JAMAICA SAVINGS BANK FSB
SUPPLEMENTAL SPECIAL TERMINATION AGREEMENT
WHEREAS, ("Executive") and Jamaica Savings Bank FSB ("Bank") desire to enter
into this Supplemental Special Termination Agreement ("Supplemental Agreement")
to supplement the Special Termination Agreement entered into between the
Executive and the Bank on June 27, 1993 (hereinafter referred to as the
"Termination Agreement"); and
WHEREAS, there is an accelerating trend of consolidation among companies within
the banking industries; and
WHEREAS, tax law provisions relating to "golden parachute payments" could have
the effect of reducing the benefits otherwise provided to Executive under the
Termination Agreement as a result of a change in control of the Bank; and
WHEREAS, the Board of Directors of the Bank ("Board") believes that it is in the
best interests of the Bank that this Supplemental Agreement be entered into in
order to provide the benefits intended to be provided under the Termination
Agreement to Executive in the event of a change in control of the Bank or its
holding company, JSB Financial, Inc. ("Company"), without any reduction because
of tax code "penalties" or excise taxes relating to a change in control; and
WHEREAS, the Bank and the Executive also desire to enter into this Supplemental
Agreement for the purpose of eliminating conflicting terms contained in the
Termination Agreement and to provide the Executive with termination benefits
substantially similar to those provided to key executives at other savings
institutions; and
WHEREAS, the Bank and the Executive also desire to enter into this Supplemental
Agreement for the purpose of providing further incentive to the Executive to
achieve successful results in the management and the operation of the Bank.
NOW, THEREFORE, in consideration of the mutual covenants herein contained, and
upon the other terms and conditions hereinafter provided, the parties hereby
agree as follows:
A. SUPPLEMENTAL BENEFITS
1. In the event of a Change in Control of the Bank or the Company (as defined in
the Termination Agreement), the Executive shall be entitled to receive, pursuant
to this Supplemental Agreement, an amount, payable by the Bank or the Company,
in addition to any compensation or benefits payable by the Bank or the Company
pursuant to the Termination Agreement, which amount shall equal the difference
between (i) the amount that would be paid under the Termination Agreement
pursuant to Section 3(a) of the Termination Agreement but for the reductions in
payments required by Section 3(f) of the Termination Agreement, and (ii) the
amount that is actually paid under the terms of the Termination Agreement after
giving consideration to Section 3(f) of said Termination Agreement.
2. In each calendar year that Executive is entitled to receive payments or
benefits under the provisions of the Termination Agreement and this Supplemental
Agreement, the Bank or the Company or their independent accountants shall
determine if an excess parachute payment (as defined in Section 4999 of the
Internal Revenue Code of 1986, as amended, and any successor provision thereto,
(the "Code") exists. Such determination shall be made after taking any
reductions permitted pursuant to Section 280G of the Code and the regulations
thereunder. Any amount determined to be an excess parachute payment after taking
into account such reductions shall be hereafter referred to as the "Initial
Excess Parachute Payment". As soon as practicable after a Change in Control and
an event entitling the Executive to payments under the Termination Agreement and
this Supplemental Agreement, the Initial Excess Parachute Payment shall be
determined. Upon the Date of Termination following a Change in Control, the Bank
or the Company shall pay Executive, subject to applicable withholding
requirements under applicable state and federal law an amount equal to:
(i) twenty (20) percent of the Initial Excess Parachute Payment (or such other
amount equal to the tax imposed under Section 4999 of the Code); and
(ii) such additional amount (tax allowance) as may be necessary to compensate
Executive for the payment by Executive of city, state and federal income, excise
and employment-related taxes on the payment provided under Clause (i) and on any
payments under this Clause (ii). In computing such tax allowance, the payment to
be made under Clause (i) shall be divided by the "gross up percentage" ("GUP").
The GUP shall be determined as follows:
GUP = 1.00 - The Executive's Tax Rate
The Executive's Tax Rate for purposes of computing the GUP shall be the highest
marginal federal, state and city income, excise and employment-related tax rate,
including any applicable to the Executive in the year in which the payment under
Clause (i) is made.
3. Notwithstanding the foregoing, if it shall subsequently be determined in a
final judicial determination with any taxing authority or a final administrative
settlement with any taxing authority to which Executive is a party that the
excess parachute payment as defined in Section 4999 of the Code, reduced as
described above, is different from the Initial Excess Parachute Payment (such
different amount being hereafter referred to as the "Determinative Excess
Parachute Payment") then the Bank or the Company's independent accountants shall
determine the amount (the "Adjustment Amount") the Executive must pay to the
Bank or the Company or the Bank or the Company must pay to the Executive in
order to put the Executive (or the Bank or the Company, as the case may be) in
the same position as the Executive (or the Bank or the Company, as the case may
be) would have been if the Initial Excess Parachute Payment had been equal to
the Determinative Excess Parachute Payment. In determining the Adjustment
Amount, the independent accountants shall take into account any and all taxes
(including any penalties and interest) paid by or for Executive or refunded to
Executive or for Executive's benefit. As soon as practicable after the
Adjustment Amount has been so determined, the Bank or the Company shall pay the
Adjustment Amount to Executive or the Executive shall repay the Adjustment
Amount to the Bank or the Company, as the case may be.
