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EXHIBIT 10.44
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 Xxxxx X. Xxxxxxx, an individual
residing at 00 Xxxx Xxxxx, Xxxxxxxxxx, 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:
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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
(B) at least 51% of the securities entitled to vote generally in
the election
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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 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
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(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.
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.
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The Officer's employment with the Bank shall terminate automatically, and
without any further action on the part of any party to this Agreement, on the
date of the Officer's death. In such event, the Bank shall pay and deliver to
the Officer's estate and surviving dependents and designated beneficiaries, as
applicable, the Standard Termination Entitlements.
Section 4. Termination Due to Disability after a Pending Change of Control
or a Change of Control.
The Bank may terminate the Officer's employment during the Term and after
the occurrence of a Pending Change of Control or a Change of Control upon a
determination by the Board of Directors of the Bank, by the affirmative vote of
75% of its entire membership, acting in reliance on the written advice of a
medical professional acceptable to it, that the Officer is suffering from a
physical or mental impairment which, at the date of the determination, has
prevented the Officer from performing the Officer's assigned duties on a
substantially full-time basis for a period of at least one hundred and eighty
(180) days during the period of one (1) year ending with the date of the
determination or is likely to result in death or prevent the Officer from
performing the Officer's assigned duties on a substantially full-time basis for
a period of at least one hundred and eighty (180) days during the period of one
(1) year beginning with the date of the determination. In such event:
(a) The Bank shall pay and deliver the Standard Termination Entitlements
to the Officer or, in the event of the Officer's death following such
termination but before payment, to the Officer's estate, surviving
dependents or designated beneficiaries, as applicable.
(b) In addition to the Standard Termination Entitlements, the Bank shall
continue to pay the Officer his or her base salary, at the annual rate
in effect for the Officer immediately prior to the termination of the
Officer's employment, during a period ending on the earliest of: (i)
the expiration of one hundred and eighty (180) days after the date of
termination of the Officer's employment; (ii) the date on which
long-term disability insurance benefits are first payable to the
Officer under any long-term disability insurance plan covering
employees of the Bank; or (iii) the date of the Officer's death.
A termination of employment due to disability under this section 4 shall be
effected by a notice of termination given to the Officer by the Bank and shall
take effect on the later of the effective date of termination specified in such
notice or, if no such date is specified, the date on which the notice of
termination is deemed given to the Officer.
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Section 5. Discharge with Cause after a Pending Change of Control or Change
of Control.
(a) The Bank may terminate the Officer's employment with "Cause" during
the Term and after the occurrence of a Pending Change of Control or a
Change of Control, but a termination shall be deemed to have occurred
with "Cause" only if:
(i) (A) the Board of Directors of the Bank, by the affirmative
vote of 75% of its entire membership, determines that the
Officer is guilty of personal dishonesty, incompetence,
wilful misconduct, breach of fiduciary duty involving
personal profit, intentional failure to perform stated
duties, wilful violation of any law, rule or regulation
(other than traffic violations or similar offenses) or final
cease and desist order, or any material breach of this
Agreement, in each case measured against standards generally
prevailing at the relevant time in the savings and community
banking industry;
(B) prior to the vote contemplated by section 5(a)(i)(A), the
Board of Directors of the Bank shall provide the Officer
with notice of the Bank's intent to discharge the Officer
for Cause, detailing with particularity the facts and
circumstances which are alleged to constitute Cause (the
"Notice of Intent to Discharge"); and
(C) after the giving of the Notice of Intent to Discharge and
before the taking of the vote contemplated by section
5(a)(i)(A), the Officer, together with the Officer's legal
counsel, if he so desires, are afforded a reasonable
opportunity to make both written and oral presentations
before the Board of Directors of the Bank for the purpose of
refuting the alleged grounds for Cause for the Officer's
discharge; and
(D) after the vote contemplated by section 5(a)(i)(A), the Bank
has furnished to the Officer a notice of termination which
shall specify the effective date of the Officer's
termination of employment (which shall in no event be
earlier than the date on which such notice is deemed given)
and include a copy of a resolution or resolutions adopted by
the Board of Directors of the Bank, certified by its
corporate secretary, authorizing the termination of the
Officer's employment with Cause and stating with
particularity the facts and circumstances found to
constitute Cause for the Officer's discharge (the "Final
Discharge Notice"); or
(ii) the Officer, during the 90 day period commencing on the delivery
to the Officer by the Bank of the Notice of Intent to Discharge
specified in section 5(a)(i)(B), resigns his or her employment
with the Bank prior to the delivery
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to the Officer by the Bank of the Final Discharge Notice
specified in section 5(a)(i)(D).
