1
ASTORIA FINANCIAL CORPORATION
LITIGATION ADVISORY COMMITTEE CONSULTING AGREEMENT
This CONSULTING AGREEMENT ("Agreement") is made and entered
into as of April 2, 1998 by and between ASTORIA FINANCIAL CORPORATION, a
business corporation organized and operating under the laws of the State of
Delaware and having an office at Xxx Xxxxxxx Xxxxxxx Xxxxx, Xxxx Xxxxxxx, Xxx
Xxxx 00000-0000 ("Company") and XXXX X. XXXXXXX, XX., an individual residing at
0 Xxxxxx Xxxxx, Xxxxxx Xxxx, Xxx Xxxx 00000 ("Consultant").
WITNESETH:
WHEREAS, pursuant to an Agreement and Plan of Merger by and
between the Company and Long Island Bancorp, Inc. ("Seller") dated April 2, 1998
("Agreement and Plan of Merger"), the Company and Seller have agreed to a merger
of the Seller with the Company, effective as of the closing date specified in
the Agreement and Plan of Merger ("Closing Date"); and
WHEREAS, the Consultant is the Chief Executive Officer of the
Seller and is familiar with its business, operations and properties; and
WHEREAS, The Long Island Savings Bank, FSB ("Seller Bank") is
the plaintiff in the case resulting from a complaint filed by the Seller Bank in
the United States Court of Federal Claims entitled The Long Island Savings Bank
FSB v. The United States (the "Case"); and
WHEREAS, if successful on the merits, the Case could result in
a substantial recovery to Astoria Federal Savings and Loan Association, as
successor by merger to Seller Bank ("Association"); and
WHEREAS, pursuant to section 4.13(d) of the Agreement and Plan
of Merger, the Corporation has established a Litigation Advisory Committee to
preserve the knowledge and experience of certain officers of the Seller in
connection with the Case and to assist the Company in evaluating and managing
the progress thereof (hereinafter referred to as the "Litigation Advisory
Committee"); and
WHEREAS, the Consultant possesses specialized knowledge and
experience as the chief executive officer of the Seller and the Seller Bank and
as a result of his involvement with the Case; and
WHEREAS, the Company desires to assure the availability of the
Consultant's services in furthering the objectives of the Litigation Advisory
Committee; and
WHEREAS, the Consultant is willing to serve the Company on the
terms and conditions hereinafter set forth;
2
NOW, THEREFORE, in consideration of the premises and the
mutual covenants and conditions hereinafter set forth, the Company and the
Consultant hereby agree as follows:
Section 1. Service.
The Company agrees to engage the Consultant's services as a
member and the Chairman of the Litigation Advisory Committee, and the Consultant
hereby agrees to hold himself available and to provide such services, during the
period and upon the terms and conditions set forth in this Agreement.
Section 2. Consulting Period.
The terms and conditions of this Agreement shall be and remain
in effect during the period of service established under this section 2
("Consulting Period"). The Consulting Period shall be for a term beginning on
the day after the Consultant's termination of employment with the Company for
any reason other than death, disability or "cause", in each case as defined in
the Employment Agreement between the Consultant and the Company dated April 2,
1998 ("Employment Agreement"), and ending on the third anniversary of the
Closing Date, extended as hereinafter provided. On the third anniversary of the
Closing Date, the Consulting Period shall automatically be extended for one (1)
additional year, unless either the Company or the Consultant elects not to
extend this Agreement further by giving prior written notice to the other party
at least ninety (90) days in advance of the then-applicable expiration date, in
which case the Consulting Period shall end on the third anniversary of the
Closing Date. If the Consulting Period is extended as aforesaid, on the fourth
anniversary of the Closing Date, the Consulting Period shall be extended for one
(1) additional year unless either the Company or the Consultant elects not to
extend this Agreement further by giving prior written notice to the other party
at least ninety (90) days in advance of the then-applicable expiration date, in
which case the Consulting Period shall end on the fourth anniversary of the
Closing Date. Notwithstanding anything contained herein to the contrary, in all
cases the Consulting Period shall end no later than the earliest of (i) the
fifth anniversary of the Closing Date; (ii) the date of a final, unappealable
judgment in the Case or any final settlement of the Case; or (iii) termination
of this Agreement pursuant to section 7. If the Consultant terminates employment
with the Company under the Employment Agreement due to death, disability or
"cause" under the Employment Agreement or the expiration of the Consulting
Period, this Agreement shall cease.
Section 3. Extent of Services.
