SEPARATION, NON-COMPETITION AND CONSULTING AGREEMENT
Exhibit 10.1
SEPARATION, NON-COMPETITION AND CONSULTING AGREEMENT
THIS SEPARATION, NON-COMPETITION AND CONSULTING AGREEMENT (this “Agreement”) dated as of August 9, 2019, and effective as of the Closing Date (as defined below), is entered into by and between OceanFirst Financial Corp., a Delaware corporation (the “Company”), OceanFirst Bank, National Association, a national banking association and a wholly owned subsidiary of the Company (the “Company Bank”) and Xxxxxx X. Xxxxxx, Xx. (“Xx. Xxxxxx” and together with the Company and the Company Bank, the “Parties”).
WHEREAS, the Company has entered into that certain Agreement and Plan of Merger (the “Merger Agreement”) dated as of August 9, 2019, by and among the Company, Midtown Merger Sub Corp., a New York corporation and a wholly-owned subsidiary of the Company (“Merger Sub”) and Country Bank Holding Company, Inc. (“CBHC”), pursuant to which, on the terms and subject to the conditions set forth in the Merger Agreement, Merger Sub will merge with and into CBHC, with CBHC as the surviving corporation, and immediately thereafter, CBHC will merge with and into the Company, with the Company as the surviving corporation, to be followed by the merger of Country Bank, a wholly owned subsidiary of CBHC (“Country Bank”), with and into Company Bank, with Company Bank as the surviving institution (together, the “Mergers”, and the date of the closing of such Mergers, the “Closing Date”);
WHEREAS, Xx. Xxxxxx currently is employed as President of CBHC and President and Chief Executive Officer of Country Bank; and
WHEREAS, as the result of the Mergers, the employment of Xx. Xxxxxx will be terminated; and
WHEREAS, in accordance with the terms and subject to the conditions set forth in the Merger Agreement, Xx. Xxxxxx is to be appointed to the Board of Directors of both the Company and the Company Bank as of the Effective Time (as defined in the Merger Agreement); and
WHEREAS, in connection with the Mergers, the Parties contemplate that Xx. Xxxxxx will serve in a consultant capacity to Company Bank for two (2) years following the Closing Date.
NOW THEREFORE, in consideration of the mutual covenants and agreements contained herein, and for other good and valuable consideration, the receipt and sufficiency whereof is hereby acknowledged, the Parties hereto agree, effective as of the Closing (as defined in the Merger Agreement), as follows:
1. Termination of Employment.
(a) Termination Date. The Parties agree that the Closing Date shall be the last day of Xx. Xxxxxx’x employment with CBHC and Country Bank and that Xx. Xxxxxx’x employment and service as the President of CBHC and President and Chief Executive Officer of Country Bank shall terminate as of the Closing Date. Effective as of the Closing Date, Xx. Xxxxxx shall resign from all positions as an officer, director, benefit plan trustee or otherwise with respect to CBHC
and Country Bank or any of their subsidiaries. It is intended that the Closing Date shall constitute Xx. Xxxxxx’x “separation from service” from CBHC and Country Bank within the meaning of Section 409A of the Internal Revenue Code of 1986, as amended (“Section 409A”).
(b) Cash Payment. As the result of the termination of Xx. Xxxxxx’x employment with Country Bank and CBHC, in exchange for the non-competition and non-solicitation restrictions in Sections 6(a) and 6(b) of this Agreement and subject to the conditions of Section 3(f) below, within five (5) business days following the Release Effective Date (as defined in Section 3(f) below), Xx. Xxxxxx will receive from Company Bank or Country Bank, if directed by Company Bank, a lump-sum cash severance payment in the amount of $850,000 (less any applicable withholdings) (the “Cash Payment”).
