Exhibit 10(e)
PLAN OF ACQUISITION
OF ALL THE OUTSTANDING STOCK
OF CORNERSTONE BANK
BY
CORNERSTONE FINANCIAL CORPORATION
THIS PLAN OF ACQUISITION (the "Plan") is entered into as of this 17th
day of July, 2008, by CORNERSTONE BANK, a commercial bank organized under the
laws of the State of New Jersey, with its principal office at 6000 Midlantic
Drive, Suite 120S, Mount Laurel, New Jersey, 08054 (the "Bank") and CORNERSTONE
FINANCIAL CORPORATION, a corporation organized under the laws of the state of
New Jersey, with its principal office at 6000 Midlantic Drive, Suite 120S, Mount
Laurel, New Jersey, 08054 ("Corp").
WHEREAS, the Bank is desirous of forming a bank holding company because
it believes that the holding company will provide it with future flexibility in
undertaking the Bank's current activities and future new activities and assist
the Bank in remaining an independent institution, if the Board determines that
remaining independent is in the best interests of the Bank and its shareholders;
and
WHEREAS, the Bank's Board of Directors has determined that the
formation of a holding company is in the best interest of the Bank's
shareholders; and
WHEREAS, Corp was formed under the New Jersey Business Corporation Act
on behalf of the Bank at the direction of the Bank's Board of Directors; and
WHEREAS, N.J.S.A. 17:9A-355 et seq. authorizes a New Jersey corporation
and a state-chartered bank to enter into a plan of acquisition to exchange
shares in the bank for shares in the holding company, to submit the plan to the
New Jersey Department of Banking and Insurance for approval and implement the
plan if it is approved by the bank's shareholders, subject to the right of the
bank's shareholders to dissent and receive the fair value of their shares; and
WHEREAS, the Boards of Directors of the Bank and Corp have adopted
this Plan pursuant to the provisions of N.J.S.A. 17:9A-357.
NOW, THEREFORE, the parties hereto agree as follows:
1.0 PLAN OF ACQUISITION REQUIRED BY SECTION 17:9A-357.
1.1 NAME OF ACQUIRING CORPORATION. The name and the
address of the acquiring corporation is:
Cornerstone Financial Corporation, 6000 Midlantic Drive, Suite 120S,
Mount Laurel, New Jersey, 08054.
1.2 NAME OF PARTICIPATING BANK. The name and
address of the participating bank is:
Cornerstone Bank, 6000 Midlantic Drive, Suite 120S, Mount Laurel, New Jersey,
08054.
1.3 NAMES AND ADDRESS OF DIRECTORS. The names and
addresses of the members of the Board of Directors of Corp are:
Name Address
- ---- -------
George W. Matteo, Jr., Chairman of the Board c/o Cornerstone Bank
6000 Midlantic Drive,
Suite 120S, Mount Laurel, New Jersey, 08054
J. Mark Baiada, Director c/o Cornerstone Bank
6000 Midlantic Drive,
Suite 120S, Mount Laurel, New Jersey, 08054
Richard P. Meehan, Jr., CPA, Director c/o Cornerstone Bank
6000 Midlantic Drive,
Suite 120S, Mount Laurel, New Jersey, 08054
J. Richard Carnall, Director c/o Cornerstone Bank
6000 Midlantic Drive,
Suite 120S, Mount Laurel, New Jersey, 08054
Gaetano P. Giordano, Director c/o Cornerstone Bank
6000 Midlantic Drive,
Suite 120S, Mount Laurel, New Jersey, 08054
Robert A. Kennedy, Jr., Director c/o Cornerstone Bank
6000 Midlantic Drive,
Suite 120S, Mount Laurel, New Jersey, 08054
Ronald S. Murphy, Director c/o Cornerstone Bank
6000 Midlantic Drive,
Suite 120S, Mount Laurel, New Jersey, 08054
Bruce Paparone, Director c/o Cornerstone Bank
6000 Midlantic Drive,
Suite 120S, Mount Laurel, New Jersey, 08054
Kenneth H. Zekavat c/o Cornerstone Bank
6000 Midlantic Drive,
Suite 120S, Mount Laurel, New Jersey, 08054
1.4 DIRECTORS OF THE BANK. Upon the effective date
