), (iii) the maximum contributions that could be
made by or on behalf of the Executive with respect to any employee benefit plans
and programs maintained by the Company and the Bank based upon the Base Salary
and, if applicable, the bonus or other incentive compensation, respectively,
that the Executive would have been paid during the remaining term of this
Agreement including the assumed increases referred to in clauses (i) and (ii) of
this Section 5(b), and (iv) the present value of the pension benefits to which
the Executive is entitled under Section 4(b)(vi) with respect to the RP and the
BRP (and under any other qualified and non-qualified defined benefit plans
maintained by the Bank or the Company covering the Executive) shall be
determined as if he had continued working for the Bank during the remaining
Unexpired Employment Period and shall be based upon the Base Salary and, if
applicable, the bonus or other incentive compensation, respectively, that the
Executive would have been paid during the remaining term of this Agreement
including the assumed increases referred to in clauses (i) and (ii) of this
Section 5(b). The benefits to be provided under, and the amounts payable
pursuant to, this Section 5 shall be provided and be payable without regard to
proof of damages and without regard to the Executive's efforts, if any, to
mitigate damages. The Bank and the Executive hereby stipulate that the damages
which may be incurred by the Executive following any Change in Control are not
capable of accurate measurement as of the date first above written and that such
liquidated damages constitute reasonable damages under the circumstances.
(c) Payments under Section 5(b) shall be made to the Executive
on the Change in Control Date. Such payments shall be made regardless of whether
the Executive's employment terminates.
6. TERMINATION FOR DISABILITY.
(a) In the event of Termination for Disability, the Executive
shall receive the benefits provided in Section 6(b); provided, however, that the
benefits provided under Section 6(b) shall not be deemed to be in lieu of the
benefits he is otherwise entitled as a former employee under the Bank or the
Company's employee plans and programs. For purposes of this Agreement, the
Executive may be terminated for disability only if (i) the Executive shall have
been absent from his duties with the Bank on a full-time basis for at least six
consecutive months, or (ii) a majority of the members of the Board acting in
good faith determine that, based upon competent and independent medical evidence
presented by a physician or physicians agreed upon by the parties, the
Executive's physical or mental condition is such that he is totally and
permanently incapable of engaging in any substantial gainful employment based
upon his education, training and experience; provided, however, that on and
after the earliest date on which a Change in Control of the Bank or the Company
as defined in Section 5 occurs, such a determination shall require the
affirmative vote of at least three-fourths of the members of the Board acting in
good faith and such vote shall not be made prior to the expiration of a 60-day
period following the date on which the Board shall, by written notice to the
Executive, furnish him a statement of its grounds for proposing to make such
determination, during which period the Executive shall be afforded a reasonable
opportunity to make oral and written presentations to the members of the Board,
and to be represented by his legal counsel at such presentations, to refute the
grounds for the proposed determination.
(b) The Bank will pay the Executive as Disability pay, a
bi-weekly payment equal to 100% of the Executive's bi-weekly annual rate of Base
Salary in effect on the date of the Executive's Termination for Disability. In
addition, the Bank will cause to be continued insurance coverage, including
group life, health (including hospitalization, medical and major medical),
dental, accidental death and dismemberment, travel accident and short-term
disability coverage substantially identical to the coverage maintained by the
Bank or the Company for the Executive prior to his Termination for Disability.
The Disability pay and coverages shall commence on the effective date of the
Executive's termination and shall cease upon the earliest to occur of: (i) the
date the Executive returns to the full-time employment of the Bank, in the same
capacity as he was employed prior to his Termination for Disability and pursuant
to an employment agreement between the Executive and the Bank; (ii) the
Executive's full-time employment by another employer; (iii) the Executive's
attaining the normal age of retirement or receiving benefits under the RP or
other defined benefit pension plan of the Bank or the Company; (iv) the
Executive's death; (v) the Executive's eligibility to collect payments under the
disability provision of the RP or other defined benefit pension plan of the Bank
or the Company; or (vi) the expiration of the term of this Agreement.
(c) Notwithstanding the foregoing, there will be no reduction
in the compensation otherwise payable to the Executive during any period during
which the Executive is incapable of performing his duties hereunder by reason of
temporary disability.
7. TERMINATION UPON DEATH.
The Executive's employment shall terminate automatically upon
the Executive's death during the Employment Period. In such event, the Executive
and the Executive's legal representatives shall be entitled to the following:
(i) payment of the Executive's "Accrued Obligations;"
(ii) the continuation of all benefits to the Executive's
family and dependents that would have been provided if the Executive
had been entitled to the benefits under Section 4(b)(ii), (iii) and
(iv), and
(iii) the timely payment of any other amounts or benefits
required to be paid or provided or which the Executive is eligible to
receive under any plan, program, policy or practice or contract or
agreement of the Bank and its affiliated companies (all such other
amounts and benefits shall be hereinafter referred to as the "Other
Benefits");
provided, however, that if the Executive dies while in the employment of the
Bank, the amount of life insurance provided to the Executive by the Bank shall
not be less than the lesser of $200,000 or three times the Executive's then
annual Base Salary. Accrued Obligations shall be paid to the Executive's estate
or beneficiary, as applicable, in a lump sum cash payment within ten days of the
Date of Termination. With respect to the provision of Other Benefits after the
Change in Control Date, the term Other Benefits as utilized in this Section 7
shall include, without limitation, that the Executive's estate and/or
beneficiaries shall be entitled to receive, benefits at least equal to the most
favorable benefits provided by the Bank and affiliated companies to the estates
and beneficiaries of peer executives of the Bank and such affiliates companies
under such plans, programs, practices and policies relating to death benefits,
if any, as in effect with respect to other peer executives and their
beneficiaries at any time during the 120-day period immediately preceding the
Change in Control Date.
8. TERMINATION UPON RETIREMENT.
Termination by the Bank of the Executive based on "Retirement"
shall mean termination in accordance with the Company's or the Bank's retirement
policy or in accordance with any retirement arrangement established with the
Executive's consent with respect to him. Upon termination of the Executive upon
Retirement, the Executive shall be entitled to all benefits under the RP and any
other retirement plan of the Bank or the Company and other plans to which the
Executive is a party, and the Executive shall be entitled to the benefits, if
any, that would be payable to him as a former employee under the Bank's or the
Company's employee benefit plans and programs and compensation plans and
programs.
9. TERMINATION FOR CAUSE.
The terms "Termination for Cause" or "Cause" shall mean
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 any material breach of
this Agreement, in such case as measured against standards generally prevailing
at the relevant time in the savings and community banking industry. For purposes
of this Section, no act, or the failure to act, on the Executive's part shall be
"willful" unless done, or omitted to be done, in bad faith and without
reasonable belief that the action or omission was in the best interest of the
Bank or its affiliates. Any act, or failure to act, based upon authority given
pursuant to a resolution duly adopted by the Board or based upon the written
advice of counsel for the Bank shall be conclusively presumed to be done, or
omitted to be done, by the Executive in good faith and in the best interests of
the Bank. Notwithstanding the foregoing, the Executive shall not be deemed to
have been terminated for Cause unless and until there shall have been delivered
to him a Notice of Termination which shall include a copy of a resolution duly
adopted by the affirmative vote of not less than three-fourths of the members of
the Board at a meeting of the Board called and held for that purpose (after
reasonable notice to the Executive and an opportunity for him, together with
counsel, to be heard before the Board), finding that in the good faith opinion
of the Board, the Executive was guilty of conduct justifying Termination for
Cause and specifying the particulars thereof in detail. The Executive shall not
have the right to receive compensation or other benefits for any period after
Termination for Cause.
10. NOTICE.
(a) Any purported termination by the Bank or by the Executive
shall be communicated by a Notice of Termination to the other party hereto. For
purposes of this Agreement, a "Notice of Termination" shall mean a written
notice which shall indicate the specific termination provision in this Agreement
relied upon and shall set forth in reasonable detail the facts and circumstances
claimed to provide a basis for termination of the Executive's employment under
the provision so indicated.
(b) Subject to Section 10(c), "Date of Termination" shall mean
(A) if the Executive's employment is terminated for Disability, 30 days after a
Notice of Termination is given (provided that he shall not have returned to the
performance of his duties on a full-time basis during such 30-day period), and
(B) if his employment is terminated for any other reason, the date specified in
the Notice of Termination (which, in the case of a Termination for Cause, shall
be immediate).
(c) If, within 30 days after any Notice of Termination is
given, the party receiving such Notice of Termination notifies the other party
that a dispute exists concerning the termination, then, except upon the
occurrence of a Change in Control and voluntary termination by the Executive in
which case the Date of Termination shall be the date specified in the Notice,
the Date of Termination shall be the date on which the dispute is finally
determined, either by mutual written agreement of the parties, by a binding
arbitration award, or by a final judgment, order or decree of a court of
competent jurisdiction (the time for appeal therefrom having expired and no
appeal having been perfected) and provided further that the Date of Termination
shall be extended by a notice of dispute only if such notice is given in good
faith and the party giving such notice pursues the resolution of such dispute
with reasonable diligence. Notwithstanding the pendency of any such dispute, the
Bank will continue to pay the Executive his full compensation in effect when the
notice giving rise to the dispute was given (including, but not limited to, Base
Salary) and continue him as a participant in all compensation, benefit and
insurance plans in which he was participating when the notice of dispute was
given, until the dispute is finally resolved in accordance with this Agreement.
Amounts paid under this Section are in addition to all other amounts due under
this Agreement and shall not be offset against or reduce any other amounts due
under this Agreement.
(d) The Bank may terminate the Executive's employment at any
time, but any termination by the Bank, other than Termination for Cause, shall
not prejudice the Executive's right to compensation or other benefits under this
Agreement or under any other benefit or compensation plans or programs
maintained by the Bank or the Company from time to time. The Executive shall not
have the right to receive compensation or other benefits for any period after a
Termination for Cause as defined in Section 9 hereinabove.
(e) Any communication to a party required or permitted under
this Agreement, including any notice, direction, designation, consent,
instruction, objection or waiver, shall be in writing and shall be deemed to
have been given at such time as it is delivered personally, or five days after
mailing if mailed, postage prepaid, by registered or certified mail, return
receipt requested, addressed to such party at the address listed below or at
such other address as one such party may by written notice specify to the other
party, as follows. If to the Executive, (address omitted); if to the Bank,
Jamaica Savings Bank FSB, 303 Merrick Road, Lynbrook, New York 11563, Attention:
President, with a copy to Thacher Proffitt & Wood, Two World Trade Center, New
York, New York 10048, Attention: Douglas J. McClintock, Esq.
11. POST-TERMINATION OBLIGATIONS.
(a) All payments and benefits to the Executive under this
Agreement shall be subject to the Executive's compliance with paragraph (b) of
this Section 11 during the term of this Agreement and for one full year after
the expiration or termination hereof.
(b) The Executive shall, upon reasonable notice, furnish such
information and assistance to the Bank as may reasonably be required by the Bank
in connection with any litigation in which it or any of its subsidiaries or
affiliates is, or may become, a party; provided, that the Bank reimburses the
Executive for the reasonable value of his time in connection therewith and for
any out-of-pocket costs attributable thereto.
12. COVENANT NOT TO COMPETE.
The Executive hereby covenants and agrees that for a period of
one year following his Date of Termination, if such termination occurs prior to
the end of the term of the Agreement, he shall not, without the written consent
of the Board, become an officer, employee, consultant, director or trustee of
any savings bank, savings and loan association, savings and loan holding
company, bank or bank holding company if such position (a) entails working in
(or providing services in) New York City, Nassau or Suffolk counties or (b)
entails working in (or providing services in) any other county that is both (i)
within the Bank's primary trade (or operating) area at the time in question,
which shall be determined by reference to the Bank's business plan as in effect
from time to time, and (ii) in which the Bank engages in material or substantial
deposit-taking functions or lending activities at such time; provided, however,
that this Section 12 shall not apply if the Executive's employment is terminated
for the reasons set forth in any of Sections 4, 5, 6 or 8.
13. SOURCE OF PAYMENTS.
All payments provided in this Agreement shall be timely paid
in cash or check from the general funds of the Bank.
14. EFFECT ON PRIOR AGREEMENTS.
This Agreement contains the entire understanding between the
parties hereto and supersedes any prior employment agreement between the Bank or
any predecessor of the Bank and the Executive, except that this Agreement shall
not affect or operate to reduce any benefit or compensation inuring to the
Executive of a kind elsewhere provided. No provisions of this Agreement shall be
interpreted to mean that the Executive is subject to receiving fewer benefits
than those available to him without reference to this Agreement.
15. EFFECT OF ACTION UNDER COMPANY AGREEMENT.
Notwithstanding any provision herein to the contrary, to the
extent that full compensation payments and benefits are paid to or received by
the Executive under the Employment Agreement, dated June 22, 1999, as it may be
amended from time to time, between the Executive and the Company, such
compensation payments and benefits paid by the Company will be deemed to satisfy
the corresponding obligations of the Bank under this Agreement.
16. NO ATTACHMENT.
Except as required by law, no right to receive payments under
this Agreement shall be subject to anticipation, commutation, alienation, sale,
assignment, encumbrance, charge, pledge, or hypothecation, or to execution,
attachment, levy, or similar process or assignment by operation of law, and any
attempt, voluntary or involuntary, to affect any such action shall be null,
void, and of no effect.
17. MODIFICATION AND WAIVER.
(a) This Agreement may not be modified or amended except by an
instrument in writing signed by the parties hereto.
(b) No term or condition of this Agreement shall be deemed to
have been waived, nor shall there be any estoppel against the enforcement of any
provision of this Agreement, except by written instrument of the party charged
with such waiver or estoppel. No such written waiver shall be deemed a
continuing waiver unless specifically stated therein, and each such waiver shall
operate only as to the specific term or condition waived and shall not
constitute a waiver of such term or condition for the future as to any act other
than that specifically waived.
18. SUCCESSOR AND ASSIGNS.
This Agreement will inure to the benefit of and be binding
upon the Executive, his legal representatives and testate or intestate
distributees, and the Bank, its successors and assigns, including any successor
by purchase, merger, consolidation or otherwise or a statutory receiver or any
other person or firm or corporation to which all or substantially all of the
assets and business of the Bank may be sold or otherwise transferred. Any such
successor of the Bank shall be deemed to have assumed this Agreement and to have
become obligated hereunder to the same extent as the Bank and the Executive's
obligations hereunder shall continue in favor of such successor.
19. SEVERABILITY.
If, for any reason, any provision of this Agreement, or any
part of any provision, is held invalid, such invalidity shall not affect any
other provision of this Agreement or any part of such provision not held so
invalid, and each such other provision and part thereof shall to the full extent
consistent with law continue in full force and effect.
20. HEADINGS FOR REFERENCE ONLY.
The headings of Sections and paragraphs herein are included
solely for convenience of reference and shall not control the meaning or
interpretation of any of the provisions of this Agreement. Any reference in this
Agreement to a Section or Subsection shall refer to a Section or Subsection of
this Agreement, except as otherwise specified.
21. GOVERNING LAW.
This Agreement shall be governed by the laws of the State of
New York, without reference to conflicts of law principles.
22. INDEMNIFICATION AND ATTORNEYS' FEES.
(a) The Bank shall indemnify, hold harmless and defend the
Executive against reasonable costs, including legal fees, incurred by him in
connection with his consultation with legal counsel or arising out of any
action, suit or proceeding in which he may be involved, as a result of his
efforts, in good faith, to defend or enforce the terms of this Agreement. The
Bank agrees to pay all such costs as they are incurred by the Executive, to the
full extent permitted by law, and without regard to whether the Bank believes
that it has a defense to any action, suit or proceeding by the Executive or that
it is not obligated for any payments under this Agreement.
(b) In the event any dispute or controversy arising under or
in connection with the Executive's termination is resolved in favor of the
Executive, whether by judgment, arbitration or settlement, the Executive shall
be entitled to the payment of all back-pay, including salary, bonuses and any
other cash compensation, fringe benefits and any compensation and benefits due
the Executive under this Agreement.
(c) The Bank shall indemnify, hold harmless and defend the
Executive for any act taken or not taken, or any omission or failure to act, by
him in good faith while performing services for the Bank or the Company to the
same extent and upon the same terms and conditions as other similarly situated
officers and directors of the Bank or the Company. If and to the extent that the
Bank or the Company, maintains, at any time during the Employment Period, an
insurance policy covering the other officers and directors of the Bank or the
Company against lawsuits, the Bank or the Company shall use its best efforts to
cause the Executive to be covered under such policy upon the same terms and
conditions as other similarly situated officers and directors.
23. TAX INDEMNIFICATION.
(a) Subject to the provisions of Section 28 hereof, this
Section 23 shall apply if a change "in the ownership or effective control" of
the Bank or "in the ownership of a substantial portion of the assets" of the
Bank occurs within the meaning of section 280G of the Code. If this Section 23
applies, then with respect to any taxable year in which the Executive shall be
liable for the payment of an excise tax under section 4999 of the Code with
respect to any payment in the nature of compensation made by the Bank, the
Company or any direct or indirect subsidiary or affiliate of the Bank to (or
for the benefit of) the Executive, the Bank shall pay to the Executive an amount
equal to X determined under the following formula:
X = E x P
-------------------------------------------------
1 - [(FI x (1 - SLI)) + SLI + E + M]
where
E = the rate at which the excise tax is assessed under
section 4999 of the Code;
P = the amount with respect to which such excise tax is
assessed, determined without regard to this Section
23;
FI = the highest effective marginal rate of income tax
applicable to the Executive under the Code for the
taxable year in question (taking into account any
phase-out or loss of deductions, personal exemptions
and other similar adjustments);
SLI = the sum of the highest effective marginal rates of
income tax applicable to the Executive under all
applicable state and local laws for the taxable year
in question (taking into account any phase-out or
loss of deductions, personal exemptions and other
similar adjustments); and
M = the highest marginal rate of Medicare tax
applicable to the Executive under the Code for the
taxable year in question.
Attached as Appendix A to this Agreement is an example that illustrates
application of this Section 23. Any payment under this Section 23 shall be
adjusted so as to fully indemnify the Executive on an after-tax basis so that
the Executive would be in the same after-tax financial position in which he
would have been if no excise tax under section 4999 of the Code had been
imposed. With respect to any payment in the nature of compensation that is made
to (or for the benefit of) the Executive under the terms of this Agreement or
otherwise and on which an excise tax under section 4999 of the Code will be
assessed, the payment determined under this Section 23(a) shall be made to the
Executive on the earlier of (i) the date the Bank, the Company or any direct or
indirect subsidiary or affiliate of the Bank is required to withhold such tax,
or (ii) the date the tax is required to be paid by the Executive.
(b) Notwithstanding anything in this Section 23 to the
contrary, in the event that the Executive's liability for the excise tax under
section 4999 of the Code for a taxable year is subsequently determined to be
different than the amount determined by the formula (X + P) x E, where X, P and
E have the meanings provided in Section 23(a), the Executive or the Bank, as the
case may be, shall pay to the other party at the time that the amount of such
excise tax is finally determined, an appropriate amount, plus interest, such
that the payment made under Section 23(a), when increased by the amount of the
payment made to the Executive under this Section 23(b) by the Bank, or when
reduced by the amount of the payment made to the Bank under this Section 23(b)
by the Executive, equals the amount that, it is finally determined, should have
properly been paid to the Executive under Section 23(a). The interest paid under
this Section 23(b) shall be determined at the rate provided under section
1274(b)(2)(B) of the Code. To confirm that the proper amount, if any, was paid
to the Executive under this Section 23, the Executive shall furnish to the Bank
a copy of each tax return which reflects a liability for an excise tax payment
made by the Bank, at least 20 days before the date on which such return is
required to be filed with the Internal Revenue Service.
<PAGE>
24. NON-EXCLUSIVITY OF RIGHTS.
Except as otherwise provided herein, nothing in this Agreement
shall prevent or limit the Executive's continuing or future participation in any
plan, program, policy or practice provided by the Bank or any of its affiliated
companies and for which the Executive may qualify, nor shall anything herein
limit or otherwise affect such rights as the Executive may have under any
contract or agreement with the Bank or any of its affiliated companies. Amounts
which are vested benefits or which the Executive is otherwise entitled to
receive under any plan, policy, practice or program of or any contract or
agreement with the Bank or any of its affiliated companies at or subsequent to
the Date of Termination shall be payable in accordance with such plan, policy,
practice or program or contract or agreement except as explicitly modified by
this Agreement. Notwithstanding the foregoing, in the event of a termination of
employment, the amounts provided in Section 4 or Section 5, as applicable, shall
be the Executive's sole remedy for any purported breach of this Agreement by the
Bank.
25. MITIGATION; OTHER CLAIMS.
The Bank's obligation to make the payments provided for in
this Agreement and otherwise to perform its obligations hereunder shall not be
affected by any set-off, counterclaim, recoupment, defense or other claim, right
or action which the Bank may have against the Executive or others. In no event
shall the Executive be obligated to seek other employment or take any other
action by way of mitigation of the amounts payable to the Executive under any of
the provisions of this Agreement and such amounts shall not be reduced whether
or not the Executive obtains other employment.
26. CONFIDENTIAL INFORMATION.
The Executive shall hold in a fiduciary capacity for the
benefit of the Bank all secret or confidential information, knowledge or data
relating to the Bank or any of its affiliated companies, and their respective
businesses, which shall have been obtained by the Executive during the
Executive's employment by the Bank or any of its affiliated companies and which
shall not be or become public knowledge (other than by acts by the Executive or
representatives of the Executive in violation of this Agreement). After
termination of the Executive's employment with the Bank, the Executive shall
not, without the prior written consent of the Bank or as may otherwise be
required by law or legal process, communicate or divulge any such information,
knowledge or data to anyone other than the Bank and those designated by it. For
purposes of this Agreement, secret and confidential information, knowledge or
data relating to the Bank or any of its affiliates, and their respective
business, shall not include any information that is public, publicly available
or available through trade association sources. Notwithstanding any other
provision of this Agreement to the contrary, the Executive acknowledges and
agrees that in the event of a violation or threatened violation of any of the
provisions of this Section 26, the Bank shall have no adequate remedy at law and
shall therefore be entitled to enforce each such provision by temporary or
permanent injunction or mandatory relief obtained in any court of competent
jurisdiction without the necessity of proving damages or posting any bond or
other security, and without prejudice to any other remedies that may be
available at law or in equity.
27. ACCESS TO DOCUMENTS.
The Executive shall have the right to obtain copies of any
Bank or Bank documents that the Executive reasonably believes, in good faith,
are necessary or appropriate in determining his entitlement to, and the amount
of, payments and benefits under this Agreement.
28. REQUIRED REGULATORY PROVISIONS.
The following provisions are included for the purpose of
complying with various laws, rules and regulations applicable to the Bank:
(a) Notwithstanding anything herein contained to the contrary,
in no event shall the aggregate amount of compensation payable to the
Executive under Section 4(b) hereof (exclusive of amounts described in
Sections 4(b)(i) and (ii)) exceed three times the Executive's average
annual total compensation for the last five consecutive calendar years
to end prior to his termination of employment with the Bank (or for his
entire period of employment with the Bank if less than five calendar
years).
(b) Notwithstanding anything herein contained to the contrary,
any payments to the Executive by the Bank, whether pursuant to this
Agreement or otherwise, are subject to and conditioned upon their
compliance with Section 18(k) of the Federal Deposit Insurance Act
("FDI Act"), 12 U.S.C.
ss.1828(k), and any regulations promulgated thereunder.
(c) Notwithstanding anything herein contained to the contrary,
if the Executive is suspended from office and/or temporarily prohibited
from participating in the conduct of the affairs of the Bank pursuant
to a notice served under Section 8(e)(3) or 8(g)(1) of the FDI Act, 12
U.S.C. ss.1818(e)(3) or 1818(g)(1), the Bank's obligations under this
Agreement shall be suspended as of the date of service of such notice,
unless stayed by appropriate proceedings. If the charges in such notice
are dismissed, the Bank, in its discretion, may (i) pay to the
Executive all or part of the compensation withheld while the Bank's
obligations hereunder were suspended and (ii) reinstate, in whole or in
part, any of the obligations which were suspended.
(d) Notwithstanding anything herein contained to the contrary,
if the Executive 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) or 8(g)(1) of the FDI Act, 12 U.S.C.
ss.1818(e)(4) or (g)(1), all prospective obligations of the Bank under
this Agreement shall terminate as of the effective date of the order,
but vested rights and obligations of the Bank and the Executive shall
not be affected.
(e) Notwithstanding anything herein contained to the contrary,
if the Bank is in default (within the meaning of Section 3(x)(1) of the
FDI Act, 12 U.S.C. ss.1813(x)(1), all prospective obligations of the
Bank under this Agreement shall terminate as of the date of default,
but vested rights and obligations of the Bank and the Executive shall
not be affected.
(f) Notwithstanding anything herein contained to the contrary,
all prospective obligations of the Bank hereunder shall be terminated,
except to the extent that a continuation of this Agreement is necessary
for the continued operation of the Bank: (i) by the Director of the OTS
or his or her designee or the FDIC, at the time the FDIC enters into an
agreement to provide assistance to or on behalf of the Bank under the
authority contained in Section 13(c) of the FDI Act, 12 U.S.C.
ss.1823(c); (ii) by the Director of the OTS or his or her designee at
the time such Director or designee approves a supervisory merger to
resolve problems related to the operation of the Bank or when the Bank
is determined by such Director to be in an unsafe or unsound condition.
The vested rights and obligations of the parties shall not be affected.
If and to the extent that any of the foregoing provisions shall cease to be
required by applicable law, rule or regulation, the same shall become
inoperative as though eliminated by formal amendment of this Agreement.
<PAGE>
SIGNATURES
IN WITNESS WHEREOF, JAMAICA SAVINGS BANK FSB. has caused this
Agreement to be executed and its seal to be affixed hereunto by its duly
authorized officer, and the Executive has signed this Agreement, on the 22nd day
of June, 1999.
ATTEST: JAMAICA SAVINGS BANK FSB
Joanne Corrigan By: Edward P. Henson
- --------------- ----------------
Joanne Corrigan Edward P. Henson
Secretary President
[Seal]
WITNESS:
Daniel J. Huber
---------------
Daniel J. Huber
<PAGE>
STATE OF NEW YORK )
: ss.:
COUNTY OF NASSAU )
On this 22nd day of June, 1999, before me personally came
Edward P. Henson, to me known, who, being by me duly sworn, did depose and say
that he is President of Jamaica Savings Bank FSB, the federally chartered
savings bank described in and which executed the foregoing instrument; that he
knows the seal of said bank; that the seal affixed to said instrument is such
seal; that it was so affixed by order of the Board of Directors of said bank;
and that he signed his name thereto by like order.
Name:
Notary Public
STATE OF NEW YORK )
: ss.:
COUNTY OF NASSAU )
On this 22nd day of June, 1999, before me personally came
Daniel J. Huber, to me known, and known to me to be the individual described in
the foregoing instrument, who, being by me duly sworn, did depose and say that
he resides at the address set forth in said instrument, and that he signed his
name to the foregoing instrument.
Name:
Notary Public
<PAGE>
APPENDIX A
----------
1. INTRODUCTION. Sections 280G and 4999 of the Internal Revenue Code of
1986, as amended ("Code"), impose a 20% non-deductible federal excise tax on a
person if the payments and benefits in the nature of compensation to or for the
benefit of that person that are contingent on a change in the ownership or
effective control of the Company or the Bank or in the ownership of a
substantial portion of the assets of the Company or the Bank (such payments and
benefits are considered "parachute payments" under section 280G) exceed three
times the person's "base amount" under section 280G. Section 23 of the Agreement
provides for the Executive to receive a tax indemnification payment (sometimes
referred to as a "gross-up" payment) if the payments and benefits in the nature
of compensation to or for the benefit of the Executive that are considered
parachute payments cause the imposition of an excise tax under section 4999 of
the Code. Capitalized terms in this Appendix A that are not defined in this
Appendix A have the meaning used in the Employment Agreement with the Executive.
2. PURPOSE. The purpose of this Appendix A is to illustrate how the tax
indemnification or gross-up payment would be computed. The amounts, figures and
rates used in this example are meant to be illustrative and do not reflect the
actual payments and benefits that would be made to the Executive under this
Agreement. For purposes of this example, it is assumed that a change in control
within the meaning of section 280G of the Code has occurred and that:
(a) The value of the insurance benefits required to be provided to a
hypothetical employee "Z" under sections 4(b)(iii) and 5(b) of the
Agreement for medical, dental, life and other insurance benefits
during the unexpired employment period is $23,000.
(b) The annual rate of Z's salary covered by the Agreement is $100,000,
and Z received annual salary increases of 4%, 5% and 6% (i.e., a
three-year average of 5%) for each of the prior three years. Hence,
the amount payable under sections 4(b)(v) and 5(b) of the Agreement
for salary during the unexpired employment period would be $331,013
[$105,000 + $110, 250 + $115,763].
(c) Z received annual bonuses equal to 20% of his salary in each of the
prior three years. Hence, the amount payable under sections 4(b)(v)
and 5(b) of the Agreement for bonuses during the unexpired employment
period would be $66,203 [20% x ($105,000 + $110,250 + $115,763)].
(d) The amount payable under sections 4(b)(vi) and 5(b) of the Agreement
for the present value of the additional RP and BRP accruals during the
unexpired employment period would be $45,000.
(e) The amount payable under sections 4(b)(vii) and 5(b) of the Agreement
for additional contributions to the ESOP, 401(k) Plan and BRP during
the unexpired employment period would be $20,000.
(f) Z's base amount (i.e., average W-2 wages for the five-year period
preceding the change in control) is $87,000.
3. DETERMINE IF Z IS SUBJECT TO AN EXCISE TAX. Z's parachute payments would
total $485,216 [$23,000 + $331,013 + $66,203 + $45,000 + $20,000]. Three times
Z's base amount is $261,000 [3 x $87,000]; accordingly, Z is subject to an
excise tax because $485,216 exceeds $261,000. Z's "excess parachute payments"
under section 280G of the Code are equal to Z's total parachute payments minus
one times Z's base amount, or $398,216 [$485,216 - $87,000]. If Z were not
protected by section 23 of the Agreement, Z would be subjected to an excise tax
of $79,643 [$398,216 x 20%], in addition to ordinary income taxes.
4. Compute Z's Tax Indemnification Payment. Z's tax indemnification payment
under section 23 of the Agreement would be computed pursuant to the following
formula:
E x P .2 x $398,216
X = ------------------------------------ = ----------------------------------
1 - [(FI x (1 - SLI)) + SLI + E + M] 1 - [.368874 + .0685 + .2 + .0145]
where
E = excise tax rate under section 4999 of the Code [20%];
P = the amount with respect to which such excise tax is
assessed determined without regard to section 23 of
the Agreement [$398,216];
FI = the highest effective marginal rate of income tax
applicable to Z under the Code for the taxable year
in question [assumed to be 39.6% in this example, but
in actuality, the rate is adjusted to take into
account any phase-out or loss of deductions, personal
exemptions and other similar adjustments];
SLI = the sum of the highest effective marginal rates of
income tax applicable to Z under applicable state and
local laws for the taxable year in question [assumed
to be 6.85% in this example, but in actuality, the
rate is adjusted to take into account any phase-out
or loss of deductions, personal exemptions and other
similar adjustments]; and
M = the highest marginal rate of Medicare tax applicable
to Z under the Code for the year in question [1.45%].
