DOCID687400A02- 6 -
                     PEAPACK-GLADSTONE FINANCIAL CORPORATION
                           DIRECTORS' RETIREMENT PLAN


Section 1. Establishment of the Plan
           -------------------------

           Effective March 31, 2001, there is hereby established a plan under
which certain members of the Board of Directors of Peapack-Gladstone Financial
Corporation or any of its subsidiaries, who are not current employees
("Directors") are provided with a nonqualified retirement plan benefit following
termination of their service as Directors.

Section 2. Definitions
           -----------

           When used in the Plan, the following terms shall have the definitions
set forth in this Section 2:

           2.1 Beneficiary: The term "Beneficiary" means the beneficiary or
beneficiaries (including any contingent beneficiary or beneficiaries designated
by the Participant pursuant to Section 4.3. hereof).

           2.2 Board of Directors: The term "Board of Directors" means the Board
of Directors of the Company.

           2.3 Company: The term "Company" means Peapack-Gladstone Financial
Corporation and all of its subsidiaries.

           2.4 Final Compensation: The term "Final Compensation" means the
retainer and the aggregate of all fees for service and attendance at Board of
Directors and committee meetings to which a Director is entitled for services
rendered to the Company as a Director for the last year in which a Director
served as a member of the Board of Directors for the entire calendar year.










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           2.5 Disability: The term "Disability" means the complete and
permanent inability of an individual, by reason of illness or accident, to
perform the individual's duties as a Director. The determination whether a
Director has suffered a Disability shall be made by the Board of Directors based
upon such evidence as it deems appropriate.

           2.6 Participant: The term "Participant" means a Director who is not a
current employee of the Company and who has become a Participant pursuant to
Section 3.

           2.7 Plan: The term "Plan" means this Peapack-Gladstone Financial
Corporation Directors' Retirement Plan, as set forth herein and as it may be
amended from time to time.

           2.8 Retirement: The term "Retirement" means the date on which a
Participant ceases to serve as a member of the Board of Directors, whether by
retirement, death, Disability or otherwise. 2.9 Retirement Benefit: The term
"Retirement Benefit" has the meaning set forth in Section 4. 2.10 Years of
Service: The term "Years of Service" means the number of complete years during
which a Participant serves as a member of the Board of Directors.
Notwithstanding the above, no more than ten (10) Years of Service will be
granted to any Director for service prior to the Effective Date. Years of
Service shall be measured from the date on which a Director is first elected as
a Director (but disregarding any periods thereafter during which the Director
did not serve as a member of the Board of Directors).

Section 3. Participation
           -------------

           Each individual who is or becomes a member of the Board of Directors
on or after the Effective Date, and who is not an employee of the Company, is
automatically a Participant in






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the Plan. If a member of the Board of Directors was or is an employee of the
Company, then he or she shall become a Participant in the Plan only upon
termination of employment as an employee with the Company, and only if he or she
continues to be a member of the Board of Directors thereafter.

Section 4. Retirement Benefits
           -------------------

           4.1 Benefit Formula. Each Participant who is a member of the Board on
or after the Effective Date, will be entitled to a Retirement Benefit under the
Plan upon his or her Retirement, provided that upon such Retirement he or she is
credited with at least ten (10) Years of Service. Notwithstanding the above, in
the event that a Participant who is credited with at least ten (10) Years of
Service ceases to be a Director as a result of death or Disability, he or she
shall be credited with a total of fifteen (15) Years of Service. In the event
that a Director with at least five (5) Years of Service ceases to serve as a
Director following a Change of Control (as such term is defined under Section
280G(b)(2)(A)(i) of the Internal Revenue Code of 1986, as amended) of the
Company, then such Director will nevertheless be treated as having fifteen (15)
Years of Service as of such Retirement. The annual amount of the Retirement
Benefit will be equal to twenty-five percent (25%) of the Participant's Final
Compensation (for a Participant with ten (10) Years of Service), except that the
percentage will increase by five percent (5%) for each Year of Service in excess
of ten (10), but in all cases limited to a maximum of fifty percent (50%) of
Final Compensation.

