JSB FINANCIAL, INC.
SUPPLEMENTAL EMPLOYMENT AGREEMENT
WHEREAS, ("Executive") and JSB Financial, Inc. (the "Company") desire to enter
into this Supplemental Employment Agreement ("Supplemental Agreement") to
supplement the Employment Agreement entered into between the Executive and the
Company on June 27, 1990 (hereinafter referred to as the "Employment
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
Employment Agreement as a result of a change in control of the Company; and
WHEREAS, the Board of Directors of the Company ("Board") believes that it is in
the best interests of the Company and its shareholders that this Supplemental
Agreement be entered into in order to provide the benefits intended to be
provided under the Employment Agreement to Executive in the event of a change in
control of the Company, without any reduction because of tax code "penalties" or
excise taxes relating to a change in control; and
WHEREAS, the Company and the Executive also desire to enter into this
Supplemental Agreement for the purpose of eliminating conflicting terms
contained in the Employment Agreement and to provide the Executive with
termination benefits substantially similar to those provided to key executives
at other savings and loan holding companies; and
WHEREAS, the Company 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 Company.
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 Company (as defined in the
Employment Agreement), the Executive shall be entitled to receive, pursuant to
this Supplemental Agreement, an amount, payable by the Company, in addition to
any compensation or benefits payable by the Company pursuant to the Employment
Agreement, which amount shall equal the difference between (i) the amount that
would be paid under the Employment Agreement pursuant to Section 5(c) of the
Employment Agreement but for the reductions in payments required by Section 5(h)
of the Employment Agreement, and (ii) the amount that is actually paid under the
terms of the Employment Agreement after giving consideration to Section 5(h) of
said Employment Agreement.
2. In each calendar year that Executive is entitled to receive payments or
benefits under the provisions of the Employment Agreement and this Supplemental
Agreement, the Company or it's 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, the Initial Excess
Parachute Payment shall be determined. Upon the Date of Termination following a
Change in Control, 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 Company's independent accountants shall determine
the amount (the "Adjustment Amount") the Executive must pay to the Company or
the Company must pay to the Executive in order to put the Executive (or the
Company, as the case may be ) in the same position as the Executive (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 Company
shall pay the Adjustment Amount to Executive or the Executive shall repay the
Adjustment Amount to the Company, as the case may be.
4. In each calendar year that Executive receives payments or benefits under the
Employment 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 Company as
described above. 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
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 Company shall assume control, at its 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 Employment Agreement
or this Supplemental Agreement) and Executive shall cooperate fully with the
Company in any such proceeding. The Executive shall not enter into any
compromise or settlement or otherwise prejudice any rights the Company may have
in connection therewith without prior consent of the Company.
B. MITIGATION
1. Upon the occurrence of an Event of Termination or Change in Control followed
by the subsequent payment of termination benefits to Executive under the
Employment 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.
C. INSURANCE COVERAGE BENEFITS
1. Notwithstanding the terms contained in Sections 4(c) and 5(d) of the
Employment Agreement, upon the occurrence of an Event of Termination or a Change
of Control, 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 or the Company prior to severance in lieu of receiving such continued
coverage as set forth in the Employment Agreement.
D. CONFLICTING TERMS
1. Notwithstanding the terms contained in Sections 4(b) and 5(c) of the
Employment Agreement, upon the occurrence of an Event of Termination or a Change
of Control, 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, JSB Financial, Inc. has caused this Supplemental Agreement
to be executed and its seal to be affixed hereunto by its duly authorized
officers, and Executive has signed this Supplemental Agreement on the day of ,
1996.
ATTEST: [SEAL] JSB FINANCIAL, INC.
Xxxxxx Xxxxxxxx Xxxxxx X. Xxxxxx
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Xxxxxx Xxxxxxxx, Secretary Xxxxxx X. Xxxxxx, President
[SEAL]
WITNESS:
Xxxxxxxx X. Xxxx Park X. Xxxxxx
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Xxxxxxxx X. Xxxx, Sen. Vice Pres. Park X. Xxxxxx