For purposes of this section 5, no act or failure to act, on the part
of the Officer, shall be considered "willful" unless it is done, or
omitted to be done, by the Officer in bad faith or without reasonable
belief that the Officer's action or omission was in the best interests
of the Bank or the Company, respectively. Any act or failure to act
based upon authority given pursuant to a resolution duly adopted by
the Board of Directors of the Bank or the Company or based upon the
written advice of counsel for the Bank or the Company shall be
conclusively presumed to be done or omitted to be done by the Officer
in good faith and in the best interests of the Bank or the Company,
respectively.
(b) If the Officer is discharged with Cause during the Term and after a
Pending Change of Control or a Change of Control, the Bank shall pay
and provide to him or, in the event of the Officer's death following
such discharge but prior to payment and providing, to the Officer's
estate, surviving dependents or designated beneficiaries, as
applicable, the Standard Termination Entitlements only.
(c) Following the giving of a Notice of Intent to Discharge, the Bank may
temporarily suspend the Officer's duties and authority and, in such
event, may also suspend the payment of salary and other cash
compensation, but not the Officer's participation in retirement,
insurance and other employee benefit plans. If the Officer is not
discharged or is discharged without Cause within forty-five (45) days
after the giving of a Notice of Intent to Discharge, payments of
salary and cash compensation shall resume, and all payments withheld
during the period of suspension shall be promptly restored. If the
Officer is discharged with Cause not later than forty-five (45) days
after the giving of the Notice of Intent to Discharge, all payments
withheld during the period of suspension shall be deemed forfeited and
shall not be included in the Standard Termination Entitlements. If a
Final Discharge Notice is given later than forty-five (45) days, but
sooner than ninety (90) days, after the giving of the Notice of Intent
to Discharge, all payments made to the Officer during the period
beginning with the giving of the Notice of Intent to Discharge and
ending with the Officer's discharge with Cause shall be retained by
the Officer and shall not be applied to offset the Standard
Termination Entitlements. If the Bank does not give a Final Discharge
Notice to the Officer within ninety (90) days after giving a Notice of
Intent to Discharge, the Notice of Intent to Discharge shall be deemed
withdrawn and any future action to discharge the Officer with Cause
shall require the giving of a new Notice of Intent to Discharge. If
the Officer resigns pursuant to Section 5(a)(ii), the Officer shall
forfeit his or her right to suspended amounts that have not been
restored as of the date of the Officer's resignation or notice of
resignation, whichever is earlier.
Section 6. Discharge Without Cause after a Pending Change of Control or
Change of
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Control.
The Bank may discharge the Officer without Cause at any time after the
occurrence of a Pending Change of Control or a Change of Control, and in such
event:
(a) The Bank shall pay and deliver the Standard Termination Entitlements
to the Officer or, in the event of the Officer's death following the
Officer's discharge but before payment, to the Officer's estate,
surviving dependents or designated beneficiaries, as applicable.
(b) In addition to the Standard Termination Entitlements:
(i) the Bank shall provide for a period of two years following the
date of the Officer's discharge (the "Assurance Period") for the
benefit of the Officer and the Officer's spouse and dependents
continued group life, health (including hospitalization, medical
and major medical), dental, accident and long-term disability
insurance benefits on substantially the same terms and conditions
(including any co-payments and deductibles, but excluding any
premium sharing arrangements, it being the intention of the
parties to this Agreement that the premiums for such insurance
benefits shall be the sole cost and expense of the Bank) in
effect for them immediately prior to the Officer's discharge. The
coverage provided under this section 6(b)(i) may, at the election
of the Bank, be secondary to the coverage provided as part of the
Standard Termination Entitlements and to any employer-paid
coverage provided by a subsequent employer or through Medicare,
with the result that benefits under the other coverages will
offset the coverage required by this section 6(b)(i), provided,
however, that for purposes of this section 6(b)(i) benefits
provided at the cost of the Officer or the Officer's spouse or
dependants pursuant to the Comprehensive Omnibus Budget
Reconciliation Act, as amended, shall not be considered Standard
Termination Entitlements.
