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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
(MARK ONE)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM TO
COMMISSION FILE NUMBER 0-22228
ASTORIA FINANCIAL CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 11-3170868
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
ONE ASTORIA FEDERAL PLAZA, LAKE SUCCESS, NEW YORK 11042
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
(516) 327-3000
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
(SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT): NONE
(SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT):
COMMON STOCK $.01 PAR VALUE
(TITLE OF CLASS)
PREFERRED STOCK, PURCHASE RIGHTS
(TITLE OF CLASS)
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. YES X NO
--- ---
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of the registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. ( X )
The aggregate market value of voting stock held by non-affiliates of the
registrant as of March 15, 2000: Common stock par value $.01 per share,
$1,225,560,921. This figure is based on the closing price by the Nasdaq National
Market for a share of the registrant's common stock on March 15, 2000, which was
$24.69 as reported in the Wall Street Journal on March 16, 2000. The number of
shares of the registrant's Common Stock outstanding as of March 15, 2000 was
51,474,749 shares.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the definitive Proxy Statement dated April 10, 2000 in connection
with the Annual Meeting of Stockholders to be held on May 17, 2000 and any
adjournment thereof and which is expected to be filed with the Securities and
Exchange Commission on or about April 10, 2000, are incorporated by reference
into Part III.
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ASTORIA FINANCIAL CORPORATION
1999 ANNUAL REPORT ON FORM 10-K
TABLE OF CONTENTS
<TABLE>
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Part I Page
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Item 1. Business.................................................................. 1
Item 2. Properties................................................................ 30
Item 3. Legal Proceedings......................................................... 31
Item 4. Submission of Matters to a Vote of Security Holders....................... 34
Part II
Item 5. Market for Astoria Financial Corporation's Common
Equity and Related Stockholder Matters.................................... 34
Item 6. Selected Financial Data................................................... 36
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations...................................... 38
Item 7A. Quantitative and Qualitative Disclosures about Market Risk................ 66
Item 8. Financial Statements and Supplementary Data............................... 66
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure...................................... 66
Part III
Item 10. Directors and Executive Officers of Astoria Financial Corporation......... 66
Item 11. Executive Compensation.................................................... 66
Item 12. Security Ownership of Certain Beneficial Owners
and Management........................................................... 67
Item 13. Certain Relationships and Related Transactions............................ 67
Part IV
Item 14. Exhibits, Financial Statement Schedules and Reports on
Form 8-K................................................................. 67
SIGNATURES ........................................................................... 68
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PRIVATE SECURITIES LITIGATION REFORM ACT SAFE HARBOR STATEMENT
This Annual Report on Form 10-K contains certain forward-looking statements
within the meaning of the Private Securities Litigation Reform Act of 1995, and
may be identified by the use of such words as "believe," "expect," "anticipate,"
"should," "planned," "estimated" and "potential." Examples of forward-looking
statements include, but are not limited to, estimates with respect to our
financial condition, results of operations and business that are subject to
various factors which could cause actual results to differ materially from these
estimates. These factors include, but are not limited to, general economic
conditions, changes in interest rates, deposit flows, loan demand, real estate
values, and competition; changes in accounting principles, policies, or
guidelines; changes in legislation or regulation; and other economic,
competitive, governmental, regulatory, and technological factors affecting our
operations, pricing, products and services.
PART I
As used in this Form 10-K, "we," "us" and "our" refer to Astoria Financial
Corporation and its consolidated subsidiaries, including Astoria Federal Savings
and Loan Association and its subsidiaries, and Astoria Capital Trust I,
depending on the context.
ITEM 1. BUSINESS
GENERAL
We are a Delaware corporation organized on June 14, 1993, as a unitary savings
and loan association holding company for Astoria Federal Savings and Loan
Association, or Astoria Federal. At December 31, 1999, we had assets of $22.70
billion, deposits of $9.55 billion, and stockholders' equity of $1.20 billion.
Our primary business is the operation of our wholly-owned subsidiary, Astoria
Federal. In addition to directing, planning and coordinating the business
activities of Astoria Federal, we invest primarily in U.S. Government and
federal agency securities, mortgage-backed securities and other securities. We
have acquired, and may continue to acquire or organize either directly or
indirectly through Astoria Federal other operating subsidiaries, including other
financial institutions.
Astoria Federal's principal business is attracting retail deposits from the
general public and investing those deposits, together with funds generated from
operations, principal repayments on loans and securities and borrowed funds,
primarily in one-to-four family residential mortgage loans and mortgage-backed
securities and, to a lesser extent, multi-family residential mortgage loans,
commercial real estate loans and consumer and other loans. In addition, Astoria
Federal invests in U.S. Government and federal agency securities and in other
investments permitted by federal laws and regulations. Astoria Federal's
revenues are derived principally from interest on its mortgage loan and
mortgage-backed securities portfolios and interest and dividends on its other
securities portfolio. Astoria Federal's cost of funds consists of interest
expense on deposits and borrowings.
MERGERS AND ACQUISITIONS
We continue to consider mergers and acquisitions of other financial institutions
as an integral part of our strategic objective for long-term growth. Since 1995,
we have completed the acquisitions of Fidelity New York, FSB, or Fidelity, The
Greater New York Savings Bank, FSB, or The Greater, and Long Island Bancorp,
Inc., or LIB. See Item 7, "Management's Discussion and Analysis of Financial
Condition and Results of Operations," or MD&A, and Note 2 of Notes to
Consolidated Financial Statements in Item 8, "Financial Statements and
Supplementary Data," for further discussion of our acquisitions.
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These acquisitions have enabled us to expand our operations through an
increased customer base thereby increasing deposits and loan originations and
providing customers with a broader array of financial products. Acquisition
candidates have been selected based on, among other factors, the extent to
which the candidates could enhance our retail presence in new or existing
markets. The acquisition of The Greater increased our banking offices and
provided us with a substantial market presence in Brooklyn, New York. The
acquisitions of Fidelity and LIB strengthened our deposit market share in
Queens, Nassau and Suffolk counties.
LENDING ACTIVITIES
GENERAL. Our loan portfolio is comprised primarily of mortgage loans, most of
which are conventional loans secured by one-to-four family residences and, to a
lesser extent, by multi-family residences and commercial real estate. The
remainder of the portfolio consists of a variety of consumer and other loans.
At December 31, 1999, our net loan portfolio totaled $10.22 billion, or 45.0% of
total assets, which includes $11.4 million of real estate loans held-for-sale.
The increase in the portfolio since 1994 resulted primarily from our initiation,
during 1994, of a third party loan origination program and a broker loan program
coupled with a strengthening of the mortgage market, our prior acquisitions, and
from bulk purchases made during the years ended December 31, 1995 and 1996.
We originate mortgage loans, either directly from existing or past customers and
members of the communities served or indirectly through real estate agents,
attorneys, builders and brokers. The retail loan origination program accounted
for approximately $1.27 billion of originations during 1999 and $2.54 billion of
originations during 1998. The broker loan program consists of relationships with
mortgage brokers and accounted for approximately $2.08 billion of originations
during 1999 and $2.45 billion of originations during 1998. Astoria Federal
originates mortgage loans through its banking and loan production offices in the
New York metropolitan area and through an extensive broker network in thirteen
states: New York, New Jersey, Connecticut, Pennsylvania, Massachusetts,
Delaware, Maryland, Ohio, Virginia, North Carolina, South Carolina, Georgia and
Florida. Our correspondent loan program (third party originated loans), which
includes relationships with other financial institutions, mortgage brokers, and
mortgage-bankers, was initiated in 1994 to increase loan volume and, to a lesser
degree, reduce our geographical loan concentration in the New York metropolitan
area. This program accounted for approximately $417.6 million of loan
originations during 1999 and $187.5 million of loan originations during 1998.
See Loan Portfolio Composition table on page 24 and Loan Maturity, Repricing and
Activity tables on pages 25 and 26.
One-to-Four Family Mortgage Lending. Our primary lending emphasis is on the
origination and purchase of first mortgage loans secured by one-to-four family
residences that serve as the primary residence of the owner. To a much lesser
degree, we make loans secured by non-owner occupied one-to-four family
properties acquired as an investment by the borrower. We also offer, although we
have originated only a limited number of, second mortgage loans which are
underwritten according to the same standards as first mortgage loans.
At December 31, 1999, $9.02 billion, or 88.1%, of our total loan portfolio
consisted of one-to-four family residential loans, of which $6.40 billion, or
71.0%, were adjustable rate mortgage, or ARM, loans. We currently offer ARM
loans which are initially fixed for one, three, five, seven and ten years and
convert into one-year ARM loans at the end of the initial fixed period. The
one-year, three-year, five-year and seven-year ARM loans have terms of up to 40
years, and the ten-year ARM loans have terms of up to 30 years. ARM loans may
carry, for a period of time, an initial interest rate which is less than the
fully indexed rate for the loan. We determine the initial discounted rate in
accordance with market and competitive factors. All ARM loans we offer have
annual and lifetime interest rate ceilings. Generally,
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ARM loans pose credit risks somewhat greater than the risk posed by fixed-rate
loans primarily because, as interest rates rise, the underlying payments of the
borrower rise, increasing the potential for default. To recognize the credit
risks associated with ARM loans offered at initial discounts below fully-indexed
rates, we generally underwrite our one-year ARM loans assuming a rate equal to
200 basis points over the initial discounted rate, but not less than 7.0%. For
ARM loans with longer adjustment periods, and therefore, less risk due to the
longer period for the borrower's income to adjust to anticipated higher future
payments, we underwrite the loans using the initial rate, which may be a
discounted rate.
Our policy on owner-occupied, one-to-four family residential mortgage loans is
to lend up to 80% of the appraised value of the property securing the loan.
Generally, for mortgage loans which have a loan-to-value ratio of greater than
80%, we require the mortgagor to obtain private mortgage insurance. In addition,
we offer a variety of proprietary products which allow the borrower to obtain
financing of up to 90% loan-to-value without private mortgage insurance.
We originate most 30-year fixed-rate loans and, beginning in June 1999, 15-year
fixed-rate loans for immediate sale to Federal National Mortgage Association, or
FNMA, Federal Home Loan Mortgage Corporation, or FHLMC, the State of New York
Mortgage Agency, or SONYMA, or other investors on a servicing released or
retained basis. Generally, the sale of such loans is arranged through a master
commitment with the agencies on a mandatory or best efforts basis. The sale of
loans to other investors are also arranged with specific contractual commitments
on a mandatory or best efforts basis.
In recent years, we have originated a greater volume of one-to-four family
residential mortgage loans due to the strengthening of the economy as well as
through the expansion of our various delivery channels. However, in the second
half of 1999 mortgage interest rates increased, significantly reducing the
number of mortgage loans refinanced. The closing and disposal of certain loan
production offices, or LPOs, also contributed to the reduction in the volume of
originations. One-to-four family mortgage loan originations and purchases
decreased $1.54 billion, from $4.94 billion in 1998 to $3.40 billion in 1999.
Commercial Real Estate and Multi-Family Lending. As of December 31, 1999, our
total loan portfolio contained $433.0 million, or 4.2%, of commercial real
estate loans and $615.4 million, or 6.0%, of multi-family loans. During 1999, we
originated $352.4 million of commercial, multi-family and mixed use loans. Mixed
use loans are secured by properties which are intended for both business and
residential use and are classified as commercial or multi-family based on the
greater number of commercial versus residential units.
The commercial real estate and multi-family loans in our portfolio consist of
both fixed-rate and adjustable rate loans which were originated at prevailing
market rates. Commercial real estate and multi-family loans generally are
provided as five to fifteen year term balloon loans amortized over 15 to 30
years. Our policy has been to originate commercial real estate or multi-family
loans generally in our local market areas. In making such loans, we primarily
consider the ability of the net operating income generated by the real estate to
support the debt service, the financial resources, income level and managerial
expertise of the borrower, the marketability of the property, and our lending
experience with the borrower. Our policy requires a minimum debt coverage ratio
of 1.20 times for commercial real estate and multi-family loans. Additionally on
commercial real estate and multi-family loans, our policy is to finance up to
75% of the lesser of the purchase price or appraised value of the property
securing the loan on purchases and up to 70% on refinances.
Commercial real estate loans typically are secured by properties such as retail
stores, office buildings and mixed use (more business than residential units)
properties. The single largest commercial real estate loan at December 31, 1999,
had an outstanding principal balance of $9.5 million, was current and was
secured by a multi-story office building in Mineola, New York.
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The majority of the multi-family loans in our portfolio are secured by six to
forty unit apartment buildings and other mixed use (more residential than
business units) properties. The single largest multi-family loan at December 31,
1999 had an outstanding balance of $6.1 million, was current and was secured by
an apartment building containing 1,592 residential units and 22 retail outlets
located in Manhattan, New York.
Loans secured by commercial real estate and multi-family properties generally
involve a greater degree of risk than one-to-four family residential loans
because they typically have larger balances and are more affected by adverse
conditions in the economy. These loans also involve a greater degree of risk
than one-to-four family residential mortgage loans and require more ongoing
evaluation and monitoring. Our commercial real estate and multi-family loans are
concentrated in the New York metropolitan area. Because payments on loans
secured by commercial and multi-family properties often depend upon the
successful operation and management of the properties and the businesses which
operate from within them, repayment of such loans may be affected by factors
outside the borrower's control such as adverse conditions in the real estate
market or the economy or changes in government regulation. We provide
multi-family and commercial real estate loans, using prudent underwriting
standards which include consideration of the demand for such properties and the
general economic conditions in our market area.
Consumer and Other Loans. At December 31, 1999, $174.9 million, or 1.7%, of our
total loan portfolio consisted of consumer loans which were primarily home
equity loans. Consumer loans, with the exception of home equity lines of credit,
are offered primarily on a fixed-rate, short-term basis. The underwriting
standards we employ for consumer loans include a determination of the
applicant's payment history on other debts and an assessment of the borrower's
ability to make payments on the proposed loan and other indebtedness. In
addition to the credit worthiness of the applicant, the underwriting process
also includes a review of the value of the security, if any, in relation to the
proposed loan amount. Our consumer loans tend to have higher interest rates and
shorter maturities than one-to-four family residential mortgage loans, but are
considered to entail a greater risk of default than such loans.
Our home equity lines of credit are originated on one-to-four family
owner-occupied residential properties. These loans are generally limited to
aggregate outstanding indebtedness secured by up to 80% of the appraised value
of the property. Such lines of credit are underwritten based upon guidelines
established by us in order to evaluate the borrower's ability and willingness to
repay the debt.
Included in other loans were $4.5 million of commercial loans at December 31,
1999. These loans are underwritten based upon the earnings of the borrower and
the value of the collateral, if any, securing such loans.
Loan Approval Procedures and Authority. Except for loans in excess of $5.0
million, mortgage loan approval authority has been delegated by the Board of
Directors to our underwriters and Loan Committee, which consists of certain
members of executive management and other Astoria Federal officers.
Upon receipt of a completed application from a prospective borrower, for
mortgage loans secured by one-to-four family properties, we generally order a
credit report, verify income and other information and, if necessary, obtain
additional financial or credit related information. An appraisal of the real
estate used for collateral is also obtained. For mortgage loans secured by
commercial and multi-family properties, appraisals are obtained as part of the
final underwriting process. All appraisals are performed by licensed or
certified appraisers. Most appraisals are currently performed by licensed
independent third party appraisers. The Board of Directors reviews all changes
to our appraisal policy.
ASSET QUALITY
Non-performing Assets. We do not accrue interest on loans past due 90 days or
more, with the exception of selected mortgage loans delinquent 90 days or more
as to their maturity date on which we have
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continued to accept monthly interest payments as if the loan had not matured.
Such loans are primarily balloon loans consisting of smaller commercial and
multi-family loans. In general, 90 days prior to a loan's maturity, the
borrower is reminded of the maturity date and is sent an application to
refinance the loan. Where the borrower has continued to make monthly
payments to us and where we do not have a reason to believe that any loss will
be incurred on the loan, we have treated these loans as current and have
continued to accrue interest. When a loan is placed on non-accrual status,
previously accrued but unpaid interest is deducted from interest income.
Included in our non-performing assets are real estate owned, or REO, and
non-performing investments in real estate.
Total non-performing assets decreased $62.0 million, to $58.4 million at
December 31, 1999, from $120.4 million at December 31, 1998. Non-performing
loans, a component of non-performing assets, decreased by $57.7 million to $53.4
million at December 31, 1999, from $111.1 million at December 31, 1998. The
percentage of non-performing loans to total loans decreased from 1.23% at
December 31, 1998, to 0.52% at December 31, 1999. Our percentages of
non-performing assets to total assets decreased from 0.58% at December 31, 1998,
to 0.26% at December 31, 1999. The allowance for loan losses as a percentage of
total non-performing loans was 143.49% at December 31, 1999 compared to 66.99%
at December 31, 1998. The allowance for loan losses as a percentage of total
non-accrual loans was 151.77% at December 31, 1999, compared to 70.00% at
December 31, 1998. For a further discussion of the allowance for loan losses,
non-performing assets and loans, see Item 7, "MD&A."
Real Estate Owned - The net carrying value of our REO totaled $5.1 million at
December 31, 1999 and consisted of residential real estate properties. The REO
balance decreased $1.0 million, from $6.1 million at December 31, 1998.
Classified Assets - Our Asset Review Department reviews and classifies our
assets and independently reports the results of its reviews to the Board of
Directors quarterly. Our Asset Classification Committee establishes policy
relating to the internal classification of loans and also provides input to the
Asset Review Department in its review of our classified assets.
Federal regulations and our policy require the classification of loans and other
assets, such as debt and equity securities considered to be of lesser quality,
as "special mention," "substandard," "doubtful" or "loss" assets. An asset
classified as "special mention" has "potential weaknesses," which, if
uncorrected, may result in the deterioration of the repayment prospects or in
the institution's credit position at some future date. An asset is considered
"substandard" if it is inadequately protected by the current net worth and
paying capacity of the obligor or the collateral pledged, if any. "Substandard"
assets include those characterized by the "distinct possibility" that the
institution will sustain "some loss" if the deficiencies are not corrected.
Assets classified as "doubtful" have all of the weaknesses inherent in those
classified "substandard," with the added characteristic that the weaknesses
present make "collection or liquidation in full," on the basis of currently
existing facts, conditions, and values, "highly questionable and improbable."
Assets classified as "loss" are those considered "uncollectible" and of such
little value that their continuance as assets without the establishment of a
specific loss reserve is not warranted. Those assets classified "substandard,"
"doubtful," or "loss" are considered adversely classified. See page 27 for
additional information on our classified assets.
A loan is considered impaired when, based upon current information and events,
it is probable that we will be unable to collect all amounts due, including
principal and interest, according to the contractual terms of the loan
agreement. Our total impaired loans at December 31, 1999, net of allowance for
loan losses of $2.7 million, was $21.7 million, of which $3.7 million are
classified as non-performing and $18.0 million are current. Interest income
recognized on impaired loans, which was not materially different from cash-basis
income, amounted to $1.7 million for the year ended December 31, 1999. For
further detail on our impaired loans, see Note 5 of Notes to Consolidated
Financial Statements in Item 8, "Financial Statements and Supplementary Data."
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Allowance for Losses on Loans, Investments in Real Estate and Real Estate Owned.
Our allowance for loan losses is established and maintained through a provision
for loan losses based on our evaluation of the risks inherent in our loan
portfolio. Such evaluation, which includes, but is not limited to, a review of
loans on which full collectibility is not reasonably assured, considers among
other matters the estimated fair value of the underlying collateral, economic
and regulatory conditions, current and historical loss experience and other
factors to arrive at an adequate loan loss allowance. General valuation
allowances represent loss allowances that have been established to recognize the
inherent risk associated with lending activities, but which, unlike specific
allowances, have not been allocated to particular problem assets. In determining
the adequacy of the general valuation allowance, we consider changes in the size
and composition of the loan portfolio, historical loan loss experience, current
and anticipated economic conditions, and our credit administration and asset
management philosophies and procedures. Although we believe that the allowance
for loan losses has been established and maintained at adequate levels, future
adjustments may be necessary if economic and other conditions differ
substantially from the conditions used in making the initial determinations.
Pursuant to our policy, loan losses must be charged-off in the period the loans,
or portions thereof, are deemed uncollectible.
If a loan is classified, an estimated value of the property securing the loan
is determined through an appraisal, where possible. In instances where we have
not taken possession of the property or do not otherwise have access to the
premises and, therefore, cannot obtain an appraisal, a real estate broker's
opinion as to the value of the property is obtained based primarily on a
drive-by inspection and a comparison of the property securing the loan with
similar properties in the area. If the unpaid balance of the loan is greater
than such estimated fair value, a specific valuation allowance is established
for the difference between the carrying value and the estimated fair value.
In addition to the requirements of Generally Accepted Accounting Principles, or
GAAP, related to loss contingencies, a federally chartered savings association's
determination as to the classification of its assets and the amount of its
valuation allowances is subject to review by the Office of Thrift Supervision,
or OTS. The OTS, in conjunction with the other federal banking agencies,
provides guidance for financial institutions on both the responsibilities of
management for the assessment and establishment of adequate allowances and
guidance for banking agency examiners to use in determining the adequacy of
general valuation allowances. It is required that all institutions have
effective systems and controls to identify, monitor and address asset quality
problems; analyze all significant factors that affect the collectibility of the
portfolio in a reasonable manner; and establish acceptable allowance evaluation
processes that meet the objectives of the federal regulatory agencies.
A review of the loan portfolio is undertaken as part of our examination by the
OTS. While we believe we have established an adequate allowance for loan losses,
there can be no assurance that regulators, as a result of reviewing our loan
portfolio, will not request us to increase our allowance for loan losses,
thereby negatively affecting our financial condition and earnings.
REO is carried net of all allowances for losses at the lower of cost or fair
value less estimated selling costs, and investments in real estate are carried
at the lower of cost or fair value.
INVESTMENT ACTIVITIES
GENERAL. Our investment policy is designed primarily to complement our lending
activities, to generate a favorable return without incurring undue interest rate
and credit risk, to enable us to manage the interest rate sensitivity of our
overall assets and liabilities, and to provide and maintain liquidity primarily
through cash flow. In establishing our investment strategies, we consider our
business and growth plans, the economic environment, our interest rate
sensitivity position, the types of securities held and other factors.
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SECURITIES. Federally chartered savings associations have authority to invest in
various types of assets, including U.S. Treasury obligations, securities of
various federal agencies, mortgage-backed securities, including Collateralized
Mortgage Obligations, or CMOs, and Real Estate Mortgage Investment Conduits, or
REMICs, certain certificates of deposit of insured banks and federally chartered
savings associations, certain bankers acceptances and, subject to certain
limits, corporate securities, commercial paper and mutual funds.
We utilize mortgage-backed and other securities purchases as a complement to our
mortgage lending activities. Such investments are made in conjunction with our
overall liquidity, interest rate risk and credit risk management processes.
Purchases during 1999 consisted primarily of U.S. Government and agency
obligations (CMOS, REMICs and debentures) or other AAA-rated issues which
provide liquidity, collateral for borrowings and minimal credit risk while
providing appropriate returns.
Mortgage-backed securities generally yield less than the loans that underlie
such securities because of the cost of payment guarantees or credit enhancements
that reduce credit risk. However, mortgage-backed securities are more liquid
than individual mortgage loans and may be used to collateralize our borrowings.
In general, mortgage-backed securities issued or guaranteed by FNMA, FHLMC and
the Government National Mortgage Association, or GNMA, are weighted at no more
than 20% for risk-based capital purposes, compared to the 50% risk weighting
assigned to most non-securitized residential mortgage loans.
While mortgage-backed securities carry a reduced credit risk as compared to
whole loans, they, like all fixed-rate whole loans, remain subject to the risk
of a fluctuating interest rate environment. Along with other factors, such as
the geographic distribution of the underlying mortgage loans, changes in
interest rates may alter the prepayment rate of those mortgage loans and affect
both the prepayment rates and estimated market value of mortgage-backed
securities.
As a member of the Federal Home Loan Bank of New York, or FHLB-NY, Astoria
Federal is required to maintain a specified investment in the capital stock of
the FHLB-NY. See "Regulation and Supervision - Federal Home Loan Bank System."
For a further discussion of our securities portfolio, see Item 7, "MD&A" and
Note 4 of Notes to Consolidated Financial Statements in Item 8, "Financial
Statements and Supplementary Data."
FEDERAL FUNDS SOLD AND REPURCHASE AGREEMENTS. We invest in a wide range of money
market instruments, including overnight and term federal funds and securities
purchased under agreements to resell. Money market instruments are used to
invest our available funds resulting from deposit-taking operations and normal
cash flow and to help satisfy both internal liquidity needs and Astoria
Federal's regulatory liquidity requirements. See "Regulation and Supervision -
Liquidity."
For a further discussion of our federal funds sold and repurchase agreements,
see Note 1 and Note 3 of Notes to Consolidated Financial Statements in Item 8,
"Financial Statements and Supplementary Data."
Our investment policy also permits us to invest in certain derivative financial
instruments. These instruments consist of interest rate swaps and options and
are generally used to hedge against interest rate risk exposure. See Note 11 of
Notes to Consolidated Financial Statements in Item 8, "Financial Statements and
Supplementary Data," for further discussion of such derivative financial
instruments.
SECURITIES COMPOSITION. At December 31, 1999, we had $862.2 million, or 3.8% of
total assets, in mortgage-backed securities, insured or guaranteed by either
FNMA, FHLMC or GNMA. In addition, we had $8.43 billion in REMICs and CMOs, or
37.1% of total assets, of which 88.9% had fixed rates. Our REMICs and CMOs had
coupon rates ranging from 5.00% to 8.32% and a weighted average yield of 6.41%
at December 31, 1999. Of the REMICs and CMOs portfolio, $6.54 billion, or 77.6%,
are insured
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or guaranteed, either directly or indirectly, by FNMA, FHLMC or GNMA, as issuer.
We believe these securities represent attractive and limited risk alternatives
to other investments due to the wide variety of maturity and repayment options
available. The remaining securities portfolio of $1.48 billion, or 6.5% of total
assets, consists of obligations of U.S. Government and agencies, obligations of
state and political subdivisions and equity and corporate debt securities.
Included in the total securities portfolio are various callable securities,
which generally possess higher yields than those securities of similar
contractual terms to maturity without callable features. As of December 31,
1999, the amortized cost of such callable securities totaled $1.34 billion. Our
held-to-maturity portfolio consists primarily of seasoned fixed-rate
mortgage-backed securities and U.S. Government and agency securities. At
December 31, 1999, our securities available-for-sale totaled $8.86 billion and
our securities held-to-maturity totaled $1.90 billion.
See the Securities Portfolio tables on pages 22 and 23.
SOURCES OF FUNDS
GENERAL. Our primary source of funds is the cash flow provided by our investing
activities, including principal and interest payments on loans and
mortgage-backed and other securities. Our other sources of funds are provided by
operating activities (primarily net income) and financing activities, including
borrowings and deposits.
DEPOSITS. We offer a variety of deposit accounts with a range of interest rates
and terms. We presently offer passbook and statement savings accounts, NOW and
money manager accounts, money market accounts, demand deposit accounts and
certificates of deposit. Of the total deposit balance, $1.34 billion, or 14.0%,
represent Individual Retirement Accounts.
The flow of deposits is influenced significantly by general economic conditions,
changes in prevailing interest rates, pricing of deposits and competition. Our
deposits are primarily obtained from areas surrounding our banking offices. We
rely primarily on marketing, new products, service and long-standing
relationships with customers to attract and retain these deposits. We do not use
brokers to obtain deposits. Astoria Federal's growth in deposits from 1994 to
the present was primarily due to mergers and acquisitions. At December 31, 1999,
our deposits totaled $9.55 billion. The acquisition of Fidelity in 1995 added
$1.05 billion of deposits and the acquisition of The Greater in 1997 added $1.60
billion of deposits. During 1999, we sold our five upstate New York banking
offices with deposits totaling $156.4 million.
When we determine the levels of our deposit rates, consideration is given to
local competition, yields of U.S. Treasury securities and the rates charged for
other sources of funds. We have maintained a high level of core deposits, which
has contributed to our low cost-of-funds. Core deposits include savings, money
market, NOW and money manager and demand deposit accounts, which, in aggregate,
represented 48.4% of total deposits at December 31, 1999 and 47.8% of total
deposits at December 31, 1998.
BORROWINGS. We enter into reverse repurchase agreements with nationally
recognized primary securities dealers and the FHLB-NY. Reverse repurchase
agreements are accounted for as borrowings and are secured by the securities
sold under agreements to repurchase. We also obtain advances from the FHLB-NY
which are generally secured by a blanket lien against, among other things,
Astoria Federal's mortgage portfolio and Astoria Federal's investment in the
stock of the FHLB-NY. See "Regulation and Supervision - Federal Home Loan Bank
System." The maximum amount that the FHLB-NY will advance, for purposes other
than for meeting withdrawals, fluctuates from time to time in accordance with
the policies of the FHLB-NY. Over the past several years we issued a funding
note, two three-year medium-term notes and a five year medium-term note. The
outstanding balance of these notes was $475.1 million at December 31, 1999.
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In order to fund our asset growth during the first quarter of 1999, as well as
being a part of our interest rate risk management strategy, we increased our
borrowings by $2.38 billion, or 26.4%, to $11.40 billion at December 31, 1999,
from $9.02 billion at December 31, 1998. The increase was primarily in the form
of callable reverse repurchase agreements. At December 31, 1999, we had $10.08
billion of callable borrowings of which $4.14 billion were callable within one
year. The callable borrowings had contractual maturities of up to eight years.
At December 31, 1999, we had available a 12-month commitment for overnight and
one month lines of credit with the FHLB-NY totaling $100.0 million. Both lines
of credit are priced at the federal funds rate plus 10.0 basis points and
reprice daily. See Borrowings table on page 30.
For a further discussion of our borrowings, see Note 8 of Notes to Consolidated
Financial Statements in Item 8, "Financial Statements and Supplementary Data."
SUBSIDIARY ACTIVITIES
We have two wholly-owned subsidiaries, Astoria Federal and Astoria Capital Trust
I. On October 28, 1999, Astoria Capital Trust I issued $125.0 million aggregate
liquidation amount of 9.75% Capital Securities due November 1, 2029, Series A
referred to as Capital Securities. We have fully and unconditionally guaranteed
the Capital Securities along with all obligations of Astoria Capital Trust I
under the trust agreement. Astoria Capital Trust I was formed for the exclusive
purpose of issuing the Capital Securities and common securities and using the
proceeds to acquire Junior Subordinated Debentures issued by us. The Junior
Subordinated Debentures total $128.9 million, have an interest rate of 9.75%,
mature on November 1, 2029 and are the sole assets of Astoria Capital Trust I.
The Junior Subordinated Debentures are prepayable, in whole or in part, at our
option on or after November 1, 2009 at declining premiums to maturity. Proceeds
totaling $31.3 million from the issuance of the Junior Subordinated Debentures
were used to increase the capital level of Astoria Federal and the remaining
proceeds were used primarily for the repurchase of our common stock.
At December 31, 1999, the following were wholly-owned subsidiaries of Astoria
Federal:
AF Agency, Inc. was formed in 1990 to offer tax-deferred annuities through its
licensed agents. During 1995, AF Agency, Inc. began selling Savings Bank Life
Insurance as an agent for another issuing New York State chartered thrift. Upon
the acquisition of The Greater, AF Agency, Inc. was authorized by the OTS to
engage indirectly in the sale of tax-deferred annuities, a variety of mutual
funds and the offering of stock brokerage services through an unaffiliated third
party vendor. As of December 31, 1999, AF Agency, Inc. has discontinued selling
Saving Bank Life Insurance. Astoria Federal is reimbursed for expenses and
administrative services it provides to AF Agency, Inc. Fees generated by AF
Agency, Inc. totaled $3.7 million for the year ended December 31, 1999, which
represented 4.3% of non-interest income on the consolidated statements of
income.
Astoria Federal Mortgage Corp. is an operating subsidiary through which Astoria
Federal engages in lending activities outside the State of New York.
Star Preferred Holding Corporation, or Star Preferred, was incorporated in the
State of New Jersey in December 1999, to function as a holding company for
Astoria Preferred Funding Corporation, or APFC, and Starline Development Corp.,
or Starline. APFC and Starline are real estate investment trusts created
pursuant to the Internal Revenue Code of 1986, as amended.
Suffco Service Corporation serves as document custodian to facilitate operations
with FNMA.
201 Old Country Road Inc. was formed as a special purpose subsidiary which
currently holds mortgage loans that serve as collateral for a funding note.
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Mortgage Headquarters, Inc., was formed by The Long Island Savings Bank, FSB, or
LISB, primarily for the purpose of serving as a holding company for lower tier
subsidiary operations. Mortgage Headquarters, Inc. was also a partner in a joint
venture called Entrust Mortgage Headquarters, a licensed mortgage broker, which
was dissolved in 1999.
Dollar Service Corp., Fidata Service Corp., 3 Belmont Corporation and Zythum
Realty, Inc. may qualify for special tax treatment under Article 9A of the New
York State Tax Law and therefore, although inactive, are retained by Astoria
Federal.
Infoserve Corporation provides research information services for Astoria Federal
and other financial institutions. The research provided stems from services
Infoserve Corporation offered in the past, as a subsidiary of The Greater, for
check clearing and processing as well as check and money order issuances.
35 East 75th Street Associates Ltd., formerly an inactive subsidiary, is now the
owner of a fifty percent (50%) interest in Entrust Title Agency, LLC, which
sells mortgage title insurance. The name of this subsidiary will be changed to
Entrust Holding Corp. upon approval of the New York State Banking Department.
Long Island Savings Agency, Inc. was an inactive subsidiary as of December 31,
1999.
Longco Investors, Inc. is part of a joint venture which developed Avery Village,
an FHA subsidized senior citizen apartment complex. Longco Investors, Inc.
retains an interest in the cash flow from the project.
Longpond Investors, Inc. is part of a joint venture which developed The Towers
Office Building located in Great Neck, New York.
Longrich Investors, Inc. and Syosset N.J. Realty Inc. were formed for the sole
purpose of holding title to foreclosed property. Currently, the combined net
book value of these properties is $392,000.
1780 Ocean Avenue Corp. holds title to Astoria Federal's banking office located
at 1780 Ocean Avenue, Brooklyn, New York.
Oldfield Realty, Inc. and 3366 Park Avenue Corp. are currently inactive but have
been retained to hold title to foreclosed property.
S.H.I. Corporation and AF Roosevelt Avenue are both inactive but have been
retained by Astoria Federal due to their involvement in various litigation
matters. Once the litigations are resolved, Astoria Federal intends to dissolve
both subsidiaries.
1401 Avenue M Associates Ltd. which holds title to Astoria Federal's banking
office located at 1401 Avenue M, Brooklyn, New York, is also involved in
litigation. Once the litigation is resolved, the subsidiary intends to transfer
title to the property to Astoria Federal and Astoria Federal intends to dissolve
the subsidiary.
Astoria Federal has thirty-three additional subsidiaries, all of which are
inactive and which Astoria Federal intends to dissolve or is in the process of
dissolving.
MARKET AREA AND COMPETITION
Astoria Federal has been, and continues to be, a community-oriented federally
chartered savings association offering a variety of financial services to meet
the needs of the communities it serves. Astoria
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Federal's deposit gathering sources are primarily concentrated in the
communities surrounding Astoria Federal's banking offices in Queens, Kings
(Brooklyn), Nassau, Suffolk and Westchester counties in the New York
metropolitan area. Astoria Federal originates mortgage loans through its banking
and loan production offices in the New York metropolitan area and through an
extensive broker network in thirteen states: New York, New Jersey, Connecticut,
Pennsylvania, Massachusetts, Delaware, Maryland, Ohio, Virginia, North Carolina,
South Carolina, Georgia and Florida.
The New York metropolitan area has a high density of financial institutions, a
number of which are significantly larger and have greater financial resources
than we have. All are our competitors to varying degrees. Our competition for
loans, both locally and in the aggregate, comes principally from mortgage
banking companies, commercial banks, savings banks and savings and loan
associations. Our most direct competition for deposits comes from commercial
banks, savings banks, savings and loan associations and credit unions. We also
face intense competition for deposits from money market mutual funds and other
corporate and government securities funds as well as from other financial
intermediaries such as brokerage firms and insurance companies.
The New York metropolitan area economy has experienced increased growth over the
past several years as evidenced by local employment growth statistics.
Improvement can also be seen in the local real estate market, as reflected in
increased existing home sales during the past few years and an increase in local
real estate values. Our broker and third party loan origination programs
increased our volume of one-to-four family residential loans outside our primary
lending market, thereby reducing our geographical loan concentration as well as
our potential exposure to a concentration of credit risk. While the majority of
our loans are secured by properties located in New York, at December 31, 1999,
$4.84 billion, or 48.1%, of our total mortgage loan portfolio was secured by
properties located in 46 states other than New York. Excluding New York, we have
a concentration of lending in Connecticut, New Jersey, Maryland, and Virginia,
each comprising between 5.0% and 12.0% of our total mortgage loan portfolio.
We serve our local market areas with a wide selection of loan products and other
retail financial services. We consider our strong banking office network,
together with our reputation for financial strength and customer service, as our
major competitive advantage in attracting and retaining customers in our market
areas.
PERSONNEL
As of December 31, 1999, we had 1,747 full-time employees and 333 part-time
employees, or 1,914 full time equivalents. The employees are not represented by
a collective bargaining unit and we consider our relationship with our employees
to be good.
REGULATION AND SUPERVISION
GENERAL. Astoria Federal is subject to extensive regulation, examination and
supervision by the OTS, as its chartering agency, and by the Federal Deposit
Insurance Corporation, or FDIC, as deposit insurer. We, as a unitary savings and
loan holding company, are regulated, examined and supervised by the OTS. Astoria
Federal is a member of the Federal Home Loan Bank, or FHLB, System and its
deposit accounts are insured up to applicable limits by the FDIC under the
Savings Association Insurance Fund, or SAIF, except for those deposits acquired
from The Greater, which are insured by the FDIC under the Bank Insurance Fund,
or BIF. We and Astoria Federal must file reports with the OTS concerning our
activities and financial condition in addition to obtaining regulatory approvals
prior to entering into certain transactions such as mergers with, or
acquisitions of, other financial institutions. The OTS and the FDIC periodically
perform safety and soundness examinations of Astoria Federal and us to test our
compliance with various regulatory requirements. The OTS has primary enforcement
responsibility over federally
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chartered savings associations and has substantial discretion to impose
enforcement action on an institution that fails to comply with its regulatory
requirements, particularly with respect to its capital requirements. In
addition, the FDIC has the authority to recommend to the Director of the OTS
that enforcement action be taken with respect to a particular federally
chartered savings association and, if action is not taken by the Director, the
FDIC has authority to take such action under certain circumstances.
This regulation and supervision establish a comprehensive framework to regulate
and control the activities in which an institution can engage and is intended
primarily for the protection of the insurance fund and depositors. The
regulatory structure also gives the regulatory authorities extensive discretion
in connection with their supervisory and enforcement activities and examination
policies, including policies with respect to the classification of assets and
the establishment of adequate loan loss reserves for regulatory purposes. Any
change in such regulation, whether by the OTS, FDIC or Congress, could have a
material adverse impact on Astoria Federal and its operations and us and our
operations.
The description of statutory provisions and regulations applicable to federally
chartered savings associations and their holding companies set forth in this
document do not purport to be complete descriptions of such statutes and
regulations and their effects on Astoria Federal and us.
IMPACT OF ENACTMENT OF THE GRAMM-LEACH-BLILEY ACT
On November 12, 1999, President Clinton signed the Gramm-Leach-Bliley Act, or
Gramm-Leach, which among other things, establishes a comprehensive framework to
permit affiliations among commercial banks, insurance companies and securities
firms. Generally, the new law (1) repeals the historical restrictions and
eliminates many federal and state law barriers to affiliations among banks and
securities firms, insurance companies and other financial service providers, (2)
provides a uniform framework for the activities of banks, savings institutions
and their holding companies, (3) broadens the activities that may be conducted
by subsidiaries of national banks and state banks, (4) provides an enhanced
framework for protecting the privacy of information gathered by financial
institutions regarding their customers and consumers, (5) adopts a number of
provisions related to the capitalization, membership, corporate governance and
other measures designed to modernize the FHLB System, (6) requires public
disclosure of certain agreements relating to funds expended in connection with
an institution's compliance with the Community Reinvestment Act, or CRA, and (7)
addresses a variety of other legal and regulatory issues affecting both
day-to-day operations and long-term activities of financial institutions,
including the functional regulation of bank securities and insurance activities.
Gramm-Leach also restricts the powers of new unitary savings and loan
association holding companies. Unitary savings and loan holding companies that
are "grandfathered," i.e., unitary savings and loan holding companies in
existence or with applications filed with the OTS on or before May 4, 1999, such
as us, retain their authority under the prior law. All other unitary savings and
loan holding companies are limited to financially related activities permissible
for bank holding companies, as defined under Gramm-Leach. Gramm-Leach also
prohibits non-financial companies from acquiring grandfathered unitary savings
and loan association holding companies.
Gramm-Leach also requires financial institutions to disclose, on ATM machines,
any non-customer fees and to disclose to their customers upon the issuance of an
ATM card any fees that may be imposed by the institutions on ATM users. For
older ATMs, financial institutions will have until December 31, 2004 to provide
such notices.
Bank holding companies are permitted to engage in a wider variety of financial
activities than permitted under the prior law, particularly with respect to
insurance and securities activities. In addition, in a change
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from the prior law, bank holding companies are in a position to be owned,
controlled or acquired by any company engaged in financially related
activities.
We do not believe that the new law will have a material adverse affect upon our
operations in the near term. However, to the extent the new law permits banks,
securities firms and insurance companies to affiliate, the financial services
industry may experience further consolidation. This type of consolidation could
result in a growing number of larger financial institutions that offer a wider
variety of financial services than we currently offer and that can aggressively
compete in the markets we currently serve.
FEDERALLY CHARTERED SAVINGS ASSOCIATION REGULATION
BUSINESS ACTIVITIES. Astoria Federal derives its lending and investment powers
from the Home Owner's Loan Act, as amended, or HOLA, and the regulations of the
OTS thereunder. Under these laws and regulations, Astoria Federal may invest in
mortgage loans secured by residential and non-residential real estate,
commercial and consumer loans, certain types of debt securities and certain
other assets. Astoria Federal may also establish service corporations that may
engage in activities not otherwise permissible for Astoria Federal, including
certain real estate equity investments and securities and insurance brokerage
activities. These investment powers are subject to various limitations,
including (1) a prohibition against the acquisition of any corporate debt
security that is not rated in one of the four highest rating categories, (2) a
limit of 400% of an association's capital on the aggregate amount of loans
secured by non-residential real estate property, (3) a limit of 20% of an
association's assets on commercial loans, with the amount of commercial loans in
excess of 10% of assets being limited to small business loans, (4) a limit of
35% of an association's assets on the aggregate amount of consumer loans and
acquisitions of certain debt securities, (5) a limit of 5% of assets on
non-conforming loans (loans in excess of the specific limitations of HOLA), and
(6) a limit of the greater of 5% of assets or an association's capital on
certain construction loans made for the purpose of financing what is or is
expected to become residential property.
CAPITAL REQUIREMENTS. The OTS capital regulations require federally chartered
savings associations to meet three capital ratios: a 1.5% tangible capital
ratio, a 4% leverage (core capital) ratio and an 8% risk-based capital ratio. In
assessing an institution's capital adequacy, the OTS takes into consideration
not only these numeric factors but also qualitative factors as well, and has the
authority to establish higher capital requirements for individual institutions
where necessary. Astoria Federal, as a matter of prudent management, targets as
its goal the maintenance of capital ratios which exceed these minimum
requirements and that are consistent with Astoria Federal's risk profile. At
December 31, 1999, Astoria Federal exceeded each of its capital requirements
with tangible and leverage capital ratios of 5.98% and a risk-based capital
ratio of 15.33%.
The Federal Deposit Insurance Corporation Improvement Act, or FDICIA, requires
that the OTS and other federal banking agencies revise their risk-based capital
standards, with appropriate transition rules, to ensure that they take into
account interest rate risk, or IRR, concentration of risk and the risks of
non-traditional activities. The OTS adopted regulations, effective January 1,
1994, that set forth the methodology for calculating an IRR component to be
incorporated into the OTS risk-based capital regulations. The OTS has
indefinitely deferred its requirement of the IRR component in the calculation of
an institution's risk-based capital calculation. The OTS continues to monitor
the IRR of individual institutions through analysis of the change in net
portfolio value, or NPV. The OTS has also used this NPV analysis as part of its
evaluation of certain applications submitted by thrift institutions. For a more
complete discussion of NPV analysis, see Item 7, "MD&A - Interest Rate
Sensitivity Analysis." The OTS, through its general oversight of the safety and
soundness of savings associations, retains the right to impose minimum capital
requirements on individual institutions to the extent the institution is not in
compliance with certain written guidelines established by the OTS regarding NPV
analysis. The OTS has not imposed any such requirements on Astoria Federal.
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PROMPT CORRECTIVE REGULATORY ACTION. FDICIA established a system of prompt
corrective action to resolve the problems of undercapitalized institutions.
Under this system, the banking regulators are required to take certain
supervisory actions against undercapitalized institutions, based upon five
categories of capitalization which FDICIA created: "well capitalized,"
"adequately capitalized," "undercapitalized," "significantly undercapitalized,"
and "critically undercapitalized," the severity of which depends upon the
institution's degree of capitalization. Generally, a capital restoration plan
must be filed with the OTS within 45 days of the date an association receives
notice that it is "undercapitalized," "significantly undercapitalized" or
"critically undercapitalized." In addition, various mandatory supervisory
actions become immediately applicable to the institution, including restrictions
on growth of assets and other forms of expansion. Under the OTS regulations,
generally, a federally chartered savings association is treated as well
capitalized if its total risk-based capital ratio is 10% or greater, its Tier 1
risk-based capital ratio is 6% or greater, and its leverage ratio is 5% or
greater, and it is not subject to any order or directive by the OTS to meet a
specific capital level. As of December 31, 1999, Astoria Federal was considered
"well capitalized" by the OTS.
INSURANCE OF DEPOSIT ACCOUNTS. Pursuant to FDICIA, the FDIC established a
risk-based assessment system for insured depository institutions that takes into
account the risks attributable to different categories and concentrations of
assets and liabilities. Under the risk-based assessment system, the FDIC assigns
an institution to one of three capital categories based on the institution's
financial information as of the reporting period ending seven months before the
assessment period, consisting of (1) well capitalized, (2) adequately
capitalized or (3) undercapitalized. The FDIC also assigns an institution to one
of three supervisory subcategories within each capital group. The supervisory
subgroup to which an institution is assigned is based on a supervisory
evaluation provided to the FDIC by the institution's primary federal regulator
and information that the FDIC determines to be relevant to the institution's
financial condition and the risk posed to the deposit insurance funds. An
institution's assessment rate depends on the capital category and supervisory
category to which it is assigned. Under the risk-based assessment system, there
are nine assessment risk classifications (i.e., combinations of capital groups
and supervisory subgroups) to which different assessment rates are applied.
As a result of the recapitalization of the SAIF in 1996 after the enactment of
the Deposit Funds Insurance Act of 1996, the FDIC reduced the assessment rates
for deposit insurance for BIF-assessable and for SAIF-assessable deposits for
1997 to a range of 0 to 27 basis points. The assessment rates for our
BIF-assessable and SAIF-assessable deposits since 1997 were each 0 basis points.
In addition, SAIF-assessable deposits are also subject to assessments for
payments on the bonds issued in the late 1980s by the Financing Corporation, or
FICO, to recapitalize the now defunct Federal Savings and Loan Insurance
Corporation. Our total expense in 1999 for the assessment for deposit insurance
and the FICO payments was $4.5 million.
LOANS TO ONE BORROWER. Under the HOLA, savings associations are generally
subject to the national bank limits on loans to one borrower. Generally, savings
associations may not make a loan or extend credit to a single or related group
of borrowers in excess of 15% of the institution's unimpaired capital and
surplus. An additional amount may be loaned, equal to 10% of unimpaired capital
and surplus, if such loan is secured by readily-marketable collateral. Astoria
Federal is in compliance with applicable loans to one borrower limitations. At
December 31, 1999, Astoria Federal's largest aggregate amount of loans to one
borrower totaled $19.4 million. All of the loans for the largest borrower were
performing in accordance with their terms and the borrower had no affiliation
with Astoria Federal.
QUALIFIED THRIFT LENDER, OR QTL, TEST. The HOLA requires savings associations to
meet a QTL test. Under the QTL test, a savings association is required to
maintain at least 65% of its "portfolio assets" (total assets less (1) specified
liquid assets up to 20% of total assets, (2) intangibles, including goodwill,
and (3) the value of property used to conduct business) in certain "qualified
thrift investments" (primarily residential mortgages and related investments,
including certain mortgage-backed securities, credit card
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loans, student loans, and small business loans) on a monthly basis in 9 out of
every 12 months. As of December 31, 1999, Astoria Federal maintained its
portfolio assets in qualified thrift investments in excess of 92% and had more
than 65% of its portfolio assets in qualified thrift investments for each of the
12 months ending December 31, 1999. Therefore, Astoria Federal qualified under
the QTL test.
A savings association that fails the QTL test and does not convert to a bank
charter generally will be prohibited from: (1) engaging in any new activity not
permissible for a national bank, (2) paying dividends not permissible under
national bank regulations, (3) obtaining advances from any FHLB, and (4)
establishing any new branch office in a location not permissible for a national
bank in the association's home state. In addition, beginning three years after
the association failed the QTL test, the association would be prohibited from
engaging in any activity not permissible for a national bank and would have to
repay any outstanding advances from the FHLB as promptly as possible.
LIMITATION ON CAPITAL DISTRIBUTIONS. The OTS regulations impose limitations upon
certain capital distributions by savings associations, such as cash dividends,
payments to repurchase or otherwise acquire its shares, payments to shareholders
of another institution in a cash-out merger and other distributions charged
against capital. Effective April 1, 1999, the OTS amended its capital
distribution regulations to reduce regulatory burdens on savings associations.
The OTS limits all capital distributions by Astoria Federal directly or
indirectly to us, including dividend payments. As the subsidiary of a savings
and loan holding company, Astoria Federal currently must file a notice with the
OTS for each capital distribution. However, if the total amount of all capital
distributions (including each proposed capital distribution) for the applicable
calendar year exceeds net income for that year to date plus the retained net
income for the preceding two years, then Astoria Federal must file an
application to receive the approval of the OTS for the proposed capital
distribution.
In addition to the OTS limits, Astoria Federal may not pay dividends to us if,
after paying those dividends, it would fail to meet the required minimum levels
under risk-based capital guidelines and the minimum leverage and tangible
capital ratio requirements or the OTS notified Astoria Federal that it was in
need of more than normal supervision. Under the Federal Deposit Insurance Act,
or FDIA, an insured depository institution such as Astoria Federal is prohibited
from making capital distributions, including the payment of dividends, if, after
making such distribution, the institution would become "undercapitalized" (as
such term is used in the FDIA). Payment of dividends by Astoria Federal also may
be restricted at any time at the discretion of the appropriate regulator if it
deems the payment to constitute an unsafe and unsound banking practice.
In addition, Astoria Federal may not declare or pay cash dividends on or
repurchase any of its shares of common stock if the effect thereof would cause
stockholders' equity to be reduced below the amounts required for the
liquidation accounts which were established as a result of Astoria Federal's
conversion from mutual to stock form of ownership and the acquisitions of
Fidelity, The Greater and LIB. For further discussion on the liquidation
accounts, see Note 10 of Notes to Consolidated Financial Statements in Item 8,
"Financial Statements and Supplementary Data."
LIQUIDITY. Astoria Federal is required to maintain an average daily balance of
liquid assets (cash, certain time deposits, bankers' acceptances, specified U.S.
Government, state or federal agency obligations, shares of certain mutual funds
and certain corporate debt securities and commercial paper) equal to a monthly
average of not less than a specified percentage of its net withdrawable deposit
accounts plus short-term borrowings. This liquidity requirement may be changed
from time to time by the OTS to any amount within the range of 4% to 10%
depending upon economic conditions and the savings flows of member institutions.
The OTS' current minimum required liquidity is 4.0%. Monetary penalties may be
imposed for failure to meet liquidity requirements. Astoria Federal's liquidity
ratio at December 31, 1999
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was 6.28%. For additional information on Astoria Federal's regulatory liquid
assets, see Item 7, "MD&A - Liquidity."
ASSESSMENTS. The assessment by the OTS for an individual savings association is
based on three components: the size of the association, on which the basic
assessment is based; the association's supervisory condition, which results in
an additional assessment based on a percentage of the basic assessment for any
savings institution with a composite rating of 3, 4 or 5 in its most recent
safety and soundness examination; and the complexity of the association's
operations, which results in an additional assessment based on a percentage of
the basic assessment for any savings association that managed over $1.00 billion
in trust assets, serviced for others loans aggregating more than $1.00 billion,
or had certain off-balance sheet assets aggregating more than $1.00 billion. In
order to avoid a disproportionate impact on the smaller savings institutions,
which are those whose total assets never exceeded $100.0 million, the OTS
regulations provide that the portion of the assessment based on asset size be
the lesser of the assessment under the amended regulations or the regulations
before the amendment.
BRANCHING. The OTS regulations authorize federally chartered savings
associations to branch nationwide to the extent allowed by federal statute. This
permits federal savings and loan associations with interstate networks to
diversify more easily their loan portfolios and lines of business
geographically. OTS authority preempts any state law purporting to regulate
branching by federal savings associations.
COMMUNITY REINVESTMENT. Under CRA, as implemented by the OTS regulations, a
federally chartered savings association has a continuing and affirmative
obligation, consistent with its safe and sound operation, to help meet the
credit needs of its entire community, including low and moderate income
neighborhoods. The CRA does not establish specific lending requirements or
programs for financial institutions nor does it limit an institution's
discretion to develop the types of products and services that it believes are
best suited to its particular community, consistent with the CRA. The CRA
requires the OTS, in connection with its examination of a federally chartered
savings association, to assess the institution's record of meeting the credit
needs of its community and to take such record into account in its evaluation of
certain applications by such institution. The CRA also requires all institutions
to make public disclosure of their CRA ratings. Astoria Federal has been rated
as "outstanding" as of the most recent CRA examination.
TRANSACTIONS WITH RELATED PARTIES. Astoria Federal is subject to the affiliate
and insider transaction rules set forth in Sections 23A, 23B, 22(g) and 22(h) of
the Federal Reserve Act, as well as additional limitations as may be adopted by
the OTS Director. These provisions, among other things, prohibit or limit a
savings institution from extending credit to, or entering into certain
transactions with, its affiliates (which for Astoria Federal would include us
and our non-federally chartered savings association subsidiaries, if any) and
principal stockholders, directors and executive officers of Astoria Federal and
its affiliates.
STANDARDS FOR SAFETY AND SOUNDNESS. Pursuant to the requirements of FDICIA, as
amended by the Riegle Community Development and Regulatory Improvement Act of
1994, or Community Development Act, the OTS, together with the other federal
bank regulatory agencies, adopted guidelines establishing general standards,
relating to internal controls, information systems and internal audit systems,
loan documentation, credit underwriting, interest rate risk exposure, asset
growth, asset quality, earnings, and compensation, fees and benefits. In
general, the guidelines require, among other things, appropriate systems and
practices to identify and manage the risks and exposures specified in the
guidelines. The guidelines prohibit excessive compensation as an unsafe and
unsound practice and describe compensation as excessive when the amounts paid
are unreasonable or disproportionate to the services performed by an executive
officer, employee, director or principal shareholder. In addition, regulations
were adopted pursuant to FDICIA to require a savings association that is given
notice by the OTS that it is not satisfying any of such safety and soundness
standards to submit a compliance plan to the OTS. If, after being so
16
<PAGE> 19
notified, a savings association fails to submit an acceptable compliance plan or
fails in any material respect to implement an accepted compliance plan, the OTS
may issue an order directing corrective and other actions of the types to which
a significantly undercapitalized institution is subject under the "prompt
corrective action" provisions of FDICIA. If a savings association fails to
comply with such an order, the OTS may seek to enforce such order in judicial
proceedings and to impose civil money penalties.
PRIVACY PROTECTION
The OTS has recently proposed regulations implementing the privacy protection
provisions of Gramm-Leach. The proposed regulations would require each financial
institution to adopt procedures to protect customers' and consumers' "nonpublic
personal information" by November 13, 2000. We would be required to disclose our
privacy policy, including identifying with whom we share "nonpublic personal
information," to customers at the time of establishing the customer relationship
and annually thereafter. In addition, we would be required to provide our
customers with the ability to "opt-out" of having us share their personal
information with unaffiliated third parties. We currently have a privacy
protection policy in place and intend to review and amend that policy, if
necessary, for compliance with the regulations when they are adopted in final
form.
Gramm-Leach also provides for the ability of each state to enact legislation
that is more protective of consumers' personal information. Currently, there are
a number of privacy bills pending in the New York legislature. No action has
been taken on any of these bills, and we cannot predict what impact, if any,
these bills would have.
FEDERAL HOME LOAN BANK SYSTEM
Astoria Federal is a member of the FHLB System, which consists of 12 regional
FHLBs. The FHLB provides a central credit facility primarily for member
institutions. Astoria Federal, as a member of the FHLB-NY, is required to
acquire and hold shares of capital stock in the FHLB-NY in an amount at least
equal to 1% of the aggregate principal amount of its unpaid residential mortgage
loans and similar obligations at the beginning of each year, 0.3% of total
assets, or 5% of its borrowings from the FHLB-NY, whichever is greater. Astoria
Federal was in compliance with this requirement with an investment in FHLB-NY
stock at December 31, 1999, of $265.3 million. Dividends from the FHLB-NY to
Astoria Federal amounted to $17.4 million for the year ended December 31, 1999,
$9.5 million for the year ended December 31, 1998 and $5.7 million for the year
ended December 31, 1997. Pursuant to Gramm-Leach, the foregoing minimum share
ownership requirements will be replaced by regulations to be promulgated by the
Federal Housing Finance Board. Gramm-Leach specifically provides that the
minimum requirements in existence immediately prior to adoption of Gramm-Leach
shall remain in effect until such regulations are adopted. Formerly, federal
savings associations were required to be members of the FHLB System. The new law
removed the mandatory membership requirement and authorized voluntary membership
for federal savings associations, as is the case for all other eligible
institutions.
FEDERAL RESERVE SYSTEM
Federal Reserve Board regulations require federally chartered savings
associations to maintain non-interest-earning cash reserves against their
transaction accounts (primarily NOW and regular checking accounts). A reserve of
3% is to be maintained against aggregate transaction accounts between $5.0
million and $44.3 million (subject to adjustment by the Federal Reserve Board)
and a reserve of 10% (subject to adjustment by the Federal Reserve Board between
8% and 14%) against that portion of total transaction accounts in excess of
$44.3 million. The first $5.0 million of otherwise reservable balances (subject
to adjustments by the Federal Reserve Board) is exempt from the reserve
requirements. Astoria Federal is in compliance with the foregoing requirements.
The balances maintained to meet the reserve
17
<PAGE> 20
requirements imposed by the Federal Reserve Board may be used to satisfy
liquidity requirements imposed by the OTS. Because required reserves must be
maintained in the form of either vault cash, a non-interest-bearing account at a
Federal Reserve Bank or a pass-through account as defined by the Federal Reserve
Board, the effect of this reserve requirement is to reduce Astoria Federal's
interest-earning assets. FHLB System members are also authorized to borrow from
the Federal Reserve "discount window," but Federal Reserve Board regulations
require institutions to exhaust all FHLB sources before borrowing from a Federal
Reserve Bank.
HOLDING COMPANY REGULATION
We are a unitary savings and loan holding company within the meaning of the
HOLA. As such, we are registered with the OTS and are subject to the OTS
regulations, examinations, supervision and reporting requirements. In addition,
the OTS has enforcement authority over us and savings association subsidiaries.
Among other things, this authority permits the OTS to restrict or prohibit
activities that are determined to be a serious risk to the subsidiary savings
association. Astoria Federal must notify the OTS at least 30 days before
declaring any dividend to us. Astoria Federal has given notice to, and received
approval from the OTS for each dividend declared to us in 1999.
The HOLA prohibits a savings and loan holding company (directly or indirectly,
or through one or more subsidiaries) from acquiring another savings association
or holding company thereof without prior written approval of the OTS; acquiring
or retaining, with certain exceptions, more than 5% of a non-subsidiary savings
association, a non-subsidiary holding company, or a non-subsidiary company
engaged in activities other than those permitted by the HOLA or acquiring or
retaining control of an institution that is not federally insured. In evaluating
applications by holding companies to acquire savings associations, the OTS must
consider the financial and managerial resources and future prospects of the
company and institution involved, the effect of the acquisition on the risk to
the insurance funds, the convenience and needs of the community and competitive
factors.
FEDERAL SECURITIES LAWS
We are subject to the periodic reporting, proxy solicitation, tender offer,
insider trading restrictions and other requirements under the Securities
Exchange Act of 1934, as amended, or Exchange Act.
DELAWARE CORPORATION LAW
We are incorporated under the laws of the State of Delaware. Thus, we are
subject to regulation by the State of Delaware and the rights of our
shareholders are governed by the Delaware General Corporation Law.
FEDERAL TAXATION
GENERAL. We report our income on a calendar year basis using the accrual method
of accounting and are subject to federal income taxation in the same manner as
other corporations. The following discussion of tax matters is intended only as
a summary and does not purport to be a comprehensive description of the tax
rules applicable to Astoria Federal or us.
CORPORATE ALTERNATIVE MINIMUM TAX. In addition to the regular income tax,
corporations (including savings and loan associations) generally are subject to
an alternative minimum tax, or AMT, in an amount equal to 20% of alternative
minimum taxable income, or AMTI, to the extent the AMT exceeds the corporation's
regular tax. AMTI is regular taxable income as modified by certain adjustments
and increased by certain tax preference items. AMTI includes an amount equal to
three-quarters of the excess of adjusted current earnings over such specially
computed AMTI. Only 90% of AMTI can be offset by
18
<PAGE> 21
net operating loss carryovers. The AMT is available as a credit against future
regular income tax. We do not expect to be subject to the AMT.
TAX BAD DEBT RESERVES. Effective 1996, federal tax legislation modified the
methods by which a thrift computes its bad debt deduction. As a result, Astoria
Federal is required to claim a deduction equal to its actual loss experience,
and the "reserve method" is no longer available. Any cumulative reserve
additions (i.e., bad debt deductions) in excess of actual loss experience for
tax years 1988 through 1995 are subject to recapture over a six year period.
Generally, reserve balances as of December 31, 1987 will only be subject to
recapture upon distribution of such reserves to shareholders. See
"Distributions."
New York State and New York City tax laws allow thrift institutions to continue
to use the reserve method of tax accounting for bad debts and to determine a
deduction for bad debts in a manner similar to prior law. See the discussion
below under "State and Local Taxation."
DISTRIBUTIONS. To the extent that Astoria Federal makes "nondividend
distributions" to shareholders, such distributions will be considered to result
in distributions from Astoria Federal's "base year reserve," (i.e., its reserve
as of December 1987), to the extent thereof and then from its supplemental
reserve for losses on loans, and an amount based on the amount distributed will
be included in Astoria Federal's taxable income. Nondividend distributions
include distributions in excess of Astoria Federal's current and accumulated
earnings and profits, as calculated for federal income tax purposes,
distributions in redemption of stock and distributions in partial or complete
liquidation. However, dividends paid out of Astoria Federal's current or
accumulated earnings and profits will not constitute nondividend distributions
and, therefore, will not be included in Astoria Federal's income.
The amount of additional taxable income created from a nondividend distribution
is an amount that, when reduced by the tax attributable to the income, is equal
to the amount of the distribution. Thus, approximately one and one-half times
the nondividend distribution would be includable in gross income for federal
income tax purposes, assuming a 35% federal corporate income tax rate.
DIVIDENDS RECEIVED DEDUCTION AND OTHER MATTERS. We may exclude from our income
100% of dividends received from Astoria Federal as a member of the same
affiliated group of corporations. The corporate dividends received deduction is
generally 70% in the case of dividends received from unaffiliated corporations
with which we will not file a consolidated tax return, except that if we own
more than 20% of the stock of a corporation distributing a dividend, 80% of any
dividends received may be deducted.
STATE AND LOCAL TAXATION
NEW YORK STATE TAXATION. New York State imposes an annual franchise tax on
banking corporations, based on net income allocable to New York State, at a rate
of 9% (8.5% effective July 1, 2000, 8% effective July 1, 2001 and 7.5% effective
July 1, 2002). If, however, the application of an alternative minimum tax (based
on taxable assets allocated to New York, "alternative" net income, or a flat
minimum fee) results in a greater tax, an alternative minimum tax will be
imposed. In addition, New York State imposes a tax surcharge of 17% of the New
York State franchise tax allocable to business activities carried on in the
Metropolitan Commuter Transportation District. These taxes apply to us, Astoria
Federal and certain of Astoria Federal's subsidiaries. Certain subsidiaries of a
banking corporation may be subject to a general business corporation tax in lieu
of the tax on banking corporations. The rules regarding the determination of
income allocated to New York and alternative minimum taxes differ for these
subsidiaries.
New York State passed legislation that incorporated the former provisions of
Internal Revenue Code, or IRC, Section 593 into New York State tax law. The
impact of this legislation enabled Astoria Federal to defer the recapture of the
New York State tax bad debt reserves that would have otherwise occurred as a
result of the federal amendment to IRC 593. The legislation also enabled Astoria
Federal to continue to
19
<PAGE> 22
utilize the reserve method for computing its bad debt deduction. The following
discussion of the reserve for bad debts is intended only as a summary and does
not purport to be a comprehensive description of the New York State tax rules
applicable to Astoria Federal or us.
BAD DEBT DEDUCTION. Federally chartered savings associations such as Astoria
Federal which meet certain definition tests primarily relating to their assets
and the nature of their business, or qualifying thrifts, are permitted to
establish a reserve for bad debts and to make annual additions thereto, which
additions may, within specified formula limits, be deducted in arriving at their
taxable income. Astoria Federal will be a qualifying thrift only if, among other
requirements, at least 60% of its assets are assets described in Section
1453(h)(1) of the New York State Tax Law, or the 60% Test. Astoria Federal
presently satisfies the 60% Test. Although there can be no assurance that
Astoria Federal will satisfy the 60% Test in the future, we believe that this
level of qualifying assets can be maintained by Astoria Federal. Astoria
Federal's deduction for additions to its bad debt reserve with respect to
qualifying loans may be computed using the experience method or a percentage
equal to 32% of Astoria Federal's taxable income, computed with certain
modifications, without regard to Astoria Federal's actual loss experience, and
reduced by the amount of any addition permitted to the reserve for
non-qualifying loans, or NYS Percentage of Taxable Income Method. Astoria
Federal's deduction with respect to non-qualifying loans must be computed under
the experience method which is based on its actual loss experience.
Under the experience method, the amount of a reasonable addition, in general,
equals the amount necessary to increase the balance of the bad debt reserve at
the close of the taxable year to the greater of (1) the amount that bears the
same ratio to loans outstanding at the close of the taxable year as the total
net bad debts sustained during the current and five preceding taxable years
bears to the sum of the loans outstanding at the close of those six years, or
(2) the balance of the bad debt reserve at the close of the base year (assuming
that the loans outstanding have not declined since then). The "base year" for
these purposes is the last taxable year beginning before the NYS percentage of
income bad debt deduction was taken. Any deduction for the addition to the
reserve for non-qualifying loans reduces the addition to the reserve for
qualifying real property loans calculated under the NYS Percentage of Taxable
Income Method. Each year Astoria Federal reviews the most favorable way to
calculate the deduction attributable to an addition to the bad debt reserve.
The amount of the addition to the reserve for losses on qualifying real property
loans under the NYS Percentage of Taxable Income Method cannot exceed the amount
necessary to increase the balance of the reserve for losses on qualifying real
property loans at the close of the taxable year to 6% of the balance of the
qualifying real property loans outstanding at the end of the taxable year. Also,
if the qualifying thrift uses the NYS Percentage of Taxable Income Method, then
the qualifying thrift's aggregate addition to its reserve for losses on
qualifying real property loans cannot, when added to the addition to the reserve
for losses on non-qualifying loans, exceed the amount by which (1) 12% of the
amount that the total deposits or withdrawable accounts of depositors of the
qualifying thrift at the close of the taxable year exceeded (2) the sum of the
qualifying thrift's surplus, undivided profits and reserves at the beginning of
such year.
NEW YORK CITY TAXATION. Astoria Federal is also subject to the New York City
Financial Corporation Tax calculated, subject to a New York City income and
expense allocation, on a similar basis as the New York State Franchise Tax. In
this connection, legislation was enacted regarding the use and treatment of tax
bad debt reserves that is substantially similar to the New York State
legislation described above.
A significant portion of Astoria Federal's entire net income for New York City
purposes is allocated outside the jurisdiction which has the effect of
significantly reducing the New York City taxable income of Astoria Federal.
20
<PAGE> 23
DELAWARE TAXATION. As a Delaware holding company not earning income in Delaware,
we are exempt from Delaware corporate income tax but are required to file an
annual report with and pay an annual franchise tax to the State of Delaware.
STATISTICAL DATA
The detailed statistical data which follows is presented in accordance with
Guide 3, prescribed by the Securities and Exchange Commission, or SEC. This
data should be read in conjunction with Item 7, "MD&A" and Item 8, "Financial
Statements and Supplementary Data."
Information regarding distribution of assets, liabilities and stockholders'
equity; interest rates and interest differential appears under Item 7, "MD&A."
Page 48 presents the distribution of assets, liabilities and stockholders'
equity under the caption "Analysis of Net Interest Income," and page 49 presents
the interest differential under the caption "Rate/Volume Analysis."
21
<PAGE> 24
SECURITIES PORTFOLIO
The following table sets forth the composition of our available-for-sale (at
fair value) and held-to-maturity securities portfolios in dollar amounts and in
percentages of the portfolios at the dates indicated:
<TABLE>
<CAPTION>
AT DECEMBER 31,
-----------------------------------------------------------------------------------
1999 1998 1997
-----------------------------------------------------------------------------------
PERCENT PERCENT PERCENT
(DOLLARS IN THOUSANDS) AMOUNT OF TOTAL AMOUNT OF TOTAL AMOUNT OF TOTAL
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
SECURITIES AVAILABLE-FOR-SALE:
Mortgage-backed securities:
GNMA pass-through certificates .... $ 125,701 1.42% $ 166,516 2.03% $ 612,310 12.74%
FHLMC pass-through certificates ... 226,414 2.55 342,722 4.18 755,402 15.71
FNMA pass-through certificates .... 447,505 5.05 615,794 7.51 1,143,950 23.80
REMICs and CMOs:
Agency issuance .............. 5,869,778 66.23 4,920,500 60.04 1,216,283 25.30
Non-agency issuance .......... 1,535,579 17.33 1,508,302 18.40 781,446 16.26
Obligations of U.S. Government and
agencies .......................... 474,204 5.35 467,199 5.71 178,836 3.72
FNMA and FHLMC preferred stock ........ 127,479 1.44 128,840 1.57 64,988 1.35
Asset-backed and other securities ..... 1,908 0.02 25,845 0.31 54,090 1.12
Corporate debt securities ............. 54,181 0.61 20,726 0.25 -- --
----------- ------ ----------- ------ ----------- ------
Total securities available-for-sale ........ $ 8,862,749 100.00% $ 8,196,444 100.00% $ 4,807,305 100.00%
=========== ====== =========== ====== =========== ======
SECURITIES HELD-TO-MATURITY:
Mortgage-backed securities:
GNMA pass-through certificates .... $ 4,245 0.22% $ 53,258 2.52% $ 71,075 2.69%
FHLMC pass-through certificates ... 45,128 2.37 14,726 0.70 21,303 0.81
FNMA pass-through certificates .... 13,106 0.69 15,975 0.76 19,445 0.74
REMICs and CMOs:
Agency issuance .............. 668,823 35.13 787,255 37.28 929,588 35.25
Non-agency issuance .......... 354,766 18.63 268,270 12.70 346,073 13.12
Obligations of U.S. Government
and agencies ...................... 772,733 40.59 925,355 43.82 1,190,101 45.12
Obligations of states and
political subdivisions ............ 45,128 2.37 46,961 2.22 49,787 1.89
Corporate debt securities ............. -- -- -- -- 10,048 0.38
----------- ------ ----------- ------ ----------- ------
Total securities held-to-maturity .......... 1,903,929 100.00% 2,111,800 100.00% 2,637,420 100.00%
----------- ====== ----------- ====== ----------- ======
Net discount ............................... (3,972) (2,989) (4,748)
----------- ----------- -----------
Net securities held-to-maturity ............ $ 1,899,957 $ 2,108,811 $ 2,632,672
=========== =========== ===========
</TABLE>
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<PAGE> 25
The table below sets forth certain information regarding the book value,
weighted average yields and contractual maturities of our federal funds sold and
repurchase agreements, FHLB-NY stock and mortgage-backed and other securities
available-for-sale and held-to-maturity portfolios at December 31,1999.
<TABLE>
<CAPTION>
ONE YEAR ONE TO FIVE TO
OR LESS FIVE YEARS TEN YEARS
------- ---------- ---------
ANNUALIZED ANNUALIZED ANNUALIZED
WEIGHTED WEIGHTED WEIGHTED
BOOK AVERAGE BOOK AVERAGE BOOK AVERAGE
(DOLLARS IN THOUSANDS) VALUE YIELD VALUE YIELD VALUE YIELD
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
FEDERAL FUNDS SOLD AND
REPURCHASE AGREEMENTS .......................... $ 335,653 5.18% $ -- --% $ -- --%
========== ========== ==========
FHLB-NY STOCK (1), (2) .......................... $ -- --% $ -- --% $ -- -- %
========== ========== ==========
MORTGAGE-BACKED AND OTHER
SECURITIES AVAILABLE-FOR-SALE:
GNMA pass-through certificates ............. $ -- -- % $ -- -- % $ -- -- %
FHLMC pass-through certificates ............ -- -- 841 6.51 18,642 5.86
FNMA pass-through certificates ............. -- -- 1,701 6.47 9,971 6.31
REMICs and CMOs:
Agency issuance ....................... -- -- -- -- 31,859 6.09
Non-agency issuance ................... -- -- -- -- 2,666 6.78
Obligations of the U.S. ...................
Government and agencies ................... 40,888 5.85 501 5.45 49,935 6.32
Corporate debt securities ................. -- -- -- -- -- --
Asset-backed and other securities.......... -- -- 2 -- -- --
Equity securities (1), (3) ................ -- -- -- -- -- --
---------- ---------- ----------
TOTAL SECURITIES AVAILABLE-FOR-SALE: ............ $ 40,888 5.85% $ 3,045 6.31% $ 113,073 6.19%
========== ========== ==========
MORTGAGE-BACKED AND OTHER
SECURITIES HELD-TO-MATURITY:
GNMA pass-through certificates ............. $ 22 10.07% $ 404 8.41% $ 1,713 8.48%
FHLMC pass-through certificates ............ -- -- 1,540 7.41 14,611 7.97
FNMA pass-through certificates ............. -- -- 298 9.22 1,726 7.13
REMICs and CMOs:
Agency issuance ...................... -- -- 6,105 6.56 112,314 6.36
Non-agency issuance .................. -- -- -- -- 49,198 6.39
Obligations of the U.S.
Government and agencies ................... -- -- 14,996 5.72 -- --
Obligations of states and
political subdivisions .................... -- -- 1,883 3.88 -- --
---------- ---------- ----------
TOTAL SECURITIES HELD-TO-MATURITY: .............. $ 22 10.07% $ 25,226 5.97% $ 179,562 6.53%
========== ========== ==========
</TABLE>
<TABLE>
<CAPTION>
TOTAL SECURITIES
--------------------------------------------------
MORE THAN
TEN YEARS
---------
AVERAGE
ANNUALIZED LIFE BY
WEIGHTED CONTRACTUAL WEIGHTED
BOOK AVERAGE MATURITY BOOK FAIR AVERAGE
(DOLLARS IN THOUSANDS) VALUE YIELD (IN YEARS) VALUE VALUE YIELD
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
FEDERAL FUNDS SOLD AND
REPURCHASE AGREEMENTS .......................... $ -- --% 0.01 $ 335,653 $ 335,653 5.18%
========== ========== ==========
FHLB-NY STOCK (1), (2) .......................... $ 265,250 6.75% -- $ 265,250 $ 265,250 6.75%
========== ========== ==========
MORTGAGE-BACKED AND OTHER
SECURITIES AVAILABLE-FOR-SALE:
GNMA pass-through certificates ............. $ 129,029 7.02% 20.10 $ 129,029 $ 125,701 7.02%
FHLMC pass-through certificates ............ 209,421 6.72 22.44 228,904 226,414 6.65
FNMA pass-through certificates ............. 431,967 6.61 29.76 443,639 447,505 6.60
REMICs and CMOs:
Agency issuance ....................... 6,272,558 6.34 25.92 6,304,417 5,869,778 6.34
Non-agency issuance ................... 1,601,669 6.47 26.59 1,604,335 1,535,579 6.47
Obligations of the U.S
Government and agencies .................. 455,758 6.94 16.04 547,082 474,204 6.80
Corporate debt securities .................. 61,349 7.94 27.56 61,349 54,181 7.94
Asset-backed and other securities........... 1,807 6.16 19.51 1,809 1,810 6.16
Equity securities (1), (3) ................. 147,613 5.46 -- 147,613 127,577 5.46
---------- ---------- ----------
TOTAL SECURITIES AVAILABLE-FOR-SALE: ............ $9,311,171 6.42% 25.08 $9,468,177 $8,862,749 6.41%
========== ========== ==========
MORTGAGE-BACKED AND OTHER
SECURITIES HELD-TO-MATURITY:
GNMA pass-through certificates ............. $ 2,108 9.33% 12.77 $ 4,247 $ 4,466 8.90%
FHLMC pass-through certificates ............ 29,136 8.09 13.93 45,287 45,964 8.03
FNMA pass-through certificates ............. 11,059 6.11 12.83 13,083 12,451 6.32
REMICs and CMOs:
Agency issuance ...................... 548,830 6.76 19.65 667,249 662,167 6.69
Non-agency issuance .................. 303,197 6.87 25.04 352,395 346,203 6.80
Obligations of the U.S.
Government and agencies ................... 757,588 7.37 15.09 772,584 727,284 7.33
Obligations of states and
political subdivisions .................... 43,229 6.68 17.78 45,112 45,072 6.56
---------- ---------- ----------
TOTAL SECURITIES HELD-TO-MATURITY: .............. $1,695,147 7.07% 18.55 $1,899,957 $1,843,607 7.00%
========== ========== ==========
</TABLE>
(1) As equity securities have no maturities, they are classified in the
more than ten years category.
(2) The carrying amount of FHLB-NY stock equals cost.
(3) Equity securities include FNMA and FHLMC preferred stock which had a
book value of $147.5 million at December 31, 1999 and a market value of
$127.5 million at December 31, 1999.
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<PAGE> 26
LOAN PORTFOLIO
LOAN PORTFOLIO COMPOSITION
The following table sets forth the composition of our loans receivable and loans
held-for-sale portfolios in dollar amounts and in percentages of the portfolio
at the dates indicated.
<TABLE>
<CAPTION>
AT DECEMBER 31,
---------------------------------------------------------------------------
1999 1998 1997
--------------------------- --------------------------- --------------
PERCENT PERCENT
OF OF
(DOLLARS IN THOUSANDS) AMOUNT TOTAL AMOUNT TOTAL AMOUNT
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
MORTGAGE LOANS (GROSS) (1):
One-to-four family .................. $ 9,018,270 88.05% $ 7,857,964 87.37% $ 6,904,114
Multi-family ........................ 615,438 6.01 452,854 5.03 377,292
Commercial real estate .............. 433,035 4.23 453,973 5.05 456,194
---------- ----- --------- ----- ---------
Total mortgage loans ......... 10,066,743 98.29 8,764,791 97.45 7,737,600
---------- ----- --------- ----- ---------
CONSUMER AND OTHER LOANS (GROSS):
Home equity ......................... 116,726 1.14 142,437 1.58 130,665
Passbook ............................ 7,481 0.07 6,653 0.07 7,207
Home Improvement .................... 3,787 0.04 5,992 0.07 8,283
Student (2) ......................... 2,780 0.03 4,118 0.05 13,212
Line of Credit, Overdraft ........... 23,186 0.23 24,846 0.28 37,057
Other (3) ........................... 16,413 0.16 39,758 0.44 51,800
Commercial .......................... 4,531 0.04 5,573 0.06 8,136
---------- ----- --------- ----- ---------
Total other loans ............ 174,904 1.71 229,377 2.55 256,360
---------- ----- --------- ----- ---------
TOTAL LOANS ................................ 10,241,647 100.00% 8,994,168 100.00% 7,993,960
---------- ===== --------- ===== ---------
LESS:
Unearned premiums (discounts)
and deferred costs (fees), net 58,803 32,463 26,638
Allowance for loan losses ........... (76,578) (74,403) (73,920)
---------- --------- ---------
TOTAL LOANS, NET ........................... $ 10,223,872 $ 8,952,228 $ 7,946,678
========== ========= =========
</TABLE>
<TABLE>
<CAPTION>
AT DECEMBER 31,
-------------------------------------------------------------------------
1997 1996 1995
--------------- ------------------------- -------------------------
PERCENT PERCENT PERCENT
OF OF OF
(DOLLARS IN THOUSANDS) TOTAL AMOUNT TOTAL AMOUNT TOTAL
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
MORTGAGE LOANS (GROSS) (1):
One-to-four family .................. 86.37% $ 5,107,371 88.32% $ 3,571,222 86.13%
Multi-family ........................ 4.72 201,719 3.49 145,652 3.51
Commercial real estate .............. 5.70 245,584 4.24 221,533 5.34
------ --------- ------ --------- ------
Total mortgage loans ......... 96.79 5,554,674 96.05 3,938,407 94.98
------ --------- ------ --------- ------
CONSUMER AND OTHER LOANS (GROSS):
Home equity ......................... 1.63 105,475 1.82 88,508 2.13
Passbook ............................ 0.09 6,497 0.11 5,564 0.13
Home Improvement .................... 0.11 10,133 0.18 12,354 0.30
Student (2) ......................... 0.17 9,904 0.17 5,739 0.14
Line of Credit, Overdraft ........... 0.46 40,734 0.70 48,288 1.16
Other (3) ........................... 0.65 45,764 0.80 36,151 0.88
Commercial .......................... 0.10 9,826 0.17 11,649 0.28
------ --------- ------ --------- ------
Total other loans ............ 3.21 228,333 3.95 208,253 5.02
------ --------- ------ --------- ------
TOTAL LOANS ................................ 100.00% 5,783,007 100.00% 4,146,660 100.00%
====== --------- ====== --------- ======
LESS:
Unearned premiums (discounts)
and deferred costs (fees), net 1,127 (11,051)
Allowance for loan losses ........... (48,001) (47,853)
--------- ---------
TOTAL LOANS, NET ........................... $ 5,736,133 $ 4,087,756
========= =========
</TABLE>
(1) These amounts include $11.4 million, $212.9 million, $163.7 million,
$58.5 million and $49.9 million of mortgage loans classified as
held-for-sale at December 31, 1999, 1998, 1997, 1996 and 1995,
respectively.
(2) Includes $252,000, $108,000 and $30,000 of student loans classified as
held-for-sale at December 31, 1997, 1996, and 1995, respectively.
(3) Includes automobile, personal unsecured and credit card loans.
24
<PAGE> 27
LOAN MATURITY, REPRICING AND ACTIVITY
The following table shows the maturity of our loans receivable at December 31,
1999. The table does not include loans held-for-sale and the effect of
prepayments or scheduled principal amortization.
<TABLE>
<CAPTION>
AT DECEMBER 31, 1999
------------------------------------------------------------------------------------
ONE-TO CONSUMER
-FOUR MULTI- COMMERCIAL AND TOTAL LOANS
(In Thousands) FAMILY FAMILY REAL ESTATE OTHER RECEIVABLE
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Amounts due:
Within one year ................. $ 5,173 $ 7,934 $ 61,507 $ 29,150 $ 103,764
After one year:
One to three years ........... 38,872 28,927 63,892 28,141 159,832
Three to five years .......... 62,495 9,045 39,909 12,342 123,791
Five to ten years ............ 387,212 171,806 132,092 19,249 710,359
Ten to twenty years .......... 2,415,008 371,527 132,999 47,649 2,967,183
Over twenty years ............ 6,098,134 26,199 2,636 38,373 6,165,342
------------ ------------ ------------ ------------ ------------
Total due after one year ........ 9,001,721 607,504 371,528 145,754 10,126,507
------------ ------------ ------------ ------------ ------------
Total amounts due ..................... $ 9,006,894 $ 615,438 $ 433,035 $ 174,904 $ 10,230,271
============ ============ ============ ============ ============
Unearned premiums (discounts)
and deferred costs (fees), net 58,803
Allowance for loan losses ....... (76,578)
------------
Loans receivable, net ................. $ 10,212,496
============
</TABLE>
The following table sets forth at December 31, 1999, the dollar amount of all
loans receivable due after December 31, 2000, and whether such loans have fixed
interest rates or adjustable interest rates.
<TABLE>
<CAPTION>
DUE AFTER DECEMBER 31, 2000
-------------------------------------------------------------------
(In Thousands) FIXED ADJUSTABLE TOTAL
- ------------------------------------------------------------------------------------------------------------------------------------
Mortgage loans:
<S> <C> <C> <C>
One-to-four family ....................... $ 2,605,303 $ 6,396,418 $ 9,001,721
Multi-family ............................. 187,638 419,866 607,504
Commercial real estate ................... 141,500 230,028 371,528
Consumer and other loans ....................... 58,566 87,188 145,754
----------- ----------- -----------
Total loans receivable ......................... $ 2,993,007 $ 7,133,500 $10,126,507
=========== =========== ===========
</TABLE>
25
<PAGE> 28
The following table sets forth our loan originations, purchases, sales and
principal repayments for the periods indicated:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------
(IN THOUSANDS) 1999 1998 1997
- -----------------------------------------------------------------------------------------------------------------------------------
MORTGAGE LOANS (GROSS):
<S> <C> <C> <C>
At beginning of year ........................ $ 8,764,791 $ 7,737,600 $ 5,554,674
Mortgage loans originated:
One-to-four family .................. 2,986,529 4,747,609 3,292,451
Multi-family ........................ 231,740 158,849 120,874
Commercial .......................... 120,636 92,666 61,197
------------ ------------ ------------
Total mortgage loans originated .......... 3,338,905 4,999,124 3,474,522
------------ ------------ ------------
Purchases of mortgage loans:
Third party loan origination
program (1) ....................... 417,641 187,519 562,408
Loans from acquired institution ....... -- -- 872,970
Sales of mortgage loans ............... (490,687) (1,428,646) (969,187)
Transfer of loans to REO .............. (10,580) (14,350) (15,775)
Principal repayments .................. (1,951,994) (2,349,832) (1,056,003)
Loans charged off ..................... (1,333) (8,148) (5,120)
Securitized loans ..................... -- (387,071) (680,889)
Adjustment to conform fiscal year of
Long Island Bancorp, Inc. to Astoria
Financial Corporation .............. -- 28,595 --
------------ ------------ ------------
At end of year (2) .......................... $ 10,066,743 $ 8,764,791 $ 7,737,600
============ ============ ============
CONSUMER AND OTHER LOANS (GROSS):
At beginning of year ........................ $ 229,377 $ 256,360 $ 228,333
Other loans originated ................ 72,938 114,433 123,176
Purchases ............................. -- 6,008 18,190
Loans from acquired institution ....... -- -- 8,208
Sales of other loans .................. (7,357) (17,618) (14,369)
Transfer of loans to REO .............. -- (67) --
Principal repayments .................. (115,756) (131,707) (102,577)
Loans charged off ..................... (4,298) (3,809) (4,601)
Adjustment to conform fiscal year of
Long Island Bancorp, Inc. to Astoria
Financial Corporation .............. -- 5,777 --
------------ ------------ ------------
At end of year (3) .......................... $ 174,904 $ 229,377 $ 256,360
============ ============ ============
</TABLE>
(1) Third party loan originations for the years ended December 31, 1999,
1998 and 1997 were predominantly secured by one-to-four family
properties.
(2) Includes $11.4 million, $212.9 million and $163.7 million in real
estate loans classified as held-for-sale at December 31, 1999, 1998 and
1997, respectively.
(3) Includes $252,000 in student loans classified as held-for-sale at
December 31,1997.
26
<PAGE> 29
DELINQUENT LOANS AND CLASSIFIED ASSETS
Information regarding delinquent loans and non-performing assets appears under
Item 7, "MD&A - Asset Quality."
The following table sets forth at December 31, 1999, our carrying value of the
assets, exclusive of general valuation allowances, classified as special
mention, substandard or doubtful:
<TABLE>
<CAPTION>
SPECIAL MENTION SUBSTANDARD DOUBTFUL
---------------- ----------- --------
(Dollars in Thousands) NUMBER AMOUNT NUMBER AMOUNT NUMBER AMOUNT
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
LOANS:
One-to-four family ..... 1 $ 157 347 $50,870 6 $ 369
Multi-family ........... 7 2,577 15 3,122 -- --
Commercial ............. 12 17,263 27 23,039 -- --
Consumer and other loans -- -- 150 2,348 -- --
------- ------- ------- ------- ------- -------
Total .............. 20 $19,997 539 $79,379 6 $ 369
------- ------- ------- ------- ------- -------
REAL ESTATE OWNED:
One-to-four family ..... -- -- 52 5,080 -- --
------- ------- ------- ------- ------- -------
TOTAL ........................... 20 $19,997 591 $84,459 6 $ 369
======= ======= ======= ======= ======= =======
</TABLE>
Note: There were no assets classified as loss at December 31, 1999.
27
<PAGE> 30
DEPOSITS
The following table presents our deposit activity for the years indicated:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
---------------------------------------------------------------------------------
(DOLLARS IN THOUSANDS) 1999 1998 1997
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Opening balance .................... $ 9,668,286 $ 9,951,421 $ 8,146,103
Net withdrawals .................... (320,467) (694,666) (167,537)
Interest credited .................. 363,156 399,602 371,543
Sale of upstate New York
banking offices ................. (156,441) -- --
Deposits assumed from acquired
institution ..................... -- -- 1,601,312
Adjustment to conform fiscal year
of Long Island Bancorp, Inc. to
Astoria Financial Corporation . -- 11,929 --
----------- ----------- -----------
Ending balance ..................... $ 9,554,534 $ 9,668,286 $ 9,951,421
=========== =========== ===========
Net (decrease) increase ............ $ (113,752) $ (283,135) $ 1,805,318
=========== =========== ===========
Percentage (decrease) increase ....... (1.18)% (2.85)% 22.16%
</TABLE>
The following table sets forth the maturity periods of our certificate of
deposit accounts in amounts of $100,000 or more at December 31, 1999.
<TABLE>
<CAPTION>
AMOUNT
(IN THOUSANDS)
- --------------------------------------------------------------------------------
MATURITY PERIOD
<S> <C>
Three months or less ......... $166,301
Over three through six months 114,960
Over six through twelve months 105,067
Over twelve months ........... 215,963
--------
Total ........................ $602,291
========
</TABLE>
28
<PAGE> 31
The following table sets forth the distribution of our average deposit balances
for the periods indicated and the weighted average nominal interest rates on
each category of deposit presented.
<TABLE>
<CAPTION>
Year Ended December 31,
----------------------------------------------
1999
----------------------------------------------
Weighted
Percent Average
Average Of Total Nominal
(Dollars in Thousands) Balance Deposits Rate
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Savings .................... $2,697,726 28.19% 2.00%
Money market ............... 1,038,765 10.86 4.27
NOW and money manager ...... 516,010 5.39 1.00
Non-interest bearing ....... 372,360 3.89 --
---------- -----
Total ...................... 4,624,861 48.33 2.24
---------- -----
Certificates of Deposit (1):
Within one year ....... 2,030,613 21.22 4.50
One to three years .... 1,624,501 16.98 5.24
Three to five years ... 1,108,682 11.59 6.04
Five or more years .... 64,692 0.68 5.87
Jumbo ................. 115,184 1.20 4.49
---------- -----
Total ...................... 4,943,672 51.67 5.10
---------- -----
Total deposits ............. $9,568,533 100.00%
========== =====
</TABLE>
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------
1998 1997
-----------------------------------------------------------------------------------------------------
Weighted Weighted
Percent Average Percent Average
Average Of Total Nominal Average Of Total Nominal
(Dollars in Thousands) Balance Deposits Rate Balance Deposits Rate
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Savings ................... $2,889,510 29.45% 2.47% $2,560,738 29.59% 2.75%
Money market ............... 729,106 7.43 4.31 484,599 5.60 4.08
NOW and money manager ...... 497,433 5.07 1.26 418,592 4.83 1.55
Non-interest bearing ....... 399,568 4.07 -- 263,436 3.05 --
---------- ------ ---------- ------
Total ...................... 4,515,617 46.02 2.42 3,727,365 43.07 2.60
---------- ------ ---------- ------
Certificates of Deposit (1):
Within one year ....... 2,096,650 21.37 4.52 1,420,788 16.42 4.97
One to three years .... 1,922,096 19.58 5.65 2,266,128 26.18 5.75
Three to five years ... 1,085,050 11.06 6.14 1,047,035 12.10 6.16
Five or more years .... 71,595 0.73 6.20 77,670 0.90 6.05
Jumbo ................. 121,918 1.24 4.85 114,867 1.33 5.09
---------- ------ ---------- ------
Total ...................... 5,297,309 53.98 5.40 4,926,488 56.93 5.60
---------- ------ ---------- ------
Total deposits ............. $9,812,926 100.00% $8,653,853 100.00%
========== ====== ========== ======
</TABLE>
(1) Terms indicated are original, not term remaining to maturity.
The following table presents, by rate categories, the remaining periods to
maturity of the certificate of deposit accounts outstanding at December 31, 1999
and the balances of our certificates of deposit outstanding at December 31,
1999, 1998 and 1997:
<TABLE>
<CAPTION>
Period to maturity from December 31, 1999 At December 31,
----------------------------------------------------------- -------------------------------------------
Within One to two Two to three Over three
(In Thousands) one year years years years 1999 1998 1997
- ------------------------------------------------------------------------------------ -------------------------------------------
CERTIFICATES OF DEPOSIT:
<S> <C> <C> <C> <C> <C> <C> <C>
3.99% or less $ 287,439 $ 300 $ -- $ -- $ 287,739 $ 267,768 $ 270,026
4.00% to 4.99% 1,032,132 11,127 3,265 11,128 1,057,652 1,480,241 430,877
5.00% to 5.99% 1,481,835 861,465 66,930 116,261 2,526,491 2,226,385 3,497,581
6.00% to 6.99% 165,798 234,343 253,113 301,033 954,287 963,553 1,270,595
7.00% and over 103,474 -- -- -- 103,474 104,805 163,904
---------- ---------- ---------- ---------- ---------- ---------- ----------
Total .......... $3,070,678 $1,107,235 $ 323,308 $ 428,422 $4,929,643 $5,042,752 $5,632,983
========== ========== ========== ========== ========== ========== ==========
</TABLE>
29
<PAGE> 32
BORROWINGS
The following table sets forth certain information regarding our
borrowed funds at or for the years ended on the dates indicated:
<TABLE>
<CAPTION>
AT OR FOR THE YEAR ENDED DECEMBER 31,
---------------------------------------------------------------------
(DOLLARS IN THOUSANDS) 1999 1998 1997
- -----------------------------------------------------------------------------------------------------------------------------------
FHLB-NY ADVANCES:
<S> <C> <C> <C>
Average balance ................................. $ 1,265,968 $ 360,233 $ 369,374
Maximum balance outstanding at any month
end during the year ............................ 1,610,058 1,210,170 426,932
Balance outstanding at end of year .............. 1,610,058 1,210,170 423,136
Weighted average interest rate during the year .. 5.00% 5.78% 6.00%
Weighted average interest rate at end of the year 5.25 4.94 6.16
REVERSE REPURCHASE AGREEMENTS:
Average balance ................................. $ 9,561,718 $ 5,767,274 $ 3,334,692
Maximum balance outstanding at any
month end during the year .................... 10,026,800 7,491,800 3,896,165
Balance outstanding at end of year .............. 9,276,800 7,291,800 3,896,165
Weighted average interest rate during the year .. 5.17% 5.50% 5.73%
Weighted average interest rate at end of the year 5.24 5.27 5.78
OTHER BORROWINGS:
Average balance ................................. $ 493,711 $ 514,945 $ 259,256
Maximum balance outstanding at any month
end during the year .......................... 514,663 566,697 462,758
Balance outstanding at end of year .............. 514,663 520,827 454,936
Weighted average interest rate during the year .... 6.67% 6.66% 6.44%
Weighted average interest rate at end of the year 6.86 6.66 6.66
TOTAL BORROWINGS:
Average balance ................................. $11,321,397 $ 6,642,452 $ 3,963,322
Maximum balance outstanding at any month
end during the year ............................ 11,744,333 9,022,797 4,774,237
Balance outstanding at end of year .............. 11,401,521 9,022,797 4,774,237
Weighted average interest rate during the year .. 5.22% 5.61% 5.77%
Weighted average interest rate at end of the year 5.31 5.31 5.90
</TABLE>
ITEM 2. PROPERTIES
At December 31, 1999, we operated 87 full-service banking offices, of which 50
were owned and 37 were leased. At December 31, 1999, we owned our principal
executive offices and the office for our mortgage operations, both located in
Lake Success, New York.
For further information regarding our obligations, see Note 12 of Notes to
Consolidated Financial Statements in Item 8, "Financial Statements and
Supplementary Data."
In addition, at December 31, 1999, we owned the former main operating
headquarters of LIB located in Melville, New York. We no longer occupy this
facility and it is in contract for sale and scheduled to close before the end of
the first quarter of 2000. Also, at December 31, 1999, we leased our previous
mortgage operating facility in Mineola, New York which we no longer occupy.
Approximately one-third of this facility was sublet at December 31, 1999.
30
<PAGE> 33
ITEM 3. LEGAL PROCEEDINGS
On March 24, 1994, our predecessor, LISB, received notice that it had been named
as a defendant in a class action lawsuit filed in the United States District
Court for the Eastern District of New York. Other defendants included James J.
Conway, Jr., former Chairman and Chief Executive Officer of LISB who resigned
from LISB in June 1992, his former law firm, certain predecessor firms of that
law firm, and certain partners of that law firm. The lawsuit is entitled Ronnie
Weil Also Known as Ronnie Moore, for Herself and on Behalf of All Other Persons
Who Obtained Mortgage Loans from The Long Island Savings Bank, FSB during the
period January 1, 1983 through December 31, 1992 vs. The Long Island Savings
Bank, FSB, et al. The complaint alleges that the defendants caused mortgage loan
commitments to be issued to mortgage loan borrowers, submitted legal invoices to
the borrowers at the closing of mortgage loans which falsely represented the
true legal fees charged for representing LISB in connection with the mortgage
loans and failed to advise that a part of the listed legal fee would be paid to
Mr. Conway, thereby defrauding the borrowers. The complaint does not specify the
amount of damages sought.
On or about June 9, 1994, Astoria Federal was served with an Amended Summons and
Amended Complaint adding LISB's directors as individual defendants. On or about
July 29, 1994, LISB and the individual director defendants served on plaintiffs
a motion to dismiss the Amended Complaint. On or about August 29, 1994, the
plaintiffs served papers in response to the motion. The remaining schedule on
the motion was held in abeyance pending certain discovery.
On January 4, 1999, we were served with a second amended complaint alleging
essentially the same claims and adding as additional defendants, us, as
successor to LISB, and certain members of James J. Conway, Jr.'s family. The
second amended complaint seeks damages of at least $11.0 million trebled. On or
about February 22, 1999, we, on behalf of ourselves and LISB, and the individual
directors of LISB filed motions to dismiss the second amended complaint. On or
about November 15, 1999, the Court denied our motion to dismiss the second
amended complaint as to ourselves, LISB and the individual directors of LISB.
We believe that the likelihood is remote that this case will have a material
adverse impact on our consolidated financial condition and results of
operations.
On July 18, 1997, a purported class action, or the Federal Action, was commenced
in the United States District Court for the Eastern District of New York
entitled Leonard Minzer, et ano. v. Gerard C. Keegan, et al. against The
Greater, The Greater's directors and certain of its executive officers, and us.
The suit alleges, among other things, that The Greater, The Greater's directors
and certain of its executive officers solicited proxies in violation of Section
14(a) of the Securities Exchange Act of 1934 and Rule 14a-9, promulgated
thereunder, by failing to disclose certain allegedly material facts in the proxy
statement, as amended, that was circulated to The Greater stockholders in
connection with The Greater Acquisition, and that The Greater's directors and
certain of its executive officers breached their fiduciary duties by entering
into The Greater Acquisition and related arrangements. The suit further alleged,
without specification, that we participated in the preparation and distribution
of The Greater's proxy materials and/or aided and abetted the alleged breaches
of fiduciary duty by The Greater defendants. Plaintiffs sought, among other
things, a preliminary and permanent injunction against consummation of The
Greater Acquisition and the related transactions, an order directing that the
directors and executive officers of The Greater carry-out their fiduciary
duties, and unspecified damages and costs.
On September 2, 1997, plaintiffs filed an amended complaint and an Application
for a preliminary injunction, or the Application. An evidentiary hearing on
plaintiffs' Application was held on September 10, 1997. On September 22, 1997,
the Court issued a written decision denying plaintiffs' Application in all
respects. Upon stipulation of the parties, all claims against the non-director,
executive officers of The Greater, except one, were dismissed. The remaining
defendants moved to dismiss the amended complaint. On June 1, 1998 the Court
granted defendant's motion to dismiss the amended complaint without prejudice.
31
<PAGE> 34
In July 1998, the plaintiffs filed a second amended complaint, which the
defendants moved to dismiss on July 21, 1998. The motion was argued before the
Court on October 21, 1998 and after supplemental submissions by the parties, the
Court on January 25, 1999 dismissed the second amended complaint in all
respects.
On or about February 18, 1999, plaintiffs filed a Notice of Appeal to the United
States Court of Appeals for the Second Circuit. Briefs were submitted on the
appeal and oral argument was held on October 12, 1999. The Court has not yet
rendered a decision on the appeal.
We believe the allegations made in the second amended complaint in the Federal
Action are without merit and intend to aggressively defend The Greater's and our
interests with respect to such matters.
On August 15, 1989, LISB, and its former wholly owned subsidiary, The Long
Island Savings Bank of Centereach, FSB, or Centereach, filed suit against the
United States seeking damages and/or other appropriate relief on the grounds,
among others, that the government had breached the terms of the 1983 assistance
agreement between LISB and the Federal Savings and Loan Insurance Corporation
pursuant to which LISB acquired Centereach, or the Assistance Agreement. The
Assistance Agreement, among other things, provided for the inclusion of
supervisory goodwill as an asset on Centereach's balance sheet to be included in
capital and amortized over 40 years for regulatory purposes.
The suit is pending before Chief Judge Loren Smith in the United States Court of
Federal Claims and is entitled The Long Island Savings Bank, FSB et al. vs. The
United States, or the LISB Goodwill Litigation.
Similarly, on July 21, 1995, we commenced an action, Astoria Federal Savings and
Loan Association vs. United States, or the Astoria Goodwill Litigation, in the
United States Court of Federal Claims against the United States seeking in
excess of $250.0 million in damages arising from the government's breach of an
assistance agreement entered into by our predecessor in interest, Fidelity New
York, FSB, in connection with its acquisition in October 1984 of Suburbia
Federal Savings and Loan Association, and the government's subsequent enactment
and implementation of the Financial Institutions Reform, Recovery and
Enforcement Act, or FIRREA, in 1989. In addition to its breach of contract
claim, Astoria Federal's complaint also asserts claims based on promissory
estoppel, failure of consideration and frustration of purpose, and a taking of
Astoria Federal's property without just compensation in violation of the Fifth
Amendment to the United States Constitution.
Initially, both the LISB Goodwill Litigation and the Astoria Goodwill Litigation
had been stayed pending disposition by the United States Supreme Court of three
related supervisory goodwill cases, or the Winstar Cases. On July 1, 1996, the
Supreme Court ruled in the Winstar Cases that the government had breached its
contracts in the Winstar Cases and was liable in damages for those breaches.
On September 18, 1996, Judge Smith issued an Omnibus Case Management Order, or
Case Management Order, applicable to all Winstar-related cases. The Case
Management Order addresses certain timing and procedural matters with respect to
the administration of the Winstar-related cases, including organization of the
parties, initial discovery, initial determinations regarding liability, and the
resolution of certain common issues. The Case Management Order provides that the
parties will attempt to agree upon a Master Litigation Plan, which may be in
phases, to govern all further proceedings, including the resolution of common
issues (other than common issues covered by the Case Management Order),
dispositive motions, trials, discovery schedules, protocols for depositions,
document production, expert witnesses, and other matters.
On November 1, 1996, LISB filed a motion for partial summary judgment against
the government on the issues of whether LISB had a contract with the government
and whether the enactment of FIRREA was contrary to the terms of such contract.
The government contested such motion and cross-moved for summary judgment
seeking to dismiss LISB's contract claims.
32
<PAGE> 35
On November 6, 1996, we also moved for partial summary judgment against the
government on the issues of whether Fidelity had a contract with the government
and whether the enactment of FIRREA was contrary to the terms of such contract.
The government contested such motion and cross-moved for summary judgment
seeking to dismiss our contract claims.
On August 7 and 8, 1997, the United States Court of Federal Claims heard oral
arguments on eleven common issues raised by the government in the various
partial summary judgment motions filed by the plaintiffs in the goodwill cases.
The Court heard argument on these common issues in the context of four specific
summary judgment motions, not including the LISB Goodwill Litigation or the
Astoria Goodwill Litigation. In an opinion filed December 22, 1997, all such
common issues were found in favor of the Plaintiffs and the government was
ordered to show cause within sixty days why partial summary judgment should not
be entered in all cases which have partial summary judgment motions pending,
including the LISB Goodwill Litigation and the Astoria Goodwill Litigation.
The government responded in the LISB Goodwill Litigation that if the Court will
not consider case specific facts, then it has no defense to LISB's motion for
partial summary judgment. The government further indicated that if the Court
will consider case specific facts, then it asserts among other things that there
are factual issues in dispute concerning the assistance agreement regarding
Centereach which render the granting of partial summary judgment inappropriate.
LISB's motion for partial summary judgment remains pending before the Court. The
Court has not yet ruled on the motion in the LISB Goodwill Litigation.
On September 14, 1999, the government moved to dismiss Counts II through V of
the complaint in the LISB Goodwill Litigation. These counts are based on breach
of implied contract, promissory estoppel, failure of consideration and
frustration of purpose, and takings under the Fifth Amendment of the United
States Constitution. The defendants also sought to supplement their cross motion
for summary judgment.
The Court has directed the parties in the "First Thirty Cases," including the
LISB Goodwill Litigation, to meet and attempt to agree on open issues under the
pending partial summary judgment motions and for plaintiffs in such cases to
submit a proposed order listing all pending damage, as opposed to liability,
claims. The government will then be given twenty-one days to respond. Those
claims identified by the Court as solely damage claims will not be resolved in
the current limited summary judgment procedure. The Court stayed all claims
based on takings under the Fifth Amendment of the United States Constitution and
pending completion of this identification procedure, all responses to damage
issues.
The government has responded in the Astoria Goodwill Litigation that if the
Court will not consider case specific facts, then it has no defense to Astoria
Federal's motion for partial summary judgment. The government further indicated
that if the Court will consider case specific facts, then it asserts that the
relevant portion of the Assistance Agreement with Fidelity did not authorize
the use of its capital credit as a permanent addition to regulatory capital. In
this response, the government did not raise any issues related to the
supervisory goodwill portion of Astoria Federal's motion. Astoria Federal has
responded to the government's response indicating in substance that the issue
raised by the government was specifically addressed and decided by the United
States Supreme Court in the Winstar Cases, that the contractual language in the
Fidelity's Assistance Agreement and other operative documents is factually
indistinguishable from that ruled upon in the Winstar Cases, and thus, that
Astoria Federal's motion for partial summary judgment should be granted.
Astoria Federal's response further requests reimbursement of Astoria Federal's
attorneys' fees from the government for seeking to relitigate the capital
credit issue. Astoria Federal's motion for partial summary judgment remains
pending before the Court.
Pursuant to the Case Management Order, the LISB Goodwill Litigation has
been designated as one of the "First Thirty Cases". As a result of this
designation, discovery has been underway for approximately one year and a half.
Both sides have exchanged documents and directed interrogatories to each other
which have been answered. Our attorneys have taken depositions of key former
government regulators who had supervisory authority over LISB. The government
has taken depositions of a number of former LISB directors, officers and
employees.
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<PAGE> 36
The Astoria Goodwill Litigation has been designated as one of the "Second Thirty
Cases." As a result, discovery in such case commenced on August 23, 1999.
On April 9, 1999 and on April 16, 1999, damage decisions were rendered by the
United States Court of Federal Claims in the cases of Glendale Federal Bank, FSB
v. The United States, Case No. 90-772C and California Federal Bank v. United
States of America, Case No. 92-138C, respectively. The former was rendered by
Chief Judge Loren A. Smith while the latter decision was rendered by Judge
Robert H. Hodges, Jr. Both of these decisions have been appealed. Similarly, on
September 30, 1999, Judge Eric G. Bruggink rendered a damage decision in the
case of LaSalle Talman Bank, F.S.B. v. The United States, Case No. 92-652C.
Based upon our review of these decisions, we are unable to predict with any
degree of certainty the outcome of our claims against the United States and the
amount of damages that may be awarded in connection with either the LISB
Goodwill Litigation or the Astoria Goodwill Litigation, if any. No assurance can
be given as to the results of these claims or the timing of any proceedings in
relation thereto.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matter was submitted during the quarter ended December 31, 1999 to a vote of
our security holders through the solicitation of proxies or otherwise.
PART II
ITEM 5. MARKET FOR ASTORIA FINANCIAL CORPORATION'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS
Our common stock trades on the Nasdaq National Market tier of the Nasdaq Stock
Market under the symbol "ASFC." The table below shows the reported high and low
closing price of our common stock during the periods indicated in 1999 and 1998.
<TABLE>
<CAPTION>
1999 1998
---------------------------------------------------
High Low High Low
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
First Quarter $ 50.50 $ 44.00 $ 62.50 $ 46.88
Second Quarter 51.06 41.25 62.38 51.56
Third Quarter 42.44 28.94 55.25 35.94
Fourth Quarter 38.19 28.50 48.13 30.13
</TABLE>
As of March 9, 2000, we had 4,514 shareholders of record. As of December 31,
1999, there were 51,730,959 shares of common stock outstanding.
The following schedule summarizes the cash dividends paid per common share for
1999 and 1998:
<TABLE>
<CAPTION>
1999 1998
-------- --------
<S> <C> <C>
First Quarter $ 0.24 $ 0.20
Second Quarter 0.24 0.20
Third Quarter 0.24 0.20
Fourth Quarter 0.24 0.20
</TABLE>
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<PAGE> 37
On January 19, 2000, our Board of Directors declared a quarterly cash dividend
of $0.24 per common share, payable on March 1, 2000, to common stockholders of
record at the close of business on February 15, 2000. Our Board of Directors
intends to review the payment of dividends quarterly and plans to continue to
maintain a regular quarterly dividend in the future, dependent upon our
earnings, financial condition and other factors.
We are subject to the laws of the State of Delaware which generally limit
dividends to an amount equal to the excess of our net assets (the amount by
which total assets exceed total liabilities) over our statutory capital, or if
there is no such excess, to our net profits for the current and/or immediately
preceding fiscal year.
Our payment of dividends could be dependent, in large part, upon receipt of
dividends from Astoria Federal. Astoria Federal is subject to certain
restrictions which may limit its ability to pay us dividends. See "Regulation
and Supervision" in Item 1, "Business" and Note 10 of Notes to Consolidated
Financial Statements in Item 8, "Financial Statements and Supplementary Data"
for an explanation of the liquidation accounts and regulatory capital
requirements on Astoria Federal's ability to pay dividends. See "Regulation and
Supervision" in Item 1, "Business" and Note 13 of Notes to Consolidated
Financial Statements in Item 8, "Financial Statements and Supplementary Data"
concerning the tax effect of paying a portion of the retained earnings for
dividends rather than absorbing tax bad debt losses.
Following the close of business on September 30, 1997, in connection with The
Greater Acquisition, we issued 2,000,000 shares of 12% Noncumulative Perpetual
Preferred Stock, Series B, or Series B Preferred Stock, in exchange for all of
the outstanding 12% Noncumulative Perpetual Preferred Stock, Series B of The
Greater. The shares of the Series B Preferred Stock issued were exempt from
registration under the Securities Act of 1933, as amended, or the Securities
Act, pursuant to Section 4(2) of the Securities Act.
On October 28, 1999, our wholly-owned subsidiary, Astoria Capital Trust I,
issued $125.0 million of Capital Securities. Astoria Capital Trust I was formed
for the exclusive purpose of issuing the Capital Securities and $3.9 million of
9.75% Common Securities, Series A, purchased by us, and using the proceeds to
acquire Junior Subordinated Debentures, Series A, issued by us. The Junior
Subordinated Debentures totaled $128.9 million, have an interest rate of 9.75%,
mature on November 1, 2029 and are the sole assets of Astoria Capital Trust I.
We have fully and unconditionally guaranteed the Capital Securities along with
all obligations of Astoria Capital Trust I under the trust agreements pursuant
to which it was organized.
The Capital Securities were originally purchased by Sandler O'Neill & Partners,
L.P. as initial purchaser, who sold them in a private placement to "qualified
institutional buyers" as defined in Rule 144A under the Securities Act, or to
"institutional accredited investors" within the meaning of Rule 501 of the
Securities Act. In connection with the offering, we incurred $1.9 million in
commissions.
The Capital Securities are exempt from registration pursuant to Section 4(2) of
the Securities Act. The exemption is based on (1) the identity of all the
purchasers as either "qualified insitutional buyers" or "institutional
accredited investors," (2) the private placement made by Sandler O'Neill &
Partners, L.P., which did not include a general solicitation, (3) our
compliance with the periodic reporting requirements of the Exchange Act, (4)
the transfer restrictions placed on the Capital Securities and (5) the use of a
confidential private placement memorandum describing the Capital Securities.
On March 10, 2000, we commenced an exchange offer which will expire on or about
April 11, 2000 providing for the exchange of any and all of the Capital
Securities for $125.0 million aggregate liquidation amount of 9.75% Capital
Securities due November 1, 2029, Series B referred to as Series B Capital
Securities. The terms of the Series B Capital Securities are identical in all
material respects to the Capital Securities, except that the Series B Capital
Securities have been registered pursuant to the Securities Act, Registration
Nos. 333-30792 and 333-30792.01.
35
<PAGE> 38
ITEM 6. SELECTED FINANCIAL DATA
Set forth below are our selected consolidated financial and other data. This
financial data is derived in part from, and should be read in conjunction with,
our consolidated financial statements and related notes.
<TABLE>
<CAPTION>
AT DECEMBER 31,
-------------------------------------------------------------------------------
(IN THOUSANDS) 1999 1998 1997 1996 1995
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
SELECTED FINANCIAL DATA:
Total assets $22,696,536 $20,587,741 $16,432,337 $12,586,694 $11,478,912
Federal funds sold and repurchase
agreements 335,653 266,437 110,550 89,480 110,100
Mortgage-backed and other securities
available-for-sale 8,862,749 8,196,444 4,807,305 4,194,418 3,688,223
Mortgage-backed and other securities
held-to-maturity 1,899,957 2,108,811 2,632,672 1,984,111 3,009,284
Loans held-for-sale 11,376 212,909 163,962 58,643 49,901
Loans receivable, net 10,212,496 8,739,319 7,782,716 5,677,490 4,037,855
Mortgage servicing rights, net 48,369 50,237 41,789 29,687 11,328
Deposits 9,554,534 9,668,286 9,951,421 8,146,103 7,836,950
Borrowed funds 11,401,521 9,022,797 4,774,237 3,089,537 2,338,366
Capital trust securities 125,000 -- -- -- --
Stockholders' equity 1,196,912 1,462,384 1,445,799 1,107,923 1,116,859
</TABLE>
<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31,
------------------------------------------------------------------------------
(IN THOUSANDS, EXCEPT PER SHARE DATA) 1999 1998 1997 1996 1995
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
SELECTED OPERATING DATA:
Interest income $ 1,495,279 $ 1,224,448 $ 978,155 $ 842,469 $ 755,896
Interest expense 955,331 775,465 603,591 501,343 433,294
----------- ----------- ----------- ----------- -----------
Net interest income 539,948 448,983 374,564 341,126 322,602
Provision for loan losses 4,119 15,380 9,061 10,163 8,477
----------- ----------- ----------- ----------- -----------
Net interest income after provision
for loan losses 535,829 433,603 365,503 330,963 314,125
Non-interest income 86,696 62,263 62,686 51,917 38,500
Non-interest expense:
General and administrative 195,266 232,888 212,570 208,177 191,384
Real estate operations and provision
for losses, net (186) (119) 3,072 (5,400) (1,854)
Goodwill litigation 6,417 1,665 1,101 370 --
Capital trust securities 2,169 -- -- -- --
Amortization of goodwill 19,425 19,754 11,722 8,968 8,518
Acquisition costs and restructuring charges -- 124,168 -- -- --
SAIF recapitalization assessment -- -- -- 47,202 --
----------- ----------- ----------- ----------- -----------
Total non-interest expense 223,091 378,356 228,465 259,317 198,048
----------- ----------- ----------- ----------- -----------
Income before income tax expense and
extraordinary item 399,434 117,510 199,724 123,563 154,577
Income tax expense 163,764 61,825 81,840 54,435 65,640
----------- ----------- ----------- ----------- -----------
Income before extraordinary item 235,670 55,685 117,884 69,128 88,937
Extraordinary item, net of tax -- (10,637) -- -- --
----------- ----------- ----------- ----------- -----------
Net income 235,670 45,048 117,884 69,128 88,937
Preferred dividends declared 6,000 6,000 1,500 -- --
----------- ----------- ----------- ----------- -----------
Net income available to common
shareholders $ 229,670 $ 39,048 $ 116,384 $ 69,128 $ 88,937
=========== =========== =========== =========== ===========
Basic earnings per common share $ 4.47 $ 0.77 $ 2.51 $ 1.49 $ 1.81
Diluted earnings per common share $ 4.37 $ 0.74 $ 2.39 $ 1.44 $ 1.76
</TABLE>
36
<PAGE> 39
<TABLE>
<CAPTION>
AT OR FOR THE YEAR ENDED DECEMBER 31,
-------------------------------------------------------------------
1999 1998 1997 1996 1995
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
SELECTED FINANCIAL RATIOS AND OTHER DATA:
Return on average assets 1.04% 0.25% 0.84% 0.58% 0.82%
Return on average stockholders' equity 17.31 3.02 9.83 6.27 8.25
Return on average tangible stockholders' equity 20.92 3.65 11.16 6.95 9.16
Average stockholders' equity to average assets 5.99 8.13 8.56 9.18 9.89
Average tangible stockholders' equity
to average tangible assets 5.01 6.83 7.62 8.36 9.00
Stockholders' equity to total assets 5.27 7.10 8.80 8.80 9.73
Core deposits to total deposits (1) 48.41 47.84 43.40 41.89 43.65
Net interest spread 2.14 2.20 2.38 2.56 2.70
Net interest margin 2.46 2.58 2.78 2.96 3.09
Operating income to average assets (2) 0.29 0.28 0.34 0.37 0.34
General and administrative expense to average
assets 0.86 1.27 1.52 1.73 1.76
Efficiency ratio (3) 32.21 46.56 50.27 54.01 53.24
Average interest-earning assets to average
interest-bearing liabilities 1.07x 1.09x 1.09x 1.09x 1.10x
Book value per common share $ 22.17 $ 25.84 $ 25.93 $ 22.24 $ 21.23
Tangible book value per common share 17.84 21.34 21.04 20.13 19.11
Cash dividends paid per common share 0.96 0.80 0.56 0.43 0.20
Dividend payout ratio 21.97% 108.11% 23.43% 29.86% 11.36%
ASSET QUALITY RATIOS:
Non-performing loans to total loans (4)(5) 0.52 1.23 1.12 1.50 2.42
Non-performing loans to total assets (4)(5) 0.24 0.54 0.55 0.69 0.87
Non-performing assets to total assets (5)(6) 0.26 0.58 0.70 0.87 1.15
Allowance for loan losses to non-performing loans 143.49 66.99 82.23 55.41 47.78
Allowance for loan losses to non-accrual loans 151.77 70.00 86.79 60.58 50.72
Allowance for loan losses to total loans 0.75 0.83 0.93 0.83 1.15
OTHER DATA:
Number of deposit accounts 952,514 980,307 1,044,390 858,030 830,898
Mortgage loans serviced for others (in thousands) $ 4,414,684 $ 4,944,176 $ 4,690,746 $ 3,791,920 $ 2,687,797
Number of full service banking offices 87 96 96 82 82
Regional lending offices 1 12 22 25 16
Full time equivalent employees 1,914 1,987 2,664 2,347 2,215
OTHER NON-GAAP DISCLOSURES (7)
Return on average assets 0.99% 0.79% 0.84% 0.81% 0.82%
Cash return on average assets (8) 1.13 1.05 1.09 1.04 1.01
Return on average stockholders' equity 16.48 9.76 9.83 8.76 8.25
Cash return on average stockholders' equity (8) 18.92 12.86 12.77 11.35 10.22
Return on average tangible stockholders' equity 19.91 11.78 11.16 9.71 9.16
Cash return on average tangible
stockholders' equity (8) 22.86 15.53 14.49 12.57 11.34
Cash general and administrative expense to average
assets (9) 0.82 1.17 1.38 1.59 1.64
Cash efficiency ratio (3)(9) 30.57 42.92 45.70 49.41 49.80
</TABLE>
(1) Core deposits are comprised of savings, money market, NOW and money
manager and demand deposit accounts.
(2) Operating income represents total non-interest income less net gains on
sales of securities, premises and equipment, and for 1999, the net gain
on sale and disposition of banking and loan production offices.
Operating income totaled $66.2 million, $51.2 million, $48.3 million,
$44.3 million and $36.9 million for 1999, 1998, 1997, 1996 and 1995,
respectively.
(3) Efficiency ratio represents general and administrative expense divided
by the sum of net interest income plus operating income.
(4) Non-performing loans consist of all non-accrual loans and all mortgage
loans delinquent 90 days or more as to their maturity date but not
their interest payments.
(5) Non-performing loans and assets exclude loans which have been
restructured and are accruing and performing in accordance with the
restructured terms. Restructured accruing loans totaled $6.7 million,
$6.9 million, $9.1 million, $11.8 million and $12.1 million at December
31, 1999, 1998, 1997, 1996 and 1995, respectively.
(6) Non-performing assets consist of all non-performing loans, real estate
owned and non-performing investments in real estate, net.
(7) The information presented is not in conformity with GAAP. The following
infrequently occurring items have been excluded from the return
calculations: For 1999, $11.3 million, after tax, for net gain on sale
and disposition of banking and loan production offices. For 1998,
$100.3 million, after tax, for costs associated with the acquisition of
LIB and other infrequently occurring charges. For 1996, $27.6 million,
after tax, special assessment for the recapitalization of the SAIF.
This information is being presented since we consider it a more
accurate presentation of our actual results of operations.
(8) Excludes non-cash charge for amortization of goodwill and amortization
relating to allocation of Employee Stock Ownership Plan, or ESOP, stock
and earned portion of the Recognition and Retention Plan, or RRP,
stock, and related tax benefit.
(9) Excludes non-cash charge for amortization relating to allocation of
ESOP stock and earned portion of RRP stock.
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<PAGE> 40
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The following discussion and analysis should be read in conjunction with our
Consolidated Financial Statements and Notes to the Consolidated Financial
Statements presented elsewhere in this report.
GENERAL
We are headquartered in Lake Success, New York and our principal business
consists of the operation of our wholly-owned subsidiary, Astoria Federal.
Astoria Federal's primary business is attracting retail deposits from the
general public and investing those deposits, together with funds generated from
operations, principal repayments on loans and securities, and borrowed funds,
primarily in one-to-four family residential mortgage loans, mortgage-backed
securities and, to a lesser extent, commercial real estate loans, multi-family
mortgage loans and consumer and other loans. In addition, Astoria Federal
invests in securities issued by the U.S. Government and federal agencies and
other securities.
Our results of operations are dependent primarily on our net interest income,
which is the difference between the interest earned on our assets, primarily our
loan and securities portfolios, and our cost of funds, which consists of the
interest paid on our deposits and borrowings. Our net income is also affected by
our provision for loan losses, non-interest income, general and administrative
expense, other non-interest expense, and income tax expense. General and
administrative expense consists of compensation and benefits, occupancy,
equipment and systems expenses, federal deposit insurance premiums, advertising
and other operating expenses. Other non-interest expense generally consists of
real estate operations and provision for losses, goodwill litigation expense,
capital trust securities expense and amortization of goodwill. Our earnings are
also significantly affected by general economic and competitive conditions,
particularly changes in market interest rates and U.S. Treasury yield curves,
government policies and actions of regulatory authorities.
MERGERS AND ACQUISITIONS
We continue to consider merger and acquisition activity as an integral part of
our strategic objective for our long-term growth. Since our incorporation in
1993, we have been successful in expanding our operations through business
combinations with other financial institutions as follows:
LIB Acquisition
Following the close of business on September 30, 1998, we completed the
acquisition of LIB, the holding company of LISB, a federally chartered savings
bank. LIB was merged with us and LISB was merged with Astoria Federal. We refer
to this transaction as the LIB Acquisition. The transaction was accounted for
as a pooling-of-interests. Accordingly, the assets, liabilities and
stockholders' equity as reported by LIB immediately prior to consummation were
recorded by us. No goodwill was created as a result of the LIB Acquisition.
Under the terms of the merger agreement, holders of LIB common stock, par value
$.01 per share, or LIB Common Stock, received 1.15 shares of our common stock,
for each share of LIB Common Stock. We issued 27,876,636 shares of our common
stock to complete the LIB Acquisition.
As part of our strategy of improving operating efficiency following the LIB
Acquisition, we entered into various transactions in 1999. Such transactions
include, but are not limited to, the disposition and closing of certain loan
production offices, or LPOs, and the sale or consolidation of certain banking
offices. In the first quarter of 1999, we recognized a $1.2 million ($732,000,
net of taxes) loss relating to the closing and disposition of certain LPOs. On
April 8, 1999 we entered into a contract to sell the former headquarters of LIB
for a total of $20.0 million. The sale is expected to close before the end of
the first quarter of 2000.
38
<PAGE> 41
As part of our evaluation of our banking office network, in the third quarter of
1999, we sold our five upstate New York banking offices in Otsego and Chenango
counties with deposits totaling $156.4 million to CNB Financial Corporation, the
parent company of Central National Bank, headquartered in Canajoharie, New York.
As a result of the transaction, we recognized a $20.4 million ($12.0 million,
net of taxes) gain during the third quarter of 1999.
The Greater Acquisition
Following the close of business on September 30, 1997, we completed the
acquisition of The Greater in a transaction which was accounted for as a
purchase. We refer to this transaction as The Greater Acquisition. Stockholders
of The Greater received 0.50 shares of our common stock for each share of The
Greater's common stock for 75% of the shares of The Greater's common stock
outstanding and $19.00 per share of The Greater's common stock for the remaining
25% of the shares of The Greater's common stock outstanding. In addition, we
issued 2,000,000 shares of Series B Preferred Stock, in exchange for all of the
outstanding 12% Noncumulative Perpetual Preferred Stock, Series B of The
Greater. At December 31, 1999, the remaining goodwill balance generated in the
transaction was $147.9 million.
The Fidelity Acquisition
Following the close of business on January 31, 1995, we completed the
acquisition of Fidelity in a transaction which was accounted for as a purchase.
At December 31, 1999, the remaining goodwill balance generated in the
transaction was $75.4 million.
LIQUIDITY AND CAPITAL RESOURCES
Our primary source of funds is cash provided by investing activities, which
includes principal and interest payments on loans, mortgage-backed securities
and other securities. Principal payments on loans and mortgage-backed
securities and proceeds from maturities of other securities totaled $5.31
billion for the year ended December 31, 1999 and $6.05 billion for the year
ended December 31, 1998. During the year ended December 31, 1999, we received
$192.7 million of funds from the sale of securities available-for-sale and real
estate compared to $1.92 billion from sales during the year ended December 31,
1998. Our other sources of funds are provided by operating and financing
activities. Net cash provided from operating activities totaled $340.0 million
during the year ended December 31, 1999 and $302.4 million during the year
ended December 31, 1998. The net increase in borrowings during 1999 totaled
$2.38 billion reflecting the funding of our asset growth discussed below. The
net increase in deposits totaled $42.7 million during 1999, which excludes the
effect of the sale of our five upstate New York banking offices with deposits
totaling $156.4 million. The transfer of these deposits was funded with cash
flow from ongoing operations. The net increase in borrowings during 1998
totaled $4.12 billion and the net decrease in deposits during 1998 totaled
$294.1 million.
Our primary uses of funds in our investing activities are for the purchase and
origination of mortgage loans and the purchase of mortgage-backed securities and
other securities. During the year ended December 31, 1999, our gross purchases
and originations of mortgage loans totaled $3.76 billion, compared to $5.19
billion during the year ended December 31, 1998. Our purchases of
mortgage-backed securities and other securities totaled $4.37 billion during the
year ended December 31, 1999 and $7.85 billion during the year ended December
31, 1998. See "Lending and Investing Activities" for further discussion.
Stockholders' equity decreased $265.4 million to $1.20 billion at December 31,
1999, from $1.46 billion at December 31, 1998. Decreases to stockholders' equity
included a $329.6 million increase in the unrealized loss on securities
available-for-sale, net of taxes, primarily due to increases in interest rates
during the year ended December 31, 1999, which adversely affected the market
values of our available-for-sale securities. Additional deceases in
stockholders' equity were the result of repurchases of our common stock of
$159.4 million and dividends declared of $55.2 million. These decreases were
partially offset by
39
<PAGE> 42
$235.7 million of net income, the effect of options exercised and related tax
benefit of $29.3 million and the amortization for the allocated portion of
shares held by the ESOPs and the related tax benefit on the earned portion of
the shares held by the RRP of $13.8 million.
Astoria Federal is required by the OTS to maintain a minimum liquidity ratio,
calculated as the average daily balance of liquid assets as a percentage of net
withdrawable deposit accounts plus short-term borrowings, of 4.00%. Astoria
Federal's liquidity ratio was 6.28% at December 31, 1999 and 11.29% at December
31, 1998. The levels of Astoria Federal's liquid assets are dependent on Astoria
Federal's operating, investing and financing activities during any given period.
In the normal course of business, we routinely enter into various commitments,
primarily relating to the origination and purchase of loans, the purchase of
securities and the leasing of certain office facilities. At December 31, 1999,
total commitments outstanding to originate and purchase loans were $376.4
million. There were no outstanding commitments to purchase securities at
December 31, 1999. Rental payments under non-cancelable lease commitments
totaled $6.7 million for the year ended December 31, 1999. We anticipate that
we will have sufficient funds available to meet our current commitments in the
normal course of our business.
Certificates of deposit totaling $3.07 billion will mature within the next
twelve months. Based on historical experience and current pricing policies, we
expect a significant portion of these deposits to remain with us.
On April 21, 1999, our Board of Directors approved our sixth stock repurchase
plan authorizing the purchase, at our management's discretion, of up to 10% of
our common stock then outstanding, or 5,528,000 shares, over a two year period
in open-market or privately negotiated transactions. Under this plan, 4,257,200
shares of our common stock have been repurchased during 1999 at an aggregate
cost of $159.4 million.
We declared cash dividends on our common stock totaling $49.2 million during the
year ended December 31, 1999 and $32.6 million during the year ended December
31, 1998. On January 19, 2000, we declared a quarterly cash dividend of $0.24
per share on shares of our common stock, payable on March 1, 2000 to
stockholders of record as of the close of business on February 15, 2000. During
each of the years ended December 31, 1999 and 1998, we declared cash dividends
on our Series B Preferred Stock totaling $6.0 million.
On October 28, 1999, our wholly-owned subsidiary, Astoria Capital Trust I issued
$125.0 million of Capital Securities. We have fully and unconditionally
guaranteed the Capital Securities along with all obligations of Astoria Capital
Trust I under the trust agreement. The Capital Securities are rated "BBB-" by
Duff & Phelps Credit Rating Co., "BBB-" by Thomson Financial BankWatch and "ba2"
by Moody's Investors Service. Astoria Capital Trust I was formed for the
exclusive purpose of issuing the Capital Securities and common securities and
using the proceeds to acquire Junior Subordinated Debentures issued by us. The
Junior Subordinated Debentures total $128.9 million, have an interest rate of
9.75%, mature on November 1, 2029 and are the sole assets of Astoria Capital
Trust I. The Junior Subordinated Debentures are prepayable, in whole or in part,
at our option on or after November 1, 2009 at declining premiums to maturity.
Proceeds totaling $31.3 million from the issuance of the Junior Subordinated
Debentures were used to increase the capital level of Astoria Federal and the
remaining proceeds were used primarily for the repurchase of our common stock.
In 1996, we adopted a Stockholder Rights Plan, or the Rights Plan, and declared
a dividend of one preferred share purchase right, or Right, for each outstanding
share of our common stock. Each Right entitles stockholders to buy one
one-hundredth interest in a share of a new series of our preferred stock, at an
exercise price of $100.00 upon the occurrence of certain events described in the
Rights Plan. We reserved 325,000 shares of our Series A Preferred Stock for the
Rights Plan.
40
<PAGE> 43
At the time of the conversion from mutual to stock form of ownership, Astoria
Federal was required to establish a liquidation account in an amount equal to
its capital as of June 30, 1993. As part of its acquisitions of LIB, Fidelity
and The Greater, Astoria Federal established similar liquidation accounts equal
to the remaining liquidation account balances previously maintained by those
entities as a result of their conversions from mutual to stock form of
ownership. These liquidation accounts will be reduced to the extent that
eligible account holders reduce their qualifying deposits. In the unlikely event
of a complete liquidation of Astoria Federal, each eligible account holder will
be entitled to receive a distribution from the liquidation accounts. Astoria
Federal is not permitted to declare or pay dividends on its capital stock, or
repurchase any of its outstanding stock, if it would cause stockholders' equity
to be reduced below the amounts required for the liquidation accounts or
applicable regulatory capital requirements.
At December 31, 1999, Astoria Federal exceeded all of its regulatory capital
requirements with tangible and leverage capital ratios of 5.98% and a risk-based
capital ratio of 15.33%. The minimum regulatory requirements were 1.50% tangible
capital ratio, 4.00% leverage capital ratio and 8.00% risk-based capital ratio.
Retained earnings at December 31, 1999 and 1998 include approximately $159.1
million for which no federal income tax liability has been recognized. This
amount represents the balance of the bad debt reserves created for tax purposes
as of December 31, 1987. This amount is subject to recapture in the unlikely
event that Astoria Federal (1) makes distributions in excess of earnings and
profits, (2) redeems its stock, or (3) liquidates.
LENDING AND INVESTING ACTIVITIES
Our primary lending and investing activities include the origination of
mortgage, consumer and other loans and the purchase of mortgage loans,
mortgage-backed securities and other securities. Our lending and investing
activities in the latter part of 1998 and the first quarter of 1999 were
reflective of our objective to prudently and effectively deploy our capital
through asset growth, with continued emphasis on one-to-four family mortgage
lending and purchases of mortgage-backed securities. We believe that we have
been successful in achieving our strategy of growth through deployment of our
excess capital and are now focused on maintaining our current capital levels. We
continue to emphasize the origination of one-to-four family mortgage loans.
However, in response to the rising interest rate environment, we have shifted
our asset mix toward adjustable rate mortgage loans and, therefore, sell the
majority of our fixed rate residential mortgage loan production while retaining
our adjustable-rate mortgage loan production for portfolio.
We originate loans, either directly or through mortgage brokers who obtain
applications and process loans, which are underwritten, committed for and closed
by us. We originated gross mortgage loans totaling $3.34 billion for the year
ended December 31, 1999, of which, $2.08 billion were originated through
mortgage brokers. During the year ended December 31, 1998, we originated gross
mortgage loans totaling $5.00 billion of which $2.45 billion were originated
through mortgage brokers. In addition, gross mortgage loan purchases totaled
$417.6 million for the year ended December 31, 1999 and $187.5 million for the
year ended December 31, 1998. We sold mortgage loans totaling $490.7 million
during the year ended December 31, 1999 and $1.43 billion during the year ended
December 31, 1998, consisting primarily of FHA/VA and thirty-year FHLMC/FNMA
conforming conventional loans as well as fifteen-year fixed rate loans. While
the majority of our loans are secured by properties located in New York, at
December 31, 1999, $4.84 billion, or 48.1%, of our total mortgage loan portfolio
was secured by properties located in 46 states other than New York. Excluding
New York, we have a concentration of lending in Connecticut, New Jersey,
Maryland and Virginia, each comprising between 5.0% and 12.0% of our total
mortgage loan portfolio.
We utilize mortgage-backed and other securities purchases as a complement to our
mortgage lending activities. Purchases during 1999 consisted primarily of U.S.
Government and agency obligations (CMOs,
41
<PAGE> 44
REMICs and debentures) or other AAA-rated issues which provide liquidity,
collateral for borrowings and minimal credit risk while providing appropriate
returns. For the year ended December 31, 1999, purchases of mortgage-backed
securities totaled $4.15 billion and purchases of other securities totaled
$221.1 million. For the year ended December 31, 1998, purchases of
mortgage-backed securities totaled $6.58 billion and purchases of other
securities totaled $1.27 billion.
The significant growth we experienced during the second half of 1998 and first
quarter of 1999 was funded primarily through medium-term borrowings. Net
borrowings increased $2.38 billion for the year ended December 31, 1999 and
$4.12 billion for the year ended December 31, 1998. Reverse repurchase
agreements increased by $1.99 billion during 1999 and $3.22 billion during 1998.
FHLB-NY advances increased by $400.0 million during 1999 and $820.0 million
during 1998. We believe that during 1998 and 1999, callable borrowings were more
cost effective than deposit generation. The relatively flat U.S. Treasury yield
curve and continued attractiveness of the equity markets experienced over the
past two years combined to make significant deposit generation almost
unattainable without incurring unacceptable increases in interest and other
expense. Despite the attraction of alternate investments available to our
customers, we have been successful in avoiding a significant outflow of our
deposit base during this period. More importantly, core deposits have increased
to 48.4% of total deposits at December 31, 1999, from 47.8% at December 31,
1998.
INTEREST RATE SENSITIVITY ANALYSIS
Our primary component of market risk is interest rate risk. Our net interest
income, the primary component of our net income, is subject to substantial risk
due to changes in interest rates or changes in market yield curves, particularly
if there is a substantial variation in the timing between the repricing of our
assets and the liabilities which fund them. We seek to manage interest rate risk
by monitoring and controlling the variation in repricing intervals between our
assets and liabilities. To a lesser extent, we also monitor our interest rate
sensitivity by analyzing the estimated changes in market value of our assets and
liabilities assuming various interest rate scenarios. As discussed below, a
variety of factors influence the repricing characteristics and the market value
of any given asset or liability.
The matching of the repricing characteristics of assets and liabilities may be
analyzed by examining the extent to which such assets and liabilities are
"interest rate sensitive" and by monitoring an institution's interest rate
sensitivity "gap." An asset or liability is said to be interest rate sensitive
within a specific time period if it will mature or reprice within that time
period, either by contractual terms or based upon certain assumptions made by
management, including, but not limited to, estimated prepayments. The interest
rate sensitivity gap is the difference between the amount of interest-earning
assets anticipated to mature or reprice within a specific time period and the
amount of interest-bearing liabilities anticipated to mature or reprice within
that same time period. A gap is considered positive when the amount of interest
rate sensitive assets maturing or repricing within a specific time frame exceeds
the amount of interest rate sensitive liabilities maturing or repricing within
that same time frame. Conversely, a gap is considered negative when the amount
of interest rate sensitive liabilities maturing or repricing within a specific
time frame exceeds the amount of interest rate sensitive assets maturing or
repricing within that same time frame. In a rising interest rate environment, an
institution with a positive gap would generally be expected, absent the effects
of other factors, to experience a greater increase in the yields of its assets
relative to the costs of its liabilities and thus an increase in the
institution's net interest income, whereas an institution with a negative gap
would generally be expected to experience the opposite results. Conversely,
during a period of falling interest rates, a positive gap would tend to result
in a decrease in net interest income while a negative gap would tend to increase
net interest income.
The actual duration of mortgage loans and mortgage-backed securities can be
significantly impacted by changes in mortgage prepayments. Mortgage prepayment
rates will vary due to a number of factors, including the regional economy in
the area where the underlying mortgages were originated, seasonal factors,
demographic variables and the assumability of the underlying mortgages. However,
the major
42
<PAGE> 45
factors affecting prepayment rates are prevailing interest rates and related
mortgage refinancing opportunities.
We monitor interest rate sensitivity so that adjustments in the asset and
liability mix, when deemed appropriate, can be made on a timely basis. Purchases
of fixed-rate mortgage-backed securities are concentrated on those securities
with short- and medium-term average lives. The majority of originations of
fifteen-year and thirty-year fixed rate mortgages are sold in the secondary
market, while the remainder, primarily adjustable-rate mortgages, are held for
portfolio.
At December 31, 1999, our net interest-earning assets maturing or repricing
within one year exceeded interest-bearing liabilities maturing or repricing
within the same time period by $434.2 million, representing a positive
cumulative one-year gap of 1.91% of total assets. This compares to net
interest-earning assets maturing or repricing within one year exceeding
interest-bearing liabilities maturing or repricing within the same time period
by $1.07 billion, representing a positive cumulative one-year gap of 5.18% of
total assets at December 31, 1998. Our December 31, 1999 and 1998 cumulative
one-year gap positions reflect the classification of available-for-sale
securities within repricing periods based on their contractual maturities
adjusted for estimated prepayments, if any. If those securities at December 31,
1999 were classified within the one-year or less maturing or repricing category,
net interest-earning assets maturing or repricing within one year would have
exceeded interest-bearing liabilities maturing or repricing within the same time
period by $6.75 billion, representing a positive cumulative one-year gap of
29.74% of total assets. Using this method at December 31, 1998, net
interest-earning assets maturing or repricing within one year would have
exceeded interest-bearing liabilities maturing or repricing within the same time
period by $6.46 billion, representing a positive cumulative one-year gap of
31.39% of total assets. The available-for-sale securities may or may not be
sold, subject to our discretion.
The following table, referred to as the Gap Table, sets forth the amount of
interest-earning assets and interest-bearing liabilities outstanding at December
31, 1999, that we anticipate, using certain assumptions based on our historical
experience and other data available to us to reprice or mature in each of the
future time periods shown. The Gap Table does not necessarily indicate the
impact of general interest rate movements on our net interest income because the
actual repricing dates of various assets and liabilities are subject to customer
discretion and competitive and other pressures. Callable features of certain
assets and liabilities, in addition to the foregoing, may cause actual
experience to vary from that indicated. Included in this table are $1.34 billion
of callable other securities at their amortized cost, classified according to
their maturity dates, which are primarily within the more than five years
maturity category. Of such securities, $1.09 billion are callable within one
year and at various other times thereafter. Also included in this table are
$9.51 billion of callable borrowings, classified according to their maturity
dates, which are primarily within the more than three years to five years
category and the more than five years category. Of such borrowings, $4.08
billion are callable within one year and at various other times thereafter. The
use of these callable borrowings during our periods of rapid growth and the low
absolute level of interest rates at the end of 1998 and in the first quarter of
1999 has allowed us to maintain a low cost of funding. As of December 31, 1999,
the weighted average rate on these borrowings was 5.14%. The majority of those
borrowings which have already reached their first call date have not been called
as of December 31, 1999; however, there can be no assurances that these
borrowings will not be called in the future, particularly in a rising interest
rate environment.
