Exhibit 10 A 4
AMENDED AND RESTATED
CHANGE-IN-CONTROL AGREEMENT
"XXXXXX BIRMINGHAM"
THIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT (the "Agreement"), is
made as of this "JANUARY 1, 2008", among PEAPACK-GLADSTONE BANK ("Bank"), a New
Jersey state banking association with its principal office at 000 Xxxx Xxxxxx,
Xxxxxxxxx, Xxx Xxxxxx 00000, PEAPACK-GLADSTONE FINANCIAL CORPORATION
("Peapack"), a New Jersey Corporation which maintains its principal office at
000 Xxxxx 000 Xxxxx, Xxxxxxxxx, Xxx Xxxxxx 00000 (Peapack and the Bank
collectively are the "Company") and XXXXXX BIRMINGHAM, JR. (the "Executive").
BACKGROUND
WHEREAS, the Executive has been continuously employed by the Bank
for many years;
WHEREAS, the Executive throughout his/her tenure has worked
diligently in his/her position in the business of the Bank and Peapack;
WHEREAS, the Board of Directors of the Bank and Peapack believe that
the future services of the Executive are of great value to the Bank and Peapack
and that it is important for the growth and development of the Bank that the
Executive continue in his/her position;
WHEREAS, if the Company receives any proposal from a third person
concerning a possible business combination with, or acquisition of equities
securities of, the Company, the Board of Directors of the Company (the "Board")
believes it is imperative that the Company and the Board be able to rely upon
the Executive to continue in his/her position, and that they be able to receive
and rely upon his/her advice, if they request it, as to the best interests of
the Company and its shareholders, without concern that the Executive might be
distracted by the personal uncertainties and risks created by such a proposal;
WHEREAS, to achieve that goal, and to retain the Executive's
services prior to any such activity, the Board of Directors and the Executive
have agreed to enter into this Agreement to govern the Executive's termination
benefits in the event of a Change in Control of the Company, as hereinafter
defined.
NOW, THEREFORE, to assure the Company that it will have the
continued dedication of the Executive and the availability of his/her advice and
counsel notwithstanding the possibility, threat or occurrence of a bid to take
over control of the Company, and to induce the Executive to remain in the employ
of the Company, and for other good and valuable consideration, the Company and
the Executive, each intending to be legally bound hereby agree as follows:
1. Definitions
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a. Cause. For purposes of this Agreement "Cause" with
respect to the termination by the Company of Executive's employment shall
mean (i) willful and continued failure by the Executive to perform his/her
duties for the Company under this Agreement after at least one warning in
writing from the Company's Board of Directors identifying specifically any
such failure; (ii) the willful engaging by the Executive in misconduct
which causes material injury to the Company as specified in a written
notice to the Executive from the Board of Directors; or (iii) conviction
of a crime, other than a traffic violation, habitual drunkenness, drug
abuse, or excessive absenteeism other than for illness, after a warning
(with respect to drunkenness or absenteeism only) in writing from the
Board of Directors to refrain from such behavior. No act or failure to act
on the part of the
Executive shall be considered willful unless done, or omitted to be done,
by the Executive not in good faith and without reasonable belief that the
action or omission was in the best interest of the Company.