(ii) The Bank shall make a lump sum payment to the Officer or, in the
event of the Officer's death following the Officer's discharge
but before payment, to the Officer's estate in an amount equal to
the salary that the Officer would have earned if he had continued
working for the Bank during the Assurance Period at the highest
annual rate of salary achieved during the period of three (3)
years ending immediately prior to the date of termination (the
"Salary Severance Payment"). The Salary Severance Payment shall
be computed using the following formula:
SSP = BS x NY
where:
"SSP" is the amount of the Salary Severance Payment, before the
deduction
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of applicable federal, state and local withholding taxes;
"BS" is the highest annual rate of salary achieved by the Officer
during the period of three (3) years ending immediately prior to
the date of termination; and
"NY" is the Assurance Period expressed as a number of years
(rounded, if such period is not a whole number, to the next
highest whole number).
The Salary Severance Payment shall be made within thirty (30)
days after the Officer's termination of employment and shall be
in lieu of any claim to a continuation of base salary which the
Officer might otherwise have and in lieu of cash severance
benefits under any severance benefits program which may be in
effect for officers or employees of the Bank.
(iii)The Bank shall make a lump sum payment to the Officer or, in the
event of the Officer's death following the Officer's discharge
but before payment, to the Officer's estate in an amount equal to
the potential annual bonuses that the Officer would have earned
if the Officer had continued working for the Bank during the
Assurance Period at the highest annual rate of salary achieved
during the period of three (3) years ending immediately prior to
the date of termination (the "Bonus Severance Payment"). The
Bonus Severance Payment shall be computed using the following
formula:
BSP = ((BS x TIO x IP) + ( BS x TIO x FP x AP)) x NY
where:
"BSP" is the amount of the Bonus Severance Payment, before the
deduction of applicable federal, state and local withholding
taxes;
"BS" is the highest annual rate of salary achieved by the Officer
during the period of three (3) years ending immediately prior to
the date of termination;
"TIO" is the target incentive opportunity for the Officer
expressed as a percentage as established by the Compensation
Committee of the Board of Directors of the Bank pursuant to the
Bank's Annual Incentive Plan for Select Executives for the year
in which the employment of the Officer by the Bank terminates or,
if no target incentive opportunity is established by the
Compensation Committee of the Board of Directors of the Bank for
such year 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;
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"IP" is either (i) the percentage of the TIO which is to be
determined by the individual performance of the Officer as
established by the Compensation Committee of the Board of
Directors of the Bank pursuant to the Bank's Annual Incentive
Plan for Select Executives for the year in which the employment
of the Officer by the Bank terminates or, (ii) if no target
incentive opportunity has been established with respect to the
Officer by the Compensation Committee of the Board of Directors
of the Bank for the year in which the employment of the Officer
by the Bank terminates, then the lowest percentage of the target
incentive opportunity to be determined by the individual
performance of the Officer established by the Compensation
Committee of the Board of Directors of the Bank for the Officer
pursuant to the Annual Incentive Plan for Select Executives
during the period of three (3) years ending immediately prior to
the date of termination;
"FP" is either (i) the percentage of the TIO with respect to the
Officer which is to be determined by the financial performance of
the Company as established by the Compensation Committee of the
Board of Directors of the Bank pursuant to the Bank's Annual
Incentive Plan for Select Executives for the year in which the
employment of the Officer by the Bank terminates or, (ii) if no
target incentive opportunity has been established with respect to
the Officer by the Compensation Committee of the Board of
Directors of the Bank for the year in which the employment of the
Officer by the Bank terminates, then a percentage equal to 100%
minus the IP;
"AP" is the highest award percentage available to the Officer
with respect to the financial performance of the Company as
established by the Compensation Committee of the Board of
Directors of the Bank pursuant to the Bank's Annual Incentive
Plan for Select Executives for the year in which the employment
of the Officer by the Bank terminates or, (ii) if no target
incentive opportunity has been established with respect to the
Officer by the Compensation Committee of the Board of Directors
of the Bank for the year in which the employment of the Officer
by the Bank terminates, then the highest award percentage
available to the Officer with respect to the financial
performance of the Company established by the Compensation
Committee of the Board of Directors of the Bank for the Officer
pursuant to the Annual Incentive Plan for Select Executives
during the period of three (3) years ending immediately prior to
the date of termination;
"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.
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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;
"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
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Advisor and shall be based on the following assumptions:
(i) that a change in ownership, a change in effective ownership
or control or a change in the ownership of a substantial
portion of the assets of the Bank or the Company has
occurred within the meaning of section 28OG of the Code (a
"28OG Change of Control");
(ii) that all direct or indirect payments made to or benefits
conferred upon the Officer on account of the Officer's
termination of employment are "parachute payments" within
the meaning of section 28OG of the Code; and
(iii)that no portion of such payments is reasonable compensation
for services rendered prior to the Officer's termination of
employment.
