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Xxxxxxxx X. Xxxxxx
000 Xxxxx Xxxx
Xxxxxxxxxx, 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, subject to the aggregate limitations imposed
under
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paragraph 1 hereof, provide 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
6.8.1, 6.8.3 and 6.8.4 of the Employment Agreement, with any additional payments
or refunds to be paid at the time provided in such Section 6.8.4 or in Section
6.9 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/ Xxxxxxxx X. Xxxxxx
Xxxxxxxx X. Xxxxxx
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
--------------------------------------------------- ------------
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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Xxxxxx
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SCHEDULE A
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Contract Pay-out
3 times highest Salary $750,000
3 times highest Bonus $400,000
3 years of Welfare Benefits $13,343
28OG Gross-Up $1,213,130
Prior Year Bonus $200,000
Severance $250,000
Vacation (# of Weeks X Salary) $36,060
Split Dollar --
Deferred Pension Payout $525,000
Computer $7,000
Car (estimate) $40,000
Outplacement Services --
Waiver of Non-Compete YES**
Maintain Life Insurance $33,000 per year - Board approved
Maintain Health for Spouse Included above until age 65 - currently 62
Retirement plan for non employee (PV) $264,963
Deferred Stock Unit Plan $55,110
** A waiver by AFC, LIB, The Long Island Savings Bank, FSB and Astoria
Federal Savings and Loan Association of the "non-compete" provision
contained in Section 4.03(b) of The Long Island Savings Bank, FSB
Deferred Pension Plan.
*** 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
XXXXX XXXXXX Co. Cost Participates Paid By
Medical $0 No
Dental $0 No
Long Term Disability $375 Yes LISB
Life Insurance $858 Yes LISB
Accidental Death & $117 Yes LISB
Dismemberment
XXXXX XXXXXX
Medical $2,533 Yes Shared
Dental $565 Yes Shared
Long Term Disability $0 No
Life Insurance $0 No
Accidental Death & $0 No
Dismemberment
__________
$8,447.8
Agreement Coverage __________3
$13,343.40
__________
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
