Exhibit 10 m) (iii)
  AMENDED
AND RESTATED EMPLOYMENT AGREEMENT
 
 This Employment Agreement (the
“Agreement”) is made and entered into as of December 10, 2007 by and among State
Bancorp, Inc., a New York business corporation (the “Company”), State Bank of
Long Island, a banking corporation organized and operating under the laws of the
State of New York (the “Bank”), and Thomas M. O’Brien, an individual (the
“Executive”).
 
 
 INTRODUCTORY
STATEMENT
 
 The Company is a bank holding company
whose common stock is listed for trading on the Nasdaq Stock Market Global
Market. The Bank is a wholly owned subsidiary of the Company and conducts a
commercial and consumer banking business in the New York metropolitan area. The
Executive has substantial prior experience as a senior executive at public and
private banking companies in the New York metropolitan area, including service
as chief executive officer. The Board of Directors of the Company (the “Company
Board”) and the Board of Directors of the Bank (the “Bank Board”) have caused
the Bank and the Company to enter into an EmploymentAgreement with the Executive
as of November 6, 2006 (the “Prior Agreement”) to secure his
services.  The Executive, the Company and the Bank wish to amend and
restate the Prior Agreement pursuant to section 31 thereof.  The terms
and conditions which the Company, the Bank and the Executive have agreed to are
as follows.
 
 
 AGREEMENT
 
 1.  Employment.
 
 The Company and the Bank hereby offer
to employ the Executive, and the Executive hereby accepts such employment,
during the period and on the terms and conditions set forth in this
Agreement.
 
 2.  Employment
Period; Remaining Unexpired Employment Period.
 
 (a)           
The Bank shall employ the Executive for a period of five (5) years beginning on
November 6, 2006 (the “Employment Commencement Date”) and ending on the fifth
(5th) anniversary of the Employment Commencement Date (the “Employment
Period”).
 
 (b)           
Except as otherwise expressly provided in this Agreement, any reference in this
Agreement to the term “Remaining Unexpired Employment Period” as of any date
shall mean the period beginning on such date and ending on the last day of the
Employment Period.




(c)           
Nothing in this Agreement shall be deemed to prohibit the Bank or the Company
from terminating the Executive’s employment before the end of the Employment
Period with or without notice and for any reason or without reason. This
Agreement shall determine the relative rights and obligations of the Company,
the Bank and the Executive in the event of any such termination. In addition,
nothing in this Agreement shall require a termination, or prohibit a
continuation, of the Executive’s employment at the expiration of the Employment
Period. Any such continuation shall be on an “at-will” basis unless the Company,
the Bank and the Executive agree otherwise.
 
 3.  Duties/Investment.
 
 (a)           
The Executive shall be elected to the position of President and Chief Operating
Officer of the Bank and the Company as of the Employment Commencement Date and
to the additional positions of Chief Executive Officer of the Bank and the
Company effective upon the retirement of the incumbent Chief Executive Officer
from such positions, shall have such power, authority and responsibility and
perform such duties as are prescribed by or under the Bank’s By-Laws and as are
customarily associated with such position and shall report only to the Company
Board and the Bank Board.
 
 (b)           
The Executive shall also serve as a member of the Bank Board and the Company
Board and as an officer or director of any subsidiary or affiliate of the Bank
or the Company, if duly elected or appointed to serve in such
capacities.
 
 (c)           
The Executive shall devote his full business time and attention (other than
during weekends, holidays, approved vacation periods, and periods of illness or
approved leaves of absence) to the business and affairs of the Company and the
Bank and shall use all of his skill and efforts to advance their best interests.
On the Employment Commencement Date, the Executive shall execute a copy of the
Company’s Code of Business Conduct and Ethics.
 
 (d)           
Within a reasonable period after the Employment Commencement Date, the Executive
agrees to invest $1,000,000 in the Company’s Common Stock on a basis reasonably
acceptable to the Company and the Executive consistent with the Company’s stock
ownership guidelines for executives.
 
 4.  Outside
Activities.
 
 The Executive may serve as a member of
the boards of directors or other governing bodies of such business, community
and charitable organizations as he may disclose to and as may be approved by the
Company Board, or the Compensation Committee or Executive Committee thereof
(which approval shall not be unreasonably withheld); provided, however, that
such service shall not materially interfere with the performance of his duties
under this Agreement. The Executive may also engage in personal business and
investment activities which do not materially interfere with the performance of
his duties hereunder; provided, however, that such activities are not prohibited
under any code of conduct or investment or securities trading policy established
by the Bank or the Company and generally applicable to all similarly situated
executives. As of the date of this Agreement,
the Executive has disclosed to, the Company Board has approved, the Executive’s
service as a director of the entities enumerated on Exhibit A to this
Agreement.
  2




5.  Working
Facilities and Expenses.
 
 The Executive’s principal place of
employment shall be at the Company’s executive offices as of the Employment
Commencement Date, or at such other location as the Company and the Executive
may mutually agree upon. The Company or the Bank shall provide the Executive at
his principal place of employment with a private office, secretarial services
and other support services and facilities (including but not limited to a
Company owned or leased automobile) suitable to his positions with the Company
and the Bank and necessary or appropriate in connection with the performance of
his assigned duties under this Agreement. The Company shall reimburse the
Executive for such ordinary and necessary travel, entertainment and business
expenses consistent with past practice or as the Executive and the Company shall
mutually agree are necessary and appropriate for business purposes, upon
presentation of an itemized account of such expenses in such form as the Company
may reasonably require.
 