43
<PAGE> 46
<TABLE>
<CAPTION>
At December 31, 1999
--------------------------------------------------------------------------------
More than More than
One Year Three Years
One Year to to More than
(Dollars in Thousands) or Less Three Years Five Years Five Years Total
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Interest-earning assets:
Mortgage loans (1) $ 2,408,380 $ 2,701,350 $ 2,312,034 $ 2,593,238 $10,015,002
Consumer and other loans (1) 143,177 30,100 -- -- 173,277
Federal funds sold and
repurchase agreements 335,653 -- -- -- 335,653
Mortgage-backed and other
securities available-for-sale 2,547,372 2,074,377 1,464,849 2,776,151 8,862,749
Mortgage-backed and other securities
held-to-maturity 449,752 384,908 162,595 1,171,924 2,169,179
----------- ----------- ----------- ----------- -----------
Total interest-earning assets 5,884,334 5,190,735 3,939,478 6,541,313 21,555,860
Add:
Net unamortized purchase premiums
and deferred costs (2) 12,497 14,515 12,980 14,839 54,831
----------- ----------- ----------- ----------- -----------
Net interest-earning assets 5,896,831 5,205,250 3,952,458 6,556,152 21,610,691
----------- ----------- ----------- ----------- -----------
Interest-bearing liabilities:
Savings 154,887 309,773 309,773 1,807,009 2,581,442
Money market 1,028,743 14,420 14,420 108,151 1,165,734
Now and money manager 26,555 53,113 53,113 398,350 531,131
Certificates of deposit 3,070,678 1,430,543 428,422 -- 4,929,643
Borrowed funds 1,181,754 2,079,767 5,165,000 2,975,000 11,401,521
----------- ----------- ----------- ----------- -----------
Total interest-bearing liabilities 5,462,617 3,887,616 5,970,728 5,288,510 20,609,471
----------- ----------- ----------- ----------- -----------
Interest sensitivity gap 434,214 1,317,634 (2,018,270) 1,267,642 $ 1,001,220
=========== =========== =========== =========== ===========
Cumulative interest sensitivity gap $ 434,214 $ 1,751,848 $ (266,422) $ 1,001,220
=========== =========== =========== =========== ===========
Cumulative interest sensitivity
gap as a percentage of total assets 1.91% 7.72% (1.17)% 4.41%
Cumulative net interest-earning
assets as a percentage of
interest-bearing liabilities 107.95% 118.74% 98.26% 104.86%
</TABLE>
(1) Mortgage, consumer and other loans exclude non-performing loans, but
are not reduced for the allowance for loan losses.
(2) Net unamortized purchase premiums and deferred costs are prorated.
Certain shortcomings are inherent in the method of analysis presented in the
Gap Table. For example, although certain assets and liabilities may have
similar contractual maturities or periods to repricing, they may react in
different ways to changes in market interest rates. Certain assets, such as ARM
loans, have contractual features which restrict changes in interest rates on a
short-term basis and over the life of the asset. In the event of a change in
interest rates, prepayment and early withdrawal levels would likely deviate
significantly from those assumed in calculating the table. Finally, the ability
of borrowers to service their ARM loans or other loan obligations may decrease
in the event of an interest rate increase. The Gap Table reflects our estimates
as to periods to repricing at a particular point in time. Among the factors
considered, are current trends and historical repricing experience with respect
to similar products. As a result, different assumptions may be used at
different points in time.
We also monitor Astoria Federal's interest rate sensitivity through analysis of
the change in the NPV. NPV is defined as the net present value of the expected
future cash flows of an entity's assets and liabilities and, therefore,
hypothetically represents the value of an institution's net worth. Increases in
the value of assets will increase the NPV whereas decreases in value of assets
will decrease the NPV. Conversely, increases in the value of liabilities will
decrease NPV whereas decreases in the value of liabilities will increase the
NPV. The changes in value of assets and liabilities due to changes in interest
rates reflect the interest sensitivity of those assets and liabilities as their
values are derived from the characteristics of the asset or liability (i.e.
fixed rate, adjustable rate, caps, floors) relative to the interest rate
environment. For example, in a rising interest rate environment, the fair value
of a fixed rate asset will decline, whereas the fair value of an adjustable rate
asset, depending on its repricing characteristics, may not decline. The NPV
44
<PAGE> 47
ratio under any interest rate scenario is defined as the NPV in that scenario
divided by the value of assets in the same scenario. This analysis, presented in
the following table, or the NPV Table, initially measures percentage changes
from the value of projected NPV in a given rate scenario, and then measures
interest rate sensitivity by the change in the NPV ratio, over a range of
interest rate change scenarios. The OTS also produces a similar analysis using
its own model based upon data submitted on Astoria Federal's quarterly Thrift
Financial Reports, the results of which may vary from our internal model
primarily because of differences in assumptions utilized between our internal
model and the OTS model, including estimated loan prepayment rates, reinvestment
rates and deposit decay rates.
For purposes of the NPV Table, prepayment speeds and deposit decay rates similar
to the Gap Table were used. However, we have utilized different assumptions with
respect to the borrowings with imbedded call features for the NPV Table.
Specifically, for the scenarios involving no change or an increase in interest
rates, we have assumed that those borrowings with imbedded call options will be
called at their next available call date. Since the NPV Table reflects a
hypothetical value of net assets based on present value of cash flows, utilizing
the shorter life by call date instead of maturity date would result in the most
conservative value of Astoria Federal's borrowings and, therefore, the most
conservative view of its NPV ratio. Despite the recent increase in interest
rates during 1999, many of these borrowings which are currently in their call
periods have not had those options exercised, thereby allowing us to maintain
our low borrowing cost. However, no assurance, particularly in a rising interest
rate environment, can be given that this will continue in the future.
The NPV Table is based on simulations which utilize institution specific
assumptions with regard to future cash flows, including customer options such as
loan prepayments, period and lifetime caps, puts and calls, and deposit
withdrawal estimates. The NPV Table uses discount rates derived from various
sources including, but not limited to, U.S. Treasury yield curves, thrift retail
certificate of deposit curves, national and local secondary mortgage markets,
brokerage security pricing services and various alternative funding sources.
Specifically, for mortgage loans receivable, the discount rates used were based
on market rates for new loans of similar type and purpose, adjusted, when
necessary, for factors such as servicing cost, credit risk and term. The
discount rates used for certificates of deposit and borrowings were based on
rates which approximate those we would incur to replace such funding of similar
remaining maturities. The NPV Table calculates the NPV at a flat rate scenario
at a point in time by computing the present value of cash flows of interest
earning assets less the present value of interest bearing liabilities. Certain
assets, including fixed assets and real estate held for development, are assumed
to remain at book value (net of valuation allowance) regardless of interest rate
scenario.
The following represents our NPV Table as of December 31, 1999:
<TABLE>
<CAPTION>
Net Portfolio Value ("NPV") Portfolio Value of Assets
Rates in ------------------------------------------ -------------------------
Basis Points Dollar Dollar Percentage NPV Sensitivity
(Rate Shock) Amount Change Change Ratio Change
- ------------ ------ ------ ---------- ----- -----------
(Dollars in Thousands)
<S> <C> <C> <C> <C> <C>
+200 $1,305,831 $ (903,342) (40.89)% 6.24% (3.68)%
+100 1,791,229 (417,944) (18.92) 8.29 (1.63)
-0- 2,209,173 -- -- 9.92 --
- -100 2,834,871 625,698 28.32 12.34 2.42
- -200 2,795,892 586,719 26.56 11.96 2.04
</TABLE>
As with the Gap Table, certain shortcomings are inherent in the methodology used
in the above interest rate risk measurements. Modeling of changes in NPV
requires the making of certain assumptions which may or may not reflect the
manner in which actual yields and costs respond to changes in market interest
rates. In this regard, the NPV model assumes that the composition of our
interest sensitive assets and liabilities existing at the beginning of a period
remains constant over the period being measured and also
45
<PAGE> 48
assumes that a particular change in interest rates is immediate and is reflected
uniformly across the yield curve regardless of the duration to maturity or
repricing of specific assets and liabilities. In addition, prepayment estimates
and other assumptions within the NPV Table are subjective in nature, involve
uncertainties and, therefore, cannot be determined with precision. Accordingly,
although the NPV measurements, in theory, may provide an indication of our
interest rate risk exposure at a particular point in time, such measurements are
not intended to and do not provide for a precise forecast of the effect of
changes in market interest rates on Astoria Federal's NPV and will differ from
actual results.
From time to time, in an attempt to further reduce volatility in our earnings
caused by changes in interest rates, we will enter into financial derivative
agreements with third parties. See Note 11 of Notes to Consolidated Financial
Statements in Item 8, "Financial Statements and Supplementary Data" for a
description of such transactions. Additionally, we are not subject to foreign
currency exchange or commodity price risk and do not own any trading assets.
COMPARISON OF FINANCIAL CONDITION AND OPERATING RESULTS FOR THE YEARS ENDED
DECEMBER 31, 1999 AND 1998
FINANCIAL CONDITION
Total assets increased $2.11 billion or 10.2%, to $22.70 billion at December 31,
1999, from $20.59 billion at December 31, 1998. This increase reflects our
objective of effectively deploying capital through asset growth, which resulted
in increases in the mortgage loan and mortgage-backed securities portfolios,
primarily during the first quarter of 1999. Mortgage loans, net, increased $1.53
billion, from $8.58 billion at December 31, 1998 to $10.11 billion at December
31, 1999. Gross mortgage loans originated and purchased during the year ended
December 31, 1999 totaled $3.76 billion, of which $3.34 billion were
originations and $417.6 million were purchases. These originations and purchases
consisted primarily of one-to-four family residential mortgage loans. This
compares to $5.00 billion of originations and $187.5 million of purchases for a
total of $5.19 billion during the year ended December 31, 1998. The decrease in
the mortgage loan originations was primarily a result of the general increase in
market interest rates, which decreased the levels of mortgage refinance
activity. Additionally, the closing and disposal of certain LPOs acquired from
LIB also contributed to the significant reduction in our volume of loan
originations. This reduction was offset by a slowdown in loan prepayments, also
a result of the increase in interest rates. Mortgage-backed securities increased
$596.6 million to $9.29 billion at December 31, 1999, from $8.69 billion at
December 31, 1998. This increase was the result of purchases totaling $4.15
billion, consisting primarily of agency-issued REMICs and CMOs purchased in the
first quarter of 1999, offset by principal payments received of $2.94 billion,
sales of $146.8 million and an increase in the net unrealized loss on securities
available-for-sale of $473.7 million. See "Lending and Investing Activities" for
further discussion.
In addition to the increases in the mortgaged-backed securities and mortgage
loan portfolios, other assets increased $227.7 million from $166.6 million at
December 31, 1998 to $394.3 million at December 31, 1999, primarily due to the
increase in the deferred tax asset directly related to the increase in the
unrealized loss on securities available-for-sale. Federal funds sold and
repurchase agreements also increased $69.3 million to $335.7 million at December
31, 1999, from $266.4 million at December 31, 1998. These increases were
slightly offset by a decrease in loans held-for-sale of $201.5 million to $11.4
million at December 31, 1999, from $212.9 million at December 31, 1998, which is
reflective of our focus on originating loans for portfolio rather than for sale
in the secondary market, as mentioned above. Other securities also decreased
$139.2 million to $1.48 billion at December 31, 1999, from $1.61 billion at
December 31, 1998.
The growth in the loan and mortgage-backed securities portfolios was funded
primarily through additional medium-term borrowings, which is consistent with
our strategy of complementing our growth through acquisitions by leveraging our
excess capital. Reverse repurchase agreements increased $1.99 billion, to
46
<PAGE> 49
$9.28 billion at December 31, 1999, from $7.29 billion at December 31, 1998.
Federal Home Loan Bank of New York advances increased $400.0 million to $1.61
billion at December 31, 1999 from $1.21 billion at December 31, 1998. Deposits
decreased $113.8 million from $9.67 billion at December 31, 1998 to $9.55
billion at December 31, 1999 primarily due to the sale of our five upstate New
York banking offices with deposits totaling $156.4 million in the third quarter
of 1999.
On October 28, 1999, our wholly owned subsidiary, Astoria Capital Trust I issued
$125.0 million of Capital Securities which are fully and unconditionally
guaranteed by us. For further discussion of the Capital Securities, see
"Liquidity and Capital Resources."
Stockholders' equity totaled $1.20 billion at December 31, 1999 and $1.46
billion at December 31, 1998. Decreases to stockholders' equity included a
$329.6 million increase in the unrealized loss on securities available-for-sale,
net of taxes, primarily due to increases in interest rates during the year ended
December 31, 1999, which adversely affected the market values of our
available-for-sale securities. Additional decreases in stockholders' equity were
the result of repurchases of our common stock of $159.4 million and dividends
declared of $55.2 million. These decreases were partially offset by $235.7
million of net income, the effect of options exercised and related tax benefit
of $29.3 million and the amortization for the allocated portion of shares held
by the ESOPs and the related tax benefit on the earned portion of the shares
held by the RRP of $13.8 million.
RESULTS OF OPERATIONS
GENERAL
Net income for the year ended December 31, 1999 increased $190.7 million to
$235.7 million for the year ended December 31, 1999, from $45.0 million for the
year ended December 31, 1998. For the year ended December 31, 1999, diluted
earnings per common share increased to $4.37 per share, as compared to $0.74 per
share for the year ended December 31, 1998. Return on average assets increased
to 1.04% for the year ended December 31, 1999, from 0.25% for the year ended
December 31, 1998. Return on average stockholders' equity increased to 17.31%
for the year ended December 31, 1999, from 3.02% for the year ended December 31,
1998. Return on average tangible stockholders' equity increased to 20.92% for
the year ended December 31, 1999, from 3.65% for the year ended December 31,
1998.
The results of operations for the year ended December 31, 1999 include an $11.3
million, after-tax, net gain on the disposition of banking and loan production
offices. The results of operations for the year ended December 31, 1998 include
infrequently occurring charges related to the LIB Acquisition of $89.7 million,
after-tax, and penalties related to prepaid borrowings of $10.6 million,
after-tax. See "Consolidated Schedules of Operating Earnings and Operating Cash
Earnings" on page 55 for details of these charges. The following comparison of
net operating income, diluted operating earnings per common share and related
operating returns reflect the 1999 results exclusive of the net gain and the
1998 results exclusive of the infrequently occurring charges.
For the year ended December 31, 1999, net operating income increased $78.9
million, or 54.3%, to $224.3 million, from $145.4 million for the year ended
December 31, 1998. Diluted operating earnings per common share for the year
ended December 31, 1999 increased to $4.16 per share, or 57.6%, from $2.64 per
share for the year ended December 31, 1998. The operating return on average
assets for the year ended December 31, 1999 increased to 0.99%, from 0.79% for
the year ended December 31, 1998. The operating return on average stockholders'
equity for the year ended December 31, 1999 increased to 16.48%, from 9.76% for
the year ended December 31, 1998. The operating return on average tangible
stockholders' equity for the year ended December 31, 1999 increased to 19.91%,
from 11.78% for the year ended December 31, 1998.
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<PAGE> 50
NET INTEREST INCOME
Net interest income represents the difference between income on interest-earning
assets and expense on interest-bearing liabilities. Net interest income depends
primarily upon the volume of interest-earning assets and interest-bearing
liabilities and the corresponding interest rates earned or paid.
Our net interest income is significantly impacted by changes in interest rates
and market yield curves. Over the past two years, interest rates have fluctuated
significantly, and various financial instrument markets have become increasingly
volatile. During the year ended December 31, 1998, interest rates, in general,
steadily declined. Conversely, 1999 represented a year of rising interest rates.
However, the overall levels of interest rates did not surpass prior year levels
until late in the second quarter of 1999.
For the year ended December 31, 1999, net interest income increased $90.9
million, or 20.3%, to $539.9 million, from $449.0 million for the year ended
December 31, 1998. This increase was a result of the growth in average
interest-earning assets of $4.56 billion and the growth in average
interest-bearing liabilities of $4.46 billion. This increase in average
interest-earning assets was partially offset by a decrease in the net interest
rate spread to 2.14% for the year ended December 31, 1999, from 2.20% for the
year ended December 31, 1998. The change in the net interest rate spread
resulted from a decrease in the average yield on total interest-earning assets
to 6.80% for the year ended December 31, 1999, from 7.03% for the year ended
December 31, 1998, partially offset by a decrease in the average cost of
interest-bearing liabilities to 4.66% for the year ended December 31, 1999, from
4.83% for 1998. The net interest margin was 2.46% for the year ended December
31, 1999 and 2.58% for the year ended December 31, 1998.
ANALYSIS OF NET INTEREST INCOME
The following table sets forth certain information for the years ended December
31, 1999, 1998 and 1997. Yields are derived by dividing income by the average
balance of the related assets and costs are derived by dividing expense by the
average balance of the related liabilities, for the periods shown, except where
otherwise noted. Average balances are derived from average daily balances. The
average balance of loans receivable includes loans on which we have discontinued
accruing interest. The yields and costs include fees, premiums and discounts
which are considered adjustments to interest rates.
48
<PAGE> 51
<TABLE>
<CAPTION>
Year Ended December 31,
----------------------------------------------------------------------
1999 1998
---------------------------------- ----------------------------------
Average Average
Average Yield/ Average Yield/
(Dollars in Thousands) Balance Interest Cost Balance Interest Cost
----------- ---------- ------- ----------- ---------- -------
<S> <C> <C> <C> <C> <C> <C>
ASSETS:
Interest-earning assets:
Mortgage loans (1) $ 9,531,892 $ 679,623 7.13% $ 8,321,732 $ 612,606 7.36%
Consumer and other loans (1) 200,178 19,285 9.63 260,615 24,422 9.37
Mortgage-backed securities (2) 10,242,306 658,140 6.43 6,662,882 438,934 6.59
Other securities (2) 1,837,254 129,030 7.02 1,885,438 132,414 7.02
Federal funds sold and repurchase
agreements 179,408 9,201 5.13 296,516 16,072 5.42
------------ ---------- ----------- ----------
Total interest-earning assets 21,991,038 1,495,279 6.80 17,427,183 1,224,448 7.03
---------- ----------
Non-interest-earning assets 726,644 893,388
------------ -----------
Total assets $ 22,717,682 $18,320,571
============ ===========
Liabilities and stockholders' equity:
Interest-bearing liabilities:
Savings $ 2,697,726 54,341 2.01 $ 2,889,510 72,243 2.50
Certificates of deposit 4,943,672 258,389 5.23 5,297,309 288,914 5.45
NOW and money manager 516,010 5,110 0.99 497,433 6,337 1.27
Money market 1,038,765 45,316 4.36 729,106 32,108 4.40
------------ ---------- ----------- ----------
Total deposits 9,196,173 363,156 3.95 9,413,358 399,602 4.25
Borrowed funds 11,321,397 592,175 5.23 6,642,452 375,863 5.66
------------ ---------- ----------- ----------
Total interest-bearing liabilities 20,517,570 955,331 4.66 16,055,810 775,465 4.83
---------- ----------
Non-interest-bearing liabilities 838,566 774,538
------------ -----------
Total liabilities 21,356,136 16,830,348
Stockholders' equity 1,361,546 1,490,223
------------ -----------
Total liabilities and
stockholders' equity $ 22,717,682 $18,320,571
============ ===========
Net interest income/net
interest rate spread $ 539,948 2.14% $ 448,983 2.20%
========== ==== ========== ====
Net interest-earning assets/
net interest margin $ 1,473,468 2.46% $ 1,371,373 2.58%
============ ==== =========== ====
Ratio of interest-earnings assets
to interest-bearing liabilities 1.07x 1.09x
</TABLE>
<TABLE>
<CAPTION>
Year Ended December 31,
----------------------------------
1997
----------------------------------
Average
Average Yield/
(Dollars in Thousands) Balance Interest Cost
----------- -------- -------
<S> <C> <C> <C>
ASSETS:
Interest-earning assets:
Mortgage loans (1) $ 6,568,162 $503,504 7.67%
Consumer and other loans (1) 237,580 23,981 10.09
Mortgage-backed securities (2) 5,178,752 352,841 6.81
Other securities (2) 1,253,939 85,968 6.86
Federal funds sold and repurchase
agreements 213,502 11,861 5.56
----------- --------
Total interest-earning assets 13,451,935 978,155 7.27
--------
Non-interest-earning assets 555,483
-----------
Total assets $14,007,418
===========
Liabilities and stockholders' equity:
Interest-bearing liabilities:
Savings $ 2,560,738 70,755 2.76
Certificates of deposit 4,926,488 274,042 5.56
NOW and money manager 418,592 6,625 1.58
Money market 484,599 20,121 4.15
----------- --------
Total deposits 8,390,417 371,543 4.43
Borrowed funds 3,963,322 232,048 5.85
----------- --------
Total interest-bearing liabilities 12,353,739 603,591 4.89
--------
Non-interest-bearing liabilities 454,903
-----------
Total liabilities 12,808,642
Stockholders' equity 1,198,776
-----------
Total liabilities and
stockholders' equity $14,007,418
===========
Net interest income/net
interest rate spread $374,564 2.38%
======== ====
Net interest-earning assets/
net interest margin $ 1,098,196 2.78%
=========== ====
Ratio of interest-earnings assets
to interest-bearing liabilities 1.09x
</TABLE>
(1) Mortgage and consumer loans include non-performing loans and exclude
the allowance for loan losses.
(2) Securities available-for-sale are reported at average amortized cost.
RATE/VOLUME ANALYSIS
The following table presents the extent to which changes in interest rates and
changes in the volume of interest-earning assets and interest-bearing
liabilities have affected our interest income and interest expense during the
periods indicated. Information is provided in each category with respect to (1)
the changes attributable to changes in volume (changes in volume multiplied by
prior rate), (2) the changes attributed to changes in rate (changes in rate
multiplied by prior volume), and (3) the net change. The changes attributable to
the combined impact of volume and rate have been allocated proportionately to
the changes due to volume and the changes due to rate.
49
<PAGE> 52
<TABLE>
<CAPTION>
Year Ended December 31, 1999 Year Ended December 31, 1998
Compared to Compared to
Year Ended December 31, 1998 Year Ended December 31, 1997
-----------------------------------------------------------------------------------
Increase (Decrease) Increase (Decrease)
--------------------------------------- --------------------------------------
(In Thousands) Volume Rate Net Volume Rate Net
--------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Interest-earning assets:
Mortgage loans $ 86,672 $ (19,655) $ 67,017 $ 130,125 $ (21,023) $ 109,102
Consumer and other loans (5,799) 662 (5,137) 2,225 (1,784) 441
Mortgage-backed securities 230,127 (10,921) 219,206 97,849 (11,756) 86,093
Other securities (3,384) -- (3,384) 44,390 2,056 46,446
Federal funds sold and
repurchase agreements (6,051) (820) (6,871) 4,516 (305) 4,211
--------- --------- --------- --------- --------- ---------
Total 301,565 (30,734) 270,831 279,105 (32,812) 246,293
--------- --------- --------- --------- --------- ---------
Interest-bearing liabilities:
Savings (4,529) (13,373) (17,902) 8,539 (7,051) 1,488
Certificates of deposit (19,022) (11,503) (30,525) 20,359 (5,487) 14,872
NOW and money manager 217 (1,444) (1,227) 1,142 (1,430) (288)
Money market 13,503 (295) 13,208 10,709 1,278 11,987
Borrowed funds 246,818 (30,506) 216,312 151,592 (7,777) 143,815
--------- --------- --------- --------- --------- ---------
Total 236,987 (57,121) 179,866 192,341 (20,467) 171,874
--------- --------- --------- --------- --------- ---------
Net change in net interest
income $ 64,578 $ 26,387 $ 90,965 $ 86,764 $ (12,345) $ 74,419
========= ========= ========= ========= ========= =========
</TABLE>
INTEREST INCOME
Interest income for the year ended December 31, 1999 increased $270.8 million,
or 22.1%, to $1.50 billion, from $1.22 billion for the year ended December 31,
1998. This increase was the result of a $4.56 billion increase in average
interest-earning assets to $21.99 billion for the year ended December 31, 1999,
from $17.43 billion for 1998. This increase was partially offset by a decrease
in the average yield of interest-earning assets to 6.80% for 1999, from 7.03%
for 1998. The increase in average interest-earning assets was primarily due to
increases in mortgage loans and mortgage-backed securities resulting from our
strategy of deploying excess capital through growth.
Interest income on mortgage loans increased $67.0 million to $679.6 million for
1999, from $612.6 million for 1998, which was the result of an increase in the
average balance of $1.21 billion, partially offset by a decrease in the average
yield on mortgage loans to 7.13% for 1999, from 7.36% for 1998. The increase in
the average balance of mortgage loans reflects our continued emphasis on
originations of primarily one-to-four family residential mortgage loans. The
decrease in the average yield was due to the continued decline in market
interest rates during the latter half of 1998, coupled with the accelerated
prepayments and refinancing activity during 1998, which continued through the
first quarter of 1999. Although rising interest rates during 1999 have caused a
deceleration of this prepayment and refinancing activity, the overall levels of
interest rates did not surpass prior year levels until late in the second
quarter of 1999. Additionally, the rising interest rate environment has created
a shift in consumer demand from fixed rate products to adjustable rate products
which are initially offered at rates below their fully indexed rate.
Accordingly, the impact of these rising rates has not yet been fully reflected
in the overall average yield on our mortgage loan portfolio. Interest income on
consumer and other loans decreased $5.1 million resulting from a decrease in the
average balance of $60.4 million, partially offset by an increase in the yield
to 9.63% for 1999, from 9.37% for 1998.
Interest income on mortgage-backed securities increased $219.2 million to $658.1
million for 1999, from $438.9 million for 1998. This increase was the result of
a $3.58 billion increase in the average balance
50
<PAGE> 53
of this portfolio, partially offset by a decrease in the average yield to 6.43%
for 1999, from 6.59% for 1998. The decrease in the average yield of our
mortgage-backed securities portfolio is reflective of the changes in the
interest rate environment discussed above. Interest income on other securities
decreased $3.4 million to $129.0 million for 1999, from $132.4 million for 1998.
This was the result of a decrease in the average balance of this portfolio of
$48.2 million, while the average yield remained constant at 7.02% for both the
years ended December 31, 1999 and 1998. Interest income on federal funds sold
and repurchase agreements decreased $6.9 million as a result of a decrease in
the average balance of $117.1 million and a decrease in the average yield to
5.13% for 1999, from 5.42% for 1998.
INTEREST EXPENSE
Interest expense for the year ended December 31, 1999 increased $179.8 million,
to $955.3 million, from $775.5 million for the year ended December 31, 1998.
This increase was attributable to an increase in the average balance of
interest-bearing liabilities of $4.46 billion, to $20.52 billion for the year
ended December 31, 1999, from $16.06 billion for the year ended December 31,
1998, partially offset by a decrease in the average cost of such liabilities to
4.66% for 1999, from 4.83% for 1998. The significant increase in average
interest-bearing liabilities, particularly borrowed funds, was primarily
attributable to the previously mentioned growth strategy deployed during the
latter portion of 1998 and the beginning of 1999. The decline in the overall
average costs of our interest-bearing liabilities reflects the lower interest
rate environment that prevailed in the first half of 1999 versus the comparable
1998 period.
Interest expense on borrowed funds increased $216.3 million, to $592.2 million
for the year ended December 31, 1999, from $375.9 million for the year ended
December 31, 1998. This increase was attributable to an increase in the average
balance of borrowed funds of $4.68 billion, partially offset by a decrease in
the average cost of borrowed funds to 5.23% for 1999, from 5.66% for 1998. The
significant growth we experienced during the second half of 1998 and the first
quarter of 1999 was funded primarily through medium-term callable borrowings,
which provide us with flexibility and efficiency which could not be obtained
through deposit growth.
Interest expense on deposits decreased $36.4 million to $363.2 million for the
year ended December 31, 1999, from $399.6 million for the year ended December
31, 1998, reflecting a decrease in the average cost of interest-bearing deposits
to 3.95% for 1999 from 4.25% for 1998 coupled with a decrease in the average
balance of interest-bearing deposits of $217.2 million. Interest expense on
savings accounts decreased $17.9 million as a result of a decrease in the
average cost to 2.01% for 1999, from 2.50% for 1998 and a decrease in the
average balance of $191.8 million. The decrease in average cost of savings
accounts was a result of us lowering the rates paid on these accounts during the
fourth quarter of 1998. Interest expense on certificates of deposit decreased
$30.5 million from the combined effect of a decrease in the average balance of
$353.6 million and a decrease in the average cost to 5.23% for 1999, from 5.45%
for 1998. Interest expense on money market accounts increased $13.2 million to
$45.3 million for 1999, from $32.1 million for 1998, as a result of an increase
in the average balance of $309.7 million, offset by a decrease in the average
cost to 4.36% for 1999, from 4.40% for 1998. Interest paid on money market
accounts is on a tiered basis with 86.53% of the balance in the highest tier
(accounts with balances of $50,000 and higher). The yield on the top tier is by
policy at least equal to the discount rate for the three-month U.S. Treasury
bill. As previously mentioned, despite the increase in rates during 1999, the
actual levels of interest rates did not surpass those of the prior year until
late in the second quarter of 1999. Interest expense on NOW and money manager
accounts decreased $1.2 million as a result of us lowering the rates paid on
these accounts during the third quarter of 1998.
PROVISION FOR LOAN LOSSES
Provision for loan losses decreased $11.3 million, to $4.1 million for the year
ended December 31, 1999, from $15.4 million for the year ended December 31,
1998. The $15.4 million recorded in 1998 included $5.6 million for nonspecific
loan losses to conform LIB's previous accounting practices and asset review
51
<PAGE> 54
methodologies to ours, as well as a $4.0 million charge due to increased
delinquencies experienced in the consumer loan portfolio in 1998. The allowance
for loan losses increased to $76.6 million at December 31, 1999, from $74.4
million at December 31, 1998. Net loan charge-offs totaled $1.9 million for the
year ended December 31, 1999 compared to $14.8 million for the year ended
December 31, 1998, which included $9.2 million in charge-offs relating to one
property. Non-performing loans decreased $57.7 million to $53.4 million at
December 31, 1999, from $111.1 million at December 31, 1998. This reduction in
non-performing loans improved the percentage of allowance for loan losses to
non-performing loans from 66.99% at December 31, 1998 to 143.49% at December 31,
1999. The allowance for loan losses as a percentage of total loans decreased
from 0.83% at December 31, 1998 to 0.75% at December 31, 1999 primarily due to
the increase of $1.25 billion in gross total loans from December 31, 1998 to
December 31, 1999. The decline in the provision generally reflects the decline
in non-performing loans. For further discussion of non-performing loans and
allowance for loan losses, see "Asset Quality."
NON-INTEREST INCOME
Non-interest income for the year ended December 31, 1999 increased $24.4
million, or 39.2%, to $86.7 million from $62.3 million for the year ended
December 31, 1998. Excluding gains on sales of securities and the net gain on
disposition of banking and loan production offices, non-interest income for 1999
increased $15.5 million, or 30.2%, to $66.8 million, from $51.3 million for
1998.
Customer service and other loan fees increased $5.4 million to $40.0 million for
the year ended December 31, 1999, from $34.6 million for the year ended December
31, 1998. This increase is due in part to our changes in customer service fees
in 1998 and the overall growth in the loan portfolio. Loan servicing fees
increased $10.2 million to $15.4 million for 1999, from $5.2 million for 1998.
Loan servicing fees include all contractual and ancillary servicing revenue we
receive net of amortization of mortgage servicing rights and valuation allowance
adjustments for the impairment of mortgage servicing rights. The increase in
loan servicing fees was the result of a $5.0 million decrease in amortization of
servicing rights coupled with changes in the market valuation of servicing
rights. As a result of a change in prepayment speeds in 1999, we recognized a
recovery of portions of the valuation allowance for mortgage servicing rights of
$2.5 million for the year ended December 31, 1999. In contrast, for the year
ended December 31, 1998, we recorded a $3.1 million provision for impairment on
our mortgage servicing rights due to increased mortgage refinance activity and
accelerating prepayment speeds.
Net gains on sales of loans increased $1.3 million to $3.3 million for the year
ended December 31, 1999, from $2.0 million for the year ended December 31, 1998.
Operating income from real estate joint ventures increased $2.2 million to $3.9
million in 1999, from $1.7 million in 1998. In 1999, we recognized a $981,000
gain on the sale of one of our joint venture properties. Other non-interest
income decreased $3.6 million to $4.2 million for the year ended December 31,
1999, from $7.8 million for the year ended December 31, 1998. The decrease is
primarily due to a $1.6 million gain on the settlement of a real estate dispute
recorded in the second quarter of 1998 and $885,000 of rental income for the
year ended December 31, 1998 recognized from a sublease from our former mortgage
headquarters, which expired in January 1999.
For the year ended December 31, 1999, net gain on sales of securities decreased
$10.2 million to $739,000, from $11.0 million for the year ended December 31,
1998. The activity in 1998 was concentrated on the sale of mortgage-backed
securities created from the securitizations of mortgage loans. During 1999,
however, production of thirty-year and fifteen-year fixed rate loans declined as
consumers shifted to adjustable rate mortgage loans which we retain for
portfolio.
During the year ended December 31, 1999, we recognized a $1.2 million ($732,000,
net of taxes) loss on the closing and disposition of certain LPOs and a $20.4
million ($12.0 million, net of taxes) gain on the sale of our five upstate New
York banking offices. See further discussion under "Mergers and Acquisitions."
52
<PAGE> 55
NON-INTEREST EXPENSE
Non-interest expense for the year ended December 31, 1999 was $223.1 million, a
decrease of $155.3 million, or 41.0%, from $378.4 million for the year ended
December 31, 1998. Included in 1998 non-interest expense was $124.2 million
attributable to acquisition costs and restructuring charges related to the LIB
Acquisition. Excluding this infrequently occurring charge, non-interest expense
for the year ended December 31, 1998 was $254.2 million, resulting in a $31.1
million decrease in non-interest expense from 1998 to 1999. General and
administrative expense decreased $37.6 million to $195.3 million for 1999, from
$232.9 million for 1998. Included in other general and administrative expense
during the third quarter of 1998, were $8.4 million of various accruals for
expenses incurred and for differences between the general ledger and various
subsidiary ledgers relating to the LIB Acquisition. The remaining reduction in
non-interest expense was primarily the result of the consolidation of LIB's
operations into ours which resulted in significant cost savings.
Compensation and benefits decreased $19.3 million to $99.9 million for the year
ended December 31, 1999, from $119.2 million for the year ended December 31,
1998. Included in this $19.3 million decrease was an $8.3 million decrease in
employee stock plans amortization expense to $9.9 million for the year ended
December 31, 1999, from $18.2 million for the year ended December 31, 1998. The
decrease in employee stock plans amortization expense includes a decrease
relating to the allocation of ESOP stock due to a lower average market value of
our common stock from $50.30 per share for 1998 to $40.75 per share for 1999. In
addition, our vesting period for the majority of shares granted under the RRP
was completed in January 1999. The amortization period for these grants was
primarily completed in fiscal 1998, resulting in a decrease in amortization
expense to $145,000 for 1999, compared to $5.4 million for 1998.
Occupancy, equipment and systems expense decreased $4.0 million to $53.7 million
for the year ended December 31, 1999, from $57.7 million for the year ended
December 31, 1998. Advertising expense increased $2.1 million to $6.9 million
for 1999, from $4.8 million for 1998. Other expenses decreased $15.0 million to
$30.2 million for 1999, from $45.2 million for 1998. This decrease is primarily
a result of $8.4 million of various accruals for expenses incurred and for
differences between the general ledger and various subsidiary ledgers relating
to the LIB Acquisition, as previously mentioned. Goodwill litigation expense
increased $4.7 million to $6.4 million for 1999, from $1.7 million for 1998. For
further discussion on the goodwill litigation proceedings, see "Part I - Item 3
- - Legal Proceedings." Our percentage of general and administrative expense to
average assets improved to 0.86% for the year ended December 31, 1999, from
1.27% for the year ended December 31, 1998. The efficiency ratio also improved
to 32.21% for the year ended December 31, 1999, from 46.56% for the year ended
December 31, 1998.
INCOME TAX EXPENSE
For the year ended December 31, 1999, income tax expense was $163.8 million,
representing an effective tax rate of 41.0%, as compared to $61.8 million,
representing an effective tax rate of 52.6%, for the 1998 period. The decrease
in our effective tax rate was attributable to the 1998 infrequently occurring
charges related to the LIB Acquisition which included approximately $24.0
million of charges which are not deductible for income tax purposes and a tax
benefit derived from a 1999 corporate restructuring of certain subsidiaries of
Astoria Federal.
CASH EARNINGS
Tangible stockholders' equity (stockholders' equity less goodwill) totaled
$973.0 million at December 31, 1999, compared to $1.22 billion at December 31,
1998. Tangible equity is a critical measure of a company's ability to repurchase
shares, pay dividends and continue to grow. Astoria Federal is subject to
various capital requirements which affect its classification for safety and
soundness purposes, as well
53
<PAGE> 56
as for deposit insurance premium purposes. These requirements utilize, subject
to further adjustments, tangible equity as a base component, not equity as
defined by GAAP.
Although reported earnings and return on equity are traditional measures of a
company's performance, we believe that the change in tangible equity, or "cash
earnings," is also a significant measure of a company's performance. Cash
earnings exclude the effects of various non-cash expenses, such as the
amortization for the allocation of ESOP and RRP stock and related tax benefit,
as well as the amortization of goodwill. In the case of tangible equity, these
items have either been previously charged to equity, as in the case of ESOP and
RRP charges, through contra-equity accounts, or do not affect tangible equity,
such as the market appreciation of allocated ESOP shares, for which the
operating charge is offset by a credit to additional paid-in capital, and
goodwill amortization for which the related intangible asset has already been
deducted in the calculation of tangible equity.
We believe that cash earnings and cash returns on average tangible equity
reflect our ability to generate tangible capital that can be leveraged for
future growth. The following comparisons exclude the net gain on disposition of
banking and loan production offices recognized in 1999 and acquisition costs and
other infrequently occurring charges incurred during 1998. For the year ended
December 31, 1999, operating cash earnings totaled $257.6 million, or $33.2
million more than operating earnings, representing a cash return on average
tangible equity of 22.86%. For the year ended December 31, 1998, operating cash
earnings totaled $191.7 million, or $46.3 million more than operating earnings,
representing a cash return on average tangible equity of 15.53%. We believe that
various other performance measures should also be analyzed utilizing cash
earnings. The cash return on average assets was 1.13% for the year ended
December 31, 1999 and 1.05% for the year ended December 31,1998. Additionally,
the cash general and administrative expense (general and administrative expense,
excluding non-cash amortization expense relating to certain employee stock
plans) to average assets ratio decreased to 0.82% for the year ended December
31, 1999, from 1.17% for the year ended December 31, 1998. The operating cash
efficiency ratio was 30.57% for the year ended December 31, 1999 and 42.92% for
the year ended December 31, 1998. For more details on operating cash earnings
and operating earnings, see "Consolidated Schedules of Operating Earnings and
Operating Cash Earnings" on the following page.
54
<PAGE> 57
CONSOLIDATED SCHEDULES OF OPERATING EARNINGS AND OPERATING CASH EARNINGS
(In Thousands, Except Share Data)
<TABLE>
<CAPTION>
Year Ended December 31,
------------------------------------------------
SCHEDULE OF OPERATING EARNINGS 1999 (1) 1998 (2) 1997
------------ ------------ ------------
<S> <C> <C> <C>
Net interest income $ 539,948 $ 448,983 $ 374,564
Provision for loan losses (2) 4,119 9,780 9,061
------------ ------------ ------------
Net interest income after provision for loan losses 535,829 439,203 365,503
------------ ------------ ------------
Total non-interest income (1),(2) 67,490 66,218 62,686
------------ ------------ ------------
Total non-interest expense (2) 223,091 254,188 228,465
------------ ------------ ------------
Operating earnings before income tax expense (1),(2) 380,228 251,233 199,724
Provision for income taxes (1),(2) 155,890 105,810 81,840
------------ ------------ ------------
Operating earnings 224,338 145,423 117,884
------------ ------------ ------------
Preferred dividends declared (6,000) (6,000) (1,500)
------------ ------------ ------------
Operating earnings available to common shareholders $ 218,338 $ 139,423 $ 116,384
============ ============ ============
Basic operating earnings per common share $ 4.25 $ 2.74 $ 2.51
============ ============ ============
Diluted operating earnings per common share $ 4.16 $ 2.64 $ 2.39
============ ============ ============
SCHEDULE OF OPERATING CASH EARNINGS
Operating earnings $ 224,338 $ 145,423 $ 117,884
Add back:
Employee stock plans amortization expense (3) 9,927 18,195 19,338
Amortization of goodwill (4) 19,425 19,754 11,722
Income tax benefit on amortization expense of
earned portion RRP stock (5) 3,870 8,302 4,116
------------ ------------ ------------
Operating cash earnings 257,560 191,674 153,060
------------ ------------ ------------
Preferred dividends declared (6,000) (6,000) (1,500)
------------ ------------ ------------
Operating cash earnings available to common shareholders $ 251,560 $ 185,674 $ 151,560
============ ============ ============
Basic operating cash earnings per common share $ 4.90 $ 3.65 $ 3.27
============ ============ ============
Diluted operating cash earnings per common share $ 4.79 $ 3.51 $ 3.11
============ ============ ============
Basic weighted average common shares 51,351,355 50,801,598 46,362,179
Diluted weighted average common and common
equivalent shares 52,506,962 52,886,191 48,765,698
</TABLE>
(1) For the year ended December 31, 1999, the net gain on sale and
disposition of five upstate New York banking offices and certain loan
production offices of $19.2 million, with a tax effect of $7.9 million,
has been excluded for purposes of displaying operating earnings.
(2) For the year ended December 31, 1998, acquisition, restructuring and
other infrequently occurring charges have been excluded for purposes of
displaying operating earnings. The following details such charges:
<TABLE>
<CAPTION>
Before Tax Tax Effect After Tax
---------- ---------- ---------
<S> <C> <C> <C>
Acquisition-related costs $124,168 $ 40,317 $ 83,851
Additional loan loss reserves 5,600 1,960 3,640
Asset/liability management actions:
Penalties related to borrowings prepaid 18,547 7,910 10,637
Losses on securities sold 3,955 1,708 2,247
-------- -------- --------
Total $152,270 $ 51,895 $100,375
======== ======== ========
</TABLE>
(3) Non-cash amortization expenses relating to allocation of ESOP stock and
earned portion of RRP stock.
(4) Non-cash amortization expense of goodwill.
(5) Related tax benefit on non-cash amortization expense of earned portion
of RRP stock.
55
<PAGE> 58
COMPARISON OF FINANCIAL CONDITION AND OPERATING RESULTS FOR THE YEARS ENDED
DECEMBER 31, 1998 AND 1997
FINANCIAL CONDITION
Total assets increased $4.16 billion or 25.3%, to $20.59 billion at December 31,
1998, from $16.43 billion at December 31, 1997. This increase was primarily due
to our short-term objective of effectively deploying capital through asset
growth, which resulted in increases in our mortgage-backed securities and
mortgage loan portfolios. Mortgage-backed securities increased $2.80 billion to
$8.69 billion at December 31, 1998, from $5.89 billion at December 31, 1997.
This increase was attributable to $6.58 billion of purchases during 1998,
partially offset by $1.64 billion of sales. Our objective to deploy capital
through asset growth during 1998 was concentrated in the purchases of agency
REMICs which, combined with the growth in our loan portfolio, reflected our
continued emphasis on residential lending. Our net loan portfolio increased
$1.00 billion, to $8.95 billion at December 31, 1998, from $7.95 billion at
December 31, 1997. During the year ended December 31, 1998, gross mortgage loans
originated and purchased totaled $5.19 billion, of which $5.00 billion were
originations and $187.5 million were third party purchases. This compares to
$3.47 billion of originations and $562.4 million of purchases for the year ended
December 31, 1997. The increase in mortgage loan originations was partially
offset by loan prepayments, as well as normal principal repayments. Loan
originations were primarily in seven- and ten-year adjustable rates and fifteen-
and thirty-year fixed rate products. We sold most of our thirty-year fixed-rate
mortgage loan originations in the secondary market. See "Lending and Investing
Activities" for further discussion.
In addition to the increases in the mortgaged-backed securities and mortgage
loan portfolios, federal funds sold and repurchase agreements increased $155.8
million to $266.4 million at December 31, 1998, from $110.6 million at December
31, 1997. Other securities also increased $67.7 million to $1.61 billion at
December 31, 1998, from $1.55 billion at December 31, 1997.
The growth in our mortgage-backed securities and mortgage loan portfolios was
funded primarily through additional medium-term and long-term callable reverse
repurchase agreements and FHLB-NY advances. Reverse repurchase agreements
increased $3.39 billion to $7.29 billion at December 31, 1998, from $3.90
billion at December 31, 1997. Federal Home Loan Bank advances increased $787.0
million to $1.21 billion at December 31, 1998, from $423.1 million at December
31, 1997. Deposits, another source of funds, decreased $283.1 million to $9.67
billion at December 31, 1998, from $9.95 billion at December 31, 1997 as
competition with equity markets, coupled with a low interest rate environment,
creates minimal opportunities for deposit growth.
Accrued expenses and other liabilities increased $171.9 million, from $146.3
million at December 31, 1997 to $318.2 million at December 31, 1998. The
increase was a result of our accrued acquisition costs and restructuring charges
for the LIB Acquisition coupled with accrued interest payable, which increased
in direct relation to the increase in borrowed funds.
Stockholders' equity increased to $1.46 billion at December 31, 1998, from $1.45
billion at December 31, 1997. The $16.7 million increase in stockholders' equity
reflects net income of $45.0 million, the amortization relating to the
allocation of ESOP stock and earned portion of RRP stock and related tax benefit
of $26.5 million, the effect of stock options exercised and related tax benefit
of $24.4 million and the adjustment to conform the fiscal year of LIB to ours of
$10.9 million. These increases were offset by dividends declared of $38.6
million, the increase in unrealized losses on securities, net of taxes, of $34.9
million and the repurchases of our common stock, in the first quarter of 1998,
of $16.6 million.
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<PAGE> 59
RESULTS OF OPERATIONS
GENERAL
Net income decreased $72.9 million to $45.0 million for the year ended December
31, 1998, from $117.9 million for the year ended December 31, 1997. For the year
ended December 31, 1998, diluted earnings per common share decreased to $0.74,
as compared to $2.39 per share for the year ended December 31, 1997. Return on
average assets decreased to 0.25% for the year ended December 31, 1998, from
0.84% for the year ended December 31, 1997. Return on average stockholders'
equity decreased to 3.02% for the year ended December 31, 1998, from 9.83% for
the year ended December 31, 1997. Return on average tangible stockholders'
equity decreased to 3.65% for the year ended December 31, 1998, from 11.16% for
the year ended December 31, 1997. Included in net income for the year ended
December 31, 1998 are infrequently occurring charges related to the LIB
Acquisition of $89.7 million, after-tax and penalties related to prepaid
borrowings of $10.6 million, after-tax. See "Consolidated Schedules of Operating
Earnings and Operating Cash Earnings" on page 55 for details of these charges.
The following comparison of net operating income, operating earnings per common
share and related operating returns reflect 1998 results exclusive of
infrequently occurring charges. For the year ended December 31, 1998, net
operating income increased $27.5 million, or 23.4%, to $145.4 million, from
$117.9 million for the year ended December 31, 1997. Diluted operating earnings
per common share for the year ended December 31, 1998 increased to $2.64 per
share, or 10.5%, from $2.39 for the year ended December 31, 1997. The operating
return on average assets for the year ended December 31, 1998 decreased to
0.79%, from 0.84% for the year ended December 31, 1997. The operating return on
average stockholders' equity for the year ended December 31, 1998 decreased to
9.76%, from 9.83% for the year ended December 31, 1997. The operating return on
average tangible stockholders' equity for the year ended December 31, 1998
increased to 11.78%, from 11.16% for the year ended December 31, 1997.
NET INTEREST INCOME
Net interest income represents the difference between income on interest-earning
assets and expense on interest-bearing liabilities. Net interest income depends
primarily upon the volume of interest-earning assets and interest-bearing
liabilities and the corresponding interest rates earned or paid.
Our net interest income is significantly impacted by changes in interest rates
and changes in market yield curves. Over the past two years, interest rates have
declined significantly, and the markets for which related financial instruments
trade have become increasingly volatile. In addition, the decline in interest
rates on long-term instruments has been greater than the decline in rates on
short-term instruments, accentuating the flatness of the U.S. Treasury yield
curve. As such, we have continued to experience compression on our net interest
spread and net interest margin.
Net interest income increased $74.4 million, or 19.9%, to $449.0 million for the
year ended December 31, 1998, from $374.6 million for the year ended December
31, 1997. This change was the result of an increase in total average
interest-earning assets of $3.98 billion, offset by an increase in total average
interest-bearing liabilities of $3.71 billion. The effect of the growth in
average net interest-earning assets was partially offset by the decrease in our
net interest rate spread to 2.20% for 1998, from 2.38% for 1997. This decrease
in net interest rate spread was the result of the average yield on total
interest-earning assets decreasing to 7.03% for 1998 from 7.27% for 1997,
partially offset by the average cost of interest-bearing liabilities decreasing
to 4.83% for 1998, from 4.89% for 1997. Our net interest margin decreased to
2.58% for 1998, from 2.78% for 1997.
INTEREST INCOME
Interest income for the year ended December 31, 1998 increased $246.3 million,
or 25.2%, to $1.22
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<PAGE> 60
billion, from $978.2 million for the year ended December 31, 1997. This increase
was the result of a $3.98 billion increase in average interest-earning assets to
$17.43 billion for the year ended December 31, 1998, from $13.45 billion for
1997. This increase was partially offset by a decrease in the average yield of
interest-earning assets to 7.03% for 1998 from 7.27% for 1997. The increase in
average interest-earning assets was primarily due to increases in mortgage loans
and mortgage-backed and other securities.
During 1998, we continued to emphasize the origination of mortgage loans.
Interest income on mortgage loans increased $109.1 million to $612.6 million for
1998, which was the result of an increase in the average balance of $1.75
billion for 1998, partially offset by a decrease in the average yield on
mortgage loans to 7.36% for 1998, from 7.67% for 1997. The decrease of the
average yield was due to the flattening of the U.S. Treasury yield curve and the
significant decline in market rates, which has resulted in increased prepayments
and refinancing activity.
Interest income on mortgage-backed securities increased $86.1 million to $438.9
million for 1998, from $352.8 million for 1997 reflecting our strategy of
effectively deploying our capital through asset growth. This increase was the
result of a $1.48 billion increase in the average balance of this portfolio,
partially offset by a decrease in the average yield to 6.59% for 1998, from
6.81% for 1997. The decrease in yield on the mortgage-backed portfolio is a
result of overall decreases in market rates coupled with accelerated
prepayments, resulting in reinvestments at lower rates. Interest income on other
securities increased $46.4 million to $132.4 million for 1998, from $86.0
million for 1997. The increase was a result of the combined effect of an
increase in the average balance of this portfolio of $631.5 million and an
increase in the average yield to 7.02% for 1998, from 6.86% for 1997 primarily
resulting from our purchases of higher-yielding long-term U.S. government agency
securities with call features during the second half of 1997 and first half of
1998. Interest income on federal funds sold and repurchase agreements increased
$4.2 million as a result of an increase in the average balance of $83.0 million,
partially offset by a decrease in the average yield to 5.42% for 1998, from
5.56% for 1997.
INTEREST EXPENSE
Interest expense for the year ended December 31, 1998 increased $171.9 million,
or 28.5%, to $775.5 million, from $603.6 million for the year ended December 31,
1997. This increase was attributable to an increase in the average balance of
interest-bearing liabilities of $3.71 billion, to $16.06 billion for the year
ended December 31, 1998 from $12.35 billion for the year ended December 31,
1997, partially offset by a decrease in the average cost of such liabilities to
4.83% for 1998 from 4.89% for 1997. The increase in average interest-bearing
liabilities was attributable to increases in the average balances of both
borrowings and deposits. We significantly increased borrowings with lower
interest rates during 1998 which were primarily utilized to fund the asset
growth discussed above.
Interest expense on borrowed funds increased $143.9 million, or 62.0%, to $375.9
million for the year ended December 31, 1998, from $232.0 million for the year
ended December 31, 1997. This increase was attributable to an increase in the
average balance of borrowings of $2.68 billion, to $6.64 billion for 1998, from
$3.96 billion for 1997, partially offset by a decrease in the average cost of
borrowings to 5.66% for 1998, from 5.85% for 1997. We continue to utilize
medium-term and long-term callable borrowings as a funding source for asset
growth, which provide us with flexibility and efficiency which could not be
obtained through deposit growth.
Interest expense on deposits increased $28.1 million to $399.6 million for 1998,
from $371.5 million for 1997, reflecting an increase in the average balance of
total interest-bearing deposits of $1.02 billion, offset by a decrease in the
average cost of interest-bearing deposits to 4.25% in 1998 from 4.43% in 1997.
The increase in the average balance of deposits reflects the addition of
deposits from The Greater Acquisition which was completed following the close of
business on September 30, 1997. Interest expense on savings accounts increased
$1.5 million as a result of an increase in the average balance of $328.8
million, offset by a decrease in the average cost to 2.50% for 1998, from 2.76%
for 1997. This decrease in average cost
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<PAGE> 61
is a result of our lowering the rates offered on savings accounts during 1998.
Interest expense on certificates of deposit increased $14.9 million to $288.9
million for 1998, from $274.0 million for 1997. This increase was the result of
the average balance of these accounts increasing $370.8 million, offset in part
by a decrease in the average cost to 5.45% for 1998, from 5.56% for 1997.
Interest expense on money market accounts increased $12.0 million to $32.1
million for 1998, from $20.1 million for 1997, due to an increase in both the
average cost and average balance of such accounts. The average cost of money
market accounts increased to 4.40% for year ended December 31, 1998 from 4.15%
for the year ended December 31, 1997. Interest paid on money market accounts is
on a tiered basis with over 82.2% of the balance in the highest tier. The yield
on this top tier will be at least equal to the discount rate for the three-month
U.S. Treasury bill. While interest rates have fallen, the short end of the yield
curve, reflecting short-term rates, has been the least affected and has not
always moved as quickly as the remaining portion of the yield curve, reflecting
long-term rates. Additionally, we have not always reduced the interest rate on
such accounts with the yield curve, thereby attracting new deposits. Interest
expense on NOW and money manager accounts decreased $288,000 which was
attributable to a decrease in the average cost of these accounts to 1.27% for
1998, from 1.58% for 1997, partially offset by an increase in average balance of
$78.8 million. The decrease in the average cost of NOW and money manager
accounts is a result of our lowering the rates offered on these accounts during
1998.
PROVISION FOR LOAN LOSSES
Provision for loan losses increased $6.3 million, to $15.4 million for the year
ended December 31, 1998, from $9.1 million for the year ended December 31, 1997.
Of the $6.3 million increase in the provision for loan losses, $5.6 million was
recorded for nonspecific loan losses to conform LIB's previous accounting
practices and asset review methodologies to ours. Net loan charge-offs for the
year ended December 31, 1998 totaled $14.8 million, which included $9.2 million
in charge-offs relating to one property, compared to $8.6 million in net loan
charge-offs for the year ended December 31, 1997. The net effect of the
provision for loan losses and total 1998 net loan charge-offs, in addition to
the $146,000 adjustment to conform the fiscal year of LIB to ours, increased our
allowance for loan losses by $483,000, to $74.4 million at December 31, 1998,
from $73.9 million at December 31, 1997. Non-performing loans increased to
$111.1 million at December 31, 1998, from $89.9 million at December 31, 1997.
The allowance for loan losses to non-performing loans decreased to 66.99% at
December 31, 1998, from 82.23% at December 31, 1997. The allowance for loan
losses to total loans decreased to 0.83% at December 31, 1998 from 0.93% at
December 31, 1997. Our percentage of non-performing loans to total loans
increased to 1.23% at December 31, 1998, from 1.12% at December 31, 1997. For
further discussion on non-performing loans and allowance for loan losses, see
"Asset Quality."
NON-INTEREST INCOME
Non-interest income for the year ended December 31, 1998, excluding net gain on
sales of securities, increased $3.0 million, or 6.2%, to $51.3 million, from
$48.3 million for the year ended December 31, 1997. Customer service and other
loan fees increased $11.3 million to $34.6 million for 1998 from $23.3 million
for 1997 primarily as a result of the additional banking offices acquired from
The Greater in the fourth quarter of 1997. The increases in customer service and
other loan fees are also due in part to our increasing customer service fees in
June 1998, record loan originations and overall growth in the loan portfolio
during 1998. Loan servicing fees include all contractual and ancillary servicing
revenue we receive net of amortization of mortgage servicing rights and
valuation allowance adjustments for the impairment in mortgage servicing rights.
Loan servicing fees decreased $7.3 million to $5.2 million for 1998, from $12.5
million for 1997. This decrease is primarily attributable to a $5.8 million
increase in the amortization of mortgage servicing rights and a $3.1 million
impairment provision due to accelerated loan prepayments due to the interest
rate environment for 1998.
Net gain on sales of loans decreased to $2.0 million for the year ended December
31, 1998, from $4.0
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<PAGE> 62
million for the year ended December 31, 1997. Included in those gains for 1997
was a $1.0 million gain from the sale of our credit card portfolio and $2.1
million relating to the satisfaction of a former problem loan. Net gains on
sales of securities decreased $3.4 million to $11.0 million for the year ended
December 31, 1998 from $14.4 million for the year ended December 31, 1997. The
decrease was primarily attributable to a $4.0 million loss, recorded in the
fourth quarter of 1998, on the sale of mortgage-backed securities held by the
former LIB at premiums, where the book values of such securities exceeded their
par values. The securities were sold as part of our asset/liability management
process which included certain portfolio restructurings.
NON-INTEREST EXPENSE
Non-interest expense for the year ended December 31, 1998 was $378.4 million, an
increase of $149.9 million, or 65.6%, from $228.5 million for the year ended
December 31, 1997. Of this increase, $124.2 million was attributable to
acquisition costs and restructuring charges related to the LIB Acquisition.
Excluding this infrequently occurring charge, non-interest expense for the year
ended December 31, 1998 was $254.2 million, or an increase of $25.7 million over
the prior year. The amortization of goodwill increased $8.1 million to $19.8
million for 1998, from $11.7 million for 1997, due to a full year of
amortization of goodwill generated from The Greater Acquisition incurred during
1998, versus one quarter of amortization incurred during 1997.
General and administrative expense also increased $20.3 million, to $232.9
million for 1998, from $212.6 million for 1997. The increase in general and
administrative expense was primarily the result of increases in occupancy,
equipment and systems expense and other expense. Occupancy, equipment and
systems expense increased $9.6 million, or 20.0%, to $57.7 million for 1998,
from $48.1 million for 1997. This increase was primarily a result of the full
year effect of the additional banking offices acquired from The Greater
Acquisition in the fourth quarter of 1997. Other non-interest expense increased
$12.3 million to $45.2 million for 1998, from $32.9 million for 1997. Of this
increase, $8.4 million was attributable to various accruals recorded by the
former LIB for expenses incurred during their quarter ended September 30, 1998
and for differences between the former LIB's general ledger and various
subsidiary ledgers. These increases were partially offset by a decrease of $4.2
million in advertising expense to $4.8 million for 1998 from $9.0 million for
1997. Our percentage of general and administrative expense to average assets
improved to 1.27% for the year ended December 31, 1998, from 1.52% for the year
ended December 31, 1997. Our efficiency ratio also improved to 46.56% for the
year ended December 31, 1998 from 50.27% for the year ended December 31, 1997.
INCOME TAX EXPENSE
For the year ended December 31, 1998, income tax expense was $61.8 million,
representing an effective tax rate of 52.6%, as compared to $81.8 million,
representing an effective tax rate of 41.0%, for the 1997 period. The increase
in our effective tax rate was primarily attributable to the infrequently
occurring charges related to the LIB Acquisition which included approximately
$24.0 million of charges which are not deductible for income tax purposes.
CASH EARNINGS
Tangible stockholders' equity (stockholders' equity less goodwill) totaled $1.22
billion at December 31, 1998, compared to $1.18 billion at December 31, 1997.
The following comparisons exclude acquisition costs and other infrequently
occurring charges incurred during 1998. For the year ended December 31, 1998,
operating cash earnings totaled $191.7 million, or $46.3 million more than
operating earnings, representing a cash return on average tangible equity of
15.53%. For the year ended December 31, 1997, operating cash earnings totaled
$153.1 million, or $35.2 million more than reported net income, representing a
cash return on average tangible equity of 14.49%. The cash return on average
assets was 1.05% for the year ended December 31, 1998 and 1.09% for the year
ended December 31, 1997.
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<PAGE> 63
Additionally, the cash general and administrative expense (general and
administrative expense, excluding non-cash amortization expense relating to
certain employee stock plans) to average assets ratio decreased to 1.17% for the
year ended December 31, 1998, from 1.38% for the year ended December 31, 1997.
The cash efficiency ratio decreased to 42.92% for the year ended December 31,
1998 from 45.70% for the year ended December 31, 1997. For more details on
operating cash earnings and operating earnings, see "Consolidated Schedules of
Operating Earnings and Operating Cash Earnings" on page 55.
ASSET QUALITY
One of our key operating objectives has been and continues to be to maintain a
high level of asset quality. Through a variety of strategies, including, but not
limited to borrower workout arrangements and aggressive marketing of foreclosed
properties, we have been proactive in addressing problem and non-performing
assets which, in turn, has helped to build the strength of our financial
condition. Such strategies, as well as our concentration on one-to-four family
mortgage lending and maintaining sound credit standards for new loan
originations, and in particular a generally strong and stable economy and real
estate market, have resulted in a steady reduction in non-performing assets to
total assets from December 31, 1995 through December 31, 1999. Non-performing
assets decreased from $120.4 million at December 31, 1998 to $58.4 million at
December 31, 1999. The ratio of non-performing assets to total assets decreased
from 0.58% at December 31, 1998 to 0.26% at December 31, 1999. The decrease in
non-performing assets was primarily due to a $57.7 million decrease in
non-performing loans from $111.1 million at December 31, 1998 to $53.4 million
at December 31, 1999. Following the LIB Acquisition, we conformed LIB's
collection policies and procedures to those of ours. These efforts, aided by a
stable economy, resulted in this significant decrease in non-performing loans,
particularly during the second and third quarters of 1999. The decrease in
investments in real estate is a result of the sale of the property which
comprised this balance at December 31, 1998.
The following table sets forth information regarding non-performing assets. In
addition to the non-performing loans, we had approximately $5.6 million of
potential problem loans at December 31, 1999. Such loans are 60-89 days
delinquent as shown on page 62.
<TABLE>
<CAPTION>
Non-Performing Assets
At December 31,
----------------------------------------------------------------
(Dollars in Thousands) 1999 1998 1997 1996 1995
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Non-accrual delinquent mortgage loans (1) $ 48,830 $100,302 $ 80,604 $ 71,630 $ 85,747
Non-accrual delinquent consumer and other loans 1,626 5,995 4,563 7,600 8,599
Mortgage loans delinquent 90 days or more (2) 2,913 4,776 4,728 7,396 5,810
-------- -------- -------- -------- --------
Total non-performing loans 53,369 111,073 89,895 86,626 100,156
-------- -------- -------- -------- --------
Real estate owned, net (3) 5,080 6,071 12,734 15,576 26,570
Investment in real estate, net (4) -- 3,266 12,633 7,233 5,654
-------- -------- -------- -------- --------
Total real estate owned and investment in
real estate, net 5,080 9,337 25,367 22,809 32,224
-------- -------- -------- -------- --------
Total non-performing assets $ 58,449 $120,410 $115,262 $109,435 $132,380
======== ======== ======== ======== ========
Allowance for loan losses to non-performing loans 143.49% 66.99% 82.23% 55.41% 47.78%
Allowance for loan losses to total loans 0.75% 0.83% 0.93% 0.83% 1.15%
</TABLE>
(1) Consists primarily of loans secured by one-to-four family properties.
(2) Loans delinquent 90 days or more and still accruing interest consist
solely of loans delinquent 90 days or more as to their maturity date
but not their interest payments, and are primarily secured by
multi-family and commercial properties.
(3) Real estate acquired by us as a result of foreclosure or by deed in
lieu of foreclosure is recorded at the lower of cost or fair value,
less estimated selling costs.
(4) Investment in real estate is recorded at the lower of cost or fair
value.
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<PAGE> 64
If all non-accrual loans had been performing in accordance with their original
terms, we would have recorded interest income, with respect to such loans, of
$3.8 million for the year ended December 31, 1999, $6.8 million for the year
ended December 31, 1998 and $5.2 million for the year ended December 31, 1997.
This compares to $1.9 million for the year ended December 31, 1999, $1.6 million
for the year ended December 31, 1998 and $1.2 million for the year ended
December 31, 1997 of actual payments recorded as interest income with respect to
such loans.
Excluded from non-performing assets are restructured loans that have complied
with the terms of their restructure agreement for a satisfactory period and
have, therefore, been returned to performing status. Restructured loans that are
in compliance with their restructured terms totaled $6.7 million at December 31,
1999, $6.9 million at December 31, 1998, $9.1 million at December 31, 1997,
$11.8 million at December 31, 1996 and $12.1 million at December 31, 1995.
The following set of tables shows a comparison of delinquent loans at December
31, 1999, 1998 and 1997.
<TABLE>
<CAPTION>
Delinquent Loans At December 31, 1999
------------------------------
60-89 Days 90 Days or More
Principal Principal
Balance Balance
(Dollars in Thousands) of Loans of Loans
---------- ---------------
<S> <C> <C>
One-to-four family $ 2,202 $48,610
Multi-family -- 802
Commercial real estate 2,369 2,331
Consumer and other loans 1,033 1,626
------- -------
Total delinquent loans $ 5,604 $53,369
------- -------
Delinquent loans to total loans 0.05% 0.52%
</TABLE>
<TABLE>
<CAPTION>
At December 31, 1998
-------------------------------
60-89 Days 90 Days or More
Principal Principal
Balance Balance
(Dollars in Thousands) of Loans of Loans
---------- ---------------
<S> <C> <C>
One-to-four family $ 2,422 $ 94,078
Multi-family 203 2,224
Commercial real estate 221 8,776
Consumer and other loan 2,058 5,995
-------- --------
Total delinquent loans $ 4,904 $111,073
-------- --------
Delinquent loans to total loans 0.05% 1.23%
</TABLE>
<TABLE>
<CAPTION>
At December 31, 1997
-------------------------------
60-89 Days 90 Days or More
Principal Principal
Balance Balance
(Dollars in Thousands) of Loans of Loans
---------- ---------------
<S> <C> <C>
One-to-four family $17,516 $66,960
Multi-family 578 7,335
Commercial real estate 90 11,037
Consumer and other loans 1,178 4,563
------- -------
Total delinquent loans $19,362 $89,895
------- -------
Delinquent loans to total loans 0.24% 1.12%
</TABLE>
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<PAGE> 65
The underlying credit quality of our loan portfolio is dependent primarily on
each borrower's ability to continue to make required loan payments and, in the
event a borrower is unable to continue to do so, the value of the collateral, if
any, securing the loan. A borrower's ability to pay typically is dependent
primarily on employment and other sources of income, which in turn is impacted
by general economic conditions, although other factors, such as unanticipated
expenditures or changes in the financial markets may also impact a borrower's
ability to pay. Collateral values, particularly real estate values, are also
impacted by a variety of factors including general economic conditions,
demographics, maintenance and collection or foreclosure delays.
A loan is normally deemed impaired when it is probable we will be unable to
collect both principal and interest due according to the contractual terms. A
valuation allowance is established (with a corresponding charge to the provision
for loan losses) when the fair value of the property that collateralizes the
impaired loan is less than the recorded investment in the loan. Our procedure
for identifying impaired loans is conducted in conjunction with the review of
the adequacy of the allowance for loan losses. At December 31, 1999, our balance
of impaired loans was $24.3 million compared to $26.8 million at December 31,
1998. For further discussion of impaired loans, see Note 5 of Notes of
Consolidated Financial Statements in Item 8, "Financial Statements and
Supplementary Data."
The provision for loan losses is based upon management's estimate of the amount
necessary to maintain adequate reserves for losses inherent in our loan
portfolio. The estimate of inherent losses is developed by us considering a
number of factors, including matters pertinent to the underlying quality of the
loan portfolio. We review our loan receivable portfolio quarterly including, but
not limited to, the size, composition and risk profile of the portfolio,
delinquency levels, historical loss experience, cure rates on delinquent loans,
economic conditions and other pertinent factors, such as assumptions and
projections of future conditions. We determine loan loss provisions by reviewing
individual loans as well as an overall assessment of the loan portfolio in view
of the state of the regional economies, trends in the real estate market of our
lending areas and trends in the level of our non-performing loans.
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<PAGE> 66
The following table sets forth our allowance for losses on loans, investments in
real estate and REO at the dates indicated.
<TABLE>
<CAPTION>
At or For the Years Ended December 31,
----------------------------------------------------------------
(Dollars in Thousands) 1999 1998 1997 1996 1995
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
ALLOWANCE FOR LOSSES ON LOANS:
Balance at beginning of year .............................. $ 74,403 $ 73,920 $ 48,001 $ 47,853 $ 47,886
Allowance of acquired institution ................... -- -- 25,433 -- 3,528
Provision charged to operations ..................... 4,119 15,380 9,061 10,163 8,477
Charge-offs:
One-to-four family ............................. (1,554) (13,039) (3,971) (5,179) (6,465)
Multi-family ................................... (12) (769) (2,059) (226) (664)
Commercial ..................................... (845) (1,528) (72) (2,468) (2,031)
Consumer and other ............................. (4,298) (3,824) (4,726) (4,819) (5,747)
-------- -------- -------- -------- --------
Total charge-offs ................................... (6,709) (19,160) (10,828) (12,692) (14,907)
Recoveries:
One-to-four family ............................. 1,540 1,616 728 637 1,237
Multi-family ................................... 270 516 -- 37 --
Commercial ..................................... 1,591 1,788 617 1,047 580
Consumer and other ............................. 1,364 489 908 956 1,052
-------- -------- -------- -------- --------
Total recoveries .................................... 4,765 4,409 2,253 2,677 2,869
-------- -------- -------- -------- --------
Net charge-offs...................................... (1,944) (14,751) (8,575) (10,015) (12,038)
Adjustment to conform fiscal year of Long Island
Bancorp, Inc. to Astoria Financial Corporation ... -- (146) -- -- --
-------- -------- -------- -------- --------
Balance at end of year .................................... $ 76,578 $ 74,403 $ 73,920 $ 48,001 $ 47,853
======== ======== ======== ======== ========
Ratio of net charge-offs during the year
to average loans outstanding during the year .............. 0.02% 0.17% 0.13% 0.20% 0.32%
Ratio of allowance for loan losses to total
loans at end of the year .................................. 0.75 0.83 0.93 0.83 1.15
Ratio of allowance for loan losses to
non-performing loans at end of the year ................... 143.49 66.99 82.23 55.41 47.78
ALLOWANCE FOR LOSSES ON INVESTMENTS IN REAL ESTATE AND REO:
Balance at beginning of year .............................. $ 689 $ 1,493 $ 2,045 $ 3,746 $ 5,250
Allowance of acquired institution ................... -- -- 94 -- 1,144
(Recovery) provision recorded to operations ......... (38) 1,108 1,035 (1,257) 813
Charge-offs ......................................... (587) (2,835) (1,726) (2,110) (4,551)
Recoveries .......................................... 107 241 45 1,666 1,090
Adjustment to conform fiscal year of Long Island
Bancorp, Inc. to Astoria Financial Corporation ... -- 682 -- -- --
-------- -------- -------- -------- --------
Balance at end of year .................................... $ 171 $ 689 $ 1,493 $ 2,045 $ 3,746
======== ======== ======== ======== ========
</TABLE>
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<PAGE> 67
The following table sets forth our allocation of the allowance for loan losses
by loan category and the percent of loans in each category to total loans
receivable at the dates indicated. The portion of the allowance for loan losses
allocated to each loan category does not represent the total available for
future losses which may occur within the loan category since the total loan loss
reserve is a valuation reserve applicable to the entire loan portfolio.
<TABLE>
<CAPTION>
At December 31,
-------------------------------------------------------------------------------
1999 1998 1997
----------------------- ----------------------- -----------------------
% of Loans % of Loans % of Loans
To To To
(Dollars in Thousands) Amount Total Loans Amount Total Loans Amount Total Loans
------ ----------- ------ ----------- ------ -----------
<S> <C> <C> <C> <C> <C> <C>
One-to-four family $44,556 88.05% $42,084 87.37% $40,715 86.37%
Multi-family ..... 5,086 6.01 3,426 5.03 5,305 4.72
Commercial ....... 10,765 4.23 10,537 5.05 13,676 5.70
Consumer and other 16,171 1.71 18,356 2.55 14,224 3.21
------- ------ ------- ------ ------- ------
Total allowances . $76,578 100.00% $74,403 100.00% $73,920 100.00%
======= ====== ======= ====== ======= ======
</TABLE>
<TABLE>
<CAPTION>
At December 31,
---------------------------------------------------
1996 1995
----------------------- ------------------------
% of Loans % of Loans
To To
(Dollars in Thousands) Amount Total Loans Amount Total Loans
------ ----------- ------ -----------
<S> <C> <C> <C> <C>
One-to-four family ..... $20,139 88.32% $18,740 86.13%
Multi-family ........... 3,057 3.49 1,551 3.51
Commercial ............. 10,364 4.24 12,983 5.34
Consumer and other ..... 14,441 3.95 14,579 5.02
------- ------ ------- ------
Total allowances ....... $48,001 100.00% $47,853 100.00%
======= ====== ======= ======
</TABLE>
IMPACT OF NEW ACCOUNTING STANDARDS
In June 1998, the Financial Accounting Standards Board, or FASB, issued
Statement of Financial Accounting Standards No. 133, "Accounting for Derivative
Instruments and Hedging Activities," or SFAS No. 133. SFAS No. 133 establishes
accounting and reporting standards for derivative instruments and for hedging
activities. It requires that an entity recognize all derivatives as either
assets or liabilities in the statement of financial condition and measure those
instruments at fair value. The accounting for changes in the fair value of a
derivative (that is, unrealized gains and losses) depends on the intended use of
the derivative and the resulting designation. In June 1999, the FASB issued
Statement of Financial Accounting Standards No. 137, "Accounting for Derivative
Instruments and Hedging Activities - Deferral of the Effective Date of FASB
Statement No. 133," or SFAS No. 137. SFAS No.137 defers the effective date of
SFAS No. 133 from fiscal quarters of fiscal years beginning after June 15, 1999
to June 15, 2000. SFAS No. 133 does not require restatement of prior periods. We
believe the implementation of SFAS No. 133 will not have a material impact on
our financial condition or results of operations.
THE YEAR 2000 PROJECT
Over the past several quarters, we reported, on a regular basis, potential
concerns relating to the "Year 2000 Problem," which centered upon the possible
inability of computer systems to recognize the change into the year 2000. We did
not experience any significant interruptions in any computer operations related
to the Year 2000 Problem. Our loan and deposit data processing functions were
not affected by the change into the year 2000. Additionally, we did not
encounter any significant delays in loan payments from our borrowers due to
difficulties they may have encountered as a result of the Year 2000 Problem. We
estimate that the total costs we incurred related to the Year 2000 Problem, from
inception to date, did not exceed $2.4 million, and we do not anticipate any
additional costs to be incurred related to this matter.
65
<PAGE> 68
IMPACT OF INFLATION AND CHANGING PRICES
The consolidated financial statements and notes thereto presented herein have
been prepared in accordance with GAAP, which require the measurement of our
financial position and operating results in terms of historical dollars without
considering the changes in the relative purchasing power of money over time due
to inflation. The impact of inflation is reflected in the increased cost of our
operations. Unlike industrial companies, nearly all of our assets and
liabilities are monetary in nature. As a result, interest rates have a greater
impact on our performance than do the effects of general levels of inflation.
Interest rates do not necessarily move in the same direction or, to the same
extent, as the price of goods and services.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Information regarding quantitative and qualitative disclosures about market risk
appears under Item 7, "MD&A" on pages 42 through 46 under the caption "Interest
Rate Sensitivity Analysis," and pages 61 through 65 under the caption "Asset
Quality."
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
For our Consolidated Financial Statements, see index on page 70.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF ASTORIA FINANCIAL CORPORATION
Information regarding directors and executive officers who are not directors of
the Registrant, is presented in the tables under the heading "Board Nominees,
Directors and Executive Officers" and under the heading "Committees and Meetings
of the Board of Directors of Astoria Financial Corporation" in our definitive
Proxy Statement to be dated April 10, 2000, for our Annual Meeting of
Shareholders to be held on May 17, 2000, which will be filed with the SEC within
120 days from December 31, 1999, and is incorporated herein by reference.
ITEM 11. EXECUTIVE COMPENSATION
Information relating to executive (and director) compensation is included under
the headings "Summary Compensation Table," "Fiscal Year End Option/SAR Values,"
"Pension Plans," "Director Compensation," "Employment Agreements," "Incentive
Option Plans," that portion of the "Report of the Compensation Committee on
Executive Compensation" entitled "Long-term Incentive Compensation," and
"Compensation Committee Interlocks and Insider Participation in Compensation
Decisions" in our definitive Proxy Statement to be dated April 10, 2000 for our
Annual Meeting of Shareholders to be held on May 17, 2000, which will be filed
with the SEC within 120 days from December 31, 1999, and is incorporated herein
by reference.
66
<PAGE> 69
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Information relating to security ownership of certain beneficial owners and
management is included under the headings "Security Ownership of Certain
Beneficial Owners" and "Security Ownership of Management" in our definitive
Proxy Statement to be dated April 10, 2000 for our Annual Meeting of
Shareholders to be held on May 17, 2000, which will be filed with the SEC within
120 days from December 31, 1999, and is incorporated herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Information regarding certain relationships and related transactions is included
under the headings "Transactions with Certain Related Persons" and "Compensation
Committee Interlocks and Insider Participation in Compensation Decisions" in our
definitive Proxy Statement to be dated April 10, 2000 for our Annual Meeting of
Shareholders to be held on May 17, 2000, which will be filed with the SEC within
120 days from December 31, 1999, and is incorporated herein by reference.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a) 1. FINANCIAL STATEMENTS
See Index to Consolidated Financial Statements on page 70.
2. FINANCIAL STATEMENT SCHEDULES
Financial Statement Schedules have been omitted because they are not
applicable or the required information is shown in the Consolidated
Financial Statements or Notes thereto under Item 8, "Financial
Statements and Supplementary Data."
(b) REPORTS ON FORM 8-K FILED DURING THE LAST QUARTER OF THE REGISTRANT'S
FISCAL YEAR ENDED DECEMBER 31, 1999
We filed the following reports on Form 8-K during the fourth quarter of
our fiscal year ended December 31, 1999:
(1) Form 8-K dated October 20, 1999 which includes our
announcement of earnings for the quarter ended September 30,
1999.
(2) Form 8-K dated October 25, 1999 which includes our
announcement of our sale of $125.0 million of Trust Preferred
Securities.
(3) Form 8-K dated February 16, 2000 which includes our
announcement of earnings for the quarter ended December 31,
1999.
(c) EXHIBITS:
See Index of Exhibits on page 110.
67
<PAGE> 70
SIGNATURES
Pursuant to the requirements of Section 13 or 15 (d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
Astoria Financial Corporation
/s/ George L. Engelke, Jr. Date: March 14, 2000
----------------------------------------------- --------------
George L. Engelke, Jr.
Chairman, President and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the Registrant and
in the capacities and on the dates indicated:
<TABLE>
<CAPTION>
NAME DATE
---- ----
<S> <C>
/s/ George L. Engelke, Jr. March 14, 2000
------------------------------------------------------- --------------
George L. Engelke, Jr.
Chairman, President and Chief Executive Officer
/s/ John J. Conefry, Jr. March 14, 2000
------------------------------------------------------- --------------
John J. Conefry, Jr.
Vice Chairman and Director
/s/ Gerard C. Keegan March 14, 2000
------------------------------------------------------- --------------
Gerard C. Keegan
Vice Chairman, Chief Administrative
Officer and Director
/s/ Monte N. Redman March 14, 2000
------------------------------------------------------- --------------
Monte N. Redman
Executive Vice President and Chief Financial Officer
/s/ Andrew M. Burger March 14, 2000
------------------------------------------------------- --------------
Andrew M. Burger
Director
/s/ Denis J. Connors March 14, 2000
------------------------------------------------------- --------------
Denis J. Connors
Director
/s/ Robert J. Conway March 14, 2000
------------------------------------------------------- --------------
Robert J. Conway
Director
/s/ Thomas J. Donahue March 14, 2000
------------------------------------------------------- --------------
Thomas J. Donahue
Director
/s/ William J. Fendt March 14, 2000
------------------------------------------------------- --------------
William J. Fendt
Director
</TABLE>
68
<PAGE> 71
/s/ Peter C. Haeffner, Jr. March 14, 2000
--------------------------------------------------- --------------
Peter C. Haeffner, Jr.
Director
/s/ Ralph F. Palleschi March 14, 2000
--------------------------------------------------- --------------
Ralph F. Palleschi
Director
/s/ Lawrence W. Peters March 14, 2000
--------------------------------------------------- --------------
Lawrence W. Peters
Director
/s/ Thomas V. Powderly March 14, 2000
--------------------------------------------------- --------------
Thomas V. Powderly
Director
/s/ Leo J. Waters March 14, 2000
---------------------------------------------------- --------------
Leo J. Waters
Director
/s/ Donald D. Wenk March 14, 2000
--------------------------------------------------- --------------
Donald D. Wenk
Director
69
<PAGE> 72
CONSOLIDATED FINANCIAL STATEMENTS OF
ASTORIA FINANCIAL CORPORATION AND SUBSIDIARIES
INDEX
<TABLE>
<CAPTION>
Page
<S> <C>
CONSOLIDATED FINANCIAL STATEMENTS AS OF DECEMBER 31, 1999, 1998 AND 1997
Independent Auditors' Report................................................................................................ 71
Consolidated Statements of Financial Condition as of December 31, 1999 and 1998 ............................................ 72
Consolidated Statements of Income for the years ended December 31, 1999, 1998
and 1997................................................................................................................ 73
Consolidated Statements of Changes in Stockholders' Equity for the years ended
December 31, 1999, 1998 and 1997........................................................................................ 74
Consolidated Statements of Cash Flows for the years ended December 31, 1999,
1998 and 1997........................................................................................................... 75
Notes to Consolidated Financial Statements.................................................................................. 77
</TABLE>
70
<PAGE> 73
INDEPENDENT AUDITORS' REPORT
To The Board of Directors and Stockholders of Astoria Financial Corporation
We have audited the accompanying consolidated statements of financial condition
of Astoria Financial Corporation and subsidiaries as of December 31, 1999 and
1998, and the related consolidated statements of income, changes in
stockholders' equity, and cash flows for each of the years in the three-year
period ended December 31, 1999. These consolidated financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these consolidated financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Astoria Financial
Corporation and subsidiaries as of December 31, 1999 and 1998, and the results
of their operations and their cash flows for each of the years in the three-year
period ended December 31, 1999 in conformity with generally accepted accounting
principles.
/s/ KPMG LLP
Melville, New York
January 20, 2000
71
<PAGE> 74
ASTORIA FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
<TABLE>
<CAPTION>
AT DECEMBER 31,
--------------------------------------------
(In Thousands, Except Share Data) 1999 1998
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS:
Cash and due from banks $ 154,918 $ 126,945
Federal funds sold and repurchase agreements 335,653 266,437
Mortgage-backed securities available-for-sale 8,204,977 7,553,834
Other securities available-for-sale 657,772 642,610
Mortgage-backed securities held-to-maturity
(fair value of $1,071,251 and $1,141,145, respectively) 1,082,261 1,136,799
Other securities held-to-maturity (fair value of $772,356
and $982,295, respectively) 817,696 972,012
Federal Home Loan Bank of New York stock 265,250 210,250
Loans held-for-sale 11,376 212,909
Loans receivable 10,289,074 8,813,722
Less allowance for loan losses 76,578 74,403
- -----------------------------------------------------------------------------------------------------------------------------------
Loans receivable, net 10,212,496 8,739,319
Mortgage servicing rights, net 48,369 50,237
Accrued interest receivable 110,668 102,288
Premises and equipment, net 176,813 161,629
Goodwill 223,945 245,862
Other assets 394,342 166,610
- -----------------------------------------------------------------------------------------------------------------------------------
Total assets $ 22,696,536 $ 20,587,741
===================================================================================================================================
LIABILITIES:
Deposits $ 9,554,534 $ 9,668,286
Reverse repurchase agreements 9,276,800 7,291,800
Federal Home Loan Bank of New York advances 1,610,058 1,210,170
Other borrowings 514,663 520,827
Mortgage escrow funds 120,350 116,106
Accrued expenses and other liabilities 298,219 318,168
- -----------------------------------------------------------------------------------------------------------------------------------
Total liabilities 21,374,624 19,125,357
Guaranteed preferred beneficial interest in junior subordinated debentures 125,000 -
STOCKHOLDERS' EQUITY:
Preferred stock, $1.00 par value; 5,000,000 shares authorized:
Series A (325,000 shares authorized and -0- shares issued and outstanding) - -
Series B (2,000,000 shares authorized, issued and outstanding) 2,000 2,000
Common stock, $.01 par value; (200,000,000 shares authorized;
55,498,296 and 54,655,095 shares issued, respectively; and
51,730,959 and 54,655,095 shares outstanding, respectively) 555 547
Additional paid-in capital 800,414 767,846
Retained earnings 908,236 742,679
Treasury stock (3,767,337 shares, at cost) (137,071) -
Accumulated other comprehensive income:
Net unrealized loss on securities, net of taxes (344,198) (14,566)
Unallocated common stock held by ESOPs (32,955) (35,908)
Unearned common stock held by RRP (69) (214)
- -----------------------------------------------------------------------------------------------------------------------------------
Total stockholders' equity 1,196,912 1,462,384
- -----------------------------------------------------------------------------------------------------------------------------------
Total liabilities and stockholders' equity $ 22,696,536 $ 20,587,741
===================================================================================================================================
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
72
<PAGE> 75
ASTORIA FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------------------------------------
(In Thousands, Except Share Data) 1999 1998 1997
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
INTEREST INCOME:
Mortgage loans $ 679,623 $ 612,606 $ 503,504
Consumer and other loans 19,285 24,422 23,981
Mortgage-backed securities 658,140 438,934 352,841
Other securities 129,030 132,414 85,968
Federal funds sold and repurchase agreements 9,201 16,072 11,861
- ------------------------------------------------------------------------------------------------------------------------------------
Total interest income 1,495,279 1,224,448 978,155
- ------------------------------------------------------------------------------------------------------------------------------------
INTEREST EXPENSE:
Deposits 363,156 399,602 371,543
Borrowed funds 592,175 375,863 232,048
- ------------------------------------------------------------------------------------------------------------------------------------
Total interest expense 955,331 775,465 603,591
- ------------------------------------------------------------------------------------------------------------------------------------
Net interest income 539,948 448,983 374,564
Provision for loan losses 4,119 15,380 9,061
- ------------------------------------------------------------------------------------------------------------------------------------
Net interest income after provision for loan losses 535,829 433,603 365,503
- ------------------------------------------------------------------------------------------------------------------------------------
NON-INTEREST INCOME:
Customer service and other loan fees 39,965 34,619 23,298
Loan servicing fees 15,377 5,162 12,481
Net gain on sales of securities 739 10,976 14,400
Net gain on sales of loans 3,340 1,990 4,044
Net gain on disposition of banking and loan
production offices 19,206 -- --
Operating income from real estate joint ventures 3,892 1,735 1,209
Other 4,177 7,781 7,254
- ------------------------------------------------------------------------------------------------------------------------------------
Total non-interest income 86,696 62,263 62,686
- ------------------------------------------------------------------------------------------------------------------------------------
NON-INTEREST EXPENSE:
General and administrative:
Compensation and benefits 99,906 119,240 116,076
Occupancy, equipment and systems 53,726 57,688 48,069
Federal deposit insurance premiums 4,537 5,931 6,589
Advertising 6,926 4,782 8,969
Other 30,171 45,247 32,867
- ------------------------------------------------------------------------------------------------------------------------------------
Total general and administrative 195,266 232,888 212,570
Real estate operations and provision for losses, net (186) (119) 3,072
Goodwill litigation 6,417 1,665 1,101
Capital trust securities 2,169 -- --
Amortization of goodwill 19,425 19,754 11,722
Acquisition costs and restructuring charges -- 124,168 --
- ------------------------------------------------------------------------------------------------------------------------------------
Total non-interest expense 223,091 378,356 228,465
- ------------------------------------------------------------------------------------------------------------------------------------
Income before income tax expense and extraordinary item 399,434 117,510 199,724
Income tax expense 163,764 61,825 81,840
- ------------------------------------------------------------------------------------------------------------------------------------
Income before extraordinary item 235,670 55,685 117,884
Extraordinary item, net of tax -- (10,637) --
- ------------------------------------------------------------------------------------------------------------------------------------
NET INCOME $ 235,670 $ 45,048 $ 117,884
====================================================================================================================================
Basic earnings per common share:
Income before extraordinary item $ 4.47 $ 0.98 $ 2.51
Extraordinary item, net of tax -- (0.21) --
Net earnings per common share $ 4.47 $ 0.77 $ 2.51
====================================================================================================================================
Diluted earnings per common share:
Income before extraordinary item $ 4.37 $ 0.94 $ 2.39
Extraordinary item, net of tax -- (0.20) --
Net earnings per common share $ 4.37 $ 0.74 $ 2.39
====================================================================================================================================
Basic weighted average common shares 51,351,355 50,801,598 46,362,179
Diluted weighted average common and
common equivalent shares 52,506,962 52,886,191 48,765,698
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
73
<PAGE> 76
ASTORIA FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
YEARS ENDED DECEMBER 31, 1999, 1998, AND 1997
<TABLE>
<CAPTION>
ADDITIONAL
PREFERRED COMMON PAID-IN RETAINED
(In Thousands, Except Share Data) TOTAL STOCK STOCK CAPITAL EARNINGS
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
BALANCE AT DECEMBER 31, 1996 $ 1,107,923 $ -- $ 532 $ 634,425 $ 665,187
Comprehensive income:
Net income 117,884 -- -- -- 117,884
Other comprehensive income, net of tax:
Net unrealized gain on securities, net
of reclassification adjustment 14,076 -- -- -- --
-----------
Comprehensive income 131,960
-------
Issuance of Series B, preferred stock
(2,000,000 shares) to effect acquisition
of The Greater New York Savings Bank 62,000 2,000 -- 60,000 --
Issuance of common stock (89,548 shares)
to effect acquisition of The Greater New
York Savings Bank 84,192 -- 1 84,191 --
Conversion of The Greater New York
Savings Bank stock options into Astoria
Financial Corporation stock options 8,572 -- -- 8,572 --
Common stock repurchased (2,224,372 shares) (85,735) -- -- -- --
Dividends on common and preferred stock (25,965) -- -- -- (25,965)
Issuance of treasury stock (5,695,827 shares)
to effect acquisition of The Greater New
York Savings Bank 130,465 -- -- -- --
Exercise of stock options and related tax benefit 8,933 -- -- 4,852 (6,801)
Amortization relating to allocation of ESOP
stock and earned portion of RRP stock and
related tax benefit 23,454 -- -- 14,616 --
- -------------------------------------------------------------------------------------------------------------------------------
BALANCE AT DECEMBER 31, 1997 1,445,799 2,000 533 806,656 750,305
Comprehensive income:
Net income 45,048 -- -- -- 45,048
Other comprehensive income, net of tax:
Net unrealized loss on securities, net
of reclassification adjustment (34,928) -- -- -- --
----------
Comprehensive income 10,120
----------
Adjustments to stockholders' equity to effect the
acquisition of Long Island Bancorp, Inc. -- -- 11 (69,667) --
Common stock repurchased (339,892 shares) (16,633) -- -- -- --
Dividends on common and preferred stock
and amortization of purchase premium (38,631) -- -- (1,304) (37,327)
Exercise of stock options and related tax benefit 24,357 -- 3 13,630 (25,113)
Amortization relating to allocation of ESOP
stock and earned portion of RRP stock and
related tax benefit 26,496 -- -- 17,665 --
Adjustment to conform fiscal year of Long
Island Bancorp, Inc. to Astoria Financial
Corporation 10,876 -- -- 866 9,766
- -------------------------------------------------------------------------------------------------------------------------------
BALANCE AT DECEMBER 31, 1998 1,462,384 2,000 547 767,846 742,679
Comprehensive loss:
Net income 235,670 -- -- -- 235,670
Other comprehensive income, net of tax:
Net unrealized loss on securities, net
of reclassification adjustment (329,632) -- -- -- --
--------
Comprehensive loss (93,962)
--------
Common stock repurchased (4,257,200 shares) (159,367) -- -- -- --
Dividends on common and preferred stock
and amortization of purchase premium (55,222) -- -- (1,304) (53,918)
Exercise of stock options and related tax benefit 29,282 -- 8 23,173 (16,195)
Amortization relating to allocation of ESOP
stock and earned portion of RRP stock and
related tax benefit 13,797 -- -- 10,699 --
- -------------------------------------------------------------------------------------------------------------------------------
BALANCE AT DECEMBER 31, 1999 $ 1,196,912 $ 2,000 $ 555 $ 800,414 $ 908,236
===============================================================================================================================
</TABLE>
ASTORIA FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
YEARS ENDED DECEMBER 31, 1999, 1998, AND 1997
<TABLE>
<CAPTION>
ACCUMULATED UNALLOCATED UNEARNED
OTHER COMMON COMMON
TREASURY COMPREHENSIVE STOCK HELD STOCK HELD
(In Thousands, Except Share Data) STOCK INCOME BY ESOPs BY RRP
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
BALANCE AT DECEMBER 31, 1996 $ (143,552) $ 6,789 $ (43,719) $ (11,739)
Comprehensive income:
Net income -- -- -- --
Other comprehensive income, net of tax:
Net unrealized gain on securities, net
of reclassification adjustment -- 14,076 -- --
Comprehensive income
Issuance of Series B, preferred stock
(2,000,000 shares) to effect acquisition
of The Greater New York Savings Bank -- -- -- --
Issuance of common stock (89,548 shares)
to effect acquisition of The Greater New
York Savings Bank -- -- -- --
Conversion of The Greater New York
Savings Bank stock options into Astoria
Financial Corporation stock options -- -- -- --
Common stock repurchased (2,224,372 shares) (85,735) -- -- --
Dividends on common and preferred stock -- -- -- --
Issuance of treasury stock (5,695,827 shares)
to effect acquisition of The Greater New
York Savings Bank 130,465 -- -- --
Exercise of stock options and related tax benefit 10,882 -- -- --
Amortization relating to allocation of ESOP
stock and earned portion of RRP stock and
related tax benefit -- -- 4,152 4,686
- -----------------------------------------------------------------------------------------------------------------
BALANCE AT DECEMBER 31, 1997 (87,940) 20,865 (39,567) (7,053)
Comprehensive income:
Net income -- -- -- --
Other comprehensive income, net of tax:
Net unrealized loss on securities, net
of reclassification adjustment -- (34,928) -- --
Comprehensive income
Adjustments to stockholders' equity to effect the
acquisition of Long Island Bancorp, Inc. 68,586 -- -- 1,070
Common stock repurchased (339,892 shares) (16,633) -- -- --
Dividends on common and preferred stock
and amortization of purchase premium -- -- -- --
Exercise of stock options and related tax benefit 35,837 -- -- --
Amortization relating to allocation of ESOP
stock and earned portion of RRP stock and
related tax benefit -- -- 3,467 5,364
Adjustment to conform fiscal year of Long
Island Bancorp, Inc. to Astoria Financial
Corporation 150 (503) 192 405
- -----------------------------------------------------------------------------------------------------------------
BALANCE AT DECEMBER 31, 1998 -- (14,566) (35,908) (214)
Comprehensive loss:
Net income -- -- -- --
Other comprehensive income, net of tax:
Net unrealized loss on securities, net
of reclassification adjustment -- (329,632) -- --
Comprehensive loss
Common stock repurchased (4,257,200 shares) (159,367) -- -- --
Dividends on common and preferred stock
and amortization of purchase premium -- -- -- --
Exercise of stock options and related tax benefit 22,296 -- -- --
Amortization relating to allocation of ESOP
stock and earned portion of RRP stock and
related tax benefit -- -- 2,953 145
- -----------------------------------------------------------------------------------------------------------------
BALANCE AT DECEMBER 31, 1999 $ (137,071) $ (344,198) $ (32,955) $ (69)
=================================================================================================================
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
74
<PAGE> 77
ASTORIA FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------------------------
(In Thousands) 1999 1998 1997
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 235,670 $ 45,048 $ 117,884
---------------------------------------------
Adjustments to reconcile net income to net cash provided by operating
activities:
Net accretion of discounts, premiums and deferred loan fees (56,959) (25,939) (20,401)
Provision for loan and real estate losses 4,081 16,489 9,886
Depreciation and amortization 13,913 16,959 23,591
Net gain on sales of securities and loans (4,079) (12,966) (18,444)
Net gain on disposition of banking and loan production offices (19,206) -- --
Originations of loans held-for-sale, net of proceeds from sales 140,703 (22,175) (105,071)
Amortization of goodwill 19,425 19,754 11,722
Allocated and earned shares from ESOPs and RRP 9,927 18,195 19,663
Increase in accrued interest receivable (8,380) (8,671) (5,874)
Mortgage servicing rights amortization and valuation allowance,
net of capitalized amounts 1,868 (6,061) (8,036)
Loss on early extinguishment of debt -- 18,547 --
Decrease in other assets 11,540 24,930 62,928
(Decrease) increase in accrued expenses and other liabilities (8,467) 131,236 (33,933)
Acquisition costs and restructuring charges -- 87,101 --
---------------------------------------------
Net cash provided by operating activities 340,036 302,447 53,915
---------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Origination of loans held-for-investment, net of principal payments (1,011,999) (1,260,776) (1,591,419)
Loan purchases through third parties (413,573) (195,336) (581,794)
Principal payments on mortgage-backed securities held-to-maturity 337,081 319,212 80,635
Principal payments on mortgage-backed securities available-for-sale 2,599,970 1,964,457 800,946
Purchases of mortgage-backed securities held-to-maturity (281,165) (72,651) (119,080)
Purchases of mortgage-backed securities available-for-sale (3,869,950) (6,505,183) (799,257)
Purchases of other securities held-to-maturity (42,078) (213,456) (743,799)
Purchases of other securities available-for-sale (179,018) (1,061,236) (180,550)
Proceeds from maturities of other securities available-for-sale 74,006 755,248 220,853
Proceeds from maturities of other securities held-to-maturity 213,723 527,527 139,514
Purchases of FHLB stock, net (55,000) (101,476) (7,970)
Proceeds from sales of securities available-for-sale 177,825 1,903,658 1,556,073
Proceeds from sales of real estate owned and investments in
real estate, net 14,871 20,524 37,303
Proceeds from disposition of loan production offices 4,208 -- --
Purchases of premises and equipment, net of proceeds from sales (27,150) (27,677) (18,233)
Purchase of mortgage servicing rights -- -- (4,066)
Acquisitions net of cash and cash equivalents acquired -- -- (82,202)
---------------------------------------------
Net cash used in investing activities (2,458,249) (3,947,165) (1,293,046)
---------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net increase (decrease) in deposits 42,689 (294,106) 203,912
Net increase in reverse repurchase agreements 1,985,000 3,219,488 912,166
Net increase in FHLB of New York advances 400,000 820,000 2,120
Net (decrease) increase in other borrowings (6,344) 77,855 276,913
Increase in mortgage escrow funds 4,244 22,720 8,376
Sale of upstate New York banking offices (135,637) -- --
Issuance of capital trust securities 125,000 -- --
Costs to repurchase common stock (159,367) (16,633) (85,735)
Cash dividends paid to stockholders (56,908) (42,754) (25,797)
Cash received for options exercised 16,725 15,012 4,960
---------------------------------------------
Net cash provided by financing activities 2,215,402 3,801,582 1,296,915
---------------------------------------------
Net increase in cash and cash equivalents 97,189 156,864 57,784
Adjustment to conform fiscal year of Long Island Bancorp, Inc.
to Astoria Financial Corporation -- 77,323 --
Cash and cash equivalents at beginning of year 393,382 159,195 101,411
---------------------------------------------
Cash and cash equivalents at end of year $ 490,571 $ 393,382 $ 159,195
=============================================
</TABLE>
75
<PAGE> 78
ASTORIA FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS -- Continued
<TABLE>
<CAPTION>
Year Ended December 31,
(In Thousands) 1999 1998 1997
- --------------------------------------------------------------------------------------
<S> <C> <C> <C>
Supplemental disclosures:
Cash paid during the year:
Interest $939,709 $738,271 $593,880
====================================
Income taxes $155,395 $ 25,078 $ 42,570
====================================
Additions to real estate owned $ 10,952 $ 15,955 $ 16,511
====================================
Securitization of loans $ -- $387,071 $680,889
====================================
</TABLE>
SUPPLEMENTAL INFORMATION TO THE CONSOLIDATED STATEMENTS OF CASH FLOWS RELATING
TO THE GREATER ACQUISITION
Noncash investing and financing transactions relating to The Greater acquisition
that are not reflected in the Consolidated Statement of Cash Flows for the year
ended December 31, 1997 are listed below:
<TABLE>
<CAPTION>
(In Thousands)
- --------------------------------------------------------------------------------------
<S> <C>
Fair value of assets acquired, excluding cash and cash
equivalents acquired $2,340,822
Liabilities assumed (2,140,102)
Conversion of stock options and common stock
previously acquired from acquiree (13,132)
Goodwill 169,335
75% stock consideration (274,721)
- ---------------------------------------------------------------------------------------
Cash paid for acquiree, net of cash and cash equivalents
acquired $ 82,202
=======================================================================================
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
76
<PAGE> 79
ASTORIA FINANCIAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The following significant accounting and reporting policies of Astoria Financial
Corporation and our subsidiaries conform to generally accepted accounting
principles, or GAAP, and are used in preparing and presenting these consolidated
financial statements.
(a) Basis of Presentation
The accompanying consolidated financial statements include the accounts of
Astoria Financial Corporation and our wholly-owned subsidiaries, (1) Astoria
Federal Savings and Loan Association, or Astoria Federal, and its subsidiaries
and (2) Astoria Capital Trust I. As used in this annual report, "we," "us" and
"our" refer to Astoria Financial Corporation and its consolidated subsidiaries,
including Astoria Federal and Astoria Capital Trust I, depending on the context.
All significant inter-company accounts and transactions have been eliminated in
consolidation.
The preparation of financial statements requires us to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results may differ from those estimates. Certain
reclassifications have been made to prior year financial statements to conform
to the current year presentation.
(b) Cash Equivalents
For the purpose of reporting cash flows, cash and cash equivalents include cash
and due from banks, federal funds sold and repurchase agreements with original
maturities of three months or less.
(c) Securities
Management determines the appropriate classification of debt and equity
securities at the time of purchase. Our available-for-sale portfolio is carried
at estimated fair value, with any unrealized gains and losses, net of taxes,
reported as a separate component of accumulated comprehensive income in
stockholders' equity. The securities which we have the positive intent and
ability to hold to maturity are classified as held-to-maturity and are carried
at amortized cost. Premiums and discounts are recognized as adjustments to
interest income using the interest method over the remaining period to
contractual maturity, adjusted for estimated prepayments when applicable. Gains
and losses on the sale of all securities are determined using the specific
identification method and are reflected in earnings when realized. For the years
ended December 31, 1999 and 1998, we did not maintain a trading portfolio. We
conduct a periodic review and evaluation of the securities portfolio to
determine if the value of any security has declined below its carrying value,
and whether such decline is other than temporary.
(d) Loans Held-for-Sale
Loans held-for-sale are carried at the lower of cost or estimated fair value, as
determined on an aggregate basis. Net unrealized losses are recognized in a
valuation allowance by charges to operations. Premiums, discounts and
origination fees and costs on loans held-for-sale are deferred and recognized as
a component of the gain or loss on sale. Gains and losses on sales of loans
held-for-sale are recognized on settlement dates and are determined by the
difference between the sale proceeds and the carrying value of the loans.
(e) Loans Receivable
Loans receivable are carried at the unpaid principal balances, net of
unamortized discounts and premiums and deferred loan origination fees and costs
which are recognized as yield adjustments over the lives of the loans using the
interest method. Loan origination and commitment fees and certain direct loan
origination costs are deferred and amortized to income using the interest
method. Discounts and premiums on mortgage loans purchased are also deferred and
amortized using the interest method. We generally amortize these amounts over
the contractual life of the related loans, adjusted for prepayments.
77
<PAGE> 80
ASTORIA FINANCIAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
The allowance for loan losses is increased by charges to income and decreased by
charge-offs (net of recoveries). Our periodic evaluation of the adequacy of the
allowance is based on our past loan loss experience, trends in portfolio volume,
quality, maturity and composition, the status and amount of non-performing and
past-due loans, known and inherent risks in the portfolio, adverse situations
that may affect a borrower's ability to repay, the estimated fair value of any
underlying collateral and current and prospective, as well as specific and
general, economic conditions.
When loans become 90 days delinquent, with the exception of loans delinquent 90
days or more as to their maturity date but not their interest payment, we
discontinue accruing interest, which results in a charge to interest income
equal to all interest previously accrued and not collected. While loans are in
non-accrual status, interest due is monitored and income is recognized only to
the extent cash is received, until a return to accrual status is warranted. We
return loans to an accrual status when principal and interest payments are
current, full collection of principal and interest is reasonably assured and a
consistent record of performance has been demonstrated.
A loan is considered impaired when, based upon current information and events,
it is probable that a creditor will be unable to collect all amounts due,
including principal and interest, according to the contractual terms of the loan
agreement. We review larger balance loans for individual impairment and groups
of smaller balance loans based on homogeneous pools. Interest income received on
impaired non-accrual loans is recognized on a cash basis. Interest income on
other impaired loans is recognized on an accrual basis.
(f) Mortgage Servicing Rights, or MSR
We recognize as separate assets the rights to service mortgage loans, whether
those rights are acquired through loan purchase or loan origination activities.
MSR are amortized in proportion to and over the estimated period of net
servicing income.
We stratify our MSR by underlying loan type (primarily fixed and adjustable) and
interest rate. The estimated fair value of each MSR stratum is determined
through a discounted analysis of future cash flows, incorporating numerous
assumptions including servicing income, servicing costs, market discount rates,
prepayment speeds and default rates.
We assess impairment of the MSR based on the fair value of those rights on a
stratum-by-stratum basis with any impairment recognized through a valuation
allowance for each impaired stratum. Individual allowances for each stratum are
then adjusted in subsequent periods to reflect changes in the measurement of
impairment.
(g) Real Estate Owned and Investments in Real Estate
Real estate acquired through foreclosure or the collection process is carried
(1) at the lower of cost or estimated fair value at the date of acquisition, and
(2) at the lower of the new cost basis or estimated fair value, less estimated
selling costs, thereafter. Fair value is estimated through current appraisals.
Write-downs required at the time of acquisition are charged to the allowance for
loan losses. Thereafter, we maintain an allowance for actual and potential
future declines in value which are charged to income along with any additional
expenses incurred on the property.
Investments in unconsolidated real estate joint ventures are accounted for using
the equity method of accounting. Interest and other carrying charges are
capitalized on projects in process of development. The recognition of gains on
the sale of real estate is dependent upon the terms of sale and various other
factors. Valuation allowances for estimated losses are charged to income when
the carrying value of real estate held for investment exceeds its estimated fair
value. Real estate owned and investments in real estate, which are included in
other assets, amounted to $5.1 million at December 31, 1999 and $9.3 million at
December 31, 1998.
(h) Premises and Equipment
Land is carried at cost. Buildings and improvements, leasehold improvements and
furniture, fixtures and equipment are carried at cost, less accumulated
depreciation and amortization. Buildings and improvements and furniture,
fixtures and equipment are depreciated using the straight-line method over the
estimated useful lives of the assets.
78
<PAGE> 81
ASTORIA FINANCIAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
Leasehold improvements are amortized using the straight-line method over the
shorter of the term of the related leases or the estimated useful lives of the
improved property.
(i) Goodwill
The portion, if any, of intangible assets generated in acquisitions identified
as core deposit intangible is amortized using the interest method over the
estimated lives of the related liabilities. The remaining portion is considered
goodwill and is amortized using the straight line method over varying periods up
to fifteen years. We evaluate goodwill periodically for impairment in response
to changes in circumstances or events.
(j) Reverse Repurchase Agreements (Securities Sold Under Agreements to
Repurchase)
We enter into sales of securities under agreements to repurchase with selected
dealers and banks. Such agreements are treated as financings and the obligations
to repurchase securities sold are reflected as a liability in our consolidated
statements of financial condition. The securities underlying the agreements are
delivered to the dealer or bank with whom each transaction is executed. The
dealers or banks, who may sell, loan or otherwise dispose of such securities to
other parties in the normal course of their operations, agree to resell us
substantially the same securities at the maturities of the agreements. We retain
the right of substitution of collateral throughout the terms of the agreements.
(k) Interest Rate Caps/Floors and Interest Rate Swaps
As part of our asset/liability management program, we utilize from time-to-time
interest rate caps, floors and swaps to reduce our sensitivity to interest rate
fluctuations. Premiums paid for interest rate caps and floors are amortized to
interest expense over the terms of the agreements. Net interest income is
decreased or increased on an accrual basis by amounts receivable or payable with
respect to the rate caps and floors purchased or sold. The net interest
differential, resulting from the difference between exchanging variable and
fixed rate interest payments as part of an interest rate swap, is recorded as a
component of net interest income.
(l) Income Taxes
We use the asset and liability method of accounting for income taxes. Under the
asset and liability method, deferred income taxes are recognized for the tax
consequences of "temporary differences" by applying enacted statutory tax rates,
applicable to future years, to differences between the financial statement
carrying amounts and tax basis of existing assets and liabilities. The effect on
deferred taxes of a change in tax rates is recognized in income in the period
that includes the enactment date.
(m) Earnings Per Common Share, or EPS
Basic EPS is computed by dividing income before extraordinary item less
preferred dividends by the weighted-average common shares outstanding during the
year. The weighted-average common shares outstanding includes the average number
of shares of common stock outstanding adjusted for the weighted average number
of unallocated shares held by the Employee Stock Ownership Plans, or ESOPs, and
the Recognition and Retention Plan, or RRP.
Diluted EPS is computed by dividing income before extraordinary item less
preferred dividends by the weighted-average common shares and common equivalent
shares outstanding during the year. For the diluted EPS calculation, the
weighted average common shares and common equivalent shares outstanding include
the average number of shares of common stock outstanding adjusted for the
weighted average number of unallocated shares held by the ESOPs and the RRP and
the dilutive effect of unexercised stock options using the treasury stock
method. When applying the treasury stock method, our average stock price is
utilized, and we add to the proceeds, the tax benefit that would have been
credited to additional paid-in capital assuming exercise of non-qualified stock
options.
79
<PAGE> 82
ASTORIA FINANCIAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
(n) Employee Benefits
Astoria Federal has a qualified, non-contributory defined benefit pension plan,
or the Pension Plan, covering substantially all of its eligible employees.
Astoria Federal's policy is to fund pension costs in accordance with the minimum
funding requirement. Contributions are intended to provide not only for benefits
attributed to service to date, but also for those expected to be earned in the
future. As a result of the acquisition of The Greater New York Savings Bank, or
The Greater, the qualified, non-contributory defined benefit pension plan for
employees of The Greater was merged into the Pension Plan in the first quarter
of 1998 and plan assets of $48.6 million were transferred to the Pension Plan.
As a result of the acquisition of Long Island Bancorp, Inc., or LIB, the
qualified, non-contributory defined benefit pension plan for employees of LIB
was merged into the Pension Plan as of December 31, 1998 and plan assets of
$71.8 million were transferred to the Pension Plan.
In addition, Astoria Federal has non-qualified and unfunded supplemental
retirement plans covering certain officers and directors. Pursuant to the
acquisition of LIB, we assumed a non-qualified unfunded retirement plan for
former directors of LIB. We also sponsor a defined health care plan that
provides postretirement medical and dental coverage to select individuals. The
costs of postretirement benefits are accrued during an employee's active
working career. We also continue to provide health care and life insurance
benefits for certain former LIB retirees and their eligible dependents.
We record compensation expense related to the ESOPs at an amount equal to the
shares allocated by the ESOPs multiplied by the average fair value of our common
stock during the reporting period. For EPS and other per-share disclosure, ESOP
shares that have been committed to be released are considered outstanding. ESOP
shares that have not been committed to be released (unallocated shares) are
excluded from outstanding shares on a weighted average basis for EPS
calculations. The difference between the fair value of shares for the period and
the cost of the shares allocated by the ESOPs is recorded as an adjustment to
additional paid-in capital.
(o) Segment Reporting
As a community-oriented financial institution, substantially all of our
operations involve the delivery of loan and deposit products to customers. We
make operating decisions and assess performance based on an ongoing review of
these community banking operations, which constitute our only operating segment
for financial reporting purposes.
(2) BUSINESS COMBINATIONS
LIB Acquisition
Following the close of business on September 30, 1998, we completed the
acquisition of LIB, the holding company of The Long Island Savings Bank, FSB, or
LISB, a federally chartered savings bank. LIB was merged with us and LISB was
merged with Astoria Federal. We refer to this transaction as the LIB
Acquisition. All subsidiaries of LISB became subsidiaries of Astoria Federal.
The transaction was accounted for as a pooling-of-interests. Accordingly, under
GAAP, the assets, liabilities and stockholders' equity as reported by LIB
immediately prior to consummation were recorded by us. No goodwill was created
as a result of the LIB Acquisition. Under the terms of the merger agreement,
holders of LIB common stock, par value $.01 per share, or LIB Common Stock,
received 1.15 shares of our common stock for each share of LIB Common Stock. We
issued 27,876,636 shares of our common stock to complete the LIB Acquisition.
LIB had $6.58 billion in total assets, $3.58 billion in deposits, and $581.0
million in stockholders' equity at September 30, 1998.
Acquisition Costs and Restructuring Charges
From the period between initiation of the LIB Acquisition and the consummation
date, we developed formal plans to integrate LIB's business into our business.
Such plans included, among other things, the termination of employees, disposal
of duplicate facilities, consolidation and relocation of equipment and
facilities, integration of information systems and cancellation of lease
contracts and other executory contracts. We have recognized as liabilities only
those items that qualify for recognition under the consensus reached on Issue
No. 94-3 by the
80
<PAGE> 83
ASTORIA FINANCIAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
Emerging Issues Task Force, or EITF, "Liability Recognition for
Certain Employee Termination Benefits and Other Costs to Exit An Activity
(including Certain Costs Incurred in a Restructuring)."
We have recorded all direct costs related to the LIB Acquisition as liabilities
as of the consummation date, and the total pre-tax charge of $124.2 million has
been classified as acquisition costs and restructuring charges in our
consolidated statement of income for the year ended December 31, 1998. Such
costs relate to restructuring plans and/or exit plans we formally adopted.
The following table sets forth the activity in the balances of accrued
acquisition costs and restructuring charges for the year ended December 31,
1999:
<TABLE>
<CAPTION>
Accrued Balance at Cash Payments Accrued Balance at
(In Thousands) December 31, 1998 in 1999 December 31, 1999
- -------------- ----------------- ------- -----------------
<S> <C> <C> <C>
Employee termination costs $10,326 $ 5,280 $ 5,046 (a)
Facilities, equipment and
systems costs 12,428 5,736 6,692 (b)
Transaction fees & other costs 8,557 7,399 1,158 (c)
------- ------- -------
Total $31,311 $18,415 $12,896
======= ======= =======
</TABLE>
(a) The remaining accrued balance primarily represents voluntary early
retirement charges for pension and postretirement benefits for certain
former employees of LIB. Such benefits will remain as accrued pension and
postretirement benefit costs until all such benefits are paid during these
former LIB employees' lifetimes. As such, the balance has been
reclassified out of accrued merger costs and into the appropriate accrued
pension and postretirement benefit costs.
(b) The remaining accrued balance primarily represents the present value of
net operating costs for our former mortgage headquarters. This accrued
balance will continue to be charged for the net operating costs of the
building, whose lease extends to the year 2017.
(c) The remaining accrued balance primarily represents accrued legal fees
which we will incur to restructure the various employee benefit plans of
LIB and the subsidiaries of LISB.
The Greater Acquisition
Following the close of business on September 30, 1997, we completed the
acquisition of The Greater. The Greater was merged with Astoria Federal in a
transaction which was accounted for as a purchase. We refer to this transaction
as The Greater Acquisition. Accordingly, the assets and liabilities of The
Greater were recorded on our books at their fair market values of $2.37 billion
and $2.14 billion, respectively. The cost of The Greater Acquisition was $399.5
million, including approximately $38.2 million of acquisition-related costs.
The balance of goodwill generated by The Greater Acquisition at December 31,
1999 was $147.9 million. Our consolidated results of operations include The
Greater's results of operations commencing October 1, 1997.
(3) REPURCHASE AGREEMENTS
We purchase securities under agreements to resell (repurchase agreements). These
agreements represent short-term loans and are reflected as an asset in the
consolidated statements of financial condition. We may sell, loan or otherwise
dispose of such securities to other parties in the normal course of operations.
Substantially the same securities are to be resold at maturity of the repurchase
agreements.
Repurchase agreements averaged $37.9 million during the year ended December 31,
1999 and $29.5 million during the year ended December 31, 1998. The maximum
amount of such agreements outstanding at any month end was $110.0 million during
the year ended December 31, 1999 and $100.8 million during the year ended
December 31, 1998. As of December 31, 1999, one repurchase agreement for $35.7
million was outstanding. As of December 31, 1998, one repurchase agreement for
$66.4 million was outstanding.
81
<PAGE> 84
ASTORIA FINANCIAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
(4) SECURITIES
The amortized cost and estimated fair value of securities available-for-sale and
held-to-maturity at December 31, 1999 and 1998 are as follows:
<TABLE>
<CAPTION>
At December 31, 1999
---------------------------------------------------------------------
Gross Gross Estimated
Amortized Unrealized Unrealized Fair
(In Thousands) Cost Gains Losses Value
- -------------------------------------- --------- ---------- ---------- ---------
<S> <C> <C> <C> <C>
Available-for-sale:
Mortgage-backed securities:
GNMA pass-through certificates $ 129,029 $ 658 $ (3,986) $ 125,701
FHLMC pass-through certificates 228,904 917 (3,407) 226,414
FNMA pass-through certificates 443,639 6,068 (2,202) 447,505
REMICs and CMOs:
Agency issuance 6,304,417 454 (435,093) 5,869,778
Non agency issuance 1,604,335 366 (69,122) 1,535,579
---------- ------- -------- ----------
Total mortgage-backed securities 8,710,324 8,463 (513,810) 8,204,977
---------- ------- -------- ----------
Other securities:
Obligations of the U.S. Government
and agencies 547,082 - (72,878) 474,204
Corporate debt securities 61,349 - (7,168) 54,181
FNMA and FHLMC preferred stock 147,515 44 (20,080) 127,479
Asset-backed and other securities 1,907 1 - 1,908
---------- ------- -------- ----------
Total other securities 757,853 45 (100,126) 657,772
---------- ------- -------- ----------
Total available-for-sale $9,468,177 $ 8,508 $(613,936) $8,862,749
========== ======= ======== ==========
Held-to-maturity:
Mortgage-backed securities:
GNMA pass-through certificates $ 4,247 $ 220 $ (1) $ 4,466
FHLMC pass-through certificates 45,287 719 (42) 45,964
FNMA pass-through certificates 13,083 16 (648) 12,451
REMICs and CMOs:
Agency issuance 667,249 1,308 (6,390) 662,167
Non agency issuance 352,395 121 (6,313) 346,203
---------- ------- -------- ----------
Total mortgage-backed securities 1,082,261 2,384 (13,394) 1,071,251
---------- ------- -------- ----------
Other securities:
Obligations of the U.S. Government
and agencies 772,584 17,384 (62,684) 727,284
Obligations of states and political
subdivisions 45,112 - (40) 45,072
---------- ------- -------- ----------
Total other securities 817,696 17,384 (62,724) 772,356
---------- ------- -------- ----------
Total held-to-maturity $1,899,957 $19,768 $(76,118) $1,843,607
========== ======= ======== ==========
</TABLE>
82
<PAGE> 85
ASTORIA FINANCIAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
<TABLE>
<CAPTION>
At December 31, 1998
----------------------------------------------------------------
Gross Gross Estimated
Amortized Unrealized Unrealized Fair
(In Thousands) Cost Gains Losses Value
- ---------------------------------------- ---------- ---------- ---------- ---------
<S> <C> <C> <C> <C>
Available-for-sale:
Mortgage-backed securities:
GNMA pass-through certificates $ 163,731 $ 2,795 $ (10) $ 166,516
FHLMC pass-through certificates 342,311 2,079 (1,668) 342,722
FNMA pass-through certificates 608,842 8,513 (1,561) 615,794
REMICs and CMOs:
Agency issuance 4,961,157 1,363 (42,020) 4,920,500
Non agency issuance 1,509,402 3,689 (4,789) 1,508,302
--------- ------ ------- ---------
Total mortgage-backed securities 7,585,443 18,439 (50,048) 7,553,834
--------- ------ ------- ---------
Other securities:
Obligations of the U.S. Government
and agencies 462,302 4,910 (13) 467,199
Corporate debt securities 21,048 - (322) 20,726
FNMA and FHLMC preferred stock 127,515 1,325 - 128,840
Asset-backed and other securities 25,904 41 (100) 25,845
--------- ------ ------- ---------
Total other securities 636,769 6,276 (435) 642,610
--------- ------ ------- ---------
Total available-for-sale $8,222,212 $24,715 $(50,483) $8,196,444
========= ====== ======= =========
Held-to-maturity:
Mortgage-backed securities:
GNMA pass-through certificates $ 53,455 $2,122 $ - $ 55,577
FHLMC pass-through certificates 14,738 493 (4) 15,227
FNMA pass-through certificates 15,954 135 - 16,089
REMICs and CMOs:
Agency issuance 785,314 3,427 (1,138) 787,603
Non agency issuance 267,338 1,404 (2,093) 266,649
--------- ------ ------- ---------
Total mortgage-backed securities 1,136,799 7,581 (3,235) 1,141,145
--------- ------ ------- ---------
Other securities:
Obligations of the U.S. Government
and agencies 925,074 10,412 (128) 935,358
Obligations of states and political
subdivisions 46,938 - (1) 46,937
--------- ------ ------- ---------
Total other securities 972,012 10,412 (129) 982,295
--------- ------ ------- ---------
Total held-to-maturity $2,108,811 $17,993 $(3,364) $2,123,440
========= ====== ======= =========
</TABLE>
Sales of securities from the available-for-sale portfolio are summarized as
follows:
<TABLE>
<CAPTION>
Year Ended December 31,
-----------------------
(In Thousands) 1999 1998 1997
- -------------- ---- ---- ----
<S> <C> <C> <C>
Proceeds from sale $ 170,119 $1,811,686 $1,327,250
Gross gains 1,017 16,353 16,504
Gross losses 278 5,377 2,104
</TABLE>
The amortized cost and estimated fair value of debt securities at December 31,
1999, by contractual maturity, excluding mortgage-backed securities, are shown
on page 84. Expected maturities will differ from contractual maturities because
borrowers may have the right to call or prepay obligations with or without call
or prepayment penalties. As of December 31, 1999, the amortized cost of such
callable securities totaled $1.34 billion of which $1.09 billion are callable
within one year and at various other times thereafter.
83
<PAGE> 86
ASTORIA FINANCIAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
<TABLE>
<CAPTION>
At December 31,
---------------
1999 1998
---- ----
Estimated Estimated
Amortized Fair Amortized Fair
(In Thousands) Cost Value Cost Value
- -------------- ---- ----- ---- -----
<S> <C> <C> <C> <C>
Available-for-sale:
Due in one year or less $ 40,888 $ 40,825 $ 21,981 $ 21,949
Due after one year through five years 503 499 92,302 93,274
Due after five years through ten years 49,935 46,363 129 137
Due after ten years 518,914 442,508 394,745 398,312
-------- -------- -------- --------
Total available-for-sale $610,240 $530,195 $509,157 $513,672
======== ======== ======== ========
Held-to-maturity:
Due in one year or less $ - $ - $ 800 $ 800
Due after one year through five years 16,880 16,745 1,877 1,876
Due after five years through ten years -- -- 175,110 176,425
Due after ten years 800,816 755,611 794,225 803,194
-------- -------- -------- --------
Total held-to-maturity $817,696 $772,356 $972,012 $982,295
======== ======== ======== ========
</TABLE>
The balance of accrued interest receivable for mortgage-backed securities
totaled $51.8 million at December 31, 1999 and $48.0 million at December 31,
1998. The balance of accrued interest receivable for other securities and
Federal Home Loan Bank of New York, or FHLB-NY, stock totaled $11.9 million at
December 31, 1999 and $10.6 million at December 31, 1998.
(5) LOANS RECEIVABLE, NET, MORTGAGE LOAN SERVICING AND LOANS HELD-FOR-SALE
Loans receivable, net, are summarized as follows:
<TABLE>
<CAPTION>
At December 31,
---------------
(In Thousands) 1999 1998
- -------------- ---- ----
<S> <C> <C>
Mortgage loans:
Secured by one-to-four family residences $9,006,894 $7,646,641
Secured by multi-family properties 615,438 452,854
Secured by commercial properties 433,035 452,387
----------- ----------
10,055,367 8,551,882
Net deferred loan origination costs (fees) 2,957 (5,049)
Net unamortized premium 54,892 36,522
----------- ----------
Total mortgage loans 10,113,216 8,583,355
----------- ----------
Consumer and other loans:
Home equity 116,726 142,437
Passbook 7,481 6,653
Other 50,697 80,287
----------- ----------
174,904 229,377
Net deferred loan origination costs 816 1,921
Net unamortized premium (discount) 138 (931)
----------- ----------
Total consumer and other loans 175,858 230,367
----------- ----------
Total loans 10,289,074 8,813,722
Allowance for loan losses (76,578) (74,403)
----------- ----------
Loans receivable, net $10,212,496 $8,739,319
=========== ==========
</TABLE>
Accrued interest receivable on all loans totaled $47.0 million at December 31,
1999 and $43.7 million at December 31, 1998.
84
<PAGE> 87
ASTORIA FINANCIAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
Included in loans receivable were non-accrual loans totaling $50.5 million at
December 31, 1999 and $106.3 million at December 31, 1998. If all non-accrual
loans had been performing in accordance with their original terms, we would have
recorded interest income, with respect to such loans, of $3.8 million for the
year ended December 31, 1999, $6.8 million for the year ended December 31, 1998
and $5.2 million for the year ended December 31, 1997. This compares to $1.9
million for the year ended December 31, 1999, $1.6 million for the year ended
December 31, 1998 and $1.2 million for the year ended December 31, 1997 of
actual payments recorded as interest income with respect to such loans.
Loans we individually review for impairment are limited to multi-family mortgage
loans, commercial loans, loans modified in a troubled debt restructuring and
selected large one-to-four family residential mortgage loans. Examples of
measurement techniques we utilize in determining the book value of an impaired
loan include the market price of the loan, if one exists, the estimated fair
value of the collateral and the present value of expected future cash flows.
The following table summarizes information regarding our impaired mortgage
loans:
<TABLE>
<CAPTION>
At December 31, 1999
--------------------
Allowance
Recorded for Loan Net
(In Thousands) Investment Losses Investment
- -------------- ---------- ------ ----------
<S> <C> <C> <C>
One-to-four family:
With a related allowance $1,856 $(351) $ 1,505
Without a related allowance 4,648 - 4,648
------- ------- -------
Total one-to-four family 6,504 (351) 6,153
------- ------- -------
Commercial and multi-family:
With a related allowance 17,217 (2,315) 14,902
Without a related allowance 624 - 624
------- ------- -------
Total commercial and multi-family 17,841 (2,315) 15,526
------- ------- -------
Total impaired mortgage loans $24,345 $(2,666) $21,679
======= ======= =======
</TABLE>
<TABLE>
<CAPTION>
At December 31, 1998
--------------------
Allowance
Recorded for Loan Net
(In Thousands) Investment Losses Investment
- -------------- ---------- ------ ----------
<S> <C> <C> <C>
One-to-four family:
With a related allowance $ 1,993 $ (378) $ 1,615
Without a related allowance 3,376 -- 3,376
------- ------- -------
Total one-to-four family 5,369 (378) 4,991
------- ------- -------
Commercial and multi-family:
With a related allowance 21,385 (2,901) 18,484
Without a related allowance 94 -- 94
------- ------- -------
Total commercial and multi-family 21,479 (2,901) 18,578
------- ------- -------
Total impaired mortgage loans $26,848 $(3,279) $23,569
======= ======= =======
</TABLE>
Our average recorded investment in impaired loans was $25.5 million for the year
ended December 31, 1999, $25.1 million for the year ended December 31, 1998 and
$19.0 million for the year ended December 31, 1997. Interest income recognized
on impaired loans, which was not materially different from cash-basis interest
income, amounted to $1.7 million for the year ended December 31, 1999, $2.3
million for the year ended December 31, 1998 and $1.7 million for the year ended
December 31, 1997.
85
<PAGE> 88
ASTORIA FINANCIAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
Mortgage Loan Servicing
We service mortgage loans for investors with unpaid principal balances of $4.41
billion at December 31, 1999 and $4.94 billion at December 31, 1998, which are
not reflected in the accompanying consolidated statements of financial
condition. The right to service loans for others is generally obtained by either
the sale of loans with servicing retained or the open market purchase of MSR.
MSR activity is summarized as follows:
<TABLE>
<CAPTION>
Year Ended December 31,
-----------------------
(In Thousands) 1999 1998 1997
- -------------- ---- ---- ----
<S> <C> <C> <C>
Balance at beginning of year $ 53,338 $ 41,839 $ 29,769
Purchased MSR -- -- 4,066
Capitalized MSR 3,919 22,217 15,385
Amortization of MSR (8,249) (13,218) (7,381)
Adjustment to conform fiscal year
of Long Island Bancorp, Inc. to
Astoria Financial Corporation -- 2,500 --
- ---------------------------------------------------------------------------------
49,008 53,338 41,839
Less: Valuation allowance for MSR 639 3,101 50
- ---------------------------------------------------------------------------------
Balance at end of year $ 48,369 $ 50,237 $ 41,789
=================================================================================
</TABLE>
Fees earned for servicing loans are reported as income when the related mortgage
loan payments are collected. MSR are amortized as a reduction to loan servicing
fee income on a level-yield basis over the estimated remaining life of the
underlying mortgage loans. MSR are carried at cost and impairment, if any, is
recognized through a valuation allowance.
Loan servicing income is summarized as follows:
<TABLE>
<CAPTION>
Year Ended December 31,
-----------------------
(In Thousands) 1999 1998 1997
-------------- ---- ---- ----
<S> <C> <C> <C>
Servicing fees $ 21,164 $ 21,431 $ 19,830
Amortization of MSR (8,249) (13,218) (7,381)
Recovery of (provision for) valuation
allowance for MSR 2,462 (3,051) 32
- ---------------------------------------------------------------------------------
Total servicing income $ 15,377 $ 5,162 $ 12,481
=================================================================================
</TABLE>
Loans Held-for-Sale
We originate most 30-year fixed rate loans for immediate sale to the Federal
National Mortgage Association, or FNMA, the Federal Home Loan Mortgage
Corporation, or FHLMC, the State of New York Mortgage Agency, or SONYMA, or
other investors on a servicing released or retained basis. In addition, we began
selling our 15-year fixed rate loan production in the secondary market during
1999. Generally, the sale of such loans is arranged through a master commitment
with the agencies on a mandatory or best efforts basis. The sale of loans to
other investors are also arranged with specific contractual commitments on a
mandatory or best efforts basis. In addition, student loans are sold to the
Student Loan Marketing Association generally before repayment begins during the
grace period of the loan. Our balance of loans held-for-sale was $11.4 million
at December 31, 1999 and $212.9 million at December 31, 1998.
86
<PAGE> 89
ASTORIA FINANCIAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
(6) ALLOWANCE FOR LOAN LOSSES
Activity in the allowance for loan losses is summarized as follows:
<TABLE>
<CAPTION>
Year Ended December 31,
(In Thousands) 1999 1998 1997
- -------------- ---- ---- ----
<S> <C> <C> <C>
Balance at beginning of year $ 74,403 $ 73,920 $ 48,001
Allowance of acquired institution -- -- 25,433
Provision charged to operations 4,119 15,380 9,061
Charge-offs (net of recoveries of $4,765
$4,409 and $2,253, respectively) (1,944) (14,751) (8,575)
Adjustment to conform fiscal year of
Long Island Bancorp, Inc. to Astoria
Financial Corporation -- (146) --
-------- -------- --------
Balance at end of year $ 76,578 $ 74,403 $ 73,920
======== ======== ========
</TABLE>
The $15.4 million provision charged to operations during the year ended December
31, 1998 included $4.0 million recorded by LIB prior to consummation of the
acquisition, primarily for increased consumer loan delinquencies. In addition,
$5.6 million was provided by us in the 1998 fourth quarter, primarily to conform
LIB's credit administration, asset management philosophies and accounting
methodologies to ours.
(7) DEPOSITS
Deposits are summarized as follows:
<TABLE>
<CAPTION>
At December 31,
-----------------------------------------------------------------------------------
1999 1998
-----------------------------------------------------------------------------------
Weighted Weighted
Average Average
(Dollars in Thousands) Rate Balance Percent Rate Balance Percent
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Core deposits:
Savings 2.00% $2,581,442 27.02% 2.00% $2,815,681 29.12%
Money market 4.82 1,165,734 12.20 4.17 857,295 8.87
NOW and money manger 1.00 531,131 5.56 1.00 532,369 5.51
Non-interest bearing NOW
and money manager - 346,584 3.63 - 420,189 4.34
---------- ------ ---------- ------
Total core deposits 4,624,891 48.41 4,625,534 47.84
Certificates of deposit 5.34 4,929,643 51.59 5.31 5,042,752 52.16
---------- ------ ---------- ------
Total deposits $9,554,534 100.00% $9,668,286 100.00%
========== ====== ========== ======
</TABLE>
On August 27, 1999, we sold our five upstate New York banking offices in Otsego
and Chenango counties with deposits totaling $156.4 million to CNB Financial
Corporation for a net gain of $20.4 million.
The aggregate amount of certificates of deposit with balances equal to or
greater than $100,000 was $602.3 million at December 31, 1999 and $568.7 million
at December 31, 1998.
87
<PAGE> 90
ASTORIA FINANCIAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
At December 31, 1999 and 1998, scheduled maturities of certificates of deposit
are as follows:
<TABLE>
<CAPTION>
At December 31,
---------------
1999 1998
---- ----
Weighted Weighted
Average Average
(Dollars in Thousands) Rate Balance Percent Rate Balance Percent
- ---------------------- ---- ------- ------- ---- ------- -------
<S> <C> <C> <C> <C> <C> <C>
One year or less 5.05% $3,070,678 62.29% 5.10% $3,601,044 71.41%
Greater than one year
through three years 5.72 1,430,543 29.02 5.85 1,144,240 22.69
Greater than three years 6.13 428,422 8.69 5.88 297,468 5.90
---------- ------ ---------- ------
Total certificates of deposit $4,929,643 100.00% $5,042,752 100.00%
========== ====== ========== ======
</TABLE>
Interest expense on deposits for the years ended December 31, 1999, 1998 and
1997 is summarized as follows:
<TABLE>
<CAPTION>
Year Ended December 31,
---------------------------------
(In Thousands) 1999 1998 1997
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Savings $ 54,341 $ 72,243 $ 70,755
Money market 45,316 32,108 20,121
NOW and money manager 5,110 6,337 6,625
Certificates of deposit 258,389 288,914 274,042
- --------------------------------------------------------------------------------
Total interest expense on deposits $363,156 $399,602 $371,543
================================================================================
</TABLE>
(8) BORROWED FUNDS
Borrowed funds are summarized as follows:
<TABLE>
<CAPTION>
At December 31,
------------------------------------------------
1999 1998
------------------------------------------------
Weighted Weighted
Average Average
(Dollars in Thousands) Amount Rate Amount Rate
- ----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Reverse repurchase agreements $ 9,276,800 5.24% $ 7,291,800 5.27%
Advances from the FHLB-NY, net 1,610,058 5.25 1,210,170 4.94
Other borrowings, net 514,663 6.86 520,827 6.66
----------- -----------
Total borrowed funds, net $11,401,521 5.31 $ 9,022,797 5.31
=========== ===========
</TABLE>
88
<PAGE> 91
ASTORIA FINANCIAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
Reverse Repurchase Agreements
At December 31, 1999 and 1998, all of the outstanding reverse repurchase
agreements had original contractual maturities between one and ten years, with
the exception of one agreement outstanding at December 31, 1999 for $100.0
million with an original contractual maturity of 40 days. All of the outstanding
agreements were secured by U.S. Treasury securities, U.S. Government agency
securities or mortgage-backed securities. The following is a summary of
information relating to these agreements:
<TABLE>
<CAPTION>
At or for the Year Ended
December 31,
-----------------------------
(Dollars in Thousands) 1999 1998
- --------------------------------------------------------------------------------------------
<S> <C> <C>
Book value (amortized cost) of collateral (including
accrued interest):
U.S. Treasury securities $ 32,453 $ 33,266
U.S. Government agency securities 1,060,801 1,191,916
Mortgage-backed securities 9,407,792 6,557,070
Fair value of collateral (including accrued interest):
U.S. Treasury securities 32,392 33,896
U.S. Government agency securities 963,754 1,204,380
Mortgage-backed securities 8,899,901 6,535,477
Average balance of outstanding agreements during the year 9,561,718 5,767,274
Maximum balance of outstanding agreements at any month
end during the year 10,026,800 7,491,800
Average interest rate for the year 5.17% 5.50%
</TABLE>
Reverse repurchase agreements at December 31, 1999 have contractual maturities
as follows:
<TABLE>
<CAPTION>
Year Amount
---- --------------
(In Thousands)
<S> <C>
2000 $ 100,000
2002 1,480,000
2003 1,400,000
2004 2,955,000
2007 50,000
2008 3,291,800
</TABLE>
At December 31, 1999, $3.94 billion of such reverse repurchase agreements are
callable in 2000, $3.48 billion are callable in 2001 and $1.76 billion are
callable in 2002 and at various other times thereafter.
FHLB-NY Advances
Pursuant to a blanket collateral agreement with the FHLB-NY, advances are
secured by all of our stock in the FHLB- NY, certain qualifying mortgage loans,
mortgage-backed securities and other securities not otherwise pledged in an
amount at least equal to 110% of the advances outstanding. The following is a
summary of information relating to these advances:
<TABLE>
<CAPTION>
For the Year Ended
December 31,
---------------------------
(Dollars in Thousands) 1999 1998
- ------------------------------------------------------------------------------------------
<S> <C> <C>
Average balance of outstanding agreements during the year $1,265,968 $ 360,233
Maximum balance of outstanding agreements at any month
end during the year 1,610,058 1,210,170
Average interest rate for the year 5.00% 5.78%
</TABLE>
89
<PAGE> 92
ASTORIA FINANCIAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
FHLB-NY advances at December 31, 1999 have contractual maturities as follows:
<TABLE>
<CAPTION>
Year Amount
---- --------------
(In Thousands)
<S> <C>
2000 $450,058
2001 150,000
2003 750,000
2004 260,000
</TABLE>
At December 31, 1999, $200.0 million of such advances are callable in 2000,
$450.0 million are callable in 2001 and $250.0 million are callable in 2002 and
at various other times thereafter.
At December 31, 1999, we had available a 12-month commitment for overnight and
one month lines of credit with the FHLB-NY totaling $100.0 million. Both lines
of credit are priced at the federal funds rate plus 10.0 basis points and
reprice daily.
As part of our interest rate risk management and subsequent to the consummation
of the LIB Acquisition, $1.41 billion of reverse repurchase agreements and
FHLB-NY advances were restructured during the fourth quarter of 1998. We prepaid
$1.41 billion of borrowed funds with a weighted average maturity of 1.07 years,
a weighted average initial call of 0.27 years and a weighted average rate of
5.83%. We then borrowed new funds having a weighted average maturity date of
4.52 years, a weighted average initial call of 2.46 years and a weighted average
rate of 4.86%. The prepayment penalty incurred in connection therewith totaled
$18.5 million ($10.6 million net of taxes), and is reflected as an extraordinary
item in our consolidated statement of income for the year ended December 31,
1998.
Other Borrowings
A funding note was issued during the year ended December 31, 1996 in the amount
of $181.4 million and is collateralized by a pool of adjustable rate residential
mortgage loans. The interest on the funding note changes monthly and is subject
to a maximum rate of 11% through June 2001. Thereafter, the interest on the
funding note is subject to further adjustments. We have the option to redeem the
funding note in whole on or after June 2001 or when the principal balance of the
collateral pool is less than $13.5 million. At December 31, 1999, the
outstanding principal balance of the funding note collateral pool was $115.1
million. The outstanding balance of the funding note was $25.4 million at
December 31, 1999 and $71.4 million at December 31, 1998.
During the year ended December 31, 1998, we issued two three-year medium-term
notes, each in the amount of $75.0 million. During the year ended December 31,
1997, we issued a five year medium-term note in the amount of $300.0 million.
The medium-term notes were part of a $1.00 billion medium-term note program we
established in 1997 in which medium-term notes could be issued bearing interest
at either a fixed or floating rate, with maturities ranging from nine months to
30 years from their respective issue dates. The outstanding balance of the net
medium-term notes was $449.7 million at December 31, 1999 and $449.4 million at
December 31, 1998.
In December 1999, we obtained $40.0 million of short-term financing with an
interest rate equal to the six-month LIBOR plus 250 basis points which matures
on June 22, 2000. This short-term financing is collateralized by a pledge of the
notes held by us from our ESOPs. Deferred loan costs of $400,000 are being
amortized over the life of the loan. At December 31, 1999, the outstanding
balance on the short-term financing was $39.6 million, net of deferred costs.
90
<PAGE> 93
ASTORIA FINANCIAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
Interest expense on borrowed funds is summarized as follows:
<TABLE>
<CAPTION>
Year Ended December 31,
------------------------------------
(In Thousands) 1999 1998 1997
- ----------------------------------------------------------------------------------
<S> <C> <C> <C>
Reverse repurchase agreements $500,948 $322,647 $193,419
Advances from the FHLB-NY 64,090 21,820 22,794
Other borrowings 27,137 31,396 15,835
- ----------------------------------------------------------------------------------
Total interest expense on borrowed funds $592,175 $375,863 $232,048
==================================================================================
</TABLE>
(9) GUARANTEED PREFERRED BENEFICIAL INTEREST IN JUNIOR SUBORDINATED DEBENTURES
On October 28, 1999, our wholly-owned finance subsidiary, Astoria Capital Trust
I, issued $125.0 million aggregate liquidation amount of 9.75% Capital
Securities due November 1, 2029, Series A referred to as Capital Securities. We
have fully and unconditionally guaranteed the Capital Securities along with all
obligations of Astoria Capital Trust I under the trust agreement. Astoria
Capital Trust I was formed for the exclusive purpose of issuing the Capital
Securities and common securities and using the proceeds to acquire Junior
Subordinated Debentures issued by us. The Junior Subordinated Debentures total
$128.9 million, have an interest rate of 9.75%, mature on November 1, 2029 and
are the sole assets of Astoria Capital Trust I. The Junior Subordinated
Debentures are prepayable, in whole or in part, at our option on or after
November 1, 2009 at declining premiums to maturity. Proceeds totaling $31.3
million from the issuance of the Junior Subordinated Debentures were used to
increase the capital level of Astoria Federal and the remaining proceeds were
used primarily for the repurchase of our common stock.
The balance outstanding on the Capital Securities was $125.0 million at December
31, 1999. The costs associated with the Capital Securities issuance have been
capitalized and are being amortized using the straight-line method over a period
of ten years. Distributions on the Capital Securities are payable semi-annually
beginning May 1, 2000, and are reflected in our Consolidated Statements of
Income as a component of non-interest expense under the caption "Capital trust
securities."
