Exhibit 10.1
CHANGE-IN-CONTROL AGREEMENT
BRIDGET J. WALSH
THIS EMPLOYMENT AGREEMENT (the "Agreement"), is made as of this 2nd day
of August, 2006, among PEAPACK-GLADSTONE BANK ("Bank"), a New Jersey state
banking association with its principal office at 190 Main Street, Gladstone, New
Jersey 07934, PEAPACK-GLADSTONE FINANCIAL CORPORATION ("Peapack"), a New Jersey
Corporation which maintains its principal office at 158 Route 206 North,
Gladstone, New Jersey 07934 (Peapack and the Bank collectively are the
"Company") and Bridget J. Walsh (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:
Definitions
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a. Cause. For purposes of this Agreement "Cause" with respect to
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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/her 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
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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 ornomination 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
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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
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of 1934, as amended.
e. Good Reason. When used with reference to a voluntary
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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
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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,
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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
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employed as Senior Vice 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/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
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compensation for his/her services during the Contract Period as follows:
a. Base Salary. A base annual salary equal to the annual salary
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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
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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
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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/her 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
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entitled to reimbursement for all business expenses incurred by him/her 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/her immediately prior to the
Change in Control.
b. Supplemental Retirement Plan. During the Contract Period, if
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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
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Control, the Executive was entitled to membership in a country club and/or the
use of an automobile, he/she 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
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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
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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
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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
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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
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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 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/her 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/her hereunder
or the Gross-Up Payment due under Section 12 hereof, or to provide him/her 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/her 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
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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
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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
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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
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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
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liable for the payment of an excise tax under Section 4999 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/her 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 in good funds
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
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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/her
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 and provided
further that the Company shall not take any action or fail to make any Gross-Up
Payment so as to cause the assessment of any IRS levy and the Company shall
cause any levy so assessed to be immediately released by payment of the Gross-Up
Amount, together with all costs, interest and penalties.
13. Term and Effect Prior to Change in Control.
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a. Term. Except as otherwise provided for hereunder, this
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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
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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/her Agreement shall thereafter be of no
further force and effect.
14. Severance Compensation and Benefits Not in Derogation of Other
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Benefits. Anything to the contrary herein contained notwithstanding, the payment
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or obligation to pay any monies, or granting of any benefits, rights or
privileges to Executive as provided in this/her 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/she shall not be entitled to
any payment under the Company's severance policies for officers and employees.
15. Payroll and Withholding Taxes. All payments to be made or
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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 sent to the IRS in the ordinary course of the Company's payroll
withholding.
16. Miscellaneous. This Agreement is the joint and several
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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/her 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/ Robert M. Rogers By: /s/ Frank A. Kissel
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Robert M. Rogers, President Frank A. Kissel, Chairman
ATTEST: PEAPACK-GLADSTONE BANK
/s/ Robert M. Rogers By: Frank A. Kissel
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Robert M. Rogers, President Frank A. Kissel, Chairman
WITNESS:
/s/ Robert M. Rogers /s/ Bridget J. Walsh
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Robert M. Rogers, President Bridget J. Walsh, Executive