 6.  Compensation.
 
 For his services under this Agreement
during the Employment Period, the Bank and the Company shall provide the
Executive with a compensation package consisting of the following: (i) a base
salary; (ii) a stock-based signing bonus in the form of a restricted stock
grant; (iii) an annual incentive; and (iv) a long-term incentive in the form of
stock options, as follows:
 
 (i)  Base Salary. The Company
and the Bank shall pay the Executive a base salary at the annual rate of Fifty
Thousand Dollars ($50,000) prior to July 1, 2007 and One Hundred Thousand
Dollars ($100,000) thereafter, payable in approximately equal installments in
accordance with the Bank’s customary payroll practices.  The Company
Board, or the Compensation Committee or Executive Committee thereof, shall
review the Executive’s annual rate of salary at such times during the Employment
Period as it deems appropriate, but not less frequently than once every twelve
(12) months, and may, in its discretion, approve a salary increase.
 
 (ii)  Annual Incentive. The
Executive shall be eligible for an annual incentive award, which may be payable
in cash or stock-based compensation, on a basis no less favorable than members
of the office of the Chairman of the Company (the “Annual Bonus”). The Executive
shall have a target Annual Bonus (the “Target Bonus”) of $225,000.
 
 (iii)  Long-term Incentive.
In consideration of the Executive’s acceptance of employment and execution of
this Agreement, the Company shall grant to the Executive non-qualified stock
options (the “Initial Stock Options”) to purchase a number of shares of Common
Stock of the Company (“Common Stock”) equal to the quotient of (i) One Million
Dollars ($1,000,000) divided by (ii) thirty-four percent (34%) of the closing
sales price for a share of Common Stock as reported in the New York City Edition
of the Wall Street Journal for the fourth (4th) trading day after the Company's
issuance of a press release announcing the Executive's employment as President
and Chief Operating Officer of the Company (the date of such announcement, the
“Announcement Date”). Twenty (20%) of the Initial Stock Options shall vest and
become exercisable on each anniversary of the Announcement Date until all of the
Initial Stock Options have become exercisable. The Initial Stock Options shall
have a term that expires on the tenth (10th) anniversary of the Announcement
Date or, if earlier, at the date and time of the Executive’s discharge with
Cause (as defined herein) and an exercise price per share equal to fair market
value of the Common Stock subject to the Initial Stock Options on the date of
grant. The Initial Stock Options shall be evidenced by a written stock option
agreement in a form prescribed by the Company that is consistent with the terms
of this Agreement and otherwise is substantially the same as the form of stock
option agreement used by the Company for other executive officer stock option
grants as of the date of this Agreement.
   3


(iv)  Signing
Bonus. In consideration of the Executive’s acceptance of employment and
execution of this Agreement, the Company shall pay to the Executive a signing
bonus (the “Signing Bonus”) by delivery to the Executive of a number of shares
of Common Stock equal to the quotient of (A) One Million Five Hundred Thousand
Dollars ($1,500,000.00) divided by (B) the average of the closing sales price
for a share of Common Stock as reported in the New York City Edition of the Wall
Street Journal for each trading day during the period of seven (7) consecutive
trading days commencing on the fourth (4th) trading day after the Announcement
Date (such period, the “Averaging Period” and such number of shares of Common
Stock, the “Bonus Stock”). The Signing Bonus shall be delivered by issuance to
the Executive of a certificate evidencing the Bonus Stock with a record date of
the last day of the Averaging Period. The Executive may, in his discretion,
timely file an election under section 83(b) of the Internal Revenue Code of
1986, as amended (the “Code”) with respect to the Bonus Stock. The Bonus Stock
shall vest in twenty (20) equal quarterly installments commencing with the end
of the first quarter in which the Employment Commencement Date occurs, subject
to acceleration upon death, Disability and termination without Cause or
termination by the Executive with Good Reason.  The Signing Bonus
shall be in lieu of participation during the Employment Period in any
non-qualified deferred compensation or supplemental executive retirement program
provided for other senior executives of the Bank or the Company, however
denominated (except for any program providing for the voluntary or mandatory
deferral of compensation otherwise earned and payable).





7.  Employee
Benefit Plans and Programs.





(a)           
Except as expressly provided herein to the contrary, during the Employment
Period, the Executive shall be treated as an employee of the Bank and the
Company and shall be entitled to participate in and receive benefits under any
and all 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 Bank and 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 Bank’s and the Company’s customary
practices.






4


(b)          
The Company and the Bank shall provide the Executive and his eligible dependents
with coverage under the Bank’s and the Company’s group health (including
hospitalization, medical and major medical), dental and vision care plans
through the last day of the first calendar month in which the both the Executive
and his spouse are eligible for coverage under Medicare. In lieu thereof, the
Bank and the Company may provide substitute coverage by direct payment to the
carrier of the Executive’s share of premiums for continuation coverage under the
corresponding plan of a prior employer or for coverage under an individual
policy providing substantially equivalent benefits and approved by the Executive
(which approval shall not be unreasonably withheld or delayed). The Company may
require the Executive, while employed, to pay a portion of the premium cost of
such coverage; provided, however, that the Executive’s dollar cost for any
period shall not exceed the dollar cost borne by senior executives of the
Company for corresponding coverage. Following the Executive’s termination of
employment, the Company shall use all reasonable efforts to have such coverage
continued and the Company may require the Executive to pay the full premium cost
for such coverage (but in no event in excess of the aggregate premium cost paid
by the Company and an actively employed executive for the same or substantially
similar coverage), provided that if the Company cannot provide continuing
coverage under its then existing plans, it shall have no obligation to acquire
alternative coverage. The obligation to provide this coverage shall survive the
termination of the Agreement unless the Executive is terminated with Cause or
resigns without Good Reason (as defined in this Agreement).