In this example, the amount of tax indemnification payment due to Z under
section 23 of the Agreement would be $79,643 [.2 x $398,216] divided by 0.348126
[1 - (.368874 + .0685 + .2 + .0145)], or $228,777. Such amount would be payable
in addition to the other amounts payable under the Agreement in order to put Z
in approximately the same after-tax position that Z would have been in if there
were no excise tax imposed under sections 280G and 4999 of the Code. The tax
indemnification to Z of $228,777 would in turn be a parachute payment subject to
excise tax under sections 280G and 4999. Accordingly, Z's actual excess
parachute payment would be $626,993 [$485,216 - $87,000) + $228,777)] resulting
in an excise tax of $125,399 [$626,993 x 20%]. The difference between the
indemnification. payment and the excise tax [$103,378] is an amount equal to the
sum of the income and other applicable taxes due on the indemnification payment
[($228,777 x .368874) + ($228,777 x .0685) + ($228,777 x .0145)], confirming
that the amount of the tax indemnification payment is sufficient to satisfy all
of Z's tax liability resulting from the excess parachute payment.
JAMAICA SAVINGS BANK FSB
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT ("Agreement") is made and entered
into as of June 22, 1999 by and between JAMAICA SAVINGS BANK FSB, a federally
chartered savings bank, having its principal office at 303 Merrick Road,
Lynbrook, New York 11563 ("Bank"), and Lawrence J. Kane, an individual residing
at (address omitted) ("Executive"). This Agreement amends, restates and
supersedes the Employment Agreement dated as of June 27, 1996 and the
Supplemental Employment Agreement dated as of July 9, 1996 by and between the
Bank and the Executive. Any reference to the "Company" in this Agreement shall
mean JSB Financial, Inc. and any successor thereto.
W I T N E S S E T H :
WHEREAS, the Executive is currently serving as Executive Vice
President of the Bank, and the Bank wishes to assure itself of the services of
the Executive for the period provided in this Agreement; and
WHEREAS, the Executive is willing to serve in the employ of
the Bank on the terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the premises and the
mutual covenants and conditions hereinafter set forth, the Bank and the
Executive hereby agree as follows:
1. POSITION AND RESPONSIBILITIES.
During the period of his employment hereunder, the Executive
agrees to serve as Executive Vice President of the Bank. The Executive shall
render administrative and management services to the Bank such as are
customarily performed by persons situated in a similar executive capacity and
shall perform such other duties not inconsistent with his title and office as
may be assigned to him by or under the authority of the Board of Directors of
the Bank (the "Board"). The Executive shall have such authority as is necessary
or appropriate to carry out his assigned duties. Failure to re-elect the
Executive as Executive Vice President of the Bank (or a more senior position)
without the consent of the Executive shall constitute a breach of this
Agreement.
2. TERMS.
(a) The period of the Executive's employment under this
Agreement shall be deemed to have commenced as of the date first above written
(the "Effective Date") and shall be for an initial term of three years. Prior to
the first anniversary of the Effective Date of this Agreement and on each
anniversary date thereafter (each, an "Anniversary Date"), the Board shall
review the terms of this Agreement and the Executive's performance of services
hereunder and may, in the absence of objection from the Executive, approve an
extension of the Employment Agreement. In such event, the Employment Agreement
shall be extended to the third anniversary of the relevant Anniversary Date. For
purposes of this Agreement, the term "Employment Period" shall mean the term of
this Agreement plus such extensions as are provided herein.
(b) During the period of his employment hereunder, except for
periods of absence occasioned by illness, disability, holidays, reasonable
vacation periods and reasonable leaves of absence, the Executive shall devote
substantially all of his business time, attention, skill and efforts to the
faithful performance of his duties hereunder including (i) service as Executive
Vice President of the Bank, and, if duly elected, a Director of the Bank, (ii)
performance of such duties not inconsistent with his title and office as may be
assigned to him by or under the authority of the Board or a more senior
executive officer, and (iii) such other activities and services related to the
organization, operation and management of the Bank. During the Employment Period
it shall not be a violation of this Agreement for the Executive to (A) serve on
corporate, civic, industry or charitable boards or committees, (B) deliver
lectures, fulfill speaking engagements or teach at educational institutions and
(C) manage personal investments, so long as such activities do not significantly
interfere with the performance of the Executive's responsibilities as an
employee of the Bank in accordance with this Agreement. It is expressly
understood and agreed that to the extent that any such activities have been
conducted by the Executive prior to the Effective Date, the continued conduct of
such activities (or the conduct of activities similar in nature and scope
thereto) subsequent to the Effective Date shall not thereafter be deemed to
interfere with the performance of the Executive's responsibilities to the Bank.
It is also expressly agreed that the Executive may conduct activities subsequent
to the Effective Date that are generally accepted for an executive in his
position, regardless of whether conducted by the Executive prior to the
Effective Date.
(c) Notwithstanding anything herein contained to the contrary:
(i) the Executive's employment with the Bank may be terminated by the Bank or
the Executive during the term of this Agreement, subject to the terms and
conditions of this Agreement; and (ii) nothing in this Agreement shall mandate
or prohibit a continuation of the Executive's employment following the
expiration of the term of this Agreement upon such terms and conditions as the
Board and the Executive may mutually agree.
(d) For all purposes of this Agreement, the term "Unexpired
Employment Period" as of any date shall mean the period beginning on such date
and ending on the Anniversary Date on which the Employment Period (as extended
pursuant to Section 2(a) of this Agreement) is then scheduled to expire.
3. COMPENSATION AND REIMBURSEMENT.
(a) The compensation specified under this Agreement shall
constitute the salary and benefits paid for the duties described in Section 1.
The Bank shall pay the Executive as compensation a salary at an annual rate of
not less than (salary omitted) per year or such higher rate as may be prescribed
by or under the authority of the Board ("Base Salary"). The Base Salary payable
under this Section 3 shall be paid in approximately equal installments in
accordance with the Bank's customary payroll practices. During the period of
this Agreement, the Executive's Base Salary shall be reviewed at least annually;
the first such review will be made no later than one year from the date of this
Agreement. Such review shall be conducted by a Committee designated by the
Board, and the Board may increase the Executive's Base Salary, which increased
amount shall be considered the Executive's "Base Salary" for purposes of this
Agreement. In no event shall the Executive's annual rate of Base Salary under
this Agreement in effect at a particular time be reduced without his prior
written consent. In addition to the Base Salary provided in this Section 3(a),
the Bank shall provide the Executive at no cost to the Executive with all such
other benefits as are provided uniformly to permanent full-time employees of the
Bank.
(b) The Bank will provide the Executive with employee benefit
plans, arrangements and perquisites substantially equivalent to those in which
the Executive was participating or otherwise deriving benefit from immediately
prior to the beginning of the term of this Agreement, and the Bank will not,
without the Executive's prior written consent, make any changes in such plans,
arrangements or perquisites which would adversely affect the Executive's rights
or benefits thereunder. Without limiting the generality of the foregoing
provisions of this Subsection (b), the Executive will be entitled to participate
in or receive benefits under any employee benefit plans with respect to which
the Executive satisfies the eligibility requirements, including, but not limited
to, the Retirement Plan of Jamaica Savings Bank FSB ("RP"), the Incentive
Savings Plan of Jamaica Savings Bank FSB ("ISP"), the Jamaica Savings Bank FSB
Employee Stock Ownership Plan ("ESOP"), the Benefit Restoration Plan of Jamaica
Savings Bank FSB ("BRP"), the JSB Financial, Inc. 1990 Stock Option Plan, the
JSB Financial, Inc. 1996 Stock Option Plan, retirement plans, supplemental
retirement plans, pension plans, profit-sharing plans, group life, health
(including hospitalization, medical and major medical), dental, accidental death
and dismemberment, travel accident and short-term disability insurance plans, or
any other employee benefit plan or arrangement made available by the Bank in the
future to its senior executives and key management employees, subject to and on
a basis consistent with the terms, conditions and overall administration of such
plans and arrangements. The Executive will be entitled to incentive compensation
and bonuses as provided in any plan of the Bank in which the Executive is
eligible to participate. Nothing paid to the Executive under any such plan or
arrangement will be deemed to be in lieu of other compensation to which the
Executive is entitled under this Agreement.
(c) The Executive's principal place of employment shall be at
the Bank's executive offices at the address first above written, or at such
other location in New York City or in Nassau County or Suffolk County at which
the Bank shall maintain its principal executive offices, or at such other
location as the Board and the Executive may mutually agree upon. The Bank shall
provide the Executive, at his principal place of employment with support
services and facilities suitable to his position with the Bank and necessary or
appropriate in connection with the performance of his assigned duties under this
Agreement. The Bank shall reimburse the Executive for his ordinary and necessary
business expenses, including, without limitation, fees for memberships in such
clubs and organizations as the Executive and the Board shall mutually agree are
necessary and appropriate for business purposes, and travel and entertainment
expenses, incurred in connection with the performance of his duties under this
Agreement, upon presentation to the Bank of an itemized account of such expenses
in such form as the Bank may reasonably require.
4. PAYMENTS TO THE EXECUTIVE UPON AN EVENT OF TERMINATION.
The provisions of this Section shall in all respects be
subject to the terms and conditions stated in Sections 9 and 28.
(a) Upon the occurrence of an Event of Termination (as herein
defined) during the Executive's term of employment under this Agreement, the
provisions of this Section shall apply. As used in this Agreement, an "Event of
Termination" shall mean and include any one or more of the following: (i) the
termination by the Bank or the Company of the Executive's full-time employment
hereunder for any reason other than: following a Change in Control, as defined
in Section 5; for Disability, as defined in Section 6; for Retirement, as
defined in Section 8; for Cause, as defined in Section 9; or upon the
Executive's death; or (ii) unless consented to by the Executive, the Executive's
voluntary resignation from the Bank's employ, upon any: (A) failure to elect or
re-elect or to appoint or re-appoint the Executive as Executive Vice President
of the Bank, (B) material adverse change in the Executive's function, duties, or
responsibilities, which change would cause the Executive's position to become
one of lesser responsibility, importance, or scope from the position and
attributes thereof described in Section 1, above (and any such material change
shall be deemed a continuing breach of this Agreement), (C) relocation of the
Executive's principal place of employment by more than 30 miles from its
location at the Effective Date of this Agreement, or a material reduction in the
benefits and perquisites to the Executive from those being provided as of the
Effective Date of this Agreement, (D) liquidation or dissolution of the Bank or
the Company, or (E) material breach of this Agreement by the Bank. Upon the
occurrence of any event described in clauses (A), (B), (C), (D) or (E), above,
the Executive shall have the right to elect to terminate his employment under
this Agreement by resignation upon written notice pursuant to Section 10 given
within a reasonable period of time not to exceed, except in case of a continuing
breach, four calendar months after the event giving rise to said right to elect.
(b) Upon the occurrence of an Event of Termination as set
forth in Section 4(a), on the Date of Termination, as defined in Section 10, the
Bank shall be obligated to pay, or to provide, the Executive, or, in the event
of his subsequent death, to his surviving spouse or such other beneficiary or
beneficiaries as the Executive may designate in writing, or if neither his
estate, as severance pay or liquidated damages, or both, the benefits provided
below and a payment equal to the sum of the payments set forth below:
(i) payment of the sum of (A) the Executive's annual Base
Salary through the Date of Termination to the extent not theretofore
paid and (B) any compensation previously deferred by the Executive
(together with any accrued interest or earnings thereon) and any
accrued vacation pay, in each case to the extent not theretofore paid
(the sum of the amounts described in clauses (A) and (B) shall be
hereinafter referred to as the "Accrued Obligations");
(ii) the benefits, if any, to which the Executive is entitled
as a former employee under the Bank's or the Company's employee benefit
plans and programs and compensation plans and programs;
(iii) continued group life, health (including hospitalization,
medical and major medical), dental, accidental death and dismemberment,
travel accident and short-term disability insurance benefits as
provided by the Bank or the Company, in addition to that provided
pursuant to Section 4(b)(ii), if and to the extent necessary to provide
for the Executive, for the remaining Unexpired Employment Period,
coverage equivalent to the coverage to which he would have been
entitled if he had continued working for the Bank during the remaining
Unexpired Employment Period at the highest annual rate of salary
achieved during the Employment Period; provided, however, if the
Executive has obtained group life, health (including hospitalization,
medical and major medical), dental, accidental death and dismemberment,
travel accident and/or short-term disability insurance benefits
coverage from another source, the Executive may, as of any month, make
an irrevocable election to forego the continued coverage that would
otherwise be provided hereunder for the remaining Unexpired Employment
Period, or any portion thereof, in which case the Bank or the Company,
upon receipt of the Executive's irrevocable election, shall pay the
Executive an amount equal to the estimated cost to the Bank or the
Company of providing such coverage during such period;
(iv) if and to the extent not already provided under Sections
4(b)(ii) and 4(b)(iii), continued health (including hospitalization,
medical and major medical) and dental insurance benefits to the extent
maintained by the Bank or the Company for its employees or retirees
during the remainder of the Executive's lifetime and the lifetime of
his spouse, if any, for so long as the Executive continues to reimburse
the Bank for the cost of such continued coverage;
(v) a lump sum payment, as liquidated damages, in an amount
equal to the Base Salary and bonus or other incentive compensation that
the Executive would have earned if the Executive had continued working
for the Bank and the Company during the remaining Unexpired Employment
Period (A) at the highest annual rate of Base Salary and bonus or other
incentive compensation achieved by the Executive during the three-year
period immediately preceding the Executive's Date of Termination,
except that (B) in the case of a Change in Control, such lump sum shall
be determined based upon the Base Salary and the bonus or other
incentive compensation, respectively, that the Executive would have
been paid during the remaining Unexpired Employment Period including
the assumed increases referred to in clauses (i) and (ii) of Section
5(b);
(vi) a lump sum payment in an amount equal to the excess, if
any, of: (A) the present value of the pension benefits to which the
Executive would be entitled under the RP and the BRP (and under any
other qualified and non-qualified defined benefit plans maintained by
the Bank or the Company covering the Executive) as if he had continued
working for the Bank during the remaining Unexpired Employment Period
(x) at the highest annual rate of Base Salary and, if applicable, the
highest bonus or other incentive compensation, respectively, achieved
by the Executive during the three-year period immediately preceding the
Executive's Date of Termination, except that (y) in the case of a
Change in Control, such lump sum shall be determined based upon the
Base Salary and, if applicable, the highest bonus or other incentive
compensation, respectively, that the Executive would have been paid
during the remaining Unexpired Employment Period including the assumed
increases referred to in clauses (i) and (ii) of Section 5(b), and (z)
in the case of a Change in Control, as if three additional years are
added to the Executive's age and years of creditable service under the
RP and the BRP and after taking into account any other compensation
required to be taken into account under the RP and the BRP (and any
other qualified and non-qualified defined benefit plans of the Bank or
the Company, as applicable), over (B) the present value of the pension
benefits to which he is actually entitled under the RP and the BRP (and
any other qualified and non-qualified defined benefit plans) as of his
Date of Termination, where such present values are to be determined
using a discount rate of 6% and the mortality tables prescribed under
section 72 of the Internal Revenue Code of 1986, as amended ("Code");
and
(vii) a lump sum payment in an amount equal to the
contributions that would have been made by the Bank or the Company on
the Executive's behalf to the ISP and the ESOP and to the BRP with
respect to such ISP and ESOP contributions (and to any other qualified
and non-qualified defined contribution plans maintained by the Bank or
the Company covering the Executive) as if the Executive had continued
working for the Bank and the Company during the remaining Unexpired
Employment Period making the maximum amount of employee contributions
required, if any, under such plan or plans and earning (A) the highest
annual rate of Base Salary and, if applicable, the highest bonus or
other incentive compensation, respectively, achieved by the Executive
during the three-year period immediately preceding the Executive's Date
of Termination, except that (B) in the case of a Change in Control,
such lump sum shall be determined based upon the Base Salary and, if
applicable, the bonus or other incentive compensation, respectively,
that the Executive would have been paid during the remaining Unexpired
Employment Period including the assumed increases referred to in
clauses (i) and (ii) of Section 5(b).
The benefits to be provided under, and the amounts payable pursuant to, this
Section 4 shall be provided and be payable without regard to proof of damages
and without regard to the Executive's efforts, if any, to mitigate damages. The
Bank and the Executive hereby stipulate that the damages which may be incurred
by the Executive following any such termination of employment are not capable of
accurate measurement as of the date first above written and that such liquidated
damages constitute reasonable damages under the circumstances.
(c) Payments to the Executive under Section 4 shall be made
within ten days of the Executive's Date of Termination.
(d) In the event payments are made under Section 4 or Section
5, the Executive may select an individual or firm to provide him with reasonable
outplacement counseling services, and the Bank shall pay for the costs of such
services; provided, however, that the cost to the Bank of such outplacement
counseling services shall not exceed 25% of the Executive's Base Salary.
5. CHANGE IN CONTROL.
(a) No benefit shall be payable under this Section 5 unless
there shall have been a Change in Control of the Bank or the Company, as set
forth below. For purposes of this Agreement, a "Change in Control" of the Bank
or the Company shall mean any one or more of the following:
(i) An event of a nature that would be required to be reported
in response to Item l(a) of the current report on Form 8-K, as in
effect on the date hereof, pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act");
(ii) An event of a nature that results in a Change in Control
of the Bank or the Company within the meaning of the Home Owners' Loan
Act of 1933, as amended, or the Change in Bank Control Act of 1978, as
amended, as applicable, and the Rules and Regulations promulgated by
the Office of Thrift Supervision ("OTS") or its predecessor agency, the
Federal Deposit Insurance Corporation ("FDIC") or the Board of
Governors of the Federal Reserve System ("FRB"), as the case may be, as
in effect on the date hereof, but excluding any such Change in Control
resulting from the purchase of securities by the Company or the Bank's
or the Company's tax-qualified employee benefit plans and trusts;
(iii) If any "person" (as the term is used in Sections 13(d)
and 14(d) of the Exchange Act) is or becomes the "beneficial owner" (as
defined in Rule 13d-3 under the Exchange Act), directly or indirectly,
of securities of the Bank or the Company representing 20% or more of
the Bank's or the Company's outstanding securities except for any
securities of the Bank purchased by the Company in connection with the
initial conversion of the Bank from mutual to stock form (the
"Conversion") and any securities purchased by the Company or the Bank's
or the Company's tax-qualified employee benefit plans and trusts;
(iv) If the individuals who constitute the Board on the date
hereof (the "Incumbent Board") cease for any reason to constitute at
least a majority of the Board, provided, however, that any person
becoming a director subsequent to the date hereof whose election or
nomination for election by the Company's stockholders, was approved by
a vote of at least three-quarters of the directors then comprising the
Incumbent Board shall be considered as though he were a member of the
Incumbent Board, but excluding, for this purpose, any such person whose
initial assumption of office occurs as a result of an actual or
threatened election contest with respect to the election or removal of
directors or other actual or threatened solicitation of proxies or
consents by or on behalf of a person other than the Board;
(v) A merger, consolidation, reorganization, sale of all or
substantially all the assets of the Bank or the Company or similar
transaction occurs in which the Bank or the Company is not the
resulting entity, other than a transaction following which (A) at least
51% of the equity ownership interests of the entity resulting from such
transaction are beneficially owned (within the meaning of Rule 13d-3
promulgated under Exchange Act) in substantially the same relative
proportions by persons who, immediately prior to such transaction,
beneficially owned (within the meaning of Rule 13d-3 promulgated under
the Exchange Act) at least 51% of the outstanding equity ownership
interests in the Bank or the Company and (B) at least 51% of the
securities entitled to vote generally in the election of directors of
the entity resulting from such transaction are beneficially owned
(within the meaning of Rule 13d-3 promulgated under the Exchange Act)
in substantially the same relative proportions by persons who,
immediately prior to such transaction, beneficially owned (within the
meaning of Rule 13d-3 promulgated under the Exchange Act) at least 51%
of the securities entitled to vote generally in the election of
directors of the Bank or the Company;
(vi) A proxy statement shall be distributed soliciting proxies
from stockholders of the Company, by someone other than the current
management of the Company, seeking stockholder approval of a plan of
reorganization, merger or consolidation of the Company or the Bank or
similar transaction with one or more corporations as a result of which
the outstanding shares of the class of securities then subject to such
plan or transaction are exchanged for or converted into cash or
property or securities not issued by the Bank or the Company; or
(vii) A tender offer is completed for 20% or more of the
voting securities of the Bank or Company then outstanding.
The "Change in Control Date" shall mean the date during the Employment Period on
which a Change in Control occurs. Anything in this Agreement to the contrary
notwithstanding, if the Executive's employment with the Company is terminated
and if it is reasonably demonstrated by the Executive that such termination of
employment (1) was at the request of a third party who has taken steps
reasonably calculated to effect a Change in Control or (2) otherwise arose in
connection with or anticipation of a Change in Control, then for all purposes of
this Agreement the "Change in Control Date" shall mean the date immediately
prior to the date of such termination of employment.
(b) If any of the events described in Section 5(a)
constituting a Change in Control have occurred or the Board has determined that
a Change in Control has occurred, the Executive shall be entitled to the
payments and the benefits provided below on the Change in Control Date. The
amounts payable and the benefits to be provided under this Section 5(b) to the
Executive shall consist of the payments and benefits that would be due to the
Executive and the Executive's family under Section 4(b) for the Unexpired
Employment Period as if an Event of Termination under Section 4(a) had occurred
on the Change in Control Date. For purposes of determining the payments and
benefits due under this Section 5(b), when calculating the payments due and
benefits to be provided for the Unexpired Employment Period, it shall be assumed
that for each year of the remaining term of this Agreement, the Executive would
have received (i) an annual increase in Base Salary equal to the average
percentage increase in Base Salary received by the Executive for the three-year
period ending with the earlier of (x) the year in which the Change in Control
Date occurs or (y) the year during which a definitive agreement, if any,
governing the Change in Control is executed, with the first such increase
effective as of the January 1st next following such three-year period and the
second and third such increases effective as of the next two anniversaries of
such January 1st, (ii) a bonus or other incentive compensation equal to the
highest percentage rate of bonus or incentive compensation paid to the Executive
during the three-year period referred to in clause (i) of this Section 5(b)
times the Base Salary that the Executive would have been paid during the
remaining term of this Agreement including the assumed increases referred to in
clause (i) of this Section 5(b), (iii) the maximum contributions that could be
made by or on behalf of the Executive with respect to any employee benefit plans
and programs maintained by the Company and the Bank based upon the Base Salary
and, if applicable, the bonus or other incentive compensation, respectively,
that the Executive would have been paid during the remaining term of this
Agreement including the assumed increases referred to in clauses (i) and (ii) of
this Section 5(b), and (iv) the present value of the pension benefits to which
the Executive is entitled under Section 4(b)(vi) with respect to the RP and the
BRP (and under any other qualified and non-qualified defined benefit plans
maintained by the Bank or the Company covering the Executive) shall be
determined as if he had continued working for the Bank during the remaining
Unexpired Employment Period and shall be based upon the Base Salary and, if
applicable, the bonus or other incentive compensation, respectively, that the
Executive would have been paid during the remaining term of this Agreement
including the assumed increases referred to in clauses (i) and (ii) of this
Section 5(b). The benefits to be provided under, and the amounts payable
pursuant to, this Section 5 shall be provided and be payable without regard to
proof of damages and without regard to the Executive's efforts, if any, to
mitigate damages. The Bank and the Executive hereby stipulate that the damages
which may be incurred by the Executive following any Change in Control are not
capable of accurate measurement as of the date first above written and that such
liquidated damages constitute reasonable damages under the circumstances.
(c) Payments under Section 5(b) shall be made to the Executive
on the Change in Control Date. Such payments shall be made regardless of whether
the Executive's employment terminates.
6. TERMINATION FOR DISABILITY.
(a) In the event of Termination for Disability, the Executive
shall receive the benefits provided in Section 6(b); provided, however, that the
benefits provided under Section 6(b) shall not be deemed to be in lieu of the
benefits he is otherwise entitled as a former employee under the Bank or the
Company's employee plans and programs. For purposes of this Agreement, the
Executive may be terminated for disability only if (i) the Executive shall have
been absent from his duties with the Bank on a full-time basis for at least six
consecutive months, or (ii) a majority of the members of the Board acting in
good faith determine that, based upon competent and independent medical evidence
presented by a physician or physicians agreed upon by the parties, the
Executive's physical or mental condition is such that he is totally and
permanently incapable of engaging in any substantial gainful employment based
upon his education, training and experience; provided, however, that on and
after the earliest date on which a Change in Control of the Bank or the Company
as defined in Section 5 occurs, such a determination shall require the
affirmative vote of at least three-fourths of the members of the Board acting in
good faith and such vote shall not be made prior to the expiration of a 60-day
period following the date on which the Board shall, by written notice to the
Executive, furnish him a statement of its grounds for proposing to make such
determination, during which period the Executive shall be afforded a reasonable
opportunity to make oral and written presentations to the members of the Board,
and to be represented by his legal counsel at such presentations, to refute the
grounds for the proposed determination.
(b) The Bank will pay the Executive as Disability pay, a
bi-weekly payment equal to 100% of the Executive's bi-weekly annual rate of Base
Salary in effect on the date of the Executive's Termination for Disability. In
addition, the Bank will cause to be continued insurance coverage, including
group life, health (including hospitalization, medical and major medical),
dental, accidental death and dismemberment, travel accident and short-term
disability coverage substantially identical to the coverage maintained by the
Bank or the Company for the Executive prior to his Termination for Disability.
The Disability pay and coverages shall commence on the effective date of the
Executive's termination and shall cease upon the earliest to occur of: (i) the
date the Executive returns to the full-time employment of the Bank, in the same
capacity as he was employed prior to his Termination for Disability and pursuant
to an employment agreement between the Executive and the Bank; (ii) the
Executive's full-time employment by another employer; (iii) the Executive's
attaining the normal age of retirement or receiving benefits under the RP or
other defined benefit pension plan of the Bank or the Company; (iv) the
Executive's death; (v) the Executive's eligibility to collect payments under the
disability provision of the RP or other defined benefit pension plan of the Bank
or the Company; or (vi) the expiration of the term of this Agreement.
(c) Notwithstanding the foregoing, there will be no reduction
in the compensation otherwise payable to the Executive during any period during
which the Executive is incapable of performing his duties hereunder by reason of
temporary disability.
7. TERMINATION UPON DEATH.
The Executive's employment shall terminate automatically upon
the Executive's death during the Employment Period. In such event, the Executive
and the Executive's legal representatives shall be entitled to the following:
(i) payment of the Executive's "Accrued Obligations;"
(ii) the continuation of all benefits to the Executive's
family and dependents that would have been provided if the Executive
had been entitled to the benefits under Section 4(b)(ii), (iii) and
(iv), and
(iii) the timely payment of any other amounts or benefits
required to be paid or provided or which the Executive is eligible to
receive under any plan, program, policy or practice or contract or
agreement of the Bank and its affiliated companies (all such other
amounts and benefits shall be hereinafter referred to as the "Other
Benefits");
provided, however, that if the Executive dies while in the employment of the
Bank, the amount of life insurance provided to the Executive by the Bank shall
not be less than the lesser of $200,000 or three times the Executive's then
annual Base Salary. Accrued Obligations shall be paid to the Executive's estate
or beneficiary, as applicable, in a lump sum cash payment within ten days of the
Date of Termination. With respect to the provision of Other Benefits after the
Change in Control Date, the term Other Benefits as utilized in this Section 7
shall include, without limitation, that the Executive's estate and/or
beneficiaries shall be entitled to receive, benefits at least equal to the most
favorable benefits provided by the Bank and affiliated companies to the estates
and beneficiaries of peer executives of the Bank and such affiliates companies
under such plans, programs, practices and policies relating to death benefits,
if any, as in effect with respect to other peer executives and their
beneficiaries at any time during the 120-day period immediately preceding the
Change in Control Date.
8. TERMINATION UPON RETIREMENT.
Termination by the Bank of the Executive based on "Retirement"
shall mean termination in accordance with the Company's or the Bank's retirement
policy or in accordance with any retirement arrangement established with the
Executive's consent with respect to him. Upon termination of the Executive upon
Retirement, the Executive shall be entitled to all benefits under the RP and any
other retirement plan of the Bank or the Company and other plans to which the
Executive is a party, and the Executive shall be entitled to the benefits, if
any, that would be payable to him as a former employee under the Bank's or the
Company's employee benefit plans and programs and compensation plans and
programs.
9. TERMINATION FOR CAUSE.
The terms "Termination for Cause" or "Cause" shall mean
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 any material breach of
this Agreement, in such case as measured against standards generally prevailing
at the relevant time in the savings and community banking industry. For purposes
of this Section, no act, or the failure to act, on the Executive's part shall be
"willful" unless done, or omitted to be done, in bad faith and without
reasonable belief that the action or omission was in the best interest of the
Bank or its affiliates. Any act, or failure to act, based upon authority given
pursuant to a resolution duly adopted by the Board or based upon the written
advice of counsel for the Bank shall be conclusively presumed to be done, or
omitted to be done, by the Executive in good faith and in the best interests of
the Bank. Notwithstanding the foregoing, the Executive shall not be deemed to
have been terminated for Cause unless and until there shall have been delivered
to him a Notice of Termination which shall include a copy of a resolution duly
adopted by the affirmative vote of not less than three-fourths of the members of
the Board at a meeting of the Board called and held for that purpose (after
reasonable notice to the Executive and an opportunity for him, together with
counsel, to be heard before the Board), finding that in the good faith opinion
of the Board, the Executive was guilty of conduct justifying Termination for
Cause and specifying the particulars thereof in detail. The Executive shall not
have the right to receive compensation or other benefits for any period after
Termination for Cause.
10. NOTICE.
(a) Any purported termination by the Bank or by the Executive
shall be communicated by a Notice of Termination to the other party hereto. For
purposes of this Agreement, a "Notice of Termination" shall mean a written
notice which shall indicate the specific termination provision in this Agreement
relied upon and shall set forth in reasonable detail the facts and circumstances
claimed to provide a basis for termination of the Executive's employment under
the provision so indicated.
(b) Subject to Section 10(c), "Date of Termination" shall mean
(A) if the Executive's employment is terminated for Disability, 30 days after a
Notice of Termination is given (provided that he shall not have returned to the
performance of his duties on a full-time basis during such 30-day period), and
(B) if his employment is terminated for any other reason, the date specified in
the Notice of Termination (which, in the case of a Termination for Cause, shall
be immediate).
(c) If, within 30 days after any Notice of Termination is
given, the party receiving such Notice of Termination notifies the other party
that a dispute exists concerning the termination, then, except upon the
occurrence of a Change in Control and voluntary termination by the Executive in
which case the Date of Termination shall be the date specified in the Notice,
the Date of Termination shall be the date on which the dispute is finally
determined, either by mutual written agreement of the parties, by a binding
arbitration award, or by a final judgment, order or decree of a court of
competent jurisdiction (the time for appeal therefrom having expired and no
appeal having been perfected) and provided further that the Date of Termination
shall be extended by a notice of dispute only if such notice is given in good
faith and the party giving such notice pursues the resolution of such dispute
with reasonable diligence. Notwithstanding the pendency of any such dispute, the
Bank will continue to pay the Executive his full compensation in effect when the
notice giving rise to the dispute was given (including, but not limited to, Base
Salary) and continue him as a participant in all compensation, benefit and
insurance plans in which he was participating when the notice of dispute was
given, until the dispute is finally resolved in accordance with this Agreement.