(10) STOCKHOLDERS' EQUITY
At the time of its conversion from a federally-chartered mutual savings and loan
association to a federally-chartered capital stock savings and loan association,
Astoria Federal established a liquidation account with a balance equal to the
retained earnings reflected in its June 30, 1993 statement of financial
condition. As part of the acquisitions of LIB, Fidelity and The Greater, (see
Note 2), Astoria Federal established liquidation accounts equal to the account
balances previously maintained by these acquired institutions for eligible
account holders. These liquidation accounts are reduced annually to the extent
that eligible account holders reduce their qualifying deposits. In the event of
a complete liquidation, each eligible account holder will be entitled to receive
a distribution from the liquidation accounts in an amount proportionate to the
current adjusted qualifying balances for accounts then held.
In connection with the LIB Acquisition, we issued 27,876,636 shares of our
common stock in exchange for all of the outstanding LIB Common Stock using an
exchange rate of 1.15 shares of our common stock for each share of LIB Common
Stock. As a result of the LIB Acquisition, we retired LIB's previously held
treasury shares totaling 2,482,667 which had a cost of $68.6 million.
In connection with The Greater Acquisition, we issued 5,785,375 shares of our
common stock, of which 5,695,827 were treasury shares. In addition, we issued
2,000,000 shares of 12% Noncumulative Perpetual Preferred Stock, Series B, or
the Series B Preferred Stock, in exchange for all of the outstanding 12%
Noncumulative Preferred Stock, Series B of The Greater. The Series B Preferred
Stock, which has a par value of $1.00 per share and a liquidation preference of
$25.00 per share, may be redeemed at our option, in whole or in part, on or
after October 1, 2003, at an initial price of $27.25 per share and declining
ratably to $25.00 per share on October 1, 2013. Dividends on the Series B
Preferred Stock are not cumulative but, if declared by us, are payable
quarterly.
91
<PAGE> 94
ASTORIA FINANCIAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
On April 21, 1999, our Board of Directors approved our sixth stock repurchase
plan authorizing the purchase, at our management's discretion, of up to 10% of
our common stock then outstanding, or 5,528,000 shares, over a two year period
in open-market or privately negotiated transactions. Under this plan, we
repurchased 4,257,200 shares of our common stock during 1999 at an aggregate
cost of $159.4 million.
We have a dividend reinvestment and stock purchase plan, or the Plan. The Plan,
which became effective on December 1, 1995, requires no additional shares to be
issued out of authorized and unissued shares, although 300,000 shares of
authorized and unissued shares are reserved for use by the Plan, should the need
arise.
In 1996, we adopted a Stockholders Rights Plan, or the Rights Plan, and declared
a dividend of one preferred share purchase right, or Right, for each outstanding
share of our common stock. Each Right, initially, will entitle stockholders to
buy a one one-hundredth interest in a share of a new series of our preferred
stock at an exercise price of $100.00 upon the occurrence of certain events
described in the Rights Plan. We reserved 325,000 shares of our available
preferred stock for such series.
(11) INTEREST RATE CAPS/FLOORS AND INTEREST RATE SWAPS
Interest Rate Caps/Floors
At December 31, 1999 and 1998, we had $60.0 million (based upon contractual
notional principal) of interest rate floor agreements outstanding, resulting
from The Greater Acquisition. The agreements had a weighted-average floor rate
of 6.08%, and expire in February 2000. The carrying amount (unamortized premium)
of interest rate floor agreements in the consolidated statements of financial
condition aggregated $19,000 at December 31, 1999 and $147,000 at December 31,
1998. The estimated fair value of these instruments aggregated $19,000 at
December 31, 1999 and $769,000 at December 31, 1998. The estimated fair value
represents the approximate amount we would have received upon termination of the
agreements at December 31, 1999 and 1998, considering the then current levels of
interest rates. The amortization of premium paid for the agreements, net of
contractual amounts received, increased net interest income by $419,000 for the
year ended December 31, 1999 and $172,000 for the year ended December 31, 1998.
Interest Rate Swaps
During the year ended December 31, 1998, we entered into three interest rate
swap agreements aggregating $450.0 million (contractual notional principal). The
swap agreements effectively converted the three medium-term fixed rate
borrowings into floating rate borrowings. The following table details the terms
of the swap agreements at December 31, 1999:
<TABLE>
<CAPTION>
Fixed Interest Rate
Notional Amount Floating Interest Rate Paid Received Maturity Date
--------------- --------------------------- ------------------- -------------
(In Thousands)
<S> <C> <C> <C>
$300,000 3-month LIBOR minus 3 basis points 7.00% January 16, 2008
75,000 3-month LIBOR minus 18 basis points 6.20 April 2, 2003
75,000 3-month LIBOR minus 38 basis points 6.20 April 2, 2005
</TABLE>
The above agreements are initially callable in 2000 and at various other times
thereafter. Interest expense on borrowed funds decreased $6.5 million for the
year ended December 31, 1999 and $4.1 million for the year ended December 31,
1998 as a result of these swaps. As of December 31, 1999, the interest rate
swaps had a gross negative market value of $14.0 million which is fully
collateralized by U.S. Treasury Notes.
(12) COMMITMENTS AND CONTINGENCIES
Lease Commitments
At December 31, 1999, we were obligated under several non-cancelable operating
leases on buildings and land used for office space and banking purposes through
2043. These operating leases contain escalation clauses which provide for
increased rental expense based primarily on increases in real estate taxes and
cost-of living indices. Rent expense
92
<PAGE> 95
ASTORIA FINANCIAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
under these operating leases was $6.7 million for the year ended December 31,
1999, $9.1 million for the year ended December 31, 1998 and $6.8 million for the
year ended December 31, 1997.
The minimum rental payments under the terms of the non-cancelable operating
leases as of December 31, 1999, are summarized below:
<TABLE>
<CAPTION>
Years Ending
December 31, Amount
-----------------------------------------------
(In Thousands)
<S> <C>
2000 $ 6,846
2001 6,874
2002 6,426
2003 6,396
2004 6,143
Thereafter 53,500
-----------------------------------------------
$86,185
===============================================
</TABLE>
Outstanding Commitments
We had outstanding commitments as follows:
<TABLE>
<CAPTION>
At December 31,
-----------------------
(In Thousands) 1999 1998
- -------------------------------------------------------------------------------------
<S> <C> <C>
Mortgage loans - commitments to extend credit $352,267 $563,818
Commitments to purchase mortgage loans 24,162 75,481
Home equity loans - unused lines of credit 74,175 58,729
Consumer and commercial loans - unused lines of credit 95,028 95,086
Commitments to sell loans 18,011 229,598
Commitments to purchase securities -- 785,720
</TABLE>
We use the same credit policies and underwriting standards in making loan
commitments and extending lines of credit (off balance sheet financial
instruments) as we do for on balance sheet financial instruments. Our maximum
exposure to credit risk is represented by the contractual amount of the
instruments.
Commitments to extend credit are agreements to lend to a customer as long as
there is no violation of any condition established in the contract. Commitments
generally have fixed expiration dates or other termination clauses and may
require payment of a fee. Since some of the commitments are expected to expire
without being drawn upon, the total commitment amounts do not necessarily
represent future cash requirements. We evaluate each customer's creditworthiness
on a case-by-case basis.
Assets Sold with Recourse
We are obligated under various recourse provisions associated with certain first
mortgage loans sold in past years. The principal balance of loans sold with
recourse amounted to $917.4 million at December 31, 1999 and $1.07 billion at
December 31, 1998. Although we do not believe that our recourse obligations
subject us to risk of material loss in the future, we have established recourse
reserves totaling $1.1 million at December 31, 1999 and $1.2 million at December
31, 1998.
We have two collateralized repurchase obligations due to the sale of certain
long-term fixed-rate municipal revenue bonds and FHA project loans to investment
trust funds for proceeds that approximated par value. The trust funds have put
options that require us to repurchase the securities or loans for specified
amounts prior to maturity under certain specified circumstances, as defined in
the agreements. The outstanding option balance on the two agreements totaled
$57.1 million at December 31, 1999 and $58.5 million at December 31, 1998.
Various securities have been pledged as collateral.
93
<PAGE> 96
ASTORIA FINANCIAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
Litigation
Certain claims, suits, complaints and investigations arising in the ordinary
course of business, have been filed or are pending. In our opinion, after
consultation with legal counsel, our financial position, operating results and
liquidity will not be materially affected by the outcome of such legal
proceedings.
(13) INCOME TAXES
We file a consolidated federal income tax return on a calendar-year basis. Prior
to the enactment of the Small Business Job Protection Act of 1996, or the 1996
Act, thrift institutions such as Astoria Federal, which met certain definitional
tests primarily relating to their assets and the nature of their business, were
permitted, for federal income tax purposes, to establish tax reserves for bad
debts. Such thrift institutions were also permitted to make annual additions to
the reserve, to be deducted in arriving at its taxable income within specified
limitations. Similar deductions for additions to Astoria Federal's bad debt
reserve were permitted under the New York State Franchise Tax and the New York
City Financial Corporation Tax regulations.
Under the 1996 Act, Astoria Federal is unable to make additions to the tax bad
debt reserve, but is permitted to deduct bad debts as they occur. Additionally,
the 1996 Act required institutions to recapture over a six-year period,
beginning with Astoria Federal's taxable year commencing January 1, 1996, the
excess, if any, of the balance of its bad debt reserves as of December 31, 1995
over the balance of such reserves as of December 31, 1987. However, under the
1996 Act, such recapture requirements will be suspended for each of the two
successive taxable years, beginning January 1, 1996, in which Astoria Federal
originates a minimum amount of certain residential loans during such years that
are not less than the average of the principal amounts of such loans made by
Astoria Federal during its six taxable years preceding January 1, 1996. Astoria
Federal's tax bad debt reserves at December 31, 1995 exceeded its December 31,
1987 reserves. The remaining balance at December 31, 1999, to be recaptured into
taxable income is $1.5 million.
In response to the federal legislation, the New York State and New York City tax
laws have been amended to prevent a similar recapture of Astoria Federal's bad
debt reserve. The amendment permitted the continued future use of the bad debt
reserve method for purposes of determining Astoria Federal's New York State and
New York City tax liabilities, so long as Astoria Federal continues to satisfy
certain New York State and New York City definitional tests.
Retained earnings at December 31, 1999 and 1998 included base year bad debt
reserves, which amounted to approximately $159.1 million, for which no federal
income tax liability has been recognized. This represents the balance of the bad
debt reserves created for tax purposes as of December 31, 1987. These amounts
are subject to recapture in the unlikely event that Astoria Federal (1) makes
distributions in excess of earnings and profits, (2) redeems its stock, or (3)
liquidates.
Income tax expense attributable to income before extraordinary item for the
years ended December 31, 1999, 1998 and 1997 is summarized as follows:
<TABLE>
<CAPTION>
Year Ended December 31,
-----------------------------------------
(In Thousands) 1999 1998 1997
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Current
Federal $ 120,980 $ 56,011 $ 36,592
State and local 26,835 10,042 8,829
- ---------------------------------------------------------------------------------------------------------
147,815 66,053 45,421
- ---------------------------------------------------------------------------------------------------------
Deferred
Federal 14,547 (2,342) 30,422
State and local 1,402 (1,886) 5,997
- ---------------------------------------------------------------------------------------------------------
15,949 (4,228) 36,419
=========================================================================================================
Total income tax expense attributable to income
before extraordinary item $163,764 $61,825 $81,840
=========================================================================================================
</TABLE>
94
<PAGE> 97
ASTORIA FINANCIAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
The total income tax expense differed from the amounts computed by applying the
federal income tax rate to income before extraordinary item, for the years ended
December 31, 1999, 1998 and 1997, as a result of the following:
<TABLE>
<CAPTION>
Year Ended December 31,
(In Thousands) 1999 1998 1997
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Expected income tax expense at statutory federal rate $ 139,799 $ 41,128 $ 69,903
State and local taxes, net of federal tax benefit 19,314 5,301 9,636
Amortization of goodwill 6,698 6,677 3,737
Acquisition costs -- 8,400 --
Non-deductible expense of ESOP 2,185 3,645 2,795
Tax exempt income (1,063) (1,090) (2,099)
Reversal of deferred tax valuation allowance (1,477) (592) --
Other, net (1,692) (1,644) (2,132)
- ----------------------------------------------------------------------------------------------------
Total income tax expense attributable to income
before extraordinary item $ 163,764 $ 61,825 $ 81,840
====================================================================================================
</TABLE>
The tax effects of temporary differences that give rise to significant portions
of the deferred tax assets and deferred tax liabilities at December 31, 1999 and
1998 are as follows:
<TABLE>
<CAPTION>
At December 31,
---------------------------------
(In Thousands) 1999 1998
- -------------------------------------------------------------------------------------------
<S> <C> <C>
Deferred tax assets:
Net operating loss carryforward $ 32,606 $ 40,226
Allowances and tax reserves 37,900 44,938
Deferred losses on securities sold -- 6,218
Compensation and benefits 19,911 20,942
Tax credits 3,129 3,129
Mark-to-market - IRC Section 475 2,721 2,782
Unrealized loss on securities available-for-sale 261,451 11,202
Accrued acquisition related expenses 11,620 16,064
Other 3,224 3,001
- -------------------------------------------------------------------------------------------
Total gross deferred tax assets 372,562 148,502
Valuation allowance (9,537) (11,014)
- -------------------------------------------------------------------------------------------
Deferred tax assets 363,025 137,488
- -------------------------------------------------------------------------------------------
Deferred tax liabilities:
Book premiums in excess of tax (7,786) (7,707)
Mortgage loans (7,833) (6,023)
Premises and equipment (11,705) (11,343)
Basis difference in home equity investment (1,468) (1,500)
Mortgage servicing rights (6,306) (6,742)
Other (1,660) (2,570)
- -------------------------------------------------------------------------------------------
Total gross deferred tax liabilities (36,758) (35,885)
===========================================================================================
Net deferred tax assets $326,267 $101,603
===========================================================================================
</TABLE>
The valuation allowance for deferred tax assets of $9.5 million at December 31,
1999 relates primarily to the portion of the tax reserves which may not be
realized for New York State and New York City tax purposes, as they do not
provide for net operating loss carryforwards or carrybacks. At December 31,
1999, we had alternative minimum tax credit carryforwards for federal tax
purposes of approximately $3.1 million. Federal income tax net operating loss
carryforwards of approximately $93.2 million will expire in the year 2012.
95
<PAGE> 98
ASTORIA FINANCIAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
(14) EARNINGS PER COMMON SHARE
The following table is a reconciliation of basic and diluted EPS:
<TABLE>
<CAPTION>
Year Ended December 31,
1999 1998
- ------------------------------------------------------------------------------------------------------
(In Thousands, Average Per-share Average Per-share
Except Share Data) Income Shares Amount Income Shares Amount
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Income before extra-
ordinary item (1) $235,670 $55,685
Less: preferred stock
dividends 6,000 6,000
-------- -------
Basic EPS:
Income available to
common stockholders 229,670 51,351,355 $4.47 49,685 50,801,598 $0.98
===== =====
Effect of dilutive securities:
Options 1,155,607 2,084,593
---------- ----------
Diluted EPS:
Income available to common
stockholders plus assumed
conversions $229,670 52,506,962 $4.37 $49,685 52,886,191 $0.94
======== ========== ===== ======= ========== =====
</TABLE>
<TABLE>
<CAPTION>
Year Ended December 31,
1997
---------------------------------
(In Thousands, Average Per-share
Except Share Data) Income Shares Amount
- ------------------------------------------------------------------
<S> <C> <C> <C>
Income before extra-
ordinary item (1) $117,884
Less: preferred stock
dividends 1,500
--------
Basic EPS:
Income available to
common stockholders 116,384 46,362,179 $2.51
=====
Effect of dilutive securities:
Options 2,403,519
----------
Diluted EPS:
Income available to common
stockholders plus assumed
conversions $116,384 48,765,698 $2.39
======== ========== =====
</TABLE>
(1) Extraordinary item applies to the year ended December 31, 1998 only.
(15) COMPREHENSIVE INCOME
The components of comprehensive income, other than net income, are as follows:
<TABLE>
<CAPTION>
Year Ended December 31, 1999
-----------------------------------------
Before-Tax Tax Net-of-Tax
(In Thousands) Amount Benefit Amount
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Unrealized losses arising during period $(578,921) $ 249,709 $(329,212)
Less: reclassification adjustment for gains
included in net income (739) 319 (420)
--------- --------- ---------
Net unrealized losses on securities $(579,660) $ 250,028 $(329,632)
========= ========= =========
</TABLE>
<TABLE>
<CAPTION>
Year Ended December 31, 1998
-----------------------------------------
Before-Tax Tax Net-of-Tax
(In Thousands) Amount Benefit Amount
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Unrealized losses arising during period $(50,640) $ 21,916 $(28,724)
Less: reclassification adjustment for gains
included in net income (10,976) 4,772 (6,204)
-------- -------- --------
Net unrealized losses on securities $(61,616) $ 26,688 $(34,928)
======== ======== ========
</TABLE>
<TABLE>
<CAPTION>
Year Ended December 31, 1997
-----------------------------------------
Before-Tax Tax (Expense) Net-of-Tax
(In Thousands) Amount Benefit Amount
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Unrealized gains arising during period $ 38,988 $(16,733) $ 22,255
Less: reclassification adjustment for gains
included in net income (14,400) 6,221 (8,179)
-------- -------- --------
Net unrealized gains on securities $ 24,588 $(10,512) $ 14,076
======== ======== ========
</TABLE>
96
<PAGE> 99
ASTORIA FINANCIAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
(16) BENEFIT PLANS
Pension Plans and Other Postretirement Benefits
The following tables set forth the changes in our defined benefit pension plans'
and postretirement plans' accumulated benefit obligations, fair values of plan
assets and funded status as of December 31, 1999 and 1998:
<TABLE>
<CAPTION>
AT DECEMBER 31,
---------------------------------------------------------------------
OTHER POSTRETIREMENT
PENSION BENEFITS BENEFITS
----------------------------- -----------------------------
(IN THOUSANDS) 1999 1998 1999 1998
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
CHANGE IN BENEFIT OBLIGATION:
Benefit obligation at beginning of year $ 130,130 $ 83,612 $ 18,585 $ 8,783
Service cost 2,033 2,669 204 434
Interest cost 8,456 7,722 884 1,094
Amendments 539 -- -- --
Actuarial (gain) loss (14,205) 10,179 (5,985) (1,010)
The Greater Acquisition -- 27,654 -- 6,971
Curtailments -- 706 -- 1,577
Special termination benefits -- 4,903 -- 1,994
Benefits paid (8,276) (7,315) (1,252) (1,258)
--------- --------- --------- ---------
Benefit obligation at end of year $ 118,677 $ 130,130 $ 12,436 $ 18,585
========= ========= ========= =========
CHANGE IN PLAN ASSETS:
Fair value of plan assets at beginning of year $ 160,683 $ 97,227 $ -- $ --
Actual return on plan assets 22,480 20,505 -- --
The Greater Acquisition -- 48,401 -- --
Employer contribution 349 1,865 1,252 1,258
Benefits paid (8,276) (7,315) (1,252) (1,258)
--------- --------- --------- ---------
Fair value of plan assets at end of year $ 175,236 $ 160,683 $ -- $ --
========= ========= ========= =========
Funded status $ 56,558 $ 30,553 $ (12,436) $ (18,585)
Unrecognized net actuarial gain (39,387) (13,995) (8,370) (2,148)
Unrecognized prior service benefit (cost) 433 (1,670) 328 55
Unrecognized transition asset (451) (555) -- --
--------- --------- --------- ---------
Net amount recognized $ 17,153 $ 14,333 $ (20,478) $ (20,678)
========= ========= ========= =========
Amounts recognized in the consolidated
statements of financial condition consist of:
Prepaid benefit cost $ 28,651 $ 25,879 $ -- $ --
Accrued benefit liability (11,521) (11,622) (20,478) (20,678)
Intangible asset 23 76 -- --
--------- --------- --------- ---------
Net amount recognized $ 17,153 $ 14,333 $ (20,478) $ (20,678)
========= ========= ========= =========
</TABLE>
<TABLE>
<CAPTION>
EXPECTED RETURN RATE OF
DISCOUNT RATE ON PLAN ASSETS COMPENSATION INCREASE
WEIGHTED-AVERAGE ASSUMPTIONS ---------------- ------------------ ---------------------
ON PENSION BENEFIT PLANS: 1999 1998 1999 1998 1999 1998
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Astoria Federal Pension Plan 7.75% 6.75% 8.00% 8.00% 5.00% 5.00%
Astoria Federal Excess Benefit and
Supplemental Benefit Plans 6.00 6.00 N/A N/A 8.00 8.00
Astoria Federal Directors' Retirement Plan 6.00 6.00 N/A N/A 4.00 4.00
The Greater Directors' Retirement Plan 6.00 6.00 N/A N/A N/A N/A
The Retirement Plan of LIB -- 6.50 -- 8.00 -- 5.50
LIB Directors' Retirement Plan 6.00 6.00 N/A N/A N/A N/A
</TABLE>
97
<PAGE> 100
ASTORIA FINANCIAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
<TABLE>
<CAPTION>
DISCOUNT RATE
--------------------
WEIGHTED-AVERAGE ASSUMPTIONS ON 1999 1998
OTHER POSTRETIREMENT BENEFIT PLANS: ---- ----
<S> <C> <C>
Astoria Federal Retiree Health Care Plan 7.75% 6.75%
LIB Postretirement Benefit Plan -- 6.50
</TABLE>
For measurement purposes for the Astoria Federal Retiree Health Care Plan, an
11% annual rate of increase in the per capita cost of covered health care
benefits was assumed for 1997. The rate was assumed to decrease gradually to 6%
for 2002 and remain at that level thereafter. For measurement purposes for the
LIB Postretirement Benefit Plan, an 8.5% annual rate of increase in the per
capita cost of covered health care benefits was assumed for 1997. The rate was
assumed to decrease gradually to 4.5% for 2009 and remain at that level
thereafter.
The components of net periodic (benefit) costs are as follows:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------------------------------------------
OTHER POSTRETIREMENT
PENSION BENEFITS BENEFITS
-------------------------------- --------------------------------
(IN THOUSANDS) 1999 1998 1997 1999 1998 1997
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Service cost $ 2,033 $ 2,669 $ 1,998 $ 204 $ 434 $ 311
Interest cost 8,456 7,722 5,410 884 1,094 535
Expected return on plan assets (12,570) (11,400) (6,620) -- -- --
Amortization of prior service (cost) benefit (525) (691) (717) 40 10 10
Recognized net actuarial gain (66) (774) (372) (453) (171) (307)
Amortization of transition asset (104) (104) (412) -- -- --
-------- -------- -------- -------- -------- --------
Net periodic (benefit) cost (2,776) (2,578) (713) 675 1,367 549
-------- -------- -------- -------- -------- --------
Curtailment gain -- (1,875) -- -- (136) --
Special termination benefit cost -- 4,903 -- -- 1,994 --
-------- -------- -------- -------- -------- --------
Total (benefit) cost $ (2,776) $ 450 $ (713) $ 675 $ 3,225 $ 549
======== ======== ======== ======== ======== ========
</TABLE>
The Astoria Federal Excess Benefit and Supplemental Benefit Plans, Astoria
Federal Directors' Retirement Plan, The Greater Directors' Retirement Plan and
the LIB Directors' Retirement Plan are unfunded plans. The projected benefit
obligation and accumulated benefit obligation for these plans as of December 31,
1999 and December 31, 1998 were:
<TABLE>
<CAPTION>
At December 31,
------------------------------
(In Thousands) 1999 1998
- -------------------------------------------------------------------------------
<S> <C> <C>
Projected benefit obligation $ 13,255 $ 11,532
Accumulated benefit obligation 9,197 8,964
</TABLE>
Assumed health care cost trend rates have a significant effect on the amounts
reported for the health care plan. A one-percentage point change in assumed
health care cost trend rates would have the following effects:
<TABLE>
<CAPTION>
One Percentage One Percentage
(In Thousands) Point Increase Point Decrease
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Effect on total service and interest cost components $ 58 $ (48)
Effect on the postretirement benefit obligation 486 (425)
</TABLE>
Incentive Savings Plan
Astoria Federal maintains a 401(K) incentive savings plan which provides for
contributions to trust funds by both Astoria Federal and its participating
employees. Under the plan, participants may contribute up to 10% of their
pre-tax base salary, not to exceed $10,000 for the calendar year ending December
31, 1999. Matching contributions, if any, will be made at the discretion of
Astoria Federal. No such contributions were made for 1999, 1998 and 1997.
Participants vest immediately in their own contributions and after a period of
five years for Astoria Federal contributions.
During 1993, an employer stock fund was established as an investment alternative
for participants in connection with
98
<PAGE> 101
ASTORIA FINANCIAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
the conversion of Astoria Federal to stock form of ownership. As of December 31,
1999, the fund held 292,349 shares of our common stock valued at $30.44 per
share on behalf of participants. As of December 31, 1998, the fund held 297,941
shares of our common stock valued at $45.75 per share on behalf of participants.
Shares held by the fund are voted by the fund trustee as directed by the
participants for whose accounts the shares are held.
Pursuant to the LIB Acquisition, we assumed sponsorship of the 401(K) plan for
former LIB employees. New enrollment in this participant-directed, individual
account plan was frozen after the close of business on September 30, 1998, as a
result of the LIB Acquisition. The LIB 401(K) plan held shares of our common
stock on behalf of participants totaling 211,480 at December 31, 1999 and
292,446 at December 31, 1998. Shares held on behalf of participants are voted by
the plan trustee as directed by the participants for whose accounts the shares
are held.
Employee Stock Ownership Plans and Trusts
Astoria Federal established an Employee Stock Ownership Plan, or AFS ESOP, for
its eligible employees. To fund the purchase of 2,642,354 shares of our common
stock issued in the conversion, the AFS ESOP borrowed funds from us. The loan to
the AFS ESOP is being repaid principally from Astoria Federal's contributions to
the AFS ESOP over a period of 12 years and the collateral for the loan is our
common stock purchased by the AFS ESOP. Astoria Federal's contributions are
reduced by any investment earnings realized and any dividends paid on
unallocated shares. Prior to June 1, 1998, dividends on allocated shares were
used to make voluntary prepayments of additional principal, resulting in the
allocation of additional shares to participants' accounts. Effective June 1,
1998, dividends paid on allocated shares are no longer being utilized to make
additional loan principal payments. During the year ended December 31, 1998, a
total of $172,000 in dividends were paid on allocated shares, which increased
total shares allocated in that year. Dividends paid on unallocated shares which
reduced Astoria Federal's contribution to the AFS ESOP, totaled $1.5 million for
the year ended December 31, 1999 and $1.4 million for the year ended December
31, 1998. The AFS ESOP loan has an interest rate of 6.00% and an outstanding
balance of $18.6 million at December 31, 1999 and $21.3 million at December 31,
1998.
Shares purchased by the AFS ESOP are held by a trustee for allocation among
participants as the loan is repaid. The number of shares released annually is
based upon the ratio that the current principal and interest payment bears to
the current and all remaining scheduled future principal and interest payments.
Shares allocated to participants totaled 220,895 for the year ended December 31,
1999, 230,514 for the year ended December 31, 1998 and 240,086 for the year
ended December 31, 1997. As of December 31, 1999, 1,269,162 shares remain
unallocated.
Pursuant to the LIB Acquisition, we also maintain an Employee Stock Ownership
Plan for former employees of LIB, or the LIB ESOP. In 1994, the LIB ESOP
borrowed $23.8 million from LIB and used the funds to purchase 2,070,000 shares
of the then LIB Common Stock. All unallocated and allocated shares from the LIB
ESOP were converted to shares of our common stock at the exchange ratio of 1.15.
The loan has a scheduled maturity date of 15 years from its origination date and
has an amortization schedule that is tied to the aggregate payroll for its
covered employees. The LIB Acquisition has been treated as a partial termination
of this plan and, therefore, all terminated participants have vested in their
accounts. The trustee for the LIB ESOP must vote all allocated shares held in
the LIB ESOP trust in accordance with the instructions of the participants.
Unallocated shares held by the LIB ESOP trust are voted by the trustee in a
manner calculated to most accurately reflect the results of the allocated LIB
ESOP shares voted, subject to the requirements of the Employee Retirement Income
Security Act of 1974, as amended. Dividends paid on unallocated shares totaled
$1.7 million for the year ended December 31, 1999 and $1.1 million for the year
ended December 31, 1998. As of December 31, 1999 and 1998, the LIB ESOP loan had
an outstanding balance of $19.7 million and an interest rate of 6.15%. Shares
allocated to participants totaled 17,692 for the year ended December 31, 1999,
53,651 for the year ended December 31, 1998 and 70,895 for the year ended
December 31, 1997. As of December 31, 1999, 1,728,341 shares remain unallocated.
In accordance with SOP 93-6, we recorded compensation expense relating to the
ESOPs of $9.8 million for the year ended December 31, 1999, $13.6 million for
the year ended December 31, 1998 and $13.4 million for the year ended December
31, 1997, which was equal to the shares allocated by the ESOPs multiplied by the
average estimated fair value of our common stock during the year of allocation.
The average quoted price of a share of our common stock was $40.75 for the year
ended December 31, 1999, $50.30 for the year ended December 31, 1998 and $45.76
for the year ended December 31, 1997.
99
<PAGE> 102
ASTORIA FINANCIAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
(17) STOCK AND STOCK OPTION PLANS
In 1999, we adopted the 1999 Stock Option Plan for Officers and Employees of
Astoria Financial Corporation, or the 1999 Employee Option Plan, and the 1999
Stock Option Plan for Outside Directors of Astoria Financial Corporation, or the
1999 Directors' Option Plan. As a result of the adoption of these option plans,
all previous employee and director option plans were frozen and no further
option grants will be made pursuant to those plans. The number of shares
reserved for issuance under the 1999 Employee Option Plan was 2,500,000 and the
number of shares reserved for issuance under the 1999 Directors' Option Plan was
175,000. In the aggregate at December 31, 1999, we had six stock option plans
under which 3,834,615 options are outstanding and 2,829,043 are exercisable by
directors, officers, key employees and former directors and officers of
Fidelity, The Greater and LIB.
Under all plans, the exercise price of each option granted was equal to the
market price of our common stock on the grant date. Under the Employee Option
Plans, all options granted immediately vest and are exercisable in the event the
optionee terminates his/her employment due to death, disability, retirement or
in the event we experience a change of control as defined in such plans. Under
the Directors' Option Plans, all options granted are exercisable immediately on
their grant date, except options granted under the 1993 Stock Option Plan for
Outside Directors, which vested over three years. Options granted under all
plans were granted in tandem with limited stock appreciation rights exercisable
only in the event we experience a change of control, as defined by the plans.
Upon consummation of the acquisitions of Fidelity, The Greater and LIB, we
converted options previously granted to certain executive officers of those
institutions. Options converted for these three acquisitions totaled 2,127,205
and became 100% exercisable upon the consummation of the acquisition. Also,
pursuant to each of these three merger agreements, we granted their former
Boards of Directors options to acquire 112,000 shares of our common stock at the
then current market prices. For all options granted to these former Boards of
Directors, the maximum term of the options granted is ten years and the options
were immediately exercisable at the grant date.
We apply Accounting Principles Board Opinion No. 25, "Accounting for Stock
Issued to Employees," or APB No. 25, and related interpretations in accounting
for our stock option plans. Accordingly, no compensation cost has been
recognized for our fixed stock option plans. Had compensation cost for these
stock-based compensation plans been determined consistent with Statement of
Financial Accounting Standards No. 123, "Accounting for Stock-Based
Compensation," or SFAS No. 123, our net income and earnings per common share
would have been reduced to the pro forma amounts indicated below:
<TABLE>
<CAPTION>
Year Ended December 31,
----------------------------------------
(In Thousands, Except Per Share Data) 1999 1998 1997
- ---------------------------------------------------------------------------------
<S> <C> <C> <C>
Net income:
As reported $ 235,670 $ 45,048 $ 117,884
Pro forma $ 234,103 $ 38,019 $ 111,543
Basic earnings per common share:
As reported $ 4.47 $ 0.77 $ 2.51
Pro forma $ 4.44 $ 0.63 $ 2.37
Diluted earnings per common share:
As reported $ 4.37 $ 0.74 $ 2.39
Pro forma $ 4.34 $ 0.61 $ 2.26
</TABLE>
100
<PAGE> 103
ASTORIA FINANCIAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
Activity in our option plans is summarized as follows:
<TABLE>
<CAPTION>
Year Ended December 31,
--------------------------------------------------------------------------------
1999 1998 1997
--------------------------------------------------------------------------------
Weighted Weighted Weighted
Average Average Average
Exercise Exercise Exercise
Shares Price Shares Price Shares Price
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Outstanding at beginning of year: 4,640,737 $ 20.70 5,305,763 $ 16.08 5,145,154 $ 12.72
Granted 585,700 30.67 515,648 45.20 713,386 35.17
Canceled (49,014) (44.28) (19,805) (19.24) (92,622) (12.81)
Exercised (1,342,808) (12.80) (1,287,685) (13.26) (460,155) (11.92)
Adjustment to conform fiscal year
of Long Island Bancorp, Inc. to
Astoria Financial Corporation -- 126,816 38.37 -- --
--------- --------- ---------
Outstanding at end of year 3,834,615 $ 24.69 4,640,737 $ 20.70 5,305,763 $ 16.08
========= ========= =========
Options exercisable at end of year 2,829,043 3,726,720 2,768,885
</TABLE>
Options to purchase 2,113,300 shares at December 31, 1999, 109,248 shares at
December 31, 1998, and 691,907 shares at December 31, 1997 were available for
future grants under the Employee Option Plans.
The following table summarizes information about our stock options outstanding
at December 31, 1999:
<TABLE>
<CAPTION>
Options Outstanding Options Exercisable
------------------------------------------------- ----------------------------
Number Weighted Weighted Number Weighted
of Options Average Remaining Average of Options Average
Exercise Prices at 12/31/99 Contractual Life Exercise Price at 12/31/99 Exercise Price
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
$ 3.06 to $10.00 887,104 4.11 years $ 9.55 887,104 $ 9.55
12.50 to 23.81 1,246,819 4.39 years 14.45 1,194,547 14.22
26.13 to 36.00 818,250 9.01 years 30.90 256,550 33.15
36.75 to 59.75 882,442 8.41 years 48.60 490,842 51.48
--------- ---------
3.06 to 59.75 3,834,615 6.24 years $ 24.69 2,829,043 $ 20.93
========= =========
</TABLE>
The fair value of the option grants, excluding options from LIB for the year
ended December 31, 1997 was estimated on the date of grant using the
Black-Scholes option pricing model with the following weighted-average
assumptions used for grants:
<TABLE>
<CAPTION>
For the Year Ended December 31,
----------------------------------------
1999 1998 1997
---- ---- ----
<S> <C> <C> <C>
Dividend yield 3.00% 1.25% 1.25%
Expected stock price volatility 24.91 24.35 18.80
Risk-free interest rates based
upon equivalent-term U.S.
Treasury rates 6.60 4.75 5.98
Expected option lives 5.96 year 5.78 year 4.97 years
</TABLE>
The fair value of LIB's stock options for the year ended December 31, 1997 was
estimated on the date of grant using the Black-Scholes option pricing model
based upon the following assumptions: dividend yield of 1.35%; expected stock
price volatility of 24.07%; risk free interest rate of 6.04% and an expected
option life of 6.90 years.
101
<PAGE> 104
ASTORIA FINANCIAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
The following table summarizes the weighted average fair value of the stock
options granted:
<TABLE>
<CAPTION>
Year Ended December 31,
--------------------------------------------------------------------------------------
1999 1998 1997
--------------------------------------------------------------------------------------
Weighted Weighted Weighted
Options Average Options Average Options Average
Granted Fair Value Granted Fair Value Granted Fair Value
------- ---------- ------- ---------- ------- ----------
<S> <C> <C> <C> <C> <C> <C>
Employees 561,700 437,691 413,589
Outside directors 24,000 37,957 25,957
Other - 40,000 273,840
------- ------- -------
585,700 $8.01 515,648 $15.06 713,386 $23.10
======= ===== ======= ====== ======= ======
</TABLE>
The weighted-average fair value of options was calculated using the above
assumptions, based on our judgments regarding future option exercise experience
and market conditions. These assumptions are subjective in nature, involve
uncertainties and therefore cannot be determined with precision. The
Black-Scholes option pricing model also contains certain inherent limitations
when applied to options which are not immediately exercisable and are not traded
on public markets.
Recognition and Retention Plans
Astoria Federal established the RRPs as a method of providing our officers,
employees and non-employee directors with a proprietary interest in us in a
manner designed to encourage such persons to remain with us. Astoria Federal
contributed funds to the RRPs to enable the trusts to acquire 1,322,500 shares
of our common stock in the conversion and in open market transactions following
the conversion. This contribution represents deferred compensation which is
initially recorded as a reduction of stockholders' equity and ratably charged to
compensation expense over the vesting period of the actual stock awards. The
RRPs acquired the shares at an average price of $14.44 per share. During 1993,
all of the shares were awarded under the RRP for Officers and Employees
(1,035,042 shares), while 267,106 shares of the 287,458 shares available under
the RRP for Outside Directors were awarded. In 1995, 10,176 additional shares
were awarded under the terms of the RRP for Outside Directors. In 1996, we
amended the RRP for Outside Directors so that no future awards would be made and
the RRP Trustee sold, in the open market, the remaining 10,176 of unallocated
shares in such plan. Prior to January 1, 1996, a total of 25,946 shares were
forfeited under the RRP for Officers and Employees. 10,000 additional shares
were awarded in 1998 and 15,000 additional shares were awarded in 1997 under the
terms of the RRP for Officers and Employees. As of December 31, 1999, 946 shares
remain unallocated under the RRP for Officers and Employees.
RRP distributions to outside directors were completed during the year ended
December 31, 1998 and totaled 3,392 shares. 79,712 shares were distributed for
the year ended December 31, 1997. Initial awards to executive officers vested in
five equal annual installments commencing January 1995. Distributions to
executive officers totaled 133,892 shares during the year ended December 31,
1999, 128,894 shares during the year ended December 31, 1998 and 123,894 shares
during the year ended December 31, 1997. Initial awards to other officers and
employees vest in three equal annual installments commencing January 1997.
Distributions to other officers and employees totaled 129,906 shares during the
year ended December 31, 1999, 129,896 shares during the year ended December 31,
1998 and 129,834 shares during the year ended December 31, 1997. LIB had also
maintained similar RRPs which enabled its plans to acquire 776,250 shares of LIB
Common Stock at their then average price of $11.50 per share. Pursuant to the
LIB Acquisition, 91,763 shares of LIB Common Stock representing unallocated RRPs
were canceled. We recorded compensation expense relating to the RRPs of $145,000
for the year ended December 31, 1999, $4.6 million for the year ended December
31, 1998 and $5.5 million for the year ended December 31, 1997.
(18) REGULATORY MATTERS
Federal law requires that savings associations, such as Astoria Federal,
maintain minimum capital requirements. These capital standards are required to
be no less stringent than standards applicable to national banks. At December
31, 1999, Astoria Federal was in compliance with all regulatory capital
requirements.
102
<PAGE> 105
ASTORIA FINANCIAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
The following table sets forth the regulatory capital calculations for Astoria
Federal:
<TABLE>
<CAPTION>
At December 31, 1999
----------------------------------------------------------------------------------
Capital Actual Excess
(Dollars in Thousands) Requirement % Capital % Capital %
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Tangible $ 345,110 1.5% $1,376,195 5.98% $1,031,085 4.48%
Leverage 920,293 4.0 1,376,195 5.98 455,902 1.98
Risk-based 757,977 8.0 1,452,773 15.33 694,796 7.33
</TABLE>
<TABLE>
<CAPTION>
At December 31, 1998
----------------------------------------------------------------------------------
Capital Actual Excess
(Dollars in Thousands) Requirement % Capital % Capital %
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Tangible $ 303,854 1.5% $1,080,837 5.34% $ 776,983 3.84%
Leverage 607,709 3.0 1,080,837 5.34 473,128 2.34
Risk-based 683,458 8.0 1,155,836 13.53 472,378 5.53
</TABLE>
Effective April 1, 1999, the OTS and the federal banking regulators amended
their minimum capital regulations to provide that the minimum leverage capital
ratio for a depository institution that has been assigned the highest composite
rating of 1 under the Uniform Financial Institutions Ratings System is 3% and
that the minimum leverage capital ratio for any other depository institution is
4%, unless a higher leverage capital ratio is warranted by the particular
circumstances or risk profile of the depository institution.
Astoria Federal's Tier 1 risked-based capital ratio was 14.52% at December 31,
1999 and 12.65% at December 31, 1998.
The Federal Deposit Insurance Corporation Improvement Act of 1991, or FDICIA,
establishes a system of prompt corrective action to resolve the problems of
undercapitalized institutions. The regulators adopted rules which require them
to take action against undercapitalized institutions, based upon the five
categories of capitalization which the FDICIA created: "well capitalized,"
"adequately capitalized," "undercapitalized," "significantly undercapitalized"
and "critically undercapitalized." The rules adopted generally provide that an
insured institution whose total risk- based capital ratio is 10% or greater,
Tier 1 risk-based capital ratio is 6% or greater, leverage ratio is 5% or
greater and is not subject to any written agreement, order, capital directive or
prompt corrective action directive issued by the FDIC shall be considered a
"well capitalized" institution. As of December 31, 1999 and 1998, Astoria
Federal was a "well capitalized" institution.
(19) FAIR VALUE OF FINANCIAL INSTRUMENTS
Statement of Financial Accounting Standards No. 107, "Disclosures about Fair
Value of Financial Instruments," or SFAS No. 107, requires disclosure of
estimated fair value information for our financial instruments. Fair values are
most commonly derived from quoted market prices available in formal trading
marketplaces. In many cases, our financial instruments are not bought or sold in
formal trading marketplaces. Accordingly, in cases where quoted market prices
are not available, fair values are derived or estimated based on a variety of
valuation techniques. These techniques are sensitive to the various assumptions
and estimates used and the resulting fair value estimates may be materially
affected by minor variations in those assumptions or estimates. In that regard,
it is likely that we would realize amounts different from the fair value
estimates in an immediate settlement of our financial instruments.
Fair value estimates are made at a specific point in time, based on relevant
market information about the financial instrument. These estimates do not
reflect any possible tax ramifications, estimated transaction costs, or any
premium or discount that could result from offering for sale at one time our
entire holdings of a particular financial instrument. Because no market exists
for a certain portion of our financial instruments, fair value estimates are
based on judgments regarding future loss experience, current economic
conditions, risk characteristics, and other such factors. These estimates are
subjective in nature, involve uncertainties and, therefore, cannot be determined
with
103
<PAGE> 106
ASTORIA FINANCIAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
precision. Changes in assumptions could significantly affect the estimates. For
these reasons and others, the estimated fair value disclosures presented herein
do not represent our entire underlying value.
The following table summarizes the carrying values and estimated fair values of
our on and off balance sheet financial instruments at December 31, 1999 and
1998:
<TABLE>
<CAPTION>
At December 31,
-------------------------------------------------------------------------
1999 1998
-------------------------------------------------------------------------
Carrying Estimated Carrying Estimated
(In Thousands) Amount Fair Value Amount Fair Value
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
ON BALANCE SHEET:
Financial assets:
Federal funds sold and
repurchase agreements $ 335,653 $ 335,653 $ 266,437 $ 266,437
Securities available-for-sale 8,862,749 8,862,749 8,196,444 8,196,444
Securities held-to-maturity 1,899,957 1,843,607 2,108,811 2,123,440
Federal Home Loan Bank of New York stock 265,250 265,250 210,250 210,250
Loans held-for-sale 11,376 11,377 212,909 213,316
Loans receivable, net 10,212,496 10,060,285 8,739,319 8,917,560
Mortgage servicing rights 48,369 65,818 50,237 63,140
Financial Liabilities:
Deposits 9,554,534 9,545,704 9,668,286 9,697,799
Borrowed funds 11,401,521 11,233,668 9,022,797 9,047,953
OFF BALANCE SHEET:
Outstanding commitments to originate
or purchase loans 376,429 376,429 639,299 639,299
Outstanding commitments to sell loans 18,011 18,011 229,598 229,598
Outstanding commitments to purchase
investment securities -- -- 785,720 785,720
Commitment to fund unused lines of credit 169,203 169,203 153,815 153,815
Interest rate swaps (a) -- (14,017) -- 7,125
Interest rate caps and floors (a) 19 19 147 769
</TABLE>
(a) See Note 11
Methods and assumptions used to estimate fair values are stated below:
Federal Funds Sold and Repurchase Agreements
The carrying amounts of federal funds sold and repurchase agreements approximate
fair values since all mature in six months or less.
Securities Available-for-Sale and Held-to-Maturity
Fair values for all securities are based on published or securities dealers'
market values.
Federal Home Loan Bank of New York Stock
The carrying amount of FHLB-NY stock equals cost. The fair value of FHLB-NY
stock approximates the carrying amount.
Loans Held-for-Sale
The fair value of loans held-for-sale was determined by outstanding investor
commitments, or in the absence of such commitments, current investor yield
requirements.
104
<PAGE> 107
ASTORIA FINANCIAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
Loans Receivable, Net
Fair values are calculated by discounting the expected future cash flows of
pools of loans with similar characteristics. The loans are first segregated by
type, such as one-to-four family residential, other residential, commercial and
consumer and other, and then further segregated into fixed and adjustable rate
and seasoned and nonseasoned categories. Expected future cash flows are then
projected based on contractual cash flows, adjusted for prepayments. Prepayment
estimates are based on a variety of factors including our experience with
respect to each loan category, the effect of current economic and lending
conditions and regional statistics for each loan category, if available. The
discount rates used are based on market rates for new loans of similar type and
purpose, adjusted, when necessary, for factors such as servicing cost, credit
risk and term.
As mentioned previously, this technique of estimating fair value is extremely
sensitive to the assumptions and estimates used. While we have attempted to use
assumptions and estimates which are the most reflective of the loan portfolio
and the current market, a greater degree of subjectivity is inherent in these
values than those determined in formal trading marketplaces. As such, readers
are again cautioned in using this information for purposes of evaluating our
financial condition and/or value either alone or in comparison with any other
company.
Mortgage Servicing Rights
The fair value of mortgage servicing rights is estimated using projected cash
flows, adjusted for the effects of anticipated prepayments, using a market
discount rate.
Deposits
The fair values of deposits with no stated maturity, such as savings accounts,
NOW accounts, money manager accounts and money market accounts, are equal to the
amount payable on demand. The related insensitivity of the majority of these
deposits to interest rate changes creates a significant inherent value which is
not reflected in the fair value reported.
The fair values of certificates of deposit are based on discounted contractual
cash flows using rates which approximate the rates we offer for deposits of
similar remaining maturities.
Borrowed Funds
Fair value estimates are based on discounted contractual cash flows using rates
which approximate the rates offered for borrowings of similar remaining
maturities.
Outstanding Commitments
Fair value of commitments outstanding are estimated based on the rates that
would be charged for similar agreements, considering the remaining term of the
agreement, the rate offered and the creditworthiness of the parties.
Interest Rate Caps/Floors and Interest Rate Swaps
Fair values for interest rate caps/floors and interest rate swaps are based on
securities dealers' estimated market values.
105
<PAGE> 108
ASTORIA FINANCIAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
(20) CONDENSED PARENT COMPANY ONLY FINANCIAL STATEMENTS
The following condensed statements of financial condition as of December 31,
1999 and 1998 and condensed statements of income and cash flows for the years
ended December 31, 1999, 1998 and 1997, for us (parent company only) reflect our
investments in our wholly-owned subsidiaries, Astoria Federal and Astoria
Capital Trust I, using the equity method of accounting:
ASTORIA FINANCIAL CORPORATION
CONDENSED STATEMENTS OF FINANCIAL CONDITION
<TABLE>
<CAPTION>
At December 31,
----------------------------
(In Thousands) 1999 1998
- -------------------------------------------------------------------------------------
<S> <C> <C>
Assets:
Cash $ 3,990 $ 645
Federal funds sold and repurchase agreements 35,653 66,437
Mortgage-backed securities available-for-sale -- 4,207
Other securities available-for-sale 620 647
ESOP loan receivable 38,334 40,980
Accrued interest receivable 28 49
Amounts due from subsidiaries -- 629
Deferred tax asset 224 215
Other assets 6,054 3,169
Investment in Astoria Federal 1,281,518 1,348,829
Investment in Astoria Capital Trust I 3,932 --
- -------------------------------------------------------------------------------------
Total assets $1,370,353 $1,465,807
=====================================================================================
Liabilities and stockholders' equity:
Other borrowings $ 39,620 $ --
Other liabilities 1,612 1,423
Dividends payable 2,000 2,000
Amounts due to subsidiaries 1,343 --
Junior subordinated debentures 128,866 --
Stockholders' equity 1,196,912 1,462,384
- -------------------------------------------------------------------------------------
Total liabilities and stockholders' equity $1,370,353 $1,465,807
=====================================================================================
</TABLE>
106
<PAGE> 109
ASTORIA FINANCIAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
ASTORIA FINANCIAL CORPORATION
CONDENSED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
Year Ended December 31,
-----------------------------------------
(In Thousands) 1999 1998 1997
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Interest Income:
Mortgage-backed and other securities $ 2,000 $ 4,560 $ 5,141
ESOP loan receivable 2,508 2,661 2,834
- ---------------------------------------------------------------------------------------------------------
Total interest income 4,508 7,221 7,975
Interest expense on borrowed funds 107 131 108
- ---------------------------------------------------------------------------------------------------------
Net interest income 4,401 7,090 7,867
- ---------------------------------------------------------------------------------------------------------
Non-interest income 846 3,879 --
Cash dividends from subsidiaries 44,000 50,000 65,562
- ---------------------------------------------------------------------------------------------------------
Non-interest expense:
Acquisition costs and restructuring charges -- 10,745 --
Compensation and benefits 1,062 1,066 1,359
Capital trust securities 2,235 -- --
Other 1,508 1,646 1,697
- ---------------------------------------------------------------------------------------------------------
Total non-interest expense 4,805 13,457 3,056
- ---------------------------------------------------------------------------------------------------------
Income before income taxes and equity in undistributed
(overdistributed) earnings of subsidiaries 44,442 47,512 70,373
Income tax expense (benefit) 301 (1,080) 1,960
- ---------------------------------------------------------------------------------------------------------
Income before equity in undistributed (overdistributed)
earnings of subsidiaries 44,141 48,592 68,413
Equity in undistributed (overdistributed) earnings
of subsidiaries (1) 191,529 (3,544) 49,471
- ---------------------------------------------------------------------------------------------------------
Net income $235,670 $ 45,048 $117,884
=========================================================================================================
</TABLE>
(1) The equity in overdistributed earnings of subsidiaries for the year ended
December 31, 1998 represents dividends paid to us in excess of
subsidiaries' current year's earnings.
107
<PAGE> 110
ASTORIA FINANCIAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
ASTORIA FINANCIAL CORPORATION
CONDENSED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Year Ended December 31,
---------------------------------------------
(In Thousands) 1999 1998 1997
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Cash flows from operating activities:
Net income $ 235,670 $ 45,048 $ 117,884
Adjustments to reconcile net income to cash provided by
operating activities:
Equity in (undistributed) overdistributed earnings of
subsidiaries (191,529) 3,544 (49,471)
Decrease in accrued interest receivable 21 175 184
Amortization of premium net of accretion of discount 16 (8) (641)
Net gain on sales of securities (846) (3,848) --
(Decrease) increase in other assets, other liabilities
and amounts due subsidiaries (834) (3,921) 3,992
- --------------------------------------------------------------------------------------------------------------------
Net cash provided by investing activities 42,498 40,990 71,948
- --------------------------------------------------------------------------------------------------------------------
Cash flows from investing activities:
Increase (decrease) in repurchase agreements 30,784 (64,887) (1,550)
Purchases of securities available-for-sale (6,932) (526,938) (144,695)
Proceeds from maturities and principal payments on
securities available-for-sale 4,215 536,336 139,933
Proceeds from sale of securities available-for-sale 7,779 66,606 25,000
Investment in Astoria Federal (41,250) -- --
Investment in Astoria Capital Trust I (3,866) -- --
Redemption of acquiree stock -- -- 4,560
Principal payments on ESOP loan receivable 2,646 2,735 2,660
- --------------------------------------------------------------------------------------------------------------------
Net cash (used in) provided by investing activities (6,624) 13,852 25,908
- --------------------------------------------------------------------------------------------------------------------
Cash flows from financing activities:
(Decrease) increase in reverse repurchase agreements -- (12,765) 12,765
Increase in other borrowings 39,600 -- --
Issuance of junior subordinated debt 128,866 -- --
Repurchase of common stock (159,367) (16,633) (85,735)
Cash received for options exercised 16,725 15,012 4,960
Cash dividends paid to stockholders (58,353) (42,754) (27,287)
- --------------------------------------------------------------------------------------------------------------------
Net cash used in financing activities (32,529) (57,140) (95,297)
- --------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in cash and cash equivalents 3,345 (2,298) 2,559
Adjustment to conform fiscal year of Long Island Bancorp, Inc.
to Astoria Financial Corporation -- (3,565) --
Cash and cash equivalents at the beginning of the year 645 6,508 3,949
- --------------------------------------------------------------------------------------------------------------------
Cash and cash equivalents at the end of the year $ 3,990 $ 645 $ 6,508
====================================================================================================================
</TABLE>
108
<PAGE> 111
ASTORIA FINANCIAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
Q U A R T E R L Y R E S U L T S O F O P E R A T I O N S (Unaudited)
<TABLE>
<CAPTION>
Year Ended December 31, 1999
-----------------------------------------------------------------
First Second Third Fourth
(In Thousands, Except Per Share Data) Quarter Quarter Quarter Quarter
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Interest income $ 360,895 $ 377,213 $ 378,447 $ 378,724
Interest expense 225,100 240,423 245,210 244,598
- ----------------------------------------------------------------------------------------------------------------------------
Net interest income 135,795 136,790 133,237 134,126
Provision for loan losses 1,061 1,032 1,026 1,000
- ----------------------------------------------------------------------------------------------------------------------------
Net interest income after provision for loan losses 134,734 135,758 132,211 133,126
Non-interest income 16,715 16,366 36,778 16,837
- ----------------------------------------------------------------------------------------------------------------------------
Total income 151,449 152,124 168,989 149,963
- ----------------------------------------------------------------------------------------------------------------------------
General and administrative expense 51,977 50,381 47,993 44,915
Real estate operations and provision
for losses, net (1) (175) 116 (126)
Goodwill litigation 1,149 1,798 1,094 2,376
Capital trust securities -- -- -- 2,169
Amortization of goodwill 4,906 4,843 4,843 4,833
- ----------------------------------------------------------------------------------------------------------------------------
Income before income tax expense 93,418 95,277 114,943 95,796
Income tax expense 39,964 39,555 47,995 36,250
- ----------------------------------------------------------------------------------------------------------------------------
Net income $ 53,454 $ 55,722 $ 66,948 $ 59,546
============================================================================================================================
Basic earnings per common share $ 1.00 $ 1.04 $ 1.27 $ 1.16
Diluted earnings per common share $ 0.97 $ 1.02 $ 1.25 $ 1.14
</TABLE>
(1) Includes a $20.4 million net gain on the sale of banking offices.
<TABLE>
<CAPTION>
Year Ended December 31, 1998
-------------------------------------------------------------
First Second Third Fourth
(In Thousands, Except Per Share Data) Quarter Quarter Quarter Quarter
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Interest income $ 289,847 $ 299,121 $ 313,042 $ 322,438
Interest expense 179,622 188,457 200,772 206,614
- --------------------------------------------------------------------------------------------------------------------------
Net interest income 110,225 110,664 112,270 115,824
Provision for loan losses 1,800 1,814 5,166 6,600
- --------------------------------------------------------------------------------------------------------------------------
Net interest income after provision for loan losses 108,425 108,850 107,104 109,224
Non-interest income 17,252 22,618 8,279 14,114
- --------------------------------------------------------------------------------------------------------------------------
Total income 125,677 131,468 115,383 123,338
- --------------------------------------------------------------------------------------------------------------------------
General and administrative expense 58,894 57,184 66,967 49,843
Real estate operations and provision for
losses, net 237 445 (646) (155)
Goodwill litigation 116 583 421 545
Amortization of goodwill 4,885 4,962 4,962 4,945
Acquisition costs and restructuring charges -- -- -- 124,168
- --------------------------------------------------------------------------------------------------------------------------
Income (loss) before income tax expense (benefit) and
extraordinary item 61,545 68,294 43,679 (56,008)
Income tax expense (benefit) 25,339 28,775 18,815 (11,104)
- --------------------------------------------------------------------------------------------------------------------------
Income (loss) before extraordinary item 36,206 39,519 24,864 (44,904)
Extraordinary item, net of tax -- -- -- 10,637
- --------------------------------------------------------------------------------------------------------------------------
Net income (loss) $ 36,206 $ 39,519 $ 24,864 $ (55,541)
==========================================================================================================================
Basic earnings (loss) per common share:
Income (loss) before extraordinary item $ 0.69 $ 0.75 $ 0.46 $ (0.90)
Extraordinary item, net of tax -- -- -- (0.21)
Net earnings (loss) per common share $ 0.69 $ 0.75 $ 0.46 $ (1.11)
Diluted earnings (loss) per common share:
Income (loss) before extraordinary item $ 0.66 $ 0.72 $ 0.44 $ (0.90)
Extraordinary item, net of tax -- -- -- (0.21)
Net earnings (loss) per common share $ 0.66 $ 0.72 $ 0.44 $ (1.11)
</TABLE>
109
<PAGE> 112
ASTORIA FINANCIAL CORPORATION AND SUBSIDIARIES
INDEX OF EXHIBITS
EXHIBIT IDENTIFICATION OF EXHIBIT
2.1 Agreement and Plan of Merger, dated as of July 12, 1994, by
and among Astoria Financial Corporation, Astoria Federal
Savings and Loan Association and Fidelity New York F.S.B. (1)
2.2 Amendment No. 1 to the Amended and Restated Agreement and Plan
of Merger, dated as of January 27, 1995, by and among Astoria
Financial Corporation, Astoria Federal Savings and Loan
Association and Fidelity New York F.S.B. (2)
2.3 Agreement and Plan of Merger dated as of the 29th day of
March, 1997, as amended, by and among Astoria Financial
Corporation, Astoria Federal Savings and Loan Association and
The Greater New York Savings Bank. (3)
2.4 Agreement and Plan of Merger dated as of the 2nd day of April,
1998 by and between Astoria Financial Corporation and Long
Island Bancorp, Inc., as amended. (4)
3.1 Certificate of Incorporation of Astoria Financial Corporation,
as amended effective as of June 3, 1998. (5)
3.2 Bylaws of Astoria Financial Corporation. (6)
4.1 Astoria Financial Corporation Specimen Stock Certificate. (7)
4.2 Federal Stock Charter of Astoria Federal Savings and Loan
Association. (8)
4.3 Bylaws of Astoria Federal Savings and Loan Association. (9)
4.4 Certificate of Designations, Preferences and Rights of Series
A Junior Participating Preferred Stock. (10)
4.5 Rights Agreement between Astoria Financial Corporation and
ChaseMellon Shareholder Services, L.L.C., as Rights Agent,
dated as of July 17, 1996, as amended. (10)
4.6 Amendment No. 1 to Rights Agreement, dated as of April 2, 1998
by and between Astoria Financial Corporation and ChaseMellon
Shareholder Services L.L.C. (4)
4.7 Amendment No. 2 to Rights Agreement, dated as of September 15,
1999 by and between Astoria Financial Corporation and
ChaseMellon Shareholder Services L.L.C., as Rights Agent (11)
4.8 Form of Rights Certificate. (10)
110
<PAGE> 113
EXHIBIT IDENTIFICATION OF EXHIBIT
4.9 Certificate of Designations, Preferences and Rights of 12%
Noncumulative, Perpetual Preferred Stock, Series B. (3)
4.10 Astoria Financial Corporation Specimen 12% Noncumulative,
Perpetual Preferred Stock, Series B Certificate. (12)
4.11 Indenture, dated as of October 28, 1999, between Astoria
Financial Corporation and Wilmington Trust Company, as
Debenture Trustee, including as Exhibit A thereto the Form of
Certificate of Exchange Junior Subordinated Debentures (13)
4.12 Form of Certificate of Junior Subordinated Debenture (13)
4.13 Form of Certificate of Exchange Junior Subordinated Debenture
(13)
4.14 Amended and Restated Declaration of Trust of Astoria Capital
Trust I, dated as of October 28, 1999 (13)
4.15 Common Securities Guarantee Agreement of Astoria Financial
Corporation, dated as of October 28, 1999 (13)
4.16 Form of Certificate Evidencing Common Securities of Astoria
Capital Trust I (13)
4.17 Form of Exchange Capital Security Certificate for Astoria
Capital Trust I (13)
4.18 Series A Capital Securities Guarantee Agreement of Astoria
Financial Corporation, dated as of October 28, 1999 (13)
4.19 Form of Series B Capital Securities Guarantee Agreement of
Astoria Financial Corporation (13)
4.20 Form of Capital Security Certificate of Astoria Capital Trust
I (13)
4.21 Astoria Financial Corporation Automatic Dividend Reinvestment
and Stock Purchase Plan. (14)
10.1 Astoria Federal Savings and Loan Association Employee Stock
Ownership Trust Loan and Security Agreement. (6)
10.2 Amendment to Astoria Federal Savings and Loan Association
Employee Stock Ownership Trust Loan and Security Agreement,
Promissory Note, and Security Agreement Re Instruments of
Negotiable Documents to be Deposited. (6)
10.3 Loan Agreement among Long Island Bancorp, Inc., The Long
Island Savings Bank, FSB and United States Trust Company of
New York, solely as trustee of The LISB Employee Stock
Ownership Plan. (6)
111
<PAGE> 114
EXHIBIT IDENTIFICATION OF EXHIBIT
10.4 Amendment No. 1 to Loan Agreement among Long Island Bancorp,
Inc., The Long Island Savings Bank, FSB and United States
Trust Company of New York, solely as trustee of The LISB
Employee Stock Ownership Plan. (6)
10.5 Astoria Federal Savings and Loan Association and Astoria
Financial Corporation Directors' Retirement Plan, as amended
and restated effective February 21, 1996. This exhibit is a
management contract or compensatory plan or arrangement
required to be filed as an exhibit to this Form 10-K pursuant
to Item 14(c) of this report. (15)
10.6 The Long Island Bancorp, Inc., Non-Employee Director
Retirement Benefit Plan, as amended. This exhibit is a
management contract or compensatory plan or arrangement
required to be filed as an exhibit to this Form 10-K pursuant
to Item 14(c) of this report. (6)
10.7 Astoria Financial Corporation Death Benefit Plan for Outside
Directors - This exhibit is a management contract or
compensatory plan or arrangement required to be filed as an
exhibit to this Form 10-K pursuant to Item 14(c) of this
report. (15)
10.8 Deferred Compensation Plan for Directors of Astoria Financial
Corporation - This exhibit is a management contract or
compensatory plan or arrangement required to be filed as an
exhibit to this Form 10-K pursuant to Item 14(c) of this
report. (15)
10.9 Astoria Financial Corporation 1993 Incentive Stock Option
Plan, as amended - This exhibit is a management contract or
compensatory plan or arrangement required to be filed as an
exhibit to this Form 10-K pursuant to Item 14(c) of this
report. (12)
10.10 Astoria Financial Corporation 1993 Stock Option Plan For
Outside Directors, as amended - This exhibit is a management
contract or compensatory plan or arrangement required to be
filed as an exhibit to this Form 10-K pursuant to Item 14(c)
of this report. (12)
10.11 1996 Stock Option Plan for Officers and Employees of Astoria
Financial Corporation, as amended This exhibit is a management
contract or compensatory plan or arrangement required to be
filed as an exhibit to this Form 10-K pursuant to Item 14(c)
of this report. (12)
10.12 1996 Stock Option Plan for Outside Directors of Astoria
Financial Corporation, as amended - This exhibit is a
management contract or compensatory plan or arrangement
required to be filed as an exhibit to this Form 10-K pursuant
to Item 14(c) of this report. (12)
112
<PAGE> 115
EXHIBIT IDENTIFICATION OF EXHIBIT
10.13 1999 Stock Option Plan for Officers and Employees of Astoria
Financial Corporation - This exhibit is a management contract
or compensatory plan or arrangement required to be filed as an
exhibit to this Form 10-K pursuant to Item 14(c) of this
report. (16)
10.14 1999 Stock Option Plan for Outside Directors of Astoria
Financial Corporation - This exhibit is a management contract
or compensatory plan or arrangement required to be filed as an
exhibit to this Form 10-K pursuant to Item 14(c) of this
report. (16)
10.15 Astoria Federal Savings and Loan Association Recognition and
Retention Plan for Outside Directors as amended March 1, 1996
- This exhibit is a management contract or compensatory plan
or arrangement required to be filed as an exhibit to this Form
10-K pursuant to Item 14(c) of this report. (15)
10.16 Astoria Federal Savings and Loan Association Annual Incentive
Plan for Select Executives - This exhibit is a management
contract or compensatory plan or arrangement required to be
filed as an exhibit to this Form 10-K pursuant to Item 14(c)
of this report. (6)
10.17 Astoria Financial Corporation Executive Officer Annual
Incentive Plan - This exhibit is a management contract or
compensatory plan or arrangement required to be filed as an
exhibit to this Form 10-K pursuant to Item 14(c) of this
report. (16)
10.18 Astoria Financial Corporation Amended and Restated Employment
Agreement with George L. Engelke, Jr., dated as of January 1,
2000 - This exhibit is a management contract or compensatory
plan or arrangement required to be filed as an exhibit to this
Form 10-K pursuant to Item 14(c) of this report. (*)
10.19 Astoria Federal Savings and Loan Association Amended and
Restated Employment Agreement with George L. Engelke, Jr.,
dated as of January 1, 2000 - This exhibit is a management
contract or compensatory plan or arrangement required to be
filed as an exhibit to this Form 10-K pursuant to Item 14(c)
of this report. (*)
10.20 Astoria Financial Corporation Amended and Restated Employment
Agreement with Gerard C. Keegan, dated as of January 1, 2000 -
This exhibit is a management contract or compensatory plan or
arrangement required to be filed as an exhibit to this Form
10-K pursuant to Item 14(c) of this report. (*)
10.21 Astoria Federal Savings and Loan Association Amended and
Restated Employment Agreement with Gerard C. Keegan, dated as
of January 1, 2000 - This exhibit is a management contract or
compensatory plan or arrangement required to be filed as an
exhibit to this Form 10-K pursuant to Item 14(c) of this
report. (*)
113
<PAGE> 116
EXHIBIT IDENTIFICATION OF EXHIBIT
10.22 Astoria Financial Corporation Employment Agreement with John
J. Conefry, Jr. - This exhibit is a management contract or
compensatory plan or arrangement required to be filed as an
exhibit to this Form 10-K pursuant to Item 14(c) of the
report. (6)
10.23 Astoria Financial Corporation Amended and Restated Employment
Agreement with Arnold K. Greenberg, dated as of January 1,
2000 - This exhibit is a management contract or compensatory
plan or arrangement required to be filed as an exhibit to this
Form 10-K pursuant to Item 14(c) of this report. (*)
10.24 Astoria Federal Savings and Loan Association Amended and
Restated Employment Agreement with Arnold K. Greenberg, dated
as of January 1, 2000 - This exhibit is a management contract
or compensatory plan or arrangement required to be filed as an
exhibit to this Form 10-K pursuant to Item 14(c) of this
report. (*)
10.25 Astoria Financial Corporation Amended and Restated Employment
Agreement with Thomas W. Drennan, dated as of January 1, 2000
- This exhibit is a management contract or compensatory plan
or arrangement required to be filed as an exhibit to this Form
10-K pursuant to Item 14(c) of this report. (*)
10.26 Astoria Federal Savings and Loan Association Amended and
Restated Employment Agreement with Thomas W. Drennan, dated as
of January 1, 2000 - This exhibit is a management contract or
compensatory plan or arrangement required to be filed as an
exhibit to this Form 10-K pursuant to Item 14(c) of this
report. (*)
10.27 Astoria Financial Corporation Amended and Restated Employment
Agreement with Monte N. Redman, dated as of January 1, 2000 -
This exhibit is a management contract or compensatory plan or
arrangement required to be filed as an exhibit to this Form
10-K pursuant to Item 14(c) of this report. (*)
10.28 Astoria Federal Savings and Loan Association Amended and
Restated Employment Agreement with Monte N. Redman, dated as
of January 1, 2000 - This exhibit is a management contract or
compensatory plan or arrangement required to be filed as an
exhibit to this Form 10-K pursuant to Item 14(c) of this
report. (*)
10.29 Astoria Financial Corporation Amended and Restated Employment
Agreement with William K. Sheerin, dated as of January 1, 2000
- This exhibit is a management contract or compensatory plan
or arrangement required to be filed as an exhibit to this Form
10-K pursuant to Item 14(c) of this report. (*)
10.30 Astoria Federal Savings and Loan Association Amended and
Restated Employment Agreement with William K. Sheerin, dated
as of January 1, 2000 - This exhibit is a management contract
or compensatory plan or arrangement required to be filed as an
exhibit to this Form 10-K pursuant to Item 14(c) of this
report. (*)
114
<PAGE> 117
EXHIBIT IDENTIFICATION OF EXHIBIT
10.31 Astoria Financial Corporation Amended and Restated Employment
Agreement with Alan P. Eggleston, dated as of January 1, 2000
- This exhibit is a management contract or compensatory plan
or arrangement required to be filed as an exhibit to this Form
10-K pursuant to Item 14(c) of this report. (*)
10.32 Astoria Federal Savings and Loan Association Amended and
Restated Employment Agreement with Alan P. Eggleston, dated as
of January 1, 2000 - This exhibit is a management contract or
compensatory plan or arrangement required to be filed as an
exhibit to this Form 10-K pursuant to Item 14(c) of this
report. (*)
10.33 Change of Control Severance Agreement, dated as of January 1,
2000, by and among Astoria Federal Savings and Loan
Association, Astoria Financial Corporation and Josie Callari -
This exhibit is a management contract or compensatory plan or
arrangement required to be filed as an exhibit to this Form
10-K pursuant to Item 14(c) of this report. (*)
10.34 Change of Control Severance Agreement, dated as of January 1,
2000, by and among Astoria Federal Savings and Loan
Association, Astoria Financial Corporation and Robert J.
Destefano - This exhibit is a management contract or
compensatory plan or arrangement required to be filed as an
exhibit to this Form 10-K pursuant to Item 14(c) of this
report. (*)
10.35 Change of Control Severance Agreement, dated as of January 1,
2000, by and among Astoria Federal Savings and Loan
Association, Astoria Financial Corporation and Frank E. Fusco
- This exhibit is a management contract or compensatory plan
or arrangement required to be filed as an exhibit to this Form
10-K pursuant to Item 14(c) of this report. (*)
10.36 Change of Control Severance Agreement, dated as of January 1,
2000, by and among Astoria Federal Savings and Loan
Association, Astoria Financial Corporation and Gary T. McCann
This exhibit is a management contract or compensatory plan or
arrangement required to be filed as an exhibit to this Form
10-K pursuant to Item 14(c) of this report. (*)
10.37 Change of Control Severance Agreement, dated as of January 1,
2000, by and among Astoria Federal Savings and Loan
Association, Astoria Financial Corporation and Robert T. Volk
- This exhibit is a management contract or compensatory plan
or arrangement required to be filed as an exhibit to this Form
10-K pursuant to Item 14(c) of this report. (*)
10.38 Change of Control Severance Agreement, dated as of January 1,
2000, by and among Astoria Federal Savings and Loan
Association, Astoria Financial Corporation and Ira M. Yourman
- This exhibit is a management contract or compensatory plan
or arrangement required to be filed as an exhibit to this Form
10-K pursuant to Item 14(c) of this report. (*)
115
<PAGE> 118
EXHIBIT IDENTIFICATION OF EXHIBIT
10.39 Retirement Medical and Dental Benefit Policy for Senior
Officers - This exhibit is a management contract or
compensatory plan or arrangement required to be filed as an
exhibit to this Form 10-K pursuant to Item 14(c) of this
report. (12)
10.40 Form of Option Conversion Agreement by and between Astoria
Financial Corporation and each of Mr. Thomas V. Powderly. (2)
10.41 Form of Option Conversion Agreement by and between Astoria
Financial Corporation and Former Officer or Director of Long
Island Bancorp, Inc. dated September 30, 1998. (17)
10.42 Option Conversion Certificates of John J. Conefry, Jr., Robert
J. Conway, Lawrence W. Peters, Leo J. Waters and Donald D.
Wenk. (6)
10.43 Trust Agreement, dated as of January 31, 1995 between Astoria
Financial Corporation and State Street Bank and Trust Company.
(2)
10.44 Astoria Federal Savings and Loan Association Recognition and
Retention Plan for Officers and Employees - This exhibit is a
management contract or compensatory plan or arrangement
required to be filed as an exhibit to this Form 10-K pursuant
to Item 14(c) of this report. (6)
10.45 Option Conversion Agreement by and between Astoria Financial
Corporation and Mr. Gerard C. Keegan - This exhibit is a
management contract or compensatory plan or arrangement
required to be filed as an exhibit to this Form 10-K pursuant
to Item 14(c) of this report. (12)
10.46 Astoria Financial Corporation Litigation Advisory Committee
Consulting Agreement with John J. Conefry, Jr. (6)
10.47 Letter Agreement dated April 2, 1998 by and between John J.
Conefry, Jr. and Astoria Financial Corporation. (6)
10.48 Letter Agreement dated April 2, 1998 by and between Lawrence
W. Peters and Astoria Financial Corporation. (6)
10.49 Registration Rights Agreement, dated as of October 25, 1999 by
and among Astoria Financial Corporation, Astoria Capital Trust
I and Sandler O'Neill & Partners, L.P., as Initial Purchaser
(13)
10.50 Liquidated Damages Agreement, dated as of October 25, 1999 by
and among Astoria Financial Corporation, Astoria Capital Trust
I and Sandler O'Neill & Partners, L.P., as Initial Purchaser
(13)
11.1 Statement regarding computation of earnings per share. (*)
21.1 Subsidiaries of Astoria Financial Corporation. (*)
116
<PAGE> 119
EXHIBIT IDENTIFICATION OF EXHIBIT
23 Consent of Independent Auditors. (*)
27 Financial Data Schedule. (*)
99.1 Proxy Statement for the Annual Meeting of Shareholders to be
held on May 17, 2000, which will be filed with the SEC within
120 days from December 31, 1999, is incorporated herein by
reference.
* Filed herewith. Copies of exhibits will be provided to
shareholders upon written request to Astoria Financial
Corporation, Investor Relations Department, One Astoria
Federal Plaza, Lake Success, New York 11042 at a charge of
$0.10 per page. Copies are also available at no charge through
the SEC website: www.sec.gov/edaux/seaches.htm
(1) Incorporated by reference to Astoria Financial Corporation's
Current Report on Form 8-K dated on or about July 25, 1994 and
filed with the Securities and Exchange Commission on or about
July 26, 1994.
(2) Incorporated by reference to Astoria Financial Corporation's
Current Report on Form 8-K, dated January 31, 1995 and filed
with the Securities and Exchange Commission on February 10,
1995.
(3) Incorporated by reference to Form S-4 Registration Statement
as filed with the Securities and Exchange Commission on June
24, 1997.
(4) Incorporated by reference to Astoria Financial Corporation's
Current Report on Form 8-K/A, dated April 2, 1998, and filed
with the Securities and Exchange Commission on April 10, 1998,
as amended by the First Amendment, incorporated by reference
to the Registrant's Current Report on Form 8-K, dated May 29,
1998 and the Second Amendment, incorporated by reference to
the Registrant's Current Report on Form 8-K, dated July 10,
1998.
(5) Incorporated by reference to Astoria Financial Corporation's
Quarterly Report on Form 10-Q/A for the quarter ended June 30,
1998, and filed with the Securities and Exchange Commission on
September 10, 1998.
(6) Incorporated by reference to Astoria Financial Corporation's
Annual Report on Form 10-K for the fiscal year ended December
31, 1998 filed with the Securities and Exchange Commission on
March 24, 1999.
(7) Incorporated by reference to Astoria Financial Corporation's
Annual Report on Form 10-K for the fiscal year ended December
31, 1996, filed with the Securities and Exchange Commission on
March 28, 1997.
(8) Incorporated by reference to Astoria Financial Corporation's
Annual Report on Form 10-K for the fiscal year ended December
31, 1994, filed with the Securities and Exchange Commission on
March 15, 1995.
117
<PAGE> 120
(9) Incorporated by reference to Astoria Financial Corporation's
Quarterly Report on Form 10-Q for the quarter ended September
30, 1998, and filed with the Securities and Exchange
Commission on November 13, 1998.
(10) Incorporated by reference to Astoria Financial Corporation's
Registration Statement on Form 8-K/A dated July 17, 1996 and
filed with the Securities and Exchange Commission in August
1996.
(11) Incorporated by reference to Astoria Financial Corporation's
Quarterly Report on Form 10-Q for the quarter ended September
30, 1999, and filed with the Securities and Exchange
Commission on November 13, 1999.
(12) Incorporated by reference to Astoria Financial Corporation's
Annual Report on Form 10-K for the fiscal year ended December
31, 1997 filed with the Securities and Exchange Commission on
March 25, 1998.
(13) Incorporated by reference to Form S-4 Registration Statement
filed with the Securities and Exchange Commission on February
18, 2000.
(14) Incorporated by reference to Form S-3 Registration Statement
as filed with the Securities and Exchange Commission on
October 23, 1995.
(15) Incorporated by reference to Astoria Financial Corporation's
Annual Report on Form 10-K for the fiscal year ended December
31, 1995 filed with the Securities and Exchange Commission on
March 29, 1996.
(16) Incorporated by reference to Astoria Financial Corporation's
Form 14-A Definitive Proxy Statement filed on April 8, 1999.
(17) Incorporated by reference to Astoria Financial Corporation's
Registration Statement on Form S-8, dated September 30, 1998,
and filed with the Securities and Exchange Commission on
September 30, 1998.
118
<PAGE> 1
EXHIBIT 10.18
ASTORIA FINANCIAL CORPORATION
AMENDED AND RESTATED
EMPLOYMENT AGREEMENT WITH EXECUTIVE OFFICER
This AMENDED AND RESTATED EMPLOYMENT AGREEMENT (the "Agreement") is
made and entered into as of January 1, 2000 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 One Astoria Federal Plaza, Lake
Success, New York 11042-1085 (the "Company"), and GEORGE L. ENGELKE, JR., an
individual residing at 83 Chelsea Road, Garden City, New York 11530 (the
"Executive").
WITNESSETH:
WHEREAS, the Executive currently serves the Company in the capacity of
Chairman, President and Chief Executive Officer and as Chairman, President and
Chief Executive Officer of its wholly owned subsidiary, ASTORIA FEDERAL SAVINGS
AND LOAN ASSOCIATION (the "Association"); and
WHEREAS, the Executive currently has an Employment Agreement with the
Company dated January 1, 1996 which the Executive and the Company wish to amend
and modify; 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 amend and restate in its entirety the Employment Agreement by and between
the Company and the Executive dated as of January 1, 1996 so as to provide as
follows from and after the date hereof:
Section 1. Employment.
The Company agrees to continue to employ the Executive, and the
Executive hereby agrees to such continued employment, during the period and upon
the terms and conditions set forth in this Agreement.
Page 1 of 31
<PAGE> 2
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 (the "Employment Period"). The Employment
Period shall be for an initial term of three years beginning
on the date of this Agreement and ending on the day before the
third anniversary date of this Agreement, plus such
extensions, if any, as are provided by the Board of Directors
of the Company (the "Board") pursuant to Section 2(b).
(b) Beginning on the date of this Agreement, the Employment Period
shall automatically be extended for one (1) additional day
each day, unless either the Company or the Executive elects
not to extend the Agreement further by giving written notice
to the other party, in which case the Employment Period shall
end on the day before the third anniversary of the date on
which such written notice is given. 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 day before the
third anniversary of the date on which such notice is
given; and
(ii) in all other cases, the day before the third
anniversary of the date as of which the Remaining
Unexpired Employment Period is being determined.
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 previously
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 pursuant to this
Agreement.
Section 3. Duties.
The Executive shall serve as Chairman, President and Chief Executive
Officer of the Company, having such power, authority and responsibility and
performing such duties as are prescribed by or pursuant to the By-Laws of the
Company and as are customarily associated with such position. The Executive
shall devote his or her 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, its
affiliates and subsidiaries and shall use his
Page 2 of 31
<PAGE> 3
or her best efforts to advance the interests of the Company.
Section 4. Cash Compensation.
In consideration for the services to be rendered by the Executive
hereunder, the Company shall pay to him or her a salary at an initial annual
rate of EIGHT HUNDRED TEN THOUSAND DOLLARS ($810,000), 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. In no event shall the Executive's annual rate of
salary under this Agreement in effect at a particular time be reduced without
his or her prior written consent and any such reduction in the absence of such
consent shall be a material breach of this Agreement. 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.
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 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
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 or her harmless from, any costs, liabilities,
losses
Page 3 of 31
<PAGE> 4
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 as he
or she may disclose to and as may be approved by the Board
(which approval shall not be unreasonably withheld); provided,
however, that such service shall not materially interfere with
the performance of his or her 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 or her 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 or her 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 or she
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 or her principal place of employment with a private office,
secretarial services and other support services and facilities suitable to his
or her position with the Company and necessary or appropriate in connection with
the performance of his or her assigned duties under this Agreement. The Company
shall provide to the Executive for his or her exclusive use an automobile owned
or leased by the Company and appropriate to his or her position, to be used in
the performance of his or her duties hereunder, including commuting to and from
his or her personal residence. The Company shall reimburse the Executive for his
or her ordinary and necessary business expenses, including, without limitation,
all expenses associated with his or her business use
Page 4 of 31
<PAGE> 5
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 or her travel and
entertainment expenses incurred in connection with the performance of his or her
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 or her 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 six (6) months following:
(A) the failure of the Board to appoint or
re-appoint or elect or re-elect the
Executive to the office of Chairman,
President and Chief Executive Officer (or a
more senior office) of the Company;
(B) if the Executive is or becomes a member of
the Board, 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;
(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 Certificate of Incorporation
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 or her
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
(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
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<PAGE> 6
effect on the aggregate value of his or her
total compensation package), unless, during
such thirty (30) day period, the Company
cures such failure in a manner determined by
the Executive, in his or her discretion, to
be satisfactory; or
(E) the relocation of the Executive's principal
place of employment, without his or her
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 the Executive's death following the
Executive's termination of employment, to his or her estate):
(i) his or her 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 or her 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 any event not later than thirty (30) days
after termination of employment;
(ii) the benefits, if any, to which he or she 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;
(iii) continued group life, health (including
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
(including any co-payments and deductibles, but
excluding any premium sharing arrangements, it being
the intention of the parties to this Agreement that
the premiums for such insurance benefits shall be the
sole cost and expense of the Company) equivalent to
the coverage to which he or she would have been
entitled under such plans (as in effect on the date
of his or her termination of employment, or, if his
or her
Page 6 of 31
<PAGE> 7
termination of employment occurs after a Change of
Control, on the date of such Change of Control,
whichever benefits are greater), if he or she had
continued working for the Company during the
Remaining Unexpired Employment Period at the highest
annual rate of salary or compensation, as applicable,
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 the Executive's
termination of employment with the Company, a lump
sum payment in an amount representing an estimate of
the salary that the Executive would have earned if he
or she 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 (the "Salary Severance Payment"). The Salary
Severance Payment shall be computed using the
following formula:
SSP = BS x NY
where:
"SSP" is the amount of the Salary Severance Payment,
before the deduction of applicable federal, state and
local withholding taxes;
"BS" is 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;
"NY" is the Remaining Unexpired Employment Period
expressed as a number of years (rounded, if such
period is not a whole number, to the next highest
whole number).
The Salary Severance Payment shall 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 the Executive's
termination of employment with the Company, a lump
sum payment (the "DB Severance Payment") in an amount
equal to the excess, if any, of:
(A) the present value of the aggregate benefits
to which he or she would be entitled under
any and all qualified and non-qualified
defined benefit pension plans maintained by,
or covering employees of, the
Page 7 of 31
<PAGE> 8
Company, if he or she 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 pursuant to Sections 9(b)(i), (iv),
(vii), (viii) and (ix) of this Agreement;
over
(B) the present value of the benefits to which
he or she is actually entitled under such
defined benefit pension plans as of the date
of his or her termination;
The DB Severance Payment shall be computed using the
following formula:
DBSP = SEVLS - LS
where:
"DBSP" is the amount of the DB Severance Payment,
before the deduction of applicable federal, state and
local withholding taxes;
"SEVLS" is the sum of the present value of the
defined benefit pension benefits that have been or
would be accrued by the Executive under all qualified
and non-qualified defined benefit pension plans of
which the Company or any of its affiliates or
subsidiaries are a sponsor and in which the Executive
is or, but for the completion of any service
requirement that would have been completed during the
Remaining Unexpired Employment Period, would be a
participant utilizing the following assumptions:
(I) the executive is 100% vested in the
plans regardless of actual service,
(II) the benefit to be valued shall be a
single life annuity with monthly
payments due on the first day of
each month and with a guaranteed
payout of not less than 120 monthly
payments,
(III) the calculation shall be made
utilizing the same mortality table
and interest rate as would be
utilized by the plan on the date of
termination as if the calculation
were being made pursuant to Section
417(e)(3)(A)(ii) of the Internal
Revenue
Page 8 of 31
<PAGE> 9
Code, as amended, (the "Code");
(IV) for purpose of calculating the
Executive's monthly or annual
benefit under the defined benefit
plans, additional service equal to
the Remaining Unexpired Employment
Period (rounded up to the next whole
year if such period is not a whole
number when expressed in years)
shall be added to the Executive's
actual service to calculate the
amount of the benefit; and
(V) for purpose of calculating the
Executive's monthly or annual
benefit under the defined benefit
plans, the following sums shall be
added to the Executive's
compensation recognized under such
plans for the most recent year
recognized:
(1) payments made pursuant to
Section 9(b)(i);
(2) the Salary Severance Payment;
(3) the Bonus Severance Payment;
(4) the Option Surrender Payment;
and
(5) the RRP Surrender Payment.
"LS" is the sum of the present value of the defined
benefit pension benefits that are vested benefits
actually accrued by the Executive under all qualified
and non-qualified defined benefit pension plans
maintained by, or covering employees of, the Company
or any of its affiliates or subsidiaries in which the
Executive is or, but for the completion of any
service requirement, would be a participant utilizing
the following assumptions:
(I) the benefit to be valued shall be a
single life annuity with monthly
payments due on the first day of
each month and with a guaranteed
payout of not less than 120 monthly
payments, and
(II) the calculation shall be made
utilizing the same mortality table
and interest rate as would be
utilized by the plan on the date of
termination as if the calculation
were being made pursuant to Section
417(e)(3)(A)(ii) of the Code;
(vi) within thirty (30) days following the Executive's
termination of employment with the Company, a lump
sum payment (the "Defined Contribution Severance
Payment") equal to the sum of:
(A) an estimate of the additional employer
contributions to which he or
Page 9 of 31
<PAGE> 10
she would have been entitled under any and
all qualified and non-qualified defined
contribution pension plans, excluding the
employee stock ownership plans, maintained
by, or covering employees of, the Company or
any of its affiliates or subsidiaries as if
he or she were 100% vested thereunder and
had continued working for the Company during
the Remaining Unexpired Employment Period
(the "401K Severance Payment"); and
(B) an estimate of the value of the additional
assets which would have been allocable to
him or her through debt service or otherwise
under any and all qualified and
non-qualified employee stock ownership
plans, maintained by, or covering employees
of, the Company or any of its affiliates or
subsidiaries as if he or she were 100%
vested thereunder and had continued working
for the Company during the Remaining
Unexpired Employment Period, based on the
fair market value of such assets at
termination of employment (the "ESOP
Severance Payment").
The Defined Contribution Severance Payment shall be
calculated as follows:
DCSP = 401KSP + ESOPSP
where:
"DCSP" is the amount of the Defined Contribution
Severance Payment, before the deduction of applicable
federal, state and local withholding taxes;
"401KSP" is the amount of the 401K Severance Payment,
before the deduction of applicable federal, state and
local withholding taxes; and
"ESOPSP" is the amount of the ESOP Severance Payment,
before the deduction of applicable federal, state and
local withholding taxes.
The 401KSP shall be calculated as follows:
401KSP = (401KC x NY) + UVB
where
"401KC" is the sum of the Company Contributions as
defined in the Association's Incentive Savings Plan
or, if made under another defined contribution
pension plan other than an employee stock ownership
plan, the comparable contribution made for the
benefit of the Executive during the one
Page 10 of 31
<PAGE> 11
year period which shall end on the date of his or her
termination of his or her employment with the
Company;
"NY" is the Remaining Unexpired Employment Period
expressed as a number of years (rounded, if such
period is not a whole number, to the next highest
whole number); and
"UVB" is the actual balance credited to the
Executive's account under the applicable plan at the
date of his or her termination of employment that is
not vested and does not become vested as a
consequence of such termination of employment.
The ESOPSP shall be calculated as follows:
ESOPSP = (((ALL x FMV) + C) x NY) + UVB
where:
"ALL" is the sum of the number of shares of the
Company's common stock or, if applicable, phantom
shares of such stock by whatever term it is described
allocated to the Executive's accounts under all
qualified and non-qualified employee stock ownership
plans maintained by the Company or any of its
affiliates or subsidiaries during or for the last
complete plan year in which the Executive
participated in such plans and received such an
allocation whether the allocation occurred as a
result of contributions made by the Company, the
payment by the Company or any of its affiliates or
subsidiaries of any loan payments under a leveraged
employee stock ownership plan, the allocation of
forfeitures under the terms of such plan or as a
result of the use of cash or earnings allocated to
the Executive's account during such plan year to make
loan payments that result in share allocations,
provided however, that excluded shall be any shares
or phantom shares allocated to the Executive's
account under any qualified and non-qualified
employee stock ownership plans maintained by the
Company or any of its affiliates or subsidiaries
solely as a result of the termination of such plans,
provided further, that if the shares allocated are
not shares of the Association's common stock or
phantom shares of such stock than shares of whatever
securities are so allocated shall be utilized, and
provided further, that in the event that there shall
be any shares or phantom shares allocated during the
then current plan year or the last complete plan year
to the Executive's account under any qualified and
non-qualified employee stock ownership plans
maintained by the Association or any of its
affiliates or subsidiaries solely as a result of the
termination of such plans, the ALL shall be reduced
(but not to an amount less than zero (0)) by an
amount calculated
Page 11 of 31
<PAGE> 12
by multiplying the number of shares or phantom shares
allocated to the Executive's account solely as a
result of the termination of such plans times the FMV
utilized to calculate the ESOPSP;
"C" is the sum of all cash allocated to the
Executive's accounts under all qualified and
non-qualified employee stock ownership plans
maintained by the Company during or for the last
complete plan year in which the Executive
participated in such plans whether the allocation
occurred as a result of contributions made by the
Company, the payment by the Company or the
Association of any loan payments under a leveraged
employee stock ownership plan or the allocation of
forfeitures under the terms of such plan during such
plan year;
"FMV" is the closing price of the Company's common
stock on The Nasdaq Stock Market or on whatever other
stock exchange or market such stock is publicly
traded on the date the Executive's employment
terminates or, if such day is not a day on which such
securities are traded, on the most recent preceding
trading day on which a trade occurs, provided however
that if the security allocated to the Executive's
account during the last completed plan year is other
than the Company's common stock the closing price of
such other security on the date the Executive's
employment terminates shall be utilized.
"NY" is the Remaining Unexpired Employment Period
expressed as a number of years (rounded, if such
period is not a whole number, to the next highest
whole number); and
"UVB" is the actual balance credited to the
Executive's account under the applicable plan at the
date of his or her termination of employment that is
not vested and does not become vested as a
consequence of such termination of employment.
(vii) within thirty (30) days following the Executive's
termination of employment with the Company, the
Company shall make a lump sum payment to the
Executive in an amount equal to the estimated
potential annual bonuses or incentive compensation
that the Executive could have earned if the Executive
had continued working for the Company during the
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 (the
"Bonus Severance Payment"). The Bonus Severance
Payment shall be computed using the following
formula:
BSP = (BS x TIO x AP x NY)
Page 12 of 31
<PAGE> 13
where:
"BSP" is the amount of the Bonus Severance Payment,
before the deduction of applicable federal, state and
local withholding taxes;
"BS" is 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;
"TIO" is the highest target incentive opportunity
(expressed as a percentage of base salary)
established by the Compensation Committee of the
Board for the Executive pursuant to the Astoria
Financial Corporation Executive Officer Annual
Incentive Plan during that portion of the Employment
Period which is prior to the Executive's termination
of employment with the Company;
"AP" is the highest award percentage available to the
Executive with respect to the financial performance
of the Company (expressed as a percentage of the TIO)
established by the Compensation Committee of the
Board for the Executive pursuant to the Astoria
Financial Corporation Executive Officer Annual
Incentive Plan during the period during that portion
of the Employment Period which is prior to the
Executive's termination of employment with the
Company; and
"NY" is the Remaining Unexpired Employment Period
expressed as a number of years (rounded, if such
period is not a whole number, to the next highest
whole number).
(viii) 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
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 (the
"Option Surrender Payment"). The Option Surrender
Payment shall be calculated as follows:
OSP = (FMV - EP) x N
where:
"OSP" is the amount of the Option Surrender Payment,
before the deduction of applicable federal, state and
local withholding taxes;
Page 13 of 31
<PAGE> 14
"FMV" is the closing price of the Company's common
stock on The Nasdaq Stock Market, or on whatever
other stock exchange or market such stock is publicly
traded, on the date the Executive's employment
terminates or, if such day is not a day on which such
securities are traded, on the most recent preceding
trading day on which a trade occurs, provided however
that if the option or stock appreciation right is for
a security other than the Company's common stock, 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 shall be utilized;
"EP" is the exercise price per share for such option
or appreciation right, as specified in or under the
relevant plan or program; and
"N" is the number of shares with respect to which
options or appreciation rights are being surrendered.
For purposes of determining the Option Severance
Payment and for purposes of determining the
Executive's right following his or her 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 or she is not 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 shares awarded to the Executive under any
restricted stock plan maintained by, or covering
employees of, the Company, a lump sum payment (the
"RRP Surrender Payment") The RRP Surrender Payment
shall be calculated as follows:
RSP = FMV x N
where:
"RSP" is the amount of the RRP Surrender Payment,
before the deduction of applicable federal, state and
local withholding taxes;
"FMV" is the closing price of the Company's common
stock on The Nasdaq Stock Market, or on whatever
other stock exchange or market such stock is publicly
traded, on the date the Executive's employment
terminates or, if such day is not a day on which such
securities are traded, on the preceding trading day
on which a trade occurs, provided however that if the
restricted stock is
Page 14 of 31
<PAGE> 15
a security other than the Company's common stock, the
fair market value of a share of stock of the same
class as the stock granted under such plan,
determined as of the date of termination of
employment shall be utilized; and
"N" is the number of shares which are being
surrendered.
For purposes of determining the RRP Surrender Payment
and for purposes of determining the Executive's right
following his or her 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 or she is not vested under such plan.
The Salary Severance Payment, the DB Severance Payment, the
Defined Contribution Severance Payment, the Bonus Severance
Payment, the Option Surrender Payment and the RRP Surrender
Payment shall be computed at the expense of the Company by an
attorney of the firm of Thacher Proffitt & Wood, Two World
Trade Center, New York, New York 10048 or, if such firm is
unavailable or unwilling to perform such calculation, by a
firm of independent certified public accountants selected by
the Executive and reasonably satisfactory to the Company (the
"Computation Advisor"). The determination of the Computation
Advisor as to the amount of such payments shall be final and
binding in the absence of manifest error.
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 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 payment of the Salary
Severance Payment, the DB Severance Payment, the Defined
Contribution Severance Payment, the Bonus Severance Payment,
the Option Surrender Payment and the RRP Surrender Payment on
the receipt of the Executive's resignation from any and all
positions which he or she holds as an officer, director or
committee member with respect to the Company, the Association
or any subsidiary or affiliate of either of them.
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:
Page 15 of 31
<PAGE> 16
(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 the
Executive's performance of services for the
Company resulting in the Executive's
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 the Executive's 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 the Executive's
fiduciary duties to the Company for personal
profit;
(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 the Executive's performance of services
for the Company; or
(F) the Executive's material breach of any
material provision of this Agreement which
is not substantially cured within 60 days
after written notice of such breach is
received by the Executive from 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 Disabled;
(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, except as otherwise specifically provided
herein, shall have no further obligations under this
Agreement, other than the payment to the Executive (or, in the
event of his or her death, to his or her estate) of the
amounts or benefits provided in Section 9(b)(i) and (ii) of
this Agreement (the "Standard Termination
Page 16 of 31
<PAGE> 17
Entitlements").
(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. Except as specifically provided below, 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:
(i) the Board, by the affirmative vote of 75% of its
entire membership, determines that the Executive is
guilty of the conduct described in Section 10(a)(i)
above measured against standards generally prevailing
at the relevant time in the savings and community
banking industry;
(ii) prior to the vote contemplated by Section 10(b)(i),
the Board shall provide the Executive with notice of
the Company's intent to discharge the Executive for
Cause, detailing with particularity the facts and
circumstances which are alleged to constitute Cause
(the "Notice of Intent to Discharge"); and
(iii) after the giving of the Notice of Intent to Discharge
and before the taking of the vote contemplated by
Section 10(b)(i), the Executive, together with the
Executive's legal counsel, if the Executive so
desires, are afforded a reasonable opportunity to
make both written and oral presentations before the
Board for the purpose of refuting the alleged grounds
for Cause for the Executive's discharge; and
(iv) after the vote contemplated by Section 10(b)(i), the
Company has furnished to the Executive a notice of
termination which shall specify the effective date of
the Executive's termination of employment (which
shall in no event be earlier than the date on which
such notice is deemed given) and include a copy of a
resolution or resolutions adopted by the Board,
certified by its corporate secretary, authorizing the
termination of the Executive's employment with Cause
and stating with particularity the facts and
circumstances found to constitute Cause for the
Executive's discharge (the "Final Discharge Notice").
If the Executive, during the 90 (ninety) day period commencing
on the delivery by the Company to the Executive of the Notice
of Intent to Discharge specified in Section 10(b)(ii), resigns
his or her employment with the Company prior to the
Page 17 of 31
<PAGE> 18
delivery to the Executive by the Company of the Final
Discharge Notice specified in Section 10(b)(iv), then the
cessation of employment of the Executive shall be deemed to be
for Cause.
Following the giving of a Notice of Intent to Discharge, the
Bank may temporarily suspend the Executive's duties and
authority and, in such event, may also suspend the payment of
salary and other cash compensation, but not the Executive's
participation in retirement, insurance and other employee
benefit plans. If the Executive is not discharged or is
discharged without Cause within forty-five (45) days after the
giving of a Notice of Intent to Discharge, payments of salary
and cash compensation shall resume, and all payments withheld
during the period of suspension shall be promptly restored. If
the Executive is discharged with Cause not later than
forty-five (45) days after the giving of the Notice of Intent
to Discharge, all payments withheld during the period of
suspension shall be deemed forfeited and shall not be included
in the Standard Termination Entitlements. If a Final Discharge
Notice is given later than forty-five (45) days, but sooner
than ninety (90) days, after the giving of the Notice of
Intent to Discharge, all payments made to the Executive during
the period beginning with the giving of the Notice of Intent
to Discharge and ending with the Executive's discharge with
Cause shall be retained by the Executive and shall not be
applied to offset the Standard Termination Entitlements. If
the Bank does not give a Final Discharge Notice to the
Executive within ninety (90) days after giving a Notice of
Intent to Discharge, the Notice of Intent to Discharge shall
be deemed withdrawn and any future action to discharge the
Executive with Cause shall require the giving of a new Notice
of Intent to Discharge. If the Executive resigns pursuant to
Section 10(b), the Executive shall forfeit his or her right to
suspended amounts that have not been restored as of the date
of the Executive's resignation or notice of resignation,
whichever is earlier.
(c) The Company may terminate the Executive's employment on the
basis that the Executive is Disabled during the Employment
Period upon a determination by the Board, by the affirmative
vote of 75% of its entire membership, acting in reliance on
the written advice of a medical professional acceptable to it,
that the Executive is suffering from a physical or mental
impairment which, at the date of the determination, has
prevented the Executive from performing the Executive's
assigned duties on a substantially full-time basis for a
period of at least one hundred and eighty (180) days during
the period of one (1) year ending with the date of the
determination or is likely to result in death or prevent the
Executive from performing the Executive's assigned duties on a
substantially full-time basis for a period of at least one
hundred and eighty (180) days during the period of one (1)
year beginning with the date of the determination. In such
event:
(A) The Company shall pay and provide the Standard
Termination Entitlements to the Executive;
Page 18 of 31
<PAGE> 19
(B) In addition to the Standard Termination Entitlements,
the Company shall continue to pay to the Executive
the Executive's base salary, at the annual rate in
effect for the Executive immediately prior to the
termination of the Executive's employment, during a
period ending on the earliest of:
(I) the expiration of one hundred and eighty
(180) days after the date of termination of
the Executive's employment;
(II) the date on which long-term disability
insurance benefits are first payable to the
Executive under any long-term disability
insurance plan covering the Executive; or
(III) the date of the Executive's death.
A termination of employment due to Disability under this
Section shall be effected by a notice of termination given to
the Executive by the Company and shall take effect on the
later of the effective date of termination specified in such
notice or, if no such date is specified, the date on which the
notice of termination is deemed given to the Executive.
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 Securities Exchange Act of 1934, as
amended (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
Page 19 of 31
<PAGE> 20
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;
(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
do not belong to any of the following groups:
(A) individuals who were members of the Board on
the date of this Agreement; or
(B) individuals who first became members of the
Board after the date of this Agreement
either:
(I) upon election to serve as a member
of the Board 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, but only if nominated for
election by affirmative vote of
three-quarters of the members of the
Board, 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
Page 20 of 31
<PAGE> 21
the Board; or
(v) any event which would be described in Section
11(a)(i), (ii), (iii) or (iv) if the term
"Association" were substituted for the term "Company"
therein or the term "Board of Directors of the
Association" were substituted for the term "Board".
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 an affiliate or
subsidiary of either of 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 or her 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 within six
(6) months following his or her demotion, loss of
title, office or significant authority or
responsibility or following any reduction in any
element of his or her package of compensation and
benefits;
(ii) resignation, voluntary or otherwise, by the Executive
at any time during the Employment Period within six
(6) months following any relocation of his or her
principal place of employment or any change in
working conditions at such principal place of
employment which the Executive, in his or her
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 within six
(6) months 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 her; or
(iv) resignation, voluntary or otherwise, for any reason
whatsoever during the Employment Period within six
months following the effective date of the Change of
Control.
Page 21 of 31
<PAGE> 22
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 intended to indemnify the Executive against the
financial effects of the excise tax imposed on excess
parachute payments under Section 28OG of the Code (the "Tax
Indemnity Payment"). The Tax Indemnity Payment shall be
determined under the following formula:
E x P
TIP = ----------------------------------------
1 - (( FI x ( 1 - SLI )) + SLI + E + M )
where:
"TIP" is the Tax Indemnity Payment, before the deduction of
applicable federal, state and local withholding taxes;
"E" is the percentage rate at which an excise tax is assessed
under Section 4999 of the Code;
"P" is the amount with respect to which such excise tax is
assessed, determined without regard to any amount payable
pursuant to this Section 12;
"FI" is the highest marginal rate of income tax applicable to
the Executive under the Code for the taxable year in question;
"SLI" is 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
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<PAGE> 23
"M" is the highest marginal rate of Medicare tax applicable to
the Executive under the Code for the taxable year in question.
(b) The computation of the Tax Indemnity Payment shall be made at
the expense of the Company by the Computation Advisor and
shall be based on the following assumptions:
(i) that a change in ownership, a change in effective
ownership or control or a change in the ownership of
a substantial portion of the assets of the
Association or the Company has occurred within the
meaning of Section 28OG of the Code (a "28OG Change
of Control");
(ii) that all direct or indirect payments made to or
benefits conferred upon the Executive on account of
the Executive's termination of employment are
"parachute payments" within the meaning of Section
28OG of the Code; and
(iii) that no portion of such payments is reasonable
compensation for services rendered prior to the
Executive's termination of employment.
(c) With respect to any payment that is presumed to be a parachute
payment for purposes of Section 28OG of the Code, the Tax
Indemnity Payment shall be made to the Executive on the
earlier of 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 the date the
tax is required to be paid by the Executive, unless, prior to
such date, the Company delivers to the Executive the written
opinion (the "Opinion Letter"), in form and substance
reasonably satisfactory to the Executive, of the Computation
Advisor or, if the Computation Advisor is unable to provide
such opinion, of an attorney or firm of independent certified
public accountants selected by the Company and reasonably
satisfactory to the Executive, to the effect that the
Executive has a reasonable basis on which to conclude that:
(i) no 28OG Change in Control has occurred, or
(ii) all or part of the payment or benefit in question is
not a parachute payment for purposes of Section 28OG
of the Code, or
(iii) all or a part of such payment or benefit constitutes
reasonable compensation for services rendered prior
to the 28OG Change of Control, or
(iv) for some other reason which shall be set forth in
detail in such letter, no excise tax is due under
Section 4999 of the Code with respect to such payment
or benefit.
Page 23 of 31
<PAGE> 24
If the Company delivers an Opinion Letter, the Computation
Advisor shall re-compute, and the Company shall make, the Tax
Indemnity Payment, if any, in reliance on the information
contained in the Opinion Letter.
(d) 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 with
respect to which the Tax Indemnity Payment is made, 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 pursuant to Sections 12(a) and 12(c),
when increased by the amount of the payment made to the
Executive pursuant to this Section 12(d), or when reduced by
the amount of the payment made to the Company pursuant to this
Section 12(d), equals the amount that should have properly
been paid to the Executive under Sections 12(a) and 12(c). The
interest paid to the Company under this Section 12(d) shall be
determined at the rate provided under Section 1274(b)(2)(B) of
the Code. The payment made to the Executive shall include such
amount of interest as is necessary to satisfy any interest
assessment made by the Internal Revenue Service and an
additional amount equal to any monetary penalties assessed by
the Internal Revenue Service on account of an underpayment of
the excise tax. 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, at least 20 days
before the date on which such return is required to be filed
with the Internal Revenue Service. Nothing in this Agreement
shall give the Company any right to control or otherwise
participate in any action, suit or proceeding to which the
Executive is a party as a result of positions taken on the
Executive's federal income tax return with respect to the
Executive's liability for excise taxes under Section 4999 of
the Code.
(e) 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, in the event of his or
her termination of employment with the Company prior to the expiration of the
Employment Period, for a period of one (1) year following the date of his or her
termination of employment with the Company (or, if less, for the Remaining
Unexpired Employment Period), the Executive shall not, without the written
consent of the Company, become an officer, employee, consultant, director or
trustee of any savings
Page 24 of 31
<PAGE> 25
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(c) of this Agreement, this Section 13 shall not prevent the
Executive from accepting any position or performing any services if:
(a) he or she 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 the Executive obtains the prior written consent of the Company,
the Executive shall keep confidential and shall refrain from using for the
benefit of the Executive or any person or entity other than the Company, any
entity which is a subsidiary of the Company or any entity which the Company is a
subsidiary of, any material document or information obtained from the Company,
or from its affiliates or subsidiaries, in the course of the Executive's
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 or her 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
proceeding 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 Executive's termination of employment with the Company, he or
she shall not, without the 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 or subsidiary of ether 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
Page 25 of 31
<PAGE> 26
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;
(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 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 or
subsidiary of either of them, to terminate his or her
employment and accept employment, 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, the Association, or
any affiliate or subsidiary of either of them to terminate an
existing business or commercial relationship with the Company,
the Association, or any affiliate or subsidiary of either of
them.
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.
Section 17. Successors and Assigns.
This Agreement will inure to the benefit of and be binding upon the
Executive, his or her 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
Page 26 of 31
<PAGE> 27
its express written assumption of the Company's obligations under this Agreement
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:
George L. Engelke, Jr.
83 Chelsea Road
Garden City, New York 11530
If to the Company:
Astoria Financial Corporation
One Astoria Federal Plaza
Lake Success, New York 11042-1085
Attention: General Counsel
with a copy to:
Thacher Proffitt & Wood
Two World Trade Center
New York, New York 10048
Attention: W. Edward Bright, Esq.
Section 19. Indemnification for Attorneys' Fees.
The Company shall indemnify, hold harmless and defend the Executive
against reasonable costs, including legal fees, incurred by him or her in
connection with or arising out of any action, suit or proceeding in which he or
she may be involved, as a result of his or her efforts, in good faith, to defend
or enforce the terms of this Agreement; provided, however, that in the case of
any action, suit or proceeding instituted prior to a Change of Control, the
Executive shall have substantially prevailed on the merits pursuant to a
judgment, decree or order of a court of competent jurisdiction
Page 27 of 31
<PAGE> 28
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 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
Page 28 of 31
<PAGE> 29
relating to the subject matter hereof. No modifications of this Agreement shall
be valid unless made in writing and signed by the parties hereto.
Section 26. Guarantee.
The Company hereby agrees to guarantee the payment by the Association
of any benefits and compensation to which the Executive is or may be entitled to
under the terms and conditions of the Amended and Restated Employment Agreement
dated as of the lst day of January, 2000 between the Association and the
Executive.
Section 27. Non-duplication.
In the event that the Executive shall perform services for the
Association or any other affiliate or 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 affiliates and
subsidiaries.
Section 28. Survival.
The provisions of any sections of this Agreement which by its terms
contemplates performance after the expiration or termination of this Agreement
(including, but not limited to, Sections 6, 9, 10, 11, 12, 13, 14, 15, 16, 17,
18, 19, 21, 26, 27, 29, 30 and 31) shall survive the expiration of the
Employment Period or termination of this Agreement.
Section 29. 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 30. 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 conditioned upon their compliance with Section
18(k) of the Federal Deposit Insurance Act, 12 U.S.C. Section1828(k), and any
regulations promulgated thereunder.
Section 31. No Offset or Recoupment; No Attachment.
The Company's obligation to make the payments provided for in this
Agreement and otherwise to perform its obligations under this Agreement shall
not be affected by any set-off,
Page 29 of 31
<PAGE> 30
counterclaim, recoupment, defense or other claim, right or action which the
Company or any of its affiliates or subsidiaries may have against the Executive.
In no event shall the Executive be obligated to seek other employment or take
any other action by way of mitigation of the amounts payable to the Executive
under any of the provisions of this Agreement and such amounts shall not be
reduced whether or not the Executive obtains other employment. Except as
required by law, no right to receive payments under this Agreement shall be
subject to anticipation, commutation, alienation, sale, assignment, encumbrance,
charge, pledge, or hypothecation, or to execution, attachment, levy, or similar
process or assignment by operation of law, and any attempt, voluntary or
involuntary, to affect any such action shall be null, void, and of no effect.
Section 32. LISB Transaction.
The Executive hereby waives any claim the Executive may have pursuant
to his or her Employment Agreements each dated January 1, 1996 with the Company
and the Association, respectively, that the acquisition by and the merger of
Long Island Bancorp, Inc. and The Long Island Savings Bank, FSB with and into
the Company and the Association, respectively, constituted a "change of control"
of the Company or the Association as defined in such Employment Contracts.
IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed and the Executive has hereunto set his or her hand, all as of the day
and year first above written.
ATTEST:
/S/ William K. Sheerin
William K. Sheerin
[Seal]
ASTORIA FINANCIAL CORPORATION
By: /S/ Gerard C. Keegan
Name: Gerard C. Keegan
Title: Vice Chairman and Chief Administrative Officer
/S/ George L. Engelke, Jr.
GEORGE L. ENGELKE, JR.
Page 30 of 31
<PAGE> 31
STATE OF NEW YORK )
) ss.:
COUNTY OF NASSAU )
On this 20 day of March, 2000, before me, the undersigned, personally
appeared George L. Engelke, Jr., personally known to me or proved to me on the
basis of satisfactory evidence to be the individual(s) whose name(s) is (are)
subscribed to the within instrument and acknowledged to me that he/she/they
executed the same in his/her/their capacity(ies), and that by his/her/their
signature(s) on the instrument, the individual(s), or the person upon behalf of
which the individual(s) acted, executed the instrument.
/S/ Anna Knice
Notary Public
Anna Knice
Notary Public, State of New York
No. 4980431
Qualified in Suffolk County
Commission Expires April 22, 2001
STATE OF NEW YORK )
) ss.:
COUNTY OF NASSAU )
On this 20 day of March, 2000, before me, the undersigned, personally
appeared Gerard C. Keegan, personally known to me or proved to me on the basis
of satisfactory evidence to be the individual(s) whose name(s) is (are)
subscribed to the within instrument and acknowledged to me that he/she/they
executed the same in his/her/their capacity(ies), and that by his/her/their
signature(s) on the instrument, the individual(s), or the person upon behalf of
which the individual(s) acted, executed the instrument.
/S/ Anna Knice
Notary Public
Anna Knice
Notary Public, State of New York
No. 4980431
Qualified in Suffolk County
Commission Expires April 22, 2001
Page 31 of 31
<PAGE> 1
EXHIBIT 10.19
ASTORIA FEDERAL SAVINGS AND LOAN ASSOCIATION
AMENDED AND RESTATED
EMPLOYMENT AGREEMENT WITH EXECUTIVE OFFICER
This AMENDED AND RESTATED EMPLOYMENT AGREEMENT (the "Agreement") is
made and entered into as of January 1, 2000 by and between ASTORIA FEDERAL
SAVINGS AND LOAN ASSOCIATION, a savings association organized and operating
under the federal laws of the United States and having an office at One Astoria
Federal Plaza, Lake Success, New York 11042-1085 (the "Association") and, GEORGE
L. ENGELKE, JR., an individual residing at 83 Chelsea Road, Garden City, New
York 11530 (the "Executive").
WITNESSETH:
WHEREAS, the Executive currently serves the Association in the capacity
of Chairman, President and Chief Executive Officer and as Chairman, President
and Chief Executive Officer of the Association's savings and loan holding
company, ASTORIA FINANCIAL CORPORATION, a publicly held business corporation
organized and operating pursuant to the laws of the State of Delaware (the
"Company"); and
WHEREAS, the Executive currently has an Employment Agreement with the
Association dated January 1, 1996 which the Executive and the Association wish
to amend and modify; and
WHEREAS, the Association 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 Association
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 Association and the
Executive hereby amend and restate in its entirety the Employment Agreement by
and between the Association and the Executive dated as of January 1, 1996 so as
to provide as follows from and after the date hereof:
Section 1. Employment.
The Association agrees to continue to employ the Executive, and the
Executive hereby agrees to such continued employment, during the period and upon
the terms and conditions set forth in this Agreement.
Page 1 of 29
<PAGE> 2
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 (the "Employment Period"). The Employment
Period shall be for an initial term of three years beginning
on the date of this Agreement and ending on the day before the
third anniversary date of this Agreement. Prior to the first
anniversary of the date of this Agreement and on each
anniversary date thereafter (each an "Anniversary Date) the
Board of Directors of the Association (the "Board") shall
review the terms of this Agreement and the Executive's
performance of services hereunder and may, in the absence of
objection from the Executive, approve an extension of the
Employment Period. In such event, the Employment Period shall
be extended to the day before the third anniversary of the
relevant Anniversary Date.
(b) 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 the day before the
Anniversary Date on which the Employment Period (as extended
pursuant to Section 2(a) of this Agreement) is then scheduled
to expire.
(c) Nothing in this Agreement shall be deemed to prohibit the
Association 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 Association and the Executive in the event
of any such termination shall be determined pursuant to this
Agreement.
Section 3. Duties.
The Executive shall serve as Chairman, President and Chief Executive
Officer of the Association, having such power, authority and responsibility and
performing such duties as are prescribed by or pursuant to the By-Laws of the
Association and as are customarily associated with such position. The Executive
shall devote his or her 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 Association and
shall use his or her best efforts to advance the interests of the Association.
Section 4. Cash Compensation.
In consideration for the services to be rendered by the Executive
hereunder, the Association shall pay to him or her a salary at an initial annual
rate of EIGHT HUNDRED TEN THOUSAND DOLLARS ($810,000), payable in approximately
equal installments in accordance with the Association's customary payroll
practices for senior officers. Prior to each Anniversary Date occurring during
the Employment Period, the Board shall review the Executive's annual rate of
Page 2 of 29
<PAGE> 3
salary and may, in its discretion, approve an increase therein. In addition to
salary, the Executive may receive other cash compensation from the Association
for services hereunder at such times, in such amounts and on such terms and
conditions as the Board may determine from time to time.
Section 5. Employee Benefit Plans and Programs.
During the Employment Period, the Executive shall be treated as an
employee of the Association 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 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 Association, in accordance with the terms and conditions of such employee
benefit plans and programs and compensation plans and programs and consistent
with the Association's customary practices.
Section 6. Indemnification and Insurance.
(a) During the Employment Period and for a period of six (6) years
thereafter, the Association 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
Association or service in other capacities at the request of
the Association. 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 Association.
(b) To the maximum extent permitted under applicable law, during
the Employment Period and for a period of six (6) years
thereafter, the Association shall indemnify the Executive
against, and hold him or her 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
Association or any subsidiary or affiliate thereof. This
Section 6(b) shall not be applicable where Section 18 is
applicable.
Section 7. Other Activities.
(a) The Executive may serve as a member of the boards of directors
of such business, community and charitable organizations as he
or she may disclose to and as may be approved by the Board
(which approval shall not be unreasonably withheld); provided,
however, that such service shall not materially interfere with
the performance of his or her duties under this Agreement. The
Executive may also
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<PAGE> 4
engage in personal business and investment activities which do
not materially interfere with the performance of his or her
duties hereunder; provided, however, that such activities are
not prohibited under any code of conduct or investment or
securities trading policy established by the Association and
generally applicable to all similarly situated executives.
(b) The Executive may also serve as an officer or director of the
Company on such terms and conditions as the Association and
the Company may mutually agree upon, and such service shall
not be deemed to materially interfere with the Executive's
performance of his or her duties hereunder or otherwise result
in a material breach of this Agreement.
Section 8. Working Facilities and Expenses.
The Executive's principal place of employment shall be at the
Association'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
Association shall maintain its principal executive offices, or at such other
location as the Association and the Executive may mutually agree upon. The
Association shall provide the Executive at his or her principal place of
employment with a private office, secretarial services and other support
services and facilities suitable to his or her position with the Association and
necessary or appropriate in connection with the performance of his or her
assigned duties under this Agreement. The Association shall provide to the
Executive for his or her exclusive use an automobile owned or leased by the
Association and appropriate to his or her position, to be used in the
performance of his or her duties hereunder, including commuting to and from his
or her personal residence. The Association shall reimburse the Executive for his
or her ordinary and necessary business expenses, including, without limitation,
all expenses associated with his or her business use of the aforementioned
automobile, fees for memberships in such clubs and organizations as the
Executive and the Association shall mutually agree are necessary and appropriate
for business purposes, and his or her travel and entertainment expenses incurred
in connection with the performance of his or her duties under this Agreement, in
each case upon presentation to the Association of an itemized account of such
expenses in such form as the Association 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 or her employment with
the Association terminates during the Employment Period under
any of the following circumstances:
(i) the Executive's voluntary resignation from employment
with the Association within six (6) months following:
(A) the failure of the Board to appoint or
re-appoint or elect or re-elect the
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<PAGE> 5
Executive to the office of Chairman,
President and Chief Executive Officer (or a
more senior office) of the Association;
(B) if the Executive is or becomes a member of
the Board, the failure of the stockholders
of the Association 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;
(C) the expiration of a thirty (30) day period
following the date on which the Executive
gives written notice to the Association of
its material failure, whether by amendment
of the Association's Organization
Certificate or By-laws, action of the Board
or the Association'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 Association
cures such failure;
(D) the expiration of a thirty (30) day period
following the date on which the Executive
gives written notice to the Association of
its material breach of any term, condition
or covenant contained in this Agreement
(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 or her total
compensation package), unless, during such
thirty (30) day period, the Association
cures such failure; or
(E) the relocation of the Executive's principal
place of employment, without his or her
written consent, to a location outside of
Nassau County and Queens County, New York;
(ii) the termination of the Executive's employment with
the Association for any other reason not described in
Section 10(a).
In such event and subject to Section 27 of this Agreement, the
Association 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
Association under circumstances described in Section 9(a) of
this Agreement, the Association shall pay and provide to the
Executive (or, in the event of the Executive's death following
the Executive's termination of employment, to his or her
estate):
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<PAGE> 6
(i) his or her 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 or her employment with the Association, such
payment to be made at the time and in the manner
prescribed by law applicable to the payment of wages
but in any event not later than thirty (30) days
after termination of employment;
(ii) the benefits, if any, to which he or she is entitled
as a former employee under the employee benefit plans
and programs and compensation plans and programs
maintained for the benefit of the Association's
officers and employees;
(iii) continued group life, health (including
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
(including any co-payments and deductibles, but
excluding any premium sharing arrangements, it being
the intention of the parties to this Agreement that
the premiums for such insurance benefits shall be the
sole cost and expense of the Association) equivalent
to the coverage to which he or she would have been
entitled under such plans (as in effect on the date
of his or her termination of employment, or, if his
or her termination of employment occurs after a
Change of Control, on the date of such Change of
Control, whichever benefits are greater), if he or
she had continued working for the Association during
the Remaining Unexpired Employment Period at the
highest annual rate of salary or compensation, as
applicable, achieved during that portion of the
Employment Period which is prior to the Executive's
termination of employment with the Association;
(iv) within thirty (30) days following the Executive's
termination of employment with the Association, a
lump sum payment in an amount representing an
estimate of the salary that the Executive would have
earned if he or she had continued working for the
Association 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 Association (the "Salary Severance
Payment"). The Salary Severance Payment shall be
computed using the following formula:
SSP = BS x NY
where:
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<PAGE> 7
"SSP" is the amount of the Salary Severance Payment,
before the deduction of applicable federal, state and
local withholding taxes;
"BS" is 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 Association;
"NY" is the Remaining Unexpired Employment Period
expressed as a number of years (rounded, if such
period is not a whole number, to the next highest
whole number).
The Salary Severance Payment shall 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 the Executive's
termination of employment with the Association, a
lump sum payment (the "DB Severance Payment") in an
amount equal to the excess, if any, of:
(A) the present value of the aggregate benefits
to which he or she would be entitled under
any and all qualified and non-qualified
defined benefit pension plans maintained by,
or covering employees of, the Association,
if he or she were 100% vested thereunder and
had continued working for the Association
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 pursuant to
Sections 9(b)(i), (iv), (vii), (viii) and
(ix) of this Agreement; over
(B) the present value of the benefits to which
he or she is actually entitled under such
defined benefit pension plans as of the date
of his or her termination;
The DB Severance Payment shall be computed using the
following formula:
DBSP = SEVLS - LS
where:
"DBSP" is the amount of the DB Severance Payment,
before the deduction
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<PAGE> 8
of applicable federal, state and local withholding
taxes;
"SEVLS" is the sum of the present value of the
defined benefit pension benefits that have been or
would be accrued by the Executive under all qualified
and non-qualified defined benefit pension plans of
which the Association or any of its affiliates or
subsidiaries are a sponsor and in which the Executive
is or, but for the completion of any service
requirement that would have been completed during the
Remaining Unexpired Employment Period, would be a
participant utilizing the following assumptions:
(I) the executive is 100% vested in the
plans regardless of actual service,
(II) the benefit to be valued shall be a
single life annuity with monthly
payments due on the first day of
each month and with a guaranteed
payout of not less than 120 monthly
payments,
(III) the calculation shall be made
utilizing the same mortality table
and interest rate as would be
utilized by the plan on the date of
termination as if the calculation
were being made pursuant to Section
417(e)(3)(A)(ii) of the Internal
Revenue Code, as amended, (the
"Code");
(IV) for purpose of calculating the
Executive's monthly or annual
benefit under the defined benefit
plans, additional service equal to
the Remaining Unexpired Employment
Period (rounded up to the next whole
year if such period is not a whole
number when expressed in years)
shall be added to the Executive's
actual service to calculate the
amount of the benefit; and
(V) for purpose of calculating the
Executive's monthly or annual
benefit under the defined benefit
plans, the following sums shall be
added to the Executive's
compensation recognized under such
plans for the most recent year
recognized:
(1) payments made pursuant to
Section 9(b)(i);
(2) the Salary Severance Payment;
(3) the Bonus Severance Payment;
(4) the Option Surrender Payment;
and
(5) the RRP Surrender Payment.
Page 8 of 29
<PAGE> 9
"LS" is the sum of the present value of the defined
benefit pension benefits that are vested benefits
actually accrued by the Executive under all qualified
and non-qualified defined benefit pension plans
maintained by, or covering employees of, the Company
or any of its affiliates or subsidiaries in which the
Executive is or, but for the completion of any
service requirement, would be a participant utilizing
the following assumptions:
(I) the benefit to be valued shall be a
single life annuity with monthly
payments due on the first day of
each month and with a guaranteed
payout of not less than 120 monthly
payments, and
(II) the calculation shall be made
utilizing the same mortality table
and interest rate as would be
utilized by the plan on the date of
termination as if the calculation
were being made pursuant to Section
417(e)(3)(A)(ii) of the Code;
(vi) within thirty (30) days following the Executive's
termination of employment with the Association, a
lump sum payment (the "Defined Contribution Severance
Payment") equal to the sum of:
(A) an estimate of the additional employer
contributions to which he or she would have
been entitled under any and all qualified
and non-qualified defined contribution
pension plans, excluding the employee stock
ownership plans, maintained by, or covering
employees of, the Association or any of its
affiliates or subsidiaries as if he or she
were 100% vested thereunder and had
continued working for the Association during
the Remaining Unexpired Employment Period
(the "401K Severance Payment"); and
(B) an estimate of the value of the additional
assets which would have been allocable to
him or her through debt service or otherwise
under any and all qualified and
non-qualified employee stock ownership
plans, maintained by, or covering employees
of the Association or any of its affiliates
or subsidiaries as if he or she were 100%
vested thereunder and had continued working
for the Association during the Remaining
Unexpired Employment Period, based on the
fair market value of such assets at
termination of employment (the "ESOP
Severance Payment").
The Defined Contribution Severance Payment shall be
calculated as follows:
DCSP = 401KSP + ESOPSP
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<PAGE> 10
where:
"DCSP" is the amount of the Defined Contribution
Severance Payment, before the deduction of applicable
federal, state and local withholding taxes;
"401KSP" is the amount of the 401K Severance Payment,
before the deduction of applicable federal, state and
local withholding taxes; and
"ESOPSP" is the amount of the ESOP Severance Payment,
before the deduction of applicable federal, state and
local withholding taxes.
The 401KSP shall be calculated as follows:
401SP = (401KC x NY) + UVB
where
"401KC" is the sum of the Association Contributions
as defined in the Association's Incentive Savings
Plan or, if made under another defined contribution
pension plan other than an employee stock ownership
plan, the comparable contribution made for the
benefit of the Executive during the one year period
which shall end on the date of his or her termination
of his or her employment with the Association;
"NY" is the Remaining Unexpired Employment Period
expressed as a number of years (rounded, if such
period is not a whole number, to the next highest
whole number); and
"UVB" is the actual balance credited to the
Executive's account under the applicable plan at the
date of his or her termination of employment that is
not vested and does not become vested as a
consequence of such termination of employment.
The ESOPSP shall be calculated as follows:
ESOPSP = (((ALL x FMV) + C) x NY) + UVB
where:
"ALL" is the sum of the number of shares of the
Association's common stock or, if applicable, phantom
shares of such stock by whatever term it is described
allocated to the Executive's accounts under all
qualified and non-
Page 10 of 29
<PAGE> 11
qualified employee stock ownership plans maintained
by the Association or any of its affiliates or
subsidiaries during or for the last complete plan
year in which the Executive participated in such
plans and received such an allocation whether the
allocation occurred as a result of contributions made
by the Association, the payment by the Association or
any of its affiliates or subsidiaries of any loan
payments under a leveraged employee stock ownership
plan, the allocation of forfeitures under the terms
of such plan or as a result of the use of cash or
earnings allocated to the Executives account during
such plan year to make loan payments that result in
share allocations, provided however, that excluded
shall be any shares or phantom shares allocated to
the Executive's account under any qualified and
non-qualified employee stock ownership plans
maintained by the Association or any of its
affiliates or subsidiaries solely as a result of the
termination of such plans, provided further, that if
the shares allocated are not shares of the
Association's common stock or phantom shares of such
stock than shares of whatever securities are so
allocated shall be utilized, and provided further,
that in the event that there shall be any shares or
phantom shares allocated during the then current plan
year or the last complete plan year to the
Executive's account under any qualified and
non-qualified employee stock ownership plans
maintained by the Association or any of its
affiliates or subsidiaries solely as a result of the
termination of such plans, the ALL shall be reduced
(but not to an amount less than zero (0)) by an
amount calculated by multiplying the number of shares
or phantom shares allocated to the Executive's
account solely as a result of the termination of such
plans times the FMV utilized to calculate the ESOPSP;
"C" is the sum of all cash allocated to the
Executive's accounts under all qualified and
non-qualified employee stock ownership plans
maintained by the Association during or for the last
complete plan year in which the Executive
participated in such plans whether the allocation
occurred as a result of contributions made by the
Association, the payment by the Association or the
Association of any loan payments under a leveraged
employee stock ownership plan or the allocation of
forfeitures under the terms of such plan during such
plan year;
"FMV" is the closing price of the Association's
common stock on The Nasdaq Stock Market or on
whatever other stock exchange or market such stock is
publicly traded on the date the Executive's
employment terminates or, if such day is not a day on
which such securities are traded, on the most recent
preceding trading day on which a trade occurs,
provided however that if the security allocated to
the Executive's account during the last completed
plan year is other than the Association's common
stock the closing price of such security on the date
the Executive's employment terminates shall be
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<PAGE> 12
utilized;
"NY" is the Remaining Unexpired Employment Period
expressed as a number of years (rounded, if such
period is not a whole number, to the next highest
whole number); and
"UVB" is the actual balance credited to the
Executive's account under the applicable plan at the
date of his or her termination of employment that is
not vested and does not become vested as a
consequence of such termination of employment.
(vii) within thirty (30) days following the Executive's
termination of employment with the Association, the
Association shall make a lump sum payment to the
Executive in an amount equal to the estimated
potential annual bonuses or incentive compensation
that the Executive could have earned if the Executive
had continued working for the Association during the
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 Association (the
"Bonus Severance Payment"). The Bonus Severance
Payment shall be computed using the following
formula:
BSP = ( BS x TIO x AP x NY)
where:
"BSP" is the amount of the Bonus Severance Payment,
before the deduction of applicable federal, state and
local withholding taxes;
"BS" is 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 Association;
"TIO" is the highest target incentive opportunity
(expressed as a percentage of base salary)
established by the Compensation Committee of the
Board for the Executive pursuant to the Astoria
Financial Corporation Executive Officer Annual
Incentive Plan during that portion of the Employment
Period which is prior to the Executive's termination
of employment with the Association;
"AP" is the highest award percentage available to the
Executive with respect to the financial performance
of the Company (expressed as a percentage of the TIO)
established by the Compensation Committee of the
Board for the
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<PAGE> 13
Executive pursuant to the Astoria Financial
Corporation Executive Officer Annual Incentive Plan
during the period during that portion of the
Employment Period which is prior to the Executive's
termination of employment with the Association; and
"NY" is the Remaining Unexpired Employment Period
expressed as a number of years (rounded, if such
period is not a whole number, to the next highest
whole number).
(viii) at the election of the Association made within thirty
(30) days following the Executive's termination of
employment with the Association, 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 Association, a lump sum payment
(the "Option Surrender Payment"). The Option
Surrender Payment shall be calculated as follows:
OSP = (FMV - EP) x N
where:
"OSP" is the amount of the Option Surrender Payment,
before the deduction of applicable federal, state and
local withholding taxes;
"FMV" is the closing price of the Association's
common stock on The Nasdaq Stock Market, or on
whatever other stock exchange or market such stock is
publicly traded, on the date the Executive's
employment terminates or, if such day is not a day on
which such securities are traded, on the most recent
preceding trading day on which a trade occurs,
provided however that if the option or stock
appreciation right is for a security other than the
Association's common stock, 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 shall be utilized;
"EP" is the exercise price per share for such option
or appreciation right, as specified in or under the
relevant plan or program; and
"N" is the number of shares with respect to which
options or appreciation rights are being surrendered.
For purposes of determining the Option Severance
Payment and for purposes of determining the
Executive's right following his or her termination of
employment with the Association to exercise any
options or appreciation
Page 13 of 29
<PAGE> 14
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 Association, even if he or
she is not vested under such plan or program;
(ix) at the election of the Association made within thirty
(30) days following the Executive's termination of
employment with the Association, upon the surrender
of any shares awarded to the Executive under any
restricted stock plan maintained by, or covering
employees of, the Association, a lump sum payment
(the "RRP Surrender Payment") The RRP Surrender
Payment shall be calculated as follows:
RSP = FMV x N
where:
"RSP" is the amount of the RRP Surrender Payment,
before the deduction of applicable federal, state and
local withholding taxes;
"FMV" is the closing price of the Association's
common stock on The Nasdaq Stock Market, or on
whatever other stock exchange or market such stock is
publicly traded, on the date the Executive's
employment terminates or, if such day is not a day on
which such securities are traded, on the most recent
preceding trading day on which a trade occurs,
provided however that if the restricted stock is a
security other than the Association's common stock,
the fair market value of a share of stock of the same
class as the stock granted under such plan,
determined as of the date of termination of
employment shall be utilized; and
"N" is the number of shares which are being
surrendered.
For purposes of determining the RRP Surrender Payment
and for purposes of determining the Executive's right
following his or her termination of employment with
the Association 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
Association, even if he or she is not vested under
such plan.
The Salary Severance Payment, the DB Severance Payment, the
Defined Contribution Severance Payment, the Bonus Severance
Payment, the Option Surrender Payment and the RRP Surrender
Payment shall be computed at the expense of the Association by
an attorney of the firm of Thacher Proffitt & Wood, Two World
Trade Center, New York, New York 10048 or, if such firm is
unavailable
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<PAGE> 15
or unwilling to perform such calculation, by a firm of
independent certified public accountants selected by the
Executive and reasonably satisfactory to the Association (the
"Computation Advisor"). The determination of the Computation
Advisor as to the amount of such payments shall be final and
binding in the absence of manifest error.
The Association 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 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 Association and the Executive further
agree that the Association may condition the payment of the
Salary Severance Payment, the DB Severance Payment, the
Defined Contribution Severance Payment, the Bonus Severance
Payment, the Option Surrender Payment and the RRP Surrender
Payment on the receipt of the Executive's resignation from any
and all positions which he or she holds as an officer,
director or committee member with respect to the Association,
the Association or any subsidiary or affiliate of either of
them.
Section 10. Termination without Additional Association Liability.
(a) In the event that the Executive's employment with the
Association 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 personal
dishonesty, incompetence, wilful misconduct, breach
of fiduciary duty involving personal profit,
intentional failure to perform stated duties, wilful
violation of any law, rule or regulation (other than
traffic violations or similar offenses) or final
cease and desist order, or any material breach of
this Agreement, in each case measured against
standards generally prevailing at the relevant time
in the savings and community banking industry;
(ii) the Executive's voluntary resignation from employment
with the Association 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 Disabled;
(v) the Executive's termination of employment for any
reason at or after attainment of mandatory retirement
age under the Association's mandatory
Page 15 of 29
<PAGE> 16
retirement policy for executive officers in effect as
of the date of this Agreement;
then the Association, except as otherwise specifically
provided herein, shall have no further obligations under this
Agreement, other than the payment to the Executive (or, in the
event of his or her death, to his or her estate) of the
amounts or benefits provided in Section 9(b)(i) and (ii) of
this Agreement (the "Standard Termination Entitlements").
(b) 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:
(i) the Board, by the affirmative vote of 75% of its
entire membership, determines that the Executive is
guilty of the conduct described in Section 10(a)(i)
above measured against standards generally prevailing
at the relevant time in the savings and community
banking industry;
(ii) prior to the vote contemplated by Section 10(b)(i),
the Board shall provide the Executive with notice of
the Association's intent to discharge the Executive
for Cause, detailing with particularity the facts and
circumstances which are alleged to constitute Cause
(the "Notice of Intent to Discharge"); and
(iii) after the giving of the Notice of Intent to Discharge
and before the taking of the vote contemplated by
Section 10(b)(i), the Executive, together with the
Executive's legal counsel, if the Executive so
desires, are afforded a reasonable opportunity to
make both written and oral presentations before the
Board for the purpose of refuting the alleged grounds
for Cause for the Executive's discharge; and
(iv) after the vote contemplated by Section 10(b)(i), the
Association has furnished to the Executive a notice
of termination which shall specify the effective date
of the Executive's termination of employment (which
shall in no event be earlier than the date on which
such notice is deemed given) and include a copy of a
resolution or resolutions adopted by the Board,
certified by its corporate secretary, authorizing the
termination of the Executive's employment with Cause
and stating with particularity the facts and
circumstances found to constitute Cause for the
Executive's discharge (the "Final Discharge Notice").
If the Executive, during the ninety (90) day period commencing
on the delivery by the Association to the Executive of the
Notice of Intent to Discharge specified in Section 10(b)(ii),
resigns his or her employment with the Association prior to
the
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<PAGE> 17
delivery to the Executive by the Association of the Final
Discharge Notice specified in Section 10(b)(iv), then the
cessation of employment of the Executive shall be deemed to be
for Cause.
Following the giving of a Notice of Intent to Discharge, the
Bank may temporarily suspend the Executive's duties and
authority and, in such event, may also suspend the payment of
salary and other cash compensation, but not the Executive's
participation in retirement, insurance and other employee
benefit plans. If the Executive is not discharged or is
discharged without Cause within forty-five (45) days after the
giving of a Notice of Intent to Discharge, payments of salary
and cash compensation shall resume, and all payments withheld
during the period of suspension shall be promptly restored. If
the Executive is discharged with Cause not later than
forty-five (45) days after the giving of the Notice of Intent
to Discharge, all payments withheld during the period of
suspension shall be deemed forfeited and shall not be included
in the Standard Termination Entitlements. If a Final Discharge
Notice is given later than forty-five (45) days, but sooner
than ninety (90) days, after the giving of the Notice of
Intent to Discharge, all payments made to the Executive during
the period beginning with the giving of the Notice of Intent
to Discharge and ending with the Executive's discharge with
Cause shall be retained by the Executive and shall not be
applied to offset the Standard Termination Entitlements. If
the Bank does not give a Final Discharge Notice to the
Executive within ninety (90) days after giving a Notice of
Intent to Discharge, the Notice of Intent to Discharge shall
be deemed withdrawn and any future action to discharge the
Executive with Cause shall require the giving of a new Notice
of Intent to Discharge. If the Executive resigns pursuant to
Section 10(b), the Executive shall forfeit his or her right to
suspended amounts that have not been restored as of the date
of the Executive's resignation or notice of resignation,
whichever is earlier.
(c) The Association may terminate the Executive's employment on
the basis that the Executive is Disabled during the Employment
Period upon a determination by the Board, by the affirmative
vote of 75% of its entire membership, acting in reliance on
the written advice of a medical professional acceptable to it,
that the Executive is suffering from a physical or mental
impairment which, at the date of the determination, has
prevented the Executive from performing the Executive's
assigned duties on a substantially full-time basis for a
period of at least one hundred and eighty (180) days during
the period of one (1) year ending with the date of the
determination or is likely to result in death or prevent the
Executive from performing the Executive's assigned duties on a
substantially full-time basis for a period of at least one
hundred and eighty (180) days during the period of one (1)
year beginning with the date of the determination. In such
event:
(A) The Association shall pay and provide the Standard
Termination Entitlements to the Executive;
Page 17 of 29
<PAGE> 18
(B) In addition to the Standard Termination Entitlements,
the Association shall continue to pay to the
Executive the Executive's base salary, at the annual
rate in effect for the Executive immediately prior to
the termination of the Executive's employment, during
a period ending on the earliest of:
(I) the expiration of one hundred and eighty
(180) days after the date of termination of
the Executive's employment;
(II) the date on which long-term disability
insurance benefits are first payable to the
Executive under any long-term disability
insurance plan covering the Executive; or
(III) the date of the Executive's death.
A termination of employment due to Disability under this
Section shall be effected by a notice of termination given to
the Executive by the Association and shall take effect on the
later of the effective date of termination specified in such
notice or, if no such date is specified, the date on which the
notice of termination is deemed given to the Executive.
Section 11. Termination Upon or Following a Change of Control.
(a) A Change of Control of the Association ("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 Association of a
transaction that would result in the reorganization,
merger or consolidation of the Association 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 Securities Exchange Act of 1934, as
amended (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 Association; 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
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<PAGE> 19
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 Association;
(ii) the acquisition of all or substantially all of the
assets of the Association 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 Association 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 Association of any
transaction which would result in such an
acquisition;
(iii) a complete liquidation or dissolution of the
Association, or approval by the stockholders of the
Association 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
do not belong to any of the following groups:
(A) individuals who were members of the Board on
the date of this Agreement; or
(B) individuals who first became members of the
Board after the date of this Agreement
either:
(I) upon election to serve as a member
of the Board 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 Association to serve as a member
of the Board, but only if nominated
for election by affirmative vote of
three-quarters of the members of the
Board, 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
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<PAGE> 20
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; or
(v) any event which would be described in Section
11(a)(i), (ii), (iii) or (iv) if the term "Company"
were substituted for the term "Association" therein
or the term "Board of Directors of the Company" were
substituted for the term "Board".
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 Association, the Association, or an affiliate or
subsidiary of either of them, by the Association, 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 or her termination of employment with
the Association 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 within six
(6) months following his or her demotion, loss of
title, office or significant authority or
responsibility or following any reduction in any
element of his or her package of compensation and
benefits;
(ii) resignation, voluntary or otherwise, by the Executive
at any time during the Employment Period within six
(6) months following any relocation of his or her
principal place of employment or any change in
working conditions at such principal place of
employment which the Executive, in his or her
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 within six
(6) months following the failure of any successor to
the Association 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 Association which
is at least as favorable to him or her; or
(iv) resignation, voluntary or otherwise, for any reason
whatsoever during the Employment Period within six
months following the expiration of a transition
period of thirty (30) days beginning on the effective
date of the Change of
Page 20 of 29
<PAGE> 21
Control (or for such longer period, not to exceed
ninety (90) days beginning on the effective date of
the Change of Control, as the Association or its
successor may reasonably request) to facilitate a
transfer of management responsibilities.
Section 12. Covenant Not To Compete.
The Executive hereby covenants and agrees that, in the event of his or
her termination of employment with the Association prior to the expiration of
the Employment Period, for a period of one (1) year following the date of his or
her termination of employment with the Association (or, if less, for the
Remaining Unexpired Employment Period), the Executive shall not, without the
written consent of the Association, become an officer, employee, consultant,
director or trustee of any savings bank, savings and loan association, savings
and loan holding Association, bank or bank holding Association, 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 Association 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 12 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(c) of this Agreement, this
Section 12 shall not prevent the Executive from accepting any position or
performing any services if:
(a) he or she first offers, by written notice, to accept a similar
position with or perform similar services for the Association
on substantially the same terms and conditions and
(b) the Association declines to accept such offer within ten (10)
days after such notice is given.
Section 13. Confidentiality.
Unless the Executive obtains the prior written consent of the
Association, the Executive shall keep confidential and shall refrain from using
for the benefit of the Executive or any person or entity other than the
Association, any entity which is a subsidiary of the Association or any entity
which the Association is a subsidiary of, any material document or information
obtained from the Association, or from its affiliates or subsidiaries, in the
course of the Executive's 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 or her
own) until the same ceases to be material (or becomes so ascertainable or
available); provided, however, that nothing in this Section 13 shall prevent the
Executive, with or without the Association's consent, from participating in or
disclosing documents or information in connection with any judicial or
administrative investigation, inquiry or proceeding to the extent that such
participation or disclosure is required
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<PAGE> 22
under applicable law.
Section 14. Solicitation.
