EXHIBIT 10.5
SALARY CONTINUATION AGREEMENT BETWEEN FIRST FEDERAL BANK OF IDAHO, F.S.B. AND
XXXXX X. XXXXXX
FIRST FEDERAL BANK OF IDAHO, FSB
SALARY CONTINUATION AGREEMENT
THIS AGREEMENT is made this 1st day of March, 1995, by and between
FIRST FEDERAL BANK OF IDAHO, FSB, (the "Company"), and Xxxxx X. Xxxxxx, (the
"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.
The Company will pay the benefits from its general assets.
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 "CHANGE IN CONTROL" means the conversion of Company to a
public stock company, followed by the acquisition by a single person or
entity of more than fifty percent (50%) of the outstanding stock of the
Company.
1.1.2 "CODE" means the Internal Revenue Code of 1986, as
amended. References to a Code section shall be deemed to be to that section
as it now exists and to any successor provision.
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1.1.3 "DISABILITY" means, if the Executive is covered by a
Company-sponsored disability insurance policy, total disability as defined
in such policy without regard to any waiting period. If the Executive is
not covered by such policy, Disability means the Executive suffering a
sickness, accident or injury which, in the judgement of a physician
satisfactory to the Company, prevents the Executive from performing
substantially all of the Executive's normal duties for the Company. As a
condition to any benefits, the Company may require the Executive to submit
such physical or mental evaluation and tests as the Company's Board of
Directors deems appropriate.
1.1.4 "NORMAL RETIREMENT DATE" means the Executive attaining age
sixty (60) years.
1.1.5 "PLAN MONTH" means the period from the effective date to
the close of business on the day preceding that date in the following month
with subsequent Plan Months being measured in like manner.
1.1.6 "PLAN YEAR" means a twelve- (12-) month period beginning
on the effective date of this agreement specified in Section 8.2 or the
anniversary of that effective date, as the case may be, and ending at the
close of business on the next anniversary of such effective date.
1.1.7 "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.
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1.1.8 "PLAN YEARS OF SERVICE" means the total number of Plan
Years after the effective date of this agreement during which the Executive
is employed on a full-time basis by the Company, inclusive of any approved
leaves of absence.
1.1.9 "VESTING PERCENTAGE" means, at any time, the percentage
under Column B of Schedule A, attached hereto, shown opposite the number of
full Plan Years of Service then completed by Executive.
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 a Monthly Normal Retirement Benefit
computed and payable as follows:
2.1.1 MONTHLY RETIREMENT BENEFIT. The benefit shall be a
Monthly Retirement Benefit equal to one-twelfth (1/12th) of the Annual
Benefit computed from column "G" of Schedule A attached hereto, multiplied
by Executive's then applicable Vesting Percentage determined from Column B
of said Schedule A. If Executive's termination occurs less than one (1)
Plan Month after the end of a Plan Year, the Annual Benefit shown opposite
the number of full Plan Years of Service completed by the Executive prior
to his termination shall the Annual Benefit used to compute the Executive's
Monthly Retirement Benefit. If the Executive's termination occurs more than
one (1) Plan Month after the end of a Plan Year, the Annual Benefit shown
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opposite the number of full Plan Years of Service completed by the
Executive prior to his termination plus an additional amount computed by
multiplying the difference between that Annual Benefit and the Annual
Benefit which would have accrued if the Executive would have completed the
next full Plan Year of service times a fraction, the denominator of which
is twelve (12) and the numerator of which is the number of full Plan Months
of Service completed by the Executive after the end of the last full Plan
Year of Service, shall be the Annual Benefit used to compute the
Executive's Monthly Retirement Benefit.
2.1.2 PAYMENT OF BENEFIT. The Company shall begin payment of
the Monthly Retirement Benefit to the Executive on the first (1st) day of
the month following the month in which employment terminates. The Company
shall continue to pay the Monthly Retirement Benefit during the Executive's
lifetime or until a total of Two Hundred Forty (240) payments have been
made, which ever is longer.
2.2 EARLY RETIREMENT BENEFIT. If the Executive has a least one full
Plan Year of Service and terminates employment for reasons other than death
before the Normal Retirement Date, the Company shall pay to the Executive a
Monthly Early Retirement Benefit computed and payable as follows:
2.2.1 MONTHLY EARLY RETIREMENT BENEFIT. The benefit shall be a
Monthly Early Retirement Benefit equal to one-twelfth (1/12th) of the
Annual Benefit computed from column "G" of Schedule A attached hereto,
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multiplied by Executive's then applicable Vesting Percentage determined
from Column B of said Schedule A. If the Executive's termination occurs
less than one (1) Plan Month after the end of a Plan Year, the Annual
Benefits shown opposite the number of full Plan Years of Service completed
by the Executive prior to his termination shall be the Annual Benefit used
to compute the Executive's Monthly Early Retirement Benefit. If the
Executive's termination occurs more than one (1) Plan Month after the end
of a Plan Year, the Annual Benefit shown opposite the number of full Plan
Years of Service completed by the Executive prior to his termination plus
an additional amount computed by multiplying the difference between that
Annual Benefit and the Annual Benefit which would have accrued if the
Executive would have completed the next full Plan Year of service, times a
fraction, the denominator of which is twelve (12) and the numerator of
which is the number of full Plan Months of Service completed by the
Executive after the end of the last Full Plan Year of Service, shall be the
Annual Benefits used to compute Executive's Monthly Early Retirement
Benefit.
