UNION CENTER NATIONAL BANK
SENIOR OFFICERS PROTECTION PLAN
SECTION 1. STATEMENT OF PURPOSE
This Plan is designed and implemented for the purpose of providing
to a limited group of key management or highly compensated employees of Union
Center National Bank (the "Bank") who are largely responsible for the Bank's
success the opportunity to receive deferred compensation in the form of
supplemental executive retirement benefits, thereby increasing the incentive of
such key employees to remain in the employ of the Bank and to make the Bank more
profitable.
SECTION 2. DEFINITIONS
2.1 "Account" means the bookkeeping account created and maintained
by the Bank for the benefit of a Participant which shall reflect the value of
amounts payable to such Participant, if any, under the Plan.
2.2 "Beneficiary" means one or more persons, trusts, estates or
other entities designated by a Participant in writing on a form satisfactory to
the Bank, that is/are entitled to benefits under this Plan upon the death of the
Participant or the death of the predecessor Beneficiary receiving benefits under
the Plan.
2.3 "Board" means the Board of Directors of the Bank.
2.4 "Cause" means any of the following acts or circumstances: (i)
disloyal, dishonest or felonious conduct of the Participant that materially
adversely affects the Bank or Center Bancorp; or (ii) termination of the Bank's
business due to unprofitability, insolvency, bankruptcy or directive by
governmental regulators; provided, however, that if a Participant has entered
into a written employment agreement with the Bank that defines "cause" or words
of similar import, then "Cause", as applied to such Participant shall have the
meaning ascribed such term or words of similar import under such employment
agreement.
2.5 "Change in Control" means a change in control required to be
reported in response to Item 5(f) of Schedule 14A of Regulation 14A (or any
successor provision) promulgated under the Securities Exchange Act of 1934 (the
"Exchange Act"); provided that, without limitation, such a change in control
shall be deemed to have occurred if (a) any "person" (including as such term is
used in Section 13(d) and 14(d)(2) (or any successor provision) of the Exchange
Act) is or becomes the beneficial owner, directly or indirectly, of securities
of Center Bancorp (the "Company") representing thirty-three percent (33%) or
more of the combined voting power of the Company's outstanding securities then
entitled to vote for the election of directors; or (b) during any period of two
(2) consecutive years, individuals who at the beginning of such period
constituted the Board cease for any reason to constitute at least a majority
thereof (excluding for purposes of this calculation any director who dies during
such period); or (c) the Company shall meet the delisting criteria of the New
York Stock Exchange, Inc. or any successor exchange in respect of the number of
publicly held shares or the number of shareholders holding one hundred (100)
shares or more; or (d) the Board shall approve the sale of all or substantially
all of the assets of the Company; or (e) the Board shall approve any merger,
consolidation, issuance of securities or purchase of assets, the result of which
would be the occurrence of any event described in clause (a), (b), or (c) above.
2.6 "Disability" means, in the determination of the Committee, the
inability of a Participant to engage in any substantial gainful activity by
reason of any medically determinable physical or mental impairment which can be
expected to result in death or which can be expected to be permanent. The
Committee may require such proof of Disability as the Committee in its sole
discretion deems appropriate, and the Committee's good faith determination as to
whether the Participant is disabled shall be final and binding on all parties
concerned.
2.7 "Normal Retirement Date" means the first day of the month
coincident with or next following the date on which the Participant attains age
sixty-five (65).
2.8 "Participant" means a senior officer of the Bank who has met the
requirements of the eligibility and participation provisions set forth in
Section 4 hereof.
2.9 "Plan" means the Union Center National Bank Senior Officers
Protection Plan contained in this document, including all amendments thereto.
2.10 "Vested Account" means that percentage, if any, of a
Participant's Account that has vested in accordance with Section 7 hereof.
2.11 "Year of Service" means a period of twelve (12) consecutive
months during which a Participant is continuously employed by the Bank. For
purposes of the Plan, a Participant shall be credited with Years of Service
which have accrued both before and after the date of adoption of the Plan.
