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ASTORIA FINANCIAL CORPORATION
EMPLOYMENT AGREEMENT WITH XXXX X. XXXXXXX, XX.
This EMPLOYMENT 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 ("Executive").
WITNESSETH:
WHEREAS, upon the effective date set forth in section 30 of this Agreement,
Long Island Bancorp, Inc. ("Seller") will merge with and into the Company and
The Long Island Savings Bank, FSB, a wholly owned subsidiary of the Seller
("Seller Bank"), will merge with and into the Company's wholly owned subsidiary,
Astoria Federal Savings and Loan Association ("Association"), all pursuant to or
as contemplated by an Agreement and Plan of Merger between the Company and
Seller dated April 2, 1998 ("Agreement and Plan of Merger"); and
WHEREAS, the Executive has served as Chairman and Chief Executive Officer
of the Seller and the Seller Bank and possesses valuable knowledge and
experience concerning their respective assets, businesses and operations; and
WHEREAS, in the course of his employment with the Seller and the Seller
Bank, the Executive was instrumental in conceiving, planning and implementing
the strategic expansion of the Seller Bank's businesses both on a regional and
nationwide basis; and
WHEREAS, the terms of the Executive's employment contracts with the Seller
and the Seller Bank give the Executive a financial incentive to terminate his
employment with the Seller and the Seller Bank upon the closing of the
transactions contemplated by the Agreement and Plan of Merger; and
WHEREAS, the Company desires to assure for itself the continued
availability of the Executive's services and the ability of the Executive to
perform such services with a minimum of personal distraction in the event of a
pending or threatened Change of Control (as hereinafter defined); and
WHEREAS, the Executive is willing to continue to serve the Company on the
terms and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and the mutual covenants
and conditions hereinafter set forth, the Company and the Executive hereby agree
as follows:
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Section 1. Employment.
The Company agrees to employ the Executive, and the Executive hereby agrees
to such employment, during the period and upon the terms and conditions set
forth in this Agreement.
Section 2. Employment Period, Remaining Unexpired
Employment Period.
(a) The terms and conditions of this Agreement shall be and remain in
effect during the period of employment established under this section 2
("Employment Period"). The Employment Period shall be for an initial term of
three years beginning on the Effective Date (as defined in section 30 of this
Agreement) and ending on the day before the third anniversary date of the
Effective Date, plus such extensions, if any, as are provided by the Board of
Directors of the Company ("Board") pursuant to section 2(b).
(b) Beginning on the Effective Date (as defined in section 30 of this
Agreement), the Employment Period shall automatically be extended for one (1)
additional day each day until ninety (90) days after the second anniversary of
the Effective Date (as defined in section 30 of this Agreement), unless either
the Company or the Executive makes an earlier election not to extend the
Agreement further by giving written notice to the other party. The Employment
Period shall end automatically and without further act on the part of the
Executive or the Company on the earlier of (i) the third anniversary of the
earliest date on which any such written notice is given or (ii) ninety (90) days
after the fifth anniversary of the Effective Date (as defined in section 30 of
this Agreement). For all purposes of this Agreement, the term "Remaining
Unexpired Employment Period" as of any date shall mean the period beginning on
such date and ending on: (i) if a notice of non-extension has been given in
accordance with this section 2(b), the third anniversary of the date on which
such notice is given; and (ii) in all other cases, (A) if the date of
determination is before ninety (90) days after the second anniversary of the
Effective Date (as defined in section 30 of this Agreement), the third
anniversary of the date as of which the Remaining Unexpired Employment Period is
being determined and (B) if the date of determination is on or after ninety (90)
days after the second anniversary of the Effective Date (as defined in section
30 of this Agreement), ninety (90) days after the fifth anniversary of the
Effective Date (as defined in section 30 of this Agreement). Upon termination of
the Executive's employment with the Company for any reason whatsoever, any daily
extensions provided pursuant to this section 2(b), if not therefore
discontinued, shall automatically cease.
(c) Nothing in this Agreement shall be deemed to prohibit the Company from
terminating the Executive's employment at any time during the Employment Period
with or without notice for any reason; provided, however, that the relative
rights and obligations of the Company and the Executive in the event of any such
termination shall be determined under this Agreement.
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Section 3. Duties.
The Executive shall serve as a Vice Chairman of the Company and the
Chairman of the Litigation Advisory Committee, having such power, authority and
responsibility and performing such duties as are prescribed by or under the
By-Laws of the Company and as are customarily associated with such positions.
The Executive's functional responsibilities shall include, but may not be
limited to, assisting the Company in the conversion of the Seller Bank's
business to that of the Association including, but not limited to, assisting in
the conversion of the Seller Bank's data processing system to the Association's
data processing system; assisting in the conversion of the Seller Bank's branch
offices to branch offices of the Association; assisting in the integration of
the Seller Bank's employees with those of the Association; preserving the Seller
Bank's franchise by promoting the Association and its products and services in
communities previously served by the Seller Bank; promoting the recognition and
acceptance of the Association as the Seller Bank's successor among the Seller
Bank's customers; advising the Association with respect to the management of the
loan and investment portfolios and the development and expansion of the Seller
Bank's mortgage origination enterprise for the benefit of the Company and
assisting the Company in identifying, evaluating and implementing other business
expansion strategies and other strategic initiatives. The Executive shall devote
his full business time and attention (other than during weekends, holidays,
approved vacation periods, and periods of illness or approved leaves of absence)
to the business and affairs of the Company and shall use his best efforts to
advance the interests of the Company. The Executive shall report directly to the
chief executive officer of the Company.
