Exhibit 10.18
Prepared 6-3-02
CORNERSTONE BANK
SALARY CONTINUATION AGREEMENT
THIS AGREEMENT is adopted this 7 day of June, 2002, by and between
CORNERSTONE BANK, a state-chartered commercial bank located in Stamford,
Connecticut (the "Company"), and M. XXX XXXXXXXXX (the "Executive").
INTRODUCTION
To encourage the Executive to remain an employee of the Company, the
Company is willing to provide salary continuation benefits to the Executive. The
Company will pay the benefits from its general assets.
AGREEMENT
The Company and the Executive agree as follows:
ARTICLE 1
DEFINITIONS
Whenever used in this Agreement, the following words and phrases shall
have the meanings specified:
1.1 "Code" means the Internal Revenue Code of 1986, as amended.
1.2 "Disability" means the Executive's suffering a sickness, accident
or injury which has been determined by the carrier of any individual or group
disability insurance policy covering the Executive, or by the Social Security
Administration, to be a disability rendering the Executive totally and
permanently disabled. The Executive must submit proof to the Company of the
carrier's or Social Security Administration's determination upon the request of
the Company.
1.3 "Effective Date" means April 1, 2002.
1.4 "Involuntary Early Termination" means that the Executive, prior to
Normal Retirement Age, has been notified in writing, that Executive's employment
with the Company is terminated for reasons other than an approved leave of
absence, Termination for Cause, Disability, Voluntary Termination or Death.
1.5 "Normal Retirement Age" means the Executive's 65th birthday.
1.6 "Normal Retirement Date" means the later of the Normal Retirement
Age or Termination of Employment.
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1.7 "Plan Year" means a twelve-month period commencing on April 1 and
ending on March 31 of each year. The initial Plan Year shall commence on the
effective date of this Agreement.
1.8 "Termination of Employment" means that the Executive ceases to be
employed by the Company for any reason, voluntary or involuntary, other than by
reason of a leave of absence approved by the Company.
1.9 "Voluntary Early Termination" means that the Executive, prior to
Normal Retirement Age, has terminated employment with the Company for reasons
other than an approved leave of absence, Termination for Cause, Disability,
Involuntary Termination or Death.
ARTICLE 2
LIFETIME BENEFITS
2.1 Normal Retirement Benefit. Upon Termination of Employment on or
after the Normal Retirement Age for reasons other than Death or Termination for
Cause, the Company shall pay to the Executive the benefit described in this
Section 2.1 in lieu of any other benefit under this Agreement.
2.1.1 Amount of Benefit. The annual benefit under this Section
2.1 is $100,700 (One Hundred Thousand Seven Hundred Dollars). The
Company's Board of Directors, in its sole discretion, may increase the
annual benefit under this Section 2.1.1; however, any increase shall
require the recalculation of Schedule A.
2.1.2 Payment of Benefit. The Company shall pay the annual
benefit to the Executive in 12 equal monthly installments commencing with
the month following the Executive's Normal Retirement Date, paying the
annual benefit to the Executive for a period of 15 years.
2.1.3 Benefit Increases. Commencing on the first anniversary of
the first benefit payment, and continuing on each subsequent anniversary,
the Company's Board of Directors, at its sole discretion, may increase
the benefit.
2.2 Voluntary Early Termination Benefit. Upon a Voluntary Early
Termination, the Executive may receive a benefit from the Company. Any benefit
paid under this Section 2.2 shall be paid in lieu of any other benefit under
this Agreement.
2.2.1 Amount of Benefit. Upon the Executive's Voluntary Early
Termination prior to November 27, 2003, no benefit shall be paid under
this Agreement. Upon a Voluntary Early Termination between November 27,
2003, and March 31, 2004, the Executive shall be 50 percent vested in the
Normal Retirement Benefit set forth in Section 2.1.1 (the benefit shall
equal 50 percent of the benefit in Section 2.1.1). After April 1, 2004,
the benefit under this Section 2.2 is the Voluntary Early Termination
Installment set forth in Schedule A for the Plan Year ending immediately
prior to Termination of Employment, determined by continuing from the 50
percent vesting set forth above and vesting the Executive in an
additional 25 percent for each Plan Year thereafter until the Executive
becomes 100 percent vested in the Normal
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Retirement Benefit. An increase in the annual benefit under Section 2.1.1
will require the recalculation of this benefit in Schedule A.
