FEDERAL SAVINGS BANK
SALARY CONTINUATION AGREEMENT
THIS SALARY CONTINUATION PLAN FOR JAMES ONEILL (the Plan) is effective as of July 1, 2015, and is entered into by Federal Savings Bank (the Bank) and James ONeill (Executive).
WHEREAS, the purpose of the Plan is to provide additional retirement benefits to Executive, who, as a member of senior management, has contributed significantly to the success of the Bank, and whose continued services are vital to the Banks continued growth and success; and
WHEREAS, this Plan is intended to be an unfunded, non-qualified deferred compensation plan that complies with Sections 451 and 409A of the Internal Revenue Code of 1986, as amended (the Code), and the regulations thereunder and is also intended to be a top hat pension plan within the meaning of the Employee Retirement Income Security Act of 1974, as amended (ERISA).
When used herein, the following words and phrases shall have the meanings below unless the context clearly indicates otherwise:
|1.1 || |
Accrued Benefit means, as of any date, the liability that should be accrued by the Bank under generally accepted accounting principles (GAAP) to reflect the Banks obligation to Executive under the Plan.
|1.2 || |
Administrator means the Bank and/or its Board of Directors, provided, however, the Board of Directors can designate a committee of the Board of Directors (Committee) as the Administrator.
|1.3 || |
Bank means Federal Savings Bank and any successor to its business and/or assets which assumes and agrees to perform the duties and obligations under this Plan by operation of law or otherwise.
|1.4 || |
Beneficiary means the person or persons (and, if applicable, their heirs) designated by Executive as the beneficiary to whom the deceased Executives benefits are payable. The beneficiary designation shall be made on the form attached hereto as Exhibit A and filed with the Administrator. If no Beneficiary is so designated, then Executives Spouse, if living, will be deemed the Beneficiary. If Executives Spouse is not living at the time of Executives death or dies prior to payment to her of the Survivors Benefit, then the Children of Executive will be deemed the Beneficiaries and will take on a per stirpes basis. If there are no living Children, then Executives estate will be deemed the Beneficiary. For this purpose, the term Children means Executives children, or the
|1.6 || |
Board of Directors shall mean the Board of Directors of the Bank.
|1.7 || |
Cause shall mean Executives (i) personal dishonesty; (ii) willful misconduct; (iii) incompetence; (iv) breach of fiduciary duty involving personal profit; (v) intentional failure to perform his stated duties; or (vi) willful violation of any law, rule or regulation (other than traffic violations or similar offenses) or final cease-and-desist order.
For purposes of this paragraph, no act or failure to act on the part of Executive shall be considered willful unless done, or omitted to be done, by Executive not in good faith and without reasonable belief that Executives action or omission was in the best interest of the Bank.
|1.8 || |
Change in Control shall mean any of the following events: (i) a change in the ownership of the Bank; (ii) a change in the effective control of the Bank; or (iii) a change in the ownership of a substantial portion of the assets of the Bank, as described below:
| ||(a) || |
A change in ownership occurs on the date that any one person, or more than one person acting as a group (as defined in Treasury Regulations section 1.409A-3(i)(5)(v)(B)), acquires ownership of stock of the Bank that, together with stock held by such person or group, constitutes more than 50% of the total fair market value or total voting power of the stock of the Bank.
| ||(b) || |
A change in the effective control of the Bank occurs on the date that either (A) any one person, or more than one person acting as a group (as defined in Treasury Regulations section 1.409A-3(i)(5)(vi)(B)) acquires (or has acquired during the 12-month period ending on the date of the most recent acquisition by such person or persons) ownership of stock of the Bank possessing 30% or more of the total voting power of the stock of the Bank, or (B) a majority of the members of the Board of Directors is replaced during any 12-month period by directors whose appointment or election is not endorsed by a majority of the members of the Board of Directors prior to the date of the appointment or election, provided that this subsection is inapplicable where a majority shareholder of the corporation is another corporation.
| ||(c) || |
A change in the ownership of a substantial portion of the Banks assets occurs on the date that any one person or more than one person acting as a group (as defined in Treasury Regulations section 1.409A-3(i)(5)(vii)(C)) acquires (or has acquired during the 12-month period ending on the date of the most recent acquisition by such person or persons) assets from the Bank that have a total gross fair market value equal to or more than 40% of the total gross fair market value of all of the assets of the Bank. For purposes of this Agreement, gross fair market value means the value of the assets of the Bank, or the value of the assets being disposed of, without regard to any liabilities associated with such assets.
| ||(d) || |
For purposes of Code Section 409A, any installment payments required hereunder shall be deemed a single payment.
|1.14 || |
Present Value means the present value, as of a specified date, of a stream of payments payable to Executive or his Beneficiary. For these purposes, Present Value shall be determined each calendar year by applying a discount factor equal to the discount rate determined as of the immediately preceding December under the Citigroup Pension Liability Index (CPLI) or such other rate as determined by the Committee from time to time and set forth in a written resolution.
|1.15 || |
Separation from Service (or Separated from Service) means Executives death, retirement or other termination of employment with the Bank within the meaning of Code Section 409A. No Separation from Service shall be deemed to occur due to military leave, sick leave or other bona fide leave of absence if the period of the leave does not exceed six months or, if longer, so long as Executives right to reemployment is provided by law or contract. If the leave exceeds six months and Executives right to reemployment is not provided by law or by contract, then Executive shall have a Separation from Service on the first date immediately following such six-month period.
