Document:

Exhibit 10.2

 

CARDINAL FINANCIAL
CORPORATION

 

Executive
Deferred Income Plan

 

 

(A Plan of Nonqualified Deferred Compensation)

 

Effective January 1, 2005

 

As amended April 21, 2006

 

 

TABLE
OF CONTENTS

 

	
  I.

  	
  Introduction

  	
  3

  
	
   

  	
   

  	
   

  
	
  II.

  	
  Definitions

  	
  3

  
	
   

  	
   

  	
   

  
	
  III.

  	
  Eligibility &
  Participation

  	
  8

  
	
   

  	
   

  	
   

  
	
  IV.

  	
  Elections, Deferrals &
  Matching Contributions

  	
  9

  
	
   

  	
   

  	
   

  
	
  V.

  	
  Accounts & Account
  Crediting

  	
  10

  
	
   

  	
   

  	
   

  
	
  VI.

  	
  Vesting

  	
  12

  
	
   

  	
   

  	
   

  
	
  VII.

  	
  Distributions

  	
  12

  
	
   

  	
   

  	
   

  
	
  VIII.

  	
  Administration &
  Claims Procedure

  	
  15

  
	
   

  	
   

  	
   

  
	
  IX.

  	
  Amendment, Termination
  & Reorganization

  	
  18

  
	
   

  	
   

  	
   

  
	
  X.

  	
  General Provisions

  	
  19

  

 

2

 

ARTICLE I—INTRODUCTION

 

1.1                                                                               Name.

 

The name of
this Plan is the Cardinal Financial Corporation Executive Deferred Income Plan
(the Plan).

 

1.2                                                                               Purpose.

 

The
purpose of the Plan is to offer Participants the opportunity to defer
voluntarily current Compensation for retirement income and other significant
future financial needs for themselves, their families and other dependents, and
to provide the Employer, if appropriate, a vehicle to address limitations on
its contributions under any tax-qualified defined contribution plan. This Plan
is intended to be a nonqualified “top-hat” plan; that is, an unfunded plan of
deferred compensation maintained for a select group of management or highly
compensated employees pursuant to Sections 201(2), 301(a)(3), and 401(a)(1) of
ERISA, and an unfunded plan of deferred compensation under the Code.

 

1.3                                                                               Interpretation.

 

Throughout the
Plan, certain words and phrases have meanings, which are specifically defined
for purposes of the Plan. These words and phrases can be identified in that the
first letter of the word or words in the phrase is capitalized. The definitions
of these words and phrases are set forth in Article II and elsewhere in the
Plan document. Wherever appropriate, pronouns of any gender shall be deemed
synonymous, as shall singular and plural pronouns. Headings of Articles and
Sections are for convenience or reference only, and are not to be considered in
the construction or interpretation of the Plan. The Plan shall be interpreted
and administered to give effect to its purpose in Section 1.3 and to qualify as
a nonqualified, unfunded plan of deferred compensation.

 

ARTICLE II—DEFINITIONS

 

2.1                                                                               Generally.

 

Certain words
and phrases are defined when first used in later paragraphs of this Agreement.
Unless the context clearly indicates otherwise, the following words and phrases
when used in this Agreement shall have the following respective meanings:

 

2.2                                                                               Account.

 

“Account”
shall mean the interest of a Participant in the Plan as represented by the
hypothetical bookkeeping entries kept by the Employer for each Participant.
Each Participant’s interest may be divided into one or more separate accounts
or sub-accounts, including the Participant Deferral Account and the Matching
Contribution Account, which reflect not only the Contributions into the Plan,
but also gains and losses, and income and expenses allocated thereto, as well
as distributions or any other withdrawals. The value of these accounts or
sub-accounts shall be determined as of

 

3

 

the Valuation Date. The
existence of an account or bookkeeping entries for a Participant (or his
Designated Beneficiary) does not create, suggest or imply that a Participant,
Designated Beneficiary, or other person claiming through them under this Plan,
has a beneficial interest in any asset of the Employer.

 

2.3                                                                               Balance.

 

“Balance”
shall mean the total of Contributions and Deemed Earnings credited to a
Participant’s Account under Article V, as adjusted for distributions or other
withdrawals in accordance with the terms of this Plan and the standard
bookkeeping rules established by the Employer.

 

2.4                                                                               Board
Committee.

 

“Board Committee”
or “Committee” shall mean the Compensation Committee of the Employer’s Board of
Directors, or such other Committee of the Board as may be delegated with the
duty of determining Participant eligibility under the Plan.

 

2.5                                                                               Board
of Directors.

 

“Board of
Directors” or “Board” shall mean the Board of Directors of the Employer.

 

2.6                                                                               Change
of Control.

 

“Change of Control” shall mean a change in the ownership or effective
control of the Employer, or in the ownership of a substantial portion of the
assets of the Employer, as provided in Treasury regulations.

 

2.7                                                                               Code.

 

“Code” shall
mean the Internal Revenue Code of 1986 and the Regulations thereto, as amended
from time to time.

 

2.8                                                                               Compensation.

 

“Compensation” shall mean the base or regular
cash salary payable to an Employee by the Employer, as well as incentives or
bonuses payable to an Employee by the Employer, commissions payable to an
Employee by the Employer, including any such amounts which are not includible
in the Participant’s gross income under Sections 125, 401(k), 402(h) or 403(b)
of the Internal Revenue Code of 1986, as amended.

 

2.9                                                                               Contributions.

 

“Contributions”
shall mean the total of Participant Deferrals and Matching Contributions
pursuant to Article IV, which represent each Participant’s credits to his
Account.

 

4

 

2.10                                                                        Deemed
Earnings.

 

“Deemed
Earnings” shall mean the gains and losses (realized and unrealized), and income
and expenses credited or debited to Contributions based upon the Deemed
Crediting Options in a Participant’s Account as of any Valuation Date.

 

2.11                                                                        Deemed
Crediting Options.

 

“Deemed
Crediting Options” shall mean the hypothetical options made available to Plan
Participants by the Employer for the purposes of determining the proper
crediting of gains and losses, and income and expenses to each Participant’s
Account, subject to procedures and requirements established by the
Committee.  A Participant may reallocate
his Account among such Deemed Crediting Options periodically at such frequency
and upon such terms as the Committee may determine from time to time.

 

2.12                                                                        Deferral
Election Form.

 

“Deferral
Election Form” or “Annual Deferral Election Form” shall mean that written
agreement of a Participant. The Deferral Election Form shall be in such form or
forms as may be prescribed by the Committee, filed annually with the Employer,
according to procedures and at such times as established by the Committee.
Among other information the Committee may require of the Participant for proper
administration of the Plan, such agreement shall establish the Participant’s
election to defer Compensation for a Plan Year under the Plan; the amount of
the deferral into the Plan for the Plan Year; the Participant’s elections as to
distribution of his Account, and the allocation of his Accounts among the
Deemed Crediting Options provided under the Plan; and the Designated
Beneficiary.

 

2.13                                                                        Designated
Beneficiary.

 

“Designated
Beneficiary” or “Beneficiary” shall mean the person, persons or trust
specifically named to be a direct or contingent recipient of all or a portion
of a Participant’s benefits under the Plan in the event of the Participant’s
death prior to the distribution of his full Account Balance. Such designation
of a recipient or recipients may be made and amended, at the Participant’s
discretion, on the Deferral Election Form and according to procedures
established by the Committee. No beneficiary designation or change of
Beneficiary shall become effective until received and acknowledged by the
Employer. In the event a Participant does not have a beneficiary properly
designated, the beneficiary under this Plan shall be the Participant’s estate.

 

2.14                                                                        Disability.

 

 “Disability” shall mean that a Participant (i)
is unable 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 can be expected to last for a continuous period of not less
than twelve months, or (ii) is, by reason of 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

 

5

 

twelve months,
receiving income replacement benefits for a period of not less than three
months under an accident and health plan covering employees of the
Participant’s employer.

 

2.15                                                                        Effective Date.

 

“Effective
Date” of the Plan shall mean January 1, 2005.

 

2.16                                                                        Eligible
Employee.

 

“Eligible
Employee” shall mean a person who (for any Plan Year or portion thereof) is:
(1) an Employee of the Employer; (2) a member of a select group of management
or a highly compensated employee of the Employer; and (3) selected by the Board
Committee to participate in the Plan.

