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CONSULTING AGREEMENT
This CONSULTING AGREEMENT ("Agreement") is made and entered
into as of April 2, 1998 by and between ASTORIA FINANCIAL CORPORATION, a
corporation organized and existing under the laws of the State of Delaware and
having its executive offices at Xxx Xxxxxxx Xxxxxxx Xxxxx, Xxxx Xxxxxxx, Xxx
Xxxx 00000-0000 ("Corporation") and XXXXXXXX X. XXXXXX, residing at 000 XXXXX
XXXX, XXXXXXXXXX, XXX XXXX 00000 ("Consultant").
WITNESSETH:
WHEREAS, pursuant to an Agreement and Plan of Merger by and
between the Corporation and Long Island Bancorp, Inc. ('Seller") dated April 2,
1998 ("Agreement and Plan of Merger"), the Corporation and the Seller have
agreed to a merger of the Seller with the Corporation, effective as of the
closing date specified in the Agreement and Plan of Merger ("Closing Date"); and
WHEREAS, the Consultant is a senior executive officer of the
Seller and is familiar with its business, operations and properties; and
WHEREAS, the Consultant is a party to Employment Agreements
with the Seller and The Long Island Savings Bank, FSB ('Seller Bank") which
provide a financial incentive for him to resign from employment with the Seller
and the Seller Bank or their successors upon consummation of a transaction of
the nature contemplated by the Agreement and Plan of Merger; and
WHEREAS, for purposes of facilitating a smooth transition in
ownership and control, and an effective consolidation of the Seller's operations
with those of the Corporation, the Corporation wishes to secure for itself and
its wholly owned subsidiary, Astoria Federal Savings and Loan Association
("Association"), the services of the Consultant for a period of one year
following the Closing Date; and
WHEREAS, the Consultant is willing to make his services
available to the Corporation on the terms and conditions hereinafter set forth;
NOW, THEREFORE, the Corporation and the Consultant hereby
agree as follows:
Section 1. Engagement; Period of Engagement.
(a) The Corporation offers to engage the Consultant, and the
Consultant hereby accepts such engagement, to provide services to the
Corporation as a consultant for the period established under this section 1
("Period of Engagement"). The Period of Engagement shall be for one year
beginning on the Closing Date and ending on the first anniversary date of
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the Closing Date.
(b) Notwithstanding anything herein to the contrary, the
Period of Engagement shall end upon any termination of this Agreement pursuant
to section 6.
Section 2. Extent of Services.
(a) During the Period of Engagement, the Consultant shall hold
himself available during regular business hours to perform such services in
connection with the transition of the ownership and operation of the businesses
and assets acquired by the Corporation pursuant to the Agreement and Plan of
Merger and the other businesses of the Corporation and its affiliates as the
Corporation may reasonably request; provided, however, that the Corporation
shall have no obligation to avail itself of the Consultant's services. The
services which may be required of the Consultant hereunder may include, but are
not limited to, 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; and otherwise
facilitating the transition of ownership and control and an effective
consolidation of the Seller's operations with those of the Corporation. The
Corporation may, in its sole and absolute discretion, engage other employees or
independent contractors to perform any or all of the services for which the
Consultant is available under this section 2(a). The Consultant may engage in
business activities and perform services as an employee or independent
contractor (other than for the Corporation) 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 Corporation as
contemplated by this Agreement or contravene the provisions of section 5 of this
Agreement.
(b) 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 times, places and dates at which such
services will be performed. The Consultant shall provide his consulting services
under this Agreement to the Chairman of the Corporation or a designee of the
Chairman of the Corporation.
Section 3. Compensation.
In consideration for the availability of the Consultant's
services hereunder, as well as for any services to be provided under section
2(a), the Corporation shall pay to the Consultant a retainer at the annual rate
of FIVE HUNDRED THOUSAND DOLLARS ($500,000), payable in advance in monthly
installments, the first such installment to be paid on the first business day of
the first calendar month following the Closing Date; provided, however, that no
payment shall be made for any month after the month in which this Agreement
terminates as provided in section 6 hereof.
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Section 4. Expenses.
(a) The Corporation shall provide the Consultant with office
facilities and secretarial and other support services on its premises to the
extent required to perform the consulting services contemplated herein, as
determined by the Corporation in its discretion.
(b) If, in connection with the performance of service
hereunder at the request of the Corporation, the Consultant incurs out-of-pocket
costs for expenses for travel, meals and lodging or other reasonable expenses of
a type for which other providers of professional services to the Corporation
would be reimbursed by the Corporation, he shall be entitled to reimbursement
therefor by the Corporation in accordance with the reasonable standards and
procedures established by the Corporation and communicated to the Consultant.
Section 5. Confidentiality; Nonsolicitation.