2.2.2 PAYMENT OF BENEFIT. The Company shall begin payment of
the Monthly Early Retirement Benefit to the Executive on the first (1st)
day of the month following the month in which Executive attains his Normal
Retirement Date. The Company shall continue to pay the Monthly Early
Retirement Benefit during the Executive's lifetime or until a total of Two
Hundred Forty (240) payments have been made, which ever is longer.
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2.2.3 IMMEDIATE PAYMENT OF BENEFIT. If the Executive is
entitled to receive an Early Retirement Benefit but elects prior to the
receipt of any Monthly Early Retirement Benefits to have his Early
Retirement Benefit begin on the first day of the month following the month
in which his employment terminates, the Monthly Early Retirement Benefit
will be computed using the Immediate Annual Benefit under column "E" of
Schedule A, rather then the Annual Benefit under column "G" of Schedule A
and the first Monthly Early Retirement Benefit shall be paid on the first
day of the month after the month in which Executive employment terminates.
As a condition to the Executive's right to receive his Early retirement
Benefits prior to his Normal Retirement Date, the Company shall require
that Executive enter into an written agreement that the Executive will not
compete with Company until after he reaches his Normal Retirement Date.
2.3 DISABILITY BENEFIT. If the Executive terminates employment for
Disability before the Normal Retirement Date, the Company shall pay to the
Executive a Monthly Disability Benefit computed and payable as follows:
2.3.1 MONTHLY DISABILITY BENEFIT. The benefits shall be a
Monthly Disability Benefit equal to one-twelfth (1/12th) of the Immediate
Annual Benefit computed from column "E" of Schedule A attached hereto,
multiplied by Executive's then applicable Vesting Percentage determined
from Column B of said Schedule A. If Executive's termination occurs less
than one (1) Plan Month after the end of a Plan Year, the Immediate Annual
Benefit
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shown opposite the number of full Plan Years of Service completed by the
Executive prior to his termination shall be the Immediate Annual Benefit
used to compute the Executive's Monthly Early Retirement Benefit. If the
Executive's termination occurs more than one (1) Plan Month after the end
of a Plan Year, the Immediate Annual Benefit shown opposite the number of
full Plan Years of Service competed by the Executive prior to his
termination plus an additional amount computed by multiplying the
difference between that Immediate Annual Benefit and the Immediate Annual
Benefit which would have accrued if the Executive would have completed the
next full Plan Year of service, times a fraction, the denominator of which
is twelve (12) and the numerator of which is the number of full Plan Months
of Service, shall be the Annual Benefit used to compute Executive's Monthly
Disability Benefit.
2.3.2 PAYMENT OF BENEFIT. The Company shall begin payment of
the Monthly Disability Benefit to the Executive on the first (1st) day of
the month following the month in which employment terminates. The Company
shall continue to pay the Monthly Disability Benefit until the earlier of
(a) the Executive's recovery from the Disability, or (b) until a total of
Two Hundred Forty (240) payments have been made.
2.4 CHANGE OF CONTROL BENEFIT. Upon a Change of Control and the
termination of the Executive's employment within one (1) year thereafter, the
Company
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shall pay to the Executive the Change of Control Benefit in lieu of all other
benefits payable under this agreement, which Change of Control Benefit is
computed and payable as follows:
2.4.1 CHANGE OF CONTROL BENEFIT. The benefit shall be a lump-
sum amount computed upon the Immediate Lump-Sum Benefit from column "D" of
Schedule A attached hereto, multiplied by Executive's then applicable
Vesting Percentage determined from Column B of said Schedule A. If
Executive's termination occurs less than one (1) Plan Month after the end
of a Plan Year, the Immediate Lump-Sum Benefit shown opposite the number of
full Plan Years of Service completed by the Executive prior to his
termination shall the Lump-Sum Benefit used to compute the Change of
Control Benefit. If the Executive's termination occurs more than one (1)
Plan Month after the end of a Plan Year, the Immediate Lump-Sum Benefit
shown opposite the number of full Plan Years of Service completed by the
Executive prior to his termination plus an additional amount computed by
multiplying the difference between that Immediate Lump-Sum Benefit and the
Immediate Lump-Sum Benefit which would have accrued if the Executive would
have completed the next full Plan Year of service, times a fraction, the
denominator of which is twelve (12) and the numerator of which is the
number of full Plan Months of Service completed by the Executive after the
end of the last full Plan Year of Service, shall be the Lump-Sum Benefit
used to compute the Change of Control Benefit.