The Executive hereby covenants and agrees that, for a period of one (1)
year following the Executive's termination of employment with the Association,
he or she shall not, without the written consent of the Association, 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 Association, the Association or any
affiliate or subsidiary of ether 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 Association, savings and loan holding
Association, 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
Association has an office or has filed an application for
regulatory approval to establish an office;
(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 Association, savings
and loan holding Association, 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 Association has an office or has filed an application
for regulatory approval to establish an office 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 Association, the Association, or
any affiliate or subsidiary of either of them, to terminate
his or her employment and accept employment, become affiliated
with or provide services for compensation in any capacity
whatsoever to any such savings bank, savings and loan
association, bank, bank holding Association, savings and loan
holding Association 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 Association, the Association,
or any affiliate or subsidiary of either of them to terminate
an existing business or commercial relationship with the
Association, the Association, or any affiliate or subsidiary
of either of them.
Section 15. No Effect on Employee Benefit Plans or Programs.
The termination of the Executive's employment during the term of this
Agreement or
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<PAGE> 23
thereafter, whether by the Association or by the Executive, shall have no effect
on the rights and obligations of the parties hereto under the Association'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 Association from
time to time.
Section 16. Successors and Assigns.
This Agreement will inure to the benefit of and be binding upon the
Executive, his or her legal representatives and testate or intestate
distributees, and the Association 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 Association may be sold or otherwise transferred. Failure of the
Association to obtain from any successor its express written assumption of the
Association's obligations under this Agreement 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 17. 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:
George L. Engelke, Jr.
83 Chelsea Road
Garden City, New York 11530
If to the Association:
Astoria Federal Savings and Loan Association
One Astoria Federal Plaza
Lake Success, New York 11042-1085
Attention: General Counsel
with a copy to:
Page 23 of 29
<PAGE> 24
Thacher Proffitt & Wood
Two World Trade Center
New York, New York 10048
Attention: W. Edward Bright, Esq.
Section 18. Indemnification for Attorneys' Fees.
The Association shall indemnify, hold harmless and defend the Executive
against reasonable costs, including legal fees, incurred by him or her in
connection with or arising out of any action, suit or proceeding in which he or
she may be involved, as a result of his or her efforts, in good faith, to defend
or enforce the terms of this Agreement; provided, however, that in the case of
any action, suit or proceeding instituted prior to a Change of Control, 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 Association'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 19. 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 20. 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 21. 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 22. Governing Law.
This Agreement shall be governed by and construed and enforced in
accordance with the
Page 24 of 29
<PAGE> 25
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 performed entirely within the State of New
York.
Section 23. 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.
Page 25 of 29
<PAGE> 26
Section 24. 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. No modifications of this Agreement shall be valid unless made in writing
and signed by the parties hereto.
Section 25. Survival.
The provisions of any sections of this Agreement which by its terms
contemplates performance after the expiration or termination of this Agreement
(including, but not limited to, Sections 6, 9, 10, 11, 12, 13, 14, 15, 16, 17,
18, 20, 26, 27 and 28) shall survive the expiration of the Employment Period or
termination of this Agreement.
Section 26. Equitable Remedies.
The Association and the Executive hereby stipulate that money damages
are an inadequate remedy for violations of Sections 6(a), 12, 13 or 14 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 27. Required Regulatory Provisions.
The following provisions are included for the purposes of complying
with various laws, rules and regulations applicable to the Association:
(a) Notwithstanding anything herein contained to the contrary, in
no event shall the aggregate amount of compensation payable to
the Executive pursuant to Section 9(b) of this Agreement
(exclusive of amounts described in Section 9(b)(i), (ii),
(viii) or (ix)) exceed three times the Executive's average
annual total compensation for the last five consecutive
calendar years to end prior to the Executive's termination of
employment with the Association (or for the Executive's entire
period of employment with the Association if less than five
calendar years).
(b) Notwithstanding anything herein contained to the contrary, any
payments to the Executive by the Association, 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 ("FDI Act"), 12 U.S.C. Section1828(k),
and any regulations promulgated thereunder.
(c) Notwithstanding anything herein contained to the contrary, if
the Executive is suspended from office and/or temporarily
prohibited from participating in the
Page 26 of 29
<PAGE> 27
conduct of the affairs of the Association pursuant to a notice
served under Section 8(e)(3) or 8(g)(1) of the FDI Act, 12
U.S.C. Section 1818(e)(3) or 1818(g)(1), the Association's
obligations under this Agreement shall be suspended as of the
date of service of such notice, unless stayed by appropriate
proceedings. If the charges in such notice are dismissed, the
Association, in its discretion, may (i) pay to the Executive
all or part of the compensation withheld while the
Association's obligations hereunder were suspended and (ii)
reinstate, in whole or in part, any of the obligations which
were suspended.
(d) Notwithstanding anything herein contained to the contrary, if
the Executive is removed and/or permanently prohibited from
participating in the conduct of the Association's affairs by
an order issued under Section 8(e)(4) or 8(g)(1) of the FDI
Act, 12 U.S.C. Section 1818(e)(4) or (g)(1), all prospective
obligations of the Association under this Agreement shall
terminate as of the effective date of the order, but vested
rights and obligations of the Association and the Executive
shall not be affected.
(e) Notwithstanding anything herein contained to the contrary, if
the Association is in default (within the meaning of Section
3(x)(1) of the FDI Act, 12 U.S.C. Section 1813(x)(1), all
prospective obligations of the Association under this
Agreement shall terminate as of the date of default, but
vested rights and obligations of the Association and the
Executive shall not be affected.
(f) Notwithstanding anything herein contained to the contrary, all
prospective obligations of the Association hereunder shall be
terminated, except to the extent that a continuation of this
Agreement is necessary for the continued operation of the
Association: (i) by the Director of the Office of Thrift
Supervision ("OTS") or his or her designee or the Federal
Deposit Insurance Corporation ("FDIC"), at the time the FDIC
enters into an agreement to provide assistance to or on behalf
of the Association under the authority contained in Section
13(c) of the FDI Act, 12 U.S.C. Section 1823(c); (ii) by the
Director of the OTS or his or her designee at the time such
Director or designee approves a supervisory merger to resolve
problems related to the operation of the Association or when
the Association is determined by such Director to be in an
unsafe or unsound condition. The vested rights and obligations
of the parties shall not be affected.
If and to the extent that any of the foregoing provisions shall cease to be
required or by applicable law, rule or regulation, the same shall become
inoperative as though eliminated by formal amendment of this Agreement.
Section 28. No Offset or Recoupment; No Attachment.
The Association's obligation to make the payments provided for in this
Agreement and
Page 27 of 29
<PAGE> 28
otherwise to perform its obligations under this Agreement shall not be affected
by any set-off, counterclaim, recoupment, defense or other claim, right or
action which the Association or any of its affiliates or subsidiaries may have
against the Executive. In no event shall the Executive be obligated to seek
other employment or take any other action by way of mitigation of the amounts
payable to the Executive under any of the provisions of this Agreement and such
amounts shall not be reduced whether or not the Executive obtains other
employment. Except as required by law, no right to receive payments under this
Agreement shall be subject to anticipation, commutation, alienation, sale,
assignment, encumbrance, charge, pledge, or hypothecation, or to execution,
attachment, levy, or similar process or assignment by operation of law, and any
attempt, voluntary or involuntary, to affect any such action shall be null,
void, and of no effect.
Section 29. LISB Transaction.
The Executive hereby waives any claim the Executive may have pursuant
to his or her Employment Agreements each dated January 1, 1996 with the Company
and the Association, respectively, that the acquisition by and the merger of
Long Island Bancorp, Inc. and The Long Island Savings Bank, FSB with and into
the Company and the Association, respectively, constituted a "change of control"
of the Company or the Association as defined in such Employment Contracts.
IN WITNESS WHEREOF, the Association has caused this Agreement to be
executed and the Executive has hereunto set his or her hand, all as of the day
and year first above written.
ATTEST:
/S/ William K. Sheerin
William K. Sheerin
[Seal]
ASTORIA FEDERAL SAVINGS AND LOAN ASSOCIATION
By: /S/ Gerard C. Keegan
Name: Gerard C. Keegan
Title: Vice Chairman and Chief Administrative Officer
/S/ George L. Engelke, Jr.
GEORGE L. ENGELKE, JR.
STATE OF NEW YORK )
) ss.:
COUNTY OF NASSAU )
On this 20 day of March, 2000, before me, the undersigned, personally
appeared George L.
Page 28 of 29
<PAGE> 29
Engelke, Jr., personally known to me or proved to me on the basis of
satisfactory evidence to be the individual(s) whose name(s) is (are) subscribed
to the within instrument and acknowledged to me that he/she/they executed the
same in his/her/their capacity(ies), and that by his/her/their signature(s) on
the instrument, the individual(s), or the person upon behalf of which the
individual(s) acted, executed the instrument.
/S/ Anna Knice
Notary Public
Anna Knice
Notary Public, State of New York
No. 4980431
Qualified in Suffolk County
Commission Expires April 22, 2001
STATE OF NEW YORK )
) ss.:
COUNTY OF NASSAU )
On this 20 day of March, 2000, before me, the undersigned, personally
appeared Gerard C. Keegan, personally known to me or proved to me on the basis
of satisfactory evidence to be the individual(s) whose name(s) is (are)
subscribed to the within instrument and acknowledged to me that he/she/they
executed the same in his/her/their capacity(ies), and that by his/her/their
signature(s) on the instrument, the individual(s), or the person upon behalf of
which the individual(s) acted, executed the instrument.
/S/ Anna Knice
Notary Public
Anna Knice
Notary Public, State of New York
No. 4980431
Qualified in Suffolk County
Commission Expires April 22, 2001
Page 29 of 29
<PAGE> 1
EXHIBIT 10.20
ASTORIA FINANCIAL CORPORATION
AMENDED AND RESTATED
EMPLOYMENT AGREEMENT WITH EXECUTIVE OFFICER
This AMENDED AND RESTATED EMPLOYMENT AGREEMENT (the "Agreement") is made
and entered into as of January 1, 2000 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 One Astoria Federal Plaza, Lake
Success, New York 11042-1085 (the "Company"), and GERARD C. KEEGAN, an
individual residing at 89 Eleventh Street, Garden City, New York 11530 (the
"Executive").
WITNESSETH:
WHEREAS, the Executive currently serves the Company in the capacity of
Vice Chairman and Chief Administrative Officer and as Vice Chairman and Chief
Administrative Officer of its wholly owned subsidiary, ASTORIA FEDERAL SAVINGS
AND LOAN ASSOCIATION (the "Association"); and
WHEREAS, the Executive currently has an Employment Agreement with the
Company dated March 29, 1997 which the Executive and the Company wish to amend
and modify; 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 amend
and restate in its entirety the Employment Agreement by and between the Company
and the Executive dated as of March 29, 1997 so as to provide as follows from
and after the date hereof:
Section 1. Employment.
----------
The Company agrees to continue to employ the Executive, and the Executive
hereby agrees to such continued employment, during the period and upon the terms
and conditions set forth in this Agreement.
Page 1 of 31
<PAGE> 2
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 (the "Employment Period"). The Employment Period shall be
for an initial term of three years beginning on the date of this
Agreement and ending on the day before the third anniversary date of
this Agreement, plus such extensions, if any, as are provided by the
Board of Directors of the Company (the "Board") pursuant to Section
2(b).
(b) Beginning on the date of this Agreement, the Employment Period shall
automatically be extended for one (1) additional day each day,
unless either the Company or the Executive elects not to extend the
Agreement further by giving written notice to the other party, in
which case the Employment Period shall end on the day before the
third anniversary of the date on which such written notice is given.
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 day before the third anniversary of the
date on which such notice is given; and
(ii) in all other cases, the day before the third anniversary of
the date as of which the Remaining Unexpired Employment Period
is being determined.
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 previously 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 pursuant to this Agreement.
Section 3. Duties.
------
The Executive shall serve as Vice Chairman and Chief Administrative
Officer of the Company, having such power, authority and responsibility and
performing such duties as are prescribed by or pursuant to the By-Laws of the
Company and as are customarily associated with such position. The Executive
shall devote his or her 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, its
affiliates and subsidiaries and shall use his
Page 2 of 31
<PAGE> 3
or her best efforts to advance the interests of the Company.
Section 4. Cash Compensation.
-----------------
In consideration for the services to be rendered by the Executive
hereunder, the Company shall pay to him or her a salary at an initial annual
rate of THREE HUNDRED SEVENTY FIVE THOUSAND DOLLARS ($375,000), 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. In no event shall the Executive's
annual rate of salary under this Agreement in effect at a particular time be
reduced without his or her prior written consent and any such reduction in the
absence of such consent shall be a material breach of this Agreement. 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.
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 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
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 or her
harmless from, any costs, liabilities, losses
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<PAGE> 4
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 as he or she
may disclose to and as may be approved by the Board (which approval
shall not be unreasonably withheld); provided, however, that such
service shall not materially interfere with the performance of his
or her 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 or her 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 or her 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 or she 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 or her principal place of employment with a private office,
secretarial services and other support services and facilities suitable to his
or her position with the Company and necessary or appropriate in connection with
the performance of his or her assigned duties under this Agreement. The Company
shall provide to the Executive for his or her exclusive use an automobile owned
or leased by the Company and appropriate to his or her position, to be used in
the performance of his or her duties hereunder, including commuting to and from
his or her personal residence. The Company shall reimburse the Executive for his
or her ordinary and necessary business expenses, including, without limitation,
all expenses associated with his or her business use
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<PAGE> 5
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 or her travel and
entertainment expenses incurred in connection with the performance of his or her
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 or her 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 six (6) months 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 and Chief Administrative Officer (or a more
senior office) of the Company;
(B) if the Executive is or becomes a member of the Board,
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;
(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 Certificate of Incorporation 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
or her 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 (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
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<PAGE> 6
effect on the aggregate value of his or her total
compensation package), unless, during such thirty (30)
day period, the Company cures such failure in a manner
determined by the Executive, in his or her discretion,
to be satisfactory; or
(E) the relocation of the Executive's principal place of
employment, without his or her 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
the Executive's death following the Executive's termination of
employment, to his or her estate):
(i) his or her 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 or her 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
any event not later than thirty (30) days after termination of
employment;
(ii) the benefits, if any, to which he or she 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;
(iii) continued group life, health (including 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 (including any
co-payments and deductibles, but excluding any premium sharing
arrangements, it being the intention of the parties to this
Agreement that the premiums for such insurance benefits shall
be the sole cost and expense of the Company) equivalent to the
coverage to which he or she would have been entitled under
such plans (as in effect on the date of his or her termination
of employment, or, if his or her
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<PAGE> 7
termination of employment occurs after a Change of Control, on
the date of such Change of Control, whichever benefits are
greater), if he or she had continued working for the Company
during the Remaining Unexpired Employment Period at the
highest annual rate of salary or compensation, as applicable,
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 the Executive's termination
of employment with the Company, a lump sum payment in an
amount representing an estimate of the salary that the
Executive would have earned if he or she 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 (the
"Salary Severance Payment"). The Salary Severance Payment
shall be computed using the following formula:
SSP = BS x NY
where:
"SSP" is the amount of the Salary Severance Payment, before
the deduction of applicable federal, state and local
withholding taxes;
"BS" is 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;
"NY" is the Remaining Unexpired Employment Period expressed as
a number of years (rounded, if such period is not a whole
number, to the next highest whole number).
The Salary Severance Payment shall 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 the Executive's termination
of employment with the Company, a lump sum payment (the "DB
Severance Payment") in an amount equal to the excess, if any,
of:
(A) the present value of the aggregate benefits to which he
or she would be entitled under any and all qualified and
non-qualified defined benefit pension plans maintained
by, or covering employees of, the
Page 7 of 31
<PAGE> 8
Company, if he or she 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 pursuant
to Sections 9(b)(i), (iv), (vii), (viii) and (ix) of
this Agreement; over
(B) the present value of the benefits to which he or she is
actually entitled under such defined benefit pension
plans as of the date of his or her termination;
The DB Severance Payment shall be computed using the following
formula:
DBSP = SEVLS - LS
where:
"DBSP" is the amount of the DB Severance Payment, before the
deduction of applicable federal, state and local withholding
taxes;
"SEVLS" is the sum of the present value of the defined benefit
pension benefits that have been or would be accrued by the
Executive under all qualified and non-qualified defined
benefit pension plans of which the Company or any of its
affiliates or subsidiaries are a sponsor and in which the
Executive is or, but for the completion of any service
requirement that would have been completed during the
Remaining Unexpired Employment Period, would be a participant
utilizing the following assumptions:
(I) the executive is 100% vested in the plans
regardless of actual service,
(II) the benefit to be valued shall be a single life
annuity with monthly payments due on the first day
of each month and with a guaranteed payout of not
less than 120 monthly payments,
(III) the calculation shall be made utilizing the same
mortality table and interest rate as would be
utilized by the plan on the date of termination as
if the calculation were being made pursuant to
Section 417(e)(3)(A)(ii) of the Internal Revenue
Page 8 of 31
<PAGE> 9
Code, as amended, (the "Code");
(IV) for purpose of calculating the Executive's monthly
or annual benefit under the defined benefit plans,
additional service equal to the Remaining
Unexpired Employment Period (rounded up to the
next whole year if such period is not a whole
number when expressed in years) shall be added to
the Executive's actual service to calculate the
amount of the benefit; and
(V) for purpose of calculating the Executive's monthly
or annual benefit under the defined benefit plans,
the following sums shall be added to the
Executive's compensation recognized under such
plans for the most recent year recognized:
(1) payments made pursuant to Section 9(b)(i);
(2) the Salary Severance Payment;
(3) the Bonus Severance Payment;
(4) the Option Surrender Payment; and
(5) the RRP Surrender Payment.
"LS" is the sum of the present value of the defined benefit
pension benefits that are vested benefits actually accrued by
the Executive under all qualified and non-qualified defined
benefit pension plans maintained by, or covering employees of,
the Company or any of its affiliates or subsidiaries in which
the Executive is or, but for the completion of any service
requirement, would be a participant utilizing the following
assumptions:
(I) the benefit to be valued shall be a single life
annuity with monthly payments due on the first day
of each month and with a guaranteed payout of not
less than 120 monthly payments, and
(II) the calculation shall be made utilizing the same
mortality table and interest rate as would be
utilized by the plan on the date of termination as
if the calculation were being made pursuant to
Section 417(e)(3)(A)(ii) of the Code;
(vi) within thirty (30) days following the Executive's termination
of employment with the Company, a lump sum payment (the
"Defined Contribution Severance Payment") equal to the sum of:
(A) an estimate of the additional employer contributions to
which he or
Page 9 of 31
<PAGE> 10
she would have been entitled under any and all qualified
and non- qualified defined contribution pension plans,
excluding the employee stock ownership plans, maintained
by, or covering employees of, the Company or any of its
affiliates or subsidiaries as if he or she were 100%
vested thereunder and had continued working for the
Company during the Remaining Unexpired Employment Period
(the "401K Severance Payment"); and
(B) an estimate of the value of the additional assets which
would have been allocable to him or her through debt
service or otherwise under any and all qualified and
non-qualified employee stock ownership plans, maintained
by, or covering employees of, the Company or any of its
affiliates or subsidiaries as if he or she were 100%
vested thereunder and had continued working for the
Company during the Remaining Unexpired Employment
Period, based on the fair market value of such assets at
termination of employment (the "ESOP Severance
Payment").
The Defined Contribution Severance Payment shall be calculated
as follows:
DCSP = 401KSP + ESOPSP
where:
"DCSP" is the amount of the Defined Contribution Severance
Payment, before the deduction of applicable federal, state and
local withholding taxes;
"401KSP" is the amount of the 401K Severance Payment, before
the deduction of applicable federal, state and local
withholding taxes; and
"ESOPSP" is the amount of the ESOP Severance Payment, before
the deduction of applicable federal, state and local
withholding taxes.
The 401KSP shall be calculated as follows:
401KSP = (401KC x NY) + UVB
where
"401KC" is the sum of the Company Contributions as defined in
the Association's Incentive Savings Plan or, if made under
another defined contribution pension plan other than an
employee stock ownership plan, the comparable contribution
made for the benefit of the Executive during the one
Page 10 of 31
<PAGE> 11
year period which shall end on the date of his or her
termination of his or her employment with the Company;
"NY" is the Remaining Unexpired Employment Period expressed as
a number of years (rounded, if such period is not a whole
number, to the next highest whole number); and
"UVB" is the actual balance credited to the Executive's
account under the applicable plan at the date of his or her
termination of employment that is not vested and does not
become vested as a consequence of such termination of
employment.
The ESOPSP shall be calculated as follows:
ESOPSP = (((ALL x FMV) + C) x NY) + UVB
where:
"ALL" is the sum of the number of shares of the Company's
common stock or, if applicable, phantom shares of such stock
by whatever term it is described allocated to the Executive's
accounts under all qualified and non- qualified employee stock
ownership plans maintained by the Company or any of its
affiliates or subsidiaries during or for the last complete
plan year in which the Executive participated in such plans
and received such an allocation whether the allocation
occurred as a result of contributions made by the Company, the
payment by the Company or any of its affiliates or
subsidiaries of any loan payments under a leveraged employee
stock ownership plan, the allocation of forfeitures under the
terms of such plan or as a result of the use of cash or
earnings allocated to the Executive's account during such plan
year to make loan payments that result in share allocations,
provided however, that excluded shall be any shares or phantom
shares allocated to the Executive's account under any
qualified and non-qualified employee stock ownership plans
maintained by the Company or any of its affiliates or
subsidiaries solely as a result of the termination of such
plans, provided further, that if the shares allocated are not
shares of the Association's common stock or phantom shares of
such stock than shares of whatever securities are so allocated
shall be utilized, and provided further, that in the event
that there shall be any shares or phantom shares allocated
during the then current plan year or the last complete plan
year to the Executive's account under any qualified and
non-qualified employee stock ownership plans maintained by the
Association or any of its affiliates or subsidiaries solely as
a result of the termination of such plans, the ALL shall be
reduced (but not to an amount less than zero (0)) by an amount
calculated
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<PAGE> 12
by multiplying the number of shares or phantom shares
allocated to the Executive's account solely as a result of the
termination of such plans times the FMV utilized to calculate
the ESOPSP;
"C" is the sum of all cash allocated to the Executive's
accounts under all qualified and non-qualified employee stock
ownership plans maintained by the Company during or for the
last complete plan year in which the Executive participated in
such plans whether the allocation occurred as a result of
contributions made by the Company, the payment by the Company
or the Association of any loan payments under a leveraged
employee stock ownership plan or the allocation of forfeitures
under the terms of such plan during such plan year;
"FMV" is the closing price of the Company's common stock on
The Nasdaq Stock Market or on whatever other stock exchange or
market such stock is publicly traded on the date the
Executive's employment terminates or, if such day is not a day
on which such securities are traded, on the most recent
preceding trading day on which a trade occurs, provided
however that if the security allocated to the Executive's
account during the last completed plan year is other than the
Company's common stock the closing price of such other
security on the date the Executive's employment terminates
shall be utilized.
"NY" is the Remaining Unexpired Employment Period expressed as
a number of years (rounded, if such period is not a whole
number, to the next highest whole number); and
"UVB" is the actual balance credited to the Executive's
account under the applicable plan at the date of his or her
termination of employment that is not vested and does not
become vested as a consequence of such termination of
employment.
(vii) within thirty (30) days following the Executive's termination
of employment with the Company, the Company shall make a lump
sum payment to the Executive in an amount equal to the
estimated potential annual bonuses or incentive compensation
that the Executive could have earned if the Executive had
continued working for the Company during the 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 (the "Bonus Severance Payment"). The Bonus Severance
Payment shall be computed using the following formula:
BSP = (BS x TIO x AP x NY)
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<PAGE> 13
where:
"BSP" is the amount of the Bonus Severance Payment, before the
deduction of applicable federal, state and local withholding
taxes;
"BS" is 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;
"TIO" is the highest target incentive opportunity (expressed
as a percentage of base salary) established by the
Compensation Committee of the Board for the Executive pursuant
to the Astoria Financial Corporation Executive Officer Annual
Incentive Plan during that portion of the Employment Period
which is prior to the Executive's termination of employment
with the Company;
"AP" is the highest award percentage available to the
Executive with respect to the financial performance of the
Company (expressed as a percentage of the TIO) established by
the Compensation Committee of the Board for the Executive
pursuant to the Astoria Financial Corporation Executive
Officer Annual Incentive Plan during the period during that
portion of the Employment Period which is prior to the
Executive's termination of employment with the Company; and
"NY" is the Remaining Unexpired Employment Period expressed as
a number of years (rounded, if such period is not a whole
number, to the next highest whole number).
(viii) 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 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 (the "Option
Surrender Payment"). The Option Surrender Payment shall be
calculated as follows:
OSP = (FMV - EP) x N
where:
"OSP" is the amount of the Option Surrender Payment, before
the deduction of applicable federal, state and local
withholding taxes;
Page 13 of 31
<PAGE> 14
"FMV" is the closing price of the Company's common stock on
The Nasdaq Stock Market, or on whatever other stock exchange
or market such stock is publicly traded, on the date the
Executive's employment terminates or, if such day is not a day
on which such securities are traded, on the most recent
preceding trading day on which a trade occurs, provided
however that if the option or stock appreciation right is for
a security other than the Company's common stock, 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 shall be utilized;
"EP" is the exercise price per share for such option or
appreciation right, as specified in or under the relevant plan
or program; and
"N" is the number of shares with respect to which options or
appreciation rights are being surrendered.
For purposes of determining the Option Severance Payment and
for purposes of determining the Executive's right following
his or her 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 or she is not 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 shares awarded to the
Executive under any restricted stock plan maintained by, or
covering employees of, the Company, a lump sum payment (the
"RRP Surrender Payment") The RRP Surrender Payment shall be
calculated as follows:
RSP = FMV x N
where:
"RSP" is the amount of the RRP Surrender Payment, before the
deduction of applicable federal, state and local withholding
taxes;
"FMV" is the closing price of the Company's common stock on
The Nasdaq Stock Market, or on whatever other stock exchange
or market such stock is publicly traded, on the date the
Executive's employment terminates or, if such day is not a day
on which such securities are traded, on the preceding trading
day on which a trade occurs, provided however that if the
restricted stock is
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<PAGE> 15
a security other than the Company's common stock, the fair
market value of a share of stock of the same class as the
stock granted under such plan, determined as of the date of
termination of employment shall be utilized; and
"N" is the number of shares which are being surrendered.
For purposes of determining the RRP Surrender Payment and for
purposes of determining the Executive's right following his or
her 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 or she is not vested under such plan.
The Salary Severance Payment, the DB Severance Payment, the Defined
Contribution Severance Payment, the Bonus Severance Payment, the
Option Surrender Payment and the RRP Surrender Payment shall be
computed at the expense of the Company by an attorney of the firm of
Thacher Proffitt & Wood, Two World Trade Center, New York, New York
10048 or, if such firm is unavailable or unwilling to perform such
calculation, by a firm of independent certified public accountants
selected by the Executive and reasonably satisfactory to the Company
(the "Computation Advisor"). The determination of the Computation
Advisor as to the amount of such payments shall be final and binding
in the absence of manifest error.
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 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 payment of the
Salary Severance Payment, the DB Severance Payment, the Defined
Contribution Severance Payment, the Bonus Severance Payment, the
Option Surrender Payment and the RRP Surrender Payment on the
receipt of the Executive's resignation from any and all positions
which he or she holds as an officer, director or committee member
with respect to the Company, the Association or any subsidiary or
affiliate of either of them.
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:
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<PAGE> 16
(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 the Executive's performance of
services for the Company resulting in the Executive's
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 the
Executive's 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 the Executive's fiduciary duties
to the Company for personal profit;
(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 the Executive's performance of services
for the Company; or
(F) the Executive's material breach of any material
provision of this Agreement which is not substantially
cured within 60 days after written notice of such breach
is received by the Executive from 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 Disabled;
(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, except as otherwise specifically provided herein,
shall have no further obligations under this Agreement, other than
the payment to the Executive (or, in the event of his or her death,
to his or her estate) of the amounts or benefits provided in Section
9(b)(i) and (ii) of this Agreement (the "Standard Termination
Page 16 of 31
<PAGE> 17
Entitlements").
(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. Except as specifically
provided below, 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:
(i) the Board, by the affirmative vote of 75% of its entire
membership, determines that the Executive is guilty of the
conduct described in Section 10(a)(i) above measured against
standards generally prevailing at the relevant time in the
savings and community banking industry;
(ii) prior to the vote contemplated by Section 10(b)(i), the Board
shall provide the Executive with notice of the Company's
intent to discharge the Executive for Cause, detailing with
particularity the facts and circumstances which are alleged to
constitute Cause (the "Notice of Intent to Discharge"); and
(iii) after the giving of the Notice of Intent to Discharge and
before the taking of the vote contemplated by Section
10(b)(i), the Executive, together with the Executive's legal
counsel, if the Executive so desires, are afforded a
reasonable opportunity to make both written and oral
presentations before the Board for the purpose of refuting the
alleged grounds for Cause for the Executive's discharge; and
(iv) after the vote contemplated by Section 10(b)(i), the Company
has furnished to the Executive a notice of termination which
shall specify the effective date of the Executive's
termination of employment (which shall in no event be earlier
than the date on which such notice is deemed given) and
include a copy of a resolution or resolutions adopted by the
Board, certified by its corporate secretary, authorizing the
termination of the Executive's employment with Cause and
stating with particularity the facts and circumstances found
to constitute Cause for the Executive's discharge (the "Final
Discharge Notice").
If the Executive, during the 90 (ninety) day period commencing on
the delivery by the Company to the Executive of the Notice of Intent
to Discharge specified in Section 10(b)(ii), resigns his or her
employment with the Company prior to the
Page 17 of 31
<PAGE> 18
delivery to the Executive by the Company of the Final Discharge
Notice specified in Section 10(b)(iv), then the cessation of
employment of the Executive shall be deemed to be for Cause.
Following the giving of a Notice of Intent to Discharge, the Bank
may temporarily suspend the Executive's duties and authority and, in
such event, may also suspend the payment of salary and other cash
compensation, but not the Executive's participation in retirement,
insurance and other employee benefit plans. If the Executive is not
discharged or is discharged without Cause within forty-five (45)
days after the giving of a Notice of Intent to Discharge, payments
of salary and cash compensation shall resume, and all payments
withheld during the period of suspension shall be promptly restored.
If the Executive is discharged with Cause not later than forty-five
(45) days after the giving of the Notice of Intent to Discharge, all
payments withheld during the period of suspension shall be deemed
forfeited and shall not be included in the Standard Termination
Entitlements. If a Final Discharge Notice is given later than
forty-five (45) days, but sooner than ninety (90) days, after the
giving of the Notice of Intent to Discharge, all payments made to
the Executive during the period beginning with the giving of the
Notice of Intent to Discharge and ending with the Executive's
discharge with Cause shall be retained by the Executive and shall
not be applied to offset the Standard Termination Entitlements. If
the Bank does not give a Final Discharge Notice to the Executive
within ninety (90) days after giving a Notice of Intent to
Discharge, the Notice of Intent to Discharge shall be deemed
withdrawn and any future action to discharge the Executive with
Cause shall require the giving of a new Notice of Intent to
Discharge. If the Executive resigns pursuant to Section 10(b), the
Executive shall forfeit his or her right to suspended amounts that
have not been restored as of the date of the Executive's resignation
or notice of resignation, whichever is earlier.
(c) The Company may terminate the Executive's employment on the basis
that the Executive is Disabled during the Employment Period upon a
determination by the Board, by the affirmative vote of 75% of its
entire membership, acting in reliance on the written advice of a
medical professional acceptable to it, that the Executive is
suffering from a physical or mental impairment which, at the date of
the determination, has prevented the Executive from performing the
Executive's assigned duties on a substantially full-time basis for a
period of at least one hundred and eighty (180) days during the
period of one (1) year ending with the date of the determination or
is likely to result in death or prevent the Executive from
performing the Executive's assigned duties on a substantially
full-time basis for a period of at least one hundred and eighty
(180) days during the period of one (1) year beginning with the date
of the determination. In such event:
(A) The Company shall pay and provide the Standard Termination
Entitlements to the Executive;
Page 18 of 31
<PAGE> 19
(B) In addition to the Standard Termination Entitlements,
the Company shall continue to pay to the Executive the
Executive's base salary, at the annual rate in effect
for the Executive immediately prior to the termination
of the Executive's employment, during a period ending on
the earliest of:
(I) the expiration of one hundred and eighty (180)
days after the date of termination of the
Executive's employment;
(II) the date on which long-term disability insurance
benefits are first payable to the Executive under
any long-term disability insurance plan covering
the Executive; or
(III) the date of the Executive's death.
A termination of employment due to Disability under this
Section shall be effected by a notice of termination given to
the Executive by the Company and shall take effect on the
later of the effective date of termination specified in such
notice or, if no such date is specified, the date on which the
notice of termination is deemed given to the Executive.
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 Securities Exchange Act of 1934, as amended
(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
Page 19 of 31
<PAGE> 20
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;
(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 do not belong
to any of the following groups:
(A) individuals who were members of the Board on the date of
this Agreement; or
(B) individuals who first became members of the Board after
the date of this Agreement either:
(I) upon election to serve as a member of the Board 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, but only if
nominated for election by affirmative vote of
three-quarters of the members of the Board, 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
Page 20 of 31
<PAGE> 21
the Board; or
(v) any event which would be described in Section 11(a)(i), (ii),
(iii) or (iv) if the term "Association" were substituted for
the term "Company" therein or the term "Board of Directors of
the Association" were substituted for the term "Board".
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 an affiliate or subsidiary of
either of 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 or her 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 within six (6) months
following his or her demotion, loss of title, office or
significant authority or responsibility or following any
reduction in any element of his or her package of compensation
and benefits;
(ii) resignation, voluntary or otherwise, by the Executive at any
time during the Employment Period within six (6) months
following any relocation of his or her principal place of
employment or any change in working conditions at such
principal place of employment which the Executive, in his or
her 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 within six (6) months
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 her; or
(iv) resignation, voluntary or otherwise, for any reason whatsoever
during the Employment Period within six months following the
effective date of the Change of Control.
Page 21 of 31
<PAGE> 22
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 intended to indemnify the
Executive against the financial effects of the excise tax imposed on
excess parachute payments under Section 28OG of the Code (the "Tax
Indemnity Payment"). The Tax Indemnity Payment shall be determined
under the following formula:
E x P
TIP = ------------------------------
1 - (( FI x ( 1 - SLI )) + SLI + E + M )
where:
"TIP" is the Tax Indemnity Payment, before the deduction of
applicable federal, state and local withholding taxes;
"E" is the percentage rate at which an excise tax is assessed under
Section 4999 of the Code;
"P" is the amount with respect to which such excise tax is assessed,
determined without regard to any amount payable pursuant to this
Section 12;
"FI" is the highest marginal rate of income tax applicable to the
Executive under the Code for the taxable year in question;
"SLI" is 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
Page 22 of 31
<PAGE> 23
"M" is the highest marginal rate of Medicare tax applicable to the
Executive under the Code for the taxable year in question.
(b) The computation of the Tax Indemnity Payment shall be made at the
expense of the Company by the Computation Advisor and shall be based
on the following assumptions:
(i) that a change in ownership, a change in effective ownership or
control or a change in the ownership of a substantial portion
of the assets of the Association or the Company has occurred
within the meaning of Section 28OG of the Code (a "28OG Change
of Control");
(ii) that all direct or indirect payments made to or benefits
conferred upon the Executive on account of the Executive's
termination of employment are "parachute payments" within the
meaning of Section 28OG of the Code; and
(iii) that no portion of such payments is reasonable compensation
for services rendered prior to the Executive's termination of
employment.
(c) With respect to any payment that is presumed to be a parachute
payment for purposes of Section 28OG of the Code, the Tax Indemnity
Payment shall be made to the Executive on the earlier of 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 the date the tax is required to be paid by the
Executive, unless, prior to such date, the Company delivers to the
Executive the written opinion (the "Opinion Letter"), in form and
substance reasonably satisfactory to the Executive, of the
Computation Advisor or, if the Computation Advisor is unable to
provide such opinion, of an attorney or firm of independent
certified public accountants selected by the Company and reasonably
satisfactory to the Executive, to the effect that the Executive has
a reasonable basis on which to conclude that:
(i) no 28OG Change in Control has occurred, or
(ii) all or part of the payment or benefit in question is not a
parachute payment for purposes of Section 28OG of the Code, or
(iii) all or a part of such payment or benefit constitutes
reasonable compensation for services rendered prior to the
28OG Change of Control, or
(iv) for some other reason which shall be set forth in detail in
such letter, no excise tax is due under Section 4999 of the
Code with respect to such payment or benefit.
Page 23 of 31
<PAGE> 24
If the Company delivers an Opinion Letter, the Computation Advisor
shall re- compute, and the Company shall make, the Tax Indemnity
Payment, if any, in reliance on the information contained in the
Opinion Letter.
(d) 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 with respect to which the
Tax Indemnity Payment is made, 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 pursuant to
Sections 12(a) and 12(c), when increased by the amount of the
payment made to the Executive pursuant to this Section 12(d), or
when reduced by the amount of the payment made to the Company
pursuant to this Section 12(d), equals the amount that should have
properly been paid to the Executive under Sections 12(a) and 12(c).
The interest paid to the Company under this Section 12(d) shall be
determined at the rate provided under Section 1274(b)(2)(B) of the
Code. The payment made to the Executive shall include such amount of
interest as is necessary to satisfy any interest assessment made by
the Internal Revenue Service and an additional amount equal to any
monetary penalties assessed by the Internal Revenue Service on
account of an underpayment of the excise tax. 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, at least 20
days before the date on which such return is required to be filed
with the Internal Revenue Service. Nothing in this Agreement shall
give the Company any right to control or otherwise participate in
any action, suit or proceeding to which the Executive is a party as
a result of positions taken on the Executive's federal income tax
return with respect to the Executive's liability for excise taxes
under Section 4999 of the Code.
(e) 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, in the event of his or her
termination of employment with the Company prior to the expiration of the
Employment Period, for a period of one (1) year following the date of his or her
termination of employment with the Company (or, if less, for the Remaining
Unexpired Employment Period), the Executive shall not, without the written
consent of the Company, become an officer, employee, consultant, director or
trustee of any savings
Page 24 of 31
<PAGE> 25
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(c) of this Agreement, this Section 13 shall not prevent the
Executive from accepting any position or performing any services if:
(a) he or she 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 the Executive obtains the prior written consent of the Company, the
Executive shall keep confidential and shall refrain from using for the benefit
of the Executive or any person or entity other than the Company, any entity
which is a subsidiary of the Company or any entity which the Company is a
subsidiary of, any material document or information obtained from the Company,
or from its affiliates or subsidiaries, in the course of the Executive's
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 or her 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
proceeding 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 Executive's termination of employment with the Company, he or
she shall not, without the 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 or subsidiary of ether 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
Page 25 of 31
<PAGE> 26
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;
(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
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 or subsidiary of either of them, to terminate his or her
employment and accept employment, 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, the Association, or any affiliate or
subsidiary of either of them to terminate an existing business or
commercial relationship with the Company, the Association, or any
affiliate or subsidiary of either of them.
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.
Section 17. Successors and Assigns.
----------------------
This Agreement will inure to the benefit of and be binding upon the
Executive, his or her 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
Page 26 of 31
<PAGE> 27
its express written assumption of the Company's obligations under this Agreement
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:
Gerard C. Keegan
89 Eleventh Street
Garden City, New York 11530
If to the Company:
Astoria Financial Corporation
One Astoria Federal Plaza
Lake Success, New York 11042-1085
Attention: General Counsel
with a copy to:
Thacher Proffitt & Wood
Two World Trade Center
New York, New York 10048
Attention: W. Edward Bright, Esq.
Section 19. Indemnification for Attorneys' Fees.
-----------------------------------
The Company shall indemnify, hold harmless and defend the Executive
against reasonable costs, including legal fees, incurred by him or her in
connection with or arising out of any action, suit or proceeding in which he or
she may be involved, as a result of his or her efforts, in good faith, to defend
or enforce the terms of this Agreement; provided, however, that in the case of
any action, suit or proceeding instituted prior to a Change of Control, the
Executive shall have substantially prevailed on the merits pursuant to a
judgment, decree or order of a court of competent jurisdiction
Page 27 of 31
<PAGE> 28
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 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
Page 28 of 31
<PAGE> 29
relating to the subject matter hereof. No modifications of this Agreement shall
be valid unless made in writing and signed by the parties hereto.
Section 26. Guarantee.
---------
The Company hereby agrees to guarantee the payment by the Association of
any benefits and compensation to which the Executive is or may be entitled to
under the terms and conditions of the Amended and Restated Employment Agreement
dated as of the lst day of January, 2000 between the Association and the
Executive.
Section 27. Non-duplication.
---------------
In the event that the Executive shall perform services for the Association
or any other affiliate or 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 affiliates and
subsidiaries.
Section 28. Survival.
--------
The provisions of any sections of this Agreement which by its terms
contemplates performance after the expiration or termination of this Agreement
(including, but not limited to, Sections 6, 9, 10, 11, 12, 13, 14, 15, 16, 17,
18, 19, 21, 26, 27, 29, 30 and 31) shall survive the expiration of the
Employment Period or termination of this Agreement.
Section 29. 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 30. 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 conditioned upon their compliance with Section 18(k) of the
Federal Deposit Insurance Act, 12 U.S.C. Section 1828(k), and any regulations
promulgated thereunder.
Section 31. No Offset or Recoupment; No Attachment.
--------------------------------------
The Company's obligation to make the payments provided for in this
Agreement and otherwise to perform its obligations under this Agreement shall
not be affected by any set-off,
Page 29 of 31
<PAGE> 30
counterclaim, recoupment, defense or other claim, right or action which the
Company or any of its affiliates or subsidiaries may have against the Executive.
In no event shall the Executive be obligated to seek other employment or take
any other action by way of mitigation of the amounts payable to the Executive
under any of the provisions of this Agreement and such amounts shall not be
reduced whether or not the Executive obtains other employment. Except as
required by law, no right to receive payments under this Agreement shall be
subject to anticipation, commutation, alienation, sale, assignment, encumbrance,
charge, pledge, or hypothecation, or to execution, attachment, levy, or similar
process or assignment by operation of law, and any attempt, voluntary or
involuntary, to affect any such action shall be null, void, and of no effect.
Section 32. LISB Transaction.
----------------
The Executive hereby waives any claim the Executive may have pursuant to
his or her Employment Agreements each dated March 29, 1997 with the Company and
the Association, respectively, that the acquisition by and the merger of Long
Island Bancorp, Inc. and The Long Island Savings Bank, FSB with and into the
Company and the Association, respectively, constituted a "change of control" of
the Company or the Association as defined in such Employment Contracts.
IN WITNESS WHEREOF, the Company has caused this Agreement to be executed
and the Executive has hereunto set his or her hand, all as of the day and year
first above written.
ATTEST:
/S/ William K. Sheerin
- ----------------------
William K. Sheerin
[Seal]
ASTORIA FINANCIAL CORPORATION
By: /S/ George L. Engelke, Jr.
--------------------------
Name: George L. Engelke, Jr.
Title:Chairman, President and Chief
Executive Officer
/S/ Gerard C. Keegan
- ------------------------------
GERARD C. KEEGAN
Page 30 of 31
<PAGE> 31
STATE OF NEW YORK )
) ss.:
COUNTY OF NASSAU )
On this 20 day of March, 2000, before me, the undersigned, personally
appeared Gerard C. Keegan, personally known to me or proved to me on the basis
of satisfactory evidence to be the individual(s) whose name(s) is (are)
subscribed to the within instrument and acknowledged to me that he/she/they
executed the same in his/her/their capacity(ies), and that by his/her/their
signature(s) on the instrument, the individual(s), or the person upon behalf of
which the individual(s) acted, executed the instrument.
/S/ Anna Knice
--------------
Notary Public
Anna Knice
Notary Public, State of New York
No. 4980431
Qualified in Suffolk County
Commission Expires April 22, 2001
STATE OF NEW YORK )
) ss.:
COUNTY OF NASSAU )
On this 20 day of March, 2000, before me, the undersigned, personally
appeared George L. Engelke, Jr., personally known to me or proved to me on the
basis of satisfactory evidence to be the individual(s) whose name(s) is (are)
subscribed to the within instrument and acknowledged to me that he/she/they
executed the same in his/her/their capacity(ies), and that by his/her/their
signature(s) on the instrument, the individual(s), or the person upon behalf of
which the individual(s) acted, executed the instrument.
/S/ Anna Knice
--------------
Notary Public
Anna Knice
Notary Public, State of New York
No. 4980431
Qualified in Suffolk County
Commission Expires April 22, 2001
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<PAGE> 1
EXHIBIT 10.21
ASTORIA FEDERAL SAVINGS AND LOAN ASSOCIATION
AMENDED AND RESTATED
EMPLOYMENT AGREEMENT WITH EXECUTIVE OFFICER
This AMENDED AND RESTATED EMPLOYMENT AGREEMENT (the "Agreement") is
made and entered into as of January 1, 2000 by and between ASTORIA FEDERAL
SAVINGS AND LOAN ASSOCIATION, a savings association organized and operating
under the federal laws of the United States and having an office at One Astoria
Federal Plaza, Lake Success, New York 11042-1085 (the "Association") and, GERARD
C. KEEGAN, an individual residing at 89 Eleventh Street, Garden City, New York
11530 (the "Executive").
WITNESSETH:
WHEREAS, the Executive currently serves the Association in the capacity
of Vice Chairman and Chief Administrative Officer and as Vice Chairman and Chief
Administrative Officer of the Association's savings and loan holding company,
ASTORIA FINANCIAL CORPORATION, a publicly held business corporation organized
and operating pursuant to the laws of the State of Delaware (the "Company"); and
WHEREAS, the Executive currently has an Employment Agreement with the
Association dated March 29, 1997, including Amendment No.1 thereto, which the
Executive and the Association wish to amend and modify; and
WHEREAS, the Association 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 Association
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 Association and the
Executive hereby amend and restate in its entirety the Employment Agreement by
and between the Association and the Executive dated as of March 29, 1997 so as
to provide as follows from and after the date hereof:
Section 1. Employment.
The Association agrees to continue to employ the Executive, and the
Executive hereby agrees to such continued employment, during the period and upon
the terms and conditions set forth in this Agreement.
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<PAGE> 2
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 (the "Employment Period"). The Employment
Period shall be for an initial term of three years beginning
on the date of this Agreement and ending on the day before the
third anniversary date of this Agreement. Prior to the first
anniversary of the date of this Agreement and on each
anniversary date thereafter (each an "Anniversary Date) the
Board of Directors of the Association (the "Board") shall
review the terms of this Agreement and the Executive's
performance of services hereunder and may, in the absence of
objection from the Executive, approve an extension of the
Employment Period. In such event, the Employment Period shall
be extended to the day before the third anniversary of the
relevant Anniversary Date.
(b) 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 the day before the
Anniversary Date on which the Employment Period (as extended
pursuant to Section 2(a) of this Agreement) is then scheduled
to expire.
(c) Nothing in this Agreement shall be deemed to prohibit the
Association 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 Association and the Executive in the event
of any such termination shall be determined pursuant to this
Agreement.
Section 3. Duties.
The Executive shall serve as Vice Chairman and Chief Administrative
Officer of the Association, having such power, authority and responsibility and
performing such duties as are prescribed by or pursuant to the By-Laws of the
Association and as are customarily associated with such position. The Executive
shall devote his or her 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 Association and
shall use his or her best efforts to advance the interests of the Association.
Section 4. Cash Compensation.
In consideration for the services to be rendered by the Executive
hereunder, the Association shall pay to him or her a salary at an initial annual
rate of THREE HUNDRED SEVENTY FIVE THOUSAND DOLLARS ($375,000), payable in
approximately equal installments in accordance with the Association's customary
payroll practices for senior officers. Prior to each Anniversary Date occurring
during the Employment Period, the Board shall review the Executive's annual rate
of salary and may, in its discretion, approve an increase therein. In addition
to salary, the Executive
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<PAGE> 3
may receive other cash compensation from the Association for services hereunder
at such times, in such amounts and on such terms and conditions as the Board may
determine from time to time.
Section 5. Employee Benefit Plans and Programs.
During the Employment Period, the Executive shall be treated as an
employee of the Association 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 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 Association, in accordance with the terms and conditions of such employee
benefit plans and programs and compensation plans and programs and consistent
with the Association's customary practices.
Section 6. Indemnification and Insurance.
(a) During the Employment Period and for a period of six (6) years
thereafter, the Association 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
Association or service in other capacities at the request of
the Association. 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 Association.
(b) To the maximum extent permitted under applicable law, during
the Employment Period and for a period of six (6) years
thereafter, the Association shall indemnify the Executive
against, and hold him or her 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
Association or any subsidiary or affiliate thereof. This
Section 6(b) shall not be applicable where Section 18 is
applicable.
Section 7. Other Activities.
(a) The Executive may serve as a member of the boards of directors
of such business, community and charitable organizations as he
or she may disclose to and as may be approved by the Board
(which approval shall not be unreasonably withheld); provided,
however, that such service shall not materially interfere with
the performance of his or her duties under this Agreement. The
Executive may also engage in personal business and investment
activities which do not materially
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<PAGE> 4
interfere with the performance of his or her duties hereunder;
provided, however, that such activities are not prohibited
under any code of conduct or investment or securities trading
policy established by the Association and generally applicable
to all similarly situated executives.
(b) The Executive may also serve as an officer or director of the
Company on such terms and conditions as the Association and
the Company may mutually agree upon, and such service shall
not be deemed to materially interfere with the Executive's
performance of his or her duties hereunder or otherwise result
in a material breach of this Agreement.
Section 8. Working Facilities and Expenses.
The Executive's principal place of employment shall be at the
Association'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
Association shall maintain its principal executive offices, or at such other
location as the Association and the Executive may mutually agree upon. The
Association shall provide the Executive at his or her principal place of
employment with a private office, secretarial services and other support
services and facilities suitable to his or her position with the Association and
necessary or appropriate in connection with the performance of his or her
assigned duties under this Agreement. The Association shall provide to the
Executive for his or her exclusive use an automobile owned or leased by the
Association and appropriate to his or her position, to be used in the
performance of his or her duties hereunder, including commuting to and from his
or her personal residence. The Association shall reimburse the Executive for his
or her ordinary and necessary business expenses, including, without limitation,
all expenses associated with his or her business use of the aforementioned
automobile, fees for memberships in such clubs and organizations as the
Executive and the Association shall mutually agree are necessary and appropriate
for business purposes, and his or her travel and entertainment expenses incurred
in connection with the performance of his or her duties under this Agreement, in
each case upon presentation to the Association of an itemized account of such
expenses in such form as the Association 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 or her employment with
the Association terminates during the Employment Period under
any of the following circumstances:
(i) the Executive's voluntary resignation from employment
with the Association within six (6) months 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 and
Chief Administrative
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<PAGE> 5
Officer (or a more senior office) of the
Association;
(B) if the Executive is or becomes a member of
the Board, the failure of the stockholders
of the Association 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;
(C) the expiration of a thirty (30) day period
following the date on which the Executive
gives written notice to the Association of
its material failure, whether by amendment
of the Association's Organization
Certificate or By-laws, action of the Board
or the Association'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 Association
cures such failure;
(D) the expiration of a thirty (30) day period
following the date on which the Executive
gives written notice to the Association of
its material breach of any term, condition
or covenant contained in this Agreement
(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 or her total
compensation package), unless, during such
thirty (30) day period, the Association
cures such failure; or
(E) the relocation of the Executive's principal
place of employment, without his or her
written consent, to a location outside of
Nassau County and Queens County, New York;
(ii) the termination of the Executive's employment with
the Association for any other reason not described in
Section 10(a).
In such event and subject to Section 27 of this Agreement, the
Association 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
Association under circumstances described in Section 9(a) of
this Agreement, the Association shall pay and provide to the
Executive (or, in the event of the Executive's death following
the Executive's termination of employment, to his or her
estate):
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<PAGE> 6
(i) his or her 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 or her employment with the
Association, such payment to be made at the time and in the
manner prescribed by law applicable to the payment of wages
but in any event not later than thirty (30) days after
termination of employment;
(ii) the benefits, if any, to which he or she is entitled as a
former employee under the employee benefit plans and programs
and compensation plans and programs maintained for the benefit
of the Association's officers and employees;
(iii) continued group life, health (including 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 (including any
co-payments and deductibles, but excluding any premium sharing
arrangements, it being the intention of the parties to this
Agreement that the premiums for such insurance benefits shall
be the sole cost and expense of the Association) equivalent to
the coverage to which he or she would have been entitled under
such plans (as in effect on the date of his or her termination
of employment, or, if his or her termination of employment
occurs after a Change of Control, on the date of such Change
of Control, whichever benefits are greater), if he or she had
continued working for the Association during the Remaining
Unexpired Employment Period at the highest annual rate of
salary or compensation, as applicable, achieved during that
portion of the Employment Period which is prior to the
Executive's termination of employment with the Association;
(iv) within thirty (30) days following the Executive's termination
of employment with the Association, a lump sum payment in an
amount representing an estimate of the salary that the
Executive would have earned if he or she had continued working
for the Association 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 Association
(the "Salary Severance Payment"). The Salary Severance Payment
shall be computed using the following formula:
SSP = BS x NY
where:
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<PAGE> 7
"SSP" is the amount of the Salary Severance Payment, before
the deduction of applicable federal, state and local
withholding taxes;
"BS" is 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 Association;
"NY" is the Remaining Unexpired Employment Period expressed as
a number of years (rounded, if such period is not a whole
number, to the next highest whole number).
The Salary Severance Payment shall 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 the Executive's termination
of employment with the Association, a lump sum payment (the
"DB Severance Payment") in an amount equal to the excess, if
any, of:
(A) the present value of the aggregate benefits to which
he or she would be entitled under any and all
qualified and non-qualified defined benefit pension
plans maintained by, or covering employees of, the
Association, if he or she were 100% vested thereunder
and had continued working for the Association 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 pursuant to Sections 9(b)(i),
(iv), (vii), (viii) and (ix) of this Agreement; over
(B) the present value of the benefits to which he or she
is actually entitled under such defined benefit
pension plans as of the date of his or her
termination;
The DB Severance Payment shall be computed using the following
formula:
DBSP = SEVLS - LS
where:
"DBSP" is the amount of the DB Severance Payment, before the
deduction
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<PAGE> 8
of applicable federal, state and local withholding taxes;
"SEVLS" is the sum of the present value of the defined benefit
pension benefits that have been or would be accrued by the
Executive under all qualified and non-qualified defined
benefit pension plans of which the Association or any of its
affiliates or subsidiaries are a sponsor and in which the
Executive is or, but for the completion of any service
requirement that would have been completed during the
Remaining Unexpired Employment Period, would be a participant
utilizing the following assumptions:
(I) the executive is 100% vested in the plans
regardless of actual service,
(II) the benefit to be valued shall be a single
life annuity with monthly payments due on
the first day of each month and with a
guaranteed payout of not less than 120
monthly payments,
(III) the calculation shall be made utilizing the
same mortality table and interest rate as
would be utilized by the plan on the date of
termination as if the calculation were being
made pursuant to Section 417(e)(3)(A)(ii) of
the Internal Revenue Code, as amended, (the
"Code");
(IV) for purpose of calculating the Executive's
monthly or annual benefit under the defined
benefit plans, additional service equal to
the Remaining Unexpired Employment Period
(rounded up to the next whole year if such
period is not a whole number when expressed
in years) shall be added to the Executive's
actual service to calculate the amount of
the benefit; and
(V) for purpose of calculating the Executive's
monthly or annual benefit under the defined
benefit plans, the following sums shall be
added to the Executive's compensation
recognized under such plans for the most
recent year recognized:
(1) payments made pursuant to Section
9(b)(i);
(2) the Salary Severance Payment;
(3) the Bonus Severance Payment;
(4) the Option Surrender Payment; and
(5) the RRP Surrender Payment.
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<PAGE> 9
"LS" is the sum of the present value of the defined benefit
pension benefits that are vested benefits actually accrued by
the Executive under all qualified and non-qualified defined
benefit pension plans maintained by, or covering employees of,
the Company or any of its affiliates or subsidiaries in which
the Executive is or, but for the completion of any service
requirement, would be a participant utilizing the following
assumptions:
(I) the benefit to be valued shall be a single
life annuity with monthly payments due on
the first day of each month and with a
guaranteed payout of not less than 120
monthly payments, and
(II) the calculation shall be made utilizing the
same mortality table and interest rate as
would be utilized by the plan on the date of
termination as if the calculation were being
made pursuant to Section 417(e)(3)(A)(ii) of
the Code;
(vi) within thirty (30) days following the Executive's termination
of employment with the Association, a lump sum payment (the
"Defined Contribution Severance Payment") equal to the sum of:
(A) an estimate of the additional employer contributions
to which he or she would have been entitled under any
and all qualified and non-qualified defined
contribution pension plans, excluding the employee
stock ownership plans, maintained by, or covering
employees of, the Association or any of its
affiliates or subsidiaries as if he or she were 100%
vested thereunder and had continued working for the
Association during the Remaining Unexpired Employment
Period (the "401K Severance Payment"); and
(B) an estimate of the value of the additional assets
which would have been allocable to him or her through
debt service or otherwise under any and all qualified
and non-qualified employee stock ownership plans,
maintained by, or covering employees of the
Association or any of its affiliates or subsidiaries
as if he or she were 100% vested thereunder and had
continued working for the Association during the
Remaining Unexpired Employment Period, based on the
fair market value of such assets at termination of
employment (the "ESOP Severance Payment").
The Defined Contribution Severance Payment shall be calculated
as follows:
DCSP = 401KSP + ESOPSP
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<PAGE> 10
where:
"DCSP" is the amount of the Defined Contribution
Severance Payment, before the deduction of applicable
federal, state and local withholding taxes;
"401KSP" is the amount of the 401K Severance Payment,
before the deduction of applicable federal, state and
local withholding taxes; and
"ESOPSP" is the amount of the ESOP Severance Payment,
before the deduction of applicable federal, state and
local withholding taxes.
The 401KSP shall be calculated as follows:
401SP = (401KC x NY) + UVB
where
"401KC" is the sum of the Association Contributions
as defined in the Association's Incentive Savings
Plan or, if made under another defined contribution
pension plan other than an employee stock ownership
plan, the comparable contribution made for the
benefit of the Executive during the one year period
which shall end on the date of his or her termination
of his or her employment with the Association;
"NY" is the Remaining Unexpired Employment Period
expressed as a number of years (rounded, if such
period is not a whole number, to the next highest
whole number); and
"UVB" is the actual balance credited to the
Executive's account under the applicable plan at the
date of his or her termination of employment that is
not vested and does not become vested as a
consequence of such termination of employment.
The ESOPSP shall be calculated as follows:
ESOPSP = (((ALL x FMV) + C) x NY) + UVB
where:
"ALL" is the sum of the number of shares of the
Association's common stock or, if applicable, phantom
shares of such stock by whatever term it is described
allocated to the Executive's accounts under all
qualified and non-
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<PAGE> 11
qualified employee stock ownership plans maintained
by the Association or any of its affiliates or
subsidiaries during or for the last complete plan
year in which the Executive participated in such
plans and received such an allocation whether the
allocation occurred as a result of contributions made
by the Association, the payment by the Association or
any of its affiliates or subsidiaries of any loan
payments under a leveraged employee stock ownership
plan, the allocation of forfeitures under the terms
of such plan or as a result of the use of cash or
earnings allocated to the Executives account during
such plan year to make loan payments that result in
share allocations, provided however, that excluded
shall be any shares or phantom shares allocated to
the Executive's account under any qualified and
non-qualified employee stock ownership plans
maintained by the Association or any of its
affiliates or subsidiaries solely as a result of the
termination of such plans, provided further, that if
the shares allocated are not shares of the
Association's common stock or phantom shares of such
stock than shares of whatever securities are so
allocated shall be utilized, and provided further,
that in the event that there shall be any shares or
phantom shares allocated during the then current plan
year or the last complete plan year to the
Executive's account under any qualified and
non-qualified employee stock ownership plans
maintained by the Association or any of its
affiliates or subsidiaries solely as a result of the
termination of such plans, the ALL shall be reduced
(but not to an amount less than zero (0)) by an
amount calculated by multiplying the number of shares
or phantom shares allocated to the Executive's
account solely as a result of the termination of such
plans times the FMV utilized to calculate the ESOPSP;
"C" is the sum of all cash allocated to the
Executive's accounts under all qualified and
non-qualified employee stock ownership plans
maintained by the Association during or for the last
complete plan year in which the Executive
participated in such plans whether the allocation
occurred as a result of contributions made by the
Association, the payment by the Association or the
Association of any loan payments under a leveraged
employee stock ownership plan or the allocation of
forfeitures under the terms of such plan during such
plan year;
"FMV" is the closing price of the Association's
common stock on The Nasdaq Stock Market or on
whatever other stock exchange or market such stock is
publicly traded on the date the Executive's
employment terminates or, if such day is not a day on
which such securities are traded, on the most recent
preceding trading day on which a trade occurs,
provided however that if the security allocated to
the Executive's account during the last completed
plan year is other than the Association's common
stock the closing price of such security on the date
the Executive's employment terminates shall be
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<PAGE> 12
utilized;
"NY" is the Remaining Unexpired Employment Period
expressed as a number of years (rounded, if such
period is not a whole number, to the next highest
whole number); and
"UVB" is the actual balance credited to the
Executive's account under the applicable plan at the
date of his or her termination of employment that is
not vested and does not become vested as a
consequence of such termination of employment.
(vii) within thirty (30) days following the Executive's
termination of employment with the Association, the
Association shall make a lump sum payment to the
Executive in an amount equal to the estimated
potential annual bonuses or incentive compensation
that the Executive could have earned if the Executive
had continued working for the Association during the
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 Association (the
"Bonus Severance Payment"). The Bonus Severance
Payment shall be computed using the following
formula:
BSP = ( BS x TIO x AP x NY)
where:
"BSP" is the amount of the Bonus Severance Payment,
before the deduction of applicable federal, state and
local withholding taxes;
"BS" is 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 Association;
"TIO" is the highest target incentive opportunity
(expressed as a percentage of base salary)
established by the Compensation Committee of the
Board for the Executive pursuant to the Astoria
Financial Corporation Executive Officer Annual
Incentive Plan during that portion of the Employment
Period which is prior to the Executive's termination
of employment with the Association;
"AP" is the highest award percentage available to the
Executive with respect to the financial performance
of the Company (expressed as a percentage of the TIO)
established by the Compensation Committee of the
Board for the
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<PAGE> 13
Executive pursuant to the Astoria Financial
Corporation Executive Officer Annual Incentive Plan
during the period during that portion of the
Employment Period which is prior to the Executive's
termination of employment with the Association; and
"NY" is the Remaining Unexpired Employment Period
expressed as a number of years (rounded, if such
period is not a whole number, to the next highest
whole number).
(viii) at the election of the Association made within thirty
(30) days following the Executive's termination of
employment with the Association, 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 Association, a lump sum payment
(the "Option Surrender Payment"). The Option
Surrender Payment shall be calculated as follows:
OSP = (FMV - EP) x N
where:
"OSP" is the amount of the Option Surrender Payment,
before the deduction of applicable federal, state and
local withholding taxes;
"FMV" is the closing price of the Association's
common stock on The Nasdaq Stock Market, or on
whatever other stock exchange or market such stock is
publicly traded, on the date the Executive's
employment terminates or, if such day is not a day on
which such securities are traded, on the most recent
preceding trading day on which a trade occurs,
provided however that if the option or stock
appreciation right is for a security other than the
Association's common stock, 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 shall be utilized;
"EP" is the exercise price per share for such option
or appreciation right, as specified in or under the
relevant plan or program; and
"N" is the number of shares with respect to which
options or appreciation rights are being surrendered.
For purposes of determining the Option Severance
Payment and for purposes of determining the
Executive's right following his or her termination of
employment with the Association to exercise any
options or appreciation
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<PAGE> 14
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 Association, even if he or
she is not vested under such plan or program;
(ix) at the election of the Association made within thirty
(30) days following the Executive's termination of
employment with the Association, upon the surrender
of any shares awarded to the Executive under any
restricted stock plan maintained by, or covering
employees of, the Association, a lump sum payment
(the "RRP Surrender Payment") The RRP Surrender
Payment shall be calculated as follows:
RSP = FMV x N
where:
"RSP" is the amount of the RRP Surrender Payment,
before the deduction of applicable federal, state and
local withholding taxes;
"FMV" is the closing price of the Association's
common stock on The Nasdaq Stock Market, or on
whatever other stock exchange or market such stock is
publicly traded, on the date the Executive's
employment terminates or, if such day is not a day on
which such securities are traded, on the most recent
preceding trading day on which a trade occurs,
provided however that if the restricted stock is a
security other than the Association's common stock,
the fair market value of a share of stock of the same
class as the stock granted under such plan,
determined as of the date of termination of
employment shall be utilized; and
"N" is the number of shares which are being
surrendered.
For purposes of determining the RRP Surrender Payment
and for purposes of determining the Executive's right
following his or her termination of employment with
the Association 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
Association, even if he or she is not vested under
such plan.
The Salary Severance Payment, the DB Severance Payment, the
Defined Contribution Severance Payment, the Bonus Severance
Payment, the Option Surrender Payment and the RRP Surrender
Payment shall be computed at the expense of the Association by
an attorney of the firm of Thacher Proffitt & Wood, Two World
Trade Center, New York, New York 10048 or, if such firm is
unavailable
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<PAGE> 15
or unwilling to perform such calculation, by a firm of
independent certified public accountants selected by the
Executive and reasonably satisfactory to the Association (the
"Computation Advisor"). The determination of the Computation
Advisor as to the amount of such payments shall be final and
binding in the absence of manifest error.
The Association 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 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 Association and the Executive further
agree that the Association may condition the payment of the
Salary Severance Payment, the DB Severance Payment, the
Defined Contribution Severance Payment, the Bonus Severance
Payment, the Option Surrender Payment and the RRP Surrender
Payment on the receipt of the Executive's resignation from any
and all positions which he or she holds as an officer,
director or committee member with respect to the Association,
the Association or any subsidiary or affiliate of either of
them.
Section 10. Termination without Additional Association Liability.
(a) In the event that the Executive's employment with the
Association 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 personal
dishonesty, incompetence, wilful misconduct, breach
of fiduciary duty involving personal profit,
intentional failure to perform stated duties, wilful
violation of any law, rule or regulation (other than
traffic violations or similar offenses) or final
cease and desist order, or any material breach of
this Agreement, in each case measured against
standards generally prevailing at the relevant time
in the savings and community banking industry;
(ii) the Executive's voluntary resignation from employment
with the Association 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 Disabled;
(v) the Executive's termination of employment for any
reason at or after attainment of mandatory retirement
age under the Association's mandatory
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<PAGE> 16
retirement policy for executive officers in effect as
of the date of this Agreement;
then the Association, except as otherwise specifically
provided herein, shall have no further obligations under this
Agreement, other than the payment to the Executive (or, in the
event of his or her death, to his or her estate) of the
amounts or benefits provided in Section 9(b)(i) and (ii) of
this Agreement (the "Standard Termination Entitlements").
(b) 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:
(i) the Board, by the affirmative vote of 75% of its
entire membership, determines that the Executive is
guilty of the conduct described in Section 10(a)(i)
above measured against standards generally prevailing
at the relevant time in the savings and community
banking industry;
(ii) prior to the vote contemplated by Section 10(b)(i),
the Board shall provide the Executive with notice of
the Association's intent to discharge the Executive
for Cause, detailing with particularity the facts and
circumstances which are alleged to constitute Cause
(the "Notice of Intent to Discharge"); and
(iii) after the giving of the Notice of Intent to Discharge
and before the taking of the vote contemplated by
Section 10(b)(i), the Executive, together with the
Executive's legal counsel, if the Executive so
desires, are afforded a reasonable opportunity to
make both written and oral presentations before the
Board for the purpose of refuting the alleged grounds
for Cause for the Executive's discharge; and
(iv) after the vote contemplated by Section 10(b)(i), the
Association has furnished to the Executive a notice
of termination which shall specify the effective date
of the Executive's termination of employment (which
shall in no event be earlier than the date on which
such notice is deemed given) and include a copy of a
resolution or resolutions adopted by the Board,
certified by its corporate secretary, authorizing the
termination of the Executive's employment with Cause
and stating with particularity the facts and
circumstances found to constitute Cause for the
Executive's discharge (the "Final Discharge Notice").
If the Executive, during the ninety (90) day period commencing
on the delivery by the Association to the Executive of the
Notice of Intent to Discharge specified in Section 10(b)(ii),
resigns his or her employment with the Association prior to
the
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<PAGE> 17
delivery to the Executive by the Association of the Final
Discharge Notice specified in Section 10(b)(iv), then the
cessation of employment of the Executive shall be deemed to be
for Cause.
Following the giving of a Notice of Intent to Discharge, the
Bank may temporarily suspend the Executive's duties and
authority and, in such event, may also suspend the payment of
salary and other cash compensation, but not the Executive's
participation in retirement, insurance and other employee
benefit plans. If the Executive is not discharged or is
discharged without Cause within forty-five (45) days after the
giving of a Notice of Intent to Discharge, payments of salary
and cash compensation shall resume, and all payments withheld
during the period of suspension shall be promptly restored. If
the Executive is discharged with Cause not later than
forty-five (45) days after the giving of the Notice of Intent
to Discharge, all payments withheld during the period of
suspension shall be deemed forfeited and shall not be included
in the Standard Termination Entitlements. If a Final Discharge
Notice is given later than forty-five (45) days, but sooner
than ninety (90) days, after the giving of the Notice of
Intent to Discharge, all payments made to the Executive during
the period beginning with the giving of the Notice of Intent
to Discharge and ending with the Executive's discharge with
Cause shall be retained by the Executive and shall not be
applied to offset the Standard Termination Entitlements. If
the Bank does not give a Final Discharge Notice to the
Executive within ninety (90) days after giving a Notice of
Intent to Discharge, the Notice of Intent to Discharge shall
be deemed withdrawn and any future action to discharge the
Executive with Cause shall require the giving of a new Notice
of Intent to Discharge. If the Executive resigns pursuant to
Section 10(b), the Executive shall forfeit his or her right to
suspended amounts that have not been restored as of the date
of the Executive's resignation or notice of resignation,
whichever is earlier.
(c) The Association may terminate the Executive's employment on
the basis that the Executive is Disabled during the Employment
Period upon a determination by the Board, by the affirmative
vote of 75% of its entire membership, acting in reliance on
the written advice of a medical professional acceptable to it,
that the Executive is suffering from a physical or mental
impairment which, at the date of the determination, has
prevented the Executive from performing the Executive's
assigned duties on a substantially full-time basis for a
period of at least one hundred and eighty (180) days during
the period of one (1) year ending with the date of the
determination or is likely to result in death or prevent the
Executive from performing the Executive's assigned duties on a
substantially full-time basis for a period of at least one
hundred and eighty (180) days during the period of one (1)
year beginning with the date of the determination. In such
event:
(A) The Association shall pay and provide the
Standard Termination Entitlements to the
Executive;
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<PAGE> 18
(B) In addition to the Standard Termination
Entitlements, the Association shall continue
to pay to the Executive the Executive's base
salary, at the annual rate in effect for the
Executive immediately prior to the
termination of the Executive's employment,
during a period ending on the earliest of:
(I) the expiration of one hundred and
eighty (180) days after the date of
termination of the Executive's
employment;
(II) the date on which long-term
disability insurance benefits are
first payable to the Executive under
any long-term disability insurance
plan covering the Executive; or
(III) the date of the Executive's death.
A termination of employment due to Disability under
this Section shall be effected by a notice of
termination given to the Executive by the Association
and shall take effect on the later of the effective
date of termination specified in such notice or, if
no such date is specified, the date on which the
notice of termination is deemed given to the
Executive.
Section 11. Termination Upon or Following a Change of Control.
(a) A Change of Control of the Association ("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 Association of a
transaction that would result in the reorganization,
merger or consolidation of the Association 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 Securities Exchange Act of 1934, as
amended (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 Association; 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
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<PAGE> 19
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 Association;
(ii) the acquisition of all or substantially all of the
assets of the Association 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 Association 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 Association of any
transaction which would result in such an
acquisition;
(iii) a complete liquidation or dissolution of the
Association, or approval by the stockholders of the
Association 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
do not belong to any of the following groups:
(A) individuals who were members of the Board on
the date of this Agreement; or
(B) individuals who first became members of the
Board after the date of this Agreement
either:
(I) upon election to serve as a member
of the Board 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 Association to serve as a
member of the Board, but only if
nominated for election by
affirmative vote of three-quarters
of the members of the Board, 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
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<PAGE> 20
promulgated under the Exchange Act) other
than by or on behalf of the Board; or
(v) any event which would be described in Section
11(a)(i), (ii), (iii) or (iv) if the term "Company"
were substituted for the term "Association" therein
or the term "Board of Directors of the Company" were
substituted for the term "Board".
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 Association, the Association, or an affiliate or
subsidiary of either of them, by the Association, 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 or her termination of employment with
the Association 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 within six
(6) months following his or her demotion, loss of
title, office or significant authority or
responsibility or following any reduction in any
element of his or her package of compensation and
benefits;
(ii) resignation, voluntary or otherwise, by the Executive
at any time during the Employment Period within six
(6) months following any relocation of his or her
principal place of employment or any change in
working conditions at such principal place of
employment which the Executive, in his or her
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 within six
(6) months following the failure of any successor to
the Association 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 Association which
is at least as favorable to him or her; or
(iv) resignation, voluntary or otherwise, for any reason
whatsoever during the Employment Period within six
months following the expiration of a transition
period of thirty (30) days beginning on the effective
date of the Change of
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<PAGE> 21
Control (or for such longer period, not to exceed
ninety (90) days beginning on the effective date of
the Change of Control, as the Association or its
successor may reasonably request) to facilitate a
transfer of management responsibilities.
Section 12. Covenant Not To Compete.
The Executive hereby covenants and agrees that, in the event of his or
her termination of employment with the Association prior to the expiration of
the Employment Period, for a period of one (1) year following the date of his or
her termination of employment with the Association (or, if less, for the
Remaining Unexpired Employment Period), the Executive shall not, without the
written consent of the Association, become an officer, employee, consultant,
director or trustee of any savings bank, savings and loan association, savings
and loan holding Association, bank or bank holding Association, 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 Association 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 12 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(c) of this Agreement, this
Section 12 shall not prevent the Executive from accepting any position or
performing any services if:
(a) he or she first offers, by written notice, to accept a similar
position with or perform similar services for the Association
on substantially the same terms and conditions and
(b) the Association declines to accept such offer within ten (10)
days after such notice is given.
Section 13. Confidentiality.
Unless the Executive obtains the prior written consent of the
Association, the Executive shall keep confidential and shall refrain from using
for the benefit of the Executive or any person or entity other than the
Association, any entity which is a subsidiary of the Association or any entity
which the Association is a subsidiary of, any material document or information
obtained from the Association, or from its affiliates or subsidiaries, in the
course of the Executive's 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 or her
own) until the same ceases to be material (or becomes so ascertainable or
available); provided, however, that nothing in this Section 13 shall prevent the
Executive, with or without the Association's consent, from participating in or
disclosing documents or information in connection with any judicial or
administrative investigation, inquiry or proceeding to the extent that such
participation or disclosure is required
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<PAGE> 22
under applicable law.
Section 14. Solicitation.
The Executive hereby covenants and agrees that, for a period of one (1)
year following the Executive's termination of employment with the Association,
he or she shall not, without the written consent of the Association, 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 Association, the Association or any
affiliate or subsidiary 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 Association, savings and loan holding
Association, 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
Association has an office or has filed an application for
regulatory approval to establish an office;
(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 Association, savings
and loan holding Association, 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 Association has an office or has filed an application
for regulatory approval to establish an office 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 Association, the Association, or
any affiliate or subsidiary of either of them, to terminate
his or her employment and accept employment, become affiliated
with or provide services for compensation in any capacity
whatsoever to any such savings bank, savings and loan
association, bank, bank holding Association, savings and loan
holding Association 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 Association, the Association,
or any affiliate or subsidiary of either of them to terminate
an existing business or commercial relationship with the
Association, the Association, or any affiliate or subsidiary
of either of them.
Section 15. No Effect on Employee Benefit Plans or Programs.
The termination of the Executive's employment during the term of this
Agreement or
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<PAGE> 23
thereafter, whether by the Association or by the Executive, shall have no effect
on the rights and obligations of the parties hereto under the Association'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 Association from
time to time.
Section 16. Successors and Assigns.
This Agreement will inure to the benefit of and be binding upon the
Executive, his or her legal representatives and testate or intestate
distributees, and the Association 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 Association may be sold or otherwise transferred. Failure of the
Association to obtain from any successor its express written assumption of the
Association's obligations under this Agreement 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 17. 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:
Gerard C. Keegan
89 Eleventh Street
Garden City, New York 11530
If to the Association:
Astoria Federal Savings and Loan Association
One Astoria Federal Plaza
Lake Success, New York 11042-1085
Attention: General Counsel
with a copy to:
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<PAGE> 24
Thacher Proffitt & Wood
Two World Trade Center
New York, New York 10048
Attention: W. Edward Bright, Esq.
Section 18. Indemnification for Attorneys' Fees.
The Association shall indemnify, hold harmless and defend the Executive
against reasonable costs, including legal fees, incurred by him or her in
connection with or arising out of any action, suit or proceeding in which he or
she may be involved, as a result of his or her efforts, in good faith, to defend
or enforce the terms of this Agreement; provided, however, that in the case of
any action, suit or proceeding instituted prior to a Change of Control, 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 Association'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 19. 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 20. 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 21. 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 22. Governing Law.
This Agreement shall be governed by and construed and enforced in
accordance with the
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<PAGE> 25
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 performed entirely within the State of New
York.
Section 23. 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.
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<PAGE> 26
Section 24. 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. No modifications of this Agreement shall be valid unless made in writing
and signed by the parties hereto.
Section 25. Survival.
The provisions of any sections of this Agreement which by its terms
contemplates performance after the expiration or termination of this Agreement
(including, but not limited to, Sections 6, 9, 10, 11, 12, 13, 14, 15, 16, 17,
18, 20, 26, 27 and 28) shall survive the expiration of the Employment Period or
termination of this Agreement.
Section 26. Equitable Remedies.
The Association and the Executive hereby stipulate that money damages
are an inadequate remedy for violations of Sections 6(a), 12, 13 or 14 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 27. Required Regulatory Provisions.
The following provisions are included for the purposes of complying
with various laws, rules and regulations applicable to the Association:
(a) Notwithstanding anything herein contained to the contrary, in
no event shall the aggregate amount of compensation payable to
the Executive pursuant to Section 9(b) of this Agreement
(exclusive of amounts described in Section 9(b)(i), (ii),
(viii) or (ix)) exceed three times the Executive's average
annual total compensation for the last five consecutive
calendar years to end prior to the Executive's termination of
employment with the Association (or for the Executive's entire
period of employment with the Association if less than five
calendar years).
(b) Notwithstanding anything herein contained to the contrary, any
payments to the Executive by the Association, 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 ("FDI Act"), 12 U.S.C. Section 1828(k),
and any regulations promulgated thereunder.
(c) Notwithstanding anything herein contained to the contrary, if
the Executive is suspended from office and/or temporarily
prohibited from participating in the
Page 26 of 29
<PAGE> 27
conduct of the affairs of the Association pursuant to a notice
served under Section 8(e)(3) or 8(g)(1) of the FDI Act, 12
U.S.C.Section 1818(e)(3) or 1818(g)(1), the Association's
obligations under this Agreement shall be suspended as of the
date of service of such notice, unless stayed by appropriate
proceedings. If the charges in such notice are dismissed, the
Association, in its discretion, may (i) pay to the Executive
all or part of the compensation withheld while the
Association's obligations hereunder were suspended and (ii)
reinstate, in whole or in part, any of the obligations which
were suspended.
(d) Notwithstanding anything herein contained to the contrary, if
the Executive is removed and/or permanently prohibited from
participating in the conduct of the Association's affairs by
an order issued under Section 8(e)(4) or 8(g)(1) of the FDI
Act, 12 U.S.C. Section 1818(e)(4) or (g)(1), all prospective
obligations of the Association under this Agreement shall
terminate as of the effective date of the order, but vested
rights and obligations of the Association and the Executive
shall not be affected.
(e) Notwithstanding anything herein contained to the contrary, if
the Association is in default (within the meaning of Section
3(x)(1) of the FDI Act, 12 U.S.C. Section 1813(x)(1), all
prospective obligations of the Association under this
Agreement shall terminate as of the date of default, but
vested rights and obligations of the Association and the
Executive shall not be affected.
(f) Notwithstanding anything herein contained to the contrary, all
prospective obligations of the Association hereunder shall be
terminated, except to the extent that a continuation of this
Agreement is necessary for the continued operation of the
Association: (i) by the Director of the Office of Thrift
Supervision ("OTS") or his or her designee or the Federal
Deposit Insurance Corporation ("FDIC"), at the time the FDIC
enters into an agreement to provide assistance to or on behalf
of the Association under the authority contained in Section
13(c) of the FDI Act, 12 U.S.C.Section 1823(c); (ii) by the
Director of the OTS or his or her designee at the time such
Director or designee approves a supervisory merger to resolve
problems related to the operation of the Association or when
the Association is determined by such Director to be in an
unsafe or unsound condition. The vested rights and obligations
of the parties shall not be affected.
If and to the extent that any of the foregoing provisions shall cease to be
required or by applicable law, rule or regulation, the same shall become
inoperative as though eliminated by formal amendment of this Agreement.
Section 28. No Offset or Recoupment; No Attachment.
The Association's obligation to make the payments provided for in this
Agreement and
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<PAGE> 28
otherwise to perform its obligations under this Agreement shall not be affected
by any set-off, counterclaim, recoupment, defense or other claim, right or
action which the Association or any of its affiliates or subsidiaries may have
against the Executive. In no event shall the Executive be obligated to seek
other employment or take any other action by way of mitigation of the amounts
payable to the Executive under any of the provisions of this Agreement and such
amounts shall not be reduced whether or not the Executive obtains other
employment. Except as required by law, no right to receive payments under this
Agreement shall be subject to anticipation, commutation, alienation, sale,
assignment, encumbrance, charge, pledge, or hypothecation, or to execution,
attachment, levy, or similar process or assignment by operation of law, and any
attempt, voluntary or involuntary, to affect any such action shall be null,
void, and of no effect.
Section 29. LISB Transaction.
The Executive hereby waives any claim the Executive may have pursuant
to his or her Employment Agreements each dated March 29, 1997 with the Company
and the Association, respectively, that the acquisition by and the merger of
Long Island Bancorp, Inc. and The Long Island Savings Bank, FSB with and into
the Company and the Association, respectively, constituted a "change of control"
of the Company or the Association as defined in such Employment Contracts.
IN WITNESS WHEREOF, the Association has caused this Agreement to be
executed and the Executive has hereunto set his or her hand, all as of the day
and year first above written.
ATTEST: ASTORIA FEDERAL SAVINGS AND LOAN
ASSOCIATION
/S/ William K. Sheerin By: /S/ George L. Engelke, Jr.
- ---------------------------------- --------------------------------------
William K. Sheerin Name: George L. Engelke, Jr.
Title: Chairman, President and Chief
Executive Officer
[Seal]
/S/ Gerard C. Keegan
--------------------------------------
GERARD C. KEEGAN
STATE OF NEW YORK )
) ss.:
COUNTY OF NASSAU )
On this 20 day of March, 2000, before me, the undersigned, personally
appeared Gerard C.
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<PAGE> 29
Keegan, personally known to me or proved to me on the basis
of satisfactory evidence to be the individual(s) whose name(s) is (are)
subscribed to the within instrument and acknowledged to me that he/she/they
executed the same in his/her/their capacity(ies), and that by his/her/their
signature(s) on the instrument, the individual(s), or the person upon behalf of
which the individual(s) acted, executed the instrument.
/S/ Anna Knice
--------------------------------------
Notary Public
Anna Knice
Notary Public, State of New York
No. 4980431
Qualified in Suffolk County
Commission Expires April 22, 2001
STATE OF NEW YORK )
) ss.:
COUNTY OF NASSAU )
On this 20 day of March, 2000, before me, the undersigned, personally
appeared George L. Engelke, Jr., personally known to me or proved to me on the
basis of satisfactory evidence to be the individual(s) whose name(s) is (are)
subscribed to the within instrument and acknowledged to me that he/she/they
executed the same in his/her/their capacity(ies), and that by his/her/their
signature(s) on the instrument, the individual(s), or the person upon behalf of
which the individual(s) acted, executed the instrument.
/S/ Anna Knice
--------------------------------------
Notary Public
Anna Knice
Notary Public, State of New York
No. 4980431
Qualified in Suffolk County
Commission Expires April 22, 2001
Page 29 of 29
<PAGE> 1
EXHIBIT 10.23
ASTORIA FINANCIAL
CORPORATION
AMENDED AND RESTATED
EMPLOYMENT AGREEMENT WITH EXECUTIVE OFFICER
This AMENDED AND RESTATED EMPLOYMENT AGREEMENT (the "Agreement") is
made and entered into as of January 1, 2000 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 One Astoria Federal Plaza, Lake
Success, New York 11042-1085 (the "Company"), and ARNOLD K. GREENBERG, an
individual residing at 40 Quintree Lane, Melville, New York 11747 (the
"Executive").
WITNESSETH:
WHEREAS, the Executive currently serves the Company in the capacity of
Executive Vice President and as Executive Vice President of its wholly owned
subsidiary, ASTORIA FEDERAL SAVINGS AND LOAN ASSOCIATION (the "Association");
and
WHEREAS, the Executive currently has an Employment Agreement with the
Company dated January 1, 1996 which the Executive and the Company wish to amend
and modify; 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 amend and restate in its entirety the Employment Agreement by and between
the Company and the Executive dated as of January 1, 1996 so as to provide as
follows from and after the date hereof:
Section 1. Employment.
The Company agrees to continue to employ the Executive, and the
Executive hereby agrees to such continued employment, during the period and upon
the terms and conditions set forth in this Agreement.
Section 2. Employment Period; Remaining Unexpired Employment
Period.
Page 1 of 31
<PAGE> 2
(a) The terms and conditions of this Agreement shall be and remain
in effect during the period of employment established under
this Section 2 (the "Employment Period"). The Employment
Period shall be for an initial term of three years beginning
on the date of this Agreement and ending on the day before the
third anniversary date of this Agreement, plus such
extensions, if any, as are provided by the Board of Directors
of the Company (the "Board") pursuant to Section 2(b).
(b) Beginning on the date of this Agreement, the Employment Period
shall automatically be extended for one (1) additional day
each day, unless either the Company or the Executive elects
not to extend the Agreement further by giving written notice
to the other party, in which case the Employment Period shall
end on the day before the third anniversary of the date on
which such written notice is given. 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 day before the
third anniversary of the date on which such notice is
given; and
(ii) in all other cases, the day before the third
anniversary of the date as of which the Remaining
Unexpired Employment Period is being determined.
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 previously
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 pursuant to this
Agreement.
Section 3. Duties.
The Executive shall serve as Executive Vice President of the Company,
having such power, authority and responsibility and performing such duties as
are prescribed by or pursuant to the By-Laws of the Company and as are
customarily associated with such position. The Executive shall devote his or her
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, its affiliates and subsidiaries and shall
use his or her best efforts to advance the interests of the Company.
Page 2 of 31
<PAGE> 3
Section 4. Cash Compensation.
In consideration for the services to be rendered by the Executive
hereunder, the Company shall pay to him or her a salary at an initial annual
rate of THREE HUNDRED FORTY FIVE THOUSAND DOLLARS ($345,000), 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. In no event shall the Executive's
annual rate of salary under this Agreement in effect at a particular time be
reduced without his or her prior written consent and any such reduction in the
absence of such consent shall be a material breach of this Agreement. 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.
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 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
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 or her harmless from, any costs, liabilities,
losses and exposures to the fullest extent and on the most
favorable terms and conditions
Page 3 of 31
<PAGE> 4
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 as he
or she may disclose to and as may be approved by the Board
(which approval shall not be unreasonably withheld); provided,
however, that such service shall not materially interfere with
the performance of his or her 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 or her 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 or her 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 or she
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 or her principal place of employment with a private office,
secretarial services and other support services and facilities suitable to his
or her position with the Company and necessary or appropriate in connection with
the performance of his or her assigned duties under this Agreement. The Company
shall provide to the Executive for his or her exclusive use an automobile owned
or leased by the Company and appropriate to his or her position, to be used in
the performance of his or her duties hereunder, including commuting to and from
his or her personal residence. The Company shall reimburse the Executive for his
or her ordinary and necessary business expenses, including, without limitation,
all expenses associated with his or her business use of the aforementioned
automobile, fees for memberships in such clubs and organizations as the
Page 4 of 31
<PAGE> 5
Executive and the Company shall mutually agree are necessary and appropriate for
business purposes, and his or her travel and entertainment expenses incurred in
connection with the performance of his or her 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 or her 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 six (6) months following:
(A) the failure of the Board to appoint or
re-appoint or elect or re-elect the
Executive to the office of Executive Vice
President (or a more senior office) of the
Company;
(B) if the Executive is or becomes a member of
the Board, 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;
(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 Certificate of Incorporation
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 or her
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
(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 or her total
compensation
Page 5 of 31
<PAGE> 6
package), unless, during such thirty (30)
day period, the Company cures such failure
in a manner determined by the Executive, in
his or her discretion, to be satisfactory;
or
(E) the relocation of the Executive's principal
place of employment, without his or her
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 the Executive's death following the
Executive's termination of employment, to his or her estate):
(i) his or her 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 or her 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 any event not later than thirty (30) days
after termination of employment;
(ii) the benefits, if any, to which he or she 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;
(iii) continued group life, health (including
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
(including any co-payments and deductibles, but
excluding any premium sharing arrangements, it being
the intention of the parties to this Agreement that
the premiums for such insurance benefits shall be the
sole cost and expense of the Company) equivalent to
the coverage to which he or she would have been
entitled under such plans (as in effect on the date
of his or her termination of employment, or, if his
or her termination of employment occurs after a
Change of Control, on the date of
Page 6 of 31
<PAGE> 7
such Change of Control, whichever benefits are
greater), if he or she had continued working for the
Company during the Remaining Unexpired Employment
Period at the highest annual rate of salary or
compensation, as applicable, 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 the Executive's
termination of employment with the Company, a lump
sum payment in an amount representing an estimate of
the salary that the Executive would have earned if he
or she 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 (the "Salary Severance Payment"). The Salary
Severance Payment shall be computed using the
following formula:
SSP = BS x NY
where:
"SSP" is the amount of the Salary Severance Payment,
before the deduction of applicable federal, state and
local withholding taxes;
"BS" is 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;
"NY" is the Remaining Unexpired Employment Period
expressed as a number of years (rounded, if such
period is not a whole number, to the next highest
whole number).
The Salary Severance Payment shall 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 the Executive's
termination of employment with the Company, a lump
sum payment (the "DB Severance Payment") in an amount
equal to the excess, if any, of:
(A) the present value of the aggregate benefits
to which he or she would be entitled under
any and all qualified and non-qualified
defined benefit pension plans maintained by,
or covering employees of, the Company, if he
or she were 100% vested thereunder and had
Page 7 of 31
<PAGE> 8
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 pursuant to Sections
9(b)(i), (iv), (vii), (viii) and (ix) of
this Agreement; over
(B) the present value of the benefits to which
he or she is actually entitled under such
defined benefit pension plans as of the date
of his or her termination;
The DB Severance Payment shall be computed using the
following formula:
DBSP = SEVLS - LS
where:
"DBSP" is the amount of the DB Severance Payment,
before the deduction of applicable federal, state and
local withholding taxes;
"SEVLS" is the sum of the present value of the
defined benefit pension benefits that have been or
would be accrued by the Executive under all qualified
and non-qualified defined benefit pension plans of
which the Company or any of its affiliates or
subsidiaries are a sponsor and in which the Executive
is or, but for the completion of any service
requirement that would have been completed during the
Remaining Unexpired Employment Period, would be a
participant utilizing the following assumptions:
(I) the executive is 100% vested in the
plans regardless of actual service,
(II) the benefit to be valued shall be a
single life annuity with monthly
payments due on the first day of
each month and with a guaranteed
payout of not less than 120 monthly
payments,
(III) the calculation shall be made
utilizing the same mortality table
and interest rate as would be
utilized by the plan on the date of
termination as if the calculation
were being made pursuant to Section
417(e)(3)(A)(ii) of the Internal
Revenue Code, as amended, (the
"Code");
Page 8 of 31
<PAGE> 9
(IV) for purpose of calculating the
Executive's monthly or annual
benefit under the defined benefit
plans, additional service equal to
the Remaining Unexpired Employment
Period (rounded up to the next
whole year if such period is not a
whole number when expressed in
years) shall be added to the
Executive's actual service to
calculate the amount of the
benefit; and
(V) for purpose of calculating the
Executive's monthly or annual
benefit under the defined benefit
plans, the following sums shall be
added to the Executive's
compensation recognized under such
plans for the most recent year
recognized:
(1) payments made pursuant to
Section 9(b)(i);
(2) the Salary Severance
Payment;
(3) the Bonus Severance
Payment;
(4) the Option Surrender
Payment; and
(5) the RRP Surrender
Payment.
"LS" is the sum of the present value of the defined benefit
pension benefits that are vested benefits actually accrued by
the Executive under all qualified and non-qualified defined
benefit pension plans maintained by, or covering employees of,
the Company or any of its affiliates or subsidiaries in which
the Executive is or, but for the completion of any service
requirement, would be a participant utilizing the following
assumptions:
(I) the benefit to be valued shall be a single
life annuity with monthly payments due on
the first day of each month and with a
guaranteed payout of not less than 120
monthly payments, and
(II) the calculation shall be made utilizing the
same mortality table and interest rate as
would be utilized by the plan on the date of
termination as if the calculation were being
made pursuant to Section 417(e)(3)(A)(ii) of
the Code;
(vi) within thirty (30) days following the Executive's termination
of employment with the Company, a lump sum payment (the
"Defined Contribution Severance Payment") equal to the sum of:
(A) an estimate of the additional employer contributions
to which he or she would have been entitled under any
and all qualified and non-qualified defined
contribution pension plans, excluding the employee
Page 9 of 31
<PAGE> 10
stock ownership plans, maintained by, or covering
employees of, the Company or any of its affiliates or
subsidiaries as if he or she were 100% vested
thereunder and had continued working for the Company
during the Remaining Unexpired Employment Period (the
"401K Severance Payment"); and
(B) an estimate of the value of the additional assets
which would have been allocable to him or her through
debt service or otherwise under any and all qualified
and non-qualified employee stock ownership plans,
maintained by, or covering employees of, the Company
or any of its affiliates or subsidiaries as if he or
she were 100% vested thereunder and had continued
working for the Company during the Remaining
Unexpired Employment Period, based on the fair market
value of such assets at termination of employment
(the "ESOP Severance Payment").
The Defined Contribution Severance Payment shall be calculated
as follows:
DCSP = 401KSP + ESOPSP
where:
"DCSP" is the amount of the Defined Contribution Severance
Payment, before the deduction of applicable federal, state and
local withholding taxes;
"401KSP" is the amount of the 401K Severance Payment, before
the deduction of applicable federal, state and local
withholding taxes; and
"ESOPSP" is the amount of the ESOP Severance Payment, before
the deduction of applicable federal, state and local
withholding taxes.
The 401KSP shall be calculated as follows:
401KSP = (401KC x NY) + UVB
where
"401KC" is the sum of the Company Contributions as defined in
the Association's Incentive Savings Plan or, if made under
another defined contribution pension plan other than an
employee stock ownership plan, the comparable contribution
made for the benefit of the Executive during the one year
period which shall end on the date of his or her termination
of his or her employment with the Company;
Page 10 of 31
<PAGE> 11
"NY" is the Remaining Unexpired Employment Period expressed as
a number of years (rounded, if such period is not a whole
number, to the next highest whole number); and
"UVB" is the actual balance credited to the Executive's
account under the applicable plan at the date of his or her
termination of employment that is not vested and does not
become vested as a consequence of such termination of
employment.
The ESOPSP shall be calculated as follows:
ESOPSP = (((ALL x FMV) + C) x NY) + UVB
where:
"ALL" is the sum of the number of shares of the Company's
common stock or, if applicable, phantom shares of such stock
by whatever term it is described allocated to the Executive's
accounts under all qualified and non-qualified employee stock
ownership plans maintained by the Company or any of its
affiliates or subsidiaries during or for the last complete
plan year in which the Executive participated in such plans
and received such an allocation whether the allocation
occurred as a result of contributions made by the Company, the
payment by the Company or any of its affiliates or
subsidiaries of any loan payments under a leveraged employee
stock ownership plan, the allocation of forfeitures under the
terms of such plan or as a result of the use of cash or
earnings allocated to the Executive's account during such plan
year to make loan payments that result in share allocations,
provided however, that excluded shall be any shares or phantom
shares allocated to the Executive's account under any
qualified and non-qualified employee stock ownership plans
maintained by the Company or any of its affiliates or
subsidiaries solely as a result of the termination of such
plans, provided further, that if the shares allocated are not
shares of the Association's common stock or phantom shares of
such stock than shares of whatever securities are so allocated
shall be utilized, and provided further, that in the event
that there shall be any shares or phantom shares allocated
during the then current plan year or the last complete plan
year to the Executive's account under any qualified and
non-qualified employee stock ownership plans maintained by the
Association or any of its affiliates or subsidiaries solely as
a result of the termination of such plans, the ALL shall be
reduced (but not to an amount less than zero (0)) by an amount
calculated by multiplying the number of shares or phantom
shares allocated to the Executive's account solely as a result
of the termination of such plans times the FMV utilized to
calculate the ESOPSP;
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<PAGE> 12
"C" is the sum of all cash allocated to the Executive's
accounts under all qualified and non-qualified employee stock
ownership plans maintained by the Company during or for the
last complete plan year in which the Executive participated in
such plans whether the allocation occurred as a result of
contributions made by the Company, the payment by the Company
or the Association of any loan payments under a leveraged
employee stock ownership plan or the allocation of forfeitures
under the terms of such plan during such plan year;
"FMV" is the closing price of the Company's common stock on
The Nasdaq Stock Market or on whatever other stock exchange or
market such stock is publicly traded on the date the
Executive's employment terminates or, if such day is not a day
on which such securities are traded, on the most recent
preceding trading day on which a trade occurs, provided
however that if the security allocated to the Executive's
account during the last completed plan year is other than the
Company's common stock the closing price of such other
security on the date the Executive's employment terminates
shall be utilized.
"NY" is the Remaining Unexpired Employment Period expressed as
a number of years (rounded, if such period is not a whole
number, to the next highest whole number); and
"UVB" is the actual balance credited to the Executive's
account under the applicable plan at the date of his or her
termination of employment that is not vested and does not
become vested as a consequence of such termination of
employment.
(vii) within thirty (30) days following the Executive's termination
of employment with the Company, the Company shall make a lump
sum payment to the Executive in an amount equal to the
estimated potential annual bonuses or incentive compensation
that the Executive could have earned if the Executive had
continued working for the Company during the 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 (the "Bonus Severance Payment"). The Bonus Severance
Payment shall be computed using the following formula:
BSP = ( BS x TIO x AP x NY)
where:
"BSP" is the amount of the Bonus Severance Payment, before the
deduction
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<PAGE> 13
of applicable federal, state and local withholding taxes;
"BS" is 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;
"TIO" is the highest target incentive opportunity (expressed
as a percentage of base salary) established by the
Compensation Committee of the Board for the Executive pursuant
to the Astoria Financial Corporation Executive Officer Annual
Incentive Plan during that portion of the Employment Period
which is prior to the Executive's termination of employment
with the Company;
"AP" is the highest award percentage available to the
Executive with respect to the financial performance of the
Company (expressed as a percentage of the TIO) established by
the Compensation Committee of the Board for the Executive
pursuant to the Astoria Financial Corporation Executive
Officer Annual Incentive Plan during the period during that
portion of the Employment Period which is prior to the
Executive's termination of employment with the Company; and
"NY" is the Remaining Unexpired Employment Period expressed as
a number of years (rounded, if such period is not a whole
number, to the next highest whole number).
(viii) 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 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 (the "Option
Surrender Payment"). The Option Surrender Payment shall be
calculated as follows:
OSP = (FMV - EP) x N
where:
"OSP" is the amount of the Option Surrender Payment, before
the deduction of applicable federal, state and local
withholding taxes;
"FMV" is the closing price of the Company's common stock on
The Nasdaq Stock Market, or on whatever other stock exchange
or market such stock is publicly traded, on the date the
Executive's employment terminates or, if such
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<PAGE> 14
day is not a day on which such securities are traded, on the
most recent preceding trading day on which a trade occurs,
provided however that if the option or stock appreciation
right is for a security other than the Company's common stock,
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 shall
be utilized;
"EP" is the exercise price per share for such option or
appreciation right, as specified in or under the relevant plan
or program; and
"N" is the number of shares with respect to which options or
appreciation rights are being surrendered.
For purposes of determining the Option Severance Payment and
for purposes of determining the Executive's right following
his or her 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 or she is not 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 shares awarded to the
Executive under any restricted stock plan maintained by, or
covering employees of, the Company, a lump sum payment (the
"RRP Surrender Payment") The RRP Surrender Payment shall be
calculated as follows:
RSP = FMV x N
where:
"RSP" is the amount of the RRP Surrender Payment, before the
deduction of applicable federal, state and local withholding
taxes;
"FMV" is the closing price of the Company's common stock on
The Nasdaq Stock Market, or on whatever other stock exchange
or market such stock is publicly traded, on the date the
Executive's employment terminates or, if such day is not a day
on which such securities are traded, on the preceding trading
day on which a trade occurs, provided however that if the
restricted stock is a security other than the Company's common
stock, the fair market value of a share of stock of the same
class as the stock granted under such plan, determined as of
the date of termination of employment shall be utilized; and
Page 14 of 31
<PAGE> 15
"N" is the number of shares which are being surrendered.
For purposes of determining the RRP Surrender Payment and for
purposes of determining the Executive's right following his or
her 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 or she is not vested under such plan.
The Salary Severance Payment, the DB Severance Payment, the Defined
Contribution Severance Payment, the Bonus Severance Payment, the Option
Surrender Payment and the RRP Surrender Payment shall be computed at
the expense of the Company by an attorney of the firm of Thacher
Proffitt & Wood, Two World Trade Center, New York, New York 10048 or,
if such firm is unavailable or unwilling to perform such calculation,
by a firm of independent certified public accountants selected by the
Executive and reasonably satisfactory to the Company (the "Computation
Advisor"). The determination of the Computation Advisor as to the
amount of such payments shall be final and binding in the absence of
manifest error.
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 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 payment of the Salary Severance Payment, the DB Severance
Payment, the Defined Contribution Severance Payment, the Bonus
Severance Payment, the Option Surrender Payment and the RRP Surrender
Payment on the receipt of the Executive's resignation from any and all
positions which he or she holds as an officer, director or committee
member with respect to the Company, the Association or any subsidiary
or affiliate of either of them.
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:
Page 15 of 31
<PAGE> 16
(A) the Executive intentionally engages in dishonest
conduct in connection with the Executive's
performance of services for the Company resulting in
the Executive's 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
the Executive's 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 the Executive's fiduciary
duties to the Company for personal profit;
(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 the Executive's
performance of services for the Company; or
(F) the Executive's material breach of any material
provision of this Agreement which is not
substantially cured within 60 days after written
notice of such breach is received by the Executive
from 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 Disabled;
(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, except as otherwise specifically provided herein,
shall have no further obligations under this Agreement, other than the
payment to the Executive (or, in the event of his or her death, to his
or her estate) of the amounts or benefits provided in Section 9(b)(i)
and (ii) of this Agreement (the "Standard Termination Entitlements").
(b) For purposes of Section 10(a)(i), no act or failure to act, on the part
of the Executive,
Page 16 of 31
<PAGE> 17
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.
Except as specifically provided below, 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:
(i) the Board, by the affirmative vote of 75% of its entire
membership, determines that the Executive is guilty of the
conduct described in Section 10(a)(i) above measured against
standards generally prevailing at the relevant time in the
savings and community banking industry;
(ii) prior to the vote contemplated by Section 10(b)(i), the Board
shall provide the Executive with notice of the Company's
intent to discharge the Executive for Cause, detailing with
particularity the facts and circumstances which are alleged to
constitute Cause (the "Notice of Intent to Discharge"); and
(iii) after the giving of the Notice of Intent to Discharge and
before the taking of the vote contemplated by Section
10(b)(i), the Executive, together with the Executive's legal
counsel, if the Executive so desires, are afforded a
reasonable opportunity to make both written and oral
presentations before the Board for the purpose of refuting the
alleged grounds for Cause for the Executive's discharge; and
(iv) after the vote contemplated by Section 10(b)(i), the Company
has furnished to the Executive a notice of termination which
shall specify the effective date of the Executive's
termination of employment (which shall in no event be earlier
than the date on which such notice is deemed given) and
include a copy of a resolution or resolutions adopted by the
Board, certified by its corporate secretary, authorizing the
termination of the Executive's employment with Cause and
stating with particularity the facts and circumstances found
to constitute Cause for the Executive's discharge (the "Final
Discharge Notice").
If the Executive, during the 90 (ninety) day period commencing on the
delivery by the Company to the Executive of the Notice of Intent to
Discharge specified in Section 10(b)(ii), resigns his or her employment
with the Company prior to the delivery to the Executive by the Company
of the Final Discharge Notice specified in Section 10(b)(iv), then the
cessation of employment of the Executive shall be deemed to be for
Cause.
Page 17 of 31
<PAGE> 18
Following the giving of a Notice of Intent to Discharge, the Bank may
temporarily suspend the Executive's duties and authority and, in such
event, may also suspend the payment of salary and other cash
compensation, but not the Executive's participation in retirement,
insurance and other employee benefit plans. If the Executive is not
discharged or is discharged without Cause within forty-five (45) days
after the giving of a Notice of Intent to Discharge, payments of salary
and cash compensation shall resume, and all payments withheld during
the period of suspension shall be promptly restored. If the Executive
is discharged with Cause not later than forty-five (45) days after the
giving of the Notice of Intent to Discharge, all payments withheld
during the period of suspension shall be deemed forfeited and shall not
be included in the Standard Termination Entitlements. If a Final
Discharge Notice is given later than forty-five (45) days, but sooner
than ninety (90) days, after the giving of the Notice of Intent to
Discharge, all payments made to the Executive during the period
beginning with the giving of the Notice of Intent to Discharge and
ending with the Executive's discharge with Cause shall be retained by
the Executive and shall not be applied to offset the Standard
Termination Entitlements. If the Bank does not give a Final Discharge
Notice to the Executive within ninety (90) days after giving a Notice
of Intent to Discharge, the Notice of Intent to Discharge shall be
deemed withdrawn and any future action to discharge the Executive with
Cause shall require the giving of a new Notice of Intent to Discharge.
If the Executive resigns pursuant to Section 10(b), the Executive shall
forfeit his or her right to suspended amounts that have not been
restored as of the date of the Executive's resignation or notice of
resignation, whichever is earlier.
(c) The Company may terminate the Executive's employment on the basis that
the Executive is Disabled during the Employment Period upon a
determination by the Board, by the affirmative vote of 75% of its
entire membership, acting in reliance on the written advice of a
medical professional acceptable to it, that the Executive is suffering
from a physical or mental impairment which, at the date of the
determination, has prevented the Executive from performing the
Executive's assigned duties on a substantially full-time basis for a
period of at least one hundred and eighty (180) days during the period
of one (1) year ending with the date of the determination or is likely
to result in death or prevent the Executive from performing the
Executive's assigned duties on a substantially full-time basis for a
period of at least one hundred and eighty (180) days during the period
of one (1) year beginning with the date of the determination. In such
event:
(A) The Company shall pay and provide the Standard
Termination Entitlements to the Executive;
(B) In addition to the Standard Termination Entitlements,
the Company shall continue to pay to the Executive
the Executive's base salary, at the annual rate in
effect for the Executive immediately prior to the
Page 18 of 31
<PAGE> 19
termination of the Executive's employment, during a
period ending on the earliest of:
(I) the expiration of one hundred and eighty
(180) days after the date of termination of
the Executive's employment;
(II) the date on which long-term disability
insurance benefits are first payable to the
Executive under any long-term disability
insurance plan covering the Executive; or
(III) the date of the Executive's death.
A termination of employment due to Disability under this
Section shall be effected by a notice of termination given to
the Executive by the Company and shall take effect on the
later of the effective date of termination specified in such
notice or, if no such date is specified, the date on which the
notice of termination is deemed given to the Executive.
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 Securities Exchange Act of
1934, as amended (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
Page 19 of 31
<PAGE> 20
under the Exchange Act) at least 51 % of the
securities entitled to vote generally in the election
of directors of the Company;
(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 do not belong
to any of the following groups:
(A) individuals who were members of the Board on the date
of this Agreement; or
(B) individuals who first became members of the Board
after the date of this Agreement either:
(I) upon election to serve as a member of the
Board 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,
but only if nominated for election by
affirmative vote of three-quarters of the
members of the Board, 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; or
(v) any event which would be described in Section 11(a)(i), (ii),
(iii) or (iv) if the
Page 20 of 31
<PAGE> 21
term "Association" were substituted for the term "Company"
therein or the term "Board of Directors of the Association"
were substituted for the term "Board".
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 an affiliate or subsidiary of either of
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 or her 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 within six (6) months
following his or her demotion, loss of title, office or
significant authority or responsibility or following any
reduction in any element of his or her package of compensation
and benefits;
(ii) resignation, voluntary or otherwise, by the Executive at any
time during the Employment Period within six (6) months
following any relocation of his or her principal place of
employment or any change in working conditions at such
principal place of employment which the Executive, in his or
her 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 within six (6) months
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 her; or
(iv) resignation, voluntary or otherwise, for any reason whatsoever
during the Employment Period within six months 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
Page 21 of 31
<PAGE> 22
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 intended to indemnify the Executive against the
financial effects of the excise tax imposed on excess parachute
payments under Section 28OG of the Code (the "Tax Indemnity Payment").
The Tax Indemnity Payment shall be determined under the following
formula:
E x P
TIP =
---------------------------------------
1 - (( FI x ( 1 - SLI )) + SLI + E + M )
where:
"TIP" is the Tax Indemnity Payment, before the deduction of applicable
federal, state and local withholding taxes;
"E" is the percentage rate at which an excise tax is assessed under
Section 4999 of the Code;
"P" is the amount with respect to which such excise tax is assessed,
determined without regard to any amount payable pursuant to this
Section 12;
"FI" is the highest marginal rate of income tax applicable to the
Executive under the Code for the taxable year in question;
"SLI" is 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" is the highest marginal rate of Medicare tax applicable to the
Executive under the Code for the taxable year in question.
Page 22 of 31
<PAGE> 23
(b) The computation of the Tax Indemnity Payment shall be made at the
expense of the Company by the Computation Advisor and shall be based on
the following assumptions:
(i) that a change in ownership, a change in effective ownership or
control or a change in the ownership of a substantial portion
of the assets of the Association or the Company has occurred
within the meaning of Section 28OG of the Code (a "28OG Change
of Control");
(ii) that all direct or indirect payments made to or benefits
conferred upon the Executive on account of the Executive's
termination of employment are "parachute payments" within the
meaning of Section 28OG of the Code; and
(iii) that no portion of such payments is reasonable compensation
for services rendered prior to the Executive's termination of
employment.
(c) With respect to any payment that is presumed to be a parachute payment
for purposes of Section 28OG of the Code, the Tax Indemnity Payment
shall be made to the Executive on the earlier of 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 the
date the tax is required to be paid by the Executive, unless, prior to
such date, the Company delivers to the Executive the written opinion
(the "Opinion Letter"), in form and substance reasonably satisfactory
to the Executive, of the Computation Advisor or, if the Computation
Advisor is unable to provide such opinion, of an attorney or firm of
independent certified public accountants selected by the Company and
reasonably satisfactory to the Executive, to the effect that the
Executive has a reasonable basis on which to conclude that:
(i) no 28OG Change in Control has occurred, or
(ii) all or part of the payment or benefit in question is not a
parachute payment for purposes of Section 28OG of the Code, or
(iii) all or a part of such payment or benefit constitutes
reasonable compensation for services rendered prior to the
28OG Change of Control, or
(iv) for some other reason which shall be set forth in detail in
such letter, no excise tax is due under Section 4999 of the
Code with respect to such payment or benefit.
If the Company delivers an Opinion Letter, the Computation Advisor
shall re-compute, and the Company shall make, the Tax Indemnity
Payment, if any, in reliance on the information contained in the
Opinion Letter.
Page 23 of 31
<PAGE> 24
(d) 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 with
respect to which the Tax Indemnity Payment is made, 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 pursuant to Sections 12(a) and 12(c),
when increased by the amount of the payment made to the
Executive pursuant to this Section 12(d), or when reduced by
the amount of the payment made to the Company pursuant to this
Section 12(d), equals the amount that should have properly
been paid to the Executive under Sections 12(a) and 12(c). The
interest paid to the Company under this Section 12(d) shall be
determined at the rate provided under Section 1274(b)(2)(B) of
the Code. The payment made to the Executive shall include such
amount of interest as is necessary to satisfy any interest
assessment made by the Internal Revenue Service and an
additional amount equal to any monetary penalties assessed by
the Internal Revenue Service on account of an underpayment of
the excise tax. 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, at least 20 days
before the date on which such return is required to be filed
with the Internal Revenue Service. Nothing in this Agreement
shall give the Company any right to control or otherwise
participate in any action, suit or proceeding to which the
Executive is a party as a result of positions taken on the
Executive's federal income tax return with respect to the
Executive's liability for excise taxes under Section 4999 of
the Code.
(e) 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, in the event of his or
her termination of employment with the Company prior to the expiration of the
Employment Period, for a period of one (1) year following the date of his or her
termination of employment with the Company (or, if less, for the Remaining
Unexpired Employment Period), the Executive 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
Page 24 of 31
<PAGE> 25
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(c) of
this Agreement, this Section 13 shall not prevent the Executive from accepting
any position or performing any services if:
(a) he or she 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 the Executive obtains the prior written consent of the Company,
the Executive shall keep confidential and shall refrain from using for the
benefit of the Executive or any person or entity other than the Company, any
entity which is a subsidiary of the Company or any entity which the Company is a
subsidiary of, any material document or information obtained from the Company,
or from its affiliates or subsidiaries, in the course of the Executive's
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 or her 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
proceeding 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 Executive's termination of employment with the Company, he or
she shall not, without the 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 or subsidiary of ether 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;
Page 25 of 31
<PAGE> 26
(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 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 or
subsidiary of either of them, to terminate his or her
employment and accept employment, 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, the Association, or
any affiliate or subsidiary of either of them to terminate an
existing business or commercial relationship with the Company,
the Association, or any affiliate or subsidiary of either of
them.
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.
Section 17. Successors and Assigns.
This Agreement will inure to the benefit of and be binding upon the
Executive, his or her 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 under this Agreement 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.
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<PAGE> 27
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:
Arnold K. Greenberg
40 Quintree Lane
Melville, New York 11747
If to the Company:
Astoria Financial Corporation
One Astoria Federal Plaza
Lake Success, New York 11042-1085
Attention: General Counsel
with a copy to:
Thacher Proffitt & Wood
Two World Trade Center
New York, New York 10048
Attention: W. Edward Bright, Esq.
Section 19. Indemnification for Attorneys' Fees.
The Company shall indemnify, hold harmless and defend the Executive
against reasonable costs, including legal fees, incurred by him or her in
connection with or arising out of any action, suit or proceeding in which he or
she may be involved, as a result of his or her efforts, in good faith, to defend
or enforce the terms of this Agreement; provided, however, that in the case of
any action, suit or proceeding instituted prior to a Change of Control, 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
Page 27 of 31
<PAGE> 28
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 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. No modifications of this Agreement shall be valid unless made in writing
and signed by the parties hereto.
Page 28 of 31
<PAGE> 29
Section 26. Guarantee.
The Company hereby agrees to guarantee the payment by the Association
of any benefits and compensation to which the Executive is or may be entitled to
under the terms and conditions of the Amended and Restated Employment Agreement
dated as of the 1st day of January, 2000 between the Association and the
Executive.
Section 27. Non-duplication.
In the event that the Executive shall perform services for the
Association or any other affiliate or 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 affiliates and
subsidiaries.
Section 28. Survival.
The provisions of any sections of this Agreement which by its terms
contemplates performance after the expiration or termination of this Agreement
(including, but not limited to, Sections 6, 9, 10, 11, 12, 13, 14, 15, 16, 17,
18, 19, 21, 26, 27, 29, 30 and 31) shall survive the expiration of the
Employment Period or termination of this Agreement.
Section 29. 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 30. 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 conditioned upon their compliance with Section
18(k) of the Federal Deposit Insurance Act, 12 U.S.C. Section 1828(k), and any
regulations promulgated thereunder.
Section 31. No Offset or Recoupment; No Attachment.
The Company's obligation to make the payments provided for in this
Agreement and otherwise to perform its obligations under this Agreement shall
not be affected by any set-off, counterclaim, recoupment, defense or other
claim, right or action which the Company or any of its affiliates or
subsidiaries may have against the Executive. In no event shall the Executive be
obligated to seek other employment or take any other action by way of mitigation
of the amounts payable to
Page 29 of 31
<PAGE> 30
the Executive under any of the provisions of this Agreement and such amounts
shall not be reduced whether or not the Executive obtains other employment.
Except as required by law, no right to receive payments under this Agreement
shall be subject to anticipation, commutation, alienation, sale, assignment,
encumbrance, charge, pledge, or hypothecation, or to execution, attachment,
levy, or similar process or assignment by operation of law, and any attempt,
voluntary or involuntary, to affect any such action shall be null, void, and of
no effect.
Section 32. LISB Transaction.
The Executive hereby waives any claim the Executive may have pursuant
to his or her Employment Agreements each dated January 1, 1996 with the Company
and the Association, respectively, that the acquisition by and the merger of
Long Island Bancorp, Inc. and The Long Island Savings Bank, FSB with and into
the Company and the Association, respectively, constituted a "change of control"
of the Company or the Association as defined in such Employment Contracts.
IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed and the Executive has hereunto set his or her hand, all as of the day
and year first above written.
ATTEST:
/S/ William K. Sheerin
William K. Sheerin
[Seal]
ASTORIA FINANCIAL CORPORATION
By: /S/ George L. Engelke, Jr.
Name: George L. Engelke, Jr.
Title: Chairman, President and Chief
Executive Officer
/S/ Arnold K. Greenberg
ARNOLD K. GREENBERG
Page 30 of 31
<PAGE> 31
STATE OF NEW YORK )
) ss.:
COUNTY OF NASSAU )
On this 20 day of March, 2000, before me, the undersigned, personally
appeared Arnold K. Greenberg, personally known to me or proved to me on the
basis of satisfactory evidence to be the individual(s) whose name(s) is (are)
subscribed to the within instrument and acknowledged to me that he/she/they
executed the same in his/her/their capacity(ies), and that by his/her/their
signature(s) on the instrument, the individual(s), or the person upon behalf of
which the individual(s) acted, executed the instrument.
/S/ Anna Knice
Notary Public
Anna Knice
Notary Public, State of New York
No. 4980431
Qualified in Suffolk County
Commission Expires April 22, 2001
STATE OF NEW YORK )
) ss.:
COUNTY OF NASSAU )
On this 20 day of March, 2000, before me, the undersigned, personally
appeared George L. Engelke, Jr., personally known to me or proved to me on the
basis of satisfactory evidence to be the individual(s) whose name(s) is (are)
subscribed to the within instrument and acknowledged to me that he/she/they
executed the same in his/her/their capacity(ies), and that by his/her/their
signature(s) on the instrument, the individual(s), or the person upon behalf of
which the individual(s) acted, executed the instrument.
/S/ Anna Knice
Notary Public
Anna Knice
Notary Public, State of New York
No. 4980431
Qualified in Suffolk County
Commission Expires April 22, 2001
Page 31 of 31
<PAGE> 1
EXHIBIT 10.24
ASTORIA FEDERAL SAVINGS AND LOAN ASSOCIATION
AMENDED AND RESTATED
EMPLOYMENT AGREEMENT WITH EXECUTIVE OFFICER
This AMENDED AND RESTATED EMPLOYMENT AGREEMENT (the "Agreement") is
made and entered into as of January 1, 2000 by and between ASTORIA FEDERAL
SAVINGS AND LOAN ASSOCIATION, a savings association organized and operating
under the federal laws of the United States and having an office at One Astoria
Federal Plaza, Lake Success, New York 11042-1085 (the "Association") and, ARNOLD
K. GREENBERG, an individual residing at 40 Quintree Lane, Melville, New York
11747 (the "Executive").
WITNESSETH:
WHEREAS, the Executive currently serves the Association in the capacity
of Executive Vice President and as Executive Vice President of the Association's
savings and loan holding company, ASTORIA FINANCIAL CORPORATION, a publicly held
business corporation organized and operating pursuant to the laws of the State
of Delaware (the "Company"); and
WHEREAS, the Executive currently has an Employment Agreement with the
Association dated January 1, 1996 which the Executive and the Association wish
to amend and modify; and
WHEREAS, the Association 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 Association
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 Association and the
Executive hereby amend and restate in its entirety the Employment Agreement by
and between the Association and the Executive dated as of January 1, 1996 so as
to provide as follows from and after the date hereof:
Section 1. Employment.
The Association agrees to continue to employ the Executive, and the
Executive hereby agrees to such continued employment, during the period and upon
the terms and conditions set forth in this Agreement.
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<PAGE> 2
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 (the "Employment Period"). The Employment
Period shall be for an initial term of three years beginning
on the date of this Agreement and ending on the day before the
third anniversary date of this Agreement. Prior to the first
anniversary of the date of this Agreement and on each
anniversary date thereafter (each an "Anniversary Date) the
Board of Directors of the Association (the "Board") shall
review the terms of this Agreement and the Executive's
performance of services hereunder and may, in the absence of
objection from the Executive, approve an extension of the
Employment Period. In such event, the Employment Period shall
be extended to the day before the third anniversary of the
relevant Anniversary Date.
(b) 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 the day before the
Anniversary Date on which the Employment Period (as extended
pursuant to Section 2(a) of this Agreement) is then scheduled
to expire.
(c) Nothing in this Agreement shall be deemed to prohibit the
Association 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 Association and the Executive in the event
of any such termination shall be determined pursuant to this
Agreement.
Section 3. Duties.
The Executive shall serve as Executive Vice President of the
Association, having such power, authority and responsibility and performing such
duties as are prescribed by or pursuant to the ByLaws of the Association and as
are customarily associated with such position. The Executive shall devote his or
her 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 Association and shall use his or her best
efforts to advance the interests of the Association.
Section 4. Cash Compensation.
In consideration for the services to be rendered by the Executive
hereunder, the Association shall pay to him or her a salary at an initial annual
rate of THREE HUNDRED FORTY FIVE THOUSAND DOLLARS ($345,000), payable in
approximately equal installments in accordance with the Association's customary
payroll practices for senior officers. Prior to each Anniversary Date occurring
during the Employment Period, the Board shall review the Executive's annual rate
of salary and may, in its discretion, approve an increase therein. In addition
to salary, the Executive
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<PAGE> 3
may receive other cash compensation from the Association for services hereunder
at such times, in such amounts and on such terms and conditions as the Board may
determine from time to time.
Section 5. Employee Benefit Plans and Programs.
During the Employment Period, the Executive shall be treated as an
employee of the Association 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 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 Association, in accordance with the terms and conditions of such employee
benefit plans and programs and compensation plans and programs and consistent
with the Association's customary practices.
Section 6. Indemnification and Insurance.
(a) During the Employment Period and for a period of six (6) years
thereafter, the Association 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
Association or service in other capacities at the request of
the Association. 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 Association.
(b) To the maximum extent permitted under applicable law, during
the Employment Period and for a period of six (6) years
thereafter, the Association shall indemnify the Executive
against, and hold him or her 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
Association or any subsidiary or affiliate thereof. This
Section 6(b) shall not be applicable where Section 18 is
applicable.
Section 7. Other Activities.
(a) The Executive may serve as a member of the boards of directors
of such business, community and charitable organizations as he
or she may disclose to and as may be approved by the Board
(which approval shall not be unreasonably withheld); provided,
however, that such service shall not materially interfere with
the performance of his or her duties under this Agreement. The
Executive may also engage in personal business and investment
activities which do not materially
Page 3 of 29
<PAGE> 4
interfere with the performance of his or her duties hereunder;
provided, however, that such activities are not prohibited
under any code of conduct or investment or securities trading
policy established by the Association and generally applicable
to all similarly situated executives.
(b) The Executive may also serve as an officer or director of the
Company on such terms and conditions as the Association and
the Company may mutually agree upon, and such service shall
not be deemed to materially interfere with the Executive's
performance of his or her duties hereunder or otherwise result
in a material breach of this Agreement.
Section 8. Working Facilities and Expenses.
The Executive's principal place of employment shall be at the
Association'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
Association shall maintain its principal executive offices, or at such other
location as the Association and the Executive may mutually agree upon. The
Association shall provide the Executive at his or her principal place of
employment with a private office, secretarial services and other support
services and facilities suitable to his or her position with the Association and
necessary or appropriate in connection with the performance of his or her
assigned duties under this Agreement. The Association shall provide to the
Executive for his or her exclusive use an automobile owned or leased by the
Association and appropriate to his or her position, to be used in the
performance of his or her duties hereunder, including commuting to and from his
or her personal residence. The Association shall reimburse the Executive for his
or her ordinary and necessary business expenses, including, without limitation,
all expenses associated with his or her business use of the aforementioned
automobile, fees for memberships in such clubs and organizations as the
Executive and the Association shall mutually agree are necessary and appropriate
for business purposes, and his or her travel and entertainment expenses incurred
in connection with the performance of his or her duties under this Agreement, in
each case upon presentation to the Association of an itemized account of such
expenses in such form as the Association 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 or her employment with
the Association terminates during the Employment Period under
any of the following circumstances:
(i) the Executive's voluntary resignation from employment
with the Association within six (6) months following:
(A) the failure of the Board to appoint or
re-appoint or elect or re-elect the
Executive to the office of Executive Vice
President (or a more senior
Page 4 of 29
<PAGE> 5
office) of the Association;
(B) if the Executive is or becomes a member of the Board, the
failure of the stockholders of the Association 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;
(C) the expiration of a thirty (30) day period following the date
on which the Executive gives written notice to the Association
of its material failure, whether by amendment of the
Association's Organization Certificate or By-laws, action of
the Board or the Association'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 Association cures such failure;
(D) the expiration of a thirty (30) day period following the date
on which the Executive gives written notice to the Association
of its material breach of any term, condition or covenant
contained in this Agreement (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 or her total compensation package), unless, during such
thirty (30) day period, the Association cures such failure; or
(E) the relocation of the Executive's principal place of
employment, without his or her written consent, to a location
outside of Nassau County and Queens County, New York;
(ii) the termination of the Executive's employment with the Association for
any other reason not described in Section 10(a).
In such event and subject to Section 27 of this Agreement, the
Association 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
Association under circumstances described in Section 9(a) of
this Agreement, the Association shall pay and provide to the
Executive (or, in the event of the Executive's death following
the Executive's termination of employment, to his or her
estate):
Page 5 of 29
<PAGE> 6
(i) his or her 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 or her employment with the Association, such
payment to be made at the time and in the manner
prescribed by law applicable to the payment of wages
but in any event not later than thirty (30) days
after termination of employment;
(ii) the benefits, if any, to which he or she is entitled
as a former employee under the employee benefit plans
and programs and compensation plans and pro grams
maintained for the benefit of the Association's
officers and employees;
(iii) continued group life, health (including
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
(including any co-payments and deductibles, but
excluding any premium sharing arrangements, it being
the intention of the parties to this Agreement that
the premiums for such insurance benefits shall be the
sole cost and expense of the Association) equivalent
to the coverage to which he or she would have been
entitled under such plans (as in effect on the date
of his or her termination of employment, or, if his
or her termination of employment occurs after a
Change of Control, on the date of such Change of
Control, whichever benefits are greater), if he or
she had continued working for the Association during
the Remaining Unexpired Employment Period at the
highest annual rate of salary or compensation, as
applicable, achieved during that portion of the
Employment Period which is prior to the Executive's
termination of employment with the Association;
(iv) within thirty (30) days following the Executive's
termination of employment with the Association, a
lump sum payment in an amount representing an
estimate of the salary that the Executive would have
earned if he or she had continued working for the
Association 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 Association (the "Salary Severance
Payment"). The Salary Severance Payment shall be
computed using the following formula:
SSP = BS x NY
where:
Page 6 of 29
<PAGE> 7
"SSP" is the amount of the Salary Severance Payment,
before the deduction of applicable federal, state and
local withholding taxes;
"BS" is 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 Association;
"NY" is the Remaining Unexpired Employment Period
expressed as a number of years (rounded, if such
period is not a whole number, to the next highest
whole number).
The Salary Severance Payment shall 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 the Executive's
termination of employment with the Association, a
lump sum payment (the "DB Severance Payment") in an
amount equal to the excess, if any, of:
(A) the present value of the aggregate benefits
to which he or she would be entitled under
any and all qualified and non-qualified
defined benefit pension plans maintained by,
or covering employees of, the Association,
if he or she were 100% vested thereunder and
had continued working for the Association
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 pursuant to
Sections 9(b)(i), (iv), (vii), (viii) and
(ix) of this Agreement; over
(B) the present value of the benefits to which
he or she is actually entitled under such
defined benefit pension plans as of the date
of his or her termination;
The DB Severance Payment shall be computed using the
following formula:
DBSP = SEVLS - LS
where:
"DBSP" is the amount of the DB Severance Payment,
before the deduction
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<PAGE> 8
of applicable federal, state and local withholding taxes;
"SEVLS" is the sum of the present value of the defined benefit
pension benefits that have been or would be accrued by the
Executive under all qualified and non-qualified defined
benefit pension plans of which the Association or any of its
affiliates or subsidiaries are a sponsor and in which the
Executive is or, but for the completion of any service
requirement that would have been completed during the
Remaining Unexpired Employment Period, would be a participant
utilizing the following assumptions:
(I) the executive is 100% vested in the plans
regardless of actual service,
(II) the benefit to be valued shall be a single
life annuity with monthly payments due on
the first day of each month and with a
guaranteed payout of not less than 120
monthly payments,
(III) the calculation shall be made utilizing the
same mortality table and interest rate as
would be utilized by the plan on the date of
termination as if the calculation were being
made pursuant to Section 417(e)(3)(A)(ii) of
the Internal Revenue Code, as amended, (the
"Code");
(IV) for purpose of calculating the Executive's
monthly or annual benefit under the defined
benefit plans, additional service equal to
the Remaining Unexpired Employment Period
(rounded up to the next whole year if such
period is not a whole number when expressed
in years) shall be added to the Executive's
actual service to calculate the amount of
the benefit; and
(V) for purpose of calculating the Executive's
monthly or annual benefit under the defined
benefit plans, the following sums shall be
added to the Executive's compensation
recognized under such plans for the most
recent year recognized:
(1) payments made pursuant to Section
9(b)(i);
(2) the Salary Severance Payment;
(3) the Bonus Severance Payment;
(4) the Option Surrender Payment; and
(5) the RRP Surrender Payment.
Page 8 of 29
<PAGE> 9
"LS" is the sum of the present value of the defined benefit
pension benefits that are vested benefits actually accrued by
the Executive under all qualified and non-qualified defined
benefit pension plans maintained by, or covering employees of,
the Company or any of its affiliates or subsidiaries in which
the Executive is or, but for the completion of any service
requirement, would be a participant utilizing the following
assumptions:
(I) the benefit to be valued shall be a
single life annuity with monthly
payments due on the first day of
each month and with a guaranteed
payout of not less than 120 monthly
payments, and
(II) the calculation shall be made
utilizing the same mortality table
and interest rate as would be
utilized by the plan on the date of
termination as if the calculation
were being made pursuant to Section
417(e)(3)(A)(ii) of the Code;
(vi) within thirty (30) days following the Executive's termination
of employment with the Association, a lump sum payment (the
"Defined Contribution Severance Payment") equal to the sum of:
(A) an estimate of the additional employer contributions
to which he or she would have been entitled under any
and all qualified and non- qualified defined
contribution pension plans, excluding the employee
stock ownership plans, maintained by, or covering
employees of, the Association or any of its
affiliates or subsidiaries as if he or she were 100%
vested thereunder and had continued working for the
Association during the Remaining Unexpired Employment
Period (the "401K Severance Payment"); and
(B) an estimate of the value of the additional assets
which would have been allocable to him or her through
debt service or otherwise under any and all qualified
and non-qualified employee stock ownership plans,
maintained by, or covering employees of the
Association or any of its affiliates or subsidiaries
as if he or she were 100% vested thereunder and had
continued working for the Association during the
Remaining Unexpired Employment Period, based on the
fair market value of such assets at termination of
employment (the "ESOP Severance Payment").
The Defined Contribution Severance Payment shall be calculated as
follows:
DCSP = 401KSP + ESOPSP
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<PAGE> 10
where:
"DCSP" is the amount of the Defined Contribution
Severance Payment, before the deduction of applicable
federal, state and local withholding taxes;
"401KSP" is the amount of the 401K Severance Payment,
before the deduction of applicable federal, state and
local withholding taxes; and
"ESOPSP" is the amount of the ESOP Severance Payment,
before the deduction of applicable federal, state and
local withholding taxes.
The 401KSP shall be calculated as follows:
401SP = (401KC x NY) + UVB
where
"401KC" is the sum of the Association Contributions
as defined in the Association's Incentive Savings
Plan or, if made under another defined contribution
pension plan other than an employee stock ownership
plan, the comparable contribution made for the
benefit of the Executive during the one year period
which shall end on the date of his or her termination
of his or her employment with the Association;
"NY" is the Remaining Unexpired Employment Period
expressed as a number of years (rounded, if such
period is not a whole number, to the next highest
whole number); and
"UVB" is the actual balance credited to the
Executive's account under the applicable plan at the
date of his or her termination of employment that is
not vested and does not become vested as a
consequence of such termination of employment.
The ESOPSP shall be calculated as follows:
ESOPSP = (((ALL x FMV) + C) x NY) + UVB
where:
"ALL" is the sum of the number of shares of the
Association's common stock or, if applicable, phantom
shares of such stock by whatever term it is described
allocated to the Executive's accounts under all
qualified and non-
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<PAGE> 11
qualified employee stock ownership plans maintained
by the Association or any of its affiliates or
subsidiaries during or for the last complete plan
year in which the Executive participated in such
plans and received such an allocation whether the
allocation occurred as a result of contributions made
by the Association, the payment by the Association or
any of its affiliates or subsidiaries of any loan
payments under a leveraged employee stock ownership
plan, the allocation of forfeitures under the terms
of such plan or as a result of the use of cash or
earnings allocated to the Executives account during
such plan year to make loan payments that result in
share allocations, provided however, that excluded
shall be any shares or phantom shares allocated to
the Executive's account under any qualified and
non-qualified employee stock ownership plans
maintained by the Association or any of its
affiliates or subsidiaries solely as a result of the
termination of such plans, provided further, that if
the shares allocated are not shares of the
Association's common stock or phantom shares of such
stock than shares of whatever securities are so
allocated shall be utilized, and provided further,
that in the event that there shall be any shares or
phantom shares allocated during the then current plan
year or the last complete plan year to the
Executive's account under any qualified and
non-qualified employee stock ownership plans
maintained by the Association or any of its
affiliates or subsidiaries solely as a result of the
termination of such plans, the ALL shall be reduced
(but not to an amount less than zero (0)) by an
amount calculated by multiplying the number of shares
or phantom shares allocated to the Executive's
account solely as a result of the termination of such
plans times the FMV utilized to calculate the ESOPSP;
"C" is the sum of all cash allocated to the
Executive's accounts under all qualified and
non-qualified employee stock ownership plans
maintained by the Association during or for the last
complete plan year in which the Executive
participated in such plans whether the allocation
occurred as a result of contributions made by the
Association, the payment by the Association or the
Association of any loan payments under a leveraged
employee stock ownership plan or the allocation of
forfeitures under the terms of such plan during such
plan year;
"FMV" is the closing price of the Association's
common stock on The Nasdaq Stock Market or on
whatever other stock exchange or market such stock is
publicly traded on the date the Executive's
employment terminates or, if such day is not a day on
which such securities are traded, on the most recent
preceding trading day on which a trade occurs,
provided however that if the security allocated to
the Executive's account during the last completed
plan year is other than the Association's common
stock the closing price of such security on the date
the Executive's employment terminates shall be
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<PAGE> 12
utilized;
"NY" is the Remaining Unexpired Employment Period
expressed as a number of years (rounded, if such
period is not a whole number, to the next highest
whole number); and
"UVB" is the actual balance credited to the
Executive's account under the applicable plan at the
date of his or her termination of employment that is
not vested and does not become vested as a
consequence of such termination of employment.
(vii) within thirty (30) days following the Executive's
termination of employment with the Association, the
Association shall make a lump sum payment to the
Executive in an amount equal to the estimated
potential annual bonuses or incentive compensation
that the Executive could have earned if the Executive
had continued working for the Association during the
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 Association (the
"Bonus Severance Payment"). The Bonus Severance
Payment shall be computed using the following
formula:
BSP = ( BS x TIO x AP x NY)
where:
"BSP" is the amount of the Bonus Severance Payment,
before the deduction of applicable federal, state and
local withholding taxes;
"BS" is 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 Association;
"TIO" is the highest target incentive opportunity
(expressed as a percentage of base salary)
established by the Compensation Committee of the
Board for the Executive pursuant to the Astoria
Financial Corporation Executive Officer Annual
Incentive Plan during that portion of the Employment
Period which is prior to the Executive's termination
of employment with the Association;
"AP" is the highest award percentage available to the
Executive with respect to the financial performance
of the Company (expressed as a percentage of the TIO)
established by the Compensation Committee of the
Board for the
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<PAGE> 13
Executive pursuant to the Astoria Financial
Corporation Executive Officer Annual Incentive Plan
during the period during that portion of the
Employment Period which is prior to the Executive's
termination of employment with the Association; and
"NY" is the Remaining Unexpired Employment Period
expressed as a number of years (rounded, if such
period is not a whole number, to the next highest
whole number).
(viii) at the election of the Association made within thirty
(30) days following the Executive's termination of
employment with the Association, 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 Association, a lump sum payment
(the "Option Surrender Payment"). The Option
Surrender Payment shall be calculated as follows:
OSP = (FMV - EP) x N
where:
"OSP" is the amount of the Option Surrender Payment,
before the deduction of applicable federal, state and
local withholding taxes;
"FMV" is the closing price of the Association's
common stock on The Nasdaq Stock Market, or on
whatever other stock exchange or market such stock is
publicly traded, on the date the Executive's
employment terminates or, if such day is not a day on
which such securities are traded, on the most recent
preceding trading day on which a trade occurs,
provided however that if the option or stock
appreciation right is for a security other than the
Association's common stock, 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 shall be utilized;
"EP" is the exercise price per share for such option
or appreciation right, as specified in or under the
relevant plan or program; and
"N" is the number of shares with respect to which
options or appreciation rights are being surrendered.
For purposes of determining the Option Severance
Payment and for purposes of determining the
Executive's right following his or her termination of
employment with the Association to exercise any
options or appreciation
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<PAGE> 14
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 Association, even if he or
she is not vested under such plan or program;
(ix) at the election of the Association made within thirty
(30) days following the Executive's termination of
employment with the Association, upon the surrender
of any shares awarded to the Executive under any
restricted stock plan maintained by, or covering
employees of, the Association, a lump sum payment
(the "RRP Surrender Payment") The RRP Surrender
Payment shall be calculated as follows:
RSP = FMV x N
where:
"RSP" is the amount of the RRP Surrender Payment,
before the deduction of applicable federal, state and
local withholding taxes;
"FMV" is the closing price of the Association's
common stock on The Nasdaq Stock Market, or on
whatever other stock exchange or market such stock is
publicly traded, on the date the Executive's
employment terminates or, if such day is not a day on
which such securities are traded, on the most recent
preceding trading day on which a trade occurs,
provided however that if the restricted stock is a
security other than the Association's common stock,
the fair market value of a share of stock of the same
class as the stock granted under such plan,
determined as of the date of termination of
employment shall be utilized; and
"N" is the number of shares which are being
surrendered.
For purposes of determining the RRP Surrender Payment
and for purposes of determining the Executive's right
following his or her termination of employment with
the Association 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
Association, even if he or she is not vested under
such plan.
The Salary Severance Payment, the DB Severance
Payment, the Defined Contribution Severance Payment,
the Bonus Severance Payment, the Option Surrender
Payment and the RRP Surrender Payment shall be
computed at the expense of the Association by an
attorney of the firm of Thacher Proffitt & Wood, Two
World Trade Center, New York, New York 10048 or, if
such firm is unavailable
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<PAGE> 15
or unwilling to perform such calculation, by a firm of
independent certified public accountants selected by the
Executive and reasonably satisfactory to the Association (the
"Computation Advisor"). The determination of the Computation
Advisor as to the amount of such payments shall be final and
binding in the absence of manifest error.
The Association 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 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 Association and the Executive further
agree that the Association may condition the payment of the
Salary Severance Payment, the DB Severance Payment, the
Defined Contribution Severance Payment, the Bonus Severance
Payment, the Option Surrender Payment and the RRP Surrender
Payment on the receipt of the Executive's resignation from any
and all positions which he or she holds as an officer,
director or committee member with respect to the Association,
the Association or any subsidiary or affiliate of either of
them.
Section 10. Termination without Additional Association Liability.
(a) In the event that the Executive's employment with the
Association 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 personal
dishonesty, incompetence, wilful misconduct, breach
of fiduciary duty involving personal profit,
intentional failure to perform stated duties, wilful
violation of any law, rule or regulation (other than
traffic violations or similar offenses) or final
cease and desist order, or any material breach of
this Agreement, in each case measured against
standards generally prevailing at the relevant time
in the savings and community banking industry;
(ii) the Executive's voluntary resignation from employment
with the Association 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 Disabled;
(v) the Executive's termination of employment for any
reason at or after attainment of mandatory retirement
age under the Association's mandatory
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<PAGE> 16
retirement policy for executive officers in effect as of the
date of this Agreement;
then the Association, except as otherwise specifically
provided herein, shall have no further obligations under this
Agreement, other than the payment to the Executive (or, in the
event of his or her death, to his or her estate) of the
amounts or benefits provided in Section 9(b)(i) and (ii) of
this Agreement (the "Standard Termination Entitlements").
(b) 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:
(i) the Board, by the affirmative vote of 75% of its
entire membership, determines that the Executive is
guilty of the conduct described in Section 10(a)(i)
above measured against standards generally prevailing
at the relevant time in the savings and community
banking industry;
(ii) prior to the vote contemplated by Section 10(b)(i),
the Board shall provide the Executive with notice of
the Association's intent to discharge the Executive
for Cause, detailing with particularity the facts and
circumstances which are alleged to constitute Cause
(the "Notice of Intent to Discharge"); and
(iii) after the giving of the Notice of Intent to Discharge
and before the taking of the vote contemplated by
Section 10(b)(i), the Executive, together with the
Executive's legal counsel, if the Executive so
desires, are afforded a reasonable opportunity to
make both written and oral presentations before the
Board for the purpose of refuting the alleged grounds
for Cause for the Executive's discharge; and
(iv) after the vote contemplated by Section 10(b)(i), the
Association has furnished to the Executive a notice
of termination which shall specify the effective date
of the Executive's termination of employment (which
shall in no event be earlier than the date on which
such notice is deemed given) and include a copy of a
resolution or resolutions adopted by the Board,
certified by its corporate secretary, authorizing the
termination of the Executive's employment with Cause
and stating with particularity the facts and
circumstances found to constitute Cause for the
Executive's discharge (the "Final Discharge Notice").
If the Executive, during the ninety (90) day period commencing
on the delivery by the Association to the Executive of the
Notice of Intent to Discharge specified in Section 10(b)(ii),
resigns his or her employment with the Association prior to
the
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<PAGE> 17
delivery to the Executive by the Association of the Final
Discharge Notice specified in Section 10(b)(iv), then the
cessation of employment of the Executive shall be deemed to be
for Cause.
