Exhibit
10-31

      


      


      Astoria
Federal Savings and Loan Association

      Amended
and Restated

      Employment
Agreement with Executive Officer

      


      This
Amended and
Restated Employment Agreement (the "Agreement") is made and entered into
as of January 1, 2009 by and between Astoria
Federal Savings and Loan Association, a savings association
organized and operating under the federal laws of the United States and having
an office at One Astoria Federal Plaza, Lake Success, New York 11042-1085 (the
"Association") and, Gerard C. Keegan, an individual residing at 89
Eleventh Street, Garden City, New York 11530,  (the
"Executive").

      


      Witnesseth:

      


      Whereas, the Executive currently
serves the Association in the capacity of Vice Chairman and Chief Administrative
Officer and as Vice Chairman and Chief Administrative Officer of the
Association's savings and loan holding company, Astoria
Financial Corporation, a publicly held business corporation organized and
operating pursuant to the laws of the State of Delaware (the "Company");
and

      


      Whereas, the Association desires
to assure for itself the continued availability of the Executive's services and
the ability of the Executive to perform such services with a minimum of personal
distraction in the event of a pending or threatened Change of Control (as
hereinafter defined); and

      


      Whereas, the Executive is willing
to continue to serve the Association on the terms and conditions hereinafter set
forth; and

      


      Whereas,
the Executive currently has an employment contract with the Association entered
into on January 1, 1996 (the “Initial Effective Date”), amended and restated on
January 1, 2000, and further amended as of August 15, 2007 (such agreement, as
amended, the “Prior Agreement”); and

      


      Whereas,
the Executive and the Association wish to further amend and modify the Prior
Agreement pursuant to Section 24 thereof for the purpose, among others, of
compliance with the applicable requirements of Section 409A of the Internal
Revenue Code of 1986 (the “Code”);

      


      Now,
Therefore, in consideration of the
premises and the mutual covenants and conditions hereinafter set forth, the
Association and the Executive amend and restate in its entirety the Employment
Agreement by and between the Association and the Executive as amended through
August 15, 2007 so as to provide as follows from and after the date
hereof:



      
        
           


        

        
          Page 1 of
30

          
            

          

        

        
           


        

      


      
        
          	
                	
                  Section 1.

                	
                  Employment.

                


        

      

      


      The Association agrees to continue to
employ the Executive, and the Executive hereby agrees to such continued
employment, during the period and upon the terms and conditions set forth in
this Agreement.

      


      
        	
              	
                Section 2.

              	
                Employment Period;
      Remaining Unexpired Employment
Period.

              


      

      


      (a)           The
terms and conditions of this Agreement shall be and remain in effect during the
period of employment established under this Section 2 (the "Employment Period").
The Employment Period shall be for an initial term of three years beginning on
the Initial Effective Date and ending on the third anniversary date of the
Effective Date, plus such extensions, if any, as are provided by the Board of
Directors of the Association (the “Board”) as provided below. Prior to the first
anniversary of the date of this Agreement and on each anniversary date
thereafter (each an "Anniversary Date) the Board shall review the terms of this
Agreement and the Executive's performance of services hereunder and may, in the
absence of objection from the Executive, approve an extension of the Employment
Period. In such event, the Employment Period shall be extended to the third
anniversary of the relevant Anniversary Date.

      


      (b)           For
all purposes of this Agreement, the term "Remaining Unexpired Employment Period"
as of any date shall mean the period beginning on such date and ending on the
Anniversary Date on which the Employment Period (as extended pursuant to Section
2(a) of this Agreement) is then scheduled to expire.

      


      (c)           Nothing
in this Agreement shall be deemed to prohibit the Association from terminating
the Executive's employment at any time during the Employment Period with or
without notice for any reason; provided, however, that the relative rights and
obligations of the Association and the Executive in the event of any such
termination shall be determined pursuant to this Agreement.

      


      
        	
              	
                Section
      3.

              	
                Duties.