 

2.17                                                                        Employee.

 

“Employee”
shall mean a full time common law employee of the Employer.

 

2.18                                                                        Employer.

 

“Employer”
shall mean Cardinal Financial Corporation, its designated subsidiaries, and any
corporate successors and assigns, unless otherwise provided herein.

 

2.19                                                                        ERISA.

 

“ERISA” shall
mean the Employee Retirement Income Security Act of 1974, as amended from time
to time.

 

2.20                                                                        Key Employee.

 

“Key Employee” shall mean any Participant who is (i) one of the
top-fifty most highly compensated officers with annual compensation in excess
of $130,000 (as adjusted from time to time by Treasury regulations); (ii) a
five percent owner of the Employer; or (iii) a one percent owner of the
Employer with annual compensation in excess of $150,000 (as adjusted from time
to time by Treasury regulations) of a publicly traded corporation.

 

2.21                                                                        Leave of Absence.

 

“Leave of
Absence” shall mean a period of time, not to exceed twelve (12) consecutive
calendar months during which time a Participant shall not be an active Employee
of the Employer, but shall be treated for purposes of this Plan as in
continuous service with the Employer. A Leave of Absence may be either paid or
unpaid, but must be agreed to in writing by both the Employer and the Participant.
A Leave Of Absence that continues beyond the twelve (12) consecutive months
shall be treated as a Termination of Service as of the first business day of
the thirteenth month for purposes of the Plan.

 

6

 

2.22                                                                        Matching Contribution.

 

“Matching
Contribution” shall mean an amount credited to a Participant’s Account in
accordance with Section 4.4.

 

2.23                                                                        Matching Contribution Account.

 

“Matching
Contribution Account” shall mean that portion of a Participant’s Account
established to record Matching Contributions on behalf of a Participant.  Matching Contributions shall be deemed to be
invested in the Employer stock, and a Participant shall not be permitted to
elect a different Deemed Crediting Option for such Matching Contributions.

 

2.24                                                                        Participant.

 

“Participant”
shall mean an Eligible Employee who participates in the Plan under Article III;
a former Eligible Employee who has participated in the Plan and continues to be
entitled to a benefit (in the form of an undistributed Account Balance) under
the Plan, and any former Eligible Employee who has participated in the Plan
under Article III and has not yet exceeded any Leave of Absence.

 

2.25                                                                        Participant Deferral.

 

“Participant
Deferral” shall mean voluntary Participant deferral amounts, which could have
been received currently but for the election to defer and are credited to his
Account for later distribution, subject to the terms of the Plan.

 

2.26                                                                        Participant Deferral Account.

 

“Participant
Deferral Account” shall mean that portion of a Participant’s Account
established to record Participant Deferrals on behalf of a Participant.

 

2.27                                                                        Performance Based Compensation.

 

“Performance-based
compensation” shall mean compensation that is (i) variable and contingent on
the satisfaction of pre-established organizational or individual performance
criteria; (ii) not readily ascertainable at the time; and (iii) based on
services performed over a period of at least twelve months.

 

2.28                                                                        Plan
Year.

 

“Plan Year”
shall mean the twelve (12) consecutive month period constituting a calendar
year, beginning on January 1 and ending on December 31. However, in any partial
year of the Plan that does not begin on January 1, “Plan Year” shall also mean
the remaining partial year ending on December 31.

 

7

 

2.29                                                                        Qualified Retirement Plan.

 

“Qualified
Retirement Plan” shall mean the 401k Plan sponsored by the Employer.

 

2.30                                                                        Retirement.

 

“Retirement”
shall mean a Participant’s actual separation from service from the Employer
having attained age sixty-five (62).

 

2.31                                                                        Separation from Service.

 

“Separation
from Service” shall mean a Participant’s separation from service as an Employee
with the Employer, other than for death, Disability, or Leave of Absence.  A transfer of employment within and among the
Employer and any member of a controlled group, as provided in Code Section 409A
(d)(6), shall not be deemed a Separation from Service.

 

2.32                                                                        Unforeseeable Emergency.

 

“Unforeseeable
emergency” shall mean a severe financial hardship to the Participant, the
Participant’s spouse, or a dependent (as defined in Section 152(a) of the
Code)of the participant, loss of the Participant’s property due to casualty, or
other similar extraordinary and unforeseeable circumstances arising as a result
of events beyond the control of the Participant.

 

2.33                                                                        Valuation Date.

 

“Valuation
Date” shall mean the close of each business day, as established and amended
from time to time by guidelines and procedures of the Committee in its sole and
exclusive discretion.

 

ARTICLE III—ELIGIBILITY & PARTICIPATION

 

3.1                                                                               Eligibility
Requirements.

 

Only an
Eligible Employee selected by the Board Committee may become a Participant in
this Plan. Moreover, a Participant shall not be permitted to make new
Participant Deferrals to the Plan, if he ceases to be an Eligible Employee
because he is no longer a member a select group of management or highly
compensated employees, or otherwise.  
The Board Committee shall notify an Eligible Employee of his eligibility
for a Plan Year in such form as it may determine most appropriate.  Current Participants remain eligible until
notified otherwise.

 

3.2                                                                               Participation.

 

An Eligible
Employee shall become a Participant in the Plan by the completion and timely
filing with and subsequent acceptance by, the Employer of the Deferral Election
Form, in such form and according to the terms and conditions established by the
Committee. A Participant (or any

 

8

 

Designated
Beneficiary who becomes entitled) remains a Participant as to his Account until
his Account Balance is fully distributed under the terms of the Plan.

 

ARTICLE IV—ELECTIONS, DEFERRALS & MATCHING CONTRIBUTIONS

 

4.1                                                                               Participant
Election to Defer Compensation.

 

A.            Prior
to December 31 or an earlier date set by the Committee, a Participant may elect
to defer Compensation for services to be performed in the next following Plan
Year by the execution and timely filing, and Employer’s acceptance of, a Deferral
Election Form in such form and according to such procedures as the Committee
may prescribe from time to time. Each such Deferral Election Form shall be
effective for the Plan Year to which the Deferral Election Form pertains.

 

B.            Each Participant may
elect annually to have his Compensation for the Plan Year reduced by a whole
percentage that is not less than five percent (5%) ($2,000 minimum), and up to
one hundred percent (100%), by timely filing, and the acceptance by the
Employer of, his Deferral Election Form detailing such deferral. The amount of
this Participant Deferral shall be deferred into the Plan and credited to the
Participant’s Account as provided in Article V

 

C.            An election to
defer Performance-Based Compensation may be made at such time and in such
manner as the Committee may specify, but in any event not later than six months
before the end of the period for which it is earned.

 

D.            Under
such Deferral Election Form, a Participant shall indicate the amount of such
Participant Deferral; designate and allocate such Participant Deferral in or
among the elective distribution Account option(s); and, allocate such Accounts
among the various Deemed Crediting Options; provided, however, that Matching
Contributions and earnings thereon must remain in the Employer stock Deemed
Crediting Option.  The Deferral Election
Form shall also permit a Participant to elect annually to receive a
distribution of his entire Account in the event of a Change of Control during
the forthcoming Plan Year. The Deferral Election Form may also request other
information, such as a Participant’s Designated Beneficiary, as may be required
or useful for the administration of the Plan.

 

4.2
                                                                            New
Participants and Partial Years.

 

The
initial Deferral Election Form of a new Participant shall be filed with the
Employer on a date established by the Committee, but in any event not later
than 30 days following the date the Participant becomes eligible to participate
in the Plan and shall be effective only with respect to services to be
performed subsequent to the election. Such first Deferral Election Form shall
be applicable to a Participant’s Compensation beginning with the first payroll
in the month after such Form is filed and accepted by the Employer.

 

4.3                                                                               Irrevocable
Elections.

 

An
election in a Deferral Election Form to defer Compensation for a Plan Year,
once made by a Participant, shall be irrevocable.  The Committee, however, shall reduce or
eliminate Participant 

 

9

 

Deferrals
upon granting a Participant’s request for a distribution based upon an
Unforeseeable Emergency.

