Exhibit 10(f)
THE CORNERSTONE BANK
NON QUALIFIED DEFERRED COMPENSATION PLAN
(Originally Effective January 1,2006, Amended and Restated
Effective September 1,2008)
ARTICLE I - PURPOSE
The purpose of the Plan is to provide for supplemental retirement and
related benefits for a select group of management and highly compensated
employees of Cornerstone Bank and any affiliated entities, as well as members of
the Board, who are designated by the Committee (as hereinafter defined) as
eligible to participate in the Plan. The Plan is intended to operate as a part
of the overall compensation and benefits arrangements for those employees and
members of the Board who are eligible to participate.
ARTICLE II - DEFINITIONS
The following words and phrases as used herein shall have the following
meanings, unless a different meaning is plainly required by the context:
2.1 "Bank" shall mean Cornerstone Bank, a New Jersey state-chartered
commercial bank, and, where appropriate in the context, such other affiliates
whose employees have been designated as eligible to participate in the Plan.
2.2 "Base Compensation" shall mean a Participant's base salary.
2.3 "Board" shall mean the Board of Directors of Cornerstone Bank.
2.4 "Change of Control" shall mean the occurrence of any of the
following:
(a) the direct or indirect sale, lease, transfer, conveyance or other
disposition (other than by way of merger or consolidation), in one or a series
of related transactions, of all or substantially all of the assets of the Bank
and its subsidiaries taken as a whole, to any "person" (as that term is used in
Section 13(d)(3) of the Securities Exchange Act of 1934, any such person being
referred to hereinafter as a "Person");
(b) the adoption of a plan relating to the liquidation or dissolution of the
Bank;
(c) the consummation of any transaction (including, without limitation, any
merger or consolidation) the result of which is that any Person becomes the
beneficial owner, directly or indirectly, of more than 50% of the voting stock
of the Bank;
(d) the Bank consolidates or merges with or into another Person or any Person
consolidates or merges with or into the Bank, in either case under this clause
(d), in one transaction or a series of related transactions in which immediately
after the consummation thereof Persons beneficially owning, directly or
indirectly, voting stock representing in the aggregate a majority of the total
voting power of the voting stock of the Bank immediately prior to such
consummation do not beneficially own, directly or indirectly, voting stock
representing a majority of the total voting power of the voting stock of the
Bank or the surviving or transferee Person; or
(e) the first day on which a majority of the members of the Board of Directors
of the Bank are not Continuing Directors.
2.5 "Code" shall mean the Internal Revenue Code of 1986, as amended.
2.6 "Committee" shall mean the Board or such person or persons as the
Board shall from time to time designate to act as the Committee with respect to
the Plan.
2.7 "Company Common Stock" shall mean shares of the Bank's common
stock, par value $5.00 per share.
2.8 "Compensation" shall mean the Participant's base salary and bonus
from the Bank, and shall exclude all other types of compensation, including, but
not limited to severance pay and contributions to the Bank's tax qualified
retirement plans.
2.9 "Continuing Director" means, as of any date of determination, any
member of the Board who (1) was a member of the Board on July. 1, 2005 or (2)
was nominated for election or elected to the Board with the approval of a
majority of the Continuing Directors who were members of the Board at the time
of such nomination or election.
2.10 "Contribution" shall mean the amount, if any, that is credited
annually to a Participant's Plan Deferral Account (other than amounts that are
credited by reason of an Earnings Adjustment). The crediting of a "Contribution"
to a Participant's Plan Deferral Account is a book -keeping entry only, and does
not require that any amount actually be contributed to any trust, account,
policy or otherwise be set aside, and is merely a means of tracking the amount
of the benefit potentially payable to a Participant.
2.11 "Designated Beneficiary" shall mean the beneficiary designated by
a Participant to receive any benefits payable under the Plan upon his or her
death. In the absence of a beneficiary designation, the Participant's
"Designated Beneficiary" shall be his or her spouse and if none, his or her
estate.
2.12 "Disability" shall mean:
(a) any medically determinable physical or mental impairment which can be
expected to result in death or can be expected to last for a continuous period
of not less than 12 months and that the Committee determines renders a
Participant unable to engage in any substantial gainful activity; or
(b) any other medically determinable physical or mental impairment which can be
expected to result in death or can be expected to last for a continuous period
of not less than 12 months, as a result of which a Participant receives benefits
under any long-term disability plan of the Bank or receives Social Security
disability insurance benefits.