(c)           
In addition to coverage under any group-term life insurance program maintained
generally for employees of the Bank and the Company, the Bank and the Company
shall pay directly to the carrier all required premiums under [redacted] that
are to become due during the period beginning on the Employment Commencement
Date and ending on December 31, 2007. The obligation to make these payments
shall survive the termination or expiration of this Agreement for any reason
other than the Executive’s discharge with Cause or resignation without Good
Reason (as defined in this Agreement).





8.  Indemnification
and Insurance.





(a)           
During the Employment Period and thereafter, the Bank and the Company shall
cause the Executive to be covered by any policy or contract of insurance
obtained by them to insure their respective directors and officers against
personal liability for acts or omissions in connection with service as an
officer or director or service in other capacities at their request. The
coverage provided to the Executive pursuant to this section 8 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 Bank and the
Company.






5




(b)           
To the maximum extent permitted under applicable law, during the Employment
Period and thereafter, the Bank and the Company shall indemnify the Executive
against and hold him harmless from any costs, liabilities, losses and exposures
to the fullest extent and on the most favorable terms and conditions that
similar indemnification is offered to any director or officer of the Bank or any
subsidiary or affiliate thereof.
 
 9.  Termination
of Employment Due to Death.
 
 (a)          The
Executive’s employment with the Bank and the Company shall terminate,
automatically and without any further action on the part of any party to this
Agreement, on the date of the Executive’s death. In such event:
 
 (i)           
The Bank and the Company shall pay to the Executive’s estate his earned but
unpaid compensation (including, without limitation, salary, any Annual Incentive
payable in respect of a completed fiscal year, and all other items which
constitute wages under applicable law) as of the date of his 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 (thirty)
days after the date of the Executive’s termination of employment.
 
 (ii)           
The Bank and the Company shall provide the benefits, if any, due to the
Executive’s estate, surviving dependents or designated beneficiaries under the
employee benefit plans and programs and compensation plans and programs
maintained for the benefit of the officers and employees of the Bank and the
Company. 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.
 
 The
payments and benefits described in sections 9(a)(i) and (ii) shall be referred
to in this Agreement as the “Standard Termination Entitlements.”
 
 (b)           
In addition to the Standard Termination Entitlements, in the event of the
Executive’s death during the Employment Period, the entire unvested portion of
the Signing Bonus and the Initial Stock Options shall vest as of the Executive’s
date of death.
 
 10.  Termination
Due to Disability.
 
 The Bank and the Company may terminate
the Executive’s employment upon a determination, by vote of a majority of the
members of the Company Board, or the members of the Compensation Committee or
Executive Committee thereof, acting in reliance on the written advice of a
medical professional acceptable to them, that the Executive is suffering from a
physical or mental impairment which, at the date of the determination, has
prevented the Executive from performing his assigned duties on a substantially
full-time basis for a period of at least sixty (60) days during the period of
six (6) months ending with the date of the determination or is likely to result
in death or prevent the Executive from performing his assigned duties on a
substantially full-time basis for a period of at leastsixty
(60) days during the period of six (6) months beginning with the date of the
determination. In such event:
   6




(a)           
The Bank shall pay and deliver to the Executive (or in the event of his death
before payment, to his estate, surviving dependents or beneficiaries, as
applicable) the Standard Termination Entitlements.
 
 (b)           
In addition to the Standard Termination Entitlements (i) the Signing Bonus and
the Initial Stock Options shall continue to vest as if the Executive remained in
the active service of the Bank and the Company and (ii) upon the Executive’s
death prior to full vesting, any unvested portion of the Signing Bonus and the
Initial Stock Options shall vest as of the Executive’s date of
death.
 
 A
termination of employment due to disability under this section 10 shall be
effected by notice of termination given to the Executive by the Bank and the
Company and shall take effect on the later of the effective date of termination
specified in such notice or sixty (60) days after the date on which the notice
of termination is deemed given to the Executive.
 
 11.  Discharge
with Cause.
 
 (a)  The Bank and the Company
may terminate the Executive’s employment during the Employment Period, and such
termination shall be deemed to have occurred with “Cause” only if the Company
Board and the Bank Board, by majority vote of their entire membership, each
determines that the Executive (i) has willfully failed or refused to perform his
assigned duties under this Agreement in any material respect (including, for
these purposes, the Executive’s inability to perform such duties as a result of
drug or alcohol dependency); (ii) has committed gross negligence in the
performance of, or is guilty of continual neglect of, his assigned duties; (iii)
has been convicted or entered a plea of guilty or nolo contendere to, the
commission of a felony or any other crime involving dishonesty, personal profit
or other circumstance likely, in the reasonable judgment of the Company Board
and Bank Board, to have a material adverse effect on the Bank and the Company or
their business, operations or reputation taken as a whole; (iv) has violated, in
any material respect, any law, rule, regulation, written agreement or final
cease-and-desist order applicable to the Bank in his performance of services for
the Bank or the Company or the Company’s or the Bank’s Code of Conduct; or (v)
has willfully and intentionally breached the material terms of this Agreement in
any material respect. For purposes of this section 11, no act or failure to act
on the part of the Executive shall be considered “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 Bank
and the Company. Any act, or failure to act, based upon authority given pursuant
to a resolution duly adopted by the Company Board or the Bank Board or the
Executive Committee thereof 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 Bank and the Company.
Termination with Cause shall be effected by written notice to the
Executive setting
forth with particularity the grounds for termination.
  7
  (b)  If
the Executive is discharged during the Employment Period with Cause, the Bank
and the Company shall pay and provide to him (or, in the event of his death, to
his estate, his surviving beneficiaries or dependents, as applicable) the
Standard Termination Entitlements only; any unvested Bonus Stock, any
unexercised options to purchase Common Stock, whether or not vested shall be
forfeited. While a proceeding to discharge the Executive with Cause is pending,
the Company Board and the Bank Board may, by written notice to the Executive,
temporarily suspend the Executive’s duties and authority and, in such event, may
also suspend the payment of salary and other cash compensation and the vesting
of Bonus Stock and the exercise of stock options, but not the Executive’s
participation in retirement, insurance and other employee benefit plans. If the
Executive is not discharged within ninety (90) days after the commencement of
such a suspension, payments of salary and cash compensation shall resume, and
all compensation withheld during the period of suspension shall be promptly
restored. If the Executive is discharged without Cause during such ninety (90)
day period, all compensation withheld during the period of suspension shall be
promptly restored and shall be paid in addition to amounts due to the Executive
under this Agreement on account of his discharge without Cause. If the Executive
is discharged with Cause not later than ninety (90) days after the commencement
of such a suspension, all payments withheld during the period of suspension
shall be deemed forfeited and shall not be included in the Standard Termination
Entitlements.
 