 

4.4                                                                               Matching
Contributions.

 

The Employer
may, but shall not be required to, provide a deemed match, in such amounts as
it may determine from time to time, for Participant Deferrals.  Such Matching Contributions, if any, shall be
credited to the Matching Contribution Account of the Participant’s Account and
shall be subject to the vesting requirements set forth in Section 6.2.  Such Matching Contributions shall not exceed
the greater of 50% of the Participants deferral of $50,000 per Participant per
year.

 

ARTICLE
V—ACCOUNTS & ACCOUNT CREDITING

 

5.1                                                                               Establishment
of a Participant’s Account.

 

A.            Bookkeeping
Account. The Committee shall cause a deemed bookkeeping Account and
appropriate sub-accounts, based upon the primary elective distribution
option(s) to be established and maintained in the name of each Participant,
according to his annual Deferral Election Form for the Plan Year. This Account
shall reflect the amount of Participant Deferrals, Matching Contributions and
Deemed Earnings credited on behalf of each Participant under this Plan.

 

B.            Bookkeeping
Activity. Participant Deferrals shall be credited to a Participant’s
Account on the business day they would otherwise have been made available as
cash to the Participant.  Matching
Contributions shall be credited to a Participant’s Account on the Valuation
Date the Employer designates.  Deemed
Earnings shall be credited or debited to each Participant’s Account, as well as
any distributions, any other withdrawals under this Plan, as of a Valuation
Date. Accounts shall continue on each Valuation Date until the Participant’s
Account is fully distributed under the terms of the Plan.

 

5.2                                                                               Deemed
Crediting Options.

 

A.            General.  The Committee shall establish a portfolio
of two or more Deemed Crediting Options, among which a Participant may allocate
amounts credited to his Account, which are subject to Participant direction
under this Plan. The Committee reserves the right, in its sole and exclusive
discretion, to substitute, eliminate and otherwise change this portfolio of
Deemed Crediting Options, as well as the right to establish rules and
procedures for the selection and offering of these Deemed Crediting Options.

 

B.            Employer Stock Deemed
Crediting. One of the Deemed Crediting Options shall be Employer
Stock.  Amounts credited to this option
shall be deemed to be invested in shares of common stock of the Employer.  A Participant’s Account will be credited with
deemed distributions if and when dividends are declared and paid with respect
to Employer common stock, and such deemed dividends will be deemed to have been
reinvested in Employer common stock as of the first business day following the
deemed payment. Fair market value of Employer common stock means, as of any
day, the average of the closing prices of sales of

 

10

 

shares of
common stock on all national securities exchanges on which the common stock may
be listed.  If there have been no sales
on such day, the average of the highest bid and lowest asked prices on all such
exchanges at the end of such day shall be used. 
If such common stock is not listed on any national exchange, then the
average of the representative bid and asked prices quoted in the National
Association of Securities Dealers, Inc. Automated Quotation System for such
date or the next preceding date that the common stock was traded on such market
shall be used.

 

5.3                                                                               Allocation
Of Account Among Deemed Crediting Options.

 

A.            Each
Participant shall elect the manner in which his Account is divided among the
Deemed Crediting Options by giving allocation instructions in a Deferral
Election Form supplied by and filed with the Committee, or by such other
procedure, including electronic communications, as the Committee may prescribe.
A Participant’s election shall specify the percentage of his Account (in any
whole percentage) to be deemed to be invested in any Deemed Crediting Option;
provided, however, that a Participant Matching Contribution Account must be
fully allocated to the Employer Stock Deemed Crediting Option.  Such election shall remain in effect until a
new election is made.

 

B.            Amounts
credited to a Participant’s Account shall be deemed to be invested in
accordance with the most recent effective Deemed Crediting Option election. As
of the effective date of any new Deemed Crediting Option election, all or a
portion of the Participant’s Account shall be reallocated among the designated
Deemed Crediting Options and according to the percentages specified in the new
instructions, until and unless subsequent instructions shall be filed and
become effective. If the Committee receives a Deemed Crediting Option election,
which is unclear, incomplete or improper, the Deemed Crediting Option election
then in effect shall remain in effect until the subsequent instruction is
clarified, completed or otherwise made acceptable to the Committee.

 

5.4                                                                               Valuation
and Risk of Decrease in Value.

 

The
Participant’s Account will be valued on the Valuation Date at fair market
value. On such date, Deemed Earnings will be allocated to each Participant’s
Account. Each Participant and Designated Beneficiary assumes the risk in
connection with any decrease in the fair market value of his Account.

 

5.5                                                                               Limited
Function of Committee.

 

By deferring
compensation pursuant to the Plan, each Participant hereby agrees that the
Employer and Committee are in no way responsible for or guarantor of the
investment results of the Participant’s Account. The Committee shall have no
duty to review, or to advise the Participant on, the investment of the
Participant’s Account; and in fact, shall not review or advise the Participant
thereon. Furthermore, the Committee shall have no power to direct the
investment of the Participant’s Account other than promptly to carry out the
Participant’s deemed investment instructions when properly completed and
transmitted to the Committee and accepted according to its rules and
procedures.

 

11

 

ARTICLE VI—VESTING

 

6.1
                                                                            Vesting
of Participant Deferrals.

 

A Participant
shall be fully vested at all times in Participant Deferrals, as well as Deemed
Earnings upon Participant Deferrals, credited to his Participant Deferral
Account.

 

6.2                                                                               Vesting
of Matching Contributions.

 

A Participant
shall vest in Matching Contributions, as well as Deemed Earnings upon Matching
Contributions, credited to his Matching Contribution Account in accordance with
the schedule below.

 

	
  Year of Matching
  Contribution:

  	
   

  	
  0

  	
  %

  
	
  The first year after the Matching Contribution

  	
   

  	
  0

  	
  %

  
	
  The second year after the Matching Contribution

  	
   

  	
  0

  	
  %

  
	
  The third year after the Matching Contribution

  	
   

  	
  0

  	
  %

  
	
  The forth year after the Matching Contribution

  	
   

  	
  100

  	
  %

  

 

Notwithstanding
the above, a Participant shall become fully vested in his Matching Contribution
Account upon death, Disability, Change of Control or Retirement.  Upon Separation from Service, a Participant
shall be entitled to the vested portion of his Matching Contribution Account,
and any non-vested portion shall be forfeited.

 

ARTICLE VII—DISTRIBUTIONS

 

7.1                                                                               Distributions
Generally.

 

A Participant’s Account shall be distributed
only in accordance with the provisions of this Article VII. All distributions
from Accounts under the Plan shall be made in cash in American currency. Distributions
from the Plan shall be made in cash; provided, however, that to the extent that
all or a portion of a Participant’s Account is deemed to be invested in common
stock of Cardinal Financial Corporation (“Common Stock”), such amounts shall be
paid in shares of Common Stock in an amount equal to the number of whole shares
of Common Stock credited to the Participant’s Account as of the date of
distribution.  Any fractional share shall
be paid in cash.  

 

7.2                                                                               Automatic
Distributions.

 

A.            Participant’s
Death. If the Participant dies while employed by the Employer, his Account
shall be valued as of the Valuation Date next following his date of death and
shall be distributed in lump sum to his Designated Beneficiary as soon as
administratively feasible.

 

B.            Participant’s
Disability. If a Participant becomes disabled while employed by the
Employer, his Account shall be valued as of the Valuation Date next following
his date of Disability and shall be distributed in lump sum to him as soon as
administratively feasible.

 

C.            Separation from Service. If a Participant
incurs a Separation from Service, his vested Account shall be valued as of the
Valuation Date next following his official date of separation and shall be
distributed in lump sum to him as soon as administratively feasible; provided,

 

12

 

however, that
the Account of a Key Employee shall not be distributed until six months
following Separation from Service.

 

7.3                                                                               Elective
Distributions.

 

A
Participant shall become entitled to receive a distribution from his Account at
such time or times and by such method of payment as elected and specified in
the Participant’s applicable annual Deferral Election Form, and/or as may be
mandated by the provisions of this Article VII based upon the following
distribution options:

 

A.            Retirement
Distribution. Upon a Participant’s Retirement from the Employer, his
Account shall be distributed according to the method of payment elected in his
applicable Deferral Election Form.  If
the Participant dies while receiving Retirement installment payments, his
Designated Beneficiary shall continue to receive the remaining installments.  If subsequently, the Designated Beneficiary
dies, any remaining installments will be paid to the Designated Beneficiaries
estate.