              


      

      


      The Executive shall serve as Vice
Chairman and Chief Administrative Officer of the Association, having such power,
authority and responsibility and performing such duties as are prescribed by or
pursuant to the By-Laws of the Association and as are customarily associated
with such position. The Executive shall devote his full business time and
attention (other than during weekends, holidays, approved vacation periods, and
periods of illness or approved leaves of absence) to the business and affairs of
the Association and shall use his best efforts to advance the interests of the
Association.

      


      
        	
              	
                Section
      4.

              	
                Cash
      Compensation.

              


      

      


      In consideration for the services to be
rendered by the Executive hereunder, the Association shall pay to him a salary
at an initial annual rate of FIVE HUNDRED FORTY FOUR THOUSAND DOLLARS ($544,000), payable in approximately
equal installments in 

       

      
        
           

        

        
          Page 2 of
30

          
            

          

        

        
           

        

      

       

      accordance
with the Association's customary payroll practices for senior officers. At least
annually during the Employment Period, the Board shall review the Executive's
annual rate of salary and may, in its discretion, approve an increase therein.
In no event shall the Executive's annual rate of salary under this Agreement in
effect at a particular time be reduced without his or her prior written consent
and any such reduction in the absence of such consent shall be a material breach
of this Agreement. In addition to salary, the Executive may receive other cash
compensation from the Association for services hereunder at such times, in such
amounts and on such terms and conditions as the Board may determine from time to
time.

      


      
        	
              	
                Section
      5.

              	
                Employee Benefit Plans
      and Programs.

              


      

      


      During the Employment Period, the
Executive shall be treated as an employee of the Association and shall be
entitled to participate in and receive benefits under any and all qualified or
non-qualified retirement, pension, savings, profit-sharing or stock bonus plans,
any and all group life, health (including hospitalization, medical and major
medical), dental, accident and long term disability insurance plans, and any
other employee benefit and compensation plans (including, but not limited to,
any incentive compensation plans or programs, stock option and appreciation
rights plans and restricted stock plans) as may from time to time be maintained
by, or cover employees of, the Association, in accordance with the terms and
conditions of such employee benefit plans and programs and compensation plans
and programs and consistent with the Association's customary
practices.

      


      
        	
              	
                Section
      6.

              	
                Indemnification and
      Insurance.

              


      

      


      (a)           During
the Employment Period and for a period of six (6) years thereafter, the
Association shall cause the Executive to be covered by and named as an insured
under any policy or contract of insurance obtained by it to insure its directors
and officers against personal liability for acts or omissions in connection with
service as an officer or director of the Association or service in other
capacities at the request of the Association. The coverage provided to the
Executive pursuant to this Section 6 shall be of the same scope and on the same
terms and conditions as the coverage (if any) provided to other officers or
directors of the Association.

      


      (b)           To
the maximum extent permitted under applicable law, during the Employment Period
and for a period of six (6) years thereafter, the Association shall indemnify
the Executive against, and hold him harmless from any costs, liabilities, losses
and exposures for acts or omissions in connection with service as an officer or
director of the Association or service in other capacities at the request of the
Association, to the fullest extent and on the most favorable terms and
conditions that similar indemnification is offered to any director or officer of
the Association or any subsidiary or affiliate thereof.



      
        
           


        

        
          Page 3 of
30

          
            

          

        

        
           


        

      


      
        	
              	
                Section
      7.

              	
                Other
      Activities.

              


      

      


      (a)           The
Executive may serve as a member of the boards of directors of such business,
community and charitable organizations as he may disclose to and as may be
approved by the Board (which approval shall not be unreasonably withheld);
provided, however, that such service shall not materially interfere with the
performance of his duties under this Agreement. The Executive may also engage in
personal business and investment activities which do not materially interfere
with the performance of his duties hereunder; provided, however, that such
activities are not prohibited under any code of conduct or investment or
securities trading policy established by the Association and generally
applicable to all similarly situated executives.