SECTION 3. PLAN ADMINISTRATION
3.1 Power and Duties of the Committee. The Board shall designate
from among its members a compensation committee (the "Committee") to administer
the Plan, which shall consist of no fewer than three members of the Board. A
majority of the members of the Committee shall constitute a quorum, and the act
of a majority of the members of the Committee shall be the act of the Committee.
Any member of the Committee may be removed at any time either with or without
cause by resolution adopted by the Board, and any vacancy on the Committee may
at any time be filled by resolution adopted by the Board.
The Committee shall administer the Plan in accordance with its
terms and shall have the power and the discretion to construe the terms of the
Plan and to determine all questions arising in connection with the
administration, interpretation, and application of the Plan. The Committee may
establish procedures, correct any defect, supply any information, or reconcile
any inconsistency in such manner and to such extent as shall be deemed necessary
or advisable by the Committee to carry out the purpose of the Plan. The
Committee shall have all power necessary or appropriate to accomplish his duties
under this Plan.
-2-
The Committee shall be charged with the duties of the general
administration of the Plan, including, but not limited to, the following:
(a) the discretion to determine all questions relating to the
eligibility of employees to participate or remain a Participant
hereunder and to receive benefits under the Plan;
(b) to compute and make determinations with respect to the
amount of benefits to which any Participant shall be entitled
hereunder;
(c) to authorize and make non-discretionary or otherwise
directed disbursements to Participants;
(d) to maintain all necessary records for the administration
of the Plan;
(e) to interpret the provisions of the Plan and to make and
publish such rules for the regulation of the Plan as are consistent
with the terms hereof;
(f) to prepare and implement a procedure to notify employees
that they have been selected as eligible to participate in the Plan;
and
(g) to assist any Participant regarding his rights, benefits,
or elections available under the Plan.
3.2 Records and Reports. The Committee shall keep a record of all
actions taken and shall keep all other books of account, records, and other data
that may be necessary for proper administration of the Plan and shall be
responsible for supplying all information and reports to the Bank, Participants
and Beneficiaries.
3.3 Information from Bank. To enable the Committee to perform its
function, the Bank shall supply full and timely information to the Committee on
all matters relating to the compensation of all Participants, their retirement,
death, or termination of employment, and such other pertinent facts as the
Committee may require. The Committee may rely upon such information as is
supplied by the Bank and shall have no duty or responsibility to verify such
information.
SECTION 4. ELIGIBILITY AND PARTICIPATION
4.1 Eligibility. The Board, in its sole discretion, shall select the
employees of the Bank who are eligible to become Participants, and those
employees shall be listed on Schedule A attached hereto.
4.2 Participation. The Committee shall notify those employees listed
on Schedule A attached hereto of their participation in the Plan.
-3-
SECTION 5. ACCOUNTS
5.1 From time to time and in its sole discretion, the Bank may
credit a Participant's Account with principal and, in the sole discretion of the
Bank, interest or other earnings. The Bank shall be under no obligation,
however, to credit any Account hereunder and will choose to credit an Account
based on the employment performance of a Participant and on the operating profit
of the Bank. The Participant may from time to time inquire of the Bank the value
of his or her Account, and the Bank will make reasonable efforts to provide the
Participant with such information on a timely basis.
SECTION 6. PAYMENT OF RETIREMENT BENEFIT
6.1 Normal Retirement Date. A Participant who terminates employment
with the Bank on or after his or her Normal Retirement Date shall be entitled to
receive the value of his or her Vested Account, payable in a lump sum no later
than the first day of the fourth month following the Participant's actual
retirement date; provided, however, that such a Participant may, by filing an
election form with, and acceptable to, the Committee elect to have payment of
his or her Vested Account made in annual installments, payable over not more
than ten (10) years. Such election shall not be given any effect, however,
unless such election is filed with the Committee at least a full calendar year
before the distribution of the Participant's retirement benefit hereunder
begins. If a Participant elects to have his or her retirement benefit paid in
installments, as of the date of the Participant's actual retirement and on each
anniversary date thereafter during the benefit payment period, the amount of
each installment to be paid during such year shall be equal to the remaining
balance in the Participant's Vested Account as of each retirement anniversary
date divided by the number of annual installment payments remaining to be made.
