Exhibit 10.1
CHANGE IN CONTROL
AGREEMENT
THIS CHANGE IN CONTROL AGREEMENT
(the “Agreement”), is dated as of the 12
th day of June 2009, among Lakeland Bancorp, Inc.
(the “Holding Company”), a New Jersey corporation, and
Lakeland Bank (the “Bank”), a New Jersey chartered
commercial bank, having offices at 250 Oak Ridge Road, Oak Ridge,
New Jersey 07438 (the Holding Company and the Bank are collectively
referred to herein as the “Company”) and Ronald E.
Schwarz (the “Executive”).
BACKGROUND
WHEREAS , the Executive is employed as Executive Vice
President and Chief Retail Officer of the Company; and
WHEREAS , the Company believes that the future services
of the Executive are of great value to the Company and that it is
important for the growth and development of the Company that the
Executive continue in his position; and
WHEREAS , the Board of Directors of the Holding Company
(the “Board”) believes it is imperative that the
Company be able to rely upon the Executive to continue in his
position in the event that Holding Company receives any proposal
from a third person concerning a possible business combination
with, or acquisition of equities securities of, the Company, 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; and
WHEREAS , to achieve that goal, and to retain the
Executives services prior to any such activity, the Company 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, 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
a.
Cause . For purposes of this Agreement “Cause”
with respect to the termination by the Company of Executive’s
employment shall mean: (i) failure by the Executive to
materially perform his duties for the Company under this Agreement
after at least one warning in writing identifying specifically any
such material failure and offering a reasonable opportunity to cure
such failure; (ii) the willful engaging by the Executive in
material misconduct which causes material injury to the Company; 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
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. The Company shall have the burden of
proving Cause by clear and convincing evidence.
b. Change
in Control . For purposes of this Agreement, a “Change in
Control” shall mean the occurrence of any of the following
events with respect to the Holding Company:
(i) the
consummation of any consolidation or merger of the Holding Company
in which the Holding Company is not the continuing or surviving
corporation or pursuant to which shares of the Holding
Company’s common stock (“Common Stock”) would be
converted into cash, securities or other property, other than a
merger of the Holding Company in which the holders of the shares of
the Holding Company’s Common Stock immediately prior to the
merger have the same proportionate ownership of common stock of the
surviving corporation immediately after the merger; or
(ii) the
consummation of any sale, lease, exchange or other transfer (in one
transaction or a series of related transactions) of all, or
substantially all, of the assets of the Holding Company, other than
to a subsidiary or affiliate; or
(iii) an
approval by the shareholders of the Holding Company of any plan or
proposal for the liquidation or dissolution of the Holding Company;
or
(iv) any
action pursuant to which any person (as such term is defined in
Section 13(d) of the Exchange Act), corporation or other
entity (other than any person who owns more than ten percent
(10%) of the outstanding Common Stock on the date this
Agreement is entered into, the Holding Company or any benefit plan
sponsored by the Holding Company or any of its subsidiaries) shall
become the “beneficial owner” (as such term is defined
in Rule 13d-3 under the Exchange Act), directly or indirectly, of
shares of capital stock entitled to vote generally for the election
of directors of the Holding Company (“Voting
Securities”) representing fifty-one (51%) percent or
more of the combined voting power of the Holding Company’s
then outstanding Voting Securities (calculated as provided in Rule
13d-3(d) in the case of rights to acquire any such securities),
unless, prior to such person so becoming such beneficial owner, the
Board shall determine that such person so becoming such beneficial
owner shall not constitute a Change in Control; or
(v) the
individuals (x) who, as of the date on which the Agreement is
entered into, constitute the Board (the “Original
Directors”) and (y) who thereafter are elected to the
Board and whose election, or nomination for election, to the Board
was approved by a vote of at least two thirds of the Original
Directors then still in office (such Directors being called
“Additional Original Directors ” ) and (z) who thereafter are elected to the
Board and whose election or nomination for election to the Board
was approved by a vote of at least two thirds of the Original
Directors and Additional Original Directors then still in office,
cease for any reason to constitute a majority of the members
of
2
the Board.
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 second
anniversary of the Change in Control; (ii) the date the
Executive would attain age 65; or (iii) the death of the
Executive.
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:
(i) The
assignment to Executive of any duties inconsistent with, or the
reduction of authority, powers or responsibilities associated with,
Executive’s position, title, duties, responsibilities and
status with the Company immediately prior to a Change in Control (a
“Change in Assignment”) or 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 position, title, duties, responsibilities and
status or position(s) or office(s) following a Change in Control
shall constitute a Change in Assignment unless the
Executive’s new title, duties and responsibilities are
accepted in writing by the Executive, in the sole discretion of the
Executive;
(ii) A
reduction by the Company in Executive’s annual base
compensation as in effect immediately prior to a Change in
Control;
(iii) A
failure by the Company to continue for Executive 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.
(iv) After a
Change in Control, 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;
(v) The
failure by the Company to continue in effect for Executive any
employee benefit plan, program or arrangement (including, without
limitation any 401(k) plan, pension plan, life insurance plan,
health and accident plan, disability plan, or stock option 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 after a
Change in Control 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
3
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; or
(vi) 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 upon consummation of the event giving rise to the Change
in Control.
2.
Employment . During the Contract Period, the Company hereby
agrees to employ the Executive, and the Executive hereby accepts
employment, upon the terms and conditions set forth
herein.
3.
Position . During the Contract Period, the Executive shall
be employed as Executive Vice President and Chief Retail Officer of
the Company 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 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 salary
and bonus compensation for his services during the Contract Period
as follows:
a. Annual
Salary . An Annual salary equal to the annual salary in effect
immediately prior to Change in Control. The annual salary shall be
payable in installments in accordance with the Company’s
usual payroll method. The annual salary shall not be reduced during
the Contract Period.
b. Annual
Bonus . An Annual cash bonus equal to the highest annual bonus
paid to the Executive during the three most recent fiscal 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
5.
Expenses and Fringe Benefits . 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. If prior to the Change in Control, the Executive was
entitled to the use of an automobile, he shall be entitled to the
same use of an automobile at least comparable to the automobile
provided to him prior to the Change in Control, and he 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 Executive officers of the Company, all upon terms
as favorable as those enjoyed by other Executive officers of
the
4
Company. Notwithstanding anything in this
section to the contrary, if the Company adopts any change in the
expenses allowed to, or fringe benefits provided for, Executive
officers of the Company, and such policy is uniformly applied to
all Executive officers of the Company (and any successor or
acquirer of the Company, if any), including the chief executive
officer of such entities, then no such change shall be
de