Section 4. Cash Compensation.
(a) In consideration for the services to be rendered by the Executive
during the Employment Period, the Company shall pay to him a salary at an
initial annual rate of SEVEN HUNDRED THOUSAND DOLLARS ($700,000), payable in
approximately equal installments in accordance with the Company's customary
payroll practices for senior officers. At least annually during the Employment
Period, the Board shall review the Executive's annual rate of salary and may, in
its discretion, approve an increase therein; provided, however, that at all
times during the Employment Period, the Executive's annual rate of salary shall
not be less than SEVEN HUNDRED THOUSAND DOLLARS ($700,000) and shall be at least
eighty percent (80%) of the rate of base salary then payable by the Company to
its Chief Executive Officer.
(b) The Executive shall participate in the Company's annual bonus plan as
the same may be in effect from time to time on such terms and conditions as may
be prescribed by or pursuant to the provisions of such plan; provided, however,
that for each bonus period the Executive shall receive a bonus in an amount not
less than eighty percent (80%) of the amount paid as a bonus to the Company's
Chief Executive Officer for the corresponding bonus period. The bonus amount
shall be pro-rated for the fiscal year of the Company that includes the
Effective Date of this Agreement as defined in section 30 and for any short or
stub years commencing after 1998.
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(c) In addition to salary, the Executive may receive other cash
compensation from the Company for services hereunder at such times, in such
amounts and on such terms and conditions as the Board may determine from time to
time.
(d) In addition to the above, the Executive shall be entitled to receive,
on the Effective Date (as defined in section 30 of this Agreement), an option to
acquire 25,000 shares of the Company's common stock granted under the Company's
1996 Stock Option Plan for Officers and Employees of Astoria Financial
Corporation, with an exercise price per share equal to the closing bid quotation
of the Company's common stock on such date and having a ten year option period;
provided, however, that during each fiscal year during the Employment Period the
Executive shall receive an additional option grant or grants to acquire a number
of shares of the common stock of the Company such that the Executive receives,
in respect of each fiscal year during the Employment Period, options to acquire
a number of shares of the Company's common stock equal to at least 80% of the
number of shares which the Chief Executive Officer may acquire under stock
options granted to the Chief Executive Officer during any such fiscal year, such
options having terms and provisions substantially similar to those contained in
the Chief Executive Officer's option grants. All such options shall vest upon
the third anniversary of the date of grant and shall thereafter be exercisable;
provided, however, that in the event of the termination of the Executive's
employment for any reason (other than for cause or due to the Executive's
voluntary resignation for reasons other than those specified in Section 9(a) or
11 (b)), all such options shall immediately become 100% vested and exercisable.
Such vested and exercisable options shall remain exercisable for one year after
any such termination.
(e) In addition to the above, the Executive shall be entitled to receive,
on the Effective Date (as defined in section 30 of this Agreement), a grant of
10,000 shares of restricted Common Stock of the Company. 5,000 of such shares
shall vest on January 10, 1999 and the remaining 5,000 shares shall vest on
January 10, 2000.
Section 5. Employee Benefit Plans and Programs.
During the Employment Period, the Executive shall be treated as an employee
of the Company and shall be entitled to participate in and receive benefits
under any and all qualified or non-qualified retirement, pension, savings,
profit-sharing or stock bonus plans, any and all group life, health (including,
but not limited to, hospitalization, medical and major medical), dental,
accident and long term disability insurance plans, and any other employee
benefit and compensation plans (including, but not limited to, any incentive
compensation plans or programs, stock option and appreciation rights plans and
restricted stock plans) as may from time to time be maintained by, or cover
employees of, the Company, in accordance with the terms and conditions of such
employee benefit plans and programs and compensation plans and programs and
consistent with the Company's customary practices.
Section 6. Indemnification and Insurance.
(a) During the Employment Period and for a period of six (6) years
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thereafter,the Company shall cause the Executive to be covered by and named
as an insured under any policy or contract of insurance obtained by it to
insure its directors and officers against personal liability for acts or
omissions in connection with service as an officer or director of the Company or
service in other capacities at the request of the Company. The coverage provided
to the Executive pursuant to this section 6 shall be of the same scope and on
the same terms and conditions as the coverage (if any) provided to other
officers or directors of the Company.
(b) To the maximum extent permitted under applicable law, during the
Employment Period and for a period of six (6) years thereafter, the Company
shall indemnify the Executive 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 7. Other Activities.
(a) The Executive may serve as a member of the boards of directors of such
business, community and charitable organizations disclosed in the attached
Schedule 7(a) and other such organizations as he may disclose to and as may be
approved by the Board (which approval shall not be unreasonably withheld or
delayed); provided, however, that such service shall not materially interfere
with the performance of his duties under this Agreement. The Executive may also
engage in personal business and investment activities which do not materially
interfere with the performance of his duties hereunder; provided, however, that
such activities are not prohibited under any code of conduct or investment or
securities trading policy established by the Company and generally applicable to
all similarly situated executives.