      


      (b)           The
Executive may also serve as an officer or director of the Company on such terms
and conditions as the Association and the Company may mutually agree upon, and
such service shall not be deemed to materially interfere with the Executive's
performance of his duties hereunder or otherwise result in a material breach of
this Agreement.

      


      
        	
              	
                Section
      8.

              	
                Working Facilities and
      Expenses.

              


      

      


      The Executive's principal place of
employment shall be at the Association's executive offices at the address first
above written, or at such other location within Queens County or Nassau County,
New York at which the Association shall maintain its principal executive
offices, or at such other location as the Association and the Executive may
mutually agree upon. The Association shall provide the Executive at his
principal place of employment with a private office, secretarial services and
other support services and facilities suitable to his or her position with the
Association and necessary or appropriate in connection with the performance of
his or her assigned duties under this Agreement. The Association shall provide
to the Executive for his or her exclusive use an automobile owned or leased by
the Association and appropriate to his position, to be used in the performance
of his or her duties hereunder, including commuting to and from his personal
residence. The Association shall (i) reimburse the Executive for all expenses
associated with his or her business use of the aforementioned automobile; (ii)
reimburse the Executive for his or her ordinary and necessary business expenses
incurred in the performance of his or her duties under this Agreement (including
but not limited to travel and entertainment expenses) that are excludible from
the Executive’s gross income for federal income tax purposes; (iii) reimburse
the Executive for fees for memberships in such clubs and organizations and such
other expenses as the Executive and the Association shall mutually agree are
necessary and appropriate for business purposes, in each case upon presentation
to the Association of an itemized account of such expenses in such form as the
Association may reasonably require, each such reimbursement payment to be made
promptly following receipt of the itemized account and in any event not later
than the last day of the calendar year following the calendar year in which the
expense was incurred.  The Executive shall be responsible for the
payment of any taxes on account of his personal use of the automobile provided
by the Association and on account of any other benefit provided
herein.



      
        
           


        

        
          Page 4 of
30

          
            

          

        

        
           


        

      


      
        	
              	
                Section
      9.

              	
                Termination of
      Employment with Severance
Benefits.

              


      

      
         

        (a)           The
Executive shall be entitled to the severance benefits described herein in the
event that his employment with the Association terminates during the Employment
Period under any of the following circumstances:

        


        (i)           the
Executive's voluntary resignation from employment with the Association within
six (6) months following:

        


        (A)           the
failure of the Board to appoint or re-appoint or elect or re-elect the Executive
to the office of Vice Chairman and Chief Administrative Officer (or a more
senior office) of the Association;

        


        (B)           if
the Executive is a member of the Board, the failure of the stockholders of the
Association to elect or re-elect the Executive to the Board or the failure of
the Board (or the nominating committee thereof) to nominate the Executive for
such election or re-election;

        


        (C)           the
expiration of a thirty (30) day period following the date on which the Executive
gives written notice to the Association of its material failure, whether by
amendment of the Association's Charter or By-laws, action of the Board or the
Association's stockholders or otherwise, to vest in the Executive the functions,
duties, or responsibilities prescribed in Section 3 of this Agreement as of the
date hereof, unless, during such thirty (30) day period, the Association cures
such failure in a manner determined by the Executive, in his or her discretion,
to be satisfactory;

        


        (D)           the
expiration of a thirty (30) day period following the date on which the Executive
gives written notice to the Association of its material breach of any term,
condition or covenant contained in this Agreement (including, without
limitation, any reduction of the Executive's rate of base salary in effect from
time to time and any change in the terms and conditions of any compensation or
benefit program in which the Executive participates which, either individually
or together with other changes, has a material adverse effect on the aggregate
value of his total compensation package), unless, during such thirty (30) day
period, the Association cures such failure in a manner determined by the
Executive, in his or her discretion, to be satisfactory; or

        


        (E)           the
relocation of the Executive's principal place of employment, without his or her
written consent, to a location outside of Nassau County and Queens County, New
York;

        


        (ii)           the
termination of the Executive's employment with the Association for any other
reason not described in Section 10(a).