2. Appointment to the Board of Directors.
(a) Appointment. Effective as of the Closing Date, and in accordance with the terms of the Merger Agreement, the Company shall, and shall cause the Company Bank to, (i) increase the size of the Board of Directors of the Company and the Company Bank, respectively, by one member and (ii) appoint Xx. Xxxxxx to the Board of Directors of the Company and the Company Bank, respectively, in each case, unless Xx. Xxxxxx is unable to serve as such. Subject to the Company’s internal procedures and corporate governance guidelines with respect to director recommendations, the Leadership Committee of the Board of Directors of the Company shall recommend that the Board of Directors nominate Xx. Xxxxxx for election by the stockholders of the Company to the Board of Directors of the Company at the annual meeting of stockholders of the Company to be held in 2020 (and, if the Leadership Committee makes such recommendation, then the Board of Directors of the Company shall, subject to applicable fiduciary duties, nominate Xx. Xxxxxx for such election by the stockholders of the Company). Assuming Xx. Xxxxxx is duly elected to the Board of Directors of the Company by the requisite vote of the Company stockholders at the annual meeting of stockholders of the Company to be held in 2020, the Company shall cause the Company Bank to take such actions as may be necessary to appoint Xx. Xxxxxx to the Board of Directors of the Company Bank at its annual meeting of stockholders (or action by consent in lieu thereof) in 2020.
(b) Compensation for Board Service. If Xx. Xxxxxx is duly elected to the Board of Directors of the Company in accordance with Section 2(a), Xx. Xxxxxx shall be eligible to receive compensation as a non-employee director of the Company and the Company Bank following his appointment to the Board of Directors of the Company and Company Bank in accordance with the Company’s non-employee director compensation program as then in effect, pro-rated for any portion of the year for which he did not serve as a non-employee director.
3. Consulting Services.
(a) Services. For the period beginning on the day after the Closing Date and expiring on the date that is twenty-four (24) months following the Closing Date (the “Consulting Period”), Xx. Xxxxxx shall provide the following services to the Company and the Company Bank (the “Services”): (1) assisting with the retention of customers and key employees; (2) becoming generally familiar with the Company Bank’s services and products and introducing prospective customers to appropriate Company Bank employees; (3) otherwise initiating referrals for Company Bank business development officers and relationship managers; (4) assisting with customer relationship management; and (5) undertaking such other duties and responsibilities as may be reasonably related to the foregoing.
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Notwithstanding the foregoing, Xx. Xxxxxx shall not be required to provide the Services for more than eight (8) hours per week during any part of the Consulting Period. It is the intent of the Parties that the Services shall not exceed twenty percent (20%) of the average level of services that Xx. Xxxxxx performed during the three (3) year period prior to the Closing Date.
(b) Consulting Fee. In exchange for the Services performed hereunder, the Company and Company Bank agree to pay Xx. Xxxxxx $6,250 per month during the Consulting Period. The fee for the Services shall be paid within thirty (30) days following the last day of each calendar month during the Consulting Period, with the last payment due within forty-five (45) days following the termination or expiration of the Consulting Period. In the event that the Company terminates the Services prior to the end of the Consulting Period or in the event Xx. Xxxxxx dies before the end of the Consulting Period, Xx. Xxxxxx, or his designated beneficiary in the event of death, shall continue to receive the monthly consulting fee for the remainder of the Consulting Period at the same time such payments would have been paid to Xx. Xxxxxx had Xx. Xxxxxx continued to provide the Services during the entire Consulting Period.
(c) Expense Reimbursement. During the Consulting Period, the Company Bank shall continue to provide or reimburse Xx. Xxxxxx, as applicable, up to $1,000 per month for an automobile and associated expenses. After the Closing Date, the Company and Company Bank shall reimburse Xx. Xxxxxx for reasonable business expenses incurred during the course of performing the Services during the Consulting Period, in a manner consistent with the applicable expense reimbursement policies of the Company and the Company Bank, upon presentation to the Company of an itemized account of such expenses in such form as the Company and Company Bank may reasonably require, provided that such reimbursement shall be made as soon as practicable but in no event later than March 15 of the year following the year in which such right to such reimbursement occurred.
(d) Administrative Matters. During the Consulting Period, subject to compliance with all applicable Company policies and procedures, Xx. Xxxxxx shall be provided with his current office space at 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx, with reasonable existing secretarial support. In addition, following the Closing Date, the Company shall take such steps as are necessary to transfer Xx. Xxxxxx’x current cell phone number to his name.