2.2.2 Payment of Benefit. The Company shall pay the annual
benefit to the Executive in 12 equal monthly installments commencing at
Normal Retirement Age, paying the annual benefit to the Executive for a
period of 15 years.
2.3 Involuntary Early Termination Benefit. Upon an Involuntary Early
Termination, the Company shall pay to the Executive the benefit described in
this Section 2.3 in lieu of any other benefit under this Agreement.
2.3.1 Amount of Benefit. The benefit under this Section 2.3 is
the Involuntary Early Termination Installment set forth in Schedule A for
the Plan Year ending immediately prior to Termination of Employment
(except during the first Plan Year, the benefit is the amount set forth
for Plan Year 1), determined by vesting the Executive in 100 percent of
the Normal Retirement Benefit set forth in Section 2.1.1. An increase in
the annual benefit under Section 2.1.1 will require the recalculation of
this benefit in Schedule A.
2.3.2 Payment of Benefit. The Company shall pay the annual
benefit in this Section 2.3 to the Executive in 12 equal monthly
installments commencing at Normal Retirement Age, paying the annual
benefit to the Executive for a period of 15 years.
2.4 Disability Benefit. If the Executive terminates employment due to
Disability prior to Normal Retirement Age, the Company 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 benefit under this Section 2.4 is
the Disability Annual Installment set forth in Schedule A for the Plan
Year ending immediately prior to the date in which Termination of
Employment occurs, determined by zero vesting if Termination of
Employment is the result of a Disability occurring prior to November 27,
2003, and then vesting the Executive in 100 percent of the Normal
Retirement Benefit set forth in Section 2.1.1. An increase in the annual
benefit under Section 2.1.1 will require the recalculation of this
benefit in Schedule A.
2.4.2 Payment of Benefit. The Company shall pay the annual
benefit in this Section 2.4 to the Executive in 12 equal monthly
installments commencing with the month following Normal Retirement Age,
paying the annual benefit to the Executive for a period of 15 years.
2.4.3 Benefit Increases. Benefit payments may be increased as
provided in Section 2.1.3.
ARTICLE 3
DEATH BENEFITS
3.1 Death During Active Service. If the Executive dies while in the
active service of the
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Company, the Company shall pay to the Executive's beneficiary the benefit
described in this Section 3.1. This benefit shall be paid in lieu of the
benefits under Article 2.
3.1.1 Amount of Benefit. The annual benefit under this Section
3.1 is the Normal Retirement Benefit amount described in Section 2.1.1.
3.1.2 Payment of Benefit. The Company shall pay the annual
benefit to the Executive's beneficiary in 12 equal monthly installments
commencing with the month following the Executive's death, paying the
annual benefit to the Executive's beneficiary for a period of 15 years.
The Executive's beneficiary may petition the Company to pay the present
value of this death benefit in a lump sum and the Company, in its sole
discretion, may accept or deny said petition.
3.2 Death During Payment of a Lifetime Benefit. If the Executive dies
after any Lifetime Benefit payments have commenced under Article 2 of this
Agreement but before receiving all such payments, the Company shall pay the
remaining benefits to the Executive's beneficiary at the same time and in the
same amounts they would have been paid to the Executive had the Executive
survived.
3.3 Death After Termination of Employment But Before Payment of a
Lifetime Benefit Commences. If the Executive is entitled to a Lifetime Benefit
under Article 2 of this Agreement, but dies prior to the commencement of said
benefit payments, the Company shall pay the same benefit payments to the
Executive's beneficiary that the Executive was entitled to prior to death except
that the benefit payments shall commence on the first day of the month following
the date of the Executive's death.
ARTICLE 4
BENEFICIARIES
4.1 Beneficiary Designations. The Executive shall designate a
beneficiary by filing a written designation with the Company. The Executive may
revoke or modify the designation at any time by filing a new designation.
However, designations will only be effective if signed by the Executive and
received by the Company during the Executive's lifetime. The Executive's
beneficiary designation shall be deemed automatically revoked if all designated
beneficiaries (primary and contingent) predecease the Executive, or if the
Executive names a spouse as beneficiary (either primary or contingent) and the
marriage is subsequently dissolved. If the Executive dies without a valid
beneficiary designation, all payments shall be made to the Executive's estate.