 12.  Discharge
without Cause.
 
 The Bank may discharge the Executive at
any time during the Employment Period and, unless such discharge constitutes a
discharge with Cause:
 
 (a)           
The Bank shall pay and deliver to the Executive (or in the event of his death
before payment, to his estate, surviving dependents or beneficiaries, as
applicable) the Standard Termination Entitlements.
 
 (b)           
In addition to the Standard Termination Entitlements:
 
 (i)           
The shares of Bonus Stock (if any) and the Initial Stock Options that are not
vested as of the date of termination of employment) shall vest as of the date of
termination of employment.
 
 (ii)           
The Bank or the Company shall pay to the Executive (or, in the event of his
death, his estate or designated beneficiaries) ten (10) business days after
termination of employment a pro rata Annual Bonus for the year of termination
based on the Target Bonus.
 
 (iii)           
The Bank or the Company shall pay to the Executive (or, in the event of his
death, his estate or designated beneficiaries) ten (10) business days after
termination of employment, an additional lump sum payment equal to two times the
sum of the Executive’s most recent Base Salary plus the Executive’s Target
Bonus.
   8




(iv)           
If the Executive’s termination of employment occurs upon, following or in
connection with a Change of Control (as defined in this Agreement), (A) any
options to purchase Common Stock (including but not limited to Initial Stock
Options) and any unvested restricted stock or other Common Stock or stock-based
awards that are scheduled to vest during the Remaining Unexpired Employment
Period shall vest as of the date of termination of employment and (B) if the
Remaining Unexpired Employment Period is less than 3 years, the Company shall
pay to the Executive (or, in the event of his death, his estate or designated
beneficiaries), subject to Section 21, ten (10) business days after termination
of employment a lump sum payment equal to three times the sum of the Executive’s
most recent Base Salary plus the Executive’s Target Bonus in lieu of the payment
described in section 12(b)(iii).
 
 The
payments and benefits enumerated in section 12(b)(i), (ii), (iii) and (iv) shall
be referred to collectively in this Agreement as the “Additional Termination
Entitlements”.
 
 13.  Resignation.
 
 (a)           
The Executive may resign from his employment with the Bank and the Company any
time. A resignation under this section 13 shall be effected by notice of
resignation given by the Executive to the Bank and the Company and shall take
effect on the effective date of termination specified in such notice (which
shall in no event be sooner than sixty (60) days after the notice is deemed
given) or such earlier or later date as the Executive, the Company and the Bank
may mutually agree upon. The Executive’s resignation of any of the positions
within the Bank and the Company to which he has been assigned shall be deemed a
resignation from all such positions unless the Bank, the Company and the
Executor agree in writing otherwise.
 
 (b)           
The Executive’s resignation shall be deemed to be for “Good Reason” if the
effective date of resignation occurs within six (6) months after any of the
following, where the Executive has given the Company notice of such event and a
reasonable opportunity to cure:
 
 (i)           
the failure of the Bank or the Company (whether by act or omission of the Bank
Board, the Company Board or otherwise), to appoint or re-appoint or elect or
re-elect the Executive to the position(s) with the Bank or the Company that he
holds immediately prior to such failure, or to a more senior
position;
 
 (ii)           
the failure of the Bank’s shareholders or the Company’s shareholders to elect or
re-elect the Executive to membership at the expiration of his term of membership
(whether or not the Executive is a nominee for election), unless such failure is
a result of the Executive’s refusal to stand for election or attainment of a
mandatory retirement age generally imposed all employee-members of the
Board;
 
 (iii)           
a material failure by the Bank or the Company, whether by amendment of its
certificate of incorporation or organization, by-laws, action of its Board or
otherwise, to vest in the Executive the functions, duties, or responsibilities
prescribed in section 3 of this Agreement or the functions, duties and
responsibilities associated with a more senior position, provided that the
Executive shall have given written notice of such failure to the Bank and the
Company, and the Bank and the Company shall not have substantially cured such
failure within thirty (30) days after such notice is deemed
given;






9


(iv)           
any reduction of the Executive’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 cured promptly upon notice) to pay any portion of
the Executive’s cash compensation as and when due;