of the acquisition, the Board of Directors of the Bank shall consist of
the following:
Name Address
- ---- -------
George W. Matteo, Jr., Chairman of the Board c/o Cornerstone Bank
6000 Midlantic Drive,
Suite 120S, Mount Laurel, New Jersey, 08054
J. Mark Baiada, Director c/o Cornerstone Bank
6000 Midlantic Drive,
Suite 120S, Mount Laurel, New Jersey, 08054
Richard P. Meehan, Jr., CPA, Director c/o Cornerstone Bank
6000 Midlantic Drive,
Suite 120S, Mount Laurel, New Jersey, 08054
J. Richard Carnall, Director c/o Cornerstone Bank
6000 Midlantic Drive,
Suite 120S, Mount Laurel, New Jersey, 08054
Gaetano P. Giordano, Director c/o Cornerstone Bank
6000 Midlantic Drive,
Suite 120S, Mount Laurel, New Jersey, 08054
Robert A. Kennedy, Jr., Director c/o Cornerstone Bank
6000 Midlantic Drive,
Suite 120S, Mount Laurel, New Jersey, 08054
Ronald S. Murphy, Director c/o Cornerstone Bank
6000 Midlantic Drive,
Suite 120S, Mount Laurel, New Jersey, 08054
Bruce Paparone, Director c/o Cornerstone Bank
6000 Midlantic Drive,
Suite 120S, Mount Laurel, New Jersey, 08054
Kenneth H. Zekavat c/o Cornerstone Bank
6000 Midlantic Drive,
Suite 120S, Mount Laurel, New Jersey, 08054
1.5 SHARES OF OTHER BANKS OWNED BY CORP. Corp does not
own any shares of capital stock of any other bank.
1.6 TERMS AND CONDITIONS OF ACQUISITION. The terms and
conditions of the acquisition are the terms set forth in Sections 2, 3, 5, and
6 hereof.
1.7 EFFECTIVE DATE. The effective date shall be the date
determined under Section 7 hereof.
1.8 OTHER PROVISIONS. There are no other provisions of
the Plan except as set forth herein.
2.0 CAPITALIZATION; TERMS OF ACQUISITION.
2.1 CAPITALIZATION OF CORP. Corp is authorized to issue
10,000,000 shares of capital stock without nominal or par value ("Common
Stock"). Corp shall not issue any of its shares of Common Stock prior to the
Effective Date.
2.2 CAPITALIZATION OF THE BANK. The Bank is authorized to
issue 7,000,000 shares of common stock, par value $5.00 per share (the "Bank
Common Stock"). As of May 15, 2008, 1,655,767 shares were issued and
outstanding. In addition, as of March 31, 2008, options to purchase 69,034
shares of Bank Common Stock were reserved for issuance under employee and
director stock option plans.
2.3 TERMS OF EXCHANGE. Upon the Effective Date, each share of
the Bank Common stock shall be converted into one share of Common Stock (the
"Exchange Ratio"), subject to the rights of dissenting shareholders as provided
in Section 4 hereof, and, to the extent applicable, each option to purchase
shares of Bank Common Stock shall be converted into an option to purchase shares
of Common Stock at the Exchange Ratio. In addition, the Corp shall assume all of
the Bank's obligations under any outstanding stock option or benefit plan.
3.0 MODE OF CARRYING INTO EFFECT THE PLAN OF EXCHANGE.
3.1 Exchange Effective Immediately. Upon the Effective Date,
each certificate representing shares of the Bank Common Stock shall by virtue of
the Plan, and without any action on the part of the holder thereof, be deemed to
represent shares of Common Stock, and shall no longer represent the Bank Common
Stock. As set forth in Section 4 hereof, after the Effective Date any dissenting
shareholder who complies with the requirements of N.J.S.A. 17:9A-360 et seq.
shall have only the rights accorded dissenting shareholders and such stockholder
certificates shall not be deemed to represent shares of Common Stock or the Bank
Common Stock.
3.2 ISSUANCE OF SHARES OF BANK TO CORP. Upon the Effective
Date, the Bank shall issue to Corp 1,655,767 shares of its Common Stock, par
value $5.00 per share.