(b) With respect to any payment that is presumed to be a parachute
payment for purposes of section 28OG of the Code, the Tax
Indemnity Payment shall be made to the Officer on the earlier of
the date the Company, the Bank or any direct or indirect
subsidiary or affiliate of the Company or the Bank is required to
withhold such tax or the date the tax is required to be paid by
the Officer, unless, prior to such date, the Company delivers to
the Officer the written opinion (the "Opinion Letter"), in form
and substance reasonably satisfactory to the Officer, of the
Computation Advisor or, if the Computation Advisor is unable to
provide such opinion, of an attorney or firm of independent
certified public accountants selected by the Company and
reasonably satisfactory to the Officer, to the effect that the
Officer has a reasonable basis on which to conclude that:
(i) no 28OG Change in Control has occurred, or
(ii) all or part of the payment or benefit in question is not a
parachute payment for purposes of section 28OG of the Code,
or
(iii)all or a part of such payment or benefit constitutes
reasonable compensation for services rendered prior to the
28OG Change of Control, or
(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
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Company, as the case may be, shall pay to the other party at the
time that the amount of such excise tax is finally determined, an
appropriate amount, plus interest, such that the payment made
pursuant to sections 7(a) or 7(b), when increased by the amount
of the payment made to the Officer pursuant to this section 7(c),
or when reduced by the amount of the payment made to the Company
pursuant to this section 7(c), equals the amount that should have
properly been paid to the Officer under section 7(a). The
interest paid to the Company under this section 7(c) shall be
determined at the rate provided under section 1274(b)(2)(B) of
the Code. The payment made to the Officer shall include such
amount of interest as is necessary to satisfy any interest
assessment made by the Internal Revenue Service and an additional
amount equal to any monetary penalties assessed by the Internal
Revenue Service on account of an underpayment of the excise tax.
To confirm that the proper amount, if any, was paid to the
Officer under this section 7, the Officer shall furnish to the
Company a copy of each tax return which reflects a liability for
an excise tax, at least 20 days before the date on which such
return is required to be filed with the Internal Revenue Service.
Nothing in this Agreement shall give the Company any right to
control or otherwise participate in any action, suit or
proceeding to which the Officer is a party as a result of
positions taken on the Officer's federal income tax return with
respect to the Officer's liability for excise taxes under section
4999 of the Code.
Section 8. Indemnification upon and following a Change of Control.
(a) From and after the effective date of a Change of Control through the
sixth anniversary of such effective date, the Bank and the Company
agree to indemnify and hold harmless the Officer, against any costs or
expenses (including reasonable attorneys' fees), judgments, fines,
losses, claims, damages or liabilities (collectively, "Costs")
incurred in connection with any claim, action, suit, proceeding or
investigation, whether civil, criminal, administrative or
investigative, arising out of matters existing or occurring at or
prior to the time the Change of Control became effective whether
asserted or claimed prior to, at or after the effective date of the
Change of Control, and to advance any such Costs to the Officer as
they are from 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
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14
Company shall not be liable to the Officer for any legal expenses
of other counsel subsequently incurred by the Officer in
connection with the defense thereof, except that if the Bank and
the Company do not elect to assume such defense within a
reasonable time or counsel for the Officer at any time advises
that there are issues which raise conflicts of interest between
the Bank or the Company and the Officer (and counsel for the Bank
or the Company does not disagree), the Officer may retain counsel
satisfactory to the Officer, and the Bank and the Company shall
remain responsible for the reasonable fees and expenses of such
counsel as set forth above, to be paid promptly as statements
therefor are received; provided, however, that the Bank and the
Company shall be obligated pursuant to this paragraph (b)(i) to
pay for only one firm of counsel for all indemnified parties in
any one jurisdiction with respect to any given claim, action,
suit, proceeding or investigation unless the use of one counsel
for such indemnified parties, including the Officer, would
present such counsel with a conflict of interest;
(ii) the Officer will reasonably cooperate in the defense of any such
matter; and
(iii)the Bank and the Company shall not be liable for any settlement
effected by the Officer without their prior written consent,
which shall not be unreasonably withheld.
Section 9. Resignation.
