Exhibit 10.5
Salary Continuation Agreement Between Federal Trust Bank
and Xxxxxx X. Xxxxxx, Xx.
FEDERAL TRUST BANK
SALARY CONTINUATION AGREEMENT
THIS AGREEMENT is made this 23rd day of January 1997 by and between Federal
Trust Bank (collectively herein called the "Company"), Xxxxxx X. Xxxxxx,
Xx. ("Executive").
INTRODUCTION
To encourage the Executive to remain an employee of the Company, the
Company is willing to provide salary continuation benefits to the Executive.
AGREEMENT
The Executive and the Company agree as follows:
Article 1
Definitions
1.1 Definitions. Whenever used in this Agreement, the following words and
phrases shall have the meanings specified:
1.1.1 "Anniversary Date" means the 31st day of December of each
calendar year.
1.1.2 "Change of Control" means the transfer of 50% or more of the
Company's outstanding voting common stock within a consecutive 24
month period of time.
1.1.3 "Code" means the Internal Revenue Code of 1986, as amended.
References to a Code section shall be deemed to be that section
as it now exists and to any successor provision.
1.1.4 "Disability" means sickness, accident or injury which, in the
judgment of a physician appointed by the Company, prevents the
Executive from performing all of the Executive's customary duties
for the Company. As a condition to any benefits, the Company may
require the Executive to submit to such physical or mental
evaluations and tests as the Company's Board of Directors deems
appropriate.
1.1.5 "Early Retirement Date" means the Executive attaining age
(OPTION) and completing Years of Service.
1.1.6 "Effective Date" means the day of , 1996. 1 .1.7 "Month of
Service" means each completed full month of a Year of Service.
1.1.7 "Month of Service" means each completed full month of a Year of
Service.
1.1.8 "Normal Retirement Date" means the Anniversary Date in the year
the Executive attains age 65.
1.1.9 "Termination of Employment" means the Executive's ceasing to be
employed by the Company for any reason whatsoever, voluntary or
involuntary, other than by reason of an approved leave of
absence.
1.1.10"Years of Service" means the total number of consecutive
twelve-month periods during which the Executive is employed on a
full-time or part-time basis by the Company, inclusive of any
approved leaves of absence, from the Effective Date of this
Agreement until Termination of Employment.
Article 2
Lifetime Benefits
2.1 Normal Retirement Benefit. If the Executive terminates employment on or
after the Normal Retirement Date for reasons other than death, the
Company shall pay to the Executive the benefit described in this
Section 2.1.
2.1.1 Amount of Benefit. The annual benefit under this Section 2.1
shall be thirty one thousand three hundred twenty dollars
($31,320) per year for 17 consecutive years (the aggregate amount
of which is referred to herein as the "Normal Retirement
Benefit"), with the annual benefit amount inflated 4% annually
for each Year of Service until age 65.
2.1.2 Payment of Benefit. The Company shall pay two thousand, six
hundred and ten dollars ($2,610), inflated 4% annually for each
Year of Service until age 65, to the Executive on the first day
of each month commencing with the month following the Normal
Retirement Date and continuing for 203 additional months.
2.2 Early Retirement Benefit. If the Executive terminates employment after
the Early Retirement Date but before the Normal Retirement Date, and
for reasons other than death or Disability, the Company shall pay to
the Executive the benefit described in this Section 2.2.
2.2.1 Amount of Benefit. The Early Retirement Benefit under this
Section 2.2 is the Executive's vested percentage of the accrued
liability listed on Schedule A (for each Month of Service in a
partial year, the accrued liability in the year of Termination of
Employment will be increased as follows [the annual increase in
the accrued liability divided by twelve(12) times the number of
Months of Service]), determined as of the date of Termination of
Employment.
2.2.2 Payment of Benefit The Company shall pay the benefit to the
Executive on the first day of each month commencing with the
month following the Executive's Termination Date and continuing
in equal monthly payments, including interest at 8.0% per year,
for 203 additional months.