4. In each calendar year that Executive receives payments or benefits under the
Termination Agreement or this Supplemental Agreement, Executive shall report on
his state and federal income tax returns such information as is consistent with
the determination made by the independent accountants of the Bank or the Company
as described above. The Bank and the Company shall indemnify and hold Executive
harmless from any and all losses, costs and expenses (including without
limitation, reasonable attorney's fees, interest, fines and penalties) which
Executive incurs as a result of so reporting such information. Executive shall
promptly notify the Bank or the Company in writing whenever the Executive
receives notice of the institution of a judicial or administrative proceeding,
formal or informal, in which the federal tax treatment under Section 4999 of the
Code of any amount paid or payable under this Supplemental Agreement is being
reviewed or is in dispute. The Bank and the Company shall assume control, at
their expense, over all legal and accounting matters pertaining to such federal
tax treatment (except to the extent necessary or appropriate for Executive to
resolve any such proceeding with respect to any matter unrelated to amounts paid
or payable pursuant to the Termination Agreement or this Supplemental Agreement)
and Executive shall cooperate fully with the Bank or the Company in any such
proceeding. The Executive shall not enter into any compromise or settlement or
otherwise prejudice any rights the Bank or the Company may have in connection
therewith without prior consent of the Bank or the Company.
B. WINDOW PERIOD PROVISION
1. Notwithstanding the provisions of Section 2(a) of the Termination Agreement,
Executive shall be entitled to payments under Section 3 of the Termination
Agreement upon a voluntary termination of employment following a Change of
Control, whether or not for good reason and regardless of whether the events
described in the last sentence of Section 2A of the Termination Agreement have
occurred, provided Executive terminates employment during a thirty (30) day
window period beginning on the first anniversary of the date of the Change of
Control. Such payments shall be made in accordance with Section 3(a) of the
Termination Agreement giving full consideration to Paragraph A of this
Supplemental Agreement.
C. MITIGATION
1. Upon the occurrence of a Change in Control followed by the subsequent payment
of termination benefits to Executive under the Termination Agreement or this
Supplemental Agreement, Executive shall have no duty or obligation to mitigate
and such payments shall not be reduced in the event the Executive obtains other
employment.
D. INSURANCE COVERAGE BENEFITS
1. Notwithstanding the terms contained in Sections 3(b) of the Termination
Agreement, upon the occurrence of a Change of Control followed by the subsequent
payment of termination benefits to Executive under the Termination Agreement or
this Supplemental Agreement, Executive shall receive a cash payment equal to the
cost of what the Executive would be required to pay for continued life, medical,
dental and disability coverage substantially identical to the coverage
maintained by the Bank prior to severance, in lieu of receiving such continued
coverage as set forth in the Termination Agreement.
E. CONFLICTING TERMS
1. Notwithstanding the terms contained in Sections 3(a) of the Termination
Agreement, upon the occurrence of a Change of Control followed by the subsequent
payment of termination benefits to Executive under the Termination Agreement or
this Supplemental Agreement the Bank or the Company shall pay Executive, or in
the event of his subsequent death, his beneficiary or beneficiaries, or his
estate, as the case may be, as severance pay or liquidated damages, or both, a
sum equal to the greater of the payments due for the remaining term of the
Agreement or three (3) times the average of the three (3) preceding years' Base
Salary, including bonuses and any other cash compensation paid to the Executive
during such years, and the amount of any contributions made to any employee
benefit plans, on behalf of the Executive, maintained by the Bank or the Company
during such years.
IN WITNESS WHEREOF, Jamaica Savings Bank FSB and JSB Financial, Inc. have caused
this Supplemental Agreement to be executed and its seal to be affixed hereunto
by their duly authorized officers, and Executive has signed this Supplemental
Agreement on the day of , 1996.
ATTEST: [SEAL] JAMAICA SAVINGS BANK FSB
Xxxxxx Xxxxxxxx Xxxxxx X. Xxxxxx
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Xxxxxx Xxxxxxxx, Secretary Xxxxxx X. Xxxxxx, President
ATTEST: [SEAL] JSB FINANCIAL, INC.
Xxxxxx Xxxxxxxx Xxxxxx X. Xxxxxx
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Xxxxxx Xxxxxxxx, Secretary Xxxxxx X. Xxxxxx, President
WITNESS:
Xxxxxxxx X. Xxxx
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Xxxxxxxx X. Xxxx, Senior Vice Pres.