2.13 "Earnings Adjustment" shall mean the adjustment to each
Participant's Plan Deferral Account in accordance with the provisions of Article
VII.
2.14 "Effective Date" shall mean the effective date set out above.
2.15 "Normal Retirement Age" shall mean age 65.
2.16 "Participant" shall mean each employee of the Bank or member of
the Board who is designated as eligible to participate in the Plan in accordance
with Article III.
2.17 "Participation Agreement" shall mean a written agreement executed
by a Participant for the purpose of making such elections as are permitted to be
made by a Participant in the Plan and specifying a Designated Beneficiary.
2.18 "Plan" shall mean the Cornerstone Bank Nonqualified Deferred
Compensation Plan, as set forth herein, and as amended from time to time.
2.19 "Plan Deferral Account" shall mean the book-keeping account
established and maintained for the benefit of a Participant as provided under
Article VII of the Plan.
2.20 "Plan Year" shall mean the calendar year, except that the first
Plan Year shall be the portion of the 2005 calendar year starting as of the
Effective date and ending on December 31, 2005.
2.21 "Prime Rate" shall be such rate as the Committee establishes from
time to time as the "Prime Rate" for purposes of the Plan. The Prime Rate is
intended generally to represent the interest rate at which the best customers
may normally obtain a loan from the Bank or from other similar institutions and
may, but need not, be a rate that is determined by reference to publications
such as the Wall Street Journal, all as determined at the discretion of the
Committee. For these purposes, the Committee shall generally establish the Prime
Rate to be effective for a Plan Year by reference to the average of the rates
for each of the four business days preceding the first day of the Plan Year.
2.22 "Rabbi Trust" shall mean a grantor trust in which assets may be
segregated for use by the Bank to pay liabilities to Participants in the Plan;
provided, however, that any such trust shall be established and maintained in a
manner that is consistent with the treatment of its assets as assets of the Bank
for federal income tax purposes and that such assets shall be held in the trust
subject to the claims of the Bank's creditors in the event of Bank's bankruptcy
or insolvency. In the event a Rabbi Trust is established under the Plan, such
Rabbi Trust shall be in a form that is substantially consistent with the form of
trust set forth in Revenue Procedure 92-64 (or any successor to such Revenue
Procedure) as a model grantor trust for use with plans providing for non
qualified deferred compensation.
2.23 "Valuation Date" shall mean the last day of each Plan Year, any
other date or dates that are designated by the Committee as a Valuation Date,
and, with respect to any Participant, the date of a payment under the Plan of
all or any portion of such Participant's Plan Deferral Account (or such other
date as may be designated as the Valuation Date applicable to such payment).
ARTICLE III - PARTICIPATION
The employees of the Bank who are eligible to participate in the Plan
shall be those management and highly compensated executives designated by the
Board as eligible. In addition, any member of the Board may be designated by the
Board as eligible to participate in the Plan. Any employee or member of the
Board who is so designated shall be a Participant in the Plan and shall have a
Plan Deferral Account to which will be credited annual contributions and
earnings thereon. The amount that will be credited as a Contribution to any
Participant's Plan Deferral Account shall be determined in accordance with the
Schedule of Participation attached hereto as Exhibit A, as such may be amended
by the Bank from time to time.
ARTICLE IV - TERM OF PLAN
The Plan shall be in effect as of the Effective Date, and shall
continue until all obligations of the Bank pursuant to the Plan have been paid,
unless sooner terminated at the discretion of the Bank.
ARTICLE V - VESTING
Except as otherwise may be specifically provided with respect to any
individual Participant, the provisions set forth below shall establish the
extent to which a Participant's benefit under the Plan is vested:
5.1 Full Vesting at Normal Retirement Age or Upon the Occurrence of a
Change of Control. A Participant's interest in his or her Plan Deferral Account
shall, except as may be otherwise specified by the Committee, become fully
vested upon attainment of his or her Normal Retirement Age or upon the
occurrence of a Change of Control, provided such Participant has remained
continuously employed by the Bank through such date.