(e) Status as Independent Contractor. In all matters relating to the Services, Xx. Xxxxxx shall be acting as an independent contractor. Neither Xx. Xxxxxx, nor any affiliated employees or subcontractors, shall be the agent(s) or employee(s) of the Company or the Company Bank under the meaning or application of any federal or state laws, including but not limited to unemployment insurance or worker’s compensation laws. Xx. Xxxxxx will be solely responsible for all income, business or other taxes imposed on the recipient and payable as a result of the fees paid for the Services. Xx. Xxxxxx shall not sign any agreement or make any commitments on behalf of the Company or the Company Bank or bind the Company or the Company Bank in any way, nor shall Xx. Xxxxxx make any public statements concerning the Services that purport to be on behalf of the Company or the Company Bank, in each case without prior express written consent from the Company or the Company Bank. Except as otherwise may conflict with the
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other provisions of this Agreement, Xx. Xxxxxx shall perform the Services on a non-exclusive basis and shall be free to accept other engagements during the term of this Agreement. The Parties hereby acknowledge and agree that neither the Company nor the Company Bank has the right to control the manner, means, or method by which Xx. Xxxxxx performs the Services.
(f) Release. The Cash Payment described in Section 1(b) of this Agreement shall be contingent upon (x) Xx. Xxxxxx executing and delivering to the Company a general release of claims substantially in the form attached as Exhibit A (the “Release”) within 45 days following the Closing Date and (y) such Release becoming effective in accordance with its terms (the date on which such Release becomes effective, the “Release Effective Date”). Xx. Xxxxxx shall not sign the Release sooner than the Closing Date.
4. Other Payments and Benefits.
(a) Accrued Pay; Unused Vacation. Xx. Xxxxxx shall receive a lump sum cash payment (less any applicable withholdings) on the Closing Date in respect of his accrued but unpaid base salary and any accrued but unused vacation days earned through the Closing Date.
(b) Other Plans. Xx. Xxxxxx’x right to receive vested payments and benefits under any other plan, program or arrangement (including, without limitation, the Country Bank 401(k) Savings & Retirement Plan) shall be governed by the terms of such other plan, program or arrangement that are applicable to terminated employees.
(c) Insurance Coverage. Xx. Xxxxxx shall be permitted to remain on Country Bank’s health and welfare plans through October 31, 2020 on the same terms and conditions as active employees of Country Bank. For the period from November 1, 2020 through the expiration of the Consulting Period, the Company Bank shall provide Xx. Xxxxxx with, subject to Xx. Xxxxxx properly and timely making an election under COBRA, an amount in cash equal to the COBRA premium for Xx. Xxxxxx. Xx. Xxxxxx shall be responsible for all applicable taxes incurred by him in connection with such payments and the provision of such benefits and the coverage provided hereunder shall be secondary to any coverage provided to Xx. Xxxxxx by a subsequent employer and to any Medicare coverage for which Xx. Xxxxxx becomes eligible.
5. Legal Fees. The Company shall reimburse Xx. Xxxxxx for all out-of-pocket expenses, including, without limitation, reasonable attorney’s fees, incurred by Xx. Xxxxxx in connection with successful enforcement by Xx. Xxxxxx of the obligations of the Company and the Company Bank to Xx. Xxxxxx under this Agreement. Successful enforcement shall mean the grant of an award of money or the requirement that the Company and/or the Company Bank take some action specified by this Agreement: (i) as a result of a court or arbitration order, or (ii) otherwise following an initial failure of the Company and/or the Company Bank to pay such money or take such action promptly after written demand therefor from Xx. Xxxxxx stating the reason that such money or action was due under this Agreement at or prior to the time of such demand.