(a) The Consultant shall serve as a member and the Chairman of
the Litigation Advisory Committee, having such power, authority and
responsibility and performing such duties as are prescribed by the Company in
order to provide advisory services to the Company regarding the Case. These
duties shall include, but not be limited to, advising Seller and the Company
exclusively on the prosecution and settlement of the Case, including but not
limited to testimony as a witness, the evaluation of any settlement proposals,
the making of and responses to motions to dismiss, proposals to terminate or
cease prosecuting the Case, and the pursuit or abandonment of
2
3
any appeals. The Consultant shall use his best efforts to advance the interests
of the Company in every aspect of the Case. As Chairman of the Litigation
Advisory Committee, the Consultant shall also manage the activities of the
Litigation Advisory Committee in a manner consistent with section 4.13(d) of the
Agreement and Plan of Merger and with the purpose of assisting the Company and
the Association in achieving an early and favorable resolution to the Case and
shall report directly to the Company's Chief Executive Officer or a designee of
the Company's Chief Executive Officer.
(b) Subject to the requirements of the Company consistent with
the efficient management of the Case, in the performance of any services
required of him hereunder, the Consultant shall have exclusive control over the
manner of performance of such services, including without limitation: the
selection, supervision and compensation of personnel, if any, in addition to the
Consultant to be involved in the performance of such services; the selection of
methods, procedures, strategies and equipment to be employed in the performance
of such services; and determination of the time, places and dates at which such
services will be performed.
(c) The Consultant may engage in business activities and may
perform services as an employee or independent contractor (other than for the
Company) to the extent that such business activities and/or the performance of
such services does not impair the Consultant's availability to perform services
for the Company as contemplated by this Agreement or contravene the provisions
of section 6.
Section 4. Cash Compensation.
In consideration for his availability to perform services
hereunder, as well as the services actually rendered by the Consultant
hereunder, the Company shall pay to him during the Consulting Period a retainer
fee at an annual rate of FOUR HUNDRED THOUSAND DOLLARS ($400,000), payable in
advance in monthly installments commencing on the first day of the Consulting
Period; provided, however, that this retainer fee shall only be paid for the
portion of the Consulting Period during which the Consultant is not an officer
or employee of the Company or Association. If the Consultant performs services
for the Company with respect to the Case after the expiration of the Consulting
Period, the Company shall pay him an hourly fee in the amount of TWO HUNDRED
DOLLARS ($200) per hour, payable monthly in arrears upon presentation of time
records in such form and manner as the Company may reasonably require, and shall
continue to observe the provisions of section 5 with respect to the Consultant.
Section 5. Facilities and Expenses.
(a) The Company shall provide the Consultant with office
facilities and secretarial and other support services on its premises to the
extent required to perform the services contemplated in section 3 of this
Agreement, as determined by the Company in its discretion.
(b) If, in connection with the performance of service
hereunder at the request of the Company, the Consultant incurs out-of-pocket
costs for travel, meals, lodging and other
3
4
reasonable expenses of a type for which other providers of professional services
to the Company would be reimbursed by the Company, he shall be entitled to
reimbursement therefor by the Company in accordance with the reasonable
standards and procedures established by the Company and communicated to the
Consultant.
Section 6. Confidentiality; Nonsolicitation.
(a) During the Consulting Period and at all times thereafter,
the Consultant, except as previously authorized by the Company in writing, shall
keep confidential and shall refrain from using or disclosing for the benefit of
any person or entity other than the Company or the Association any document or
information obtained in the course of performing services under this Agreement
or as an officer, employee, or director of Seller or Seller Bank prior to the
Closing Date. The preceding sentence shall not apply to the use or disclosure of
any such document or information: (i) on or following the date on which such
information or document is first readily ascertainable from public or published
information or trade sources; or (ii) in connection with any judicial or
administrative investigation, inquiry or proceeding to the extent compelled
pursuant to applicable law and as to which, unless expressly prohibited by
applicable law, the Consultant has given notice to the Company as soon as
reasonably practicable after such compulsion.
(b) The Consultant acknowledges that during the course of his
performance of service for the Seller, Seller Bank, Company, or Association he
may develop or otherwise acquire papers, files or other records involving or
relating to confidential or secret plans, design information of any kind,
devices, material, research, new product development, customers or customer
lists. All such papers, files and other records identified by the Company as
confidential shall be the exclusive property of the Company and shall, together
with any and all copies thereof, be returned to the Company (or the Executive
shall certify to the Company that any such materials not returned have been
destroyed) upon the earliest to occur of the termination of this Agreement, the
expiration of the Consulting Period, and a request in writing by the Company for
the return thereof.