The final installment payment shall be equal to the remaining amount payable to
the Participant. In no event shall the amount of any installment payment exceed
the remaining amount payable to the Participant. If a Participant should die
after commencement of installments, but prior to the completion of such
installment payments, such annual benefit shall be continued to the
Participant's Beneficiary for the unexpired portion of the previously-elected
installment period. Notwithstanding the foregoing, the Bank reserves the right
to distribute a Participant's retirement benefit in one lump sum rather than in
installments at any time.
6.2 Death, Disability. In the event that a Participant terminates
employment with the Bank due to death or Disability prior to his or her Normal
Retirement Date, the Bank shall pay to the Participant or the Beneficiary, as
the case may be, the value of the Participant's Vested Account. Such payment
shall be made in a lump sum no later than the first day of the fourth month
following the date of the Participant's death or termination of employment due
to Disability, as the case may be.
6.3 Other Payments. If a Participant's employment with the Bank is
terminated for any reason other than Cause, or if a Participant voluntarily
discontinues employment with the Bank for any reason (other than death,
Disability or retirement), then the Participant shall be entitled to receive a
termination benefit equal to the value of his Vested Account as of the date of
his or her termination of employment. This termination benefit shall be due and
payable in a lump sum amount on or about the first day of the fourth month
following the month of the Participant's termination of employment.
-4-
SECTION 7. VESTING
7.1 A Participant's interest in his or her Account shall vest in
accordance with the following schedule.
Years of Service Vesting Percentage
---------------- ------------------
Less than 6 0%
6 but less than 7 10%
7 but less than 8 20%
8 but less than 9 30%
9 but less than 10 40%
10 but less than 11 50%
11 but less than 12 60%
12 but less than 13 70%
13 but less than 14 80%
14 but less than 15 90%
15 or more 100%
Notwithstanding the foregoing, a Participant's Account shall vest in
full (i) in the event that the Participant's employment terminates due to death
or Disability, (ii) upon a Change in Control, or (iii) upon the Participant's
attainment of age 65 while employed by the Bank.
Notwithstanding anything contained herein to the contrary, if a
Participant's employment with the Bank terminates for Cause, the Participant
shall not be entitled to any benefits under the terms of the Plan regardless of
whether he or she had any vested interest.
SECTION 8. CLAIMS PROCEDURES
8.1 Claims Procedure. Claims for benefits under the Plan may be
filed with the Committee on forms supplied by the Bank. Written notice of the
disposition of a claim shall be furnished to the claimant within ninety (90)
days after the claim is filed. If additional time (up to ninety (90) days) is
required by the Committee to process the claim, written notice shall be provided
to the claimant within the initial ninety (90) day period. The extension notice
shall indicate the special circumstances requiring an extension of time and the
date by which the Committee expects to render a determination. In the event the
claim is denied, the reasons for the denial shall be specifically set forth in
the notice in language calculated to be understood by the claimant. In addition,
the claimant shall be furnished with an explanation of the Plan's claims review
procedure.
8.2 Claims Review Procedure. Any employee, former employee, or
Beneficiary who has been denied a benefit by decision of the Committee pursuant
to Section 8.1 hereof shall be entitled to request the Committee to give further
consideration to his claim by filing with the Committee a request for a hearing.
Such request, together with a written statement of the reason why the claimant
believes his claim should be allowed, shall be filed with the Committee no later
than sixty (60) days after receipt of the written notification provided for in
Section 8.1 hereof. The Committee shall make a final decision as to the
allowance of the claim within sixty (60) days of receipt of the appeal (unless
there has been an extension due to special circumstances, provided the delay and
the special circumstances occasioning it are communicated to the claimant in
writing within the sixty (60) day period). Such communication shall be written
in a manner calculated to be understood by the claimant and shall include
specific reasons for the decision and specific references to the pertinent Plan
provisions on which the decision is based.