5.2 Five Year Vesting for Each Contribution. Any Participant whose
employment with the Bank terminates for any reason prior to his or her
attainment of Normal Retirement Age shall be vested only with respect to those
Contributions credited to his or her Plan Deferral Account five or more years
prior to the date of such termination of employment, plus the portion of his or
her Plan Deferral Account that represents the Earnings Adjustments attributable
to such vested Contributions. Any Contributions that are not vested as of the
date of a Participant's termination of employment with the Bank (and the portion
of the Participant's Plan Deferral Account representing the Earnings Adjustments
attributable to such unvested Contributions) shall be forfeited as of the date
of such Participant's termination of employment with the Bank.
5.3 Forfeiture for Cause. Notwithstanding anything contained herein to
the contrary, if the Committee determines that a Participant has engaged in any
act of disloyalty to the Bank, including, but not limited to, fraud,
embezzlement, theft, commission of a felony or any other act of dishonesty in
the course of his or her employment, willful failure to carry out his or her
duties, or insubordination, or if the Participant has breached the terms of a
material agreement with the Bank, the Committee may detennine that such
Participant's benefit under the Plan is forfeited, and the Participant shall
thereafter have no further rights to any benefits under the Plan. Any such
determination by the Committee may, but need not, be made in connection with the
termination of the Participant's employment with the Bank for cause.
5.4 Death Benefits Subject to Termination or Modification. A
Participant's entitlement to a death benefit (in addition to distribution of the
amount in such Participant's Plan Deferral Account) shall not be considered a
vested benefit hereunder and may be terminated by amendment to the Plan or by
the termination of the Plan at any time.
5.5 Cutback in Benefit to Avoid Application of Excess Parachute
Payment Rules. In the event any payment or benefit otherwise required to be
provided hereunder shall be considered to be a "contingent payment" related to
a change in the ownership or effective control of the Bank or in the ownership
of a substantial portion of the assets of the Bank so that any Participant
would, but for this Section 5.5, be subject to any tax imposed pursuant to Code
Section 4999 on "excess parachute payments," such Participant's benefit or
payments payable hereunder shall be reduced, if possible, so that such
Participant is not subject to any such tax; provided, however, if such
Participant's net benefit after taxes would, notwithstanding the imposition of a
tax pursuant to Code Section 4999, be increased if this Section 5.5 were not
applicable, then this Section 5.5 shall be inapplicable to such Participant.
ARTICLE VI - BENEFIT ENTITLEMENT
6.1 Benefits. Except as otherwise provided under the Plan, a
Participant's benefit under the Plan shall be the vested portion of such
Participant's Plan Deferral Account.
6.2 Payment of Benefits.
(a) Except as otherwise provided herein, the benefit payable to a Participant
shall be distributed in the form of a lump sum payment as soon as practicable
following the later of the Participant's attainment of his or her Normal
Retirement Age or the Participant's termination of employment with the Bank.
Notwithstanding the foregoing sentence, a Participant may elect, by filing a
Participation Agreement with the Committee at the time the Participant commences
his or her participation in the Plan, to receive his or her benefit in the form
of up to 10 annual installments commencing as of the date such Participant would
have been entitled to receive a lump sum distribution. Such election shall not
apply to distributions made to the Participant's Designated Beneficiary, which
shall in all cases be in the form of a lump sum payment.
(b) If a series of annual installments has been elected by a Participant, the
amount of each annual installment will be determined by multiplying the value of
the Participant's Plan Deferral Account (determined immediately before such
distribution) by a fraction, the numerator of which is 1 and the denominator of
which is equal to the number of installments remaining to be made to such
Participant (including the installment being detennined). For example, if a
participant has elected to be paid in six equal annual installments, the first
installment will be equal to 1/6 of the Participant's Plan Deferral Account
immediately prior to such installment payment, the second installment will be
equal to 1/5 of the Participant's Plan Deferral Account immediately prior to
such installment, and so on.
(c) Notwithstanding the foregoing provisions of this Section 6.2, the Committee
may, at its discretion, permit a Participant to elect to change the form of or
time at which a distribution of such Participant's benefits are to be
distributed, but any such election shall be irrevocable when filed, and shall
not be given effect with respect to any distributions that are to be made under
the terms of the Plan during the 12 months following the date such election is
filed, and shall only be given effect if the election provides for a deferral of
such distribution to a date that is at least five years after the date the
distribution would have been made in the absence of the election. This Section
6.2(c) shall be interpreted consistent with the provisions of Treasury
Regulation Section 1.409A.2(b), and shall be implemented by treating payments
made in installments for these purposes as a single payment to be made as of the
date the installment payments are to commence, consistent with Treasury
Regulation Section 1.409A.2(b)(2).