Amounts paid under this Section are in addition to all other amounts due under
this Agreement and shall not be offset against or reduce any other amounts due
under this Agreement.
(d) The Bank may terminate the Executive's employment at any
time, but any termination by the Bank, other than Termination for Cause, shall
not prejudice the Executive's right to compensation or other benefits under this
Agreement or under any other benefit or compensation plans or programs
maintained by the Bank or the Company from time to time. The Executive shall not
have the right to receive compensation or other benefits for any period after a
Termination for Cause as defined in Section 9 hereinabove.
(e) Any communication to a party required or permitted under
this Agreement, including any notice, direction, designation, consent,
instruction, objection or waiver, shall be in writing and shall be deemed to
have been given at such time as it is delivered personally, or five days after
mailing if mailed, postage prepaid, by registered or certified mail, return
receipt requested, addressed to such party at the address listed below or at
such other address as one such party may by written notice specify to the other
party, as follows. If to the Executive, (address omitted); if to the Bank,
Jamaica Savings Bank FSB, 303 Merrick Road, Lynbrook, New York 11563, Attention:
President, with a copy to Thacher Proffitt & Wood, Two World Trade Center, New
York, New York 10048, Attention: Douglas J. McClintock, Esq.
11. POST-TERMINATION OBLIGATIONS.
(a) All payments and benefits to the Executive under this
Agreement shall be subject to the Executive's compliance with paragraph (b) of
this Section 11 during the term of this Agreement and for one full year after
the expiration or termination hereof.
(b) The Executive shall, upon reasonable notice, furnish such
information and assistance to the Bank as may reasonably be required by the Bank
in connection with any litigation in which it or any of its subsidiaries or
affiliates is, or may become, a party; provided, that the Bank reimburses the
Executive for the reasonable value of his time in connection therewith and for
any out-of-pocket costs attributable thereto.
12. COVENANT NOT TO COMPETE.
The Executive hereby covenants and agrees that for a period of
one year following his Date of Termination, if such termination occurs prior to
the end of the term of the Agreement, he shall not, without the written consent
of the Board, become an officer, employee, consultant, director or trustee of
any savings bank, savings and loan association, savings and loan holding
company, bank or bank holding company if such position (a) entails working in
(or providing services in) New York City, Nassau or Suffolk counties or (b)
entails working in (or providing services in) any other county that is both (i)
within the Bank's primary trade (or operating) area at the time in question,
which shall be determined by reference to the Bank's business plan as in effect
from time to time, and (ii) in which the Bank engages in material or substantial
deposit-taking functions or lending activities at such time; provided, however,
that this Section 12 shall not apply if the Executive's employment is terminated
for the reasons set forth in any of Sections 4, 5, 6 or 8.
13. SOURCE OF PAYMENTS.
All payments provided in this Agreement shall be timely paid
in cash or check from the general funds of the Bank.
14. EFFECT ON PRIOR AGREEMENTS.
This Agreement contains the entire understanding between the
parties hereto and supersedes any prior employment agreement between the Bank or
any predecessor of the Bank and the Executive, including the Employment
Agreement dated June 27, 1996 and the Supplemental Employment Agreement dated
July 9, 1996, except that this Agreement shall not affect or operate to reduce
any benefit or compensation inuring to the Executive of a kind elsewhere
provided. No provisions of this Agreement shall be interpreted to mean that the
Executive is subject to receiving fewer benefits than those available to him
without reference to this Agreement.
15. EFFECT OF ACTION UNDER COMPANY AGREEMENT.
Notwithstanding any provision herein to the contrary, to the
extent that full compensation payments and benefits are paid to or received by
the Executive under the Employment Agreement, dated June 22, 1999, as it may be
amended from time to time, between the Executive and the Company, such
compensation payments and benefits paid by the Company will be deemed to satisfy
the corresponding obligations of the Bank under this Agreement.
16. NO ATTACHMENT.
Except as required by law, no right to receive payments under
this Agreement shall be subject to anticipation, commutation, alienation, sale,
assignment, encumbrance, charge, pledge, or hypothecation, or to execution,
attachment, levy, or similar process or assignment by operation of law, and any
attempt, voluntary or involuntary, to affect any such action shall be null,
void, and of no effect.
17. MODIFICATION AND WAIVER.
(a) This Agreement may not be modified or amended except by an
instrument in writing signed by the parties hereto.
(b) No term or condition of this Agreement shall be deemed to
have been waived, nor shall there be any estoppel against the enforcement of any
provision of this Agreement, except by written instrument of the party charged
with such waiver or estoppel. No such written waiver shall be deemed a
continuing waiver unless specifically stated therein, and each such waiver shall
operate only as to the specific term or condition waived and shall not
constitute a waiver of such term or condition for the future as to any act other
than that specifically waived.
18. SUCCESSOR AND ASSIGNS.
This Agreement will inure to the benefit of and be binding
upon the Executive, his legal representatives and testate or intestate
distributees, and the Bank, its successors and assigns, including any successor
by purchase, merger, consolidation or otherwise or a statutory receiver or any
other person or firm or corporation to which all or substantially all of the
assets and business of the Bank may be sold or otherwise transferred. Any such
successor of the Bank shall be deemed to have assumed this Agreement and to have
become obligated hereunder to the same extent as the Bank and the Executive's
obligations hereunder shall continue in favor of such successor.
19. SEVERABILITY.
If, for any reason, any provision of this Agreement, or any
part of any provision, is held invalid, such invalidity shall not affect any
other provision of this Agreement or any part of such provision not held so
invalid, and each such other provision and part thereof shall to the full extent
consistent with law continue in full force and effect.
20. HEADINGS FOR REFERENCE ONLY.
The headings of Sections and paragraphs herein are included
solely for convenience of reference and shall not control the meaning or
interpretation of any of the provisions of this Agreement. Any reference in this
Agreement to a Section or Subsection shall refer to a Section or Subsection of
this Agreement, except as otherwise specified.
21. GOVERNING LAW.
This Agreement shall be governed by the laws of the State of
New York, without reference to conflicts of law principles.
22. INDEMNIFICATION AND ATTORNEYS' FEES.
(a) The Bank shall indemnify, hold harmless and defend the
Executive against reasonable costs, including legal fees, incurred by him in
connection with his consultation with legal counsel or arising out of any
action, suit or proceeding in which he may be involved, as a result of his
efforts, in good faith, to defend or enforce the terms of this Agreement. The
Bank agrees to pay all such costs as they are incurred by the Executive, to the
full extent permitted by law, and without regard to whether the Bank believes
that it has a defense to any action, suit or proceeding by the Executive or that
it is not obligated for any payments under this Agreement.
(b) In the event any dispute or controversy arising under or
in connection with the Executive's termination is resolved in favor of the
Executive, whether by judgment, arbitration or settlement, the Executive shall
be entitled to the payment of all back-pay, including salary, bonuses and any
other cash compensation, fringe benefits and any compensation and benefits due
the Executive under this Agreement.
(c) The Bank shall indemnify, hold harmless and defend the
Executive for any act taken or not taken, or any omission or failure to act, by
him in good faith while performing services for the Bank or the Company to the
same extent and upon the same terms and conditions as other similarly situated
officers and directors of the Bank or the Company. If and to the extent that the
Bank or the Company, maintains, at any time during the Employment Period, an
insurance policy covering the other officers and directors of the Bank or the
Company against lawsuits, the Bank or the Company shall use its best efforts to
cause the Executive to be covered under such policy upon the same terms and
conditions as other similarly situated officers and directors.
23. TAX INDEMNIFICATION.
(a) Subject to the provisions of Section 28 hereof, this
Section 23 shall apply if a change "in the ownership or effective control" of
the Bank or "in the ownership of a substantial portion of the assets" of the
Bank occurs within the meaning of section 280G of the Code. If this Section 23
applies, then with respect to any taxable year in which the Executive shall be
liable for the payment of an excise tax under section 4999 of the Code with
respect to any payment in the nature of compensation made by the Bank, the
Company or any direct or indirect subsidiary or affiliate of the Bank to (or for
the benefit of) the Executive, the Bank shall pay to the Executive an amount
equal to X determined under the following formula:
X = E x P
-------------------------------------------------
1 - [(FI x (1 - SLI)) + SLI + E + M]
where
E = the rate at which the excise tax is assessed under
section 4999 of the Code;
P = the amount with respect to which such excise tax is
assessed, determined without regard to this Section
23;
FI = the highest effective marginal rate of income tax
applicable to the Executive under the Code for the
taxable year in question (taking into account any
phase-out or loss of deductions, personal exemptions
and other similar adjustments);
SLI = the sum of the highest effective marginal rates of
income tax applicable to the Executive under all
applicable state and local laws for the taxable year
in question (taking into account any phase-out or
loss of deductions, personal exemptions and other
similar adjustments); and
M = the highest marginal rate of Medicare tax
applicable to the Executive under the Code for the
taxable year in question.
Attached as Appendix A to this Agreement is an example that illustrates
application of this Section 23. Any payment under this Section 23 shall be
adjusted so as to fully indemnify the Executive on an after-tax basis so that
the Executive would be in the same after-tax financial position in which he
would have been if no excise tax under section 4999 of the Code had been
imposed. With respect to any payment in the nature of compensation that is made
to (or for the benefit of) the Executive under the terms of this Agreement or
otherwise and on which an excise tax under section 4999 of the Code will be
assessed, the payment determined under this Section 23(a) shall be made to the
Executive on the earlier of (i) the date the Bank, the Company or any direct or
indirect subsidiary or affiliate of the Bank is required to withhold such tax,
or (ii) the date the tax is required to be paid by the Executive.
(b) Notwithstanding anything in this Section 23 to the
contrary, in the event that the Executive's liability for the excise tax under
section 4999 of the Code for a taxable year is subsequently determined to be
different than the amount determined by the formula (X + P) x E, where X, P and
E have the meanings provided in Section 23(a), the Executive or the Bank, as the
case may be, shall pay to the other party at the time that the amount of such
excise tax is finally determined, an appropriate amount, plus interest, such
that the payment made under Section 23(a), when increased by the amount of the
payment made to the Executive under this Section 23(b) by the Bank, or when
reduced by the amount of the payment made to the Bank under this Section 23(b)
by the Executive, equals the amount that, it is finally determined, should have
properly been paid to the Executive under Section 23(a). The interest paid under
this Section 23(b) shall be determined at the rate provided under section
1274(b)(2)(B) of the Code. To confirm that the proper amount, if any, was paid
to the Executive under this Section 23, the Executive shall furnish to the Bank
a copy of each tax return which reflects a liability for an excise tax payment
made by the Bank, at least 20 days before the date on which such return is
required to be filed with the Internal Revenue Service.
24. NON-EXCLUSIVITY OF RIGHTS.
Except as otherwise provided herein, nothing in this Agreement
shall prevent or limit the Executive's continuing or future participation in any
plan, program, policy or practice provided by the Bank or any of its affiliated
companies and for which the Executive may qualify, nor shall anything herein
limit or otherwise affect such rights as the Executive may have under any
contract or agreement with the Bank or any of its affiliated companies. Amounts
which are vested benefits or which the Executive is otherwise entitled to
receive under any plan, policy, practice or program of or any contract or
agreement with the Bank or any of its affiliated companies at or subsequent to
the Date of Termination shall be payable in accordance with such plan, policy,
practice or program or contract or agreement except as explicitly modified by
this Agreement. Notwithstanding the foregoing, in the event of a termination of
employment, the amounts provided in Section 4 or Section 5, as applicable, shall
be the Executive's sole remedy for any purported breach of this Agreement by the
Bank.
25. MITIGATION; OTHER CLAIMS.
The Bank's obligation to make the payments provided for in
this Agreement and otherwise to perform its obligations hereunder shall not be
affected by any set-off, counterclaim, recoupment, defense or other claim, right
or action which the Bank may have against the Executive or others. In no event
shall the Executive be obligated to seek other employment or take any other
action by way of mitigation of the amounts payable to the Executive under any of
the provisions of this Agreement and such amounts shall not be reduced whether
or not the Executive obtains other employment.
26. CONFIDENTIAL INFORMATION.
The Executive shall hold in a fiduciary capacity for the
benefit of the Bank all secret or confidential information, knowledge or data
relating to the Bank or any of its affiliated companies, and their respective
businesses, which shall have been obtained by the Executive during the
Executive's employment by the Bank or any of its affiliated companies and which
shall not be or become public knowledge (other than by acts by the Executive or
representatives of the Executive in violation of this Agreement). After
termination of the Executive's employment with the Bank, the Executive shall
not, without the prior written consent of the Bank or as may otherwise be
required by law or legal process, communicate or divulge any such information,
knowledge or data to anyone other than the Bank and those designated by it. For
purposes of this Agreement, secret and confidential information, knowledge or
data relating to the Bank or any of its affiliates, and their respective
business, shall not include any information that is public, publicly available
or available through trade association sources. Notwithstanding any other
provision of this Agreement to the contrary, the Executive acknowledges and
agrees that in the event of a violation or threatened violation of any of the
provisions of this Section 26, the Bank shall have no adequate remedy at law and
shall therefore be entitled to enforce each such provision by temporary or
permanent injunction or mandatory relief obtained in any court of competent
jurisdiction without the necessity of proving damages or posting any bond or
other security, and without prejudice to any other remedies that may be
available at law or in equity.
27. ACCESS TO DOCUMENTS.
The Executive shall have the right to obtain copies of any
Bank or Bank documents that the Executive reasonably believes, in good faith,
are necessary or appropriate in determining his entitlement to, and the amount
of, payments and benefits under this Agreement.
28. REQUIRED REGULATORY PROVISIONS.
The following provisions are included for the purpose of
complying with various laws, rules and regulations applicable to the Bank:
(a) Notwithstanding anything herein contained to the contrary,
in no event shall the aggregate amount of compensation payable to the
Executive under Section 4(b) hereof (exclusive of amounts described in
Sections 4(b)(i) and (ii)) exceed three times the Executive's average
annual total compensation for the last five consecutive calendar years
to end prior to his termination of employment with the Bank (or for his
entire period of employment with the Bank if less than five calendar
years).
(b) Notwithstanding anything herein contained to the contrary,
any payments to the Executive by the Bank, whether pursuant to this
Agreement or otherwise, are subject to and conditioned upon their
compliance with Section 18(k) of the Federal Deposit Insurance Act
("FDI Act"), 12 U.S.C.
ss.1828(k), and any regulations promulgated thereunder.
(c) Notwithstanding anything herein contained to the contrary,
if the Executive is suspended from office and/or temporarily prohibited
from participating in the conduct of the affairs of the Bank pursuant
to a notice served under Section 8(e)(3) or 8(g)(1) of the FDI Act, 12
U.S.C. ss.1818(e)(3) or 1818(g)(1), the Bank's obligations under this
Agreement shall be suspended as of the date of service of such notice,
unless stayed by appropriate proceedings. If the charges in such notice
are dismissed, the Bank, in its discretion, may (i) pay to the
Executive all or part of the compensation withheld while the Bank's
obligations hereunder were suspended and (ii) reinstate, in whole or in
part, any of the obligations which were suspended.
(d) Notwithstanding anything herein contained to the contrary,
if the Executive 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) or 8(g)(1) of the FDI Act, 12 U.S.C.
ss.1818(e)(4) or (g)(1), all prospective obligations of the Bank under
this Agreement shall terminate as of the effective date of the order,
but vested rights and obligations of the Bank and the Executive shall
not be affected.
(e) Notwithstanding anything herein contained to the contrary,
if the Bank is in default (within the meaning of Section 3(x)(1) of the
FDI Act, 12 U.S.C. ss.1813(x)(1), all prospective obligations of the
Bank under this Agreement shall terminate as of the date of default,
but vested rights and obligations of the Bank and the Executive shall
not be affected.
(f) Notwithstanding anything herein contained to the contrary,
all prospective obligations of the Bank hereunder shall be terminated,
except to the extent that a continuation of this Agreement is necessary
for the continued operation of the Bank: (i) by the Director of the OTS
or his or her designee or the FDIC, at the time the FDIC enters into an
agreement to provide assistance to or on behalf of the Bank under the
authority contained in Section 13(c) of the FDI Act, 12 U.S.C.
ss.1823(c); (ii) by the Director of the OTS or his or her designee at
the time such Director or designee approves a supervisory merger to
resolve problems related to the operation of the Bank or when the Bank
is determined by such Director to be in an unsafe or unsound condition.
The vested rights and obligations of the parties shall not be affected.
If and to the extent that any of the foregoing provisions shall cease to be
required by applicable law, rule or regulation, the same shall become
inoperative as though eliminated by formal amendment of this Agreement.
<PAGE>
SIGNATURES
IN WITNESS WHEREOF, JAMAICA SAVINGS BANK FSB. has caused this
Agreement to be executed and its seal to be affixed hereunto by its duly
authorized officer, and the Executive has signed this Agreement, on the 22nd day
of June, 1999.
ATTEST: JAMAICA SAVINGS BANK FSB
By:
Joanne Corrigan Edward P. Henson
- --------------- ----------------
Joanne Corrigan Edward P. Henson
Secretary President
[Seal]
WITNESS:
Lawrence J. Kane
----------------
Lawrence J. Kane
<PAGE>
STATE OF NEW YORK )
: ss.:
COUNTY OF NASSAU )
On this 22nd day of June, 1999, before me personally came
Edward P. Henson, to me known, who, being by me duly sworn, did depose and say
that he is President of Jamaica Savings Bank FSB, the federally chartered
savings bank described in and which executed the foregoing instrument; that he
knows the seal of said bank; that the seal affixed to said instrument is such
seal; that it was so affixed by order of the Board of Directors of said bank;
and that he signed his name thereto by like order.
Name:
Notary Public
STATE OF NEW YORK )
: ss.:
COUNTY OF NASSAU )
On this 22nd day of June, 1999, before me personally came
Lawrence J. Kane, to me known, and known to me to be the individual described in
the foregoing instrument, who, being by me duly sworn, did depose and say that
he resides at the address set forth in said instrument, and that he signed his
name to the foregoing instrument.
Name:
Notary Public
<PAGE>
APPENDIX A
----------
1. INTRODUCTION. Sections 280G and 4999 of the Internal Revenue Code of
1986, as amended ("Code"), impose a 20% non-deductible federal excise tax on a
person if the payments and benefits in the nature of compensation to or for the
benefit of that person that are contingent on a change in the ownership or
effective control of the Company or the Bank or in the ownership of a
substantial portion of the assets of the Company or the Bank (such payments and
benefits are considered "parachute payments" under section 280G) exceed three
times the person's "base amount" under section 280G. Section 23 of the Agreement
provides for the Executive to receive a tax indemnification payment (sometimes
referred to as a "gross-up" payment) if the payments and benefits in the nature
of compensation to or for the benefit of the Executive that are considered
parachute payments cause the imposition of an excise tax under section 4999 of
the Code. Capitalized terms in this Appendix A that are not defined in this
Appendix A have the meaning used in the Employment Agreement with the Executive.
2. PURPOSE. The purpose of this Appendix A is to illustrate how the tax
indemnification or gross-up payment would be computed. The amounts, figures and
rates used in this example are meant to be illustrative and do not reflect the
actual payments and benefits that would be made to the Executive under this
Agreement. For purposes of this example, it is assumed that a change in control
within the meaning of section 280G of the Code has occurred and that:
(a) The value of the insurance benefits required to be provided to a
hypothetical employee "Z" under sections 4(b)(iii) and 5(b) of the
Agreement for medical, dental, life and other insurance benefits
during the unexpired employment period is $23,000.
(b) The annual rate of Z's salary covered by the Agreement is $100,000,
and Z received annual salary increases of 4%, 5% and 6% (i.e., a
three-year average of 5%) for each of the prior three years. Hence,
the amount payable under sections 4(b)(v) and 5(b) of the Agreement
for salary during the unexpired employment period would be $331,013
[$105,000 + $110, 250 + $115,763].
(c) Z received annual bonuses equal to 20% of his salary in each of the
prior three years. Hence, the amount payable under sections 4(b)(v)
and 5(b) of the Agreement for bonuses during the unexpired employment
period would be $66,203 [20% x ($105,000 + $110,250 + $115,763)].
(d) The amount payable under sections 4(b)(vi) and 5(b) of the Agreement
for the present value of the additional RP and BRP accruals during the
unexpired employment period would be $45,000.
(e) The amount payable under sections 4(b)(vii) and 5(b) of the Agreement
for additional contributions to the ESOP, 401(k) Plan and BRP during
the unexpired employment period would be $20,000.
(f) Z's base amount (i.e., average W-2 wages for the five-year period
preceding the change in control) is $87,000.
3. DETERMINE IF Z IS SUBJECT TO AN EXCISE TAX. Z's parachute payments would
total $485,216 [$23,000 + $331,013 + $66,203 + $45,000 + $20,000]. Three times
Z's base amount is $261,000 [3 x $87,000]; accordingly, Z is subject to an
excise tax because $485,216 exceeds $261,000. Z's "excess parachute payments"
under section 280G of the Code are equal to Z's total parachute payments minus
one times Z's base amount, or $398,216 [$485,216 - $87,000]. If Z were not
protected by section 23 of the Agreement, Z would be subjected to an excise tax
of $79,643 [$398,216 x 20%], in addition to ordinary income taxes.
4. Compute Z's Tax Indemnification Payment. Z's tax indemnification payment
under section 23 of the Agreement would be computed pursuant to the following
formula:
E x P .2 x $398,216
X = ------------------------------------ = ----------------------------------
1 - [(FI x (1 - SLI)) + SLI + E + M] 1 - [.368874 + .0685 + .2 + .0145]
where
E = excise tax rate under section 4999 of the Code [20%];
P = the amount with respect to which such excise tax is
assessed determined without regard to section 23 of
the Agreement [$398,216];
FI = the highest effective marginal rate of income tax
applicable to Z under the Code for the taxable year
in question [assumed to be 39.6% in this example, but
in actuality, the rate is adjusted to take into
account any phase-out or loss of deductions, personal
exemptions and other similar adjustments];
SLI = the sum of the highest effective marginal rates of
income tax applicable to Z under applicable state and
local laws for the taxable year in question [assumed
to be 6.85% in this example, but in actuality, the
rate is adjusted to take into account any phase-out
or loss of deductions, personal exemptions and other
similar adjustments]; and
M = the highest marginal rate of Medicare tax applicable
to Z under the Code for the year in question [1.45%].
In this example, the amount of tax indemnification payment due to Z under
section 23 of the Agreement would be $79,643 [.2 x $398,216] divided by 0.348126
[1 - (.368874 + .0685 + .2 + .0145)], or $228,777. Such amount would be payable
in addition to the other amounts payable under the Agreement in order to put Z
in approximately the same after-tax position that Z would have been in if there
were no excise tax imposed under sections 280G and 4999 of the Code. The tax
indemnification to Z of $228,777 would in turn be a parachute payment subject to
excise tax under sections 280G and 4999. Accordingly, Z's actual excess
parachute payment would be $626,993 [$485,216 - $87,000) + $228,777)] resulting
in an excise tax of $125,399 [$626,993 x 20%]. The difference between the
indemnification. payment and the excise tax [$103,378] is an amount equal to the
sum of the income and other applicable taxes due on the indemnification payment
[($228,777 x .368874) + ($228,777 x .0685) + ($228,777 x .0145)], confirming
that the amount of the tax indemnification payment is sufficient to satisfy all
of Z's tax liability resulting from the excess parachute payment.
JAMAICA SAVINGS BANK FSB
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT ("Agreement") is made and entered
into as of June 22, 1999 by and between JAMAICA SAVINGS BANK FSB, a federally
chartered savings bank, having its principal office at 303 Merrick Road,
Lynbrook, New York 11563 ("Bank"), and Thomas R. Lehmann, an individual residing
at (address omitted) ("Executive"). This Agreement amends, restates and
supersedes the Employment Agreement dated as of June 27, 1995 and the
Supplemental Employment Agreement dated as of July 9, 1996 by and between the
Bank and the Executive. Any reference to the "Company" in this Agreement shall
mean JSB Financial, Inc. and any successor thereto.
W I T N E S S E T H :
WHEREAS, the Executive is currently serving as Executive Vice
President of the Bank, and the Bank wishes to assure itself of the services of
the Executive for the period provided in this Agreement; and
WHEREAS, the Executive is willing to serve in the employ of
the Bank on the terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the premises and the
mutual covenants and conditions hereinafter set forth, the Bank and the
Executive hereby agree as follows:
1. POSITION AND RESPONSIBILITIES.
During the period of his employment hereunder, the Executive
agrees to serve as Executive Vice President of the Bank. The Executive shall
render administrative and management services to the Bank such as are
customarily performed by persons situated in a similar executive capacity and
shall perform such other duties not inconsistent with his title and office as
may be assigned to him by or under the authority of the Board of Directors of
the Bank (the "Board"). The Executive shall have such authority as is necessary
or appropriate to carry out his assigned duties. Failure to re-elect the
Executive as Executive Vice President of the Bank (or a more senior position)
without the consent of the Executive shall constitute a breach of this
Agreement.
2. TERMS.
(a) The period of the Executive's employment under this
Agreement shall be deemed to have commenced as of the date first above written
(the "Effective Date") and shall be for an initial term of three years. Prior to
the first anniversary of the Effective Date of this Agreement and on each
anniversary date thereafter (each, an "Anniversary Date"), the Board shall
review the terms of this Agreement and the Executive's performance of services
hereunder and may, in the absence of objection from the Executive, approve an
extension of the Employment Agreement. In such event, the Employment Agreement
shall be extended to the third anniversary of the relevant Anniversary Date. For
purposes of this Agreement, the term "Employment Period" shall mean the term of
this Agreement plus such extensions as are provided herein.
(b) During the period of his employment hereunder, except for
periods of absence occasioned by illness, disability, holidays, reasonable
vacation periods and reasonable leaves of absence, the Executive shall devote
substantially all of his business time, attention, skill and efforts to the
faithful performance of his duties hereunder including (i) service as Executive
Vice President of the Bank, and, if duly elected, a Director of the Bank, (ii)
performance of such duties not inconsistent with his title and office as may be
assigned to him by or under the authority of the Board or a more senior
executive officer, and (iii) such other activities and services related to the
organization, operation and management of the Bank. During the Employment Period
it shall not be a violation of this Agreement for the Executive to (A) serve on
corporate, civic, industry or charitable boards or committees, (B) deliver
lectures, fulfill speaking engagements or teach at educational institutions and
(C) manage personal investments, so long as such activities do not significantly
interfere with the performance of the Executive's responsibilities as an
employee of the Bank in accordance with this Agreement. It is expressly
understood and agreed that to the extent that any such activities have been
conducted by the Executive prior to the Effective Date, the continued conduct of
such activities (or the conduct of activities similar in nature and scope
thereto) subsequent to the Effective Date shall not thereafter be deemed to
interfere with the performance of the Executive's responsibilities to the Bank.
It is also expressly agreed that the Executive may conduct activities subsequent
to the Effective Date that are generally accepted for an executive in his
position, regardless of whether conducted by the Executive prior to the
Effective Date.
(c) Notwithstanding anything herein contained to the contrary:
(i) the Executive's employment with the Bank may be terminated by the Bank or
the Executive during the term of this Agreement, subject to the terms and
conditions of this Agreement; and (ii) nothing in this Agreement shall mandate
or prohibit a continuation of the Executive's employment following the
expiration of the term of this Agreement upon such terms and conditions as the
Board and the Executive may mutually agree.
(d) For all purposes of this Agreement, the term "Unexpired
Employment Period" as of any date shall mean the period beginning on such date
and ending on the Anniversary Date on which the Employment Period (as extended
pursuant to Section 2(a) of this Agreement) is then scheduled to expire.
3. COMPENSATION AND REIMBURSEMENT.
(a) The compensation specified under this Agreement shall
constitute the salary and benefits paid for the duties described in Section 1.
The Bank shall pay the Executive as compensation a salary at an annual rate of
not less than (salary omitted) per year or such higher rate as may be prescribed
by or under the authority of the Board ("Base Salary"). The Base Salary payable
under this Section 3 shall be paid in approximately equal installments in
accordance with the Bank's customary payroll practices. During the period of
this Agreement, the Executive's Base Salary shall be reviewed at least annually;
the first such review will be made no later than one year from the date of this
Agreement. Such review shall be conducted by a Committee designated by the
Board, and the Board may increase the Executive's Base Salary, which increased
amount shall be considered the Executive's "Base Salary" for purposes of this
Agreement. In no event shall the Executive's annual rate of Base Salary under
this Agreement in effect at a particular time be reduced without his prior
written consent. In addition to the Base Salary provided in this Section 3(a),
the Bank shall provide the Executive at no cost to the Executive with all such
other benefits as are provided uniformly to permanent full-time employees of the
Bank.
(b) The Bank will provide the Executive with employee benefit
plans, arrangements and perquisites substantially equivalent to those in which
the Executive was participating or otherwise deriving benefit from immediately
prior to the beginning of the term of this Agreement, and the Bank will not,
without the Executive's prior written consent, make any changes in such plans,
arrangements or perquisites which would adversely affect the Executive's rights
or benefits thereunder. Without limiting the generality of the foregoing
provisions of this Subsection (b), the Executive will be entitled to participate
in or receive benefits under any employee benefit plans with respect to which
the Executive satisfies the eligibility requirements, including, but not limited
to, the Retirement Plan of Jamaica Savings Bank FSB ("RP"), the Incentive
Savings Plan of Jamaica Savings Bank FSB ("ISP"), the Jamaica Savings Bank FSB
Employee Stock Ownership Plan ("ESOP"), the Benefit Restoration Plan of Jamaica
Savings Bank FSB ("BRP"), the JSB Financial, Inc. 1990 Stock Option Plan, the
JSB Financial, Inc. 1996 Stock Option Plan, retirement plans, supplemental
retirement plans, pension plans, profit-sharing plans, group life, health
(including hospitalization, medical and major medical), dental, accidental death
and dismemberment, travel accident and short-term disability insurance plans, or
any other employee benefit plan or arrangement made available by the Bank in the
future to its senior executives and key management employees, subject to and on
a basis consistent with the terms, conditions and overall administration of such
plans and arrangements. The Executive will be entitled to incentive compensation
and bonuses as provided in any plan of the Bank in which the Executive is
eligible to participate. Nothing paid to the Executive under any such plan or
arrangement will be deemed to be in lieu of other compensation to which the
Executive is entitled under this Agreement.
(c) The Executive's principal place of employment shall be at
the Bank's executive offices at the address first above written, or at such
other location in New York City or in Nassau County or Suffolk County at which
the Bank shall maintain its principal executive offices, or at such other
location as the Board and the Executive may mutually agree upon. The Bank shall
provide the Executive, at his principal place of employment with support
services and facilities suitable to his position with the Bank and necessary or
appropriate in connection with the performance of his assigned duties under this
Agreement. The Bank shall reimburse the Executive for his ordinary and necessary
business expenses, including, without limitation, fees for memberships in such
clubs and organizations as the Executive and the Board shall mutually agree are
necessary and appropriate for business purposes, and travel and entertainment
expenses, incurred in connection with the performance of his duties under this
Agreement, upon presentation to the Bank of an itemized account of such expenses
in such form as the Bank may reasonably require.