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2.4.2 PAYMENT OF BENEFIT. The Company shall pay the Change of
Control Benefit to the Executive in a lump sum within sixty (60) days after
the Executive's Termination of Employment.
2.5 COMPUTATION OF BENEFIT BEFORE END OF FIRST PLAN YEAR. In the
event an Executive is disabled or terminated because of Change of Control prior
to the completion of one Plan Year of Service, the benefit to which Executive
will be entitled shall be computed by multiplying the Immediate Annual Benefit
which would have accrued if the Executive would have completed the first full
Plan Year of Service times, a fraction, the denominator of which is twelve (12)
and the numerator of which is the number of full plan months of service
completed by the Executive prior to his termination for Disability or Change of
Control. For such purposes, the Vesting Percentage shall be determined as if
Executive had completed one (1) full Plan Year of Service. If Executive's
employment is terminated for any other reasons than Disability, Change of
Control or Executive's death before the Executive has competed one (1) full Plan
Year of Service, he shall not be entitled to any benefit whatsoever.
ARTICLE 3
DEATH BENEFITS
3.1 DEATH DURING ACTIVE SERVICE. If the Executive dies while in the
active service of the Company, the Company shall pay to the Executive's
beneficiary the benefit described in this Section 3.1
3.1.1 MONTHLY DEATH BENEFIT. The benefit shall be a Monthly
Death benefit equal to one-twelfth (1/12th) of the last amount shown in
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Column "G" of Schedule A attached hereto, multiplied by Executive's then
applicable Vesting Percentage determined from Column B of said Schedule A.
3.1.2 PAYMENT OF BENEFIT. The Company shall begin payment of
the Monthly Death benefit to the Executive's beneficiary on the first (1st)
day of the month following the month in which death occurs. The Company
shall continue to pay the Monthly Death Benefit until a total of Two
Hundred Forty (240) payments have been made.
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 until a total of two
hundred forty (240) Monthly Benefit payments have been made by the Company.
ARTICLE 4
LUMP-SUM PAYMENT
If the Company and Executive mutually agree, the benefit payable by
reason of Executive's Normal Retirement, Early Retirement, Disability, or Death
may be paid in lump sum using the appropriate lump-sum schedule multiplied by
Executive's then applicable Vesting Percentage under Column B of Schedule A.
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ARTICLE 5
BENEFICIARIES
5.1 BENEFICIARY DESIGNATIONS. The Executive shall designate a
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, designation will only be effective if signed by the Executive and
accepted by the Company during the Executive's lifetime. The Executive's
beneficiary designation shall be 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 to the Executive's surviving
spouse, if any, and if none, to the Executive's surviving children and the
descendants of any deceased child by right of representation, and if no children
or descendants survive, to the Executive's estate.
5.2 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
incompetency, minority or guardianship as it may deem appropriate prior to the
distribution of the benefit. Such distribution shall completely discharge the
Company from all liability with respect to such benefit.
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ARTICLE 6
GENERAL LIMITATIONS
Notwithstanding any provision of this Agreement to the contrary, the
Company shall not pay any benefit under this Agreement:
6.1 EXCESS PARACHUTE PAYMENT. To the extent the benefit would be an
excess parachute payment under Section 280G of the Code.
6.2 TERMINATION FOR CAUSE. If the Company terminates the executive's
employment for:
6.2.1 Gross negligence or gross neglect of duties;
6.2.2 Commission of felony or of gross misdemeanor involving
moral turpitude;
6.2.3 Fraud, disloyalty, dishonesty or willful violation of any
law or significant Company policy committed in connection with the
Executive's employment and resulting in an adverse effect on the Company;
or
6.2.4 While in the Company's employment, accepting additional
employment with a competing institution.
6.3 SUICIDE. No benefits shall be payable if the Executive commits
suicide within two (2) years after the date of this Agreement, or if the
Executive has made any material misstatement of fact on any application for life
insurance purchased by the Company.
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ARTICLE 7
CLAIMS AND REVIEW PROCEDURES
7.1 CLAIMS PROCEDURE. The Company shall notify the Executive's
beneficiary, in writing, within ninety (90) days of his or her written
application for benefits, of his or her eligibility or non-eligibility for
benefits under the Agreement. If the Company determines that the beneficiary 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 his or her 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 beneficiary 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 beneficiary 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- (90-) day period.