(d) In the event a Participant dies after termination of employment but prior to
attainment of his or her Normal Retirement Age, the vested Plan Deferral Account
of such Participant shall be paid to the Designated Beneficiary of such
Participant as soon as practicable following the Participant's death.
(e) Notwithstanding anything to the contrary set forth in the Plan, or in this
Section 6.2, any distribution of any benefit payable under the Plan to a
Participant's that is made on account of such Participant's termination of
employment that would be paid prior to the date that is six months after such
Participant's termination of employment, shall be deferred and paid out as soon
as practicable following the six month anniversary of such Participant's
termination of employment; provided, however, that this Section 6.2{ e) shall
only be applicable to a Participant who is a "specified employee," as that tenn
is defined in Code Section 409A(a)(2)(B)(i) and Treasury Regulation Section
1.409A-1(i)).
6.3 Death Benefits.
(a) In the event a Participant dies prior to termination of employment, the
Designated Beneficiary of the Participant shall be entitled to a benefit equal
to the sum of such Participant's Plan Deferral Account plus $50,000, subject,
however, to the following adjustment: The $50,000 referred to above shall be
reduced to an amount that does not exceed the death benefit payable under the
life insurance contract on the Participant's life, and shall be reduced to $0 if
no such life insurance contract has been obtained (either because the
Participant cannot be insured or otherwise).
(b) The death benefit payable under this Section 6.3 is intended to be funded
using insurance contracts on the life of the Participant and is intended to
constitute a taxable insurance benefit for the Participant to the extent of the
proceeds of such insurance contracts. No Participant shall be entitled to any
benefit in excess of his or her vested Plan Deferral Account unless such
Participant is insurable and only if the Bank has obtained a life insurance
contract on such Participant that is sufficient to cover such benefit.
6.4 Disability. In the event a Participant's employment with the Bank
terminates by reason of the Participant's Disability, the Participant's Plan
Deferral Account shall be fully vested and shall be payable in a lump sum as
soon as practicable following the Committee's determination of eligibility for a
distribution pursuant to this Section 6.4.
ARTICLE VII. PLAN DEFERRAL ACCOUNTS AND EARNINGS ADJUSTMENTS
7.1 Contributions. Each Participant shall have a Plan Deferral Account
which shall be credited with Contributions made with respect to such
Participant, and with Earnings Adjustments, and which shall be debited for any
amounts paid to such Participant. The Committee may establish subaccounts within
a Participant's Plan Deferral Account for purposes of applying separately the
vesting of each year's Contributions, and any other terms and conditions that
may not be applicable to all amounts credited to a Participant's Plan Deferral
Account.
7.2 Earnings Adjustment. Each Participant's Plan Deferral Account
shall be adjusted at the end of each Plan Year (and on any other Valuation Date)
to take into account the Earnings Adjustment for such period applicable to such
account. For purposes of the Plan, the Earnings Adjustment applicable to a
Participant's Plan Deferral Account shall be determined by treating the amount
credited to the Participant's Plan Deferral Account as of the prior Valuation
Date as though such amount were either invested in an interest bearing
investment paying interest at the Prime Rate, or as though such amount were
invested in Company Common Stock (with any dividends paid on such Company Common
Stock being reinvested in additional shares of Company Common Stock). Except to
the extent the Committee determines to establish different rules or procedures
with respect to the manner in which and the time or times at which a Participant
may choose the method for determining Earnings Adjustments applicable to such
Participant's Plan Deferral Account, or to the extent the Committee determines
that other methods of determining Earnings Adjustments shall be applicable
(which can be established on a Participant by Participant basis, or for all
Participants in the Plan, all at the discretion of the Committee), the following
rules shall be applicable:
(a) Except as otherwise provided below, each Participant shall make an election
as to the method for determining Earnings Adjustments which election shall apply
irrevocably to all Contributions made on and after the date that election is
filed with the Committee and prior to the date as of which a different election
is filed with the Committee;
(b) Contributions made in addition to the regular annual contribution that are
made at the discretion of the Committee (which may be on the basis of
performance) shall be subject to Earnings Adjustments only by reference to the
value of Company Common Stock during the period the Participant remains employed
by or continues to provide services to the Bank;
(c) Any election to use the value of Company Common Stock to determine Earnings
Adjustments shall be revoked automatically for all prospective Earnings
Adjustments for a Participant's Plan Deferral Account as of the date such
Participant ceases to provide services or be employed by the Bank (adjustments
to such Participant's Plan Deferral Account thereafter being made as though the
balance were invested in an interest bearing investment paying interest at the
Prime Rate); and
(d) The Earnings Adjustments applicable to any Participant's Plan Deferral
Account that are made by reference to the value of Company Common Stock shall be
limited so that the rate of return so determined shall not be in excess of an
annual rate of return of 150/0 (in applying this limitation, the Earnings
Adjustment shall be detennined without regard to this limitation, and compared
with a separate calculation made assuming an annual Earnings Adjustment of 15%
for each of the years involved, and the actual Earnings Adjustment will then be
equal to which ever calculation is lower, the intent of this being to permit the
full benefit of growth in value of Company Common Stock to be available so long
as that does not exceed an average annual rate of return of 15(degree)~). In
addition, annual Earnings Adjustments based on the value of Company Common Stock
shall be made by reference to the average of the closing prices of Company
Common Stock for the 20 business days preceding the relevant Valuation Date.
