1
Xxxx X. Xxxxxxx, Xx.
0 Xxxxxx Xxxxx
Xxxxxx Xxxx, Xxx Xxxx 00000
April 2, 1998
Astoria Financial Corporation
One Astoria Federal Plaza
Lake Success, New York
Gentlemen:
The purpose of this letter is to set forth the agreement that
we have reached concerning the settlement of certain obligations of Long Island
Bancorp, Inc. ("LISB") and The Long Island Savings Bank FSB ("LISB Bank") to me
in connection with the merger of LISB with and into Astoria Financial
Corporation ("AFC") and LISB Bank with and into Astoria Federal Savings and Loan
Association ("AFSL") pursuant to the Agreement and Plan of Merger dated as of
April 2, 1998 by and between AFC and LISB (the "Merger Agreement").
1. My Agreement.
Section 2.03(o) of the Merger Agreement provides for a
schedule showing a good faith estimate of the present value as of September 30,
1998 of the monetary amounts (including tax indemnification payments in respect
of income and/or excise taxes) and identifying the in-kind benefits due to me
under, and in accordance with the terms and provisions of, all employment
agreements, change in control agreements, severance agreements, termination
agreements, severance plans, pension, retirement or deferred compensation plans
for non-employee directors, supplemental executive retirement programs, tax
indemnification agreements, outplacement programs, cash bonus programs, stock
appreciation rights, phantom stock or stock unit plans, and health, life,
disability and other insurance or welfare plans or other arrangements, but
excluding any tax-qualified pension, profit-sharing or employee stock ownership
plans and any stock option or restricted stock plan (the "Specified Compensation
and Benefit Programs"), in the event of my discharge other than for cause or in
the event of my resignation for good reason at or following the date of the
closing of the transactions contemplated by the Merger Agreement (the "Closing
Date"). The Specified Compensation and Benefit Programs shall include but not be
limited to the employment agreement between LISB and myself and the employment
agreement between LISB Bank and myself (collectively the "Employment
Agreement"), the LISB Bank Severance Benefits Plan ("Severance Benefits Plan"),
the LISB Bank Deferred Income Plan ("Deferred Pension Plan") and the LISB
Non-Employee Directors Retirement Benefit Plan ("Retirement Plan for
Non-Employee Directors"). I hereby acknowledge and agree (A) that the Specified
Compensation and Benefit Programs listed on Schedules A and B attached are the
only Specified Compensation and Benefit Programs under which I am entitled in
connection with the transactions contemplated by the Merger Agreement to receive
any compensation payments or benefits and that the amounts actually paid to or
in respect of me, in the aggregate, shall not exceed 111 % of the aggregate
amount shown on such Schedule A and (B) to deliver in exchange for such
compensation and benefits a written release, in the form attached hereto as
Exhibit A (the "Release"), of any further claim in respect of compensatory
monetary amounts and in-kind benefits under the Specified Compensation and
Benefit Programs. These good faith estimates are based upon the provisions of
the Specified Compensation and Benefits Programs as of April 2, 1998 and my
compensation as of April 2, 1998, adjusted for anticipated increases in base
salary.
2. AFC's Agreement.
AFC acknowledges that the consummation of the transactions
contemplated by the Merger Agreement shall, upon consummation, constitute a
"change of control" and "good reason" event under the existing terms of the
Specified Compensation and Benefit Programs and that, if I am an employee of
LISB and/or LISB Bank as of the Closing Date, AFC will provide, subject to the
aggregate limitations imposed
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by paragraph 1 hereof, to me all of the payments and benefits for which
estimates and/or descriptions are provided under paragraph 1 hereof as if I
resigned for good reason on the Closing Date, whether or not I continue to
provide services to AFC or AFSL after the Closing Date. All cash payments shall
be made to me (or, if payable in installments, shall begin) within 5 days after
the Closing Date and all in-kind or other benefits shall be provided to me in
accordance with the terms and provisions of the Specified Compensation and
Benefits Programs. It is understood and agreed that whether a Section 28OG
Gross-up payment will be paid by AFC will be determined by KPMG Peat Marwick LLP
or by legal counsel reasonably acceptable to me (which determination, if I so
request, shall be in the form of a written opinion reasonably satisfactory to my
legal counsel), and that the calculation of the amount of any such Section 28OG
Gross-up payment will be made as of the Closing Date by KPMG Peat Marwick LLP,
subject to review by the parties hereto. All other estimates provided under
paragraph I hereof shall be adjusted only to the extent necessary to correct any
manifest error(s).