Whether a Separation from Service has occurred is determined based on whether the facts and circumstances indicate that the Bank and Executive reasonably anticipated that no further services would be performed after a certain date or that the level of bona fide services Executive would perform after that date (whether as an employee or as an independent contractor) would permanently decrease to less than 50% of the average level of bona fide services performed over the immediately preceding 36 months (or the lesser period of time in which Executive performed services for the Bank). The determination of whether Executive has had a Separation from Service shall be made by applying the presumptions set forth in the Treasury Regulations under Code Section 409A.
|1.16 || |
Specified Employee means an individual who also satisfies the definition of key employee as that term is defined in Code Section 416(i) (without regard to paragraph (5) thereof). In the event Executive is a Specified Employee, no distribution shall be made to such Executive upon Separation from Service (other than due to death or Disability) prior to the date which is six (6) months following Separation from Service.
|1.17 || |
Survivors Benefit means the benefit payable to Executives Beneficiary following his death in accordance with Section 2.3 of the Plan.
|1.18 || |
Unforseeable Emergency means a severe financial hardship to Executive resulting from an illness or accident of Executive, Executives spouse, dependent (as defined in Code Section 152 without regard to section 152(b)(1), (b)(2) and (d)(1)(B)) or beneficiary; loss of Executives property due to casualty (including the need to rebuild a home following damage to a home not otherwise covered by insurance); or other similar extraordinary and unforeseeable circumstances arising as a result of events beyond the control of the
| || service provider. Following are examples of items that will qualify as an Unforseeable Emergency: (i) the imminent foreclosure of or eviction from Executives primary residence; (ii) the need to pay for medical expenses, including nonrefundable deductibles, as well as the costs of prescription drug medication; (iii) the need to pay for the funeral expenses of a spouse, a beneficiary or a dependent. The purchase of a home and payment of college tuition are not Unforseeable Emergencies. Whether Executive has an Unforseeable Emergency within the meaning of Code Section 409A is to be determined based on the relevant facts and circumstances, but in any case, a distribution on account of an Unforseeable Emergency may not be made to the extent that such emergency is or may be relieved through reimbursement or compensation from insurance or otherwise, by liquidation of Executives assets, to the extent the liquidation of such assets would not cause severe financial hardship. |
|2.1 || |
Benefit on Separation from Service on or after Normal Retirement Age.
If Executive has a Separation from Service after reaching his Normal Retirement Age, Executive shall be entitled to an annual benefit equal to seventeen and sixteen one- hundredth percent (17.16%) of the average of the three highest amounts reported in Box 5 of Form W-2 for Executive, excluding any amounts attributable to the granting, vesting or exercise of stock options, restricted stock or similar equity-based compensation. The benefit under this Section 2.1 shall commence on Executives Benefit Eligibility Date specified in Section 1.5(a) of the Plan and shall be payable in installments over the Payout Period specified in Section 1.12(a) of the Plan.
|2.2 || |
Separation from Service Before Normal Retirement Age.
If Executive has a Separation from Service prior to the attainment of his Normal Retirement Age (other than due to Cause, death or Disability), Executive shall be entitled to the Accrued Benefit payable commencing on the Benefit Eligibility Date specified in Section 1.5(b) of the Plan and payable in annual installments over the Payout Period specified in Section 1.12(a) of the Plan.
| ||(a) || |
If Executive dies prior to Separation from Service, Executives Beneficiary shall be entitled to the Survivors Benefit. The Survivors Benefit shall equal the Accrued Benefit. The Survivors Benefit shall commence on the Benefit Eligibility Date in Section 1.5(c) and shall be payable over the Payout Period specified in Section 1.12(b) of the Plan.
| ||(b) || |
If Executive dies following Separation from Service but prior to the commencement of benefit payments to Executive, Executives Beneficiary shall be entitled to payment of the amount otherwise payable to Executive under the applicable Section of this Article II, commencing on the Benefit Eligibility Date set forth in Section 1.5(c) payable over the Payout Period specified in Section 1.12(c) of the Plan.
| || hardship is deemed to be an Unforseeable Emergency, the Administrator shall make a lump sum distribution to Executive of an amount necessary to satisfy the emergency need (which may include amounts necessary to pay any Federal, state or local income taxes or penalties reasonably anticipated to result from the distribution). If an Unforseeable Emergency distribution is made, the Administrator will take into consideration the distribution and will offset the distribution from any payments made to Executive under Sections 2.1, 2.2, 2.3, 2.4 or 2.5 hereof. The offset will be determined by increasing the lump sum distribution made due to the Unforseeable Emergency by the discount factor (set forth in Section 1.13) from the date of the Unforseeable Emergency distribution until the date on which the distributions commence under any other Section in this Article II and then annuitizing the amount so determined over the Payout Period and subtracting such amount from the benefit then payable. |
Executive shall make an initial designation of primary and secondary Beneficiaries upon initial participation in the Plan by completion of a Beneficiary form substantially in the form attached as Exhibit A, and shall have the right to change the designation, at any subsequent time. Any Beneficiary designation shall become effective only when receipt thereof is acknowledged in writing by the Administrator.