(a) The Officer may resign from the Officer's employment with the Bank at
any time. A resignation under this section 9 shall be effected by
notice of resignation given by the Officer to the Bank and shall take
effect on the later of the effective date of termination specified in
such notice or the date on which the notice of termination is deemed
given by the Officer. For purposes of this Agreement, retirement of
the Officer from the employment of the Bank or the Company under
circumstances 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
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15
Control or Pending Change of Control (the "Assigned Office") or
to a more senior office and position;
(ii) if the Officer is or becomes a member of the Board of Directors
of the Bank, the failure of the shareholders of the Bank (whether
in an election in which the Officer stands as a nominee or in an
election where the Officer is not a nominee), to elect or
re-elect the Officer to such directorship at the expiration of
the Officer's term as a director, unless such failure is a result
of the Officer's refusal to stand for election;
(iii)a material failure by the Bank, whether by amendment of the
charter or organization, by-laws, action of the Board of
Directors of the Bank or otherwise, to vest in the Officer the
functions, duties, or responsibilities customarily associated
with the Assigned Office; provided that the Officer shall have
given notice of such failure to the Bank, and the Bank has not
fully cured such failure within thirty (30) days after such
notice is deemed given;
(iv) any reduction of the Officer's rate of base salary in effect from
time to time, whether or not material, or any failure, other than
due to reasonable administrative error that is fully cured within
5 days after notice of such administrative error is deemed given,
to pay any portion of the Officer's compensation as and when due;
(v) any change in the terms and conditions of any compensation or
benefit program in which the Officer participates which, either
individually or together with other changes, has a material
adverse effect on the aggregate value of the Officer's total
compensation package; provided that the Officer shall have given
notice of such material adverse effect to the Bank, and the 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
Page - 15 -
16
Reason shall be conclusive in the absence of fraud, bad faith or
manifest error.
(c) In the event of the Officer's resignation for any reason, the Bank
shall pay and deliver the Standard Termination Entitlements. In the
event of the Officer's resignation with Good Reason and such
resignation is effective within six (6) months of the effective date
of the Change of Control (the "Resignation Window Period"), the Bank
shall also pay and deliver the Additional Termination Entitlements. In
the event the Officer's resignation with Good Reason is based upon
section 9(b)(iii),(iv),(v) or (vi) and the notice required by such
provision has been given within six months of the effective date of
the Change of Control but the applicable cure period will not expire
until on or after the date which is six months following the effective
date of the Change of Control, the Resignation Window Period shall be
extended so as expire 30 days following the expiration of the
applicable cure period.
Section 10. Terms and Conditions of the Additional Termination
Entitlements.
The Bank and the Officer hereby stipulate that the damages which may be
incurred by the Officer following any termination of employment are not capable
of accurate measurement as of the date first above written and that the
Additional Termination Entitlements constitute reasonable damages under the
circumstances and shall be payable without any requirement of proof of actual
damage and without regard to the Officer's efforts, if any, to mitigate damages.
The Bank and the Officer further agree that the Bank may condition the payment
and delivery of the Additional Termination Entitlements on the receipt of:
(a) the Officer's resignation from any and all positions which he holds as
an officer, director or committee member with respect to the Bank or
any subsidiary or affiliate 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
Page - 16 -
17
the federal short term rate established under section 1274 of the Code for the
month in which the Officer's termination of employment occurs calculated on the
basis of a 360 day year for the actual number of days of such deferral on the
amount so deferred.
Section 11. Confidentiality.
Unless the Officer obtains the prior written consent of the Bank or the
Company, the Officer shall keep confidential and shall refrain from using for
the benefit of himself or herself, or any person or entity other than the
Company or any entity which is a subsidiary of the Company or of which the
Company is a subsidiary, any material document or information obtained from the
Company, or from its parent or subsidiaries, in the course of the Officer's
employment with any of them concerning their properties, operations or business
(unless such document or information is readily ascertainable from public or
published information or trade sources or has otherwise been made available to
the public through no fault of the Officer) until the same ceases to be material
(or becomes so ascertainable or available); provided, however, that nothing in
this section 11 shall prevent the Officer, with or without the Company's
consent, from participating in or disclosing documents or information in
connection with any judicial or administrative investigation, inquiry or
proceeding to the extent that such participation or disclosure is required under
applicable law.
Section 12. No Effect on Employee Benefit Plans or Programs.