4. PAYMENTS TO THE EXECUTIVE UPON AN EVENT OF TERMINATION.
The provisions of this Section shall in all respects be subject
to the terms and conditions stated in Sections 9 and 28.
(a) Upon the occurrence of an Event of Termination (as herein
defined) during the Executive's term of employment under this Agreement, the
provisions of this Section shall apply. As used in this Agreement, an "Event of
Termination" shall mean and include any one or more of the following: (i) the
termination by the Bank or the Company of the Executive's full-time employment
hereunder for any reason other than: following a Change in Control, as defined
in Section 5; for Disability, as defined in Section 6; for Retirement, as
defined in Section 8; for Cause, as defined in Section 9; or upon the
Executive's death; or (ii) unless consented to by the Executive, the Executive's
voluntary resignation from the Bank's employ, upon any: (A) failure to elect or
re-elect or to appoint or re-appoint the Executive as Executive Vice President
of the Bank, (B) material adverse change in the Executive's function, duties, or
responsibilities, which change would cause the Executive's position to become
one of lesser responsibility, importance, or scope from the position and
attributes thereof described in Section 1, above (and any such material change
shall be deemed a continuing breach of this Agreement), (C) relocation of the
Executive's principal place of employment by more than 30 miles from its
location at the Effective Date of this Agreement, or a material reduction in the
benefits and perquisites to the Executive from those being provided as of the
Effective Date of this Agreement, (D) liquidation or dissolution of the Bank or
the Company, or (E) material breach of this Agreement by the Bank. Upon the
occurrence of any event described in clauses (A), (B), (C), (D) or (E), above,
the Executive shall have the right to elect to terminate his employment under
this Agreement by resignation upon written notice pursuant to Section 10 given
within a reasonable period of time not to exceed, except in case of a continuing
breach, four calendar months after the event giving rise to said right to elect.
(b) Upon the occurrence of an Event of Termination as set
forth in Section 4(a), on the Date of Termination, as defined in Section 10, the
Bank shall be obligated to pay, or to provide, the Executive, or, in the event
of his subsequent death, to his surviving spouse or such other beneficiary or
beneficiaries as the Executive may designate in writing, or if neither his
estate, as severance pay or liquidated damages, or both, the benefits provided
below and a payment equal to the sum of the payments set forth below:
(i) payment of the sum of (A) the Executive's annual Base
Salary through the Date of Termination to the extent not theretofore
paid and (B) any compensation previously deferred by the Executive
(together with any accrued interest or earnings thereon) and any
accrued vacation pay, in each case to the extent not theretofore paid
(the sum of the amounts described in clauses (A) and (B) shall be
hereinafter referred to as the "Accrued Obligations");
(ii) the benefits, if any, to which the Executive is entitled
as a former employee under the Bank's or the Company's employee benefit
plans and programs and compensation plans and programs;
(iii) continued group life, health (including hospitalization,
medical and major medical), dental, accidental death and dismemberment,
travel accident and short-term disability insurance benefits as
provided by the Bank or the Company, in addition to that provided
pursuant to Section 4(b)(ii), if and to the extent necessary to provide
for the Executive, for the remaining Unexpired Employment Period,
coverage equivalent to the coverage to which he would have been
entitled if he had continued working for the Bank during the remaining
Unexpired Employment Period at the highest annual rate of salary
achieved during the Employment Period; provided, however, if the
Executive has obtained group life, health (including hospitalization,
medical and major medical), dental, accidental death and dismemberment,
travel accident and/or short-term disability insurance benefits
coverage from another source, the Executive may, as of any month, make
an irrevocable election to forego the continued coverage that would
otherwise be provided hereunder for the remaining Unexpired Employment
Period, or any portion thereof, in which case the Bank or the Company,
upon receipt of the Executive's irrevocable election, shall pay the
Executive an amount equal to the estimated cost to the Bank or the
Company of providing such coverage during such period;
(iv) if and to the extent not already provided under Sections
4(b)(ii) and 4(b)(iii), continued health (including hospitalization,
medical and major medical) and dental insurance benefits to the extent
maintained by the Bank or the Company for its employees or retirees
during the remainder of the Executive's lifetime and the lifetime of
his spouse, if any, for so long as the Executive continues to reimburse
the Bank for the cost of such continued coverage;
(v) a lump sum payment, as liquidated damages, in an amount
equal to the Base Salary and bonus or other incentive compensation that
the Executive would have earned if the Executive had continued working
for the Bank and the Company during the remaining Unexpired Employment
Period (A) at the highest annual rate of Base Salary and bonus or other
incentive compensation achieved by the Executive during the three-year
period immediately preceding the Executive's Date of Termination,
except that (B) in the case of a Change in Control, such lump sum shall
be determined based upon the Base Salary and the bonus or other
incentive compensation, respectively, that the Executive would have
been paid during the remaining Unexpired Employment Period including
the assumed increases referred to in clauses (i) and (ii) of Section
5(b);
(vi) a lump sum payment in an amount equal to the excess, if
any, of: (A) the present value of the pension benefits to which the
Executive would be entitled under the RP and the BRP (and under any
other qualified and non-qualified defined benefit plans maintained by
the Bank or the Company covering the Executive) as if he had continued
working for the Bank during the remaining Unexpired Employment Period
(x) at the highest annual rate of Base Salary and, if applicable, the
highest bonus or other incentive compensation, respectively, achieved
by the Executive during the three-year period immediately preceding the
Executive's Date of Termination, except that (y) in the case of a
Change in Control, such lump sum shall be determined based upon the
Base Salary and, if applicable, the highest bonus or other incentive
compensation, respectively, that the Executive would have been paid
during the remaining Unexpired Employment Period including the assumed
increases referred to in clauses (i) and (ii) of Section 5(b), and (z)
in the case of a Change in Control, as if three additional years are
added to the Executive's age and years of creditable service under the
RP and the BRP and after taking into account any other compensation
required to be taken into account under the RP and the BRP (and any
other qualified and non-qualified defined benefit plans of the Bank or
the Company, as applicable), over (B) the present value of the pension
benefits to which he is actually entitled under the RP and the BRP (and
any other qualified and non-qualified defined benefit plans) as of his
Date of Termination, where such present values are to be determined
using a discount rate of 6% and the mortality tables prescribed under
section 72 of the Internal Revenue Code of 1986, as amended ("Code");
and
(vii) a lump sum payment in an amount equal to the
contributions that would have been made by the Bank or the Company on
the Executive's behalf to the ISP and the ESOP and to the BRP with
respect to such ISP and ESOP contributions (and to any other qualified
and non-qualified defined contribution plans maintained by the Bank or
the Company covering the Executive) as if the Executive had continued
working for the Bank and the Company during the remaining Unexpired
Employment Period making the maximum amount of employee contributions
required, if any, under such plan or plans and earning (A) the highest
annual rate of Base Salary and, if applicable, the highest bonus or
other incentive compensation, respectively, achieved by the Executive
during the three-year period immediately preceding the Executive's Date
of Termination, except that (B) in the case of a Change in Control,
such lump sum shall be determined based upon the Base Salary and, if
applicable, the bonus or other incentive compensation, respectively,
that the Executive would have been paid during the remaining Unexpired
Employment Period including the assumed increases referred to in
clauses (i) and (ii) of Section 5(b).
The benefits to be provided under, and the amounts payable pursuant to, this
Section 4 shall be provided and be payable without regard to proof of damages
and without regard to the Executive's efforts, if any, to mitigate damages. The
Bank and the Executive hereby stipulate that the damages which may be incurred
by the Executive following any such termination of employment are not capable of
accurate measurement as of the date first above written and that such liquidated
damages constitute reasonable damages under the circumstances.
(c) Payments to the Executive under Section 4 shall be made
within ten days of the Executive's Date of Termination.
(d) In the event payments are made under Section 4 or Section
5, the Executive may select an individual or firm to provide him with reasonable
outplacement counseling services, and the Bank shall pay for the costs of such
services; provided, however, that the cost to the Bank of such outplacement
counseling services shall not exceed 25% of the Executive's Base Salary.
5. CHANGE IN CONTROL.
(a) No benefit shall be payable under this Section 5 unless
there shall have been a Change in Control of the Bank or the Company, as set
forth below. For purposes of this Agreement, a "Change in Control" of the Bank
or the Company shall mean any one or more of the following:
(i) An event of a nature that would be required to be reported
in response to Item l(a) of the current report on Form 8-K, as in
effect on the date hereof, pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act");
(ii) An event of a nature that results in a Change in Control
of the Bank or the Company within the meaning of the Home Owners' Loan
Act of 1933, as amended, or the Change in Bank Control Act of 1978, as
amended, as applicable, and the Rules and Regulations promulgated by
the Office of Thrift Supervision ("OTS") or its predecessor agency, the
Federal Deposit Insurance Corporation ("FDIC") or the Board of
Governors of the Federal Reserve System ("FRB"), as the case may be, as
in effect on the date hereof, but excluding any such Change in Control
resulting from the purchase of securities by the Company or the Bank's
or the Company's tax-qualified employee benefit plans and trusts;
(iii) If any "person" (as the term is used in Sections 13(d)
and 14(d) of the Exchange Act) is or becomes the "beneficial owner" (as
defined in Rule 13d-3 under the Exchange Act), directly or indirectly,
of securities of the Bank or the Company representing 20% or more of
the Bank's or the Company's outstanding securities except for any
securities of the Bank purchased by the Company in connection with the
initial conversion of the Bank from mutual to stock form (the
"Conversion") and any securities purchased by the Company or the Bank's
or the Company's tax-qualified employee benefit plans and trusts;
(iv) If the individuals who constitute the Board on the date
hereof (the "Incumbent Board") cease for any reason to constitute at
least a majority of the Board, provided, however, that any person
becoming a director subsequent to the date hereof whose election or
nomination for election by the Company's stockholders, was approved by
a vote of at least three-quarters of the directors then comprising the
Incumbent Board shall be considered as though he were a member of the
Incumbent Board, but excluding, for this purpose, any such person whose
initial assumption of office occurs as a result of an actual or
threatened election contest with respect to the election or removal of
directors or other actual or threatened solicitation of proxies or
consents by or on behalf of a person other than the Board;
(v) A merger, consolidation, reorganization, sale of all or
substantially all the assets of the Bank or the Company or similar
transaction occurs in which the Bank or the Company is not the
resulting entity, other than a transaction following which (A) at least
51% of the equity ownership interests of the entity resulting from such
transaction are beneficially owned (within the meaning of Rule 13d-3
promulgated under Exchange Act) in substantially the same relative
proportions by persons who, immediately prior to such transaction,
beneficially owned (within the meaning of Rule 13d-3 promulgated under
the Exchange Act) at least 51% of the outstanding equity ownership
interests in the Bank or the Company and (B) at least 51% of the
securities entitled to vote generally in the election of directors of
the entity resulting from such transaction are beneficially owned
(within the meaning of Rule 13d-3 promulgated under the Exchange Act)
in substantially the same relative proportions by persons who,
immediately prior to such transaction, beneficially owned (within the
meaning of Rule 13d-3 promulgated under the Exchange Act) at least 51%
of the securities entitled to vote generally in the election of
directors of the Bank or the Company;
(vi) A proxy statement shall be distributed soliciting proxies
from stockholders of the Company, by someone other than the current
management of the Company, seeking stockholder approval of a plan of
reorganization, merger or consolidation of the Company or the Bank or
similar transaction with one or more corporations as a result of which
the outstanding shares of the class of securities then subject to such
plan or transaction are exchanged for or converted into cash or
property or securities not issued by the Bank or the Company; or
(vii) A tender offer is completed for 20% or more of the
voting securities of the Bank or Company then outstanding.
The "Change in Control Date" shall mean the date during the Employment Period on
which a Change in Control occurs. Anything in this Agreement to the contrary
notwithstanding, if the Executive's employment with the Company is terminated
and if it is reasonably demonstrated by the Executive that such termination of
employment (1) was at the request of a third party who has taken steps
reasonably calculated to effect a Change in Control or (2) otherwise arose in
connection with or anticipation of a Change in Control, then for all purposes of
this Agreement the "Change in Control Date" shall mean the date immediately
prior to the date of such termination of employment.
(b) If any of the events described in Section 5(a)
constituting a Change in Control have occurred or the Board has determined that
a Change in Control has occurred, the Executive shall be entitled to the
payments and the benefits provided below on the Change in Control Date. The
amounts payable and the benefits to be provided under this Section 5(b) to the
Executive shall consist of the payments and benefits that would be due to the
Executive and the Executive's family under Section 4(b) for the Unexpired
Employment Period as if an Event of Termination under Section 4(a) had occurred
on the Change in Control Date. For purposes of determining the payments and
benefits due under this Section 5(b), when calculating the payments due and
benefits to be provided for the Unexpired Employment Period, it shall be assumed
that for each year of the remaining term of this Agreement, the Executive would
have received (i) an annual increase in Base Salary equal to the average
percentage increase in Base Salary received by the Executive for the three-year
period ending with the earlier of (x) the year in which the Change in Control
Date occurs or (y) the year during which a definitive agreement, if any,
governing the Change in Control is executed, with the first such increase
effective as of the January 1st next following such three-year period and the
second and third such increases effective as of the next two anniversaries of
such January 1st, (ii) a bonus or other incentive compensation equal to the
highest percentage rate of bonus or incentive compensation paid to the Executive
during the three-year period referred to in clause (i) of this Section 5(b)
times the Base Salary that the Executive would have been paid during the
remaining term of this Agreement including the assumed increases referred to in
clause (i) of this Section 5(b), (iii) the maximum contributions that could be
made by or on behalf of the Executive with respect to any employee benefit plans
and programs maintained by the Company and the Bank based upon the Base Salary
and, if applicable, the bonus or other incentive compensation, respectively,
that the Executive would have been paid during the remaining term of this
Agreement including the assumed increases referred to in clauses (i) and (ii) of
this Section 5(b), and (iv) the present value of the pension benefits to which
the Executive is entitled under Section 4(b)(vi) with respect to the RP and the
BRP (and under any other qualified and non-qualified defined benefit plans
maintained by the Bank or the Company covering the Executive) shall be
determined as if he had continued working for the Bank during the remaining
Unexpired Employment Period and shall be based upon the Base Salary and, if
applicable, the bonus or other incentive compensation, respectively, that the
Executive would have been paid during the remaining term of this Agreement
including the assumed increases referred to in clauses (i) and (ii) of this
Section 5(b). The benefits to be provided under, and the amounts payable
pursuant to, this Section 5 shall be provided and be payable without regard to
proof of damages and without regard to the Executive's efforts, if any, to
mitigate damages. The Bank and the Executive hereby stipulate that the damages
which may be incurred by the Executive following any Change in Control are not
capable of accurate measurement as of the date first above written and that such
liquidated damages constitute reasonable damages under the circumstances.
(c) Payments under Section 5(b) shall be made to the Executive
on the Change in Control Date. Such payments shall be made regardless of whether
the Executive's employment terminates.
6. TERMINATION FOR DISABILITY.
(a) In the event of Termination for Disability, the Executive
shall receive the benefits provided in Section 6(b); provided, however, that the
benefits provided under Section 6(b) shall not be deemed to be in lieu of the
benefits he is otherwise entitled as a former employee under the Bank or the
Company's employee plans and programs. For purposes of this Agreement, the
Executive may be terminated for disability only if (i) the Executive shall have
been absent from his duties with the Bank on a full-time basis for at least six
consecutive months, or (ii) a majority of the members of the Board acting in
good faith determine that, based upon competent and independent medical evidence
presented by a physician or physicians agreed upon by the parties, the
Executive's physical or mental condition is such that he is totally and
permanently incapable of engaging in any substantial gainful employment based
upon his education, training and experience; provided, however, that on and
after the earliest date on which a Change in Control of the Bank or the Company
as defined in Section 5 occurs, such a determination shall require the
affirmative vote of at least three-fourths of the members of the Board acting in
good faith and such vote shall not be made prior to the expiration of a 60-day
period following the date on which the Board shall, by written notice to the
Executive, furnish him a statement of its grounds for proposing to make such
determination, during which period the Executive shall be afforded a reasonable
opportunity to make oral and written presentations to the members of the Board,
and to be represented by his legal counsel at such presentations, to refute the
grounds for the proposed determination.
(b) The Bank will pay the Executive as Disability pay, a
bi-weekly payment equal to 100% of the Executive's bi-weekly annual rate of Base
Salary in effect on the date of the Executive's Termination for Disability. In
addition, the Bank will cause to be continued insurance coverage, including
group life, health (including hospitalization, medical and major medical),
dental, accidental death and dismemberment, travel accident and short-term
disability coverage substantially identical to the coverage maintained by the
Bank or the Company for the Executive prior to his Termination for Disability.
The Disability pay and coverages shall commence on the effective date of the
Executive's termination and shall cease upon the earliest to occur of: (i) the
date the Executive returns to the full-time employment of the Bank, in the same
capacity as he was employed prior to his Termination for Disability and pursuant
to an employment agreement between the Executive and the Bank; (ii) the
Executive's full-time employment by another employer; (iii) the Executive's
attaining the normal age of retirement or receiving benefits under the RP or
other defined benefit pension plan of the Bank or the Company; (iv) the
Executive's death; (v) the Executive's eligibility to collect payments under the
disability provision of the RP or other defined benefit pension plan of the Bank
or the Company; or (vi) the expiration of the term of this Agreement.
(c) Notwithstanding the foregoing, there will be no reduction
in the compensation otherwise payable to the Executive during any period during
which the Executive is incapable of performing his duties hereunder by reason of
temporary disability.
7. TERMINATION UPON DEATH.
The Executive's employment shall terminate automatically upon
the Executive's death during the Employment Period. In such event, the Executive
and the Executive's legal representatives shall be entitled to the following:
(i) payment of the Executive's "Accrued Obligations;"
(ii) the continuation of all benefits to the Executive's
family and dependents that would have been provided if the Executive
had been entitled to the benefits under Section 4(b)(ii), (iii) and
(iv), and
(iii) the timely payment of any other amounts or benefits
required to be paid or provided or which the Executive is eligible to
receive under any plan, program, policy or practice or contract or
agreement of the Bank and its affiliated companies (all such other
amounts and benefits shall be hereinafter referred to as the "Other
Benefits");
provided, however, that if the Executive dies while in the employment of the
Bank, the amount of life insurance provided to the Executive by the Bank shall
not be less than the lesser of $200,000 or three times the Executive's then
annual Base Salary. Accrued Obligations shall be paid to the Executive's estate
or beneficiary, as applicable, in a lump sum cash payment within ten days of the
Date of Termination. With respect to the provision of Other Benefits after the
Change in Control Date, the term Other Benefits as utilized in this Section 7
shall include, without limitation, that the Executive's estate and/or
beneficiaries shall be entitled to receive, benefits at least equal to the most
favorable benefits provided by the Bank and affiliated companies to the estates
and beneficiaries of peer executives of the Bank and such affiliates companies
under such plans, programs, practices and policies relating to death benefits,
if any, as in effect with respect to other peer executives and their
beneficiaries at any time during the 120-day period immediately preceding the
Change in Control Date.
8. TERMINATION UPON RETIREMENT.
Termination by the Bank of the Executive based on "Retirement"
shall mean termination in accordance with the Company's or the Bank's retirement
policy or in accordance with any retirement arrangement established with the
Executive's consent with respect to him. Upon termination of the Executive upon
Retirement, the Executive shall be entitled to all benefits under the RP and any
other retirement plan of the Bank or the Company and other plans to which the
Executive is a party, and the Executive shall be entitled to the benefits, if
any, that would be payable to him as a former employee under the Bank's or the
Company's employee benefit plans and programs and compensation plans and
programs.
9. TERMINATION FOR CAUSE.
The terms "Termination for Cause" or "Cause" shall mean
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 any material breach of
this Agreement, in such case as measured against standards generally prevailing
at the relevant time in the savings and community banking industry. For purposes
of this Section, no act, or the failure to act, on the Executive's part shall be
"willful" unless done, or omitted to be done, in bad faith and without
reasonable belief that the action or omission was in the best interest of the
Bank or its affiliates. Any act, or failure to act, based upon authority given
pursuant to a resolution duly adopted by the Board or based upon the written
advice of counsel for the Bank shall be conclusively presumed to be done, or
omitted to be done, by the Executive in good faith and in the best interests of
the Bank. Notwithstanding the foregoing, the Executive shall not be deemed to
have been terminated for Cause unless and until there shall have been delivered
to him a Notice of Termination which shall include a copy of a resolution duly
adopted by the affirmative vote of not less than three-fourths of the members of
the Board at a meeting of the Board called and held for that purpose (after
reasonable notice to the Executive and an opportunity for him, together with
counsel, to be heard before the Board), finding that in the good faith opinion
of the Board, the Executive was guilty of conduct justifying Termination for
Cause and specifying the particulars thereof in detail. The Executive shall not
have the right to receive compensation or other benefits for any period after
Termination for Cause.
10. NOTICE.
(a) Any purported termination by the Bank or by the Executive
shall be communicated by a Notice of Termination to the other party hereto. For
purposes of this Agreement, a "Notice of Termination" shall mean a written
notice which shall indicate the specific termination provision in this Agreement
relied upon and shall set forth in reasonable detail the facts and circumstances
claimed to provide a basis for termination of the Executive's employment under
the provision so indicated.
(b) Subject to Section 10(c), "Date of Termination" shall mean
(A) if the Executive's employment is terminated for Disability, 30 days after a
Notice of Termination is given (provided that he shall not have returned to the
performance of his duties on a full-time basis during such 30-day period), and
(B) if his employment is terminated for any other reason, the date specified in
the Notice of Termination (which, in the case of a Termination for Cause, shall
be immediate).
(c) If, within 30 days after any Notice of Termination is
given, the party receiving such Notice of Termination notifies the other party
that a dispute exists concerning the termination, then, except upon the
occurrence of a Change in Control and voluntary termination by the Executive in
which case the Date of Termination shall be the date specified in the Notice,
the Date of Termination shall be the date on which the dispute is finally
determined, either by mutual written agreement of the parties, by a binding
arbitration award, or by a final judgment, order or decree of a court of
competent jurisdiction (the time for appeal therefrom having expired and no
appeal having been perfected) and provided further that the Date of Termination
shall be extended by a notice of dispute only if such notice is given in good
faith and the party giving such notice pursues the resolution of such dispute
with reasonable diligence. Notwithstanding the pendency of any such dispute, the
Bank will continue to pay the Executive his full compensation in effect when the
notice giving rise to the dispute was given (including, but not limited to, Base
Salary) and continue him as a participant in all compensation, benefit and
insurance plans in which he was participating when the notice of dispute was
given, until the dispute is finally resolved in accordance with this Agreement.
Amounts paid under this Section are in addition to all other amounts due under
this Agreement and shall not be offset against or reduce any other amounts due
under this Agreement.
(d) The Bank may terminate the Executive's employment at any
time, but any termination by the Bank, other than Termination for Cause, shall
not prejudice the Executive's right to compensation or other benefits under this
Agreement or under any other benefit or compensation plans or programs
maintained by the Bank or the Company from time to time. The Executive shall not
have the right to receive compensation or other benefits for any period after a
Termination for Cause as defined in Section 9 hereinabove.
(e) Any communication to a party required or permitted under
this Agreement, including any notice, direction, designation, consent,
instruction, objection or waiver, shall be in writing and shall be deemed to
have been given at such time as it is delivered personally, or five days after
mailing if mailed, postage prepaid, by registered or certified mail, return
receipt requested, addressed to such party at the address listed below or at
such other address as one such party may by written notice specify to the other
party, as follows. If to the Executive, (address omitted), New York 11793; if to
the Bank, Jamaica Savings Bank FSB, 303 Merrick Road, Lynbrook, New York 11563,
Attention: President, with a copy to Thacher Proffitt & Wood, Two World Trade
Center, New York, New York 10048, Attention: Douglas J. McClintock, Esq.
11. POST-TERMINATION OBLIGATIONS.
(a) All payments and benefits to the Executive under this
Agreement shall be subject to the Executive's compliance with paragraph (b) of
this Section 11 during the term of this Agreement and for one full year after
the expiration or termination hereof.
(b) The Executive shall, upon reasonable notice, furnish such
information and assistance to the Bank as may reasonably be required by the Bank
in connection with any litigation in which it or any of its subsidiaries or
affiliates is, or may become, a party; provided, that the Bank reimburses the
Executive for the reasonable value of his time in connection therewith and for
any out-of-pocket costs attributable thereto.
12. COVENANT NOT TO COMPETE.
The Executive hereby covenants and agrees that for a period of
one year following his Date of Termination, if such termination occurs prior to
the end of the term of the Agreement, he shall not, without the written consent
of the Board, become an officer, employee, consultant, director or trustee of
any savings bank, savings and loan association, savings and loan holding
company, bank or bank holding company if such position (a) entails working in
(or providing services in) New York City, Nassau or Suffolk counties or (b)
entails working in (or providing services in) any other county that is both (i)
within the Bank's primary trade (or operating) area at the time in question,
which shall be determined by reference to the Bank's business plan as in effect
from time to time, and (ii) in which the Bank engages in material or substantial
deposit-taking functions or lending activities at such time; provided, however,
that this Section 12 shall not apply if the Executive's employment is terminated
for the reasons set forth in any of Sections 4, 5, 6 or 8.
13. SOURCE OF PAYMENTS.
All payments provided in this Agreement shall be timely paid
in cash or check from the general funds of the Bank.
14. EFFECT ON PRIOR AGREEMENTS.
This Agreement contains the entire understanding between the
parties hereto and supersedes any prior employment agreement between the Bank or
any predecessor of the Bank and the Executive, including the Employment
Agreement dated June 27, 1995 and the Supplemental Employment Agreement dated
July 9, 1996, except that this Agreement shall not affect or operate to reduce
any benefit or compensation inuring to the Executive of a kind elsewhere
provided. No provisions of this Agreement shall be interpreted to mean that the
Executive is subject to receiving fewer benefits than those available to him
without reference to this Agreement.
15. EFFECT OF ACTION UNDER COMPANY AGREEMENT.
Notwithstanding any provision herein to the contrary, to the
extent that full compensation payments and benefits are paid to or received by
the Executive under the Employment Agreement, dated June 22, 1999, as it may be
amended from time to time, between the Executive and the Company, such
compensation payments and benefits paid by the Company will be deemed to satisfy
the corresponding obligations of the Bank under this Agreement.
16. NO ATTACHMENT.
Except as required by law, no right to receive payments under
this Agreement shall be subject to anticipation, commutation, alienation, sale,
assignment, encumbrance, charge, pledge, or hypothecation, or to execution,
attachment, levy, or similar process or assignment by operation of law, and any
attempt, voluntary or involuntary, to affect any such action shall be null,
void, and of no effect.
17. MODIFICATION AND WAIVER.
(a) This Agreement may not be modified or amended except by an
instrument in writing signed by the parties hereto.
(b) No term or condition of this Agreement shall be deemed to
have been waived, nor shall there be any estoppel against the enforcement of any
provision of this Agreement, except by written instrument of the party charged
with such waiver or estoppel. No such written waiver shall be deemed a
continuing waiver unless specifically stated therein, and each such waiver shall
operate only as to the specific term or condition waived and shall not
constitute a waiver of such term or condition for the future as to any act other
than that specifically waived.
18. SUCCESSOR AND ASSIGNS.
This Agreement will inure to the benefit of and be binding
upon the Executive, his legal representatives and testate or intestate
distributees, and the Bank, its successors and assigns, including any successor
by purchase, merger, consolidation or otherwise or a statutory receiver or any
other person or firm or corporation to which all or substantially all of the
assets and business of the Bank may be sold or otherwise transferred. Any such
successor of the Bank shall be deemed to have assumed this Agreement and to have
become obligated hereunder to the same extent as the Bank and the Executive's
obligations hereunder shall continue in favor of such successor.
19. SEVERABILITY.
If, for any reason, any provision of this Agreement, or any
part of any provision, is held invalid, such invalidity shall not affect any
other provision of this Agreement or any part of such provision not held so
invalid, and each such other provision and part thereof shall to the full extent
consistent with law continue in full force and effect.
20. HEADINGS FOR REFERENCE ONLY.
The headings of Sections and paragraphs herein are included
solely for convenience of reference and shall not control the meaning or
interpretation of any of the provisions of this Agreement. Any reference in this
Agreement to a Section or Subsection shall refer to a Section or Subsection of
this Agreement, except as otherwise specified.
21. GOVERNING LAW.
This Agreement shall be governed by the laws of the State of
New York, without reference to conflicts of law principles.
22. INDEMNIFICATION AND ATTORNEYS' FEES.
(a) The Bank shall indemnify, hold harmless and defend the
Executive against reasonable costs, including legal fees, incurred by him in
connection with his consultation with legal counsel or arising out of any
action, suit or proceeding in which he may be involved, as a result of his
efforts, in good faith, to defend or enforce the terms of this Agreement. The
Bank agrees to pay all such costs as they are incurred by the Executive, to the
full extent permitted by law, and without regard to whether the Bank believes
that it has a defense to any action, suit or proceeding by the Executive or that
it is not obligated for any payments under this Agreement.
(b) In the event any dispute or controversy arising under or
in connection with the Executive's termination is resolved in favor of the
Executive, whether by judgment, arbitration or settlement, the Executive shall
be entitled to the payment of all back-pay, including salary, bonuses and any
other cash compensation, fringe benefits and any compensation and benefits due
the Executive under this Agreement.
(c) The Bank shall indemnify, hold harmless and defend the
Executive for any act taken or not taken, or any omission or failure to act, by
him in good faith while performing services for the Bank or the Company to the
same extent and upon the same terms and conditions as other similarly situated
officers and directors of the Bank or the Company. If and to the extent that the
Bank or the Company, maintains, at any time during the Employment Period, an
insurance policy covering the other officers and directors of the Bank or the
Company against lawsuits, the Bank or the Company shall use its best efforts to
cause the Executive to be covered under such policy upon the same terms and
conditions as other similarly situated officers and directors.
23. TAX INDEMNIFICATION.
(a) Subject to the provisions of Section 28 hereof, this
Section 23 shall apply if a change "in the ownership or effective control" of
the Bank or "in the ownership of a substantial portion of the assets" of the
Bank occurs within the meaning of section 280G of the Code. If this Section 23
applies, then with respect to any taxable year in which the Executive shall be
liable for the payment of an excise tax under section 4999 of the Code with
respect to any payment in the nature of compensation made by the Bank, the
Company or any direct or indirect subsidiary or affiliate of the Bank to (or for
the benefit of) the Executive, the Bank shall pay to the Executive an amount
equal to X determined under the following formula:
X = E x P
-------------------------------------------------
1 - [(FI x (1 - SLI)) + SLI + E + M]
where
E = the rate at which the excise tax is assessed under
section 4999 of the Code;
P = the amount with respect to which such excise tax
is assessed, determined without regard to this
Section 23;
FI = the highest effective marginal rate of income tax
applicable to the Executive under the Code for the
taxable year in question (taking into account any
phase-out or loss of deductions, personal exemptions
and other similar adjustments);
SLI = the sum of the highest effective marginal rates of
income tax applicable to the Executive under all
applicable state and local laws for the taxable year
in question (taking into account any phase-out or
loss of deductions, personal exemptions and other
similar adjustments); and
M = the highest marginal rate of Medicare tax
applicable to the Executive under the Code for the
taxable year in question.
