Exhibit 10.4
November 2, 2006
Patrick D. McTernan
622 Eagle Rock Avenue
West Orange, NJ
07052-2989
Dear Mr. McTernan:
In connection with the anticipated
merger (the “Merger”) of PennFed Financial Services,
Inc. (the “Company”) with and into New York Community
Bancorp, Inc. (“NYB”) as contemplated by the Agreement
and Plan of Merger, dated as of November 2, 2006, by and
between NYB and the Company (the “Merger Agreement”),
which is entered into as of today, the Company, NYB and you hereby
enter into this agreement (this “Agreement”).
Capitalized terms used but not otherwise defined in this Agreement
shall have the meaning set forth in the Merger
Agreement.
1. Effective Time Payment
. At or immediately
following the Effective Time, the Company or NYB shall pay you
$2,200,000. If your employment with the Company is terminated prior
to the Effective Time due to disability or death, you or your
estate, as applicable, shall be entitled to the foregoing payment
at or immediately following the Effective Time. At your written
election prior to the Effective Time, the foregoing payment shall
be reduced by the present value at the Effective Time of the
expected health and dental premiums to be paid by NYB, to maintain
continuing health and dental insurance coverage for you and your
dependents for the three year period following your employment
termination (the “Extended Coverage”) and you and your
dependents will be entitled to receive the Extended Coverage and to
receive COBRA benefits thereafter. For the avoidance of doubt, and
notwithstanding anything herein to the contrary, you agree that
this payment shall not be taken into account in computing any
benefits under any plan, program or arrangement of the Company or
its Affiliates in which you participate or to which you are a
party. Not later than 10 business days prior to the scheduled
payment date, NYB shall be provided with sufficient information by
the Company to enable its Tax Advisor (as defined below) to
determine whether such payment is in compliance with Paragraph 4 of
this Agreement..
2. Exercise of Nonqualified
Stock Options . You
agree that, on or before December 28, 2006, you will exercise
all Company nonqualified stock options you hold as of the date of
this Agreement.
3. Termination of Prior
Agreement; Agreement to Remain Employed Through Effective Time
. You hereby agree that,
in consideration of the Company and NYB entering into this
Agreement, effective as of the date hereof, the amended and
restated Employment Agreement by and between the Company and you,
dated as of November 28, 2004, shall be null and void and no
person or entity shall be obligated to pay you or any person any
amounts or provide any benefits in respect to such Employment
Agreement. Further, in consideration of the benefits conferred upon
you pursuant to this Agreement, you hereby agree not to voluntarily
terminate your employment with the Company or any of its Affiliates
prior to the Effective Time, and, prior to the Effective Time, the
Company agrees not to terminate your employment with the Company or
its Affiliates, except for cause as defined in your Employment
Agreement.
4. Withholding and
Reduction . The
Company will withhold and deposit all federal, state and local
income and employment taxes that are owed by you with respect to
all amounts paid or benefits provided to or for you by the Company,
NYB or any Affiliate pursuant to this Agreement.
It is the intention of the parties
that no payment be made or benefit be provided to you under this
Agreement or otherwise by the Company that would constitute an
“excess parachute payment” within the meaning of
Section 280G of the Code and any regulations thereunder,
thereby resulting in a loss of an income tax deduction by the
Company or NYB or the imposition of an excise tax on you under
Section 4999 of the Code. If, at any time, it is determined as
provided below that some or all of the payments or benefits
scheduled to be made or provided under thi