(v)           
any change in the terms and conditions of any compensation or benefit program in
which the Executive participates (other than an across-the-board change having
substantially the same effect on all similarly situated employees) which, either
individually or together with other changes, has a material adverse effect on
the aggregate value of his total compensation package; provided that the
Executive shall have given written notice of such material adverse effect to the
Bank and the Company, and the Bank and the Company shall not have substantially
cured such failure within thirty (30) days after such notice is deemed
given;


(vii)           
any material breach by the Bank or the Company of any material term, condition
or covenant contained in this Agreement (including but not limited any failure
to provide the Executive with a Recommended Compensation Package for any portion
of the Employment Period after the Initial Employment Period; provided that the
Executive shall have given notice of such material breach to the Bank and the
Company, and the Bank and the Company shall not have substantially cured such
breach within thirty (30) days after such notice is deemed given;
or





(viii)          a
change in the Executive’s principal place of employment to a place that is not
the principal executive office of the Company or other mutually agreeable
location, or a relocation of the Company’s principal executive office to a
location that is both more than twenty-five miles farther away from the
Executive’s principal residence than the distance between the Executive’s
principal residence and principal place of employment immediately prior to the
change or relocation and more than fifty (50) miles away from the location of
the Bank’s principal executive office on the date of this
Agreement.





In all
other cases, a resignation by the Executive shall be deemed to be without Good
Reason.





(c)  In the event of the
Executive’s resignation, the Bank and the Company shall pay and deliver the
Standard Termination Entitlements. In addition, if the Executive’s resignation
is deemed to be a resignation with Good Reason, the Bank and the Company shall
also pay and deliver the Additional Termination Entitlements.






10




14.  Terms
and Conditions of the Additional Termination Entitlements.
 
 The Bank, the Company and the Executive
hereby stipulate that the damages which may be incurred by the Executive
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 Executive’s efforts, if any, to mitigate damages. The Bank, the Company and
the Executive further agree that the Bank and the Company may condition the
payment and delivery of the Additional Termination Entitlements on the receipt
of the Executive’s resignation from any and all positions which he holds as an
officer, director or committee member with respect to the Company, the Bank or
any subsidiary or affiliate and on the execution by the Executive of a
reasonable release of the Company and the Bank that is limited to
employment-related claims.
 
 15.  Definition
of “Change of Control.”
 
 For the purpose of this Agreement, a
"Change of Control" shall mean:
 
 (a)
The acquisition by any individual, entity or group (within the meaning of
Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of1934, as amended
(the "Exchange Act")) (a "Person") of beneficial ownership (within the meaning
of Rule 13d-3 promulgated under the Exchange Act) of 20% or more of either (i)
the then outstanding shares of common stock of the Company (the "Outstanding
Company Common Stock") or (ii) the combined voting power of the then outstanding
voting securities of the Company entitled to vote generally in the election of
directors (the "Outstanding Company Voting Securities"); provided, however, that
for purposes of this subsection (a), the following acquisitions shall not
constitute a Change of Control: (i) any acquisition directly from the Company,
(ii) any acquisition by the Company, (iii) any acquisition by any employee
benefit plan (or related trust) sponsored or maintained by the Company or any
corporation controlled by the Company or (iv) any acquisition pursuant to a
transaction which complies with clauses (i), (ii) and (iii) of subsection (c) of
this section 15; or
 
 (b)
Individuals who, as of the date hereof, constitute the Board (the "Incumbent
Board") cease for any reason to constitute at least a majority of the Board;
provided, however, that any individual becoming a director subsequent to the
date hereof whose election, or nomination for election by the Company's
shareholders, was approved by a vote of at least a majority of the directors
then comprising the Incumbent Board shall be considered as though such
individual were a member of the Incumbent Board, but excluding, for this
purpose, any such individual whose initial assumption of office occurs as a
result of an actual or threatened election contest with respect to the election
or removal of directors or other actual or threatened solicitation of proxies or
consents by or on behalf of a Person other than the Board; or
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(c)
Consummation by the Company of a reorganization, merger or consolidation or sale
or other disposition of all or substantially all of the assets of the Company or
the acquisition of assets of another entity (a "Business Combination"), in each
case, unless, following such Business Combination, (i) all or substantially all
of the individuals and entities who were the beneficial owners, respectively, of
the Outstanding Company Common Stock and Outstanding Company Voting Securities
immediately prior to such Business Combination beneficially own, directly or
indirectly, more than 60% of, respectively, the then outstanding shares of
common stock and the combined voting power of the then outstanding voting
securities entitled to vote generally in the election of directors, as the case
may be, of the corporation resulting from such Business Combination (including,
without limitation, a corporation which as a result of such transaction owns the
Company or all or substantially all of the Company's assets either directly or
through one or more subsidiaries) in substantially the same proportions as their
ownership, immediately prior to such Business Combination of the Outstanding
Company Common Stock and Outstanding Company Voting Securities, as the case may
be, (ii) no Person(excluding any employee benefit plan (or related trust) of the
Company or such corporation resulting from such Business Combination)
beneficially owns, directly or indirectly, 20% or more of, respectively, the
then outstanding shares of common stock of the corporation resulting from such
Business Combination or the combined voting power of the then outstanding voting
securities of such corporation except to the extent that such ownership existed
prior to the Business Combination and (iii) at least a majority of the members
of the board of directors of the corporation resulting from such Business
Combination were members of the Incumbent Board at the time of the execution of
the initial agreement, or of the action of the Board, providing for such
Business Combination; or





(d)
Approval by the shareholders of the Company of a complete liquidation or
dissolution of the Company.