Attached as Appendix A to this Agreement is an example that illustrates
application of this Section 23. Any payment under this Section 23 shall be
adjusted so as to fully indemnify the Executive on an after-tax basis so that
the Executive would be in the same after-tax financial position in which he
would have been if no excise tax under section 4999 of the Code had been
imposed. With respect to any payment in the nature of compensation that is made
to (or for the benefit of) the Executive under the terms of this Agreement or
otherwise and on which an excise tax under section 4999 of the Code will be
assessed, the payment determined under this Section 23(a) shall be made to the
Executive on the earlier of (i) the date the Bank, the Company or any direct or
indirect subsidiary or affiliate of the Bank is required to withhold such tax,
or (ii) the date the tax is required to be paid by the Executive.
(b) Notwithstanding anything in this Section 23 to the
contrary, in the event that the Executive's liability for the excise tax under
section 4999 of the Code for a taxable year is subsequently determined to be
different than the amount determined by the formula (X + P) x E, where X, P and
E have the meanings provided in Section 23(a), the Executive or the Bank, as the
case may be, shall pay to the other party at the time that the amount of such
excise tax is finally determined, an appropriate amount, plus interest, such
that the payment made under Section 23(a), when increased by the amount of the
payment made to the Executive under this Section 23(b) by the Bank, or when
reduced by the amount of the payment made to the Bank under this Section 23(b)
by the Executive, equals the amount that, it is finally determined, should have
properly been paid to the Executive under Section 23(a). The interest paid under
this Section 23(b) shall be determined at the rate provided under section
1274(b)(2)(B) of the Code. To confirm that the proper amount, if any, was paid
to the Executive under this Section 23, the Executive shall furnish to the Bank
a copy of each tax return which reflects a liability for an excise tax payment
made by the Bank, at least 20 days before the date on which such return is
required to be filed with the Internal Revenue Service.
24. NON-EXCLUSIVITY OF RIGHTS.
Except as otherwise provided herein, nothing in this Agreement
shall prevent or limit the Executive's continuing or future participation in any
plan, program, policy or practice provided by the Bank or any of its affiliated
companies and for which the Executive may qualify, nor shall anything herein
limit or otherwise affect such rights as the Executive may have under any
contract or agreement with the Bank or any of its affiliated companies. Amounts
which are vested benefits or which the Executive is otherwise entitled to
receive under any plan, policy, practice or program of or any contract or
agreement with the Bank or any of its affiliated companies at or subsequent to
the Date of Termination shall be payable in accordance with such plan, policy,
practice or program or contract or agreement except as explicitly modified by
this Agreement. Notwithstanding the foregoing, in the event of a termination of
employment, the amounts provided in Section 4 or Section 5, as applicable, shall
be the Executive's sole remedy for any purported breach of this Agreement by the
Bank.
25. MITIGATION; OTHER CLAIMS.
The Bank's obligation to make the payments provided for in
this Agreement and otherwise to perform its obligations hereunder shall not be
affected by any set-off, counterclaim, recoupment, defense or other claim, right
or action which the Bank may have against the Executive or others. In no event
shall the Executive be obligated to seek other employment or take any other
action by way of mitigation of the amounts payable to the Executive under any of
the provisions of this Agreement and such amounts shall not be reduced whether
or not the Executive obtains other employment.
26. CONFIDENTIAL INFORMATION.
The Executive shall hold in a fiduciary capacity for the
benefit of the Bank all secret or confidential information, knowledge or data
relating to the Bank or any of its affiliated companies, and their respective
businesses, which shall have been obtained by the Executive during the
Executive's employment by the Bank or any of its affiliated companies and which
shall not be or become public knowledge (other than by acts by the Executive or
representatives of the Executive in violation of this Agreement). After
termination of the Executive's employment with the Bank, the Executive shall
not, without the prior written consent of the Bank or as may otherwise be
required by law or legal process, communicate or divulge any such information,
knowledge or data to anyone other than the Bank and those designated by it. For
purposes of this Agreement, secret and confidential information, knowledge or
data relating to the Bank or any of its affiliates, and their respective
business, shall not include any information that is public, publicly available
or available through trade association sources. Notwithstanding any other
provision of this Agreement to the contrary, the Executive acknowledges and
agrees that in the event of a violation or threatened violation of any of the
provisions of this Section 26, the Bank shall have no adequate remedy at law and
shall therefore be entitled to enforce each such provision by temporary or
permanent injunction or mandatory relief obtained in any court of competent
jurisdiction without the necessity of proving damages or posting any bond or
other security, and without prejudice to any other remedies that may be
available at law or in equity.
27. ACCESS TO DOCUMENTS.
The Executive shall have the right to obtain copies of any
Bank or Bank documents that the Executive reasonably believes, in good faith,
are necessary or appropriate in determining his entitlement to, and the amount
of, payments and benefits under this Agreement.
28. REQUIRED REGULATORY PROVISIONS.
The following provisions are included for the purpose of
complying with various laws, rules and regulations applicable to the Bank:
(a) Notwithstanding anything herein contained to the contrary,
in no event shall the aggregate amount of compensation payable to the
Executive under Section 4(b) hereof (exclusive of amounts described in
Sections 4(b)(i) and (ii)) exceed three times the Executive's average
annual total compensation for the last five consecutive calendar years
to end prior to his termination of employment with the Bank (or for his
entire period of employment with the Bank if less than five calendar
years).
(b) Notwithstanding anything herein contained to the contrary,
any payments to the Executive by the Bank, whether pursuant to this
Agreement or otherwise, are subject to and conditioned upon their
compliance with Section 18(k) of the Federal Deposit Insurance Act
("FDI Act"), 12 U.S.C. ss.1828(k), and any regulations promulgated
thereunder.
(c) Notwithstanding anything herein contained to the contrary,
if the Executive is suspended from office and/or temporarily prohibited
from participating in the conduct of the affairs of the Bank pursuant
to a notice served under Section 8(e)(3) or 8(g)(1) of the FDI Act, 12
U.S.C. ss.1818(e)(3) or 1818(g)(1), the Bank's obligations under this
Agreement shall be suspended as of the date of service of such notice,
unless stayed by appropriate proceedings. If the charges in such notice
are dismissed, the Bank, in its discretion, may (i) pay to the
Executive all or part of the compensation withheld while the Bank's
obligations hereunder were suspended and (ii) reinstate, in whole or in
part, any of the obligations which were suspended.
(d) Notwithstanding anything herein contained to the contrary,
if the Executive 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) or 8(g)(1) of the FDI Act, 12 U.S.C.
ss.1818(e)(4) or (g)(1), all prospective obligations of the Bank under
this Agreement shall terminate as of the effective date of the order,
but vested rights and obligations of the Bank and the Executive shall
not be affected.
(e) Notwithstanding anything herein contained to the contrary,
if the Bank is in default (within the meaning of Section 3(x)(1) of the
FDI Act, 12 U.S.C. ss.1813(x)(1), all prospective obligations of the
Bank under this Agreement shall terminate as of the date of default,
but vested rights and obligations of the Bank and the Executive shall
not be affected.
(f) Notwithstanding anything herein contained to the contrary,
all prospective obligations of the Bank hereunder shall be terminated,
except to the extent that a continuation of this Agreement is necessary
for the continued operation of the Bank: (i) by the Director of the OTS
or his or her designee or the FDIC, at the time the FDIC enters into an
agreement to provide assistance to or on behalf of the Bank under the
authority contained in Section 13(c) of the FDI Act, 12 U.S.C.
ss.1823(c); (ii) by the Director of the OTS or his or her designee at
the time such Director or designee approves a supervisory merger to
resolve problems related to the operation of the Bank or when the Bank
is determined by such Director to be in an unsafe or unsound condition.
The vested rights and obligations of the parties shall not be affected.
If and to the extent that any of the foregoing provisions shall cease to be
required by applicable law, rule or regulation, the same shall become
inoperative as though eliminated by formal amendment of this Agreement.
<PAGE>
SIGNATURES
IN WITNESS WHEREOF, JAMAICA SAVINGS BANK FSB. has caused this
Agreement to be executed and its seal to be affixed hereunto by its duly
authorized officer, and the Executive has signed this Agreement, on the 22nd day
of June, 1999.
ATTEST: JAMAICA SAVINGS BANK FSB
By:
Joanne Corrigan Edward P. Henson
- --------------- ----------------
Joanne Corrigan Edward P. Henson
Secretary President
[Seal]
WITNESS:
Thomas R. Lehmann
-----------------
Thomas R. Lehmann
<PAGE>
STATE OF NEW YORK )
: ss.:
COUNTY OF NASSAU )
On this 22nd day of June, 1999, before me personally came
Edward P. Henson, to me known, who, being by me duly sworn, did depose and say
that he is President of Jamaica Savings Bank FSB, the federally chartered
savings bank described in and which executed the foregoing instrument; that he
knows the seal of said bank; that the seal affixed to said instrument is such
seal; that it was so affixed by order of the Board of Directors of said bank;
and that he signed his name thereto by like order.
Name:
Notary Public
STATE OF NEW YORK )
: ss.:
COUNTY OF NASSAU )
On this 22nd day of June, 1999, before me personally came
Thomas R. Lehmann, to me known, and known to me to be the individual described
in the foregoing instrument, who, being by me duly sworn, did depose and say
that he resides at the address set forth in said instrument, and that he signed
his name to the foregoing instrument.
Name:
Notary Public
<PAGE>
APPENDIX A
----------
1. INTRODUCTION. Sections 280G and 4999 of the Internal Revenue Code of
1986, as amended ("Code"), impose a 20% non-deductible federal excise tax on a
person if the payments and benefits in the nature of compensation to or for the
benefit of that person that are contingent on a change in the ownership or
effective control of the Company or the Bank or in the ownership of a
substantial portion of the assets of the Company or the Bank (such payments and
benefits are considered "parachute payments" under section 280G) exceed three
times the person's "base amount" under section 280G. Section 23 of the Agreement
provides for the Executive to receive a tax indemnification payment (sometimes
referred to as a "gross-up" payment) if the payments and benefits in the nature
of compensation to or for the benefit of the Executive that are considered
parachute payments cause the imposition of an excise tax under section 4999 of
the Code. Capitalized terms in this Appendix A that are not defined in this
Appendix A have the meaning used in the Employment Agreement with the Executive.
2. PURPOSE. The purpose of this Appendix A is to illustrate how the tax
indemnification or gross-up payment would be computed. The amounts, figures and
rates used in this example are meant to be illustrative and do not reflect the
actual payments and benefits that would be made to the Executive under this
Agreement. For purposes of this example, it is assumed that a change in control
within the meaning of section 280G of the Code has occurred and that:
(a) The value of the insurance benefits required to be provided to a
hypothetical employee "Z" under sections 4(b)(iii) and 5(b) of the
Agreement for medical, dental, life and other insurance benefits
during the unexpired employment period is $23,000.
(b) The annual rate of Z's salary covered by the Agreement is $100,000,
and Z received annual salary increases of 4%, 5% and 6% (i.e., a
three-year average of 5%) for each of the prior three years. Hence,
the amount payable under sections 4(b)(v) and 5(b) of the Agreement
for salary during the unexpired employment period would be $331,013
[$105,000 + $110, 250 + $115,763].
(c) Z received annual bonuses equal to 20% of his salary in each of the
prior three years. Hence, the amount payable under sections 4(b)(v)
and 5(b) of the Agreement for bonuses during the unexpired employment
period would be $66,203 [20% x ($105,000 + $110,250 + $115,763)].
(d) The amount payable under sections 4(b)(vi) and 5(b) of the Agreement
for the present value of the additional RP and BRP accruals during the
unexpired employment period would be $45,000.
(e) The amount payable under sections 4(b)(vii) and 5(b) of the Agreement
for additional contributions to the ESOP, 401(k) Plan and BRP during
the unexpired employment period would be $20,000.
(f) Z's base amount (i.e., average W-2 wages for the five-year period
preceding the change in control) is $87,000.
3. DETERMINE IF Z IS SUBJECT TO AN EXCISE TAX. Z's parachute payments would
total $485,216 [$23,000 + $331,013 + $66,203 + $45,000 + $20,000]. Three times
Z's base amount is $261,000 [3 x $87,000]; accordingly, Z is subject to an
excise tax because $485,216 exceeds $261,000. Z's "excess parachute payments"
under section 280G of the Code are equal to Z's total parachute payments minus
one times Z's base amount, or $398,216 [$485,216 - $87,000]. If Z were not
protected by section 23 of the Agreement, Z would be subjected to an excise tax
of $79,643 [$398,216 x 20%], in addition to ordinary income taxes.
4. Compute Z's Tax Indemnification Payment. Z's tax indemnification payment
under section 23 of the Agreement would be computed pursuant to the following
formula:
E x P .2 x $398,216
X = ------------------------------------ = ----------------------------------
1 - [(FI x (1 - SLI)) + SLI + E + M] 1 - [.368874 + .0685 + .2 + .0145]
where
E = excise tax rate under section 4999 of the Code [20%];
P = the amount with respect to which such excise tax is
assessed determined without regard to section 23 of
the Agreement [$398,216];
FI = the highest effective marginal rate of income tax
applicable to Z under the Code for the taxable year
in question [assumed to be 39.6% in this example, but
in actuality, the rate is adjusted to take into
account any phase-out or loss of deductions, personal
exemptions and other similar adjustments];
SLI = the sum of the highest effective marginal rates of
income tax applicable to Z under applicable state and
local laws for the taxable year in question [assumed
to be 6.85% in this example, but in actuality, the
rate is adjusted to take into account any phase-out
or loss of deductions, personal exemptions and other
similar adjustments]; and
M = the highest marginal rate of Medicare tax applicable
to Z under the Code for the year in question [1.45%].
In this example, the amount of tax indemnification payment due to Z under
section 23 of the Agreement would be $79,643 [.2 x $398,216] divided by 0.348126
[1 - (.368874 + .0685 + .2 + .0145)], or $228,777. Such amount would be payable
in addition to the other amounts payable under the Agreement in order to put Z
in approximately the same after-tax position that Z would have been in if there
were no excise tax imposed under sections 280G and 4999 of the Code. The tax
indemnification to Z of $228,777 would in turn be a parachute payment subject to
excise tax under sections 280G and 4999. Accordingly, Z's actual excess
parachute payment would be $626,993 [$485,216 - $87,000) + $228,777)] resulting
in an excise tax of $125,399 [$626,993 x 20%]. The difference between the
indemnification. payment and the excise tax [$103,378] is an amount equal to the
sum of the income and other applicable taxes due on the indemnification payment
[($228,777 x .368874) + ($228,777 x .0685) + ($228,777 x .0145)], confirming
that the amount of the tax indemnification payment is sufficient to satisfy all
of Z's tax liability resulting from the excess parachute payment.
JAMAICA SAVINGS BANK FSB
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT ("Agreement") is made and entered
into as of June 22, 1999 by and between JAMAICA SAVINGS BANK FSB, a federally
chartered savings bank, having its principal office at 303 Merrick Road,
Lynbrook, New York 11563 ("Bank"), and Philip Pepe, an individual residing at
(address omitted) ("Executive"). This Agreement amends, restates and supersedes
the Termination Agreement dated as of June 27, 1993 and the Supplemental
Termination Agreement dated as of July 9, 1996 by and between the Bank and the
Executive. Any reference to the "Company" in this Agreement shall mean JSB
Financial, Inc. and any successor thereto.
W I T N E S S E T H :
WHEREAS, the Executive is currently serving as Vice President
of the Bank, and the Bank wishes to assure itself of the services of the
Executive for the period provided in this Agreement; and
WHEREAS, the Executive is willing to serve in the employ of
the Bank on the terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the premises and the
mutual covenants and conditions hereinafter set forth, the Bank and the
Executive hereby agree as follows:
1. POSITION AND RESPONSIBILITIES.
During the period of his employment hereunder, the Executive
agrees to serve as Vice President of the Bank. The Executive shall render
administrative and management services to the Bank such as are customarily
performed by persons situated in a similar executive capacity and shall perform
such other duties not inconsistent with his title and office as may be assigned
to him by or under the authority of the Board of Directors of the Bank (the
"Board"). The Executive shall have such authority as is necessary or appropriate
to carry out his assigned duties. Failure to re-elect the Executive as Vice
President of the Bank (or a more senior position) without the consent of the
Executive shall constitute a breach of this Agreement.
2. TERMS.
(a) The period of the Executive's employment under this
Agreement shall be deemed to have commenced as of the date first above written
(the "Effective Date") and shall be for an initial term of three years. Prior to
the first anniversary of the Effective Date of this Agreement and on each
anniversary date thereafter (each, an "Anniversary Date"), the Board shall
review the terms of this Agreement and the Executive's performance of services
hereunder and may, in the absence of objection from the Executive, approve an
extension of the Employment Agreement. In such event, the Employment Agreement
shall be extended to the third anniversary of the relevant Anniversary Date. For
purposes of this Agreement, the term "Employment Period" shall mean the term of
this Agreement plus such extensions as are provided herein.
(b) During the period of his employment hereunder, except for
periods of absence occasioned by illness, disability, holidays, reasonable
vacation periods and reasonable leaves of absence, the Executive shall devote
substantially all of his business time, attention, skill and efforts to the
faithful performance of his duties hereunder including (i) service as Vice
President of the Bank, and, if duly elected, a Director of the Bank, (ii)
performance of such duties not inconsistent with his title and office as may be
assigned to him by or under the authority of the Board or a more senior
executive officer, and (iii) such other activities and services related to the
organization, operation and management of the Bank. During the Employment Period
it shall not be a violation of this Agreement for the Executive to (A) serve on
corporate, civic, industry or charitable boards or committees, (B) deliver
lectures, fulfill speaking engagements or teach at educational institutions and
(C) manage personal investments, so long as such activities do not significantly
interfere with the performance of the Executive's responsibilities as an
employee of the Bank in accordance with this Agreement. It is expressly
understood and agreed that to the extent that any such activities have been
conducted by the Executive prior to the Effective Date, the continued conduct of
such activities (or the conduct of activities similar in nature and scope
thereto) subsequent to the Effective Date shall not thereafter be deemed to
interfere with the performance of the Executive's responsibilities to the Bank.
It is also expressly agreed that the Executive may conduct activities subsequent
to the Effective Date that are generally accepted for an executive in his
position, regardless of whether conducted by the Executive prior to the
Effective Date.
(c) Notwithstanding anything herein contained to the contrary:
(i) the Executive's employment with the Bank may be terminated by the Bank or
the Executive during the term of this Agreement, subject to the terms and
conditions of this Agreement; and (ii) nothing in this Agreement shall mandate
or prohibit a continuation of the Executive's employment following the
expiration of the term of this Agreement upon such terms and conditions as the
Board and the Executive may mutually agree.
(d) For all purposes of this Agreement, the term "Unexpired
Employment Period" as of any date shall mean the period beginning on such date
and ending on the Anniversary Date on which the Employment Period (as extended
pursuant to Section 2(a) of this Agreement) is then scheduled to expire.
3. COMPENSATION AND REIMBURSEMENT.
(a) The compensation specified under this Agreement shall
constitute the salary and benefits paid for the duties described in Section 1.
The Bank shall pay the Executive as compensation a salary at an annual rate of
not less than (salary omitted) per year or such higher rate as may be prescribed
by or under the authority of the Board ("Base Salary"). The Base Salary payable
under this Section 3 shall be paid in approximately equal installments in
accordance with the Bank's customary payroll practices. During the period of
this Agreement, the Executive's Base Salary shall be reviewed at least annually;
the first such review will be made no later than one year from the date of this
Agreement. Such review shall be conducted by a Committee designated by the
Board, and the Board may increase the Executive's Base Salary, which increased
amount shall be considered the Executive's "Base Salary" for purposes of this
Agreement. In no event shall the Executive's annual rate of Base Salary under
this Agreement in effect at a particular time be reduced without his prior
written consent. In addition to the Base Salary provided in this Section 3(a),
the Bank shall provide the Executive at no cost to the Executive with all such
other benefits as are provided uniformly to permanent full-time employees of the
Bank.
(b) The Bank will provide the Executive with employee benefit
plans, arrangements and perquisites substantially equivalent to those in which
the Executive was participating or otherwise deriving benefit from immediately
prior to the beginning of the term of this Agreement, and the Bank will not,
without the Executive's prior written consent, make any changes in such plans,
arrangements or perquisites which would adversely affect the Executive's rights
or benefits thereunder. Without limiting the generality of the foregoing
provisions of this Subsection (b), the Executive will be entitled to participate
in or receive benefits under any employee benefit plans with respect to which
the Executive satisfies the eligibility requirements, including, but not limited
to, the Retirement Plan of Jamaica Savings Bank FSB ("RP"), the Incentive
Savings Plan of Jamaica Savings Bank FSB ("ISP"), the Jamaica Savings Bank FSB
Employee Stock Ownership Plan ("ESOP"), the Benefit Restoration Plan of Jamaica
Savings Bank FSB ("BRP"), the JSB Financial, Inc. 1990 Stock Option Plan, the
JSB Financial, Inc. 1996 Stock Option Plan, retirement plans, supplemental
retirement plans, pension plans, profit-sharing plans, group life, health
(including hospitalization, medical and major medical), dental, accidental death
and dismemberment, travel accident and short-term disability insurance plans, or
any other employee benefit plan or arrangement made available by the Bank in the
future to its senior executives and key management employees, subject to and on
a basis consistent with the terms, conditions and overall administration of such
plans and arrangements. The Executive will be entitled to incentive compensation
and bonuses as provided in any plan of the Bank in which the Executive is
eligible to participate. Nothing paid to the Executive under any such plan or
arrangement will be deemed to be in lieu of other compensation to which the
Executive is entitled under this Agreement.
(c) The Executive's principal place of employment shall be at
the Bank's executive offices at the address first above written, or at such
other location in New York City or in Nassau County or Suffolk County at which
the Bank shall maintain its principal executive offices, or at such other
location as the Board and the Executive may mutually agree upon. The Bank shall
provide the Executive, at his principal place of employment with support
services and facilities suitable to his position with the Bank and necessary or
appropriate in connection with the performance of his assigned duties under this
Agreement. The Bank shall reimburse the Executive for his ordinary and necessary
business expenses, including, without limitation, fees for memberships in such
clubs and organizations as the Executive and the Board shall mutually agree are
necessary and appropriate for business purposes, and travel and entertainment
expenses, incurred in connection with the performance of his duties under this
Agreement, upon presentation to the Bank of an itemized account of such expenses
in such form as the Bank may reasonably require.
4. PAYMENTS TO THE EXECUTIVE UPON AN EVENT OF TERMINATION.
The provisions of this Section shall in all respects be
subject to the terms and conditions stated in Sections 9 and 28.
(a) Upon the occurrence of an Event of Termination (as herein
defined) during the Executive's term of employment under this Agreement, the
provisions of this Section shall apply. As used in this Agreement, an "Event of
Termination" shall mean and include any one or more of the following: (i) the
termination by the Bank or the Company of the Executive's full-time employment
hereunder for any reason other than: following a Change in Control, as defined
in Section 5; for Disability, as defined in Section 6; for Retirement, as
defined in Section 8; for Cause, as defined in Section 9; or upon the
Executive's death; or (ii) unless consented to by the Executive, the Executive's
voluntary resignation from the Bank's employ, upon any: (A) failure to elect or
re-elect or to appoint or re-appoint the Executive as Vice President of the
Bank, (B) material adverse change in the Executive's function, duties, or
responsibilities, which change would cause the Executive's position to become
one of lesser responsibility, importance, or scope from the position and
attributes thereof described in Section 1, above (and any such material change
shall be deemed a continuing breach of this Agreement), (C) relocation of the
Executive's principal place of employment by more than 30 miles from its
location at the Effective Date of this Agreement, or a material reduction in the
benefits and perquisites to the Executive from those being provided as of the
Effective Date of this Agreement, (D) liquidation or dissolution of the Bank or
the Company, or (E) material breach of this Agreement by the Bank. Upon the
occurrence of any event described in clauses (A), (B), (C), (D) or (E), above,
the Executive shall have the right to elect to terminate his employment under
this Agreement by resignation upon written notice pursuant to Section 10 given
within a reasonable period of time not to exceed, except in case of a continuing
breach, four calendar months after the event giving rise to said right to elect.
(b) Upon the occurrence of an Event of Termination as set
forth in Section 4(a), on the Date of Termination, as defined in Section 10, the
Bank shall be obligated to pay, or to provide, the Executive, or, in the event
of his subsequent death, to his surviving spouse or such other beneficiary or
beneficiaries as the Executive may designate in writing, or if neither his
estate, as severance pay or liquidated damages, or both, the benefits provided
below and a payment equal to the sum of the payments set forth below:
(i) payment of the sum of (A) the Executive's annual Base
Salary through the Date of Termination to the extent not theretofore
paid and (B) any compensation previously deferred by the Executive
(together with any accrued interest or earnings thereon) and any
accrued vacation pay, in each case to the extent not theretofore paid
(the sum of the amounts described in clauses (A) and (B) shall be
hereinafter referred to as the "Accrued Obligations");
(ii) the benefits, if any, to which the Executive is entitled
as a former employee under the Bank's or the Company's employee benefit
plans and programs and compensation plans and programs;
(iii) continued group life, health (including hospitalization,
medical and major medical), dental, accidental death and dismemberment,
travel accident and short-term disability insurance benefits as
provided by the Bank or the Company, in addition to that provided
pursuant to Section 4(b)(ii), if and to the extent necessary to provide
for the Executive, for the remaining Unexpired Employment Period,
coverage equivalent to the coverage to which he would have been
entitled if he had continued working for the Bank during the remaining
Unexpired Employment Period at the highest annual rate of salary
achieved during the Employment Period; provided, however, if the
Executive has obtained group life, health (including hospitalization,
medical and major medical), dental, accidental death and dismemberment,
travel accident and/or short-term disability insurance benefits
coverage from another source, the Executive may, as of any month, make
an irrevocable election to forego the continued coverage that would
otherwise be provided hereunder for the remaining Unexpired Employment
Period, or any portion thereof, in which case the Bank or the Company,
upon receipt of the Executive's irrevocable election, shall pay the
Executive an amount equal to the estimated cost to the Bank or the
Company of providing such coverage during such period;
(iv) if and to the extent not already provided under Sections
4(b)(ii) and 4(b)(iii), continued health (including hospitalization,
medical and major medical) and dental insurance benefits to the extent
maintained by the Bank or the Company for its employees or retirees
during the remainder of the Executive's lifetime and the lifetime of
his spouse, if any, for so long as the Executive continues to reimburse
the Bank for the cost of such continued coverage;
(v) a lump sum payment, as liquidated damages, in an amount
equal to the Base Salary and bonus or other incentive compensation that
the Executive would have earned if the Executive had continued working
for the Bank and the Company during the remaining Unexpired Employment
Period (A) at the highest annual rate of Base Salary and bonus or other
incentive compensation achieved by the Executive during the three-year
period immediately preceding the Executive's Date of Termination,
except that (B) in the case of a Change in Control, such lump sum shall
be determined based upon the Base Salary and the bonus or other
incentive compensation, respectively, that the Executive would have
been paid during the remaining Unexpired Employment Period including
the assumed increases referred to in clauses (i) and (ii) of Section
5(b);
(vi) a lump sum payment in an amount equal to the excess, if
any, of: (A) the present value of the pension benefits to which the
Executive would be entitled under the RP and the BRP (and under any
other qualified and non-qualified defined benefit plans maintained by
the Bank or the Company covering the Executive) as if he had continued
working for the Bank during the remaining Unexpired Employment Period
(x) at the highest annual rate of Base Salary and, if applicable, the
highest bonus or other incentive compensation, respectively, achieved
by the Executive during the three-year period immediately preceding the
Executive's Date of Termination, except that (y) in the case of a
Change in Control, such lump sum shall be determined based upon the
Base Salary and, if applicable, the highest bonus or other incentive
compensation, respectively, that the Executive would have been paid
during the remaining Unexpired Employment Period including the assumed
increases referred to in clauses (i) and (ii) of Section 5(b), and (z)
in the case of a Change in Control, as if three additional years are
added to the Executive's age and years of creditable service under the
RP and the BRP and after taking into account any other compensation
required to be taken into account under the RP and the BRP (and any
other qualified and non-qualified defined benefit plans of the Bank or
the Company, as applicable), over (B) the present value of the pension
benefits to which he is actually entitled under the RP and the BRP (and
any other qualified and non-qualified defined benefit plans) as of his
Date of Termination, where such present values are to be determined
using a discount rate of 6% and the mortality tables prescribed under
section 72 of the Internal Revenue Code of 1986, as amended ("Code");
and
(vii) a lump sum payment in an amount equal to the
contributions that would have been made by the Bank or the Company on
the Executive's behalf to the ISP and the ESOP and to the BRP with
respect to such ISP and ESOP contributions (and to any other qualified
and non-qualified defined contribution plans maintained by the Bank or
the Company covering the Executive) as if the Executive had continued
working for the Bank and the Company during the remaining Unexpired
Employment Period making the maximum amount of employee contributions
required, if any, under such plan or plans and earning (A) the highest
annual rate of Base Salary and, if applicable, the highest bonus or
other incentive compensation, respectively, achieved by the Executive
during the three-year period immediately preceding the Executive's Date
of Termination, except that (B) in the case of a Change in Control,
such lump sum shall be determined based upon the Base Salary and, if
applicable, the bonus or other incentive compensation, respectively,
that the Executive would have been paid during the remaining Unexpired
Employment Period including the assumed increases referred to in
clauses (i) and (ii) of Section 5(b).
The benefits to be provided under, and the amounts payable pursuant to, this
Section 4 shall be provided and be payable without regard to proof of damages
and without regard to the Executive's efforts, if any, to mitigate damages. The
Bank and the Executive hereby stipulate that the damages which may be incurred
by the Executive following any such termination of employment are not capable of
accurate measurement as of the date first above written and that such liquidated
damages constitute reasonable damages under the circumstances.
(c) Payments to the Executive under Section 4 shall be made
within ten days of the Executive's Date of Termination.
(d) In the event payments are made under Section 4 or Section
5, the Executive may select an individual or firm to provide him with reasonable
outplacement counseling services, and the Bank shall pay for the costs of such
services; provided, however, that the cost to the Bank of such outplacement
counseling services shall not exceed 25% of the Executive's Base Salary.