      

      
        
           

        

        
          Page 5 of
30

          
            

          

        

        
           

        

      

      
        
           

          In such
event and subject to Section 27 of this Agreement, the Association shall provide
the benefits and pay to the Executive the amounts described in Section
9(b).

        

      

      


      
        (b)           Upon the
termination of the Executive's employment with the Association under
circumstances described in Section 9(a) of this Agreement, the Association shall
pay and provide to the Executive (or, in the event of the Executive's death
following the Executive's termination of employment, to his or her
estate):

      

      


      (i)           
his or her earned but unpaid compensation (including, without limitation, all
items which constitute wages under Section 190.1 of the New York Labor Law and
the payment of which is not otherwise provided for under this Section 9(b)) as
of the date of the termination of his or her employment with the Association,
such payment to be made at the time and in the manner prescribed by law
applicable to the payment of wages but in any event not later than thirty (30)
days after termination of employment;

      


      (ii)           the
benefits, if any, to which he or she is entitled as a former employee under the
employee benefit plans and programs and compensation plans and programs
maintained for the benefit of the Association's officers and employees,
including the annual bonus (if any) to which he or she is entitled under any
cash-based annual bonus or performance compensation plan in effect for the year
in which his or her termination occurs, to be paid at the same time and on the
terms and conditions (including but not limited to achievement of performance
goals) applicable under the relevant plan;

      


      (iii)          continued
group life, health (including hospitalization, medical and major medical),
dental, accident and long term disability insurance benefits, in addition to
that provided pursuant to Section 9(b)(ii), and after taking into account the
coverage provided by any subsequent employer, if and to the extent necessary to
provide for the Executive, for the Remaining Unexpired Employment Period,
coverage (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 Association) equivalent to the coverage to which he or she would have
been entitled under such plans (as in effect on the date of his or her
termination of employment, or, if his or her termination of employment occurs
after a Change of Control, on the date of such Change of Control, whichever
benefits are greater), if he or she had continued working for the Association
during the Remaining Unexpired Employment Period at the highest annual rate of
salary or compensation, as applicable, achieved during that portion of the
Employment Period which is prior to the Executive's termination of employment
with the Association;

      


      (iv)          thirty
(30) days following the Executive's termination of employment with the
Association, a lump sum payment in an amount representing an estimate of the
salary that the Executive would have earned if he or she had continued working
for the Association during the Remaining Unexpired Employment Period at the
highest annual rate of salary achieved during that portion of the Employment
Period 

       

      
        
           

        

        
          Page 6 of
30

          
            

          

        

        
           

        

      

       

      which is
prior to the Executive's termination of employment with the Association (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 during that portion of the Employment
Period which is prior to the Executive's termination of employment with the
Association;

          


          "NY" is
the Remaining Unexpired Employment 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 paid in lieu of all other payments of
      salary provided for under this Agreement in respect of the period
      following any such termination.

              


      

      


      (v)           a
lump sum payment (the "DB Severance Payment") in an amount equal to the excess,
if any, of:

      


      (A)           the
present value of the aggregate benefits to which he or she would be entitled
under any and all qualified and non-qualified defined benefit pension plans
maintained by, or covering employees of, the Association, if he or she were 100%
vested thereunder and had continued working for the Association during the
Remaining Unexpired Employment Period, such benefits to be determined as of the
date of termination of employment by adding to the service actually recognized
under such plans an additional period equal to the Remaining Unexpired
Employment Period and by adding to the compensation recognized under such plans
for the most recent year recognized all amounts payable pursuant to Sections
9(b)(i), (iv), (vii), (viii) and (ix) of this Agreement; over

      


      (B)           the
present value of the benefits to which he or she is actually entitled under such
defined benefit pension plans as of the date of his or her
termination;

      


      The DB Severance Payment shall be
computed using the following formula:

      


      DBSP         =        SEVLS
- LS

       

      
        
           

        