For example, a Participant may make an election to use the value of Company
Common Stock to determine his or her Earnings Adjustments as of the date the
Participant first commences participation in the Plan, and may then make a new
election after three years' Contributions have been made. The portion of such
Participant's Plan Deferral Account attributable to the first three years'
Contributions will continue to be adjusted using Earnings Adjustments based on
changes in the value of the Company Common Stock through the date such
Participant terminates employment with the Bank, while the portion of such
Participant's Plan Deferral Account attributable to the fourth year's and later
Contributions will be adjusted on the basis of the Prime Rate. In addition, if a
Participant has elected to have Earnings Adjustments based on the value of
Company Common Stock and the value of Company Common Stock grows by 25% in year
one, and 5% in year two (for an aggregate increase of 31.25% over a two year
period), the full 31.25% would be the Earnings Adjustment, as that is less than
the aggregate 32.25% increase in value that would result from two consecutive
years of 15% growth (taking into account compounding). If, however, in this same
example, the second year's growth in value of Company Common Stock were 10%, for
an aggregate. increase in value over the two years of 37.5%, the Earnings
Adjustment that would apply if a benefit were payable at the close of year two
would be limited to 32.25% growth.
7.3 No Required Investment of Bank Assets. Notwithstanding anything
contained herein to the contrary, including those provisions giving a
Participant the right of designating the manner in which the Earnings Adjustment
is determined for his or her Plan Deferral Account, the Bank reserves the right
to invest its assets, including any assets that may have been set aside for the
purpose of funding the benefits to be provided under the Plan, at its own
discretion, and such assets shall remain the property of the Bank, or may be
held in a Rabbi Trust, as the case may be, subject to the claims of the general
creditors of the Bank, and no Participant shall have any right to any portion of
such assets other than as an unsecured general creditor of the Bank.
ARTICLE VIII - FUNDING OF LIABILITIES
8.1 General. The Plan is intended to be an unfunded, non-qualified
plan maintained by the Bank for the purpose of providing deferred compensation
for a select group of management and highly compensated employees. Benefits
under the Plan may, however, be provided through a Rabbi Trust. A contribution
to such trust in any year shall not create any obligation of the Bank to make
contributions to such trust thereafter. The Plan shall be administered and
construed so as to effectuate this intent. Any liability of the Bank to any
person with respect to benefits payable under the Plan shall be based solely
upon such contractual obligations, if any, as shall be created by the Plan, and
shall give rise only to a claim against the general assets of the Bank. No such
liability shall be deemed to be secured by any pledge or any other encumbrance
on any specified property of the Bank. To the extent any benefits payable under
the Plan are paid through a Rabbi Trust, the Bank's contractual obligations, if
any, shall be reduced accordingly.
8.2 Change of Control. In the event there is a Change of Control,
(a) the Bank shall establish a Rabbi Trust, if one has not already been
established; such Rabbi Trust shall be irrevocable (or shall be amended to be
irrevocable) effective as of the date of the Change of Control; and
(b) the Bank shall immediately transfer assets to the Rabbi Trust that are
certified by an actuarial firm hired for this purpose by the Bank as being
sufficient to provide all benefits reasonably anticipated as becoming payable
under the Plan, using for these purposes reasonably actuarial assumptions.