Notwithstanding anything in this letter agreement to the
contrary, the determination of whether a Section 28OG Gross up Payment is
payable to me, and the amount of any such payment (including, but not limited
to, additional payments by AFC or refunds of overpayments to AFC), shall be
subject to change after the Closing Date, to the extent and in the manner
provided in Sections 6.9.1, 6.9.3 and 6.9.4 of the Employment Agreement, with
any additional payments or refunds to be paid at the time provided in such
Section 6.9.4 or in Section 6. 10 of the Employment Agreement, as applicable.
3. Other Matters.
This letter agreement, when signed by me and countersigned by
AFC and AFSL below, will constitute the entire agreement between the parties
with regard to the subject matter hereof and will supersede, to the extent
payments and benefits are paid or provided hereunder, in their entirety any and
all prior agreements, understandings and undertakings, whether or not in
writing, with regard to the subject matter hereof. This letter agreement will be
construed and enforced in accordance with the laws of the State of New York
applicable to contracts between parties all of whom are citizens and residents
of New York and which are to be performed wholly within the boundaries of the
State of New York. This letter agreement may be executed to two or more
counterparts, each of which shall be deemed an original and all of which shall
constitute one and the same instrument.
Very truly yours,
/S/ Xxxx X. Xxxxxxx, Xx.
Xxxx X. Xxxxxxx, Xx.
ACCEPTED AND AGREED TO:
ASTORIA FINANCIAL CORPORATION
By /S/ Xxxxxx X. Xxxxxxx, Xx. Dated: July 8. 1998
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Name: Xxxxxx X. Xxxxxxx, Xx.
Title: Chairman, President and
Chief Executive Officer
ACCEPTED AND AGREED TO:
ASTORIA FEDERAL SAVINGS AND LOAN ASSOCIATION
By /S/ Xxxxxx X. Xxxxxxx, Xx. Dated: July 8. 1998
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Name: Xxxxxx X. Xxxxxxx, Xx.
Title: Chairman, President and
Chief Executive Officer
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Exhibit A
FORM OF RELEASE
1. In consideration of the payment by Astoria Financial Corporation ("AFC")
of $ ______________ the receipt of which is hereby acknowledged, I,
______________ for myself and my heirs, executors, administrators, successors
and assigns, hereby irrevocably and unconditionally release and forever
discharge AFC, Astoria Federal Savings and Loan Association ("Association"),
Long Island Bancorp, Inc. ("LISB") and The Long Island Savings Bank, FSB ("LISB
Bank"), the stockholders, subsidiaries, affiliates, officers, directors,
employees and agents of either of them, and their respective heirs, executors,
administrators, successors and assigns (collectively, the "Releasee") of and
from all actions, causes of action, suits, debts, dues, sums of money, accounts,
reckonings, bonds, bills, specialties, covenants, contracts, controversies,
agreements, promises, variances, trespasses, damages, judgments, extents,
executions, claims, and demands whatsoever, in law, admiralty or equity, which
against the Releasee, I or my heirs, executors, administrators, successors or
assigns ever had, now have or hereafter can, shall or may, have by reason of any
matter, cause or thing whatsoever for payment of any amount owed pursuant to the
Specified Compensation and Benefit Programs (as defined in the Agreement and
Plan of Merger, dated April 2, 1998, by and between AFC and LISB), except for
any continuing obligations of AFC or the Association under (i) the Employment
Agreement dated ____________, 199__ among LISB and me, (ii) the Employment
Agreement dated ________________, 199__ among LISB Bank and me (collectively the
"Employment Agreements") the obligations of which have been assumed by AFC and
the Association (as more particularly described in paragraph 2 below), (iii) any
Employment Agreement and/or Consulting Agreement among AFC, the Association and
me, and (iv) any additional benefits set forth on Schedule A to the letter
agreement among AFC and me, dated April 2, 1998, pursuant to section 4.16(b) of
the Agreement and Plan of Merger (the "Letter Agreement").