 

B. 
In-Service Distributions. If a Participant elects in his annual Deferral Election
Form, he can receive a distribution from his Account, as soon as three (3)
years after the end of the deferral Plan Year, all of his annual deferral
amount, plus amounts credited/debited based on the performance of the
Participant’s elected Deemed Crediting Options. The election is made on an
annual basis, applies only to the Participant’s current Plan Year
contributions, is irrevocable and is payable according to the method of payment
elected in the Participant’s applicable annual Deferral Election Form. If the
Participant dies while receiving In-Service installment payments, his
Designated Beneficiary shall continue to receive the remaining installments. If
subsequently, the Designated Beneficiary dies; any remaining installments will
be paid to the Designated Beneficiary’s estate.

 

C.            Change
of Control Distribution. If a Participant shall so elect in his annual
Deferral Election Form, a Participant’s elective distribution election(s) shall
be overridden and his entire Account shall be distributed to him as set forth
in Section 7.4 C if a Change of Control should occur during the Plan Year.

 

7.4                                                                               Timing
and Method of Payment for Elective Distributions.

 

A.            Retirement Distribution. At the
election of a Participant in the applicable Deferral Election Form, a
Participant may receive a Retirement distribution in a lump sum or in payments
of up to ten (10) annual installments (10 years) with the first installment to
begin within ten (10) days of the first business day on or after January 1 in
the calendar year following the Participant’s date of Retirement and to be paid
thereafter within ten (10) days of the first business day on or after January 1
of each calendar year until the Account has been fully distributed; provided,
however, that a Participant who is a Key Employee shall not begin to receive
payment earlier than six months following his retirement.

 

B.            In-Service Distributions.  At the election of a Participant in the
applicable Deferral Election Form, an In-Service distribution may be selected
for payment as soon as three (3)

 

13

 

years after
the end of the deferral Plan Year. 
Distribution will be either in the form of a lump-sum, occurring no
later than thirty (30) days following the distribution date elected on the
Deferral Election Form, or in annual installment payments beginning with the
first business day on or after the commencement date as selected by the
Participant in the annual Deferral Election Form and for a duration as selected
by the Participant in the annual Deferral Election Form and to be paid
thereafter within ten (10) days of the anniversary of the distribution date of
each calendar year until the In-Service Distribution amount has been fully
distributed.  A Participant’s Account
shall be valued as of such distribution date elected on the Deferral Election Form.

 

C.            Change of Control Distribution. If
so elected by the Participant in his Annual Distribution Election Form, a
distribution of all of a Participant’s Account shall be made to him in a lump
sum within thirty (30) days of the effective date of a Change of Control,
overriding any prior Participant election(s) for distribution. Notwithstanding
the foregoing provision, no distribution shall be made to any Participant until
the earliest date and upon such conditions as may be set forth under Treasury
regulations issued pursuant to Code Section 409A (e). A Participant’s Account
shall be valued as of such effective date of the Change of Control.  If no such election was made by the
Participant in his Annual Distribution Election Form, his distribution election(s)
will not be overridden.

 

D.            Installment Payments. In any
distribution in which a Participant has elected or will receive distribution in
periodic installments, the amount of each periodic installment shall be
determined by applying a formula to the Account in which the numerator is the
number one and the denominator is the number of remaining installments to be
paid. For example, if a Participant elects ten (10) annual installments for a
Retirement distribution, the first payment will be 1/10 of the Account, the
second will be 1/9, the third will be 1/8; the fourth will be 1/7 and so on
until the Account is entirely distributed.

 

E.              Failure to Designate a Method of Payment. In
any situation in which the Committee is unable to determine the method of payment
because of incomplete, unclear, or uncertain instructions in a Participant’s
Deferral Election Form, the Participant will be deemed to have elected a lump
sum distribution.

 

F.              Subsequent
Elections.  A Participant who has
made an In-Service distribution or a Retirement distribution election may make
one or more subsequent elections to postpone the distribution date or to change
the form of payment to another form permitted by the Plan.  Such Subsequent Election shall be made in
writing is such form as is acceptable to the Committee and (i) is made at least
twelve months prior to the original distribution date; (ii) provides for an
effective date at least twelve months following the Subsequent Election; and
(iii) postpones the commencement of payment for a period of not less than five
years from the previous distribution date.

 

7.5                                                                               Distributions
Resulting from Unforeseeable Emergency.

 

A Participant may request that all or a
portion of his Account be distributed at any time prior to separation from
service from the Employer by submitting a written request to the Committee,

 

14

 

provided that the Participant has incurred an
Unforeseeable Emergency, and the distribution is necessary to alleviate such
Unforeseeable Emergency.

 

Such distribution shall be limited to an
amount that does not exceed the amount necessary to satisfy such emergency,
plus amounts necessary to pay taxes reasonably anticipated as a result of the
distribution, after taking into account the extent to which such hardship is or
may be relieved through reimbursement or compensation by insurance or otherwise
or by liquidation of the Participant’s assets (to the extent the liquidation of
such assets would not itself cause severe financial hardship).  Such distribution shall be made as soon as
administratively practicable. The Balance not distributed from the
Participant’s Account shall remain in the Plan.

 

7.6                                                                               Distributions
of Small Accounts.

 

If at any time
the value of the Participant’s Account is less than $5,000 (or such other
greater or lesser amount as may be specified as “minimal” under Treasury
regulations), the Committee, in its sole and exclusive discretion, may make a
distribution in lump sum of the value of the entire Account. If the value of a
Participant’s Account is zero upon the Valuation Date of any distribution, the
Participant shall be deemed to have received a distribution of such Account and
his participation in the Plan terminates.

 

ARTICLE VIII—ADMINISTRATION & CLAIMS
PROCEDURE

 

8.1                                                                               Duties
of the Employer.

 

The Employer
shall have overall responsibility for the establishment, amendment,
termination, administration, and operation of the Plan. The Employer shall
discharge this responsibility by the appointment and removal (with or without
cause) of the members of the Committee, to which is delegated overall
responsibility for administering, managing and operating the Plan.

 

8.2                                                                               The
Committee.

 

The
Committee shall consist of one or more members who shall be appointed by, and
may be removed by, the Employer, and one of whom (who must be an officer of the
Employer) shall be designated by the Employer as Chairman of the Committee. In
the absence of such appointment, the Employer shall serve as the Committee. The
Committee shall consist of officers or other Employees of the Employer, or any
other persons who shall serve at the request of the Employer. Any member of the
Committee may resign by delivering a written resignation to the Employer and to
the Committee, and this resignation shall become effective upon the date
specified therein. The members of the Committee shall serve at the will of the
Employer, and the Employer may from time to time remove any Committee member
with or without cause and appoint their successors. In the event of a vacancy
in membership, the remaining members shall constitute the Committee with full
order to act.

 

15

 

8.3                                                                               Committee’s
Powers and Duties to Enforce Plan.

 

The Committee
shall be the “Administrator” and “Named Fiduciary” only to the extent required
by ERISA for top-hat plans and shall have the complete control and authority to
enforce the Plan on behalf of any and all persons having or claiming any
interest in the Plan in accordance with its terms. The Committee, in its sole
and absolute discretion, shall interpret the Plan and shall determine all
questions arising in the administration and application of the Plan. Any such
interpretation by the Committee shall be final, conclusive and binding on all
persons.

 

8.4                                                                               Organization
of the Committee.

 

The Committee
shall act by a majority of its members at the time in office. Committee action
may be taken either by a vote at a meeting or by written consent without a
meeting. The Committee may authorize any one or more of its members to execute
any document or documents on behalf of the Committee. The Committee shall
notify the Employer, in writing, of such authorization and the name or names of
its member or members so designated in such cases. The Employer thereafter
shall accept and rely on any documents executed by said member of the Committee
or members as representing action by the Committee until the Committee shall
file with the Employer a written revocation of such designation.  The Committee may adopt such by-laws and
regulations, as it deems desirable for the proper conduct of the Plan and to
change or amend these by-laws and regulations from time to time. With the
permission of the Employer, the Committee may employ and appropriately
compensate accountants, legal counsel, benefit specialists, actuaries, plan
administrators and record keepers and any other persons as it deems necessary
or desirable in connection with the administration and maintenance of the Plan.
Such professionals and advisors shall not be considered members of the
Committee for any purpose.