(a) During the Period of Engagement and at all times
thereafter, the Consultant, except as previously authorized by the Corporation
in writing, shall keep confidential and shall refrain from using or disclosing
for the benefit of any person or entity other than the Corporation 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 Corporation as soon as reasonably practicable after such compulsion.
(b) The Consultant acknowledges that during the course of his
employment with the Seller or Seller Bank and performance of service for the
Corporation 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 as
confidential by the Corporation shall be the exclusive property of the
Corporation and shall, together with any and all copies thereof, be returned to
the Corporation (or the Consultant 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 Period of Engagement, and a
request by the Corporation for the return thereof.
(c) The Consultant hereby covenants and agrees that, during
the Period of Engagement and for six months thereafter, he shall not, without
the written consent of the Corporation, either directly or indirectly:
(i) solicit, offer employment to, or take any other action
intended to cause any officer or employee of the Corporation or any
affiliate to terminate his
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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 Corporation 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 Corporation or any
affiliate that is intended to cause any officer or employee of the
Corporation 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 the Corporation 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, or to cause any
customer of the Corporation or any affiliate to terminate an existing
business or commercial relationship with the Corporation or any
affiliate; or
(iv) take any action as a result of which the relations
between the Corporation and its affiliates and their customers or
others are impaired or which is otherwise detrimental to the business
of the Corporation and its affiliates as then conducted.
(d) The duties and obligations imposed on the Consultant under
this section 5 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
Corporation or its affiliates under applicable law. This section 5 shall be
construed and enforced so as to give effect to this intent. The Consultant
hereby stipulates that the Corporation 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 6. Termination of Agreement.
This Agreement and the Period of Engagement established
hereunder shall terminate immediately upon the occurrence of any of the
following events: (i) the Consultant's death; (ii) a determination by the
Corporation, on the basis of a report from a competent medical doctor (to which
the Consultant shall have 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 2 or 5 hereof and subsequent failure to
substantially cure such breach after notice of such breach; (iv) the Consultant
has been convicted of a felony; or (v) the Consultant's voluntary termination,
upon 30 days notice to the Corporation, of this Agreement. Following the
termination of this Agreement, the Corporation shall have no further obligations
hereunder, but the Consultant shall continue to be bound by the provisions of
sections 5, 7 and 17.
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Section 7. No Employment Relationship Created.
The relationship between the Corporation and the Consultant
shall be that of client and independent contractor. The Corporation 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 Corporation, and specifically
waives any and all such rights. The Consultant hereby agrees to take any and all
such actions as the Corporation may reasonably request in order to establish
that no employment relationship exists 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 8. Right to Specific Performance.
The Consultant hereby agrees that any breach of his covenants
and agreements under sections 5, 7 or 17 of this Agreement will cause
irreparable injury to the Corporation for which the Corporation has no adequate
remedy at law. Therefore, the Consultant agrees that each and every covenant and
agreement set forth in section 5, 7 and 17 shall, in addition to and not by way
of limitation of any other remedy (including money damages) which may be
available, be specifically enforceable against him by any party entitled to
enforcement thereof.
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 Corporation, and their respective successors and assigns,
including, in the case of the Corporation, 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
Corporation 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:
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If to the Consultant:
Xxxxxxxx X. Xxxxxx
000 Xxxxx Xxxx
Xxxxxxxxxx, Xxx Xxxx 00000
with a copy to:
Milbank, Tweed, Xxxxxx & XxXxxx
0 Xxxxx Xxxxxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxxxx X. Xxxxx, Esq.
If to the Corporation:
Astoria Financial Corporation
Xxx Xxxxxxx Xxxxxxx Xxxxx
Xxxx Xxxxxxx, Xxx Xxxx 00000-0000
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, in whole
or in part, is invalid or unenforceable shall not affect the validity or
enforceability of any other provision hereof or of any part of the provision in
question not determined to be unenforceable.
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
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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 without giving effect to
the conflict of law principles of such laws. Notwithstanding anything herein
contained to the contrary, any payments to the Consultant by the Corporation,
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.
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 Corporation 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 1 7. 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.
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Section 18. Indemnification.
To the maximum extent permitted under applicable law, during
the Period of Engagement and for a period of six (6) years thereafter, the
Corporation 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, officer or former director or officers of the Corporation or any
subsidiary or affiliate thereof.
Section 19. Survival.
The provisions of sections 5, 7, 8, 9, 10, 17, and 18 of this
Agreement shall survive the termination of this Agreement or the expiration of
the Period of Engagement.
Section 20. 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 Corporation 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.
/S/ Xxxxxxxx X. Xxxxxx
XXXXXXXX X. XXXXXX
ASTORIA FINANCIAL CORPORATION
By: /S/ Xxxxxx X. Xxxxxxx, Xx.
Title: Chairman, President and Chief
Executive Officer
ATTEST:
By /S/ Xxxxxxx X. Xxxxxxx
Secretary