Following the giving of a Notice of Intent to Discharge, the
Bank may temporarily suspend the Executive's duties and
authority and, in such event, may also suspend the payment of
salary and other cash compensation, but not the Executive's
participation in retirement, insurance and other employee
benefit plans. If the Executive is not discharged or is
discharged without Cause within forty-five (45) days after the
giving of a Notice of Intent to Discharge, payments of salary
and cash compensation shall resume, and all payments withheld
during the period of suspension shall be promptly restored. If
the Executive is discharged with Cause not later than
forty-five (45) days after the giving of the Notice of Intent
to Discharge, all payments withheld during the period of
suspension shall be deemed forfeited and shall not be included
in the Standard Termination Entitlements. If a Final Discharge
Notice is given later than forty-five (45) days, but sooner
than ninety (90) days, after the giving of the Notice of
Intent to Discharge, all payments made to the Executive during
the period beginning with the giving of the Notice of Intent
to Discharge and ending with the Executive's discharge with
Cause shall be retained by the Executive and shall not be
applied to offset the Standard Termination Entitlements. If
the Bank does not give a Final Discharge Notice to the
Executive within ninety (90) days after giving a Notice of
Intent to Discharge, the Notice of Intent to Discharge shall
be deemed withdrawn and any future action to discharge the
Executive with Cause shall require the giving of a new Notice
of Intent to Discharge. If the Executive resigns pursuant to
Section 10(b), the Executive shall forfeit his or her right to
suspended amounts that have not been restored as of the date
of the Executive's resignation or notice of resignation,
whichever is earlier.
(c) The Association may terminate the Executive's employment on
the basis that the Executive is Disabled during the Employment
Period upon a determination by the Board, by the affirmative
vote of 75% of its entire membership, acting in reliance on
the written advice of a medical professional acceptable to it,
that the Executive is suffering from a physical or mental
impairment which, at the date of the determination, has
prevented the Executive from performing the Executive's
assigned duties on a substantially full-time basis for a
period of at least one hundred and eighty (180) days during
the period of one (1) year ending with the date of the
determination or is likely to result in death or prevent the
Executive from performing the Executive's assigned duties on a
substantially full-time basis for a period of at least one
hundred and eighty (180) days during the period of one (1)
year beginning with the date of the determination. In such
event:
(A) The Association shall pay and provide the
Standard Termination Entitlements to the
Executive;
Page 17 of 29
<PAGE> 18
(B) In addition to the Standard Termination
Entitlements, the Association shall continue
to pay to the Executive the Executive's base
salary, at the annual rate in effect for the
Executive immediately prior to the
termination of the Executive's employment,
during a period ending on the earliest of:
(I) the expiration of one hundred and
eighty (180) days after the date of
termination of the Executive's
employment;
(II) the date on which long-term
disability insurance benefits are
first payable to the Executive under
any long-term disability insurance
plan covering the Executive; or
(III) the date of the Executive's death.
A termination of employment due to Disability under
this Section shall be effected by a notice of
termination given to the Executive by the Association
and shall take effect on the later of the effective
date of termination specified in such notice or, if
no such date is specified, the date on which the
notice of termination is deemed given to the
Executive.
Section 11. Termination Upon or Following a Change of Control.
(a) A Change of Control of the Association ("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 Association of a
transaction that would result in the reorganization,
merger or consolidation of the Association 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 Securities Exchange Act of 1934, as
amended (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 Association; 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
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<PAGE> 19
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 Association;
(ii) the acquisition of all or substantially all of the
assets of the Association 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 Association 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 Association of any
transaction which would result in such an
acquisition;
(iii) a complete liquidation or dissolution of the
Association, or approval by the stockholders of the
Association 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
do not belong to any of the following groups:
(A) individuals who were members of the Board on
the date of this Agreement; or
(B) individuals who first became members of the
Board after the date of this Agreement
either:
(I) upon election to serve as a member
of the Board 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 Association to serve as a member
of the Board, but only if nominated
for election by affirmative vote of
three-quarters of the members of the
Board, 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
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<PAGE> 20
promulgated under the Exchange Act) other
than by or on behalf of the Board; or
(v) any event which would be described in Section
11(a)(i), (ii), (iii) or (iv) if the term "Company"
were substituted for the term "Association" therein
or the term "Board of Directors of the Company" were
substituted for the term "Board".
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 Association, the Association, or an affiliate or
subsidiary of either of them, by the Association, 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 or her termination of employment with
the Association 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 within six
(6) months following his or her demotion, loss of
title, office or significant authority or
responsibility or following any reduction in any
element of his or her package of compensation and
benefits;
(ii) resignation, voluntary or otherwise, by the Executive
at any time during the Employment Period within six
(6) months following any relocation of his or her
principal place of employment or any change in
working conditions at such principal place of
employment which the Executive, in his or her
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 within six
(6) months following the failure of any successor to
the Association 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 Association which
is at least as favorable to him or her; or
(iv) resignation, voluntary or otherwise, for any reason
whatsoever during the Employment Period within six
months following the expiration of a transition
period of thirty (30) days beginning on the effective
date of the Change of
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<PAGE> 21
Control (or for such longer period, not to exceed
ninety (90) days beginning on the effective date of
the Change of Control, as the Association or its
successor may reasonably request) to facilitate a
transfer of management responsibilities.
Section 12. Covenant Not To Compete.
The Executive hereby covenants and agrees that, in the event of his or
her termination of employment with the Association prior to the expiration of
the Employment Period, for a period of one (1) year following the date of his or
her termination of employment with the Association (or, if less, for the
Remaining Unexpired Employment Period), the Executive shall not, without the
written consent of the Association, become an officer, employee, consultant,
director or trustee of any savings bank, savings and loan association, savings
and loan holding Association, bank or bank holding Association, 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 Association 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 12 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(c) of this Agreement, this
Section 12 shall not prevent the Executive from accepting any position or
performing any services if:
(a) he or she first offers, by written notice, to accept a similar
position with or perform similar services for the Association
on substantially the same terms and conditions and
(b) the Association declines to accept such offer within ten (10)
days after such notice is given.
Section 13. Confidentiality.
Unless the Executive obtains the prior written consent of the
Association, the Executive shall keep confidential and shall refrain from using
for the benefit of the Executive or any person or entity other than the
Association, any entity which is a subsidiary of the Association or any entity
which the Association is a subsidiary of, any material document or information
obtained from the Association, or from its affiliates or subsidiaries, in the
course of the Executive's 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 or her
own) until the same ceases to be material (or becomes so ascertainable or
available); provided, however, that nothing in this Section 13 shall prevent the
Executive, with or without the Association's consent, from participating in or
disclosing documents or information in connection with any judicial or
administrative investigation, inquiry or proceeding to the extent that such
participation or disclosure is required
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<PAGE> 22
under applicable law.
Section 14. Solicitation.
The Executive hereby covenants and agrees that, for a period of one (1)
year following the Executive's termination of employment with the Association,
he or she shall not, without the written consent of the Association, 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 Association, the Association or any
affiliate or subsidiary of ether 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 Association, savings and loan holding
Association, 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
Association has an office or has filed an application for
regulatory approval to establish an office;
(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 Association, savings
and loan holding Association, 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 Association has an office or has filed an application
for regulatory approval to establish an office 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 Association, the Association, or
any affiliate or subsidiary of either of them, to terminate
his or her employment and accept employment, become affiliated
with or provide services for compensation in any capacity
whatsoever to any such savings bank, savings and loan
association, bank, bank holding Association, savings and loan
holding Association 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 Association, the Association,
or any affiliate or subsidiary of either of them to terminate
an existing business or commercial relationship with the
Association, the Association, or any affiliate or subsidiary
of either of them.
Section 15. No Effect on Employee Benefit Plans or Programs.
The termination of the Executive's employment during the term of this Agreement
or
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<PAGE> 23
thereafter, whether by the Association or by the Executive, shall have no effect
on the rights and obligations of the parties hereto under the Association'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 Association from
time to time.
Section 16. Successors and Assigns.
This Agreement will inure to the benefit of and be binding upon the
Executive, his or her legal representatives and testate or intestate
distributees, and the Association 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 Association may be sold or otherwise transferred. Failure of the
Association to obtain from any successor its express written assumption of the
Association's obligations under this Agreement 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 17. 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:
Arnold K. Greenberg
40 Quintree Lane
Melville, New York 11747
If to the Association:
Astoria Federal Savings and Loan Association
One Astoria Federal Plaza
Lake Success, New York 11042-1085
Attention: General Counsel
with a copy to:
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<PAGE> 24
Thacher Proffitt & Wood
Two World Trade Center
New York, New York 10048
Attention: W. Edward Bright, Esq.
Section 18. Indemnification for Attorneys' Fees.
The Association shall indemnify, hold harmless and defend the Executive
against reasonable costs, including legal fees, incurred by him or her in
connection with or arising out of any action, suit or proceeding in which he or
she may be involved, as a result of his or her efforts, in good faith, to defend
or enforce the terms of this Agreement; provided, however, that in the case of
any action, suit or proceeding instituted prior to a Change of Control, 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 Association'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 19. 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 20. 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 21. 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 22. Governing Law.
This Agreement shall be governed by and construed and enforced in
accordance with the
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<PAGE> 25
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 performed entirely within the State of New
York.
Section 23. 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.
Page 25 of 29
<PAGE> 26
Section 24. 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. No modifications of this Agreement shall be valid unless made in writing
and signed by the parties hereto.
Section 25. Survival.
The provisions of any sections of this Agreement which by its terms
contemplates performance after the expiration or termination of this Agreement
(including, but not limited to, Sections 6, 9, 10, 11, 12, 13, 14, 15, 16, 17,
18, 20, 26, 27 and 28) shall survive the expiration of the Employment Period or
termination of this Agreement.
Section 26. Equitable Remedies.
The Association and the Executive hereby stipulate that money damages
are an inadequate remedy for violations of Sections 6(a), 12, 13 or 14 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 27. Required Regulatory Provisions.
The following provisions are included for the purposes of complying
with various laws, rules and regulations applicable to the Association:
(a) Notwithstanding anything herein contained to the contrary, in
no event shall the aggregate amount of compensation payable to
the Executive pursuant to Section 9(b) of this Agreement
(exclusive of amounts described in Section 9(b)(i), (ii),
(viii) or (ix)) exceed three times the Executive's average
annual total compensation for the last five consecutive
calendar years to end prior to the Executive's termination of
employment with the Association (or for the Executive's entire
period of employment with the Association if less than five
calendar years).
(b) Notwithstanding anything herein contained to the contrary, any
payments to the Executive by the Association, 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 ("FDI Act"), 12 U.S.C. Section1828(k),
and any regulations promulgated thereunder.
(c) Notwithstanding anything herein contained to the contrary, if
the Executive is suspended from office and/or temporarily
prohibited from participating in the
Page 26 of 29
<PAGE> 27
conduct of the affairs of the Association pursuant to a notice
served under Section 8(e)(3) or 8(g)(1) of the FDI Act, 12
U.S.C. Section1818(e)(3) or 1818(g)(1), the Association's
obligations under this Agreement shall be suspended as of the
date of service of such notice, unless stayed by appropriate
proceedings. If the charges in such notice are dismissed, the
Association, in its discretion, may (i) pay to the Executive
all or part of the compensation withheld while the
Association's obligations hereunder were suspended and (ii)
reinstate, in whole or in part, any of the obligations which
were suspended.
(d) Notwithstanding anything herein contained to the contrary, if
the Executive is removed and/or permanently prohibited from
participating in the conduct of the Association's affairs by
an order issued under Section 8(e)(4) or 8(g)(1) of the FDI
Act, 12 U.S.C. Section1818(e)(4) or (g)(1), all prospective
obligations of the Association under this Agreement shall
terminate as of the effective date of the order, but vested
rights and obligations of the Association and the Executive
shall not be affected.
(e) Notwithstanding anything herein contained to the contrary, if
the Association is in default (within the meaning of Section
3(x)(1) of the FDI Act, 12 U.S.C. Section1813(x)(1), all
prospective obligations of the Association under this
Agreement shall terminate as of the date of default, but
vested rights and obligations of the Association and the
Executive shall not be affected.
(f) Notwithstanding anything herein contained to the contrary, all
prospective obligations of the Association hereunder shall be
terminated, except to the extent that a continuation of this
Agreement is necessary for the continued operation of the
Association: (i) by the Director of the Office of Thrift
Supervision ("OTS") or his or her designee or the Federal
Deposit Insurance Corporation ("FDIC"), at the time the FDIC
enters into an agreement to provide assistance to or on behalf
of the Association under the authority contained in Section
13(c) of the FDI Act, 12 U.S.C. Section1823(c); (ii) by the
Director of the OTS or his or her designee at the time such
Director or designee approves a supervisory merger to resolve
problems related to the operation of the Association or when
the Association is determined by such Director to be in an
unsafe or unsound condition. The vested rights and obligations
of the parties shall not be affected.
If and to the extent that any of the foregoing provisions shall cease to be
required or by applicable law, rule or regulation, the same shall become
inoperative as though eliminated by formal amendment of this Agreement.
Section 28. No Offset or Recoupment; No Attachment.
The Association's obligation to make the payments provided for in this
Agreement and
Page 27 of 29
<PAGE> 28
otherwise to perform its obligations under this Agreement shall not be affected
by any set-off, counterclaim, recoupment, defense or other claim, right or
action which the Association or any of its affiliates or subsidiaries may have
against the Executive. In no event shall the Executive be obligated to seek
other employment or take any other action by way of mitigation of the amounts
payable to the Executive under any of the provisions of this Agreement and such
amounts shall not be reduced whether or not the Executive obtains other
employment. Except as required by law, no right to receive payments under this
Agreement shall be subject to anticipation, commutation, alienation, sale,
assignment, encumbrance, charge, pledge, or hypothecation, or to execution,
attachment, levy, or similar process or assignment by operation of law, and any
attempt, voluntary or involuntary, to affect any such action shall be null,
void, and of no effect.
Section 29. LISB Transaction.
The Executive hereby waives any claim the Executive may have pursuant
to his or her Employment Agreements each dated January 1, 1996 with the Company
and the Association, respectively, that the acquisition by and the merger of
Long Island Bancorp, Inc. and The Long Island Savings Bank, FSB with and into
the Company and the Association, respectively, constituted a "change of control"
of the Company or the Association as defined in such Employment Contracts.
IN WITNESS WHEREOF, the Association has caused this Agreement to be
executed and the Executive has hereunto set his or her hand, all as of the day
and year first above written.
ATTEST: ASTORIA FEDERAL SAVINGS AND LOAN
ASSOCIATION
/S/ William K. Sheerin
- ----------------------
William K. Sheerin
[Seal]
By: /S/ George L. Engelke, Jr.
-------------------------------
Name: George L. Engelke, Jr.
Title: Chairman, President and Chief
Executive Officer
/S/ Arnold K. Greenberg
-----------------------
ARNOLD K. GREENBERG
STATE OF NEW YORK )
) ss.:
COUNTY OF NASSAU )
On this 20 day of March, 2000, before me, the undersigned, personally
appeared Arnold K.
Page 28 of 29
<PAGE> 29
Greenberg, personally known to me or proved to me on the basis of satisfactory
evidence to be the individual(s) whose name(s) is (are) subscribed to the within
instrument and acknowledged to me that he/she/they executed the same in
his/her/their capacity(ies), and that by his/her/their signature(s) on the
instrument, the individual(s), or the person upon behalf of which the
individual(s) acted, executed the instrument.
/S/ Anna Knice
--------------
Notary Public
Anna Knice
Notary Public, State of New York
No. 4980431
Qualified in Suffolk County
Commission Expires April 22, 2001
STATE OF NEW YORK )
) ss.:
COUNTY OF NASSAU )
On this 20 day of March, 2000, before me, the undersigned, personally
appearedGeorge L. Engelke, Jr., personally known to me or proved to me on the
basis of satisfactory evidence to be the individual(s) whose name(s) is (are)
subscribed to the within instrument and acknowledged to me that he/she/they
executed the same in his/her/their capacity(ies), and that by his/her/their
signature(s) on the instrument, the individual(s), or the person upon behalf of
which the individual(s) acted, executed the instrument.
/S/ Anna Knice
--------------
Notary Public
Anna Knice
Notary Public, State of New York
No. 4980431
Qualified in Suffolk County
Commission Expires April 22, 2001
Page 29 of 29
<PAGE> 1
EXHIBIT 10.25
ASTORIA FINANCIAL CORPORATION
AMENDED AND RESTATED
EMPLOYMENT AGREEMENT WITH EXECUTIVE OFFICER
This AMENDED AND RESTATED EMPLOYMENT AGREEMENT (the "Agreement") is
made and entered into as of January 1, 2000 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 One Astoria Federal Plaza, Lake
Success, New York 11042-1085 (the "Company"), and THOMAS W. DRENNAN, an
individual residing at 15 Whitman Avenue, Syosset, New York 11791 (the
"Executive").
WITNESSETH:
WHEREAS, the Executive currently serves the Company in the capacity of
Executive Vice President and as Executive Vice President of its wholly owned
subsidiary, ASTORIA FEDERAL SAVINGS AND LOAN ASSOCIATION (the "Association");
and
WHEREAS, the Executive currently has an Employment Agreement with the
Company dated January 1, 1996 which the Executive and the Company wish to amend
and modify; 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 amend and restate in its entirety the Employment Agreement by and between
the Company and the Executive dated as of January 1, 1996 so as to provide as
follows from and after the date hereof:
Section 1. Employment.
The Company agrees to continue to employ the Executive, and the
Executive hereby agrees to such continued 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
Page 1 of 31
<PAGE> 2
period of employment established under this Section 2 (the
"Employment Period"). The Employment Period shall be for an
initial term of three years beginning on the date of this
Agreement and ending on the day before the third anniversary
date of this Agreement, plus such extensions, if any, as are
provided by the Board of Directors of the Company (the
"Board") pursuant to Section 2(b).
(b) Beginning on the date of this Agreement, the Employment Period
shall automatically be extended for one (1) additional day
each day, unless either the Company or the Executive elects
not to extend the Agreement further by giving written notice
to the other party, in which case the Employment Period shall
end on the day before the third anniversary of the date on
which such written notice is given. 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 day before the
third anniversary of the date on which such notice is
given; and
(ii) in all other cases, the day before the third
anniversary of the date as of which the Remaining
Unexpired Employment Period is being determined.
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 previously
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 pursuant to this
Agreement.
Section 3. Duties.
The Executive shall serve as Executive Vice President of the Company,
having such power, authority and responsibility and performing such duties as
are prescribed by or pursuant to the ByLaws of the Company and as are
customarily associated with such position. The Executive shall devote his or her
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, its affiliates and subsidiaries and shall
use his or her best efforts to advance the interests of the Company.
Page 2 of 31
<PAGE> 3
Section 4. Cash Compensation.
In consideration for the services to be rendered by the Executive
hereunder, the Company shall pay to him or her a salary at an initial annual
rate of THREE HUNDRED SEVENTY FIVE THOUSAND DOLLARS ($375,000), 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. In no event shall the Executive's
annual rate of salary under this Agreement in effect at a particular time be
reduced without his or her prior written consent and any such reduction in the
absence of such consent shall be a material breach of this Agreement. 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.
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 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
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 or her harmless from, any costs, liabilities,
losses and exposures to the fullest extent and on the most
favorable terms and conditions
Page 3 of 31
<PAGE> 4
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 as he
or she may disclose to and as may be approved by the Board
(which approval shall not be unreasonably withheld); provided,
however, that such service shall not materially interfere with
the performance of his or her 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 or her 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 or her 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 or she
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 or her principal place of employment with a private office,
secretarial services and other support services and facilities suitable to his
or her position with the Company and necessary or appropriate in connection with
the performance of his or her assigned duties under this Agreement. The Company
shall provide to the Executive for his or her exclusive use an automobile owned
or leased by the Company and appropriate to his or her position, to be used in
the performance of his or her duties hereunder, including commuting to and from
his or her personal residence. The Company shall reimburse the Executive for his
or her ordinary and necessary business expenses, including, without limitation,
all expenses associated with his or her business use of the aforementioned
automobile, fees for memberships in such clubs and organizations as the
Page 4 of 31
<PAGE> 5
Executive and the Company shall mutually agree are necessary and appropriate for
business purposes, and his or her travel and entertainment expenses incurred in
connection with the performance of his or her 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 or her 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 six (6) months following:
(A) the failure of the Board to appoint or
re-appoint or elect or re-elect the
Executive to the office of Executive Vice
President (or a more senior office) of the
Company;
(B) if the Executive is or becomes a member of
the Board, 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;
(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 Certificate of Incorporation
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 or her
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
(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 or her total
compensation
Page 5 of 31
<PAGE> 6
package), unless, during such thirty (30)
day period, the Company cures such failure
in a manner determined by the Executive, in
his or her discretion, to be satisfactory;
or
(E) the relocation of the Executive's principal
place of employment, without his or her
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 the Executive's death following the
Executive's termination of employment, to his or her estate):
(i) his or her 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 or her 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 any event not later than thirty (30) days
after termination of employment;
(ii) the benefits, if any, to which he or she 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;
(iii) continued group life, health (including
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
(including any co-payments and deductibles, but
excluding any premium sharing arrangements, it being
the intention of the parties to this Agreement that
the premiums for such insurance benefits shall be the
sole cost and expense of the Company) equivalent to
the coverage to which he or she would have been
entitled under such plans (as in effect on the date
of his or her termination of employment, or, if his
or her termination of employment occurs after a
Change of Control, on the date of
Page 6 of 31
<PAGE> 7
such Change of Control, whichever benefits are
greater), if he or she had continued working for the
Company during the Remaining Unexpired Employment
Period at the highest annual rate of salary or
compensation, as applicable, 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 the Executive's
termination of employment with the Company, a lump
sum payment in an amount representing an estimate of
the salary that the Executive would have earned if he
or she 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 (the "Salary Severance Payment"). The Salary
Severance Payment shall be computed using the
following formula:
SSP = BS x NY
where:
"SSP" is the amount of the Salary Severance Payment,
before the deduction of applicable federal, state and
local withholding taxes;
"BS" is 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;
"NY" is the Remaining Unexpired Employment Period
expressed as a number of years (rounded, if such
period is not a whole number, to the next highest
whole number).
The Salary Severance Payment shall 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 the Executive's
termination of employment with the Company, a lump
sum payment (the "DB Severance Payment") in an amount
equal to the excess, if any, of:
(A) the present value of the aggregate benefits
to which he or she would be entitled under
any and all qualified and non-qualified
defined benefit pension plans maintained by,
or covering employees of, the Company, if he
or she were 100% vested thereunder and had
Page 7 of 31
<PAGE> 8
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 pursuant to Sections
9(b)(i), (iv), (vii), (viii) and (ix) of
this Agreement; over
(B) the present value of the benefits to which
he or she is actually entitled under such
defined benefit pension plans as of the date
of his or her termination;
The DB Severance Payment shall be computed using the
following formula:
DBSP = SEVLS - LS
where:
"DBSP" is the amount of the DB Severance Payment,
before the deduction of applicable federal, state and
local withholding taxes;
"SEVLS" is the sum of the present value of the
defined benefit pension benefits that have been or
would be accrued by the Executive under all qualified
and non-qualified defined benefit pension plans of
which the Company or any of its affiliates or
subsidiaries are a sponsor and in which the Executive
is or, but for the completion of any service
requirement that would have been completed during the
Remaining Unexpired Employment Period, would be a
participant utilizing the following assumptions:
(I) the executive is 100% vested in the
plans regardless of actual service,
(II) the benefit to be valued shall be a
single life annuity with monthly
payments due on the first day of
each month and with a guaranteed
payout of not less than 120 monthly
payments,
(III) the calculation shall be made
utilizing the same mortality table
and interest rate as would be
utilized by the plan on the date of
termination as if the calculation
were being made pursuant to Section
417(e)(3)(A)(ii) of the Internal
Revenue Code, as amended, (the
"Code");
Page 8 of 31
<PAGE> 9
(IV) for purpose of calculating the
Executive's monthly or annual
benefit under the defined benefit
plans, additional service equal to
the Remaining Unexpired Employment
Period (rounded up to the next whole
year if such period is not a whole
number when expressed in years)
shall be added to the Executive's
actual service to calculate the
amount of the benefit; and
(V) for purpose of calculating the
Executive's monthly or annual
benefit under the defined benefit
plans, the following sums shall be
added to the Executive's
compensation recognized under such
plans for the most recent year
recognized:
(1) payments made pursuant to Section
9(b)(i);
(2) the Salary Severance Payment;
(3) the Bonus Severance Payment;
(4) the Option Surrender Payment; and
(5) the RRP Surrender Payment.
"LS" is the sum of the present value of the defined
benefit pension benefits that are vested benefits
actually accrued by the Executive under all qualified
and non-qualified defined benefit pension plans
maintained by, or covering employees of, the Company
or any of its affiliates or subsidiaries in which the
Executive is or, but for the completion of any
service requirement, would be a participant utilizing
the following assumptions:
(I) the benefit to be valued shall be a
single life annuity with monthly
payments due on the first day of
each month and with a guaranteed
payout of not less than 120 monthly
payments, and
(II) the calculation shall be made
utilizing the same mortality table
and interest rate as would be
utilized by the plan on the date of
termination as if the calculation
were being made pursuant to Section
417(e)(3)(A)(ii) of the Code;
(vi) within thirty (30) days following the Executive's
termination of employment with the Company, a lump
sum payment (the "Defined Contribution Severance
Payment") equal to the sum of:
(A) an estimate of the additional employer
contributions to which he or she would have
been entitled under any and all qualified
and non-qualified defined contribution
pension plans, excluding the employee
Page 9 of 31
<PAGE> 10
stock ownership plans, maintained by, or
covering employees of, the Company or any of
its affiliates or subsidiaries as if he or
she were 100% vested thereunder and had
continued working for the Company during the
Remaining Unexpired Employment Period (the
"401K Severance Payment"); and
(B) an estimate of the value of the additional
assets which would have been allocable to
him or her through debt service or otherwise
under any and all qualified and
non-qualified employee stock ownership
plans, maintained by, or covering employees
of, the Company or any of its affiliates or
subsidiaries as if he or she were 100%
vested thereunder and had continued working
for the Company during the Remaining
Unexpired Employment Period, based on the
fair market value of such assets at
termination of employment (the "ESOP
Severance Payment").
The Defined Contribution Severance Payment
shall be calculated as follows:
DCSP = 401KSP + ESOPSP
where:
"DCSP" is the amount of the Defined Contribution
Severance Payment, before the deduction of applicable
federal, state and local withholding taxes;
"401KSP" is the amount of the 401K Severance Payment,
before the deduction of applicable federal, state and
local withholding taxes; and
"ESOPSP" is the amount of the ESOP Severance Payment,
before the deduction of applicable federal, state and
local withholding taxes.
The 401KSP shall be calculated as follows:
401KSP = (401KC x NY) + UVB
where
"401KC" is the sum of the Company Contributions as
defined in the Association's Incentive Savings Plan
or, if made under another defined contribution
pension plan other than an employee stock ownership
plan, the comparable contribution made for the
benefit of the Executive during the one year period
which shall end on the date of his or her termination
of his or her employment with the Company;
Page 10 of 31
<PAGE> 11
"NY" is the Remaining Unexpired Employment Period
expressed as a number of years (rounded, if such
period is not a whole number, to the next highest
whole number); and
"UVB" is the actual balance credited to the
Executive's account under the applicable plan at the
date of his or her termination of employment that is
not vested and does not become vested as a
consequence of such termination of employment.
The ESOPSP shall be calculated as follows:
ESOPSP = (((ALL x FMV) + C) x NY) + UVB
where:
"ALL" is the sum of the number of shares of the
Company's common stock or, if applicable, phantom
shares of such stock by whatever term it is described
allocated to the Executive's accounts under all
qualified and non-qualified employee stock ownership
plans maintained by the Company or any of its
affiliates or subsidiaries during or for the last
complete plan year in which the Executive
participated in such plans and received such an
allocation whether the allocation occurred as a
result of contributions made by the Company, the
payment by the Company or any of its affiliates or
subsidiaries of any loan payments under a leveraged
employee stock ownership plan, the allocation of
forfeitures under the terms of such plan or as a
result of the use of cash or earnings allocated to
the Executive's account during such plan year to make
loan payments that result in share allocations,
provided however, that excluded shall be any shares
or phantom shares allocated to the Executive's
account under any qualified and non-qualified
employee stock ownership plans maintained by the
Company or any of its affiliates or subsidiaries
solely as a result of the termination of such plans,
provided further, that if the shares allocated are
not shares of the Association's common stock or
phantom shares of such stock than shares of whatever
securities are so allocated shall be utilized, and
provided further, that in the event that there shall
be any shares or phantom shares allocated during the
then current plan year or the last complete plan year
to the Executive's account under any qualified and
non-qualified employee stock ownership plans
maintained by the Association or any of its
affiliates or subsidiaries solely as a result of the
termination of such plans, the ALL shall be reduced
(but not to an amount less than zero (0)) by an
amount calculated by multiplying the number of shares
or phantom shares allocated to the Executive's
account solely as a result of the termination of such
plans times the FMV utilized to calculate the ESOPSP;
Page 11 of 31
<PAGE> 12
"C" is the sum of all cash allocated to the
Executive's accounts under all qualified and
non-qualified employee stock ownership plans
maintained by the Company during or for the last
complete plan year in which the Executive
participated in such plans whether the allocation
occurred as a result of contributions made by the
Company, the payment by the Company or the
Association of any loan payments under a leveraged
employee stock ownership plan or the allocation of
forfeitures under the terms of such plan during such
plan year;
"FMV" is the closing price of the Company's common
stock on The Nasdaq Stock Market or on whatever other
stock exchange or market such stock is publicly
traded on the date the Executive's employment
terminates or, if such day is not a day on which such
securities are traded, on the most recent preceding
trading day on which a trade occurs, provided however
that if the security allocated to the Executive's
account during the last completed plan year is other
than the Company's common stock the closing price of
such other security on the date the Executive's
employment terminates shall be utilized.
"NY" is the Remaining Unexpired Employment Period
expressed as a number of years (rounded, if such
period is not a whole number, to the next highest
whole number); and
"UVB" is the actual balance credited to the
Executive's account under the applicable plan at the
date of his or her termination of employment that is
not vested and does not become vested as a
consequence of such termination of employment.
(vii) within thirty (30) days following the Executive's
termination of employment with the Company, the
Company shall make a lump sum payment to the
Executive in an amount equal to the estimated
potential annual bonuses or incentive compensation
that the Executive could have earned if the Executive
had continued working for the Company during the
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 (the
"Bonus Severance Payment"). The Bonus Severance
Payment shall be computed using the following
formula:
BSP = ( BS x TIO x AP x NY)
where:
"BSP" is the amount of the Bonus Severance Payment,
before the deduction
Page 12 of 31
<PAGE> 13
of applicable federal, state and local withholding
taxes;
"BS" is 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;
"TIO" is the highest target incentive opportunity
(expressed as a percentage of base salary)
established by the Compensation Committee of the
Board for the Executive pursuant to the Astoria
Financial Corporation Executive Officer Annual
Incentive Plan during that portion of the Employment
Period which is prior to the Executive's termination
of employment with the Company;
"AP" is the highest award percentage available to the
Executive with respect to the financial performance
of the Company (expressed as a percentage of the TIO)
established by the Compensation Committee of the
Board for the Executive pursuant to the Astoria
Financial Corporation Executive Officer Annual
Incentive Plan during the period during that portion
of the Employment Period which is prior to the
Executive's termination of employment with the
Company; and
"NY" is the Remaining Unexpired Employment Period
expressed as a number of years (rounded, if such
period is not a whole number, to the next highest
whole number).
(viii) 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
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 (the
"Option Surrender Payment"). The Option Surrender
Payment shall be calculated as follows:
OSP = (FMV - EP) x N
where:
"OSP" is the amount of the Option Surrender Payment,
before the deduction of applicable federal, state and
local withholding taxes;
"FMV" is the closing price of the Company's common
stock on The Nasdaq Stock Market, or on whatever
other stock exchange or market such stock is publicly
traded, on the date the Executive's employment
terminates or, if such
Page 13 of 31
<PAGE> 14
day is not a day on which such securities are traded,
on the most recent preceding trading day on which a
trade occurs, provided however that if the option or
stock appreciation right is for a security other than
the Company's common stock, 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 shall be utilized;
"EP" is the exercise price per share for such option
or appreciation right, as specified in or under the
relevant plan or program; and
"N" is the number of shares with respect to which
options or appreciation rights are being surrendered.
For purposes of determining the Option Severance
Payment and for purposes of determining the
Executive's right following his or her 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 or she is not 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 shares awarded to the Executive under any
restricted stock plan maintained by, or covering
employees of, the Company, a lump sum payment (the
"RRP Surrender Payment") The RRP Surrender Payment
shall be calculated as follows:
RSP = FMV x N
where:
"RSP" is the amount of the RRP Surrender Payment,
before the deduction of applicable federal, state and
local withholding taxes;
"FMV" is the closing price of the Company's common
stock on The Nasdaq Stock Market, or on whatever
other stock exchange or market such stock is publicly
traded, on the date the Executive's employment
terminates or, if such day is not a day on which such
securities are traded, on the preceding trading day
on which a trade occurs, provided however that if the
restricted stock is a security other than the
Company's common stock, the fair market value of a
share of stock of the same class as the stock granted
under such plan, determined as of the date of
termination of employment shall be utilized; and
Page 14 of 31
<PAGE> 15
"N" is the number of shares which are being
surrendered.
For purposes of determining the RRP Surrender Payment
and for purposes of determining the Executive's right
following his or her 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 or she is not vested under such plan.
The Salary Severance Payment, the DB Severance Payment, the
Defined Contribution Severance Payment, the Bonus Severance
Payment, the Option Surrender Payment and the RRP Surrender
Payment shall be computed at the expense of the Company by an
attorney of the firm of Thacher Proffitt & Wood, Two World
Trade Center, New York, New York 10048 or, if such firm is
unavailable or unwilling to perform such calculation, by a
firm of independent certified public accountants selected by
the Executive and reasonably satisfactory to the Company (the
"Computation Advisor"). The determination of the Computation
Advisor as to the amount of such payments shall be final and
binding in the absence of manifest error.
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 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 payment of the Salary
Severance Payment, the DB Severance Payment, the Defined
Contribution Severance Payment, the Bonus Severance Payment,
the Option Surrender Payment and the RRP Surrender Payment on
the receipt of the Executive's resignation from any and all
positions which he or she holds as an officer, director or
committee member with respect to the Company, the Association
or any subsidiary or affiliate of either of them.
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:
Page 15 of 31
<PAGE> 16
(A) the Executive intentionally engages in
dishonest conduct in connection with the
Executive's performance of services for the
Company resulting in the Executive's
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 the Executive's 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 the Executive's
fiduciary duties to the Company for personal
profit;
(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 the Executive's performance of services
for the Company; or
(F) the Executive's material breach of any
material provision of this Agreement which
is not substantially cured within 60 days
after written notice of such breach is
received by the Executive from 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 Disabled;
(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, except as otherwise specifically provided
herein, shall have no further obligations under this
Agreement, other than the payment to the Executive (or, in the
event of his or her death, to his or her estate) of the
amounts or benefits provided in Section 9(b)(i) and (ii) of
this Agreement (the "Standard Termination Entitlements").
(b) For purposes of Section 10(a)(i), no act or failure to act, on
the part of the Executive,
Page 16 of 31
<PAGE> 17
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. Except
as specifically provided below, 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:
(i) the Board, by the affirmative vote of 75% of its
entire membership, determines that the Executive is
guilty of the conduct described in Section 10(a)(i)
above measured against standards generally prevailing
at the relevant time in the savings and community
banking industry;
(ii) prior to the vote contemplated by Section 10(b)(i),
the Board shall provide the Executive with notice of
the Company's intent to discharge the Executive for
Cause, detailing with particularity the facts and
circumstances which are alleged to constitute Cause
(the "Notice of Intent to Discharge"); and
(iii) after the giving of the Notice of Intent to Discharge
and before the taking of the vote contemplated by
Section 10(b)(i), the Executive, together with the
Executive's legal counsel, if the Executive so
desires, are afforded a reasonable opportunity to
make both written and oral presentations before the
Board for the purpose of refuting the alleged grounds
for Cause for the Executive's discharge; and
(iv) after the vote contemplated by Section 10(b)(i), the
Company has furnished to the Executive a notice of
termination which shall specify the effective date of
the Executive's termination of employment (which
shall in no event be earlier than the date on which
such notice is deemed given) and include a copy of a
resolution or resolutions adopted by the Board,
certified by its corporate secretary, authorizing the
termination of the Executive's employment with Cause
and stating with particularity the facts and
circumstances found to constitute Cause for the
Executive's discharge (the "Final Discharge Notice").
If the Executive, during the 90 (ninety) day period commencing
on the delivery by the Company to the Executive of the Notice
of Intent to Discharge specified in Section 10(b)(ii), resigns
his or her employment with the Company prior to the delivery
to the Executive by the Company of the Final Discharge Notice
specified in Section 10(b)(iv), then the cessation of
employment of the Executive shall be deemed to be for Cause.
Page 17 of 31
<PAGE> 18
Following the giving of a Notice of Intent to Discharge, the
Bank may temporarily suspend the Executive's duties and
authority and, in such event, may also suspend the payment of
salary and other cash compensation, but not the Executive's
participation in retirement, insurance and other employee
benefit plans. If the Executive is not discharged or is
discharged without Cause within forty-five (45) days after the
giving of a Notice of Intent to Discharge, payments of salary
and cash compensation shall resume, and all payments withheld
during the period of suspension shall be promptly restored. If
the Executive is discharged with Cause not later than
forty-five (45) days after the giving of the Notice of Intent
to Discharge, all payments withheld during the period of
suspension shall be deemed forfeited and shall not be included
in the Standard Termination Entitlements. If a Final Discharge
Notice is given later than forty-five (45) days, but sooner
than ninety (90) days, after the giving of the Notice of
Intent to Discharge, all payments made to the Executive during
the period beginning with the giving of the Notice of Intent
to Discharge and ending with the Executive's discharge with
Cause shall be retained by the Executive and shall not be
applied to offset the Standard Termination Entitlements. If
the Bank does not give a Final Discharge Notice to the
Executive within ninety (90) days after giving a Notice of
Intent to Discharge, the Notice of Intent to Discharge shall
be deemed withdrawn and any future action to discharge the
Executive with Cause shall require the giving of a new Notice
of Intent to Discharge. If the Executive resigns pursuant to
Section 10(b), the Executive shall forfeit his or her right to
suspended amounts that have not been restored as of the date
of the Executive's resignation or notice of resignation,
whichever is earlier.
(c) The Company may terminate the Executive's employment on the
basis that the Executive is Disabled during the Employment
Period upon a determination by the Board, by the affirmative
vote of 75% of its entire membership, acting in reliance on
the written advice of a medical professional acceptable to it,
that the Executive is suffering from a physical or mental
impairment which, at the date of the determination, has
prevented the Executive from performing the Executive's
assigned duties on a substantially full-time basis for a
period of at least one hundred and eighty (180) days during
the period of one (1) year ending with the date of the
determination or is likely to result in death or prevent the
Executive from performing the Executive's assigned duties on a
substantially full-time basis for a period of at least one
hundred and eighty (180) days during the period of one (1)
year beginning with the date of the determination. In such
event:
(A) The Company shall pay and provide the
Standard Termination Entitlements to the
Executive;
(B) In addition to the Standard Termination
Entitlements, the Company shall continue to
pay to the Executive the Executive's base
salary, at the annual rate in effect for the
Executive immediately prior to the
Page 18 of 31
<PAGE> 19
termination of the Executive's employment,
during a period ending on the earliest of:
(I) the expiration of one hundred and
eighty (180) days after the date of
termination of the Executive's
employment;
(II) the date on which long-term
disability insurance benefits are
first payable to the Executive under
any long-term disability insurance
plan covering the Executive; or
(III) the date of the Executive's death.
A termination of employment due to Disability under
this Section shall be effected by a notice of
termination given to the Executive by the Company and
shall take effect on the later of the effective date
of termination specified in such notice or, if no
such date is specified, the date on which the notice
of termination is deemed given to the Executive.
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 Securities Exchange Act of 1934, as
amended (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
Page 19 of 31
<PAGE> 20
under the Exchange Act) at least 51 % of the
securities entitled to vote generally in the
election of directors of the Company;
(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
do not belong to any of the following groups:
(A) individuals who were members of the Board on
the date of this Agreement; or
(B) individuals who first became members of the
Board after the date of this Agreement
either:
(I) upon election to serve as a member
of the Board 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, but only if nominated for
election by affirmative vote of
three-quarters of the members of the
Board, 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; or
(v) any event which would be described in Section
11(a)(i), (ii), (iii) or (iv) if the
Page 20 of 31
<PAGE> 21
term "Association" were substituted for the term
"Company" therein or the term "Board of Directors of
the Association" were substituted for the term
"Board".
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 an affiliate or
subsidiary of either of 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 or her 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 within six
(6) months following his or her demotion, loss of
title, office or significant authority or
responsibility or following any reduction in any
element of his or her package of compensation and
benefits;
(ii) resignation, voluntary or otherwise, by the Executive
at any time during the Employment Period within six
(6) months following any relocation of his or her
principal place of employment or any change in
working conditions at such principal place of
employment which the Executive, in his or her
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 within six
(6) months 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 her; or
(iv) resignation, voluntary or otherwise, for any reason
whatsoever during the Employment Period within six
months 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
Page 21 of 31
<PAGE> 22
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 intended to indemnify the Executive against the
financial effects of the excise tax imposed on excess
parachute payments under Section 28OG of the Code (the "Tax
Indemnity Payment"). The Tax Indemnity Payment shall be
determined under the following formula:
E x P
TIP = ----------------------------------------
1 - (( FI x ( 1 - SLI )) + SLI + E + M )
where:
"TIP" is the Tax Indemnity Payment, before the deduction of
applicable federal, state and local withholding taxes;
"E" is the percentage rate at which an excise tax is assessed
under Section 4999 of the Code;
"P" is the amount with respect to which such excise tax is
assessed, determined without regard to any amount payable
pursuant to this Section 12;
"FI" is the highest marginal rate of income tax applicable to
the Executive under the Code for the taxable year in question;
"SLI" is 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" is the highest marginal rate of Medicare tax applicable to
the Executive under the Code for the taxable year in question.
Page 22 of 31
<PAGE> 23
(b) The computation of the Tax Indemnity Payment shall be made at
the expense of the Company by the Computation Advisor and
shall be based on the following assumptions:
(i) that a change in ownership, a change in effective
ownership or control or a change in the ownership of
a substantial portion of the assets of the
Association or the Company has occurred within the
meaning of Section 28OG of the Code (a "28OG Change
of Control");
(ii) that all direct or indirect payments made to or
benefits conferred upon the Executive on account of
the Executive's termination of employment are
"parachute payments" within the meaning of Section
28OG of the Code; and
(iii) that no portion of such payments is reasonable
compensation for services rendered prior to the
Executive's termination of employment.
(c) With respect to any payment that is presumed to be a parachute
payment for purposes of Section 28OG of the Code, the Tax
Indemnity Payment shall be made to the Executive on the
earlier of 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 the date the
tax is required to be paid by the Executive, unless, prior to
such date, the Company delivers to the Executive the written
opinion (the "Opinion Letter"), in form and substance
reasonably satisfactory to the Executive, of the Computation
Advisor or, if the Computation Advisor is unable to provide
such opinion, of an attorney or firm of independent certified
public accountants selected by the Company and reasonably
satisfactory to the Executive, to the effect that the
Executive has a reasonable basis on which to conclude that:
(i) no 28OG Change in Control has occurred, or
(ii) all or part of the payment or benefit in question is
not a parachute payment for purposes of Section 28OG
of the Code, or
(iii) all or a part of such payment or benefit constitutes
reasonable compensation for services rendered prior
to the 28OG Change of Control, or
(iv) for some other reason which shall be set forth in
detail in such letter, no excise tax is due under
Section 4999 of the Code with respect to such payment
or benefit.
If the Company delivers an Opinion Letter, the Computation
Advisor shall re-compute, and the Company shall make, the Tax
Indemnity Payment, if any, in reliance on the information
contained in the Opinion Letter.
Page 23 of 31
<PAGE> 24
(d) 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 with
respect to which the Tax Indemnity Payment is made, 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 pursuant to Sections 12(a) and 12(c),
when increased by the amount of the payment made to the
Executive pursuant to this Section 12(d), or when reduced by
the amount of the payment made to the Company pursuant to this
Section 12(d), equals the amount that should have properly
been paid to the Executive under Sections 12(a) and 12(c). The
interest paid to the Company under this Section 12(d) shall be
determined at the rate provided under Section 1274(b)(2)(B) of
the Code. The payment made to the Executive shall include such
amount of interest as is necessary to satisfy any interest
assessment made by the Internal Revenue Service and an
additional amount equal to any monetary penalties assessed by
the Internal Revenue Service on account of an underpayment of
the excise tax. 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, at least 20 days
before the date on which such return is required to be filed
with the Internal Revenue Service. Nothing in this Agreement
shall give the Company any right to control or otherwise
participate in any action, suit or proceeding to which the
Executive is a party as a result of positions taken on the
Executive's federal income tax return with respect to the
Executive's liability for excise taxes under Section 4999 of
the Code.
(e) 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, in the event of his or
her termination of employment with the Company prior to the expiration of the
Employment Period, for a period of one (1) year following the date of his or her
termination of employment with the Company (or, if less, for the Remaining
Unexpired Employment Period), the Executive 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
Page 24 of 31
<PAGE> 25
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(c) of
this Agreement, this Section 13 shall not prevent the Executive from accepting
any position or performing any services if:
(a) he or she 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 the Executive obtains the prior written consent of the Company,
the Executive shall keep confidential and shall refrain from using for the
benefit of the Executive or any person or entity other than the Company, any
entity which is a subsidiary of the Company or any entity which the Company is a
subsidiary of, any material document or information obtained from the Company,
or from its affiliates or subsidiaries, in the course of the Executive's
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 or her 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
proceeding 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 Executive's termination of employment with the Company, he or
she shall not, without the 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 or subsidiary of ether 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;
Page 25 of 31
<PAGE> 26
(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 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 or
subsidiary of either of them, to terminate his or her
employment and accept employment, 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, the Association, or
any affiliate or subsidiary of either of them to terminate an
existing business or commercial relationship with the Company,
the Association, or any affiliate or subsidiary of either of
them.
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.
Section 17. Successors and Assigns.
This Agreement will inure to the benefit of and be binding upon the
Executive, his or her 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 under this Agreement 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.
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<PAGE> 27
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:
Thomas W. Drennan
15 Whitman Avenue
Syosset, New York 11791
If to the Company:
Astoria Financial Corporation
One Astoria Federal Plaza
Lake Success, New York 11042-1085
Attention: General Counsel
with a copy to:
Thacher Proffitt & Wood
Two World Trade Center
New York, New York 10048
Attention: W. Edward Bright, Esq.
Section 19. Indemnification for Attorneys' Fees.
The Company shall indemnify, hold harmless and defend the Executive
against reasonable costs, including legal fees, incurred by him or her in
connection with or arising out of any action, suit or proceeding in which he or
she may be involved, as a result of his or her efforts, in good faith, to defend
or enforce the terms of this Agreement; provided, however, that in the case of
any action, suit or proceeding instituted prior to a Change of Control, 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
Page 27 of 31
<PAGE> 28
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 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. No modifications of this Agreement shall be valid unless made in writing
and signed by the parties hereto.
Page 28 of 31
<PAGE> 29
Section 26. Guarantee.
The Company hereby agrees to guarantee the payment by the Association
of any benefits and compensation to which the Executive is or may be entitled to
under the terms and conditions of the Amended and Restated Employment Agreement
dated as of the 1st day of January, 2000 between the Association and the
Executive.
Section 27. Non-duplication.
In the event that the Executive shall perform services for the
Association or any other affiliate or 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 affiliates and
subsidiaries.
Section 28. Survival.
The provisions of any sections of this Agreement which by its terms
contemplates performance after the expiration or termination of this Agreement
(including, but not limited to, Sections 6, 9, 10, 11, 12, 13, 14, 15, 16, 17,
18, 19, 21, 26, 27, 29, 30 and 31) shall survive the expiration of the
Employment Period or termination of this Agreement.
Section 29. 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 30. 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 conditioned upon their compliance with Section
18(k) of the Federal Deposit Insurance Act, 12 U.S.C. Section 1828(k), and any
regulations promulgated thereunder.
Section 31. No Offset or Recoupment; No Attachment.
The Company's obligation to make the payments provided for in this
Agreement and otherwise to perform its obligations under this Agreement shall
not be affected by any set-off, counterclaim, recoupment, defense or other
claim, right or action which the Company or any of its affiliates or
subsidiaries may have against the Executive. In no event shall the Executive be
obligated to seek other employment or take any other action by way of mitigation
of the amounts payable to
Page 29 of 31
<PAGE> 30
the Executive under any of the provisions of this Agreement and such amounts
shall not be reduced whether or not the Executive obtains other employment.
Except as required by law, no right to receive payments under this Agreement
shall be subject to anticipation, commutation, alienation, sale, assignment,
encumbrance, charge, pledge, or hypothecation, or to execution, attachment,
levy, or similar process or assignment by operation of law, and any attempt,
voluntary or involuntary, to affect any such action shall be null, void, and of
no effect.
Section 32. LISB Transaction.
The Executive hereby waives any claim the Executive may have pursuant
to his or her Employment Agreements each dated January 1, 1996 with the Company
and the Association, respectively, that the acquisition by and the merger of
Long Island Bancorp, Inc. and The Long Island Savings Bank, FSB with and into
the Company and the Association, respectively, constituted a "change of control"
of the Company or the Association as defined in such Employment Contracts.
IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed and the Executive has hereunto set his or her hand, all as of the day
and year first above written.
ATTEST: ASTORIA FINANCIAL CORPORATION
/S/ William K. Sheerin By: /S/ George L. Engelke, Jr.
- ---------------------- ------------------------------
William K. Sheerin Name: George L. Engelke, Jr.
Title: Chairman, President and Chief
Executive Officer
[Seal]
/S/ Thomas W. Drennan
---------------------
THOMAS W. DRENNAN
Page 30 of 31
<PAGE> 31
STATE OF NEW YORK )
) ss.:
COUNTY OF NASSAU )
On this 20 day of March, 2000, before me, the undersigned, personally
appeared Thomas W. Drennan, personally known to me or proved to me on the basis
of satisfactory evidence to be the individual(s) whose name(s) is (are)
subscribed to the within instrument and acknowledged to me that he/she/they
executed the same in his/her/their capacity(ies), and that by his/her/their
signature(s) on the instrument, the individual(s), or the person upon behalf of
which the individual(s) acted, executed the instrument.
/S/ Anna Knice
--------------
Notary Public
Anna Knice
Notary Public, State of New York
No. 4980431
Qualified in Suffolk County
Commission Expires April 22, 2001
STATE OF NEW YORK )
) ss.:
COUNTY OF NASSAU )
On this 20 day of March, 2000, before me, the undersigned, personally
appeared George L. Engelke, Jr., personally known to me or proved to me on the
basis of satisfactory evidence to be the individual(s) whose name(s) is (are)
subscribed to the within instrument and acknowledged to me that he/she/they
executed the same in his/her/their capacity(ies), and that by his/her/their
signature(s) on the instrument, the individual(s), or the person upon behalf of
which the individual(s) acted, executed the instrument.
/S/ Anna Knice
--------------
Notary Public
Anna Knice
Notary Public, State of New York
No. 4980431
Qualified in Suffolk County
Commission Expires April 22, 2001
Page 31 of 31
<PAGE> 1
EXHIBIT 10.26
ASTORIA FEDERAL SAVINGS AND LOAN ASSOCIATION
AMENDED AND RESTATED
EMPLOYMENT AGREEMENT WITH EXECUTIVE OFFICER
This AMENDED AND RESTATED EMPLOYMENT AGREEMENT (the "Agreement") is
made and entered into as of January 1, 2000 by and between ASTORIA FEDERAL
SAVINGS AND LOAN ASSOCIATION, a savings association organized and operating
under the federal laws of the United States and having an office at One Astoria
Federal Plaza, Lake Success, New York 11042-1085 (the "Association") and, THOMAS
W. DRENNAN, an individual residing at 15 Whitman Avenue, Syosset, New York 11791
(the "Executive").
WITNESSETH:
WHEREAS, the Executive currently serves the Association in the capacity
of Executive Vice President and as Executive Vice President of the Association's
savings and loan holding company, ASTORIA FINANCIAL CORPORATION, a publicly held
business corporation organized and operating pursuant to the laws of the State
of Delaware (the "Company"); and
WHEREAS, the Executive currently has an Employment Agreement with the
Association dated January 1, 1996 which the Executive and the Association wish
to amend and modify; and
WHEREAS, the Association 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 Association
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 Association and the
Executive hereby amend and restate in its entirety the Employment Agreement by
and between the Association and the Executive dated as of January 1, 1996 so as
to provide as follows from and after the date hereof:
Section 1. Employment.
The Association agrees to continue to employ the Executive, and the
Executive hereby agrees to such continued employment, during the period and upon
the terms and conditions set forth in this Agreement.
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<PAGE> 2
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 (the "Employment Period"). The Employment
Period shall be for an initial term of three years beginning
on the date of this Agreement and ending on the day before the
third anniversary date of this Agreement. Prior to the first
anniversary of the date of this Agreement and on each
anniversary date thereafter (each an "Anniversary Date") the
Board of Directors of the Association (the "Board") shall
review the terms of this Agreement and the Executive's
performance of services hereunder and may, in the absence of
objection from the Executive, approve an extension of the
Employment Period. In such event, the Employment Period shall
be extended to the day before the third anniversary of the
relevant Anniversary Date.
(b) 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 the day before the
Anniversary Date on which the Employment Period (as extended
pursuant to Section 2(a) of this Agreement) is then scheduled
to expire.
(c) Nothing in this Agreement shall be deemed to prohibit the
Association 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 Association and the Executive in the event
of any such termination shall be determined pursuant to this
Agreement.
Section 3. Duties.
The Executive shall serve as Executive Vice President of the
Association, having such power, authority and responsibility and performing such
duties as are prescribed by or pursuant to the By-Laws of the Association and as
are customarily associated with such position. The Executive shall devote his or
her 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 Association and shall use his or her best
efforts to advance the interests of the Association.
Section 4. Cash Compensation.
In consideration for the services to be rendered by the Executive
hereunder, the Association shall pay to him or her a salary at an initial annual
rate of THREE HUNDRED SEVENTY FIVE THOUSAND DOLLARS ($375,000), payable in
approximately equal installments in accordance with the Association's customary
payroll practices for senior officers. Prior to each Anniversary Date occurring
during the Employment Period, the Board shall review the Executive's annual rate
of salary and may, in its discretion, approve an increase therein. In addition
to salary, the Executive
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<PAGE> 3
may receive other cash compensation from the Association for services hereunder
at such times, in such amounts and on such terms and conditions as the Board may
determine from time to time.
Section 5. Employee Benefit Plans and Programs.
During the Employment Period, the Executive shall be treated as an
employee of the Association 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 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 Association, in accordance with the terms and conditions of such employee
benefit plans and programs and compensation plans and programs and consistent
with the Association's customary practices.
Section 6. Indemnification and Insurance.
(a) During the Employment Period and for a period of six (6) years
thereafter, the Association 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
Association or service in other capacities at the request of
the Association. 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 Association.
(b) To the maximum extent permitted under applicable law, during
the Employment Period and for a period of six (6) years
thereafter, the Association shall indemnify the Executive
against, and hold him or her 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
Association or any subsidiary or affiliate thereof. This
Section 6(b) shall not be applicable where Section 18 is
applicable.
Section 7. Other Activities.
(a) The Executive may serve as a member of the boards of directors
of such business, community and charitable organizations as he
or she may disclose to and as may be approved by the Board
(which approval shall not be unreasonably withheld); provided,
however, that such service shall not materially interfere with
the performance of his or her duties under this Agreement. The
Executive may also engage in personal business and investment
activities which do not materially
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<PAGE> 4
interfere with the performance of his or her duties hereunder;
provided, however, that such activities are not prohibited
under any code of conduct or investment or securities trading
policy established by the Association and generally applicable
to all similarly situated executives.
(b) The Executive may also serve as an officer or director of the
Company on such terms and conditions as the Association and
the Company may mutually agree upon, and such service shall
not be deemed to materially interfere with the Executive's
performance of his or her duties hereunder or otherwise result
in a material breach of this Agreement.
Section 8. Working Facilities and Expenses.
The Executive's principal place of employment shall be at the
Association'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
Association shall maintain its principal executive offices, or at such other
location as the Association and the Executive may mutually agree upon. The
Association shall provide the Executive at his or her principal place of
employment with a private office, secretarial services and other support
services and facilities suitable to his or her position with the Association and
necessary or appropriate in connection with the performance of his or her
assigned duties under this Agreement. The Association shall provide to the
Executive for his or her exclusive use an automobile owned or leased by the
Association and appropriate to his or her position, to be used in the
performance of his or her duties hereunder, including commuting to and from his
or her personal residence. The Association shall reimburse the Executive for his
or her ordinary and necessary business expenses, including, without limitation,
all expenses associated with his or her business use of the aforementioned
automobile, fees for memberships in such clubs and organizations as the
Executive and the Association shall mutually agree are necessary and appropriate
for business purposes, and his or her travel and entertainment expenses incurred
in connection with the performance of his or her duties under this Agreement, in
each case upon presentation to the Association of an itemized account of such
expenses in such form as the Association 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 or her employment with
the Association terminates during the Employment Period under
any of the following circumstances:
(i) the Executive's voluntary resignation from employment
with the Association within six (6) months following:
(A) the failure of the Board to appoint or
re-appoint or elect or re-elect the
Executive to the office of Executive Vice
President (or a more senior
Page 4 of 29
<PAGE> 5
office) of the Association;
(B) if the Executive is or becomes a member of
the Board, the failure of the stockholders
of the Association 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;
(C) the expiration of a thirty (30) day period
following the date on which the Executive
gives written notice to the Association of
its material failure, whether by amendment
of the Association's Organization
Certificate or By-laws, action of the Board
or the Association'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 Association
cures such failure;
(D) the expiration of a thirty (30) day period
following the date on which the Executive
gives written notice to the Association of
its material breach of any term, condition
or covenant contained in this Agreement
(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 or her total
compensation package), unless, during such
thirty (30) day period, the Association
cures such failure; or
(E) the relocation of the Executive's principal
place of employment, without his or her
written consent, to a location outside of
Nassau County and Queens County, New York;
(ii) the termination of the Executive's employment with
the Association for any other reason not described in
Section 10(a).
In such event and subject to Section 27 of this Agreement, the
Association 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
Association under circumstances described in Section 9(a) of
this Agreement, the Association shall pay and provide to the
Executive (or, in the event of the Executive's death following
the Executive's termination of employment, to his or her
estate):
Page 5 of 29
<PAGE> 6
(i) his or her 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 or her employment with the Association, such
payment to be made at the time and in the manner
prescribed by law applicable to the payment of wages
but in any event not later than thirty (30) days
after termination of employment;
(ii) the benefits, if any, to which he or she is entitled
as a former employee under the employee benefit plans
and programs and compensation plans and programs
maintained for the benefit of the Association's
officers and employees;
(iii) continued group life, health (including
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
(including any co-payments and deductibles, but
excluding any premium sharing arrangements, it being
the intention of the parties to this Agreement that
the premiums for such insurance benefits shall be the
sole cost and expense of the Association) equivalent
to the coverage to which he or she would have been
entitled under such plans (as in effect on the date
of his or her termination of employment, or, if his
or her termination of employment occurs after a
Change of Control, on the date of such Change of
Control, whichever benefits are greater), if he or
she had continued working for the Association during
the Remaining Unexpired Employment Period at the
highest annual rate of salary or compensation, as
applicable, achieved during that portion of the
Employment Period which is prior to the Executive's
termination of employment with the Association;
(iv) within thirty (30) days following the Executive's
termination of employment with the Association, a
lump sum payment in an amount representing an
estimate of the salary that the Executive would have
earned if he or she had continued working for the
Association 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 Association (the "Salary Severance
Payment"). The Salary Severance Payment shall be
computed using the following formula:
SSP = BS x NY
where:
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<PAGE> 7
"SSP" is the amount of the Salary Severance Payment,
before the deduction of applicable federal, state and
local withholding taxes;
"BS" is 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 Association;
"NY" is the Remaining Unexpired Employment Period
expressed as a number of years (rounded, if such
period is not a whole number, to the next highest
whole number).
The Salary Severance Payment shall 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 the Executive's
termination of employment with the Association, a
lump sum payment (the "DB Severance Payment") in an
amount equal to the excess, if any, of:
(A) the present value of the aggregate benefits
to which he or she would be entitled under
any and all qualified and non-qualified
defined benefit pension plans maintained by,
or covering employees of, the Association,
if he or she were 100% vested thereunder and
had continued working for the Association
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 pursuant to
Sections 9(b)(i), (iv), (vii), (viii) and
(ix) of this Agreement; over
(B) the present value of the benefits to which
he or she is actually entitled under such
defined benefit pension plans as of the date
of his or her termination;
The DB Severance Payment shall be computed using the
following formula:
DBSP = SEVLS - LS
where:
"DBSP" is the amount of the DB Severance Payment,
before the deduction
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<PAGE> 8
of applicable federal, state and local withholding
taxes;
"SEVLS" is the sum of the present value of the
defined benefit pension benefits that have been or
would be accrued by the Executive under all qualified
and non-qualified defined benefit pension plans of
which the Association or any of its affiliates or
subsidiaries are a sponsor and in which the Executive
is or, but for the completion of any service
requirement that would have been completed during the
Remaining Unexpired Employment Period, would be a
participant utilizing the following assumptions:
(I) the executive is 100% vested in the plans
regardless of actual service,
(II) the benefit to be valued shall be a single
life annuity with monthly payments due on
the first day of each month and with a
guaranteed payout of not less than 120
monthly payments,
(III) the calculation shall be made utilizing the
same mortality table and interest rate as
would be utilized by the plan on the date of
termination as if the calculation were being
made pursuant to Section 417(e)(3)(A)(ii) of
the Internal Revenue Code, as amended, (the
"Code");
(IV) for purpose of calculating the Executive's
monthly or annual benefit under the defined
benefit plans, additional service equal to
the Remaining Unexpired Employment Period
(rounded up to the next whole year if such
period is not a whole number when expressed
in years) shall be added to the Executive's
actual service to calculate the amount of
the benefit; and
(V) for purpose of calculating the Executive's
monthly or annual benefit under the defined
benefit plans, the following sums shall be
added to the Executive's compensation
recognized under such plans for the most
recent year recognized:
(1) payments made pursuant to
Section 9(b)(i);
(2) the Salary Severance Payment;
(3) the Bonus Severance Payment;
(4) the Option Surrender Payment;
and
(5) the RRP Surrender Payment.
Page 8 of 29
<PAGE> 9
"LS" is the sum of the present value of the defined
benefit pension benefits that are vested benefits
actually accrued by the Executive under all qualified
and non-qualified defined benefit pension plans
maintained by, or covering employees of, the Company
or any of its affiliates or subsidiaries in which the
Executive is or, but for the completion of any
service requirement, would be a participant utilizing
the following assumptions:
(I) the benefit to be valued shall be a
single life annuity with monthly
payments due on the first day of
each month and with a guaranteed
payout of not less than 120 monthly
payments, and
(II) the calculation shall be made
utilizing the same mortality table
and interest rate as would be
utilized by the plan on the date of
termination as if the calculation
were being made pursuant to Section
417(e)(3)(A)(ii) of the Code;
(vi) within thirty (30) days following the Executive's
termination of employment with the Association, a
lump sum payment (the "Defined Contribution Severance
Payment") equal to the sum of:
(A) an estimate of the additional employer
contributions to which he or she would have
been entitled under any and all qualified
and non-qualified defined contribution
pension plans, excluding the employee stock
ownership plans, maintained by, or covering
employees of, the Association or any of its
affiliates or subsidiaries as if he or she
were 100% vested thereunder and had
continued working for the Association during
the Remaining Unexpired Employment Period
(the "401K Severance Payment"); and
(B) an estimate of the value of the additional
assets which would have been allocable to
him or her through debt service or otherwise
under any and all qualified and
non-qualified employee stock ownership
plans, maintained by, or covering employees
of the Association or any of its affiliates
or subsidiaries as if he or she were 100%
vested thereunder and had continued working
for the Association during the Remaining
Unexpired Employment Period, based on the
fair market value of such assets at
termination of employment (the "ESOP
Severance Payment").
The Defined Contribution Severance Payment shall be
calculated as follows:
DCSP = 401KSP + ESOPSP
Page 9 of 29
<PAGE> 10
where:
"DCSP" is the amount of the Defined Contribution
Severance Payment, before the deduction of applicable
federal, state and local withholding taxes;
"401KSP" is the amount of the 401K Severance Payment,
before the deduction of applicable federal, state and
local withholding taxes; and
"ESOPSP" is the amount of the ESOP Severance Payment,
before the deduction of applicable federal, state and
local withholding taxes.
The 401KSP shall be calculated as follows:
401SP = (401KC x NY) + UVB
where
"401KC" is the sum of the Association Contributions
as defined in the Association's Incentive Savings
Plan or, if made under another defined contribution
pension plan other than an employee stock ownership
plan, the comparable contribution made for the
benefit of the Executive during the one year period
which shall end on the date of his or her termination
of his or her employment with the Association;
"NY" is the Remaining Unexpired Employment Period
expressed as a number of years (rounded, if such
period is not a whole number, to the next highest
whole number); and
"UVB" is the actual balance credited to the
Executive's account under the applicable plan at the
date of his or her termination of employment that is
not vested and does not become vested as a
consequence of such termination of employment.
The ESOPSP shall be calculated as follows:
ESOPSP = (((ALL x FMV) + C) x NY) + UVB
where:
"ALL" is the sum of the number of shares of the
Association's common stock or, if applicable, phantom
shares of such stock by whatever term it is described
allocated to the Executive's accounts under all
qualified and non-
Page 10 of 29
<PAGE> 11
qualified employee stock ownership plans maintained
by the Association or any of its affiliates or
subsidiaries during or for the last complete plan
year in which the Executive participated in such
plans and received such an allocation whether the
allocation occurred as a result of contributions made
by the Association, the payment by the Association or
any of its affiliates or subsidiaries of any loan
payments under a leveraged employee stock ownership
plan, the allocation of forfeitures under the terms
of such plan or as a result of the use of cash or
earnings allocated to the Executives account during
such plan year to make loan payments that result in
share allocations, provided however, that excluded
shall be any shares or phantom shares allocated to
the Executive's account under any qualified and
non-qualified employee stock ownership plans
maintained by the Association or any of its
affiliates or subsidiaries solely as a result of the
termination of such plans, provided further, that if
the shares allocated are not shares of the
Association's common stock or phantom shares of such
stock than shares of whatever securities are so
allocated shall be utilized, and provided further,
that in the event that there shall be any shares or
phantom shares allocated during the then current plan
year or the last complete plan year to the
Executive's account under any qualified and
non-qualified employee stock ownership plans
maintained by the Association or any of its
affiliates or subsidiaries solely as a result of the
termination of such plans, the ALL shall be reduced
(but not to an amount less than zero (0)) by an
amount calculated by multiplying the number of shares
or phantom shares allocated to the Executive's
account solely as a result of the termination of such
plans times the FMV utilized to calculate the ESOPSP;
"C" is the sum of all cash allocated to the
Executive's accounts under all qualified and
non-qualified employee stock ownership plans
maintained by the Association during or for the last
complete plan year in which the Executive
participated in such plans whether the allocation
occurred as a result of contributions made by the
Association, the payment by the Association or the
Association of any loan payments under a leveraged
employee stock ownership plan or the allocation of
forfeitures under the terms of such plan during such
plan year;
"FMV" is the closing price of the Association's
common stock on The Nasdaq Stock Market or on
whatever other stock exchange or market such stock is
publicly traded on the date the Executive's
employment terminates or, if such day is not a day on
which such securities are traded, on the most recent
preceding trading day on which a trade occurs,
provided however that if the security allocated to
the Executive's account during the last completed
plan year is other than the Association's common
stock the closing price of such security on the date
the Executive's employment terminates shall be
Page 11 of 29
<PAGE> 12
utilized;
"NY" is the Remaining Unexpired Employment Period
expressed as a number of years (rounded, if such
period is not a whole number, to the next highest
whole number); and
"UVB" is the actual balance credited to the
Executive's account under the applicable plan at the
date of his or her termination of employment that is
not vested and does not become vested as a
consequence of such termination of employment.
(vii) within thirty (30) days following the Executive's
termination of employment with the Association, the
Association shall make a lump sum payment to the
Executive in an amount equal to the estimated
potential annual bonuses or incentive compensation
that the Executive could have earned if the Executive
had continued working for the Association during the
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 Association (the
"Bonus Severance Payment"). The Bonus Severance
Payment shall be computed using the following
formula:
BSP = ( BS x TIO x AP x NY)
where:
"BSP" is the amount of the Bonus Severance Payment,
before the deduction of applicable federal, state and
local withholding taxes;
"BS" is 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 Association;
"TIO" is the highest target incentive opportunity
(expressed as a percentage of base salary)
established by the Compensation Committee of the
Board for the Executive pursuant to the Astoria
Financial Corporation Executive Officer Annual
Incentive Plan during that portion of the Employment
Period which is prior to the Executive's termination
of employment with the Association;
"AP" is the highest award percentage available to the
Executive with respect to the financial performance
of the Company (expressed as a percentage of the TIO)
established by the Compensation Committee of the
Board for the
Page 12 of 29
<PAGE> 13
Executive pursuant to the Astoria Financial
Corporation Executive Officer Annual Incentive Plan
during the period during that portion of the
Employment Period which is prior to the Executive's
termination of employment with the Association; and
"NY" is the Remaining Unexpired Employment Period
expressed as a number of years (rounded, if such
period is not a whole number, to the next highest
whole number).
(viii) at the election of the Association made within thirty
(30) days following the Executive's termination of
employment with the Association, 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 Association, a lump sum payment
(the "Option Surrender Payment"). The Option
Surrender Payment shall be calculated as follows:
OSP = (FMV - EP) x N
where:
"OSP" is the amount of the Option Surrender Payment,
before the deduction of applicable federal, state and
local withholding taxes;
"FMV" is the closing price of the Association's
common stock on The Nasdaq Stock Market, or on
whatever other stock exchange or market such stock is
publicly traded, on the date the Executive's
employment terminates or, if such day is not a day on
which such securities are traded, on the most recent
preceding trading day on which a trade occurs,
provided however that if the option or stock
appreciation right is for a security other than the
Association's common stock, 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 shall be utilized;
"EP" is the exercise price per share for such option
or appreciation right, as specified in or under the
relevant plan or program; and
"N" is the number of shares with respect to which
options or appreciation rights are being surrendered.
For purposes of determining the Option Severance
Payment and for purposes of determining the
Executive's right following his or her termination of
employment with the Association to exercise any
options or appreciation
Page 13 of 29
<PAGE> 14
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 Association, even if he or
she is not vested under such plan or program;
(ix) at the election of the Association made within thirty
(30) days following the Executive's termination of
employment with the Association, upon the surrender
of any shares awarded to the Executive under any
restricted stock plan maintained by, or covering
employees of, the Association, a lump sum payment
(the "RRP Surrender Payment") The RRP Surrender
Payment shall be calculated as follows:
RSP = FMV x N
where:
"RSP" is the amount of the RRP Surrender Payment,
before the deduction of applicable federal, state and
local withholding taxes;
"FMV" is the closing price of the Association's
common stock on The Nasdaq Stock Market, or on
whatever other stock exchange or market such stock is
publicly traded, on the date the Executive's
employment terminates or, if such day is not a day on
which such securities are traded, on the most recent
preceding trading day on which a trade occurs,
provided however that if the restricted stock is a
security other than the Association's common stock,
the fair market value of a share of stock of the same
class as the stock granted under such plan,
determined as of the date of termination of
employment shall be utilized; and
"N" is the number of shares which are being
surrendered.
For purposes of determining the RRP Surrender Payment
and for purposes of determining the Executive's right
following his or her termination of employment with
the Association 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
Association, even if he or she is not vested under
such plan.
The Salary Severance Payment, the DB Severance Payment, the
Defined Contribution Severance Payment, the Bonus Severance
Payment, the Option Surrender Payment and the RRP Surrender
Payment shall be computed at the expense of the Association by
an attorney of the firm of Thacher Proffitt & Wood, Two World
Trade Center, New York, New York 10048 or, if such firm is
unavailable
Page 14 of 29
<PAGE> 15
or unwilling to perform such calculation, by a firm of
independent certified public accountants selected by the
Executive and reasonably satisfactory to the Association (the
"Computation Advisor"). The determination of the Computation
Advisor as to the amount of such payments shall be final and
binding in the absence of manifest error.
The Association 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 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 Association and the Executive further
agree that the Association may condition the payment of the
Salary Severance Payment, the DB Severance Payment, the
Defined Contribution Severance Payment, the Bonus Severance
Payment, the Option Surrender Payment and the RRP Surrender
Payment on the receipt of the Executive's resignation from any
and all positions which he or she holds as an officer,
director or committee member with respect to the Association,
the Association or any subsidiary or affiliate of either of
them.
Section 10. Termination without Additional Association Liability.
(a) In the event that the Executive's employment with the
Association 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 personal
dishonesty, incompetence, wilful misconduct, breach
of fiduciary duty involving personal profit,
intentional failure to perform stated duties, wilful
violation of any law, rule or regulation (other than
traffic violations or similar offenses) or final
cease and desist order, or any material breach of
this Agreement, in each case measured against
standards generally prevailing at the relevant time
in the savings and community banking industry;
(ii) the Executive's voluntary resignation from employment
with the Association 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 Disabled;
(v) the Executive's termination of employment for any
reason at or after attainment of mandatory retirement
age under the Association's mandatory
Page 15 of 29
<PAGE> 16
retirement policy for executive officers in effect as
of the date of this Agreement;
then the Association, except as otherwise specifically
provided herein, shall have no further obligations under this
Agreement, other than the payment to the Executive (or, in the
event of his or her death, to his or her estate) of the
amounts or benefits provided in Section 9(b)(i) and (ii) of
this Agreement (the "Standard Termination Entitlements").
(b) 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:
(i) the Board, by the affirmative vote of 75% of its
entire membership, determines that the Executive is
guilty of the conduct described in Section 10(a)(i)
above measured against standards generally prevailing
at the relevant time in the savings and community
banking industry;
(ii) prior to the vote contemplated by Section 10(b)(i),
the Board shall provide the Executive with notice of
the Association's intent to discharge the Executive
for Cause, detailing with particularity the facts and
circumstances which are alleged to constitute Cause
(the "Notice of Intent to Discharge"); and
(iii) after the giving of the Notice of Intent to Discharge
and before the taking of the vote contemplated by
Section 10(b)(i), the Executive, together with the
Executive's legal counsel, if the Executive so
desires, are afforded a reasonable opportunity to
make both written and oral presentations before the
Board for the purpose of refuting the alleged grounds
for Cause for the Executive's discharge; and
(iv) after the vote contemplated by Section 10(b)(i), the
Association has furnished to the Executive a notice
of termination which shall specify the effective date
of the Executive's termination of employment (which
shall in no event be earlier than the date on which
such notice is deemed given) and include a copy of a
resolution or resolutions adopted by the Board,
certified by its corporate secretary, authorizing the
termination of the Executive's employment with Cause
and stating with particularity the facts and
circumstances found to constitute Cause for the
Executive's discharge (the "Final Discharge Notice").
If the Executive, during the ninety (90) day period commencing
on the delivery by the Association to the Executive of the
Notice of Intent to Discharge specified in Section 10(b)(ii),
resigns his or her employment with the Association prior to
the
Page 16 of 29
<PAGE> 17
delivery to the Executive by the Association of the Final
Discharge Notice specified in Section 10(b)(iv), then the
cessation of employment of the Executive shall be deemed to be
for Cause.
Following the giving of a Notice of Intent to Discharge, the
Bank may temporarily suspend the Executive's duties and
authority and, in such event, may also suspend the payment of
salary and other cash compensation, but not the Executive's
participation in retirement, insurance and other employee
benefit plans. If the Executive is not discharged or is
discharged without Cause within forty-five (45) days after the
giving of a Notice of Intent to Discharge, payments of salary
and cash compensation shall resume, and all payments withheld
during the period of suspension shall be promptly restored. If
the Executive is discharged with Cause not later than
forty-five (45) days after the giving of the Notice of Intent
to Discharge, all payments withheld during the period of
suspension shall be deemed forfeited and shall not be included
in the Standard Termination Entitlements. If a Final Discharge
Notice is given later than forty-five (45) days, but sooner
than ninety (90) days, after the giving of the Notice of
Intent to Discharge, all payments made to the Executive during
the period beginning with the giving of the Notice of Intent
to Discharge and ending with the Executive's discharge with
Cause shall be retained by the Executive and shall not be
applied to offset the Standard Termination Entitlements. If
the Bank does not give a Final Discharge Notice to the
Executive within ninety (90) days after giving a Notice of
Intent to Discharge, the Notice of Intent to Discharge shall
be deemed withdrawn and any future action to discharge the
Executive with Cause shall require the giving of a new Notice
of Intent to Discharge. If the Executive resigns pursuant to
Section 10(b), the Executive shall forfeit his or her right to
suspended amounts that have not been restored as of the date
of the Executive's resignation or notice of resignation,
whichever is earlier.
(c) The Association may terminate the Executive's employment on
the basis that the Executive is Disabled during the Employment
Period upon a determination by the Board, by the affirmative
vote of 75% of its entire membership, acting in reliance on
the written advice of a medical professional acceptable to it,
that the Executive is suffering from a physical or mental
impairment which, at the date of the determination, has
prevented the Executive from performing the Executive's
assigned duties on a substantially full-time basis for a
period of at least one hundred and eighty (180) days during
the period of one (1) year ending with the date of the
determination or is likely to result in death or prevent the
Executive from performing the Executive's assigned duties on a
substantially full-time basis for a period of at least one
hundred and eighty (180) days during the period of one (1)
year beginning with the date of the determination. In such
event:
(A) The Association shall pay and provide the Standard
Termination Entitlements to the Executive;
Page 17 of 29
<PAGE> 18
(B) In addition to the Standard Termination Entitlements,
the Association shall continue to pay to the
Executive the Executive's base salary, at the annual
rate in effect for the Executive immediately prior to
the termination of the Executive's employment, during
a period ending on the earliest of:
(I) the expiration of one hundred and eighty
(180) days after the date of termination of
the Executive's employment;
(II) the date on which long-term disability
insurance benefits are first payable to the
Executive under any long-term disability
insurance plan covering the Executive; or
(III) the date of the Executive's death.
A termination of employment due to Disability under this
Section shall be effected by a notice of termination given to
the Executive by the Association and shall take effect on the
later of the effective date of termination specified in such
notice or, if no such date is specified, the date on which the
notice of termination is deemed given to the Executive.
Section 11. Termination Upon or Following a Change of Control.
(a) A Change of Control of the Association ("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 Association of a
transaction that would result in the reorganization,
merger or consolidation of the Association 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 Securities Exchange Act of 1934, as
amended (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 Association; 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
Page 18 of 29
<PAGE> 19
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 Association;
(ii) the acquisition of all or substantially all of the
assets of the Association 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 Association 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 Association of any
transaction which would result in such an
acquisition;
(iii) a complete liquidation or dissolution of the
Association, or approval by the stockholders of the
Association 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
do not belong to any of the following groups:
(A) individuals who were members of the Board on
the date of this Agreement; or
(B) individuals who first became members of the
Board after the date of this Agreement
either:
(I) upon election to serve as a member
of the Board 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 Association to serve as a member
of the Board, but only if nominated
for election by affirmative vote of
three-quarters of the members of the
Board, 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
Page 19 of 29
<PAGE> 20
promulgated under the Exchange Act) other
than by or on behalf of the Board; or
(v) any event which would be described in Section
11(a)(i), (ii), (iii) or (iv) if the term "Company"
were substituted for the term "Association" therein
or the term "Board of Directors of the Company" were
substituted for the term "Board".
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 Association, the Association, or an affiliate or
subsidiary of either of them, by the Association, 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 or her termination of employment with
the Association 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 within six
(6) months following his or her demotion, loss of
title, office or significant authority or
responsibility or following any reduction in any
element of his or her package of compensation and
benefits;
(ii) resignation, voluntary or otherwise, by the Executive
at any time during the Employment Period within six
(6) months following any relocation of his or her
principal place of employment or any change in
working conditions at such principal place of
employment which the Executive, in his or her
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 within six
(6) months following the failure of any successor to
the Association 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 Association which
is at least as favorable to him or her; or
(iv) resignation, voluntary or otherwise, for any reason
whatsoever during the Employment Period within six
months following the expiration of a transition
period of thirty (30) days beginning on the effective
date of the Change of
Page 20 of 29
<PAGE> 21
Control (or for such longer period, not to exceed
ninety (90) days beginning on the effective date of
the Change of Control, as the Association or its
successor may reasonably request) to facilitate a
transfer of management responsibilities.
Section 12. Covenant Not To Compete.
The Executive hereby covenants and agrees that, in the event of his or
her termination of employment with the Association prior to the expiration of
the Employment Period, for a period of one (1) year following the date of his or
her termination of employment with the Association (or, if less, for the
Remaining Unexpired Employment Period), the Executive shall not, without the
written consent of the Association, become an officer, employee, consultant,
director or trustee of any savings bank, savings and loan association, savings
and loan holding Association, bank or bank holding Association, 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 Association 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 12 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(c) of this Agreement, this
Section 12 shall not prevent the Executive from accepting any position or
performing any services if:
(a) he or she first offers, by written notice, to accept a similar
position with or perform similar services for the Association
on substantially the same terms and conditions and
(b) the Association declines to accept such offer within ten (10)
days after such notice is given.
Section 13. Confidentiality.
Unless the Executive obtains the prior written consent of the
Association, the Executive shall keep confidential and shall refrain from using
for the benefit of the Executive or any person or entity other than the
Association, any entity which is a subsidiary of the Association or any entity
which the Association is a subsidiary of, any material document or information
obtained from the Association, or from its affiliates or subsidiaries, in the
course of the Executive's 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 or her
own) until the same ceases to be material (or becomes so ascertainable or
available); provided, however, that nothing in this Section 13 shall prevent the
Executive, with or without the Association's consent, from participating in or
disclosing documents or information in connection with any judicial or
administrative investigation, inquiry or proceeding to the extent that such
participation or disclosure is required
Page 21 of 29
<PAGE> 22
under applicable law.
Section 14. Solicitation.
The Executive hereby covenants and agrees that, for a period of one (1)
year following the Executive's termination of employment with the Association,
he or she shall not, without the written consent of the Association, 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 Association, the Association or any
affiliate or subsidiary of ether 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 Association, savings and loan holding
Association, 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
Association has an office or has filed an application for
regulatory approval to establish an office;
(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 Association, savings
and loan holding Association, 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 Association has an office or has filed an application
for regulatory approval to establish an office 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 Association, the Association, or
any affiliate or subsidiary of either of them, to terminate
his or her employment and accept employment, become affiliated
with or provide services for compensation in any capacity
whatsoever to any such savings bank, savings and loan
association, bank, bank holding Association, savings and loan
holding Association 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 Association, the Association,
or any affiliate or subsidiary of either of them to terminate
an existing business or commercial relationship with the
Association, the Association, or any affiliate or subsidiary
of either of them.
Section 15. No Effect on Employee Benefit Plans or Programs.
The termination of the Executive's employment during the term of this
Agreement or
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<PAGE> 23
thereafter, whether by the Association or by the Executive, shall have no effect
on the rights and obligations of the parties hereto under the Association'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 Association from
time to time.
Section 16. Successors and Assigns.
This Agreement will inure to the benefit of and be binding upon the
Executive, his or her legal representatives and testate or intestate
distributees, and the Association 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 Association may be sold or otherwise transferred. Failure of the
Association to obtain from any successor its express written assumption of the
Association's obligations under this Agreement 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 17. 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:
Thomas W. Drennan
15 Whitman Avenue
Syosset, New York 11791
If to the Association:
Astoria Federal Savings and Loan Association
One Astoria Federal Plaza
Lake Success, New York 11042-1085
Attention: General Counsel
with a copy to:
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<PAGE> 24
Thacher Proffitt & Wood
Two World Trade Center
New York, New York 10048
Attention: W. Edward Bright, Esq.
Section 18. Indemnification for Attorneys' Fees.
The Association shall indemnify, hold harmless and defend the Executive
against reasonable costs, including legal fees, incurred by him or her in
connection with or arising out of any action, suit or proceeding in which he or
she may be involved, as a result of his or her efforts, in good faith, to defend
or enforce the terms of this Agreement; provided, however, that in the case of
any action, suit or proceeding instituted prior to a Change of Control, 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 Association'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 19. 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 20. 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 21. 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 22. Governing Law.
This Agreement shall be governed by and construed and enforced in
accordance with the
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<PAGE> 25
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 performed entirely within the State of New
York.
Section 23. 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.
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<PAGE> 26
Section 24. 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. No modifications of this Agreement shall be valid unless made in writing
and signed by the parties hereto.
Section 25. Survival.
The provisions of any sections of this Agreement which by its terms
contemplates performance after the expiration or termination of this Agreement
(including, but not limited to, Sections 6, 9, 10, 11, 12, 13, 14, 15, 16, 17,
18, 20, 26, 27 and 28) shall survive the expiration of the Employment Period or
termination of this Agreement.
Section 26. Equitable Remedies.
The Association and the Executive hereby stipulate that money damages
are an inadequate remedy for violations of Sections 6(a), 12, 13 or 14 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 27. Required Regulatory Provisions.
The following provisions are included for the purposes of complying
with various laws, rules and regulations applicable to the Association:
(a) Notwithstanding anything herein contained to the contrary, in
no event shall the aggregate amount of compensation payable to
the Executive pursuant to Section 9(b) of this Agreement
(exclusive of amounts described in Section 9(b)(i), (ii),
(viii) or (ix)) exceed three times the Executive's average
annual total compensation for the last five consecutive
calendar years to end prior to the Executive's termination of
employment with the Association (or for the Executive's entire
period of employment with the Association if less than five
calendar years).
(b) Notwithstanding anything herein contained to the contrary, any
payments to the Executive by the Association, 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 ("FDI Act"), 12 U.S.C. Section 1828(k),
and any regulations promulgated thereunder.
(c) Notwithstanding anything herein contained to the contrary, if
the Executive is suspended from office and/or temporarily
prohibited from participating in the
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<PAGE> 27
conduct of the affairs of the Association pursuant to a notice
served under Section 8(e)(3) or 8(g)(1) of the FDI Act, 12
U.S.C. Section 1818(e)(3) or 1818(g)(1), the Association's
obligations under this Agreement shall be suspended as of the
date of service of such notice, unless stayed by appropriate
proceedings. If the charges in such notice are dismissed, the
Association, in its discretion, may (i) pay to the Executive
all or part of the compensation withheld while the
Association's obligations hereunder were suspended and (ii)
reinstate, in whole or in part, any of the obligations which
were suspended.
(d) Notwithstanding anything herein contained to the contrary, if
the Executive is removed and/or permanently prohibited from
participating in the conduct of the Association's affairs by
an order issued under Section 8(e)(4) or 8(g)(1) of the FDI
Act, 12 U.S.C. Section 1818(e)(4) or (g)(1), all prospective
obligations of the Association under this Agreement shall
terminate as of the effective date of the order, but vested
rights and obligations of the Association and the Executive
shall not be affected.
(e) Notwithstanding anything herein contained to the contrary, if
the Association is in default (within the meaning of Section
3(x)(1) of the FDI Act, 12 U.S.C. Section 1813(x)(1), all
prospective obligations of the Association under this
Agreement shall terminate as of the date of default, but
vested rights and obligations of the Association and the
Executive shall not be affected.
(f) Notwithstanding anything herein contained to the contrary, all
prospective obligations of the Association hereunder shall be
terminated, except to the extent that a continuation of this
Agreement is necessary for the continued operation of the
Association: (i) by the Director of the Office of Thrift
Supervision ("OTS") or his or her designee or the Federal
Deposit Insurance Corporation ("FDIC"), at the time the FDIC
enters into an agreement to provide assistance to or on behalf
of the Association under the authority contained in Section
13(c) of the FDI Act, 12 U.S.C. Section 1823(c); (ii) by the
Director of the OTS or his or her designee at the time such
Director or designee approves a supervisory merger to resolve
problems related to the operation of the Association or when
the Association is determined by such Director to be in an
unsafe or unsound condition. The vested rights and obligations
of the parties shall not be affected.
If and to the extent that any of the foregoing provisions shall cease to be
required or by applicable law, rule or regulation, the same shall become
inoperative as though eliminated by formal amendment of this Agreement.
Section 28. No Offset or Recoupment; No Attachment.
The Association's obligation to make the payments provided for in this
Agreement and
Page 27 of 29
<PAGE> 28
otherwise to perform its obligations under this Agreement shall not be affected
by any set-off, counterclaim, recoupment, defense or other claim, right or
action which the Association or any of its affiliates or subsidiaries may have
against the Executive. In no event shall the Executive be obligated to seek
other employment or take any other action by way of mitigation of the amounts
payable to the Executive under any of the provisions of this Agreement and such
amounts shall not be reduced whether or not the Executive obtains other
employment. Except as required by law, no right to receive payments under this
Agreement shall be subject to anticipation, commutation, alienation, sale,
assignment, encumbrance, charge, pledge, or hypothecation, or to execution,
attachment, levy, or similar process or assignment by operation of law, and any
attempt, voluntary or involuntary, to affect any such action shall be null,
void, and of no effect.
Section 29. LISB Transaction.
The Executive hereby waives any claim the Executive may have pursuant
to his or her Employment Agreements each dated January 1, 1996 with the Company
and the Association, respectively, that the acquisition by and the merger of
Long Island Bancorp, Inc. and The Long Island Savings Bank, FSB with and into
the Company and the Association, respectively, constituted a "change of control"
of the Company or the Association as defined in such Employment Contracts.
IN WITNESS WHEREOF, the Association has caused this Agreement to be
executed and the Executive has hereunto set his or her hand, all as of the day
and year first above written.
ATTEST:
/S/ William K. Sheerin ASTORIA FEDERAL SAVINGS AND LOAN
William K. Sheerin ASSOCIATION
[Seal]
By: /S/ George L. Engelke, Jr.
Name: George L. Engelke, Jr.
Title: Chairman, President and Chief
Executive Officer
/S/ Thomas W. Drennan
THOMAS W. DRENNAN
STATE OF NEW YORK )
) ss.:
COUNTY OF NASSAU )
On this 20 day of March, 2000, before me, the undersigned, personally
appeared Thomas W.
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<PAGE> 29
Drennan, personally known to me or proved to me on the basis of satisfactory
evidence to be the individual(s) whose name(s) is (are) subscribed to the within
instrument and acknowledged to me that he/she/they executed the same in
his/her/their capacity(ies), and that by his/her/their signature(s) on the
instrument, the individual(s), or the person upon behalf of which the
individual(s) acted, executed the instrument.
/S/ Anna Knice
Notary Public
Anna Knice
Notary Public, State of New York
No. 4980431
Qualified in Suffolk County
Commission Expires April 22, 2001
STATE OF NEW YORK )
) ss.:
COUNTY OF NASSAU )
On this 20 day of March, 2000, before me, the undersigned, personally
appeared George L. Engelke, Jr., personally known to me or proved to me on the
basis of satisfactory evidence to be the individual(s) whose name(s) is (are)
subscribed to the within instrument and acknowledged to me that he/she/they
executed the same in his/her/their capacity(ies), and that by his/her/their
signature(s) on the instrument, the individual(s), or the person upon behalf of
which the individual(s) acted, executed the instrument.
/S/ Anna Knice
Notary Public
Anna Knice
Notary Public, State of New York
No. 4980431
Qualified in Suffolk County
Commission Expires April 22, 2001
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<PAGE> 1
EXHIBIT 10.27
ASTORIA FINANCIAL CORPORATION
AMENDED AND RESTATED
EMPLOYMENT AGREEMENT WITH EXECUTIVE OFFICER
This AMENDED AND RESTATED EMPLOYMENT AGREEMENT (the "Agreement") is
made and entered into as of January 1, 2000 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 One Astoria Federal Plaza, Lake
Success, New York 11042-1085 (the "Company"), and MONTE N. REDMAN, an individual
residing at 69 Third Street, Garden City, New York 11530 (the "Executive").
WITNESSETH:
WHEREAS, the Executive currently serves the Company in the capacity of
Executive Vice President and Chief Financial Officer and as Executive Vice
President and Chief Financial Officer of its wholly owned subsidiary, ASTORIA
FEDERAL SAVINGS AND LOAN ASSOCIATION (the "Association"); and
WHEREAS, the Executive currently has an Employment Agreement with the
Company dated January 1, 1996 which the Executive and the Company wish to amend
and modify; 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 amend and restate in its entirety the Employment Agreement by and between
the Company and the Executive dated as of January 1, 1996 so as to provide as
follows from and after the date hereof:
Section 1. Employment.
The Company agrees to continue to employ the Executive, and the
Executive hereby agrees to such continued employment, during the period and upon
the terms and conditions set forth in this Agreement.
Section 2. Employment Period; Remaining Unexpired Employment Period.
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<PAGE> 2
(a) The terms and conditions of this Agreement shall be and remain
in effect during the period of employment established under
this Section 2 (the "Employment Period"). The Employment
Period shall be for an initial term of three years beginning
on the date of this Agreement and ending on the day before the
third anniversary date of this Agreement, plus such
extensions, if any, as are provided by the Board of Directors
of the Company (the "Board") pursuant to Section 2(b).
(b) Beginning on the date of this Agreement, the Employment Period
shall automatically be extended for one (1) additional day
each day, unless either the Company or the Executive elects
not to extend the Agreement further by giving written notice
to the other party, in which case the Employment Period shall
end on the day before the third anniversary of the date on
which such written notice is given. 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 day before the
third anniversary of the date on which such notice is
given; and
(ii) in all other cases, the day before the third
anniversary of the date as of which the Remaining
Unexpired Employment Period is being determined.
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 previously
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 pursuant to this
Agreement.
Section 3. Duties.
The Executive shall serve as Executive Vice President and Chief
Financial Officer of the Company, having such power, authority and
responsibility and performing such duties as are prescribed by or pursuant to
the By-Laws of the Company and as are customarily associated with such position.
The Executive shall devote his or her 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, its affiliates and subsidiaries and shall use his or her best efforts
to advance the interests of the Company.
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<PAGE> 3
Section 4. Cash Compensation.
In consideration for the services to be rendered by the Executive
hereunder, the Company shall pay to him or her a salary at an initial annual
rate of FOUR HUNDRED TEN THOUSAND DOLLARS ($410,000), 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. In no event shall the Executive's annual rate of
salary under this Agreement in effect at a particular time be reduced without
his or her prior written consent and any such reduction in the absence of such
consent shall be a material breach of this Agreement. 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.
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 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
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 or her harmless from, any costs, liabilities,
losses and exposures to the fullest extent and on the most
favorable terms and conditions
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<PAGE> 4
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 as he
or she may disclose to and as may be approved by the Board
(which approval shall not be unreasonably withheld); provided,
however, that such service shall not materially interfere with
the performance of his or her 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 or her 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 or her 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 or she
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 or her principal place of employment with a private office,
secretarial services and other support services and facilities suitable to his
or her position with the Company and necessary or appropriate in connection with
the performance of his or her assigned duties under this Agreement. The Company
shall provide to the Executive for his or her exclusive use an automobile owned
or leased by the Company and appropriate to his or her position, to be used in
the performance of his or her duties hereunder, including commuting to and from
his or her personal residence. The Company shall reimburse the Executive for his
or her ordinary and necessary business expenses, including, without limitation,
all expenses associated with his or her business use of the aforementioned
automobile, fees for memberships in such clubs and organizations as the
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<PAGE> 5
Executive and the Company shall mutually agree are necessary and appropriate for
business purposes, and his or her travel and entertainment expenses incurred in
connection with the performance of his or her 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 or her 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 six (6) months following:
(A) the failure of the Board to appoint or
re-appoint or elect or re-elect the
Executive to the office of Executive Vice
President and Chief Financial Officer (or a
more senior office) of the Company;
(B) if the Executive is or becomes a member of
the Board, 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;
(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 Certificate of Incorporation
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 or her
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
(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 or her total
compensation
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<PAGE> 6
package), unless, during such thirty (30)
day period, the Company cures such failure
in a manner determined by the Executive, in
his or her discretion, to be satisfactory;
or
(E) the relocation of the Executive's principal
place of employment, without his or her
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 the Executive's death following the
Executive's termination of employment, to his or her estate):
(i) his or her 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 or her 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 any event not later than thirty (30) days
after termination of employment;
(ii) the benefits, if any, to which he or she 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;
(iii) continued group life, health (including
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
(including any co-payments and deductibles, but
excluding any premium sharing arrangements, it being
the intention of the parties to this Agreement that
the premiums for such insurance benefits shall be the
sole cost and expense of the Company) equivalent to
the coverage to which he or she would have been
entitled under such plans (as in effect on the date
of his or her termination of employment, or, if his
or her termination of employment occurs after a
Change of Control, on the date of
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<PAGE> 7
such Change of Control, whichever benefits are
greater), if he or she had continued working for the
Company during the Remaining Unexpired Employment
Period at the highest annual rate of salary or
compensation, as applicable, 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 the Executive's
termination of employment with the Company, a lump
sum payment in an amount representing an estimate of
the salary that the Executive would have earned if he
or she 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 (the "Salary Severance Payment"). The Salary
Severance Payment shall be computed using the
following formula:
SSP = BS x NY
where:
"SSP" is the amount of the Salary Severance Payment,
before the deduction of applicable federal, state and
local withholding taxes;
"BS" is 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;
"NY" is the Remaining Unexpired Employment Period
expressed as a number of years (rounded, if such
period is not a whole number, to the next highest
whole number).
The Salary Severance Payment shall 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 the Executive's
termination of employment with the Company, a lump
sum payment (the "DB Severance Payment") in an amount
equal to the excess, if any, of:
(A) the present value of the aggregate benefits
to which he or she would be entitled under
any and all qualified and non-qualified
defined benefit pension plans maintained by,
or covering employees of, the Company, if he
or she were 100% vested thereunder and had
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<PAGE> 8
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 pursuant to Sections
9(b)(i), (iv), (vii), (viii) and (ix) of
this Agreement; over
(B) the present value of the benefits to which
he or she is actually entitled under such
defined benefit pension plans as of the date
of his or her termination;
The DB Severance Payment shall be computed using the
following formula:
DBSP = SEVLS - LS
where:
"DBSP" is the amount of the DB Severance Payment,
before the deduction of applicable federal, state and
local withholding taxes;
"SEVLS" is the sum of the present value of the
defined benefit pension benefits that have been or
would be accrued by the Executive under all qualified
and non-qualified defined benefit pension plans of
which the Company or any of its affiliates or
subsidiaries are a sponsor and in which the Executive
is or, but for the completion of any service
requirement that would have been completed during the
Remaining Unexpired Employment Period, would be a
participant utilizing the following assumptions:
(I) the executive is 100% vested in the
plans regardless of actual service,
(II) the benefit to be valued shall be a
single life annuity with monthly
payments due on the first day of
each month and with a guaranteed
payout of not less than 120 monthly
payments,
(III) the calculation shall be made
utilizing the same mortality table
and interest rate as would be
utilized by the plan on the date of
termination as if the calculation
were being made pursuant to Section
417(e)(3)(A)(ii) of the Internal
Revenue Code, as amended, (the
"Code");
Page 8 of 31
<PAGE> 9
(IV) for purpose of calculating the
Executive's monthly or annual
benefit under the defined benefit
plans, additional service equal to
the Remaining Unexpired Employment
Period (rounded up to the next whole
year if such period is not a whole
number when expressed in years)
shall be added to the Executive's
actual service to calculate the
amount of the benefit; and
(V) for purpose of calculating the
Executive's monthly or annual
benefit under the defined benefit
plans, the following sums shall be
added to the Executive's
compensation recognized under such
plans for the most recent year
recognized:
(1) payments made pursuant to
Section 9(b)(i);
(2) the Salary Severance Payment;
(3) the Bonus Severance Payment;
(4) the Option Surrender Payment;
and
(5) the RRP Surrender Payment.
"LS" is the sum of the present value of the defined
benefit pension benefits that are vested benefits
actually accrued by the Executive under all qualified
and non-qualified defined benefit pension plans
maintained by, or covering employees of, the Company
or any of its affiliates or subsidiaries in which the
Executive is or, but for the completion of any
service requirement, would be a participant utilizing
the following assumptions:
(I) the benefit to be valued shall be a
single life annuity with monthly
payments due on the first day of
each month and with a guaranteed
payout of not less than 120 monthly
payments, and
(II) the calculation shall be made
utilizing the same mortality table
and interest rate as would be
utilized by the plan on the date of
termination as if the calculation
were being made pursuant to Section
417(e)(3)(A)(ii) of the Code;
(vi) within thirty (30) days following the Executive's
termination of employment with the Company, a lump
sum payment (the "Defined Contribution Severance
Payment") equal to the sum of:
(A) an estimate of the additional employer
contributions to which he or she would have
been entitled under any and all qualified
and non-qualified defined contribution
pension plans, excluding the employee
Page 9 of 31
<PAGE> 10
stock ownership plans, maintained by, or
covering employees of, the Company or any of
its affiliates or subsidiaries as if he or
she were 100% vested thereunder and had
continued working for the Company during the
Remaining Unexpired Employment Period (the
"401K Severance Payment"); and
(B) an estimate of the value of the additional
assets which would have been allocable to
him or her through debt service or otherwise
under any and all qualified and
non-qualified employee stock ownership
plans, maintained by, or covering employees
of, the Company or any of its affiliates or
subsidiaries as if he or she were 100%
vested thereunder and had continued working
for the Company during the Remaining
Unexpired Employment Period, based on the
fair market value of such assets at
termination of employment (the "ESOP
Severance Payment").
The Defined Contribution Severance Payment shall be
calculated as follows:
DCSP = 401KSP + ESOPSP
where:
"DCSP" is the amount of the Defined Contribution
Severance Payment, before the deduction of applicable
federal, state and local withholding taxes;
"401KSP" is the amount of the 401K Severance Payment,
before the deduction of applicable federal, state and
local withholding taxes; and
"ESOPSP" is the amount of the ESOP Severance Payment,
before the deduction of applicable federal, state and
local withholding taxes.
The 401KSP shall be calculated as follows:
401KSP = (401KC x NY) + UVB
where
"401KC" is the sum of the Company Contributions as
defined in the Association's Incentive Savings Plan
or, if made under another defined contribution
pension plan other than an employee stock ownership
plan, the comparable contribution made for the
benefit of the Executive during the one year period
which shall end on the date of his or her termination
of his or her employment with the Company;
Page 10 of 31
<PAGE> 11
"NY" is the Remaining Unexpired Employment Period
expressed as a number of years (rounded, if such
period is not a whole number, to the next highest
whole number); and
"UVB" is the actual balance credited to the
Executive's account under the applicable plan at the
date of his or her termination of employment that is
not vested and does not become vested as a
consequence of such termination of employment.
The ESOPSP shall be calculated as follows:
ESOPSP = (((ALL x FMV) + C) x NY) + UVB
where:
"ALL" is the sum of the number of shares of the
Company's common stock or, if applicable, phantom
shares of such stock by whatever term it is described
allocated to the Executive's accounts under all
qualified and non-qualified employee stock ownership
plans maintained by the Company or any of its
affiliates or subsidiaries during or for the last
complete plan year in which the Executive
participated in such plans and received such an
allocation whether the allocation occurred as a
result of contributions made by the Company, the
payment by the Company or any of its affiliates or
subsidiaries of any loan payments under a leveraged
employee stock ownership plan, the allocation of
forfeitures under the terms of such plan or as a
result of the use of cash or earnings allocated to
the Executive's account during such plan year to make
loan payments that result in share allocations,
provided however, that excluded shall be any shares
or phantom shares allocated to the Executive's
account under any qualified and non-qualified
employee stock ownership plans maintained by the
Company or any of its affiliates or subsidiaries
solely as a result of the termination of such plans,
provided further, that if the shares allocated are
not shares of the Association's common stock or
phantom shares of such stock than shares of whatever
securities are so allocated shall be utilized, and
provided further, that in the event that there shall
be any shares or phantom shares allocated during the
then current plan year or the last complete plan year
to the Executive's account under any qualified and
non-qualified employee stock ownership plans
maintained by the Association or any of its
affiliates or subsidiaries solely as a result of the
termination of such plans, the ALL shall be reduced
(but not to an amount less than zero (0)) by an
amount calculated by multiplying the number of shares
or phantom shares allocated to the Executive's
account solely as a result of the termination of such
plans times the FMV utilized to calculate the ESOPSP;
Page 11 of 31
<PAGE> 12
"C" is the sum of all cash allocated to the
Executive's accounts under all qualified and
non-qualified employee stock ownership plans
maintained by the Company during or for the last
complete plan year in which the Executive
participated in such plans whether the allocation
occurred as a result of contributions made by the
Company, the payment by the Company or the
Association of any loan payments under a leveraged
employee stock ownership plan or the allocation of
forfeitures under the terms of such plan during such
plan year;
"FMV" is the closing price of the Company's common
stock on The Nasdaq Stock Market or on whatever other
stock exchange or market such stock is publicly
traded on the date the Executive's employment
terminates or, if such day is not a day on which such
securities are traded, on the most recent preceding
trading day on which a trade occurs, provided however
that if the security allocated to the Executive's
account during the last completed plan year is other
than the Company's common stock the closing price of
such other security on the date the Executive's
employment terminates shall be utilized.
"NY" is the Remaining Unexpired Employment Period
expressed as a number of years (rounded, if such
period is not a whole number, to the next highest
whole number); and
"UVB" is the actual balance credited to the
Executive's account under the applicable plan at the
date of his or her termination of employment that is
not vested and does not become vested as a
consequence of such termination of employment.
(vii) within thirty (30) days following the Executive's
termination of employment with the Company, the
Company shall make a lump sum payment to the
Executive in an amount equal to the estimated
potential annual bonuses or incentive compensation
that the Executive could have earned if the Executive
had continued working for the Company during the
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 (the
"Bonus Severance Payment"). The Bonus Severance
Payment shall be computed using the following
formula:
BSP = (BS x TIO x AP x NY)
where:
"BSP" is the amount of the Bonus Severance Payment,
before the deduction
Page 12 of 31
<PAGE> 13
of applicable federal, state and local withholding
taxes;
"BS" is 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;
"TIO" is the highest target incentive opportunity
(expressed as a percentage of base salary)
established by the Compensation Committee of the
Board for the Executive pursuant to the Astoria
Financial Corporation Executive Officer Annual
Incentive Plan during that portion of the Employment
Period which is prior to the Executive's termination
of employment with the Company;
"AP" is the highest award percentage available to the
Executive with respect to the financial performance
of the Company (expressed as a percentage of the TIO)
established by the Compensation Committee of the
Board for the Executive pursuant to the Astoria
Financial Corporation Executive Officer Annual
Incentive Plan during the period during that portion
of the Employment Period which is prior to the
Executive's termination of employment with the
Company; and
"NY" is the Remaining Unexpired Employment Period
expressed as a number of years (rounded, if such
period is not a whole number, to the next highest
whole number).
(viii) 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
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 (the
"Option Surrender Payment"). The Option Surrender
Payment shall be calculated as follows:
OSP = (FMV - EP) x N
where:
"OSP" is the amount of the Option Surrender Payment,
before the deduction of applicable federal, state and
local withholding taxes;
"FMV" is the closing price of the Company's common
stock on The Nasdaq Stock Market, or on whatever
other stock exchange or market such stock is publicly
traded, on the date the Executive's employment
terminates or, if such
Page 13 of 31
<PAGE> 14
day is not a day on which such securities are traded,
on the most recent preceding trading day on which a
trade occurs, provided however that if the option or
stock appreciation right is for a security other than
the Company's common stock, 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 shall be utilized;
"EP" is the exercise price per share for such option
or appreciation right, as specified in or under the
relevant plan or program; and
"N" is the number of shares with respect to which
options or appreciation rights are being surrendered.
For purposes of determining the Option Severance
Payment and for purposes of determining the
Executive's right following his or her 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 or she is not 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 shares awarded to the Executive under any
restricted stock plan maintained by, or covering
employees of, the Company, a lump sum payment (the
"RRP Surrender Payment") The RRP Surrender Payment
shall be calculated as follows:
RSP = FMV x N
where:
"RSP" is the amount of the RRP Surrender Payment,
before the deduction of applicable federal, state and
local withholding taxes;
"FMV" is the closing price of the Company's common
stock on The Nasdaq Stock Market, or on whatever
other stock exchange or market such stock is publicly
traded, on the date the Executive's employment
terminates or, if such day is not a day on which such
securities are traded, on the preceding trading day
on which a trade occurs, provided however that if the
restricted stock is a security other than the
Company's common stock, the fair market value of a
share of stock of the same class as the stock granted
under such plan, determined as of the date of
termination of employment shall be utilized; and
Page 14 of 31
<PAGE> 15
"N" is the number of shares which are being
surrendered.
For purposes of determining the RRP Surrender Payment
and for purposes of determining the Executive's right
following his or her 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 or she is not vested under such plan.
The Salary Severance Payment, the DB Severance Payment, the
Defined Contribution Severance Payment, the Bonus Severance
Payment, the Option Surrender Payment and the RRP Surrender
Payment shall be computed at the expense of the Company by an
attorney of the firm of Thacher Proffitt & Wood, Two World
Trade Center, New York, New York 10048 or, if such firm is
unavailable or unwilling to perform such calculation, by a
firm of independent certified public accountants selected by
the Executive and reasonably satisfactory to the Company (the
"Computation Advisor"). The determination of the Computation
Advisor as to the amount of such payments shall be final and
binding in the absence of manifest error.
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 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 payment of the Salary
Severance Payment, the DB Severance Payment, the Defined
Contribution Severance Payment, the Bonus Severance Payment,
the Option Surrender Payment and the RRP Surrender Payment on
the receipt of the Executive's resignation from any and all
positions which he or she holds as an officer, director or
committee member with respect to the Company, the Association
or any subsidiary or affiliate of either of them.
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:
Page 15 of 31
<PAGE> 16
(A) the Executive intentionally engages in
dishonest conduct in connection with the
Executive's performance of services for the
Company resulting in the Executive's
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 the Executive's 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 the Executive's
fiduciary duties to the Company for personal
profit;
(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 the Executive's performance of services
for the Company; or
(F) the Executive's material breach of any
material provision of this Agreement which
is not substantially cured within 60 days
after written notice of such breach is
received by the Executive from 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 Disabled;
(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, except as otherwise specifically provided
herein, shall have no further obligations under this
Agreement, other than the payment to the Executive (or, in the
event of his or her death, to his or her estate) of the
amounts or benefits provided in Section 9(b)(i) and (ii) of
this Agreement (the "Standard Termination Entitlements").
(b) For purposes of Section 10(a)(i), no act or failure to act, on
the part of the Executive,
Page 16 of 31
<PAGE> 17
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. Except
as specifically provided below, 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:
(i) the Board, by the affirmative vote of 75% of its
entire membership, determines that the Executive is
guilty of the conduct described in Section 10(a)(i)
above measured against standards generally prevailing
at the relevant time in the savings and community
banking industry;
(ii) prior to the vote contemplated by Section 10(b)(i),
the Board shall provide the Executive with notice of
the Company's intent to discharge the Executive for
Cause, detailing with particularity the facts and
circumstances which are alleged to constitute Cause
(the "Notice of Intent to Discharge"); and
(iii) after the giving of the Notice of Intent to Discharge
and before the taking of the vote contemplated by
Section 10(b)(i), the Executive, together with the
Executive's legal counsel, if the Executive so
desires, are afforded a reasonable opportunity to
make both written and oral presentations before the
Board for the purpose of refuting the alleged grounds
for Cause for the Executive's discharge; and
(iv) after the vote contemplated by Section 10(b)(i), the
Company has furnished to the Executive a notice of
termination which shall specify the effective date of
the Executive's termination of employment (which
shall in no event be earlier than the date on which
such notice is deemed given) and include a copy of a
resolution or resolutions adopted by the Board,
certified by its corporate secretary, authorizing the
termination of the Executive's employment with Cause
and stating with particularity the facts and
circumstances found to constitute Cause for the
Executive's discharge (the "Final Discharge Notice").
If the Executive, during the 90 (ninety) day period commencing
on the delivery by the Company to the Executive of the Notice
of Intent to Discharge specified in Section 10(b)(ii), resigns
his or her employment with the Company prior to the delivery
to the Executive by the Company of the Final Discharge Notice
specified in Section 10(b)(iv), then the cessation of
employment of the Executive shall be deemed to be for Cause.
Page 17 of 31
<PAGE> 18
Following the giving of a Notice of Intent to Discharge, the
Bank may temporarily suspend the Executive's duties and
authority and, in such event, may also suspend the payment of
salary and other cash compensation, but not the Executive's
participation in retirement, insurance and other employee
benefit plans. If the Executive is not discharged or is
discharged without Cause within forty-five (45) days after the
giving of a Notice of Intent to Discharge, payments of salary
and cash compensation shall resume, and all payments withheld
during the period of suspension shall be promptly restored. If
the Executive is discharged with Cause not later than
forty-five (45) days after the giving of the Notice of Intent
to Discharge, all payments withheld during the period of
suspension shall be deemed forfeited and shall not be included
in the Standard Termination Entitlements. If a Final Discharge
Notice is given later than forty-five (45) days, but sooner
than ninety (90) days, after the giving of the Notice of
Intent to Discharge, all payments made to the Executive during
the period beginning with the giving of the Notice of Intent
to Discharge and ending with the Executive's discharge with
Cause shall be retained by the Executive and shall not be
applied to offset the Standard Termination Entitlements. If
the Bank does not give a Final Discharge Notice to the
Executive within ninety (90) days after giving a Notice of
Intent to Discharge, the Notice of Intent to Discharge shall
be deemed withdrawn and any future action to discharge the
Executive with Cause shall require the giving of a new Notice
of Intent to Discharge. If the Executive resigns pursuant to
Section 10(b), the Executive shall forfeit his or her right to
suspended amounts that have not been restored as of the date
of the Executive's resignation or notice of resignation,
whichever is earlier.
(c) The Company may terminate the Executive's employment on the
basis that the Executive is Disabled during the Employment
Period upon a determination by the Board, by the affirmative
vote of 75% of its entire membership, acting in reliance on
the written advice of a medical professional acceptable to it,
that the Executive is suffering from a physical or mental
impairment which, at the date of the determination, has
prevented the Executive from performing the Executive's
assigned duties on a substantially full-time basis for a
period of at least one hundred and eighty (180) days during
the period of one (1) year ending with the date of the
determination or is likely to result in death or prevent the
Executive from performing the Executive's assigned duties on a
substantially full-time basis for a period of at least one
hundred and eighty (180) days during the period of one (1)
year beginning with the date of the determination. In such
event:
(A) The Company shall pay and provide the
Standard Termination Entitlements to the
Executive;
(B) In addition to the Standard Termination
Entitlements, the Company shall continue to
pay to the Executive the Executive's base
salary, at the annual rate in effect for the
Executive immediately prior to the
Page 18 of 31
<PAGE> 19
termination of the Executive's employment,
during a period ending on the earliest of:
(I) the expiration of one hundred and
eighty (180) days after the date of
termination of the Executive's
employment;
(II) the date on which long-term
disability insurance benefits are
first payable to the Executive under
any long-term disability insurance
plan covering the Executive; or
(III) the date of the Executive's death.
A termination of employment due to Disability under
this Section shall be effected by a notice of
termination given to the Executive by the Company and
shall take effect on the later of the effective date
of termination specified in such notice or, if no
such date is specified, the date on which the notice
of termination is deemed given to the Executive.
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 Securities Exchange Act of 1934, as
amended (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
Page 19 of 31
<PAGE> 20
under the Exchange Act) at least 51 % of the
securities entitled to vote generally in the
election of directors of the Company;
(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
do not belong to any of the following groups:
(A) individuals who were members of the Board on
the date of this Agreement; or
(B) individuals who first became members of the
Board after the date of this Agreement
either:
(I) upon election to serve as a member
of the Board 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, but only if nominated for
election by affirmative vote of
three-quarters of the members of the
Board, 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; or
(v) any event which would be described in Section
11(a)(i), (ii), (iii) or (iv) if the
Page 20 of 31
<PAGE> 21
term "Association" were substituted for the term
"Company" therein or the term "Board of Directors of
the Association" were substituted for the term
"Board".
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 an affiliate or
subsidiary of either of 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 or her 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 within six
(6) months following his or her demotion, loss of
title, office or significant authority or
responsibility or following any reduction in any
element of his or her package of compensation and
benefits;
(ii) resignation, voluntary or otherwise, by the Executive
at any time during the Employment Period within six
(6) months following any relocation of his or her
principal place of employment or any change in
working conditions at such principal place of
employment which the Executive, in his or her
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 within six
(6) months 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 her; or
(iv) resignation, voluntary or otherwise, for any reason
whatsoever during the Employment Period within six
months 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
Page 21 of 31
<PAGE> 22
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 intended to indemnify the Executive against the
financial effects of the excise tax imposed on excess
parachute payments under Section 28OG of the Code (the "Tax
Indemnity Payment"). The Tax Indemnity Payment shall be
determined under the following formula:
E x P
TIP = -------------------------------------
1 - (( FI x ( 1 - SLI )) + SLI + E + M )
where:
"TIP" is the Tax Indemnity Payment, before the deduction of
applicable federal, state and local withholding taxes;
"E" is the percentage rate at which an excise tax is assessed
under Section 4999 of the Code;
"P" is the amount with respect to which such excise tax is
assessed, determined without regard to any amount payable
pursuant to this Section 12;
"FI" is the highest marginal rate of income tax applicable to
the Executive under the Code for the taxable year in question;
"SLI" is 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" is the highest marginal rate of Medicare tax applicable to
the Executive under the Code for the taxable year in question.
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<PAGE> 23
(b) The computation of the Tax Indemnity Payment shall be made at
the expense of the Company by the Computation Advisor and
shall be based on the following assumptions:
(i) that a change in ownership, a change in effective
ownership or control or a change in the ownership of
a substantial portion of the assets of the
Association or the Company has occurred within the
meaning of Section 28OG of the Code (a "28OG Change
of Control");
(ii) that all direct or indirect payments made to or
benefits conferred upon the Executive on account of
the Executive's termination of employment are
"parachute payments" within the meaning of Section
28OG of the Code; and
(iii) that no portion of such payments is reasonable
compensation for services rendered prior to the
Executive's termination of employment.
(c) With respect to any payment that is presumed to be a parachute
payment for purposes of Section 28OG of the Code, the Tax
Indemnity Payment shall be made to the Executive on the
earlier of 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 the date the
tax is required to be paid by the Executive, unless, prior to
such date, the Company delivers to the Executive the written
opinion (the "Opinion Letter"), in form and substance
reasonably satisfactory to the Executive, of the Computation
Advisor or, if the Computation Advisor is unable to provide
such opinion, of an attorney or firm of independent certified
public accountants selected by the Company and reasonably
satisfactory to the Executive, to the effect that the
Executive has a reasonable basis on which to conclude that:
(i) no 28OG Change in Control has occurred, or
(ii) all or part of the payment or benefit in question is
not a parachute payment for purposes of Section 28OG
of the Code, or
(iii) all or a part of such payment or benefit constitutes
reasonable compensation for services rendered prior
to the 28OG Change of Control, or
(iv) for some other reason which shall be set forth in
detail in such letter, no excise tax is due under
Section 4999 of the Code with respect to such payment
or benefit.
If the Company delivers an Opinion Letter, the Computation
Advisor shall re- compute, and the Company shall make, the Tax
Indemnity Payment, if any, in reliance on the information
contained in the Opinion Letter.
Page 23 of 31
<PAGE> 24
(d) 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 with
respect to which the Tax Indemnity Payment is made, 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 pursuant to Sections 12(a) and 12(c),
when increased by the amount of the payment made to the
Executive pursuant to this Section 12(d), or when reduced by
the amount of the payment made to the Company pursuant to this
Section 12(d), equals the amount that should have properly
been paid to the Executive under Sections 12(a) and 12(c). The
interest paid to the Company under this Section 12(d) shall be
determined at the rate provided under Section 1274(b)(2)(B) of
the Code. The payment made to the Executive shall include such
amount of interest as is necessary to satisfy any interest
assessment made by the Internal Revenue Service and an
additional amount equal to any monetary penalties assessed by
the Internal Revenue Service on account of an underpayment of
the excise tax. 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, at least 20 days
before the date on which such return is required to be filed
with the Internal Revenue Service. Nothing in this Agreement
shall give the Company any right to control or otherwise
participate in any action, suit or proceeding to which the
Executive is a party as a result of positions taken on the
Executive's federal income tax return with respect to the
Executive's liability for excise taxes under Section 4999 of
the Code.
(e) 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, in the event of his or
her termination of employment with the Company prior to the expiration of the
Employment Period, for a period of one (1) year following the date of his or her
termination of employment with the Company (or, if less, for the Remaining
Unexpired Employment Period), the Executive 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
Page 24 of 31
<PAGE> 25
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(c) of
this Agreement, this Section 13 shall not prevent the Executive from accepting
any position or performing any services if:
(a) he or she 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 the Executive obtains the prior written consent of the Company,
the Executive shall keep confidential and shall refrain from using for the
benefit of the Executive or any person or entity other than the Company, any
entity which is a subsidiary of the Company or any entity which the Company is a
subsidiary of, any material document or information obtained from the Company,
or from its affiliates or subsidiaries, in the course of the Executive's
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 or her 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
proceeding 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 Executive's termination of employment with the
Company, he or she shall not, without the 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 or subsidiary of ether 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;
Page 25 of 31
<PAGE> 26
(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 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 or
subsidiary of either of them, to terminate his or her
employment and accept employment, 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, the Association, or
any affiliate or subsidiary of either of them to terminate an
existing business or commercial relationship with the Company,
the Association, or any affiliate or subsidiary of either of
them.
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.
Section 17. Successors and Assigns.
This Agreement will inure to the benefit of and be binding upon the
Executive, his or her 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 under this Agreement 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.
Page 26 of 31
<PAGE> 27
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:
Monte N. Redman
69 Third Street
Garden City, New York 11530
If to the Company:
Astoria Financial Corporation
One Astoria Federal Plaza
Lake Success, New York 11042-1085
Attention: General Counsel
with a copy to:
Thacher Proffitt & Wood
Two World Trade Center
New York, New York 10048
Attention: W. Edward Bright, Esq.
Section 19. Indemnification for Attorneys' Fees.
The Company shall indemnify, hold harmless and defend the Executive
against reasonable costs, including legal fees, incurred by him or her in
connection with or arising out of any action, suit or proceeding in which he or
she may be involved, as a result of his or her efforts, in good faith, to defend
or enforce the terms of this Agreement; provided, however, that in the case of
any action, suit or proceeding instituted prior to a Change of Control, 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
Page 27 of 31
<PAGE> 28
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 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. No modifications of this Agreement shall be valid unless made in writing
and signed by the parties hereto.
Page 28 of 31
<PAGE> 29
Section 26. Guarantee.
The Company hereby agrees to guarantee the payment by the Association
of any benefits and compensation to which the Executive is or may be entitled to
under the terms and conditions of the Amended and Restated Employment Agreement
dated as of the lst day of January, 2000 between the Association and the
Executive.
Section 27. Non-duplication.
In the event that the Executive shall perform services for the
Association or any other affiliate or 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 affiliates and
subsidiaries.
Section 28. Survival.
The provisions of any sections of this Agreement which by its terms
contemplates performance after the expiration or termination of this Agreement
(including, but not limited to, Sections 6, 9, 10, 11, 12, 13, 14, 15, 16, 17,
18, 19, 21, 26, 27, 29, 30 and 31) shall survive the expiration of the
Employment Period or termination of this Agreement.
Section 29. 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 30. 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 conditioned upon their compliance with Section
18(k) of the Federal Deposit Insurance Act, 12 U.S.C. Section 1828(k), and any
regulations promulgated thereunder.
Section 31. No Offset or Recoupment; No Attachment.
The Company's obligation to make the payments provided for in this
Agreement and otherwise to perform its obligations under this Agreement shall
not be affected by any set-off, counterclaim, recoupment, defense or other
claim, right or action which the Company or any of its affiliates or
subsidiaries may have against the Executive. In no event shall the Executive be
obligated to seek other employment or take any other action by way of mitigation
of the amounts payable to
Page 29 of 31
<PAGE> 30
the Executive under any of the provisions of this Agreement and such amounts
shall not be reduced whether or not the Executive obtains other employment.
Except as required by law, no right to receive payments under this Agreement
shall be subject to anticipation, commutation, alienation, sale, assignment,
encumbrance, charge, pledge, or hypothecation, or to execution, attachment,
levy, or similar process or assignment by operation of law, and any attempt,
voluntary or involuntary, to affect any such action shall be null, void, and of
no effect.
Section 32. LISB Transaction.
The Executive hereby waives any claim the Executive may have pursuant
to his or her Employment Agreements each dated January 1, 1996 with the Company
and the Association, respectively, that the acquisition by and the merger of
Long Island Bancorp, Inc. and The Long Island Savings Bank, FSB with and into
the Company and the Association, respectively, constituted a "change of control"
of the Company or the Association as defined in such Employment Contracts.
IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed and the Executive has hereunto set his or her hand, all as of the day
and year first above written.
ATTEST:
/S/ William K. Sheerin ASTORIA FINANCIAL CORPORATION
William K. Sheerin
[Seal] By: /S/ George L. Engelke, Jr.
Name: George L. Engelke, Jr.
Title: Chairman, President and Chief
Executive Officer
/S/ Monte N. Redman
MONTE N. REDMAN
Page 30 of 31
<PAGE> 31
STATE OF NEW YORK )
) ss.:
COUNTY OF NASSAU )
On this 20 day of March, 2000, before me, the undersigned, personally
appeared Monte N. Redman, personally known to me or proved to me on the basis of
satisfactory evidence to be the individual(s) whose name(s) is (are) subscribed
to the within instrument and acknowledged to me that he/she/they executed the
same in his/her/their capacity(ies), and that by his/her/their signature(s) on
the instrument, the individual(s), or the person upon behalf of which the
individual(s) acted, executed the instrument.
/S/ Anna Knice
Notary Public
Anna Knice
Notary Public, State of New York
No. 4980431
Qualified in Suffolk County
Commission Expires April 22, 2001
STATE OF NEW YORK )
) ss.:
COUNTY OF NASSAU )
On this 20 day of March, 2000, before me, the undersigned, personally
appeared George L. Engelke, Jr., personally known to me or proved to me on the
basis of satisfactory evidence to be the individual(s) whose name(s) is (are)
subscribed to the within instrument and acknowledged to me that he/she/they
executed the same in his/her/their capacity(ies), and that by his/her/their
signature(s) on the instrument, the individual(s), or the person upon behalf of
which the individual(s) acted, executed the instrument.
/S/ Anna Knice
Notary Public
Anna Knice
Notary Public, State of New York
No. 4980431
Qualified in Suffolk County
Commission Expires April 22, 2001
Page 31 of 31
<PAGE> 1
EXHIBIT 10.28
ASTORIA FEDERAL SAVINGS AND LOAN ASSOCIATION
AMENDED AND RESTATED
EMPLOYMENT AGREEMENT WITH EXECUTIVE OFFICER
This AMENDED AND RESTATED EMPLOYMENT AGREEMENT (the "Agreement") is
made and entered into as of January 1, 2000 by and between ASTORIA FEDERAL
SAVINGS AND LOAN ASSOCIATION, a savings association organized and operating
under the federal laws of the United States and having an office at One Astoria
Federal Plaza, Lake Success, New York 11042-1085 (the "Association") and, MONTE
N. REDMAN, an individual residing at 69 Third Street, Garden City, New York
11530 (the "Executive").
WITNESSETH:
WHEREAS, the Executive currently serves the Association in the capacity
of Executive Vice President and Chief Financial Officer and as Executive Vice
President and Chief Financial Officer of the Association's savings and loan
holding company, ASTORIA FINANCIAL CORPORATION, a publicly held business
corporation organized and operating pursuant to the laws of the State of
Delaware (the "Company"); and
WHEREAS, the Executive currently has an Employment Agreement with the
Association dated January 1, 1996 which the Executive and the Association wish
to amend and modify; and
WHEREAS, the Association 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 Association
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 Association and the
Executive hereby amend and restate in its entirety the Employment Agreement by
and between the Association and the Executive dated as of January 1, 1996 so as
to provide as follows from and after the date hereof:
Section 1. Employment.
The Association agrees to continue to employ the Executive, and the
Executive hereby agrees to such continued employment, during the period and upon
the terms and conditions set forth in this Agreement.
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<PAGE> 2
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 (the "Employment Period"). The Employment
Period shall be for an initial term of three years beginning
on the date of this Agreement and ending on the day before the
third anniversary date of this Agreement. Prior to the first
anniversary of the date of this Agreement and on each
anniversary date thereafter (each an "Anniversary Date) the
Board of Directors of the Association (the "Board") shall
review the terms of this Agreement and the Executive's
performance of services hereunder and may, in the absence of
objection from the Executive, approve an extension of the
Employment Period. In such event, the Employment Period shall
be extended to the day before the third anniversary of the
relevant Anniversary Date.
(b) 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 the day before the
Anniversary Date on which the Employment Period (as extended
pursuant to Section 2(a) of this Agreement) is then scheduled
to expire.
(c) Nothing in this Agreement shall be deemed to prohibit the
Association 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 Association and the Executive in the event
of any such termination shall be determined pursuant to this
Agreement.
Section 3. Duties.
The Executive shall serve as Executive Vice President and Chief
Financial Officer of the Association, having such power, authority and
responsibility and performing such duties as are prescribed by or pursuant to
the By-Laws of the Association and as are customarily associated with such
position. The Executive shall devote his or her 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
Association and shall use his or her best efforts to advance the interests of
the Association.
Section 4. Cash Compensation.
In consideration for the services to be rendered by the Executive
hereunder, the Association shall pay to him or her a salary at an initial annual
rate of FOUR HUNDRED TEN THOUSAND DOLLARS ($410,000), payable in approximately
equal installments in accordance with the Association's customary payroll
practices for senior officers. Prior to each Anniversary Date occurring during
the Employment Period, the Board shall review the Executive's annual rate of
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<PAGE> 3
salary and may, in its discretion, approve an increase therein. In addition to
salary, the Executive may receive other cash compensation from the Association
for services hereunder at such times, in such amounts and on such terms and
conditions as the Board may determine from time to time.
Section 5. Employee Benefit Plans and Programs.
During the Employment Period, the Executive shall be treated as an
employee of the Association 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 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 Association, in accordance with the terms and conditions of such employee
benefit plans and programs and compensation plans and programs and consistent
with the Association's customary practices.
Section 6. Indemnification and Insurance.
(a) During the Employment Period and for a period of six (6) years
thereafter, the Association 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
Association or service in other capacities at the request of
the Association. 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 Association.
(b) To the maximum extent permitted under applicable law, during
the Employment Period and for a period of six (6) years
thereafter, the Association shall indemnify the Executive
against, and hold him or her 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
Association or any subsidiary or affiliate thereof. This
Section 6(b) shall not be applicable where Section 18 is
applicable.
Section 7. Other Activities.
(a) The Executive may serve as a member of the boards of directors
of such business, community and charitable organizations as he
or she may disclose to and as may be approved by the Board
(which approval shall not be unreasonably withheld); provided,
however, that such service shall not materially interfere with
the performance of his or her duties under this Agreement. The
Executive may also
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<PAGE> 4
engage in personal business and investment activities which do
not materially interfere with the performance of his or her
duties hereunder; provided, however, that such activities are
not prohibited under any code of conduct or investment or
securities trading policy established by the Association and
generally applicable to all similarly situated executives.
(b) The Executive may also serve as an officer or director of the
Company on such terms and conditions as the Association and
the Company may mutually agree upon, and such service shall
not be deemed to materially interfere with the Executive's
performance of his or her duties hereunder or otherwise result
in a material breach of this Agreement.
Section 8. Working Facilities and Expenses.
The Executive's principal place of employment shall be at the
Association'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
Association shall maintain its principal executive offices, or at such other
location as the Association and the Executive may mutually agree upon. The
Association shall provide the Executive at his or her principal place of
employment with a private office, secretarial services and other support
services and facilities suitable to his or her position with the Association and
necessary or appropriate in connection with the performance of his or her
assigned duties under this Agreement. The Association shall provide to the
Executive for his or her exclusive use an automobile owned or leased by the
Association and appropriate to his or her position, to be used in the
performance of his or her duties hereunder, including commuting to and from his
or her personal residence. The Association shall reimburse the Executive for his
or her ordinary and necessary business expenses, including, without limitation,
all expenses associated with his or her business use of the aforementioned
automobile, fees for memberships in such clubs and organizations as the
Executive and the Association shall mutually agree are necessary and appropriate
for business purposes, and his or her travel and entertainment expenses incurred
in connection with the performance of his or her duties under this Agreement, in
each case upon presentation to the Association of an itemized account of such
expenses in such form as the Association 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 or her employment with
the Association terminates during the Employment Period under
any of the following circumstances:
(i) the Executive's voluntary resignation from employment
with the Association within six (6) months following:
(A) the failure of the Board to appoint or
re-appoint or elect or re-elect the
Page 4 of 29
<PAGE> 5
Executive to the office of Executive Vice
President and Chief Financial Officer (or a more
senior office) of the Association;
(B) if the Executive is or becomes a member of the
Board, the failure of the stockholders of the
Association 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;
(C) the expiration of a thirty (30) day period
following the date on which the Executive gives
written notice to the Association of its
material failure, whether by amendment of the
Association's Organization Certificate or
By-laws, action of the Board or the
Association'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 Association
cures such failure;
(D) the expiration of a thirty (30) day period
following the date on which the Executive gives
written notice to the Association of its
material breach of any term, condition or
covenant contained in this Agreement (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 or her total
compensation package), unless, during such
thirty (30) day period, the Association cures
such failure; or
(E) the relocation of the Executive's principal
place of employment, without his or her written
consent, to a location outside of Nassau County
and Queens County, New York;
(ii) the termination of the Executive's employment with
the Association for any other reason not described in
Section 10(a).
In such event and subject to Section 27 of this Agreement, the
Association 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
Association under circumstances described in Section 9(a) of
this Agreement, the Association shall pay and provide to the
Executive (or, in the event of the Executive's death following
the Executive's termination of employment, to his or her
estate):
Page 5 of 29
<PAGE> 6
(i) his or her 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 or her employment with the Association, such
payment to be made at the time and in the manner
prescribed by law applicable to the payment of wages
but in any event not later than thirty (30) days
after termination of employment;
(ii) the benefits, if any, to which he or she is entitled
as a former employee under the employee benefit plans
and programs and compensation plans and programs
maintained for the benefit of the Association's
officers and employees;
(iii) continued group life, health (including
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
(including any co-payments and deductibles, but
excluding any premium sharing arrangements, it being
the intention of the parties to this Agreement that
the premiums for such insurance benefits shall be the
sole cost and expense of the Association) equivalent
to the coverage to which he or she would have been
entitled under such plans (as in effect on the date
of his or her termination of employment, or, if his
or her termination of employment occurs after a
Change of Control, on the date of such Change of
Control, whichever benefits are greater), if he or
she had continued working for the Association during
the Remaining Unexpired Employment Period at the
highest annual rate of salary or compensation, as
applicable, achieved during that portion of the
Employment Period which is prior to the Executive's
termination of employment with the Association;
(iv) within thirty (30) days following the Executive's
termination of employment with the Association, a
lump sum payment in an amount representing an
estimate of the salary that the Executive would have
earned if he or she had continued working for the
Association 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 Association (the "Salary Severance
Payment"). The Salary Severance Payment shall be
computed using the following formula:
SSP = BS x NY
where:
Page 6 of 29
<PAGE> 7
"SSP" is the amount of the Salary Severance Payment,
before the deduction of applicable federal, state and
local withholding taxes;
"BS" is 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 Association;
"NY" is the Remaining Unexpired Employment Period
expressed as a number of years (rounded, if such
period is not a whole number, to the next highest
whole number).
The Salary Severance Payment shall 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 the Executive's
termination of employment with the Association, a
lump sum payment (the "DB Severance Payment") in an
amount equal to the excess, if any, of:
(A) the present value of the aggregate benefits to
which he or she would be entitled under any and
all qualified and non-qualified defined benefit
pension plans maintained by, or covering
employees of, the Association, if he or she were
100% vested thereunder and had continued working
for the Association 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 pursuant to
Sections 9(b)(i), (iv), (vii), (viii) and (ix)
of this Agreement; over
(B) the present value of the benefits to which he or
she is actually entitled under such defined
benefit pension plans as of the date of his or
her termination;
The DB Severance Payment shall be computed using the
following formula:
DBSP = SEVLS - LS
where:
"DBSP" is the amount of the DB Severance Payment,
before the deduction
Page 7 of 29
<PAGE> 8
of applicable federal, state and local withholding
taxes;
"SEVLS" is the sum of the present value of the
defined benefit pension benefits that have been or
would be accrued by the Executive under all qualified
and non-qualified defined benefit pension plans of
which the Association or any of its affiliates or
subsidiaries are a sponsor and in which the Executive
is or, but for the completion of any service
requirement that would have been completed during the
Remaining Unexpired Employment Period, would be a
participant utilizing the following assumptions:
(I) the executive is 100% vested in the plans
regardless of actual service,
(II) the benefit to be valued shall be a single
life annuity with monthly payments due on
the first day of each month and with a
guaranteed payout of not less than 120
monthly payments,
(III) the calculation shall be made utilizing the
same mortality table and interest rate as
would be utilized by the plan on the date of
termination as if the calculation were being
made pursuant to Section 417(e)(3)(A)(ii) of
the Internal Revenue Code, as amended, (the
"Code");
(IV) for purpose of calculating the Executive's
monthly or annual benefit under the defined
benefit plans, additional service equal to
the Remaining Unexpired Employment Period
(rounded up to the next whole year if such
period is not a whole number when expressed
in years) shall be added to the Executive's
actual service to calculate the amount of
the benefit; and
(V) for purpose of calculating the Executive's
monthly or annual benefit under the defined
benefit plans, the following sums shall be
added to the Executive's compensation
recognized under such plans for the most
recent year recognized:
(1) payments made pursuant to Section
9(b)(i);
(2) the Salary Severance Payment;
(3) the Bonus Severance Payment;
(4) the Option Surrender Payment; and
(5) the RRP Surrender Payment.
Page 8 of 29
<PAGE> 9
"LS" is the sum of the present value of the defined
benefit pension benefits that are vested benefits
actually accrued by the Executive under all qualified
and non-qualified defined benefit pension plans
maintained by, or covering employees of, the Company
or any of its affiliates or subsidiaries in which the
Executive is or, but for the completion of any
service requirement, would be a participant utilizing
the following assumptions:
(I) the benefit to be valued shall be a single
life annuity with monthly payments due on
the first day of each month and with a
guaranteed payout of not less than 120
monthly payments, and
(II) the calculation shall be made utilizing the
same mortality table and interest rate as
would be utilized by the plan on the date of
termination as if the calculation were being
made pursuant to Section 417(e)(3)(A)(ii) of
the Code;
(vi) within thirty (30) days following the Executive's
termination of employment with the Association, a
lump sum payment (the "Defined Contribution Severance
Payment") equal to the sum of:
(A) an estimate of the additional employer
contributions to which he or she would have been
entitled under any and all qualified and non-
qualified defined contribution pension plans,
excluding the employee stock ownership plans,
maintained by, or covering employees of, the
Association or any of its affiliates or
subsidiaries as if he or she were 100% vested
thereunder and had continued working for the
Association during the Remaining Unexpired
Employment Period (the "401K Severance
Payment"); and
(B) an estimate of the value of the additional
assets which would have been allocable to him or
her through debt service or otherwise under any
and all qualified and non-qualified employee
stock ownership plans, maintained by, or
covering employees of the Association or any of
its affiliates or subsidiaries as if he or she
were 100% vested thereunder and had continued
working for the Association during the Remaining
Unexpired Employment Period, based on the fair
market value of such assets at termination of
employment (the "ESOP Severance Payment").
The Defined Contribution Severance Payment shall be
calculated as follows:
DCSP = 401KSP + ESOPSP
Page 9 of 29
<PAGE> 10
where:
"DCSP" is the amount of the Defined Contribution
Severance Payment, before the deduction of applicable
federal, state and local withholding taxes;
"401KSP" is the amount of the 401K Severance Payment,
before the deduction of applicable federal, state and
local withholding taxes; and
"ESOPSP" is the amount of the ESOP Severance Payment,
before the deduction of applicable federal, state and
local withholding taxes.
The 401KSP shall be calculated as follows:
401SP = (401KC x NY) + UVB
where
"401KC" is the sum of the Association Contributions
as defined in the Association's Incentive Savings
Plan or, if made under another defined contribution
pension plan other than an employee stock ownership
plan, the comparable contribution made for the
benefit of the Executive during the one year period
which shall end on the date of his or her termination
of his or her employment with the Association;
"NY" is the Remaining Unexpired Employment Period
expressed as a number of years (rounded, if such
period is not a whole number, to the next highest
whole number); and
"UVB" is the actual balance credited to the
Executive's account under the applicable plan at the
date of his or her termination of employment that is
not vested and does not become vested as a
consequence of such termination of employment.
The ESOPSP shall be calculated as follows:
ESOPSP = (((ALL x FMV) + C) x NY) + UVB
where:
"ALL" is the sum of the number of shares of the
Association's common stock or, if applicable, phantom
shares of such stock by whatever term it is described
allocated to the Executive's accounts under all
qualified and non-
Page 10 of 29
<PAGE> 11
qualified employee stock ownership plans maintained
by the Association or any of its affiliates or
subsidiaries during or for the last complete plan
year in which the Executive participated in such
plans and received such an allocation whether the
allocation occurred as a result of contributions made
by the Association, the payment by the Association or
any of its affiliates or subsidiaries of any loan
payments under a leveraged employee stock ownership
plan, the allocation of forfeitures under the terms
of such plan or as a result of the use of cash or
earnings allocated to the Executives account during
such plan year to make loan payments that result in
share allocations, provided however, that excluded
shall be any shares or phantom shares allocated to
the Executive's account under any qualified and
non-qualified employee stock ownership plans
maintained by the Association or any of its
affiliates or subsidiaries solely as a result of the
termination of such plans, provided further, that if
the shares allocated are not shares of the
Association's common stock or phantom shares of such
stock than shares of whatever securities are so
allocated shall be utilized, and provided further,
that in the event that there shall be any shares or
phantom shares allocated during the then current plan
year or the last complete plan year to the
Executive's account under any qualified and
non-qualified employee stock ownership plans
maintained by the Association or any of its
affiliates or subsidiaries solely as a result of the
termination of such plans, the ALL shall be reduced
(but not to an amount less than zero (0)) by an
amount calculated by multiplying the number of shares
or phantom shares allocated to the Executive's
account solely as a result of the termination of such
plans times the FMV utilized to calculate the ESOPSP;
"C" is the sum of all cash allocated to the
Executive's accounts under all qualified and
non-qualified employee stock ownership plans
maintained by the Association during or for the last
complete plan year in which the Executive
participated in such plans whether the allocation
occurred as a result of contributions made by the
Association, the payment by the Association or the
Association of any loan payments under a leveraged
employee stock ownership plan or the allocation of
forfeitures under the terms of such plan during such
plan year;
"FMV" is the closing price of the Association's
common stock on The Nasdaq Stock Market or on
whatever other stock exchange or market such stock is
publicly traded on the date the Executive's
employment terminates or, if such day is not a day on
which such securities are traded, on the most recent
preceding trading day on which a trade occurs,
provided however that if the security allocated to
the Executive's account during the last completed
plan year is other than the Association's common
stock the closing price of such security on the date
the Executive's employment terminates shall be
Page 11 of 29
<PAGE> 12
utilized;
"NY" is the Remaining Unexpired Employment Period
expressed as a number of years (rounded, if such
period is not a whole number, to the next highest
whole number); and
"UVB" is the actual balance credited to the
Executive's account under the applicable plan at the
date of his or her termination of employment that is
not vested and does not become vested as a
consequence of such termination of employment.