        
          Page 7 of
30

          
            

          

        

        
           

        

      

       

      where:

      


      "DBSP" is
the amount of the DB Severance Payment, before the deduction of applicable
federal, state and local withholding taxes;

      


      "SEVLS"
is the sum of the present value of the defined benefit pension benefits that
have been or would be accrued by the Executive under all qualified and
non-qualified defined benefit pension plans of which the Association or any of
its affiliates or subsidiaries are a sponsor and in which the Executive is or,
but for the completion of any service requirement that would have been completed
during the Remaining Unexpired Employment Period, would be a participant
utilizing the following assumptions:

      


      
        (I)           the
executive is 100% vested in the plans regardless of actual service,

        


        (II)           the
benefit to be valued shall be a single life annuity with monthly payments due on
the first of each month and with a guaranteed payout of not less than 120
payments,

        


        (III)           the
calculation shall be made utilizing the same mortality table and interest rate
as would be utilized by the plan on the date of termination as if the
calculation were being made pursuant to Section 417(e)(3) of the Code, as
amended;

        


        (IV)           for
purpose of calculating the Executive's monthly or annual benefit under the
defined benefit plans, additional service equal to the Remaining Unexpired
Employment Period (rounded up to the next whole year if such period is not a
whole number when expressed in years) shall be added to the Executive's actual
service to calculate the amount of the benefit; and

        


        (V)           for
purpose of calculating the Executive's monthly or annual benefit under the
defined benefit plans, the following sums shall be added to the Executive's
compensation recognized under such plans for the most recent year
recognized:

      

       

      (1)           payments
made pursuant to Section 9(b)(i);

      


      (2)           the
Salary Severance Payment;

      


      (3)           the
Bonus Severance Payment;

      


      (4)           the
Option Surrender Payment; and

      


      (5)           the
RRP Surrender Payment.

       

      
        
           

        

        
          Page 8 of
30

          
            

          

        

        
           

        

      

      
        


        "LS" is
the sum of the present value of the defined benefit pension benefits that are
vested benefits actually accrued by the Executive under all qualified and
non-qualified defined benefit pension plans maintained by, or covering employees
of, the Association or any of its affiliates or subsidiaries in which the
Executive is or, but for the completion of any service requirement, would be a
participant utilizing the following assumptions:

        


        (I)           the
benefit to be valued shall be a single life annuity with monthly payments due on
the first day of each month and with a guaranteed payout of not less than 120
payments, and

        


        (II)           the
calculation shall be made utilizing the same mortality table and interest rate
as would be utilized by the plan on the date of termination as if the
calculation were being made pursuant to Section 417(e)(3) of the
Code;

        


        The DB
Severance Payment shall be converted into the same form, and paid at the same
time, and in the same manner, as benefits under the corresponding non-qualified
plan.

         

        (vi)           a
lump sum payment (the "Defined Contribution Severance Payment") equal to the sum
of:

        


        (A)           an
estimate of the additional employer contributions to which he or she would have
been entitled under any and all qualified and non-qualified defined contribution
pension plans, excluding the employee stock ownership plans, maintained by, or
covering employees of, the Association or any of its affiliates or subsidiaries
as if he or she were 100% vested thereunder and had continued working for the
Association during the Remaining Unexpired Employment Period (the "401K
Severance Payment"); and

        


        (B)           an
estimate of the value of the additional assets which would have been allocable
to him or her through debt service or otherwise under any and all qualified and
non-qualified employee stock ownership plans, maintained by, or covering
employees of, the Association or any of its affiliates or subsidiaries as if he
or she were 100% vested thereunder and had continued working for the Association
during the Remaining Unexpired Employment Period, based on the fair market value
of such assets at termination of employment (the "ESOP Severance
Payment").