(c) The Consultant hereby covenants and agrees that, during
the Consulting Period, and for a period of six months thereafter, he shall not,
without the written consent of the Company, either directly or indirectly:
(i) solicit, offer employment to, or take any other action
intended to cause, any officer or employee of the Company or any
affiliate to terminate his or her employment and accept employment or
become affiliated with, or provide services for compensation in any
capacity whatsoever to, any entity that directly or indirectly competes
with this Company in any market area in which it is then active;
(ii) provide any information, advice or recommendation with
respect to any such officer or employee of any entity engaged or to be
engaged in the same or a competing business with the Company or any
affiliate that is intended to cause any officer or employee of the
Company or any affiliate to terminate his or her
4
5
employment and accept employment or become affiliated with, or provide
services for compensation in any capacity whatsoever to, any entity
that directly or indirectly competes with the Company or any affiliate
in any market area in which it is then active;
(iii) solicit, provide any information, advice or
recommendation or take any other action intended to have the effect of
causing any customer of the Company or any affiliate to terminate an
existing business or commercial relationship with the Company or any
affiliate.
(v) take any action intended to impair or otherwise impose a
detriment upon relations between the Company and its affiliates and
their customers or others or upon the business of the Company and its
affiliates as then conducted.
(d) The duties and obligations imposed on the Consultant under
this section 6 are intended to be in addition to, and not in limitation or
exclusion of, any duties and obligations which the Consultant may owe to the
Company or its affiliates under applicable law. This section 6 shall be
construed and enforced so as to give effect to this intent. The Consultant
hereby stipulates that the Company has a legitimate business interest in
restricting the Consultant's activities in the manner provided herein, and that
the compensation paid to him hereunder is adequate compensation to him for the
imposition and observance of such restrictions.
Section 7. Termination of Agreement.
This Agreement and the Consulting Period established hereunder
shall terminate immediately upon the occurrence of any of the following events:
(i) the Consultant's death; (ii) a determination by the Company, on the basis of
a report from a competent medical doctor (to which the Consultant should have
reasonable access), that the Consultant is mentally or physically unable to
perform the services which may be required of him hereunder for a period of at
least 180 consecutive days; (iii) the Consultant's material breach of his
obligations under sections 3 or 6 hereof and a subsequent failure to
substantially cure such breach after receiving notice thereof from the Company;
(iv) the Consultant has been convicted of a felony; or (v) the Consultant's
voluntary termination, upon 30 days written notice to the Company, of this
Agreement. Following the termination of this Agreement, the Company shall have
no further obligations hereunder, but the Consultant shall continue to be bound
by the provisions of sections 6, 8 and 17.
Section 8. No Employment Relationship Created.
The relationship between the Company and the Consultant shall
be that of client and independent contractor. The Company shall not assume, and
specifically disclaims, any obligations of an employer to an employee which may
exist under applicable law. The Consultant shall not have any of the rights of
an employee with respect to the Company, and specifically waives any and all
such rights. The Consultant hereby agrees to take any and all such actions as
the Company may reasonably request in order to establish that no employment
relationship exists
5
6
between the parties. The Consultant shall be treated as an independent
contractor for all purposes of federal, state and local income taxes and payroll
taxes.
Section 9. Successors and Assigns.
This Agreement will inure to the benefit of and be binding
upon the Consultant, his legal representatives and testate or intestate
distributees, and the Company, and their respective successors and assigns,
including, in the case of the Company, any successor by merger or consolidation
or a statutory receiver or any other person or firm or corporation to which all
or substantially all of the respective assets and business of the Company may be
sold or otherwise transferred. Notwithstanding the foregoing, the availability
of the personal services of the Consultant is an integral part of this
Agreement. The Consultant's duty of performance hereunder shall not be subject
to assignment, and the rights, if any, of the Consultant hereunder shall inure
to the benefit of his legal representatives and testate or intestate
distributees only to the extent that such rights shall have accrued prior to the
date of the Consultant's death or legal incapacity.
Section 10. Notices.
Any communication required or permitted to be given under this
Agreement, including any notice, direction, designation, consent, instruction,
objection or waiver, shall be in writing and shall be deemed to have been given
at such time as it is delivered personally, or five (5) days after mailing if
mailed, postage prepaid, by registered or certified mail, return receipt
requested, addressed to such party at the address listed below or at such other
address as one such party may by written notice specify to the other party:
If to the Consultant:
Xxxx X. Xxxxxxx, Xx.
0 Xxxxxx Xxxxx
Xxxxxx Xxxx, Xxx Xxxx 00000
With a copy to:
Milbank Tweed Hadley & XxXxxx
0 Xxxxx Xxxxxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxx X. Xxxxxxxx, Esq.
If to the Company:
Astoria Financial Corporation
Xxx Xxxxxxx Xxxxxxx Xxxxx
Xxxx Xxxxxxx, Xxx Xxxx 00000-0000
6
7
Attention: General Counsel
with a copy to:
Xxxxxxx Xxxxxxxx & Wood
Xxx Xxxxx Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: W. Xxxxxx Xxxxxx, Esq.
Section 11. Severability.
A determination that any provision of this Agreement is
invalid or unenforceable shall not affect the validity or enforceability of any
other provision hereof.
Section 12. Waiver.