Except to the extent specifically provided herein, the termination of the
Officer's employment during the Assurance Period or thereafter, whether by the
Bank or by the Officer, shall have no effect on the rights and obligations of
the parties hereto under the Bank's qualified or non-qualified 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
Page - 17 -
18
to obtain from any successor its express written assumption of the Company's or
Bank's obligations hereunder at least 60 days in advance of the scheduled
effective date of any such succession shall,
if
such succession constitutes a Change of Control, constitute Good Reason for the
Officer's resignation on or at any time during the Term following the occurrence
of such succession.
Section 14. No Attachment.
Except as required by law, no right to receive payments under this
Agreement shall be subject to anticipation, commutation, alienation, sale,
assignment, encumbrance, charge, pledge, or hypothecation, or to execution,
attachment, levy, or similar process or assignment by operation of law, and any
attempt, voluntary or involuntary, to affect any such action shall be null,
void, and of no effect.
Section 15. Notices.
Any communication required or permitted to be given under this Agreement,
including any notice, direction, designation, consent, instruction, objection or
waiver, shall be in writing and shall be deemed to have been given at such time
as it is delivered personally, or five days after mailing
if
mailed, postage prepaid, by registered or certified mail, return receipt
requested, addressed to such party at the address listed below or at such other
address as one such party may by written notice specify to the other party:
If to the Officer:
Xxxxx X. Xxxxxxx
00 Xxxx Xxxxx
Xxxxxxxxxx, 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.
Page - 18 -
19
Section 16. Indemnification for Attorneys' Fees.
(a) The Bank shall indemnify, hold harmless and defend the Officer against
reasonable costs, including legal fees, incurred by him in connection
with or arising out of any action, suit or proceeding in which he may
be involved, as a result of the Officer's efforts, in good faith, to
defend or enforce the terms of this Agreement; provided, however, that
the Officer shall have substantially prevailed on the merits pursuant
to a judgment, decree or order of a court of competent jurisdiction or
of an arbitrator in an arbitration proceeding, or in a settlement..
For purposes of this Agreement, any settlement agreement which
provides for payment of any amounts in settlement of the Bank's
obligations under this Agreement shall be conclusive evidence of the
Officer's entitlement to indemnification under this Agreement, and any
such indemnification payments shall be in addition to amounts payable
pursuant to such settlement agreement, unless such settlement
agreement expressly provides otherwise.
(b) The Bank's or the Company's obligation to make the payments provided
for in this Agreement and otherwise to perform their respective
obligations under this Agreement shall not be affected by any set-off,
counterclaim, recoupment, defense or other claim, right or action
which the Bank or the Company may have against the Officer or others.
In no event shall the Officer be obligated to seek other employment or
take any other action by way of mitigation of the amounts payable to
the Officer under any of the provisions of this Agreement and such
amounts shall not be reduced whether or not the Officer obtains other
employment. Unless it is determined that the Officer has acted
frivolously or in bad faith, the Bank shall pay as incurred, to the
full extent permitted by law, all legal fees and expenses which the
Officer may reasonably incur as a result of or in connection with the
Officer's consultation with legal counsel or arising out of any
action, suit, proceeding, tax controversy, appeal or contest
(regardless of the outcome thereof) by the Bank, the Company, the
Officer or others regarding the validity or enforceability of, or
liability under, any provision of this Agreement or any guarantee of
performance thereof (including as a result of any contest by the
Officer about the amount of any payment pursuant to this Agreement),
plus in each case interest on any delayed payment at the applicable
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
Page - 19 -
20
Officer acquires a right to receive benefits from the Bank or the
Company pursuant to this Agreement, such right shall be no greater
than the right of any unsecured general creditor of the Bank or the
Company, respectively.
Section 18. Withholding.
The Bank or the Company, as applicable, shall have the right to deduct and
withhold from any amounts paid in cash pursuant to this Agreement by the Bank or
the Company, respectively, any taxes or other amounts required by law to be
withheld with respect to such payment.
Section 19. Severability.
A determination that any provision of this Agreement is invalid or
unenforceable shall not affect the validity or enforceability of any other
provision hereof.
Section 20. Survival.
The rights and obligations of the Bank, the Company and the Officer under
this Agreement, unless otherwise expressly provided in this Agreement, shall
survive the expiration of the term or other termination of this Agreement.
Page - 20 -
21
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 termination
of employment with the Bank (or for the Officer's entire period of
employment with the Bank if less than five calendar years).
Page - 21 -
22
(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.
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.
Page - 22 -
23
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/ Xxxxx X. Xxxxxxx
-------------------------
Xxxxx X. Xxxxxxx
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
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