16.  Excise
Tax.





(a)           
Anything in this Agreement to the contrary notwithstanding, in the event that
Crowe Chizek and Company LLC or such other accounting firm as shall be
designated by the Company prior to the effective time of a Change of Control
(the “Accounting Firm”) shall determine that receipt of all payments, benefits
or distributions by the Company or its affiliates in the nature of compensation
to or for the Executive’s benefit, whether paid or payable pursuant to this
Agreement or otherwise (a “Payment”) would subject the Executive to the excise
tax under Section 4999 of the Code, the Accounting Firm shall determine whether
to reduce any of the Payments paid or payable pursuant to this Agreement that
are taxable in the year in which the change in ownership or control occurs (the
“Agreement Payments”) to the Reduced Amount (as defined below). The Agreement
Payments shall be reduced to the Reduced Amount only if the Accounting Firm
determines that the Executive would have a greater Net After-Tax Receipt (as
defined below) of aggregate Payments if the Executive’s Agreement Payments were
reduced to the Reduced Amount. If such a determination is not made by the
Accounting Firm, the Executive shall receive all Agreement Payments to which the
Executive is entitled under this Agreement.




12


(b)           
If the Accounting Firm determines that aggregate Agreement Payments should be
reduced to the Reduced Amount, the Company shall promptly give the Executive
notice to that effect and a copy of the detailed calculation thereof, and the
Executive may then elect, in the Executive’s sole discretion, which and how much
of the Agreement Payments shall be eliminated or reduced (as long as after such
election the present value (determined for all purposes of section 16 of this
Agreement in accordance with Sections 280G(b)(2)(A)(ii) and 280G(d)(4) of Code)
of the aggregate Agreement Payments equals the Reduced Amount), and shall advise
the Company in writing of the Executive’s election within ten days of the
Executive’s receipt of notice. If no such election is made by the Executive
within such ten-day period, the Company may elect which of such Agreement
Payments shall be eliminated or reduced (as long as after such election the
present value of the aggregate Agreement Payments equals the Reduced Amount) and
shall notify the Executive promptly of such election. All determinations made by
the Accounting Firm under this section 16 shall be binding upon the Company and
the Executive in the absence of manifest error and shall be made within 60 days
of the effective time of the Change of Control. As promptly as practicable
following such determination, the Company shall pay to or distribute for the
Executive’s benefit such Agreement Payments as are then due to the Executive
under this Agreement and shall promptly pay to or distribute for the Executive’s
benefit in the future such Agreement Payments as become due to the Executive
under this Agreement. All fees and expenses of the Accounting Firm shall be
borne solely by the Company.





(c)           
As a result of the uncertainty in the application of Sections 280G and 4999 of
the Code at the time of the initial determination by the Accounting Firm
hereunder, it is possible that amounts will have been paid or distributed by the
Company to or for the benefit of the Executive pursuant to this Agreement which
should not have been so paid or distributed (“Overpayment”) or that additional
amounts which will have not been paid or distributed by the Company to or for
the benefit of the Executive pursuant to this Agreement could have been so paid
or distributed (“Underpayment”), in each case, consistent with the calculation
of the Reduced Amount hereunder. In the event that the Accounting Firm, based
upon the assertion of a deficiency by the Internal Revenue Service against
either the Company or the Executive which the Accounting Firm believes has a
high probability of success determines that an Overpayment has been made, the
Executive shall pay any such Overpayment to the Company together with interest
at the applicable federal rate provided for in section 7872(f)(2) of the Code;
provided, however, that no amount shall be payable by the Executive to the
Company if and to the extent such payment would not either reduce the amount on
which the Executive is subject to tax under section 1 and section 4999 of the
Code or generate a refund of such taxes. In the event that the Accounting Firm,
based upon controlling precedent or substantial authority, determines that an
Underpayment has occurred, any such Underpayment shall be promptly paid by the
Company to or for the benefit of the Executive together with interest at the
applicable federal rate provided for in Section 7872(f)(2) of the
Code.





(d)           
For purposes hereof, the following terms have the meanings set forth
below:





(i)           
“Reduced Amount” shall mean the greatest amount of Agreement Payments that can
be paid that would not result in the imposition of the excise tax under section
4999 of the Code if the Accounting Firm determines to reduce Agreement Payments
pursuant to section 16(a).






13


(ii)           
“Net After-Tax Receipt” shall mean the present value (as determined in
accordance with sections 280G(b)(2)(A)(ii) and 280G(d)(4) of the Code) of a
Payment net of all taxes imposed on the Executive with respect thereto under
sections 1 and 4999 of the Code and under applicable state and local laws,
determined by applying the highest marginal rate under section 1 of the Code and
under state and local laws which applied to the Executive’s taxable income for
the immediately preceding taxable year, or such other rate(s) as the Executive
certifies, in the Executive’s sole discretion, as likely to apply to him in the
relevant tax year(s).





17.  Confidentiality.





Unless he obtains the prior written
consent of the Company, the Executive shall keep confidential and shall refrain
from using for the benefit of himself, or any person or entity other than the
Company or any entity which is a subsidiary of the Company, any material
document or information obtained from the Company, or from its subsidiaries, in
the course of his employment with any of them concerning their properties,
operations or business (unless such document or information is readily
ascertainable from public or published information or trade sources or has
otherwise been made available to the public through no fault of his own) until
the same ceases to be material (or becomes so ascertainable or available);
provided, however, that nothing in this section 18 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 compelled under applicable law; in such Event, the Executive
shall, to the extent practicable under the circumstances, notify the Company in
advance of and afford the Company an opportunity, at its own expense, to take
action to prevent or limit the scope of such participation or
disclosure.





