Exhibit 10C
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CHANGE-IN-CONTROL AGREEMENT
Xxxxxxx X. Xxxxxxxxxx
THIS EMPLOYMENT AGREEMENT (the "Agreement"), is made as of this 9th day
of January, 2004, 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 XXXXXXX X. XXXXXXXXXX (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
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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:
1. Definitions
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a. Cause. For purposes of this Agreement "Cause" with respect
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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
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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
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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.
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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 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
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Act of 1934, as amended.
e. Good Reason. When used with reference to a voluntary
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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;
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(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;
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(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
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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
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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
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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
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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
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compensation for his services during the Contract Period as follows:
a. Base Salary. A base annual salary equal to the annual
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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
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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 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.
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5. Expenses and Fringe Benefits.
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a. Expenses. During the Contract Period, the Executive shall
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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,
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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
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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
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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
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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
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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 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 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 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
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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
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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
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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 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
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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.
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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. Certain Reduction of Payments by the Company.
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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
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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 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.
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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.
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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. 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
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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
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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 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
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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
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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 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.
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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
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Xxxxxxxxxx Xxxxxx, Secretary Xxxxx X. Xxxxxx, Chairman
ATTEST: PEAPACK-GLADSTONE BANK
/s/ Xxxxxxxxxx Xxxxxx By: /s/ Xxxxx X. Xxxxxx
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Xxxxxxxxxx Xxxxxx, Secretary Xxxxx X. Xxxxxx, Chairman
WITNESS:
/s/ Xxxxxxxxxx Xxxxxx /s/ Xxxxxxx X. Xxxxxxxxxx
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Xxxxxxxxxx Xxxxxx, Secretary Xxxxxxx X. Xxxxxxxxxx, Executive