b. Change in Control. "Change in Control" means any
of the following events: (i) when Peapack or a Subsidiary acquires actual
knowledge that any person (as such term is used in Sections 13(d) and
14(d)(2) of the Exchange Act), other than an affiliate of Peapack or a
Subsidiary or an employee benefit plan established or maintained by
Peapack, a Subsidiary or any of their respective affiliates, is or becomes
the beneficial owner (as defined in Rule 13d-3 of the Exchange Act)
directly or indirectly, of securities of Peapack representing more than
twenty-five percent (25%) of the combined voting power of Peapack's then
outstanding securities (a "Control Person"), (ii) upon the first purchase
of Peapack's common stock pursuant to a tender or exchange offer (other
than a tender or exchange offer made by Peapack, a Subsidiary or an
employee benefit plan established or maintained by Peapack, a Subsidiary
or any of their respective affiliates), (iii) upon the consummation of (A)
a merger or consolidation of Peapack with or into another corporation
(other than a merger or consolidation which is approved by at least
two-thirds of the Continuing Directors (as hereinafter defined) and the
definitive agreement for which provides that at least two-thirds of the
directors of the surviving or resulting corporation immediately after the
transaction are Continuing Directors (a "Non-Control Transaction")), (B) a
sale or disposition of all or substantially all of Peapack's assets or (C)
a plan of liquidation or dissolution of Peapack, (iv) if during any period
of two (2) consecutive years, individuals who at the beginning of such
period constitute the Board (the "Continuing Directors") cease for any
reason to constitute at least two-thirds thereof or, following a
Non-Control Transaction, two-thirds of the board of
directors of the surviving or resulting corporation; provided that any
individual whose election or nomination for election as a member of the
Board (or, following a Non-Control Transaction, the board of directors of
the surviving or resulting corporation) was approved by a vote of at least
two-thirds of the Continuing Directors then in office shall be considered
a Continuing Director, or (v) upon a sale of (A) common stock of the Bank
if after such sale any person (as such term is used in Section 13(d) and
14(d)(2) of the Exchange Act) other than Peapack, an employee benefit plan
established or maintained by Peapack or a Subsidiary, or an affiliate of
Peapack or a Subsidiary, owns a majority of the Bank's common stock or (B)
all or substantially all of the Bank's assets (other than in the ordinary
course of business). No person shall be considered a Control Person for
purposes of clause (i) above if (A) such person is or becomes the
beneficial owner, directly or indirectly, of more than ten percent (10%)
but less than twenty-five percent (25%) of the combined voting power of
Peapack's then outstanding securities if the acquisition of all voting
securities in excess of ten percent (10%) was approved in advance by a
majority of the Continuing Directors then in office or (B) such person
acquires in excess of ten percent (10%) of the combined voting power of
Peapack's then outstanding voting securities in violation of law and by
order of a court of competent jurisdiction, settlement or otherwise,
disposes or is required to dispose of all securities acquired in violation
of law.
c. Contract Period. "Contract Period" shall mean the
period commencing the day immediately preceding a Change in Control and
ending on the earlier of (i) the third anniversary of the Change in
Control or (ii) the death of the Executive. For the purpose of this
Agreement, a Change in Control shall be deemed to have occurred at the
date specified in the definition of Change-in-Control.
d. Exchange Act. "Exchange Act" means the Securities
Exchange Act of 1934, as amended.
e. Good Reason. When used with reference to a
voluntary termination by Executive of his/her employment with the Company,
"Good Reason" shall mean any of the following, if taken without
Executive's express written consent:
(1) The assignment to Executive of any duties
inconsistent with, or the reduction of powers or functions associated
with, Executive's position, title, duties, responsibilities and status
with the Company immediately prior to a Change in Control; any removal of
Executive from, or any failure to re-elect Executive to, any position(s)
or office(s) Executive held immediately prior to such Change in Control. A
change in title or positions resulting merely from a merger of the Company
into or with another bank or company which does not downgrade in any way
the Executive's powers, duties and responsibilities shall not meet the
requirements of this paragraph;
(2) A reduction by the Company in Executive's
annual base compensation as in effect immediately prior to a Change in
Control or the failure to award Executive annual increases in accordance
herewith;
(3) A failure by the Company to continue any
bonus plan in which Executive participated immediately prior to the Change
in Control or a failure by the Company to continue Executive as a
participant in such plan on at least the same basis as Executive
participated in such plan prior to the Change in Control;
(4) The Company's transfer of Executive to
another geographic location outside of New Jersey or more than 25 miles
from his/her present office location, except for required travel on the
Company's business to an extent substantially
consistent with Executive's business travel obligations immediately prior
to such Change in Control;
(5) The failure by the Company to continue in
effect any employee benefit plan, program or arrangement (including,
without limitation the Company's retirement plan, benefit equalization
plan, life insurance plan, health and accident plan, disability plan,
deferred compensation plan or long term stock incentive plan) in which
Executive is participating immediately prior to a Change in Control
(except that the Company may institute or continue plans, programs or
arrangements providing Executive with substantially similar benefits); the
taking of any action by the Company which would adversely affect
Executive's participation in or materially reduce Executive's benefits
under, any of such plans, programs or arrangements; the failure to
continue, or the taking of any action which would deprive Executive, of
any material fringe benefit enjoyed by Executive immediately prior to such
Change in Control; or the failure by the Company to provide Executive with
the number of paid vacation days to which Executive was entitled
immediately prior to such Change in Control;
(6) The failure by the Company to obtain an
assumption in writing of the obligations of the Company to perform this
Agreement by any successor to the Company and to provide such assumption
to the Executive prior to any Change in Control; or
(7) Any purported termination of Executive's
employment by the Company during the term of this Agreement which is not
effected pursuant to all of the requirements of this Agreement; and, for
purposes of this Agreement, no such purported termination shall be
effective.