18.  Noncompetition.





(a)           
The Executive agrees that, while he is employed by the Company and for one year
thereafter he will not engage in Competition (as defined below). The Executive
shall be deemed to be engaging in “Competition” if he directly or indirectly,
owns, manages, operates, controls or participates in the ownership, management,
operation or control of or is connected as an officer, employee, partner,
director, consultant or otherwise with, or has any financial interest in, any
business engaged in the financial services business (a “Competing Business”) in
any city or county in which the Company or its affiliates operates a commercial
banking or other material financial services business which is a material part
of such business and is in material competition with the business conducted by
the Company at the time of the termination of his employment with the Company.
Ownership for personal investment purposes only of less than 2% of the voting
stock of any publicly held corporation shall not constitute a violation hereof.
In no event shall services in any capacity described on Exhibit A attached here
to be deemed a violation of this section 18(a). In no event shall the Executive
have any obligation under this Section 18(a) following a Change of
Control.





(b)           
The Executive acknowledges that the Company would be irreparably injured by a
violation of this section 18 or of section 17 or section 19 and he agrees that
the Company, in addition to any other remedies available to it for such breach
or threatened breach, shall be entitled to a preliminary injunction, temporary
restraining order, or other equivalent relief, restraining the Executive from
any actual or threatened breach of sections 17, 18 or 19. If a bond is required
to be posted in order for the Company to secure an injunction or other equitable
remedy, the parties agree that said bond need not be more than a nominal
sum.






14


19.  Solicitation.





The Executive hereby covenants and
agrees that, for a period of one (1) year following his termination of
employment with the Bank and the Company, he 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 or any of its subsidiaries or
affiliates 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, making loans or doing business within the cities and
counties in which the Bank maintains an office as of the date of the executive’s
termination of employment;





(b)           
provide any information, advice or recommendation with respect to any such
officer or employee of 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, making loans or doing business
within the cities and counties specified in section 16 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 or any of its
subsidiaries or affiliates to terminate his 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, making loans or conducting any other
banking business in direct or indirect competition with the Company and its
subsidiaries within the cities and counties specified in section
19(a);





(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 (i) causing any customer of the Company or its
subsidiaries to terminate an existing business or commercial relationship with
them or (ii) interfering with their efforts to establish a business or
commercial relationship with any person or entity known by the Executive to have
been identified by the Company or its subsidiaries as a potential customer as of
the date of the Executive’s termination of employment.






15


20.  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, the Bank or by the Executive, shall have no effect on the rights and
obligations of the parties hereto under the Bank’s and 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 Bank or the Company from time
to time.





21.  Mandatory
Deferral of Compensation; Section 409A.





(a)  Notwithstanding anything
in this Agreement to the contrary, if, in the written opinion of the Company’s
independent tax advisors, any payment or vesting of any compensation, other than
Bonus Stock or resulting from the exercise of stock options, during a taxable
year would be nondeductible for federal income tax purposes for such taxable
year due to the application of section 162(m) of the Code (or the corresponding
provisions of any succeeding statute) but would be deductible for such taxable
year if section 162(m) of the Code (or corresponding provision of a succeeding
statute) did not apply, the payment or delivery of such nondeductible
compensation shall be deferred. For each taxable year, such mandatory deferral
shall be applied in reverse chronological order such that the last payments due
and payable for a taxable year are the first payments to be subject to the
mandatory deferral. All such deferred compensation shall be deposited in a
grantor trust which meets the requirements of Revenue Procedure 92-65 (as
amended or superseded from time to time), the trustee of which shall be a
financial institution selected by the Executive with the approval of the Company
(which approval shall not be unreasonably withheld or delayed), pursuant to a
trust agreement the terms of which are approved by the Executive (which approval
shall not be unreasonably withheld or delayed) (the “Rabbi Trust”). Deferred
compensation payable in shares of Common Stock shall be deposited in such shares
of Common Stock and, when distributed, shall be distributed in kind. Deferred
Compensation payable in cash shall be deposited in cash. Provision shall be made
for deferred compensation deposited in cash, as well as accumulated cash
dividends received with respect to deposited Common Stock, to be adjusted for
investment returns on the basis of investment benchmarks selected by the
Executive from time to time with the approval of the Company (which approval
shall not be unreasonably withheld or delayed). Deferred Common Stock and other
amounts deferred hereunder (as adjusted for investment returns) shall be
distributed to the Executive at the earliest of (a) January 1 of the calendar
year following the calendar year in which the Executive’s termination of service
(within the meaning of section 409A of the Code) occurs, (b) the Executive’s
death; or (c) immediately prior to the occurrence of a change in control of the
Company (within the meaning of section 409A of the Code), or, if later, at the
earliest date permitted under section 409A of the Code and the regulations
thereunder. This section shall be construed, administered and enforced so as to
prevent the imposition of an excise tax on the Executive under section 409A of
the Code. Compensation deferred under this section 21 shall be 100%
vested.






16


(b)  Notwithstanding
anything in this Agreement to the contrary, to the extent necessary to comply
with section 409A of the Internal Revenue Code of 1986, no Additional
Termination Entitlements shall be paid, and the payment of Additional
Termination Entitlements shall be deferred if necessary, until the date of the
Executive’s separation from service (within the meaning of section 409A of the
Internal Revenue Code of 1986).  In addition, if the Executive is a
“specified employee” within the meaning of section 409A of the Internal Revenue
Code of 1986) on the date of his separation from service (within the meaning of
section 409A of the Internal Revenue Code of 1986), payments that become due
under this Agreement as a result of the Executive’s separation from service
shall be deferred until the first business day that is six months and one day
after such separation fro service.    The amount of any
payments required to deferred under this section 21(b) shall be deposited in a
Rabbi Trust for investment pending distribution to the Executive; the payments
due to the executive shall be increased to reflect the investment earnings of
the Rabbi Trust. If any compensation or benefits provided by this Agreement may
result in the application of section 409A of the Code, the Company shall, in
consultation with the Executive, modify the Agreement in the least restrictive
manner necessary in order to exclude such compensation from the definition of
“deferred compensation” within the meaning of such section 409A or in order to
comply with the provisions of section 409A, other applicable provision(s) of the
Code and/or any rules, regulations or other regulatory guidance issued under
such statutory provisions and without any diminution in the value of the
payments to the Executive.