 

8.5                                                                               Limitation
of Liability.

 

A.            No
member of the Board of Directors, the Employer and no officer or Employee of
the Employer shall be liable to any Employee, Participant, Designated
Beneficiary or any other person for any action taken or act of omission in
connection with the administration or operation of this Plan unless
attributable to his own fraud or willful misconduct. Nor shall the Employer be
liable to any Employee, Participant, Designated Beneficiary or any other person
for any such action taken or act of omission unless attributable to fraud,
gross negligence or willful misconduct on the part of a Director, officer or
Employee of the Employer.  Moreover, each
Participant, Designated Beneficiary, and any other person claiming a right to
payment under the Plan shall only be entitled to look to the Employer for
payment, and shall not have the right, claim or demand against the Committee
(or any member thereof), any Director, Officer or Employee of the Employer.

 

B.            To
the fullest extent permitted by the law and subject to the Employer’s
Certificate of Incorporation and By-laws, the Employer shall indemnify the
Committee, each of its members, and the Employer’s officers and Directors (and
any Employee involved in carrying out the functions of the Employer under the
Plan) for part or all expenses, costs, or liabilities arising out of the
performance of duties required by the terms of the Plan agreement, except for
those expenses, costs, or liabilities arising out of a member’s fraud, willful
misconduct or gross negligence.

 

16

 

8.6                                                                               Committee
Reliance on Records and Reports.

 

The Committee
shall be entitled to rely upon certificates, reports, and opinions provided by
an accountant, tax or pension advisor, actuary or legal counsel employed by the
Employer or Committee. The Committee shall keep a record of all its proceedings
and acts, and shall keep all such books of account, records, and other data as may
be necessary for the proper administration of the Plan. The regularly kept
records of the Committee and the Employer shall be conclusive evidence of the
service of a Participant, Compensation, age, marital status, status as an
Employee, and all other matters contained therein and relevant to this Plan.
The Committee, in any of its dealings with Participants hereunder, may
conclusively rely on any Deferral Election Form, written statement,
representation, or documents made or provided by such Participants.

 

8.7                                                                               Costs
of the Plan.

 

All the costs
and expenses for maintaining the administration and operation of the Plan shall
be borne by the Employer unless the Employer shall give notice (that Plan
Participants bear this expense, in whole or in part) to: (a) Eligible
Participants at the time they become a Participant by completion and filing of
a Deferral Election Form; or (b) to existing Participants during annual
re-enrollment.  Such notice shall detail
the administrative expense to be assessed a Plan Participant, how that expense
will be assessed and allocated to the Participant Accounts, and any other
important information concerning the imposition of this administrative expense.
This administration charge, if any, shall operate as a reduction to the bookkeeping
Account of a Participant or his designated Beneficiary, and in the absence of
specification otherwise shall reduce the Account, and be charged annually
during the month of January.

 

8.8                                                                               Claims
Procedure.

 

A.            Claim.
Benefits shall be paid in accordance with the terms of this Plan. A
Participant, Designated Beneficiary or any person who believes that he is being
denied a benefit to which he is entitled under the Plan (hereinafter referred
to as a “Claimant”) may file a written request for such benefit with the
Employer, setting forth his claim. The request must be addressed to the
Committee care of Secretary of the Employer at its then principal place of
business.

 

B.            Claim
Decision. Upon the receipt of a claim, the Committee shall advise the
Claimant that a reply will be forthcoming within ninety (90) days and shall, in
fact, deliver such reply within such period. However, the Committee may extend
the reply period for an additional ninety (90) days for reasonable cause. Any
claim not granted or denied within such time period shall be deemed to have
been denied.  If the claim is denied in
whole or in part, the Committee shall adopt a written opinion, using language
calculated to be understood by the Claimant, setting forth:

 

(1)         The specific reason
or reasons for such denial;

 

(2)         The specific
reference to pertinent provisions of this Agreement on which such denial is
based;

 

17

 

(3)         A description of any
additional material or information necessary for the Claimant to perfect his
claim and an explanation why such material or such information is necessary;

 

(4)         Appropriate
information as to the steps to be taken if the Claimant wishes to submit the
claim for review; and

 

(5)         The
time limits for requesting a review under Subsection C and for review under
Subsection D hereof.

 

C.            Request
for Review. Within sixty (60) days after the receipt by the Claimant of the
written opinion described above, the Claimant may request in writing that the
Secretary of the Employer review the determination of the Committee. Such
request must be addressed to the Secretary of the Employer, at its then
principal place of business. The Claimant or his duly authorized representative
may, but need not, review the pertinent documents and submit issues and
comments in writing for consideration by the Employer. If the Claimant does not
request a review of the Committee’s determination by the Secretary of the
Employer within such sixty (60) day period, he shall be barred and estopped
from challenging the Committee’s determination.

 

D.            Review
of Decision. Within sixty (60) days after the Secretary’s receipt of a
request for review, he will review the Committee’s determination. After
considering all materials presented by the Claimant, the Secretary will render
a written opinion, written in a manner calculated to be understood by the
Claimant, setting forth the specific reasons for the decision and containing
specific references to the pertinent provisions of this Agreement on which the
decision is based. If special circumstances require that the sixty (60) day
time period be extended, the Secretary will so notify the Claimant and will
render the decision as soon as possible, but no later than one hundred twenty
(120) days after receipt of the request for review. Any claim not granted or
denied within such time period shall be deemed to have been denied.

 

8.9                                                                               Litigation.

 

It shall only
be necessary to join the Employer as a party in any action or judicial
proceeding affecting the Plan. No Participant or Designated Beneficiary or any
other person claiming under the Plan shall be entitled to service of process or
notice of such action or proceeding, except as may be expressly required by
law. Any final judgment in such action or proceeding shall be binding on all
Participants, Designated Beneficiaries or persons claiming under the Plan.

 

ARTICLE IX—AMENDMENT, TERMINATION &
REORGANIZATION

 

9.1                                                                               Amendment.

 

The Employer
by action of its Board of Directors, or duly authorized Committee thereof, in
accordance with its by-laws, reserves the right to amend the Plan, by
resolution of the Employer, to the extent permitted under the Code and ERISA.
However, no amendment to the Plan shall be

 

18

 

effective to
the extent that it has the effect of decreasing a Participant’s (or Designated
Beneficiary’s) accrued benefit prior to the date of the amendment.

 

9.2                                                                               Amendment
Required By Law.

 

Notwithstanding
Section 9.1, the Plan may be amended at any time, if in the opinion of the
Employer, such amendment is necessary to ensure the Plan is treated as a
nonqualified plan of deferred compensation under the Code and ERISA, or to
bring it into conformance with Treasury or SEC regulations or requirements for
such plans. This includes the right to amend this Plan, so that any Trust, if
applicable, created in conjunction with this Plan, will be treated as a grantor
Trust under Sections 671 through 679 of the Code, and to otherwise conform the
Plan provisions and such Trust, if applicable, to the requirements of any
applicable law.

 

9.3                                                                               Termination.

 

The Employer
intends to continue the Plan indefinitely. However, the Employer by action of
its Board of Directors or a duly authorized Committee thereof, in accordance
with its by-laws, reserves the right to terminate the Plan at any time.
However, no such termination shall deprive any participant or Designated
Beneficiary of a right accrued under the Plan prior to the date of termination.

 

9.4                                                                               Consolidation/Merger.

 

The Employer
shall not enter into any consolidation or merger without the guarantee and
assurance of the successor or surviving company or companies to the obligations
contained under the Plan. Should such consolidation or merger occur, the term
“Employer” as defined and used in this Agreement shall refer to the successor
or surviving company.

 

ARTICLE X—GENERAL PROVISIONS

 

10.1                                                                        Applicable
Law.

 

Except insofar
as the law has been superseded by Federal law, Virginia law shall govern the
construction, validity and administration of this Plan as created by this
Agreement. The parties to this Agreement intend that this Plan shall be a
nonqualified unfunded plan of deferred compensation without plan assets and any
ambiguities in its construction shall be resolved in favor of an interpretation
which will effect this intention.