5. CHANGE IN CONTROL.
(a) No benefit shall be payable under this Section 5 unless
there shall have been a Change in Control of the Bank or the Company, as set
forth below. For purposes of this Agreement, a "Change in Control" of the Bank
or the Company shall mean any one or more of the following:
(i) An event of a nature that would be required to be reported
in response to Item l(a) of the current report on Form 8-K, as in
effect on the date hereof, pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act");
(ii) An event of a nature that results in a Change in Control
of the Bank or the Company within the meaning of the Home Owners' Loan
Act of 1933, as amended, or the Change in Bank Control Act of 1978, as
amended, as applicable, and the Rules and Regulations promulgated by
the Office of Thrift Supervision ("OTS") or its predecessor agency, the
Federal Deposit Insurance Corporation ("FDIC") or the Board of
Governors of the Federal Reserve System ("FRB"), as the case may be, as
in effect on the date hereof, but excluding any such Change in Control
resulting from the purchase of securities by the Company or the Bank's
or the Company's tax-qualified employee benefit plans and trusts;
(iii) If any "person" (as the term is used in Sections 13(d)
and 14(d) of the Exchange Act) is or becomes the "beneficial owner" (as
defined in Rule 13d-3 under the Exchange Act), directly or indirectly,
of securities of the Bank or the Company representing 20% or more of
the Bank's or the Company's outstanding securities except for any
securities of the Bank purchased by the Company in connection with the
initial conversion of the Bank from mutual to stock form (the
"Conversion") and any securities purchased by the Company or the Bank's
or the Company's tax-qualified employee benefit plans and trusts;
(iv) If the individuals who constitute the Board on the date
hereof (the "Incumbent Board") cease for any reason to constitute at
least a majority of the Board, provided, however, that any person
becoming a director subsequent to the date hereof whose election or
nomination for election by the Company's stockholders, was approved by
a vote of at least three-quarters of the directors then comprising the
Incumbent Board shall be considered as though he were a member of the
Incumbent Board, but excluding, for this purpose, any such person whose
initial assumption of office occurs as a result of an actual or
threatened election contest with respect to the election or removal of
directors or other actual or threatened solicitation of proxies or
consents by or on behalf of a person other than the Board;
(v) A merger, consolidation, reorganization, sale of all or
substantially all the assets of the Bank or the Company or similar
transaction occurs in which the Bank or the Company is not the
resulting entity, other than a transaction following which (A) at least
51% of the equity ownership interests of the entity resulting from such
transaction are beneficially owned (within the meaning of Rule 13d-3
promulgated under Exchange Act) in substantially the same relative
proportions by persons who, immediately prior to such transaction,
beneficially owned (within the meaning of Rule 13d-3 promulgated under
the Exchange Act) at least 51% of the outstanding equity ownership
interests in the Bank or the Company and (B) at least 51% of the
securities entitled to vote generally in the election of directors of
the entity resulting from such transaction are beneficially owned
(within the meaning of Rule 13d-3 promulgated under the Exchange Act)
in substantially the same relative proportions by persons who,
immediately prior to such transaction, beneficially owned (within the
meaning of Rule 13d-3 promulgated under the Exchange Act) at least 51%
of the securities entitled to vote generally in the election of
directors of the Bank or the Company;
(vi) A proxy statement shall be distributed soliciting proxies
from stockholders of the Company, by someone other than the current
management of the Company, seeking stockholder approval of a plan of
reorganization, merger or consolidation of the Company or the Bank or
similar transaction with one or more corporations as a result of which
the outstanding shares of the class of securities then subject to such
plan or transaction are exchanged for or converted into cash or
property or securities not issued by the Bank or the Company; or
(vii) A tender offer is completed for 20% or more of the
voting securities of the Bank or Company then outstanding.
The "Change in Control Date" shall mean the date during the Employment Period on
which a Change in Control occurs. Anything in this Agreement to the contrary
notwithstanding, if the Executive's employment with the Company is terminated
and if it is reasonably demonstrated by the Executive that such termination of
employment (1) was at the request of a third party who has taken steps
reasonably calculated to effect a Change in Control or (2) otherwise arose in
connection with or anticipation of a Change in Control, then for all purposes of
this Agreement the "Change in Control Date" shall mean the date immediately
prior to the date of such termination of employment.
(b) If any of the events described in Section 5(a)
constituting a Change in Control have occurred or the Board has determined that
a Change in Control has occurred, the Executive shall be entitled to the
payments and the benefits provided below on the Change in Control Date. The
amounts payable and the benefits to be provided under this Section 5(b) to the
Executive shall consist of the payments and benefits that would be due to the
Executive and the Executive's family under Section 4(b) for the Unexpired
Employment Period as if an Event of Termination under Section 4(a) had occurred
on the Change in Control Date. For purposes of determining the payments and
benefits due under this Section 5(b), when calculating the payments due and
benefits to be provided for the Unexpired Employment Period, it shall be assumed
that for each year of the remaining term of this Agreement, the Executive would
have received (i) an annual increase in Base Salary equal to the average
percentage increase in Base Salary received by the Executive for the three-year
period ending with the earlier of (x) the year in which the Change in Control
Date occurs or (y) the year during which a definitive agreement, if any,
governing the Change in Control is executed, with the first such increase
effective as of the January 1st next following such three-year period and the
second and third such increases effective as of the next two anniversaries of
such January 1st, (ii) a bonus or other incentive compensation equal to the
highest percentage rate of bonus or incentive compensation paid to the Executive
during the three-year period referred to in clause (i) of this Section 5(b)
times the Base Salary that the Executive would have been paid during the
remaining term of this Agreement including the assumed increases referred to in
clause (i) of this Section 5(b), (iii) the maximum contributions that could be
made by or on behalf of the Executive with respect to any employee benefit plans
and programs maintained by the Company and the Bank based upon the Base Salary
and, if applicable, the bonus or other incentive compensation, respectively,
that the Executive would have been paid during the remaining term of this
Agreement including the assumed increases referred to in clauses (i) and (ii) of
this Section 5(b), and (iv) the present value of the pension benefits to which
the Executive is entitled under Section 4(b)(vi) with respect to the RP and the
BRP (and under any other qualified and non-qualified defined benefit plans
maintained by the Bank or the Company covering the Executive) shall be
determined as if he had continued working for the Bank during the remaining
Unexpired Employment Period and shall be based upon the Base Salary and, if
applicable, the bonus or other incentive compensation, respectively, that the
Executive would have been paid during the remaining term of this Agreement
including the assumed increases referred to in clauses (i) and (ii) of this
Section 5(b). The benefits to be provided under, and the amounts payable
pursuant to, this Section 5 shall be provided and be payable without regard to
proof of damages and without regard to the Executive's efforts, if any, to
mitigate damages. The Bank and the Executive hereby stipulate that the damages
which may be incurred by the Executive following any Change in Control are not
capable of accurate measurement as of the date first above written and that such
liquidated damages constitute reasonable damages under the circumstances.
(c) Payments under Section 5(b) shall be made to the Executive
on the Change in Control Date. Such payments shall be made regardless of whether
the Executive's employment terminates.
6. TERMINATION FOR DISABILITY.
(a) In the event of Termination for Disability, the Executive
shall receive the benefits provided in Section 6(b); provided, however, that the
benefits provided under Section 6(b) shall not be deemed to be in lieu of the
benefits he is otherwise entitled as a former employee under the Bank or the
Company's employee plans and programs. For purposes of this Agreement, the
Executive may be terminated for disability only if (i) the Executive shall have
been absent from his duties with the Bank on a full-time basis for at least six
consecutive months, or (ii) a majority of the members of the Board acting in
good faith determine that, based upon competent and independent medical evidence
presented by a physician or physicians agreed upon by the parties, the
Executive's physical or mental condition is such that he is totally and
permanently incapable of engaging in any substantial gainful employment based
upon his education, training and experience; provided, however, that on and
after the earliest date on which a Change in Control of the Bank or the Company
as defined in Section 5 occurs, such a determination shall require the
affirmative vote of at least three-fourths of the members of the Board acting in
good faith and such vote shall not be made prior to the expiration of a 60-day
period following the date on which the Board shall, by written notice to the
Executive, furnish him a statement of its grounds for proposing to make such
determination, during which period the Executive shall be afforded a reasonable
opportunity to make oral and written presentations to the members of the Board,
and to be represented by his legal counsel at such presentations, to refute the
grounds for the proposed determination.
(b) The Bank will pay the Executive as Disability pay, a
bi-weekly payment equal to 100% of the Executive's bi-weekly annual rate of Base
Salary in effect on the date of the Executive's Termination for Disability. In
addition, the Bank will cause to be continued insurance coverage, including
group life, health (including hospitalization, medical and major medical),
dental, accidental death and dismemberment, travel accident and short-term
disability coverage substantially identical to the coverage maintained by the
Bank or the Company for the Executive prior to his Termination for Disability.
The Disability pay and coverages shall commence on the effective date of the
Executive's termination and shall cease upon the earliest to occur of: (i) the
date the Executive returns to the full-time employment of the Bank, in the same
capacity as he was employed prior to his Termination for Disability and pursuant
to an employment agreement between the Executive and the Bank; (ii) the
Executive's full-time employment by another employer; (iii) the Executive's
attaining the normal age of retirement or receiving benefits under the RP or
other defined benefit pension plan of the Bank or the Company; (iv) the
Executive's death; (v) the Executive's eligibility to collect payments under the
disability provision of the RP or other defined benefit pension plan of the Bank
or the Company; or (vi) the expiration of the term of this Agreement.
(c) Notwithstanding the foregoing, there will be no reduction
in the compensation otherwise payable to the Executive during any period during
which the Executive is incapable of performing his duties hereunder by reason of
temporary disability.
7. TERMINATION UPON DEATH.
The Executive's employment shall terminate automatically upon
the Executive's death during the Employment Period. In such event, the Executive
and the Executive's legal representatives shall be entitled to the following:
(i) payment of the Executive's "Accrued Obligations;"
(ii) the continuation of all benefits to the Executive's
family and dependents that would have been provided if the Executive
had been entitled to the benefits under Section 4(b)(ii), (iii) and
(iv), and
(iii) the timely payment of any other amounts or benefits
required to be paid or provided or which the Executive is eligible to
receive under any plan, program, policy or practice or contract or
agreement of the Bank and its affiliated companies (all such other
amounts and benefits shall be hereinafter referred to as the "Other
Benefits");
provided, however, that if the Executive dies while in the employment of the
Bank, the amount of life insurance provided to the Executive by the Bank shall
not be less than the lesser of $200,000 or three times the Executive's then
annual Base Salary. Accrued Obligations shall be paid to the Executive's estate
or beneficiary, as applicable, in a lump sum cash payment within ten days of the
Date of Termination. With respect to the provision of Other Benefits after the
Change in Control Date, the term Other Benefits as utilized in this Section 7
shall include, without limitation, that the Executive's estate and/or
beneficiaries shall be entitled to receive, benefits at least equal to the most
favorable benefits provided by the Bank and affiliated companies to the estates
and beneficiaries of peer executives of the Bank and such affiliates companies
under such plans, programs, practices and policies relating to death benefits,
if any, as in effect with respect to other peer executives and their
beneficiaries at any time during the 120-day period immediately preceding the
Change in Control Date.
8. TERMINATION UPON RETIREMENT.
Termination by the Bank of the Executive based on "Retirement"
shall mean termination in accordance with the Company's or the Bank's retirement
policy or in accordance with any retirement arrangement established with the
Executive's consent with respect to him. Upon termination of the Executive upon
Retirement, the Executive shall be entitled to all benefits under the RP and any
other retirement plan of the Bank or the Company and other plans to which the
Executive is a party, and the Executive shall be entitled to the benefits, if
any, that would be payable to him as a former employee under the Bank's or the
Company's employee benefit plans and programs and compensation plans and
programs.
9. TERMINATION FOR CAUSE.
The terms "Termination for Cause" or "Cause" shall mean
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 any material breach of
this Agreement, in such case as measured against standards generally prevailing
at the relevant time in the savings and community banking industry. For purposes
of this Section, no act, or the failure to act, on the Executive's part shall be
"willful" unless done, or omitted to be done, in bad faith and without
reasonable belief that the action or omission was in the best interest of the
Bank or its affiliates. Any act, or failure to act, based upon authority given
pursuant to a resolution duly adopted by the Board or based upon the written
advice of counsel for the Bank shall be conclusively presumed to be done, or
omitted to be done, by the Executive in good faith and in the best interests of
the Bank. Notwithstanding the foregoing, the Executive shall not be deemed to
have been terminated for Cause unless and until there shall have been delivered
to him a Notice of Termination which shall include a copy of a resolution duly
adopted by the affirmative vote of not less than three-fourths of the members of
the Board at a meeting of the Board called and held for that purpose (after
reasonable notice to the Executive and an opportunity for him, together with
counsel, to be heard before the Board), finding that in the good faith opinion
of the Board, the Executive was guilty of conduct justifying Termination for
Cause and specifying the particulars thereof in detail. The Executive shall not
have the right to receive compensation or other benefits for any period after
Termination for Cause.
10. NOTICE.
(a) Any purported termination by the Bank or by the Executive
shall be communicated by a Notice of Termination to the other party hereto. For
purposes of this Agreement, a "Notice of Termination" shall mean a written
notice which shall indicate the specific termination provision in this Agreement
relied upon and shall set forth in reasonable detail the facts and circumstances
claimed to provide a basis for termination of the Executive's employment under
the provision so indicated.
(b) Subject to Section 10(c), "Date of Termination" shall mean
(A) if the Executive's employment is terminated for Disability, 30 days after a
Notice of Termination is given (provided that he shall not have returned to the
performance of his duties on a full-time basis during such 30-day period), and
(B) if his employment is terminated for any other reason, the date specified in
the Notice of Termination (which, in the case of a Termination for Cause, shall
be immediate).
(c) If, within 30 days after any Notice of Termination is
given, the party receiving such Notice of Termination notifies the other party
that a dispute exists concerning the termination, then, except upon the
occurrence of a Change in Control and voluntary termination by the Executive in
which case the Date of Termination shall be the date specified in the Notice,
the Date of Termination shall be the date on which the dispute is finally
determined, either by mutual written agreement of the parties, by a binding
arbitration award, or by a final judgment, order or decree of a court of
competent jurisdiction (the time for appeal therefrom having expired and no
appeal having been perfected) and provided further that the Date of Termination
shall be extended by a notice of dispute only if such notice is given in good
faith and the party giving such notice pursues the resolution of such dispute
with reasonable diligence. Notwithstanding the pendency of any such dispute, the
Bank will continue to pay the Executive his full compensation in effect when the
notice giving rise to the dispute was given (including, but not limited to, Base
Salary) and continue him as a participant in all compensation, benefit and
insurance plans in which he was participating when the notice of dispute was
given, until the dispute is finally resolved in accordance with this Agreement.
Amounts paid under this Section are in addition to all other amounts due under
this Agreement and shall not be offset against or reduce any other amounts due
under this Agreement.
(d) The Bank may terminate the Executive's employment at any
time, but any termination by the Bank, other than Termination for Cause, shall
not prejudice the Executive's right to compensation or other benefits under this
Agreement or under any other benefit or compensation plans or programs
maintained by the Bank or the Company from time to time. The Executive shall not
have the right to receive compensation or other benefits for any period after a
Termination for Cause as defined in Section 9 hereinabove.
(e) Any communication to a party required or permitted under
this Agreement, including any notice, direction, designation, consent,
instruction, objection or waiver, shall be in writing and shall be deemed to
have been given at such time as it is delivered personally, or five days after
mailing if mailed, postage prepaid, by registered or certified mail, return
receipt requested, addressed to such party at the address listed below or at
such other address as one such party may by written notice specify to the other
party, as follows. If to the Executive, (address omitted); if to the Bank,
Jamaica Savings Bank FSB, 303 Merrick Road, Lynbrook, New York 11563, Attention:
President, with a copy to Thacher Proffitt & Wood, Two World Trade Center, New
York, New York 10048, Attention: Douglas J. McClintock, Esq.
11. POST-TERMINATION OBLIGATIONS.
(a) All payments and benefits to the Executive under this
Agreement shall be subject to the Executive's compliance with paragraph (b) of
this Section 11 during the term of this Agreement and for one full year after
the expiration or termination hereof.
(b) The Executive shall, upon reasonable notice, furnish such
information and assistance to the Bank as may reasonably be required by the Bank
in connection with any litigation in which it or any of its subsidiaries or
affiliates is, or may become, a party; provided, that the Bank reimburses the
Executive for the reasonable value of his time in connection therewith and for
any out-of-pocket costs attributable thereto.
12. COVENANT NOT TO COMPETE.
The Executive hereby covenants and agrees that for a period of
one year following his Date of Termination, if such termination occurs prior to
the end of the term of the Agreement, he shall not, without the written consent
of the Board, become an officer, employee, consultant, director or trustee of
any savings bank, savings and loan association, savings and loan holding
company, bank or bank holding company if such position (a) entails working in
(or providing services in) New York City, Nassau or Suffolk counties or (b)
entails working in (or providing services in) any other county that is both (i)
within the Bank's primary trade (or operating) area at the time in question,
which shall be determined by reference to the Bank's business plan as in effect
from time to time, and (ii) in which the Bank engages in material or substantial
deposit-taking functions or lending activities at such time; provided, however,
that this Section 12 shall not apply if the Executive's employment is terminated
for the reasons set forth in any of Sections 4, 5, 6 or 8.
13. SOURCE OF PAYMENTS.
All payments provided in this Agreement shall be timely paid
in cash or check from the general funds of the Bank.
14. EFFECT ON PRIOR AGREEMENTS.
This Agreement contains the entire understanding between the
parties hereto and supersedes any prior employment agreement between the Bank or
any predecessor of the Bank and the Executive, including the Termination
Agreement dated June 27, 1993 and the Supplemental Termination Agreement dated
July 9, 1996, except that this Agreement shall not affect or operate to reduce
any benefit or compensation inuring to the Executive of a kind elsewhere
provided. No provisions of this Agreement shall be interpreted to mean that the
Executive is subject to receiving fewer benefits than those available to him
without reference to this Agreement.
15. EFFECT OF ACTION UNDER COMPANY AGREEMENT.
Notwithstanding any provision herein to the contrary, to the
extent that full compensation payments and benefits are paid to or received by
the Executive under the Employment Agreement, dated June 22, 1999, as it may be
amended from time to time, between the Executive and the Company, such
compensation payments and benefits paid by the Company will be deemed to satisfy
the corresponding obligations of the Bank under this Agreement.
16. NO ATTACHMENT.
Except as required by law, no right to receive payments under
this Agreement shall be subject to anticipation, commutation, alienation, sale,
assignment, encumbrance, charge, pledge, or hypothecation, or to execution,
attachment, levy, or similar process or assignment by operation of law, and any
attempt, voluntary or involuntary, to affect any such action shall be null,
void, and of no effect.
17. MODIFICATION AND WAIVER.
(a) This Agreement may not be modified or amended except by an
instrument in writing signed by the parties hereto.
(b) No term or condition of this Agreement shall be deemed to
have been waived, nor shall there be any estoppel against the enforcement of any
provision of this Agreement, except by written instrument of the party charged
with such waiver or estoppel. No such written waiver shall be deemed a
continuing waiver unless specifically stated therein, and each such waiver shall
operate only as to the specific term or condition waived and shall not
constitute a waiver of such term or condition for the future as to any act other
than that specifically waived.
18. SUCCESSOR AND ASSIGNS.
This Agreement will inure to the benefit of and be binding
upon the Executive, his legal representatives and testate or intestate
distributees, and the Bank, its successors and assigns, including any successor
by purchase, merger, consolidation or otherwise or a statutory receiver or any
other person or firm or corporation to which all or substantially all of the
assets and business of the Bank may be sold or otherwise transferred. Any such
successor of the Bank shall be deemed to have assumed this Agreement and to have
become obligated hereunder to the same extent as the Bank and the Executive's
obligations hereunder shall continue in favor of such successor.
19. SEVERABILITY.
If, for any reason, any provision of this Agreement, or any
part of any provision, is held invalid, such invalidity shall not affect any
other provision of this Agreement or any part of such provision not held so
invalid, and each such other provision and part thereof shall to the full extent
consistent with law continue in full force and effect.
20. HEADINGS FOR REFERENCE ONLY.
The headings of Sections and paragraphs herein are included
solely for convenience of reference and shall not control the meaning or
interpretation of any of the provisions of this Agreement. Any reference in this
Agreement to a Section or Subsection shall refer to a Section or Subsection of
this Agreement, except as otherwise specified.
21. GOVERNING LAW.
This Agreement shall be governed by the laws of the State of
New York, without reference to conflicts of law principles.
22. INDEMNIFICATION AND ATTORNEYS' FEES.
(a) The Bank shall indemnify, hold harmless and defend the
Executive against reasonable costs, including legal fees, incurred by him in
connection with his consultation with legal counsel or arising out of any
action, suit or proceeding in which he may be involved, as a result of his
efforts, in good faith, to defend or enforce the terms of this Agreement. The
Bank agrees to pay all such costs as they are incurred by the Executive, to the
full extent permitted by law, and without regard to whether the Bank believes
that it has a defense to any action, suit or proceeding by the Executive or that
it is not obligated for any payments under this Agreement.
(b) In the event any dispute or controversy arising under or
in connection with the Executive's termination is resolved in favor of the
Executive, whether by judgment, arbitration or settlement, the Executive shall
be entitled to the payment of all back-pay, including salary, bonuses and any
other cash compensation, fringe benefits and any compensation and benefits due
the Executive under this Agreement.
(c) The Bank shall indemnify, hold harmless and defend the
Executive for any act taken or not taken, or any omission or failure to act, by
him in good faith while performing services for the Bank or the Company to the
same extent and upon the same terms and conditions as other similarly situated
officers and directors of the Bank or the Company. If and to the extent that the
Bank or the Company, maintains, at any time during the Employment Period, an
insurance policy covering the other officers and directors of the Bank or the
Company against lawsuits, the Bank or the Company shall use its best efforts to
cause the Executive to be covered under such policy upon the same terms and
conditions as other similarly situated officers and directors.
23. TAX INDEMNIFICATION.
(a) Subject to the provisions of Section 28 hereof, this
Section 23 shall apply if a change "in the ownership or effective control" of
the Bank or "in the ownership of a substantial portion of the assets" of the
Bank occurs within the meaning of section 280G of the Code. If this Section 23
applies, then with respect to any taxable year in which the Executive shall be
liable for the payment of an excise tax under section 4999 of the Code with
respect to any payment in the nature of compensation made by the Bank, the
Company or any direct or indirect subsidiary or affiliate of the Bank to (or
for the benefit of) the Executive, the Bank shall pay to the Executive an
amount equal to X determined under the following formula:
X = E x P
-------------------------------------------------
1 - [(FI x (1 - SLI)) + SLI + E + M]
where
E = the rate at which the excise tax is assessed under
section 4999 of the Code;
P = the amount with respect to which such excise tax is
assessed, determined without regard to this Section
23;
FI = the highest effective marginal rate of income tax
applicable to the Executive under the Code for the
taxable year in question (taking into account any
phase-out or loss of deductions, personal exemptions
and other similar adjustments);
SLI = the sum of the highest effective marginal rates of
income tax applicable to the Executive under all
applicable state and local laws for the taxable year
in question (taking into account any phase-out or
loss of deductions, personal exemptions and other
similar adjustments); and
M = the highest marginal rate of Medicare tax
applicable to the Executive under the Code for the
taxable year in question.
Attached as Appendix A to this Agreement is an example that illustrates
application of this Section 23. Any payment under this Section 23 shall be
adjusted so as to fully indemnify the Executive on an after-tax basis so that
the Executive would be in the same after-tax financial position in which he
would have been if no excise tax under section 4999 of the Code had been
imposed. With respect to any payment in the nature of compensation that is made
to (or for the benefit of) the Executive under the terms of this Agreement or
otherwise and on which an excise tax under section 4999 of the Code will be
assessed, the payment determined under this Section 23(a) shall be made to the
Executive on the earlier of (i) the date the Bank, the Company or any direct or
indirect subsidiary or affiliate of the Bank is required to withhold such tax,
or (ii) the date the tax is required to be paid by the Executive.
(b) Notwithstanding anything in this Section 23 to the
contrary, in the event that the Executive's liability for the excise tax under
section 4999 of the Code for a taxable year is subsequently determined to be
different than the amount determined by the formula (X + P) x E, where X, P and
E have the meanings provided in Section 23(a), the Executive or the Bank, as the
case may be, shall pay to the other party at the time that the amount of such
excise tax is finally determined, an appropriate amount, plus interest, such
that the payment made under Section 23(a), when increased by the amount of the
payment made to the Executive under this Section 23(b) by the Bank, or when
reduced by the amount of the payment made to the Bank under this Section 23(b)
by the Executive, equals the amount that, it is finally determined, should have
properly been paid to the Executive under Section 23(a). The interest paid under
this Section 23(b) shall be determined at the rate provided under section
1274(b)(2)(B) of the Code. To confirm that the proper amount, if any, was paid
to the Executive under this Section 23, the Executive shall furnish to the Bank
a copy of each tax return which reflects a liability for an excise tax payment
made by the Bank, at least 20 days before the date on which such return is
required to be filed with the Internal Revenue Service.
24. NON-EXCLUSIVITY OF RIGHTS.
Except as otherwise provided herein, nothing in this Agreement
shall prevent or limit the Executive's continuing or future participation in any
plan, program, policy or practice provided by the Bank or any of its affiliated
companies and for which the Executive may qualify, nor shall anything herein
limit or otherwise affect such rights as the Executive may have under any
contract or agreement with the Bank or any of its affiliated companies. Amounts
which are vested benefits or which the Executive is otherwise entitled to
receive under any plan, policy, practice or program of or any contract or
agreement with the Bank or any of its affiliated companies at or subsequent to
the Date of Termination shall be payable in accordance with such plan, policy,
practice or program or contract or agreement except as explicitly modified by
this Agreement. Notwithstanding the foregoing, in the event of a termination of
employment, the amounts provided in Section 4 or Section 5, as applicable, shall
be the Executive's sole remedy for any purported breach of this Agreement by the
Bank.
25. MITIGATION; OTHER CLAIMS.
The Bank's obligation to make the payments provided for in
this Agreement and otherwise to perform its obligations hereunder shall not be
affected by any set-off, counterclaim, recoupment, defense or other claim, right
or action which the Bank may have against the Executive or others. In no event
shall the Executive be obligated to seek other employment or take any other
action by way of mitigation of the amounts payable to the Executive under any of
the provisions of this Agreement and such amounts shall not be reduced whether
or not the Executive obtains other employment.
26. CONFIDENTIAL INFORMATION.
The Executive shall hold in a fiduciary capacity for the
benefit of the Bank all secret or confidential information, knowledge or data
relating to the Bank or any of its affiliated companies, and their respective
businesses, which shall have been obtained by the Executive during the
Executive's employment by the Bank or any of its affiliated companies and which
shall not be or become public knowledge (other than by acts by the Executive or
representatives of the Executive in violation of this Agreement). After
termination of the Executive's employment with the Bank, the Executive shall
not, without the prior written consent of the Bank or as may otherwise be
required by law or legal process, communicate or divulge any such information,
knowledge or data to anyone other than the Bank and those designated by it. For
purposes of this Agreement, secret and confidential information, knowledge or
data relating to the Bank or any of its affiliates, and their respective
business, shall not include any information that is public, publicly available
or available through trade association sources. Notwithstanding any other
provision of this Agreement to the contrary, the Executive acknowledges and
agrees that in the event of a violation or threatened violation of any of the
provisions of this Section 26, the Bank shall have no adequate remedy at law and
shall therefore be entitled to enforce each such provision by temporary or
permanent injunction or mandatory relief obtained in any court of competent
jurisdiction without the necessity of proving damages or posting any bond or
other security, and without prejudice to any other remedies that may be
available at law or in equity.
27. ACCESS TO DOCUMENTS.
The Executive shall have the right to obtain copies of any
Bank or Bank documents that the Executive reasonably believes, in good faith,
are necessary or appropriate in determining his entitlement to, and the amount
of, payments and benefits under this Agreement.
28. REQUIRED REGULATORY PROVISIONS.
The following provisions are included for the purpose of
complying with various laws, rules and regulations applicable to the Bank:
(a) Notwithstanding anything herein contained to the contrary,
in no event shall the aggregate amount of compensation payable to the
Executive under Section 4(b) hereof (exclusive of amounts described in
Sections 4(b)(i) and (ii)) exceed three times the Executive's average
annual total compensation for the last five consecutive calendar years
to end prior to his termination of employment with the Bank (or for his
entire period of employment with the Bank if less than five calendar
years).
(b) Notwithstanding anything herein contained to the contrary,
any payments to the Executive by the Bank, whether pursuant to this
Agreement or otherwise, are subject to and conditioned upon their
compliance with Section 18(k) of the Federal Deposit Insurance Act
("FDI Act"), 12 U.S.C. ss.1828(k), and any regulations promulgated
thereunder.
(c) Notwithstanding anything herein contained to the contrary,
if the Executive is suspended from office and/or temporarily prohibited
from participating in the conduct of the affairs of the Bank pursuant
to a notice served under Section 8(e)(3) or 8(g)(1) of the FDI Act, 12
U.S.C. ss.1818(e)(3) or 1818(g)(1), the Bank's obligations under this
Agreement shall be suspended as of the date of service of such notice,
unless stayed by appropriate proceedings. If the charges in such notice
are dismissed, the Bank, in its discretion, may (i) pay to the
Executive all or part of the compensation withheld while the Bank's
obligations hereunder were suspended and (ii) reinstate, in whole or in
part, any of the obligations which were suspended.
(d) Notwithstanding anything herein contained to the contrary,
if the Executive 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) or 8(g)(1) of the FDI Act, 12 U.S.C.
ss.1818(e)(4) or (g)(1), all prospective obligations of the Bank under
this Agreement shall terminate as of the effective date of the order,
but vested rights and obligations of the Bank and the Executive shall
not be affected.
(e) Notwithstanding anything herein contained to the contrary,
if the Bank is in default (within the meaning of Section 3(x)(1) of the
FDI Act, 12 U.S.C. ss.1813(x)(1), all prospective obligations of the
Bank under this Agreement shall terminate as of the date of default,
but vested rights and obligations of the Bank and the Executive shall
not be affected.
(f) Notwithstanding anything herein contained to the contrary,
all prospective obligations of the Bank hereunder shall be terminated,
except to the extent that a continuation of this Agreement is necessary
for the continued operation of the Bank: (i) by the Director of the OTS
or his or her designee or the FDIC, at the time the FDIC enters into an
agreement to provide assistance to or on behalf of the Bank under the
authority contained in Section 13(c) of the FDI Act, 12 U.S.C.
ss.1823(c); (ii) by the Director of the OTS or his or her designee at
the time such Director or designee approves a supervisory merger to
resolve problems related to the operation of the Bank or when the Bank
is determined by such Director to be in an unsafe or unsound condition.
The vested rights and obligations of the parties shall not be affected.
If and to the extent that any of the foregoing provisions shall cease to be
required by applicable law, rule or regulation, the same shall become
inoperative as though eliminated by formal amendment of this Agreement.
<PAGE>
SIGNATURES
IN WITNESS WHEREOF, JAMAICA SAVINGS BANK FSB. has caused this
Agreement to be executed and its seal to be affixed hereunto by its duly
authorized officer, and the Executive has signed this Agreement, on the 22nd day
of June, 1999.