(b) The Executive may also serve as an officer or director of the
Association on such terms and conditions as the Company and the Association may
mutually agree upon, and such service shall not be deemed to materially
interfere with the Executive's performance of his duties hereunder or otherwise
result in a material breach of this Agreement. If the Executive is discharged or
suspended, or is subject to any regulatory prohibition or restriction with
respect to participation in the affairs of the Association, he shall (subject to
the Company's powers of termination hereunder) continue to perform services for
the Company in accordance with this Agreement but shall not directly or
indirectly provide services to or participate in the affairs of the Association
in a manner inconsistent with the terms of such discharge or suspension or any
applicable regulatory order.
Section 8. Working Facilities and Expenses.
The Executive's principal place of employment shall be at the Company's
executive offices at the address first above written, or at such other location
within Queens County or Nassau County, New York at which the Company shall
maintain its principal executive offices, or at such other location as the
Company and the Executive may mutually agree upon. The Company shall provide the
Executive at his principal place of employment with a private office,
secretarial services and other support services and facilities suitable to his
position with the Company and
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necessary or appropriate in connection with the performance of his assigned
duties under this Agreement. The Company shall provide to the Executive for his
exclusive use an automobile owned or leased by the Company and appropriate to
his position, to be used in the performance of his duties hereunder, including
commuting to and from his personal residence. The Company shall reimburse the
Executive for his ordinary and necessary business expenses, including, without
limitation, all expenses associated with his business use of the aforementioned
automobile, fees for memberships in such clubs and organizations as the
Executive and the Company shall mutually agree are necessary and appropriate for
business purposes, and his travel and entertainment expenses incurred in
connection with the performance of his duties under this Agreement, in each case
upon presentation to the Company of an itemized account of such expenses in such
form as the Company may reasonably require.
Section 9. Termination of Employment with
Severance Benefits.
(a) The Executive shall be entitled to the severance benefits described
herein in the event that his employment with the Company terminates during the
Employment Period under any of the following circumstances:
(i) the Executive's voluntary resignation from employment with the Company
within ninety (90) days following:
(A) the failure of the Board to appoint or re-appoint
or elect or re-elect the Executive to the office of Vice
Chairman (or a more senior office) of the Company;
(B) the failure of the stockholders of the Company to
elect or re-elect the Executive to the Board or the failure of
the Board (or the nominating committee thereof) to nominate
the Executive for such election or re-election if the
Executive is a member of the Board on the date of this
Agreement or thereafter becomes a member of the Board;
(C) the expiration of a thirty (30) day period
following the date on which the Executive gives written notice
to the Company of its material failure, whether by amendment
of the Company's Organization Certificate or By-laws, action
of the Board or the Company's stockholders or otherwise, to
vest in the Executive the functions, duties, or
responsibilities prescribed in section 3 of this Agreement as
of the date hereof, unless, during such thirty (30) day
period, the Company cures such failure in a manner determined
by the Executive, in his sole discretion, to be satisfactory;
(D) the expiration of a thirty (30) day period
following the date on which the Executive gives written notice
to the Company of its material breach of any term, condition
or covenant contained in this Agreement
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(including, without limitation, any reduction of the
Executive's rate of base salary in effect from time to time
and any change in the terms and conditions of any compensation
or benefit program in which the Executive participates which,
either individually or together with other changes, has a
material adverse effect on the aggregate value of his total
compensation package), unless, during such thirty (30) day
period, the Company cures such failure in a manner determined
by the Executive, in his sole discretion, to be satisfactory;
or
(E) the relocation of the Executive's principal place
of employment, without his written consent, to a location
outside of Nassau County and Queens County, New York;
(ii) the termination of the Executive's employment with the
Company for any other reason not described in section 10(a).
In such event, the Company shall provide the benefits and pay to the Executive
the amounts described in section 9(b).