(vii) within thirty (30) days following the Executive's
termination of employment with the Association, the
Association shall make a lump sum payment to the
Executive in an amount equal to the estimated
potential annual bonuses or incentive compensation
that the Executive could have earned if the Executive
had continued working for the Association during the
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 Association (the
"Bonus Severance Payment"). The Bonus Severance
Payment shall be computed using the following
formula:
BSP = ( BS x TIO x AP x NY)
where:
"BSP" is the amount of the Bonus Severance Payment,
before the deduction of applicable federal, state and
local withholding taxes;
"BS" is 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 Association;
"TIO" is the highest target incentive opportunity
(expressed as a percentage of base salary)
established by the Compensation Committee of the
Board for the Executive pursuant to the Astoria
Financial Corporation Executive Officer Annual
Incentive Plan during that portion of the Employment
Period which is prior to the Executive's termination
of employment with the Association;
"AP" is the highest award percentage available to the
Executive with respect to the financial performance
of the Company (expressed as a percentage of the TIO)
established by the Compensation Committee of the
Board for the
Page 12 of 29
<PAGE> 13
Executive pursuant to the Astoria Financial
Corporation Executive Officer Annual Incentive Plan
during the period during that portion of the
Employment Period which is prior to the Executive's
termination of employment with the Association; and
"NY" is the Remaining Unexpired Employment Period
expressed as a number of years (rounded, if such
period is not a whole number, to the next highest
whole number).
(viii) at the election of the Association made within thirty
(30) days following the Executive's termination of
employment with the Association, 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 Association, a lump sum payment
(the "Option Surrender Payment"). The Option
Surrender Payment shall be calculated as follows:
OSP = (FMV - EP) x N
where:
"OSP" is the amount of the Option Surrender Payment,
before the deduction of applicable federal, state and
local withholding taxes;
"FMV" is the closing price of the Association's
common stock on The Nasdaq Stock Market, or on
whatever other stock exchange or market such stock is
publicly traded, on the date the Executive's
employment terminates or, if such day is not a day on
which such securities are traded, on the most recent
preceding trading day on which a trade occurs,
provided however that if the option or stock
appreciation right is for a security other than the
Association's common stock, 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 shall be utilized;
"EP" is the exercise price per share for such option
or appreciation right, as specified in or under the
relevant plan or program; and
"N" is the number of shares with respect to which
options or appreciation rights are being surrendered.
For purposes of determining the Option Severance
Payment and for purposes of determining the
Executive's right following his or her termination of
employment with the Association to exercise any
options or appreciation
Page 13 of 29
<PAGE> 14
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 Association, even if he or
she is not vested under such plan or program;
(ix) at the election of the Association made within thirty
(30) days following the Executive's termination of
employment with the Association, upon the surrender
of any shares awarded to the Executive under any
restricted stock plan maintained by, or covering
employees of, the Association, a lump sum payment
(the "RRP Surrender Payment") The RRP Surrender
Payment shall be calculated as follows:
RSP = FMV x N
where:
"RSP" is the amount of the RRP Surrender Payment,
before the deduction of applicable federal, state and
local withholding taxes;
"FMV" is the closing price of the Association's
common stock on The Nasdaq Stock Market, or on
whatever other stock exchange or market such stock is
publicly traded, on the date the Executive's
employment terminates or, if such day is not a day on
which such securities are traded, on the most recent
preceding trading day on which a trade occurs,
provided however that if the restricted stock is a
security other than the Association's common stock,
the fair market value of a share of stock of the same
class as the stock granted under such plan,
determined as of the date of termination of
employment shall be utilized; and
"N" is the number of shares which are being
surrendered.
For purposes of determining the RRP Surrender Payment
and for purposes of determining the Executive's right
following his or her termination of employment with
the Association 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
Association, even if he or she is not vested under
such plan.
The Salary Severance Payment, the DB Severance Payment, the
Defined Contribution Severance Payment, the Bonus Severance
Payment, the Option Surrender Payment and the RRP Surrender
Payment shall be computed at the expense of the Association by
an attorney of the firm of Thacher Proffitt & Wood, Two World
Trade Center, New York, New York 10048 or, if such firm is
unavailable
Page 14 of 29
<PAGE> 15
or unwilling to perform such calculation, by a firm of
independent certified public accountants selected by the
Executive and reasonably satisfactory to the Association (the
"Computation Advisor"). The determination of the Computation
Advisor as to the amount of such payments shall be final and
binding in the absence of manifest error.
The Association 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 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 Association and the Executive further
agree that the Association may condition the payment of the
Salary Severance Payment, the DB Severance Payment, the
Defined Contribution Severance Payment, the Bonus Severance
Payment, the Option Surrender Payment and the RRP Surrender
Payment on the receipt of the Executive's resignation from any
and all positions which he or she holds as an officer,
director or committee member with respect to the Association,
the Association or any subsidiary or affiliate of either of
them.
Section 10. Termination without Additional Association Liability.
(a) In the event that the Executive's employment with the
Association 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 personal
dishonesty, incompetence, wilful misconduct, breach
of fiduciary duty involving personal profit,
intentional failure to perform stated duties, wilful
violation of any law, rule or regulation (other than
traffic violations or similar offenses) or final
cease and desist order, or any material breach of
this Agreement, in each case measured against
standards generally prevailing at the relevant time
in the savings and community banking industry;
(ii) the Executive's voluntary resignation from employment
with the Association 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 Disabled;
(v) the Executive's termination of employment for any
reason at or after attainment of mandatory retirement
age under the Association's mandatory
Page 15 of 29
<PAGE> 16
retirement policy for executive officers in effect as
of the date of this Agreement;
then the Association, except as otherwise specifically
provided herein, shall have no further obligations under this
Agreement, other than the payment to the Executive (or, in the
event of his or her death, to his or her estate) of the
amounts or benefits provided in Section 9(b)(i) and (ii) of
this Agreement (the "Standard Termination Entitlements").
(b) 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:
(i) the Board, by the affirmative vote of 75% of its
entire membership, determines that the Executive is
guilty of the conduct described in Section 10(a)(i)
above measured against standards generally prevailing
at the relevant time in the savings and community
banking industry;
(ii) prior to the vote contemplated by Section 10(b)(i),
the Board shall provide the Executive with notice of
the Association's intent to discharge the Executive
for Cause, detailing with particularity the facts and
circumstances which are alleged to constitute Cause
(the "Notice of Intent to Discharge"); and
(iii) after the giving of the Notice of Intent to Discharge
and before the taking of the vote contemplated by
Section 10(b)(i), the Executive, together with the
Executive's legal counsel, if the Executive so
desires, are afforded a reasonable opportunity to
make both written and oral presentations before the
Board for the purpose of refuting the alleged grounds
for Cause for the Executive's discharge; and
(iv) after the vote contemplated by Section 10(b)(i), the
Association has furnished to the Executive a notice
of termination which shall specify the effective date
of the Executive's termination of employment (which
shall in no event be earlier than the date on which
such notice is deemed given) and include a copy of a
resolution or resolutions adopted by the Board,
certified by its corporate secretary, authorizing the
termination of the Executive's employment with Cause
and stating with particularity the facts and
circumstances found to constitute Cause for the
Executive's discharge (the "Final Discharge Notice").
If the Executive, during the ninety (90) day period commencing
on the delivery by the Association to the Executive of the
Notice of Intent to Discharge specified in Section 10(b)(ii),
resigns his or her employment with the Association prior to
the
Page 16 of 29
<PAGE> 17
delivery to the Executive by the Association of the Final
Discharge Notice specified in Section 10(b)(iv), then the
cessation of employment of the Executive shall be deemed to be
for Cause.
Following the giving of a Notice of Intent to Discharge, the
Bank may temporarily suspend the Executive's duties and
authority and, in such event, may also suspend the payment of
salary and other cash compensation, but not the Executive's
participation in retirement, insurance and other employee
benefit plans. If the Executive is not discharged or is
discharged without Cause within forty-five (45) days after the
giving of a Notice of Intent to Discharge, payments of salary
and cash compensation shall resume, and all payments withheld
during the period of suspension shall be promptly restored. If
the Executive is discharged with Cause not later than
forty-five (45) days after the giving of the Notice of Intent
to Discharge, all payments withheld during the period of
suspension shall be deemed forfeited and shall not be included
in the Standard Termination Entitlements. If a Final Discharge
Notice is given later than forty-five (45) days, but sooner
than ninety (90) days, after the giving of the Notice of
Intent to Discharge, all payments made to the Executive during
the period beginning with the giving of the Notice of Intent
to Discharge and ending with the Executive's discharge with
Cause shall be retained by the Executive and shall not be
applied to offset the Standard Termination Entitlements. If
the Bank does not give a Final Discharge Notice to the
Executive within ninety (90) days after giving a Notice of
Intent to Discharge, the Notice of Intent to Discharge shall
be deemed withdrawn and any future action to discharge the
Executive with Cause shall require the giving of a new Notice
of Intent to Discharge. If the Executive resigns pursuant to
Section 10(b), the Executive shall forfeit his or her right to
suspended amounts that have not been restored as of the date
of the Executive's resignation or notice of resignation,
whichever is earlier.
(c) The Association may terminate the Executive's employment on
the basis that the Executive is Disabled during the Employment
Period upon a determination by the Board, by the affirmative
vote of 75% of its entire membership, acting in reliance on
the written advice of a medical professional acceptable to it,
that the Executive is suffering from a physical or mental
impairment which, at the date of the determination, has
prevented the Executive from performing the Executive's
assigned duties on a substantially full-time basis for a
period of at least one hundred and eighty (180) days during
the period of one (1) year ending with the date of the
determination or is likely to result in death or prevent the
Executive from performing the Executive's assigned duties on a
substantially full-time basis for a period of at least one
hundred and eighty (180) days during the period of one (1)
year beginning with the date of the determination. In such
event:
(A) The Association shall pay and provide the
Standard Termination Entitlements to the
Executive;
Page 17 of 29
<PAGE> 18
(B) In addition to the Standard Termination
Entitlements, the Association shall continue to
pay to the Executive the Executive's base
salary, at the annual rate in effect for the
Executive immediately prior to the termination
of the Executive's employment, during a period
ending on the earliest of:
(I) the expiration of one hundred and eighty
(180) days after the date of termination
of the Executive's employment;
(II) the date on which long-term disability
insurance benefits are first payable to
the Executive under any long-term
disability insurance plan covering the
Executive; or
(III) the date of the Executive's death.
A termination of employment due to Disability under
this Section shall be effected by a notice of
termination given to the Executive by the Association
and shall take effect on the later of the effective
date of termination specified in such notice or, if
no such date is specified, the date on which the
notice of termination is deemed given to the
Executive.
Section 11. Termination Upon or Following a Change of Control.
(a) A Change of Control of the Association ("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 Association of a
transaction that would result in the reorganization,
merger or consolidation of the Association 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 Securities
Exchange Act of 1934, as amended (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 Association;
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
Page 18 of 29
<PAGE> 19
under the Exchange Act) at least 51% of the
securities entitled to vote generally in the
election of directors of the Association;
(ii) the acquisition of all or substantially all of the
assets of the Association 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 Association 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 Association of any
transaction which would result in such an
acquisition;
(iii) a complete liquidation or dissolution of the
Association, or approval by the stockholders of the
Association 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
do not belong to any of the following groups:
(A) individuals who were members of the Board on the
date of this Agreement; or
(B) individuals who first became members of the
Board after the date of this Agreement either:
(I) upon election to serve as a member of the
Board 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
Association to serve as a member of the
Board, but only if nominated for election
by affirmative vote of three-quarters of
the members of the Board, 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
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<PAGE> 20
promulgated under the Exchange Act) other
than by or on behalf of the Board; or
(v) any event which would be described in Section
11(a)(i), (ii), (iii) or (iv) if the term "Company"
were substituted for the term "Association" therein
or the term "Board of Directors of the Company" were
substituted for the term "Board".
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 Association, the Association, or an affiliate or
subsidiary of either of them, by the Association, 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 or her termination of employment with
the Association 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 within six
(6) months following his or her demotion, loss of
title, office or significant authority or
responsibility or following any reduction in any
element of his or her package of compensation and
benefits;
(ii) resignation, voluntary or otherwise, by the Executive
at any time during the Employment Period within six
(6) months following any relocation of his or her
principal place of employment or any change in
working conditions at such principal place of
employment which the Executive, in his or her
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 within six
(6) months following the failure of any successor to
the Association 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 Association which
is at least as favorable to him or her; or
(iv) resignation, voluntary or otherwise, for any reason
whatsoever during the Employment Period within six
months following the expiration of a transition
period of thirty (30) days beginning on the effective
date of the Change of
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<PAGE> 21
Control (or for such longer period, not to exceed
ninety (90) days beginning on the effective date of
the Change of Control, as the Association or its
successor may reasonably request) to facilitate a
transfer of management responsibilities.
Section 12. Covenant Not To Compete.
The Executive hereby covenants and agrees that, in the event of his or
her termination of employment with the Association prior to the expiration of
the Employment Period, for a period of one (1) year following the date of his or
her termination of employment with the Association (or, if less, for the
Remaining Unexpired Employment Period), the Executive shall not, without the
written consent of the Association, become an officer, employee, consultant,
director or trustee of any savings bank, savings and loan association, savings
and loan holding Association, bank or bank holding Association, 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 Association 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 12 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(c) of this Agreement, this
Section 12 shall not prevent the Executive from accepting any position or
performing any services if:
(a) he or she first offers, by written notice, to accept a similar
position with or perform similar services for the Association
on substantially the same terms and conditions and
(b) the Association declines to accept such offer within ten (10)
days after such notice is given.
Section 13. Confidentiality.
Unless the Executive obtains the prior written consent of the
Association, the Executive shall keep confidential and shall refrain from using
for the benefit of the Executive or any person or entity other than the
Association, any entity which is a subsidiary of the Association or any entity
which the Association is a subsidiary of, any material document or information
obtained from the Association, or from its affiliates or subsidiaries, in the
course of the Executive's 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 or her
own) until the same ceases to be material (or becomes so ascertainable or
available); provided, however, that nothing in this Section 13 shall prevent the
Executive, with or without the Association's consent, from participating in or
disclosing documents or information in connection with any judicial or
administrative investigation, inquiry or proceeding to the extent that such
participation or disclosure is required
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<PAGE> 22
under applicable law.
Section 14. Solicitation.
The Executive hereby covenants and agrees that, for a period of one (1)
year following the Executive's termination of employment with the Association,
he or she shall not, without the written consent of the Association, 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 Association, the Association or any
affiliate or subsidiary of ether 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 Association, savings and loan holding
Association, 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
Association has an office or has filed an application for
regulatory approval to establish an office;
(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 Association, savings
and loan holding Association, 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 Association has an office or has filed an application
for regulatory approval to establish an office 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 Association, the Association, or
any affiliate or subsidiary of either of them, to terminate
his or her employment and accept employment, become affiliated
with or provide services for compensation in any capacity
whatsoever to any such savings bank, savings and loan
association, bank, bank holding Association, savings and loan
holding Association 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 Association, the Association,
or any affiliate or subsidiary of either of them to terminate
an existing business or commercial relationship with the
Association, the Association, or any affiliate or subsidiary
of either of them.
Section 15. No Effect on Employee Benefit Plans or Programs.
The termination of the Executive's employment during the term of this
Agreement or
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<PAGE> 23
thereafter, whether by the Association or by the Executive, shall have no effect
on the rights and obligations of the parties hereto under the Association'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 Association from
time to time.
Section 16. Successors and Assigns.
This Agreement will inure to the benefit of and be binding upon the
Executive, his or her legal representatives and testate or intestate
distributees, and the Association 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 Association may be sold or otherwise transferred. Failure of the
Association to obtain from any successor its express written assumption of the
Association's obligations under this Agreement 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 17. 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:
Monte N. Redman
69 Third Street
Garden City, New York 11530
If to the Association:
Astoria Federal Savings and Loan Association
One Astoria Federal Plaza
Lake Success, New York 11042-1085
Attention: General Counsel
with a copy to:
Page 23 of 29
<PAGE> 24
Thacher Proffitt & Wood
Two World Trade Center
New York, New York 10048
Attention: W. Edward Bright, Esq.
Section 18. Indemnification for Attorneys' Fees.
The Association shall indemnify, hold harmless and defend the Executive
against reasonable costs, including legal fees, incurred by him or her in
connection with or arising out of any action, suit or proceeding in which he or
she may be involved, as a result of his or her efforts, in good faith, to defend
or enforce the terms of this Agreement; provided, however, that in the case of
any action, suit or proceeding instituted prior to a Change of Control, 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 Association'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 19. 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 20. 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 21. 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 22. Governing Law.
This Agreement shall be governed by and construed and enforced in
accordance with the
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<PAGE> 25
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 performed entirely within the State of New
York.
Section 23. 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.
Page 25 of 29
<PAGE> 26
Section 24. 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. No modifications of this Agreement shall be valid unless made in writing
and signed by the parties hereto.
Section 25. Survival.
The provisions of any sections of this Agreement which by its terms
contemplates performance after the expiration or termination of this Agreement
(including, but not limited to, Sections 6, 9, 10, 11, 12, 13, 14, 15, 16, 17,
18, 20, 26, 27 and 28) shall survive the expiration of the Employment Period or
termination of this Agreement.
Section 26. Equitable Remedies.
The Association and the Executive hereby stipulate that money damages
are an inadequate remedy for violations of Sections 6(a), 12, 13 or 14 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 27. Required Regulatory Provisions.
The following provisions are included for the purposes of complying
with various laws, rules and regulations applicable to the Association:
(a) Notwithstanding anything herein contained to the contrary, in
no event shall the aggregate amount of compensation payable to
the Executive pursuant to Section 9(b) of this Agreement
(exclusive of amounts described in Section 9(b)(i), (ii),
(viii) or (ix)) exceed three times the Executive's average
annual total compensation for the last five consecutive
calendar years to end prior to the Executive's termination of
employment with the Association (or for the Executive's entire
period of employment with the Association if less than five
calendar years).
(b) Notwithstanding anything herein contained to the contrary, any
payments to the Executive by the Association, 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 ("FDI Act"), 12 U.S.C. Section 1828(k),
and any regulations promulgated thereunder.
(c) Notwithstanding anything herein contained to the contrary, if
the Executive is suspended from office and/or temporarily
prohibited from participating in the
Page 26 of 29
<PAGE> 27
conduct of the affairs of the Association pursuant to a notice
served under Section 8(e)(3) or 8(g)(1) of the FDI Act, 12
U.S.C. Section 1818(e)(3) or 1818(g)(1), the Association's
obligations under this Agreement shall be suspended as of the
date of service of such notice, unless stayed by appropriate
proceedings. If the charges in such notice are dismissed, the
Association, in its discretion, may (i) pay to the Executive
all or part of the compensation withheld while the
Association's obligations hereunder were suspended and (ii)
reinstate, in whole or in part, any of the obligations which
were suspended.
(d) Notwithstanding anything herein contained to the contrary, if
the Executive is removed and/or permanently prohibited from
participating in the conduct of the Association's affairs by
an order issued under Section 8(e)(4) or 8(g)(1) of the FDI
Act, 12 U.S.C. Section 1818(e)(4) or (g)(1), all prospective
obligations of the Association under this Agreement shall
terminate as of the effective date of the order, but vested
rights and obligations of the Association and the Executive
shall not be affected.
(e) Notwithstanding anything herein contained to the contrary, if
the Association is in default (within the meaning of Section
3(x)(1) of the FDI Act, 12 U.S.C. Section 1813(x)(1), all
prospective obligations of the Association under this
Agreement shall terminate as of the date of default, but
vested rights and obligations of the Association and the
Executive shall not be affected.
(f) Notwithstanding anything herein contained to the contrary, all
prospective obligations of the Association hereunder shall be
terminated, except to the extent that a continuation of this
Agreement is necessary for the continued operation of the
Association: (i) by the Director of the Office of Thrift
Supervision ("OTS") or his or her designee or the Federal
Deposit Insurance Corporation ("FDIC"), at the time the FDIC
enters into an agreement to provide assistance to or on behalf
of the Association under the authority contained in Section
13(c) of the FDI Act, 12 U.S.C. Section 1823(c); (ii) by the
Director of the OTS or his or her designee at the time such
Director or designee approves a supervisory merger to resolve
problems related to the operation of the Association or when
the Association is determined by such Director to be in an
unsafe or unsound condition. The vested rights and obligations
of the parties shall not be affected.
If and to the extent that any of the foregoing provisions shall cease to be
required or by applicable law, rule or regulation, the same shall become
inoperative as though eliminated by formal amendment of this Agreement.
Section 28. No Offset or Recoupment; No Attachment.
The Association's obligation to make the payments provided for in this
Agreement and
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<PAGE> 28
otherwise to perform its obligations under this Agreement shall not be affected
by any set-off, counterclaim, recoupment, defense or other claim, right or
action which the Association or any of its affiliates or subsidiaries may have
against the Executive. In no event shall the Executive be obligated to seek
other employment or take any other action by way of mitigation of the amounts
payable to the Executive under any of the provisions of this Agreement and such
amounts shall not be reduced whether or not the Executive obtains other
employment. Except as required by law, no right to receive payments under this
Agreement shall be subject to anticipation, commutation, alienation, sale,
assignment, encumbrance, charge, pledge, or hypothecation, or to execution,
attachment, levy, or similar process or assignment by operation of law, and any
attempt, voluntary or involuntary, to affect any such action shall be null,
void, and of no effect.
Section 29. LISB Transaction.
The Executive hereby waives any claim the Executive may have pursuant
to his or her Employment Agreements each dated January 1, 1996 with the Company
and the Association, respectively, that the acquisition by and the merger of
Long Island Bancorp, Inc. and The Long Island Savings Bank, FSB with and into
the Company and the Association, respectively, constituted a "change of control"
of the Company or the Association as defined in such Employment Contracts.
IN WITNESS WHEREOF, the Association has caused this Agreement to be
executed and the Executive has hereunto set his or her hand, all as of the day
and year first above written.
ATTEST: ASTORIA FEDERAL SAVINGS AND LOAN
ASSOCIATION
/S/ William K. Sheerin
- --------------------------------
William K. Sheerin By: /S/ George L. Engelke, Jr.
-----------------------------------
Name: George L. Engelke, Jr.
Title: Chairman, President and Chief
[Seal] Executive Officer
/S/ Monte N. Redman
--------------------------------------
MONTE N. REDMAN
STATE OF NEW YORK )
) ss.:
COUNTY OF NASSAU )
On this 20 day of March, 2000, before me, the undersigned, personally
appeared Monte N.
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<PAGE> 29
Redman, personally known to me or proved to me on the basis of satisfactory
evidence to be the individual(s) whose name(s) is (are) subscribed to the within
instrument and acknowledged to me that he/she/they executed the same in
his/her/their capacity(ies), and that by his/her/their signature(s) on the
instrument, the individual(s), or the person upon behalf of which the
individual(s) acted, executed the instrument.
/S/ Anna Knice
------------------------------------
Notary Public
Anna Knice
Notary Public, State of New York
No. 4980431
Qualified in Suffolk County
Commission Expires April 22, 2001
STATE OF NEW YORK )
) ss.:
COUNTY OF NASSAU )
On this 20 day of March, 2000, before me, the undersigned, personally
appeared George L. Engelke, Jr., personally known to me or proved to me on the
basis of satisfactory evidence to be the individual(s) whose name(s) is (are)
subscribed to the within instrument and acknowledged to me that he/she/they
executed the same in his/her/their capacity(ies), and that by his/her/their
signature(s) on the instrument, the individual(s), or the person upon behalf of
which the individual(s) acted, executed the instrument.
/S/ Anna Knice
------------------------------------
Notary Public
Anna Knice
Notary Public, State of New York
No. 4980431
Qualified in Suffolk County
Commission Expires April 22, 2001
Page 29 of 29
<PAGE> 1
EXHIBIT 10.29
ASTORIA FINANCIAL CORPORATION
AMENDED AND RESTATED
EMPLOYMENT AGREEMENT WITH EXECUTIVE OFFICER
This AMENDED AND RESTATED EMPLOYMENT AGREEMENT (the "Agreement") is
made and entered into as of January 1, 2000 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 One Astoria Federal Plaza, Lake
Success, New York 11042-1085 (the "Company"), and WILLIAM K. SHEERIN, an
individual residing at 74 Hunt Drive, Jericho, New York 11753 (the "Executive").
WITNESSETH:
WHEREAS, the Executive currently serves the Company in the capacity of
Executive Vice President and Secretary and as Executive Vice President and
Secretary of its wholly owned subsidiary, ASTORIA FEDERAL SAVINGS AND LOAN
ASSOCIATION (the "Association"); and
WHEREAS, the Executive currently has an Employment Agreement with the
Company dated January 1, 1996 which the Executive and the Company wish to amend
and modify; 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 amend and restate in its entirety the Employment Agreement by and between
the Company and the Executive dated as of January 1, 1996 so as to provide as
follows from and after the date hereof:
Section 1. Employment.
The Company agrees to continue to employ the Executive, and the
Executive hereby agrees to such continued 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 (the "Employment Period").
Page 1 of 31
<PAGE> 2
The Employment Period shall be for an initial term of three
years beginning on the date of this Agreement and ending on
the day before the third anniversary date of this Agreement,
plus such extensions, if any, as are provided by the Board of
Directors of the Company (the "Board") pursuant to Section
2(b).
(b) Beginning on the date of this Agreement, the Employment Period
shall automatically be extended for one (1) additional day
each day, unless either the Company or the Executive elects
not to extend the Agreement further by giving written notice
to the other party, in which case the Employment Period shall
end on the day before the third anniversary of the date on
which such written notice is given. 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 day before the
third anniversary of the date on which such notice is
given; and
(ii) in all other cases, the day before the third
anniversary of the date as of which the Remaining
Unexpired Employment Period is being determined.
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 previously
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 pursuant to this
Agreement.
Section 3. Duties.
The Executive shall serve as Executive Vice President and Secretary of
the Company, having such power, authority and responsibility and performing such
duties as are prescribed by or pursuant to the By-Laws of the Company and as are
customarily associated with such position. The Executive shall devote his or her
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, its affiliates and subsidiaries and shall
use his or her best efforts to advance the interests of the Company.
Section 4. Cash Compensation.
In consideration for the services to be rendered by the Executive
hereunder, the Company
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<PAGE> 3
shall pay to him or her a salary at an initial annual rate of TWO HUNDRED THIRTY
THOUSAND DOLLARS ($230,000), 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. In no event shall the Executive's annual rate of salary under
this Agreement in effect at a particular time be reduced without his or her
prior written consent and any such reduction in the absence of such consent
shall be a material breach of this Agreement. 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.
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 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
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 or her 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.
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<PAGE> 4
(a) The Executive may serve as a member of the boards of directors
of such business, community and charitable organizations as he
or she may disclose to and as may be approved by the Board
(which approval shall not be unreasonably withheld); provided,
however, that such service shall not materially interfere with
the performance of his or her 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 or her 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 or her 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 or she
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 or her principal place of employment with a private office,
secretarial services and other support services and facilities suitable to his
or her position with the Company and necessary or appropriate in connection with
the performance of his or her assigned duties under this Agreement. The Company
shall provide to the Executive for his or her exclusive use an automobile owned
or leased by the Company and appropriate to his or her position, to be used in
the performance of his or her duties hereunder, including commuting to and from
his or her personal residence. The Company shall reimburse the Executive for his
or her ordinary and necessary business expenses, including, without limitation,
all expenses associated with his or her 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 or her travel and entertainment expenses incurred in
connection with the performance of his or her 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.
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<PAGE> 5
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 or her 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 six (6) months following:
(A) the failure of the Board to appoint or
re-appoint or elect or re-elect the
Executive to the office of Executive Vice
President and Secretary (or a more senior
office) of the Company;
(B) if the Executive is or becomes a member of
the Board, 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;
(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 Certificate of Incorporation
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 or her
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
(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 or her total
compensation package), unless, during such
thirty (30) day period, the Company cures
such failure in a manner determined by the
Executive, in his or her discretion, to be
satisfactory; or
(E) the relocation of the Executive's principal
place of employment, without his or her
written consent, to a location outside of
Nassau
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<PAGE> 6
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 the Executive's death following the
Executive's termination of employment, to his or her estate):
(i) his or her 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 or her 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 any event not later than thirty (30) days
after termination of employment;
(ii) the benefits, if any, to which he or she 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;
(iii) continued group life, health (including
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
(including any co-payments and deductibles, but
excluding any premium sharing arrangements, it being
the intention of the parties to this Agreement that
the premiums for such insurance benefits shall be the
sole cost and expense of the Company) equivalent to
the coverage to which he or she would have been
entitled under such plans (as in effect on the date
of his or her termination of employment, or, if his
or her termination of employment occurs after a
Change of Control, on the date of such Change of
Control, whichever benefits are greater), if he or
she had continued working for the Company during the
Remaining Unexpired Employment Period at the highest
annual rate of salary or compensation, as applicable,
achieved during that portion of the Employment Period
which is prior to the Executive's termination of
employment with the Company;
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<PAGE> 7
(iv) within thirty (30) days following the Executive's
termination of employment with the Company, a lump
sum payment in an amount representing an estimate of
the salary that the Executive would have earned if he
or she 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 (the "Salary Severance Payment"). The Salary
Severance Payment shall be computed using the
following formula:
SSP = BS x NY
where:
"SSP" is the amount of the Salary Severance Payment,
before the deduction of applicable federal, state and
local withholding taxes;
"BS" is 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;
"NY" is the Remaining Unexpired Employment Period
expressed as a number of years (rounded, if such
period is not a whole number, to the next highest
whole number).
The Salary Severance Payment shall 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 the Executive's
termination of employment with the Company, a lump
sum payment (the "DB Severance Payment") in an amount
equal to the excess, if any, of:
(A) the present value of the aggregate benefits
to which he or she would be entitled under
any and all qualified and non-qualified
defined benefit pension plans maintained by,
or covering employees of, the Company, if he
or she 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
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<PAGE> 8
recognized all amounts payable pursuant to
Sections 9(b)(i), (iv), (vii), (viii) and
(ix) of this Agreement; over
(B) the present value of the benefits to which
he or she is actually entitled under such
defined benefit pension plans as of the date
of his or her termination;
The DB Severance Payment shall be computed using the
following formula:
DBSP = SEVLS - LS
where:
"DBSP" is the amount of the DB Severance Payment,
before the deduction of applicable federal, state and
local withholding taxes;
"SEVLS" is the sum of the present value of the
defined benefit pension benefits that have been or
would be accrued by the Executive under all qualified
and non-qualified defined benefit pension plans of
which the Company or any of its affiliates or
subsidiaries are a sponsor and in which the Executive
is or, but for the completion of any service
requirement that would have been completed during the
Remaining Unexpired Employment Period, would be a
participant utilizing the following assumptions:
(I) the executive is 100% vested in the plans
regardless of actual service,
(II) the benefit to be valued shall be a single
life annuity with monthly payments due on
the first day of each month and with a
guaranteed payout of not less than 120
monthly payments,
(III) the calculation shall be made utilizing the
same mortality table and interest rate as
would be utilized by the plan on the date of
termination as if the calculation were being
made pursuant to Section 417(e)(3)(A)(ii) of
the Internal Revenue Code, as amended, (the
"Code");
(IV) for purpose of calculating the Executive's
monthly or annual benefit under the defined
benefit plans, additional service equal to
the Remaining Unexpired Employment Period
(rounded up to the next whole year if such
period is not a whole number when expressed
in years) shall be added to the
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<PAGE> 9
Executive's actual service to calculate the amount of
the benefit; and
(V) for purpose of calculating the Executive's monthly or
annual benefit under the defined benefit plans, the
following sums shall be added to the Executive's
compensation recognized under such plans for the most
recent year recognized:
(1) payments made pursuant to Section 9(b)(i);
(2) the Salary Severance Payment;
(3) the Bonus Severance Payment;
(4) the Option Surrender Payment; and
(5) the RRP Surrender Payment.
"LS" is the sum of the present value of the defined benefit pension
benefits that are vested benefits actually accrued by the Executive
under all qualified and non-qualified defined benefit pension plans
maintained by, or covering employees of, the Company or any of its
affiliates or subsidiaries in which the Executive is or, but for the
completion of any service requirement, would be a participant utilizing
the following assumptions:
(I) the benefit to be valued shall be a single life
annuity with monthly payments due on the first day of
each month and with a guaranteed payout of not less
than 120 monthly payments, and
(II) the calculation shall be made utilizing the same
mortality table and interest rate as would be
utilized by the plan on the date of termination as if
the calculation were being made pursuant to Section
417(e)(3)(A)(ii) of the Code;
(vi) within thirty (30) days following the Executive's termination of
employment with the Company, a lump sum payment (the "Defined
Contribution Severance Payment") equal to the sum of:
(A) an estimate of the additional employer contributions to which
he or she would have been entitled under any and all qualified
and non-qualified defined contribution pension plans,
excluding the employee stock ownership plans, maintained by,
or covering employees of, the Company or any of its affiliates
or subsidiaries as if he or she were 100% vested thereunder
and had continued working for the Company during the Remaining
Unexpired Employment Period (the "401K Severance Payment");
and
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<PAGE> 10
(B) an estimate of the value of the additional assets which would
have been allocable to him or her through debt service or
otherwise under any and all qualified and non-qualified
employee stock ownership plans, maintained by, or covering
employees of, the Company or any of its affiliates or
subsidiaries as if he or she were 100% vested thereunder and
had continued working for the Company during the Remaining
Unexpired Employment Period, based on the fair market value of
such assets at termination of employment (the "ESOP Severance
Payment").
The Defined Contribution Severance Payment shall be calculated as
follows:
DCSP = 401KSP + ESOPSP
where:
"DCSP" is the amount of the Defined Contribution Severance Payment,
before the deduction of applicable federal, state and local withholding
taxes;
"401KSP" is the amount of the 401K Severance Payment, before the
deduction of applicable federal, state and local withholding taxes; and
"ESOPSP" is the amount of the ESOP Severance Payment, before the
deduction of applicable federal, state and local withholding taxes.
The 401KSP shall be calculated as follows:
401KSP = (401KC x NY) + UVB
where
"401KC" is the sum of the Company Contributions as defined in the
Association's Incentive Savings Plan or, if made under another defined
contribution pension plan other than an employee stock ownership plan,
the comparable contribution made for the benefit of the Executive
during the one year period which shall end on the date of his or her
termination of his or her employment with the Company;
"NY" is the Remaining Unexpired Employment Period expressed as a number
of years (rounded, if such period is not a whole number, to the next
highest whole number); and
"UVB" is the actual balance credited to the Executive's account under
the
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<PAGE> 11
applicable plan at the date of his or her termination of employment
that is not vested and does not become vested as a consequence of such
termination of employment.
The ESOPSP shall be calculated as follows:
ESOPSP = (((ALL x FMV) + C) x NY) + UVB
where:
"ALL" is the sum of the number of shares of the Company's common stock
or, if applicable, phantom shares of such stock by whatever term it is
described allocated to the Executive's accounts under all qualified and
non-qualified employee stock ownership plans maintained by the Company
or any of its affiliates or subsidiaries during or for the last
complete plan year in which the Executive participated in such plans
and received such an allocation whether the allocation occurred as a
result of contributions made by the Company, the payment by the Company
or any of its affiliates or subsidiaries of any loan payments under a
leveraged employee stock ownership plan, the allocation of forfeitures
under the terms of such plan or as a result of the use of cash or
earnings allocated to the Executive's account during such plan year to
make loan payments that result in share allocations, provided however,
that excluded shall be any shares or phantom shares allocated to the
Executive's account under any qualified and non-qualified employee
stock ownership plans maintained by the Company or any of its
affiliates or subsidiaries solely as a result of the termination of
such plans, provided further, that if the shares allocated are not
shares of the Association's common stock or phantom shares of such
stock than shares of whatever securities are so allocated shall be
utilized, and provided further, that in the event that there shall be
any shares or phantom shares allocated during the then current plan
year or the last complete plan year to the Executive's account under
any qualified and non-qualified employee stock ownership plans
maintained by the Association or any of its affiliates or subsidiaries
solely as a result of the termination of such plans, the ALL shall be
reduced (but not to an amount less than zero (0)) by an amount
calculated by multiplying the number of shares or phantom shares
allocated to the Executive's account solely as a result of the
termination of such plans times the FMV utilized to calculate the
ESOPSP;
"C" is the sum of all cash allocated to the Executive's accounts under
all qualified and non-qualified employee stock ownership plans
maintained by the Company during or for the last complete plan year in
which the Executive participated in such plans whether the allocation
occurred as a result of
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<PAGE> 12
contributions made by the Company, the payment by the Company or the
Association of any loan payments under a leveraged employee stock
ownership plan or the allocation of forfeitures under the terms of such
plan during such plan year;
"FMV" is the closing price of the Company's common stock on The Nasdaq
Stock Market or on whatever other stock exchange or market such stock
is publicly traded on the date the Executive's employment terminates
or, if such day is not a day on which such securities are traded, on
the most recent preceding trading day on which a trade occurs, provided
however that if the security allocated to the Executive's account
during the last completed plan year is other than the Company's common
stock the closing price of such other security on the date the
Executive's employment terminates shall be utilized.
"NY" is the Remaining Unexpired Employment Period expressed as a number
of years (rounded, if such period is not a whole number, to the next
highest whole number); and
"UVB" is the actual balance credited to the Executive's account under
the applicable plan at the date of his or her termination of employment
that is not vested and does not become vested as a consequence of such
termination of employment.
(vii) within thirty (30) days following the Executive's termination of
employment with the Company, the Company shall make a lump sum payment
to the Executive in an amount equal to the estimated potential annual
bonuses or incentive compensation that the Executive could have earned
if the Executive had continued working for the Company during the
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 (the "Bonus
Severance Payment"). The Bonus Severance Payment shall be computed
using the following formula:
BSP = ( BS x TIO x AP x NY)
where:
"BSP" is the amount of the Bonus Severance Payment, before the
deduction of applicable federal, state and local withholding taxes;
"BS" is the highest annual rate of salary achieved during that portion
of the Employment Period which is prior to the Executive's termination
of
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<PAGE> 13
employment with the Company;
"TIO" is the highest target incentive opportunity (expressed as a
percentage of base salary) established by the Compensation Committee of
the Board for the Executive pursuant to the Astoria Financial
Corporation Executive Officer Annual Incentive Plan during that portion
of the Employment Period which is prior to the Executive's termination
of employment with the Company;
"AP" is the highest award percentage available to the Executive with
respect to the financial performance of the Company (expressed as a
percentage of the TIO) established by the Compensation Committee of the
Board for the Executive pursuant to the Astoria Financial Corporation
Executive Officer Annual Incentive Plan during the period during that
portion of the Employment Period which is prior to the Executive's
termination of employment with the Company; and
"NY" is the Remaining Unexpired Employment Period expressed as a number
of years (rounded, if such period is not a whole number, to the next
highest whole number).
(viii) 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 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 (the "Option Surrender Payment"). The Option Surrender Payment
shall be calculated as follows:
OSP = (FMV - EP) x N
where:
"OSP" is the amount of the Option Surrender Payment, before the
deduction of applicable federal, state and local withholding taxes;
"FMV" is the closing price of the Company's common stock on The Nasdaq
Stock Market, or on whatever other stock exchange or market such stock
is publicly traded, on the date the Executive's employment terminates
or, if such day is not a day on which such securities are traded, on
the most recent preceding trading day on which a trade occurs, provided
however that if the option or stock appreciation right is for a
security other than the Company's common stock, the fair market value
of a share of stock of the same class as
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<PAGE> 14
the stock subject to the option or appreciation right, determined as of
the date of termination of employment shall be utilized;
"EP" is the exercise price per share for such option or appreciation
right, as specified in or under the relevant plan or program; and
"N" is the number of shares with respect to which options or
appreciation rights are being surrendered.
For purposes of determining the Option Severance Payment and for
purposes of determining the Executive's right following his or her
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 or she
is not 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 shares awarded to the Executive under any restricted
stock plan maintained by, or covering employees of, the Company, a lump
sum payment (the "RRP Surrender Payment") The RRP Surrender Payment
shall be calculated as follows:
RSP = FMV x N
where:
"RSP" is the amount of the RRP Surrender Payment, before the deduction
of applicable federal, state and local withholding taxes;
"FMV" is the closing price of the Company's common stock on The Nasdaq
Stock Market, or on whatever other stock exchange or market such stock
is publicly traded, on the date the Executive's employment terminates
or, if such day is not a day on which such securities are traded, on
the preceding trading day on which a trade occurs, provided however
that if the restricted stock is a security other than the Company's
common stock, the fair market value of a share of stock of the same
class as the stock granted under such plan, determined as of the date
of termination of employment shall be utilized; and
"N" is the number of shares which are being surrendered.
For purposes of determining the RRP Surrender Payment and for purposes
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of determining the Executive's right following his or her 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 or she is not vested under such
plan.
The Salary Severance Payment, the DB Severance Payment, the Defined Contribution
Severance Payment, the Bonus Severance Payment, the Option Surrender Payment and
the RRP Surrender Payment shall be computed at the expense of the Company by an
attorney of the firm of Thacher Proffitt & Wood, Two World Trade Center, New
York, New York 10048 or, if such firm is unavailable or unwilling to perform
such calculation, by a firm of independent certified public accountants selected
by the Executive and reasonably satisfactory to the Company (the "Computation
Advisor"). The determination of the Computation Advisor as to the amount of such
payments shall be final and binding in the absence of manifest error.
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 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 payment of the Salary Severance Payment, the DB Severance
Payment, the Defined Contribution Severance Payment, the Bonus Severance
Payment, the Option Surrender Payment and the RRP Surrender Payment on the
receipt of the Executive's resignation from any and all positions which he or
she holds as an officer, director or committee member with respect to the
Company, the Association or any subsidiary or affiliate of either of them.
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 the Executive's
performance of services for the Company resulting in
the Executive's conviction of a felony;
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(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
the Executive's 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 the Executive's fiduciary
duties to the Company for personal profit;
(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 the Executive's
performance of services for the Company; or
(F) the Executive's material breach of any material
provision of this Agreement which is not
substantially cured within 60 days after written
notice of such breach is received by the Executive
from 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 Disabled;
(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, except as otherwise specifically provided herein,
shall have no further obligations under this Agreement, other than the
payment to the Executive (or, in the event of his or her death, to his
or her estate) of the amounts or benefits provided in Section 9(b)(i)
and (ii) of this Agreement (the "Standard Termination Entitlements").
(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
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<PAGE> 17
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.
Except as specifically provided below, 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:
(i) the Board, by the affirmative vote of 75% of its entire
membership, determines that the Executive is guilty of the
conduct described in Section 10(a)(i) above measured against
standards generally prevailing at the relevant time in the
savings and community banking industry;
(ii) prior to the vote contemplated by Section 10(b)(i), the Board
shall provide the Executive with notice of the Company's
intent to discharge the Executive for Cause, detailing with
particularity the facts and circumstances which are alleged to
constitute Cause (the "Notice of Intent to Discharge"); and
(iii) after the giving of the Notice of Intent to Discharge and
before the taking of the vote contemplated by Section
10(b)(i), the Executive, together with the Executive's legal
counsel, if the Executive so desires, are afforded a
reasonable opportunity to make both written and oral
presentations before the Board for the purpose of refuting the
alleged grounds for Cause for the Executive's discharge; and
(iv) after the vote contemplated by Section 10(b)(i), the Company
has furnished to the Executive a notice of termination which
shall specify the effective date of the Executive's
termination of employment (which shall in no event be earlier
than the date on which such notice is deemed given) and
include a copy of a resolution or resolutions adopted by the
Board, certified by its corporate secretary, authorizing the
termination of the Executive's employment with Cause and
stating with particularity the facts and circumstances found
to constitute Cause for the Executive's discharge (the "Final
Discharge Notice").
If the Executive, during the 90 (ninety) day period commencing on the
delivery by the Company to the Executive of the Notice of Intent to
Discharge specified in Section 10(b)(ii), resigns his or her employment
with the Company prior to the delivery to the Executive by the Company
of the Final Discharge Notice specified in Section 10(b)(iv), then the
cessation of employment of the Executive shall be deemed to be for
Cause.
Following the giving of a Notice of Intent to Discharge, the Bank may
temporarily suspend the Executive's duties and authority and, in such
event, may also suspend the payment of salary and other cash
compensation, but not the Executive's participation
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<PAGE> 18
in retirement, insurance and other employee benefit plans. If the
Executive is not discharged or is discharged without Cause within
forty-five (45) days after the giving of a Notice of Intent to
Discharge, payments of salary and cash compensation shall resume, and
all payments withheld during the period of suspension shall be promptly
restored. If the Executive is discharged with Cause not later than
forty-five (45) days after the giving of the Notice of Intent to
Discharge, all payments withheld during the period of suspension shall
be deemed forfeited and shall not be included in the Standard
Termination Entitlements. If a Final Discharge Notice is given later
than forty-five (45) days, but sooner than ninety (90) days, after the
giving of the Notice of Intent to Discharge, all payments made to the
Executive during the period beginning with the giving of the Notice of
Intent to Discharge and ending with the Executive's discharge with
Cause shall be retained by the Executive and shall not be applied to
offset the Standard Termination Entitlements. If the Bank does not give
a Final Discharge Notice to the Executive within ninety (90) days after
giving a Notice of Intent to Discharge, the Notice of Intent to
Discharge shall be deemed withdrawn and any future action to discharge
the Executive with Cause shall require the giving of a new Notice of
Intent to Discharge. If the Executive resigns pursuant to Section
10(b), the Executive shall forfeit his or her right to suspended
amounts that have not been restored as of the date of the Executive's
resignation or notice of resignation, whichever is earlier.
(c) The Company may terminate the Executive's employment on the basis that
the Executive is Disabled during the Employment Period upon a
determination by the Board, by the affirmative vote of 75% of its
entire membership, acting in reliance on the written advice of a
medical professional acceptable to it, that the Executive is suffering
from a physical or mental impairment which, at the date of the
determination, has prevented the Executive from performing the
Executive's assigned duties on a substantially full-time basis for a
period of at least one hundred and eighty (180) days during the period
of one (1) year ending with the date of the determination or is likely
to result in death or prevent the Executive from performing the
Executive's assigned duties on a substantially full-time basis for a
period of at least one hundred and eighty (180) days during the period
of one (1) year beginning with the date of the determination. In such
event:
(A) The Company shall pay and provide the Standard
Termination Entitlements to the Executive;
(B) In addition to the Standard Termination Entitlements,
the Company shall continue to pay to the Executive
the Executive's base salary, at the annual rate in
effect for the Executive immediately prior to the
termination of the Executive's employment, during a
period ending on the earliest of:
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(I) the expiration of one hundred and eighty
(180) days after the date of termination of
the Executive's employment;
(II) the date on which long-term disability
insurance benefits are first payable to the
Executive under any long-term disability
insurance plan covering the Executive; or
(III) the date of the Executive's death.
A termination of employment due to Disability under this
Section shall be effected by a notice of termination given to
the Executive by the Company and shall take effect on the
later of the effective date of termination specified in such
notice or, if no such date is specified, the date on which the
notice of termination is deemed given to the Executive.
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 Securities Exchange Act of 1934, as
amended (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;
Page 19 of 31
<PAGE> 20
(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
do not belong to any of the following groups:
(A) individuals who were members of the Board on
the date of this Agreement; or
(B) individuals who first became members of the
Board after the date of this Agreement
either:
(I) upon election to serve as a member
of the Board 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, but only if nominated
for election by affirmative vote of
three-quarters of the members of
the Board, 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; or
(v) any event which would be described in Section
11(a)(i), (ii), (iii) or (iv) if the term
"Association" were substituted for the term "Company"
therein or the term "Board of Directors of the
Association" were substituted for the term "Board".
Page 20 of 31
<PAGE> 21
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 an affiliate or
subsidiary of either of 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 or her 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 within six
(6) months following his or her demotion, loss of
title, office or significant authority or
responsibility or following any reduction in any
element of his or her package of compensation and
benefits;
(ii) resignation, voluntary or otherwise, by the Executive
at any time during the Employment Period within six
(6) months following any relocation of his or her
principal place of employment or any change in
working conditions at such principal place of
employment which the Executive, in his or her
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 within six
(6) months 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 her; or
(iv) resignation, voluntary or otherwise, for any reason
whatsoever during the Employment Period within six
months 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
Page 21 of 31
<PAGE> 22
(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 intended to indemnify the Executive against the
financial effects of the excise tax imposed on excess
parachute payments under Section 28OG of the Code (the "Tax
Indemnity Payment"). The Tax Indemnity Payment shall be
determined under the following formula:
E x P
TIP =
---------------------------------------
1 - (( FI x ( 1 - SLI )) + SLI + E + M )
where:
"TIP" is the Tax Indemnity Payment, before the deduction of
applicable federal, state and local withholding taxes;
"E" is the percentage rate at which an excise tax is assessed
under Section 4999 of the Code;
"P" is the amount with respect to which such excise tax is
assessed, determined without regard to any amount payable
pursuant to this Section 12;
"FI" is the highest marginal rate of income tax applicable to
the Executive under the Code for the taxable year in question;
"SLI" is 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" is the highest marginal rate of Medicare tax applicable to
the Executive under the Code for the taxable year in question.
(b) The computation of the Tax Indemnity Payment shall be made at
the expense of the Company by the Computation Advisor and
shall be based on the following assumptions:
Page 22 of 31
<PAGE> 23
(i) that a change in ownership, a change in effective
ownership or control or a change in the ownership of
a substantial portion of the assets of the
Association or the Company has occurred within the
meaning of Section 28OG of the Code (a "28OG Change
of Control");
(ii) that all direct or indirect payments made to or
benefits conferred upon the Executive on account of
the Executive's termination of employment are
"parachute payments" within the meaning of Section
28OG of the Code; and
(iii) that no portion of such payments is reasonable
compensation for services rendered prior to the
Executive's termination of employment.
(c) With respect to any payment that is presumed to be a parachute
payment for purposes of Section 28OG of the Code, the Tax
Indemnity Payment shall be made to the Executive on the
earlier of 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 the date the
tax is required to be paid by the Executive, unless, prior to
such date, the Company delivers to the Executive the written
opinion (the "Opinion Letter"), in form and substance
reasonably satisfactory to the Executive, of the Computation
Advisor or, if the Computation Advisor is unable to provide
such opinion, of an attorney or firm of independent certified
public accountants selected by the Company and reasonably
satisfactory to the Executive, to the effect that the
Executive has a reasonable basis on which to conclude that:
(i) no 28OG Change in Control has occurred, or
(ii) all or part of the payment or benefit in question is
not a parachute payment for purposes of Section 28OG
of the Code, or
(iii) all or a part of such payment or benefit constitutes
reasonable compensation for services rendered prior
to the 28OG Change of Control, or
(iv) for some other reason which shall be set forth in
detail in such letter, no excise tax is due under
Section 4999 of the Code with respect to such payment
or benefit.
If the Company delivers an Opinion Letter, the Computation
Advisor shall re-compute, and the Company shall make, the Tax
Indemnity Payment, if any, in reliance on the information
contained in the Opinion Letter.
(d) 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 with
respect to which the Tax Indemnity Payment is made, the
Executive or the
Page 23 of 31
<PAGE> 24
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 pursuant to Sections 12(a) and 12(c), when
increased by the amount of the payment made to the Executive
pursuant to this Section 12(d), or when reduced by the amount
of the payment made to the Company pursuant to this Section
12(d), equals the amount that should have properly been paid
to the Executive under Sections 12(a) and 12(c). The interest
paid to the Company under this Section 12(d) shall be
determined at the rate provided under Section 1274(b)(2)(B) of
the Code. The payment made to the Executive shall include such
amount of interest as is necessary to satisfy any interest
assessment made by the Internal Revenue Service and an
additional amount equal to any monetary penalties assessed by
the Internal Revenue Service on account of an underpayment of
the excise tax. 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, at least 20 days
before the date on which such return is required to be filed
with the Internal Revenue Service. Nothing in this Agreement
shall give the Company any right to control or otherwise
participate in any action, suit or proceeding to which the
Executive is a party as a result of positions taken on the
Executive's federal income tax return with respect to the
Executive's liability for excise taxes under Section 4999 of
the Code.
(e) 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, in the event of his or
her termination of employment with the Company prior to the expiration of the
Employment Period, for a period of one (1) year following the date of his or her
termination of employment with the Company (or, if less, for the Remaining
Unexpired Employment Period), the Executive 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
Page 24 of 31
<PAGE> 25
in Section 10(c) of this Agreement, this Section 13 shall not
prevent the Executive from accepting any position or performing any services if:
(a) he or she 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 the Executive obtains the prior written consent of the Company,
the Executive shall keep confidential and shall refrain from using for the
benefit of the Executive or any person or entity other than the Company, any
entity which is a subsidiary of the Company or any entity which the Company is a
subsidiary of, any material document or information obtained from the Company,
or from its affiliates or subsidiaries, in the course of the Executive's
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 or her 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
proceeding 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 Executive's termination of employment with the Company, he or
she shall not, without the 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 or subsidiary of ether 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;
(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
Page 25 of 31
<PAGE> 26
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 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 or subsidiary of either of them, to terminate
his or her employment and accept employment, 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, the Association, or
any affiliate or subsidiary of either of them to terminate an
existing business or commercial relationship with the Company,
the Association, or any affiliate or subsidiary of either of
them.
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.
Section 17. Successors and Assigns.
This Agreement will inure to the benefit of and be binding upon the
Executive, his or her 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 under this Agreement 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
Page 26 of 31
<PAGE> 27
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:
William K. Sheerin
74 Hunt Drive
Jericho, New York 11753
If to the Company:
Astoria Financial Corporation
One Astoria Federal Plaza
Lake Success, New York 11042-1085
Attention: General Counsel
with a copy to:
Thacher Proffitt & Wood
Two World Trade Center
New York, New York 10048
Attention: W. Edward Bright, Esq.
Section 19. Indemnification for Attorneys' Fees.
The Company shall indemnify, hold harmless and defend the Executive
against reasonable costs, including legal fees, incurred by him or her in
connection with or arising out of any action, suit or proceeding in which he or
she may be involved, as a result of his or her efforts, in good faith, to defend
or enforce the terms of this Agreement; provided, however, that in the case of
any action, suit or proceeding instituted prior to a Change of Control, 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.
Page 27 of 31
<PAGE> 28
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 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. No modifications of this Agreement shall be valid unless made in writing
and signed by the parties hereto.
Section 26. Guarantee.
The Company hereby agrees to guarantee the payment by the Association
of any benefits and compensation to which the Executive is or may be entitled to
under the terms and conditions of the
Page 28 of 31
<PAGE> 29
Amended and Restated Employment Agreement dated as of the 1st day of January,
2000 between the Association and the Executive.
Section 27. Non-duplication.
In the event that the Executive shall perform services for the
Association or any other affiliate or 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 affiliates and
subsidiaries.
Section 28. Survival.
The provisions of any sections of this Agreement which by its terms
contemplates performance after the expiration or termination of this Agreement
(including, but not limited to, Sections 6, 9, 10, 11, 12, 13, 14, 15, 16, 17,
18, 19, 21, 26, 27, 29, 30 and 31) shall survive the expiration of the
Employment Period or termination of this Agreement.
Section 29. 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 30. 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 conditioned upon their compliance with Section
18(k) of the Federal Deposit Insurance Act, 12 U.S.C. Section 1828(k), and any
regulations promulgated thereunder.
Section 31. No Offset or Recoupment; No Attachment.
The Company's obligation to make the payments provided for in this
Agreement and otherwise to perform its obligations under this Agreement shall
not be affected by any set-off, counterclaim, recoupment, defense or other
claim, right or action which the Company or any of its affiliates or
subsidiaries may have against the Executive. In no event shall the Executive be
obligated to seek other employment or take any other action by way of mitigation
of the amounts payable to the Executive under any of the provisions of this
Agreement and such amounts shall not be reduced whether or not the Executive
obtains other employment. Except as required by law, no right to receive
payments under this Agreement shall be subject to anticipation, commutation,
alienation, sale, assignment, encumbrance, charge, pledge, or hypothecation, or
to execution, attachment, levy,
Page 29 of 31
<PAGE> 30
or similar process or assignment by operation of
law, and any attempt, voluntary or involuntary, to affect any such action shall
be null, void, and of no effect.
Section 32. LISB Transaction.
The Executive hereby waives any claim the Executive may have pursuant
to his or her Employment Agreements each dated January 1, 1996 with the Company
and the Association, respectively, that the acquisition by and the merger of
Long Island Bancorp, Inc. and The Long Island Savings Bank, FSB with and into
the Company and the Association, respectively, constituted a "change of control"
of the Company or the Association as defined in such Employment Contracts.
IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed and the Executive has hereunto set his or her hand, all as of the day
and year first above written.
ATTEST:
/S/ Alan P. Eggleston ASTORIA FINANCIAL CORPORATION
Alan P. Eggleston
[Seal] By: /S/ George L. Engelke, Jr.
Name: George L. Engelke, Jr.
Title: Chairman, President and Chief Executive Officer
/S/ William K. Sheerin
WILLIAM K. SHEERIN
Page 30 of 31
<PAGE> 31
STATE OF NEW YORK )
) ss.:
COUNTY OF NASSAU )
On this 20 day of March, 2000, before me, the undersigned, personally
appeared William K. Sheerin, personally known to me or proved to me on the basis
of satisfactory evidence to be the individual(s) whose name(s) is (are)
subscribed to the within instrument and acknowledged to me that he/she/they
executed the same in his/her/their capacity(ies), and that by his/her/their
signature(s) on the instrument, the individual(s), or the person upon behalf of
which the individual(s) acted, executed the instrument.
/S/ Anna Knice
Notary Public
Anna Knice
Notary Public, State of New York
No. 4980431
Qualified in Suffolk County
Commission Expires April 22, 2001
STATE OF NEW YORK )
) ss.:
COUNTY OF NASSAU )
On this 20 day of March, 2000, before me, the undersigned, personally
appeared George L. Engelke, Jr., personally known to me or proved to me on the
basis of satisfactory evidence to be the individual(s) whose name(s) is (are)
subscribed to the within instrument and acknowledged to me that he/she/they
executed the same in his/her/their capacity(ies), and that by his/her/their
signature(s) on the instrument, the individual(s), or the person upon behalf of
which the individual(s) acted, executed the instrument.
/S/ Anna Knice
Notary Public
Anna Knice
Notary Public, State of New York
No. 4980431
Qualified in Suffolk County
Commission Expires April 22, 2001
Page 31 of 31
<PAGE> 1
EXHIBIT 10.30
ASTORIA FEDERAL SAVINGS AND LOAN ASSOCIATION
AMENDED AND RESTATED
EMPLOYMENT AGREEMENT WITH EXECUTIVE OFFICER
This AMENDED AND RESTATED EMPLOYMENT AGREEMENT (the "Agreement") is
made and entered into as of January 1, 2000 by and between ASTORIA FEDERAL
SAVINGS AND LOAN ASSOCIATION, a savings association organized and operating
under the federal laws of the United States and having an office at One Astoria
Federal Plaza, Lake Success, New York 11042-1085 (the "Association") and,
WILLIAM K. SHEERIN, an individual residing at 74 Hunt Drive, Jericho, New York
11753 (the "Executive").
WITNESSETH:
WHEREAS, the Executive currently serves the Association in the capacity
of Executive Vice President and Secretary and as Executive Vice President and
Secretary of the Association's savings and loan holding company, ASTORIA
FINANCIAL CORPORATION, a publicly held business corporation organized and
operating pursuant to the laws of the State of Delaware (the "Company"); and
WHEREAS, the Executive currently has an Employment Agreement with the
Association dated January 1, 1996 which the Executive and the Association wish
to amend and modify; and
WHEREAS, the Association 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 Association
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 Association and the
Executive hereby amend and restate in its entirety the Employment Agreement by
and between the Association and the Executive dated as of January 1, 1996 so as
to provide as follows from and after the date hereof:
Section 1. Employment.
The Association agrees to continue to employ the Executive, and the
Executive hereby agrees to such continued employment, during the period and upon
the terms and conditions set forth in this Agreement.
Page 1 of 29
<PAGE> 2
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 (the "Employment Period"). The Employment
Period shall be for an initial term of three years beginning
on the date of this Agreement and ending on the day before the
third anniversary date of this Agreement. Prior to the first
anniversary of the date of this Agreement and on each
anniversary date thereafter (each an "Anniversary Date) the
Board of Directors of the Association (the "Board") shall
review the terms of this Agreement and the Executive's
performance of services hereunder and may, in the absence of
objection from the Executive, approve an extension of the
Employment Period. In such event, the Employment Period shall
be extended to the day before the third anniversary of the
relevant Anniversary Date.
(b) 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 the day before the
Anniversary Date on which the Employment Period (as extended
pursuant to Section 2(a) of this Agreement) is then scheduled
to expire.
(c) Nothing in this Agreement shall be deemed to prohibit the
Association 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 Association and the Executive in the event
of any such termination shall be determined pursuant to this
Agreement.
Section 3. Duties.
The Executive shall serve as Executive Vice President and Secretary of
the Association, having such power, authority and responsibility and performing
such duties as are prescribed by or pursuant to the By-Laws of the Association
and as are customarily associated with such position. The Executive shall devote
his or her 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 Association and shall use his or
her best efforts to advance the interests of the Association.
Section 4. Cash Compensation.
In consideration for the services to be rendered by the Executive
hereunder, the Association shall pay to him or her a salary at an initial annual
rate of TWO HUNDRED THIRTY THOUSAND DOLLARS ($230,000), payable in approximately
equal installments in accordance with the Association's customary payroll
practices for senior officers. Prior to each Anniversary Date occurring during
the Employment Period, the Board shall review the Executive's annual rate of
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<PAGE> 3
salary and may, in its discretion, approve an increase therein. In addition to
salary, the Executive may receive other cash compensation from the Association
for services hereunder at such times, in such amounts and on such terms and
conditions as the Board may determine from time to time.
Section 5. Employee Benefit Plans and Programs.
During the Employment Period, the Executive shall be treated as an
employee of the Association 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 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 Association, in accordance with the terms and conditions of such employee
benefit plans and programs and compensation plans and programs and consistent
with the Association's customary practices.
Section 6. Indemnification and Insurance.
(a) During the Employment Period and for a period of six (6) years
thereafter, the Association 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
Association or service in other capacities at the request of
the Association. 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 Association.
(b) To the maximum extent permitted under applicable law, during
the Employment Period and for a period of six (6) years
thereafter, the Association shall indemnify the Executive
against, and hold him or her 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
Association or any subsidiary or affiliate thereof. This
Section 6(b) shall not be applicable where Section 18 is
applicable.
Section 7. Other Activities.
(a) The Executive may serve as a member of the boards of directors
of such business, community and charitable organizations as he
or she may disclose to and as may be approved by the Board
(which approval shall not be unreasonably withheld); provided,
however, that such service shall not materially interfere with
the performance of his or her duties under this Agreement. The
Executive may also
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<PAGE> 4
engage in personal business and investment activities which do
not materially interfere with the performance of his or her
duties hereunder; provided, however, that such activities are
not prohibited under any code of conduct or investment or
securities trading policy established by the Association and
generally applicable to all similarly situated executives.
(b) The Executive may also serve as an officer or director of the
Company on such terms and conditions as the Association and
the Company may mutually agree upon, and such service shall
not be deemed to materially interfere with the Executive's
performance of his or her duties hereunder or otherwise result
in a material breach of this Agreement.
Section 8. Working Facilities and Expenses.
The Executive's principal place of employment shall be at the
Association'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
Association shall maintain its principal executive offices, or at such other
location as the Association and the Executive may mutually agree upon. The
Association shall provide the Executive at his or her principal place of
employment with a private office, secretarial services and other support
services and facilities suitable to his or her position with the Association and
necessary or appropriate in connection with the performance of his or her
assigned duties under this Agreement. The Association shall provide to the
Executive for his or her exclusive use an automobile owned or leased by the
Association and appropriate to his or her position, to be used in the
performance of his or her duties hereunder, including commuting to and from his
or her personal residence. The Association shall reimburse the Executive for his
or her ordinary and necessary business expenses, including, without limitation,
all expenses associated with his or her business use of the aforementioned
automobile, fees for memberships in such clubs and organizations as the
Executive and the Association shall mutually agree are necessary and appropriate
for business purposes, and his or her travel and entertainment expenses incurred
in connection with the performance of his or her duties under this Agreement, in
each case upon presentation to the Association of an itemized account of such
expenses in such form as the Association 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 or her employment with
the Association terminates during the Employment Period under
any of the following circumstances:
(i) the Executive's voluntary resignation from employment
with the Association within six (6) months following:
(A) the failure of the Board to appoint or
re-appoint or elect or re-elect the
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<PAGE> 5
Executive to the office of Executive Vice
President and Secretary (or a more senior
office) of the Association;
(B) if the Executive is or becomes a member of
the Board, the failure of the stockholders
of the Association 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;
(C) the expiration of a thirty (30) day period
following the date on which the Executive
gives written notice to the Association of
its material failure, whether by amendment
of the Association's Organization
Certificate or By-laws, action of the Board
or the Association'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 Association
cures such failure;
(D) the expiration of a thirty (30) day period
following the date on which the Executive
gives written notice to the Association of
its material breach of any term, condition
or covenant contained in this Agreement
(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 or her total
compensation package), unless, during such
thirty (30) day period, the Association
cures such failure; or
(E) the relocation of the Executive's principal
place of employment, without his or her
written consent, to a location outside of
Nassau County and Queens County, New York;
(ii) the termination of the Executive's employment with
the Association for any other reason not described in
Section 10(a).
In such event and subject to Section 27 of this Agreement, the
Association 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
Association under circumstances described in Section 9(a) of
this Agreement, the Association shall pay and provide to the
Executive (or, in the event of the Executive's death following
the Executive's termination of employment, to his or her
estate):
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<PAGE> 6
(i) his or her 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 or her employment with the Association, such
payment to be made at the time and in the manner
prescribed by law applicable to the payment of wages
but in any event not later than thirty (30) days
after termination of employment;
(ii) the benefits, if any, to which he or she is entitled
as a former employee under the employee benefit plans
and programs and compensation plans and programs
maintained for the benefit of the Association's
officers and employees;
(iii) continued group life, health (including
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
(including any co-payments and deductibles, but
excluding any premium sharing arrangements, it being
the intention of the parties to this Agreement that
the premiums for such insurance benefits shall be the
sole cost and expense of the Association) equivalent
to the coverage to which he or she would have been
entitled under such plans (as in effect on the date
of his or her termination of employment, or, if his
or her termination of employment occurs after a
Change of Control, on the date of such Change of
Control, whichever benefits are greater), if he or
she had continued working for the Association during
the Remaining Unexpired Employment Period at the
highest annual rate of salary or compensation, as
applicable, achieved during that portion of the
Employment Period which is prior to the Executive's
termination of employment with the Association;
(iv) within thirty (30) days following the Executive's
termination of employment with the Association, a
lump sum payment in an amount representing an
estimate of the salary that the Executive would have
earned if he or she had continued working for the
Association 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 Association (the "Salary Severance
Payment"). The Salary Severance Payment shall be
computed using the following formula:
SSP = BS x NY
where:
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<PAGE> 7
"SSP" is the amount of the Salary Severance Payment,
before the deduction of applicable federal, state and
local withholding taxes;
"BS" is 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 Association;
"NY" is the Remaining Unexpired Employment Period
expressed as a number of years (rounded, if such
period is not a whole number, to the next highest
whole number).
The Salary Severance Payment shall 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 the Executive's
termination of employment with the Association, a
lump sum payment (the "DB Severance Payment") in an
amount equal to the excess, if any, of:
(A) the present value of the aggregate benefits
to which he or she would be entitled under
any and all qualified and non-qualified
defined benefit pension plans maintained by,
or covering employees of, the Association,
if he or she were 100% vested thereunder and
had continued working for the Association
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 pursuant to
Sections 9(b)(i), (iv), (vii), (viii) and
(ix) of this Agreement; over
(B) the present value of the benefits to which
he or she is actually entitled under such
defined benefit pension plans as of the date
of his or her termination;
The DB Severance Payment shall be computed using the
following formula:
DBSP = SEVLS - LS
where:
"DBSP" is the amount of the DB Severance Payment,
before the deduction
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<PAGE> 8
of applicable federal, state and local withholding
taxes;
"SEVLS" is the sum of the present value of the
defined benefit pension benefits that have been or
would be accrued by the Executive under all qualified
and non-qualified defined benefit pension plans of
which the Association or any of its affiliates or
subsidiaries are a sponsor and in which the Executive
is or, but for the completion of any service
requirement that would have been completed during the
Remaining Unexpired Employment Period, would be a
participant utilizing the following assumptions:
(I) the executive is 100% vested in the
plans regardless of actual service,
(II) the benefit to be valued shall be a
single life annuity with monthly
payments due on the first day of
each month and with a guaranteed
payout of not less than 120 monthly
payments,
(III) the calculation shall be made
utilizing the same mortality table
and interest rate as would be
utilized by the plan on the date of
termination as if the calculation
were being made pursuant to Section
417(e)(3)(A)(ii) of the Internal
Revenue Code, as amended, (the
"Code");
(IV) for purpose of calculating the
Executive's monthly or annual
benefit under the defined benefit
plans, additional service equal to
the Remaining Unexpired Employment
Period (rounded up to the next
whole year if such period is not a
whole number when expressed in
years) shall be added to the
Executive's actual service to
calculate the amount of the
benefit; and
(V) for purpose of calculating the
Executive's monthly or annual
benefit under the defined benefit
plans, the following sums shall be
added to the Executive's
compensation recognized under such
plans for the most recent year
recognized:
(1) payments made pursuant to
Section 9(b)(i);
(2) the Salary Severance Payment;
(3) the Bonus Severance Payment;
(4) the Option Surrender Payment;
and
(5) the RRP Surrender Payment.
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<PAGE> 9
"LS" is the sum of the present value of the defined
benefit pension benefits that are vested benefits
actually accrued by the Executive under all qualified
and non-qualified defined benefit pension plans
maintained by, or covering employees of, the Company
or any of its affiliates or subsidiaries in which the
Executive is or, but for the completion of any
service requirement, would be a participant utilizing
the following assumptions:
(I) the benefit to be valued shall be a
single life annuity with monthly
payments due on the first day of
each month and with a guaranteed
payout of not less than 120 monthly
payments, and
(II) the calculation shall be made
utilizing the same mortality table
and interest rate as would be
utilized by the plan on the date of
termination as if the calculation
were being made pursuant to Section
417(e)(3)(A)(ii) of the Code;
(vi) within thirty (30) days following the Executive's
termination of employment with the Association, a
lump sum payment (the "Defined Contribution Severance
Payment") equal to the sum of:
(A) an estimate of the additional employer
contributions to which he or she would have
been entitled under any and all qualified
and non-qualified defined contribution
pension plans, excluding the employee stock
ownership plans, maintained by, or covering
employees of, the Association or any of its
affiliates or subsidiaries as if he or she
were 100% vested thereunder and had
continued working for the Association during
the Remaining Unexpired Employment Period
(the "401K Severance Payment"); and
(B) an estimate of the value of the additional
assets which would have been allocable to
him or her through debt service or otherwise
under any and all qualified and
non-qualified employee stock ownership
plans, maintained by, or covering employees
of the Association or any of its affiliates
or subsidiaries as if he or she were 100%
vested thereunder and had continued working
for the Association during the Remaining
Unexpired Employment Period, based on the
fair market value of such assets at
termination of employment (the "ESOP
Severance Payment").
The Defined Contribution Severance Payment shall be
calculated as follows:
DCSP = 401KSP + ESOPSP
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<PAGE> 10
where:
"DCSP" is the amount of the Defined Contribution
Severance Payment, before the deduction of applicable
federal, state and local withholding taxes;
"401KSP" is the amount of the 401K Severance Payment,
before the deduction of applicable federal, state and
local withholding taxes; and
"ESOPSP" is the amount of the ESOP Severance Payment,
before the deduction of applicable federal, state and
local withholding taxes.
The 401KSP shall be calculated as follows:
401SP = (401KC x NY) + UVB
where
"401KC" is the sum of the Association Contributions
as defined in the Association's Incentive Savings
Plan or, if made under another defined contribution
pension plan other than an employee stock ownership
plan, the comparable contribution made for the
benefit of the Executive during the one year period
which shall end on the date of his or her termination
of his or her employment with the Association;
"NY" is the Remaining Unexpired Employment Period
expressed as a number of years (rounded, if such
period is not a whole number, to the next highest
whole number); and
"UVB" is the actual balance credited to the
Executive's account under the applicable plan at the
date of his or her termination of employment that is
not vested and does not become vested as a
consequence of such termination of employment.
The ESOPSP shall be calculated as follows:
ESOPSP = (((ALL x FMV) + C) x NY) + UVB
where:
"ALL" is the sum of the number of shares of the
Association's common stock or, if applicable, phantom
shares of such stock by whatever term it is described
allocated to the Executive's accounts under all
qualified and non-
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<PAGE> 11
qualified employee stock ownership plans maintained
by the Association or any of its affiliates or
subsidiaries during or for the last complete plan
year in which the Executive participated in such
plans and received such an allocation whether the
allocation occurred as a result of contributions made
by the Association, the payment by the Association or
any of its affiliates or subsidiaries of any loan
payments under a leveraged employee stock ownership
plan, the allocation of forfeitures under the terms
of such plan or as a result of the use of cash or
earnings allocated to the Executives account during
such plan year to make loan payments that result in
share allocations, provided however, that excluded
shall be any shares or phantom shares allocated to
the Executive's account under any qualified and
non-qualified employee stock ownership plans
maintained by the Association or any of its
affiliates or subsidiaries solely as a result of the
termination of such plans, provided further, that if
the shares allocated are not shares of the
Association's common stock or phantom shares of such
stock than shares of whatever securities are so
allocated shall be utilized, and provided further,
that in the event that there shall be any shares or
phantom shares allocated during the then current plan
year or the last complete plan year to the
Executive's account under any qualified and
non-qualified employee stock ownership plans
maintained by the Association or any of its
affiliates or subsidiaries solely as a result of the
termination of such plans, the ALL shall be reduced
(but not to an amount less than zero (0)) by an
amount calculated by multiplying the number of shares
or phantom shares allocated to the Executive's
account solely as a result of the termination of such
plans times the FMV utilized to calculate the ESOPSP;
"C" is the sum of all cash allocated to the
Executive's accounts under all qualified and
non-qualified employee stock ownership plans
maintained by the Association during or for the last
complete plan year in which the Executive
participated in such plans whether the allocation
occurred as a result of contributions made by the
Association, the payment by the Association or the
Association of any loan payments under a leveraged
employee stock ownership plan or the allocation of
forfeitures under the terms of such plan during such
plan year;
"FMV" is the closing price of the Association's
common stock on The Nasdaq Stock Market or on
whatever other stock exchange or market such stock is
publicly traded on the date the Executive's
employment terminates or, if such day is not a day on
which such securities are traded, on the most recent
preceding trading day on which a trade occurs,
provided however that if the security allocated to
the Executive's account during the last completed
plan year is other than the Association's common
stock the closing price of such security on the date
the Executive's employment terminates shall be
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<PAGE> 12
utilized;
"NY" is the Remaining Unexpired Employment Period
expressed as a number of years (rounded, if such
period is not a whole number, to the next highest
whole number); and
"UVB" is the actual balance credited to the
Executive's account under the applicable plan at the
date of his or her termination of employment that is
not vested and does not become vested as a
consequence of such termination of employment.
(vii) within thirty (30) days following the Executive's
termination of employment with the Association, the
Association shall make a lump sum payment to the
Executive in an amount equal to the estimated
potential annual bonuses or incentive compensation
that the Executive could have earned if the Executive
had continued working for the Association during the
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 Association (the
"Bonus Severance Payment"). The Bonus Severance
Payment shall be computed using the following
formula:
BSP = (BS x TIO x AP x NY)
where:
"BSP" is the amount of the Bonus Severance Payment,
before the deduction of applicable federal, state and
local withholding taxes;
"BS" is 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 Association;
"TIO" is the highest target incentive opportunity
(expressed as a percentage of base salary)
established by the Compensation Committee of the
Board for the Executive pursuant to the Astoria
Financial Corporation Executive Officer Annual
Incentive Plan during that portion of the Employment
Period which is prior to the Executive's termination
of employment with the Association;
"AP" is the highest award percentage available to the
Executive with respect to the financial performance
of the Company (expressed as a percentage of the TIO)
established by the Compensation Committee of the
Board for the
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<PAGE> 13
Executive pursuant to the Astoria Financial
Corporation Executive Officer Annual Incentive Plan
during the period during that portion of the
Employment Period which is prior to the Executive's
termination of employment with the Association; and
"NY" is the Remaining Unexpired Employment Period
expressed as a number of years (rounded, if such
period is not a whole number, to the next highest
whole number).
(viii) at the election of the Association made within thirty
(30) days following the Executive's termination of
employment with the Association, 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 Association, a lump sum payment
(the "Option Surrender Payment"). The Option
Surrender Payment shall be calculated as follows:
OSP = (FMV - EP) x N
where:
"OSP" is the amount of the Option Surrender Payment,
before the deduction of applicable federal, state and
local withholding taxes;
"FMV" is the closing price of the Association's
common stock on The Nasdaq Stock Market, or on
whatever other stock exchange or market such stock is
publicly traded, on the date the Executive's
employment terminates or, if such day is not a day on
which such securities are traded, on the most recent
preceding trading day on which a trade occurs,
provided however that if the option or stock
appreciation right is for a security other than the
Association's common stock, 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 shall be utilized;
"EP" is the exercise price per share for such option
or appreciation right, as specified in or under the
relevant plan or program; and
"N" is the number of shares with respect to which
options or appreciation rights are being surrendered.
For purposes of determining the Option Severance
Payment and for purposes of determining the
Executive's right following his or her termination of
employment with the Association to exercise any
options or appreciation
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<PAGE> 14
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 Association, even if he or
she is not vested under such plan or program;
(ix) at the election of the Association made within thirty
(30) days following the Executive's termination of
employment with the Association, upon the surrender
of any shares awarded to the Executive under any
restricted stock plan maintained by, or covering
employees of, the Association, a lump sum payment
(the "RRP Surrender Payment") The RRP Surrender
Payment shall be calculated as follows:
RSP = FMV x N
where:
"RSP" is the amount of the RRP Surrender Payment,
before the deduction of applicable federal, state and
local withholding taxes;
"FMV" is the closing price of the Association's
common stock on The Nasdaq Stock Market, or on
whatever other stock exchange or market such stock is
publicly traded, on the date the Executive's
employment terminates or, if such day is not a day on
which such securities are traded, on the most recent
preceding trading day on which a trade occurs,
provided however that if the restricted stock is a
security other than the Association's common stock,
the fair market value of a share of stock of the same
class as the stock granted under such plan,
determined as of the date of termination of
employment shall be utilized; and
"N" is the number of shares which are being
surrendered.
For purposes of determining the RRP Surrender Payment
and for purposes of determining the Executive's right
following his or her termination of employment with
the Association 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
Association, even if he or she is not vested under
such plan.
The Salary Severance Payment, the DB Severance Payment, the
Defined Contribution Severance Payment, the Bonus Severance
Payment, the Option Surrender Payment and the RRP Surrender
Payment shall be computed at the expense of the Association by
an attorney of the firm of Thacher Proffitt & Wood, Two World
Trade Center, New York, New York 10048 or, if such firm is
unavailable
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<PAGE> 15
or unwilling to perform such calculation, by a firm of
independent certified public accountants selected by the
Executive and reasonably satisfactory to the Association (the
"Computation Advisor"). The determination of the Computation
Advisor as to the amount of such payments shall be final and
binding in the absence of manifest error.
The Association 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 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 Association and the Executive further
agree that the Association may condition the payment of the
Salary Severance Payment, the DB Severance Payment, the
Defined Contribution Severance Payment, the Bonus Severance
Payment, the Option Surrender Payment and the RRP Surrender
Payment on the receipt of the Executive's resignation from any
and all positions which he or she holds as an officer,
director or committee member with respect to the Association,
the Association or any subsidiary or affiliate of either of
them.
Section 10. Termination without Additional Association Liability.
(a) In the event that the Executive's employment with the
Association 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 personal
dishonesty, incompetence, wilful misconduct, breach
of fiduciary duty involving personal profit,
intentional failure to perform stated duties, wilful
violation of any law, rule or regulation (other than
traffic violations or similar offenses) or final
cease and desist order, or any material breach of
this Agreement, in each case measured against
standards generally prevailing at the relevant time
in the savings and community banking industry;
(ii) the Executive's voluntary resignation from employment
with the Association 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 Disabled;
(v) the Executive's termination of employment for any
reason at or after attainment of mandatory retirement
age under the Association's mandatory
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<PAGE> 16
retirement policy for executive officers in effect as
of the date of this Agreement;
then the Association, except as otherwise specifically
provided herein, shall have no further obligations under this
Agreement, other than the payment to the Executive (or, in the
event of his or her death, to his or her estate) of the
amounts or benefits provided in Section 9(b)(i) and (ii) of
this Agreement (the "Standard Termination Entitlements").
(b) 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:
(i) the Board, by the affirmative vote of 75% of its
entire membership, determines that the Executive is
guilty of the conduct described in Section 10(a)(i)
above measured against standards generally prevailing
at the relevant time in the savings and community
banking industry;
(ii) prior to the vote contemplated by Section 10(b)(i),
the Board shall provide the Executive with notice of
the Association's intent to discharge the Executive
for Cause, detailing with particularity the facts and
circumstances which are alleged to constitute Cause
(the "Notice of Intent to Discharge"); and
(iii) after the giving of the Notice of Intent to Discharge
and before the taking of the vote contemplated by
Section 10(b)(i), the Executive, together with the
Executive's legal counsel, if the Executive so
desires, are afforded a reasonable opportunity to
make both written and oral presentations before the
Board for the purpose of refuting the alleged grounds
for Cause for the Executive's discharge; and
(iv) after the vote contemplated by Section 10(b)(i), the
Association has furnished to the Executive a notice
of termination which shall specify the effective date
of the Executive's termination of employment (which
shall in no event be earlier than the date on which
such notice is deemed given) and include a copy of a
resolution or resolutions adopted by the Board,
certified by its corporate secretary, authorizing the
termination of the Executive's employment with Cause
and stating with particularity the facts and
circumstances found to constitute Cause for the
Executive's discharge (the "Final Discharge Notice").
If the Executive, during the ninety (90) day period commencing
on the delivery by the Association to the Executive of the
Notice of Intent to Discharge specified in Section 10(b)(ii),
resigns his or her employment with the Association prior to
the
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<PAGE> 17
delivery to the Executive by the Association of the Final
Discharge Notice specified in Section 10(b)(iv), then the
cessation of employment of the Executive shall be deemed to be
for Cause.
Following the giving of a Notice of Intent to Discharge, the
Bank may temporarily suspend the Executive's duties and
authority and, in such event, may also suspend the payment of
salary and other cash compensation, but not the Executive's
participation in retirement, insurance and other employee
benefit plans. If the Executive is not discharged or is
discharged without Cause within forty-five (45) days after the
giving of a Notice of Intent to Discharge, payments of salary
and cash compensation shall resume, and all payments withheld
during the period of suspension shall be promptly restored. If
the Executive is discharged with Cause not later than
forty-five (45) days after the giving of the Notice of Intent
to Discharge, all payments withheld during the period of
suspension shall be deemed forfeited and shall not be included
in the Standard Termination Entitlements. If a Final Discharge
Notice is given later than forty-five (45) days, but sooner
than ninety (90) days, after the giving of the Notice of
Intent to Discharge, all payments made to the Executive during
the period beginning with the giving of the Notice of Intent
to Discharge and ending with the Executive's discharge with
Cause shall be retained by the Executive and shall not be
applied to offset the Standard Termination Entitlements. If
the Bank does not give a Final Discharge Notice to the
Executive within ninety (90) days after giving a Notice of
Intent to Discharge, the Notice of Intent to Discharge shall
be deemed withdrawn and any future action to discharge the
Executive with Cause shall require the giving of a new Notice
of Intent to Discharge. If the Executive resigns pursuant to
Section 10(b), the Executive shall forfeit his or her right to
suspended amounts that have not been restored as of the date
of the Executive's resignation or notice of resignation,
whichever is earlier.
(c) The Association may terminate the Executive's employment on
the basis that the Executive is Disabled during the Employment
Period upon a determination by the Board, by the affirmative
vote of 75% of its entire membership, acting in reliance on
the written advice of a medical professional acceptable to it,
that the Executive is suffering from a physical or mental
impairment which, at the date of the determination, has
prevented the Executive from performing the Executive's
assigned duties on a substantially full-time basis for a
period of at least one hundred and eighty (180) days during
the period of one (1) year ending with the date of the
determination or is likely to result in death or prevent the
Executive from performing the Executive's assigned duties on a
substantially full-time basis for a period of at least one
hundred and eighty (180) days during the period of one (1)
year beginning with the date of the determination. In such
event:
(A) The Association shall pay and provide the
Standard Termination Entitlements to the
Executive;
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<PAGE> 18
(B) In addition to the Standard Termination
Entitlements, the Association shall continue
to pay to the Executive the Executive's base
salary, at the annual rate in effect for the
Executive immediately prior to the
termination of the Executive's employment,
during a period ending on the earliest of:
(I) the expiration of one hundred and
eighty (180) days after the date of
termination of the Executive's
employment;
(II) the date on which long-term
disability insurance benefits are
first payable to the Executive
under any long-term disability
insurance plan covering the
Executive; or
(III) the date of the Executive's death.
A termination of employment due to Disability under this
Section shall be effected by a notice of termination given to
the Executive by the Association and shall take effect on the
later of the effective date of termination specified in such
notice or, if no such date is specified, the date on which the
notice of termination is deemed given to the Executive.
Section 11. Termination Upon or Following a Change of Control.
(a) A Change of Control of the Association ("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 Association of a
transaction that would result in the reorganization,
merger or consolidation of the Association 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 Securities Exchange Act of 1934, as
amended (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 Association; 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
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<PAGE> 19
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 Association;
(ii) the acquisition of all or substantially all of the
assets of the Association 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 Association 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 Association of any
transaction which would result in such an
acquisition;
(iii) a complete liquidation or dissolution of the
Association, or approval by the stockholders of the
Association 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
do not belong to any of the following groups:
(A) individuals who were members of the Board on
the date of this Agreement; or
(B) individuals who first became members of the
Board after the date of this Agreement
either:
(I) upon election to serve as a member
of the Board 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 Association to serve as a
member of the Board, but only if
nominated for election by
affirmative vote of three-quarters
of the members of the Board, 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
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<PAGE> 20
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; or
(v) any event which would be described in Section
11(a)(i), (ii), (iii) or (iv) if the term "Company"
were substituted for the term "Association" therein
or the term "Board of Directors of the Company" were
substituted for the term "Board".
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 Association, the Association, or an affiliate or
subsidiary of either of them, by the Association, 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 or her termination of employment with
the Association 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 within six
(6) months following his or her demotion, loss of
title, office or significant authority or
responsibility or following any reduction in any
element of his or her package of compensation and
benefits;
(ii) resignation, voluntary or otherwise, by the Executive
at any time during the Employment Period within six
(6) months following any relocation of his or her
principal place of employment or any change in
working conditions at such principal place of
employment which the Executive, in his or her
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 within six
(6) months following the failure of any successor to
the Association 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 Association which
is at least as favorable to him or her; or
(iv) resignation, voluntary or otherwise, for any
reason whatsoever during the Employment Period within
six months following the expiration of a transition
period of thirty (30) days beginning on the effective
date of the Change of
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<PAGE> 21
Control (or for such longer period, not to exceed
ninety (90) days beginning on the effective date of
the Change of Control, as the Association or its
successor may reasonably request) to facilitate a
transfer of management responsibilities.
Section 12. Covenant Not To Compete.
The Executive hereby covenants and agrees that, in the event of his or
her termination of employment with the Association prior to the expiration of
the Employment Period, for a period of one (1) year following the date of his or
her termination of employment with the Association (or, if less, for the
Remaining Unexpired Employment Period), the Executive shall not, without the
written consent of the Association, become an officer, employee, consultant,
director or trustee of any savings bank, savings and loan association, savings
and loan holding Association, bank or bank holding Association, 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 Association 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 12 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(c) of this Agreement, this
Section 12 shall not prevent the Executive from accepting any position or
performing any services if:
(a) he or she first offers, by written notice, to accept a similar
position with or perform similar services for the Association
on substantially the same terms and conditions and
(b) the Association declines to accept such offer within ten (10)
days after such notice is given.
Section 13. Confidentiality.
Unless the Executive obtains the prior written consent of the
Association, the Executive shall keep confidential and shall refrain from using
for the benefit of the Executive or any person or entity other than the
Association, any entity which is a subsidiary of the Association or any entity
which the Association is a subsidiary of, any material document or information
obtained from the Association, or from its affiliates or subsidiaries, in the
course of the Executive's 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 or her
own) until the same ceases to be material (or becomes so ascertainable or
available); provided, however, that nothing in this Section 13 shall prevent the
Executive, with or without the Association's consent, from participating in or
disclosing documents or information in connection with any judicial or
administrative investigation, inquiry or proceeding to the extent that such
participation or disclosure is required
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<PAGE> 22
under applicable law.
Section 14. Solicitation.
The Executive hereby covenants and agrees that, for a period of one (1)
year following the Executive's termination of employment with the Association,
he or she shall not, without the written consent of the Association, 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 Association, the Association or any
affiliate or subsidiary of ether 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 Association, savings and loan holding
Association, 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
Association has an office or has filed an application for
regulatory approval to establish an office;
(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 Association, savings
and loan holding Association, 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 Association has an office or has filed an application
for regulatory approval to establish an office 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 Association, the Association, or
any affiliate or subsidiary of either of them, to terminate
his or her employment and accept employment, become affiliated
with or provide services for compensation in any capacity
whatsoever to any such savings bank, savings and loan
association, bank, bank holding Association, savings and loan
holding Association 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 Association, the Association,
or any affiliate or subsidiary of either of them to terminate
an existing business or commercial relationship with the
Association, the Association, or any affiliate or subsidiary
of either of them.
Section 15. No Effect on Employee Benefit Plans or Programs.
The termination of the Executive's employment during the term of this
Agreement or
Page 22 of 29
<PAGE> 23
thereafter, whether by the Association or by the Executive, shall have no effect
on the rights and obligations of the parties hereto under the Association'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 Association from
time to time.
Section 16. Successors and Assigns.
This Agreement will inure to the benefit of and be binding upon the
Executive, his or her legal representatives and testate or intestate
distributees, and the Association 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 Association may be sold or otherwise transferred. Failure of the
Association to obtain from any successor its express written assumption of the
Association's obligations under this Agreement 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 17. 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:
William K. Sheerin
74 Hunt Drive
Jericho, New York 11753
If to the Association:
Astoria Federal Savings and Loan Association
One Astoria Federal Plaza
Lake Success, New York 11042-1085
Attention: General Counsel
with a copy to:
Page 23 of 29
<PAGE> 24
Thacher Proffitt & Wood
Two World Trade Center
New York, New York 10048
Attention: W. Edward Bright, Esq.
Section 18. Indemnification for Attorneys' Fees.
The Association shall indemnify, hold harmless and defend the Executive
against reasonable costs, including legal fees, incurred by him or her in
connection with or arising out of any action, suit or proceeding in which he or
she may be involved, as a result of his or her efforts, in good faith, to defend
or enforce the terms of this Agreement; provided, however, that in the case of
any action, suit or proceeding instituted prior to a Change of Control, 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 Association'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 19. 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 20. 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 21. 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 22. Governing Law.
This Agreement shall be governed by and construed and enforced in
accordance with the
Page 24 of 29
<PAGE> 25
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 performed entirely within the State of New
York.
Section 23. 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.
Page 25 of 29
<PAGE> 26
Section 24. 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. No modifications of this Agreement shall be valid unless made in writing
and signed by the parties hereto.
Section 25. Survival.
The provisions of any sections of this Agreement which by its terms
contemplates performance after the expiration or termination of this Agreement
(including, but not limited to, Sections 6, 9, 10, 11, 12, 13, 14, 15, 16, 17,
18, 20, 26, 27 and 28) shall survive the expiration of the Employment Period or
termination of this Agreement.
Section 26. Equitable Remedies.
The Association and the Executive hereby stipulate that money damages
are an inadequate remedy for violations of Sections 6(a), 12, 13 or 14 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 27. Required Regulatory Provisions.
The following provisions are included for the purposes of complying
with various laws, rules and regulations applicable to the Association:
(a) Notwithstanding anything herein contained to the contrary, in
no event shall the aggregate amount of compensation payable to
the Executive pursuant to Section 9(b) of this Agreement
(exclusive of amounts described in Section 9(b)(i), (ii),
(viii) or (ix)) exceed three times the Executive's average
annual total compensation for the last five consecutive
calendar years to end prior to the Executive's termination of
employment with the Association (or for the Executive's entire
period of employment with the Association if less than five
calendar years).
(b) Notwithstanding anything herein contained to the contrary, any
payments to the Executive by the Association, 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 ("FDI Act"), 12 U.S.C. Section1828(k),
and any regulations promulgated thereunder.
(c) Notwithstanding anything herein contained to the contrary, if
the Executive is suspended from office and/or temporarily
prohibited from participating in the
Page 26 of 29
<PAGE> 27
conduct of the affairs of the Association pursuant to a notice
served under Section 8(e)(3) or 8(g)(1) of the FDI Act, 12
U.S.C. Section 1818(e)(3) or 1818(g)(1), the Association's
obligations under this Agreement shall be suspended as of the
date of service of such notice, unless stayed by appropriate
proceedings. If the charges in such notice are dismissed, the
Association, in its discretion, may (i) pay to the Executive
all or part of the compensation withheld while the
Association's obligations hereunder were suspended and (ii)
reinstate, in whole or in part, any of the obligations which
were suspended.
(d) Notwithstanding anything herein contained to the contrary, if
the Executive is removed and/or permanently prohibited from
participating in the conduct of the Association's affairs by
an order issued under Section 8(e)(4) or 8(g)(1) of the FDI
Act, 12 U.S.C. Section 1818(e)(4) or (g)(1), all prospective
obligations of the Association under this Agreement shall
terminate as of the effective date of the order, but vested
rights and obligations of the Association and the Executive
shall not be affected.
(e) Notwithstanding anything herein contained to the contrary, if
the Association is in default (within the meaning of Section
3(x)(1) of the FDI Act, 12 U.S.C. Section 1813(x)(1), all
prospective obligations of the Association under this
Agreement shall terminate as of the date of default, but
vested rights and obligations of the Association and the
Executive shall not be affected.
(f) Notwithstanding anything herein contained to the contrary, all
prospective obligations of the Association hereunder shall be
terminated, except to the extent that a continuation of this
Agreement is necessary for the continued operation of the
Association: (i) by the Director of the Office of Thrift
Supervision ("OTS") or his or her designee or the Federal
Deposit Insurance Corporation ("FDIC"), at the time the FDIC
enters into an agreement to provide assistance to or on behalf
of the Association under the authority contained in Section
13(c) of the FDI Act, 12 U.S.C. Section 1823(c); (ii) by the
Director of the OTS or his or her designee at the time such
Director or designee approves a supervisory merger to resolve
problems related to the operation of the Association or when
the Association is determined by such Director to be in an
unsafe or unsound condition. The vested rights and obligations
of the parties shall not be affected.
If and to the extent that any of the foregoing provisions shall cease to be
required or by applicable law, rule or regulation, the same shall become
inoperative as though eliminated by formal amendment of this Agreement.
Section 28. No Offset or Recoupment; No Attachment.
The Association's obligation to make the payments provided for in this
Agreement and
Page 27 of 29
<PAGE> 28
otherwise to perform its obligations under this Agreement shall not be affected
by any set-off, counterclaim, recoupment, defense or other claim, right or
action which the Association or any of its affiliates or subsidiaries may have
against the Executive. In no event shall the Executive be obligated to seek
other employment or take any other action by way of mitigation of the amounts
payable to the Executive under any of the provisions of this Agreement and such
amounts shall not be reduced whether or not the Executive obtains other
employment. Except as required by law, no right to receive payments under this
Agreement shall be subject to anticipation, commutation, alienation, sale,
assignment, encumbrance, charge, pledge, or hypothecation, or to execution,
attachment, levy, or similar process or assignment by operation of law, and any
attempt, voluntary or involuntary, to affect any such action shall be null,
void, and of no effect.
Section 29. LISB Transaction.
The Executive hereby waives any claim the Executive may have pursuant
to his or her Employment Agreements each dated January 1, 1996 with the Company
and the Association, respectively, that the acquisition by and the merger of
Long Island Bancorp, Inc. and The Long Island Savings Bank, FSB with and into
the Company and the Association, respectively, constituted a "change of control"
of the Company or the Association as defined in such Employment Contracts.
IN WITNESS WHEREOF, the Association has caused this Agreement to be
executed and the Executive has hereunto set his or her hand, all as of the day
and year first above written.
ATTEST:
/S/ Alan P. Eggleston ASTORIA FEDERAL SAVINGS AND LOAN ASSOCIATION
Alan P. Eggleston
[Seal] By: /S/ George L. Engelke, Jr.
Name: George L. Engelke, Jr.
Title: Chairman, President and Chief Executive Officer
/S/ William K. Sheerin
WILLIAM K. SHEERIN
STATE OF NEW YORK )
) ss.:
COUNTY OF NASSAU )
On this 20 day of March, 2000, before me, the undersigned, personally
appeared William K.
Page 28 of 29
<PAGE> 29
Sheerin, personally known to me or proved to me on the basis of satisfactory
evidence to be the individual(s) whose name(s) is (are) subscribed to the within
instrument and acknowledged to me that he/she/they executed the same in
his/her/their capacity(ies), and that by his/her/their signature(s) on the
instrument, the individual(s), or the person upon behalf of which the
individual(s) acted, executed the instrument.
/S/ Anna Knice
Notary Public
Anna Knice
Notary Public, State of New York
No. 4980431
Qualified in Suffolk County
Commission Expires April 22, 2001
STATE OF NEW YORK )
) ss.:
COUNTY OF NASSAU )
On this 20 day of March, 2000, before me, the undersigned, personally
appeared George L. Engelke, Jr., personally known to me or proved to me on the
basis of satisfactory evidence to be the individual(s) whose name(s) is (are)
subscribed to the within instrument and acknowledged to me that he/she/they
executed the same in his/her/their capacity(ies), and that by his/her/their
signature(s) on the instrument, the individual(s), or the person upon behalf of
which the individual(s) acted, executed the instrument.
/S/ Anna Knice
Notary Public
Anna Knice
Notary Public, State of New York
No. 4980431
Qualified in Suffolk County
Commission Expires April 22, 2001
Page 29 of 29
<PAGE> 1
EXHIBIT 10.31
ASTORIA FINANCIAL CORPORATION
AMENDED AND RESTATED
EMPLOYMENT AGREEMENT WITH EXECUTIVE OFFICER
This AMENDED AND RESTATED EMPLOYMENT AGREEMENT (the "Agreement") is
made and entered into as of January 1, 2000 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 One Astoria Federal Plaza, Lake
Success, New York 11042-1085 (the "Company"), and ALAN P. EGGLESTON, an
individual residing at 28 Croft Place, Huntington, New York 11742 (the
"Executive").
WITNESSETH:
WHEREAS, the Executive currently serves the Company in the capacity of
Executive Vice President and General Counsel and as Executive Vice President and
General Counsel of its wholly owned subsidiary, ASTORIA FEDERAL SAVINGS AND LOAN
ASSOCIATION (the "Association"); and
WHEREAS, the Executive currently has an Employment Agreement with the
Company dated January 1, 1996 which the Executive and the Company wish to amend
and modify; 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 amend and restate in its entirety the Employment Agreement by and between
the Company and the Executive dated as of January 1, 1996 so as to provide as
follows from and after the date hereof:
Section 1. Employment.
The Company agrees to continue to employ the Executive, and the
Executive hereby agrees to such continued 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
Page 1 of 31
<PAGE> 2
period of employment established under this Section 2 (the
"Employment Period"). The Employment Period shall be for an
initial term of three years beginning on the date of this
Agreement and ending on the day before the third anniversary
date of this Agreement, plus such extensions, if any, as are
provided by the Board of Directors of the Company (the
"Board") pursuant to Section 2(b).
(b) Beginning on the date of this Agreement, the Employment Period
shall automatically be extended for one (1) additional day
each day, unless either the Company or the Executive elects
not to extend the Agreement further by giving written notice
to the other party, in which case the Employment Period shall
end on the day before the third anniversary of the date on
which such written notice is given. 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 day before the
third anniversary of the date on which such notice is
given; and
(ii) in all other cases, the day before the third
anniversary of the date as of which the Remaining
Unexpired Employment Period is being determined.
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 previously
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 pursuant to this
Agreement.
Section 3. Duties.
The Executive shall serve as Executive Vice President and General
Counsel of the Company, having such power, authority and responsibility and
performing such duties as are prescribed by or pursuant to the By-Laws of the
Company and as are customarily associated with such position. The Executive
shall devote his or her 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, its
affiliates and subsidiaries and shall use his or her best efforts to advance the
interests of the Company.
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<PAGE> 3
Section 4. Cash Compensation.
In consideration for the services to be rendered by the Executive
hereunder, the Company shall pay to him or her a salary at an initial annual
rate of TWO HUNDRED SEVENTY FIVE THOUSAND DOLLARS ($275,000), 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. In no event shall the Executive's
annual rate of salary under this Agreement in effect at a particular time be
reduced without his or her prior written consent and any such reduction in the
absence of such consent shall be a material breach of this Agreement. 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.
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 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
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 or her harmless from, any costs, liabilities,
losses and exposures to the fullest extent and on the most
favorable terms and conditions
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<PAGE> 4
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 as he
or she may disclose to and as may be approved by the Board
(which approval shall not be unreasonably withheld); provided,
however, that such service shall not materially interfere with
the performance of his or her 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 or her 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 or her 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 or she
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 or her principal place of employment with a private office,
secretarial services and other support services and facilities suitable to his
or her position with the Company and necessary or appropriate in connection with
the performance of his or her assigned duties under this Agreement. The Company
shall provide to the Executive for his or her exclusive use an automobile owned
or leased by the Company and appropriate to his or her position, to be used in
the performance of his or her duties hereunder, including commuting to and from
his or her personal residence. The Company shall reimburse the Executive for his
or her ordinary and necessary business expenses, including, without limitation,
all expenses associated with his or her business use of the aforementioned
automobile, fees for memberships in such clubs and organizations as the
Page 4 of 31
<PAGE> 5
Executive and the Company shall mutually agree are necessary and appropriate for
business purposes, and his or her travel and entertainment expenses incurred in
connection with the performance of his or her 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 or her 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 six (6) months following:
(A) the failure of the Board to appoint or
re-appoint or elect or re-elect the
Executive to the office of Executive Vice
President and General Counsel (or a more
senior office) of the Company;
(B) if the Executive is or becomes a member of
the Board, 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;
(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 Certificate of Incorporation
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 or her
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
(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 or her total
compensation
Page 5 of 31
<PAGE> 6
package), unless, during such thirty (30)
day period, the Company cures such failure
in a manner determined by the Executive, in
his or her discretion, to be satisfactory;
or
(E) the relocation of the Executive's principal
place of employment, without his or her
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 the Executive's death following the
Executive's termination of employment, to his or her estate):
(i) his or her 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 or her 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 any event not later than thirty (30) days
after termination of employment;
(ii) the benefits, if any, to which he or she 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;
(iii) continued group life, health (including
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
(including any co-payments and deductibles, but
excluding any premium sharing arrangements, it being
the intention of the parties to this Agreement that
the premiums for such insurance benefits shall be the
sole cost and expense of the Company) equivalent to
the coverage to which he or she would have been
entitled under such plans (as in effect on the date
of his or her termination of employment, or, if his
or her termination of employment occurs after a
Change of Control, on the date of
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<PAGE> 7
such Change of Control, whichever benefits are
greater), if he or she had continued working for the
Company during the Remaining Unexpired Employment
Period at the highest annual rate of salary or
compensation, as applicable, 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 the Executive's
termination of employment with the Company, a lump
sum payment in an amount representing an estimate of
the salary that the Executive would have earned if he
or she 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 (the "Salary Severance Payment"). The Salary
Severance Payment shall be computed using the
following formula:
SSP = BS x NY
where:
"SSP" is the amount of the Salary Severance Payment,
before the deduction of applicable federal, state and
local withholding taxes;
"BS" is 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;
"NY" is the Remaining Unexpired Employment Period
expressed as a number of years (rounded, if such
period is not a whole number, to the next highest
whole number).
The Salary Severance Payment shall 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 the Executive's
termination of employment with the Company, a lump
sum payment (the "DB Severance Payment") in an amount
equal to the excess, if any, of:
(A) the present value of the aggregate benefits
to which he or she would be entitled under
any and all qualified and non-qualified
defined benefit pension plans maintained by,
or covering employees of, the Company, if he
or she were 100% vested thereunder and had
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<PAGE> 8
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 pursuant to Sections
9(b)(i), (iv), (vii), (viii) and (ix) of
this Agreement; over
(B) the present value of the benefits to which
he or she is actually entitled under such
defined benefit pension plans as of the date
of his or her termination;
The DB Severance Payment shall be computed using the
following formula:
DBSP = SEVLS - LS
where:
"DBSP" is the amount of the DB Severance Payment,
before the deduction of applicable federal, state and
local withholding taxes;
"SEVLS" is the sum of the present value of the
defined benefit pension benefits that have been or
would be accrued by the Executive under all qualified
and non-qualified defined benefit pension plans of
which the Company or any of its affiliates or
subsidiaries are a sponsor and in which the Executive
is or, but for the completion of any service
requirement that would have been completed during the
Remaining Unexpired Employment Period, would be a
participant utilizing the following assumptions:
(I) the executive is 100% vested in the
plans regardless of actual service,
(II) the benefit to be valued shall be a
single life annuity with monthly
payments due on the first day of
each month and with a guaranteed
payout of not less than 120 monthly
payments,
(III) the calculation shall be made
utilizing the same mortality table
and interest rate as would be
utilized by the plan on the date of
termination as if the calculation
were being made pursuant to Section
417(e)(3)(A)(ii) of the Internal
Revenue Code, as amended, (the
"Code");
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<PAGE> 9
(IV) for purpose of calculating the
Executive's monthly or annual
benefit under the defined benefit
plans, additional service equal to
the Remaining Unexpired Employment
Period (rounded up to the next whole
year if such period is not a whole
number when expressed in years)
shall be added to the Executive's
actual service to calculate the
amount of the benefit; and
(V) for purpose of calculating the
Executive's monthly or annual
benefit under the defined benefit
plans, the following sums shall be
added to the Executive's
compensation recognized under such
plans for the most recent year
recognized:
(1) payments made pursuant to
Section 9(b)(i);
(2) the Salary Severance Payment;
(3) the Bonus Severance Payment;
(4) the Option Surrender Payment;
and
(5) the RRP Surrender Payment.
"LS" is the sum of the present value of the defined
benefit pension benefits that are vested benefits
actually accrued by the Executive under all qualified
and non-qualified defined benefit pension plans
maintained by, or covering employees of, the Company
or any of its affiliates or subsidiaries in which the
Executive is or, but for the completion of any
service requirement, would be a participant utilizing
the following assumptions:
(I) the benefit to be valued shall be a
single life annuity with monthly
payments due on the first day of
each month and with a guaranteed
payout of not less than 120 monthly
payments, and
(II) the calculation shall be made
utilizing the same mortality table
and interest rate as would be
utilized by the plan on the date of
termination as if the calculation
were being made pursuant to Section
417(e)(3)(A)(ii) of the Code;
(vi) within thirty (30) days following the Executive's
termination of employment with the Company, a lump
sum payment (the "Defined Contribution Severance
Payment") equal to the sum of:
(A) an estimate of the additional employer
contributions to which he or she would have
been entitled under any and all qualified
and non-qualified defined contribution
pension plans, excluding the employee
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<PAGE> 10
stock ownership plans, maintained by, or
covering employees of, the Company or any of
its affiliates or subsidiaries as if he or
she were 100% vested thereunder and had
continued working for the Company during the
Remaining Unexpired Employment Period (the
"401K Severance Payment"); and
(B) an estimate of the value of the additional assets
which would have been allocable to him or her through
debt service or otherwise under any and all qualified
and non-qualified employee stock ownership plans,
maintained by, or covering employees of, the Company
or any of its affiliates or subsidiaries as if he or
she were 100% vested thereunder and had continued
working for the Company during the Remaining
Unexpired Employment Period, based on the fair market
value of such assets at termination of employment
(the "ESOP Severance Payment").
The Defined Contribution Severance Payment shall be calculated as
follows:
DCSP = 401KSP + ESOPSP
where:
"DCSP" is the amount of the Defined Contribution
Severance Payment, before the deduction of applicable
federal, state and local withholding taxes;
"401KSP" is the amount of the 401K Severance Payment,
before the deduction of applicable federal, state and
local withholding taxes; and
"ESOPSP" is the amount of the ESOP Severance Payment,
before the deduction of applicable federal, state and
local withholding taxes.
The 401KSP shall be calculated as follows:
401KSP = (401KC x NY) + UVB
where
"401KC" is the sum of the Company Contributions as
defined in the Association's Incentive Savings Plan
or, if made under another defined contribution
pension plan other than an employee stock ownership
plan, the comparable contribution made for the
benefit of the Executive during the one year period
which shall end on the date of his or her termination
of his or her employment with the Company;
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<PAGE> 11
"NY" is the Remaining Unexpired Employment Period
expressed as a number of years (rounded, if such
period is not a whole number, to the next highest
whole number); and
"UVB" is the actual balance credited to the
Executive's account under the applicable plan at the
date of his or her termination of employment that is
not vested and does not become vested as a
consequence of such termination of employment.
The ESOPSP shall be calculated as follows:
ESOPSP = (((ALL x FMV) + C) x NY) + UVB
where:
"ALL" is the sum of the number of shares of the
Company's common stock or, if applicable, phantom
shares of such stock by whatever term it is described
allocated to the Executive's accounts under all
qualified and non-qualified employee stock ownership
plans maintained by the Company or any of its
affiliates or subsidiaries during or for the last
complete plan year in which the Executive
participated in such plans and received such an
allocation whether the allocation occurred as a
result of contributions made by the Company, the
payment by the Company or any of its affiliates or
subsidiaries of any loan payments under a leveraged
employee stock ownership plan, the allocation of
forfeitures under the terms of such plan or as a
result of the use of cash or earnings allocated to
the Executive's account during such plan year to make
loan payments that result in share allocations,
provided however, that excluded shall be any shares
or phantom shares allocated to the Executive's
account under any qualified and non-qualified
employee stock ownership plans maintained by the
Company or any of its affiliates or subsidiaries
solely as a result of the termination of such plans,
provided further, that if the shares allocated are
not shares of the Association's common stock or
phantom shares of such stock than shares of whatever
securities are so allocated shall be utilized, and
provided further, that in the event that there shall
be any shares or phantom shares allocated during the
then current plan year or the last complete plan year
to the Executive's account under any qualified and
non-qualified employee stock ownership plans
maintained by the Association or any of its
affiliates or subsidiaries solely as a result of the
termination of such plans, the ALL shall be reduced
(but not to an amount less than zero (0)) by an
amount calculated by multiplying the number of shares
or phantom shares allocated to the Executive's
account solely as a result of the termination of such
plans times the FMV utilized to calculate the ESOPSP;
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<PAGE> 12
"C" is the sum of all cash allocated to the
Executive's accounts under all qualified and
non-qualified employee stock ownership plans
maintained by the Company during or for the last
complete plan year in which the Executive
participated in such plans whether the allocation
occurred as a result of contributions made by the
Company, the payment by the Company or the
Association of any loan payments under a leveraged
employee stock ownership plan or the allocation of
forfeitures under the terms of such plan during such
plan year;
"FMV" is the closing price of the Company's common
stock on The Nasdaq Stock Market or on whatever other
stock exchange or market such stock is publicly
traded on the date the Executive's employment
terminates or, if such day is not a day on which such
securities are traded, on the most recent preceding
trading day on which a trade occurs, provided however
that if the security allocated to the Executive's
account during the last completed plan year is other
than the Company's common stock the closing price of
such other security on the date the Executive's
employment terminates shall be utilized.
"NY" is the Remaining Unexpired Employment Period
expressed as a number of years (rounded, if such
period is not a whole number, to the next highest
whole number); and
"UVB" is the actual balance credited to the
Executive's account under the applicable plan at the
date of his or her termination of employment that is
not vested and does not become vested as a
consequence of such termination of employment.
(vii) within thirty (30) days following the Executive's
termination of employment with the Company, the
Company shall make a lump sum payment to the
Executive in an amount equal to the estimated
potential annual bonuses or incentive compensation
that the Executive could have earned if the Executive
had continued working for the Company during the
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 (the
"Bonus Severance Payment"). The Bonus Severance
Payment shall be computed using the following
formula:
BSP = ( BS x TIO x AP x NY)
where:
"BSP" is the amount of the Bonus Severance Payment,
before the deduction
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<PAGE> 13
of applicable federal, state and local withholding
taxes;
"BS" is 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;
"TIO" is the highest target incentive opportunity
(expressed as a percentage of base salary)
established by the Compensation Committee of the
Board for the Executive pursuant to the Astoria
Financial Corporation Executive Officer Annual
Incentive Plan during that portion of the Employment
Period which is prior to the Executive's termination
of employment with the Company;
"AP" is the highest award percentage available to the
Executive with respect to the financial performance
of the Company (expressed as a percentage of the TIO)
established by the Compensation Committee of the
Board for the Executive pursuant to the Astoria
Financial Corporation Executive Officer Annual
Incentive Plan during the period during that portion
of the Employment Period which is prior to the
Executive's termination of employment with the
Company; and
"NY" is the Remaining Unexpired Employment Period
expressed as a number of years (rounded, if such
period is not a whole number, to the next highest
whole number).
(viii) 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
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 (the
"Option Surrender Payment"). The Option Surrender
Payment shall be calculated as follows:
OSP = (FMV - EP) x N
where:
"OSP" is the amount of the Option Surrender Payment,
before the deduction of applicable federal, state and
local withholding taxes;
"FMV" is the closing price of the Company's common
stock on The Nasdaq Stock Market, or on whatever
other stock exchange or market such stock is publicly
traded, on the date the Executive's employment
terminates or, if such
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<PAGE> 14
day is not a day on which such securities are traded,
on the most recent preceding trading day on which a
trade occurs, provided however that if the option or
stock appreciation right is for a security other than
the Company's common stock, 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 shall be utilized;
"EP" is the exercise price per share for such option
or appreciation right, as specified in or under the
relevant plan or program; and
"N" is the number of shares with respect to which
options or appreciation rights are being surrendered.
For purposes of determining the Option Severance
Payment and for purposes of determining the
Executive's right following his or her 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 or she is not 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 shares awarded to the Executive under any
restricted stock plan maintained by, or covering
employees of, the Company, a lump sum payment (the
"RRP Surrender Payment") The RRP Surrender Payment
shall be calculated as follows:
RSP = FMV x N
where:
"RSP" is the amount of the RRP Surrender Payment,
before the deduction of applicable federal, state and
local withholding taxes;
"FMV" is the closing price of the Company's common
stock on The Nasdaq Stock Market, or on whatever
other stock exchange or market such stock is publicly
traded, on the date the Executive's employment
terminates or, if such day is not a day on which such
securities are traded, on the preceding trading day
on which a trade occurs, provided however that if the
restricted stock is a security other than the
Company's common stock, the fair market value of a
share of stock of the same class as the stock granted
under such plan, determined as of the date of
termination of employment shall be utilized; and
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<PAGE> 15
"N" is the number of shares which are being
surrendered.
For purposes of determining the RRP Surrender Payment
and for purposes of determining the Executive's right
following his or her 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 or she is not vested under such plan.
The Salary Severance Payment, the DB Severance Payment, the
Defined Contribution Severance Payment, the Bonus Severance
Payment, the Option Surrender Payment and the RRP Surrender
Payment shall be computed at the expense of the Company by an
attorney of the firm of Thacher Proffitt & Wood, Two World
Trade Center, New York, New York 10048 or, if such firm is
unavailable or unwilling to perform such calculation, by a
firm of independent certified public accountants selected by
the Executive and reasonably satisfactory to the Company (the
"Computation Advisor"). The determination of the Computation
Advisor as to the amount of such payments shall be final and
binding in the absence of manifest error.
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 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 payment of the Salary
Severance Payment, the DB Severance Payment, the Defined
Contribution Severance Payment, the Bonus Severance Payment,
the Option Surrender Payment and the RRP Surrender Payment on
the receipt of the Executive's resignation from any and all
positions which he or she holds as an officer, director or
committee member with respect to the Company, the Association
or any subsidiary or affiliate of either of them.
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:
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<PAGE> 16
(A) the Executive intentionally engages in
dishonest conduct in connection with the
Executive's performance of services for the
Company resulting in the Executive's
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 the Executive's 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 the Executive's
fiduciary duties to the Company for personal
profit;
(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 the Executive's performance of services
for the Company; or
(F) the Executive's material breach of any
material provision of this Agreement which
is not substantially cured within 60 days
after written notice of such breach is
received by the Executive from 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 Disabled;
(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, except as otherwise specifically provided
herein, shall have no further obligations under this
Agreement, other than the payment to the Executive (or, in the
event of his or her death, to his or her estate) of the
amounts or benefits provided in Section 9(b)(i) and (ii) of
this Agreement (the "Standard Termination Entitlements").
(b) For purposes of Section 10(a)(i), no act or failure to act, on
the part of the Executive,
Page 16 of 31
<PAGE> 17
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. Except
as specifically provided below, 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:
(i) the Board, by the affirmative vote of 75% of its
entire membership, determines that the Executive is
guilty of the conduct described in Section 10(a)(i)
above measured against standards generally prevailing
at the relevant time in the savings and community
banking industry;
(ii) prior to the vote contemplated by Section 10(b)(i),
the Board shall provide the Executive with notice of
the Company's intent to discharge the Executive for
Cause, detailing with particularity the facts and
circumstances which are alleged to constitute Cause
(the "Notice of Intent to Discharge"); and
(iii) after the giving of the Notice of Intent to Discharge
and before the taking of the vote contemplated by
Section 10(b)(i), the Executive, together with the
Executive's legal counsel, if the Executive so
desires, are afforded a reasonable opportunity to
make both written and oral presentations before the
Board for the purpose of refuting the alleged grounds
for Cause for the Executive's discharge; and
(iv) after the vote contemplated by Section 10(b)(i), the
Company has furnished to the Executive a notice of
termination which shall specify the effective date of
the Executive's termination of employment (which
shall in no event be earlier than the date on which
such notice is deemed given) and include a copy of a
resolution or resolutions adopted by the Board,
certified by its corporate secretary, authorizing the
termination of the Executive's employment with Cause
and stating with particularity the facts and
circumstances found to constitute Cause for the
Executive's discharge (the "Final Discharge Notice").
If the Executive, during the 90 (ninety) day period commencing
on the delivery by the Company to the Executive of the Notice
of Intent to Discharge specified in Section 10(b)(ii), resigns
his or her employment with the Company prior to the delivery
to the Executive by the Company of the Final Discharge Notice
specified in Section 10(b)(iv), then the cessation of
employment of the Executive shall be deemed to be for Cause.
Page 17 of 31
<PAGE> 18
Following the giving of a Notice of Intent to Discharge, the
Bank may temporarily suspend the Executive's duties and
authority and, in such event, may also suspend the payment of
salary and other cash compensation, but not the Executive's
participation in retirement, insurance and other employee
benefit plans. If the Executive is not discharged or is
discharged without Cause within forty-five (45) days after the
giving of a Notice of Intent to Discharge, payments of salary
and cash compensation shall resume, and all payments withheld
during the period of suspension shall be promptly restored. If
the Executive is discharged with Cause not later than
forty-five (45) days after the giving of the Notice of Intent
to Discharge, all payments withheld during the period of
suspension shall be deemed forfeited and shall not be included
in the Standard Termination Entitlements. If a Final Discharge
Notice is given later than forty-five (45) days, but sooner
than ninety (90) days, after the giving of the Notice of
Intent to Discharge, all payments made to the Executive during
the period beginning with the giving of the Notice of Intent
to Discharge and ending with the Executive's discharge with
Cause shall be retained by the Executive and shall not be
applied to offset the Standard Termination Entitlements. If
the Bank does not give a Final Discharge Notice to the
Executive within ninety (90) days after giving a Notice of
Intent to Discharge, the Notice of Intent to Discharge shall
be deemed withdrawn and any future action to discharge the
Executive with Cause shall require the giving of a new Notice
of Intent to Discharge. If the Executive resigns pursuant to
Section 10(b), the Executive shall forfeit his or her right to
suspended amounts that have not been restored as of the date
of the Executive's resignation or notice of resignation,
whichever is earlier.
(c) The Company may terminate the Executive's employment on the
basis that the Executive is Disabled during the Employment
Period upon a determination by the Board, by the affirmative
vote of 75% of its entire membership, acting in reliance on
the written advice of a medical professional acceptable to it,
that the Executive is suffering from a physical or mental
impairment which, at the date of the determination, has
prevented the Executive from performing the Executive's
assigned duties on a substantially full-time basis for a
period of at least one hundred and eighty (180) days during
the period of one (1) year ending with the date of the
determination or is likely to result in death or prevent the
Executive from performing the Executive's assigned duties on a
substantially full-time basis for a period of at least one
hundred and eighty (180) days during the period of one (1)
year beginning with the date of the determination. In such
event:
(A) The Company shall pay and provide the
Standard Termination Entitlements to the
Executive;
(B) In addition to the Standard Termination
Entitlements, the Company shall continue to
pay to the Executive the Executive's base
salary, at the annual rate in effect for the
Executive immediately prior to the
Page 18 of 31
<PAGE> 19
termination of the Executive's employment,
during a period ending on the earliest of:
(I) the expiration of one hundred and
eighty (180) days after the date of
termination of the Executive's
employment;
(II) the date on which long-term
disability insurance benefits are
first payable to the Executive under
any long-term disability insurance
plan covering the Executive; or
(III) the date of the Executive's death.
A termination of employment due to Disability under
this Section shall be effected by a notice of
termination given to the Executive by the Company and
shall take effect on the later of the effective date
of termination specified in such notice or, if no
such date is specified, the date on which the notice
of termination is deemed given to the Executive.
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 Securities Exchange Act of 1934, as
amended (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
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<PAGE> 20
under the Exchange Act) at least 51 % of the
securities entitled to vote generally in the
election of directors of the Company;
(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
do not belong to any of the following groups:
(A) individuals who were members of the Board on
the date of this Agreement; or
(B) individuals who first became members of the
Board after the date of this Agreement
either:
(I) upon election to serve as a member
of the Board 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, but only if nominated for
election by affirmative vote of
three-quarters of the members of the
Board, 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; or
(v) any event which would be described in Section
11(a)(i), (ii), (iii) or (iv) if the
Page 20 of 31
<PAGE> 21
term "Association" were substituted for the term
"Company" therein or the term "Board of Directors of
the Association" were substituted for the term
"Board".
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 an affiliate or
subsidiary of either of 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 or her 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 within six
(6) months following his or her demotion, loss of
title, office or significant authority or
responsibility or following any reduction in any
element of his or her package of compensation and
benefits;
(ii) resignation, voluntary or otherwise, by the Executive
at any time during the Employment Period within six
(6) months following any relocation of his or her
principal place of employment or any change in
working conditions at such principal place of
employment which the Executive, in his or her
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 within six
(6) months 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 her; or
(iv) resignation, voluntary or otherwise, for any reason
whatsoever during the Employment Period within six
months 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
Page 21 of 31
<PAGE> 22
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 intended to indemnify the Executive against the
financial effects of the excise tax imposed on excess
parachute payments under Section 28OG of the Code (the "Tax
Indemnity Payment"). The Tax Indemnity Payment shall be
determined under the following formula:
E x P
TIP = ----------------------------------------
1 - (( FI x ( 1 - SLI )) + SLI + E +M )
where:
"TIP" is the Tax Indemnity Payment, before the deduction of
applicable federal, state and local withholding taxes;
"E" is the percentage rate at which an excise tax is assessed
under Section 4999 of the Code;
"P" is the amount with respect to which such excise tax is
assessed, determined without regard to any amount payable
pursuant to this Section 12;
"FI" is the highest marginal rate of income tax applicable to
the Executive under the Code for the taxable year in question;
"SLI" is 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" is the highest marginal rate of Medicare tax applicable to
the Executive under the Code for the taxable year in question.
Page 22 of 31
<PAGE> 23
(b) The computation of the Tax Indemnity Payment shall be made at
the expense of the Company by the Computation Advisor and
shall be based on the following assumptions:
(i) that a change in ownership, a change in effective
ownership or control or a change in the ownership of
a substantial portion of the assets of the
Association or the Company has occurred within the
meaning of Section 28OG of the Code (a "28OG Change
of Control");
(ii) that all direct or indirect payments made to or
benefits conferred upon the Executive on account of
the Executive's termination of employment are
"parachute payments" within the meaning of Section
28OG of the Code; and
(iii) that no portion of such payments is reasonable
compensation for services rendered prior to the
Executive's termination of employment.
(c) With respect to any payment that is presumed to be a
parachute payment for purposes of Section 28OG of the
Code, the Tax Indemnity Payment shall be made to the
Executive on the earlier of 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 the date the tax is
required to be paid by the Executive, unless, prior
to such date, the Company delivers to the Executive
the written opinion (the "Opinion Letter"), in form
and substance reasonably satisfactory to the
Executive, of the Computation Advisor or, if the
Computation Advisor is unable to provide such
opinion, of an attorney or firm of independent
certified public accountants selected by the Company
and reasonably satisfactory to the Executive, to the
effect that the Executive has a reasonable basis on
which to conclude that:
(i) no 28OG Change in Control has occurred, or
(ii) all or part of the payment or benefit in question is
not a parachute payment for purposes of Section 28OG
of the Code, or
(iii) all or a part of such payment or benefit constitutes
reasonable compensation for services rendered prior
to the 28OG Change of Control, or
(iv) for some other reason which shall be set forth in
detail in such letter, no excise tax is due under
Section 4999 of the Code with respect to such payment
or benefit.
If the Company delivers an Opinion Letter, the Computation
Advisor shall re- compute, and the Company shall make, the Tax
Indemnity Payment, if any, in reliance on the information
contained in the Opinion Letter.
Page 23 of 31
<PAGE> 24
(d) 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 with
respect to which the Tax Indemnity Payment is made, 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 pursuant to Sections 12(a) and 12(c),
when increased by the amount of the payment made to the
Executive pursuant to this Section 12(d), or when reduced by
the amount of the payment made to the Company pursuant to this
Section 12(d), equals the amount that should have properly
been paid to the Executive under Sections 12(a) and 12(c). The
interest paid to the Company under this Section 12(d) shall be
determined at the rate provided under Section 1274(b)(2)(B) of
the Code. The payment made to the Executive shall include such
amount of interest as is necessary to satisfy any interest
assessment made by the Internal Revenue Service and an
additional amount equal to any monetary penalties assessed by
the Internal Revenue Service on account of an underpayment of
the excise tax. 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, at least 20 days
before the date on which such return is required to be filed
with the Internal Revenue Service. Nothing in this Agreement
shall give the Company any right to control or otherwise
participate in any action, suit or proceeding to which the
Executive is a party as a result of positions taken on the
Executive's federal income tax return with respect to the
Executive's liability for excise taxes under Section 4999 of
the Code.
(e) 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, in the event of his or
her termination of employment with the Company prior to the expiration of the
Employment Period, for a period of one (1) year following the date of his or her
termination of employment with the Company (or, if less, for the Remaining
Unexpired Employment Period), the Executive 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
Page 24 of 31
<PAGE> 25
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(c) of
this Agreement, this Section 13 shall not prevent the Executive from accepting
any position or performing any services if:
(a) he or she 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 the Executive obtains the prior written consent of the Company,
the Executive shall keep confidential and shall refrain from using for the
benefit of the Executive or any person or entity other than the Company, any
entity which is a subsidiary of the Company or any entity which the Company is a
subsidiary of, any material document or information obtained from the Company,
or from its affiliates or subsidiaries, in the course of the Executive's
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 or her 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
proceeding 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 Executive's termination of employment with the Company, he or
she shall not, without the 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 or subsidiary of ether 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;
Page 25 of 31
<PAGE> 26
(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 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 or
subsidiary of either of them, to terminate his or her
employment and accept employment, 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, the Association, or
any affiliate or subsidiary of either of them to terminate an
existing business or commercial relationship with the Company,
the Association, or any affiliate or subsidiary of either of
them.
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.
Section 17. Successors and Assigns.
This Agreement will inure to the benefit of and be binding upon the
Executive, his or her 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 under this Agreement 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.
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<PAGE> 27
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:
Alan P. Eggleston
28 Croft Place
Huntington, New York 11742
If to the Company:
Astoria Financial Corporation
One Astoria Federal Plaza
Lake Success, New York 11042-1085
Attention: Chairman, President and Chief Executive Officer
with a copy to:
Thacher Proffitt & Wood
Two World Trade Center
New York, New York 10048
Attention: W. Edward Bright, Esq.
Section 19. Indemnification for Attorneys' Fees.
The Company shall indemnify, hold harmless and defend the Executive
against reasonable costs, including legal fees, incurred by him or her in
connection with or arising out of any action, suit or proceeding in which he or
she may be involved, as a result of his or her efforts, in good faith, to defend
or enforce the terms of this Agreement; provided, however, that in the case of
any action, suit or proceeding instituted prior to a Change of Control, 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
Page 27 of 31
<PAGE> 28
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 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. No modifications of this Agreement shall be valid unless made in writing
and signed by the parties hereto.
Page 28 of 31
<PAGE> 29
Section 26. Guarantee.
The Company hereby agrees to guarantee the payment by the Association
of any benefits and compensation to which the Executive is or may be entitled to
under the terms and conditions of the Amended and Restated Employment Agreement
dated as of the lst day of January, 2000 between the Association and the
Executive.
Section 27. Non-duplication.
In the event that the Executive shall perform services for the
Association or any other affiliate or 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 affiliates and
subsidiaries.
Section 28. Survival.
The provisions of any sections of this Agreement which by its terms
contemplates performance after the expiration or termination of this Agreement
(including, but not limited to, Sections 6, 9, 10, 11, 12, 13, 14, 15, 16, 17,
18, 19, 21, 26, 27, 29, 30 and 31) shall survive the expiration of the
Employment Period or termination of this Agreement.
Section 29. 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 30. 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 conditioned upon their compliance with Section
18(k) of the Federal Deposit Insurance Act, 12 U.S.C. Section1828(k), and any
regulations promulgated thereunder.
Section 31. No Offset or Recoupment; No Attachment.
The Company's obligation to make the payments provided for in this
Agreement and otherwise to perform its obligations under this Agreement shall
not be affected by any set-off, counterclaim, recoupment, defense or other
claim, right or action which the Company or any of its affiliates or
subsidiaries may have against the Executive. In no event shall the Executive be
obligated to seek other employment or take any other action by way of mitigation
of the amounts payable to
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<PAGE> 30
the Executive under any of the provisions of this Agreement and such amounts
shall not be reduced whether or not the Executive obtains other employment.
Except as required by law, no right to receive payments under this Agreement
shall be subject to anticipation, commutation, alienation, sale, assignment,
encumbrance, charge, pledge, or hypothecation, or to execution, attachment,
levy, or similar process or assignment by operation of law, and any attempt,
voluntary or involuntary, to affect any such action shall be null, void, and of
no effect.
Section 32. LISB Transaction.
The Executive hereby waives any claim the Executive may have pursuant
to his or her Employment Agreements each dated January 1, 1996 with the Company
and the Association, respectively, that the acquisition by and the merger of
Long Island Bancorp, Inc. and The Long Island Savings Bank, FSB with and into
the Company and the Association, respectively, constituted a "change of control"
of the Company or the Association as defined in such Employment Contracts.
IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed and the Executive has hereunto set his or her hand, all as of the day
and year first above written.
ATTEST: ASTORIA FINANCIAL CORPORATION
/S/ William K. Sheerin By: /S/ George L. Engelke, Jr.
- ---------------------- -------------------------------
William K. Sheerin Name: George L. Engelke, Jr.
Title: Chairman, President and Chief
Executive Officer
[Seal]
/S/ Alan P. Eggleston
---------------------
ALAN P. EGGLESTON
Page 30 of 31
<PAGE> 31
STATE OF NEW YORK )
) ss.:
COUNTY OF NASSAU )
On this 20 day of March, 2000, before me, the undersigned, personally
appeared Alan P. Eggleston, personally known to me or proved to me on the basis
of satisfactory evidence to be the individual(s) whose name(s) is (are)
subscribed to the within instrument and acknowledged to me that he/she/they
executed the same in his/her/their capacity(ies), and that by his/her/their
signature(s) on the instrument, the individual(s), or the person upon behalf of
which the individual(s) acted, executed the instrument.
/S/ Anna Knice
--------------
Notary Public
Anna Knice
Notary Public, State of New York
No. 4980431
Qualified in Suffolk County
Commission Expires April 22, 2001
STATE OF NEW YORK )
) ss.:
COUNTY OF NASSAU )
On this 20 day of March, 2000, before me, the undersigned, personally
appeared George L. Engelke, Jr., personally known to me or proved to me on the
basis of satisfactory evidence to be the individual(s) whose name(s) is (are)
subscribed to the within instrument and acknowledged to me that he/she/they
executed the same in his/her/their capacity(ies), and that by his/her/their
signature(s) on the instrument, the individual(s), or the person upon behalf of
which the individual(s) acted, executed the instrument.
/S/ Anna Knice
--------------
Notary Public
Anna Knice
Notary Public, State of New York
No. 4980431
Qualified in Suffolk County
Commission Expires April 22, 2001
Page 31 of 31
<PAGE> 1
EXHIBIT 10.32
ASTORIA FEDERAL SAVINGS AND LOAN ASSOCIATION
AMENDED AND RESTATED
EMPLOYMENT AGREEMENT WITH EXECUTIVE OFFICER
This AMENDED AND RESTATED EMPLOYMENT AGREEMENT (the "Agreement") is
made and entered into as of January 1, 2000 by and between ASTORIA FEDERAL
SAVINGS AND LOAN ASSOCIATION, a savings association organized and operating
under the federal laws of the United States and having an office at One Astoria
Federal Plaza, Lake Success, New York 11042-1085 (the "Association") and, ALAN
P. EGGLESTON, an individual residing at 28 Croft Place, Huntington, New York
11742 (the "Executive").
WITNESSETH:
WHEREAS, the Executive currently serves the Association in the capacity
of Executive Vice President and General Counsel and as Executive Vice President
and General Counsel of the Association's savings and loan holding company,
ASTORIA FINANCIAL CORPORATION, a publicly held business corporation organized
and operating pursuant to the laws of the State of Delaware (the "Company"); and
WHEREAS, the Executive currently has an Employment Agreement with the
Association dated January 1, 1996 which the Executive and the Association wish
to amend and modify; and
WHEREAS, the Association 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 Association
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 Association and the
Executive hereby amend and restate in its entirety the Employment Agreement by
and between the Association and the Executive dated as of January 1, 1996 so as
to provide as follows from and after the date hereof:
Section 1. Employment.
The Association agrees to continue to employ the Executive, and the
Executive hereby agrees to such continued employment, during the period and upon
the terms and conditions set forth in this Agreement.
Page 1 of 29
<PAGE> 2
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 (the "Employment Period"). The Employment
Period shall be for an initial term of three years beginning
on the date of this Agreement and ending on the day before the
third anniversary date of this Agreement. Prior to the first
anniversary of the date of this Agreement and on each
anniversary date thereafter (each an "Anniversary Date) the
Board of Directors of the Association (the "Board") shall
review the terms of this Agreement and the Executive's
performance of services hereunder and may, in the absence of
objection from the Executive, approve an extension of the
Employment Period. In such event, the Employment Period shall
be extended to the day before the third anniversary of the
relevant Anniversary Date.
(b) 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 the day before the
Anniversary Date on which the Employment Period (as extended
pursuant to Section 2(a) of this Agreement) is then scheduled
to expire.
(c) Nothing in this Agreement shall be deemed to prohibit the
Association 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 Association and the Executive in the event
of any such termination shall be determined pursuant to this
Agreement.
Section 3. Duties.
The Executive shall serve as Executive Vice President and General
Counsel of the Association, having such power, authority and responsibility and
performing such duties as are prescribed by or pursuant to the By-Laws of the
Association and as are customarily associated with such position. The Executive
shall devote his or her 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 Association and
shall use his or her best efforts to advance the interests of the Association.
Section 4. Cash Compensation.
In consideration for the services to be rendered by the Executive
hereunder, the Association shall pay to him or her a salary at an initial annual
rate of TWO HUNDRED SEVENTY FIVE THOUSAND DOLLARS ($275,000), payable in
approximately equal installments in accordance with the Association's customary
payroll practices for senior officers. Prior to each Anniversary Date occurring
during the Employment Period, the Board shall review the Executive's annual rate
of
Page 2 of 29
<PAGE> 3
salary and may, in its discretion, approve an increase therein. In addition to
salary, the Executive may receive other cash compensation from the Association
for services hereunder at such times, in such amounts and on such terms and
conditions as the Board may determine from time to time.
Section 5. Employee Benefit Plans and Programs.
During the Employment Period, the Executive shall be treated as an
employee of the Association 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 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 Association, in accordance with the terms and conditions of such employee
benefit plans and programs and compensation plans and programs and consistent
with the Association's customary practices.
Section 6. Indemnification and Insurance.
(a) During the Employment Period and for a period of six (6) years
thereafter, the Association 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
Association or service in other capacities at the request of
the Association. 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 Association.
(b) To the maximum extent permitted under applicable law, during
the Employment Period and for a period of six (6) years
thereafter, the Association shall indemnify the Executive
against, and hold him or her 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
Association or any subsidiary or affiliate thereof. This
Section 6(b) shall not be applicable where Section 18 is
applicable.
Section 7. Other Activities.
(a) The Executive may serve as a member of the boards of directors
of such business, community and charitable organizations as he
or she may disclose to and as may be approved by the Board
(which approval shall not be unreasonably withheld); provided,
however, that such service shall not materially interfere with
the performance of his or her duties under this Agreement. The
Executive may also
Page 3 of 29
<PAGE> 4
engage in personal business and investment activities which do
not materially interfere with the performance of his or her
duties hereunder; provided, however, that such activities are
not prohibited under any code of conduct or investment or
securities trading policy established by the Association and
generally applicable to all similarly situated executives.
(b) The Executive may also serve as an officer or director of the
Company on such terms and conditions as the Association and
the Company may mutually agree upon, and such service shall
not be deemed to materially interfere with the Executive's
performance of his or her duties hereunder or otherwise result
in a material breach of this Agreement.
Section 8. Working Facilities and Expenses.
The Executive's principal place of employment shall be at the
Association'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
Association shall maintain its principal executive offices, or at such other
location as the Association and the Executive may mutually agree upon. The
Association shall provide the Executive at his or her principal place of
employment with a private office, secretarial services and other support
services and facilities suitable to his or her position with the Association and
necessary or appropriate in connection with the performance of his or her
assigned duties under this Agreement. The Association shall provide to the
Executive for his or her exclusive use an automobile owned or leased by the
Association and appropriate to his or her position, to be used in the
performance of his or her duties hereunder, including commuting to and from his
or her personal residence. The Association shall reimburse the Executive for his
or her ordinary and necessary business expenses, including, without limitation,
all expenses associated with his or her business use of the aforementioned
automobile, fees for memberships in such clubs and organizations as the
Executive and the Association shall mutually agree are necessary and appropriate
for business purposes, and his or her travel and entertainment expenses incurred
in connection with the performance of his or her duties under this Agreement, in
each case upon presentation to the Association of an itemized account of such
expenses in such form as the Association 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 or her employment with
the Association terminates during the Employment Period under
any of the following circumstances:
(i) the Executive's voluntary resignation from employment
with the Association within six (6) months following:
(A) the failure of the Board to appoint or
re-appoint or elect or re-elect the
Page 4 of 29
<PAGE> 5
Executive to the office of Executive Vice
President and General Counsel (or a more
senior office) of the Association;
(B) if the Executive is or becomes a member of
the Board, the failure of the stockholders
of the Association 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;
(C) the expiration of a thirty (30) day period
following the date on which the Executive
gives written notice to the Association of
its material failure, whether by amendment
of the Association's Organization
Certificate or By-laws, action of the Board
or the Association'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 Association
cures such failure;
(D) the expiration of a thirty (30) day period
following the date on which the Executive
gives written notice to the Association of
its material breach of any term, condition
or covenant contained in this Agreement
(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 or her total
compensation package), unless, during such
thirty (30) day period, the Association
cures such failure; or
(E) the relocation of the Executive's principal
place of employment, without his or her
written consent, to a location outside of
Nassau County and Queens County, New York;
(ii) the termination of the Executive's employment with
the Association for any other reason not described in
Section 10(a).
In such event and subject to Section 27 of this Agreement, the
Association 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
Association under circumstances described in Section 9(a) of
this Agreement, the Association shall pay and provide to the
Executive (or, in the event of the Executive's death following
the Executive's termination of employment, to his or her
estate):
Page 5 of 29
<PAGE> 6
(i) his or her 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 or her employment with the Association, such
payment to be made at the time and in the manner
prescribed by law applicable to the payment of wages
but in any event not later than thirty (30) days
after termination of employment;
(ii) the benefits, if any, to which he or she is entitled
as a former employee under the employee benefit plans
and programs and compensation plans and programs
maintained for the benefit of the Association's
officers and employees;
(iii) continued group life, health (including
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
(including any co-payments and deductibles, but
excluding any premium sharing arrangements, it being
the intention of the parties to this Agreement that
the premiums for such insurance benefits shall be the
sole cost and expense of the Association) equivalent
to the coverage to which he or she would have been
entitled under such plans (as in effect on the date
of his or her termination of employment, or, if his
or her termination of employment occurs after a
Change of Control, on the date of such Change of
Control, whichever benefits are greater), if he or
she had continued working for the Association during
the Remaining Unexpired Employment Period at the
highest annual rate of salary or compensation, as
applicable, achieved during that portion of the
Employment Period which is prior to the Executive's
termination of employment with the Association;
(iv) within thirty (30) days following the Executive's
termination of employment with the Association, a
lump sum payment in an amount representing an
estimate of the salary that the Executive would have
earned if he or she had continued working for the
Association 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 Association (the "Salary Severance
Payment"). The Salary Severance Payment shall be
computed using the following formula:
SSP = BS x NY
where:
Page 6 of 29
<PAGE> 7
"SSP" is the amount of the Salary Severance Payment,
before the deduction of applicable federal, state and
local withholding taxes;
"BS" is 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 Association;
"NY" is the Remaining Unexpired Employment Period
expressed as a number of years (rounded, if such
period is not a whole number, to the next highest
whole number).
The Salary Severance Payment shall 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 the Executive's
termination of employment with the Association, a
lump sum payment (the "DB Severance Payment") in an
amount equal to the excess, if any, of:
(A) the present value of the aggregate benefits
to which he or she would be entitled under
any and all qualified and non-qualified
defined benefit pension plans maintained by,
or covering employees of, the Association,
if he or she were 100% vested thereunder and
had continued working for the Association
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 pursuant to
Sections 9(b)(i), (iv), (vii), (viii) and
(ix) of this Agreement; over
(B) the present value of the benefits to which
he or she is actually entitled under such
defined benefit pension plans as of the date
of his or her termination;
The DB Severance Payment shall be computed using the
following formula:
DBSP = SEVLS - LS
where:
"DBSP" is the amount of the DB Severance Payment,
before the deduction
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<PAGE> 8
of applicable federal, state and local withholding
taxes;
"SEVLS" is the sum of the present value of the
defined benefit pension benefits that have been or
would be accrued by the Executive under all qualified
and non-qualified defined benefit pension plans of
which the Association or any of its affiliates or
subsidiaries are a sponsor and in which the Executive
is or, but for the completion of any service
requirement that would have been completed during the
Remaining Unexpired Employment Period, would be a
participant utilizing the following assumptions:
(I) the executive is 100% vested in the
plans regardless of actual service,
(II) the benefit to be valued shall be a
single life annuity with monthly
payments due on the first day of
each month and with a guaranteed
payout of not less than 120 monthly
payments,
(III) the calculation shall be made
utilizing the same mortality table
and interest rate as would be
utilized by the plan on the date of
termination as if the calculation
were being made pursuant to Section
417(e)(3)(A)(ii) of the Internal
Revenue Code, as amended, (the
"Code");
(IV) for purpose of calculating the
Executive's monthly or annual
benefit under the defined benefit
plans, additional service equal to
the Remaining Unexpired Employment
Period (rounded up to the next whole
year if such period is not a whole
number when expressed in years)
shall be added to the Executive's
actual service to calculate the
amount of the benefit; and
(V) for purpose of calculating the
Executive's monthly or annual
benefit under the defined benefit
plans, the following sums shall be
added to the Executive's
compensation recognized under such
plans for the most recent year
recognized:
(1) payments made pursuant to
Section 9(b)(i);
(2) the Salary Severance Payment;
(3) the Bonus Severance Payment;
(4) the Option Surrender Payment;
and
(5) the RRP Surrender Payment.