6. Restrictive Covenants.
(a) Non-Competition. In exchange for the Cash Payment in Section 1(b) of this Agreement, during the period commencing on the Closing Date and ending twenty-four (24)
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months following the Closing Date (the “Restricted Period”), Xx. Xxxxxx shall not directly or indirectly, either as a principal, agent, employee, employer, consultant, partner, shareholder of a closely held corporation or shareholder in excess of five percent (5%) of a publicly traded corporation, corporate officer or director, or in any other individual or representative capacity, engage or otherwise participate in any manner or fashion in any business that is a Competing Business in the Area. Xx. Xxxxxx covenants and agrees that: (i) the Company and the Company Bank are engaged in a highly competitive business and that the preservation of their respective customer relationships and the “Confidential Information” (as defined below) is critical to the Company and the Company Bank’s continued business success; (ii) the Company and the Company Bank are purchasing goodwill developed by Country Bank and CBHC in the Mergers; (iii) by virtue of Xx. Xxxxxx’x employment with Country Bank and CBHC, Xx. Xxxxxx has had contact with Country Bank’s and CBHC’s clients and valuable confidential information and Xx. Xxxxxx’x engaging in or working for or with any business that is a Competing Business in the Area would cause the Company, the Company Bank, and their respective subsidiaries and affiliates irreparable harm; and (iv) this restrictive covenant is reasonable as to duration, terms and geographical area and that the same protects the legitimate interests of the Company, the Company Bank and their subsidiaries and affiliates, imposes no undue hardship on Xx. Xxxxxx, is not injurious to the public, and that any violation of this restrictive covenant shall be specifically enforceable in any court with jurisdiction upon short notice. Solely for purposes of this Section 6(a): “Area” means any geographic area within fifty (50) miles of any office or branch of the Company, the Company Bank, or any of their subsidiaries or affiliates, determined as of the termination or expiration of the Consulting Period, and “Competing Business” means any entity whose business materially competes with the depository, lending or other business activities of the Company, the Company Bank or any of their subsidiaries or affiliates, including Country Bank and CBHC. The Company and Company Bank agree that the business conducted by ValueXpress LLC as of August 9, 2019 is not a Competing Business and that Xx. Xxxxxx’x continuing affiliation and service with ValueXpress LLC consistent with past practice is not prohibited by this Section 6(a).
(b) Non-Solicitation. In exchange for the Cash Payment in Section 1(b) of this Agreement, during the Restricted Period, Xx. Xxxxxx shall not, directly or indirectly, (i) solicit or induce or attempt to solicit or induce any officer, director, employee, agent or consultant of the Company, the Company Bank, or any of their successors, assigns, subsidiaries or affiliates to terminate his, her or its employment or other relationship with the Company, the Company Bank, or any of their successors, assigns, subsidiaries or affiliates for the purpose of associating with any competitor of the Company, the Company Bank, or any of their successors, assigns, subsidiaries or affiliates, or otherwise encourage any such person or entity to leave or sever his, her or its employment or other relationship with the Company, the Company Bank, or any of their successors, assigns, subsidiaries or affiliates, for any other reason, or (ii) solicit, induce, or engage in business with, or attempt to solicit, induce, or engage in business with, any existing or prospective customer, supplier, client, distributor, vendor, investor, or other business relationship of the Company, the Company Bank or their respective subsidiaries and affiliates or in any way interfere with the relationship between any such existing or prospective customer, supplier, client, distributor, vendor, investor or business relationship of the Company, the Company Bank or their respective subsidiaries and affiliates; provided, however, that this restriction in clause (ii) shall only apply to existing or prospective customers, suppliers, clients, distributors, vendors, investors or other business relationships of the Company, the Company Bank or their respective
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subsidiaries and affiliates (A) with whom Xx. Xxxxxx interacted with during the Consulting Period or (B) from or about whom Xx. Xxxxxx has or, during the Consulting Period receives, trade secrets or has or, during the Consulting Period, receives confidential information.