 

10.2                                                                        Benefits
Not Transferable or Assignable.

 

A.            Benefits
under the Plan shall not be subject to anticipation, alienation, sale,
transfer, assignment, pledge, encumbrance or charge and any attempt to anticipate,
alienate, sell, transfer, assign, pledge, encumber or charge such benefits
shall be void, nor shall any such benefits be in any way liable for or subject
to the debts, contracts, liabilities, engagements or torts of any person
entitled to them. However, a Participant may name a recipient for any benefits
payable or which would become payable to a Participant upon his death. This
Section

 

19

 

shall also
apply to the creation, assignment or recognition of a right to any benefit
payable with respect to a Participant pursuant to a domestic relations order,
including a qualified domestic relations order under Section 414(p) of the
Code. In addition, the following actions shall not be treated or construed as an
assignment or alienation: (a) Plan Contribution or distribution tax
withholding; (b) recovery of distribution overpayments to a Participant or
Designated Beneficiary; (c) direct deposit of a distribution to a Participant’s
or Designated Beneficiary’s banking institution account; or (d) transfer of
Participant rights from one Plan to another Plan, if applicable.

 

B.            The
Employer may bring an action for a declaratory judgment if a Participant’s,
Designated Beneficiary’s or any Beneficiary’s benefits hereunder are attached
by an order from any court. The Employer may seek such declaratory judgment in
any court of competent jurisdiction to:

 

(1)         determine the proper
recipient or recipients of the benefits to be paid under the Plan;

 

(2)         protect the operation
and consequences of the Plan for the Employer and all Participants; and

 

(3)         request any other
equitable relief the Employer in its sole and exclusive judgment may feel
appropriate.

 

Benefits which
may become payable during the pendency of such an action shall, at the sole
discretion of the Employer, either be:

 

(1)         paid into the court as they become payable
or

 

(2)
held in the Participant’s or Designated Beneficiary’s Account subject to the
court’s final distribution order.

 

10.3                                                                        Not
an Employment Contract.

 

The Plan is
not and shall not be deemed to constitute a contract between the Employer and
any Employee, or to be a consideration for, or an inducement to, or a condition
of, the employment of any Employee. Nothing contained in the Plan shall give or
be deemed to give an Employee the right to remain in the employment of the
Employer or to interfere with the right to be retained in the employ of the
Employer, any legal or equitable right against the Employer, or to interfere
with the right of the Employer to discharge any Employee at any time. It is
expressly understood by the parties hereto that this Agreement relates to the
payment of deferred compensation for the Employee’s services, generally payable
after separation from employment with the Employer, and is not intended to be
an employment contract.

 

10.4                                                                        Notices.

 

A.            Any notices
required or permitted hereunder shall be in writing and shall be deemed to be
sufficiently given at the time when delivered personally or when mailed by
certified or registered first class mail, postage prepaid, addressed to either
party hereto as follows:

 

20

 

If to the
Employer:

 

Cardinal
Financial Corporation

8270
Greensboro Drive

Suite 500

McLean, VA
22102

 

If to the
Participant:

 

At his last
known address, as indicated by the records of the Employer.

 

or
to such changed address as such parties may have fixed by notice. However, any
notice of change of address shall be effective only upon receipt.

 

B.            Any
communication, benefit payment, statement of notice addressed to a Participant
or Designated Beneficiary at the last post office address as shown on the
Employer’s records shall be binding on the Participant or Designated
Beneficiary for all purposes of the Plan. The Employer shall not be obligated
to search for any Participant or Designated Beneficiary beyond sending a
registered letter to such last known address.

 

10.5                                                                        Severability.

 

The Plan as
contained in the provisions of this Agreement constitutes the entire Agreement
between the parties. If any provision or provisions of the Plan shall for any
reason be invalid or unenforceable, the remaining provisions of the Plan shall
be carried into effect, unless the effect thereof would be to materially alter
or defeat the purposes of the Plan. All terms of the plan and all discretion
granted hereunder shall be uniformly and consistently applied to all the
Employees, Participants and Designated Beneficiaries.

 

10.6                                                                        Participant
is General Creditor with No Rights to Assets.

 

A.            The
payments to the Participant or his Designated Beneficiary or any other
beneficiary hereunder shall be made from assets which shall continue, for all
purposes, to be a part of the general, unrestricted assets of the Employer, no
person shall have any interest in any such assets by virtue of the provisions
of this Agreement. The Employer’s obligation hereunder shall be an unfunded and
unsecured promise to pay money in the future. To the extent that any person
acquires a right to receive payments from the Employer under the provisions
hereof, such right shall be no greater than the right of any unsecured general
creditor of the Employer; no such person shall have nor require any legal or
equitable right, or claim in or to any property or assets of the Employer. The Employer
shall not be obligated under any circumstances to fund obligations under this
Agreement.

 

21

 

B.            The
Employer at its sole discretion and exclusive option, may acquire and/or
set-aside assets or funds, in a trust or otherwise, to support its financial
obligations under this Plan. No such trust established for this purpose shall
be established in or transferred to a location that would cause it to be deemed
to be an “offshore trust” for purposes of Code Section 409A (b)(1).  No such acquisition or set-aside shall impair
or derogate from the Employer’s direct obligation to a Participant or
Designated Beneficiary under this Plan. However, no Participant or Designated Beneficiary
shall be entitled to receive duplicate payments of any Accounts provided under
the Plan because of the existence of such assets or funds.

 

C.            In
the event that, in its discretion, the Employer purchases an asset(s) or
insurance policy or policies insuring the life of the Participant to allow the
Employer to recover the cost of providing benefits, in whole or in part
hereunder, neither the Participant, Designated Beneficiary nor any other
beneficiary shall have any rights whatsoever therein in such assets or in the
proceeds therefrom. The Employer shall be the sole owner and beneficiary of any
such assets or insurance policy and shall possess and may exercise all
incidents of ownership therein. No such asset or policy, policies or other
property shall be held in any trust for the Participant or any other person nor
as collateral security for any obligation of the Employer hereunder. Nor shall
any Participant’s participation in the acquisition of such assets or policy or
policies be a representation to the Participant, Designated Beneficiary or any
other beneficiary of any beneficial interest or ownership in such assets,
policy or policies. A Participant may be required to submit to medical
examinations, supply such information and to execute such documents as may be
required by an insurance carrier or carriers (to whom the Employer may apply
from time to time) as a precondition to participate in the Plan.

 

10.7                                                                        No
Trust Relationship Created.

 

Nothing
contained in this Agreement shall be deemed to create a trust of any kind or
create any fiduciary relationship between the Employer and the Participant,
Designated Beneficiary, other beneficiaries of the Participant, or any other
person claiming through the Participant. Funds allocated hereunder shall
continue for all purposes to be part of the general assets and funds of the
Employer and no person other than the Employer shall, by virtue of the
provisions of this Plan, have any beneficial interest in such assets and
funds.  The creation of a grantor Trust (so
called “Rabbi Trust”) under the Code (owned by and for the benefit of the
Employer) to hold such assets or funds for the administrative convenience of
the Employer shall not give nor be a representation to a Participant,
Designated Beneficiary, or any other person, of a property or beneficial
ownership interest in such Trust assets or funds even though the incidental
advantages or benefits of the Trust to Plan Participants may be communicated to
them.

 

10.8                                                                        Limitations
on Liability of the Employer.

 

Neither the
establishment of the Plan nor any modification hereof nor the creation of any
Account under the Plan nor the payment of any benefits under the Plan shall be
construed as giving to any Participant or any other person any legal or
equitable right against the Employer or any Director, officer or Employee
thereof except as provided by law or by any Plan provision.

 

22

 

10.9                                                                        Agreement
Between Employer and Participant Only.

 

This Agreement
is solely between the Employer and Participant. The Participant, Designated
Beneficiary, estate or any other person claiming through the Participant, shall
only have recourse against the Employer for enforcement of this Agreement. This
Agreement shall be binding upon and inure to the benefit of the Employer and its
successors and assigns, and the Participant, successors, heirs, executors,
administrators and beneficiaries.

 

10.10                                                                 Independence
of Benefits.

 

The benefits
payable under this Agreement are for services already rendered and shall be
independent of, and in addition to, any other benefits or compensation, whether
by salary, bonus, fees or otherwise, payable to the Participant under any
compensation and/or benefit arrangements or plans, incentive cash compensations
and stock plans and other retirement or welfare benefit plans, that now exist
or may hereafter exist from time to time.

