EXHIBIT 10.1
CHANGE-IN-CONTROL AGREEMENT
(Xxxxx X. Xxxxxx)
THIS EMPLOYMENT AGREEMENT (the "Agreement"), is made as of this 1st day of
January, 1998, 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 XXXXX X. XXXXXX (the "Executive").
BACKGROUND
WHEREAS, the Executive has been continuously employed by the Bank for many
years;
WHEREAS, the Executive throughout his tenure has worked diligently in his
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 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 position, and that they be able to receive and
rely upon his 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 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:
Definitions
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 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 approval by Peapack's stockholders 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 date the Executive
would attain age 65 or (iii) 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 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 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
President 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 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 which do not require any service on his part in the operation of such
investments.
4. Cash Compensation. The Company shall pay to the Executive compensation
for his 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.
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 the use
of an automobile, he shall be entitled to the same membership and/or use of
an automobile at least comparable to the automobile 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 acquiror 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 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 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
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; 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 employment with the Company,
at the Company's cost (subject to standard deductibles and co-pays, and the
Executive's continuing payment of his 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 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 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 reasonable
legal fees and expenses incurred in connection with his enforcement against the
Company of the terms of this Agreement. The Executive shall be denied payment of
his 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.
a) Non-Disclosure of Confidential Information. Except in the course of
his 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. Certain Reduction of Payments by the Company.
a) Anything in this Agreement to the contrary notwithstanding, prior
to the payment of any lump sum amount payable hereunder, the certified
public accountants of the Company immediately prior to a Change of Control
(the "Certified Public Accountants") shall determine as promptly as
practical and in any event within 20 business days following the
termination of employment of Executive whether any payment or distribution
by the Company to or for the benefit of the Executive (whether paid or
payable or distributed or distributable pursuant to the terms of this
Agreement or otherwise) (a "Payment") would more likely than not be
nondeductible by the Company for Federal income purposes because of Section
280G of the Internal Revenue Code of 1986, as amended (the "Code"), and if
it is then the aggregate present value of amounts payable or distributable
to or for the benefit of Executive pursuant to this Agreement (such
payments or distributions pursuant to this Agreement are thereinafter
referred to as "Agreement Payments") shall be reduced (but not below zero)
to the reduced Amount. For purposes of this paragraph, the "Reduced Amount"
shall be an amount expressed in present value which maximizes the aggregate
present value of Agreement Payments without causing any Payment to be
nondeductible by the Company because of said Section 280G of the Code.
b) If under paragraph (a) of this section the Certified Public
Accountants determine that any Payment would more likely than not be
nondeductible by the Company because of Section 280G of the Code, the
Company shall promptly give the Executive notice to that effect and a copy
of the detailed calculation thereof and of the Reduced Amount, and the
Executive may then elect, in his sole discretion, which and how much of the
Agreement Payments shall be eliminated or reduced (as long as after such
election the aggregate present value of the Agreement Payments equals the
Reduced Amount), and shall advise the Company in writing of his election
within 20 business days of his receipt of notice. If no such election is
made by the Executive within such 20-day period, the Company may elect
which and how much of the Agreement Payments shall be eliminated or reduced
(as long as after such election the Aggregate present Value of the
Agreement Payments equals the
Reduced Amount),and shall advise the Company in writing of his election
within 20 business days of his receipt of notice. If no selection is made
by the Executive within such 20-day period, the Company may elect which and
how much of the Agreement Payments shall be eliminated or reduced (as long
as after such election the Aggregate present Value of the Agreement
Payments equals the Reduced Amount) and shall notify the Executive promptly
of such election. For purposes of this paragraph, present Value shall be
determined in accordance with Section 280G(d)(4) of the Code. All
determinations made by the Certified Public Accountants shall be binding
upon the Company and Executive shall be made within 20 business days of a
termination of employment of Executive. With the consent of the Executive,
the Company may suspend part or all of the lump sum payment due under
Section 9 hereof and any other payments due to the Executive hereunder
until the Certified Public Accountants finish the determination and the
Executive (or the Company, as the case may be) elect how to reduce the
Agreement Payments, if necessary. As promptly as practicable following such
determination and the elections hereunder, the Company shall pay to or
distribute to or for the benefit of Executive such amounts as are then due
to Executive under this Agreement and shall promptly pay to or distribute
for the benefit of Executive in the future such amounts as become due to
Executive under this Agreement.
c) As a result of the uncertainty in the application of Section 280G
of the Code, it is possible that Agreement Payments may have been made by
the Company which should not have been made ("Overpayment") or that
additional Agreement Payments which will have not been made by the Company
could have been made ("Underpayment"), in each case, consistent with the
calculation of the Reduced Amount hereunder. In the event that the
Certified Public Accountants, based upon the assertion of a deficiency by
the Internal Revenue Service against the Company or Executive which said
Certified Public Accountants believe has a high probability of success,
determines that an Overpayment has been made, any such Overpayment shall be
treated for all purposes as a loan to Executive which
Executive shall repay to the Company together with interest at the
applicable Federal rate provided for in Section 7872(f)(2)(A) of the Code;
provided, however, that no amount shall be payable by Executive to the
Company in and for the extent such payment would not reduce the amount
which is subject to taxation under Section 4999 of the Code. In the event
that the Certified Public Accountants, based upon controlling precedent,
determine that an Underpayment has occurred, any such Underpayment shall be
promptly paid by the Company to or for the benefit of the Executive
together with interest at the applicable Federal rate provided for in
Section 7872(f)(2)(A) of the Code.
13. Term and Effect Prior to Change in Control.
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. Notwithstanding anything to the contrary contained herein, the
Initial Term shall cease when the Executive attains age 65.
b) No Effect Prior to Change in Control. This Agreement shall not
effect 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.
15. 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 parties hereto
expressly agree that the Severance Agreement between the Bank and the Executive
dated 1/27/95, is hereby terminated in its entirety. 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 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.
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/ XXXXXXXXX X. XxXXXXXXX By: /S/ T. XXXXXXX XXXX
--------------------------------- ------------------------------------
Xxxxxxxxx X. XxXxxxxxx, Secretary T. Xxxxxxx Xxxx, Chairman
ATTEST: PEAPACK-GLADSTONE BANK
XXXXXXXXX X. XxXXXXXXX By: /s/ T. XXXXXXX XXXX
--------------------------------- ------------------------------------
Xxxxxxxxx X. XxXxxxxxx, Secretary T. Xxxxxxx Xxxx, Chairman
WITNESS:
XXXX XXXXXX XXXXX X. XXXXXX, EXECUTIVE
----------------------------------- -----------------------------------
Xxxx Xxxxxx Xxxxx X. Xxxxxx, Executive