2.3 Disability Benefit. If the Executive terminates employment because of
Disability prior to the Normal Retirement Date, the Company shall pay
to the Executive the benefit described in this Section 2.3.
2.3.1 Amount of Disability Benefit. The Disability Benefit under this
Section 2.3 is 100% of the accrued liability listed on Schedule A
(for each Month of Service in a partial year, the accrued
liability in the year of Termination of Employment will be
increased as follows [the annual increase in the accrued
liability divided by twelve (12) times the number of Months of
Service]), determined as of the date of Termination of
Employment.
2.3.2 Payment of Benefit. The Company shall pay the benefit to the
Executive, at the Company's discretion, in either a lump sum
payment within 60 days of Executive's termination, or in equal
monthly payments, including interest at 8.0% per year, beginning
with the month following the Executive's disability and
continuing for 203 months.
2.4 Change of Control Benefit. Upon a Change of Control while the Executive
is employed by the Company, the Company shall pay to the Executive the
benefit described in this Section 2.4 in lieu of any other benefit
under this agreement.
2.4.1 Amount of Benefit. The Change of Control benefit shall be the
present value of 100% of the Normal Retirement Benefit in Section
2.1.1 as if the Executive worked until age 65, based on an 8.0%
discount rate.
2.4.2 Payment of Benefit. The Company shall pay the benefit to the
Executive at the Company's discretion, in either a lump sum
payment within 60 days of Change of Control, or in equal monthly
payments, including interest at 8.0% per year, beginning with the
month following the Change of Control and continuing for 203
months.
Article 3
Death Benefits
3.1 Death During Employment. If the Executive dies while employed by the
Company, the Company shall pay to the Executive's beneficiary the
benefit described in this Section 3.1.
3.1.1.Amount of Benefit. The Death Benefit Amount under this Section
3.1 is 100% of the accrued liability listed on Schedule A (for
each Month of Service in a partial year, the accrued liability in
the year of the Executive's death will be increased as follows
[the annual increase in the accrued liability divided by twelve
(12) times the number of Months of Service]), determined as of
the date of death.
3.1.2 Payment of Benefit. The Company shall pay the benefit to the
Executive's beneficiary, at the Company's discretion, in either a
lump sum payment within 60 days of Executive's death, or in equal
monthly payments, including interest at 8.0% per year, beginning
with the month following the Executive's death and continuing for
203 months.
3.2 Death During Benefit Period. If the Executive dies after benefit
payments have commenced under this Agreement but before receiving all
such payments, the Company shall pay the remaining benefits to the
Executive's beneficiary at the same time and in the same amounts the
benefit would have been paid to the Executive had the Executive
survived.
Article 4
Beneficiaries
4.1 Beneficiary Designations. The Executive shall designate a Primary and
Contingent beneficiary by filing a written designation with the
Company. The Executive may revoke or modify the designation at any time
by filing a new designation. However, designations will only be
effective if signed by the Executive and accepted by the Company during
the Executive's lifetime. A beneficiary's designation shall be deemed
automatically revoked if the beneficiary predeceases the Executive, or
if the Executive names a spouse as beneficiary and the marriage is
subsequently dissolved. If the Executive dies without a valid
beneficiary designation, all payments shall be made to the Executive's
surviving spouse, if any, and if none, to the Executive's surviving
children in equal shares per survivor, and if no survivors, to the
Executive's estate.
4.2 Facility of Payment. If a benefit is payable to a minor, to a person
declared incompetent, or to a person incapable of handling the
disposition of his or her property, the Company may pay such benefit to
the guardian, legal representative or person having the care or custody
of such minor, incompetent person or incapable person. The Company may
require proof of incompetence, minority or guardianship as it may deem
appropriate prior to distribution of the benefit. Such distribution
shall completely discharge the Company from all liability with respect
to such benefit.