(b) Upon the termination of the Executive's employment with the Company
under circumstances described in section 9(a) of this Agreement, the Company
shall pay and provide to the Executive (or, in the event of his death, to his
estate):
(i) his earned but unpaid compensation (including, without
limitation, all items which constitute wages under section 190.1 of the
New York Labor Law and the payment of which is not otherwise provided
for under this section 9(b)) as of the date of the termination of his
employment with the Company, such payment to be made at the time and in
the manner prescribed by law applicable to the payment of wages but in
no event later than thirty (30) days after termination of employment;
(ii) the benefits, if any, to which he is entitled as a former
employee under the employee benefit plans and programs and compensation
plans and programs maintained for the benefit of the Company's officers
and employees, as modified, where applicable, by this Agreement and
Plan of Merger;
(iii) continued group life, health (including without
limitation hospitalization, medical and major medical), dental,
accident and long term disability insurance benefits, in addition to
that provided pursuant to section 9(b)(ii), and after taking into
account the coverage provided by any subsequent employer, if and to the
extent necessary to provide for the Executive, for the Remaining
Unexpired Employment Period, coverage equivalent to the coverage to
which he would have been entitled under such plans (as in effect on the
date of his termination of employment, or, if his termination of
employment occurs after a
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Change of Control, on the date of such Change of Control, whichever
benefits are greater), if he had continued working for the Company
during the Remaining Unexpired Employment Period at the highest annual
rate of compensation achieved during that portion of the Employment
Period which is prior to the Executive's termination of employment with
the Company;
(iv) within thirty (30) days following his termination of
employment with the Company, a lump sum payment in an amount equal to
the present value of the salary that the Executive would have earned as
if he had continued working for the Company during the Remaining
Unexpired Employment Period at the highest annual rate of salary
achieved during that portion of the Employment Period which is prior to
the Executive's termination of employment with the Company, where such
present value is to be determined using a discount rate equal to the
applicable short-term federal rate prescribed under section 1274(d) of
the Internal Revenue Code of 1986 ("Code"), compounded using the
compounding period corresponding to the Company's regular payroll
periods for its officers, such lump sum to be paid in lieu of all other
payments of salary provided for under this Agreement in respect of the
period following any such termination;
(v) within thirty (30) days following his termination of
employment with the Company, a lump sum payment in an amount equal to
the excess, if any, of:
(A) the present value of the aggregate benefits to
which he would be entitled under any and all qualified and
non-qualified defined benefit pension plans maintained by, or
covering employees of, the Company, as if he were 100% vested
thereunder and had continued working for the Company during
the Remaining Unexpired Employment Period, such benefits to be
determined as of the date of termination of employment by
adding to the service actually recognized under such plans an
additional period equal to the Remaining Unexpired Employment
Period and by adding to the compensation recognized under such
plans for the most recent year recognized all amounts payable
under sections 9(b)(i), (iv), (vii), (viii) and (ix); over
(B) the present value of the benefits to which he is
actually entitled under such defined benefit pension plans as
of the date of his termination;
where such present values are to be determined using the mortality
tables prescribed under section 415(b)(2)(E)(v) of the Code and a
discount rate, compounded monthly, equal to the annualized rate of
interest prescribed by the Pension Benefit Guaranty Corporation for the
valuation of immediate annuities payable under terminating
single-employer defined benefit plans for the month in which the
Executive's termination of employment occurs ("Applicable PBGCRate");
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(vi) within thirty (30) days following his termination of
employment with the Company, a lump sum payment in an amount equal to
the present value of the additional employer contributions (or if
greater in the case of a leveraged employee stock ownership plan or
similar arrangement, the additional assets allocable to him through
debt service, based on the fair market value of such assets at
termination of employment) to which he would have been entitled under
any and all qualified and non-qualified defined contribution plans
maintained by, or covering employees of, the Company, as if he were
100% vested thereunder and had continued working for the Company during
the Remaining Unexpired Employment Period at the highest annual rate of
compensation achieved during that portion of the Employment Period
which is prior to the Executive's termination of employment with the
Company, and making the maximum amount of employee contributions, if
any, required under such plan or plans, such present value to be
determined on the basis of a discount rate, compounded using the
compounding period that corresponds to the frequency with which
employer contributions are made to the relevant plan, equal to the
Applicable PBGC Rate;
(vii) within thirty (30) days following his termination of
employment with the Company, a lump sum payment in an amount equal to
the present value of the payments that would have been made to the
Executive under any cash bonus or long-term or short-term cash
incentive compensation plan maintained by, or covering employees of,
the Company as if he had continued working for the Company during the
Remaining Unexpired Employment Period and had earned the maximum bonus
or incentive award in each calendar year that ends during the Remaining
Unexpired Employment Period, such payments to be equal to the product
of:
(A) the maximum percentage rate of annual salary at
which an award was ever available to the Executive under such
incentive compensation plan; multiplied by
(B) the salary that would have been paid to the
Executive during each such calendar year at the highest annual
rate of salary achieved during that portion of the Employment
Period which is prior to the Executive's termination of
employment with the Company where such present value is to be
determined using a discount rate equal to the applicable
short-term federal rate prescribed under section 1274(d) of
the Code, compounded annually;
(viii) at the election of the Company made within thirty (30)
days following his termination of employment with the Company (with the
written consent of the Executive in the case of options or appreciation
rights resulting from
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the conversion of options granted by Seller pursuant to the Agreement
and Plan of Merger), upon the surrender of options or appreciation
rights issued to the Executive under any stock option and appreciation
rights plan or program maintained by, or covering employees of, the
Company, a lump sum payment in an amount equal to the product of:
(A) the excess of (I) the fair market value of a
share of stock of the same class as the stock subject to the
option or appreciation right, determined as of the date of
termination of employment, over (II) the exer cise price per
share for such option or appreciation right, as specified in
or under the relevant plan or program; multiplied by
(B) the number of shares with respect to which
options or appreciation rights are being surrendered.
For purposes of this section 9(b)(viii) and for purposes of determining
the Executive's right following his termination of employment with the
Company to exercise any options or appreciation rights not surrendered
pursuant hereto, the Executive shall be deemed fully vested in all
options and appreciation rights under any stock option or appreciation
rights plan or program maintained by, or covering employees of, the
Company, even if he is not otherwise vested under such plan or program;
(ix) at the election of the Company made within thirty (30)
days following the Executive's termination of employment with the
Company, upon the surrender of any unvested shares awarded to the
Executive under any restricted stock plan maintained by, or covering
employees of, the Company, a lump sum payment in an amount equal to the
product of:
(A) the fair market value of a share of stock of the
same class of stock granted under such plan, determined as of
the date of the Executive's termination of employment;
multiplied by
(B) the number of shares which are being surrendered.
