Exhibit 10.2
PEAPACK-GLADSTONE FINANCIAL CORPORATION
2002 Stock Option Plan for Outside Directors
(Adopted by Directors January 10, 2002)
(Adopted by Shareholders April 23, 2002)
(Amended and Restated by Directors December 8, 2005)
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1. Purpose
The purpose of the Peapack-Gladstone Corporation (the "Company") 2002
Stock Option Plan for Outside Directors (the "Directors' Option Plan" or
the "Plan") is to promote the growth and profitability of the Company by
providing outside directors of the Company with an incentive to achieve
long-term objectives of the Company and to attract and retain non-employee
directors of outstanding competence by providing such outside directors
with an opportunity to acquire an equity interest in the Company.
2. Grant of Options
(a) The Plan will be administered by the Compensation Committee of the
Board of Directors (the "Committee"). The Committee shall consist solely
of two or more Non-Employee Directors, as such term is defined in Rule
16b-3(b)(3) of the Exchange Act. The Committee may, from time to time,
recommend the grant of options to the outside directors (for purposes of
this Directors' Option Plan, the term "outside director" shall mean a
member of the Board of Directors of the Company not also serving as an
employee of the Company) under this Plan in such numbers and upon such
terms as it deems appropriate, but all grants must be approved by the
Company's Board of Directors.
(b) Option Price. The purchase price per share of the Common Stock
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deliverable upon exercise of such option shall equal the Fair Market Value
of the Common Stock on the date of the grant of this option as determined
under paragraph (d) of this Section 2 and in no event below the par value
of the Common Stock on the Date of Grant.
(c) Ineligibility. An option under the Directors' Option Plan shall not be
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granted to any outside director who at any previous time was an employee
of the Company and in such capacity was eligible to receive any options to
purchase Common Stock.
(d) Fair Market Value. For purposes of the Directors' Option Plan, when
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used in connection with Common Stock on a certain date, Fair Market Value
means the average of the high and low prices of known trades of the Common
Stock on the relevant date, or if the Common Stock was not traded on such
date, on the next preceding day on which the Common Stock was traded
thereon.
3. Terms and Conditions
(a) Option Agreement. Each option shall be evidenced by a written option
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agreement between the Company and the recipient specifying the number of
shares of Common Stock that may be acquired
through its exercise and containing such other terms and conditions which
are not inconsistent with the terms of this grant.
(b) Vesting. Each option granted pursuant to Section 2(a) hereof shall
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become exercisable in five annual installments of twenty percent (20%).
The first installment of options granted pursuant to Section 2(a) shall
vest one year from the date of grant and the remaining four annual
installments will vest on successive anniversary dates, but only if the
optionee continues to serve as an outside director at such applicable
vesting date, unless otherwise provided in this Plan. Notwithstanding the
foregoing, the Committee may accelerate the vesting and exercisability of
any option or portion thereof at any time.
(c) Manner of Exercise. The option when exercisable may be exercised from
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time to time in whole or in part, by delivering a written notice of
exercise to the President of the Company signed by the recipient. Such
notice is irrevocable and must be accompanied by full payment of the
exercise price (as determined in Section 2(b) hereof) in cash or shares of
previously acquired common stock of the Company at the Fair Market Value
of such shares determined on the exercise date by the manner described in
Section 2(d) above.
(d) Transferability. Each option granted hereby may be exercised only by
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the recipient to whom it is issued, or in the event of the outside
director's death, his or her legal representative or successor(s) in
interest pursuant to the terms of section 3(e) hereof.
(e) Termination of Service. Upon the termination of a recipient's service
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for any reason other than disability, Change in Control, death or removal
for cause, the participant's stock options shall be exercisable only as to
those shares which were immediately purchasable by the recipient at the
date of termination. In the event of death or disability of any recipient,
all stock options held by such recipient, whether or not exercisable at
such time, shall become immediately exercisable by the recipient or the
recipient's legal representatives or beneficiaries. Upon termination of
the recipient's service due to or within 12 months after a Change in
Control, all stock options held by such recipient, whether or not
exercisable at such time, shall become immediately exercisable. However,
shares of Common Stock acquired through the exercise of options granted
under Section 2 may not be sold or otherwise disposed of for a period of
one year from the Date of Grant of the option. For purposes of this plan
the following terms are defined:
(i) "Change in Control" for purposes of this Plan shall mean an
event of a nature that: (1) any "person" (as the term is used in
Sections 13(d) and 14(d) of the Exchange Act) who is not now
presently but becomes the "beneficial owner" (as defined in Rule
13d-3 under the Exchange Act), directly or indirectly, of securities
of the Company representing 25% or more of the Company's outstanding
securities except for any securities purchased by any tax-qualified
employee benefit plan of the Company; or (2) individuals who
constitute the Board on the date hereof (the "Incumbent Board")
cease for any reason to constitute at least a majority thereof,
provided that any person becoming a director subsequent to the date
hereof whose election was approved by a vote of at least
three-quarters of the directors comprising the Incumbent Board, or
whose nomination for election by the Company's stockholders was
approved by the same Nominating Committee serving under an Incumbent
Board, shall be, for purposes of this clause (2), considered as
though he were a member of the Incumbent Board; or (3) filing is
made for regulator approval to implement a plan of reorganization,
merger, consolidation, sale of all or
substantially all the assets of the Company or similar transaction
occurs in which the Company is not the resulting entity or such
plan, merger, consolidation, sale or similar transaction occurs; or
(4) a proxy statement soliciting proxies from shareholders of the
Company shall be distributed by someone other than the current
management of the Company, seeking stockholder approval of a plan of
reorganization, merger or consolidation of the Company or similar
transaction with one or more corporations as a result of which the
outstanding shares of the class of securities then subject to the
plan or transaction are exchanged for or converted into cash or
property or securities not issued by the Company; or (5) a tender
offer is made for 25% or more of the voting securities of the
Company.