Article 5
General Limitations
Notwithstanding any provision of this Agreement to the contrary, the
Company shall not pay any benefit under this Agreement for the
following reasons:
5.1 Excess Parachute Payment. To the extent the benefit would constitute an
excess parachute payment under Section 280G of the Code, the excess
parachute payment shall not be paid to the Executive.
5.2 Termination for Cause. If the Company terminates the Executive's
employment for:
5.2.1 Gross negligence or gross neglect of duties;
5.2.2 Commission of a felony; or
5.2.3 Fraud, disloyalty, dishonesty or willful violation of any law or
material Company policy in connection with the Executive's
employment.
5.3 Suicide. No benefits shall be payable if the Executive commits suicide
prior to 98, or if the Executive has made any material misstatement of
fact on any application for life insurance purchased by the Company.
Article 6
Claims and Review Procedures
6.1 Claims Procedure. The Company shall notify the Executive or his
successor in interest ("Claimant") in writing, within ninety (90) days
of the Claimant's written application for benefits, of eligibility or
non eligibility for benefits under the Agreement. If the Company
determines that the Claimant is not eligible for benefits or full
benefits, the notice shall set forth (1 ) the specific reasons for such
denial, (2) a specific reference to the provisions of the Agreement on
which the denial is based, (3) a description of any additional
information or material necessary for the Claimant to perfect
Claimant's claim, and a description of why it is needed, and (4) an
explanation of the Agreement's claims review procedure and other
appropriate information as to the steps to be taken if the Claimant
wishes to have the claim reviewed. If the Company determines that there
are special circumstances requiring additional time to make a decision,
the Company shall notify the Claimant of the special circumstances and
the date by which a decision is expected to be made, and may extend the
time for up to an additional ninety-day period.
6.2 Review Procedure. If the Claimant is determined by the Company not to
be eligible for benefits, or if the Claimant believes that Claimant is
entitled to greater or different benefits, the Claimant shall have the
opportunity to have such claim reviewed by the Company by filing a
petition for review with the Company within sixty (60) days after
receipt of the notice issued by the Company. Said petition shall state
the specific reasons which the Claimant believes entitle Claimant to
benefits or to greater or different benefits. Within sixty (60) days
after receipt by the Company of the petition, the Company shall afford
the Claimant (and counsel, if any) an opportunity to present Claimant's
position to the Company orally, or in writing, and the Claimant (or
counsel) shall have the right to review the pertinent documents. The
Company shall notify the Claimant of its decision in writing within the
sixty-day period, stating specifically the basis of its decision,
written in a manner calculated to be understood by the Claimant and the
specific provisions of the Agreement on which the decision is based.
If, because of the need for a hearing, the 60 day period is not
sufficient, the decision may be deferred for up to another sixty-day
period at the election of the Company, but notice of this deferral
shall be given to the Claimant.
Article 7
Amendments and Termination
The Company reserves the right to amend or terminate this Agreement at
any time. In the event of termination of this Agreement, the benefit to the
Executive shall be 100% of the accrued liability listed on Schedule A (for each
Month of Service in a partial year, the accrued liability in the year of
termination of Agreement will be increased as follows [the annual increase in
the accrued liability divided by twelve (12) times the number of Months of
Service]), determined as of the date of termination of Agreement. The Company
shall pay the benefit to the Executive, at the Company's discretion, in either
lump sum payment within 60 days of Executives termination, or in equal monthly
payments, including interest at 8.5% per year, beginning with the month
following the Executive's termination of employment and continuing for 179
months. In the event of Amendment, the nonforfeitable benefit accrued as of the
effective date of the Amendment shall not be reduced by the Amendment.
Article 8
Miscellaneous
8.1 Binding Effect. This Agreement shall bind the Executive and the
Company, and their beneficiaries, survivors, executors, administrators.