 

10.11                                                                 Unclaimed
Property.

 

Except as may
be required by law, the Employer may take any of the following actions if it
gives notice to a Participant or Designated Beneficiary of an entitlement to
benefits under the Plan, and the Participant or Designated Beneficiary fails to
claim such benefit or fails to provide their location to the Employer within
three (3) calendar years of such notice:

 

(1)         Direct
distribution of such benefits, in such proportions as the Employer may
determine, to one or more or all, of a Participant’s next of kin, if their
location is known to the Employer;

 

(2)         Deem
this benefit to be a forfeiture and paid to the Employer if the location of a
Participant’s next of kin is not known. 
However, the Employer shall pay the benefit, unadjusted for gains or
losses from the date of such forfeiture, to a Participant or Designated
Beneficiary who subsequently makes proper claim to the benefit.

 

The Employer
shall not be liable to any person for payment pursuant to applicable state
unclaimed property laws.

 

10.12                                                                 Required
Tax Withholding and Reporting.

 

The Employer
shall withhold and report Federal, state and local income and payroll tax
amounts on all Contributions to and distributions and withdrawals from a
Participant’s Account as may be required by law from time to time.

 

CARDINAL
FINANCIAL CORPORATION

 

 

	
  BY

  	
   

  	
   

  
	
   

  	
   

  
	
  Title

  	
   

  	
   

  
				

 

23Exhibit 10.3

 

CARDINAL FINANCIAL CORPORATION

 

NON-EMPLOYEE
DIRECTORS DEFERRED

INCOME PLAN

AS AMENDED APRIL 21, 2006

 

SECTION I -
INTRODUCTION

 

Effective January 1, 2005, Cardinal
Financial Corporation (“Company”) hereby establishes this Non-Employee Directors
Deferred Income Plan for members of its Board of Directors (“Board”), who are
not employees of the Company or an affiliate (“Non-Employee Directors”). The
Plan is intended to comply fully with the requirements of Section 409A of the
Internal Revenue Code. 

 

SECTION II
– PLAN PARTICIPANTS

 

Each Non-Employee Director shall
become a Participant under the Plan by filing the written Election Form
described in Section III below with the Plan Administrator appointed by the
Compensation Committee of the Board (“Committee”) with respect to the Retainers
and Meeting Fees payable to the Non-Employee Director for his services as a
member of the Board. 

 

SECTION III
- DEFERRAL ELECTIONS AND MATCHING CONTRIBUTIONS

 

(a) Each Participant may elect to
defer receipt of his entire Retainer and/or Meeting Fees until his service on
the Board terminates for any reason and have the cash value of such
Retainer/Meeting Fees credited to the Participant Account established for him
under the Plan, pursuant to the provisions of paragraph (a) of Section IV
below.

 

(b) Each election with respect to a
Retainer and Meeting Fee for a calendar year shall be set forth on an Election
Form provided by the Plan Administrator. Such Election Form shall be in writing
and shall specify the elections described above with respect to Retainers and
Meeting Fees.

 

(c) An Election Form effective for
a calendar year shall be delivered to the Plan Administrator prior to the first
day of such calendar year. An Election Form shall remain in effect for subsequent
calendar years until a written notice to revise the Election Form is delivered
to the Plan Administrator on or before the first day of the calendar year in
which the revision is to become effective. Except as provided in paragraph (d)
below, an initial Election Form or a revised Election Form shall apply only to
a Retainer or Meeting Fee otherwise payable to a Participant after the end of
the calendar year in which such initial or revised Election Form is delivered
to the Plan Administrator. Any Election Form delivered by a Participant shall
be irrevocable with respect to any Retainer or Meeting Fee covered by the
elections set forth therein.

 

 

(d) Notwithstanding the provisions
of paragraph (c) above, an election made by a Participant in the calendar year
in which he first becomes eligible to participate in the Plan may be made
pursuant to an Election Form delivered to the Plan Administrator within 30 days
after the date on which he initially becomes eligible to participate, and such
Election Form shall be effective with respect to Retainers and Meeting Fees
earned from and after the date such Election Form is delivered to the Plan
Administrator.

 

(e) The Company may, but shall not
be required to, provide a deemed match, in such amounts as it may determine
from time to time, to the Participant Account. Such Matching Contributions, if
any, shall be credited to the Matching Contribution Account of the
Participant’s Account and shall be subject to the vesting requirements set
forth in subsection (f) below. Such Matching Contributions shall not exceed the
greater of 50% of the Participant’s deferral or $10,000 annually.

 

(f) A Participant shall vest in
Matching Contributions, as well as Deemed Earnings upon Matching Contributions,
immediately.

 

SECTION IV
- PARTICIPANT ACCOUNTS

 

(a) Each Participant’s Account
interest may be divided into one or more separate accounts or sub-accounts,
including the Participant Deferral Account and the Matching Contribution
Account, which reflect not only the deferrals and contributions into the Plan,
but also gains and losses, and income and expenses allocated thereto, as well
as distributions or any other withdrawals. The value of these accounts or
sub-accounts shall be determined as of the Valuation Date. The existence of an
account or bookkeeping entries for a Participant (or his Designated
Beneficiary) does not create, suggest or imply that a Participant, Designated
Beneficiary, or other person claiming through them under this Plan, has a
beneficial interest in any asset of the Company

 

(b) The Committee shall establish a
portfolio of two or more Deemed Crediting Options, among which a Participant
may allocate amounts credited to his Account, which are subject to Participant
direction under this Plan. The Committee reserves the right, in its sole and
exclusive discretion, to substitute, eliminate and otherwise change this
portfolio of Deemed Crediting Options, as well as the right to establish rules
and procedures for the selection and offering of these Deemed Crediting Options.

 

(c) One of the Deemed Crediting
Options shall be Company Stock. Amounts credited to this option shall be deemed
to be invested in shares of common stock of the Company. A Participant’s
Account will be credited with deemed distributions if and when dividends are
declared and paid with respect to Company common stock, and such deemed
dividends will be deemed to have been reinvested in Company common stock as of
the first business day following the deemed payment. Fair market value of
Company common stock means, as of any day, the average of the closing prices of
sales of shares of common stock on all national securities exchanges on which
the common stock may be listed. If there have been no sales on such day, the
average of the highest bid and lowest asked prices on all such exchanges at the
end of such day shall be used. If such

 

2

 

common stock is not listed on any national exchange, then the
average of the representative bid and asked prices quoted in the National
Association of Securities Dealers, Inc. Automated Quotation System for such
date or the next preceding date that the common stock was traded on such market
shall be used.

 

(d) Each Participant shall elect
the manner in which his Account is divided among the Deemed Crediting Options
by giving allocation instructions in a Deferral Election Form supplied by and
filed with the Committee, or by such other procedure, including electronic
communications, as the Committee may prescribe. Such election shall remain in
effect until a new election is made. A Participant’s election shall specify the
percentage of his Account (in any whole percentage) to be deemed to be invested
in any Deemed Crediting Option; provided, however, that a Participant Matching
Contribution Account must be fully to the Company Stock Deemed Crediting
Option.

 

(e) Amounts credited to a
Participant’s Account shall be deemed to be invested in accordance with the
most recent effective Deemed Crediting Option election. As of the effective date
of any new Deemed Crediting Option election, all or a portion of the
Participant’s Account shall be reallocated among the designated Deemed
Crediting Options and according to the percentages specified in the new
instructions, until and unless subsequent instructions shall be filed and
become effective. If the Committee receives a Deemed Crediting Option election,
which is unclear, incomplete or improper, the Deemed Crediting Option election
then in effect shall remain in effect until the subsequent instruction is
clarified, completed or otherwise made acceptable to the Committee.

 

SECTION V -
DISTRIBUTION OF ACCOUNTS

 

(a) The Balance of a Participant’s
Account shall be paid to him (or to his beneficiaries in the event of his
death) according to the method of payment elected in his applicable Deferral
Election Form. Distributions from the Plan shall be made in cash; provided,
however, that to the extent that all or a portion of a Participant’s Account is
deemed to be invested in common stock of Cardinal Financial Corporation
(“Common Stock”), such amounts shall be paid in shares of Common Stock in an
amount equal to the number of whole shares of Common Stock credited to the
Participant’s Account as of the date of distribution.  Any fractional share shall be paid in
cash.  