Failure to insist upon strict compliance with any of the
terms, covenants or conditions hereof shall not be deemed a waiver of such term,
covenant, or condition. A waiver of any provision of this Agreement must be made
in writing, designated as a waiver, and signed by the party against whom its
enforcement is sought. Any waiver or relinquishment of any right or power
hereunder at any one or more times shall not be deemed a waiver or
relinquishment of such right or power at any other time or times.
Section 13. Counterparts.
This Agreement may be executed in two (2) or more
counterparts, each of which shall be deemed an original, and all of which shall
constitute one and the same Agreement.
Section 14. Governing Law.
This Agreement shall be governed by and construed and enforced
in accordance with the laws of the State of New York applicable to contracts
entered into and to be performed entirely within the State of New York.
Notwithstanding anything herein contained to the contrary, any payments to the
Consultant by the Company, whether pursuant to this Agreement or otherwise, are
subject to and conditioned upon their compliance with section 18(k) of the
Federal Deposit Insurance Act, 12 U.S.C. ss.1828(k), and any regulations
promulgated thereunder.
Section 15. Headings and Construction.
The headings of sections in this Agreement are for convenience
of reference only and are not intended to qualify the meaning of any section.
Any reference to a section number shall refer to a section of this Agreement,
unless otherwise stated.
7
8
Section 16. Entire Agreement; Modifications.
This instrument contains the entire agreement of the parties
relating to the subject matter hereof, and supersedes in its entirety any and
all prior agreements, understandings or representations relating to the subject
matter hereof. This Agreement does not supercede the Letter Agreement dated
April 2, 1998 between the Consultant, the Company and the Association pursuant
to section 4.16(b) of the Agreement and Plan of Merger. No modifications of this
Agreement shall be valid unless made in writing and signed by the parties
hereto.
Section 17. Dispute Resolution.
Any controversy or claim arising out of or relating to this
Agreement, or the breach hereof, shall be settled by arbitration in accordance
with the Commercial Rules of the American Arbitration Association and judgment
upon the award rendered by the arbitral tribunal may be entered in any court
having jurisdiction thereof. The arbitration shall be held in Nassau County, New
York, or at such other place as may be selected by mutual agreement. The
arbitration shall be conducted before a panel of three neutral arbitrators, all
of whom shall be members of the Bar of the State of New York, actively engaged
in the practice of law for at least ten (10) years. Within fifteen (15) days
after the commencement of the arbitration, each party shall select one person to
act as arbitrator, and the two selected shall select a third arbitrator within
ten (10) days after their appointment; if the arbitrators selected by the
parties hereto are unable or fail to agree upon the third arbitrator, the third
arbitrator shall be selected by the President of the American Arbitration
Association or his designee. Either party may, without inconsistency with this
Agreement, seek from a court any interim or provisional relief that may be
necessary to protect the rights or property of that party pending the arbitral
tribunal's determination of the merits of the controversy. Neither party nor the
arbitrators may disclose the existence, content, or results of any arbitration
hereunder without the prior written consent of both parties. The prevailing
party shall be entitled to an award of reasonable attorneys' fees.
Section 18. Survival.
The provisions of sections 4, 6, 8-17, 19 and 20 shall survive
the expiration of the Consulting Period or termination of this Agreement.
Section 19. Equitable Remedies.
The Company and the Consultant hereby stipulate that money
damages are an inadequate remedy for violations of section 3, 6, 7, 8 and 17 of
this Agreement and agree that equitable remedies, including, without
limitations, the remedies of specific performance and injunctive relief, shall
be available with respect to the enforcement of such provisions.
Section 20. Indemnification.
To the maximum extent permitted under applicable law, during
8
9
the period beginning on the first day of the Consulting Period and ending
six (6) years after the later of (a) the last day of the Consulting Period or
(b) the last day on which the Consultant performs services for which an
hourly fee is payable under section 4 hereof, the Company shall indemnify the
Consultant against, and hold him harmless from any costs, liabilities, losses
and exposures to the fullest extent and on the most favorable terms and
conditions that similar indemnification is offered to any director or officer
of the Company or any subsidiary or affiliate thereof.
Section 21. Effective Date.
The Effective Date of this Agreement shall be the Closing
Date. In the event that the merger contemplated by the Agreement and Plan of
Merger is not consummated, this Agreement shall have no force or effect.
IN WITNESS WHEREOF, the Company has caused this Agreement to
be executed and the Consultant has hereunto set his hand, all as of the day and
year first above written.
ATTEST: ASTORIA FINANCIAL CORPORATION
By /S/ Xxxxxxx X. Xxxxxxx
By /S/ Xxxxxx X. Xxxxxxx, Xx.
Name: Xxxxxx X. Xxxxxxx, Xx.
Title: Chairman, President and
Chief Executive Officer
[Seal]
9
