1
EXHIBIT 10.43
CHANGE OF CONTROL SEVERANCE AGREEMENT
This CHANGE OF CONTROL SEVERANCE AGREEMENT (the "Agreement") is made
and entered into as of December 20, 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
Xxxxxxx Xxxxxxx Xxxxx, Xxxx Xxxxxxx, Xxx Xxxx 00000 (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 Xxxxxxx Xxxxxxx Xxxxx,
Xxxx Xxxxxxx, Xxx Xxxx 00000 (the "Company") and Xxxxxx X. Leistmann, an
individual residing at 00 Xxxxxxxxxx Xxxxxxxxx, Xxxxx, Xxx Xxxx 00000 (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-
2
AGREEMENT
Section 1. Effective Date; Term; Pending Change of Control and Change
of Control Defined.
(a) This Agreement shall take effect on December 20, 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-
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-
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-
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-
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
Page -6-
7
Officer by the Bank of the Notice of Intent to
Discharge specified in section 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
Page -7-
8
earlier.
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:
Page -8-
9
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 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
Page -9-
10
terminates or, if no target incentive opportunity is
established by the Compensation Committee of the
Board of Directors of the Bank for such year 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
Page -10-
11
Incentive Plan for Select Executives during the
period of three (3) years ending immediately prior to
the date of termination;
"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 Xxxxxxx
Xxxxxxxx & Xxxx, 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;
Page -11-
12
"P" is the amount with respect to which such excise tax is
assessed, determined without regard to this section 16;
"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
Page -12-
13
(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 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
Page -13-
14
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 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
Page -14-
15
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
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
Page -15-
16
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 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:
Page -16-
17
(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 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
Page -17-
18
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 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.
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
Page -18-
19
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:
Xxxxxx X. Leistmann
00 Xxxxxxxxxx Xxxxxxxxx
Xxxxx, Xxx Xxxx 00000
If to the Company or the Bank:
Astoria Financial Corporation
Xxx Xxxxxxx Xxxxxxx Xxxxx
Xxxx Xxxxxxx, Xxx Xxxx 00000
Attention: Chairman, President and Chief Executive Officer
with a copy to:
Xxxxxxx Xxxxxxxx & Wood
Xxx Xxxxx Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: W. Xxxxxx Xxxxxx, 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
Page -19-
20
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 Federal rate provided for in section
7872(f)(2)(A) of the Code.
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.
Page -20-
21
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.
Page -21-
22
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 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
Page -22-
23
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. ss.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 8(g)(1) of the FDI Act, 12
U.S.C.ss.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. ss.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. ss.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.ss.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.
Page -23-
24
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 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/ Xxxxxx X. Leistmann
-------------------------
XXXXXX X. LEISTMANN
Attest: ASTORIA FEDERAL SAVINGS AND LOAN
ASSOCIATION
By: /S/ Xxxxxxx X. Xxxxxxx By: /S/ Xxxxxx X. Xxxxxxx, Xx.
----------------------------- -----------------------------
Name: Xxxxxxx X. Xxxxxxx Name: Xxxxxx X. Xxxxxxx, Xx.
Title: Executive Vice President and Title: Chairman, President and Chief
Secretary Executive Officer
Attest: ASTORIA FINANCIAL CORPORATION
By: /S/ Xxxxxxx X. Xxxxxxx By: /S/ Xxxxxx X. Xxxxxxx, Xx.
---------------------------- ----------------------------
Name: Xxxxxxx X. Xxxxxxx Name: Xxxxxx X. Xxxxxxx, Xx.
Title: Executive Vice President and Title: Chairman, President and Chief
Secretary Executive Officer
Page -24-