4.2 Facility of Payment. If a benefit is payable to a minor, to a
person declared incompetent, or to a person incapable of handling the
disposition of his or her property, the Company may pay such benefit to the
guardian, legal representative or person having the care or custody of such
minor, incompetent person or incapable person. The Company may require proof of
incompetence, minority or guardianship as it may deem appropriate prior to
distribution of the benefit. Such distribution shall completely discharge the
Company from all liability with respect to such benefit.
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ARTICLE 5
GENERAL LIMITATIONS
5.1 Termination for Cause. Notwithstanding any provision of this
Agreement to the contrary, the Company shall not pay any benefit under this
Agreement if the Company terminates the Executive's employment for:
(a) Gross negligence or gross neglect of duties;
(b) Commission of a felony or of a misdemeanor involving moral
turpitude; or
(c) Fraud, dishonesty or willful violation of any law or
significant Company policy committed in connection with the Executive's
employment and resulting in a material adverse effect on the Company.
5.2 Suicide or Misstatement. The Company shall not pay any benefit
under this Agreement if the Executive commits suicide within three years after
the date of this Agreement. In addition, the Company shall not pay any benefit
under this Agreement if the Executive has made any material misstatement of fact
on an employment application or resume provided to the Company, or on any
application for any benefits provided by the Company to the Executive.
5.3 Competition After Termination of Employment. The Company shall not
pay any benefit under this Agreement if the Executive, within 18 months after
Termination of Employment, without the prior written consent of the Company,
engages in, becomes interested in, directly or indirectly, as a sole proprietor,
as a partner in a partnership, or as a substantial shareholder in a corporation,
or becomes associated with, in the capacity of employee, director, officer,
principal, agent, trustee or in any other capacity whatsoever, any enterprise
located in Fairfield County, which enterprise is, or may deemed to be by the
Company, competitive with any business carried on by the Company, including, but
not limited to entities which lend money and take deposits, as of the date of
termination of the Executive's employment or retirement from the Company. This
section shall not apply following an Involuntary Early Termination.
ARTICLE 6
CLAIMS AND REVIEW PROCEDURES
6.1 Claims Procedure. An Executive or beneficiary ("claimant") who has
not received benefits under the Agreement that he or she believes should be paid
shall make a claim for such benefits as follows:
6.1.1 Initiation - Written Claim. The claimant initiates a claim
by submitting to the Company a written claim for the benefits.
6.1.2 Timing of Company Response. The Company shall respond to
such claimant within 45 days after receiving the claim. If the Company
determines that special circumstances require additional time for
processing the claim, the Company can extend the response period by an
additional 45 days by notifying the claimant in writing, prior to the end
of the initial 45-
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day period, that an additional period is required. The notice of
extension must set forth the special circumstances and the date by which
the Company expects to render its decision.
6.1.3 Notice of Decision. If the Company denies part or all of
the claim, the Company shall notify the claimant in writing of such
denial. The Company shall write the notification in a manner calculated
to be understood by the claimant. The notification shall set forth:
(a) The specific reasons for the denial;
(b) A reference to the specific provisions of the
Agreement on which the denial is based;
(c) A description of any additional information or
material necessary for the claimant to perfect the claim and an
explanation of why it is needed;
(d) An explanation of the Agreement's review procedures
and the time limits applicable to such procedures; and
(e) A statement of the claimant's right to bring a civil
action under ERISA Section 502(a) following an adverse benefit
determination on review.
6.2 Review Procedure. If the Company denies part or all of the claim,
the claimant shall have the opportunity for a full and fair review by the
Company of the denial, as follows:
6.2.1 Initiation - Written Request. To initiate the review, the
claimant, within 60 days after receiving the Company's notice of denial,
must file with the Company a written request for review.
6.2.2 Additional Submissions - Information Access. The claimant
shall then have the opportunity to submit written comments, documents,
records and other information relating to the claim. The Company shall
also provide the claimant, upon request and free of charge, reasonable
access to, and copies of, all documents, records and other information
relevant (as defined in applicable ERISA regulations) to the claimant's
claim for benefits.
6.2.3 Considerations on Review. In considering the review, the
Company shall take into account all materials and information the
claimant submits relating to the claim, without regard to whether such
information was submitted or considered in the initial benefit
determination.