ARTICLE IX - COMMITTEE
9.1 Quorum. A majority of the members of the Committee shall
constitute a quorum for any meeting held with respect to the Plan, and the acts
of a majority of the members present at any meeting at which a quorum is
present, or the acts unanimously approved in writing by all members of the
Committee, shall be valid acts of the Committee. No member of the Committee may
act or vote with respect to a decision of the Committee specifically relating to
his or her benefits, if any, under the Plan. The Committee may be made up of a
single individual at the discretion of the Bank.
9.2 Powers. The Committee shall have the power and duty to do all
things necessary or convenient to effect the intent and purposes of the Plan and
not inconsistent with any of the provisions hereof, whether or not such powers
and duties are specifically set forth herein, and, by way of amplification and
not limitation of the foregoing, the Committee shall have the power to:
(a) provide rules and regulations for the management, operation and
administration of the Plan, and, from time to time, to amend or supplement such
rules and regulations;
(b) construe the Plan, which construction, as long as made in good faith, shall
be final and conclusive upon all parties hereto; and
(c) collect any defect, supply any omission, or reconcile any inconsistency in
the Plan in such manner and to such extent as it shall deem expedient to catTy
the same into effect, and it shall be the sole and final judge of when such
action shall be appropriate.
The acts and determinations of the Committee, including determinations with
respect to claims of a Participant or Designated Beneficiary made in accordance
with Section 12.8 hereof, shall be final and conclusive.
9.3 Indemnity. No member of the Committee shall be directly or
indirectly responsible or under any liability by reason of any action or default
by him as a member of the Committee, or the exercise of or failure to exercise
any power or discretion as such member. No member of the Committee shall be
liable in any way for the acts or defaults of any other member of the Committee,
or any of its advisors, agents or representatives. The Bank shall indemnify
and save harmless each member of the Committee against any and all expenses and
liabilities arising out of his own membership on the Committee.
9.4 Compensation and Expenses. Members of the Committee who are
employees of the Bank shall receive no compensation for their services rendered
as members of the Committee. Any other members of the Committee who are not
employees of the Bank shall receive such reasonable compensation for their
services as may be authorized from time to time by the Bank and, except as
otherwise provided by this Section, members of the Committee shall be entitled
to receive their reasonable expenses incurred in administering the Plan. Any
such compensation and expenses, as well as extraordinary expenses authorized by
the Bank, shall be paid by the Bank.
9.5 Participant Information. The Bank shall furnish to the Committee
in writing all information the Bank deems appropriate for the Committee to
exercise its powers and duties in administration of the Plan. Such information
may include, but shall not be limited to, the names of all Participants, the
date each became a Participant, his or her Compensation and date of birth,
employment, termination of employment, retirement or death. Such information
shall be conclusive for all purposes of the Plan and the Committee shall be
entitled to rely thereon without any investigation thereof; provided, however,
that the Committee may correct any errors discovered in any such information.
9.6 Inspection of Documents. The Committee shall make available to
each Participant and his Designated Beneficiary, for examination at the
principal office of the Bank (or at such other location as may be determined by
the Committee), a copy of the Plan and such of its records, or copies thereof,
as may pertain to any benefits of such Participant and beneficiary under the
Plan.
ARTICLE X - EFFECTIVE DATE, TERMINATION AND AMENDMENT
10.1 Effective Date of Participation in Plan. Participants shall
commence participation in the Plan on the later of the Effective Date or the
first day of the month coincident with or following receipt by the Committee of
the executed Participation Agreement evidencing the Participant's participation,
or such other commencement date as may be established by the Committee with
respect to any Participant. A Participation Agreement shall continue in effect
until such time as the Participation Agreement is revoked, deferrals are
terminated in accordance with the terms of the Plan, or the Plan is terminated.
10.2 Amendment and Termination of the Plan or Participation Agreement.
Notwithstanding anything contained herein to the contrary, this Plan or the
participation in this Plan by any Participant may be terminated or revoked by
the Bank at any time and the terms of a Participant's participation in the Plan
may be amended by the Bank at any time and from time to time; provided, however,
that neither the termination, revocation or amendment of the Plan or of the
participation of a Participant in the Plan may, without the written approval of
the affected Participant or Participants, reduce the Plan Deferral Account or
benefit payable to such Participant or Participants determined as of the time of
such termination or amendment. Upon a termination of the Plan or of the
participation in the Plan of one or more Participants, the Bank shall have the
right to cause an amount to be distributed to each affected Participant equal to
his or her Plan Deferral Account, subsequent to which no Participant shall have
any further rights or benefits under the Plan.