(ii) "Disability" means the permanent and total inability by reason
of mental or physical infirmity, or both, of an outside director to
perform the work customarily assigned to him. Additionally, a
medical doctor selected or approved by the Board of Direct ors must
advise the Board that it is either not possible to determine when
such disability will terminate or that it appears probable that such
disability will be permanent during the remainder of said
recipient's lifetime.
(f) Termination of Option. Each option shall expire upon the earlier of
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(i) one hundred and twenty (120) months following the date of grant, or
(ii) three (3) years following the date on which the outside director
ceases to serve in such capacity for any reason other than removal for
cause. If the outside director dies before fully exercising any portion of
an option then exercisable, such option may be exercised by such outside
director's beneficiary, personal representative(s), heir(s) or devisee(s)
at any time within the three (3) year period following his or her death;
provided, however, that in no event shall the option be exercisable more
than one hundred and twenty (120) months after the date of its grant. If
the outside director is removed for cause, all options awarded to him
shall expire upon such removal.
4. Common Stock Subject to the Directors' Option Plan
The shares which shall be issued and delivered upon exercise of options
granted under the Directors' Option Plan may be either authorized and
unissued shares of Common Stock or authorized and issued shares of Common
Stock held by the Company as treasury stock. The number of shares of
Common Stock reserved for issuance under the Directors' Option Plan shall
not exceed 40,000 shares of the Common Stock of the Company, no par value
per share, subject to adjustments pursuant to this Section 4. Any shares
of Common Stock subject to an option which for any reason either
terminates unexercised or expires, shall again be available for issuance
under the Directors' Option Plan.
In the event of any change or changes in the outstanding Common Stock of
the Company by reason of any stock dividend or split, recapitalization,
reorganization, merger, consolidation, spin-off, combination or any
similar corporate change, or other increase or decrease in such shares
effected without receipt or payment of consideration by the Company, the
number of shares of Common Stock which may be issued under the Directors'
Option Plan, the number of shares of Common Stock to options granted under
this Directors' Option Plan, and the option price of such options, shall
be automatically and proportionately adjusted to prevent dilution or
enlargement of the rights granted to recipient under the Directors' Option
Plan.
5. Effective Date of the Plan; Shareholder Ratification
This Plan was approved by the Board of Directors on January 10, 2002 and
shall become effective on such date if it is approved by the Shareholders
by a majority of the votes cast on such proposal at the 2002 Annual
Meeting if a quorum is present.
6. Termination of the Plan
The right to grant options under the Directors' Option Plan will terminate
automatically upon the earlier of ten years after the Effective Date of
the Plan or the issuance of 40,000 shares of Common Stock (the maximum
number of shares of Common Stock reserved for under this Plan) subject to
adjustment pursuant to Section 4 hereof.
7. Amendment of the Plan
The Directors' Option Plan may be amended from time to time by the Board
of Directors of the Company provided that Sections 2 and 3 hereof shall
not be amended more than once every six months other than to comport with
the Internal Revenue Code of 1986, as amended, or the Employee Retirement
Income Security Act of 1974, as amended, or the rules thereunder. Except
as provided in Section 4 hereof, rights and obligations under any option
granted before an amendment shall not be altered or impaired by such
amendment without the written consent of the optionee. If the Directors'
Option Plan is subject to 17 C.F.R. ss.240.16(b)-3 ("Rule 16(b)-3") of the
rules and regulations promulgated under the Securities Exchange Act of
1934 and an amendment would require shareholder approval under such Rule
16(b)-3 or as otherwise may be required under applicable New Jersey law,
then subject to the discretion of the Board of Directors of the Company,
such amendment shall be presented to shareholders for approval; provided,
however, that the failure to obtain shareholder ratification shall not
affect the validity of this Plan as so amended and the options granted
thereunder.
8. Applicable Law
The Plan will be administered in accordance with the laws of the State of
New Jersey and applicable federal law.
9. Compliance with Section 16
If this Plan is qualified under Rule 16b-3, transactions under this Plan
are intended to comply with all applicable conditions of Rule 16b-3 or its
successors under the Exchange Act. To the extent that any provision of the
Plan fails to so comply, such provision shall be deemed null and void, to
the extent permitted by law.