For purposes of this section 9(b)(ix) and for purposes of determining
the Executive's right following his termination of employment with the
Company to any stock not surrendered pursuant hereto, the Executive
shall be deemed fully vested in all shares awarded under any restricted
stock plan maintained by, or covering employees of, the Company, even
if he is not otherwise vested under such plan.
The Company and the Executive hereby stipulate that the damages which may be
incurred by the Executive following any such termination of employment are not
capable of accurate measurement as of the date first above written and that the
payments and benefits contemplated by this section
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9(b) constitute reasonable damages under the circumstances and shall be payable
without any requirement of proof of actual damage and without regard to the
Executive's efforts, if any, to mitigate damages. The Company and the Executive
further agree that the Company may condition the payments and benefits (if any)
due under sections 9(b)(iii), (iv), (v), (vi) and (vii) on the receipt of the
Executive's resignation from any and all positions from which he has not been
terminated and which he holds as an officer, director or committee member with
respect to the Company, the Association or any subsidiary or affiliate of either
of them; provided, however, that the foregoing shall not preclude the Executive
from performing services and receiving compensation and any other benefits under
the Astoria Financial Corporation Litigation Committee Consulting Agreement by
and between the Executive and the Company dated April 2, 1998.
Section 10. Termination without Additional Company
Liability.
(a) In the event that the Executive's employment with the Company shall
terminate during the Employment Period on account of:
(i) the discharge of the Executive for "cause," which, for
purposes of this Agreement shall mean: (A) the Executive intentionally
engages in dishonest conduct in connection with his performance of
services for the Company resulting in his conviction of a felony; (B)
the Executive is convicted of, or pleads guilty or nolo contendere to,
a felony or any crime involving moral turpitude; (C) the Executive
willfully fails or refuses to perform his duties under this Agreement
and fails to cure such breach within sixty (60) days following written
notice thereof from the Company; (D) the Executive breaches his
fiduciary duties to the Company for personal profit; or (E) the
Executive's willful breach or violation of any law, rule or regulation
(other than traffic violations or similar offenses), or final cease and
desist order in connection with his performance of services for the
Company.
(ii) the Executive's voluntary resignation from employment
with the Company for reasons other than those specified in section 9(a)
or 11 (b);
(iii) the Executive's death;
(iv) a determination that the Executive is eligible for
long-term disability benefits under the Company's long-term disability
insurance program or, if there is no such program, under the federal
Social Security Act; or
(v) the Executive's termination of employment for any reason
at or after attainment of mandatory retirement age under the Company's
mandatory retirement policy for executive officers in effect as of the
date of this Agreement;
then the Company shall have no further obligations under this Agreement, other
than the payment to the Executive (or, in the event of his death, to his estate)
of his earned but unpaid compensation as of the date of the termination of his
employment, and the provision of such other benefits, if
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any, to which he is entitled as a former employee under the employee benefit
plans and programs and compensation plans and programs maintained by, or
covering employees of, the Company.
(b) For purposes of section 10(a)(i), no act or failure to act, on the part
of the Executive, shall be considered "intentional" or "willful" unless it is
done, or omitted to be done, by the Executive in bad faith or without reasonable
belief that the Executive's action or omission was in the best interests of the
Company. Any act, or failure to act, based upon authority given pursuant to a
resolution duly adopted by the Board or based upon the written advice of counsel
for the Company shall be conclusively presumed to be done, or omitted to be
done, by the Executive in good faith and in the best interests of the Company.
The cessation of employment of the Executive shall not be deemed to be for
"cause" within the meaning of section 10(a)(i) unless and until there shall have
been delivered to the Executive a copy of a resolution duly adopted by the
affirmative vote of three-fourths of the members of the Board at a meeting of
the Board called and held for such purpose (after reasonable notice is provided
to the Executive and the Executive is given an opportunity, together with
counsel, to be heard before the Board), finding that, in the good faith opinion
of the Board, the Executive is guilty of the conduct described in section
10(a)(i) above, and specifying the particulars thereof in detail.
Section 11. Termination Upon or Following a
Change Of Control.