(c) Disparaging Comments. Commencing on the Closing Date and thereafter, Xx. Xxxxxx shall not at any time, directly or indirectly, make, publish or communicate to any person or entity or in any public forum any comments or statements, whether expressed as a fact, opinion or otherwise, which is intended or reasonably likely to disparage, malign, defame, libel or slander the Company, the Company Bank or their subsidiaries or affiliates, together with all of their respective past and present directors and officers, as well as their respective past and present managers, officers, shareholders, partners, employees, agents, attorneys, suppliers, investors, customers, and other associated third parties, and each of their predecessors, successors and assigns (the “Company Entities and Persons”) or make any disparaging or defamatory comments concerning any aspect of the termination of his employment relationship with Country Bank or CBHC. The Company shall instruct its officers and directors not to make or issue any statement that disparages Xx. Xxxxxx to any third parties or otherwise encourage or induce others to disparage him. The term “disparage” includes, without limitation, comments or statements adversely affecting in any manner (i) the conduct of the business of the Company Entities and Persons or Xx. Xxxxxx, or (ii) the business reputation of the Company Entities and Persons or Xx. Xxxxxx. Nothing in this Agreement is intended to or shall prevent either Party from complying with any applicable law or regulation or a valid order of a court of competent jurisdiction or an authorized government agency, provided that such compliance does not exceed that required by the law, regulation, or order. The Parties shall promptly provide written notice of any such order to the other Party.
(d) Confidentiality. All books of account, records, systems, correspondence, documents, and any and all other data, in whatever form, concerning or containing any reference to the works and business of the Company, the Company Bank or their affiliates shall belong to the Company and shall be given up to the Company whenever the Company requires Xx. Xxxxxx to do so. Xx. Xxxxxx shall not, at any time on or after the Closing Date, without the Company’s prior written consent, disclose to any person (individual or entity) any information or any trade secrets, plans or other information or data, in whatever form (including, without limitation, any financing strategies and practices, pricing information and methods, training and operational procedures, advertising, marketing, and sales information or methodologies or financial information concerning the Company’s, the Company Bank’s, or any of their affiliated companies’ or customers’ practices, businesses, procedures, systems, plans or policies (collectively, “Confidential Information”), nor shall Xx. Xxxxxx utilize any Confidential Information in any way or communicate with or contact any such customer other than in connection with the Services. Xx. Xxxxxx confirms that all Confidential Information constitutes the Company’s exclusive property, and that all of the restrictions on his activities contained herein and such other nondisclosure policies of the Company, the Company Bank or their affiliates are required for the Company’s reasonable protection. Confidential Information shall not include any information that has otherwise been disclosed to the public not in violation of this Agreement. This confidentiality provision shall survive the termination of this Agreement and shall not be limited by any other confidentiality agreements entered into with Company, the Company Bank or their affiliates. Pursuant to Section 7 of the Defend Trade Secrets Act of 2016 (which added 18 U.S.C. § 1833(b)), Xx. Xxxxxx acknowledges that he shall not have criminal or
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civil liability under any federal or State trade secret law for the disclosure of a trade secret that (A) is made (i) in confidence to a federal, state, or local government official, either directly or indirectly, or to an attorney and (ii) solely for the purpose of reporting or investigating a suspected violation of law; or (B) is made in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal. Nothing in this Agreement is intended to conflict with 18 U.S.C. § 1833(b) or create liability for disclosures of trade secrets that are expressly allowed by such statute. Notwithstanding anything in this Agreement to the contrary, the provisions of this Section 6 do not prohibit Xx. Xxxxxx from reporting violations of federal or state law or regulation to any governmental agency or from making other disclosures that are protected under the whistleblower provisions of federal or state law or regulation, nor do the confidentiality obligations require Xx. Xxxxxx to notify the Company regarding any such reporting, disclosure or cooperation with the government.
7. Cooperation. During the twenty-four (24) month period following the Closing Date, Xx. Xxxxxx agrees to make himself reasonably available (after taking into account his reasonable personal and professional schedule) to cooperate with the Company in matters that concern: (i) requests for information about the services Xx. Xxxxxx provided to the Company, its affiliates and their predecessors, (ii) the defense or prosecution of any claims or actions now in existence or which may be brought in the future against or on behalf of the Company, its affiliates and their predecessors which relate to events or occurrences involving the Services or to matters involving CBHC and Country Bank, or (iii) any investigation or review by any federal, state or local regulatory, quasi-regulatory or self-governing authority as any such investigation or review relates to events or occurrences that transpired while Xx. Xxxxxx was providing the Services to the Company, or to matters involving CBHC and Country Bank. Xx. Xxxxxx’x cooperation shall include, but is not limited to: (A) making himself reasonably available to meet and speak with officers or employees of the Company, the Company’s counsel or any third-parties at the request of the Company at times and locations to be determined by the Company reasonably and in good faith, and (B) giving accurate and truthful information at any interviews and accurate and truthful testimony in any legal proceedings or actions. Unless required by law or legal process, Xx. Xxxxxx will not knowingly or intentionally furnish information to or cooperate with any non-governmental entity in connection with any potential or pending proceeding or legal action involving matters arising during Xx. Xxxxxx’x employment with the Company, its affiliates and their predecessors.