-5-
8.3 Special Notification and Review Procedure for a Disability
Claim. In the event of a claim by a Participant on account of Disability, the
following claims procedure shall apply.
(a) Upon receipt of a claim for a benefit on account of
Disability, the Committee shall advise the claimant that a decision will be
forthcoming within forty-five (45) days and shall, in fact, deliver such
decision within that period. The Committee may, however, extend this period for
an additional thirty (30) days if necessary due to matters beyond the control of
the Committee, and written notice of the extension is given to the claimant
within forty-five (45) days after receipt of the claim. The Committee may also
extend the extension period for an additional thirty (30) days if necessary due
to matters beyond the control of the Committee and written notice of the
additional extension is given to the claimant prior to the end of the original
thirty-day extension period. If the claim is denied in whole or in part, the
Committee shall adopt a written decision using language calculated to be
understood by the claimant, setting forth: (i) the specific reason or reasons
for such denial; (ii) the specific reference to pertinent provisions of the Plan
on which such denial is based; (iii) a description of any additional material or
information necessary for the claimant to perfect his or her claim and an
explanation of why such material or such information is necessary; (iv)
appropriate information (including any applicable time limits) as to the steps
to be taken if the claimant wishes to submit the claim for review; (v) if an
internal rule or guideline was relied upon in denying the claim, and that a copy
of such rule or guideline will be provided free of charge and upon request; and
(vi) if the denial of the claim is based on a medical necessity or experimental
treatment or similar exclusion or limit, either an explanation of the clinical
judgment, applying the terms of the Plan to the medical circumstances of the
claimant, or a statement that such explanation will be provided free of charge
and upon request.
(b) Within one hundred and eighty (180) days after the receipt
by the claimant of the written decision described above, the claimant may
request in writing that the Disability Review Board (as defined below) of the
Bank review the decision of the Committee. Such request must be addressed to the
Disability Review Board c/o the Committee, at the Bank's then principal place of
business. The "Disability Review Board" shall be a committee consisting of one
or more individuals selected by the Board; directors, shareholders, officers and
employees are eligible to serve on the Disability Review Board, provided,
however, that neither any member of the Committee nor any subordinate of any
member of the Committee shall be eligible to serve on the Disability Review
Board. In connection with the review, the claimant or his or her duly authorized
representative shall be provided with the identification of any medical or
vocational experts whose advice was obtained in connection with the claim denial
(without regard to whether the advice was relied upon in denying the claim). The
claimant may, but need not, review the pertinent documents and submit issues and
comments in writing for consideration by the Disability Review Board.
-6-
(c) Within forty-five (45) days after the Disability Review
Board's receipt of a request for review, it will review the Committee's decision
and make its determination on review. The Disability Review Board may, however,
extend the review period for an additional forty-five (45) days if special
circumstances require an extension of time and written notice of the extension
is given to the claimant within forty-five (45) days after receipt of the
written request for review. In reviewing any decision based in whole or in part
on a medical judgment, the Disability Review Board will consult with a health
care professional who has appropriate training in the field of medicine involved
in the medical judgment; the health care professional shall neither be an
individual consulted in connection with the decision that is subject to review,
nor be the subordinate of such individual. The Disability Review Board's review
shall not afford deference to the Committee's decision. After considering all
materials presented by the claimant, the Disability Review Board will provide
its written determination on review. If the Disability Review Board's
determination on review is to deny the claim in any respect, the written
determination shall set forth: (i) the specific reason or reasons for such
denial; (ii) the specific reference to pertinent provisions of this Plan on
which such denial is based; (iii) a statement that the claimant shall be
provided upon request and free of charge reasonable access to and copies of all
documents, records and other information relating to the claim; (iv) a
description of the claimant's right to bring an action under section 502(a) of
the Employee Retirement Income Security Act of 1974, as amended; (v) if an
internal rule or guideline was relied upon in denying the claim, either the
specific rule or guideline, or a statement that such rule or guideline was
relied upon in denying the claim, and that a copy of such rule or guideline will
be provided free of charge and upon request; and (vi) if the denial of the claim
is based on a medical necessity or experimental treatment or similar exclusion
or limit, either an explanation of the clinical judgment, applying the terms of
the Plan to the medical circumstances of the claimant, or a statement that such
explanation will be provided free of charge and upon request.