f. Subsidiary. "Subsidiary" means any corporation in
an unbroken chain of corporations, beginning with Peapack, if each of the
corporations other than the last corporation in the unbroken chain owns
stock possessing 50% or more of the total combined voting power of all
classes of stock in one of the other corporations in such chain.
2. Employment. The Company hereby agrees to employ the
Executive, and the Executive hereby accepts employment, during the
Contract Period upon the terms and conditions set forth herein.
3. Position. During the Contract Period the Executive shall
be employed as Executive Vice President/Chief Financial Officer of Peapack
and the Bank, or such other corporate or divisional profit center as shall
then be the principal successor to the business, assets and properties of
the Company, with substantially the same title and the same duties and
responsibilities as before the Change in Control. The Executive shall
devote his/her full time and attention to the business of the Company, and
shall not during the Contract Period be engaged in any other business
activity. This paragraph shall not be construed as preventing the
Executive from managing any investments of his/her which do not require
any service on his/her part in the operation of such investments.
4. Cash Compensation. The Company shall pay to the
Executive compensation for his/her services during the Contract Period as
follows:
a. Base Salary. A base annual salary equal to the
annual salary in effect as of the Change in Control. The annual salary
shall be payable in installments in accordance with the Company's usual
payroll method.
b. Annual Bonus. An annual cash bonus equal to at
least the average of the bonuses paid to the Executive in the three years
prior to the Change in Control.
The bonus shall be payable at the time and in the manner which the Company
paid such bonuses prior to the Change in Control.
c. Annual Review. The Board of Directors of the
Company during the Contract Period shall review annually, or at more
frequent intervals which the Board determines is appropriate, the
Executive's compensation and shall award him additional compensation to
reflect the Executive's performance, the performance of the Company and
competitive compensation levels, all as determined in the discretion of
the Board of Directors.
5. Expenses and Fringe Benefits.
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a. Expenses. During the Contract Period, the
Executive shall be entitled to reimbursement for all business expenses
incurred by him with respect to the business of the Company in the same
manner and to the same extent as such expenses were previously reimbursed
to him immediately prior to the Change in Control.
b. Supplemental Retirement Plan. During the Contract
Period, if the Executive was entitled to benefits under any supplemental
retirement plan prior to the Change in Control, the Executive shall be
entitled to continued benefits under such plan after the Change in Control
and such plan may not be modified to reduce or eliminate such benefits
during the Contract Period.
c. Club Membership and Automobile. If prior to the
Change in Control, the Executive was entitled to membership in a country
club and/or automobile allowance, he shall be entitled to the same
membership and/or automobile allowance provided to him prior to the Change
in Control.
d. Other Benefits. The Executive also shall be
entitled to vacations and sick days, in accordance with the practices and
procedures of the Company, as such existed immediately prior to the Change
in Control. During the Contract Period, the Executive also shall be
entitled to hospital, health, medical and life insurance, and any other
benefits enjoyed, from time to time, by senior officers of the Company,
all upon terms as favorable as those enjoyed by other senior officers of
the Company. Notwithstanding anything in this paragraph 5(d) to the
contrary, if the Company adopts any change in the benefits provided for
senior officers of the Company, and such policy is uniformly applied to
all officers of the Company (and any successor or acquirer of the Company,
if any), including the chief executive officer of such entities, then no
such change shall be deemed to be contrary to this paragraph.