3.3 MEANS OF EFFECTING EXCHANGE OF CERTIFICATES OF BANK STOCK
FOR CERTIFICATES IN CORP. Upon or immediately after the Effective Date, the Bank
shall notify each Bank stockholder of record on the Effective Date (except a
holder who is a dissenting shareholder as provided in Section 4 hereof) of the
procedure by which certificates representing the Bank Common Stock may be
exchanged for certificates of Common Stock. Registrar & Transfer Company shall
act as exchange agent in effecting the exchange of certificates. After receipt
of such notification, each holder shall be obligated to surrender the
certificates representing the Bank Common Stock for exchange into certificates
of Common Stock as promptly as possible.
4.0 DISSENTING SHAREHOLDER.
Any shareholder of the Bank who desires to dissent from the
transactions contemplated by the Plan shall have the right to dissent by
complying with all of the requirements set forth in N.J.S.A. 17:9A-360 et seq.,
and, if the transactions contemplated by the Plan are consummated, shall be
entitled to be paid the fair value of his shares in accordance with those
provisions.
5.0 CONDITIONS FOR CONSUMMATION OF THE PLAN AND RIGHT OF THE BANK
TO TERMINATE THE PLAN PRIOR TO CONSUMMATION.
5.1 CONDITIONS FOR CONSUMMATION. Consummation of the Plan is
conditioned upon the following:
(a) Approval of the Plan by the Commissioner of Banking and
Insurance of the State of New Jersey;
(b) Approval of the Plan by the holders of two-thirds (2/3)
or more of the outstanding Bank Common Stock entitled to vote;
(c) The non-objection of the Board of Governors of the
Federal Reserve System to a notification by Corp of its acquisition of Bank;
and
(d) The Bank's Board of Directors not terminating the Plan
prior to the Effective Date as permitted by Section 5.2 hereof.
5.2 RIGHT OF BANK TO TERMINATE PLAN PRIOR TO THE EFFECTIVE
DATE. At any time prior to the Effective Date, the Board of Directors of the
Bank may terminate the Plan if in the judgment of the Board of Directors the
consummation of the Plan is inadvisable for any reason. To terminate the Plan
the Bank's Board of Directors shall adopt a resolution terminating the Plan and
in the event such termination occurs after the shareholders of the Bank have
voted on the Plan, promptly give written notice that the Plan has been
terminated to the shareholders of the Bank. Upon the adoption of the Board
resolution, the Plan shall be of no further force or effect and the Bank and
Corp shall not be liable to each other, to any shareholder of the Bank or to any
other person by reason of the Plan or the termination thereof. Without limiting
the reasons for which the Bank's Board may terminate the Plan, the Board may
terminate the Plan if:
(a) The number of shareholders dissenting from the Plan and
demanding payment of the fair value of their shares would in the judgment of the
Board render the Plan inadvisable; or
(b) The Bank or Corp fails to receive, or fails to receive in
form and substance satisfactory to the Bank or Corp, any permit, license or
qualification from any federal or state authority required in connection with
the consummation of the Plan.
6.0 EXPENSES.
Bank will bear all of the expenses incurred by the Bank and by
Corp in connection with the Plan, including, without limiting the foregoing, all
attorneys, accountants, and printing fees and all licensing fees incurred in
connection with the Plan and the formation of Corp.
7.0 EFFECTIVE DATE.
The Plan shall become effective upon a date selected by the
mutual agreement in writing of the parties hereto (the "Effective Date"). The
date so selected shall be within a reasonable period after the conditions set
forth in Section 5.1 have been complied with and the Bank has received any
approvals or consents without which it might terminate the Plan under Section
5.2. At least one week prior to the agreed upon effective date, the Plan shall
be filed with the Department of Banking and Insurance of the State of New Jersey
together with the writing specifying the Effective Date and a certification by
the president or a vice president of the Bank that the Bank's shareholders have
approved the Plan.
IN WITNESS WHEREOF, the Boards of Directors of Cornerstone Bank and
Cornerstone Financial Corporation have authorized the execution of the Plan
and caused the Plan to be executed as of the date first written above.
ATTEST: CORNERSTONE FINANCIAL CORPORATION
/s/ /s/ George W. Matteo, Jr.
- -------------------- By: --------------------------------
Name: George W. Matteo, Jr.
Title: Chairman, President and
Chief Executive Officer
ATTEST: CORNERSTONE BANK
/s/ /s/ George W. Matteo, Jr.
- -------------------- By: --------------------------------
Name: George W. Matteo, Jr.
Title: Chairman, President and
Chief Executive Officer