(a) A Change of Control of the Company ("Change of Control") shall be
deemed to have occurred upon the happening of any of the following events:
(i) approval by the stockholders of the Company of a
transaction that would result in the reorganization, merger or
consolidation of the Company with one or more other persons, other than
a transaction following which:
(A) at least 51 % of the equity ownership interests
of the entity resulting from such transaction are beneficially
owned (within the meaning of Rule 13d-3 promulgated under the
Exchange Act) in substantially the same relative proportions
by persons who, immediately prior to such transaction,
beneficially owned (within the meaning of Rule 13d-3
promulgated under the Exchange Act) at least 51 % of the
outstanding equity ownership interests in the Company; and
(B) at least 51 % of the securities entitled to vote
generally in the election of directors of the entity resulting
from such transaction are beneficially owned (within the
meaning of Rule 13d-3 promulgated under the Exchange Act) in
substantially the same relative proportions by persons who,
immediately prior to such transaction, beneficially owned
(within the meaning of Rule 13d-3 promulgated under the
Exchange Act) at least 51 % of the securities entitled to vote
generally in the election of directors of the Company;
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(ii) the acquisition of all or substantially all of the assets
of the Company or beneficial ownership (within the meaning of Rule
13d-3 promulgated under the Exchange Act) of 20% or more of the
outstanding securities of the Company entitled to vote generally in the
election of directors by any person or by any persons acting in
concert, or approval by the stockholders of the Company of any
transaction which would result in such an acquisition;
(iii) a complete liquidation or dissolution of the Company, or
approval by the stockholders of the Company of a plan for such
liquidation or dissolution;
(iv) the occurrence of any event if, immediately following
such event, at least 50% of the members of the board of directors of
the Company do not belong to any of the following groups:
(A) individuals who were members of the Board of the
Company on the date of this Agreement; or
(B) individuals who first became members of the Board
of the Company after the date of this Agreement either:
(I) upon election to serve as a member of
the Board of directors of the Company by affirmative
vote of three-quarters of the members of such Board,
or of a nominating committee thereof, in office at
the time of such first election; or
(II) upon election by the stockholders of
the Company to serve as a member of the Board of the
Company, but only if nominated for election by
affirmative vote of three-quarters of the members of
the board of directors of the Company, or of a
nominating committee thereof, in office at the time
of such first nomination;
provided, however, that such individual's election or
nomination did not result from an actual or threatened
election contest (within the meaning of Rule 14a- 11 of
Regulation 14A promulgated under the Exchange Act) or other
actual or threatened solicitation of proxies or consents
(within the meaning of Rule 14a-11 of Regulation 14A
promulgated under the Exchange Act) other than by or on behalf
of the Board of the Company; or
(v) any event which would be described in section 1 l(a)(i),
(ii), (iii) or (iv) if the term "Association" were substituted for the
term "Company" therein.
In no event, however, shall a Change of Control be deemed to have occurred as a
result of any acquisition of securities or assets of the Company, the
Association, or a subsidiary of either of
Page 13 of 20
14
them, by the Company, the Association, or a subsidiary of either of them, or by
any employee benefit plan maintained by any of them. For purposes of this
section 11 (a), the term "person" shall have the meaning assigned to it under
sections 13(d)(3) or 14(d)(2) of the Exchange Act.
(b) In the event of a Change of Control, the Executive shall be entitled to
the payments and benefits contemplated by section 9(b) in the event of his
termination of employment with the Company under any of the circumstances
described in section 9(a) of this Agreement or under any of the following
circumstances:
(i) resignation, voluntary or otherwise, by the Executive at
any time during the Employment Period following his demotion, loss of
title, office or significant authority or responsibility, or following
any reduction in any element of his package of compensation and
benefits;
(ii) resignation, voluntary or otherwise, by the Executive at
any time during the Employment Period following any relocation of his
principal place of employment or any change in working conditions at
such principal place of employment which the Executive, in his
reasonable discretion, determines to be embarrassing, derogatory or
otherwise adverse;
(iii) resignation, voluntary or otherwise, by the Executive at
any time during the Employment Period following the failure of any
successor to the Company in the Change of Control to include the
Executive in any compensation or benefit program maintained by it or
covering any of its executive officers, unless the Executive is already
covered by a substantially similar plan of the Company which is at
least as favorable to him; or
(iv) resignation, voluntary or otherwise, for any reason
whatsoever following the effective date of the Change of Control.
Section 12. Tax Indemnification.
(a) This section 12 shall apply if the Executive's employment is terminated
upon or following (i) a Change of Control (as defined in section 11 of this
Agreement); or (ii) a change "in the ownership or effective control" of the
Company or the Association or "in the ownership of a substantial portion of the
assets" of the Company or the Association within the meaning of section 28OG of
the Code. If this section 12 applies, then, if for any taxable year, the
Executive shall be liable for the payment of an excise tax under section 4999 of
the Code with respect to any payment in the nature of compensation made by the
Company, the Association or any direct or indirect subsidiary or affiliate of
the Company or the Association to (or for the benefit of) the Executive, the
Company shall pay to the Executive an amount equal to X determined under the
Page 14 of 20
15
following formula:
X = E x P
____________________________________
1 - [(FI x (1 - SLI)) + SLI + E + M]
where
E = the rate at which the excise tax is assessed under
section 4999 of the Code;
P = the amount with respect to which such excise tax is
assessed, determined without regard to this section
12;
FI = the highest marginal rate of income tax applicable
to the Executive under the Code for the taxable year
in question;
SLI = the sum of the highest marginal rates of income tax
applicable to the Executive under all applicable
state and local laws for the taxable year in
question; and
M = the highest marginal rate of Medicare tax
applicable to the Executive under the Code for the
taxable year in question.
With respect to any payment in the nature of compensation that is made to (or
for the benefit of) the Executive under the terms of this Agreement, or
otherwise, and on which an excise tax under section 4999 of the Code will be
assessed, the payment determined under this section 12(a) shall be made to the
Executive on the earlier of (i) the date the Company, the Association or any
direct or indirect subsidiary or affiliate of the Company or the Association is
required to withhold such tax, or (ii) the date the tax is required to be paid
by the Executive.