6. Termination for Cause. The Company shall have the right
to terminate the Executive for Cause, upon written notice to him of the
termination which notice shall specify the reasons for the termination. In
the event of termination for Cause the Executive shall not be entitled to
any further benefits under this Agreement.
7. Disability. During the Contract Period if the Executive
becomes permanently disabled, or is unable to perform his/her duties
hereunder for 4 consecutive months in any 12 month period, the Company may
terminate the employment of the Executive. In such event, the Executive
shall not be entitled to any further benefits under this Agreement.
8. Death Benefits. Upon the Executive's death during the
Contract Period, his/her estate shall not be entitled to any further
benefits under this Agreement.
9. Termination Without Cause or Resignation for Good
Reason. The Company may terminate the Executive without Cause during the
Contract Period by written notice to the Executive providing four weeks
notice. The Executive may resign for Good Reason during the Contract
Period upon four weeks' written notice to the Company specifying facts and
circumstances claimed to support the Good Reason. The Executive shall be
entitled to give a Notice of Termination that his/her or her employment is
being terminated for Good Reason at any time during the Contract Period,
not later than twelve months after any occurrence of an event stated to
constitute Good Reason. If the Company terminates the Executive's
employment during the Contract Period without Cause or if the Executive
Resigns for Good Reason, the Company shall, subject to Section 12 hereof:
(a) Within 20 business days of the termination of employment pay
the Executive a lump sum severance payment in an amount equal to three (3.0)
times the highest annual cash compensation, consisting solely of salary and
bonus, as well as any 401(k) deferral, paid to the Executive during any calendar
year in each of the three calendar years immediately prior to the Change in
Control, along with any Gross-Up Payment due under Section 12 hereof for the
calendar year of the termination; and
(b) Continue to provide the Executive during the remainder of the
Contract Period with health, hospitalization and medical insurance, as were
provided at the time of the termination of his/her employment with the Company,
at the Company's cost (subject to standard deductibles and co-pays, and the
Executive's continuing payment of his/her part of the premium for family
coverage, if applicable).
The Executive shall not have a duty to mitigate the damages suffered
by him in connection with the termination by the Company of his/her employment
without Cause or a
resignation for Good Reason during the Contract Period. If the Company fails to
pay the Executive the lump sum amount due him hereunder or the Gross-Up Payment
due under Section 12 hereof, or to provide him with the health, hospitalization
and medical insurance benefits due under this section, the Executive, after
giving 10 days' written notice to the Company identifying the Company's failure,
shall be entitled to recover from the Company all of his/her reasonable legal
fees and expenses incurred in connection with his/her enforcement against the
Company of the terms of this Agreement. The Executive shall be denied payment of
his/her legal fees and expenses only if a court finds that the Executive sought
payment of such fees without reasonable cause and not in good faith.
10. Resignation Without Good Reason. The Executive shall be
entitled to resign from the employment of the Company at any time during
the Contract Period without Good Reason, but upon such resignation the
Executive shall not be entitled to any additional compensation for the
time after which he ceases to be employed by the Company, and shall not be
entitled to any of the other benefits provided hereunder. No such
resignation shall be effective unless in writing with four weeks' notice
thereof.
11. Non-Disclosure of Confidential Information.
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a. Non-Disclosure of Confidential Information. Except
in the course of his/her employment with the Company and in the pursuit of
the business of the Company or any of its subsidiaries or affiliates, the
Executive shall not, at any time during or following the Contract Period,
disclose or use, any confidential information or proprietary data of the
Company or any of its subsidiaries or affiliates. The Executive agrees
that, among other things, all information concerning the identity of and
the Company's relations with its customers is confidential information.
b. Specific Performance. Executive agrees that the
Company does not have an adequate remedy at law for the breach of this
section and agrees that he shall be subject to injunctive relief and
equitable remedies as a result of the breach of this section. The
invalidity or unenforceability of any provision of this Agreement shall
not affect the force and effect of the remaining valid portions.
c. Survival. This section shall survive the
termination of the Executive's employment hereunder and the expiration of
this Agreement.