ATTEST: JAMAICA SAVINGS BANK FSB
By:
Joanne Corrigan Edward P. Henson
- --------------- ----------------
Joanne Corrigan Edward P. Henson
Secretary President
[Seal]
WITNESS:
Philip Pepe
-----------
Philip Pepe
<PAGE>
STATE OF NEW YORK )
: ss.:
COUNTY OF NASSAU )
On this 22nd day of June, 1999, before me personally came
Edward P. Henson, to me known, who, being by me duly sworn, did depose and say
that he is President of Jamaica Savings Bank FSB, the federally chartered
savings bank described in and which executed the foregoing instrument; that he
knows the seal of said bank; that the seal affixed to said instrument is such
seal; that it was so affixed by order of the Board of Directors of said bank;
and that he signed his name thereto by like order.
Name:
Notary Public
STATE OF NEW YORK )
: ss.:
COUNTY OF NASSAU )
On this 22nd day of June, 1999, before me personally came
Philip Pepe, to me known, and known to me to be the individual described in the
foregoing instrument, who, being by me duly sworn, did depose and say that he
resides at the address set forth in said instrument, and that he signed his name
to the foregoing instrument.
Name:
Notary Public
<PAGE>
APPENDIX A
----------
1. INTRODUCTION. Sections 280G and 4999 of the Internal Revenue Code of
1986, as amended ("Code"), impose a 20% non-deductible federal excise tax on a
person if the payments and benefits in the nature of compensation to or for the
benefit of that person that are contingent on a change in the ownership or
effective control of the Company or the Bank or in the ownership of a
substantial portion of the assets of the Company or the Bank (such payments and
benefits are considered "parachute payments" under section 280G) exceed three
times the person's "base amount" under section 280G. Section 23 of the Agreement
provides for the Executive to receive a tax indemnification payment (sometimes
referred to as a "gross-up" payment) if the payments and benefits in the nature
of compensation to or for the benefit of the Executive that are considered
parachute payments cause the imposition of an excise tax under section 4999 of
the Code. Capitalized terms in this Appendix A that are not defined in this
Appendix A have the meaning used in the Employment Agreement with the Executive.
2. PURPOSE. The purpose of this Appendix A is to illustrate how the tax
indemnification or gross-up payment would be computed. The amounts, figures and
rates used in this example are meant to be illustrative and do not reflect the
actual payments and benefits that would be made to the Executive under this
Agreement. For purposes of this example, it is assumed that a change in control
within the meaning of section 280G of the Code has occurred and that:
(a) The value of the insurance benefits required to be provided to a
hypothetical employee "Z" under sections 4(b)(iii) and 5(b) of the
Agreement for medical, dental, life and other insurance benefits
during the unexpired employment period is $23,000.
(b) The annual rate of Z's salary covered by the Agreement is $100,000,
and Z received annual salary increases of 4%, 5% and 6% (i.e., a
three-year average of 5%) for each of the prior three years. Hence,
the amount payable under sections 4(b)(v) and 5(b) of the Agreement
for salary during the unexpired employment period would be $331,013
[$105,000 + $110, 250 + $115,763].
(c) Z received annual bonuses equal to 20% of his salary in each of the
prior three years. Hence, the amount payable under sections 4(b)(v)
and 5(b) of the Agreement for bonuses during the unexpired employment
period would be $66,203 [20% x ($105,000 + $110,250 + $115,763)].
(d) The amount payable under sections 4(b)(vi) and 5(b) of the Agreement
for the present value of the additional RP and BRP accruals during the
unexpired employment period would be $45,000.
(e) The amount payable under sections 4(b)(vii) and 5(b) of the Agreement
for additional contributions to the ESOP, 401(k) Plan and BRP during
the unexpired employment period would be $20,000.
(f) Z's base amount (i.e., average W-2 wages for the five-year period
preceding the change in control) is $87,000.
3. DETERMINE IF Z IS SUBJECT TO AN EXCISE TAX. Z's parachute payments would
total $485,216 [$23,000 + $331,013 + $66,203 + $45,000 + $20,000]. Three times
Z's base amount is $261,000 [3 x $87,000]; accordingly, Z is subject to an
excise tax because $485,216 exceeds $261,000. Z's "excess parachute payments"
under section 280G of the Code are equal to Z's total parachute payments minus
one times Z's base amount, or $398,216 [$485,216 - $87,000]. If Z were not
protected by section 23 of the Agreement, Z would be subjected to an excise tax
of $79,643 [$398,216 x 20%], in addition to ordinary income taxes.
4. Compute Z's Tax Indemnification Payment. Z's tax indemnification payment
under section 23 of the Agreement would be computed pursuant to the following
formula:
E x P .2 x $398,216
X = ------------------------------------ = ----------------------------------
1 - [(FI x (1 - SLI)) + SLI + E + M] 1 - [.368874 + .0685 + .2 + .0145]
where
E = excise tax rate under section 4999 of the Code [20%];
P = the amount with respect to which such excise tax is
assessed determined without regard to section 23 of
the Agreement [$398,216];
FI = the highest effective marginal rate of income tax
applicable to Z under the Code for the taxable year
in question [assumed to be 39.6% in this example, but
in actuality, the rate is adjusted to take into
account any phase-out or loss of deductions, personal
exemptions and other similar adjustments];
SLI = the sum of the highest effective marginal rates of
income tax applicable to Z under applicable state and
local laws for the taxable year in question [assumed
to be 6.85% in this example, but in actuality, the
rate is adjusted to take into account any phase-out
or loss of deductions, personal exemptions and other
similar adjustments]; and
M = the highest marginal rate of Medicare tax applicable
to Z under the Code for the year in question [1.45%].
In this example, the amount of tax indemnification payment due to Z under
section 23 of the Agreement would be $79,643 [.2 x $398,216] divided by 0.348126
[1 - (.368874 + .0685 + .2 + .0145)], or $228,777. Such amount would be payable
in addition to the other amounts payable under the Agreement in order to put Z
in approximately the same after-tax position that Z would have been in if there
were no excise tax imposed under sections 280G and 4999 of the Code. The tax
indemnification to Z of $228,777 would in turn be a parachute payment subject to
excise tax under sections 280G and 4999. Accordingly, Z's actual excess
parachute payment would be $626,993 [$485,216 - $87,000) + $228,777)] resulting
in an excise tax of $125,399 [$626,993 x 20%]. The difference between the
indemnification. payment and the excise tax [$103,378] is an amount equal to the
sum of the income and other applicable taxes due on the indemnification payment
[($228,777 x .368874) + ($228,777 x .0685) + ($228,777 x .0145)], confirming
that the amount of the tax indemnification payment is sufficient to satisfy all
of Z's tax liability resulting from the excess parachute payment.
JAMAICA SAVINGS BANK FSB
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT ("Agreement") is made and entered
into as of June 22, 1999 by and between JAMAICA SAVINGS BANK FSB, a federally
chartered savings bank, having its principal office at 303 Merrick Road,
Lynbrook, New York 11563 ("Bank"), and Laurel M. Romito, an individual residing
at (address omitted) ("Executive"). Any reference to the "Company" in this
Agreement shall mean JSB Financial, Inc. and any successor thereto.
W I T N E S S E T H :
WHEREAS, the Executive is currently serving as Vice President
of the Bank, and the Bank wishes to assure itself of the services of the
Executive for the period provided in this Agreement; and
WHEREAS, the Executive is willing to serve in the employ of
the Bank on the terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the premises and the
mutual covenants and conditions hereinafter set forth, the Bank and the
Executive hereby agree as follows:
1. POSITION AND RESPONSIBILITIES.
During the period of her employment hereunder, the Executive
agrees to serve as Vice President of the Bank. The Executive shall render
administrative and management services to the Bank such as are customarily
performed by persons situated in a similar executive capacity and shall perform
such other duties not inconsistent with her title and office as may be assigned
to her by or under the authority of the Board of Directors of the Bank (the
"Board"). The Executive shall have such authority as is necessary or appropriate
to carry out her assigned duties. Failure to re-elect the Executive as Vice
President of the Bank (or a more senior position) without the consent of the
Executive shall constitute a breach of this Agreement.
2. TERMS.
(a) The period of the Executive's employment under this
Agreement shall be deemed to have commenced as of the date first above written
(the "Effective Date") and shall be for an initial term of three years. Prior to
the first anniversary of the Effective Date of this Agreement and on each
anniversary date thereafter (each, an "Anniversary Date"), the Board shall
review the terms of this Agreement and the Executive's performance of services
hereunder and may, in the absence of objection from the Executive, approve an
extension of the Employment Agreement. In such event, the Employment Agreement
shall be extended to the third anniversary of the relevant Anniversary Date. For
purposes of this Agreement, the term "Employment Period" shall mean the term of
this Agreement plus such extensions as are provided herein.
(b) During the period of her employment hereunder, except for
periods of absence occasioned by illness, disability, holidays, reasonable
vacation periods and reasonable leaves of absence, the Executive shall devote
substantially all of her business time, attention, skill and efforts to the
faithful performance of her duties hereunder including (i) service as Vice
President of the Bank, and, if duly elected, a Director of the Bank, (ii)
performance of such duties not inconsistent with her title and office as may be
assigned to her by or under the authority of the Board or a more senior
executive officer, and (iii) such other activities and services related to the
organization, operation and management of the Bank. During the Employment Period
it shall not be a violation of this Agreement for the Executive to (A) serve on
corporate, civic, industry or charitable boards or committees, (B) deliver
lectures, fulfill speaking engagements or teach at educational institutions and
(C) manage personal investments, so long as such activities do not significantly
interfere with the performance of the Executive's responsibilities as an
employee of the Bank in accordance with this Agreement. It is expressly
understood and agreed that to the extent that any such activities have been
conducted by the Executive prior to the Effective Date, the continued conduct of
such activities (or the conduct of activities similar in nature and scope
thereto) subsequent to the Effective Date shall not thereafter be deemed to
interfere with the performance of the Executive's responsibilities to the Bank.
It is also expressly agreed that the Executive may conduct activities subsequent
to the Effective Date that are generally accepted for an executive in her
position, regardless of whether conducted by the Executive prior to the
Effective Date.
(c) Notwithstanding anything herein contained to the contrary:
(i) the Executive's employment with the Bank may be terminated by the Bank or
the Executive during the term of this Agreement, subject to the terms and
conditions of this Agreement; and (ii) nothing in this Agreement shall mandate
or prohibit a continuation of the Executive's employment following the
expiration of the term of this Agreement upon such terms and conditions as the
Board and the Executive may mutually agree.
(d) For all purposes of this Agreement, the term "Unexpired
Employment Period" as of any date shall mean the period beginning on such date
and ending on the Anniversary Date on which the Employment Period (as extended
pursuant to Section 2(a) of this Agreement) is then scheduled to expire.
3. COMPENSATION AND REIMBURSEMENT.
(a) The compensation specified under this Agreement shall
constitute the salary and benefits paid for the duties described in Section 1.
The Bank shall pay the Executive as compensation a salary at an annual rate of
not less than (salary omitted) per year or such higher rate as may be prescribed
by or under the authority of the Board ("Base Salary"). The Base Salary payable
under this Section 3 shall be paid in approximately equal installments in
accordance with the Bank's customary payroll practices. During the period of
this Agreement, the Executive's Base Salary shall be reviewed at least annually;
the first such review will be made no later than one year from the date of this
Agreement. Such review shall be conducted by a Committee designated by the
Board, and the Board may increase the Executive's Base Salary, which increased
amount shall be considered the Executive's "Base Salary" for purposes of this
Agreement. In no event shall the Executive's annual rate of Base Salary under
this Agreement in effect at a particular time be reduced without her prior
written consent. In addition to the Base Salary provided in this Section 3(a),
the Bank shall provide the Executive at no cost to the Executive with all such
other benefits as are provided uniformly to permanent full-time employees of the
Bank.
(b) The Bank will provide the Executive with employee benefit
plans, arrangements and perquisites substantially equivalent to those in which
the Executive was participating or otherwise deriving benefit from immediately
prior to the beginning of the term of this Agreement, and the Bank will not,
without the Executive's prior written consent, make any changes in such plans,
arrangements or perquisites which would adversely affect the Executive's rights
or benefits thereunder. Without limiting the generality of the foregoing
provisions of this Subsection (b), the Executive will be entitled to participate
in or receive benefits under any employee benefit plans with respect to which
the Executive satisfies the eligibility requirements, including, but not limited
to, the Retirement Plan of Jamaica Savings Bank FSB ("RP"), the Incentive
Savings Plan of Jamaica Savings Bank FSB ("ISP"), the Jamaica Savings Bank FSB
Employee Stock Ownership Plan ("ESOP"), the Benefit Restoration Plan of Jamaica
Savings Bank FSB ("BRP"), the JSB Financial, Inc. 1990 Stock Option Plan, the
JSB Financial, Inc. 1996 Stock Option Plan, retirement plans, supplemental
retirement plans, pension plans, profit-sharing plans, group life, health
(including hospitalization, medical and major medical), dental, accidental death
and dismemberment, travel accident and short-term disability insurance plans, or
any other employee benefit plan or arrangement made available by the Bank in the
future to its senior executives and key management employees, subject to and on
a basis consistent with the terms, conditions and overall administration of such
plans and arrangements. The Executive will be entitled to incentive compensation
and bonuses as provided in any plan of the Bank in which the Executive is
eligible to participate. Nothing paid to the Executive under any such plan or
arrangement will be deemed to be in lieu of other compensation to which the
Executive is entitled under this Agreement.
(c) The Executive's principal place of employment shall be at
the Bank's executive offices at the address first above written, or at such
other location in New York City or in Nassau County or Suffolk County at which
the Bank shall maintain its principal executive offices, or at such other
location as the Board and the Executive may mutually agree upon. The Bank shall
provide the Executive, at her principal place of employment with support
services and facilities suitable to her position with the Bank and necessary or
appropriate in connection with the performance of her assigned duties under this
Agreement. The Bank shall reimburse the Executive for her ordinary and necessary
business expenses, including, without limitation, fees for memberships in such
clubs and organizations as the Executive and the Board shall mutually agree are
necessary and appropriate for business purposes, and travel and entertainment
expenses, incurred in connection with the performance of her duties under this
Agreement, upon presentation to the Bank of an itemized account of such expenses
in such form as the Bank may reasonably require.
4. PAYMENTS TO THE EXECUTIVE UPON AN EVENT OF TERMINATION.
The provisions of this Section shall in all respects be
subject to the terms and conditions stated in Sections 9 and 28.
(a) Upon the occurrence of an Event of Termination (as herein
defined) during the Executive's term of employment under this Agreement, the
provisions of this Section shall apply. As used in this Agreement, an "Event of
Termination" shall mean and include any one or more of the following: (i) the
termination by the Bank or the Company of the Executive's full-time employment
hereunder for any reason other than: following a Change in Control, as defined
in Section 5; for Disability, as defined in Section 6; for Retirement, as
defined in Section 8; for Cause, as defined in Section 9; or upon the
Executive's death; or (ii) unless consented to by the Executive, the Executive's
voluntary resignation from the Bank's employ, upon any: (A) failure to elect or
re-elect or to appoint or re-appoint the Executive as Vice President of the
Bank, (B) material adverse change in the Executive's function, duties, or
responsibilities, which change would cause the Executive's position to become
one of lesser responsibility, importance, or scope from the position and
attributes thereof described in Section 1, above (and any such material change
shall be deemed a continuing breach of this Agreement), (C) relocation of the
Executive's principal place of employment by more than 30 miles from its
location at the Effective Date of this Agreement, or a material reduction in the
benefits and perquisites to the Executive from those being provided as of the
Effective Date of this Agreement, (D) liquidation or dissolution of the Bank or
the Company, or (E) material breach of this Agreement by the Bank. Upon the
occurrence of any event described in clauses (A), (B), (C), (D) or (E), above,
the Executive shall have the right to elect to terminate her employment under
this Agreement by resignation upon written notice pursuant to Section 10 given
within a reasonable period of time not to exceed, except in case of a continuing
breach, four calendar months after the event giving rise to said right to elect.
(b) Upon the occurrence of an Event of Termination as set
forth in Section 4(a), on the Date of Termination, as defined in Section 10, the
Bank shall be obligated to pay, or to provide, the Executive, or, in the event
of her subsequent death, to her surviving spouse or such other beneficiary or
beneficiaries as the Executive may designate in writing, or if neither her
estate, as severance pay or liquidated damages, or both, the benefits provided
below and a payment equal to the sum of the payments set forth below:
(i) payment of the sum of (A) the Executive's annual Base
Salary through the Date of Termination to the extent not theretofore
paid and (B) any compensation previously deferred by the Executive
(together with any accrued interest or earnings thereon) and any
accrued vacation pay, in each case to the extent not theretofore paid
(the sum of the amounts described in clauses (A) and (B) shall be
hereinafter referred to as the "Accrued Obligations");
(ii) the benefits, if any, to which the Executive is entitled
as a former employee under the Bank's or the Company's employee benefit
plans and programs and compensation plans and programs;
(iii) continued group life, health (including hospitalization,
medical and major medical), dental, accidental death and dismemberment,
travel accident and short-term disability insurance benefits as
provided by the Bank or the Company, in addition to that provided
pursuant to Section 4(b)(ii), if and to the extent necessary to provide
for the Executive, for the remaining Unexpired Employment Period,
coverage equivalent to the coverage to which she would have been
entitled if she had continued working for the Bank during the remaining
Unexpired Employment Period at the highest annual rate of salary
achieved during the Employment Period; provided, however, if the
Executive has obtained group life, health (including hospitalization,
medical and major medical), dental, accidental death and dismemberment,
travel accident and/or short-term disability insurance benefits
coverage from another source, the Executive may, as of any month, make
an irrevocable election to forego the continued coverage that would
otherwise be provided hereunder for the remaining Unexpired Employment
Period, or any portion thereof, in which case the Bank or the Company,
upon receipt of the Executive's irrevocable election, shall pay the
Executive an amount equal to the estimated cost to the Bank or the
Company of providing such coverage during such period;
(iv) if and to the extent not already provided under Sections
4(b)(ii) and 4(b)(iii), continued health (including hospitalization,
medical and major medical) and dental insurance benefits to the extent
maintained by the Bank or the Company for its employees or retirees
during the remainder of the Executive's lifetime and the lifetime of
her spouse, if any, for so long as the Executive continues to reimburse
the Bank for the cost of such continued coverage;
(v) a lump sum payment, as liquidated damages, in an amount
equal to the Base Salary and bonus or other incentive compensation that
the Executive would have earned if the Executive had continued working
for the Bank and the Company during the remaining Unexpired Employment
Period (A) at the highest annual rate of Base Salary and bonus or other
incentive compensation achieved by the Executive during the three-year
period immediately preceding the Executive's Date of Termination,
except that (B) in the case of a Change in Control, such lump sum shall
be determined based upon the Base Salary and the bonus or other
incentive compensation, respectively, that the Executive would have
been paid during the remaining Unexpired Employment Period including
the assumed increases referred to in clauses (i) and (ii) of Section
5(b);
(vi) a lump sum payment in an amount equal to the excess, if
any, of: (A) the present value of the pension benefits to which the
Executive would be entitled under the RP and the BRP (and under any
other qualified and non-qualified defined benefit plans maintained by
the Bank or the Company covering the Executive) as if she had continued
working for the Bank during the remaining Unexpired Employment Period
(x) at the highest annual rate of Base Salary and, if applicable, the
highest bonus or other incentive compensation, respectively, achieved
by the Executive during the three-year period immediately preceding the
Executive's Date of Termination, except that (y) in the case of a
Change in Control, such lump sum shall be determined based upon the
Base Salary and, if applicable, the highest bonus or other incentive
compensation, respectively, that the Executive would have been paid
during the remaining Unexpired Employment Period including the assumed
increases referred to in clauses (i) and (ii) of Section 5(b), and (z)
in the case of a Change in Control, as if three additional years are
added to the Executive's age and years of creditable service under the
RP and the BRP and after taking into account any other compensation
required to be taken into account under the RP and the BRP (and any
other qualified and non-qualified defined benefit plans of the Bank or
the Company, as applicable), over (B) the present value of the pension
benefits to which she is actually entitled under the RP and the BRP
(and any other qualified and non-qualified defined benefit plans) as of
her Date of Termination, where such present values are to be determined
using a discount rate of 6% and the mortality tables prescribed under
section 72 of the Internal Revenue Code of 1986, as amended ("Code");
and
(vii) a lump sum payment in an amount equal to the
contributions that would have been made by the Bank or the Company on
the Executive's behalf to the ISP and the ESOP and to the BRP with
respect to such ISP and ESOP contributions (and to any other qualified
and non-qualified defined contribution plans maintained by the Bank or
the Company covering the Executive) as if the Executive had continued
working for the Bank and the Company during the remaining Unexpired
Employment Period making the maximum amount of employee contributions
required, if any, under such plan or plans and earning (A) the highest
annual rate of Base Salary and, if applicable, the highest bonus or
other incentive compensation, respectively, achieved by the Executive
during the three-year period immediately preceding the Executive's Date
of Termination, except that (B) in the case of a Change in Control,
such lump sum shall be determined based upon the Base Salary and, if
applicable, the bonus or other incentive compensation, respectively,
that the Executive would have been paid during the remaining Unexpired
Employment Period including the assumed increases referred to in
clauses (i) and (ii) of Section 5(b).
The benefits to be provided under, and the amounts payable pursuant to, this
Section 4 shall be provided and be payable without regard to proof of damages
and without regard to the Executive's efforts, if any, to mitigate damages. The
Bank and the Executive hereby stipulate that the damages which may be incurred
by the Executive following any such termination of employment are not capable of
accurate measurement as of the date first above written and that such liquidated
damages constitute reasonable damages under the circumstances.
(c) Payments to the Executive under Section 4 shall be made
within ten days of the Executive's Date of Termination.
(d) In the event payments are made under Section 4 or Section
5, the Executive may select an individual or firm to provide her with reasonable
outplacement counseling services, and the Bank shall pay for the costs of such
services; provided, however, that the cost to the Bank of such outplacement
counseling services shall not exceed 25% of the Executive's Base Salary.
5. CHANGE IN CONTROL.
(a) No benefit shall be payable under this Section 5 unless
there shall have been a Change in Control of the Bank or the Company, as set
forth below. For purposes of this Agreement, a "Change in Control" of the Bank
or the Company shall mean any one or more of the following:
(i) An event of a nature that would be required to be reported
in response to Item l(a) of the current report on Form 8-K, as in
effect on the date hereof, pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act");
(ii) An event of a nature that results in a Change in Control
of the Bank or the Company within the meaning of the Home Owners' Loan
Act of 1933, as amended, or the Change in Bank Control Act of 1978, as
amended, as applicable, and the Rules and Regulations promulgated by
the Office of Thrift Supervision ("OTS") or its predecessor agency, the
Federal Deposit Insurance Corporation ("FDIC") or the Board of
Governors of the Federal Reserve System ("FRB"), as the case may be, as
in effect on the date hereof, but excluding any such Change in Control
resulting from the purchase of securities by the Company or the Bank's
or the Company's tax-qualified employee benefit plans and trusts;
(iii) If any "person" (as the term is used in Sections 13(d)
and 14(d) of the Exchange Act) is or becomes the "beneficial owner" (as
defined in Rule 13d-3 under the Exchange Act), directly or indirectly,
of securities of the Bank or the Company representing 20% or more of
the Bank's or the Company's outstanding securities except for any
securities of the Bank purchased by the Company in connection with the
initial conversion of the Bank from mutual to stock form (the
"Conversion") and any securities purchased by the Company or the Bank's
or the Company's tax-qualified employee benefit plans and trusts;
(iv) If the individuals who constitute the Board on the date
hereof (the "Incumbent Board") cease for any reason to constitute at
least a majority of the Board, provided, however, that any person
becoming a director subsequent to the date hereof whose election or
nomination for election by the Company's stockholders, was approved by
a vote of at least three-quarters of the directors then comprising the
Incumbent Board shall be considered as though he or she were a member
of the Incumbent Board, but excluding, for this purpose, any such
person whose initial assumption of office occurs as a result of an
actual or threatened election contest with respect to the election or
removal of directors or other actual or threatened solicitation of
proxies or consents by or on behalf of a person other than the Board;
(v) A merger, consolidation, reorganization, sale of all or
substantially all the assets of the Bank or the Company or similar
transaction occurs in which the Bank or the Company is not the
resulting entity, other than a transaction following which (A) at least
51% of the equity ownership interests of the entity resulting from such
transaction are beneficially owned (within the meaning of Rule 13d-3
promulgated under Exchange Act) in substantially the same relative
proportions by persons who, immediately prior to such transaction,
beneficially owned (within the meaning of Rule 13d-3 promulgated under
the Exchange Act) at least 51% of the outstanding equity ownership
interests in the Bank or the Company and (B) at least 51% of the
securities entitled to vote generally in the election of directors of
the entity resulting from such transaction are beneficially owned
(within the meaning of Rule 13d-3 promulgated under the Exchange Act)
in substantially the same relative proportions by persons who,
immediately prior to such transaction, beneficially owned (within the
meaning of Rule 13d-3 promulgated under the Exchange Act) at least 51%
of the securities entitled to vote generally in the election of
directors of the Bank or the Company;
(vi) A proxy statement shall be distributed soliciting proxies
from stockholders of the Company, by someone other than the current
management of the Company, seeking stockholder approval of a plan of
reorganization, merger or consolidation of the Company or the Bank or
similar transaction with one or more corporations as a result of which
the outstanding shares of the class of securities then subject to such
plan or transaction are exchanged for or converted into cash or
property or securities not issued by the Bank or the Company; or
(vii) A tender offer is completed for 20% or more of the
voting securities of the Bank or Company then outstanding.
The "Change in Control Date" shall mean the date during the Employment Period on
which a Change in Control occurs. Anything in this Agreement to the contrary
notwithstanding, if the Executive's employment with the Company is terminated
and if it is reasonably demonstrated by the Executive that such termination of
employment (1) was at the request of a third party who has taken steps
reasonably calculated to effect a Change in Control or (2) otherwise arose in
connection with or anticipation of a Change in Control, then for all purposes of
this Agreement the "Change in Control Date" shall mean the date immediately
prior to the date of such termination of employment.
(b) If any of the events described in Section 5(a)
constituting a Change in Control have occurred or the Board has determined that
a Change in Control has occurred, the Executive shall be entitled to the
payments and the benefits provided below on the Change in Control Date. The
amounts payable and the benefits to be provided under this Section 5(b) to the
Executive shall consist of the payments and benefits that would be due to the
Executive and the Executive's family under Section 4(b) for the Unexpired
Employment Period as if an Event of Termination under Section 4(a) had occurred
on the Change in Control Date. For purposes of determining the payments and
benefits due under this Section 5(b), when calculating the payments due and
benefits to be provided for the Unexpired Employment Period, it shall be assumed
that for each year of the remaining term of this Agreement, the Executive would
have received (i) an annual increase in Base Salary equal to the average
percentage increase in Base Salary received by the Executive for the three-year
period ending with the earlier of (x) the year in which the Change in Control
Date occurs or (y) the year during which a definitive agreement, if any,
governing the Change in Control is executed, with the first such increase
effective as of the January 1st next following such three-year period and the
second and third such increases effective as of the next two anniversaries of
such January 1st, (ii) a bonus or other incentive compensation equal to the
highest percentage rate of bonus or incentive compensation paid to the Executive
during the three-year period referred to in clause (i) of this Section 5(b)
times the Base Salary that the Executive would have been paid during the
remaining term of this Agreement including the assumed increases referred to in
clause (i) of this Section 5(b), (iii) the maximum contributions that could be
made by or on behalf of the Executive with respect to any employee benefit plans
and programs maintained by the Company and the Bank based upon the Base Salary
and, if applicable, the bonus or other incentive compensation, respectively,
that the Executive would have been paid during the remaining term of this
Agreement including the assumed increases referred to in clauses (i) and (ii) of
this Section 5(b), and (iv) the present value of the pension benefits to which
the Executive is entitled under Section 4(b)(vi) with respect to the RP and the
BRP (and under any other qualified and non-qualified defined benefit plans
maintained by the Bank or the Company covering the Executive) shall be
determined as if she had continued working for the Bank during the remaining
Unexpired Employment Period and shall be based upon the Base Salary and, if
applicable, the bonus or other incentive compensation, respectively, that the
Executive would have been paid during the remaining term of this Agreement
including the assumed increases referred to in clauses (i) and (ii) of this
Section 5(b). The benefits to be provided under, and the amounts payable
pursuant to, this Section 5 shall be provided and be payable without regard to
proof of damages and without regard to the Executive's efforts, if any, to
mitigate damages. The Bank and the Executive hereby stipulate that the damages
which may be incurred by the Executive following any Change in Control are not
capable of accurate measurement as of the date first above written and that such
liquidated damages constitute reasonable damages under the circumstances.
(c) Payments under Section 5(b) shall be made to the Executive
on the Change in Control Date. Such payments shall be made regardless of whether
the Executive's employment terminates.
6. TERMINATION FOR DISABILITY.
(a) In the event of Termination for Disability, the Executive
shall receive the benefits provided in Section 6(b); provided, however, that the
benefits provided under Section 6(b) shall not be deemed to be in lieu of the
benefits she is otherwise entitled as a former employee under the Bank or the
Company's employee plans and programs. For purposes of this Agreement, the
Executive may be terminated for disability only if (i) the Executive shall have
been absent from her duties with the Bank on a full-time basis for at least six
consecutive months, or (ii) a majority of the members of the Board acting in
good faith determine that, based upon competent and independent medical evidence
presented by a physician or physicians agreed upon by the parties, the
Executive's physical or mental condition is such that she is totally and
permanently incapable of engaging in any substantial gainful employment based
upon her education, training and experience; provided, however, that on and
after the earliest date on which a Change in Control of the Bank or the Company
as defined in Section 5 occurs, such a determination shall require the
affirmative vote of at least three-fourths of the members of the Board acting in
good faith and such vote shall not be made prior to the expiration of a 60-day
period following the date on which the Board shall, by written notice to the
Executive, furnish her a statement of its grounds for proposing to make such
determination, during which period the Executive shall be afforded a reasonable
opportunity to make oral and written presentations to the members of the Board,
and to be represented by her legal counsel at such presentations, to refute the
grounds for the proposed determination.
(b) The Bank will pay the Executive as Disability pay, a
bi-weekly payment equal to 100% of the Executive's bi-weekly annual rate of Base
Salary in effect on the date of the Executive's Termination for Disability. In
addition, the Bank will cause to be continued insurance coverage, including
group life, health (including hospitalization, medical and major medical),
dental, accidental death and dismemberment, travel accident and short-term
disability coverage substantially identical to the coverage maintained by the
Bank or the Company for the Executive prior to her Termination for Disability.
The Disability pay and coverages shall commence on the effective date of the
Executive's termination and shall cease upon the earliest to occur of: (i) the
date the Executive returns to the full-time employment of the Bank, in the same
capacity as she was employed prior to her Termination for Disability and
pursuant to an employment agreement between the Executive and the Bank; (ii) the
Executive's full-time employment by another employer; (iii) the Executive's
attaining the normal age of retirement or receiving benefits under the RP or
other defined benefit pension plan of the Bank or the Company; (iv) the
Executive's death; (v) the Executive's eligibility to collect payments under the
disability provision of the RP or other defined benefit pension plan of the Bank
or the Company; or (vi) the expiration of the term of this Agreement.
(c) Notwithstanding the foregoing, there will be no reduction
in the compensation otherwise payable to the Executive during any period during
which the Executive is incapable of performing her duties hereunder by reason of
temporary disability.