(b) Notwithstanding anything in this section 12 to the contrary, in the
event that the Executive's liability for the excise tax under section 4999 of
the Code for a taxable year is subsequently determined to be different than the
amount determined by the formula (X + P) x E, where X, P and E have the meanings
provided in section 12(a), the Executive or the Company, as the case may be,
shall pay to the other party at the time that the amount of such excise tax is
finally determined, an appropriate amount, plus interest, such that the payment
made under section 12(a), when increased by the amount of the payment made to
the Executive under this section 12(b) by the Company, or when reduced by the
amount of the payment made to the Company under this section 12(b) by the
Executive, equals the amount that should have properly been paid to the
Executive under section 12(a). The interest paid under this section 12(b) shall
be determined at the rate provided under section 1274(b)(2)(B) of the Code. To
confirm that the proper amount, if any, was paid to the Executive under this
section 12, the Executive shall furnish to the Company a copy of each tax return
which reflects a liability for an excise tax payment made by the Company, at
least 20 days before the date on which such return is required to be filed with
the Internal Revenue Service.
Page 15 of 20
16
(c) The provisions of this section 12 are designed to reflect the
provisions of applicable federal, state and local tax laws in effect on the date
of this Agreement. If, after the date hereof, there shall be any change in any
such laws, this section 12 shall be modified in such manner as the Executive and
the Company may mutually agree upon if and to the extent necessary to assure
that the Executive is fully indemnified against the economic effects of the tax
imposed under section 4999 of the Code or any similar federal, state or local
tax.
Section 13. Covenant Not To Compete.
The Executive hereby covenants and agrees that, for a period of one (1)
year following the date of his termination of employment with the Company, he
shall not, without the written consent of the Company, become an officer,
employee, consultant, director or trustee of any savings bank, savings and loan
association, savings and loan holding company, bank or bank holding company, or
any direct or indirect subsidiary or affiliate of any such entity, that entails
working in any city, town or county in which the Association or the Company has
an office or has filed an application for regulatory approval to establish an
office, determined as of the effective date of the Executive's termination of
employment; provided, however, that this section 13 shall not apply if the
Executive's employment is terminated for the reasons set forth in section 9(a);
and provided, further, that if the Executive's employment shall be terminated on
account of disability as provided in section 10(a)(iv) of this Agreement, this
section 13 shall not prevent the Executive from accepting any position or
performing any services if (a) he first offers, by written notice, to accept a
similar position with, or perform similar services for, the Company on
substantially the same terms and conditions and (b) the Company declines to
accept such offer within ten (10) days after such notice is given.
Section 14. Confidentiality.
Unless he obtains the prior written consent of the Company, the Executive
shall keep confidential and shall refrain from using for the benefit of himself,
or any person or entity other than the Company or any entity which is a
subsidiary of the Company or of which the Company is a subsidiary, any material
document or information obtained from the Company, or from its parent or
subsidiaries, in the course of his employment with any of them concerning their
properties, operations or business (unless such document or information is
readily ascertainable from public or published information or trade sources or
has otherwise been made available to the public through no fault of his own)
until the same ceases to be material (or becomes so ascertainable or available);
provided, however, that nothing in this section 14 shall prevent the Executive,
with or without the Company's consent, from participating in or disclosing
documents or information in connection with any judicial or administrative
investigation, inquiry or proceed ing to the extent that such participation or
disclosure is required under applicable law.
Section 15. Solicitation.
The Executive hereby covenants and agrees that, for a period of one (1)
year following the date of his termination of employment with the Company, he
shall not, without the
Page 16 of 20
17
written consent of the Company, either directly or indirectly:
(a) solicit, offer employment to, or take any other action
intended, or that a reasonable person acting in like circumstances
would expect, to have the effect of causing any officer or employee of
the Company, the Association or any affiliate, as of the date of this
Agreement, of either of them, to terminate his or her employment and
accept employment or become affiliated with, or provide services for
compensation in any capacity whatsoever to, any savings bank, savings
and loan association, bank, bank holding company, savings and loan
holding company, or other institution engaged in the business of
accepting deposits and making loans, doing business in any city, town
or county in which the Association or the Company has an office or has
filed an application for regulatory approval to establish an office,
determined as of the date of this Agreement;
(b) provide any information, advice or recommendation with
respect to any such officer or employee to any savings bank, savings
and loan association, bank, bank holding company, savings and loan
holding company, or other institution engaged in the business of
accepting deposits and making loans, doing business in any city, town
or county in which the Association or the Company has an office or has
filed an application for regulatory approval to establish an office,
determined as of the date of this Agreement, that is intended, or that
a reasonable person acting in like circumstances would expect, to have
the effect of causing any officer or employee of the Company, the
Association, or any affiliate, as of the date of this Agreement, of
either of them, to terminate his or her employment and accept
employment or become affiliated with, or provide services for
compensation in any capacity whatsoever to, any such savings bank,
savings and loan association, bank, bank holding company, savings and
loan holding company, or other institution engaged in the business of
accepting deposits and making loans; or
(c) solicit, provide any information, advice or recommendation
or take any other action intended, or that a reasonable person acting
in like circumstances would expect, to have the effect of causing any
customer of the Company to terminate an existing business or commercial
relationship with the Company.