12. Gross-Up for Taxes.
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a. Additional Payments. If, for any taxable year, Executive
shall be liable for the payment of an excise tax under Section 4999 and/or
Section 409A or other substitute or similar tax assessment (the "Excise Tax") of
the Internal Revenue Code of 1986, as amended (the "Code"), including the
corresponding provisions of any succeeding law, with respect to any payments
under this Section 12 or any payments and/or benefits under this Agreement or
under any benefit plan of the Company applicable to Executive individually or
generally to executives or employees of the Company, then, the Company shall pay
to the Executive, subject to Section 15 hereof by paying the withholding for the
Executive, an additional amount (the "Gross-Up Payment") such that the net
amount retained by the Executive, after deduction of any Excise Tax on such
payments and benefits and any federal, state and local income tax and Excise Tax
upon payments provided for in this Section 12, shall be equal to the payments
due to the Executive hereunder and the payments and/or benefits due to the
Executive under any benefit plan of the Company. Each Gross-Up Payment shall be
made upon the later of (i) five (5) days after the date the Executive notifies
the Company or the Company receives notice from the certified public accounting
firm of its need to make such Gross-Up Payment, or (ii) the date of any payment
causing
the liability for such Excise Tax. The amount of any Gross-Up Payment under this
section shall be computed by a nationally recognized certified public accounting
firm designated jointly by the Company and the Executive. The cost of such
services by the accounting firm shall be paid by the Company. If the Company and
the Executive are unable to designate jointly the accounting firm, then the firm
shall be the accounting firm used by the Company immediately prior to the Change
in Control.
b. IRS Disputed Claims. The Executive shall notify the
company in writing of any claim by the Internal Revenue Service ("IRS") that, if
successful, would require the payment by the Company of a Gross-Up Payment in
addition to that payment previously paid by the Company pursuant to this
section. Such notification shall be given an soon as practicable but no later
than fifteen (15) business days after the Executive is informed in writing of
such claim and shall apprise the Company of the nature of such claim, the date
on which such claim is requested to be paid, and attach a copy of the IRS
notice. The Executive shall not pay such claim prior to the expiration of the
thirty (30) day period following the date on which the Executive gives such
notice to the Company (or such shorter period ending on the date that any
payment of taxes with respect to such claim is due). If the Company notifies the
Executive in writing prior to the expiration of such period that it desires to
contest such claim, the Executive shall:
(i) Give the Company any information reasonably
requested by the Company relating to such claim;
(ii) Take such action in connection with contesting
such claim as the Company shall reasonably request in writing from time to
time, including, without limitation, accepting legal representation with
respect to such claim by an attorney reasonably selected by the Company;
(iii) Cooperate with the Company in good faith in order
effectively to contest such claim; and
(iv) Permit the Company to participate in any
proceedings relating to such claim; provided, however that the Company
shall pay directly all costs and expenses (including legal and accounting
fees, as well as other expenses and any additional interest and penalties)
incurred by the Executive and the Company in connection with an IRS levy,
contest or claim.
c. This Section shall survive the termination of
Executive's employment hereunder.
13. Term and Effect Prior to Change in Control.
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a. Term. Except as otherwise provided for hereunder,
this Agreement shall commence on the date hereof and shall remain in
effect for a period of 3 years from the date hereof (the "Initial Term")
or until the end of the Contract Period, whichever is later. The Initial
Term shall be automatically extended for an additional one year period on
the anniversary date hereof (so that the Initial Term is always 3 years)
unless, prior to a Change in Control, the Chairman of the Board of
Directors of Peapack notifies the Executive in writing at any time that
the Contract is not so extended, in which case the Initial Term shall end
upon the later of (i) 3 years after the date hereof, or (ii) 2 years after
the date of such written notice.
b. No Effect Prior to Change in Control. This
Agreement shall not affect any rights of the Company to terminate the
Executive prior to a Change in Control or any rights of the Executive
granted in any other agreement or contract or plan with the Company. The
rights, duties and benefits provided hereunder shall only become effective
upon and after a Change in Control. If the full-time employment of the
Executive by the Company is ended for any reason prior to a Change in
Control, this Agreement shall thereafter be of no further force and
effect.