8.2 No Guaranty of Employment. This Agreement is not an employment policy
or contract. It does not give the Executive the right to remain an
employee of the Company, nor does it interfere with the Company's right
to discharge the Executive. It also does not require the Executive to
remain an employee nor interfere with the Executive's right to
terminate employment at any time.
8.3 Non-Transferability. Benefits under this Agreement cannot be sold,
transferred, assigned, pledged, attached or encumbered in any manner.
8.4 Tax Withholding. The Company shall withhold any taxes that are required
to be withheld from the benefits provided under this Agreement.
8.5 Applicable Law. The Agreement and all rights thereunder shall be
governed by the laws of Florida, except to the extent preempted by the
laws of the United States of America.
8.6 Unfunded Arrangement. The Executive and any beneficiary are general
unsecured creditors of the Company for the payment of benefits under
this Agreement. The benefits represent the mere promise by the Company
to pay such benefits. The rights to benefits are not subject in any
manner to anticipation, alienation, sale, transfer, assignment, pledge,
encumbrance, attachment, or garnishment by creditors. Insurance on the
Executive's life, if any, is a general asset of the Company to which
the Executive and any beneficiary shall have no preferred or secured
claim.
IN WITNESS WHEREOF, the Executive and a duly authorized Company officer
have signed this Agreement.
EXECUTIVE: COMPANY:
Federal Trust Bank
/s/ Xxxxxx X. Xxxxxx, Xx. /s/ Xxxxx X. Xxxxxxxxxx
Xxxxxx X. Xxxxxx, Xx. By:Xxxxx X. Xxxxxxxxxx
President & Chief Executive
Officer
FEDERAL TRUST BANK
SLALRY CONTINUATION AGREEMENT
BENEFICIARY DESIGNATION
I desinate the following as beneficiary of any death benefits under the
Salary Continuation Agreement.
Primary: Xxxxxxxx X. Xxxxxx - Spouse
Contingent A: Xxxxxxx X. Xxxxxx - Daughter
Contingent B:
Contingent C:
Note: To name a Trust as beneficiary, please provide the name of the
Trustee and the exact date of the Trust Agreement.
I understand that I may change any beneficiary designations by filing a new
written designation with the Bank. This benefit designation shall be controlled
by section 4.1 of the Salary Continuation Agreement.
Signature: /s/Xxxxxx Xxxxxx
Date: 2/4/97
Accepted by the Bank this 23rd day of January, 1997.
By: /s/Xxxxx X. Xxxxxxxxxx
---------------------------------
Xxxxx X. Xxxxxxxxxx
Title: President and Chief Executive Officer
BOARD RESOLUTION
ADOPTING SALARY CONTINUATION AGREEMENT
The Board of Directors of Federal Trust Bank, A Federal Savings Bank
("Bank") desires to retain Xxxxxx X.Xxxxxx ("Executive"), a key employee, in the
Bank's eploy. To encourage such retention, the Board of Directors desires to
enter into the Salary Continuation Agreement which is attached to these minutes.
Under the Salary Continuation Agreement, the Bank promises to pay certain
supplemental retirement or death benef its to the Executive, pursuant to the
terms and conditions contained therein.
THEREFOR, IT IS RESOLVED that the Salary Continuation Agreement, (which was
conceptually agreed to by the Compensation Committee in December of 1966 with
the intent to be immediately implemented), between Federal Trust Bank and Xxxxxx
X. Xxxxxx dated this 23rd day of January, 1997, is hereby adopted by the Bank to
be effective as of December 31, 1996, subject to the Salary Continuation
Agreement being submitted to the Office fo Thrift Supervision for prior written
approval or confirmation that the Office of Thrift Supervision has no objection
to the Salary Continuation Agreement.
RESOLVED FURTHER, that the Company's officers are authorized to take any
and all necessary financial, legal and accounting actions necessary to implement
the supplemental retirement or death benefit plan.