7. TERMINATION UPON DEATH.
The Executive's employment shall terminate automatically upon
the Executive's death during the Employment Period. In such event, the Executive
and the Executive's legal representatives shall be entitled to the following:
(i) payment of the Executive's "Accrued Obligations;"
(ii) the continuation of all benefits to the Executive's
family and dependents that would have been provided if the Executive
had been entitled to the benefits under Section 4(b)(ii), (iii) and
(iv), and
(iii) the timely payment of any other amounts or benefits
required to be paid or provided or which the Executive is eligible to
receive under any plan, program, policy or practice or contract or
agreement of the Bank and its affiliated companies (all such other
amounts and benefits shall be hereinafter referred to as the "Other
Benefits");
provided, however, that if the Executive dies while in the employment of the
Bank, the amount of life insurance provided to the Executive by the Bank shall
not be less than the lesser of $200,000 or three times the Executive's then
annual Base Salary. Accrued Obligations shall be paid to the Executive's estate
or beneficiary, as applicable, in a lump sum cash payment within ten days of the
Date of Termination. With respect to the provision of Other Benefits after the
Change in Control Date, the term Other Benefits as utilized in this Section 7
shall include, without limitation, that the Executive's estate and/or
beneficiaries shall be entitled to receive, benefits at least equal to the most
favorable benefits provided by the Bank and affiliated companies to the estates
and beneficiaries of peer executives of the Bank and such affiliates companies
under such plans, programs, practices and policies relating to death benefits,
if any, as in effect with respect to other peer executives and their
beneficiaries at any time during the 120-day period immediately preceding the
Change in Control Date.
8. TERMINATION UPON RETIREMENT.
Termination by the Bank of the Executive based on "Retirement"
shall mean termination in accordance with the Company's or the Bank's retirement
policy or in accordance with any retirement arrangement established with the
Executive's consent with respect to him. Upon termination of the Executive upon
Retirement, the Executive shall be entitled to all benefits under the RP and any
other retirement plan of the Bank or the Company and other plans to which the
Executive is a party, and the Executive shall be entitled to the benefits, if
any, that would be payable to her as a former employee under the Bank's or the
Company's employee benefit plans and programs and compensation plans and
programs.
9. TERMINATION FOR CAUSE.
The terms "Termination for Cause" or "Cause" shall mean
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 any material breach of
this Agreement, in such case as measured against standards generally prevailing
at the relevant time in the savings and community banking industry. For purposes
of this Section, no act, or the failure to act, on the Executive's part shall be
"willful" unless done, or omitted to be done, in bad faith and without
reasonable belief that the action or omission was in the best interest of the
Bank or its affiliates. Any act, or failure to act, based upon authority given
pursuant to a resolution duly adopted by the Board or based upon the written
advice of counsel for the Bank shall be conclusively presumed to be done, or
omitted to be done, by the Executive in good faith and in the best interests of
the Bank. Notwithstanding the foregoing, the Executive shall not be deemed to
have been terminated for Cause unless and until there shall have been delivered
to her a Notice of Termination which shall include a copy of a resolution duly
adopted by the affirmative vote of not less than three-fourths of the members of
the Board at a meeting of the Board called and held for that purpose (after
reasonable notice to the Executive and an opportunity for him, together with
counsel, to be heard before the Board), finding that in the good faith opinion
of the Board, the Executive was guilty of conduct justifying Termination for
Cause and specifying the particulars thereof in detail. The Executive shall not
have the right to receive compensation or other benefits for any period after
Termination for Cause.
10. NOTICE.
(a) Any purported termination by the Bank or by the Executive
shall be communicated by a Notice of Termination to the other party hereto. For
purposes of this Agreement, a "Notice of Termination" shall mean a written
notice which shall indicate the specific termination provision in this Agreement
relied upon and shall set forth in reasonable detail the facts and circumstances
claimed to provide a basis for termination of the Executive's employment under
the provision so indicated.
(b) Subject to Section 10(c), "Date of Termination" shall mean
(A) if the Executive's employment is terminated for Disability, 30 days after a
Notice of Termination is given (provided that she shall not have returned to the
performance of her duties on a full-time basis during such 30-day period), and
(B) if her employment is terminated for any other reason, the date specified in
the Notice of Termination (which, in the case of a Termination for Cause, shall
be immediate).
(c) If, within 30 days after any Notice of Termination is
given, the party receiving such Notice of Termination notifies the other party
that a dispute exists concerning the termination, then, except upon the
occurrence of a Change in Control and voluntary termination by the Executive in
which case the Date of Termination shall be the date specified in the Notice,
the Date of Termination shall be the date on which the dispute is finally
determined, either by mutual written agreement of the parties, by a binding
arbitration award, or by a final judgment, order or decree of a court of
competent jurisdiction (the time for appeal therefrom having expired and no
appeal having been perfected) and provided further that the Date of Termination
shall be extended by a notice of dispute only if such notice is given in good
faith and the party giving such notice pursues the resolution of such dispute
with reasonable diligence. Notwithstanding the pendency of any such dispute, the
Bank will continue to pay the Executive her full compensation in effect when the
notice giving rise to the dispute was given (including, but not limited to, Base
Salary) and continue her as a participant in all compensation, benefit and
insurance plans in which she was participating when the notice of dispute was
given, until the dispute is finally resolved in accordance with this Agreement.
Amounts paid under this Section are in addition to all other amounts due under
this Agreement and shall not be offset against or reduce any other amounts due
under this Agreement.
(d) The Bank may terminate the Executive's employment at any
time, but any termination by the Bank, other than Termination for Cause, shall
not prejudice the Executive's right to compensation or other benefits under this
Agreement or under any other benefit or compensation plans or programs
maintained by the Bank or the Company from time to time. The Executive shall not
have the right to receive compensation or other benefits for any period after a
Termination for Cause as defined in Section 9 hereinabove.
(e) Any communication to a party required or permitted under
this Agreement, including any notice, direction, designation, consent,
instruction, objection or waiver, shall be in writing and shall be deemed to
have been given at such time as it is delivered personally, or five days after
mailing if mailed, postage prepaid, by registered or certified mail, return
receipt requested, addressed to such party at the address listed below or at
such other address as one such party may by written notice specify to the other
party, as follows. If to the Executive, (address omitted); if to the Bank,
Jamaica Savings Bank FSB, 303 Merrick Road, Lynbrook, New York 11563, Attention:
President, with a copy to Thacher Proffitt & Wood, Two World Trade Center, New
York, New York 10048, Attention: Douglas J. McClintock, Esq.
11. POST-TERMINATION OBLIGATIONS.
(a) All payments and benefits to the Executive under this
Agreement shall be subject to the Executive's compliance with paragraph (b) of
this Section 11 during the term of this Agreement and for one full year after
the expiration or termination hereof.
(b) The Executive shall, upon reasonable notice, furnish such
information and assistance to the Bank as may reasonably be required by the Bank
in connection with any litigation in which it or any of its subsidiaries or
affiliates is, or may become, a party; provided, that the Bank reimburses the
Executive for the reasonable value of her time in connection therewith and for
any out-of-pocket costs attributable thereto.
12. COVENANT NOT TO COMPETE.
The Executive hereby covenants and agrees that for a period of
one year following her Date of Termination, if such termination occurs prior to
the end of the term of the Agreement, she shall not, without the written consent
of the Board, become an officer, employee, consultant, director or trustee of
any savings bank, savings and loan association, savings and loan holding
company, bank or bank holding company if such position (a) entails working in
(or providing services in) New York City, Nassau or Suffolk counties or (b)
entails working in (or providing services in) any other county that is both (i)
within the Bank's primary trade (or operating) area at the time in question,
which shall be determined by reference to the Bank's business plan as in effect
from time to time, and (ii) in which the Bank engages in material or substantial
deposit-taking functions or lending activities at such time; provided, however,
that this Section 12 shall not apply if the Executive's employment is terminated
for the reasons set forth in any of Sections 4, 5, 6 or 8.
13. SOURCE OF PAYMENTS.
All payments provided in this Agreement shall be timely paid
in cash or check from the general funds of the Bank.
14. EFFECT ON PRIOR AGREEMENTS.
This Agreement contains the entire understanding between the
parties hereto and supersedes any prior employment agreement between the Bank or
any predecessor of the Bank and the Executive, except that this Agreement shall
not affect or operate to reduce any benefit or compensation inuring to the
Executive of a kind elsewhere provided. No provisions of this Agreement shall be
interpreted to mean that the Executive is subject to receiving fewer benefits
than those available to her without reference to this Agreement.
15. EFFECT OF ACTION UNDER COMPANY AGREEMENT.
Notwithstanding any provision herein to the contrary, to the
extent that full compensation payments and benefits are paid to or received by
the Executive under the Employment Agreement, dated June 22, 1999, as it may be
amended from time to time, between the Executive and the Company, such
compensation payments and benefits paid by the Company will be deemed to satisfy
the corresponding obligations of the Bank under this Agreement.
16. NO ATTACHMENT.
Except as required by law, no right to receive payments under
this Agreement shall be subject to anticipation, commutation, alienation, sale,
assignment, encumbrance, charge, pledge, or hypothecation, or to execution,
attachment, levy, or similar process or assignment by operation of law, and any
attempt, voluntary or involuntary, to affect any such action shall be null,
void, and of no effect.
17. MODIFICATION AND WAIVER.
(a) This Agreement may not be modified or amended except by an
instrument in writing signed by the parties hereto.
(b) No term or condition of this Agreement shall be deemed to
have been waived, nor shall there be any estoppel against the enforcement of any
provision of this Agreement, except by written instrument of the party charged
with such waiver or estoppel. No such written waiver shall be deemed a
continuing waiver unless specifically stated therein, and each such waiver shall
operate only as to the specific term or condition waived and shall not
constitute a waiver of such term or condition for the future as to any act other
than that specifically waived.
18. SUCCESSOR AND ASSIGNS.
This Agreement will inure to the benefit of and be binding
upon the Executive, her legal representatives and testate or intestate
distributees, and the Bank, its successors and assigns, including any successor
by purchase, merger, consolidation or otherwise or a statutory receiver or any
other person or firm or corporation to which all or substantially all of the
assets and business of the Bank may be sold or otherwise transferred. Any such
successor of the Bank shall be deemed to have assumed this Agreement and to have
become obligated hereunder to the same extent as the Bank and the Executive's
obligations hereunder shall continue in favor of such successor.
19. SEVERABILITY.
If, for any reason, any provision of this Agreement, or any
part of any provision, is held invalid, such invalidity shall not affect any
other provision of this Agreement or any part of such provision not held so
invalid, and each such other provision and part thereof shall to the full extent
consistent with law continue in full force and effect.
20. HEADINGS FOR REFERENCE ONLY.
The headings of Sections and paragraphs herein are included
solely for convenience of reference and shall not control the meaning or
interpretation of any of the provisions of this Agreement. Any reference in this
Agreement to a Section or Subsection shall refer to a Section or Subsection of
this Agreement, except as otherwise specified.
21. GOVERNING LAW.
This Agreement shall be governed by the laws of the State of
New York, without reference to conflicts of law principles.
22. INDEMNIFICATION AND ATTORNEYS' FEES.
(a) The Bank shall indemnify, hold harmless and defend the
Executive against reasonable costs, including legal fees, incurred by her in
connection with her consultation with legal counsel or arising out of any
action, suit or proceeding in which she may be involved, as a result of her
efforts, in good faith, to defend or enforce the terms of this Agreement. The
Bank agrees to pay all such costs as they are incurred by the Executive, to the
full extent permitted by law, and without regard to whether the Bank believes
that it has a defense to any action, suit or proceeding by the Executive or that
it is not obligated for any payments under this Agreement.
(b) In the event any dispute or controversy arising under or
in connection with the Executive's termination is resolved in favor of the
Executive, whether by judgment, arbitration or settlement, the Executive shall
be entitled to the payment of all back-pay, including salary, bonuses and any
other cash compensation, fringe benefits and any compensation and benefits due
the Executive under this Agreement.
(c) The Bank shall indemnify, hold harmless and defend the
Executive for any act taken or not taken, or any omission or failure to act, by
her in good faith while performing services for the Bank or the Company to the
same extent and upon the same terms and conditions as other similarly situated
officers and directors of the Bank or the Company. If and to the extent that the
Bank or the Company, maintains, at any time during the Employment Period, an
insurance policy covering the other officers and directors of the Bank or the
Company against lawsuits, the Bank or the Company shall use its best efforts to
cause the Executive to be covered under such policy upon the same terms and
conditions as other similarly situated officers and directors.
23. TAX INDEMNIFICATION.
(a) Subject to the provisions of Section 28 hereof, this
Section 23 shall apply if a change "in the ownership or effective control" of
the Bank or "in the ownership of a substantial portion of the assets" of the
Bank occurs within the meaning of section 280G of the Code. If this Section 23
applies, then with respect to any taxable year in which the Executive shall be
liable for the payment of an excise tax under section 4999 of the Code with
respect to any payment in the nature of compensation made by the Bank, the
Company or any direct or indirect subsidiary or affiliate of the Bank to (or for
the benefit of) the Executive, the Bank shall pay to the Executive an amount
equal to X determined under the following formula:
X = E x P
-------------------------------------------------
1 - [(FI x (1 - SLI)) + SLI + E + M]
where
E = the rate at which the excise tax is assessed under
section 4999 of the Code;
P = the amount with respect to which such excise tax is
assessed, determined without regard to this Section
23;
FI = the highest effective marginal rate of income tax
applicable to the Executive under the Code for the
taxable year in question (taking into account any
phase-out or loss of deductions, personal exemptions
and other similar adjustments);
SLI = the sum of the highest effective marginal rates of
income tax applicable to the Executive under all
applicable state and local laws for the taxable year
in question (taking into account any phase-out or
loss of deductions, personal exemptions and other
similar adjustments); and
M = the highest marginal rate of Medicare tax
applicable to the Executive under the Code for the
taxable year in question.
Attached as Appendix A to this Agreement is an example that illustrates
application of this Section 23. Any payment under this Section 23 shall be
adjusted so as to fully indemnify the Executive on an after-tax basis so that
the Executive would be in the same after-tax financial position in which she
would have been if no excise tax under section 4999 of the Code had been
imposed. With respect to any payment in the nature of compensation that is made
to (or for the benefit of) the Executive under the terms of this Agreement or
otherwise and on which an excise tax under section 4999 of the Code will be
assessed, the payment determined under this Section 23(a) shall be made to the
Executive on the earlier of (i) the date the Bank, the Company or any direct or
indirect subsidiary or affiliate of the Bank is required to withhold such tax,
or (ii) the date the tax is required to be paid by the Executive.
(b) Notwithstanding anything in this Section 23 to the
contrary, in the event that the Executive's liability for the excise tax under
section 4999 of the Code for a taxable year is subsequently determined to be
different than the amount determined by the formula (X + P) x E, where X, P and
E have the meanings provided in Section 23(a), the Executive or the Bank, as the
case may be, shall pay to the other party at the time that the amount of such
excise tax is finally determined, an appropriate amount, plus interest, such
that the payment made under Section 23(a), when increased by the amount of the
payment made to the Executive under this Section 23(b) by the Bank, or when
reduced by the amount of the payment made to the Bank under this Section 23(b)
by the Executive, equals the amount that, it is finally determined, should have
properly been paid to the Executive under Section 23(a). The interest paid under
this Section 23(b) shall be determined at the rate provided under section
1274(b)(2)(B) of the Code. To confirm that the proper amount, if any, was paid
to the Executive under this Section 23, the Executive shall furnish to the Bank
a copy of each tax return which reflects a liability for an excise tax payment
made by the Bank, at least 20 days before the date on which such return is
required to be filed with the Internal Revenue Service.
24. NON-EXCLUSIVITY OF RIGHTS.
Except as otherwise provided herein, nothing in this Agreement
shall prevent or limit the Executive's continuing or future participation in any
plan, program, policy or practice provided by the Bank or any of its affiliated
companies and for which the Executive may qualify, nor shall anything herein
limit or otherwise affect such rights as the Executive may have under any
contract or agreement with the Bank or any of its affiliated companies. Amounts
which are vested benefits or which the Executive is otherwise entitled to
receive under any plan, policy, practice or program of or any contract or
agreement with the Bank or any of its affiliated companies at or subsequent to
the Date of Termination shall be payable in accordance with such plan, policy,
practice or program or contract or agreement except as explicitly modified by
this Agreement. Notwithstanding the foregoing, in the event of a termination of
employment, the amounts provided in Section 4 or Section 5, as applicable, shall
be the Executive's sole remedy for any purported breach of this Agreement by the
Bank.
25. MITIGATION; OTHER CLAIMS.
The Bank's obligation to make the payments provided for in
this Agreement and otherwise to perform its obligations hereunder shall not be
affected by any set-off, counterclaim, recoupment, defense or other claim, right
or action which the Bank may have against the Executive or others. In no event
shall the Executive be obligated to seek other employment or take any other
action by way of mitigation of the amounts payable to the Executive under any of
the provisions of this Agreement and such amounts shall not be reduced whether
or not the Executive obtains other employment.
26. CONFIDENTIAL INFORMATION.
The Executive shall hold in a fiduciary capacity for the
benefit of the Bank all secret or confidential information, knowledge or data
relating to the Bank or any of its affiliated companies, and their respective
businesses, which shall have been obtained by the Executive during the
Executive's employment by the Bank or any of its affiliated companies and which
shall not be or become public knowledge (other than by acts by the Executive or
representatives of the Executive in violation of this Agreement). After
termination of the Executive's employment with the Bank, the Executive shall
not, without the prior written consent of the Bank or as may otherwise be
required by law or legal process, communicate or divulge any such information,
knowledge or data to anyone other than the Bank and those designated by it. For
purposes of this Agreement, secret and confidential information, knowledge or
data relating to the Bank or any of its affiliates, and their respective
business, shall not include any information that is public, publicly available
or available through trade association sources. Notwithstanding any other
provision of this Agreement to the contrary, the Executive acknowledges and
agrees that in the event of a violation or threatened violation of any of the
provisions of this Section 26, the Bank shall have no adequate remedy at law and
shall therefore be entitled to enforce each such provision by temporary or
permanent injunction or mandatory relief obtained in any court of competent
jurisdiction without the necessity of proving damages or posting any bond or
other security, and without prejudice to any other remedies that may be
available at law or in equity.
27. ACCESS TO DOCUMENTS.
The Executive shall have the right to obtain copies of any
Bank or Bank documents that the Executive reasonably believes, in good faith,
are necessary or appropriate in determining her entitlement to, and the amount
of, payments and benefits under this Agreement.
28. REQUIRED REGULATORY PROVISIONS.
The following provisions are included for the purpose of
complying with various laws, rules and regulations applicable to the Bank:
(a) Notwithstanding anything herein contained to the contrary,
in no event shall the aggregate amount of compensation payable to the
Executive under Section 4(b) hereof (exclusive of amounts described in
Sections 4(b)(i) and (ii)) exceed three times the Executive's average
annual total compensation for the last five consecutive calendar years
to end prior to her termination of employment with the Bank (or for her
entire period of employment with the Bank if less than five calendar
years).
(b) Notwithstanding anything herein contained to the contrary,
any payments to the Executive by the Bank, whether pursuant to this
Agreement or otherwise, are subject to and conditioned upon their
compliance with Section 18(k) of the Federal Deposit Insurance Act
("FDI Act"), 12 U.S.C. ss. 1828(k), and any regulations promulgated
thereunder.
(c) Notwithstanding anything herein contained to the contrary,
if the Executive is suspended from office and/or temporarily prohibited
from participating in the conduct of the affairs of the Bank pursuant
to a notice served under Section 8(e)(3) or 8(g)(1) of the FDI Act, 12
U.S.C. ss.1818(e)(3) or 1818(g)(1), the Bank's obligations under this
Agreement shall be suspended as of the date of service of such notice,
unless stayed by appropriate proceedings. If the charges in such notice
are dismissed, the Bank, in its discretion, may (i) pay to the
Executive all or part of the compensation withheld while the Bank's
obligations hereunder were suspended and (ii) reinstate, in whole or in
part, any of the obligations which were suspended.
(d) Notwithstanding anything herein contained to the contrary,
if the Executive 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) or 8(g)(1) of the FDI Act, 12 U.S.C.
ss.1818(e)(4) or (g)(1), all prospective obligations of the Bank under
this Agreement shall terminate as of the effective date of the order,
but vested rights and obligations of the Bank and the Executive shall
not be affected.
(e) Notwithstanding anything herein contained to the contrary,
if the Bank is in default (within the meaning of Section 3(x)(1) of the
FDI Act, 12 U.S.C. ss.1813(x)(1), all prospective obligations of the
Bank under this Agreement shall terminate as of the date of default,
but vested rights and obligations of the Bank and the Executive shall
not be affected.
(f) Notwithstanding anything herein contained to the contrary,
all prospective obligations of the Bank hereunder shall be terminated,
except to the extent that a continuation of this Agreement is necessary
for the continued operation of the Bank: (i) by the Director of the OTS
or his or her designee or the FDIC, at the time the FDIC enters into an
agreement to provide assistance to or on behalf of the Bank under the
authority contained in Section 13(c) of the FDI Act, 12 U.S.C.
ss.1823(c); (ii) by the Director of the OTS or his or her designee at
the time such Director or designee approves a supervisory merger to
resolve problems related to the operation of the Bank or when the Bank
is determined by such Director to be in an unsafe or unsound condition.
The vested rights and obligations of the parties shall not be affected.
If and to the extent that any of the foregoing provisions shall cease to be
required by applicable law, rule or regulation, the same shall become
inoperative as though eliminated by formal amendment of this Agreement.
<PAGE>
SIGNATURES
IN WITNESS WHEREOF, JAMAICA SAVINGS BANK FSB. has caused this
Agreement to be executed and its seal to be affixed hereunto by its duly
authorized officer, and the Executive has signed this Agreement, on the 22nd day
of June, 1999.
ATTEST: JAMAICA SAVINGS BANK FSB
By:
Joanne Corrigan Edward P. Henson
- --------------- ----------------
Joanne Corrigan Edward P. Henson
Secretary President
[Seal]
WITNESS:
Laurel M. Romito
----------------
Laurel M. Romito
<PAGE>
STATE OF NEW YORK )
: ss.:
COUNTY OF NASSAU )
On this 22nd day of June, 1999, before me personally came
Edward P. Henson, to me known, who, being by me duly sworn, did depose and say
that he is President of Jamaica Savings Bank FSB, the federally chartered
savings bank described in and which executed the foregoing instrument; that he
knows the seal of said bank; that the seal affixed to said instrument is such
seal; that it was so affixed by order of the Board of Directors of said bank;
and that he signed his name thereto by like order.
Name:
Notary Public
STATE OF NEW YORK )
: ss.:
COUNTY OF NASSAU )
On this 22nd day of June, 1999, before me personally came
Laurel M. Romito, to me known, and known to me to be the individual described in
the foregoing instrument, who, being by me duly sworn, did depose and say that
she resides at the address set forth in said instrument, and that she signed her
name to the foregoing instrument.
Name:
Notary Public
<PAGE>
APPENDIX A
----------
1. INTRODUCTION. Sections 280G and 4999 of the Internal Revenue Code of
1986, as amended ("Code"), impose a 20% non-deductible federal excise tax on a
person if the payments and benefits in the nature of compensation to or for the
benefit of that person that are contingent on a change in the ownership or
effective control of the Company or the Bank or in the ownership of a
substantial portion of the assets of the Company or the Bank (such payments and
benefits are considered "parachute payments" under section 280G) exceed three
times the person's "base amount" under section 280G. Section 23 of the Agreement
provides for the Executive to receive a tax indemnification payment (sometimes
referred to as a "gross-up" payment) if the payments and benefits in the nature
of compensation to or for the benefit of the Executive that are considered
parachute payments cause the imposition of an excise tax under section 4999 of
the Code. Capitalized terms in this Appendix A that are not defined in this
Appendix A have the meaning used in the Employment Agreement with the Executive.
2. PURPOSE. The purpose of this Appendix A is to illustrate how the tax
indemnification or gross-up payment would be computed. The amounts, figures and
rates used in this example are meant to be illustrative and do not reflect the
actual payments and benefits that would be made to the Executive under this
Agreement. For purposes of this example, it is assumed that a change in control
within the meaning of section 280G of the Code has occurred and that:
(a) The value of the insurance benefits required to be provided to a
hypothetical employee "Z" under sections 4(b)(iii) and 5(b) of the
Agreement for medical, dental, life and other insurance benefits
during the unexpired employment period is $23,000.
(b) The annual rate of Z's salary covered by the Agreement is $100,000,
and Z received annual salary increases of 4%, 5% and 6% (i.e., a
three-year average of 5%) for each of the prior three years. Hence,
the amount payable under sections 4(b)(v) and 5(b) of the Agreement
for salary during the unexpired employment period would be $331,013
[$105,000 + $110, 250 + $115,763].
(c) Z received annual bonuses equal to 20% of his salary in each of the
prior three years. Hence, the amount payable under sections 4(b)(v)
and 5(b) of the Agreement for bonuses during the unexpired employment
period would be $66,203 [20% x ($105,000 + $110,250 + $115,763)].
(d) The amount payable under sections 4(b)(vi) and 5(b) of the Agreement
for the present value of the additional RP and BRP accruals during the
unexpired employment period would be $45,000.
(e) The amount payable under sections 4(b)(vii) and 5(b) of the Agreement
for additional contributions to the ESOP, 401(k) Plan and BRP during
the unexpired employment period would be $20,000.
(f) Z's base amount (i.e., average W-2 wages for the five-year period
preceding the change in control) is $87,000.
3. DETERMINE IF Z IS SUBJECT TO AN EXCISE TAX. Z's parachute payments would
total $485,216 [$23,000 + $331,013 + $66,203 + $45,000 + $20,000]. Three times
Z's base amount is $261,000 [3 x $87,000]; accordingly, Z is subject to an
excise tax because $485,216 exceeds $261,000. Z's "excess parachute payments"
under section 280G of the Code are equal to Z's total parachute payments minus
one times Z's base amount, or $398,216 [$485,216 - $87,000]. If Z were not
protected by section 23 of the Agreement, Z would be subjected to an excise tax
of $79,643 [$398,216 x 20%], in addition to ordinary income taxes.
4. Compute Z's Tax Indemnification Payment. Z's tax indemnification payment
under section 23 of the Agreement would be computed pursuant to the following
formula:
E x P .2 x $398,216
X = ------------------------------------ = ----------------------------------
1 - [(FI x (1 - SLI)) + SLI + E + M] 1 - [.368874 + .0685 + .2 + .0145]
where
E = excise tax rate under section 4999 of the Code [20%];
P = the amount with respect to which such excise tax is
assessed determined without regard to section 23 of
the Agreement [$398,216];
FI = the highest effective marginal rate of income tax
applicable to Z under the Code for the taxable year
in question [assumed to be 39.6% in this example, but
in actuality, the rate is adjusted to take into
account any phase-out or loss of deductions, personal
exemptions and other similar adjustments];
SLI = the sum of the highest effective marginal rates of
income tax applicable to Z under applicable state and
local laws for the taxable year in question [assumed
to be 6.85% in this example, but in actuality, the
rate is adjusted to take into account any phase-out
or loss of deductions, personal exemptions and other
similar adjustments]; and
M = the highest marginal rate of Medicare tax applicable
to Z under the Code for the year in question [1.45%].
In this example, the amount of tax indemnification payment due to Z under
section 23 of the Agreement would be $79,643 [.2 x $398,216] divided by 0.348126
[1 - (.368874 + .0685 + .2 + .0145)], or $228,777. Such amount would be payable
in addition to the other amounts payable under the Agreement in order to put Z
in approximately the same after-tax position that Z would have been in if there
were no excise tax imposed under sections 280G and 4999 of the Code. The tax
indemnification to Z of $228,777 would in turn be a parachute payment subject to
excise tax under sections 280G and 4999. Accordingly, Z's actual excess
parachute payment would be $626,993 [$485,216 - $87,000) + $228,777)] resulting
in an excise tax of $125,399 [$626,993 x 20%]. The difference between the
indemnification. payment and the excise tax [$103,378] is an amount equal to the
sum of the income and other applicable taxes due on the indemnification payment
[($228,777 x .368874) + ($228,777 x .0685) + ($228,777 x .0145)], confirming
that the amount of the tax indemnification payment is sufficient to satisfy all
of Z's tax liability resulting from the excess parachute payment.
<TABLE>
PART 1: EXHIBIT 11.00
JSB FINANCIAL, INC. AND SUBSIDIARY
STATEMENT RE: COMPUTATION OF PER SHARE EARNINGS
(In Thousands, except per share amounts)
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
------------------------ ----------------------
1999 1998 1999 1998
------------------------ ----------------------
<S> <C> <C> <C> <C>
Basic earnings per share:
- -------------------------
Basic weighted average common shares 9,288 9,878 9,337 9,882
Net Income $ 6,893 $15,186 $14,372 $22,850
Basic earnings per common share $ .74 $1.54 $ 1.54 $ 2.31
Diluted earnings per share:
- ---------------------------
Weighted average common and dilutive potential shares 9,470 10,184 9,540 10,193
Net Income $ 6,893 $15,186 $14,372 $22,850
Diluted earnings per common share $ .73 $ 1.49 $ 1.51 $ 2.24
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
This schedule contains summary financial information extracted from the
Consolidated Statement of Financial Condition as of June 30, 1999 and the
Consolidated Statement of Operations for the six months ended June 30, 1999
and is qualified in its entirety by reference to such financial statements.
</LEGEND>
<CIK> 0000861499
<NAME> JSB Financial, Inc.
<MULTIPLIER> 1,000
<CURRENCY> U.S. Dollars
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> Dec-31-1999
<PERIOD-START> Jan-01-1999
<PERIOD-END> Jun-30-1999
<EXCHANGE-RATE> 1
<CASH> 14,393
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 64,500
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 86,697
<INVESTMENTS-CARRYING> 221,364
<INVESTMENTS-MARKET> 220,883
<LOANS> 1,190,131
<ALLOWANCE> 5,943
<TOTAL-ASSETS> 1,620,021
<DEPOSITS> 1,110,116
<SHORT-TERM> 0
<LIABILITIES-OTHER> 84,990
<LONG-TERM> 50,000
0
0
<COMMON> 160
<OTHER-SE> 374,755
<TOTAL-LIABILITIES-AND-EQUITY> 1,620,021
<INTEREST-LOAN> 46,477
<INTEREST-INVEST> 7,090
<INTEREST-OTHER> 1,585
<INTEREST-TOTAL> 55,152
<INTEREST-DEPOSIT> 17,348
<INTEREST-EXPENSE> 18,741
<INTEREST-INCOME-NET> 36,411
<LOAN-LOSSES> 12
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 14,312
<INCOME-PRETAX> 25,163
<INCOME-PRE-EXTRAORDINARY> 14,372
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 14,372
<EPS-BASIC> 1.54
<EPS-DILUTED> 1.51
<YIELD-ACTUAL> 4.87
<LOANS-NON> 213
<LOANS-PAST> 272
<LOANS-TROUBLED> 557
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 5,924
<CHARGE-OFFS> 13
<RECOVERIES> 20
<ALLOWANCE-CLOSE> 5,943
<ALLOWANCE-DOMESTIC> 5,943
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