8. Section 409A; Other Tax Matters. The Parties intend for the payments and benefits under this Agreement to be exempt from Section 409A or, if not so exempt, to be paid or provided in a manner which complies with the requirements of such section and intend that this Agreement shall be construed and administered in accordance with such intention. Any payments that qualify for the “short-term deferral” exception or another exception under Section 409A shall be paid under the applicable exception. For purposes of the limitations on nonqualified deferred compensation under Section 409A, each payment of compensation under this Agreement shall be treated as a separate payment of compensation. To the extent required in order to avoid accelerated taxation and/or tax penalties under Section 409A, amounts that would otherwise be payable and benefits that would otherwise be provided pursuant to this Agreement during the six (6) month period immediately following Xx. Xxxxxx’x separation from service shall instead be paid on the first business day after the date that is six (6) months following his termination of employment (or upon his death, if earlier). Additionally, the reimbursement of
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expenses or in-kind benefits provided pursuant to this Agreement shall be subject to the following conditions: the expenses eligible for reimbursement or in-kind benefits in one taxable year shall not affect the expenses eligible for reimbursement or in-kind benefits in any other taxable year; the reimbursement of eligible expenses or in-kind benefits shall be made promptly, subject to the Company’s applicable policies, but in no event later than the end of the year after the year in which such expense was incurred; and the right to reimbursement or in-kind benefits shall not be subject to liquidation or exchange for another benefit. Notwithstanding any other provision of this Agreement, the Company or the Company Bank may withhold from amounts payable under this Agreement all amounts that are required or authorized to be withheld, including, but not limited to, federal, state, local and foreign taxes required to be withheld by applicable laws or regulations.
9. Governing Law. This Agreement shall be governed by, and construed in accordance with, the laws of the State of New York, without regard to the application of any choice-of-law rules that would result in the application of another state’s laws.
10. Entire Agreement. This Agreement sets forth the entire agreement between the Parties concerning the termination of Xx. Xxxxxx’x employment and his service as a director or consultants to the Company and the Company Bank and supersedes any other written or oral promises concerning the subject matter of this Agreement. No waiver or amendment of this Agreement will be effective unless it is in writing, refers to this Agreement, and is signed by the Parties.
11. Successors and Assigns. This Agreement is binding upon, and shall inure to the benefit of, the Parties and their respective successors and assigns.
12. Termination. If the Closing does not occur or the Merger Agreement is terminated prior to the Effective Time (as defined in the Merger Agreement), then this Agreement shall terminate ab initio and be of no further force or effect.
13. Arbitration. Any dispute or controversy arising under or in connection with this Agreement shall be settled exclusively by arbitration, conducted within 25 miles of New York, New York, in accordance with the Employment Rules of the American Arbitration Association then in effect and with the Company paying the costs of arbitration.
[Signature Page Follows]
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IN WITNESS WHEREOF, the Parties have executed this Agreement as of the date first set forth above.
| OCEANFIRST FINANCIAL CORP. | ||
| By: | /s/ Xxxxxxxxxxx X. Xxxxx | |
| Name: | Xxxxxxxxxxx X. Xxxxx | |
| OCEANFIRST BANK, NATIONAL ASSOCIATION | ||
| By: | /s/ Xxxxxxxxxxx X. Xxxxx | |
| Name: | Xxxxxxxxxxx X. Xxxxx | |
| /s/ Xxxxxx X. Xxxxxx, Xx. | ||
| XXXXXX X. XXXXXX, XX. | ||
Signature Page to Xxxxxx X. Xxxxxx, Xx.
Separation, Consulting and Non-Competition Agreement
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