2. 1 acknowledge that such payment will constitute, and agree to accept it
as, full settlement of any and all rights which I may have pursuant to the
Specified Compensation and Benefits Programs, except for any continuing
obligations of AFC or the Association under the Employment Agreements dated
__________ , 199__ among LISB, LISB Bank and me, the obligations of which have
been assumed by AFC and the Association, which shall be: (a) continued welfare
benefits in accordance with section 6.4(e) of the Employment Agreements, as
amended, between LISB, LISB Bank and me; (b) a tax reimbursement payment
(including without limitation any subsequent adjustments) in accordance with
section 6.9 of the Employment Agreements; (c) indemnification for legal fees,
expenses, liabilities and losses relating to or in connection with my employment
with LISB and LISB Bank in accordance with section 11 of the Employment
Agreements; (d) reimbursement for all reasonable fees and expenses in accordance
with Section 8 of the Employment Agreements; (e) any rights under Section 6.7 of
the Employment Agreements; (f) quarterly payments of Vested Deferred Income
pursuant to The Long Island Savings Bank, FSB Deferred Pension Plan; (g) welfare
benefits under any "Rule of 75" retiree provisions; and (h) any additional
benefits set forth on Schedule A to the Letter Agreement.
3. This instrument may not be changed orally.
IN WITNESS WHEREOF, I have executed this Instrument
this_________ day of 1998.
_______________________________________________
[Settling Party]
STATE OF NEW YORK )
: ss.
COUNTY OF NEW YORK )
On _______________, 1998, before me personally came_______________ to me
known, and known to me to be the person named in the above instrument, who did
depose and say that he is the person referred to as the undersigned in the above
instrument and that he signed his name thereto as his free act and deed.
____________________________
Notary Public
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Conefry
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SCHEDULE A
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Contract Pay-out
3 times highest Salary $2,100,000
3 times highest Bonus $1,200,000
3 years of Welfare Benefits $37,480
28OG Gross-Up $2,082,343
Prior Year Bonus $400,000
Severance $350,000
Vacation (# of Weeks X Salary) $80,769
Split Dollar $345,000
Deferred Pension Payout --
Computer $7,000
Car (estimate) $40,000
Outplacement Services $50,000
Waiver of Non-Compete --
Maintain Life Insurance --
Maintain Health for Spouse --
Retire Under Rule of 75 --
(open window)
*** Schedule A does not include ( i ) stock options and/or shares received
under the LISB Stock Option Plan or the LISB Management Retention and
Recognition Plan for Executive Officers and ( ii ) benefits under the
other LISB plans that are specifically excluded from the definition of
" Specified Compensation and Benefits Programs" contained in Section
2.03 ( o ) of the Agreement and the Plan of Merger.
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Schedule B
CONEFRY
Co. Cost Participates Paid By
Medical $8,388 Yes Shared
Dental $565 Yes Shared
Long Term Disability $540 Yes LISB
Life Insurance $2,640 Yes LISB
Accidental Death & $360 Yes LISB
Dismemberment
_________
$12,493.3
Agreement Coverage 3
__________
$37,479.96
__________
The company costs set forth above reflect LISB's out of pocket premium, not
including employee contributions, for welfare benefits, and does not reflect the
full costs for benefits coverage.
6/12/98