(d) For purposes of this Section 8.3, the Committee and the
Disability Review Board shall have the power to construe, interpret and apply
the provisions of the Plan (except to the extent such power is otherwise
specifically allocated to another party by operation of law), and to determine
any questions of fact which may arise under the Plan.
SECTION 9. AMENDMENT AND TERMINATION
9.1 Amendment, Termination. The Bank shall have the right at any
time to amend or terminate this Plan. However, no amendment shall be effective
so as to reduce the amount of any Participant's Vested Account hereunder, or to
delay the payment of any amount to a Participant beyond the time that such
amount would be payable without regard to such amendment.
SECTION 10. MISCELLANEOUS
10.1 Non-alienation of Benefits. No right or benefit under this Plan
shall be subject to anticipation, alienation, sale, assignment, pledge,
encumbrance, or charge, and any attempt to anticipate, alienate, sell, assign,
pledge, encumber, or charge any right or benefit under this Plan or any
Agreement shall be void. No such right or benefit shall in any manner be liable
for or subject to the debts, contracts, liabilities or torts of the person
entitled thereto. If a Participant or any Beneficiary hereunder shall become
bankrupt, or attempt to anticipate, alienate, sell, assign, pledge, encumber, or
charge any right hereunder, then such right or benefit shall, in the sole
discretion of the Board, cease and terminate, and in such event, the Board may
hold or apply the same or any part thereof for the benefit of the Participant or
his or her Beneficiary, spouse, children, or other dependents, or any of them in
such manner and in such amounts and proportions as the Board may deem proper.
-7-
10.2 Unsecured Liability. The obligation of the Bank to make
payments hereunder to a Participant shall constitute an unsecured liability of
the Bank. Such payments shall be made from the general funds of the Bank and the
Bank shall not be required to establish or maintain any special or separate
fund, to purchase or acquire life insurance on a Participant's life, or
otherwise to segregate assets to assure that such payments shall be made.
Neither a Participant nor any other person shall have any interest in any
particular asset of the Bank by reason it its obligations hereunder and the
right of any of them to receive payments under this Plan shall be no greater
than the right of any other unsecured general creditor of the Bank. Nothing
contained in the Plan shall create or be construed as creating a trust of any
kind or any other fiduciary relationship between the Bank and a Participant or
any other person.
10.3 No Contract of Employment. This Plan shall not be deemed to
constitute a contract between the Bank and any Participant or to be a
consideration or an inducement for the employment of any Participant or
employee. Nothing contained in this Plan shall be deemed to give any Participant
or employee the right to be retained in the service of the Bank or to interfere
with the right of the Bank to discharge any Participant or employee at any time
regardless of the effect which such discharge shall have upon him or her as a
Participant of this Plan.
10.4 Designation of Beneficiary. Each Participant shall file with
the Bank a notice in writing, in a form acceptable to the Board, designating one
or more Beneficiaries to whom payments becoming due by reason of or after his or
her death shall be made. Participants shall have the right to change the
Beneficiary or Beneficiaries so designated from time to time; provided, however,
that no such change shall become effective until received in writing and
acknowledged by the Bank.
10.5 Payments to Incompetents. The Bank shall make the payments
provided herein directly to the Participant or Beneficiary entitled thereto or,
if such Participant or Beneficiary has been determined by a court of competent
jurisdiction to be mentally or physically incompetent, then payment shall be
made to the duly appointed guardian, committee or other authorized
representative of such Participant or Beneficiary. The Bank shall have the right
to make payment directly to a Participant or Beneficiary until it has received
actual notice of the physical or mental incapacity of such Participant or
Beneficiary and actual notice of the appointment of a duly authorized
representative of his or her estate. Any payment to or for the benefit of a
Participant or Beneficiary shall be a complete discharge of all liability of the
Bank therefore.