14. Severance Compensation and Benefits Not in Derogation of
Other Benefits. Anything to the contrary herein contained notwithstanding,
the payment or obligation to pay any monies, or granting of any benefits,
rights or privileges to Executive as provided in this Agreement shall not
be in lieu or derogation of the rights and privileges that the Executive
now has or will have under any plans or programs of or agreements with the
Company, except that if the Executive received any payment hereunder, he
shall not be entitled to any payment under the Company's severance
policies for officers and employees or under any employment agreement
between Executive and the Company including the Employment Agreement dated
January 1, 2008.
15. Payroll and Withholding Taxes. All payments to be made
or benefits to be provided hereunder by the Company shall be subject to
applicable federal and state payroll or withholding taxes. Any Gross-Up
Payment shall be made in the form of withholding taxes and shall not be
paid to the Executive, but shall be timely directed to the IRS (or any
state division of taxation) on the Executive's behalf.
16. Delay in Payment. Notwithstanding anything else to the
contrary in this Agreement, or any other plan, contract, program or
otherwise, the Company (and its affiliates) are expressly authorized to
delay any scheduled payments under this Agreement and any other plan,
contract, program or otherwise, as such payments relate to the Executive,
if the Company (or its affiliate) determines that such delay is necessary
in order to comply with the requirements of Section 409A of the Internal
Revenue Code. No such payment may
be delayed beyond the date that is six (6) months following the
Executive's separation from service (as defined in Section 409A). At the
end of such period of delay, the Executive will be paid the delayed
payment amounts, plus interest for the period of any such delay. For
purposes of the preceding sentence, interest shall be calculated using the
six (6) month Treasury Xxxx rate in effect on the date on which the
payment is delayed, and shall be compounded daily. Notwithstanding the
foregoing, in the event that the conditions of the severance exception
under Treasury Regulation Section 1.409A-1(b)(9)(iii) are satisfied,
payment of benefit will not be delayed for six (6) months following
termination from employment to the extent permitted under the severance
exception.
17. Miscellaneous. This Agreement is the joint and several
obligation of the Bank and Peapack. The terms of this Agreement shall be
governed by, and interpreted and construed in accordance with the
provisions of, the laws of New Jersey. This Agreement supersedes all prior
agreements and understandings with respect to the matters covered hereby,
including expressly any prior agreement with the Company concerning
change-in-control benefits. The amendment or termination of this Agreement
may be made only in a writing executed by the Company and the Executive,
and no amendment or termination of this Agreement shall be effective
unless and until made in such a writing. This Agreement shall be binding
upon any successor (whether direct or indirect, by purchase, merge,
consolidation, liquidation or otherwise) to all or substantially all of
the assets of the Company. This Agreement is personal to the Executive and
the Executive may not assign any of his/her rights or duties hereunder but
this Agreement shall be enforceable by the Executive's legal
representatives, executors or administrators. This Agreement may be
executed in two or
more counterparts, each of which shall be deemed an original, and it shall
not be necessary in making proof of this Agreement to produce or account
for more than one such counterpart.
(signature page to follow)
IN WITNESS WHEREOF, Peapack-Gladstone Bank and Peapack-Gladstone
Financial Corporation each have caused this Agreement to be signed by their duly
authorized representatives pursuant to the authority of their Boards of
Directors, and the Executive has personally executed this Agreement, all as of
the day and year first written above.
ATTEST: PEAPACK-GLADSTONE
FINANCIAL CORPORATION
/s/ Xxxxxxxxxx Xxxxxx By: /s/ Xxxxx X. Xxxxxx
Xxxxxxxxxx Xxxxxx, Secretary Xxxxx X. Xxxxxx, Chairman
ATTEST: PEAPACK-GLADSTONE BANK
/s/ Xxxxxxxxxx Xxxxxx By: /s/ Xxxxx X. Xxxxxx
Xxxxxxxxxx Xxxxxx, Secretary Xxxxx X. Xxxxxx, Chairman
WITNESS:
/s/ Xxxxxxx X. Xxxxx By: /s/ Xxxxxx X. Birmingham
Xxxxxx X. Birmingham, Executive