Section 16. No Effect on Employee Benefit Plans
or Programs.
The termination of the Executive's employment during the term of this
Agreement or thereafter, whether by the Company or by the Executive, shall have
no effect on the rights and obligations of the parties hereto under the
Company's qualified or non-qualified retirement, pension, savings, thrift,
profit-sharing or stock bonus plans, group life, health (including
hospitalization, medical and major medical), dental, accident and long term
disability insurance plans or such other employee benefit plans or programs, or
compensation plans or programs, as may be maintained by, or cover employees of,
the Company from time to time.
Page 17 of 20
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Section 17. Successors and Assigns.
This Agreement will inure to the benefit of and be binding upon the
Executive, his legal representatives and testate or intestate distributees, and
the Company and its successors and assigns, including 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 assets and business of the Company may
be sold or otherwise transferred. Failure of the Company to obtain from any
successor its express written assumption of the Company's obligations hereunder
at least sixty (60) days in advance of the scheduled effective date of any such
succession shall be deemed a material breach of this Agreement.
Section 18. 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 Executive:
Xxxx X. Xxxxxxx, Xx.
0 Xxxxxx Xxxxx
Xxxxxx Xxxx, Xxx Xxxx 00000
with a copy to:
Milbank, Tweed, Xxxxxx & 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
Attention: General Counsel
Page 18 of 20
19
with a copy to:
Xxxxxxx Xxxxxxxx & Wood
Xxx Xxxxx Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: W. Xxxxxx Xxxxxx, Esq.
Section 19. Indemnification for Attorneys' Fees.
The Company shall indemnify, hold harmless and defend the Executive against
reasonable costs, including without limitation legal fees, incurred by him in
connection with or arising out of any action, suit or proceeding in which he may
be involved, as a result of his efforts, in good faith, to defend or enforce the
terms of this Agreement; provided, however, that the Executive shall have
substantially prevailed on the merits pursuant to a judgment, decree or order of
a court of competent jurisdiction or of an arbitrator in an arbitration
proceeding, or in a settlement. For purposes of this Agreement, any settlement
agreement which provides for payment of any amounts in settlement of the
Company's obligations hereunder shall be conclusive evidence of the Executive's
entitlement to indemnification hereunder, and any such indemnification payments
shall be in addition to amounts payable pursuant to such settlement agreement,
unless such settlement agreement expressly provides otherwise.
Section 20. 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 21. 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 22. 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 23. Governing Law.
This Agreement shall be governed by and construed and enforced in
accordance with the federal laws of the United States and, to the extent that
federal law is inapplicable, in accordance with the laws of the State of New
York applicable to contracts entered into and to be
Page 19 of 20
20
performed entirely within the State of New York.
Section 24. 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.
Section 25. 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, other than the Employment Agreements, each dated September 19, 1994, by
and between Executive and Seller Bank and Seller, respectively (the "Employment
Agreements"); the Astoria Financial Corporation Litigation Committee Consulting
Agreement between the Company and the Executive dated as of April 2, 1998; and
the Letter Agreement dated April 2, 1998 between the Executive, 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 26. Non-duplication.
In the event that the Executive shall perform services for the Association
or any other direct or indirect subsidiary of the Company, any compensation or
benefits provided to the Executive by such other employer shall be applied to
offset the obligations of the Company hereunder, it being intended that this
Agreement set forth the aggregate compensation and benefits payable to the
Executive for all services to the Company and all of its direct or indirect
subsidiaries.
Section 27. Survival.
The provisions of sections 6, 9, 11, 12, 13, 14, 15, 18, 20, and 28 shall
survive the expiration of the Employment Period or termination of this
Agreement.
Section 28. Equitable Remedies.
The Company and the Executive hereby stipulate that money damages are an
inadequate remedy for violations of sections 6(a), 13, 14 or 15 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 29. Required Regulatory Provisions.
Notwithstanding anything herein contained to the contrary, any payments to
the Executive by the Company, whether pursuant to this Agreement or otherwise,
are subject to and
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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 30. Effective Date.
The effective date of this Agreement shall be the date of closing of the
merger of the Seller with and into the Company as contemplated by the Agreement
and Plan of Merger dated April 2, 1998 ("Effective 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 Executive 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 of the Board,
President and Chief Executive
Officer
[Seal]
/S/ Xxxx X. Xxxxxxx, Xx.
XXXX X. XXXXXXX, XX.
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SCHEDULE 7A
XXXX X. XXXXXXX, XX.-BOARD MEMBERSHIPS
-------------------------------------------------------------------------------
NYC and National MS Societies
Board of directors 1979 - Present
New York Foundling Hospital
Advisory Board - 1989 - Present
Wheelchair Charities
Advisory Board 1994 - Present
Telicare
Board of Trustees 1995 - Present
St. Vincent's Services
Board of Directors 1995 - Present
Hofstra University
Board of Trustees 1996 - Present
Help for the Poor
Board Member January 1998 - Present
Page 22 of 20