10.6 Interpretation. The interpretation and construction of the Plan
by the Board, and any action taken hereunder, shall be binding and conclusive
upon all parties in interest. No member of the Board shall be liable to any
person for any action taken or omitted to be taken in connection with the
interpretation, construction, or administration of the Plan, so long as such
action or omission be made in good faith.
-8-
10.7 Authority to Establish a Trust. The Board shall have the right
at any time to establish a trust to which the Bank may transfer from time to
time certain assets to be used by said trustee(s) to satisfy some or all of the
Bank's obligations and liabilities under the Plan. All assets held by such trust
shall be subject to the claims of the Bank's creditors in the event of the
Bank's Insolvency (as defined below). For purposes of this Plan and the said
trust, "Insolvency" means (i) the Bank is unable to pay its debts as they become
due; or (ii) the Bank is subject to a pending proceeding as a debtor under the
United States Bankruptcy Code.
10.8 Prepayment. The Board may, in its sole and absolute discretion,
prepay all or any part of the annual installments remaining to be paid to a
Participant or Beneficiary under this Plan. The amount of such prepayment shall
equal the actuarial equivalent of the remaining annual installments being
prepaid, as determined by the Board in its discretion, and receipt thereof by
the Participant or Beneficiary shall be in full satisfaction of all remaining
obligations of the Bank under the Plan and any applicable Agreement.
10.9 Binding Effect. Obligations incurred by the Bank pursuant to
this Plan shall be binding upon and inure to the benefit of the Bank, its
successors and assigns, and the Participant, his or her Beneficiaries, personal
representatives, heirs and legatees.
10.10 Entire Plan. This document and any amendments hereto contain
all the terms and provisions of the Plan and shall constitute the entire Plan,
any other alleged terms or provisions being of no effect.
10.11 Merger, Consolidation or Acquisition. In the event of a merger
or consolidation of the Bank with another corporation or entity, or the sale or
lease of all or substantially all of the Bank's assets to another corporation or
entity, or the acquiring by another corporation or entity of a right to elect at
least thirty percent (30%) of the Board, then and in such event the obligations
and responsibilities of the Bank under this Plan shall be assumed by any such
successor or acquiring corporation or entity, and all of the rights, privileges
and benefits of the Participants hereunder shall continue.
10.12 Governing Law. Except to the extent preempted by federal law,
this Plan shall be construed and enforced according to the laws of the State of
New Jersey, other than its laws respecting choice of law.
10.13 Gender, Number, Headings. The masculine gender, where
appearing in the Plan, shall be deemed to include the feminine gender, and the
singular shall include the plural, unless the context clearly indicates to the
contrary. All headings used in this Plan are for convenience of reference only
and are not part of the substance of this Plan.
10.14 Enforceability. If any term or condition of this Plan shall be
invalid or unenforceable to any extent or in any application, then the remainder
of the Plan, and such term or condition except to such extent or in such
application, shall not be affected thereby, and each and every term and
condition of the Plan shall be valid and enforced to the fullest extent and in
the broadest application permitted by law.
10.15 Uniformity. All provisions of this Plan shall be interpreted
and applied in a uniform, nondiscriminatory manner. In the event of any conflict
between the terms of this Plan and any summaries or other descriptions of this
Plan, the Plan provisions shall control.
-9-
IN WITNESS WHEREOF, this Plan, having been duly approved and adopted
by the Board of the Bank, has been executed by a duly authorized officer of the
Bank as evidence of its adoption.
UNION CENTER NATIONAL BANK
By: /s/ Donald Bennetti
---------------------------------
Name: Donald Bennetti
Title: Senior Vice President
-10-
SCHEDULE A
Participants
William A. Arnold
Donald Bennetti
Mark S. Cardone
John J. Davis
Julia D'Aloia
John F. McGowan
Anthony C. Weagley
Lori Wunder