Page 8 of 29
<PAGE> 9
"LS" is the sum of the present value of the defined
benefit pension benefits that are vested benefits
actually accrued by the Executive under all qualified
and non-qualified defined benefit pension plans
maintained by, or covering employees of, the Company
or any of its affiliates or subsidiaries in which the
Executive is or, but for the completion of any
service requirement, would be a participant utilizing
the following assumptions:
(I) the benefit to be valued shall be a
single life annuity with monthly
payments due on the first day of
each month and with a guaranteed
payout of not less than 120 monthly
payments, and
(II) the calculation shall be made
utilizing the same mortality table
and interest rate as would be
utilized by the plan on the date of
termination as if the calculation
were being made pursuant to Section
417(e)(3)(A)(ii) of the Code;
(vi) within thirty (30) days following the Executive's
termination of employment with the Association, a
lump sum payment (the "Defined Contribution Severance
Payment") equal to the sum of:
(A) an estimate of the additional employer
contributions to which he or she would have
been entitled under any and all qualified
and non- qualified defined contribution
pension plans, excluding the employee stock
ownership plans, maintained by, or covering
employees of, the Association or any of its
affiliates or subsidiaries as if he or she
were 100% vested thereunder and had
continued working for the Association during
the Remaining Unexpired Employment Period
(the "401K Severance Payment"); and
(B) an estimate of the value of the additional
assets which would have been allocable to
him or her through debt service or otherwise
under any and all qualified and
non-qualified employee stock ownership
plans, maintained by, or covering employees
of the Association or any of its affiliates
or subsidiaries as if he or she were 100%
vested thereunder and had continued working
for the Association during the Remaining
Unexpired Employment Period, based on the
fair market value of such assets at
termination of employment (the "ESOP
Severance Payment").
The Defined Contribution Severance Payment shall be
calculated as follows:
DCSP = 401KSP + ESOPSP
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<PAGE> 10
where:
"DCSP" is the amount of the Defined Contribution
Severance Payment, before the deduction of applicable
federal, state and local withholding taxes;
"401KSP" is the amount of the 401K Severance Payment,
before the deduction of applicable federal, state and
local withholding taxes; and
"ESOPSP" is the amount of the ESOP Severance Payment,
before the deduction of applicable federal, state and
local withholding taxes.
The 401KSP shall be calculated as follows:
401SP = (401KC x NY) + UVB
where
"401KC" is the sum of the Association Contributions
as defined in the Association's Incentive Savings
Plan or, if made under another defined contribution
pension plan other than an employee stock ownership
plan, the comparable contribution made for the
benefit of the Executive during the one year period
which shall end on the date of his or her termination
of his or her employment with the Association;
"NY" is the Remaining Unexpired Employment Period
expressed as a number of years (rounded, if such
period is not a whole number, to the next highest
whole number); and
"UVB" is the actual balance credited to the
Executive's account under the applicable plan at the
date of his or her termination of employment that is
not vested and does not become vested as a
consequence of such termination of employment.
The ESOPSP shall be calculated as follows:
ESOPSP = (((ALL x FMV) + C) x NY) + UVB
where:
"ALL" is the sum of the number of shares of the
Association's common stock or, if applicable, phantom
shares of such stock by whatever term it is described
allocated to the Executive's accounts under all
qualified and non-
Page 10 of 29
<PAGE> 11
qualified employee stock ownership plans maintained
by the Association or any of its affiliates or
subsidiaries during or for the last complete plan
year in which the Executive participated in such
plans and received such an allocation whether the
allocation occurred as a result of contributions made
by the Association, the payment by the Association or
any of its affiliates or subsidiaries of any loan
payments under a leveraged employee stock ownership
plan, the allocation of forfeitures under the terms
of such plan or as a result of the use of cash or
earnings allocated to the Executives account during
such plan year to make loan payments that result in
share allocations, provided however, that excluded
shall be any shares or phantom shares allocated to
the Executive's account under any qualified and
non-qualified employee stock ownership plans
maintained by the Association or any of its
affiliates or subsidiaries solely as a result of the
termination of such plans, provided further, that if
the shares allocated are not shares of the
Association's common stock or phantom shares of such
stock than shares of whatever securities are so
allocated shall be utilized, and provided further,
that in the event that there shall be any shares or
phantom shares allocated during the then current plan
year or the last complete plan year to the
Executive's account under any qualified and
non-qualified employee stock ownership plans
maintained by the Association or any of its
affiliates or subsidiaries solely as a result of the
termination of such plans, the ALL shall be reduced
(but not to an amount less than zero (0)) by an
amount calculated by multiplying the number of shares
or phantom shares allocated to the Executive's
account solely as a result of the termination of such
plans times the FMV utilized to calculate the ESOPSP;
"C" is the sum of all cash allocated to the
Executive's accounts under all qualified and
non-qualified employee stock ownership plans
maintained by the Association during or for the last
complete plan year in which the Executive
participated in such plans whether the allocation
occurred as a result of contributions made by the
Association, the payment by the Association or the
Association of any loan payments under a leveraged
employee stock ownership plan or the allocation of
forfeitures under the terms of such plan during such
plan year;
"FMV" is the closing price of the Association's
common stock on The Nasdaq Stock Market or on
whatever other stock exchange or market such stock is
publicly traded on the date the Executive's
employment terminates or, if such day is not a day on
which such securities are traded, on the most recent
preceding trading day on which a trade occurs,
provided however that if the security allocated to
the Executive's account during the last completed
plan year is other than the Association's common
stock the closing price of such security on the date
the Executive's employment terminates shall be
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<PAGE> 12
utilized;
"NY" is the Remaining Unexpired Employment Period
expressed as a number of years (rounded, if such
period is not a whole number, to the next highest
whole number); and
"UVB" is the actual balance credited to the
Executive's account under the applicable plan at the
date of his or her termination of employment that is
not vested and does not become vested as a
consequence of such termination of employment.
(vii) within thirty (30) days following the Executive's
termination of employment with the Association, the
Association shall make a lump sum payment to the
Executive in an amount equal to the estimated
potential annual bonuses or incentive compensation
that the Executive could have earned if the Executive
had continued working for the Association during the
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 Association (the
"Bonus Severance Payment"). The Bonus Severance
Payment shall be computed using the following
formula:
BSP = (BS x TIO x AP x NY)
where:
"BSP" is the amount of the Bonus Severance Payment,
before the deduction of applicable federal, state and
local withholding taxes;
"BS" is 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 Association;
"TIO" is the highest target incentive opportunity
(expressed as a percentage of base salary)
established by the Compensation Committee of the
Board for the Executive pursuant to the Astoria
Financial Corporation Executive Officer Annual
Incentive Plan during that portion of the Employment
Period which is prior to the Executive's termination
of employment with the Association;
"AP" is the highest award percentage available to the
Executive with respect to the financial performance
of the Company (expressed as a percentage of the TIO)
established by the Compensation Committee of the
Board for the
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<PAGE> 13
Executive pursuant to the Astoria Financial
Corporation Executive Officer Annual Incentive Plan
during the period during that portion of the
Employment Period which is prior to the Executive's
termination of employment with the Association; and
"NY" is the Remaining Unexpired Employment Period
expressed as a number of years (rounded, if such
period is not a whole number, to the next highest
whole number).
(viii) at the election of the Association made within thirty
(30) days following the Executive's termination of
employment with the Association, 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 Association, a lump sum payment
(the "Option Surrender Payment"). The Option
Surrender Payment shall be calculated as follows:
OSP = (FMV - EP) x N
where:
"OSP" is the amount of the Option Surrender Payment,
before the deduction of applicable federal, state and
local withholding taxes;
"FMV" is the closing price of the Association's
common stock on The Nasdaq Stock Market, or on
whatever other stock exchange or market such stock is
publicly traded, on the date the Executive's
employment terminates or, if such day is not a day on
which such securities are traded, on the most recent
preceding trading day on which a trade occurs,
provided however that if the option or stock
appreciation right is for a security other than the
Association's common stock, 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 shall be utilized;
"EP" is the exercise price per share for such option
or appreciation right, as specified in or under the
relevant plan or program; and
"N" is the number of shares with respect to which
options or appreciation rights are being surrendered.
For purposes of determining the Option Severance
Payment and for purposes of determining the
Executive's right following his or her termination of
employment with the Association to exercise any
options or appreciation
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<PAGE> 14
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 Association, even if he or
she is not vested under such plan or program;
(ix) at the election of the Association made within thirty
(30) days following the Executive's termination of
employment with the Association, upon the surrender
of any shares awarded to the Executive under any
restricted stock plan maintained by, or covering
employees of, the Association, a lump sum payment
(the "RRP Surrender Payment") The RRP Surrender
Payment shall be calculated as follows:
RSP = FMV x N
where:
"RSP" is the amount of the RRP Surrender Payment,
before the deduction of applicable federal, state and
local withholding taxes;
"FMV" is the closing price of the Association's
common stock on The Nasdaq Stock Market, or on
whatever other stock exchange or market such stock is
publicly traded, on the date the Executive's
employment terminates or, if such day is not a day on
which such securities are traded, on the most recent
preceding trading day on which a trade occurs,
provided however that if the restricted stock is a
security other than the Association's common stock,
the fair market value of a share of stock of the same
class as the stock granted under such plan,
determined as of the date of termination of
employment shall be utilized; and
"N" is the number of shares which are being
surrendered.
For purposes of determining the RRP Surrender Payment
and for purposes of determining the Executive's right
following his or her termination of employment with
the Association 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
Association, even if he or she is not vested under
such plan.
The Salary Severance Payment, the DB Severance Payment, the
Defined Contribution Severance Payment, the Bonus Severance
Payment, the Option Surrender Payment and the RRP Surrender
Payment shall be computed at the expense of the Association by
an attorney of the firm of Thacher Proffitt & Wood, Two World
Trade Center, New York, New York 10048 or, if such firm is
unavailable
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<PAGE> 15
or unwilling to perform such calculation, by a firm of
independent certified public accountants selected by the
Executive and reasonably satisfactory to the Association (the
"Computation Advisor"). The determination of the Computation
Advisor as to the amount of such payments shall be final and
binding in the absence of manifest error.
The Association 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 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 Association and the Executive further
agree that the Association may condition the payment of the
Salary Severance Payment, the DB Severance Payment, the
Defined Contribution Severance Payment, the Bonus Severance
Payment, the Option Surrender Payment and the RRP Surrender
Payment on the receipt of the Executive's resignation from any
and all positions which he or she holds as an officer,
director or committee member with respect to the Association,
the Association or any subsidiary or affiliate of either of
them.
Section 10. Termination without Additional Association Liability.
(a) In the event that the Executive's employment with the
Association 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 personal
dishonesty, incompetence, wilful misconduct, breach
of fiduciary duty involving personal profit,
intentional failure to perform stated duties, wilful
violation of any law, rule or regulation (other than
traffic violations or similar offenses) or final
cease and desist order, or any material breach of
this Agreement, in each case measured against
standards generally prevailing at the relevant time
in the savings and community banking industry;
(ii) the Executive's voluntary resignation from employment
with the Association 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 Disabled;
(v) the Executive's termination of employment for any
reason at or after attainment of mandatory retirement
age under the Association's mandatory
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<PAGE> 16
retirement policy for executive officers in effect as
of the date of this Agreement;
then the Association, except as otherwise specifically
provided herein, shall have no further obligations under this
Agreement, other than the payment to the Executive (or, in the
event of his or her death, to his or her estate) of the
amounts or benefits provided in Section 9(b)(i) and (ii) of
this Agreement (the "Standard Termination Entitlements").
(b) 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:
(i) the Board, by the affirmative vote of 75% of its
entire membership, determines that the Executive is
guilty of the conduct described in Section 10(a)(i)
above measured against standards generally prevailing
at the relevant time in the savings and community
banking industry;
(ii) prior to the vote contemplated by Section 10(b)(i),
the Board shall provide the Executive with notice of
the Association's intent to discharge the Executive
for Cause, detailing with particularity the facts and
circumstances which are alleged to constitute Cause
(the "Notice of Intent to Discharge"); and
(iii) after the giving of the Notice of Intent to Discharge
and before the taking of the vote contemplated by
Section 10(b)(i), the Executive, together with the
Executive's legal counsel, if the Executive so
desires, are afforded a reasonable opportunity to
make both written and oral presentations before the
Board for the purpose of refuting the alleged grounds
for Cause for the Executive's discharge; and
(iv) after the vote contemplated by Section 10(b)(i), the
Association has furnished to the Executive a notice
of termination which shall specify the effective date
of the Executive's termination of employment (which
shall in no event be earlier than the date on which
such notice is deemed given) and include a copy of a
resolution or resolutions adopted by the Board,
certified by its corporate secretary, authorizing the
termination of the Executive's employment with Cause
and stating with particularity the facts and
circumstances found to constitute Cause for the
Executive's discharge (the "Final Discharge Notice").
If the Executive, during the ninety (90) day period commencing
on the delivery by the Association to the Executive of the
Notice of Intent to Discharge specified in Section 10(b)(ii),
resigns his or her employment with the Association prior to
the
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<PAGE> 17
delivery to the Executive by the Association of the Final
Discharge Notice specified in Section 10(b)(iv), then the
cessation of employment of the Executive shall be deemed to be
for Cause.
Following the giving of a Notice of Intent to Discharge, the
Bank may temporarily suspend the Executive's duties and
authority and, in such event, may also suspend the payment of
salary and other cash compensation, but not the Executive's
participation in retirement, insurance and other employee
benefit plans. If the Executive is not discharged or is
discharged without Cause within forty-five (45) days after the
giving of a Notice of Intent to Discharge, payments of salary
and cash compensation shall resume, and all payments withheld
during the period of suspension shall be promptly restored. If
the Executive is discharged with Cause not later than
forty-five (45) days after the giving of the Notice of Intent
to Discharge, all payments withheld during the period of
suspension shall be deemed forfeited and shall not be included
in the Standard Termination Entitlements. If a Final Discharge
Notice is given later than forty-five (45) days, but sooner
than ninety (90) days, after the giving of the Notice of
Intent to Discharge, all payments made to the Executive during
the period beginning with the giving of the Notice of Intent
to Discharge and ending with the Executive's discharge with
Cause shall be retained by the Executive and shall not be
applied to offset the Standard Termination Entitlements. If
the Bank does not give a Final Discharge Notice to the
Executive within ninety (90) days after giving a Notice of
Intent to Discharge, the Notice of Intent to Discharge shall
be deemed withdrawn and any future action to discharge the
Executive with Cause shall require the giving of a new Notice
of Intent to Discharge. If the Executive resigns pursuant to
Section 10(b), the Executive shall forfeit his or her right to
suspended amounts that have not been restored as of the date
of the Executive's resignation or notice of resignation,
whichever is earlier.
(c) The Association may terminate the Executive's employment on
the basis that the Executive is Disabled during the Employment
Period upon a determination by the Board, by the affirmative
vote of 75% of its entire membership, acting in reliance on
the written advice of a medical professional acceptable to it,
that the Executive is suffering from a physical or mental
impairment which, at the date of the determination, has
prevented the Executive from performing the Executive's
assigned duties on a substantially full-time basis for a
period of at least one hundred and eighty (180) days during
the period of one (1) year ending with the date of the
determination or is likely to result in death or prevent the
Executive from performing the Executive's assigned duties on a
substantially full-time basis for a period of at least one
hundred and eighty (180) days during the period of one (1)
year beginning with the date of the determination. In such
event:
(A) The Association shall pay and provide the
Standard Termination Entitlements to the
Executive;
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<PAGE> 18
(B) In addition to the Standard Termination
Entitlements, the Association shall continue
to pay to the Executive the Executive's base
salary, at the annual rate in effect for the
Executive immediately prior to the
termination of the Executive's employment,
during a period ending on the earliest of:
(I) the expiration of one hundred and
eighty (180) days after the date of
termination of the Executive's
employment;
(II) the date on which long-term
disability insurance benefits are
first payable to the Executive under
any long-term disability insurance
plan covering the Executive; or
(III) the date of the Executive's death.
A termination of employment due to Disability under
this Section shall be effected by a notice of
termination given to the Executive by the Association
and shall take effect on the later of the effective
date of termination specified in such notice or, if
no such date is specified, the date on which the
notice of termination is deemed given to the
Executive.
Section 11. Termination Upon or Following a Change of Control.
(a) A Change of Control of the Association ("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 Association of a
transaction that would result in the reorganization,
merger or consolidation of the Association 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 Securities Exchange Act of 1934, as
amended (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 Association; 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
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<PAGE> 19
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 Association;
(ii) the acquisition of all or substantially all of the
assets of the Association 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 Association 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 Association of any
transaction which would result in such an
acquisition;
(iii) a complete liquidation or dissolution of the
Association, or approval by the stockholders of the
Association 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
do not belong to any of the following groups:
(A) individuals who were members of the Board on
the date of this Agreement; or
(B) individuals who first became members of the
Board after the date of this Agreement
either:
(I) upon election to serve as a member
of the Board 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 Association to serve as a member
of the Board, but only if nominated
for election by affirmative vote of
three-quarters of the members of the
Board, 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
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<PAGE> 20
promulgated under the Exchange Act) other
than by or on behalf of the Board; or
(v) any event which would be described in Section
11(a)(i), (ii), (iii) or (iv) if the term "Company"
were substituted for the term "Association" therein
or the term "Board of Directors of the Company" were
substituted for the term "Board".
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 Association, the Association, or an affiliate or
subsidiary of either of them, by the Association, 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 or her termination of employment with
the Association 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 within six
(6) months following his or her demotion, loss of
title, office or significant authority or
responsibility or following any reduction in any
element of his or her package of compensation and
benefits;
(ii) resignation, voluntary or otherwise, by the Executive
at any time during the Employment Period within six
(6) months following any relocation of his or her
principal place of employment or any change in
working conditions at such principal place of
employment which the Executive, in his or her
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 within six
(6) months following the failure of any successor to
the Association 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 Association which
is at least as favorable to him or her; or
(iv) resignation, voluntary or otherwise, for any reason
whatsoever during the Employment Period within six
months following the expiration of a transition
period of thirty (30) days beginning on the effective
date of the Change of
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<PAGE> 21
Control (or for such longer period, not to exceed
ninety (90) days beginning on the effective date of
the Change of Control, as the Association or its
successor may reasonably request) to facilitate a
transfer of management responsibilities.
Section 12. Covenant Not To Compete.
The Executive hereby covenants and agrees that, in the event of his or
her termination of employment with the Association prior to the expiration of
the Employment Period, for a period of one (1) year following the date of his or
her termination of employment with the Association (or, if less, for the
Remaining Unexpired Employment Period), the Executive shall not, without the
written consent of the Association, become an officer, employee, consultant,
director or trustee of any savings bank, savings and loan association, savings
and loan holding Association, bank or bank holding Association, 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 Association 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 12 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(c) of this Agreement, this
Section 12 shall not prevent the Executive from accepting any position or
performing any services if:
(a) he or she first offers, by written notice, to accept a similar
position with or perform similar services for the Association
on substantially the same terms and conditions and
(b) the Association declines to accept such offer within ten (10)
days after such notice is given.
Section 13. Confidentiality.
Unless the Executive obtains the prior written consent of the
Association, the Executive shall keep confidential and shall refrain from using
for the benefit of the Executive or any person or entity other than the
Association, any entity which is a subsidiary of the Association or any entity
which the Association is a subsidiary of, any material document or information
obtained from the Association, or from its affiliates or subsidiaries, in the
course of the Executive's 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 or her
own) until the same ceases to be material (or becomes so ascertainable or
available); provided, however, that nothing in this Section 13 shall prevent the
Executive, with or without the Association's consent, from participating in or
disclosing documents or information in connection with any judicial or
administrative investigation, inquiry or proceeding to the extent that such
participation or disclosure is required
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<PAGE> 22
under applicable law.
Section 14. Solicitation.
The Executive hereby covenants and agrees that, for a period of one (1)
year following the Executive's termination of employment with the Association,
he or she shall not, without the written consent of the Association, 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 Association, the Association or any
affiliate or subsidiary of ether 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 Association, savings and loan holding
Association, 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
Association has an office or has filed an application for
regulatory approval to establish an office;
(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 Association, savings
and loan holding Association, 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 Association has an office or has filed an application
for regulatory approval to establish an office 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 Association, the Association, or
any affiliate or subsidiary of either of them, to terminate
his or her employment and accept employment, become affiliated
with or provide services for compensation in any capacity
whatsoever to any such savings bank, savings and loan
association, bank, bank holding Association, savings and loan
holding Association 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 Association, the Association,
or any affiliate or subsidiary of either of them to terminate
an existing business or commercial relationship with the
Association, the Association, or any affiliate or subsidiary
of either of them.
Section 15. No Effect on Employee Benefit Plans or Programs.
The termination of the Executive's employment during the term of this
Agreement or
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<PAGE> 23
thereafter, whether by the Association or by the Executive, shall have no effect
on the rights and obligations of the parties hereto under the Association'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 Association from
time to time.
Section 16. Successors and Assigns.
This Agreement will inure to the benefit of and be binding upon the
Executive, his or her legal representatives and testate or intestate
distributees, and the Association 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 Association may be sold or otherwise transferred. Failure of the
Association to obtain from any successor its express written assumption of the
Association's obligations under this Agreement 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 17. 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:
Alan P. Eggleston
28 Croft Place
Huntington, New York 11742
If to the Association:
Astoria Federal Savings and Loan Association
One Astoria Federal Plaza
Lake Success, New York 11042-1085
Attention: Chairman, President and Chief Executive Officer
with a copy to:
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<PAGE> 24
Thacher Proffitt & Wood
Two World Trade Center
New York, New York 10048
Attention: W. Edward Bright, Esq.
Section 18. Indemnification for Attorneys' Fees.
The Association shall indemnify, hold harmless and defend the Executive
against reasonable costs, including legal fees, incurred by him or her in
connection with or arising out of any action, suit or proceeding in which he or
she may be involved, as a result of his or her efforts, in good faith, to defend
or enforce the terms of this Agreement; provided, however, that in the case of
any action, suit or proceeding instituted prior to a Change of Control, 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 Association'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 19. 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 20. 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 21. 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 22. Governing Law.
This Agreement shall be governed by and construed and enforced
in accordance with the
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<PAGE> 25
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 performed entirely within the State of New
York.
Section 23. 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.
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<PAGE> 26
Section 24. 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. No modifications of this Agreement shall be valid unless made in writing
and signed by the parties hereto.
Section 25. Survival.
The provisions of any sections of this Agreement which by its terms
contemplates performance after the expiration or termination of this Agreement
(including, but not limited to, Sections 6, 9, 10, 11, 12, 13, 14, 15, 16, 17,
18, 20, 26, 27 and 28) shall survive the expiration of the Employment Period or
termination of this Agreement.
Section 26. Equitable Remedies.
The Association and the Executive hereby stipulate that money damages
are an inadequate remedy for violations of Sections 6(a), 12, 13 or 14 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 27. Required Regulatory Provisions.
The following provisions are included for the purposes of complying
with various laws, rules and regulations applicable to the Association:
(a) Notwithstanding anything herein contained to the contrary, in
no event shall the aggregate amount of compensation payable to
the Executive pursuant to Section 9(b) of this Agreement
(exclusive of amounts described in Section 9(b)(i), (ii),
(viii) or (ix)) exceed three times the Executive's average
annual total compensation for the last five consecutive
calendar years to end prior to the Executive's termination of
employment with the Association (or for the Executive's entire
period of employment with the Association if less than five
calendar years).
(b) Notwithstanding anything herein contained to the contrary, any
payments to the Executive by the Association, 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 ("FDI Act"), 12 U.S.C. Section1828(k),
and any regulations promulgated thereunder.
(c) Notwithstanding anything herein contained to the contrary, if
the Executive is suspended from office and/or temporarily
prohibited from participating in the
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<PAGE> 27
conduct of the affairs of the Association pursuant to a notice
served under Section 8(e)(3) or 8(g)(1) of the FDI Act, 12
U.S.C. Section1818(e)(3) or 1818(g)(1), the Association's
obligations under this Agreement shall be suspended as of the
date of service of such notice, unless stayed by appropriate
proceedings. If the charges in such notice are dismissed, the
Association, in its discretion, may (i) pay to the Executive
all or part of the compensation withheld while the
Association's obligations hereunder were suspended and (ii)
reinstate, in whole or in part, any of the obligations which
were suspended.
(d) Notwithstanding anything herein contained to the contrary, if
the Executive is removed and/or permanently prohibited from
participating in the conduct of the Association's affairs by
an order issued under Section 8(e)(4) or 8(g)(1) of the FDI
Act, 12 U.S.C. Section1818(e)(4) or (g)(1), all prospective
obligations of the Association under this Agreement shall
terminate as of the effective date of the order, but vested
rights and obligations of the Association and the Executive
shall not be affected.
(e) Notwithstanding anything herein contained to the contrary, if
the Association is in default (within the meaning of Section
3(x)(1) of the FDI Act, 12 U.S.C. Section1813(x)(1), all
prospective obligations of the Association under this
Agreement shall terminate as of the date of default, but
vested rights and obligations of the Association and the
Executive shall not be affected.
(f) Notwithstanding anything herein contained to the contrary, all
prospective obligations of the Association hereunder shall be
terminated, except to the extent that a continuation of this
Agreement is necessary for the continued operation of the
Association: (i) by the Director of the Office of Thrift
Supervision ("OTS") or his or her designee or the Federal
Deposit Insurance Corporation ("FDIC"), at the time the FDIC
enters into an agreement to provide assistance to or on behalf
of the Association under the authority contained in Section
13(c) of the FDI Act, 12 U.S.C. Section1823(c); (ii) by the
Director of the OTS or his or her designee at the time such
Director or designee approves a supervisory merger to resolve
problems related to the operation of the Association or when
the Association is determined by such Director to be in an
unsafe or unsound condition. The vested rights and obligations
of the parties shall not be affected.
If and to the extent that any of the foregoing provisions shall cease to be
required or by applicable law, rule or regulation, the same shall become
inoperative as though eliminated by formal amendment of this Agreement.
Section 28. No Offset or Recoupment; No Attachment.
The Association's obligation to make the payments provided for in this
Agreement and
Page 27 of 29
<PAGE> 28
otherwise to perform its obligations under this Agreement shall not be affected
by any set-off, counterclaim, recoupment, defense or other claim, right or
action which the Association or any of its affiliates or subsidiaries may have
against the Executive. In no event shall the Executive be obligated to seek
other employment or take any other action by way of mitigation of the amounts
payable to the Executive under any of the provisions of this Agreement and such
amounts shall not be reduced whether or not the Executive obtains other
employment. Except as required by law, no right to receive payments under this
Agreement shall be subject to anticipation, commutation, alienation, sale,
assignment, encumbrance, charge, pledge, or hypothecation, or to execution,
attachment, levy, or similar process or assignment by operation of law, and any
attempt, voluntary or involuntary, to affect any such action shall be null,
void, and of no effect.
Section 29. LISB Transaction.
The Executive hereby waives any claim the Executive may have pursuant
to his or her Employment Agreements each dated January 1, 1996 with the Company
and the Association, respectively, that the acquisition by and the merger of
Long Island Bancorp, Inc. and The Long Island Savings Bank, FSB with and into
the Company and the Association, respectively, constituted a "change of control"
of the Company or the Association as defined in such Employment Contracts.
IN WITNESS WHEREOF, the Association has caused this Agreement to be
executed and the Executive has hereunto set his or her hand, all as of the day
and year first above written.
ATTEST:
/S/ William K. Sheerin
William K. Sheerin
[Seal]
ASTORIA FEDERAL SAVINGS AND LOAN
ASSOCIATION
By: /S/ George L. Engelke, Jr.
Name: George L. Engelke, Jr.
Title: Chairman, President and Chief
Executive Officer
/S/ Alan P. Eggleston
ALAN P. EGGLESTON
STATE OF NEW YORK )
) ss.:
COUNTY OF NASSAU )
On this 20 day of March, 2000, before me, the undersigned, personally
appeared Alan P.
Page 28 of 29
<PAGE> 29
Eggleston, personally known to me or proved to me on the basis of satisfactory
evidence to be the individual(s) whose name(s) is (are) subscribed to the within
instrument and acknowledged to me that he/she/they executed the same in
his/her/their capacity(ies), and that by his/her/their signature(s) on the
instrument, the individual(s), or the person upon behalf of which the
individual(s) acted, executed the instrument.
/S/ Anna Knice
Notary Public
Anna Knice
Notary Public, State of New York
No. 4980431
Qualified in Suffolk County
Commission Expires April 22, 2001
STATE OF NEW YORK )
) ss.:
COUNTY OF NASSAU )
On this 20 day of March, 2000, before me, the undersigned, personally
appeared George L. Engelke, Jr., personally known to me or proved to me on the
basis of satisfactory evidence to be the individual(s) whose name(s) is (are)
subscribed to the within instrument and acknowledged to me that he/she/they
executed the same in his/her/their capacity(ies), and that by his/her/their
signature(s) on the instrument, the individual(s), or the person upon behalf of
which the individual(s) acted, executed the instrument.
/S/ Anna Knice
Notary Public
Anna Knice
Notary Public, State of New York
No. 4980431
Qualified in Suffolk County
Commission Expires April 22, 2001
Page 29 of 29
<PAGE> 1
EXHIBIT 10.33
CHANGE OF CONTROL SEVERANCE AGREEMENT
This CHANGE OF CONTROL SEVERANCE AGREEMENT (the "Agreement") is made and
entered into as of January 1, 2000 by and among ASTORIA FEDERAL SAVINGS AND LOAN
ASSOCIATION, a savings and loan association organized and existing under the
laws of the United States of America and having an office at One Astoria Federal
Plaza, Lake Success, New York 11042 (the "Bank"), ASTORIA FINANCIAL CORPORATION,
a business corporation organized and existing under the laws of the State of
Delaware and having an office at One Astoria Federal Plaza, Lake Success, New
York 11042 (the "Company") and Josie Callari, an individual residing at 85
Brookville Lane, Old Brookville, New York 11545 (the "Officer").
INTRODUCTORY STATEMENT
WHEREAS, the Boards of Directors of the Bank and the Company have
approved the Bank and the Company entering into Change of Control Severance
Agreements with certain key officers of the Bank,
WHEREAS, the Officer is a key officer of the Bank;
WHEREAS, should the possibility of a Pending Change of Control or Change
of Control of the Bank or the Company arise, the Boards of Directors of the Bank
and the Company believe it is imperative that the Bank, the Company and the
Boards of Directors of the Bank and the Company should be able to rely upon the
Officer to continue in his or her position, and that the Bank and the Company
should be able to receive and rely upon the Officer's advice, if requested, as
to the best interests of the Bank and the Company and their respective
shareholders without concern that the Officer might be distracted by the
personal uncertainties and risks created by the possibility of a Pending Change
of Control or Change of Control;
WHEREAS, should the possibility of a Pending Change of Control or Change
of Control arise, in addition to his or her regular duties, the Officer may be
called upon to assist in the assessment of such possible Pending Change of
Control or Change of Control, advise management and the Board as to whether such
Pending Change of Control or Change of Control would be in the best interests of
the Bank, the Company and their respective shareholders, and to take such other
actions as the Boards of Directors of the Bank and the Company might determine
to be appropriate; and
NOW, THEREFORE, to assure the Bank and the Company that they will have the
continued dedication of the Officer and the availability of his or her advice
and counsel notwithstanding the possibility, threat, or occurrence of a Pending
Change of Control or Change of Control of the Bank or the Company, and to induce
the Officer to remain in the employ of the Bank, in consideration of the mutual
premises and agreements set forth herein and for other good and valuable
consideration, the Bank, the Company and the Officer agree as follows:
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<PAGE> 2
AGREEMENT
Section 1. Effective Date; Term; Pending Change of Control and Change of
Control Defined.
(a) This Agreement shall take effect on January 1, 2000 (the "Effective
Date") and shall remain in effect during the period (the "Term")
beginning on the Effective Date and ending on the earlier of :
(i) the date, prior to the occurrence of a Pending Change of
Control or a Change of Control, as defined below,
respectively, on which the Officer's employment by the Bank
terminates whether by discharge, resignation, death,
disability or retirement, or
(ii) the later of:
(A) the first anniversary of the date on which the Bank
notifies the Executive of its intent to discontinue the
Agreement (the "Initial Expiration Date") or,
(B) the second anniversary of the latest Change of Control,
as defined below, that occurs after the Effective Date
and before the Initial Expiration Date, or
(b) For purposes of this Agreement, a "Change of Control" shall be
deemed to have occurred upon the happening of any of the following
events:
(i) the consummation of a 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 Securities Exchange Act of 1934, as amended
("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
2
<PAGE> 3
(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;
(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;
(iii) a complete liquidation or dissolution of the Company;
(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 Directors
of the Company on the Effective Date of this Agreement;
or
(B) individuals who first became members of the Board of
Directors of the Company after the Effective Date of
this Agreement either:
(1) 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
(2) upon election by the shareholders of the Board of
Directors of the Company to serve as a member of
such Board, 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
3
<PAGE> 4
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 Directors of the
Company; or
(v) any event which would be described in section 1(b)(i), (ii),
(iii) or (iv) if the term "Bank" 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 Bank, or a subsidiary of either of them, by the
Company, the Bank, or any subsidiary of either of them, or by any
employee benefit plan maintained by any of them. For purposes of
this section 1(b), the term "person" shall have the meaning assigned
to it under sections 13(d)(3) or 14(d)(2) of the Exchange Act.
(c) For purposes of this Agreement, a "Pending Change of Control" shall
mean:
(i) the approval by the shareholders of the Bank or the Company of
a definitive agreement for a transaction which, if
consummated, would result in a Change of Control; or
(ii) the approval by the shareholders of the Bank or the Company of
a transaction which, if consummated, would result in a Change
of Control.
Section 2. Discharge Prior to a Pending Change of Control.
The Bank may discharge the Officer at any time prior to the occurrence of
a Pending Change of Control or, if no Pending Change of Control has occurred, a
Change of Control, for any reason or for no reason. In such event:
(a) The Bank shall pay to the Officer or the Officer's estate his or her
earned but unpaid compensation, including, without limitation,
salary and all other items which constitute wages under applicable
law, as of the date of the Officer's termination of employment. This
payment shall be made at the time and in the manner prescribed by
law applicable to the payment of wages but in no event later than 30
days after the date of the Officer's termination of employment.
(b) The Bank shall provide the benefits due, if any, to the Officer or
the Officer's estate, surviving dependents or designated
beneficiaries, as applicable, under the employee benefit plans and
programs and compensation plans and programs maintained for the
benefit of the officers and employees of the Bank. The time and
manner of payment or other delivery of these benefits and the
recipients of such benefits shall be determined according to the
terms and conditions of the applicable plans and programs.
4
<PAGE> 5
The payments and benefits described in sections 2(a) and (b) shall be referred
to in this Agreement as the "Standard Termination Entitlements."
Section 3. Termination of Employment Due to Death.
The Officer's employment with the Bank shall terminate automatically, and
without any further action on the part of any party to this Agreement, on the
date of the Officer's death. In such event, the Bank shall pay and deliver to
the Officer's estate and surviving dependents and designated beneficiaries, as
applicable, the Standard Termination Entitlements.
Section 4. Termination Due to Disability after a Pending Change of
Control or a Change of Control.
The Bank may terminate the Officer's employment during the Term and after
the occurrence of a Pending Change of Control or a Change of Control upon a
determination by the Board of Directors of the Bank, by the affirmative vote of
75% of its entire membership, acting in reliance on the written advice of a
medical professional acceptable to it, that the Officer is suffering from a
physical or mental impairment which, at the date of the determination, has
prevented the Officer from performing the Officer's assigned duties on a
substantially full-time basis for a period of at least one hundred and eighty
(180) days during the period of one (1) year ending with the date of the
determination or is likely to result in death or prevent the Officer from
performing the Officer's assigned duties on a substantially full-time basis for
a period of at least one hundred and eighty (180) days during the period of one
(1) year beginning with the date of the determination. In such event:
(a) The Bank shall pay and deliver the Standard Termination Entitlements
to the Officer or, in the event of the Officer's death following
such termination but before payment, to the Officer's estate,
surviving dependents or designated beneficiaries, as applicable.
(b) In addition to the Standard Termination Entitlements, the Bank shall
continue to pay the Officer his or her base salary, at the annual
rate in effect for the Officer immediately prior to the termination
of the Officer's employment, during a period ending on the earliest
of: (i) the expiration of one hundred and eighty (180) days after
the date of termination of the Officer's employment; (ii) the date
on which long-term disability insurance benefits are first payable
to the Officer under any long-term disability insurance plan
covering employees of the Bank; or (iii) the date of the Officer's
death.
A termination of employment due to disability under this section 4 shall be
effected by a notice of termination given to the Officer by the Bank and shall
take effect on the later of the effective date of termination specified in such
notice or, if no such date is specified, the date on which the notice of
termination is deemed given to the Officer.
5
<PAGE> 6
Section 5. Discharge with Cause after a Pending Change of Control or
Change of Control.
(a) The Bank may terminate the Officer's employment with "Cause" during
the Term and after the occurrence of a Pending Change of Control or
a Change of Control, but a termination shall be deemed to have
occurred with "Cause" only if:
(i) (A) the Board of Directors of the Bank, by the affirmative
vote of 75% of its entire membership, determines that
the Officer is guilty of personal dishonesty,
incompetence, wilful misconduct, breach of fiduciary
duty involving personal profit, intentional failure to
perform stated duties, wilful violation of any law, rule
or regulation (other than traffic violations or similar
offenses) or final cease and desist order, or any
material breach of this Agreement, in each case measured
against standards generally prevailing at the relevant
time in the savings and community banking industry;
(B) prior to the vote contemplated by section 5(a)(i)(A),
the Board of Directors of the Bank shall provide the
Officer with notice of the Bank's intent to discharge
the Officer for Cause, detailing with particularity the
facts and circumstances which are alleged to constitute
Cause (the "Notice of Intent to Discharge"); and
(C) after the giving of the Notice of Intent to Discharge
and before the taking of the vote contemplated by
section 5(a)(i)(A), the Officer, together with the
Officer's legal counsel, if he so desires, are afforded
a reasonable opportunity to make both written and oral
presentations before the Board of Directors of the Bank
for the purpose of refuting the alleged grounds for
Cause for the Officer's discharge; and
(D) after the vote contemplated by section 5(a)(i)(A), the
Bank has furnished to the Officer a notice of
termination which shall specify the effective date of
the Officer's termination of employment (which shall in
no event be earlier than the date on which such notice
is deemed given) and include a copy of a resolution or
resolutions adopted by the Board of Directors of the
Bank, certified by its corporate secretary, authorizing
the termination of the Officer's employment with Cause
and stating with particularity the facts and
circumstances found to constitute Cause for the
Officer's discharge (the "Final Discharge Notice"); or
(ii) the Officer, during the 90 day period commencing on the
delivery to the Officer by the Bank of the Notice of Intent to
Discharge specified in section
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<PAGE> 7
5(a)(i)(B), resigns his or her employment with the Bank prior
to the delivery to the Officer by the Bank of the Final
Discharge Notice specified in section 5(a)(i)(D).
For purposes of this section 5, no act or failure to act, on the
part of the Officer, shall be considered "willful" unless it is
done, or omitted to be done, by the Officer in bad faith or without
reasonable belief that the Officer's action or omission was in the
best interests of the Bank or the Company, respectively. Any act or
failure to act based upon authority given pursuant to a resolution
duly adopted by the Board of Directors of the Bank or the Company or
based upon the written advice of counsel for the Bank or the Company
shall be conclusively presumed to be done or omitted to be done by
the Officer in good faith and in the best interests of the Bank or
the Company, respectively.
(b) If the Officer is discharged with Cause during the Term and after a
Pending Change of Control or a Change of Control, the Bank shall pay
and provide to him or, in the event of the Officer's death following
such discharge but prior to payment and providing, to the Officer's
estate, surviving dependents or designated beneficiaries, as
applicable, the Standard Termination Entitlements only.
(c) Following the giving of a Notice of Intent to Discharge, the Bank
may temporarily suspend the Officer's duties and authority and, in
such event, may also suspend the payment of salary and other cash
compensation, but not the Officer's participation in retirement,
insurance and other employee benefit plans. If the Officer is not
discharged or is discharged without Cause within forty-five (45)
days after the giving of a Notice of Intent to Discharge, payments
of salary and cash compensation shall resume, and all payments
withheld during the period of suspension shall be promptly restored.
If the Officer is discharged with Cause not later than forty-five
(45) days after the giving of the Notice of Intent to Discharge, all
payments withheld during the period of suspension shall be deemed
forfeited and shall not be included in the Standard Termination
Entitlements. If a Final Discharge Notice is given later than
forty-five (45) days, but sooner than ninety (90) days, after the
giving of the Notice of Intent to Discharge, all payments made to
the Officer during the period beginning with the giving of the
Notice of Intent to Discharge and ending with the Officer's
discharge with Cause shall be retained by the Officer and shall not
be applied to offset the Standard Termination Entitlements. If the
Bank does not give a Final Discharge Notice to the Officer within
ninety (90) days after giving a Notice of Intent to Discharge, the
Notice of Intent to Discharge shall be deemed withdrawn and any
future action to discharge the Officer with Cause shall require the
giving of a new Notice of Intent to Discharge. If the Officer
resigns pursuant to Section 5(a)(ii), the Officer shall forfeit his
or her right to suspended amounts that have not been restored as of
the date of the Officer's resignation or notice of resignation,
whichever is earlier.
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<PAGE> 8
Section 6. Discharge Without Cause after a Pending Change of Control or
Change of Control.
The Bank may discharge the Officer without Cause at any time after the
occurrence of a Pending Change of Control or a Change of Control, and in such
event:
(a) The Bank shall pay and deliver the Standard Termination Entitlements
to the Officer or, in the event of the Officer's death following the
Officer's discharge but before payment, to the Officer's estate,
surviving dependents or designated beneficiaries, as applicable.
(b) In addition to the Standard Termination Entitlements:
(i) the Bank shall provide for a period of two years following the
date of the Officer's discharge (the "Assurance Period") for
the benefit of the Officer and the Officer's spouse and
dependents continued group life, health (including
hospitalization, medical and major medical), dental, accident
and long-term disability insurance benefits on substantially
the same terms and conditions (including any co-payments and
deductibles, but excluding any premium sharing arrangements,
it being the intention of the parties to this Agreement that
the premiums for such insurance benefits shall be the sole
cost and expense of the Bank) in effect for them immediately
prior to the Officer's discharge. The coverage provided under
this section 6(b)(i) may, at the election of the Bank, be
secondary to the coverage provided as part of the Standard
Termination Entitlements and to any employer-paid coverage
provided by a subsequent employer or through Medicare, with
the result that benefits under the other coverages will offset
the coverage required by this section 6(b)(i), provided,
however, that for purposes of this section 6(b)(i) benefits
provided at the cost of the Officer or the Officer's spouse or
dependants pursuant to the Comprehensive Omnibus Budget
Reconciliation Act, as amended, shall not be considered
Standard Termination Entitlements.
(ii) The Bank shall make a lump sum payment to the Officer or, in
the event of the Officer's death following the Officer's
discharge but before payment, to the Officer's estate in an
amount equal to the salary that the Officer would have earned
if he had continued working for the Bank during the Assurance
Period at the highest annual rate of salary achieved during
the period of three (3) years ending immediately prior to the
date of termination (the "Salary Severance Payment"). The
Salary Severance Payment shall be computed using the following
formula:
SSP = BS x NY
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<PAGE> 9
where:
"SSP" is the amount of the Salary Severance Payment, before
the deduction of applicable federal, state and local
withholding taxes;
"BS" is the highest annual rate of salary achieved by the
Officer during the period of three (3) years ending
immediately prior to the date of termination; and
"NY" is the Assurance Period expressed as a number of years
(rounded, if such period is not a whole number, to the next
highest whole number).
The Salary Severance Payment shall be made within thirty (30)
days after the Officer's termination of employment and shall
be in lieu of any claim to a continuation of base salary which
the Officer might otherwise have and in lieu of cash severance
benefits under any severance benefits program which may be in
effect for officers or employees of the Bank.
(iii) The Bank shall make a lump sum payment to the Officer or, in
the event of the Officer's death following the Officer's
discharge but before payment, to the Officer's estate in an
amount equal to the potential annual bonuses that the Officer
would have earned if the Officer had continued working for the
Bank during the Assurance Period at the highest annual rate of
salary achieved during the period of three (3) years ending
immediately prior to the date of termination (the "Bonus
Severance Payment"). The Bonus Severance Payment shall be
computed using the following formula:
BSP = ((BS x TIO x IP) + ( BS x TIO x FP x AP)) x NY
where:
"BSP" is the amount of the Bonus Severance Payment, before the
deduction of applicable federal, state and local withholding
taxes;
"BS" is the highest annual rate of salary achieved by the
Officer during the period of three (3) years ending
immediately prior to the date of termination;
"TIO" is the target incentive opportunity for the Officer
expressed as a percentage as established by the Compensation
Committee of the Board of Directors of the Bank pursuant to
the Bank's Annual Incentive Plan for Select Executives for the
year in which the employment of the Officer by the Bank
terminates or, if no target incentive opportunity is
established by the Compensation Committee of the Board of
Directors of the Bank for such year
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<PAGE> 10
with respect to the Officer, then the highest target incentive
opportunity established by the Compensation Committee of the
Board of Directors of the Bank for the Officer pursuant to the
Annual Incentive Plan for Select Executives during the period
of three (3) years ending immediately prior to the date of
termination;
"IP" is either (i) the percentage of the TIO which is to be
determined by the individual performance of the Officer as
established by the Compensation Committee of the Board of
Directors of the Bank pursuant to the Bank's Annual Incentive
Plan for Select Executives for the year in which the
employment of the Officer by the Bank terminates or, (ii) if
no target incentive opportunity has been established with
respect to the Officer by the Compensation Committee of the
Board of Directors of the Bank for the year in which the
employment of the Officer by the Bank terminates, then the
lowest percentage of the target incentive opportunity to be
determined by the individual performance of the Officer
established by the Compensation Committee of the Board of
Directors of the Bank for the Officer pursuant to the Annual
Incentive Plan for Select Executives during the period of
three (3) years ending immediately prior to the date of
termination;
"FP" is either (i) the percentage of the TIO with respect to
the Officer which is to be determined by the financial
performance of the Company as established by the Compensation
Committee of the Board of Directors of the Bank pursuant to
the Bank's Annual Incentive Plan for Select Executives for the
year in which the employment of the Officer by the Bank
terminates or, (ii) if no target incentive opportunity has
been established with respect to the Officer by the
Compensation Committee of the Board of Directors of the Bank
for the year in which the employment of the Officer by the
Bank terminates, then a percentage equal to 100% minus the IP;
"AP" is the highest award percentage available to the Officer
with respect to the financial performance of the Company as
established by the Compensation Committee of the Board of
Directors of the Bank pursuant to the Bank's Annual Incentive
Plan for Select Executives for the year in which the
employment of the Officer by the Bank terminates or, (ii) if
no target incentive opportunity has been established with
respect to the Officer by the Compensation Committee of the
Board of Directors of the Bank for the year in which the
employment of the Officer by the Bank terminates, then the
highest award percentage available to the Officer with respect
to the financial performance of the Company established by the
Compensation Committee of the Board of Directors of the Bank
for the Officer pursuant to the Annual Incentive Plan for
Select Executives during the period of three (3) years ending
immediately prior to the date of termination;
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<PAGE> 11
"NY" is the Assurance Period expressed as a number of years
(rounded, if such period is not a whole number, to the next
highest whole number).
The Bonus Severance Payment shall be made within thirty (30)
days after the Officer's termination of employment and shall
be in lieu of any claim to a continuation of participation in
annual bonus plans of the Bank which the Officer might
otherwise have.
The payments and benefits described in section 6(b) are referred to in
this Agreement as the "Additional Termination Entitlements". The payments
described in section 6(b)(ii) and (iii) shall be computed at the expense
of the Company by an attorney of the firm of Thacher Proffitt & Wood, Two
World Trade Center, New York, New York 10048 or, if such firm is
unavailable or unwilling to perform such calculation, by a firm of
independent certified public accountants selected by the Officer and
reasonably satisfactory to the Company (the "Computation Advisor"). The
determination of the Computation Advisor as to the amount of such payments
shall be final and binding in the absence of manifest error.
Section 7. Tax Indemnification.
(a) If the Officer's employment terminates under circumstances entitling
the Officer or, in the event of the Officer's death following such
termination but before payment, his or her estate to the Additional
Termination Entitlements, the Company shall pay to the Officer or,
in the event of the Officer's death, his or her estate an additional
amount intended to indemnify the Officer against the financial
effects of the excise tax imposed on excess parachute payments under
section 28OG of the Code (the "Tax Indemnity Payment"). The Tax
Indemnity Payment shall be determined under the following formula:
E x P
TIP = ----------------------------------------
1 - (( FI x ( 1 - SLI )) + SLI + E + M )
where:
"TIP" is the Tax Indemnity Payment, before the deduction of
applicable federal, state and local withholding taxes;
"E" is the percentage rate at which an excise tax is assessed under
section 4999 of the Code;
"P" is the amount with respect to which such excise tax is assessed,
determined without regard to this section 16;
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<PAGE> 12
"FI" is the highest marginal rate of income tax applicable to the
Officer under the Code for the taxable year in question;
"SLI" is the sum of the highest marginal rates of income tax
applicable to the Officer under all applicable state and local laws
for the taxable year in question; and
"M" is the highest marginal rate of Medicare tax applicable to the
Officer under the Code for the taxable year in question.
Such computation shall be made at the expense of the Company by the
Computation Advisor and shall be based on the following assumptions:
(i) that a change in ownership, a change in effective ownership or
control or a change in the ownership of a substantial portion
of the assets of the Bank or the Company has occurred within
the meaning of section 28OG of the Code (a "28OG Change of
Control");
(ii) that all direct or indirect payments made to or benefits
conferred upon the Officer on account of the Officer's
termination of employment are "parachute payments" within the
meaning of section 28OG of the Code; and
(iii) that no portion of such payments is reasonable compensation
for services rendered prior to the Officer's termination of
employment.
(b) With respect to any payment that is presumed to be a parachute
payment for purposes of section 28OG of the Code, the Tax Indemnity
Payment shall be made to the Officer on the earlier of the date the
Company, the Bank or any direct or indirect subsidiary or affiliate
of the Company or the Bank is required to withhold such tax or the
date the tax is required to be paid by the Officer, unless, prior to
such date, the Company delivers to the Officer the written opinion
(the "Opinion Letter"), in form and substance reasonably
satisfactory to the Officer, of the Computation Advisor or, if the
Computation Advisor is unable to provide such opinion, of an
attorney or firm of independent certified public accountants
selected by the Company and reasonably satisfactory to the Officer,
to the effect that the Officer has a reasonable basis on which to
conclude that:
(i) no 28OG Change in Control has occurred, or
(ii) all or part of the payment or benefit in question is not a
parachute payment for purposes of section 28OG of the Code, or
(iii) all or a part of such payment or benefit constitutes
reasonable compensation for services rendered prior to the
28OG Change of Control, or
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(iv) for some other reason which shall be set forth in detail in
such letter, no excise tax is due under section 4999 of the
Code with respect to such payment or benefit.
If the Company delivers an Opinion Letter, the Computation Advisor
shall re-compute, and the Company shall make, the Tax Indemnity
Payment in reliance on the information contained in the Opinion
Letter.
(c) In the event that the Officer'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 with respect to which the
Tax Indemnity Payment is made, the Officer 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 pursuant to
sections 7(a) or 7(b), when increased by the amount of the payment
made to the Officer pursuant to this section 7(c), or when reduced
by the amount of the payment made to the Company pursuant to this
section 7(c), equals the amount that should have properly been paid
to the Officer under section 7(a). The interest paid to the Company
under this section 7(c) shall be determined at the rate provided
under section 1274(b)(2)(B) of the Code. The payment made to the
Officer shall include such amount of interest as is necessary to
satisfy any interest assessment made by the Internal Revenue Service
and an additional amount equal to any monetary penalties assessed by
the Internal Revenue Service on account of an underpayment of the
excise tax. To confirm that the proper amount, if any, was paid to
the Officer under this section 7, the Officer shall furnish to the
Company a copy of each tax return which reflects a liability for an
excise tax, at least 20 days before the date on which such return is
required to be filed with the Internal Revenue Service. Nothing in
this Agreement shall give the Company any right to control or
otherwise participate in any action, suit or proceeding to which the
Officer is a party as a result of positions taken on the Officer's
federal income tax return with respect to the Officer's liability
for excise taxes under section 4999 of the Code.
Section 8. Indemnification upon and following a Change of Control.
(a) From and after the effective date of a Change of Control through the
sixth anniversary of such effective date, the Bank and the Company
agree to indemnify and hold harmless the Officer, against any costs
or expenses (including reasonable attorneys' fees), judgments,
fines, losses, claims, damages or liabilities (collectively,
"Costs") incurred in connection with any claim, action, suit,
proceeding or investigation, whether civil, criminal, administrative
or investigative, arising out of matters existing or occurring at or
prior to the time the Change of Control became effective whether
asserted or claimed prior to, at or after the effective date of the
Change of Control, and to advance any such Costs to the Officer as
they are from
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time to time incurred, in each case to the fullest extent the
Officer would have been indemnified as a director or officer of the
Bank or the Company, as applicable, and as then permitted under
applicable law.
(b) The Officer, seeking to claim indemnification under section 8(a) of
this Agreement and upon learning of any such claim, action, suit,
proceeding or investigation, shall promptly notify the Bank thereof,
but the failure to so notify shall not relieve the Bank or the
Company of any liability it may have pursuant to this Agreement to
the Officer if such failure does not materially and substantially
prejudice the Bank or the Company. In the event of any such claim,
action, suit, proceeding or investigation,
(i) the Bank and the Company shall have the right to assume the
defense thereof with counsel reasonably acceptable to the
Officer, and the Bank and the Company shall not be liable to
the Officer for any legal expenses of other counsel
subsequently incurred by the Officer in connection with the
defense thereof, except that if the Bank and the Company do
not elect to assume such defense within a reasonable time or
counsel for the Officer at any time advises that there are
issues which raise conflicts of interest between the Bank or
the Company and the Officer (and counsel for the Bank or the
Company does not disagree), the Officer may retain counsel
satisfactory to the Officer, and the Bank and the Company
shall remain responsible for the reasonable fees and expenses
of such counsel as set forth above, to be paid promptly as
statements therefor are received; provided, however, that the
Bank and the Company shall be obligated pursuant to this
paragraph (b)(i) to pay for only one firm of counsel for all
indemnified parties in any one jurisdiction with respect to
any given claim, action, suit, proceeding or investigation
unless the use of one counsel for such indemnified parties,
including the Officer, would present such counsel with a
conflict of interest;
(ii) the Officer will reasonably cooperate in the defense of any
such matter; and
(iii) the Bank and the Company shall not be liable for any
settlement effected by the Officer without their prior written
consent, which shall not be unreasonably withheld.
Section 9. Resignation.
(a) The Officer may resign from the Officer's employment with the Bank
at any time. A resignation under this section 9 shall be effected by
notice of resignation given by the Officer to the Bank and shall
take effect on the later of the effective date of termination
specified in such notice or the date on which the notice of
termination is deemed given by the Officer. For purposes of this
Agreement, retirement of the Officer from the employment of the Bank
or the Company under circumstances
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<PAGE> 15
defined as "normal retirement" or "early retirement" pursuant to any
qualified defined benefit or qualified defined contribution pension
plan maintained by the Bank shall be deemed a resignation by the
Officer's of the Officer's employment with the Bank. A resignation
by the Officer as described in section 5(a)(ii) of this Agreement,
for purposes of this Agreement shall be deemed to be termination
with "Cause". The Officer's resignation of any of the positions
within the Bank or the Company to which he has been assigned shall
be deemed a resignation from all such positions.
(b) The Officer's resignation shall be deemed to be for "Good Reason" if
the effective date of resignation occurs during the Term, but on or
after the effective date of a Pending Change of Control or Change of
Control, and is on account of:
(i) the failure of the Bank (whether by act or omission of the
Board of Directors, or otherwise) to appoint, re-appoint,
elect or re-elect the Officer to the office and position with
the Bank that he held immediately prior to the Change of
Control or Pending Change of Control (the "Assigned Office")
or to a more senior office and position;
(ii) if the Officer is or becomes a member of the Board of
Directors of the Bank, the failure of the shareholders of the
Bank (whether in an election in which the Officer stands as a
nominee or in an election where the Officer is not a nominee),
to elect or re-elect the Officer to such directorship at the
expiration of the Officer's term as a director, unless such
failure is a result of the Officer's refusal to stand for
election;
(iii) a material failure by the Bank, whether by amendment of the
charter or organization, by-laws, action of the Board of
Directors of the Bank or otherwise, to vest in the Officer the
functions, duties, or responsibilities customarily associated
with the Assigned Office; provided that the Officer shall have
given notice of such failure to the Bank, and the Bank has not
fully cured such failure within thirty (30) days after such
notice is deemed given;
(iv) any reduction of the Officer's rate of base salary in effect
from time to time, whether or not material, or any failure,
other than due to reasonable administrative error that is
fully cured within 5 days after notice of such administrative
error is deemed given, to pay any portion of the Officer's
compensation as and when due;
(v) any change in the terms and conditions of any compensation or
benefit program in which the Officer participates which,
either individually or together with other changes, has a
material adverse effect on the aggregate value of the
Officer's total compensation package; provided that the
Officer shall have given notice of such material adverse
effect to the Bank, and the
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<PAGE> 16
Bank has not fully cured such failure within thirty (30) days
after such notice is deemed given;
(vi) any material breach by the Company or the Bank of any material
term, condition or covenant contained in this Agreement;
provided that the Officer shall have given notice to the
Company and the Bank of such material adverse effect, and the
Company or the Bank have not fully cured such failure within
thirty (30) days after such notice is deemed given; or
(vii) a change in the Officer's principal place of employment to a
location that is outside of Nassau County or Queens County,
New York.
In all other cases, a resignation by the Officer shall be deemed to
be without Good Reason. In the event of resignation, the Officer
shall state in the Officer's notice of resignation whether the
Officer considers his or her resignation to be a resignation with
Good Reason, and if he does, he shall state in such notice the
grounds which constitute Good Reason. The Officer's determination of
the existence of Good Reason shall be conclusive in the absence of
fraud, bad faith or manifest error.
(c) In the event of the Officer's resignation for any reason, the Bank
shall pay and deliver the Standard Termination Entitlements. In the
event of the Officer's resignation with Good Reason and such
resignation is effective within six (6) months of the effective date
of the Change of Control (the "Resignation Window Period"), the Bank
shall also pay and deliver the Additional Termination Entitlements.
In the event the Officer's resignation with Good Reason is based
upon section 9(b)(iii),(iv),(v) or (vi) and the notice required by
such provision has been given within six months of the effective
date of the Change of Control but the applicable cure period will
not expire until on or after the date which is six months following
the effective date of the Change of Control, the Resignation Window
Period shall be extended so as expire 30 days following the
expiration of the applicable cure period.
Section 10. Terms and Conditions of the Additional Termination
Entitlements.
The Bank and the Officer hereby stipulate that the damages which may be
incurred by the Officer following any termination of employment are not capable
of accurate measurement as of the date first above written and that the
Additional Termination Entitlements constitute reasonable damages under the
circumstances and shall be payable without any requirement of proof of actual
damage and without regard to the Officer's efforts, if any, to mitigate damages.
The Bank and the Officer further agree that the Bank may condition the payment
and delivery of the Additional Termination Entitlements on the receipt of:
(a) the Officer's resignation from any and all positions which he holds
as an officer, director or committee member with respect to the Bank
or any subsidiary or affiliate
16
<PAGE> 17
of the Bank; and
(b) a release of the Bank and the Company and their officers, directors,
shareholders, subsidiaries and affiliates, in form and substance
satisfactory to the Bank, of any liability to the Officer, whether
for compensation or damages, in connection with the Officer's
employment with the Bank and the termination of such employment,
except for the Standard Termination Entitlements, the Additional
Termination Entitlements, the Tax Indemnity Payment and
indemnification payments due the Officer pursuant to section 8 or
section 16 of this Agreement.
To the extent the Bank conditions the payment and delivery of the Additional
Termination Entitlements or any other amount due under this Agreement upon the
receipt of the release provided in section 10(b) of this Agreement and such
release by law may not be effective until the expiration of a required prior
notice and/or a recission period following its execution by the Officer, then
any payment required to be made pursuant to this Agreement may be deferred until
the expiration of the period which is the sum of the period within which such
payment was required to be made under the terms of this Agreement but for this
section 10 and the period of any required prior notice and recission periods,
provided, however, that the Bank shall pay to the Officer for each day of such
deferral interest in addition to any other amounts due and owing under this
Agreement at the rate of the federal short term rate established under section
1274 of the Code for the month in which the Officer's termination of employment
occurs calculated on the basis of a 360 day year for the actual number of days
of such deferral on the amount so deferred.
Section 11. Confidentiality.
Unless the Officer obtains the prior written consent of the Bank or the
Company, the Officer shall keep confidential and shall refrain from using for
the benefit of himself or herself, 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 the Officer's
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 the Officer) until the same ceases to be material
(or becomes so ascertainable or available); provided, however, that nothing in
this section 11 shall prevent the Officer, 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
proceeding to the extent that such participation or disclosure is required under
applicable law.
Section 12. No Effect on Employee Benefit Plans or Programs.
Except to the extent specifically provided herein, the termination of the
Officer's employment during the Assurance Period or thereafter, whether by the
Bank or by the Officer, shall have no effect on the rights and obligations of
the parties hereto under the Bank's qualified or non-qualified
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<PAGE> 18
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 Bank from time to time; provided, however, that
nothing in this Agreement shall be deemed to duplicate any compensation or
benefits provided under any severance agreement, plan or program covering the
Officer to which the Bank or Company is a party and any duplicative amount
payable under any such agreement, plan or program shall be applied as an offset
to reduce the amounts otherwise payable hereunder. The Additional Termination
Entitlements provided hereunder, when due and payable or provided to the
Officer, or in the case of the Officer's death, to his or her estate, surviving
dependants or designated beneficiaries, as applicable, are acknowledged to be in
lieu of any benefits that would otherwise be provided under such circumstances
pursuant to the Bank's Severance Pay Plan, as amended, or Severance Compensation
Plan, as amended.
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Section 13. Successors and Assigns.
This Agreement will inure to the benefit of and be binding upon the
Officer, the Officer's legal representatives and testate or intestate
distributees, and the Company and the Bank and their respective 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 or the Bank may be
sold or otherwise transferred. Failure of the Company to obtain from any
successor its express written assumption of the Company's or Bank's obligations
hereunder at least 60 days in advance of the scheduled effective date of any
such succession shall, if such succession constitutes a Change of Control,
constitute Good Reason for the Officer's resignation on or at any time during
the Term following the occurrence of such succession.
Section 14. No Attachment.
Except as required by law, no right to receive payments under this
Agreement shall be subject to anticipation, commutation, alienation, sale,
assignment, encumbrance, charge, pledge, or hypothecation, or to execution,
attachment, levy, or similar process or assignment by operation of law, and any
attempt, voluntary or involuntary, to affect any such action shall be null,
void, and of no effect.
Section 15. 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 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 Officer:
Josie Callari
85 Brookville Lane
Old Brookville, New York 11545
If to the Company or the Bank:
Astoria Financial Corporation
One Astoria Federal Plaza
Lake Success, New York 11042
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Attention: Chairman, President and Chief Executive Officer
with a copy to:
Thacher Proffitt & Wood
Two World Trade Center
New York, New York 10048
Attention: W. Edward Bright, Esq.
Section 16. Indemnification for Attorneys' Fees.
(a) The Bank shall indemnify, hold harmless and defend the Officer
against reasonable costs, including 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 the Officer's efforts, in
good faith, to defend or enforce the terms of this Agreement;
provided, however, that the Officer 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 Bank's obligations under this
Agreement shall be conclusive evidence of the Officer's entitlement
to indemnification under this Agreement, and any such
indemnification payments shall be in addition to amounts payable
pursuant to such settlement agreement, unless such settlement
agreement expressly provides otherwise.
(b) The Bank's or the Company's obligation to make the payments provided
for in this Agreement and otherwise to perform their respective
obligations under this Agreement shall not be affected by any
set-off, counterclaim, recoupment, defense or other claim, right or
action which the Bank or the Company may have against the Officer or
others. In no event shall the Officer be obligated to seek other
employment or take any other action by way of mitigation of the
amounts payable to the Officer under any of the provisions of this
Agreement and such amounts shall not be reduced whether or not the
Officer obtains other employment. Unless it is determined that the
Officer has acted frivolously or in bad faith, the Bank shall pay as
incurred, to the full extent permitted by law, all legal fees and
expenses which the Officer may reasonably incur as a result of or in
connection with the Officer's consultation with legal counsel or
arising out of any action, suit, proceeding, tax controversy, appeal
or contest (regardless of the outcome thereof) by the Bank, the
Company, the Officer or others regarding the validity or
enforceability of, or liability under, any provision of this
Agreement or any guarantee of performance thereof (including as a
result of any contest by the Officer about the amount of any payment
pursuant to this Agreement), plus in each case interest on any
delayed payment at the applicable
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Federal rate provided for in section 7872(f)(2)(A) of the Code.
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Section 17. Employment Rights and Funding Obligations.
(a) Nothing expressed or implied in this Agreement shall create any
right or duty on the part of the Bank, the Company or the Officer to
have the Officer continue as an officer of the Bank or the Company
or to remain in the employment of the Bank, the Company.
(b) Nothing expressed or implied in this Agreement shall create any
right or duty on the part of the Bank, the Company or the Officer to
create a trust of any kind to fund any benefits which may be payable
pursuant to this Agreement, and to the extent that the Officer
acquires a right to receive benefits from the Bank or the Company
pursuant to this Agreement, such right shall be no greater than the
right of any unsecured general creditor of the Bank or the Company,
respectively.
Section 18. Withholding.
The Bank or the Company, as applicable, shall have the right to deduct and
withhold from any amounts paid in cash pursuant to this Agreement by the Bank or
the Company, respectively, any taxes or other amounts required by law to be
withheld with respect to such payment.
Section 19. 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 20. Survival.
The rights and obligations of the Bank, the Company and the Officer under
this Agreement, unless otherwise expressly provided in this Agreement, shall
survive the expiration of the term or other termination of this Agreement.
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.
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This Agreement may be executed in two 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.
Except to the extent preempted by federal 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.
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. No modifications of this Agreement shall be valid unless made in writing
and signed by the parties hereto.
Section 26. Required Regulatory Provisions.
The following provisions are included for the purposes of complying with
various laws, rules and regulations applicable to the Bank:
(a) Notwithstanding anything herein contained to the contrary, in no
event shall the aggregate amount of compensation payable to the
Officer on account of the Officer's termination of employment exceed
three times the Officer's average annual total compensation for the
last five consecutive calendar years to end prior to the Officer's
termination of employment with the Bank (or for the Officer's entire
period of employment with the Bank if less than five calendar
years).
(b) Notwithstanding anything herein contained to the contrary, any
payments to the Officer by the Bank, 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
("FDI Act"), 12 U.S.C. Section 1828(k), and any regulations
promulgated thereunder.
(c) Notwithstanding anything herein contained to the contrary, if the
Officer is suspended from office and/or temporarily prohibited from
participating in the conduct of the affairs of the Bank pursuant to
a notice served under section 8(e)(3)
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or 8(g)(1) of the FDI Act, 12 U.S.C. Section 1818(e)(3) or
1818(g)(1), the Bank's obligations under this Agreement shall be
suspended as of the date of service of such notice, unless stayed by
appropriate proceedings. If the charges in such notice are
dismissed, the Bank, in its discretion, may (i) pay to the Officer
all or part of the compensation withheld while the Bank's
obligations hereunder were suspended and (ii) reinstate, in whole or
in part, any of the obligations which were suspended.
(d) Notwithstanding anything herein contained to the contrary, if the
Officer is removed and/or permanently prohibited from participating
in the conduct of the Bank's affairs by an order issued under
section 8(e)(4) or 8(g)(1) of the FDI Act, 12 U.S.C. Section
1818(e)(4) or (g)(1), all prospective obligations of the Bank under
this Agreement shall terminate as of the effective date of the
order, but vested rights and obligations of the Bank and the Officer
shall not be affected.
(e) Notwithstanding anything herein contained to the contrary, if the
Bank is in default (within the meaning of section 3(x)(1) of the FDI
Act, 12 U.S.C. Section 1813(x)(1), all prospective obligations of
the Bank under this Agreement shall terminate as of the date of
default, but vested rights and obligations of the Bank and the
Officer shall not be affected.
(f) Notwithstanding anything herein contained to the contrary, all
prospective obligations of the Bank hereunder shall be terminated,
except to the extent that a continuation of this Agreement is
necessary for the continued operation of the Bank: (i) by the
Director of the Office of Thrift Supervision ("OTS") or his designee
or the Federal Deposit Insurance Corporation ("FDIC"), at the time
the FDIC enters into an agreement to provide assistance to or on
behalf of the Bank under the authority contained in section 13(c) of
the FDI Act, 12 U.S.C.Section 1823(c); (ii) by the Director of the
OTS or his designee at the time such Director or designee approves a
supervisory merger to resolve problems related to the operation of
the Bank or when the Bank is determined by such Director to be in an
unsafe or unsound condition. The vested rights and obligations of
the parties shall not be affected.
If and to the extent that any of the foregoing provisions shall cease to be
required or by applicable law, rule or regulation, the same shall become
inoperative as though eliminated by formal amendment of this Agreement. None of
the foregoing provisions, other than section 26(b) shall limit any obligations
of the Company under this Agreement.
Section 27. Guaranty.
The Company hereby irrevocably and unconditionally guarantees to the
Officer the payment of all amounts, and the performance of all other
obligations, due from the Bank in accordance with the terms of this Agreement as
and when due without any requirement of presentment, demand of payment, protest
or notice of dishonor or nonpayment. Solely for purposes of determining the
extent
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of the Company's guarantee, the obligations of the Bank under this Agreement
shall be determined as though section 26(a), (c), (d), (e) and (f) did not apply
to the Bank.
IN WITNESS WHEREOF, the Bank and the Company have caused this Agreement to
be executed and the Officer has hereunto set the Officer's hand, all as of the
day and year first above written.
/S/ Josie Callari
-----------------------------------
JOSIE CALLARI
Attest: ASTORIA FEDERAL SAVINGS AND LOAN
ASSOCIATION
By: /S/ William K. Sheerin By: /S/ George L. Engelke, Jr.
---------------------------- --------------------------------
Name: William K. Sheerin Name: George L. Engelke, Jr.
Title: Executive Vice President and Title: Chairman, President and Chief
Secretary Executive Officer
Attest: ASTORIA FINANCIAL CORPORATION
By: /S/ William K. Sheerin By: /S/ George L. Engelke, Jr.
---------------------------- --------------------------------
Name: William K. Sheerin Name: George L. Engelke, Jr.
Title: Executive Vice President and Title: Chairman, President and Chief
Secretary Executive Officere
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<PAGE> 1
EXHIBIT 10.34
CHANGE OF CONTROL SEVERANCE AGREEMENT
This CHANGE OF CONTROL SEVERANCE AGREEMENT (the "Agreement") is made and
entered into as of January 1, 2000 by and among ASTORIA FEDERAL SAVINGS AND LOAN
ASSOCIATION, a savings and loan association organized and existing under the
laws of the United States of America and having an office at One Astoria Federal
Plaza, Lake Success, New York 11042 (the "Bank"), ASTORIA FINANCIAL CORPORATION,
a business corporation organized and existing under the laws of the State of
Delaware and having an office at One Astoria Federal Plaza, Lake Success, New
York 11042 (the "Company") and Robert J. DeStefano, an individual residing at 15
Grist Mill Court, Kings Park, New York 11754 (the "Officer").
INTRODUCTORY STATEMENT
WHEREAS, the Boards of Directors of the Bank and the Company have
approved the Bank and the Company entering into Change of Control Severance
Agreements with certain key officers of the Bank,
WHEREAS, the Officer is a key officer of the Bank;
WHEREAS, should the possibility of a Pending Change of Control or Change
of Control of the Bank or the Company arise, the Boards of Directors of the Bank
and the Company believe it is imperative that the Bank, the Company and the
Boards of Directors of the Bank and the Company should be able to rely upon the
Officer to continue in his or her position, and that the Bank and the Company
should be able to receive and rely upon the Officer's advice, if requested, as
to the best interests of the Bank and the Company and their respective
shareholders without concern that the Officer might be distracted by the
personal uncertainties and risks created by the possibility of a Pending Change
of Control or Change of Control;
WHEREAS, should the possibility of a Pending Change of Control or Change
of Control arise, in addition to his or her regular duties, the Officer may be
called upon to assist in the assessment of such possible Pending Change of
Control or Change of Control, advise management and the Board as to whether such
Pending Change of Control or Change of Control would be in the best interests of
the Bank, the Company and their respective shareholders, and to take such other
actions as the Boards of Directors of the Bank and the Company might determine
to be appropriate; and
NOW, THEREFORE, to assure the Bank and the Company that they will have the
continued dedication of the Officer and the availability of his or her advice
and counsel notwithstanding the possibility, threat, or occurrence of a Pending
Change of Control or Change of Control of the Bank or the Company, and to induce
the Officer to remain in the employ of the Bank, in consideration of the mutual
premises and agreements set forth herein and for other good and valuable
consideration, the Bank, the Company and the Officer agree as follows:
Page - 1 -
<PAGE> 2
AGREEMENT
Section 1. Effective Date; Term; Pending Change of Control and Change of
Control Defined.
(a) This Agreement shall take effect on January 1, 2000 (the "Effective
Date") and shall remain in effect during the period (the "Term")
beginning on the Effective Date and ending on the earlier of :
(i) the date, prior to the occurrence of a Pending Change of
Control or a Change of Control, as defined below,
respectively, on which the Officer's employment by the Bank
terminates whether by discharge, resignation, death,
disability or retirement, or
(ii) the later of:
(A) the first anniversary of the date on which the Bank
notifies the Executive of its intent to discontinue the
Agreement (the "Initial Expiration Date") or,
(B) the second anniversary of the latest Change of Control,
as defined below, that occurs after the Effective Date
and before the Initial Expiration Date, or
(b) For purposes of this Agreement, a "Change of Control" shall be
deemed to have occurred upon the happening of any of the following
events:
(i) the consummation of a 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 Securities Exchange Act of 1934, as amended
("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
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<PAGE> 3
(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;
(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;
(iii) a complete liquidation or dissolution of the Company;
(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 Directors
of the Company on the Effective Date of this Agreement;
or
(B) individuals who first became members of the Board of
Directors of the Company after the Effective Date of
this Agreement either:
(1) 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
(2) upon election by the shareholders of the Board of
Directors of the Company to serve as a member of
such Board, 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
Page - 3 -
<PAGE> 4
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 Directors of the
Company; or
(v) any event which would be described in section 1(b)(i), (ii),
(iii) or (iv) if the term "Bank" 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 Bank, or a subsidiary of either of them, by the
Company, the Bank, or any subsidiary of either of them, or by any
employee benefit plan maintained by any of them. For purposes of
this section 1(b), the term "person" shall have the meaning assigned
to it under sections 13(d)(3) or 14(d)(2) of the Exchange Act.
(c) For purposes of this Agreement, a "Pending Change of Control" shall
mean:
(i) the approval by the shareholders of the Bank or the Company of
a definitive agreement for a transaction which, if
consummated, would result in a Change of Control; or
(ii) the approval by the shareholders of the Bank or the Company of
a transaction which, if consummated, would result in a Change
of Control.
Section 2. Discharge Prior to a Pending Change of Control.
The Bank may discharge the Officer at any time prior to the occurrence of
a Pending Change of Control or, if no Pending Change of Control has occurred, a
Change of Control, for any reason or for no reason. In such event:
(a) The Bank shall pay to the Officer or the Officer's estate his or her
earned but unpaid compensation, including, without limitation,
salary and all other items which constitute wages under applicable
law, as of the date of the Officer's termination of employment. This
payment shall be made at the time and in the manner prescribed by
law applicable to the payment of wages but in no event later than 30
days after the date of the Officer's termination of employment.
(b) The Bank shall provide the benefits due, if any, to the Officer or
the Officer's estate, surviving dependents or designated
beneficiaries, as applicable, under the employee benefit plans and
programs and compensation plans and programs maintained for the
benefit of the officers and employees of the Bank. The time and
manner of payment or other delivery of these benefits and the
recipients of such benefits shall be determined according to the
terms and conditions of the applicable plans and programs.
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<PAGE> 5
The payments and benefits described in sections 2(a) and (b) shall be referred
to in this Agreement as the "Standard Termination Entitlements."
Section 3. Termination of Employment Due to Death.
The Officer's employment with the Bank shall terminate automatically, and
without any further action on the part of any party to this Agreement, on the
date of the Officer's death. In such event, the Bank shall pay and deliver to
the Officer's estate and surviving dependents and designated beneficiaries, as
applicable, the Standard Termination Entitlements.
Section 4. Termination Due to Disability after a Pending Change of
Control or a Change of Control.
The Bank may terminate the Officer's employment during the Term and after
the occurrence of a Pending Change of Control or a Change of Control upon a
determination by the Board of Directors of the Bank, by the affirmative vote of
75% of its entire membership, acting in reliance on the written advice of a
medical professional acceptable to it, that the Officer is suffering from a
physical or mental impairment which, at the date of the determination, has
prevented the Officer from performing the Officer's assigned duties on a
substantially full-time basis for a period of at least one hundred and eighty
(180) days during the period of one (1) year ending with the date of the
determination or is likely to result in death or prevent the Officer from
performing the Officer's assigned duties on a substantially full-time basis for
a period of at least one hundred and eighty (180) days during the period of one
(1) year beginning with the date of the determination. In such event:
(a) The Bank shall pay and deliver the Standard Termination Entitlements
to the Officer or, in the event of the Officer's death following
such termination but before payment, to the Officer's estate,
surviving dependents or designated beneficiaries, as applicable.
(b) In addition to the Standard Termination Entitlements, the Bank shall
continue to pay the Officer his or her base salary, at the annual
rate in effect for the Officer immediately prior to the termination
of the Officer's employment, during a period ending on the earliest
of: (i) the expiration of one hundred and eighty (180) days after
the date of termination of the Officer's employment; (ii) the date
on which long-term disability insurance benefits are first payable
to the Officer under any long-term disability insurance plan
covering employees of the Bank; or (iii) the date of the Officer's
death.
A termination of employment due to disability under this section 4 shall be
effected by a notice of termination given to the Officer by the Bank and shall
take effect on the later of the effective date of termination specified in such
notice or, if no such date is specified, the date on which the notice of
termination is deemed given to the Officer.
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<PAGE> 6
Section 5. Discharge with Cause after a Pending Change of Control or
Change of Control.
(a) The Bank may terminate the Officer's employment with "Cause" during
the Term and after the occurrence of a Pending Change of Control or
a Change of Control, but a termination shall be deemed to have
occurred with "Cause" only if:
(i) (A) the Board of Directors of the Bank, by the affirmative
vote of 75% of its entire membership, determines that
the Officer is guilty of personal dishonesty,
incompetence, wilful misconduct, breach of fiduciary
duty involving personal profit, intentional failure to
perform stated duties, wilful violation of any law, rule
or regulation (other than traffic violations or similar
offenses) or final cease and desist order, or any
material breach of this Agreement, in each case measured
against standards generally prevailing at the relevant
time in the savings and community banking industry;
(B) prior to the vote contemplated by section 5(a)(i)(A),
the Board of Directors of the Bank shall provide the
Officer with notice of the Bank's intent to discharge
the Officer for Cause, detailing with particularity the
facts and circumstances which are alleged to constitute
Cause (the "Notice of Intent to Discharge"); and
(C) after the giving of the Notice of Intent to Discharge
and before the taking of the vote contemplated by
section 5(a)(i)(A), the Officer, together with the
Officer's legal counsel, if he so desires, are afforded
a reasonable opportunity to make both written and oral
presentations before the Board of Directors of the Bank
for the purpose of refuting the alleged grounds for
Cause for the Officer's discharge; and
(D) after the vote contemplated by section 5(a)(i)(A), the
Bank has furnished to the Officer a notice of
termination which shall specify the effective date of
the Officer's termination of employment (which shall in
no event be earlier than the date on which such notice
is deemed given) and include a copy of a resolution or
resolutions adopted by the Board of Directors of the
Bank, certified by its corporate secretary, authorizing
the termination of the Officer's employment with Cause
and stating with particularity the facts and
circumstances found to constitute Cause for the
Officer's discharge (the "Final Discharge Notice"); or
(ii) the Officer, during the 90 day period commencing on the
delivery to the Officer by the Bank of the Notice of Intent to
Discharge specified in section
Page - 6 -
<PAGE> 7
5(a)(i)(B), resigns his or her employment with the Bank prior
to the delivery to the Officer by the Bank of the Final
Discharge Notice specified in section 5(a)(i)(D).
For purposes of this section 5, no act or failure to act, on the
part of the Officer, shall be considered "willful" unless it is
done, or omitted to be done, by the Officer in bad faith or without
reasonable belief that the Officer's action or omission was in the
best interests of the Bank or the Company, respectively. Any act or
failure to act based upon authority given pursuant to a resolution
duly adopted by the Board of Directors of the Bank or the Company or
based upon the written advice of counsel for the Bank or the Company
shall be conclusively presumed to be done or omitted to be done by
the Officer in good faith and in the best interests of the Bank or
the Company, respectively.
(b) If the Officer is discharged with Cause during the Term and after a
Pending Change of Control or a Change of Control, the Bank shall pay
and provide to him or, in the event of the Officer's death following
such discharge but prior to payment and providing, to the Officer's
estate, surviving dependents or designated beneficiaries, as
applicable, the Standard Termination Entitlements only.
(c) Following the giving of a Notice of Intent to Discharge, the Bank
may temporarily suspend the Officer's duties and authority and, in
such event, may also suspend the payment of salary and other cash
compensation, but not the Officer's participation in retirement,
insurance and other employee benefit plans. If the Officer is not
discharged or is discharged without Cause within forty-five (45)
days after the giving of a Notice of Intent to Discharge, payments
of salary and cash compensation shall resume, and all payments
withheld during the period of suspension shall be promptly restored.
If the Officer is discharged with Cause not later than forty-five
(45) days after the giving of the Notice of Intent to Discharge, all
payments withheld during the period of suspension shall be deemed
forfeited and shall not be included in the Standard Termination
Entitlements. If a Final Discharge Notice is given later than
forty-five (45) days, but sooner than ninety (90) days, after the
giving of the Notice of Intent to Discharge, all payments made to
the Officer during the period beginning with the giving of the
Notice of Intent to Discharge and ending with the Officer's
discharge with Cause shall be retained by the Officer and shall not
be applied to offset the Standard Termination Entitlements. If the
Bank does not give a Final Discharge Notice to the Officer within
ninety (90) days after giving a Notice of Intent to Discharge, the
Notice of Intent to Discharge shall be deemed withdrawn and any
future action to discharge the Officer with Cause shall require the
giving of a new Notice of Intent to Discharge. If the Officer
resigns pursuant to Section 5(a)(ii), the Officer shall forfeit his
or her right to suspended amounts that have not been restored as of
the date of the Officer's resignation or notice of resignation,
whichever is earlier.
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<PAGE> 8
Section 6. Discharge Without Cause after a Pending Change of Control or
Change of Control.
The Bank may discharge the Officer without Cause at any time after the
occurrence of a Pending Change of Control or a Change of Control, and in such
event:
(a) The Bank shall pay and deliver the Standard Termination Entitlements
to the Officer or, in the event of the Officer's death following the
Officer's discharge but before payment, to the Officer's estate,
surviving dependents or designated beneficiaries, as applicable.
(b) In addition to the Standard Termination Entitlements:
(i) the Bank shall provide for a period of two years following the
date of the Officer's discharge (the "Assurance Period") for
the benefit of the Officer and the Officer's spouse and
dependents continued group life, health (including
hospitalization, medical and major medical), dental, accident
and long-term disability insurance benefits on substantially
the same terms and conditions (including any co-payments and
deductibles, but excluding any premium sharing arrangements,
it being the intention of the parties to this Agreement that
the premiums for such insurance benefits shall be the sole
cost and expense of the Bank) in effect for them immediately
prior to the Officer's discharge. The coverage provided under
this section 6(b)(i) may, at the election of the Bank, be
secondary to the coverage provided as part of the Standard
Termination Entitlements and to any employer-paid coverage
provided by a subsequent employer or through Medicare, with
the result that benefits under the other coverages will offset
the coverage required by this section 6(b)(i), provided,
however, that for purposes of this section 6(b)(i) benefits
provided at the cost of the Officer or the Officer's spouse or
dependants pursuant to the Comprehensive Omnibus Budget
Reconciliation Act, as amended, shall not be considered
Standard Termination Entitlements.
(ii) The Bank shall make a lump sum payment to the Officer or, in
the event of the Officer's death following the Officer's
discharge but before payment, to the Officer's estate in an
amount equal to the salary that the Officer would have earned
if he had continued working for the Bank during the Assurance
Period at the highest annual rate of salary achieved during
the period of three (3) years ending immediately prior to the
date of termination (the "Salary Severance Payment"). The
Salary Severance Payment shall be computed using the following
formula:
SSP = BS x NY
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<PAGE> 9
where:
"SSP" is the amount of the Salary Severance Payment, before
the deduction of applicable federal, state and local
withholding taxes;
"BS" is the highest annual rate of salary achieved by the
Officer during the period of three (3) years ending
immediately prior to the date of termination; and
"NY" is the Assurance Period expressed as a number of years
(rounded, if such period is not a whole number, to the next
highest whole number).
The Salary Severance Payment shall be made within thirty (30)
days after the Officer's termination of employment and shall
be in lieu of any claim to a continuation of base salary which
the Officer might otherwise have and in lieu of cash severance
benefits under any severance benefits program which may be in
effect for officers or employees of the Bank.
(iii) The Bank shall make a lump sum payment to the Officer or, in
the event of the Officer's death following the Officer's
discharge but before payment, to the Officer's estate in an
amount equal to the potential annual bonuses that the Officer
would have earned if the Officer had continued working for the
Bank during the Assurance Period at the highest annual rate of
salary achieved during the period of three (3) years ending
immediately prior to the date of termination (the "Bonus
Severance Payment"). The Bonus Severance Payment shall be
computed using the following formula:
BSP = ((BS x TIO x IP) + (BS x TIO x FP x AP)) x NY
where:
"BSP" is the amount of the Bonus Severance Payment, before the
deduction of applicable federal, state and local withholding
taxes;
"BS" is the highest annual rate of salary achieved by the
Officer during the period of three (3) years ending
immediately prior to the date of termination;
"TIO" is the target incentive opportunity for the Officer
expressed as a percentage as established by the Compensation
Committee of the Board of Directors of the Bank pursuant to
the Bank's Annual Incentive Plan for Select Executives for the
year in which the employment of the Officer by the Bank
terminates or, if no target incentive opportunity is
established by the Compensation Committee of the Board of
Directors of the Bank for such year
Page - 9 -
<PAGE> 10
with respect to the Officer, then the highest target incentive
opportunity established by the Compensation Committee of the
Board of Directors of the Bank for the Officer pursuant to the
Annual Incentive Plan for Select Executives during the period
of three (3) years ending immediately prior to the date of
termination;
"IP" is either (i) the percentage of the TIO which is to be
determined by the individual performance of the Officer as
established by the Compensation Committee of the Board of
Directors of the Bank pursuant to the Bank's Annual Incentive
Plan for Select Executives for the year in which the
employment of the Officer by the Bank terminates or, (ii) if
no target incentive opportunity has been established with
respect to the Officer by the Compensation Committee of the
Board of Directors of the Bank for the year in which the
employment of the Officer by the Bank terminates, then the
lowest percentage of the target incentive opportunity to be
determined by the individual performance of the Officer
established by the Compensation Committee of the Board of
Directors of the Bank for the Officer pursuant to the Annual
Incentive Plan for Select Executives during the period of
three (3) years ending immediately prior to the date of
termination;
"FP" is either (i) the percentage of the TIO with respect to
the Officer which is to be determined by the financial
performance of the Company as established by the Compensation
Committee of the Board of Directors of the Bank pursuant to
the Bank's Annual Incentive Plan for Select Executives for the
year in which the employment of the Officer by the Bank
terminates or, (ii) if no target incentive opportunity has
been established with respect to the Officer by the
Compensation Committee of the Board of Directors of the Bank
for the year in which the employment of the Officer by the
Bank terminates, then a percentage equal to 100% minus the IP;
"AP" is the highest award percentage available to the Officer
with respect to the financial performance of the Company as
established by the Compensation Committee of the Board of
Directors of the Bank pursuant to the Bank's Annual Incentive
Plan for Select Executives for the year in which the
employment of the Officer by the Bank terminates or, (ii) if
no target incentive opportunity has been established with
respect to the Officer by the Compensation Committee of the
Board of Directors of the Bank for the year in which the
employment of the Officer by the Bank terminates, then the
highest award percentage available to the Officer with respect
to the financial performance of the Company established by the
Compensation Committee of the Board of Directors of the Bank
for the Officer pursuant to the Annual Incentive Plan for
Select Executives during the period of three (3) years ending
immediately prior to the date of termination;
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<PAGE> 11
"NY" is the Assurance Period expressed as a number of years
(rounded, if such period is not a whole number, to the next
highest whole number).
The Bonus Severance Payment shall be made within thirty (30)
days after the Officer's termination of employment and shall
be in lieu of any claim to a continuation of participation in
annual bonus plans of the Bank which the Officer might
otherwise have.
The payments and benefits described in section 6(b) are referred to in
this Agreement as the "Additional Termination Entitlements". The payments
described in section 6(b)(ii) and (iii) shall be computed at the expense
of the Company by an attorney of the firm of Thacher Proffitt & Wood, Two
World Trade Center, New York, New York 10048 or, if such firm is
unavailable or unwilling to perform such calculation, by a firm of
independent certified public accountants selected by the Officer and
reasonably satisfactory to the Company (the "Computation Advisor"). The
determination of the Computation Advisor as to the amount of such payments
shall be final and binding in the absence of manifest error.
Section 7. Tax Indemnification.
(a) If the Officer's employment terminates under circumstances entitling
the Officer or, in the event of the Officer's death following such
termination but before payment, his or her estate to the Additional
Termination Entitlements, the Company shall pay to the Officer or,
in the event of the Officer's death, his or her estate an additional
amount intended to indemnify the Officer against the financial
effects of the excise tax imposed on excess parachute payments under
section 28OG of the Code (the "Tax Indemnity Payment"). The Tax
Indemnity Payment shall be determined under the following formula:
E x P
TIP = ----------------------------------------
1 - (( FI x ( 1 - SLI )) + SLI + E + M )
where:
"TIP" is the Tax Indemnity Payment, before the deduction of
applicable federal, state and local withholding taxes;
"E" is the percentage rate at which an excise tax is assessed under
section 4999 of the Code;
"P" is the amount with respect to which such excise tax is assessed,
determined without regard to this section 16;
Page - 11 -
<PAGE> 12
"FI" is the highest marginal rate of income tax applicable to the
Officer under the Code for the taxable year in question;
"SLI" is the sum of the highest marginal rates of income tax
applicable to the Officer under all applicable state and local laws
for the taxable year in question; and
"M" is the highest marginal rate of Medicare tax applicable to the
Officer under the Code for the taxable year in question.
Such computation shall be made at the expense of the Company by the
Computation Advisor and shall be based on the following assumptions:
(i) that a change in ownership, a change in effective ownership or
control or a change in the ownership of a substantial portion
of the assets of the Bank or the Company has occurred within
the meaning of section 28OG of the Code (a "28OG Change of
Control");
(ii) that all direct or indirect payments made to or benefits
conferred upon the Officer on account of the Officer's
termination of employment are "parachute payments" within the
meaning of section 28OG of the Code; and
(iii) that no portion of such payments is reasonable compensation
for services rendered prior to the Officer's termination of
employment.
(b) With respect to any payment that is presumed to be a parachute
payment for purposes of section 28OG of the Code, the Tax Indemnity
Payment shall be made to the Officer on the earlier of the date the
Company, the Bank or any direct or indirect subsidiary or affiliate
of the Company or the Bank is required to withhold such tax or the
date the tax is required to be paid by the Officer, unless, prior to
such date, the Company delivers to the Officer the written opinion
(the "Opinion Letter"), in form and substance reasonably
satisfactory to the Officer, of the Computation Advisor or, if the
Computation Advisor is unable to provide such opinion, of an
attorney or firm of independent certified public accountants
selected by the Company and reasonably satisfactory to the Officer,
to the effect that the Officer has a reasonable basis on which to
conclude that:
(i) no 28OG Change in Control has occurred, or
(ii) all or part of the payment or benefit in question is not a
parachute payment for purposes of section 28OG of the Code, or
(iii) all or a part of such payment or benefit constitutes
reasonable compensation for services rendered prior to the
28OG Change of Control, or
Page - 12 -
<PAGE> 13
(iv) for some other reason which shall be set forth in detail in
such letter, no excise tax is due under section 4999 of the
Code with respect to such payment or benefit.
If the Company delivers an Opinion Letter, the Computation Advisor
shall re-compute, and the Company shall make, the Tax Indemnity
Payment in reliance on the information contained in the Opinion
Letter.
(c) In the event that the Officer'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 with respect to which the
Tax Indemnity Payment is made, the Officer 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 pursuant to
sections 7(a) or 7(b), when increased by the amount of the payment
made to the Officer pursuant to this section 7(c), or when reduced
by the amount of the payment made to the Company pursuant to this
section 7(c), equals the amount that should have properly been paid
to the Officer under section 7(a). The interest paid to the Company
under this section 7(c) shall be determined at the rate provided
under section 1274(b)(2)(B) of the Code. The payment made to the
Officer shall include such amount of interest as is necessary to
satisfy any interest assessment made by the Internal Revenue Service
and an additional amount equal to any monetary penalties assessed by
the Internal Revenue Service on account of an underpayment of the
excise tax. To confirm that the proper amount, if any, was paid to
the Officer under this section 7, the Officer shall furnish to the
Company a copy of each tax return which reflects a liability for an
excise tax, at least 20 days before the date on which such return is
required to be filed with the Internal Revenue Service. Nothing in
this Agreement shall give the Company any right to control or
otherwise participate in any action, suit or proceeding to which the
Officer is a party as a result of positions taken on the Officer's
federal income tax return with respect to the Officer's liability
for excise taxes under section 4999 of the Code.
Section 8. Indemnification upon and following a Change of Control.
(a) From and after the effective date of a Change of Control through the
sixth anniversary of such effective date, the Bank and the Company
agree to indemnify and hold harmless the Officer, against any costs
or expenses (including reasonable attorneys' fees), judgments,
fines, losses, claims, damages or liabilities (collectively,
"Costs") incurred in connection with any claim, action, suit,
proceeding or investigation, whether civil, criminal, administrative
or investigative, arising out of matters existing or occurring at or
prior to the time the Change of Control became effective whether
asserted or claimed prior to, at or after the effective date of the
Change of Control, and to advance any such Costs to the Officer as
they are from
Page - 13 -
<PAGE> 14
time to time incurred, in each case to the fullest extent the
Officer would have been indemnified as a director or officer of the
Bank or the Company, as applicable, and as then permitted under
applicable law.
(b) The Officer, seeking to claim indemnification under section 8(a) of
this Agreement and upon learning of any such claim, action, suit,
proceeding or investigation, shall promptly notify the Bank thereof,
but the failure to so notify shall not relieve the Bank or the
Company of any liability it may have pursuant to this Agreement to
the Officer if such failure does not materially and substantially
prejudice the Bank or the Company. In the event of any such claim,
action, suit, proceeding or investigation,
(i) the Bank and the Company shall have the right to assume the
defense thereof with counsel reasonably acceptable to the
Officer, and the Bank and the Company shall not be liable to
the Officer for any legal expenses of other counsel
subsequently incurred by the Officer in connection with the
defense thereof, except that if the Bank and the Company do
not elect to assume such defense within a reasonable time or
counsel for the Officer at any time advises that there are
issues which raise conflicts of interest between the Bank or
the Company and the Officer (and counsel for the Bank or the
Company does not disagree), the Officer may retain counsel
satisfactory to the Officer, and the Bank and the Company
shall remain responsible for the reasonable fees and expenses
of such counsel as set forth above, to be paid promptly as
statements therefor are received; provided, however, that the
Bank and the Company shall be obligated pursuant to this
paragraph (b)(i) to pay for only one firm of counsel for all
indemnified parties in any one jurisdiction with respect to
any given claim, action, suit, proceeding or investigation
unless the use of one counsel for such indemnified parties,
including the Officer, would present such counsel with a
conflict of interest;
(ii) the Officer will reasonably cooperate in the defense of any
such matter; and
(iii) the Bank and the Company shall not be liable for any
settlement effected by the Officer without their prior written
consent, which shall not be unreasonably withheld.
Section 9. Resignation.
(a) The Officer may resign from the Officer's employment with the Bank
at any time. A resignation under this section 9 shall be effected by
notice of resignation given by the Officer to the Bank and shall
take effect on the later of the effective date of termination
specified in such notice or the date on which the notice of
termination is deemed given by the Officer. For purposes of this
Agreement, retirement of the Officer from the employment of the Bank
or the Company under circumstances
Page - 14 -
<PAGE> 15
defined as "normal retirement" or "early retirement" pursuant to any
qualified defined benefit or qualified defined contribution pension
plan maintained by the Bank shall be deemed a resignation by the
Officer's of the Officer's employment with the Bank. A resignation
by the Officer as described in section 5(a)(ii) of this Agreement,
for purposes of this Agreement shall be deemed to be termination
with "Cause". The Officer's resignation of any of the positions
within the Bank or the Company to which he has been assigned shall
be deemed a resignation from all such positions.
(b) The Officer's resignation shall be deemed to be for "Good Reason" if
the effective date of resignation occurs during the Term, but on or
after the effective date of a Pending Change of Control or Change of
Control, and is on account of:
(i) the failure of the Bank (whether by act or omission of the
Board of Directors, or otherwise) to appoint, re-appoint,
elect or re-elect the Officer to the office and position with
the Bank that he held immediately prior to the Change of
Control or Pending Change of Control (the "Assigned Office")
or to a more senior office and position;
(ii) if the Officer is or becomes a member of the Board of
Directors of the Bank, the failure of the shareholders of the
Bank (whether in an election in which the Officer stands as a
nominee or in an election where the Officer is not a nominee),
to elect or re-elect the Officer to such directorship at the
expiration of the Officer's term as a director, unless such
failure is a result of the Officer's refusal to stand for
election;
(iii) a material failure by the Bank, whether by amendment of the
charter or organization, by-laws, action of the Board of
Directors of the Bank or otherwise, to vest in the Officer the
functions, duties, or responsibilities customarily associated
with the Assigned Office; provided that the Officer shall have
given notice of such failure to the Bank, and the Bank has not
fully cured such failure within thirty (30) days after such
notice is deemed given;
(iv) any reduction of the Officer's rate of base salary in effect
from time to time, whether or not material, or any failure,
other than due to reasonable administrative error that is
fully cured within 5 days after notice of such administrative
error is deemed given, to pay any portion of the Officer's
compensation as and when due;
(v) any change in the terms and conditions of any compensation or
benefit program in which the Officer participates which,
either individually or together with other changes, has a
material adverse effect on the aggregate value of the
Officer's total compensation package; provided that the
Officer shall have given notice of such material adverse
effect to the Bank, and the
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<PAGE> 16
Bank has not fully cured such failure within thirty (30) days
after such notice is deemed given;
(vi) any material breach by the Company or the Bank of any material
term, condition or covenant contained in this Agreement;
provided that the Officer shall have given notice to the
Company and the Bank of such material adverse effect, and the
Company or the Bank have not fully cured such failure within
thirty (30) days after such notice is deemed given; or
(vii) a change in the Officer's principal place of employment to a
location that is outside of Nassau County or Queens County,
New York.
In all other cases, a resignation by the Officer shall be deemed to
be without Good Reason. In the event of resignation, the Officer
shall state in the Officer's notice of resignation whether the
Officer considers his or her resignation to be a resignation with
Good Reason, and if he does, he shall state in such notice the
grounds which constitute Good Reason. The Officer's determination of
the existence of Good Reason shall be conclusive in the absence of
fraud, bad faith or manifest error.
(c) In the event of the Officer's resignation for any reason, the Bank
shall pay and deliver the Standard Termination Entitlements. In the
event of the Officer's resignation with Good Reason and such
resignation is effective within six (6) months of the effective date
of the Change of Control (the "Resignation Window Period"), the Bank
shall also pay and deliver the Additional Termination Entitlements.
In the event the Officer's resignation with Good Reason is based
upon section 9(b)(iii),(iv),(v) or (vi) and the notice required by
such provision has been given within six months of the effective
date of the Change of Control but the applicable cure period will
not expire until on or after the date which is six months following
the effective date of the Change of Control, the Resignation Window
Period shall be extended so as expire 30 days following the
expiration of the applicable cure period.
Section 10. Terms and Conditions of the Additional Termination
Entitlements.
The Bank and the Officer hereby stipulate that the damages which may be
incurred by the Officer following any termination of employment are not capable
of accurate measurement as of the date first above written and that the
Additional Termination Entitlements constitute reasonable damages under the
circumstances and shall be payable without any requirement of proof of actual
damage and without regard to the Officer's efforts, if any, to mitigate damages.
The Bank and the Officer further agree that the Bank may condition the payment
and delivery of the Additional Termination Entitlements on the receipt of:
(a) the Officer's resignation from any and all positions which he holds
as an officer, director or committee member with respect to the Bank
or any subsidiary or affiliate
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<PAGE> 17
of the Bank; and
(b) a release of the Bank and the Company and their officers, directors,
shareholders, subsidiaries and affiliates, in form and substance
satisfactory to the Bank, of any liability to the Officer, whether
for compensation or damages, in connection with the Officer's
employment with the Bank and the termination of such employment,
except for the Standard Termination Entitlements, the Additional
Termination Entitlements, the Tax Indemnity Payment and
indemnification payments due the Officer pursuant to section 8 or
section 16 of this Agreement.
To the extent the Bank conditions the payment and delivery of the Additional
Termination Entitlements or any other amount due under this Agreement upon the
receipt of the release provided in section 10(b) of this Agreement and such
release by law may not be effective until the expiration of a required prior
notice and/or a recission period following its execution by the Officer, then
any payment required to be made pursuant to this Agreement may be deferred until
the expiration of the period which is the sum of the period within which such
payment was required to be made under the terms of this Agreement but for this
section 10 and the period of any required prior notice and recission periods,
provided, however, that the Bank shall pay to the Officer for each day of such
deferral interest in addition to any other amounts due and owing under this
Agreement at the rate of the federal short term rate established under section
1274 of the Code for the month in which the Officer's termination of employment
occurs calculated on the basis of a 360 day year for the actual number of days
of such deferral on the amount so deferred.
Section 11. Confidentiality.
Unless the Officer obtains the prior written consent of the Bank or the
Company, the Officer shall keep confidential and shall refrain from using for
the benefit of himself or herself, 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 the Officer's
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 the Officer) until the same ceases to be material
(or becomes so ascertainable or available); provided, however, that nothing in
this section 11 shall prevent the Officer, 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
proceeding to the extent that such participation or disclosure is required under
applicable law.
Section 12. No Effect on Employee Benefit Plans or Programs.
Except to the extent specifically provided herein, the termination of the
Officer's employment during the Assurance Period or thereafter, whether by the
Bank or by the Officer, shall have no effect on the rights and obligations of
the parties hereto under the Bank's qualified or non-qualified
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<PAGE> 18
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 Bank from time to time; provided, however, that
nothing in this Agreement shall be deemed to duplicate any compensation or
benefits provided under any severance agreement, plan or program covering the
Officer to which the Bank or Company is a party and any duplicative amount
payable under any such agreement, plan or program shall be applied as an offset
to reduce the amounts otherwise payable hereunder. The Additional Termination
Entitlements provided hereunder, when due and payable or provided to the
Officer, or in the case of the Officer's death, to his or her estate, surviving
dependants or designated beneficiaries, as applicable, are acknowledged to be in
lieu of any benefits that would otherwise be provided under such circumstances
pursuant to the Bank's Severance Pay Plan, as amended, or Severance Compensation
Plan, as amended.
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<PAGE> 19
Section 13. Successors and Assigns.
This Agreement will inure to the benefit of and be binding upon the
Officer, the Officer's legal representatives and testate or intestate
distributees, and the Company and the Bank and their respective 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 or the Bank may be
sold or otherwise transferred. Failure of the Company to obtain from any
successor its express written assumption of the Company's or Bank's obligations
hereunder at least 60 days in advance of the scheduled effective date of any
such succession shall, if such succession constitutes a Change of Control,
constitute Good Reason for the Officer's resignation on or at any time during
the Term following the occurrence of such succession.
Section 14. No Attachment.
Except as required by law, no right to receive payments under this
Agreement shall be subject to anticipation, commutation, alienation, sale,
assignment, encumbrance, charge, pledge, or hypothecation, or to execution,
attachment, levy, or similar process or assignment by operation of law, and any
attempt, voluntary or involuntary, to affect any such action shall be null,
void, and of no effect.
Section 15. 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 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 Officer:
Robert J. DeStefano
15 Grist Mill Court
Kings Park, New York 11754
If to the Company or the Bank:
Astoria Financial Corporation
One Astoria Federal Plaza
Lake Success, New York 11042
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<PAGE> 20
Attention: Chairman, President and Chief Executive Officer
with a copy to:
Thacher Proffitt & Wood
Two World Trade Center
New York, New York 10048
Attention: W. Edward Bright, Esq.
Section 16. Indemnification for Attorneys' Fees.
(a) The Bank shall indemnify, hold harmless and defend the Officer
against reasonable costs, including 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 the Officer's efforts, in
good faith, to defend or enforce the terms of this Agreement;
provided, however, that the Officer 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 Bank's obligations under this
Agreement shall be conclusive evidence of the Officer's entitlement
to indemnification under this Agreement, and any such
indemnification payments shall be in addition to amounts payable
pursuant to such settlement agreement, unless such settlement
agreement expressly provides otherwise.
(b) The Bank's or the Company's obligation to make the payments provided
for in this Agreement and otherwise to perform their respective
obligations under this Agreement shall not be affected by any
set-off, counterclaim, recoupment, defense or other claim, right or
action which the Bank or the Company may have against the Officer or
others. In no event shall the Officer be obligated to seek other
employment or take any other action by way of mitigation of the
amounts payable to the Officer under any of the provisions of this
Agreement and such amounts shall not be reduced whether or not the
Officer obtains other employment. Unless it is determined that the
Officer has acted frivolously or in bad faith, the Bank shall pay as
incurred, to the full extent permitted by law, all legal fees and
expenses which the Officer may reasonably incur as a result of or in
connection with the Officer's consultation with legal counsel or
arising out of any action, suit, proceeding, tax controversy, appeal
or contest (regardless of the outcome thereof) by the Bank, the
Company, the Officer or others regarding the validity or
enforceability of, or liability under, any provision of this
Agreement or any guarantee of performance thereof (including as a
result of any contest by the Officer about the amount of any payment
pursuant to this Agreement), plus in each case interest on any
delayed payment at the applicable
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<PAGE> 21
Federal rate provided for in section 7872(f)(2)(A) of the Code.
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<PAGE> 22
Section 17. Employment Rights and Funding Obligations.
(a) Nothing expressed or implied in this Agreement shall create any
right or duty on the part of the Bank, the Company or the Officer to
have the Officer continue as an officer of the Bank or the Company
or to remain in the employment of the Bank, the Company.
(b) Nothing expressed or implied in this Agreement shall create any
right or duty on the part of the Bank, the Company or the Officer to
create a trust of any kind to fund any benefits which may be payable
pursuant to this Agreement, and to the extent that the Officer
acquires a right to receive benefits from the Bank or the Company
pursuant to this Agreement, such right shall be no greater than the
right of any unsecured general creditor of the Bank or the Company,
respectively.
Section 18. Withholding.
The Bank or the Company, as applicable, shall have the right to deduct and
withhold from any amounts paid in cash pursuant to this Agreement by the Bank or
the Company, respectively, any taxes or other amounts required by law to be
withheld with respect to such payment.
Section 19. 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 20. Survival.
The rights and obligations of the Bank, the Company and the Officer under
this Agreement, unless otherwise expressly provided in this Agreement, shall
survive the expiration of the term or other termination of this Agreement.
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.
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<PAGE> 23
This Agreement may be executed in two 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.
Except to the extent preempted by federal 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.
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. No modifications of this Agreement shall be valid unless made in writing
and signed by the parties hereto.
Section 26. Required Regulatory Provisions.
The following provisions are included for the purposes of complying with
various laws, rules and regulations applicable to the Bank:
(a) Notwithstanding anything herein contained to the contrary, in no
event shall the aggregate amount of compensation payable to the
Officer on account of the Officer's termination of employment exceed
three times the Officer's average annual total compensation for the
last five consecutive calendar years to end prior to the Officer's
termination of employment with the Bank (or for the Officer's entire
period of employment with the Bank if less than five calendar
years).
(b) Notwithstanding anything herein contained to the contrary, any
payments to the Officer by the Bank, 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
("FDI Act"), 12 U.S.C. Section 1828(k), and any regulations
promulgated thereunder.
(c) Notwithstanding anything herein contained to the contrary, if the
Officer is suspended from office and/or temporarily prohibited from
participating in the conduct of the affairs of the Bank pursuant to
a notice served under section 8(e)(3)
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<PAGE> 24
or 8(g)(1) of the FDI Act, 12 U.S.C. Section 1818(e)(3) or
1818(g)(1), the Bank's obligations under this Agreement shall be
suspended as of the date of service of such notice, unless stayed by
appropriate proceedings. If the charges in such notice are
dismissed, the Bank, in its discretion, may (i) pay to the Officer
all or part of the compensation withheld while the Bank's
obligations hereunder were suspended and (ii) reinstate, in whole or
in part, any of the obligations which were suspended.
(d) Notwithstanding anything herein contained to the contrary, if the
Officer is removed and/or permanently prohibited from participating
in the conduct of the Bank's affairs by an order issued under
section 8(e)(4) or 8(g)(1) of the FDI Act, 12 U.S.C. Section
1818(e)(4) or (g)(1), all prospective obligations of the Bank under
this Agreement shall terminate as of the effective date of the
order, but vested rights and obligations of the Bank and the Officer
shall not be affected.
(e) Notwithstanding anything herein contained to the contrary, if the
Bank is in default (within the meaning of section 3(x)(1) of the FDI
Act, 12 U.S.C. Section 1813(x)(1), all prospective obligations of
the Bank under this Agreement shall terminate as of the date of
default, but vested rights and obligations of the Bank and the
Officer shall not be affected.
(f) Notwithstanding anything herein contained to the contrary, all
prospective obligations of the Bank hereunder shall be terminated,
except to the extent that a continuation of this Agreement is
necessary for the continued operation of the Bank: (i) by the
Director of the Office of Thrift Supervision ("OTS") or his designee
or the Federal Deposit Insurance Corporation ("FDIC"), at the time
the FDIC enters into an agreement to provide assistance to or on
behalf of the Bank under the authority contained in section 13(c) of
the FDI Act, 12 U.S.C.Section 1823(c); (ii) by the Director of the
OTS or his designee at the time such Director or designee approves a
supervisory merger to resolve problems related to the operation of
the Bank or when the Bank is determined by such Director to be in an
unsafe or unsound condition. The vested rights and obligations of
the parties shall not be affected.
If and to the extent that any of the foregoing provisions shall cease to be
required or by applicable law, rule or regulation, the same shall become
inoperative as though eliminated by formal amendment of this Agreement. None of
the foregoing provisions, other than section 26(b) shall limit any obligations
of the Company under this Agreement.
Section 27. Guaranty.
The Company hereby irrevocably and unconditionally guarantees to the
Officer the payment of all amounts, and the performance of all other
obligations, due from the Bank in accordance with the terms of this Agreement as
and when due without any requirement of presentment, demand of payment, protest
or notice of dishonor or nonpayment. Solely for purposes of determining the
extent
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<PAGE> 25
of the Company's guarantee, the obligations of the Bank under this Agreement
shall be determined as though section 26(a), (c), (d), (e) and (f) did not apply
to the Bank.
IN WITNESS WHEREOF, the Bank and the Company have caused this Agreement to
be executed and the Officer has hereunto set the Officer's hand, all as of the
day and year first above written.
/S/ Robert J. DeStefano
-------------------------------------
ROBERT J. DESTEFANO
Attest: ASTORIA FEDERAL SAVINGS AND LOAN
ASSOCIATION
By: /S/ William K. Sheerin By: /S/ George L. Engelke, Jr.
--------------------------------- -------------------------------
Name: William K. Sheerin Name: George L. Engelke, Jr.
Title: Executive Vice President and Title: Chairman, President and
Secretary Chief Executive Officer
Attest: ASTORIA FINANCIAL CORPORATION
By: /S/ William K. Sheerin By: /S/ George L. Engelke, Jr.
--------------------------------- -------------------------------
Name: William K. Sheerin Name: George L. Engelke, Jr.
Title: Executive Vice President and Title: Chairman, President and
Secretary Chief Executive Officer
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<PAGE> 1
EXHIBIT 10.35
CHANGE OF CONTROL SEVERANCE AGREEMENT
This CHANGE OF CONTROL SEVERANCE AGREEMENT (the "Agreement") is made and
entered into as of January 1, 2000 by and among ASTORIA FEDERAL SAVINGS AND LOAN
ASSOCIATION, a savings and loan association organized and existing under the
laws of the United States of America and having an office at One Astoria Federal
Plaza, Lake Success, New York 11042 (the "Bank"), ASTORIA FINANCIAL CORPORATION,
a business corporation organized and existing under the laws of the State of
Delaware and having an office at One Astoria Federal Plaza, Lake Success, New
York 11042 (the "Company") and Frank E. Fusco, an individual residing at 6 Corsa
Street, Dix Hills, New York 11746 (the "Officer").
INTRODUCTORY STATEMENT
WHEREAS, the Boards of Directors of the Bank and the Company have
approved the Bank and the Company entering into Change of Control Severance
Agreements with certain key officers of the Bank,
WHEREAS, the Officer is a key officer of the Bank;
WHEREAS, should the possibility of a Pending Change of Control or Change
of Control of the Bank or the Company arise, the Boards of Directors of the Bank
and the Company believe it is imperative that the Bank, the Company and the
Boards of Directors of the Bank and the Company should be able to rely upon the
Officer to continue in his or her position, and that the Bank and the Company
should be able to receive and rely upon the Officer's advice, if requested, as
to the best interests of the Bank and the Company and their respective
shareholders without concern that the Officer might be distracted by the
personal uncertainties and risks created by the possibility of a Pending Change
of Control or Change of Control;
WHEREAS, should the possibility of a Pending Change of Control or Change
of Control arise, in addition to his or her regular duties, the Officer may be
called upon to assist in the assessment of such possible Pending Change of
Control or Change of Control, advise management and the Board as to whether such
Pending Change of Control or Change of Control would be in the best interests of
the Bank, the Company and their respective shareholders, and to take such other
actions as the Boards of Directors of the Bank and the Company might determine
to be appropriate; and
NOW, THEREFORE, to assure the Bank and the Company that they will have the
continued dedication of the Officer and the availability of his or her advice
and counsel notwithstanding the possibility, threat, or occurrence of a Pending
Change of Control or Change of Control of the Bank or the Company, and to induce
the Officer to remain in the employ of the Bank, in consideration of the mutual
premises and agreements set forth herein and for other good and valuable
consideration, the Bank, the Company and the Officer agree as follows:
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<PAGE> 2
AGREEMENT
Section 1. Effective Date; Term; Pending Change of Control and Change
of Control Defined.
(a) This Agreement shall take effect on January 1, 2000 (the "Effective
Date") and shall remain in effect during the period (the "Term")
beginning on the Effective Date and ending on the earlier of :
(i) the date, prior to the occurrence of a Pending Change of
Control or a Change of Control, as defined below,
respectively, on which the Officer's employment by the Bank
terminates whether by discharge, resignation, death,
disability or retirement, or
(ii) the later of:
(A) the first anniversary of the date on which the Bank
notifies the Executive of its intent to discontinue the
Agreement (the "Initial Expiration Date") or,
(B) the second anniversary of the latest Change of Control,
as defined below, that occurs after the Effective Date
and before the Initial Expiration Date, or
(b) For purposes of this Agreement, a "Change of Control" shall be
deemed to have occurred upon the happening of any of the following
events:
(i) the consummation of a 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 Securities Exchange Act of 1934, as amended
("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
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<PAGE> 3
(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;
(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;
(iii) a complete liquidation or dissolution of the Company;
(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 Directors
of the Company on the Effective Date of this Agreement;
or
(B) individuals who first became members of the Board of
Directors of the Company after the Effective Date of
this Agreement either:
(1) 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
(2) upon election by the shareholders of the Board of
Directors of the Company to serve as a member of
such Board, 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
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<PAGE> 4
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 Directors of the
Company; or
(v) any event which would be described in section 1(b)(i), (ii),
(iii) or (iv) if the term "Bank" 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 Bank, or a subsidiary of either of them, by the
Company, the Bank, or any subsidiary of either of them, or by any
employee benefit plan maintained by any of them. For purposes of
this section 1(b), the term "person" shall have the meaning assigned
to it under sections 13(d)(3) or 14(d)(2) of the Exchange Act.
(c) For purposes of this Agreement, a "Pending Change of Control" shall
mean:
(i) the approval by the shareholders of the Bank or the Company of
a definitive agreement for a transaction which, if
consummated, would result in a Change of Control; or
(ii) the approval by the shareholders of the Bank or the Company of
a transaction which, if consummated, would result in a Change
of Control.
Section 2. Discharge Prior to a Pending Change of Control.
The Bank may discharge the Officer at any time prior to the occurrence of
a Pending Change of Control or, if no Pending Change of Control has occurred, a
Change of Control, for any reason or for no reason. In such event:
(a) The Bank shall pay to the Officer or the Officer's estate his or her
earned but unpaid compensation, including, without limitation,
salary and all other items which constitute wages under applicable
law, as of the date of the Officer's termination of employment. This
payment shall be made at the time and in the manner prescribed by
law applicable to the payment of wages but in no event later than 30
days after the date of the Officer's termination of employment.
(b) The Bank shall provide the benefits due, if any, to the Officer or
the Officer's estate, surviving dependents or designated
beneficiaries, as applicable, under the employee benefit plans and
programs and compensation plans and programs maintained for the
benefit of the officers and employees of the Bank. The time and
manner of payment or other delivery of these benefits and the
recipients of such benefits shall be determined according to the
terms and conditions of the applicable plans and programs.
Page - 4 -
<PAGE> 5
The payments and benefits described in sections 2(a) and (b) shall be referred
to in this Agreement as the "Standard Termination Entitlements."
Section 3. Termination of Employment Due to Death.
The Officer's employment with the Bank shall terminate automatically, and
without any further action on the part of any party to this Agreement, on the
date of the Officer's death. In such event, the Bank shall pay and deliver to
the Officer's estate and surviving dependents and designated beneficiaries, as
applicable, the Standard Termination Entitlements.
Section 4. Termination Due to Disability after a Pending Change of
Control or a Change of Control.
The Bank may terminate the Officer's employment during the Term and after
the occurrence of a Pending Change of Control or a Change of Control upon a
determination by the Board of Directors of the Bank, by the affirmative vote of
75% of its entire membership, acting in reliance on the written advice of a
medical professional acceptable to it, that the Officer is suffering from a
physical or mental impairment which, at the date of the determination, has
prevented the Officer from performing the Officer's assigned duties on a
substantially full-time basis for a period of at least one hundred and eighty
(180) days during the period of one (1) year ending with the date of the
determination or is likely to result in death or prevent the Officer from
performing the Officer's assigned duties on a substantially full-time basis for
a period of at least one hundred and eighty (180) days during the period of one
(1) year beginning with the date of the determination. In such event:
(a) The Bank shall pay and deliver the Standard Termination Entitlements
to the Officer or, in the event of the Officer's death following
such termination but before payment, to the Officer's estate,
surviving dependents or designated beneficiaries, as applicable.
(b) In addition to the Standard Termination Entitlements, the Bank shall
continue to pay the Officer his or her base salary, at the annual
rate in effect for the Officer immediately prior to the termination
of the Officer's employment, during a period ending on the earliest
of: (i) the expiration of one hundred and eighty (180) days after
the date of termination of the Officer's employment; (ii) the date
on which long-term disability insurance benefits are first payable
to the Officer under any long-term disability insurance plan
covering employees of the Bank; or (iii) the date of the Officer's
death.
A termination of employment due to disability under this section 4 shall be
effected by a notice of termination given to the Officer by the Bank and shall
take effect on the later of the effective date of termination specified in such
notice or, if no such date is specified, the date on which the notice of
termination is deemed given to the Officer.
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<PAGE> 6
Section 5. Discharge with Cause after a Pending Change of Control or
Change of Control.
(a) The Bank may terminate the Officer's employment with "Cause" during
the Term and after the occurrence of a Pending Change of Control or
a Change of Control, but a termination shall be deemed to have
occurred with "Cause" only if:
(i) (A) the Board of Directors of the Bank, by the affirmative
vote of 75% of its entire membership, determines that
the Officer is guilty of personal dishonesty,
incompetence, wilful misconduct, breach of fiduciary
duty involving personal profit, intentional failure to
perform stated duties, wilful violation of any law, rule
or regulation (other than traffic violations or similar
offenses) or final cease and desist order, or any
material breach of this Agreement, in each case measured
against standards generally prevailing at the relevant
time in the savings and community banking industry;
(B) prior to the vote contemplated by section 5(a)(i)(A),
the Board of Directors of the Bank shall provide the
Officer with notice of the Bank's intent to discharge
the Officer for Cause, detailing with particularity the
facts and circumstances which are alleged to constitute
Cause (the "Notice of Intent to Discharge"); and
(C) after the giving of the Notice of Intent to Discharge
and before the taking of the vote contemplated by
section 5(a)(i)(A), the Officer, together with the
Officer's legal counsel, if he so desires, are afforded
a reasonable opportunity to make both written and oral
presentations before the Board of Directors of the Bank
for the purpose of refuting the alleged grounds for
Cause for the Officer's discharge; and
(D) after the vote contemplated by section 5(a)(i)(A), the
Bank has furnished to the Officer a notice of
termination which shall specify the effective date of
the Officer's termination of employment (which shall in
no event be earlier than the date on which such notice
is deemed given) and include a copy of a resolution or
resolutions adopted by the Board of Directors of the
Bank, certified by its corporate secretary, authorizing
the termination of the Officer's employment with Cause
and stating with particularity the facts and
circumstances found to constitute Cause for the
Officer's discharge (the "Final Discharge Notice"); or
(ii) the Officer, during the 90 day period commencing on the
delivery to the Officer by the Bank of the Notice of Intent to
Discharge specified in section
Page - 6 -
<PAGE> 7
5(a)(i)(B), resigns his or her employment with the Bank prior
to the delivery to the Officer by the Bank of the Final
Discharge Notice specified in section 5(a)(i)(D).
For purposes of this section 5, no act or failure to act, on the
part of the Officer, shall be considered "willful" unless it is
done, or omitted to be done, by the Officer in bad faith or without
reasonable belief that the Officer's action or omission was in the
best interests of the Bank or the Company, respectively. Any act or
failure to act based upon authority given pursuant to a resolution
duly adopted by the Board of Directors of the Bank or the Company or
based upon the written advice of counsel for the Bank or the Company
shall be conclusively presumed to be done or omitted to be done by
the Officer in good faith and in the best interests of the Bank or
the Company, respectively.
(b) If the Officer is discharged with Cause during the Term and after a
Pending Change of Control or a Change of Control, the Bank shall pay
and provide to him or, in the event of the Officer's death following
such discharge but prior to payment and providing, to the Officer's
estate, surviving dependents or designated beneficiaries, as
applicable, the Standard Termination Entitlements only.
(c) Following the giving of a Notice of Intent to Discharge, the Bank
may temporarily suspend the Officer's duties and authority and, in
such event, may also suspend the payment of salary and other cash
compensation, but not the Officer's participation in retirement,
insurance and other employee benefit plans. If the Officer is not
discharged or is discharged without Cause within forty-five (45)
days after the giving of a Notice of Intent to Discharge, payments
of salary and cash compensation shall resume, and all payments
withheld during the period of suspension shall be promptly restored.
If the Officer is discharged with Cause not later than forty-five
(45) days after the giving of the Notice of Intent to Discharge, all
payments withheld during the period of suspension shall be deemed
forfeited and shall not be included in the Standard Termination
Entitlements. If a Final Discharge Notice is given later than
forty-five (45) days, but sooner than ninety (90) days, after the
giving of the Notice of Intent to Discharge, all payments made to
the Officer during the period beginning with the giving of the
Notice of Intent to Discharge and ending with the Officer's
discharge with Cause shall be retained by the Officer and shall not
be applied to offset the Standard Termination Entitlements. If the
Bank does not give a Final Discharge Notice to the Officer within
ninety (90) days after giving a Notice of Intent to Discharge, the
Notice of Intent to Discharge shall be deemed withdrawn and any
future action to discharge the Officer with Cause shall require the
giving of a new Notice of Intent to Discharge. If the Officer
resigns pursuant to Section 5(a)(ii), the Officer shall forfeit his
or her right to suspended amounts that have not been restored as of
the date of the Officer's resignation or notice of resignation,
whichever is earlier.
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<PAGE> 8
Section 6. Discharge Without Cause after a Pending Change of Control or
Change of Control.
The Bank may discharge the Officer without Cause at any time after the
occurrence of a Pending Change of Control or a Change of Control, and in such
event:
(a) The Bank shall pay and deliver the Standard Termination Entitlements
to the Officer or, in the event of the Officer's death following the
Officer's discharge but before payment, to the Officer's estate,
surviving dependents or designated beneficiaries, as applicable.
(b) In addition to the Standard Termination Entitlements:
(i) the Bank shall provide for a period of two years following the
date of the Officer's discharge (the "Assurance Period") for
the benefit of the Officer and the Officer's spouse and
dependents continued group life, health (including
hospitalization, medical and major medical), dental, accident
and long-term disability insurance benefits on substantially
the same terms and conditions (including any co-payments and
deductibles, but excluding any premium sharing arrangements,
it being the intention of the parties to this Agreement that
the premiums for such insurance benefits shall be the sole
cost and expense of the Bank) in effect for them immediately
prior to the Officer's discharge. The coverage provided under
this section 6(b)(i) may, at the election of the Bank, be
secondary to the coverage provided as part of the Standard
Termination Entitlements and to any employer-paid coverage
provided by a subsequent employer or through Medicare, with
the result that benefits under the other coverages will offset
the coverage required by this section 6(b)(i), provided,
however, that for purposes of this section 6(b)(i) benefits
provided at the cost of the Officer or the Officer's spouse or
dependants pursuant to the Comprehensive Omnibus Budget
Reconciliation Act, as amended, shall not be considered
Standard Termination Entitlements.
(ii) The Bank shall make a lump sum payment to the Officer or, in
the event of the Officer's death following the Officer's
discharge but before payment, to the Officer's estate in an
amount equal to the salary that the Officer would have earned
if he had continued working for the Bank during the Assurance
Period at the highest annual rate of salary achieved during
the period of three (3) years ending immediately prior to the
date of termination (the "Salary Severance Payment"). The
Salary Severance Payment shall be computed using the following
formula:
SSP = BS x NY
Page - 8 -
<PAGE> 9
where:
"SSP" is the amount of the Salary Severance Payment, before
the deduction of applicable federal, state and local
withholding taxes;
"BS" is the highest annual rate of salary achieved by the
Officer during the period of three (3) years ending
immediately prior to the date of termination; and
"NY" is the Assurance Period expressed as a number of years
(rounded, if such period is not a whole number, to the next
highest whole number).
The Salary Severance Payment shall be made within thirty (30)
days after the Officer's termination of employment and shall
be in lieu of any claim to a continuation of base salary which
the Officer might otherwise have and in lieu of cash severance
benefits under any severance benefits program which may be in
effect for officers or employees of the Bank.
(iii) The Bank shall make a lump sum payment to the Officer or, in
the event of the Officer's death following the Officer's
discharge but before payment, to the Officer's estate in an
amount equal to the potential annual bonuses that the Officer
would have earned if the Officer had continued working for the
Bank during the Assurance Period at the highest annual rate of
salary achieved during the period of three (3) years ending
immediately prior to the date of termination (the "Bonus
Severance Payment"). The Bonus Severance Payment shall be
computed using the following formula:
BSP = ((BS x TIO x IP) + ( BS x TIO x FP x AP)) x NY
where:
"BSP" is the amount of the Bonus Severance Payment, before the
deduction of applicable federal, state and local withholding
taxes;
"BS" is the highest annual rate of salary achieved by the
Officer during the period of three (3) years ending
immediately prior to the date of termination;
"TIO" is the target incentive opportunity for the Officer
expressed as a percentage as established by the Compensation
Committee of the Board of Directors of the Bank pursuant to
the Bank's Annual Incentive Plan for Select Executives for the
year in which the employment of the Officer by the Bank
terminates or, if no target incentive opportunity is
established by the Compensation Committee of the Board of
Directors of the Bank for such year
Page - 9 -
<PAGE> 10
with respect to the Officer, then the highest target incentive
opportunity established by the Compensation Committee of the
Board of Directors of the Bank for the Officer pursuant to the
Annual Incentive Plan for Select Executives during the period
of three (3) years ending immediately prior to the date of
termination;
"IP" is either (i) the percentage of the TIO which is to be
determined by the individual performance of the Officer as
established by the Compensation Committee of the Board of
Directors of the Bank pursuant to the Bank's Annual Incentive
Plan for Select Executives for the year in which the
employment of the Officer by the Bank terminates or, (ii) if
no target incentive opportunity has been established with
respect to the Officer by the Compensation Committee of the
Board of Directors of the Bank for the year in which the
employment of the Officer by the Bank terminates, then the
lowest percentage of the target incentive opportunity to be
determined by the individual performance of the Officer
established by the Compensation Committee of the Board of
Directors of the Bank for the Officer pursuant to the Annual
Incentive Plan for Select Executives during the period of
three (3) years ending immediately prior to the date of
termination;
"FP" is either (i) the percentage of the TIO with respect to
the Officer which is to be determined by the financial
performance of the Company as established by the Compensation
Committee of the Board of Directors of the Bank pursuant to
the Bank's Annual Incentive Plan for Select Executives for the
year in which the employment of the Officer by the Bank
terminates or, (ii) if no target incentive opportunity has
been established with respect to the Officer by the
Compensation Committee of the Board of Directors of the Bank
for the year in which the employment of the Officer by the
Bank terminates, then a percentage equal to 100% minus the IP;
"AP" is the highest award percentage available to the Officer
with respect to the financial performance of the Company as
established by the Compensation Committee of the Board of
Directors of the Bank pursuant to the Bank's Annual Incentive
Plan for Select Executives for the year in which the
employment of the Officer by the Bank terminates or, (ii) if
no target incentive opportunity has been established with
respect to the Officer by the Compensation Committee of the
Board of Directors of the Bank for the year in which the
employment of the Officer by the Bank terminates, then the
highest award percentage available to the Officer with respect
to the financial performance of the Company established by the
Compensation Committee of the Board of Directors of the Bank
for the Officer pursuant to the Annual Incentive Plan for
Select Executives during the period of three (3) years ending
immediately prior to the date of termination;
Page - 10 -
<PAGE> 11
"NY" is the Assurance Period expressed as a number of years
(rounded, if such period is not a whole number, to the next
highest whole number).
The Bonus Severance Payment shall be made within thirty (30)
days after the Officer's termination of employment and shall
be in lieu of any claim to a continuation of participation in
annual bonus plans of the Bank which the Officer might
otherwise have.
The payments and benefits described in section 6(b) are referred to in
this Agreement as the "Additional Termination Entitlements". The payments
described in section 6(b)(ii) and (iii) shall be computed at the expense
of the Company by an attorney of the firm of Thacher Proffitt & Wood, Two
World Trade Center, New York, New York 10048 or, if such firm is
unavailable or unwilling to perform such calculation, by a firm of
independent certified public accountants selected by the Officer and
reasonably satisfactory to the Company (the "Computation Advisor"). The
determination of the Computation Advisor as to the amount of such payments
shall be final and binding in the absence of manifest error.
Section 7. Tax Indemnification.
(a) If the Officer's employment terminates under circumstances entitling
the Officer or, in the event of the Officer's death following such
termination but before payment, his or her estate to the Additional
Termination Entitlements, the Company shall pay to the Officer or,
in the event of the Officer's death, his or her estate an additional
amount intended to indemnify the Officer against the financial
effects of the excise tax imposed on excess parachute payments under
section 28OG of the Code (the "Tax Indemnity Payment"). The Tax
Indemnity Payment shall be determined under the following formula:
E x P
TIP = ---------------------------------------
1 - (( FI x ( 1 - SLI )) + SLI + E + M )
where:
"TIP" is the Tax Indemnity Payment, before the deduction of
applicable federal, state and local withholding taxes;
"E" is the percentage rate at which an excise tax is assessed under
section 4999 of the Code;
"P" is the amount with respect to which such excise tax is assessed,
determined without regard to this section 16;
Page - 11 -
<PAGE> 12
"FI" is the highest marginal rate of income tax applicable to the
Officer under the Code for the taxable year in question;
"SLI" is the sum of the highest marginal rates of income tax
applicable to the Officer under all applicable state and local laws
for the taxable year in question; and
"M" is the highest marginal rate of Medicare tax applicable to the
Officer under the Code for the taxable year in question.
Such computation shall be made at the expense of the Company by the
Computation Advisor and shall be based on the following assumptions:
(i) that a change in ownership, a change in effective ownership or
control or a change in the ownership of a substantial portion
of the assets of the Bank or the Company has occurred within
the meaning of section 28OG of the Code (a "28OG Change of
Control");
(ii) that all direct or indirect payments made to or benefits
conferred upon the Officer on account of the Officer's
termination of employment are "parachute payments" within the
meaning of section 28OG of the Code; and
(iii) that no portion of such payments is reasonable compensation
for services rendered prior to the Officer's termination of
employment.
(b) With respect to any payment that is presumed to be a parachute
payment for purposes of section 28OG of the Code, the Tax Indemnity
Payment shall be made to the Officer on the earlier of the date the
Company, the Bank or any direct or indirect subsidiary or affiliate
of the Company or the Bank is required to withhold such tax or the
date the tax is required to be paid by the Officer, unless, prior to
such date, the Company delivers to the Officer the written opinion
(the "Opinion Letter"), in form and substance reasonably
satisfactory to the Officer, of the Computation Advisor or, if the
Computation Advisor is unable to provide such opinion, of an
attorney or firm of independent certified public accountants
selected by the Company and reasonably satisfactory to the Officer,
to the effect that the Officer has a reasonable basis on which to
conclude that:
(i) no 28OG Change in Control has occurred, or
(ii) all or part of the payment or benefit in question is not a
parachute payment for purposes of section 28OG of the Code, or
(iii) all or a part of such payment or benefit constitutes
reasonable compensation for services rendered prior to the
28OG Change of Control, or
Page - 12 -
<PAGE> 13
(iv) for some other reason which shall be set forth in detail in
such letter, no excise tax is due under section 4999 of the
Code with respect to such payment or benefit.
If the Company delivers an Opinion Letter, the Computation Advisor
shall re-compute, and the Company shall make, the Tax Indemnity
Payment in reliance on the information contained in the Opinion
Letter.
(c) In the event that the Officer'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 with respect to which the
Tax Indemnity Payment is made, the Officer 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 pursuant to
sections 7(a) or 7(b), when increased by the amount of the payment
made to the Officer pursuant to this section 7(c), or when reduced
by the amount of the payment made to the Company pursuant to this
section 7(c), equals the amount that should have properly been paid
to the Officer under section 7(a). The interest paid to the Company
under this section 7(c) shall be determined at the rate provided
under section 1274(b)(2)(B) of the Code. The payment made to the
Officer shall include such amount of interest as is necessary to
satisfy any interest assessment made by the Internal Revenue Service
and an additional amount equal to any monetary penalties assessed by
the Internal Revenue Service on account of an underpayment of the
excise tax. To confirm that the proper amount, if any, was paid to
the Officer under this section 7, the Officer shall furnish to the
Company a copy of each tax return which reflects a liability for an
excise tax, at least 20 days before the date on which such return is
required to be filed with the Internal Revenue Service. Nothing in
this Agreement shall give the Company any right to control or
otherwise participate in any action, suit or proceeding to which the
Officer is a party as a result of positions taken on the Officer's
federal income tax return with respect to the Officer's liability
for excise taxes under section 4999 of the Code.
Section 8. Indemnification upon and following a Change of Control.
(a) From and after the effective date of a Change of Control through the
sixth anniversary of such effective date, the Bank and the Company
agree to indemnify and hold harmless the Officer, against any costs
or expenses (including reasonable attorneys' fees), judgments,
fines, losses, claims, damages or liabilities (collectively,
"Costs") incurred in connection with any claim, action, suit,
proceeding or investigation, whether civil, criminal, administrative
or investigative, arising out of matters existing or occurring at or
prior to the time the Change of Control became effective whether
asserted or claimed prior to, at or after the effective date of the
Change of Control, and to advance any such Costs to the Officer as
they are from
Page - 13 -
<PAGE> 14
time to time incurred, in each case to the fullest extent the
Officer would have been indemnified as a director or officer of the
Bank or the Company, as applicable, and as then permitted under
applicable law.
(b) The Officer, seeking to claim indemnification under section 8(a) of
this Agreement and upon learning of any such claim, action, suit,
proceeding or investigation, shall promptly notify the Bank thereof,
but the failure to so notify shall not relieve the Bank or the
Company of any liability it may have pursuant to this Agreement to
the Officer if such failure does not materially and substantially
prejudice the Bank or the Company. In the event of any such claim,
action, suit, proceeding or investigation,
(i) the Bank and the Company shall have the right to assume the
defense thereof with counsel reasonably acceptable to the
Officer, and the Bank and the Company shall not be liable to
the Officer for any legal expenses of other counsel
subsequently incurred by the Officer in connection with the
defense thereof, except that if the Bank and the Company do
not elect to assume such defense within a reasonable time or
counsel for the Officer at any time advises that there are
issues which raise conflicts of interest between the Bank or
the Company and the Officer (and counsel for the Bank or the
Company does not disagree), the Officer may retain counsel
satisfactory to the Officer, and the Bank and the Company
shall remain responsible for the reasonable fees and expenses
of such counsel as set forth above, to be paid promptly as
statements therefor are received; provided, however, that the
Bank and the Company shall be obligated pursuant to this
paragraph (b)(i) to pay for only one firm of counsel for all
indemnified parties in any one jurisdiction with respect to
any given claim, action, suit, proceeding or investigation
unless the use of one counsel for such indemnified parties,
including the Officer, would present such counsel with a
conflict of interest;
(ii) the Officer will reasonably cooperate in the defense of any
such matter; and
(iii) the Bank and the Company shall not be liable for any
settlement effected by the Officer without their prior written
consent, which shall not be unreasonably withheld.
Section 9. Resignation.
(a) The Officer may resign from the Officer's employment with the Bank
at any time. A resignation under this section 9 shall be effected by
notice of resignation given by the Officer to the Bank and shall
take effect on the later of the effective date of termination
specified in such notice or the date on which the notice of
termination is deemed given by the Officer. For purposes of this
Agreement, retirement of the Officer from the employment of the Bank
or the Company under circumstances
Page - 14 -
<PAGE> 15
defined as "normal retirement" or "early retirement" pursuant to any
qualified defined benefit or qualified defined contribution pension
plan maintained by the Bank shall be deemed a resignation by the
Officer's of the Officer's employment with the Bank. A resignation
by the Officer as described in section 5(a)(ii) of this Agreement,
for purposes of this Agreement shall be deemed to be termination
with "Cause". The Officer's resignation of any of the positions
within the Bank or the Company to which he has been assigned shall
be deemed a resignation from all such positions.
(b) The Officer's resignation shall be deemed to be for "Good Reason" if
the effective date of resignation occurs during the Term, but on or
after the effective date of a Pending Change of Control or Change of
Control, and is on account of:
(i) the failure of the Bank (whether by act or omission of the
Board of Directors, or otherwise) to appoint, re-appoint,
elect or re-elect the Officer to the office and position with
the Bank that he held immediately prior to the Change of
Control or Pending Change of Control (the "Assigned Office")
or to a more senior office and position;
(ii) if the Officer is or becomes a member of the Board of
Directors of the Bank, the failure of the shareholders of the
Bank (whether in an election in which the Officer stands as a
nominee or in an election where the Officer is not a nominee),
to elect or re-elect the Officer to such directorship at the
expiration of the Officer's term as a director, unless such
failure is a result of the Officer's refusal to stand for
election;
(iii) a material failure by the Bank, whether by amendment of the
charter or organization, by-laws, action of the Board of
Directors of the Bank or otherwise, to vest in the Officer the
functions, duties, or responsibilities customarily associated
with the Assigned Office; provided that the Officer shall have
given notice of such failure to the Bank, and the Bank has not
fully cured such failure within thirty (30) days after such
notice is deemed given;
(iv) any reduction of the Officer's rate of base salary in effect
from time to time, whether or not material, or any failure,
other than due to reasonable administrative error that is
fully cured within 5 days after notice of such administrative
error is deemed given, to pay any portion of the Officer's
compensation as and when due;
(v) any change in the terms and conditions of any compensation or
benefit program in which the Officer participates which,
either individually or together with other changes, has a
material adverse effect on the aggregate value of the
Officer's total compensation package; provided that the
Officer shall have given notice of such material adverse
effect to the Bank, and the
Page - 15 -
<PAGE> 16
Bank has not fully cured such failure within thirty (30) days
after such notice is deemed given;
(vi) any material breach by the Company or the Bank of any material
term, condition or covenant contained in this Agreement;
provided that the Officer shall have given notice to the
Company and the Bank of such material adverse effect, and the
Company or the Bank have not fully cured such failure within
thirty (30) days after such notice is deemed given; or
(vii) a change in the Officer's principal place of employment to a
location that is outside of Nassau County or Queens County,
New York.
In all other cases, a resignation by the Officer shall be deemed to
be without Good Reason. In the event of resignation, the Officer
shall state in the Officer's notice of resignation whether the
Officer considers his or her resignation to be a resignation with
Good Reason, and if he does, he shall state in such notice the
grounds which constitute Good Reason. The Officer's determination of
the existence of Good Reason shall be conclusive in the absence of
fraud, bad faith or manifest error.
(c) In the event of the Officer's resignation for any reason, the Bank
shall pay and deliver the Standard Termination Entitlements. In the
event of the Officer's resignation with Good Reason and such
resignation is effective within six (6) months of the effective date
of the Change of Control (the "Resignation Window Period"), the Bank
shall also pay and deliver the Additional Termination Entitlements.
In the event the Officer's resignation with Good Reason is based
upon section 9(b)(iii),(iv),(v) or (vi) and the notice required by
such provision has been given within six months of the effective
date of the Change of Control but the applicable cure period will
not expire until on or after the date which is six months following
the effective date of the Change of Control, the Resignation Window
Period shall be extended so as expire 30 days following the
expiration of the applicable cure period.
Section 10. Terms and Conditions of the Additional Termination
Entitlements.