ARTICLE XI - SPECIAL PROVISIONS RELATED TO CODE SECTION 409A
11.1 Compliance with Code Section 409A. Notwithstanding anything
contained herein to the contrary, distribution of Participants' Benefits under
the Plan shall be made in a manner and at such times as comply with all
applicable provisions of Code Section 409A, as in effect from time to time,
including, for these purposes, applicable effective date rules for such Code
section, applicable transitional rules and guidance issued by the Secretary of
the Treasury or the Internal Revenue Service, including, but not limited to
Notice 2005-1 published by the Internal Revenue Service January 10, 2005 in
Internal Revenue Bulletin 2005-2 and such proposed, temporary or final
regulations as may be promulgated pursuant to Code Section 409A.
11.2 Intent of Article XI. The intent of this Article XI is to ensure
that no Participant is subject to any tax liability or interest penalty, by
reason of the application of Code Section 409 A( a)(I) as a result of any
failure to comply with all of the requirements of Code Section 409A, and this
Article XI shall be interpreted in light of, and consistent with, such
requirements. This Article XI, and the following rules, shall apply to
distributions under the Plan, but only to the extent required in order to avoid
taxation of, or interest penalties on, an affected Participant under Code
Section 409A. These rules shall also be deemed modified or supplemented by such
other rules as may be necessary, from time to time, to comply with Code Section
409A, as that may be amended from time to time or modified by reason of issuance
of regulations or other guidance.
ARTICLE XII - MISCELLANEOUS PROVISIONS
12.1 Anti-alienation. No benefit payable under the Plan shall be
subject to any manner of anticipation, alienation, sale, transfer, assignment,
pledge, attachment or encumbrance except by the Bank; and any attempt to
anticipate, alienate, sell, transfer, assign, pledge, attach or encumber such
benefit, except by the Bank, shall be void.
12.2 Unsecured Creditor Status. Any Participant who may have or claim
any interest in or right to any compensation, payment, or benefit payable
hereunder, shall rely solely upon the unsecured promise of the Bank, as set
forth herein, for the payment thereof: and nothing herein contained shall be
construed to give to or vest in a Participant or any other person now or at any
time in the future, any right, title, interest, or claim in or to any specific
asset, fund, reserve, account, insurance or annuity policy or contract, or other
property of any kind whatever owned by the Bank, or in which the Bank may have
any right, title, or interest, nor or at any time in the future. Any insurance
policy or other assets acquired by the Bank to fund, in whole or in part, the
Bank's liabilities under the Plan shall not be deemed to be held as security for
the performance of the obligations of the Bank hereunder but shall be, and
remain, a general asset of the Bank subject to the claims of its creditors.
12.3 Other Bank Plans. It is agreed and understood that any benefits
under this Plan are in addition to any and all employee benefits to which a
Participant may otherwise be entitled under any other contract, arrangement, or
voluntary pension, profit sharing or other compensation plan of the Bank,
whether funded or unfunded, and that this Plan shall not affect or impair the
rights or obligations of the Bank or a Participant under any other such
contract, arrangement, or voluntary pension, profit sharing or other
compensation plan.
12.4 Separability. If any term or condition of the Plan shall be
invalid or unenforceable to any extent or in any application, then the remainder
of the Plan, with the exception of such invalid or unenforceable provision,
shall not be affected thereby, and shall continue in effect and application to
its fullest extent.
12.5 Continued Employment. Neither the establishment of the Plan, any
provisions of the Plan, nor any action of the Committee shall be held or
construed to confer upon any Participant the right to a continuation of
employment by the Bank. The Bank reserves the right to dismiss any employee
(including a Participant), or otherwise deal with any employee (including a
Participant) to the same extent as though the Plan had not been adopted.
12.6 Incapacity. If the Committee determines that a Participant or
Beneficiary is unable to care for his affairs because of illness or accident, or
is a minor, any benefit due such Participant or Beneficiary under the Plan may
be paid to his spouse, child, parent, or any other person deemed by the
Committee to have incurred expense for such Participant or Beneficiary
(including a duly appointed guardian, committee, or other legal representative),
and any such payment shall be a complete discharge of the Bank's obligation
hereunder.