 

(b) If a Participant’s service on
the Board shall terminate by reason of his death, or if he shall die after
becoming entitled to distribution hereunder, but prior to receipt of his entire
distribution, Participant’s entire Account balance shall be distributed to such
beneficiary or beneficiaries as such Participant shall have designated by an
instrument in writing last filed with the Committee prior to his death, or in
the absence of such designation or of any living beneficiary, to his spouse, or
if not to the personal representative of his estate.

 

SECTION VI
- ADMINISTRATION OF THE PLAN

 

(a) The Committee shall appoint one
or more employees of the Company to act as the Plan Administrator. The Plan
Administrator shall be responsible for the general

 

3

 

operation and administration of
the Plan, and shall have such powers as are necessary to discharge its duties
under the Plan, including, without limitation, the following:

 

(i) With the advice of the general
counsel of the Company, to construe and interpret the Plan, to decide all
questions of eligibility, to determine the amount, manner and time of payment
of any benefits hereunder, to prescribe rules and procedures to be followed by
Participants and their beneficiaries under the Plan, and to otherwise carry out
the purposes of the Plan; and

 

(ii) To appoint or employ
individuals to assist in the administration of the Plan and any other agents
deemed advisable. The decisions of the Plan Administrator shall be binding and
conclusive upon all Participants, beneficiaries and other persons.

 

(b) Any Participant claiming a
benefit, requesting an interpretation or ruling, or requesting information,
under the Plan, shall present the request in writing to the Plan Administrator,
which shall respond in writing as soon as practicable. If the claim or request
is denied, the written notice of denial shall state the following:

 

(i) The reasons for denial, with
specific reference to the Plan provisions upon which the denial is based;

 

(ii) A description of any
additional material or information required and an explanation of why it is
necessary; and

 

(iii) An explanation of the Plan’s
review procedure. The initial notice of denial shall normally be given within
90 days after receipt of the claim. If special circumstances require an
extension of time, the claimant shall be so notified and the time limit shall
be 180 days. Any person whose claim or request is denied, or who has not
received a response within 30 days, may request review by notice in writing to
the Plan Administrator. The original decision shall be reviewed by the Plan
Administrator, which may, but shall not be required to, grant the claimant a
hearing. On review, whether or not there is a hearing, the claimant may have
representation, examine pertinent documents and submit issues and comments in
writing. The decision on review shall ordinarily be made within 60 days. If an
extension of time is required for a hearing or other special circumstances, the
claimant shall be so notified and the time limit shall be extended to 120 days.
The decision on review shall be in writing and shall state the reasons and the
relevant Plan provisions. All decisions on review shall be final and bind all
parties concerned. 

 

SECTION VII - AMENDMENT OR TERMINATION

 

(a) The Company intends the Plan to
be permanent but reserves the right to amend or terminate the Plan when, in the
sole opinion of the Company, such amendment or termination is advisable. Any
such amendment or termination shall be made pursuant

 

4

 

to a resolution of the Board
and shall be effective as of the date of such resolution or such later date as
the resolution may expressly state.

 

(b) No amendment or termination of
the Plan shall (i) directly or indirectly deprive any current or former
Participant or his beneficiaries of all or any portion of his Account as
determined as of the effective date of such amendment or termination, or (ii)
directly or indirectly reduce the balance of any Account held hereunder as of
the effective date of such amendment or termination. Upon termination of the
Plan, distribution of balances in all Accounts shall be made to Participants or
their beneficiaries in the manner and at the time described in Section V as if
each Participant’s service on the Board had then terminated. No additional
deferred Retainers or Meeting Fees shall be credited to the Accounts of
Participants after termination of the Plan, but the Company shall continue to
credit earnings, gains and losses to Accounts pursuant to Section IV until the
balances of such Accounts have been fully distributed to Participants or their
beneficiaries.

 

SECTION VIII - GENERAL PROVISIONS

 

(a) The Plan at all times shall be
entirely unfunded and no provision shall at any time be made with respect to
segregating any assets of the Company for payment of any benefits hereunder.
The right of a Participant or his beneficiary to receive a benefit hereunder
shall be an unsecured claim against the general assets of the Company, and
neither the Participant nor a beneficiary shall have any rights in or against
any specific assets of the Company. All amounts credited to Accounts shall
constitute general assets of the Company.

 

(b) Nothing contained in the Plan
shall constitute a guaranty by the Company, the Committee, the Plan
Administrator, or any other person or entity, that the assets of the Company
will be sufficient to pay any benefit hereunder. No Participant or beneficiary
shall have any right to receive a distribution under the Plan except in
accordance with the terms of the Plan.

 

(c) Establishment of the Plan shall
not be construed to give any Participant the right to be retained as a member
of the Board.

 

(d) No interest of any person or
entity in, or right to receive a distribution under, the Plan, shall be subject
in any manner to sale, transfer, assignment, pledge, attachment, garnishment,
or other alienation or encumbrance of any kind; nor may such interest or right
to receive a distribution be taken, either voluntarily or involuntarily, for
the satisfaction of the debts of, or other obligations or claims against, such
person or entity, including claims for alimony, support, separate maintenance
and claims in bankruptcy proceedings.

 

(e) The Plan shall be construed and
administered under the laws of the Commonwealth of Virginia, except to the
extent preempted by federal law.

 

5

 

(f) If any person entitled to a
payment under the Plan is deemed by the Company to be incapable of personally
receiving and giving a valid receipt for such payment, then, unless and until
claim therefore shall have been made by a duly appointed guardian or other
legal representative of such person, the Company may provide for such payment
or any part thereof to be made to any other person or institution that is
contributing toward or providing for the care and maintenance of such person.
Any such payment shall be a payment for the account of such person and a complete
discharge of any liability of the Company, the Committee, the Plan
Administrator and the Plan therefore.

 

(g) The Plan shall be continued,
following a transfer or sale of assets of the Company, or following the merger
or consolidation of the Company into or with any other corporation or entity,
by the transferee, purchaser or successor entity, unless the Plan has been
terminated by the Company pursuant to the provisions of Section VII prior to
the effective date of such transaction.

 

(h) Each Participant or beneficiary
shall keep the Plan Administrator informed of his current address. The Plan
Administrator shall not be obligated to search for the whereabouts of any
person. If the location of a Participant is not made known to the Plan
Administrator within three years after the date on which payment of the
Participant’s benefits under the Plan may first be made, payment may be made as
though the Participant had died at the end of the three year period. If, within
one additional year after such three year period has elapsed, or, within three
years after the actual death of a Participant, the Plan Administrator is unable
to locate any beneficiary of the Participant, then the Company shall have no
further obligation to pay any benefit hereunder to such Participant, or
beneficiary or any other person and such benefit shall be forfeited. If such
Participant, or his beneficiary or any other person, subsequently makes a valid
claim for distribution of the amount forfeited, such amount, without gains or
earnings thereon, shall be distributed to such Participant or his beneficiary
or such other person pursuant to Section V.

 

(i) Notwithstanding any of the
preceding provisions of the Plan, none of the Company, any member of the
Committee, any Plan Administrator or any individual acting as an employee or
agent of the Company, the Committee or the Plan Administrator, shall be liable
to any Participant, former Participant, or any beneficiary or other person for
any claim, loss, liability or expense incurred by such Participant, or
beneficiary or other person in connection with the Plan.

 

(j) Any notice under the Plan shall
be in writing, or by electronic means, and shall be received when actually
delivered, or mailed postage paid as first class U.S. Mail. Notices shall be directed
to the Company at its principal business office at:

 

Cardinal Financial Corporation 

8270 Greensboro Drive 

Suite 500 

McLean, Virginia 22102

 

6

 

or to a Non-Employee Director
at the latest address on record with the Company, or to a beneficiary entitled
to benefits at the address stated in the Participant’s beneficiary designation,
or to such other addresses any party may specify by notice to the other
parties.

 

IN WITNESS WHEREOF, the Plan
has been executed on behalf of the Company on this                  day
of                             ,
2004.

 

Cardinal Financial Corporation

 

 

	
  By:

  	
   

  	
   

  

 

7

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