EXECUTIVES RIGHT TO ASSETS,
ALIENABILITY AND ASSIGNMENT PROHIBITION
At no time shall Executive be deemed to have any lien, right, title or interest in or to any specific investment or asset of the Bank. The rights of Executive, any Beneficiary, or any other person claiming through Executive under this Plan, shall be solely those of an unsecured general creditor of the Bank. Executive, the Beneficiary, or any other person claiming through Executive, shall only have the right to receive from the Bank those payments so specified under this Plan. Neither Executive nor any Beneficiary under this Plan shall have any power or right to transfer, assign, anticipate, hypothecate, mortgage, commute, modify or otherwise encumber in advance any of the benefits payable hereunder, nor shall any of said benefits be subject to seizure for the payment of any debts, judgments, alimony or separate maintenance owed by Executive or his Beneficiary, nor be transferable by operation of law in the event of bankruptcy, insolvency or otherwise.
|5.1 || |
Named Fiduciary and Administrator. The Bank shall be the Named Fiduciary and Administrator of this Plan. As Administrator, the Bank shall be responsible for the management, control and administration of the Plan as established herein. The Administrator may delegate to others certain aspects of the management and operational responsibilities of the Plan, including the employment of advisors and the delegation of ministerial duties to qualified individuals.
|5.2 || |
Claims Procedure and Arbitration. In the event that benefits under this Plan is not paid to Executive (or to his Beneficiary in the case of Executives death) and the claimant(s) feel he or they are entitled to receive the benefits, then a written claim must be made to the Administrator within sixty (60) days from the date payments are refused. The Administrator shall review the written claim and, if the claim is denied, in whole or in part, it shall provide in writing, within thirty (30) days of receipt of such claim, its specific reasons for such denial, reference to the provisions of this Plan upon which the denial is based, and any additional material or information necessary for such claimants to perfect the claim. The written notice by the Administrator shall further indicate the additional steps which must be undertaken by claimants if an additional review of the claim denial is desired.
If claimants desire a second review, they shall notify the Administrator in writing within thirty (30) days of the first claim denial. Claimants may review this Plan or any documents relating thereto and submit any issues and comments, in writing, they may feel appropriate. In its sole discretion, the Administrator shall then review the second claim and provide a written decision within thirty (30) days of receipt of such claim. This decision shall state the specific reasons for the decision and shall include reference to specific provisions of this Plan upon which the decision is based.
No claimant shall institute any action or proceeding in any state or federal court of law or equity or before any administrative tribunal or arbitrator for a claim for benefits under the Plan until the claimant has first exhausted the provisions set forth in this Section 5.2.
|6.1 || |
No Effect on Employment Rights. Nothing contained herein will confer upon Executive the right to be retained in the service of the Bank nor limit the right of the Bank to discharge or otherwise deal with Executive without regard to the existence of the Plan.
|6.2 || |
State Law. The Plan is established under, and will be construed according to, the laws of the State of New Hampshire, to the extent such laws are not preempted by ERISA and valid regulations published thereunder or any other federal law.
|6.3 || |
Severability and Interpretation of Provisions. The Bank shall have full power and authority to interpret, construe and administer this Plan and the Banks interpretation and construction thereof and actions thereunder shall be binding and conclusive on all persons for all purposes. No employee or representative of the Bank shall be liable to any person for any actions taken or omitted in connection with the interpretation and administration of this Plan unless attributable to his own willful misconduct or lack of good faith. In the event that any of the provisions of this Plan or portion hereof are held to be inoperative or invalid by any court of competent jurisdiction, or in the event that any provision is found
IN WITNESS WHEREOF, the Bank has caused this Plan to be executed, effective as of the day and date first above written.
| || || || || || |
|ATTEST: || || || ||FEDERAL SAVINGS BANK|
| || || |
|/s/ James Brannen || || || ||By: || ||/s/ James ONeill|
| || || |
| || || || ||Title: || ||President/CEO|
|July 1, 2015 || || || || || |
|Date || || || ||Date: || ||July 1, 2015|
| || || || || || |
|ATTEST: || || || ||EXECUTIVE|
| || |
|/s/ James Brannen || || || ||/s/ James ONeill|
| || || |
|July 1, 2015 || || || || || |
|Date || || || ||Date: || ||July 1, 2015|