FEDERAL TRUST BANK AMENDED SALARY CONTINUATION AGREEMENT

FEDERAL TRUST BANK

AMENDED SALARY CONTINUATION AGREEMENT

          THIS AGREEMENT is made this 31 ^st day of December, 2005, by and between Federal Trust Bank, a federal savings bank (“Bank”), and Gregory E. Smith (“Executive”), as an amendment to that certain agreement dated November 10, 2003.

INTRODUCTION

          To encourage the Executive to remain an employee of the Bank, the Bank is willing to provide salary continuation benefits to the Executive.

AGREEMENT

The Executive and the Bank agree as follows:

ARTICLE I

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 31 ^st day of December of each calendar year.

1.1.2

“ Change of Control ” means a change in control with respect to either the Bank or its corporate parent, Federal Trust Corporation, as defined in 12 C.F.R. Section 574.4(a) or (b) of the OTS regulations, or as otherwise required by Section 409A of the Internal Revenue Code of 1986, as amended, and any Treasury Regulations promulgated thereunder.

1.1.3

“ Disability ” means sickness, accident or injury which, in the judgment of a physician appointed by the Bank, prevents the Executive from performing all of the Executive’s customary duties for the Bank, or as otherwise required by Section 409A of the Internal Revenue Code of 1986, as amended, and any Treasury Regulations promulgated thereunder. As a condition to any benefits, the Bank may require the Executive to submit to such physical or mental evaluations and tests as the Bank’s Board of Directors deems appropriate.

1.1.4

“ Early Retirement Date ” means the Executive attaining age sixty-two (62) and completing ten (10) Years of Service.

1.1.5

“ Effective Date ” means the 1st day of June, 2003.

1.1.6

“ Month of Service ” means each completed full month of a Year of Service.

1.1.7

“ Normal Retirement Date ” means the Anniversary Date in the year the Executive attains age 65.

1.1.8

“ Termination of Employment ” means the Executive’s ceasing to be employed by the Bank for any reason whatsoever, voluntary or involuntary, other than by reason of an approved leave of absence.

1.1.9

“ 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 Bank, 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 Bank 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 ten thousand dollars ($10,000) per year for life (“ Normal Retirement Benefits ” ).

2.1.2

Payment of Benefit. The Bank shall pay eight hundred thirty three and 33/100 dollars ($833.33), to the Executive on the first day of each month commencing with the month following the Normal Retirement Date and continuing for life.

2.1.3

Change of Control. Upon a Change of Control after benefit payments have commenced under Section 2.1.2, the Executive may elect to receive a present value lump sum payment within sixty (60) days of such Change of Control based on a discount rate of eight percent (8%) and a life expectancy of age 82.

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 Bank 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 shall be an amount equal to the Normal Retirement Benefit reduced by five percent (5%) for each year (or part thereof) prior to Executive’s Normal Retirement Date, determined as of the date of Termination of Employment.

2.2.2

Payment of Benefit. The Bank shall pay the Early Retirement Benefit to the Executive in equal consecutive monthly payments for life.

2.2.3

Change of Control. Upon a Change of Control after benefit payments have commenced under Section 2.1.2, the Executive may elect to receive a present value lump sum payment within sixty (60) days of such Change of Control based on a discount rate of eight percent (8%) and a life expectancy of age 82.

2.3

Disability Benefit. If the Executive terminates employment because of Disability prior to the Normal Retirement Date, the Bank 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 Normal Retirement Benefit.

2.3.2

Payment of Benefit. The Bank shall pay the benefit to the Executive, at the Bank’s discretion, in either a present value lump sum payment within sixty (60) days of Termination of Employment due to Disability based on a discount rate of eight percent (8%) and a life expectancy of age 82, or in equal consecutive monthly payments for life, beginning with the month following Disability.

2.3.3

Change of Control. Upon a Change of Control after benefit payments have commenced under Section 2.1.2, the Executive may elect to receive a present value lump sum payment within sixty (60) days of such Change of Control based on a discount rate of eight percent (8%) and a life expectancy of age 82.

2.4

Change of Control Benefit. Upon a Change of Control while the Executive is employed by the Bank, the Bank 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 an amount equal to 100% of the Normal Retirement Benefit in Section 2.1.1 as if the Executive worked until age 65.

2.4.2

Payment of Benefit. The Bank shall pay the benefit to the Executive as a present value lump sum payment within 60 days of Change of Control based on a discount rate of eight percent (8%) and a life expectancy of