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Exhibit 10.41
CHANGE OF CONTROL SEVERANCE AGREEMENT
This
CHANGE OF CONTROL SEVERANCE AGREEMENT (the "Agreement") is made
and
entered into as of December 21, 2005 by and among ASTORIA FEDERAL
SAVINGS AND
LOAN ASSOCIATION, a savings and loan association organized and
existing under
the laws of the United States of America and having an office at
One Astoria
Federal Plaza, Lake Success, New York 11042 (the "Bank"), ASTORIA
FINANCIAL
CORPORATION, a business corporation organized and existing under
the laws of the
State of Delaware and having an office at One Astoria Federal
Plaza, Lake
Success, New York 11042 (the "Company") and William J. Mannix, an
individual
residing at 3 Sean Michael Court, Farmingdale, New York 11735 (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
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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:
AGREEMENT
Section 1.
Effective Date; Term; Pending Change of Control and Change of
Control Defined.
(a)
This Agreement
shall take effect on December 21, 2005 (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.
(b)
For purposes of
this Agreement, a "Change of Control" shall be
deemed to have occurred upon the happening of any of the
following
events:
(i) the
consummation of a reorganization, merger or consolidation
of the Company with one or more other persons, other than a
transaction following which:
(A) at least 51%
of the equity ownership interests of the
entity resulting from such transaction are beneficially
owned (within the meaning of Rule 13d-3 promulgated
under the Securities Exchange Act of 1934, as amended
("Exchange Act")) in substantially the same relative
proportions by persons who, immediately prior to such
transaction, beneficially owned (within the meaning of
Rule 13d-3 promulgated under the Exchange Act) at least
51% of the outstanding equity ownership interests in the
Company; and
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(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
consents (within the meaning of Rule 14a-11 of
Regulation 14A
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promulgated under the Exchange Act) other than by
or on behalf of the Board of Directors of the
Company; or
(v) any event
which would be described in Section 1(b)(i),
(ii), (iii) or (iv) if the term "Bank" were substituted
for the term "Company" therein.
In no event, however, shall a Change of Control be deemed to
have occurred as a result of any acquisition of securities or
assets of the Company, the Bank, or a subsidiary of either of
them, by the
Company, the Bank, or any subsidiary of either of
them, or by any employee benefit plan maintained by any of
them. For purposes of this Section 1(b), the term "person"
shall have the meaning assigned to it under sections 13(d)(3)
or 14(d)(2) of the Exchange Act.
(c) For purposes
of this Agreement, a "Pending Change of Control"
shall mean:
(i) the approval
by the shareholders of the Bank or the
Company of a definitive agreement for a transaction
which, if consummated, would result in a Change of
Control; or
(ii) the approval by
the shareholders of the Bank or the
Company of a transaction which, if consummated, would
result in a Change of Control.
Section 2.
Discharge Prior to a Pending Change of Control.
The Bank
may discharge the Officer at any time prior to the occurrence
of
a Pending Change of Control or, if no Pending Change of Control has
occurred, a
Change of Control, for any reason or for no reason. In such
event:
(a)
The Bank shall
pay to the Officer or the Officer's estate his or her
earned but unpaid compensation, including, without limitation,
salary and all other items which constitute wages under
applicable
law, as of the date of the Officer's termination of employment.
This
payment shall be made at the time and in the manner prescribed
by
law applicable to the payment of wages but in no event later than
30
days after the date of the Officer's termination of employment.
(b)
The Bank shall
provide the benefits due, if any, to the Officer or
the Officer's estate, surviving dependents or designated
beneficiaries, as applicable, under the employee benefit plans
and
programs and compensation plans and programs maintained for the
benefit of the officers and employees of the Bank. The time and
manner of payment or other delivery of these benefits and the
recipients of such benefits shall be determined according to
the
terms and conditions of the applicable plans and programs.
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The payments and benefits described in Sections 2(a) and (b) shall
be referred
to in this Agreement as the "Standard Termination
Entitlements."
Section 3.
Termination of Employment Due to Death.
The
Officer's employment with the Bank shall terminate automatically,
and
without any further action on the part of any party to this
Agreement, on the
date of the Officer's death. In such event, the Bank shall pay and
deliver to
the Officer's estate and surviving dependents and designated
beneficiaries, as
applicable, the Standard Termination Entitlements.
Section 4.
Termination Due to Disability after a Pending Change of Control
or a Change of Control.
The Bank
may terminate the Officer's employment during the Term and
after
the occurrence of a Pending Change of Control or a Change of
Control upon a
determination by the Board of Directors of the Bank, by the
affirmative vote of
75% of its entire membership, acting in reliance on the written
advice of a
medical professional acceptable to it, that the Officer is
suffering from a
physical or mental impairment which, at the date of the
determination, has
prevented the Officer from performing the Officer's assigned duties
on a
substantially full-time basis for a period of at least one hundred
and eighty
(180) days during the period of one (1) year ending with the date
of the
determination or is likely to result in death or prevent the
Officer from
performing the Officer's assigned duties on a substantially
full-time basis for
a period of at least one hundred and eighty (180) days during the
period of one
(1) year beginning with the date of the determination. In such
event:
(a)
The Bank shall
pay and deliver the Standard Termination Entitlements
to the Officer or, in the event of the Officer's death
following
such termination but before payment, to the Officer's estate,
surviving dependents or designated beneficiaries, as
applicable.
(b)
In addition to
the Standard Termination Entitlements, the Bank shall
continue to pay the Officer his or her base salary, at the
annual
rate in effect for the Officer immediately prior to the
termination
of the Officer's employment, during a period ending on the
earliest
of: (i) the expiration of one hundred and eighty (180) days
after
the date of termination of the Officer's employment; (ii) the
date
on which long-term disability insurance benefits are first
payable
to the Officer under any long-term disability insurance plan
covering employees of the Bank; or (iii) the date of the
Officer's
death.
A termination of employment due to disability under this Section 4
shall be
effected by a notice of termination given to the Officer by the
Bank and shall
take effect on the later of the effective date of termination
specified in such
notice or, if no such date is specified, the date on which the
notice of
termination is deemed given to the Officer.
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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 to the Officer
by the Bank of the Final Discharge Notice specified in Section
5(a)(i)(D).
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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 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:
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(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 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).
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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;
"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
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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
performanc