12.7 Jurisdiction. The Plan shall be construed, administered, and
enforced according to the laws of the State of New Jersey, except to the extent
that such laws are preempted by the Federal laws of the United States of
America.
12.8 Claims. If, pursuant to the provisions of the Plan, the Committee
denies the claim of a Participant or Designated Beneficiary for benefits under
the Plan, the Committee shall provide written notice, within 60 days after
receipt of the claim, setting forth in a manner calculated to be understood by
the claimant:
(a) the specific reasons for such denial;
(b) the specific reference to the Plan provisions on which the denial is based;
(c) a description of any additional material or information necessary to perfect
the claim and an explanation of why such material or information is needed; and
(d) an explanation of the Plan's claim review procedure and the time limitations
of this subsection applicable thereto.
A Participant or Designated Beneficiary whose claim for benefits has been denied
may request review by the Committee of the denied claim by notifying the
Committee in writing within 60 days after receipt of the notification of claim
denial. As part of said review procedure, the claimant or his authorized
representative may review pertinent documents and submit issues and comments to
the Committee in writing. The Committee shall render its decision to the
claimant in writing in a manner calculated to be understood by the claimant not
later than 60 days after receipt of the request for review, unless special
circumstances require an extension of time, in which case a decision shall be
rendered as soon after the sixty day period as possible, but not later than 120
days after receipt of the request for review. The decision on review shall state
the specific reasons therefor and the specific Plan references on which it is
based.
12.9 Withholding. The Participant or the Designated Beneficiary shall
make appropriate arrangements with the Bank for satisfaction of any federal,
state or local income tax withholding requirements and Social Security or other
tax requirements applicable to the accrual or payment of benefits under the
Plan. If no other arrangements are made, the Bank may provide, at its
discretion, for any withholding and tax payments as may be required.
12.10 Pronouns. All pronouns and any variations thereof shall be deemed
to refer to masculine, feminine, neuter, singular or plural, as the identity of
the Person or Persons may require.
IN WITNESS WHEREOF, and as evidence of the adoption of this Plan by the
Bank, it has caused the same to be signed by a duly authorized officer, and its
corporate seal to be affixed hereto, this 9th day of September, 2008.
Attest: /s/ Keith Winchester
CORNERSTONE BANK
/s/
----------------------------
Title:
[Corporate Seal]
Exhibit A
Schedule of Participation
- ------------------------------------------------------------------------------------------------------------------------
Participant Annual Contribution Maximum Additional
Annual Contribution
- ------------------------------------------------------------------------------------------------------------------------
George Matteo 15% of Base Compensation 10% of Base Compensation
- ------------------------------------------------------------------------------------------------------------------------
Keith Winchester 10% of Base Compensation 5% of Base Compensation
- ------------------------------------------------------------------------------------------------------------------------
Eugene D. D'Orazio 3% of Base Compensation 3% of Base Compensation
- ------------------------------------------------------------------------------------------------------------------------
David T. Swoyer 3% of Base Compensation 3% of Base Compensation
- ------------------------------------------------------------------------------------------------------------------------
Colleen Connell 3% of Base Compensation 3% of Base Compensation
- ------------------------------------------------------------------------------------------------------------------------
The Contribution shall be determined on or about the beginning of each Plan Year
and shall be equal to the Annual Contribution as described above, plus an
additional contribution, not in excess of the amount described as the Maximum
Additional Annual Contribution. For these purposes, a Participant's Base
Compensation shall be his or her Base Compensation in effect as of the date the
Contribution is determined. The determination of what portion, if any, of the
Maximum Additional Annual Contribution is to be credited to any Participant's
Plan Deferral Account shall be made at the discretion of the Committee, taking
into account the performance of the Bank, the performance of the Participant,
and the attainment of such goal or goals as may have been established by the
Committee for purposes of the Plan for the prior Plan Year.
Contributions for each Participant for the initial Plan Year shall be determined
without regard to the above at the discretion of the Committee.
All determinations made with respect to Contributions made pursuant to this
Schedule of Participation shall be made at the discretion of the Committee,
taking into account such facts and circumstances as the Committee deems
relevant.