7.2 REVIEW PROCEDURE. If the beneficiary is determined by the
Company not the be eligible for benefits, or if the beneficiary believes that he
or she is entitled to greater or different benefits, the beneficiary 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
beneficiary believes entitle him or her to benefits or to greater or different
benefits. Within sixty (6) days after receipt by the Company of the petition,
the
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Company shall afford the beneficiary (and counsel, if any) an opportunity to
present his or her position to the Company, orally or in writing, and the
beneficiary (or counsel) shall have the right to review the pertinent documents.
The Company shall notify the beneficiary of its decision in writing within the
sixty- (60-) day period, stating specifically and the basis of its decision,
written in a manner calculated to be understood by the beneficiary and the
specific provisions of the Agreement on which the decision is based. If,
because of the need for a hearing, the sixty- (60-) day period is not
sufficient, the decision may be deferred for up to another sixty- (60-) day
period at the election of the Company, but notice of this deferral shall be
given to the beneficiary.
ARTICLE 8
AMENDMENTS AND TERMINATION
The Company may amend or terminate this Agreement at any time if,
pursuant to legislature, judicial or regulatory action, continuation of the
Agreement would (i) cause benefits to be taxable to the Executive prior to
actual receipt, or (ii) result in significant financial penalties or other
significantly detrimental ramifications to the Company (other than the financial
impact of paying the benefits). In the event of any such amendment or
Termination, the Executive shall be one hundred percent (100%) vested in the
portion of the Normal Retirement Benefit accrued to the Executive's benefit
under Section 2.1 as of the date of the amendment or termination.
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ARTICLE 9
MISCELLANEOUS
9.1 BINDING EFFECT. This Agreement shall bind the Executive and the
Company, and their beneficiaries, survivors, executors, administrators and
transferees.
9.2 EFFECTIVE DATE. This agreement shall be effective and the First
Plan Year shall commence on March 1, 1995.
9.3 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.
9.4 NON-TRANSFERABILITY. Benefits under this Agreement cannot be
sold, transferred, assigned, pledged, attached or encumbered in any manner.
9.5 TAX WITHHOLDING. The Company shall withhold any taxes that are
required to be withheld from the benefits provided under this Agreement.
9.6 APPLICABLE LAW. The Agreement and all rights hereunder shall be
governed by the laws of the State of Idaho, except to the extent pre-empted by
the laws of the United States of America.
9.7 UNFUNDED ARRANGEMENT. The Executive and 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,
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pledge, encumbrance, attachment or garnishment by creditors. Any insurance on
the Executive's life is a general asset of the Company to which the Executive
and beneficiary have no preferred or secured claim.
IN WITNESS WHEREOF, the Executive and a duly authorized Company
officer have signed this Agreement.
EXECUTIVE COMPANY:
FIRST FEDERAL BANK OF IDAHO, FSB
/s/ Xxxxx X. Xxxxxx By:/s/ Xxxxxxx X. XxXxxxxx
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Title:President
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SCHEDULE A
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MANAGEMENT SUPPLEMENTAL RETIREMENT
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SALARY CONTINUATION PLAN
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PARTICIPANT: X. Xxxxxx
BEGINNING AGE: 44
RETIREMENT AGE: 60
LENGTH OF BENEFIT: Life with 20 Yr. Minimum
BENEFIT AMOUNT: $52,500/yr.
PRE-RETIREMENT BENEFIT ACCRUAL/VESTING SCHEDULE
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A B C D E F G
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End of Current Immediate Immediate Lump Sum Annual
Plan Vesting Year Lump Sum Annual Benefit Benefit
Year Percentage Accrual Benefit Benefit Age 60 Age 60
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1 100 15,486 15,486 1,613 55,170 5,745
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2 100 16,854 32,340 3,368 105,860 11,024
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3 100 18,344 50,684 5,278 152,433 15,874
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4 100 19,966 70,650 7,357 195,223 20,330
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5 100 21,730 92,381 9,620 234,539 24,425
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6 100 23,651 116,032 12,083 270,661 28,186
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7 100 25,742 141,774 14,764 303,850 31,643
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8 100 28,017 169,791 17,682 334,344 34,818
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9 100 30,494 200,285 20,857 362,361 37,736
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10 100 33,189 233,474 24,314 388,103 40,417
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11 100 36,123 269,596 28,075 411,754 42,880
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12 100 39,316 308,912 32,170 433,485 45,143
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13 100 42,791 351,702 36,626 453,451 47,222
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14 100 46,573 398,275 41,476 471,795 49,132
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15 100 50,690 448,965 46,755 488,649 50,887
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16 100 55,170 504,135 52,500 504,135 52,500
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