6.2.4 Timing of Company Response. The Company shall respond in
writing to such claimant within 45 days after receiving the request for
review. If the Company determines that special circumstances require
additional time for processing the claim, the Company can extend the
response period by an additional 45 days by notifying the claimant in
writing, prior to the end of the initial 45-day period, that an
additional period is required. The notice of extension must set forth the
special circumstances and the date by which the Company expects to render
its decision.
6.2.5 Notice of Decision. The Company shall notify the claimant
in writing of its decision on review. The Company shall write the
notification in a manner calculated to be
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understood by the claimant. If the Company's decision is to deny the
claim in whole or part, the notification shall set forth:
(a) The specific reasons for the denial;
(b) A reference to the specific provisions of the
Agreement on which the denial is based;
(c) A statement that the claimant is entitled to
receive, upon request and free of charge, reasonable access to,
and copies of, all documents, records and other information
relevant (as defined in applicable ERISA regulations) to the
claimant's claim for benefits; and
(d) A statement of the claimant's right to bring a civil
action under ERISA Section 502(a).
ARTICLE 7
AMENDMENTS AND TERMINATION
This Agreement may be amended or terminated only by a written agreement
signed by the Company and the Executive, except this agreement may be terminated
for cause in accordance with Article 5.1.
ARTICLE 8
MISCELLANEOUS
8.1 Binding Effect. This Agreement shall bind the Executive and the
Company, and their beneficiaries, survivors, executors, successors,
administrators and transferees.
8.2 No Guarantee of Employment. This Agreement is not an employment
policy, an employment agreement or an employment contract. It does not give the
Executive the right to remain an employee of the Company, nor does it interfere
with the Company's right to discharge the Executive. It also does not require
the Executive to remain an employee nor interfere with the Executive's right to
terminate employment at any time.
8.3 Non-Transferability. Benefits under this Agreement cannot be sold,
transferred, assigned, pledged, attached or encumbered in any manner.
8.4 Reorganization. The Company shall not merge or consolidate into or
with another company, or reorganize, or sell substantially all of its assets to
another company, firm, or person unless such succeeding or continuing company,
firm, or person agrees to assume and discharge the obligations of the Company
under this Agreement. Upon the occurrence of such event, the term "Company" as
used in this Agreement shall be deemed to refer to the successor, continuing or
survivor company, firm or person.
8.5 Tax Withholding. The Company shall withhold any taxes that are
required to be withheld from the benefits provided under this Agreement.
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8.6 Applicable Law. The Agreement and all rights hereunder shall be
governed by the laws of the State of Connecticut, except to the extent preempted
by the laws of the United States of America.
8.7 Unfunded Arrangement. The Executive and beneficiary are general
unsecured creditors of the Company for the payment of benefits under this
Agreement. The benefits represent the mere unsecured promise by the Company to
pay such benefits. The rights to benefits are not subject in any manner to
anticipation, alienation, sale, transfer, assignment, pledge, encumbrance,
attachment, or garnishment by creditors. Any insurance on the Executive's life
is a general asset of the Company to which the Executive and beneficiary have no
preferred or secured claim.
8.8 Entire Agreement. This Agreement constitutes the entire agreement
between the Company and the Executive as to the subject matter hereof. No rights
are granted to the Executive by virtue of this Agreement other than those
specifically set forth herein.
8.9 Administration. The Company shall have powers which are necessary
to administer this Agreement, including but not limited to:
(a) Establishing and revising the method of accounting for the
Agreement;
(b) Maintaining a record of benefit payments; and
(c) Establishing rules and prescribing any forms necessary or
desirable to administer the Agreement.
8.10 Named Fiduciary. The Company shall be the named fiduciary and plan
administrator under this Agreement. It may delegate to others certain aspects of
its management and operational responsibilities under this Agreement, including
the employment of advisors and the delegation of ministerial duties to qualified
individuals.
IN WITNESS WHEREOF, the Executive and the Company have signed this
Agreement.
EXECUTIVE: COMPANY:
CORNERSTONE BANK
/s/ M. Xxx Xxxxxxxxx By /s/ Xxxxx X. Xxxxxxx
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M. Xxx Xxxxxxxxx Xxxxx X. Xxxxxxx
Title President
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