           4.2 Duration of Retirement Benefit. Each Participant who is entitled
to a Retirement Benefit under the Plan will receive such Retirement Benefit for
a period of five (5) years. In the event that the Participant dies prior to the
end of the five year payout period (or if he or she dies while still a Director,
and is otherwise entitled to a Retirement Benefit), the






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remaining portions of the Retirement Benefit will be paid to his or her
Beneficiary pursuant to the original schedule of payments. All Retirement
Benefit payments will be made annually, in January of a given year for such
year.

           4.3 Beneficiary Designations. A Participant may designate a
Beneficiary, in writing, in a form acceptable to the Board of Directors. A
Participant may revoke a prior designation of a Beneficiary and may also
designate a new Beneficiary without the consent of the previously designated
Beneficiary, provided, however, that such revocation and new designation (if
any) are in writing and filed with the Company before the Participant's death.
If the Participant does not designate a Beneficiary, or if no designated
Beneficiary survives the Participant, any amount not distributed to the
Participant during the Participant's lifetime shall be paid to the Participant's
estate.

Section 5. Prohibition Against Transfer
           ----------------------------

           The right of a Participant to receive payments under the Plan may not
be transferred except by will or applicable laws of descent and distribution. A
Participant may not assign, sell, pledge, or otherwise transfer amounts to which
he/she is entitled hereunder prior to payment thereof.

Section 6. General Provisions
           ------------------

           6.1 Director's Rights Unsecured. The Plan is unfunded. The right of
any Participant to receive retirement benefits under the provisions of the Plan
shall be an unsecured claim against the general assets of the Company.

           6.2 Administration. Except as otherwise provided in the Plan, the
Plan shall be administered by the Board of Directors, which shall have the
authority to adopt rules and





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regulations for carrying out the Plan, and which shall interpret, construe, and
implement the provisions of the Plan. The Board of Directors, however, shall
have the right to delegate some or any of its administrative functions under the
Plan to another person or entity.

           6.3 Legal Opinions. The Board of Directors may consult with legal
counsel, who may be counsel for the Company, with respect to its obligations and
duties under the Plan, or with respect to any action, proceeding, or any
questions of law, and shall not be liable with respect to any good faith action
taken, or omitted, by it pursuant to the advice of such counsel.

           6.4 Liability. Any decision made or action taken by the Board of
Directors, or any employee of the Company or any of its subsidiaries, arising
out of or in connection with the construction, administration, interpretation or
effect of the Plan, shall be absolutely discretionary, and shall be conclusive
and binding on all parties. Neither the Board of Directors nor any employee of
the Company or any of its subsidiaries shall be liable for any retirement
benefits or any action hereunder, whether of omission or commission, by any
other member or employee or by any agent to whom duties in connection with the
administration of the Plan have been delegated or, except in circumstances
involving bad faith, for anything done or omitted to be done.

           6.5 Withholding. The Company shall have the right to deduct from all
payments hereunder any taxes required by law to be withheld from such payments.
The recipients of such payments shall bear all taxes on amounts paid under the
Plan to the extent that no taxes are withheld thereon, irrespective of whether
withholding is required.

Section 7. Amendment, Suspension, and Termination
           --------------------------------------

           The Board of Directors shall have the right at any time, and for any
reason, to amend, suspend, or terminate the Plan, provided, however, that no
amendment, suspension, or





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termination shall reduce or eliminate a Participant's
Retirement Benefit accrued as of the date of such amendment, suspension or
termination.

Section 8. Applicable Law
           --------------

           The Plan shall be governed by, and construed in accordance with, the
laws of the State of New Jersey, except to the extent that such laws are
preempted by federal law.

Section 9. Effective Date
           --------------

           The Effective Date of this Plan is March 31, 2001.




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