22.  Provisions
Relating to Common Stock.





(a)           
In the event any recapitalization, forward or reverse split, reorganization,
merger, consolidation, spin-off, combination, repurchase, or exchange of Common
stock for other securities, stock dividend or other special and nonrecurring
dividend or distribution (whether in the form of cash, securities or other
property), liquidation, dissolution, or other similar corporate transaction or
event, affects the Common Stock such that an adjustment is appropriate in order
to prevent the dilution or enlargement of the rights of the Executive with
respect to Bonus Stock or Initial Stock Options deliverable under this
Agreement, the Company Board or its Compensation Committee shall, in such manner
as it may determine, adjust any or all of (i) the number and kind of securities
underlying Bonus Stock and Initial Stock Options, and (iii) the exercise price
of Initial Stock Options, to prevent such dilution or enlargement.





(b)           
As soon as practicable, the Company shall prepare and file with the Securities
and Exchange Commission a registration statement on Form S-8 covering a
sufficient number of shares of Common Stock to provide for all of the Common
Stock contemplated to be issued or delivered to the Executive under this
Agreement. Thereafter, the Company shall take all actions required to maintain
the effectiveness of such registration statement until all Common Stock issuable
or deliverable to the Executive under this Agreement has been so issued and/or
delivered or the Company’s obligation to issue or deliver any such Common Stock
has lapsed.





23.  Successors
and Assigns.





This Agreement will inure to the
benefit of and be binding upon the Executive, his legal representatives and
testate or intestate distributees, and the Bank and the Company 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 Bank and the
Company may be sold or otherwise transferred. Failure of the Bank or the Company
to obtain from any successor its express written assumption of their obligations
hereunder at least 60 days in advance of the scheduled effective date of any
such succession shall be deemed a material breach of this
Agreement.




17


24.  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, to the most recent
address on file for him in the Company’s or the Bank’s personnel records, with a
copy to:





Thacher Proffitt & Wood
LLP


Two World Financial
Center


New York, NY 10281


Attention: W. Edward Bright,
Esq.





If to the Bank:





Two Jericho Plaza


Jericho, New
York  11753


Attention: General
Counsel





If to the Company:





Two Jericho Plaza


Jericho, New
York  11753


Attention: General
Counsel





25.  Reimbursement
for Attorneys’ Fees.





The Company shall indemnify the
Executive against reasonable costs, including legal fees and expenses, incurred
by him in connection with or arising out of any action suit or proceeding in
which he may be involved as a result of his efforts, in good faith, to defend or
enforce his rights under this Agreement; provided, however, that he shall have
substantially prevailed on the merits. The Company shall reimburse the Executive
for his reasonable attorneys’ fees and costs incurred in the structuring and
negotiation of this Agreement.






18


26.  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.





27.  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.





28.  Counterparts.





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.





29.  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 by
parties all of whom are citizens and residents of the State of New
York.





30.  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.





31.  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.






19


32.  Non-Duplication.





Any compensation or benefits provided
to the Executive by any direct or indirect subsidiary of the Company or the Bank
shall be applied to offset the obligations of the Company and the Bank hereunder
in such manner as the Company and the Bank may mutually agree, it being intended
that this Agreement set forth the aggregate compensation and benefits payable to
the Executive for all services to the Company, the Bank and all of their
respective direct or indirect subsidiaries and affiliates.





33.  Required
Regulatory Provisions.





Notwithstanding anything herein
contained to the contrary, any payments to the Executive by the Bank or 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.





In Witness Whereof, the Bank and the
Company have caused this Agreement to be executed and the Executive has hereunto
set his hand, all as of the day and year first above written.








____________________________________


Thomas
M. O’Brien








State Bancorp, Inc.





Attest:





By:
_________________                                                                           
By: _______________________________


Name:
Janice
Clark                                           
           
                                
Name: Patricia M. Schaubeck


Title:
Secretary                                                                   Title: General
Counsel








State Bank of Long Island





Attest:





By:
__________________                                                                       
By: ________________________________.


Name:
Janice
Clark                                                      
                                
Name: Patricia M. Schaubeck


Title:
Secretary                                                                   Title: General
Counsel






20


EXHIBIT
A





Prudential
Insurance Company of America. Serve as Independent Trustee of the $65B mutual
fund complex.





Catholic
Healthcare System of NY. Serve as trustee and finance chair. Catholic Healthcare
Foundation, Inc. Serve as trustee of affiliated charitable
foundation.








Niagara
University. Member of the Board of Trustees








Friendly
Sons of St. Patrick in the City of New York. 1st Vice President.








Galway
Bay Foundation, Inc. President & Founder of personal charitable foundation
specializing in supporting programs for the emotionally/physically challenged,
affordable housing and educational institutions.








Jacob
Marley Foundation, Manhasset, NY. Secretary/Treasurer of foundation created by
close friend lost on Sept. 11, 2001. Dedicated to working with disadvantaged
populations in Manhasset, Great Neck and Bayshore, LI.




21