The Bank and the Officer hereby stipulate that the damages which may be
incurred by the Officer following any termination of employment are not capable
of accurate measurement as of the date first above written and that the
Additional Termination Entitlements constitute reasonable damages under the
circumstances and shall be payable without any requirement of proof of actual
damage and without regard to the Officer's efforts, if any, to mitigate damages.
The Bank and the Officer further agree that the Bank may condition the payment
and delivery of the Additional Termination Entitlements on the receipt of:
(a) the Officer's resignation from any and all positions which he holds
as an officer, director or committee member with respect to the Bank
or any subsidiary or affiliate
Page - 16 -
<PAGE> 17
of the Bank; and
(b) a release of the Bank and the Company and their officers, directors,
shareholders, subsidiaries and affiliates, in form and substance
satisfactory to the Bank, of any liability to the Officer, whether
for compensation or damages, in connection with the Officer's
employment with the Bank and the termination of such employment,
except for the Standard Termination Entitlements, the Additional
Termination Entitlements, the Tax Indemnity Payment and
indemnification payments due the Officer pursuant to section 8 or
section 16 of this Agreement.
To the extent the Bank conditions the payment and delivery of the Additional
Termination Entitlements or any other amount due under this Agreement upon the
receipt of the release provided in section 10(b) of this Agreement and such
release by law may not be effective until the expiration of a required prior
notice and/or a recission period following its execution by the Officer, then
any payment required to be made pursuant to this Agreement may be deferred until
the expiration of the period which is the sum of the period within which such
payment was required to be made under the terms of this Agreement but for this
section 10 and the period of any required prior notice and recission periods,
provided, however, that the Bank shall pay to the Officer for each day of such
deferral interest in addition to any other amounts due and owing under this
Agreement at the rate of the federal short term rate established under section
1274 of the Code for the month in which the Officer's termination of employment
occurs calculated on the basis of a 360 day year for the actual number of days
of such deferral on the amount so deferred.
Section 11. Confidentiality.
Unless the Officer obtains the prior written consent of the Bank or the
Company, the Officer shall keep confidential and shall refrain from using for
the benefit of himself or herself, 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 the Officer's
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 the Officer) until the same ceases to be material
(or becomes so ascertainable or available); provided, however, that nothing in
this section 11 shall prevent the Officer, 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
proceeding to the extent that such participation or disclosure is required under
applicable law.
Section 12. No Effect on Employee Benefit Plans or Programs.
Except to the extent specifically provided herein, the termination of the
Officer's employment during the Assurance Period or thereafter, whether by the
Bank or by the Officer, shall have no effect on the rights and obligations of
the parties hereto under the Bank's qualified or non-qualified
Page - 17 -
<PAGE> 18
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 Bank from time to time; provided, however, that
nothing in this Agreement shall be deemed to duplicate any compensation or
benefits provided under any severance agreement, plan or program covering the
Officer to which the Bank or Company is a party and any duplicative amount
payable under any such agreement, plan or program shall be applied as an offset
to reduce the amounts otherwise payable hereunder. The Additional Termination
Entitlements provided hereunder, when due and payable or provided to the
Officer, or in the case of the Officer's death, to his or her estate, surviving
dependants or designated beneficiaries, as applicable, are acknowledged to be in
lieu of any benefits that would otherwise be provided under such circumstances
pursuant to the Bank's Severance Pay Plan, as amended, or Severance Compensation
Plan, as amended.
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<PAGE> 19
Section 13. Successors and Assigns.
This Agreement will inure to the benefit of and be binding upon the
Officer, the Officer's legal representatives and testate or intestate
distributees, and the Company and the Bank and their respective 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 or the Bank may be
sold or otherwise transferred. Failure of the Company to obtain from any
successor its express written assumption of the Company's or Bank's obligations
hereunder at least 60 days in advance of the scheduled effective date of any
such succession shall, if such succession constitutes a Change of Control,
constitute Good Reason for the Officer's resignation on or at any time during
the Term following the occurrence of such succession.
Section 14. No Attachment.
Except as required by law, no right to receive payments under this
Agreement shall be subject to anticipation, commutation, alienation, sale,
assignment, encumbrance, charge, pledge, or hypothecation, or to execution,
attachment, levy, or similar process or assignment by operation of law, and any
attempt, voluntary or involuntary, to affect any such action shall be null,
void, and of no effect.
Section 15. 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 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 Officer:
Frank E. Fusco
6 Corsa Street
Dix Hills, New York 11746
If to the Company or the Bank:
Astoria Financial Corporation
One Astoria Federal Plaza
Lake Success, New York 11042
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<PAGE> 20
Attention: Chairman, President and Chief Executive Officer
with a copy to:
Thacher Proffitt & Wood
Two World Trade Center
New York, New York 10048
Attention: W. Edward Bright, Esq.
Section 16. Indemnification for Attorneys' Fees.
(a) The Bank shall indemnify, hold harmless and defend the Officer
against reasonable costs, including 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 the Officer's efforts, in
good faith, to defend or enforce the terms of this Agreement;
provided, however, that the Officer 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 Bank's obligations under this
Agreement shall be conclusive evidence of the Officer's entitlement
to indemnification under this Agreement, and any such
indemnification payments shall be in addition to amounts payable
pursuant to such settlement agreement, unless such settlement
agreement expressly provides otherwise.
(b) The Bank's or the Company's obligation to make the payments provided
for in this Agreement and otherwise to perform their respective
obligations under this Agreement shall not be affected by any
set-off, counterclaim, recoupment, defense or other claim, right or
action which the Bank or the Company may have against the Officer or
others. In no event shall the Officer be obligated to seek other
employment or take any other action by way of mitigation of the
amounts payable to the Officer under any of the provisions of this
Agreement and such amounts shall not be reduced whether or not the
Officer obtains other employment. Unless it is determined that the
Officer has acted frivolously or in bad faith, the Bank shall pay as
incurred, to the full extent permitted by law, all legal fees and
expenses which the Officer may reasonably incur as a result of or in
connection with the Officer's consultation with legal counsel or
arising out of any action, suit, proceeding, tax controversy, appeal
or contest (regardless of the outcome thereof) by the Bank, the
Company, the Officer or others regarding the validity or
enforceability of, or liability under, any provision of this
Agreement or any guarantee of performance thereof (including as a
result of any contest by the Officer about the amount of any payment
pursuant to this Agreement), plus in each case interest on any
delayed payment at the applicable
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<PAGE> 21
Federal rate provided for in section 7872(f)(2)(A) of the Code.
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<PAGE> 22
Section 17. Employment Rights and Funding Obligations.
(a) Nothing expressed or implied in this Agreement shall create any
right or duty on the part of the Bank, the Company or the Officer to
have the Officer continue as an officer of the Bank or the Company
or to remain in the employment of the Bank, the Company.
(b) Nothing expressed or implied in this Agreement shall create any
right or duty on the part of the Bank, the Company or the Officer to
create a trust of any kind to fund any benefits which may be payable
pursuant to this Agreement, and to the extent that the Officer
acquires a right to receive benefits from the Bank or the Company
pursuant to this Agreement, such right shall be no greater than the
right of any unsecured general creditor of the Bank or the Company,
respectively.
Section 18. Withholding.
The Bank or the Company, as applicable, shall have the right to deduct and
withhold from any amounts paid in cash pursuant to this Agreement by the Bank or
the Company, respectively, any taxes or other amounts required by law to be
withheld with respect to such payment.
Section 19. 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 20. Survival.
The rights and obligations of the Bank, the Company and the Officer under
this Agreement, unless otherwise expressly provided in this Agreement, shall
survive the expiration of the term or other termination of this Agreement.
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.
Page - 22 -
<PAGE> 23
This Agreement may be executed in two 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.
Except to the extent preempted by federal 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.
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. No modifications of this Agreement shall be valid unless made in writing
and signed by the parties hereto.
Section 26. Required Regulatory Provisions.
The following provisions are included for the purposes of complying with
various laws, rules and regulations applicable to the Bank:
(a) Notwithstanding anything herein contained to the contrary, in no
event shall the aggregate amount of compensation payable to the
Officer on account of the Officer's termination of employment exceed
three times the Officer's average annual total compensation for the
last five consecutive calendar years to end prior to the Officer's
termination of employment with the Bank (or for the Officer's entire
period of employment with the Bank if less than five calendar
years).
(b) Notwithstanding anything herein contained to the contrary, any
payments to the Officer by the Bank, 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
("FDI Act"), 12 U.S.C. Section 1828(k), and any regulations
promulgated thereunder.
(c) Notwithstanding anything herein contained to the contrary, if the
Officer is suspended from office and/or temporarily prohibited from
participating in the conduct of the affairs of the Bank pursuant to
a notice served under section 8(e)(3)
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<PAGE> 24
or 8(g)(1) of the FDI Act, 12 U.S.C. Section 1818(e)(3) or
1818(g)(1), the Bank's obligations under this Agreement shall be
suspended as of the date of service of such notice, unless stayed by
appropriate proceedings. If the charges in such notice are
dismissed, the Bank, in its discretion, may (i) pay to the Officer
all or part of the compensation withheld while the Bank's
obligations hereunder were suspended and (ii) reinstate, in whole or
in part, any of the obligations which were suspended.
(d) Notwithstanding anything herein contained to the contrary, if the
Officer is removed and/or permanently prohibited from participating
in the conduct of the Bank's affairs by an order issued under
section 8(e)(4) or 8(g)(1) of the FDI Act, 12 U.S.C. Section
1818(e)(4) or (g)(1), all prospective obligations of the Bank under
this Agreement shall terminate as of the effective date of the
order, but vested rights and obligations of the Bank and the Officer
shall not be affected.
(e) Notwithstanding anything herein contained to the contrary, if the
Bank is in default (within the meaning of section 3(x)(1) of the FDI
Act, 12 U.S.C. Section 1813(x)(1), all prospective obligations of
the Bank under this Agreement shall terminate as of the date of
default, but vested rights and obligations of the Bank and the
Officer shall not be affected.
(f) Notwithstanding anything herein contained to the contrary, all
prospective obligations of the Bank hereunder shall be terminated,
except to the extent that a continuation of this Agreement is
necessary for the continued operation of the Bank: (i) by the
Director of the Office of Thrift Supervision ("OTS") or his designee
or the Federal Deposit Insurance Corporation ("FDIC"), at the time
the FDIC enters into an agreement to provide assistance to or on
behalf of the Bank under the authority contained in section 13(c) of
the FDI Act, 12 U.S.C.Section 1823(c); (ii) by the Director of the
OTS or his designee at the time such Director or designee approves a
supervisory merger to resolve problems related to the operation of
the Bank or when the Bank is determined by such Director to be in an
unsafe or unsound condition. The vested rights and obligations of
the parties shall not be affected.
If and to the extent that any of the foregoing provisions shall cease to be
required or by applicable law, rule or regulation, the same shall become
inoperative as though eliminated by formal amendment of this Agreement. None of
the foregoing provisions, other than section 26(b) shall limit any obligations
of the Company under this Agreement.
Section 27. Guaranty.
The Company hereby irrevocably and unconditionally guarantees to the
Officer the payment of all amounts, and the performance of all other
obligations, due from the Bank in accordance with the terms of this Agreement as
and when due without any requirement of presentment, demand of payment, protest
or notice of dishonor or nonpayment. Solely for purposes of determining the
extent
Page - 24 -
<PAGE> 25
of the Company's guarantee, the obligations of the Bank under this Agreement
shall be determined as though section 26(a), (c), (d), (e) and (f) did not apply
to the Bank.
IN WITNESS WHEREOF, the Bank and the Company have caused this Agreement to
be executed and the Officer has hereunto set the Officer's hand, all as of the
day and year first above written.
/S/ Frank E. Fusco
-------------------------------------
FRANK E. FUSCO
Attest:
By: /S/ William K. Sheerin ASTORIA FEDERAL SAVINGS AND LOAN
--------------------------------- ASSOCIATION
Name: William K. Sheerin
Title: Executive Vice President and
Secretary
By: /S/ George L. Engelke, Jr.
Attest: --------------------------------
Name: George L. Engelke, Jr.
Title: Chairman, President and
Chief Executive Officer
By: /S/ William K. Sheerin
--------------------------------- ASTORIA FINANCIAL CORPORATION
Name: William K. Sheerin
Title: Executive Vice President and
Secretary
By: /S/ George L. Engelke, Jr.
--------------------------------
Name: George L. Engelke, Jr.
Title: Chairman, President and
Chief Executive Officer
Page - 25 -
<PAGE> 1
EXHIBIT 10.36
CHANGE OF CONTROL SEVERANCE AGREEMENT
This CHANGE OF CONTROL SEVERANCE AGREEMENT (the "Agreement") is made and
entered into as of January 1, 2000 by and among ASTORIA FEDERAL SAVINGS AND LOAN
ASSOCIATION, a savings and loan association organized and existing under the
laws of the United States of America and having an office at One Astoria Federal
Plaza, Lake Success, New York 11042 (the "Bank"), ASTORIA FINANCIAL CORPORATION,
a business corporation organized and existing under the laws of the State of
Delaware and having an office at One Astoria Federal Plaza, Lake Success, New
York 11042 (the "Company") and Gary T. McCann, an individual residing at 17
Shoreham Road, Massapequa, New York 11758 (the "Officer").
INTRODUCTORY STATEMENT
WHEREAS, the Boards of Directors of the Bank and the Company have
approved the Bank and the Company entering into Change of Control Severance
Agreements with certain key officers of the Bank,
WHEREAS, the Officer is a key officer of the Bank;
WHEREAS, should the possibility of a Pending Change of Control or Change
of Control of the Bank or the Company arise, the Boards of Directors of the Bank
and the Company believe it is imperative that the Bank, the Company and the
Boards of Directors of the Bank and the Company should be able to rely upon the
Officer to continue in his or her position, and that the Bank and the Company
should be able to receive and rely upon the Officer's advice, if requested, as
to the best interests of the Bank and the Company and their respective
shareholders without concern that the Officer might be distracted by the
personal uncertainties and risks created by the possibility of a Pending Change
of Control or Change of Control;
WHEREAS, should the possibility of a Pending Change of Control or Change
of Control arise, in addition to his or her regular duties, the Officer may be
called upon to assist in the assessment of such possible Pending Change of
Control or Change of Control, advise management and the Board as to whether such
Pending Change of Control or Change of Control would be in the best interests of
the Bank, the Company and their respective shareholders, and to take such other
actions as the Boards of Directors of the Bank and the Company might determine
to be appropriate; and
NOW, THEREFORE, to assure the Bank and the Company that they will have the
continued dedication of the Officer and the availability of his or her advice
and counsel notwithstanding the possibility, threat, or occurrence of a Pending
Change of Control or Change of Control of the Bank or the Company, and to induce
the Officer to remain in the employ of the Bank, in consideration of the mutual
premises and agreements set forth herein and for other good and valuable
consideration, the Bank, the Company and the Officer agree as follows:
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<PAGE> 2
AGREEMENT
Section 1. Effective Date; Term; Pending Change of Control and Change of
Control Defined.
(a) This Agreement shall take effect on January 1, 2000 (the "Effective
Date") and shall remain in effect during the period (the "Term")
beginning on the Effective Date and ending on the earlier of :
(i) the date, prior to the occurrence of a Pending Change of
Control or a Change of Control, as defined below,
respectively, on which the Officer's employment by the Bank
terminates whether by discharge, resignation, death,
disability or retirement, or
(ii) the later of:
(A) the first anniversary of the date on which the Bank
notifies the Executive of its intent to discontinue the
Agreement (the "Initial Expiration Date") or,
(B) the second anniversary of the latest Change of Control,
as defined below, that occurs after the Effective Date
and before the Initial Expiration Date, or
(b) For purposes of this Agreement, a "Change of Control" shall be
deemed to have occurred upon the happening of any of the following
events:
(i) the consummation of a 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 Securities Exchange Act of 1934, as amended
("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
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<PAGE> 3
(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;
(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;
(iii) a complete liquidation or dissolution of the Company;
(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 Directors
of the Company on the Effective Date of this Agreement;
or
(B) individuals who first became members of the Board of
Directors of the Company after the Effective Date of
this Agreement either:
(1) 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
(2) upon election by the shareholders of the Board of
Directors of the Company to serve as a member of
such Board, 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
3
<PAGE> 4
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 Directors of the
Company; or
(v) any event which would be described in section 1(b)(i), (ii),
(iii) or (iv) if the term "Bank" 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 Bank, or a subsidiary of either of them, by the
Company, the Bank, or any subsidiary of either of them, or by any
employee benefit plan maintained by any of them. For purposes of
this section 1(b), the term "person" shall have the meaning assigned
to it under sections 13(d)(3) or 14(d)(2) of the Exchange Act.
(c) For purposes of this Agreement, a "Pending Change of Control" shall
mean:
(i) the approval by the shareholders of the Bank or the Company of
a definitive agreement for a transaction which, if
consummated, would result in a Change of Control; or
(ii) the approval by the shareholders of the Bank or the Company of
a transaction which, if consummated, would result in a Change
of Control.
Section 2. Discharge Prior to a Pending Change of Control.
The Bank may discharge the Officer at any time prior to the occurrence of
a Pending Change of Control or, if no Pending Change of Control has occurred, a
Change of Control, for any reason or for no reason. In such event:
(a) The Bank shall pay to the Officer or the Officer's estate his or her
earned but unpaid compensation, including, without limitation,
salary and all other items which constitute wages under applicable
law, as of the date of the Officer's termination of employment. This
payment shall be made at the time and in the manner prescribed by
law applicable to the payment of wages but in no event later than 30
days after the date of the Officer's termination of employment.
(b) The Bank shall provide the benefits due, if any, to the Officer or
the Officer's estate, surviving dependents or designated
beneficiaries, as applicable, under the employee benefit plans and
programs and compensation plans and programs maintained for the
benefit of the officers and employees of the Bank. The time and
manner of payment or other delivery of these benefits and the
recipients of such benefits shall be determined according to the
terms and conditions of the applicable plans and programs.
4
<PAGE> 5
The payments and benefits described in sections 2(a) and (b) shall be referred
to in this Agreement as the "Standard Termination Entitlements."
Section 3. Termination of Employment Due to Death.
The Officer's employment with the Bank shall terminate automatically, and
without any further action on the part of any party to this Agreement, on the
date of the Officer's death. In such event, the Bank shall pay and deliver to
the Officer's estate and surviving dependents and designated beneficiaries, as
applicable, the Standard Termination Entitlements.
Section 4. Termination Due to Disability after a Pending Change of
Control or a Change of Control.
The Bank may terminate the Officer's employment during the Term and after
the occurrence of a Pending Change of Control or a Change of Control upon a
determination by the Board of Directors of the Bank, by the affirmative vote of
75% of its entire membership, acting in reliance on the written advice of a
medical professional acceptable to it, that the Officer is suffering from a
physical or mental impairment which, at the date of the determination, has
prevented the Officer from performing the Officer's assigned duties on a
substantially full-time basis for a period of at least one hundred and eighty
(180) days during the period of one (1) year ending with the date of the
determination or is likely to result in death or prevent the Officer from
performing the Officer's assigned duties on a substantially full-time basis for
a period of at least one hundred and eighty (180) days during the period of one
(1) year beginning with the date of the determination. In such event:
(a) The Bank shall pay and deliver the Standard Termination Entitlements
to the Officer or, in the event of the Officer's death following
such termination but before payment, to the Officer's estate,
surviving dependents or designated beneficiaries, as applicable.
(b) In addition to the Standard Termination Entitlements, the Bank shall
continue to pay the Officer his or her base salary, at the annual
rate in effect for the Officer immediately prior to the termination
of the Officer's employment, during a period ending on the earliest
of: (i) the expiration of one hundred and eighty (180) days after
the date of termination of the Officer's employment; (ii) the date
on which long-term disability insurance benefits are first payable
to the Officer under any long-term disability insurance plan
covering employees of the Bank; or (iii) the date of the Officer's
death.
A termination of employment due to disability under this section 4 shall be
effected by a notice of termination given to the Officer by the Bank and shall
take effect on the later of the effective date of termination specified in such
notice or, if no such date is specified, the date on which the notice of
termination is deemed given to the Officer.
5
<PAGE> 6
Section 5. Discharge with Cause after a Pending Change of Control or
Change of Control.
(a) The Bank may terminate the Officer's employment with "Cause" during
the Term and after the occurrence of a Pending Change of Control or
a Change of Control, but a termination shall be deemed to have
occurred with "Cause" only if:
(i) (A) the Board of Directors of the Bank, by the affirmative
vote of 75% of its entire membership, determines that
the Officer is guilty of personal dishonesty,
incompetence, wilful misconduct, breach of fiduciary
duty involving personal profit, intentional failure to
perform stated duties, wilful violation of any law, rule
or regulation (other than traffic violations or similar
offenses) or final cease and desist order, or any
material breach of this Agreement, in each case measured
against standards generally prevailing at the relevant
time in the savings and community banking industry;
(B) prior to the vote contemplated by section 5(a)(i)(A),
the Board of Directors of the Bank shall provide the
Officer with notice of the Bank's intent to discharge
the Officer for Cause, detailing with particularity the
facts and circumstances which are alleged to constitute
Cause (the "Notice of Intent to Discharge"); and
(C) after the giving of the Notice of Intent to Discharge
and before the taking of the vote contemplated by
section 5(a)(i)(A), the Officer, together with the
Officer's legal counsel, if he so desires, are afforded
a reasonable opportunity to make both written and oral
presentations before the Board of Directors of the Bank
for the purpose of refuting the alleged grounds for
Cause for the Officer's discharge; and
(D) after the vote contemplated by section 5(a)(i)(A), the
Bank has furnished to the Officer a notice of
termination which shall specify the effective date of
the Officer's termination of employment (which shall in
no event be earlier than the date on which such notice
is deemed given) and include a copy of a resolution or
resolutions adopted by the Board of Directors of the
Bank, certified by its corporate secretary, authorizing
the termination of the Officer's employment with Cause
and stating with particularity the facts and
circumstances found to constitute Cause for the
Officer's discharge (the "Final Discharge Notice"); or
(ii) the Officer, during the 90 day period commencing on the
delivery to the Officer by the Bank of the Notice of Intent to
Discharge specified in section
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<PAGE> 7
5(a)(i)(B), resigns his or her employment with the Bank prior
to the delivery to the Officer by the Bank of the Final
Discharge Notice specified in section 5(a)(i)(D).
For purposes of this section 5, no act or failure to act, on the
part of the Officer, shall be considered "willful" unless it is
done, or omitted to be done, by the Officer in bad faith or without
reasonable belief that the Officer's action or omission was in the
best interests of the Bank or the Company, respectively. Any act or
failure to act based upon authority given pursuant to a resolution
duly adopted by the Board of Directors of the Bank or the Company or
based upon the written advice of counsel for the Bank or the Company
shall be conclusively presumed to be done or omitted to be done by
the Officer in good faith and in the best interests of the Bank or
the Company, respectively.
(b) If the Officer is discharged with Cause during the Term and after a
Pending Change of Control or a Change of Control, the Bank shall pay
and provide to him or, in the event of the Officer's death following
such discharge but prior to payment and providing, to the Officer's
estate, surviving dependents or designated beneficiaries, as
applicable, the Standard Termination Entitlements only.
(c) Following the giving of a Notice of Intent to Discharge, the Bank
may temporarily suspend the Officer's duties and authority and, in
such event, may also suspend the payment of salary and other cash
compensation, but not the Officer's participation in retirement,
insurance and other employee benefit plans. If the Officer is not
discharged or is discharged without Cause within forty-five (45)
days after the giving of a Notice of Intent to Discharge, payments
of salary and cash compensation shall resume, and all payments
withheld during the period of suspension shall be promptly restored.
If the Officer is discharged with Cause not later than forty-five
(45) days after the giving of the Notice of Intent to Discharge, all
payments withheld during the period of suspension shall be deemed
forfeited and shall not be included in the Standard Termination
Entitlements. If a Final Discharge Notice is given later than
forty-five (45) days, but sooner than ninety (90) days, after the
giving of the Notice of Intent to Discharge, all payments made to
the Officer during the period beginning with the giving of the
Notice of Intent to Discharge and ending with the Officer's
discharge with Cause shall be retained by the Officer and shall not
be applied to offset the Standard Termination Entitlements. If the
Bank does not give a Final Discharge Notice to the Officer within
ninety (90) days after giving a Notice of Intent to Discharge, the
Notice of Intent to Discharge shall be deemed withdrawn and any
future action to discharge the Officer with Cause shall require the
giving of a new Notice of Intent to Discharge. If the Officer
resigns pursuant to Section 5(a)(ii), the Officer shall forfeit his
or her right to suspended amounts that have not been restored as of
the date of the Officer's resignation or notice of resignation,
whichever is earlier.
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<PAGE> 8
Section 6. Discharge Without Cause after a Pending Change of Control or
Change of Control.
The Bank may discharge the Officer without Cause at any time after the
occurrence of a Pending Change of Control or a Change of Control, and in such
event:
(a) The Bank shall pay and deliver the Standard Termination Entitlements
to the Officer or, in the event of the Officer's death following the
Officer's discharge but before payment, to the Officer's estate,
surviving dependents or designated beneficiaries, as applicable.
(b) In addition to the Standard Termination Entitlements:
(i) the Bank shall provide for a period of two years following the
date of the Officer's discharge (the "Assurance Period") for
the benefit of the Officer and the Officer's spouse and
dependents continued group life, health (including
hospitalization, medical and major medical), dental, accident
and long-term disability insurance benefits on substantially
the same terms and conditions (including any co-payments and
deductibles, but excluding any premium sharing arrangements,
it being the intention of the parties to this Agreement that
the premiums for such insurance benefits shall be the sole
cost and expense of the Bank) in effect for them immediately
prior to the Officer's discharge. The coverage provided under
this section 6(b)(i) may, at the election of the Bank, be
secondary to the coverage provided as part of the Standard
Termination Entitlements and to any employer-paid coverage
provided by a subsequent employer or through Medicare, with
the result that benefits under the other coverages will offset
the coverage required by this section 6(b)(i), provided,
however, that for purposes of this section 6(b)(i) benefits
provided at the cost of the Officer or the Officer's spouse or
dependants pursuant to the Comprehensive Omnibus Budget
Reconciliation Act, as amended, shall not be considered
Standard Termination Entitlements.
(ii) The Bank shall make a lump sum payment to the Officer or, in
the event of the Officer's death following the Officer's
discharge but before payment, to the Officer's estate in an
amount equal to the salary that the Officer would have earned
if he had continued working for the Bank during the Assurance
Period at the highest annual rate of salary achieved during
the period of three (3) years ending immediately prior to the
date of termination (the "Salary Severance Payment"). The
Salary Severance Payment shall be computed using the following
formula:
SSP = BS x NY
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where:
"SSP" is the amount of the Salary Severance Payment, before
the deduction of applicable federal, state and local
withholding taxes;
"BS" is the highest annual rate of salary achieved by the
Officer during the period of three (3) years ending
immediately prior to the date of termination; and
"NY" is the Assurance Period expressed as a number of years
(rounded, if such period is not a whole number, to the next
highest whole number).
The Salary Severance Payment shall be made within thirty (30)
days after the Officer's termination of employment and shall
be in lieu of any claim to a continuation of base salary which
the Officer might otherwise have and in lieu of cash severance
benefits under any severance benefits program which may be in
effect for officers or employees of the Bank.
(iii) The Bank shall make a lump sum payment to the Officer or, in
the event of the Officer's death following the Officer's
discharge but before payment, to the Officer's estate in an
amount equal to the potential annual bonuses that the Officer
would have earned if the Officer had continued working for the
Bank during the Assurance Period at the highest annual rate of
salary achieved during the period of three (3) years ending
immediately prior to the date of termination (the "Bonus
Severance Payment"). The Bonus Severance Payment shall be
computed using the following formula:
BSP = ((BS x TIO x IP) + ( BS x TIO x FP x AP)) x NY
where:
"BSP" is the amount of the Bonus Severance Payment, before the
deduction of applicable federal, state and local withholding
taxes;
"BS" is the highest annual rate of salary achieved by the
Officer during the period of three (3) years ending
immediately prior to the date of termination;
"TIO" is the target incentive opportunity for the Officer
expressed as a percentage as established by the Compensation
Committee of the Board of Directors of the Bank pursuant to
the Bank's Annual Incentive Plan for Select Executives for the
year in which the employment of the Officer by the Bank
terminates or, if no target incentive opportunity is
established by the Compensation Committee of the Board of
Directors of the Bank for such year
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with respect to the Officer, then the highest target incentive
opportunity established by the Compensation Committee of the
Board of Directors of the Bank for the Officer pursuant to the
Annual Incentive Plan for Select Executives during the period
of three (3) years ending immediately prior to the date of
termination;
"IP" is either (i) the percentage of the TIO which is to be
determined by the individual performance of the Officer as
established by the Compensation Committee of the Board of
Directors of the Bank pursuant to the Bank's Annual Incentive
Plan for Select Executives for the year in which the
employment of the Officer by the Bank terminates or, (ii) if
no target incentive opportunity has been established with
respect to the Officer by the Compensation Committee of the
Board of Directors of the Bank for the year in which the
employment of the Officer by the Bank terminates, then the
lowest percentage of the target incentive opportunity to be
determined by the individual performance of the Officer
established by the Compensation Committee of the Board of
Directors of the Bank for the Officer pursuant to the Annual
Incentive Plan for Select Executives during the period of
three (3) years ending immediately prior to the date of
termination;
"FP" is either (i) the percentage of the TIO with respect to
the Officer which is to be determined by the financial
performance of the Company as established by the Compensation
Committee of the Board of Directors of the Bank pursuant to
the Bank's Annual Incentive Plan for Select Executives for the
year in which the employment of the Officer by the Bank
terminates or, (ii) if no target incentive opportunity has
been established with respect to the Officer by the
Compensation Committee of the Board of Directors of the Bank
for the year in which the employment of the Officer by the
Bank terminates, then a percentage equal to 100% minus the IP;
"AP" is the highest award percentage available to the Officer
with respect to the financial performance of the Company as
established by the Compensation Committee of the Board of
Directors of the Bank pursuant to the Bank's Annual Incentive
Plan for Select Executives for the year in which the
employment of the Officer by the Bank terminates or, (ii) if
no target incentive opportunity has been established with
respect to the Officer by the Compensation Committee of the
Board of Directors of the Bank for the year in which the
employment of the Officer by the Bank terminates, then the
highest award percentage available to the Officer with respect
to the financial performance of the Company established by the
Compensation Committee of the Board of Directors of the Bank
for the Officer pursuant to the Annual Incentive Plan for
Select Executives during the period of three (3) years ending
immediately prior to the date of termination;
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"NY" is the Assurance Period expressed as a number of years
(rounded, if such period is not a whole number, to the next
highest whole number).
The Bonus Severance Payment shall be made within thirty (30)
days after the Officer's termination of employment and shall
be in lieu of any claim to a continuation of participation in
annual bonus plans of the Bank which the Officer might
otherwise have.
The payments and benefits described in section 6(b) are referred to in
this Agreement as the "Additional Termination Entitlements". The payments
described in section 6(b)(ii) and (iii) shall be computed at the expense
of the Company by an attorney of the firm of Thacher Proffitt & Wood, Two
World Trade Center, New York, New York 10048 or, if such firm is
unavailable or unwilling to perform such calculation, by a firm of
independent certified public accountants selected by the Officer and
reasonably satisfactory to the Company (the "Computation Advisor"). The
determination of the Computation Advisor as to the amount of such payments
shall be final and binding in the absence of manifest error.
Section 7. Tax Indemnification.
(a) If the Officer's employment terminates under circumstances entitling
the Officer or, in the event of the Officer's death following such
termination but before payment, his or her estate to the Additional
Termination Entitlements, the Company shall pay to the Officer or,
in the event of the Officer's death, his or her estate an additional
amount intended to indemnify the Officer against the financial
effects of the excise tax imposed on excess parachute payments under
section 28OG of the Code (the "Tax Indemnity Payment"). The Tax
Indemnity Payment shall be determined under the following formula:
E x P
TIP = ----------------------------------------
1 - (( FI x ( 1 - SLI )) + SLI + E + M )
where:
"TIP" is the Tax Indemnity Payment, before the deduction of
applicable federal, state and local withholding taxes;
"E" is the percentage rate at which an excise tax is assessed under
section 4999 of the Code;
"P" is the amount with respect to which such excise tax is assessed,
determined without regard to this section 16;
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"FI" is the highest marginal rate of income tax applicable to the
Officer under the Code for the taxable year in question;
"SLI" is the sum of the highest marginal rates of income tax
applicable to the Officer under all applicable state and local laws
for the taxable year in question; and
"M" is the highest marginal rate of Medicare tax applicable to the
Officer under the Code for the taxable year in question.
Such computation shall be made at the expense of the Company by the
Computation Advisor and shall be based on the following assumptions:
(i) that a change in ownership, a change in effective ownership or
control or a change in the ownership of a substantial portion
of the assets of the Bank or the Company has occurred within
the meaning of section 28OG of the Code (a "28OG Change of
Control");
(ii) that all direct or indirect payments made to or benefits
conferred upon the Officer on account of the Officer's
termination of employment are "parachute payments" within the
meaning of section 28OG of the Code; and
(iii) that no portion of such payments is reasonable compensation
for services rendered prior to the Officer's termination of
employment.
(b) With respect to any payment that is presumed to be a parachute
payment for purposes of section 28OG of the Code, the Tax Indemnity
Payment shall be made to the Officer on the earlier of the date the
Company, the Bank or any direct or indirect subsidiary or affiliate
of the Company or the Bank is required to withhold such tax or the
date the tax is required to be paid by the Officer, unless, prior to
such date, the Company delivers to the Officer the written opinion
(the "Opinion Letter"), in form and substance reasonably
satisfactory to the Officer, of the Computation Advisor or, if the
Computation Advisor is unable to provide such opinion, of an
attorney or firm of independent certified public accountants
selected by the Company and reasonably satisfactory to the Officer,
to the effect that the Officer has a reasonable basis on which to
conclude that:
(i) no 28OG Change in Control has occurred, or
(ii) all or part of the payment or benefit in question is not a
parachute payment for purposes of section 28OG of the Code, or
(iii) all or a part of such payment or benefit constitutes
reasonable compensation for services rendered prior to the
28OG Change of Control, or
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<PAGE> 13
(iv) for some other reason which shall be set forth in detail in
such letter, no excise tax is due under section 4999 of the
Code with respect to such payment or benefit.
If the Company delivers an Opinion Letter, the Computation Advisor
shall recompute, and the Company shall make, the Tax Indemnity
Payment in reliance on the information contained in the Opinion
Letter.
(c) In the event that the Officer'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 with respect to which the
Tax Indemnity Payment is made, the Officer 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 pursuant to
sections 7(a) or 7(b), when increased by the amount of the payment
made to the Officer pursuant to this section 7(c), or when reduced
by the amount of the payment made to the Company pursuant to this
section 7(c), equals the amount that should have properly been paid
to the Officer under section 7(a). The interest paid to the Company
under this section 7(c) shall be determined at the rate provided
under section 1274(b)(2)(B) of the Code. The payment made to the
Officer shall include such amount of interest as is necessary to
satisfy any interest assessment made by the Internal Revenue Service
and an additional amount equal to any monetary penalties assessed by
the Internal Revenue Service on account of an underpayment of the
excise tax. To confirm that the proper amount, if any, was paid to
the Officer under this section 7, the Officer shall furnish to the
Company a copy of each tax return which reflects a liability for an
excise tax, at least 20 days before the date on which such return is
required to be filed with the Internal Revenue Service. Nothing in
this Agreement shall give the Company any right to control or
otherwise participate in any action, suit or proceeding to which the
Officer is a party as a result of positions taken on the Officer's
federal income tax return with respect to the Officer's liability
for excise taxes under section 4999 of the Code.
Section 8. Indemnification upon and following a Change of Control.
(a) From and after the effective date of a Change of Control through the
sixth anniversary of such effective date, the Bank and the Company
agree to indemnify and hold harmless the Officer, against any costs
or expenses (including reasonable attorneys' fees), judgments,
fines, losses, claims, damages or liabilities (collectively,
"Costs") incurred in connection with any claim, action, suit,
proceeding or investigation, whether civil, criminal, administrative
or investigative, arising out of matters existing or occurring at or
prior to the time the Change of Control became effective whether
asserted or claimed prior to, at or after the effective date of the
Change of Control, and to advance any such Costs to the Officer as
they are from
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<PAGE> 14
time to time incurred, in each case to the fullest extent the
Officer would have been indemnified as a director or officer of the
Bank or the Company, as applicable, and as then permitted under
applicable law.
(b) The Officer, seeking to claim indemnification under section 8(a) of
this Agreement and upon learning of any such claim, action, suit,
proceeding or investigation, shall promptly notify the Bank thereof,
but the failure to so notify shall not relieve the Bank or the
Company of any liability it may have pursuant to this Agreement to
the Officer if such failure does not materially and substantially
prejudice the Bank or the Company. In the event of any such claim,
action, suit, proceeding or investigation,
(i) the Bank and the Company shall have the right to assume the
defense thereof with counsel reasonably acceptable to the
Officer, and the Bank and the Company shall not be liable to
the Officer for any legal expenses of other counsel
subsequently incurred by the Officer in connection with the
defense thereof, except that if the Bank and the Company do
not elect to assume such defense within a reasonable time or
counsel for the Officer at any time advises that there are
issues which raise conflicts of interest between the Bank or
the Company and the Officer (and counsel for the Bank or the
Company does not disagree), the Officer may retain counsel
satisfactory to the Officer, and the Bank and the Company
shall remain responsible for the reasonable fees and expenses
of such counsel as set forth above, to be paid promptly as
statements therefor are received; provided, however, that the
Bank and the Company shall be obligated pursuant to this
paragraph (b)(i) to pay for only one firm of counsel for all
indemnified parties in any one jurisdiction with respect to
any given claim, action, suit, proceeding or investigation
unless the use of one counsel for such indemnified parties,
including the Officer, would present such counsel with a
conflict of interest;
(ii) the Officer will reasonably cooperate in the defense of any
such matter; and
(iii) the Bank and the Company shall not be liable for any
settlement effected by the Officer without their prior written
consent, which shall not be unreasonably withheld.
Section 9. Resignation.
(a) The Officer may resign from the Officer's employment with the Bank
at any time. A resignation under this section 9 shall be effected by
notice of resignation given by the Officer to the Bank and shall
take effect on the later of the effective date of termination
specified in such notice or the date on which the notice of
termination is deemed given by the Officer. For purposes of this
Agreement, retirement of the Officer from the employment of the Bank
or the Company under circumstances
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<PAGE> 15
defined as "normal retirement" or "early retirement" pursuant to any
qualified defined benefit or qualified defined contribution pension
plan maintained by the Bank shall be deemed a resignation by the
Officer's of the Officer's employment with the Bank. A resignation
by the Officer as described in section 5(a)(ii) of this Agreement,
for purposes of this Agreement shall be deemed to be termination
with "Cause". The Officer's resignation of any of the positions
within the Bank or the Company to which he has been assigned shall
be deemed a resignation from all such positions.
(b) The Officer's resignation shall be deemed to be for "Good Reason" if
the effective date of resignation occurs during the Term, but on or
after the effective date of a Pending Change of Control or Change of
Control, and is on account of:
(i) the failure of the Bank (whether by act or omission of the
Board of Directors, or otherwise) to appoint, re-appoint,
elect or re-elect the Officer to the office and position with
the Bank that he held immediately prior to the Change of
Control or Pending Change of Control (the "Assigned Office")
or to a more senior office and position;
(ii) if the Officer is or becomes a member of the Board of
Directors of the Bank, the failure of the shareholders of the
Bank (whether in an election in which the Officer stands as a
nominee or in an election where the Officer is not a nominee),
to elect or re-elect the Officer to such directorship at the
expiration of the Officer's term as a director, unless such
failure is a result of the Officer's refusal to stand for
election;
(iii) a material failure by the Bank, whether by amendment of the
charter or organization, by-laws, action of the Board of
Directors of the Bank or otherwise, to vest in the Officer the
functions, duties, or responsibilities customarily associated
with the Assigned Office; provided that the Officer shall have
given notice of such failure to the Bank, and the Bank has not
fully cured such failure within thirty (30) days after such
notice is deemed given;
(iv) any reduction of the Officer's rate of base salary in effect
from time to time, whether or not material, or any failure,
other than due to reasonable administrative error that is
fully cured within 5 days after notice of such administrative
error is deemed given, to pay any portion of the Officer's
compensation as and when due;
(v) any change in the terms and conditions of any compensation or
benefit program in which the Officer participates which,
either individually or together with other changes, has a
material adverse effect on the aggregate value of the
Officer's total compensation package; provided that the
Officer shall have given notice of such material adverse
effect to the Bank, and the
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<PAGE> 16
Bank has not fully cured such failure within thirty (30) days
after such notice is deemed given;
(vi) any material breach by the Company or the Bank of any material
term, condition or covenant contained in this Agreement;
provided that the Officer shall have given notice to the
Company and the Bank of such material adverse effect, and the
Company or the Bank have not fully cured such failure within
thirty (30) days after such notice is deemed given; or
(vii) a change in the Officer's principal place of employment to a
location that is outside of Nassau County or Queens County,
New York.
In all other cases, a resignation by the Officer shall be deemed to
be without Good Reason. In the event of resignation, the Officer
shall state in the Officer's notice of resignation whether the
Officer considers his or her resignation to be a resignation with
Good Reason, and if he does, he shall state in such notice the
grounds which constitute Good Reason. The Officer's determination of
the existence of Good Reason shall be conclusive in the absence of
fraud, bad faith or manifest error.
(c) In the event of the Officer's resignation for any reason, the Bank
shall pay and deliver the Standard Termination Entitlements. In the
event of the Officer's resignation with Good Reason and such
resignation is effective within six (6) months of the effective date
of the Change of Control (the "Resignation Window Period"), the Bank
shall also pay and deliver the Additional Termination Entitlements.
In the event the Officer's resignation with Good Reason is based
upon section 9(b)(iii),(iv),(v) or (vi) and the notice required by
such provision has been given within six months of the effective
date of the Change of Control but the applicable cure period will
not expire until on or after the date which is six months following
the effective date of the Change of Control, the Resignation Window
Period shall be extended so as expire 30 days following the
expiration of the applicable cure period.
Section 10. Terms and Conditions of the Additional Termination
Entitlements.
The Bank and the Officer hereby stipulate that the damages which may be
incurred by the Officer following any termination of employment are not capable
of accurate measurement as of the date first above written and that the
Additional Termination Entitlements constitute reasonable damages under the
circumstances and shall be payable without any requirement of proof of actual
damage and without regard to the Officer's efforts, if any, to mitigate damages.
The Bank and the Officer further agree that the Bank may condition the payment
and delivery of the Additional Termination Entitlements on the receipt of:
(a) the Officer's resignation from any and all positions which he holds
as an officer, director or committee member with respect to the Bank
or any subsidiary or affiliate
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<PAGE> 17
of the Bank; and
(b) a release of the Bank and the Company and their officers, directors,
shareholders, subsidiaries and affiliates, in form and substance
satisfactory to the Bank, of any liability to the Officer, whether
for compensation or damages, in connection with the Officer's
employment with the Bank and the termination of such employment,
except for the Standard Termination Entitlements, the Additional
Termination Entitlements, the Tax Indemnity Payment and
indemnification payments due the Officer pursuant to section 8 or
section 16 of this Agreement.
To the extent the Bank conditions the payment and delivery of the Additional
Termination Entitlements or any other amount due under this Agreement upon the
receipt of the release provided in section 10(b) of this Agreement and such
release by law may not be effective until the expiration of a required prior
notice and/or a recission period following its execution by the Officer, then
any payment required to be made pursuant to this Agreement may be deferred until
the expiration of the period which is the sum of the period within which such
payment was required to be made under the terms of this Agreement but for this
section 10 and the period of any required prior notice and recission periods,
provided, however, that the Bank shall pay to the Officer for each day of such
deferral interest in addition to any other amounts due and owing under this
Agreement at the rate of the federal short term rate established under section
1274 of the Code for the month in which the Officer's termination of employment
occurs calculated on the basis of a 360 day year for the actual number of days
of such deferral on the amount so deferred.
Section 11. Confidentiality.
Unless the Officer obtains the prior written consent of the Bank or the
Company, the Officer shall keep confidential and shall refrain from using for
the benefit of himself or herself, 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 the Officer's
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 the Officer) until the same ceases to be material
(or becomes so ascertainable or available); provided, however, that nothing in
this section 11 shall prevent the Officer, 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
proceeding to the extent that such participation or disclosure is required under
applicable law.
Section 12. No Effect on Employee Benefit Plans or Programs.
Except to the extent specifically provided herein, the termination of the
Officer's employment during the Assurance Period or thereafter, whether by the
Bank or by the Officer, shall have no effect on the rights and obligations of
the parties hereto under the Bank's qualified or non-qualified
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<PAGE> 18
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 Bank from time to time; provided, however, that
nothing in this Agreement shall be deemed to duplicate any compensation or
benefits provided under any severance agreement, plan or program covering the
Officer to which the Bank or Company is a party and any duplicative amount
payable under any such agreement, plan or program shall be applied as an offset
to reduce the amounts otherwise payable hereunder. The Additional Termination
Entitlements provided hereunder, when due and payable or provided to the
Officer, or in the case of the Officer's death, to his or her estate, surviving
dependants or designated beneficiaries, as applicable, are acknowledged to be in
lieu of any benefits that would otherwise be provided under such circumstances
pursuant to the Bank's Severance Pay Plan, as amended, or Severance Compensation
Plan, as amended.
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Section 13. Successors and Assigns.
This Agreement will inure to the benefit of and be binding upon the
Officer, the Officer's legal representatives and testate or intestate
distributees, and the Company and the Bank and their respective 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 or the Bank may be
sold or otherwise transferred. Failure of the Company to obtain from any
successor its express written assumption of the Company's or Bank's obligations
hereunder at least 60 days in advance of the scheduled effective date of any
such succession shall, if such succession constitutes a Change of Control,
constitute Good Reason for the Officer's resignation on or at any time during
the Term following the occurrence of such succession.
Section 14. No Attachment.
Except as required by law, no right to receive payments under this
Agreement shall be subject to anticipation, commutation, alienation, sale,
assignment, encumbrance, charge, pledge, or hypothecation, or to execution,
attachment, levy, or similar process or assignment by operation of law, and any
attempt, voluntary or involuntary, to affect any such action shall be null,
void, and of no effect.
Section 15. 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 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 Officer:
Gary T. McCann
17 Shoreham Road
Massapequa, New York 11758
If to the Company or the Bank:
Astoria Financial Corporation
One Astoria Federal Plaza
Lake Success, New York 11042
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Attention: Chairman, President and Chief Executive Officer
with a copy to:
Thacher Proffitt & Wood
Two World Trade Center
New York, New York 10048
Attention: W. Edward Bright, Esq.
Section 16. Indemnification for Attorneys' Fees.
(a) The Bank shall indemnify, hold harmless and defend the Officer
against reasonable costs, including 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 the Officer's efforts, in
good faith, to defend or enforce the terms of this Agreement;
provided, however, that the Officer 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 Bank's obligations under this
Agreement shall be conclusive evidence of the Officer's entitlement
to indemnification under this Agreement, and any such
indemnification payments shall be in addition to amounts payable
pursuant to such settlement agreement, unless such settlement
agreement expressly provides otherwise.
(b) The Bank's or the Company's obligation to make the payments provided
for in this Agreement and otherwise to perform their respective
obligations under this Agreement shall not be affected by any
set-off, counterclaim, recoupment, defense or other claim, right or
action which the Bank or the Company may have against the Officer or
others. In no event shall the Officer be obligated to seek other
employment or take any other action by way of mitigation of the
amounts payable to the Officer under any of the provisions of this
Agreement and such amounts shall not be reduced whether or not the
Officer obtains other employment. Unless it is determined that the
Officer has acted frivolously or in bad faith, the Bank shall pay as
incurred, to the full extent permitted by law, all legal fees and
expenses which the Officer may reasonably incur as a result of or in
connection with the Officer's consultation with legal counsel or
arising out of any action, suit, proceeding, tax controversy, appeal
or contest (regardless of the outcome thereof) by the Bank, the
Company, the Officer or others regarding the validity or
enforceability of, or liability under, any provision of this
Agreement or any guarantee of performance thereof (including as a
result of any contest by the Officer about the amount of any payment
pursuant to this Agreement), plus in each case interest on any
delayed payment at the applicable
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Federal rate provided for in section 7872(f)(2)(A) of the Code.
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Section 17. Employment Rights and Funding Obligations.
(a) Nothing expressed or implied in this Agreement shall create any
right or duty on the part of the Bank, the Company or the Officer to
have the Officer continue as an officer of the Bank or the Company
or to remain in the employment of the Bank, the Company.
(b) Nothing expressed or implied in this Agreement shall create any
right or duty on the part of the Bank, the Company or the Officer to
create a trust of any kind to fund any benefits which may be payable
pursuant to this Agreement, and to the extent that the Officer
acquires a right to receive benefits from the Bank or the Company
pursuant to this Agreement, such right shall be no greater than the
right of any unsecured general creditor of the Bank or the Company,
respectively.
Section 18. Withholding.
The Bank or the Company, as applicable, shall have the right to deduct and
withhold from any amounts paid in cash pursuant to this Agreement by the Bank or
the Company, respectively, any taxes or other amounts required by law to be
withheld with respect to such payment.
Section 19. 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 20. Survival.
The rights and obligations of the Bank, the Company and the Officer under
this Agreement, unless otherwise expressly provided in this Agreement, shall
survive the expiration of the term or other termination of this Agreement.
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.
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This Agreement may be executed in two 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.
Except to the extent preempted by federal 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.
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. No modifications of this Agreement shall be valid unless made in writing
and signed by the parties hereto.
Section 26. Required Regulatory Provisions.
The following provisions are included for the purposes of complying with
various laws, rules and regulations applicable to the Bank:
(a) Notwithstanding anything herein contained to the contrary, in no
event shall the aggregate amount of compensation payable to the
Officer on account of the Officer's termination of employment exceed
three times the Officer's average annual total compensation for the
last five consecutive calendar years to end prior to the Officer's
termination of employment with the Bank (or for the Officer's entire
period of employment with the Bank if less than five calendar
years).
(b) Notwithstanding anything herein contained to the contrary, any
payments to the Officer by the Bank, 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
("FDI Act"), 12 U.S.C. Section 1828(k), and any regulations
promulgated thereunder.
(c) Notwithstanding anything herein contained to the contrary, if the
Officer is suspended from office and/or temporarily prohibited from
participating in the conduct of the affairs of the Bank pursuant to
a notice served under section 8(e)(3) or
23
<PAGE> 24
8(g)(1) of the FDI Act, 12 U.S.C. Section 1818(e)(3) or 1818(g)(1),
the Bank's obligations under this Agreement shall be suspended as of
the date of service of such notice, unless stayed by appropriate
proceedings. If the charges in such notice are dismissed, the Bank,
in its discretion, may (i) pay to the Officer all or part of the
compensation withheld while the Bank's obligations hereunder were
suspended and (ii) reinstate, in whole or in part, any of the
obligations which were suspended.
(d) Notwithstanding anything herein contained to the contrary, if the
Officer is removed and/or permanently prohibited from participating
in the conduct of the Bank's affairs by an order issued under
section 8(e)(4) or 8(g)(1) of the FDI Act, 12 U.S.C. Section
1818(e)(4) or (g)(1), all prospective obligations of the Bank under
this Agreement shall terminate as of the effective date of the
order, but vested rights and obligations of the Bank and the Officer
shall not be affected.
(e) Notwithstanding anything herein contained to the contrary, if the
Bank is in default (within the meaning of section 3(x)(1) of the FDI
Act, 12 U.S.C. Section 1813(x)(1), all prospective obligations of
the Bank under this Agreement shall terminate as of the date of
default, but vested rights and obligations of the Bank and the
Officer shall not be affected.
(f) Notwithstanding anything herein contained to the contrary, all
prospective obligations of the Bank hereunder shall be terminated,
except to the extent that a continuation of this Agreement is
necessary for the continued operation of the Bank: (i) by the
Director of the Office of Thrift Supervision ("OTS") or his designee
or the Federal Deposit Insurance Corporation ("FDIC"), at the time
the FDIC enters into an agreement to provide assistance to or on
behalf of the Bank under the authority contained in section 13(c) of
the FDI Act, 12 U.S.C.Section 1823(c); (ii) by the Director of the
OTS or his designee at the time such Director or designee approves a
supervisory merger to resolve problems related to the operation of
the Bank or when the Bank is determined by such Director to be in an
unsafe or unsound condition. The vested rights and obligations of
the parties shall not be affected.
If and to the extent that any of the foregoing provisions shall cease to be
required or by applicable law, rule or regulation, the same shall become
inoperative as though eliminated by formal amendment of this Agreement. None of
the foregoing provisions, other than section 26(b) shall limit any obligations
of the Company under this Agreement.
Section 27. Guaranty.
The Company hereby irrevocably and unconditionally guarantees to the
Officer the payment of all amounts, and the performance of all other
obligations, due from the Bank in accordance with the terms of this Agreement as
and when due without any requirement of presentment, demand of payment, protest
or notice of dishonor or nonpayment. Solely for purposes of determining the
extent
24
<PAGE> 25
of the Company's guarantee, the obligations of the Bank under this Agreement
shall be determined as though section 26(a), (c), (d), (e) and (f) did not apply
to the Bank.
IN WITNESS WHEREOF, the Bank and the Company have caused this Agreement to
be executed and the Officer has hereunto set the Officer's hand, all as of the
day and year first above written.
/S/ Gary T. McCann
-------------------------------------
GARY T. MCCANN
Attest:
ASTORIA FEDERAL SAVINGS AND LOAN
ASSOCIATION
By: /S/ William K. Sheerin By: /S/ George L. Engelke, Jr.
---------------------------------
Name: William K. Sheerin Name: George L. Engelke, Jr.
Title: Executive Vice President and Title: Chairman, President and Chief
Secretary Executive Officer
Attest: ASTORIA FINANCIAL CORPORATION
By: /S/ William K. Sheerin By: /S/ George L. Engelke, Jr.
----------------------------- ---------------------------------
Name: William K. Sheerin Name: George L. Engelke, Jr.
Title: Executive Vice President and Title: Chairman, President and Chief
Secretary Executive Officer
25
<PAGE> 1
EXHIBIT 10.37
CHANGE OF CONTROL SEVERANCE AGREEMENT
This CHANGE OF CONTROL SEVERANCE AGREEMENT (the "Agreement") is made and
entered into as of January 1, 2000 by and among ASTORIA FEDERAL SAVINGS AND LOAN
ASSOCIATION, a savings and loan association organized and existing under the
laws of the United States of America and having an office at One Astoria Federal
Plaza, Lake Success, New York 11042 (the "Bank"), ASTORIA FINANCIAL CORPORATION,
a business corporation organized and existing under the laws of the State of
Delaware and having an office at One Astoria Federal Plaza, Lake Success, New
York 11042 (the "Company") and Robert T. Volk, an individual residing at 408
Smith Avenue, Islip, New York 11751 (the "Officer").
INTRODUCTORY STATEMENT
WHEREAS, the Boards of Directors of the Bank and the Company have
approved the Bank and the Company entering into Change of Control Severance
Agreements with certain key officers of the Bank,
WHEREAS, the Officer is a key officer of the Bank;
WHEREAS, should the possibility of a Pending Change of Control or Change
of Control of the Bank or the Company arise, the Boards of Directors of the Bank
and the Company believe it is imperative that the Bank, the Company and the
Boards of Directors of the Bank and the Company should be able to rely upon the
Officer to continue in his or her position, and that the Bank and the Company
should be able to receive and rely upon the Officer's advice, if requested, as
to the best interests of the Bank and the Company and their respective
shareholders without concern that the Officer might be distracted by the
personal uncertainties and risks created by the possibility of a Pending Change
of Control or Change of Control;
WHEREAS, should the possibility of a Pending Change of Control or Change
of Control arise, in addition to his or her regular duties, the Officer may be
called upon to assist in the assessment of such possible Pending Change of
Control or Change of Control, advise management and the Board as to whether such
Pending Change of Control or Change of Control would be in the best interests of
the Bank, the Company and their respective shareholders, and to take such other
actions as the Boards of Directors of the Bank and the Company might determine
to be appropriate; and
NOW, THEREFORE, to assure the Bank and the Company that they will have the
continued dedication of the Officer and the availability of his or her advice
and counsel notwithstanding the possibility, threat, or occurrence of a Pending
Change of Control or Change of Control of the Bank or the Company, and to induce
the Officer to remain in the employ of the Bank, in consideration of the mutual
premises and agreements set forth herein and for other good and valuable
consideration, the Bank, the Company and the Officer agree as follows:
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<PAGE> 2
AGREEMENT
Section 1. Effective Date; Term; Pending Change of Control and Change of
Control Defined.
(a) This Agreement shall take effect on January 1, 2000 (the "Effective
Date") and shall remain in effect during the period (the "Term")
beginning on the Effective Date and ending on the earlier of:
(i) the date, prior to the occurrence of a Pending Change of
Control or a Change of Control, as defined below,
respectively, on which the Officer's employment by the Bank
terminates whether by discharge, resignation, death,
disability or retirement, or
(ii) the later of:
(A) the first anniversary of the date on which the Bank
notifies the Executive of its intent to discontinue the
Agreement (the "Initial Expiration Date") or,
(B) the second anniversary of the latest Change of Control,
as defined below, that occurs after the Effective Date
and before the Initial Expiration Date, or
(b) For purposes of this Agreement, a "Change of Control" shall be
deemed to have occurred upon the happening of any of the following
events:
(i) the consummation of a 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 Securities Exchange Act of 1934, as amended
("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
Page - 2 -
<PAGE> 3
(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;
(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;
(iii) a complete liquidation or dissolution of the Company;
(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 Directors
of the Company on the Effective Date of this Agreement;
or
(B) individuals who first became members of the Board of
Directors of the Company after the Effective Date of
this Agreement either:
(1) 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
(2) upon election by the shareholders of the Board of
Directors of the Company to serve as a member of
such Board, 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
Page - 3 -
<PAGE> 4
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 Directors of the
Company; or
(v) any event which would be described in section 1(b)(i), (ii),
(iii) or (iv) if the term "Bank" 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 Bank, or a subsidiary of either of them, by the
Company, the Bank, or any subsidiary of either of them, or by any
employee benefit plan maintained by any of them. For purposes of
this section 1(b), the term "person" shall have the meaning assigned
to it under sections 13(d)(3) or 14(d)(2) of the Exchange Act.
(c) For purposes of this Agreement, a "Pending Change of Control" shall
mean:
(i) the approval by the shareholders of the Bank or the Company of
a definitive agreement for a transaction which, if
consummated, would result in a Change of Control; or
(ii) the approval by the shareholders of the Bank or the Company of
a transaction which, if consummated, would result in a Change
of Control.
Section 2. Discharge Prior to a Pending Change of Control.
The Bank may discharge the Officer at any time prior to the occurrence of
a Pending Change of Control or, if no Pending Change of Control has occurred, a
Change of Control, for any reason or for no reason. In such event:
(a) The Bank shall pay to the Officer or the Officer's estate his or her
earned but unpaid compensation, including, without limitation,
salary and all other items which constitute wages under applicable
law, as of the date of the Officer's termination of employment. This
payment shall be made at the time and in the manner prescribed by
law applicable to the payment of wages but in no event later than 30
days after the date of the Officer's termination of employment.
(b) The Bank shall provide the benefits due, if any, to the Officer or
the Officer's estate, surviving dependents or designated
beneficiaries, as applicable, under the employee benefit plans and
programs and compensation plans and programs maintained for the
benefit of the officers and employees of the Bank. The time and
manner of payment or other delivery of these benefits and the
recipients of such benefits shall be determined according to the
terms and conditions of the applicable plans and programs.
Page - 4 -
<PAGE> 5
The payments and benefits described in sections 2(a) and (b) shall be referred
to in this Agreement as the "Standard Termination Entitlements."
Section 3. Termination of Employment Due to Death.
The Officer's employment with the Bank shall terminate automatically, and
without any further action on the part of any party to this Agreement, on the
date of the Officer's death. In such event, the Bank shall pay and deliver to
the Officer's estate and surviving dependents and designated beneficiaries, as
applicable, the Standard Termination Entitlements.
Section 4. Termination Due to Disability after a Pending Change of
Control or a Change of Control.
The Bank may terminate the Officer's employment during the Term and after
the occurrence of a Pending Change of Control or a Change of Control upon a
determination by the Board of Directors of the Bank, by the affirmative vote of
75% of its entire membership, acting in reliance on the written advice of a
medical professional acceptable to it, that the Officer is suffering from a
physical or mental impairment which, at the date of the determination, has
prevented the Officer from performing the Officer's assigned duties on a
substantially full-time basis for a period of at least one hundred and eighty
(180) days during the period of one (1) year ending with the date of the
determination or is likely to result in death or prevent the Officer from
performing the Officer's assigned duties on a substantially full-time basis for
a period of at least one hundred and eighty (180) days during the period of one
(1) year beginning with the date of the determination. In such event:
(a) The Bank shall pay and deliver the Standard Termination Entitlements
to the Officer or, in the event of the Officer's death following
such termination but before payment, to the Officer's estate,
surviving dependents or designated beneficiaries, as applicable.
(b) In addition to the Standard Termination Entitlements, the Bank shall
continue to pay the Officer his or her base salary, at the annual
rate in effect for the Officer immediately prior to the termination
of the Officer's employment, during a period ending on the earliest
of: (i) the expiration of one hundred and eighty (180) days after
the date of termination of the Officer's employment; (ii) the date
on which long-term disability insurance benefits are first payable
to the Officer under any long-term disability insurance plan
covering employees of the Bank; or (iii) the date of the Officer's
death.
A termination of employment due to disability under this section 4 shall be
effected by a notice of termination given to the Officer by the Bank and shall
take effect on the later of the effective date of termination specified in such
notice or, if no such date is specified, the date on which the notice of
termination is deemed given to the Officer.
Page - 5 -
<PAGE> 6
Section 5. Discharge with Cause after a Pending Change of Control or
Change of Control.
(a) The Bank may terminate the Officer's employment with "Cause" during
the Term and after the occurrence of a Pending Change of Control or
a Change of Control, but a termination shall be deemed to have
occurred with "Cause" only if:
(i) (A) the Board of Directors of the Bank, by the affirmative
vote of 75% of its entire membership, determines that
the Officer is guilty of personal dishonesty,
incompetence, wilful misconduct, breach of fiduciary
duty involving personal profit, intentional failure to
perform stated duties, wilful violation of any law, rule
or regulation (other than traffic violations or similar
offenses) or final cease and desist order, or any
material breach of this Agreement, in each case measured
against standards generally prevailing at the relevant
time in the savings and community banking industry;
(B) prior to the vote contemplated by section 5(a)(i)(A),
the Board of Directors of the Bank shall provide the
Officer with notice of the Bank's intent to discharge
the Officer for Cause, detailing with particularity the
facts and circumstances which are alleged to constitute
Cause (the "Notice of Intent to Discharge"); and
(C) after the giving of the Notice of Intent to Discharge
and before the taking of the vote contemplated by
section 5(a)(i)(A), the Officer, together with the
Officer's legal counsel, if he so desires, are afforded
a reasonable opportunity to make both written and oral
presentations before the Board of Directors of the Bank
for the purpose of refuting the alleged grounds for
Cause for the Officer's discharge; and
(D) after the vote contemplated by section 5(a)(i)(A), the
Bank has furnished to the Officer a notice of
termination which shall specify the effective date of
the Officer's termination of employment (which shall in
no event be earlier than the date on which such notice
is deemed given) and include a copy of a resolution or
resolutions adopted by the Board of Directors of the
Bank, certified by its corporate secretary, authorizing
the termination of the Officer's employment with Cause
and stating with particularity the facts and
circumstances found to constitute Cause for the
Officer's discharge (the "Final Discharge Notice"); or
(ii) the Officer, during the 90 day period commencing on the
delivery to the Officer by the Bank of the Notice of Intent to
Discharge specified in section
Page - 6 -
<PAGE> 7
5(a)(i)(B), resigns his or her employment with the Bank prior
to the delivery to the Officer by the Bank of the Final
Discharge Notice specified in section 5(a)(i)(D).
For purposes of this section 5, no act or failure to act, on the
part of the Officer, shall be considered "willful" unless it is
done, or omitted to be done, by the Officer in bad faith or without
reasonable belief that the Officer's action or omission was in the
best interests of the Bank or the Company, respectively. Any act or
failure to act based upon authority given pursuant to a resolution
duly adopted by the Board of Directors of the Bank or the Company or
based upon the written advice of counsel for the Bank or the Company
shall be conclusively presumed to be done or omitted to be done by
the Officer in good faith and in the best interests of the Bank or
the Company, respectively.
(b) If the Officer is discharged with Cause during the Term and after a
Pending Change of Control or a Change of Control, the Bank shall pay
and provide to him or, in the event of the Officer's death following
such discharge but prior to payment and providing, to the Officer's
estate, surviving dependents or designated beneficiaries, as
applicable, the Standard Termination Entitlements only.
(c) Following the giving of a Notice of Intent to Discharge, the Bank
may temporarily suspend the Officer's duties and authority and, in
such event, may also suspend the payment of salary and other cash
compensation, but not the Officer's participation in retirement,
insurance and other employee benefit plans. If the Officer is not
discharged or is discharged without Cause within forty-five (45)
days after the giving of a Notice of Intent to Discharge, payments
of salary and cash compensation shall resume, and all payments
withheld during the period of suspension shall be promptly restored.
If the Officer is discharged with Cause not later than forty-five
(45) days after the giving of the Notice of Intent to Discharge, all
payments withheld during the period of suspension shall be deemed
forfeited and shall not be included in the Standard Termination
Entitlements. If a Final Discharge Notice is given later than
forty-five (45) days, but sooner than ninety (90) days, after the
giving of the Notice of Intent to Discharge, all payments made to
the Officer during the period beginning with the giving of the
Notice of Intent to Discharge and ending with the Officer's
discharge with Cause shall be retained by the Officer and shall not
be applied to offset the Standard Termination Entitlements. If the
Bank does not give a Final Discharge Notice to the Officer within
ninety (90) days after giving a Notice of Intent to Discharge, the
Notice of Intent to Discharge shall be deemed withdrawn and any
future action to discharge the Officer with Cause shall require the
giving of a new Notice of Intent to Discharge. If the Officer
resigns pursuant to Section 5(a)(ii), the Officer shall forfeit his
or her right to suspended amounts that have not been restored as of
the date of the Officer's resignation or notice of resignation,
whichever is earlier.
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<PAGE> 8
Section 6. Discharge Without Cause after a Pending Change of Control or
Change of Control.
The Bank may discharge the Officer without Cause at any time after the
occurrence of a Pending Change of Control or a Change of Control, and in such
event:
(a) The Bank shall pay and deliver the Standard Termination Entitlements
to the Officer or, in the event of the Officer's death following the
Officer's discharge but before payment, to the Officer's estate,
surviving dependents or designated beneficiaries, as applicable.
(b) In addition to the Standard Termination Entitlements:
(i) the Bank shall provide for a period of two years following the
date of the Officer's discharge (the "Assurance Period") for
the benefit of the Officer and the Officer's spouse and
dependents continued group life, health (including
hospitalization, medical and major medical), dental, accident
and long-term disability insurance benefits on substantially
the same terms and conditions (including any co-payments and
deductibles, but excluding any premium sharing arrangements,
it being the intention of the parties to this Agreement that
the premiums for such insurance benefits shall be the sole
cost and expense of the Bank) in effect for them immediately
prior to the Officer's discharge. The coverage provided under
this section 6(b)(i) may, at the election of the Bank, be
secondary to the coverage provided as part of the Standard
Termination Entitlements and to any employer-paid coverage
provided by a subsequent employer or through Medicare, with
the result that benefits under the other coverages will offset
the coverage required by this section 6(b)(i), provided,
however, that for purposes of this section 6(b)(i) benefits
provided at the cost of the Officer or the Officer's spouse or
dependants pursuant to the Comprehensive Omnibus Budget
Reconciliation Act, as amended, shall not be considered
Standard Termination Entitlements.
(ii) The Bank shall make a lump sum payment to the Officer or, in
the event of the Officer's death following the Officer's
discharge but before payment, to the Officer's estate in an
amount equal to the salary that the Officer would have earned
if he had continued working for the Bank during the Assurance
Period at the highest annual rate of salary achieved during
the period of three (3) years ending immediately prior to the
date of termination (the "Salary Severance Payment"). The
Salary Severance Payment shall be computed using the following
formula:
SSP = BS x NY
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<PAGE> 9
where:
"SSP" is the amount of the Salary Severance Payment, before
the deduction of applicable federal, state and local
withholding taxes;
"BS" is the highest annual rate of salary achieved by the
Officer during the period of three (3) years ending
immediately prior to the date of termination; and
"NY" is the Assurance Period expressed as a number of years
(rounded, if such period is not a whole number, to the next
highest whole number).
The Salary Severance Payment shall be made within thirty (30)
days after the Officer's termination of employment and shall
be in lieu of any claim to a continuation of base salary which
the Officer might otherwise have and in lieu of cash severance
benefits under any severance benefits program which may be in
effect for officers or employees of the Bank.
(iii) The Bank shall make a lump sum payment to the Officer or, in
the event of the Officer's death following the Officer's
discharge but before payment, to the Officer's estate in an
amount equal to the potential annual bonuses that the Officer
would have earned if the Officer had continued working for the
Bank during the Assurance Period at the highest annual rate of
salary achieved during the period of three (3) years ending
immediately prior to the date of termination (the "Bonus
Severance Payment"). The Bonus Severance Payment shall be
computed using the following formula:
BSP = ((BS x TIO x IP) + ( BS x TIO x FP x AP)) x NY
where:
"BSP" is the amount of the Bonus Severance Payment, before the
deduction of applicable federal, state and local withholding
taxes;
"BS" is the highest annual rate of salary achieved by the
Officer during the period of three (3) years ending
immediately prior to the date of termination;
"TIO" is the target incentive opportunity for the Officer
expressed as a percentage as established by the Compensation
Committee of the Board of Directors of the Bank pursuant to
the Bank's Annual Incentive Plan for Select Executives for the
year in which the employment of the Officer by the Bank
terminates or, if no target incentive opportunity is
established by the Compensation Committee of the Board of
Directors of the Bank for such year
Page - 9 -
<PAGE> 10
with respect to the Officer, then the highest target incentive
opportunity established by the Compensation Committee of the
Board of Directors of the Bank for the Officer pursuant to the
Annual Incentive Plan for Select Executives during the period
of three (3) years ending immediately prior to the date of
termination;
"IP" is either (i) the percentage of the TIO which is to be
determined by the individual performance of the Officer as
established by the Compensation Committee of the Board of
Directors of the Bank pursuant to the Bank's Annual Incentive
Plan for Select Executives for the year in which the
employment of the Officer by the Bank terminates or, (ii) if
no target incentive opportunity has been established with
respect to the Officer by the Compensation Committee of the
Board of Directors of the Bank for the year in which the
employment of the Officer by the Bank terminates, then the
lowest percentage of the target incentive opportunity to be
determined by the individual performance of the Officer
established by the Compensation Committee of the Board of
Directors of the Bank for the Officer pursuant to the Annual
Incentive Plan for Select Executives during the period of
three (3) years ending immediately prior to the date of
termination;
"FP" is either (i) the percentage of the TIO with respect to
the Officer which is to be determined by the financial
performance of the Company as established by the Compensation
Committee of the Board of Directors of the Bank pursuant to
the Bank's Annual Incentive Plan for Select Executives for the
year in which the employment of the Officer by the Bank
terminates or, (ii) if no target incentive opportunity has
been established with respect to the Officer by the
Compensation Committee of the Board of Directors of the Bank
for the year in which the employment of the Officer by the
Bank terminates, then a percentage equal to 100% minus the IP;
"AP" is the highest award percentage available to the Officer
with respect to the financial performance of the Company as
established by the Compensation Committee of the Board of
Directors of the Bank pursuant to the Bank's Annual Incentive
Plan for Select Executives for the year in which the
employment of the Officer by the Bank terminates or, (ii) if
no target incentive opportunity has been established with
respect to the Officer by the Compensation Committee of the
Board of Directors of the Bank for the year in which the
employment of the Officer by the Bank terminates, then the
highest award percentage available to the Officer with respect
to the financial performance of the Company established by the
Compensation Committee of the Board of Directors of the Bank
for the Officer pursuant to the Annual Incentive Plan for
Select Executives during the period of three (3) years ending
immediately prior to the date of termination;
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<PAGE> 11
"NY" is the Assurance Period expressed as a number of years
(rounded, if such period is not a whole number, to the next
highest whole number).
The Bonus Severance Payment shall be made within thirty (30)
days after the Officer's termination of employment and shall
be in lieu of any claim to a continuation of participation in
annual bonus plans of the Bank which the Officer might
otherwise have.
The payments and benefits described in section 6(b) are referred to in
this Agreement as the "Additional Termination Entitlements". The payments
described in section 6(b)(ii) and (iii) shall be computed at the expense
of the Company by an attorney of the firm of Thacher Proffitt & Wood, Two
World Trade Center, New York, New York 10048 or, if such firm is
unavailable or unwilling to perform such calculation, by a firm of
independent certified public accountants selected by the Officer and
reasonably satisfactory to the Company (the "Computation Advisor"). The
determination of the Computation Advisor as to the amount of such payments
shall be final and binding in the absence of manifest error.
Section 7. Tax Indemnification.
(a) If the Officer's employment terminates under circumstances entitling
the Officer or, in the event of the Officer's death following such
termination but before payment, his or her estate to the Additional
Termination Entitlements, the Company shall pay to the Officer or,
in the event of the Officer's death, his or her estate an additional
amount intended to indemnify the Officer against the financial
effects of the excise tax imposed on excess parachute payments under
section 28OG of the Code (the "Tax Indemnity Payment"). The Tax
Indemnity Payment shall be determined under the following formula:
E x P
TIP = ---------------------------------------
1 - (( FI x ( 1 - SLI )) + SLI + E + M )
where:
"TIP" is the Tax Indemnity Payment, before the deduction of
applicable federal, state and local withholding taxes;
"E" is the percentage rate at which an excise tax is assessed under
section 4999 of the Code;
"P" is the amount with respect to which such excise tax is assessed,
determined without regard to this section 16;
Page - 11 -
<PAGE> 12
"FI" is the highest marginal rate of income tax applicable to the
Officer under the Code for the taxable year in question;
"SLI" is the sum of the highest marginal rates of income tax
applicable to the Officer under all applicable state and local laws
for the taxable year in question; and
"M" is the highest marginal rate of Medicare tax applicable to the
Officer under the Code for the taxable year in question.
Such computation shall be made at the expense of the Company by the
Computation Advisor and shall be based on the following assumptions:
(i) that a change in ownership, a change in effective ownership or
control or a change in the ownership of a substantial portion
of the assets of the Bank or the Company has occurred within
the meaning of section 28OG of the Code (a "28OG Change of
Control");
(ii) that all direct or indirect payments made to or benefits
conferred upon the Officer on account of the Officer's
termination of employment are "parachute payments" within the
meaning of section 28OG of the Code; and
(iii) that no portion of such payments is reasonable compensation
for services rendered prior to the Officer's termination of
employment.
(b) With respect to any payment that is presumed to be a parachute
payment for purposes of section 28OG of the Code, the Tax Indemnity
Payment shall be made to the Officer on the earlier of the date the
Company, the Bank or any direct or indirect subsidiary or affiliate
of the Company or the Bank is required to withhold such tax or the
date the tax is required to be paid by the Officer, unless, prior to
such date, the Company delivers to the Officer the written opinion
(the "Opinion Letter"), in form and substance reasonably
satisfactory to the Officer, of the Computation Advisor or, if the
Computation Advisor is unable to provide such opinion, of an
attorney or firm of independent certified public accountants
selected by the Company and reasonably satisfactory to the Officer,
to the effect that the Officer has a reasonable basis on which to
conclude that:
(i) no 28OG Change in Control has occurred, or
(ii) all or part of the payment or benefit in question is not a
parachute payment for purposes of section 28OG of the Code, or
(iii) all or a part of such payment or benefit constitutes
reasonable compensation for services rendered prior to the
28OG Change of Control, or
Page - 12 -
<PAGE> 13
(iv) for some other reason which shall be set forth in detail in
such letter, no excise tax is due under section 4999 of the
Code with respect to such payment or benefit.
If the Company delivers an Opinion Letter, the Computation Advisor
shall re-compute, and the Company shall make, the Tax Indemnity
Payment in reliance on the information contained in the Opinion
Letter.
(c) In the event that the Officer'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 with respect to which the
Tax Indemnity Payment is made, the Officer 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 pursuant to
sections 7(a) or 7(b), when increased by the amount of the payment
made to the Officer pursuant to this section 7(c), or when reduced
by the amount of the payment made to the Company pursuant to this
section 7(c), equals the amount that should have properly been paid
to the Officer under section 7(a). The interest paid to the Company
under this section 7(c) shall be determined at the rate provided
under section 1274(b)(2)(B) of the Code. The payment made to the
Officer shall include such amount of interest as is necessary to
satisfy any interest assessment made by the Internal Revenue Service
and an additional amount equal to any monetary penalties assessed by
the Internal Revenue Service on account of an underpayment of the
excise tax. To confirm that the proper amount, if any, was paid to
the Officer under this section 7, the Officer shall furnish to the
Company a copy of each tax return which reflects a liability for an
excise tax, at least 20 days before the date on which such return is
required to be filed with the Internal Revenue Service. Nothing in
this Agreement shall give the Company any right to control or
otherwise participate in any action, suit or proceeding to which the
Officer is a party as a result of positions taken on the Officer's
federal income tax return with respect to the Officer's liability
for excise taxes under section 4999 of the Code.
Section 8. Indemnification upon and following a Change of Control.
(a) From and after the effective date of a Change of Control through the
sixth anniversary of such effective date, the Bank and the Company
agree to indemnify and hold harmless the Officer, against any costs
or expenses (including reasonable attorneys' fees), judgments,
fines, losses, claims, damages or liabilities (collectively,
"Costs") incurred in connection with any claim, action, suit,
proceeding or investigation, whether civil, criminal, administrative
or investigative, arising out of matters existing or occurring at or
prior to the time the Change of Control became effective whether
asserted or claimed prior to, at or after the effective date of the
Change of Control, and to advance any such Costs to the Officer as
they are from
Page - 13 -
<PAGE> 14
time to time incurred, in each case to the fullest extent the
Officer would have been indemnified as a director or officer of the
Bank or the Company, as applicable, and as then permitted under
applicable law.
(b) The Officer, seeking to claim indemnification under section 8(a) of
this Agreement and upon learning of any such claim, action, suit,
proceeding or investigation, shall promptly notify the Bank thereof,
but the failure to so notify shall not relieve the Bank or the
Company of any liability it may have pursuant to this Agreement to
the Officer if such failure does not materially and substantially
prejudice the Bank or the Company. In the event of any such claim,
action, suit, proceeding or investigation,
(i) the Bank and the Company shall have the right to assume the
defense thereof with counsel reasonably acceptable to the
Officer, and the Bank and the Company shall not be liable to
the Officer for any legal expenses of other counsel
subsequently incurred by the Officer in connection with the
defense thereof, except that if the Bank and the Company do
not elect to assume such defense within a reasonable time or
counsel for the Officer at any time advises that there are
issues which raise conflicts of interest between the Bank or
the Company and the Officer (and counsel for the Bank or the
Company does not disagree), the Officer may retain counsel
satisfactory to the Officer, and the Bank and the Company
shall remain responsible for the reasonable fees and expenses
of such counsel as set forth above, to be paid promptly as
statements therefor are received; provided, however, that the
Bank and the Company shall be obligated pursuant to this
paragraph (b)(i) to pay for only one firm of counsel for all
indemnified parties in any one jurisdiction with respect to
any given claim, action, suit, proceeding or investigation
unless the use of one counsel for such indemnified parties,
including the Officer, would present such counsel with a
conflict of interest;
(ii) the Officer will reasonably cooperate in the defense of any
such matter; and
(iii) the Bank and the Company shall not be liable for any
settlement effected by the Officer without their prior written
consent, which shall not be unreasonably withheld.
Section 9. Resignation.
(a) The Officer may resign from the Officer's employment with the Bank
at any time. A resignation under this section 9 shall be effected by
notice of resignation given by the Officer to the Bank and shall
take effect on the later of the effective date of termination
specified in such notice or the date on which the notice of
termination is deemed given by the Officer. For purposes of this
Agreement, retirement of the Officer from the employment of the Bank
or the Company under circumstances
Page - 14 -
<PAGE> 15
defined as "normal retirement" or "early retirement" pursuant to any
qualified defined benefit or qualified defined contribution pension
plan maintained by the Bank shall be deemed a resignation by the
Officer's of the Officer's employment with the Bank. A resignation
by the Officer as described in section 5(a)(ii) of this Agreement,
for purposes of this Agreement shall be deemed to be termination
with "Cause". The Officer's resignation of any of the positions
within the Bank or the Company to which he has been assigned shall
be deemed a resignation from all such positions.
(b) The Officer's resignation shall be deemed to be for "Good Reason" if
the effective date of resignation occurs during the Term, but on or
after the effective date of a Pending Change of Control or Change of
Control, and is on account of:
(i) the failure of the Bank (whether by act or omission of the
Board of Directors, or otherwise) to appoint, re-appoint,
elect or re-elect the Officer to the office and position with
the Bank that he held immediately prior to the Change of
Control or Pending Change of Control (the "Assigned Office")
or to a more senior office and position;
(ii) if the Officer is or becomes a member of the Board of
Directors of the Bank, the failure of the shareholders of the
Bank (whether in an election in which the Officer stands as a
nominee or in an election where the Officer is not a nominee),
to elect or re-elect the Officer to such directorship at the
expiration of the Officer's term as a director, unless such
failure is a result of the Officer's refusal to stand for
election;
(iii) a material failure by the Bank, whether by amendment of the
charter or organization, by-laws, action of the Board of
Directors of the Bank or otherwise, to vest in the Officer the
functions, duties, or responsibilities customarily associated
with the Assigned Office; provided that the Officer shall have
given notice of such failure to the Bank, and the Bank has not
fully cured such failure within thirty (30) days after such
notice is deemed given;
(iv) any reduction of the Officer's rate of base salary in effect
from time to time, whether or not material, or any failure,
other than due to reasonable administrative error that is
fully cured within 5 days after notice of such administrative
error is deemed given, to pay any portion of the Officer's
compensation as and when due;
(v) any change in the terms and conditions of any compensation or
benefit program in which the Officer participates which,
either individually or together with other changes, has a
material adverse effect on the aggregate value of the
Officer's total compensation package; provided that the
Officer shall have given notice of such material adverse
effect to the Bank, and the
Page - 15 -
<PAGE> 16
Bank has not fully cured such failure within thirty (30) days
after such notice is deemed given;
(vi) any material breach by the Company or the Bank of any material
term, condition or covenant contained in this Agreement;
provided that the Officer shall have given notice to the
Company and the Bank of such material adverse effect, and the
Company or the Bank have not fully cured such failure within
thirty (30) days after such notice is deemed given; or
(vii) a change in the Officer's principal place of employment to a
location that is outside of Nassau County or Queens County,
New York.
In all other cases, a resignation by the Officer shall be deemed to
be without Good Reason. In the event of resignation, the Officer
shall state in the Officer's notice of resignation whether the
Officer considers his or her resignation to be a resignation with
Good Reason, and if he does, he shall state in such notice the
grounds which constitute Good Reason. The Officer's determination of
the existence of Good Reason shall be conclusive in the absence of
fraud, bad faith or manifest error.
(c) In the event of the Officer's resignation for any reason, the Bank
shall pay and deliver the Standard Termination Entitlements. In the
event of the Officer's resignation with Good Reason and such
resignation is effective within six (6) months of the effective date
of the Change of Control (the "Resignation Window Period"), the Bank
shall also pay and deliver the Additional Termination Entitlements.
In the event the Officer's resignation with Good Reason is based
upon section 9(b)(iii),(iv),(v) or (vi) and the notice required by
such provision has been given within six months of the effective
date of the Change of Control but the applicable cure period will
not expire until on or after the date which is six months following
the effective date of the Change of Control, the Resignation Window
Period shall be extended so as expire 30 days following the
expiration of the applicable cure period.
Section 10. Terms and Conditions of the Additional Termination
Entitlements.
The Bank and the Officer hereby stipulate that the damages which may be
incurred by the Officer following any termination of employment are not capable
of accurate measurement as of the date first above written and that the
Additional Termination Entitlements constitute reasonable damages under the
circumstances and shall be payable without any requirement of proof of actual
damage and without regard to the Officer's efforts, if any, to mitigate damages.
The Bank and the Officer further agree that the Bank may condition the payment
and delivery of the Additional Termination Entitlements on the receipt of:
(a) the Officer's resignation from any and all positions which he holds
as an officer, director or committee member with respect to the Bank
or any subsidiary or affiliate
Page - 16 -
<PAGE> 17
of the Bank; and
(b) a release of the Bank and the Company and their officers, directors,
shareholders, subsidiaries and affiliates, in form and substance
satisfactory to the Bank, of any liability to the Officer, whether
for compensation or damages, in connection with the Officer's
employment with the Bank and the termination of such employment,
except for the Standard Termination Entitlements, the Additional
Termination Entitlements, the Tax Indemnity Payment and
indemnification payments due the Officer pursuant to section 8 or
section 16 of this Agreement.
To the extent the Bank conditions the payment and delivery of the Additional
Termination Entitlements or any other amount due under this Agreement upon the
receipt of the release provided in section 10(b) of this Agreement and such
release by law may not be effective until the expiration of a required prior
notice and/or a recission period following its execution by the Officer, then
any payment required to be made pursuant to this Agreement may be deferred until
the expiration of the period which is the sum of the period within which such
payment was required to be made under the terms of this Agreement but for this
section 10 and the period of any required prior notice and recission periods,
provided, however, that the Bank shall pay to the Officer for each day of such
deferral interest in addition to any other amounts due and owing under this
Agreement at the rate of the federal short term rate established under section
1274 of the Code for the month in which the Officer's termination of employment
occurs calculated on the basis of a 360 day year for the actual number of days
of such deferral on the amount so deferred.
Section 11. Confidentiality.
Unless the Officer obtains the prior written consent of the Bank or the
Company, the Officer shall keep confidential and shall refrain from using for
the benefit of himself or herself, 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 the Officer's
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 the Officer) until the same ceases to be material
(or becomes so ascertainable or available); provided, however, that nothing in
this section 11 shall prevent the Officer, 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
proceeding to the extent that such participation or disclosure is required under
applicable law.
Section 12. No Effect on Employee Benefit Plans or Programs.
Except to the extent specifically provided herein, the termination of the
Officer's employment during the Assurance Period or thereafter, whether by the
Bank or by the Officer, shall have no effect on the rights and obligations of
the parties hereto under the Bank's qualified or non-qualified
Page - 17 -
<PAGE> 18
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 Bank from time to time; provided, however, that
nothing in this Agreement shall be deemed to duplicate any compensation or
benefits provided under any severance agreement, plan or program covering the
Officer to which the Bank or Company is a party and any duplicative amount
payable under any such agreement, plan or program shall be applied as an offset
to reduce the amounts otherwise payable hereunder. The Additional Termination
Entitlements provided hereunder, when due and payable or provided to the
Officer, or in the case of the Officer's death, to his or her estate, surviving
dependants or designated beneficiaries, as applicable, are acknowledged to be in
lieu of any benefits that would otherwise be provided under such circumstances
pursuant to the Bank's Severance Pay Plan, as amended, or Severance Compensation
Plan, as amended.
Page - 18 -
<PAGE> 19
Section 13. Successors and Assigns.
This Agreement will inure to the benefit of and be binding upon the
Officer, the Officer's legal representatives and testate or intestate
distributees, and the Company and the Bank and their respective 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 or the Bank may be
sold or otherwise transferred. Failure of the Company to obtain from any
successor its express written assumption of the Company's or Bank's obligations
hereunder at least 60 days in advance of the scheduled effective date of any
such succession shall, if such succession constitutes a Change of Control,
constitute Good Reason for the Officer's resignation on or at any time during
the Term following the occurrence of such succession.
Section 14. No Attachment.
Except as required by law, no right to receive payments under this
Agreement shall be subject to anticipation, commutation, alienation, sale,
assignment, encumbrance, charge, pledge, or hypothecation, or to execution,
attachment, levy, or similar process or assignment by operation of law, and any
attempt, voluntary or involuntary, to affect any such action shall be null,
void, and of no effect.
Section 15. 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 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 Officer:
Robert T. Volk
408 Smith Avenue
Islip, New York 11751
If to the Company or the Bank:
Astoria Financial Corporation
One Astoria Federal Plaza
Lake Success, New York 11042
Page - 19 -
<PAGE> 20
Attention: Chairman, President and Chief Executive Officer
with a copy to:
Thacher Proffitt & Wood
Two World Trade Center
New York, New York 10048
Attention: W. Edward Bright, Esq.
Section 16. Indemnification for Attorneys' Fees.
(a) The Bank shall indemnify, hold harmless and defend the Officer
against reasonable costs, including 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 the Officer's efforts, in
good faith, to defend or enforce the terms of this Agreement;
provided, however, that the Officer 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 Bank's obligations under this
Agreement shall be conclusive evidence of the Officer's entitlement
to indemnification under this Agreement, and any such
indemnification payments shall be in addition to amounts payable
pursuant to such settlement agreement, unless such settlement
agreement expressly provides otherwise.
(b) The Bank's or the Company's obligation to make the payments provided
for in this Agreement and otherwise to perform their respective
obligations under this Agreement shall not be affected by any
set-off, counterclaim, recoupment, defense or other claim, right or
action which the Bank or the Company may have against the Officer or
others. In no event shall the Officer be obligated to seek other
employment or take any other action by way of mitigation of the
amounts payable to the Officer under any of the provisions of this
Agreement and such amounts shall not be reduced whether or not the
Officer obtains other employment. Unless it is determined that the
Officer has acted frivolously or in bad faith, the Bank shall pay as
incurred, to the full extent permitted by law, all legal fees and
expenses which the Officer may reasonably incur as a result of or in
connection with the Officer's consultation with legal counsel or
arising out of any action, suit, proceeding, tax controversy, appeal
or contest (regardless of the outcome thereof) by the Bank, the
Company, the Officer or others regarding the validity or
enforceability of, or liability under, any provision of this
Agreement or any guarantee of performance thereof (including as a
result of any contest by the Officer about the amount of any payment
pursuant to this Agreement), plus in each case interest on any
delayed payment at the applicable
Page - 20 -
<PAGE> 21
Federal rate provided for in section 7872(f)(2)(A) of the Code.
Page - 21 -
<PAGE> 22
Section 17. Employment Rights and Funding Obligations.
(a) Nothing expressed or implied in this Agreement shall create any
right or duty on the part of the Bank, the Company or the Officer to
have the Officer continue as an officer of the Bank or the Company
or to remain in the employment of the Bank, the Company.
(b) Nothing expressed or implied in this Agreement shall create any
right or duty on the part of the Bank, the Company or the Officer to
create a trust of any kind to fund any benefits which may be payable
pursuant to this Agreement, and to the extent that the Officer
acquires a right to receive benefits from the Bank or the Company
pursuant to this Agreement, such right shall be no greater than the
right of any unsecured general creditor of the Bank or the Company,
respectively.
Section 18. Withholding.
The Bank or the Company, as applicable, shall have the right to deduct and
withhold from any amounts paid in cash pursuant to this Agreement by the Bank or
the Company, respectively, any taxes or other amounts required by law to be
withheld with respect to such payment.
Section 19. 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 20. Survival.
The rights and obligations of the Bank, the Company and the Officer under
this Agreement, unless otherwise expressly provided in this Agreement, shall
survive the expiration of the term or other termination of this Agreement.
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.
Page - 22 -
<PAGE> 23
This Agreement may be executed in two 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.
Except to the extent preempted by federal 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.
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. No modifications of this Agreement shall be valid unless made in writing
and signed by the parties hereto.
Section 26. Required Regulatory Provisions.
The following provisions are included for the purposes of complying with
various laws, rules and regulations applicable to the Bank:
(a) Notwithstanding anything herein contained to the contrary, in no
event shall the aggregate amount of compensation payable to the
Officer on account of the Officer's termination of employment exceed
three times the Officer's average annual total compensation for the
last five consecutive calendar years to end prior to the Officer's
termination of employment with the Bank (or for the Officer's entire
period of employment with the Bank if less than five calendar
years).
(b) Notwithstanding anything herein contained to the contrary, any
payments to the Officer by the Bank, 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
("FDI Act"), 12 U.S.C. Section 1828(k), and any regulations
promulgated thereunder.
(c) Notwithstanding anything herein contained to the contrary, if the
Officer is suspended from office and/or temporarily prohibited from
participating in the conduct of the affairs of the Bank pursuant to
a notice served under section 8(e)(3)
Page - 23 -
<PAGE> 24
or 8(g)(1) of the FDI Act, 12 U.S.C. Section 1818(e)(3) or
1818(g)(1), the Bank's obligations under this Agreement shall be
suspended as of the date of service of such notice, unless stayed by
appropriate proceedings. If the charges in such notice are
dismissed, the Bank, in its discretion, may (i) pay to the Officer
all or part of the compensation withheld while the Bank's
obligations hereunder were suspended and (ii) reinstate, in whole or
in part, any of the obligations which were suspended.
(d) Notwithstanding anything herein contained to the contrary, if the
Officer is removed and/or permanently prohibited from participating
in the conduct of the Bank's affairs by an order issued under
section 8(e)(4) or 8(g)(1) of the FDI Act, 12 U.S.C. Section
1818(e)(4) or (g)(1), all prospective obligations of the Bank under
this Agreement shall terminate as of the effective date of the
order, but vested rights and obligations of the Bank and the Officer
shall not be affected.
(e) Notwithstanding anything herein contained to the contrary, if the
Bank is in default (within the meaning of section 3(x)(1) of the FDI
Act, 12 U.S.C. Section 1813(x)(1), all prospective obligations of
the Bank under this Agreement shall terminate as of the date of
default, but vested rights and obligations of the Bank and the
Officer shall not be affected.
(f) Notwithstanding anything herein contained to the contrary, all
prospective obligations of the Bank hereunder shall be terminated,
except to the extent that a continuation of this Agreement is
necessary for the continued operation of the Bank: (i) by the
Director of the Office of Thrift Supervision ("OTS") or his designee
or the Federal Deposit Insurance Corporation ("FDIC"), at the time
the FDIC enters into an agreement to provide assistance to or on
behalf of the Bank under the authority contained in section 13(c) of
the FDI Act, 12 U.S.C.Section 1823(c); (ii) by the Director of the
OTS or his designee at the time such Director or designee approves a
supervisory merger to resolve problems related to the operation of
the Bank or when the Bank is determined by such Director to be in an
unsafe or unsound condition. The vested rights and obligations of
the parties shall not be affected.
If and to the extent that any of the foregoing provisions shall cease to be
required or by applicable law, rule or regulation, the same shall become
inoperative as though eliminated by formal amendment of this Agreement. None of
the foregoing provisions, other than section 26(b) shall limit any obligations
of the Company under this Agreement.
Section 27. Guaranty.
The Company hereby irrevocably and unconditionally guarantees to the
Officer the payment of all amounts, and the performance of all other
obligations, due from the Bank in accordance with the terms of this Agreement as
and when due without any requirement of presentment, demand of payment, protest
or notice of dishonor or nonpayment. Solely for purposes of determining the
extent
Page - 24 -
<PAGE> 25
of the Company's guarantee, the obligations of the Bank under this Agreement
shall be determined as though section 26(a), (c), (d), (e) and (f) did not apply
to the Bank.
IN WITNESS WHEREOF, the Bank and the Company have caused this Agreement to
be executed and the Officer has hereunto set the Officer's hand, all as of the
day and year first above written.
/S/ Robert T. Volk
-------------------------------------
ROBERT T. VOLK
Attest:
<TABLE>
<S> <C>
By: /S/ William K. Sheerin ASTORIA FEDERAL SAVINGS AND LOAN
------------------------------------- ASSOCIATION
Name: William K. Sheerin
Title: Executive Vice President and
Secretary
By: /S/ George L. Engelke, Jr.
Attest: -------------------------------------
Name: George L. Engelke, Jr.
Title: Chairman, President and Chief
Executive Officer
By: /S/ William K. Sheerin
------------------------------------- ASTORIA FINANCIAL CORPORATION
Name: William K. Sheerin
Title: Executive Vice President and
Secretary
By: /S/ George L. Engelke, Jr.
-------------------------------------
Name: George L. Engelke, Jr.
Title: Chairman, President and Chief
Executive Officer
</TABLE>
Page - 25 -
<PAGE> 1
EXHIBIT 10.38
CHANGE OF CONTROL SEVERANCE AGREEMENT
This CHANGE OF CONTROL SEVERANCE AGREEMENT (the "Agreement") is made and
entered into as of January 1, 2000 by and among ASTORIA FEDERAL SAVINGS AND LOAN
ASSOCIATION, a savings and loan association organized and existing under the
laws of the United States of America and having an office at One Astoria Federal
Plaza, Lake Success, New York 11042 (the "Bank"), ASTORIA FINANCIAL CORPORATION,
a business corporation organized and existing under the laws of the State of
Delaware and having an office at One Astoria Federal Plaza, Lake Success, New
York 11042 (the "Company") and Ira M. Yourman, an individual residing at 22
Florence Avenue, Oyster Bay, New York 11771 (the "Officer").
INTRODUCTORY STATEMENT
WHEREAS, the Boards of Directors of the Bank and the Company have
approved the Bank and the Company entering into Change of Control Severance
Agreements with certain key officers of the Bank,
WHEREAS, the Officer is a key officer of the Bank;
WHEREAS, should the possibility of a Pending Change of Control or Change
of Control of the Bank or the Company arise, the Boards of Directors of the Bank
and the Company believe it is imperative that the Bank, the Company and the
Boards of Directors of the Bank and the Company should be able to rely upon the
Officer to continue in his or her position, and that the Bank and the Company
should be able to receive and rely upon the Officer's advice, if requested, as
to the best interests of the Bank and the Company and their respective
shareholders without concern that the Officer might be distracted by the
personal uncertainties and risks created by the possibility of a Pending Change
of Control or Change of Control;
WHEREAS, should the possibility of a Pending Change of Control or Change
of Control arise, in addition to his or her regular duties, the Officer may be
called upon to assist in the assessment of such possible Pending Change of
Control or Change of Control, advise management and the Board as to whether such
Pending Change of Control or Change of Control would be in the best interests of
the Bank, the Company and their respective shareholders, and to take such other
actions as the Boards of Directors of the Bank and the Company might determine
to be appropriate; and
NOW, THEREFORE, to assure the Bank and the Company that they will have the
continued dedication of the Officer and the availability of his or her advice
and counsel notwithstanding the possibility, threat, or occurrence of a Pending
Change of Control or Change of Control of the Bank or the Company, and to induce
the Officer to remain in the employ of the Bank, in consideration of the mutual
premises and agreements set forth herein and for other good and valuable
consideration, the Bank, the Company and the Officer agree as follows:
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<PAGE> 2
AGREEMENT
Section 1. Effective Date; Term; Pending Change of Control and Change of
Control Defined.
(a) This Agreement shall take effect on January 1, 2000 (the "Effective
Date") and shall remain in effect during the period (the "Term")
beginning on the Effective Date and ending on the earlier of :
(i) the date, prior to the occurrence of a Pending Change of
Control or a Change of Control, as defined below,
respectively, on which the Officer's employment by the Bank
terminates whether by discharge, resignation, death,
disability or retirement, or
(ii) the later of:
(A) the first anniversary of the date on which the Bank
notifies the Executive of its intent to discontinue the
Agreement (the "Initial Expiration Date") or,
(B) the second anniversary of the latest Change of Control,
as defined below, that occurs after the Effective Date
and before the Initial Expiration Date, or
(b) For purposes of this Agreement, a "Change of Control" shall be
deemed to have occurred upon the happening of any of the following
events:
(i) the consummation of a 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 Securities Exchange Act of 1934, as amended
("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
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<PAGE> 3
(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;
(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;
(iii) a complete liquidation or dissolution of the Company;
(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 Directors
of the Company on the Effective Date of this Agreement;
or
(B) individuals who first became members of the Board of
Directors of the Company after the Effective Date of
this Agreement either:
(1) 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
(2) upon election by the shareholders of the Board of
Directors of the Company to serve as a member of
such Board, 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
Page - 3 -
<PAGE> 4
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 Directors of the
Company; or
(v) any event which would be described in section 1(b)(i), (ii),
(iii) or (iv) if the term "Bank" 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 Bank, or a subsidiary of either of them, by the
Company, the Bank, or any subsidiary of either of them, or by any
employee benefit plan maintained by any of them. For purposes of
this section 1(b), the term "person" shall have the meaning assigned
to it under sections 13(d)(3) or 14(d)(2) of the Exchange Act.
(c) For purposes of this Agreement, a "Pending Change of Control" shall
mean:
(i) the approval by the shareholders of the Bank or the Company of
a definitive agreement for a transaction which, if
consummated, would result in a Change of Control; or
(ii) the approval by the shareholders of the Bank or the Company of
a transaction which, if consummated, would result in a Change
of Control.
Section 2. Discharge Prior to a Pending Change of Control.
The Bank may discharge the Officer at any time prior to the occurrence of
a Pending Change of Control or, if no Pending Change of Control has occurred, a
Change of Control, for any reason or for no reason. In such event:
(a) The Bank shall pay to the Officer or the Officer's estate his or her
earned but unpaid compensation, including, without limitation,
salary and all other items which constitute wages under applicable
law, as of the date of the Officer's termination of employment. This
payment shall be made at the time and in the manner prescribed by
law applicable to the payment of wages but in no event later than 30
days after the date of the Officer's termination of employment.
(b) The Bank shall provide the benefits due, if any, to the Officer or
the Officer's estate, surviving dependents or designated
beneficiaries, as applicable, under the employee benefit plans and
programs and compensation plans and programs maintained for the
benefit of the officers and employees of the Bank. The time and
manner of payment or other delivery of these benefits and the
recipients of such benefits shall be determined according to the
terms and conditions of the applicable plans and programs.
Page - 4 -
<PAGE> 5
The payments and benefits described in sections 2(a) and (b) shall be referred
to in this Agreement as the "Standard Termination Entitlements."
Section 3. Termination of Employment Due to Death.
The Officer's employment with the Bank shall terminate automatically, and
without any further action on the part of any party to this Agreement, on the
date of the Officer's death. In such event, the Bank shall pay and deliver to
the Officer's estate and surviving dependents and designated beneficiaries, as
applicable, the Standard Termination Entitlements.
Section 4. Termination Due to Disability after a Pending Change of
Control or a Change of Control.
The Bank may terminate the Officer's employment during the Term and after
the occurrence of a Pending Change of Control or a Change of Control upon a
determination by the Board of Directors of the Bank, by the affirmative vote of
75% of its entire membership, acting in reliance on the written advice of a
medical professional acceptable to it, that the Officer is suffering from a
physical or mental impairment which, at the date of the determination, has
prevented the Officer from performing the Officer's assigned duties on a
substantially full-time basis for a period of at least one hundred and eighty
(180) days during the period of one (1) year ending with the date of the
determination or is likely to result in death or prevent the Officer from
performing the Officer's assigned duties on a substantially full-time basis for
a period of at least one hundred and eighty (180) days during the period of one
(1) year beginning with the date of the determination. In such event:
(a) The Bank shall pay and deliver the Standard Termination Entitlements
to the Officer or, in the event of the Officer's death following
such termination but before payment, to the Officer's estate,
surviving dependents or designated beneficiaries, as applicable.
(b) In addition to the Standard Termination Entitlements, the Bank shall
continue to pay the Officer his or her base salary, at the annual
rate in effect for the Officer immediately prior to the termination
of the Officer's employment, during a period ending on the earliest
of: (i) the expiration of one hundred and eighty (180) days after
the date of termination of the Officer's employment; (ii) the date
on which long-term disability insurance benefits are first payable
to the Officer under any long-term disability insurance plan
covering employees of the Bank; or (iii) the date of the Officer's
death.
A termination of employment due to disability under this section 4 shall be
effected by a notice of termination given to the Officer by the Bank and shall
take effect on the later of the effective date of termination specified in such
notice or, if no such date is specified, the date on which the notice of
termination is deemed given to the Officer.
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<PAGE> 6
Section 5. Discharge with Cause after a Pending Change of Control or
Change of Control.
(a) The Bank may terminate the Officer's employment with "Cause" during
the Term and after the occurrence of a Pending Change of Control or
a Change of Control, but a termination shall be deemed to have
occurred with "Cause" only if:
(i) (A) the Board of Directors of the Bank, by the affirmative
vote of 75% of its entire membership, determines that
the Officer is guilty of personal dishonesty,
incompetence, wilful misconduct, breach of fiduciary
duty involving personal profit, intentional failure to
perform stated duties, wilful violation of any law, rule
or regulation (other than traffic violations or similar
offenses) or final cease and desist order, or any
material breach of this Agreement, in each case measured
against standards generally prevailing at the relevant
time in the savings and community banking industry;
(B) prior to the vote contemplated by section 5(a)(i)(A),
the Board of Directors of the Bank shall provide the
Officer with notice of the Bank's intent to discharge
the Officer for Cause, detailing with particularity the
facts and circumstances which are alleged to constitute
Cause (the "Notice of Intent to Discharge"); and
(C) after the giving of the Notice of Intent to Discharge
and before the taking of the vote contemplated by
section 5(a)(i)(A), the Officer, together with the
Officer's legal counsel, if he so desires, are afforded
a reasonable opportunity to make both written and oral
presentations before the Board of Directors of the Bank
for the purpose of refuting the alleged grounds for
Cause for the Officer's discharge; and
(D) after the vote contemplated by section 5(a)(i)(A), the
Bank has furnished to the Officer a notice of
termination which shall specify the effective date of
the Officer's termination of employment (which shall in
no event be earlier than the date on which such notice
is deemed given) and include a copy of a resolution or
resolutions adopted by the Board of Directors of the
Bank, certified by its corporate secretary, authorizing
the termination of the Officer's employment with Cause
and stating with particularity the facts and
circumstances found to constitute Cause for the
Officer's discharge (the "Final Discharge Notice"); or
(ii) the Officer, during the 90 day period commencing on the
delivery to the Officer by the Bank of the Notice of Intent to
Discharge specified in section
Page - 6 -
<PAGE> 7
5(a)(i)(B), resigns his or her employment with the Bank prior
to the delivery to the Officer by the Bank of the Final
Discharge Notice specified in section 5(a)(i)(D).
For purposes of this section 5, no act or failure to act, on the
part of the Officer, shall be considered "willful" unless it is
done, or omitted to be done, by the Officer in bad faith or without
reasonable belief that the Officer's action or omission was in the
best interests of the Bank or the Company, respectively. Any act or
failure to act based upon authority given pursuant to a resolution
duly adopted by the Board of Directors of the Bank or the Company or
based upon the written advice of counsel for the Bank or the Company
shall be conclusively presumed to be done or omitted to be done by
the Officer in good faith and in the best interests of the Bank or
the Company, respectively.
(b) If the Officer is discharged with Cause during the Term and after a
Pending Change of Control or a Change of Control, the Bank shall pay
and provide to him or, in the event of the Officer's death following
such discharge but prior to payment and providing, to the Officer's
estate, surviving dependents or designated beneficiaries, as
applicable, the Standard Termination Entitlements only.
(c) Following the giving of a Notice of Intent to Discharge, the Bank
may temporarily suspend the Officer's duties and authority and, in
such event, may also suspend the payment of salary and other cash
compensation, but not the Officer's participation in retirement,
insurance and other employee benefit plans. If the Officer is not
discharged or is discharged without Cause within forty-five (45)
days after the giving of a Notice of Intent to Discharge, payments
of salary and cash compensation shall resume, and all payments
withheld during the period of suspension shall be promptly restored.
If the Officer is discharged with Cause not later than forty-five
(45) days after the giving of the Notice of Intent to Discharge, all
payments withheld during the period of suspension shall be deemed
forfeited and shall not be included in the Standard Termination
Entitlements. If a Final Discharge Notice is given later than
forty-five (45) days, but sooner than ninety (90) days, after the
giving of the Notice of Intent to Discharge, all payments made to
the Officer during the period beginning with the giving of the
Notice of Intent to Discharge and ending with the Officer's
discharge with Cause shall be retained by the Officer and shall not
be applied to offset the Standard Termination Entitlements. If the
Bank does not give a Final Discharge Notice to the Officer within
ninety (90) days after giving a Notice of Intent to Discharge, the
Notice of Intent to Discharge shall be deemed withdrawn and any
future action to discharge the Officer with Cause shall require the
giving of a new Notice of Intent to Discharge. If the Officer
resigns pursuant to Section 5(a)(ii), the Officer shall forfeit his
or her right to suspended amounts that have not been restored as of
the date of the Officer's resignation or notice of resignation,
whichever is earlier.
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<PAGE> 8
Section 6. Discharge Without Cause after a Pending Change of Control or
Change of Control.
The Bank may discharge the Officer without Cause at any time after the
occurrence of a Pending Change of Control or a Change of Control, and in such
event:
(a) The Bank shall pay and deliver the Standard Termination Entitlements
to the Officer or, in the event of the Officer's death following the
Officer's discharge but before payment, to the Officer's estate,
surviving dependents or designated beneficiaries, as applicable.
(b) In addition to the Standard Termination Entitlements:
(i) the Bank shall provide for a period of two years following the
date of the Officer's discharge (the "Assurance Period") for
the benefit of the Officer and the Officer's spouse and
dependents continued group life, health (including
hospitalization, medical and major medical), dental, accident
and long-term disability insurance benefits on substantially
the same terms and conditions (including any co-payments and
deductibles, but excluding any premium sharing arrangements,
it being the intention of the parties to this Agreement that
the premiums for such insurance benefits shall be the sole
cost and expense of the Bank) in effect for them immediately
prior to the Officer's discharge. The coverage provided under
this section 6(b)(i) may, at the election of the Bank, be
secondary to the coverage provided as part of the Standard
Termination Entitlements and to any employer-paid coverage
provided by a subsequent employer or through Medicare, with
the result that benefits under the other coverages will offset
the coverage required by this section 6(b)(i), provided,
however, that for purposes of this section 6(b)(i) benefits
provided at the cost of the Officer or the Officer's spouse or
dependants pursuant to the Comprehensive Omnibus Budget
Reconciliation Act, as amended, shall not be considered
Standard Termination Entitlements.
(ii) The Bank shall make a lump sum payment to the Officer or, in
the event of the Officer's death following the Officer's
discharge but before payment, to the Officer's estate in an
amount equal to the salary that the Officer would have earned
if he had continued working for the Bank during the Assurance
Period at the highest annual rate of salary achieved during
the period of three (3) years ending immediately prior to the
date of termination (the "Salary Severance Payment"). The
Salary Severance Payment shall be computed using the following
formula:
SSP = BS x NY
Page - 8 -
<PAGE> 9
where:
"SSP" is the amount of the Salary Severance Payment, before
the deduction of applicable federal, state and local
withholding taxes;
"BS" is the highest annual rate of salary achieved by the
Officer during the period of three (3) years ending
immediately prior to the date of termination; and
"NY" is the Assurance Period expressed as a number of years
(rounded, if such period is not a whole number, to the next
highest whole number).
The Salary Severance Payment shall be made within thirty (30)
days after the Officer's termination of employment and shall
be in lieu of any claim to a continuation of base salary which
the Officer might otherwise have and in lieu of cash severance
benefits under any severance benefits program which may be in
effect for officers or employees of the Bank.
(iii) The Bank shall make a lump sum payment to the Officer or, in
the event of the Officer's death following the Officer's
discharge but before payment, to the Officer's estate in an
amount equal to the potential annual bonuses that the Officer
would have earned if the Officer had continued working for the
Bank during the Assurance Period at the highest annual rate of
salary achieved during the period of three (3) years ending
immediately prior to the date of termination (the "Bonus
Severance Payment"). The Bonus Severance Payment shall be
computed using the following formula:
BSP = ((BS x TIO x IP) + ( BS x TIO x FP x AP)) x NY
where:
"BSP" is the amount of the Bonus Severance Payment, before the
deduction of applicable federal, state and local withholding
taxes;
"BS" is the highest annual rate of salary achieved by the
Officer during the period of three (3) years ending
immediately prior to the date of termination;
"TIO" is the target incentive opportunity for the Officer
expressed as a percentage as established by the Compensation
Committee of the Board of Directors of the Bank pursuant to
the Bank's Annual Incentive Plan for Select Executives for the
year in which the employment of the Officer by the Bank
terminates or, if no target incentive opportunity is
established by the Compensation Committee of the Board of
Directors of the Bank for such year
Page - 9 -
<PAGE> 10
with respect to the Officer, then the highest target incentive
opportunity established by the Compensation Committee of the
Board of Directors of the Bank for the Officer pursuant to the
Annual Incentive Plan for Select Executives during the period
of three (3) years ending immediately prior to the date of
termination;
"IP" is either (i) the percentage of the TIO which is to be
determined by the individual performance of the Officer as
established by the Compensation Committee of the Board of
Directors of the Bank pursuant to the Bank's Annual Incentive
Plan for Select Executives for the year in which the
employment of the Officer by the Bank terminates or, (ii) if
no target incentive opportunity has been established with
respect to the Officer by the Compensation Committee of the
Board of Directors of the Bank for the year in which the
employment of the Officer by the Bank terminates, then the
lowest percentage of the target incentive opportunity to be
determined by the individual performance of the Officer
established by the Compensation Committee of the Board of
Directors of the Bank for the Officer pursuant to the Annual
Incentive Plan for Select Executives during the period of
three (3) years ending immediately prior to the date of
termination;
"FP" is either (i) the percentage of the TIO with respect to
the Officer which is to be determined by the financial
performance of the Company as established by the Compensation
Committee of the Board of Directors of the Bank pursuant to
the Bank's Annual Incentive Plan for Select Executives for the
year in which the employment of the Officer by the Bank
terminates or, (ii) if no target incentive opportunity has
been established with respect to the Officer by the
Compensation Committee of the Board of Directors of the Bank
for the year in which the employment of the Officer by the
Bank terminates, then a percentage equal to 100% minus the IP;
"AP" is the highest award percentage available to the Officer
with respect to the financial performance of the Company as
established by the Compensation Committee of the Board of
Directors of the Bank pursuant to the Bank's Annual Incentive
Plan for Select Executives for the year in which the
employment of the Officer by the Bank terminates or, (ii) if
no target incentive opportunity has been established with
respect to the Officer by the Compensation Committee of the
Board of Directors of the Bank for the year in which the
employment of the Officer by the Bank terminates, then the
highest award percentage available to the Officer with respect
to the financial performance of the Company established by the
Compensation Committee of the Board of Directors of the Bank
for the Officer pursuant to the Annual Incentive Plan for
Select Executives during the period of three (3) years ending
immediately prior to the date of termination;
Page - 10 -
<PAGE> 11
"NY" is the Assurance Period expressed as a number of years
(rounded, if such period is not a whole number, to the next
highest whole number).
The Bonus Severance Payment shall be made within thirty (30)
days after the Officer's termination of employment and shall
be in lieu of any claim to a continuation of participation in
annual bonus plans of the Bank which the Officer might
otherwise have.
The payments and benefits described in section 6(b) are referred to in
this Agreement as the "Additional Termination Entitlements". The payments
described in section 6(b)(ii) and (iii) shall be computed at the expense
of the Company by an attorney of the firm of Thacher Proffitt & Wood, Two
World Trade Center, New York, New York 10048 or, if such firm is
unavailable or unwilling to perform such calculation, by a firm of
independent certified public accountants selected by the Officer and
reasonably satisfactory to the Company (the "Computation Advisor"). The
determination of the Computation Advisor as to the amount of such payments
shall be final and binding in the absence of manifest error.
Section 7. Tax Indemnification.
(a) If the Officer's employment terminates under circumstances entitling
the Officer or, in the event of the Officer's death following such
termination but before payment, his or her estate to the Additional
Termination Entitlements, the Company shall pay to the Officer or,
in the event of the Officer's death, his or her estate an additional
amount intended to indemnify the Officer against the financial
effects of the excise tax imposed on excess parachute payments under
section 280G of the Code (the "Tax Indemnity Payment"). The Tax
Indemnity Payment shall be determined under the following formula:
E x P
TIP = ---------------------------------------
1 - (( FI x ( 1 - SLI )) + SLI + E + M )
where:
"TIP" is the Tax Indemnity Payment, before the deduction of
applicable federal, state and local withholding taxes;
"E" is the percentage rate at which an excise tax is assessed under
section 4999 of the Code;
"P" is the amount with respect to which such excise tax is assessed,
determined without regard to this section 16;
Page - 11 -
<PAGE> 12
"FI" is the highest marginal rate of income tax applicable to the
Officer under the Code for the taxable year in question;
"SLI" is the sum of the highest marginal rates of income tax
applicable to the Officer under all applicable state and local laws
for the taxable year in question; and
"M" is the highest marginal rate of Medicare tax applicable to the
Officer under the Code for the taxable year in question.
Such computation shall be made at the expense of the Company by the
Computation Advisor and shall be based on the following assumptions:
(i) that a change in ownership, a change in effective ownership or
control or a change in the ownership of a substantial portion
of the assets of the Bank or the Company has occurred within
the meaning of section 28OG of the Code (a "28OG Change of
Control");
(ii) that all direct or indirect payments made to or benefits
conferred upon the Officer on account of the Officer's
termination of employment are "parachute payments" within the
meaning of section 28OG of the Code; and
(iii) that no portion of such payments is reasonable compensation
for services rendered prior to the Officer's termination of
employment.
(b) With respect to any payment that is presumed to be a parachute
payment for purposes of section 28OG of the Code, the Tax Indemnity
Payment shall be made to the Officer on the earlier of the date the
Company, the Bank or any direct or indirect subsidiary or affiliate
of the Company or the Bank is required to withhold such tax or the
date the tax is required to be paid by the Officer, unless, prior to
such date, the Company delivers to the Officer the written opinion
(the "Opinion Letter"), in form and substance reasonably
satisfactory to the Officer, of the Computation Advisor or, if the
Computation Advisor is unable to provide such opinion, of an
attorney or firm of independent certified public accountants
selected by the Company and reasonably satisfactory to the Officer,
to the effect that the Officer has a reasonable basis on which to
conclude that:
(i) no 28OG Change in Control has occurred, or
(ii) all or part of the payment or benefit in question is not a
parachute payment for purposes of section 28OG of the Code, or
(iii) all or a part of such payment or benefit constitutes
reasonable compensation for services rendered prior to the
28OG Change of Control, or
Page - 12 -
<PAGE> 13
(iv) for some other reason which shall be set forth in detail in
such letter, no excise tax is due under section 4999 of the
Code with respect to such payment or benefit.
If the Company delivers an Opinion Letter, the Computation Advisor
shall recompute, and the Company shall make, the Tax Indemnity
Payment in reliance on the information contained in the Opinion
Letter.
(c) In the event that the Officer'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 with respect to which the
Tax Indemnity Payment is made, the Officer 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 pursuant to
sections 7(a) or 7(b), when increased by the amount of the payment
made to the Officer pursuant to this section 7(c), or when reduced
by the amount of the payment made to the Company pursuant to this
section 7(c), equals the amount that should have properly been paid
to the Officer under section 7(a). The interest paid to the Company
under this section 7(c) shall be determined at the rate provided
under section 1274(b)(2)(B) of the Code. The payment made to the
Officer shall include such amount of interest as is necessary to
satisfy any interest assessment made by the Internal Revenue Service
and an additional amount equal to any monetary penalties assessed by
the Internal Revenue Service on account of an underpayment of the
excise tax. To confirm that the proper amount, if any, was paid to
the Officer under this section 7, the Officer shall furnish to the
Company a copy of each tax return which reflects a liability for an
excise tax, at least 20 days before the date on which such return is
required to be filed with the Internal Revenue Service. Nothing in
this Agreement shall give the Company any right to control or
otherwise participate in any action, suit or proceeding to which the
Officer is a party as a result of positions taken on the Officer's
federal income tax return with respect to the Officer's liability
for excise taxes under section 4999 of the Code.
Section 8. Indemnification upon and following a Change of Control.
(a) From and after the effective date of a Change of Control through the
sixth anniversary of such effective date, the Bank and the Company
agree to indemnify and hold harmless the Officer, against any costs
or expenses (including reasonable attorneys' fees), judgments,
fines, losses, claims, damages or liabilities (collectively,
"Costs") incurred in connection with any claim, action, suit,
proceeding or investigation, whether civil, criminal, administrative
or investigative, arising out of matters existing or occurring at or
prior to the time the Change of Control became effective whether
asserted or claimed prior to, at or after the effective date of the
Change of Control, and to advance any such Costs to the Officer as
they are from
Page - 13 -
<PAGE> 14
time to time incurred, in each case to the fullest extent the
Officer would have been indemnified as a director or officer of the
Bank or the Company, as applicable, and as then permitted under
applicable law.
(b) The Officer, seeking to claim indemnification under section 8(a) of
this Agreement and upon learning of any such claim, action, suit,
proceeding or investigation, shall promptly notify the Bank thereof,
but the failure to so notify shall not relieve the Bank or the
Company of any liability it may have pursuant to this Agreement to
the Officer if such failure does not materially and substantially
prejudice the Bank or the Company. In the event of any such claim,
action, suit, proceeding or investigation,
(i) the Bank and the Company shall have the right to assume the
defense thereof with counsel reasonably acceptable to the
Officer, and the Bank and the Company shall not be liable to
the Officer for any legal expenses of other counsel
subsequently incurred by the Officer in connection with the
defense thereof, except that if the Bank and the Company do
not elect to assume such defense within a reasonable time or
counsel for the Officer at any time advises that there are
issues which raise conflicts of interest between the Bank or
the Company and the Officer (and counsel for the Bank or the
Company does not disagree), the Officer may retain counsel
satisfactory to the Officer, and the Bank and the Company
shall remain responsible for the reasonable fees and expenses
of such counsel as set forth above, to be paid promptly as
statements therefor are received; provided, however, that the
Bank and the Company shall be obligated pursuant to this
paragraph (b)(i) to pay for only one firm of counsel for all
indemnified parties in any one jurisdiction with respect to
any given claim, action, suit, proceeding or investigation
unless the use of one counsel for such indemnified parties,
including the Officer, would present such counsel with a
conflict of interest;
(ii) the Officer will reasonably cooperate in the defense of any
such matter; and
(iii) the Bank and the Company shall not be liable for any
settlement effected by the Officer without their prior written
consent, which shall not be unreasonably withheld.
Section 9. Resignation.
(a) The Officer may resign from the Officer's employment with the Bank
at any time. A resignation under this section 9 shall be effected by
notice of resignation given by the Officer to the Bank and shall
take effect on the later of the effective date of termination
specified in such notice or the date on which the notice of
termination is deemed given by the Officer. For purposes of this
Agreement, retirement of the Officer from the employment of the Bank
or the Company under circumstances
Page - 14 -
<PAGE> 15
defined as "normal retirement" or "early retirement" pursuant to any
qualified defined benefit or qualified defined contribution pension
plan maintained by the Bank shall be deemed a resignation by the
Officer's of the Officer's employment with the Bank. A resignation
by the Officer as described in section 5(a)(ii) of this Agreement,
for purposes of this Agreement shall be deemed to be termination
with "Cause". The Officer's resignation of any of the positions
within the Bank or the Company to which he has been assigned shall
be deemed a resignation from all such positions.
(b) The Officer's resignation shall be deemed to be for "Good Reason" if
the effective date of resignation occurs during the Term, but on or
after the effective date of a Pending Change of Control or Change of
Control, and is on account of:
(i) the failure of the Bank (whether by act or omission of the
Board of Directors, or otherwise) to appoint, re-appoint,
elect or re-elect the Officer to the office and position with
the Bank that he held immediately prior to the Change of
Control or Pending Change of Control (the "Assigned Office")
or to a more senior office and position;
(ii) if the Officer is or becomes a member of the Board of
Directors of the Bank, the failure of the shareholders of the
Bank (whether in an election in which the Officer stands as a
nominee or in an election where the Officer is not a nominee),
to elect or re-elect the Officer to such directorship at the
expiration of the Officer's term as a director, unless such
failure is a result of the Officer's refusal to stand for
election;
(iii) a material failure by the Bank, whether by amendment of the
charter or organization, by-laws, action of the Board of
Directors of the Bank or otherwise, to vest in the Officer the
functions, duties, or responsibilities customarily associated
with the Assigned Office; provided that the Officer shall have
given notice of such failure to the Bank, and the Bank has not
fully cured such failure within thirty (30) days after such
notice is deemed given;
(iv) any reduction of the Officer's rate of base salary in effect
from time to time, whether or not material, or any failure,
other than due to reasonable administrative error that is
fully cured within 5 days after notice of such administrative
error is deemed given, to pay any portion of the Officer's
compensation as and when due;
(v) any change in the terms and conditions of any compensation or
benefit program in which the Officer participates which,
either individually or together with other changes, has a
material adverse effect on the aggregate value of the
Officer's total compensation package; provided that the
Officer shall have given notice of such material adverse
effect to the Bank, and the
Page - 15 -
<PAGE> 16
Bank has not fully cured such failure within thirty (30) days
after such notice is deemed given;
(vi) any material breach by the Company or the Bank of any material
term, condition or covenant contained in this Agreement;
provided that the Officer shall have given notice to the
Company and the Bank of such material adverse effect, and the
Company or the Bank have not fully cured such failure within
thirty (30) days after such notice is deemed given; or
(vii) a change in the Officer's principal place of employment to a
location that is outside of Nassau County or Queens County,
New York.
In all other cases, a resignation by the Officer shall be deemed to
be without Good Reason. In the event of resignation, the Officer
shall state in the Officer's notice of resignation whether the
Officer considers his or her resignation to be a resignation with
Good Reason, and if he does, he shall state in such notice the
grounds which constitute Good Reason. The Officer's determination of
the existence of Good Reason shall be conclusive in the absence of
fraud, bad faith or manifest error.
(c) In the event of the Officer's resignation for any reason, the Bank
shall pay and deliver the Standard Termination Entitlements. In the
event of the Officer's resignation with Good Reason and such
resignation is effective within six (6) months of the effective date
of the Change of Control (the "Resignation Window Period"), the Bank
shall also pay and deliver the Additional Termination Entitlements.
In the event the Officer's resignation with Good Reason is based
upon section 9(b)(iii),(iv),(v) or (vi) and the notice required by
such provision has been given within six months of the effective
date of the Change of Control but the applicable cure period will
not expire until on or after the date which is six months following
the effective date of the Change of Control, the Resignation Window
Period shall be extended so as expire 30 days following the
expiration of the applicable cure period.
Section 10. Terms and Conditions of the Additional Termination
Entitlements.
The Bank and the Officer hereby stipulate that the damages which may be
incurred by the Officer following any termination of employment are not capable
of accurate measurement as of the date first above written and that the
Additional Termination Entitlements constitute reasonable damages under the
circumstances and shall be payable without any requirement of proof of actual
damage and without regard to the Officer's efforts, if any, to mitigate damages.
The Bank and the Officer further agree that the Bank may condition the payment
and delivery of the Additional Termination Entitlements on the receipt of:
(a) the Officer's resignation from any and all positions which he holds
as an officer, director or committee member with respect to the Bank
or any subsidiary or affiliate
Page - 16 -
<PAGE> 17
of the Bank; and
(b) a release of the Bank and the Company and their officers, directors,
shareholders, subsidiaries and affiliates, in form and substance
satisfactory to the Bank, of any liability to the Officer, whether
for compensation or damages, in connection with the Officer's
employment with the Bank and the termination of such employment,
except for the Standard Termination Entitlements, the Additional
Termination Entitlements, the Tax Indemnity Payment and
indemnification payments due the Officer pursuant to section 8 or
section 16 of this Agreement.
To the extent the Bank conditions the payment and delivery of the Additional
Termination Entitlements or any other amount due under this Agreement upon the
receipt of the release provided in section 10(b) of this Agreement and such
release by law may not be effective until the expiration of a required prior
notice and/or a recission period following its execution by the Officer, then
any payment required to be made pursuant to this Agreement may be deferred until
the expiration of the period which is the sum of the period within which such
payment was required to be made under the terms of this Agreement but for this
section 10 and the period of any required prior notice and recission periods,
provided, however, that the Bank shall pay to the Officer for each day of such
deferral interest in addition to any other amounts due and owing under this
Agreement at the rate of the federal short term rate established under section
1274 of the Code for the month in which the Officer's termination of employment
occurs calculated on the basis of a 360 day year for the actual number of days
of such deferral on the amount so deferred.
Section 11. Confidentiality.
Unless the Officer obtains the prior written consent of the Bank or the
Company, the Officer shall keep confidential and shall refrain from using for
the benefit of himself or herself, 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 the Officer's
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 the Officer) until the same ceases to be material
(or becomes so ascertainable or available); provided, however, that nothing in
this section 11 shall prevent the Officer, 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
proceeding to the extent that such participation or disclosure is required under
applicable law.
Section 12. No Effect on Employee Benefit Plans or Programs.
Except to the extent specifically provided herein, the termination of the
Officer's employment during the Assurance Period or thereafter, whether by the
Bank or by the Officer, shall have no effect on the rights and obligations of
the parties hereto under the Bank's qualified or non-qualified
Page - 17 -
<PAGE> 18
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 Bank from time to time; provided, however, that
nothing in this Agreement shall be deemed to duplicate any compensation or
benefits provided under any severance agreement, plan or program covering the
Officer to which the Bank or Company is a party and any duplicative amount
payable under any such agreement, plan or program shall be applied as an offset
to reduce the amounts otherwise payable hereunder. The Additional Termination
Entitlements provided hereunder, when due and payable or provided to the
Officer, or in the case of the Officer's death, to his or her estate, surviving
dependants or designated beneficiaries, as applicable, are acknowledged to be in
lieu of any benefits that would otherwise be provided under such circumstances
pursuant to the Bank's Severance Pay Plan, as amended, or Severance Compensation
Plan, as amended.
Page - 18 -
<PAGE> 19
Section 13. Successors and Assigns.
This Agreement will inure to the benefit of and be binding upon the
Officer, the Officer's legal representatives and testate or intestate
distributees, and the Company and the Bank and their respective 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 or the Bank may be
sold or otherwise transferred. Failure of the Company to obtain from any
successor its express written assumption of the Company's or Bank's obligations
hereunder at least 60 days in advance of the scheduled effective date of any
such succession shall, if such succession constitutes a Change of Control,
constitute Good Reason for the Officer's resignation on or at any time during
the Term following the occurrence of such succession.
Section 14. No Attachment.
Except as required by law, no right to receive payments under this
Agreement shall be subject to anticipation, commutation, alienation, sale,
assignment, encumbrance, charge, pledge, or hypothecation, or to execution,
attachment, levy, or similar process or assignment by operation of law, and any
attempt, voluntary or involuntary, to affect any such action shall be null,
void, and of no effect.
Section 15. 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 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 Officer:
Ira M. Yourman
22 Florence Avenue
Oyster Bay, New York 11771
If to the Company or the Bank:
Astoria Financial Corporation
One Astoria Federal Plaza
Lake Success, New York 11042
Page - 19 -
<PAGE> 20
Attention: Chairman, President and Chief Executive Officer
with a copy to:
Thacher Proffitt & Wood
Two World Trade Center
New York, New York 10048
Attention: W. Edward Bright, Esq.
Section 16. Indemnification for Attorneys' Fees.
(a) The Bank shall indemnify, hold harmless and defend the Officer
against reasonable costs, including 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 the Officer's efforts, in
good faith, to defend or enforce the terms of this Agreement;
provided, however, that the Officer 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 Bank's obligations under this
Agreement shall be conclusive evidence of the Officer's entitlement
to indemnification under this Agreement, and any such
indemnification payments shall be in addition to amounts payable
pursuant to such settlement agreement, unless such settlement
agreement expressly provides otherwise.
(b) The Bank's or the Company's obligation to make the payments provided
for in this Agreement and otherwise to perform their respective
obligations under this Agreement shall not be affected by any
set-off, counterclaim, recoupment, defense or other claim, right or
action which the Bank or the Company may have against the Officer or
others. In no event shall the Officer be obligated to seek other
employment or take any other action by way of mitigation of the
amounts payable to the Officer under any of the provisions of this
Agreement and such amounts shall not be reduced whether or not the
Officer obtains other employment. Unless it is determined that the
Officer has acted frivolously or in bad faith, the Bank shall pay as
incurred, to the full extent permitted by law, all legal fees and
expenses which the Officer may reasonably incur as a result of or in
connection with the Officer's consultation with legal counsel or
arising out of any action, suit, proceeding, tax controversy, appeal
or contest (regardless of the outcome thereof) by the Bank, the
Company, the Officer or others regarding the validity or
enforceability of, or liability under, any provision of this
Agreement or any guarantee of performance thereof (including as a
result of any contest by the Officer about the amount of any payment
pursuant to this Agreement), plus in each case interest on any
delayed payment at the applicable
Page - 20 -
<PAGE> 21
Federal rate provided for in section 7872(f)(2)(A) of the Code.
Page - 21 -
<PAGE> 22
Section 17. Employment Rights and Funding Obligations.
(a) Nothing expressed or implied in this Agreement shall create any
right or duty on the part of the Bank, the Company or the Officer to
have the Officer continue as an officer of the Bank or the Company
or to remain in the employment of the Bank, the Company.
(b) Nothing expressed or implied in this Agreement shall create any
right or duty on the part of the Bank, the Company or the Officer to
create a trust of any kind to fund any benefits which may be payable
pursuant to this Agreement, and to the extent that the Officer
acquires a right to receive benefits from the Bank or the Company
pursuant to this Agreement, such right shall be no greater than the
right of any unsecured general creditor of the Bank or the Company,
respectively.
Section 18. Withholding.
The Bank or the Company, as applicable, shall have the right to deduct and
withhold from any amounts paid in cash pursuant to this Agreement by the Bank or
the Company, respectively, any taxes or other amounts required by law to be
withheld with respect to such payment.
Section 19. 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 20. Survival.
The rights and obligations of the Bank, the Company and the Officer under
this Agreement, unless otherwise expressly provided in this Agreement, shall
survive the expiration of the term or other termination of this Agreement.
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.
Page - 22 -
<PAGE> 23
This Agreement may be executed in two 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.
Except to the extent preempted by federal 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.
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. No modifications of this Agreement shall be valid unless made in writing
and signed by the parties hereto.
Section 26. Required Regulatory Provisions.
The following provisions are included for the purposes of complying with
various laws, rules and regulations applicable to the Bank:
(a) Notwithstanding anything herein contained to the contrary, in no
event shall the aggregate amount of compensation payable to the
Officer on account of the Officer's termination of employment exceed
three times the Officer's average annual total compensation for the
last five consecutive calendar years to end prior to the Officer's
termination of employment with the Bank (or for the Officer's entire
period of employment with the Bank if less than five calendar
years).
(b) Notwithstanding anything herein contained to the contrary, any
payments to the Officer by the Bank, 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
("FDI Act"), 12 U.S.C. Section 1828(k), and any regulations
promulgated thereunder.
(c) Notwithstanding anything herein contained to the contrary, if the
Officer is suspended from office and/or temporarily prohibited from
participating in the conduct of the affairs of the Bank pursuant to
a notice served under section 8(e)(3)
Page - 23 -
<PAGE> 24
or 8(g)(1) of the FDI Act, 12 U.S.C. Section 1818(e)(3) or
1818(g)(1), the Bank's obligations under this Agreement shall be
suspended as of the date of service of such notice, unless stayed by
appropriate proceedings. If the charges in such notice are
dismissed, the Bank, in its discretion, may (i) pay to the Officer
all or part of the compensation withheld while the Bank's
obligations hereunder were suspended and (ii) reinstate, in whole or
in part, any of the obligations which were suspended.
(d) Notwithstanding anything herein contained to the contrary, if the
Officer is removed and/or permanently prohibited from participating
in the conduct of the Bank's affairs by an order issued under
section 8(e)(4) or 8(g)(1) of the FDI Act, 12 U.S.C. Section
1818(e)(4) or (g)(1), all prospective obligations of the Bank under
this Agreement shall terminate as of the effective date of the
order, but vested rights and obligations of the Bank and the Officer
shall not be affected.
(e) Notwithstanding anything herein contained to the contrary, if the
Bank is in default (within the meaning of section 3(x)(1) of the FDI
Act, 12 U.S.C. Section 1813(x)(1), all prospective obligations of
the Bank under this Agreement shall terminate as of the date of
default, but vested rights and obligations of the Bank and the
Officer shall not be affected.
(f) Notwithstanding anything herein contained to the contrary, all
prospective obligations of the Bank hereunder shall be terminated,
except to the extent that a continuation of this Agreement is
necessary for the continued operation of the Bank: (i) by the
Director of the Office of Thrift Supervision ("OTS") or his designee
or the Federal Deposit Insurance Corporation ("FDIC"), at the time
the FDIC enters into an agreement to provide assistance to or on
behalf of the Bank under the authority contained in section 13(c) of
the FDI Act, 12 U.S.C.Section 1823(c); (ii) by the Director of the
OTS or his designee at the time such Director or designee approves a
supervisory merger to resolve problems related to the operation of
the Bank or when the Bank is determined by such Director to be in an
unsafe or unsound condition. The vested rights and obligations of
the parties shall not be affected.
If and to the extent that any of the foregoing provisions shall cease to be
required or by applicable law, rule or regulation, the same shall become
inoperative as though eliminated by formal amendment of this Agreement. None of
the foregoing provisions, other than section 26(b) shall limit any obligations
of the Company under this Agreement.
Section 27. Guaranty.
The Company hereby irrevocably and unconditionally guarantees to the
Officer the payment of all amounts, and the performance of all other
obligations, due from the Bank in accordance with the terms of this Agreement as
and when due without any requirement of presentment, demand of payment, protest
or notice of dishonor or nonpayment. Solely for purposes of determining the
extent
Page - 24 -
<PAGE> 25
of the Company's guarantee, the obligations of the Bank under this Agreement
shall be determined as though section 26(a), (c), (d), (e) and (f) did not apply
to the Bank.
IN WITNESS WHEREOF, the Bank and the Company have caused this Agreement to
be executed and the Officer has hereunto set the Officer's hand, all as of the
day and year first above written.
/S/ Ira M. Yourman
-------------------------------------
IRA M. YOURMAN
Attest:
<TABLE>
<S> <C>
By: /S/ William K. Sheerin ASTORIA FEDERAL SAVINGS AND LOAN
- ------------------------------------ ASSOCIATION
Name: William K. Sheerin
Title: Executive Vice President and
Secretary
By: /S/ George L. Engelke, Jr.
Attest: ------------------------------------
Name: George L. Engelke, Jr.
Title: Chairman, President and Chief
Executive Officer
By: /S/ William K. Sheerin
- ------------------------------------ ASTORIA FINANCIAL CORPORATION
Name: William K. Sheerin
Title: Executive Vice President and
Secretary
By: /S/ George L. Engelke, Jr.
------------------------------------
Name: George L. Engelke, Jr.
Title: Chairman, President and Chief
Executive Officer
</TABLE>
Page - 25 -
<PAGE> 1
EXHIBIT 11.1 STATEMENT REGARDING COMPUTATION OF EARNINGS PER SHARE
<TABLE>
<CAPTION>
Year Ended
December 31, 1999
(In Thousands, Except
Per Share Data)
<S> <C>
1. Net Income $ 235,670
Less: Preferred stock dividends declared 6,000
---------
Net income available to common shareholders $ 229,670
=========
2. Weighted average common shares outstanding 54,461
3. ESOP shares not committed to be released (3,110)
---------
4. Total weighted average common shares outstanding 51,351
=========
5. Basic earnings per common share $ 4.47
=========
6. Total weighted average common shares outstanding 51,351
7. Dilutive effect of stock options using the treasury stock method 1,156
8. Total average common and common equivalent shares 52,507
=========
9. Diluted earnings per common share $ 4.37
=========
</TABLE>
<PAGE> 1
EXHIBIT 21.1 SUBSIDIARIES OF THE REGISTRANT
Jurisdiction of Incorporation
-----------------------------
Subsidiaries of Astoria Financial Corporation
Astoria Federal Savings and Loan Association United States
a/k/a Astoria Federal Savings
Astoria Capital Trust I Delaware
Subsidiaries of Astoria Federal Savings and Loan Association
A.F. Agency, Inc. New York
A.F. Roosevelt Avenue Corp. New York
Astoria Federal Mortgage Corp. New York
Dollar Service Corp. New York
Fidata Service Corp. New York
Infoserve Corporation New York
Long Island Savings Agency, Inc. New York
Longco Investors, Inc. New York
Longpond Investors, Inc. New York
Longrich Investors, Inc. New York
Mortgage Headquarters, Inc. New York
Oldfield Realty, Inc. New York
S.H.I. Corporation Massachusetts
Star Preferred Holding Corp. New Jersey
Suffco Service Corp. New York
Syosset New Jersey Realty, Inc. New Jersey
Zythum Realty, Inc. New York
3 Belmont Corporation New York
35 East 75th Street Associates, Ltd. New York
201 Old Country Road, Inc. New York
1401 Avenue M. Associates, Ltd. New York
1780 Ocean Avenue Corp. New York
3366 Park Avenue Corp. New York
Astoria Federal has thirty-three additional subsidiaries, all of which are
inactive and which Astoria Federal intends to dissolve or is in the process of
dissolving.
Subsidiaries of Star Preferred Holding Corporation
Astoria Preferred Funding Corporation Delaware
Starline Development Corp. New York
<PAGE> 1
EXHIBIT 23
KPMG LLP Letterhead
1305 Walt Whitman Road
Melville, NY 11747
INDEPENDENT AUDITORS' CONSENT
The Board of Directors
Astoria Financial Corporation:
We consent to incorporation by reference in the Registration Statements (Nos.
33-86248, 33-86250, 33-98500, 333-36807 and 333-64895) on Form S-8, (Nos.
333-29901, 333-58897 and 333-30792) on Form S-4 and (No. 33-98532) on Form S-3
of Astoria Financial Corporation of our report dated January 20, 2000, relating
to the consolidated statements of financial condition of Astoria Financial
Corporation and subsidiaries as of December 31, 1999 and 1998, and the related
consolidated statements of income, changes in stockholders' equity and cash
flows for each of the years in the three-year period ended December 31, 1999,
which report appears in the December 31, 1999 Annual Report on Form 10-K of
Astoria Financial Corporation.
/s/ KPMG LLP
Melville, New York
March 24, 2000
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
This schedule contains summary financial information extracted from the
Condensed Consolidated Statement of Financial Condition as of December 31, 1999
and the Condensed Consolidated Statement of Operations for the twelve months
ended December 31, 1999 and is qualified in its entirety by reference to such
financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> DEC-31-1999
<CASH> 154,918
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 335,653
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 8,862,749
<INVESTMENTS-CARRYING> 1,899,957
<INVESTMENTS-MARKET> 1,843,607
<LOANS> 10,300,450
<ALLOWANCE> 76,578
<TOTAL-ASSETS> 22,696,536
<DEPOSITS> 9,554,534
<SHORT-TERM> 589,678
<LIABILITIES-OTHER> 418,569
<LONG-TERM> 10,811,843
0
2,000
<COMMON> 555
<OTHER-SE> 1,194,357
<TOTAL-LIABILITIES-AND-EQUITY> 22,696,536
<INTEREST-LOAN> 698,908
<INTEREST-INVEST> 796,371
<INTEREST-OTHER> 0
<INTEREST-TOTAL> 1,495,279
<INTEREST-DEPOSIT> 363,156
<INTEREST-EXPENSE> 955,331
<INTEREST-INCOME-NET> 539,948
<LOAN-LOSSES> 4,119
<SECURITIES-GAINS> 739
<EXPENSE-OTHER> 30,171
<INCOME-PRETAX> 399,434
<INCOME-PRE-EXTRAORDINARY> 235,670
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 235,670
<EPS-BASIC> 4.47
<EPS-DILUTED> 4.37
<YIELD-ACTUAL> 2.46
<LOANS-NON> 50,456
<LOANS-PAST> 2,913
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 5,604
<ALLOWANCE-OPEN> 74,403
<CHARGE-OFFS> 6,709
<RECOVERIES> 4,765
<ALLOWANCE-CLOSE> 76,578
<ALLOWANCE-DOMESTIC> 76,578
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