        


        The
Defined Contribution Severance Payment shall be calculated as
follows:

        


        DCSP                          =           401KSP
+ ESOPSP

        


        where:

      

       

      
        
           

        

        
          Page 9 of
30

          
            

          

        

        
           

        

      

       

      
        "DCSP" is
the amount of the Defined Contribution Severance Payment, before the deduction
of applicable federal, state and local withholding taxes;

        


        "401KSP"
is the amount of the 401K Severance Payment, before the deduction of applicable
federal, state and local withholding taxes; and

        


        "ESOPSP"
is the amount of the ESOP Severance Payment, before the deduction of applicable
federal, state and local withholding taxes.

        


        The
401KSP shall be calculated as follows:

        


        401KSP                      =
(401KC x NY) +UVB

        


        where:

        


        "401KC"
is the sum of the Association Contributions as defined in the Association's
Incentive Savings Plan or, if made under another defined contribution pension
plan other than an employee stock ownership plan, the comparable contribution
made for the benefit of the Executive during the one year period which shall end
on the date of his or her termination of his or her employment with the
Association; and

        


        "NY" is
the Remaining Unexpired Employment Period expressed as a number of years
(rounded, if such period is not a whole number, to the next highest whole
number); and

        


        “UVB” is
the actual balance credited to the Executive's account under the applicable plan
at the date of his or her termination of employment that is not vested and does
not become vested as a consequence of such termination of
employment.

        


        The
ESOPSP shall be calculated as follows:

        


        ESOPSP =
(((ALL x FMV) + C) x NY) + UVB

        


        where:

      

       

      “ALL" is
the sum of the number of shares of the Association's common stock or, if
applicable, phantom shares of such stock by whatever term it is described
allocated to the Executive's accounts under all qualified and non-qualified
employee stock ownership plans maintained by the Association or any of its
affiliates or subsidiaries during or for the last complete plan year in which
the Executive participated in such plans and received such an allocation whether
the allocation occurred as a result of contributions made by the Association,
the payment by the Association or any of its affiliates or subsidiaries of any
loan

       

      
        
           

        

        
          Page 10
of 30

          
            

          

        

        
           

        

      

       

      payments
under a leveraged employee stock ownership plan, the allocation of forfeitures
under the terms of such plan or as a result of the use of cash or earnings
allocated to the Executives account during such plan year to make loan payments
that result in share allocations, provided however, that excluded shall be any
shares or phantom shares allocated to the Executive's account under any
qualified and non-qualified employee stock ownership plans maintained by the
Association or any of its affiliates or subsidiaries solely as a result of the
termination of such plans, provided further, that if the shares allocated are
not shares of the Association's common stock or phantom shares of such stock
than shares of whatever securities are so allocated shall be utilized, and
provided further, that in the event that there shall be any shares or phantom
shares allocated during the then current plan year or the last complete plan
year to the Executive's account under any qualified and non-qualified employee
stock ownership plans maintained by the Association or any of its affiliates or
subsidiaries solely as a result of the termination of such plans, the ALL shall
be reduced (but not to an amount less than zero (0)) by an amount calculated by
multiplying the number of shares or phantom shares allocated to the Executive's
account solely as a result of the termination of such plans times the FMV
utilized to calculate the ESOPSP;

      


      "C" is
the sum of all cash allocated to the Executive's accounts under all qualified
and non-qualified employee stock ownership plans maintained by the Association
during or for the last complete plan year in which the Executive participated in
such plans whether the allocation occurred as a result of contributions made by
the Association, the payment by the Company or the Association of any loan
payments under a leveraged employee stock ownership plan or the allocation of
forfeitures under the terms of such plan during such plan year;

      


      "FMV" is
the closing price of the Association's common stock on The New York Stock
Exchange (“NYSE”) or on whatever other stock exchange or market such stock is
publicly traded on the date the Executive's employment terminates or, if such
day is not a day on which such securities are traded, on the most recent
preceding trading day on which a trade occurs, provided however that if the
security allocated to the Executive's account during the last completed plan
year is other than the Association's common stock the closing price of such
security on the date the Executive's employment terminates shall be
utilized.

      


      "NY" is
the Remaining Unexpired Employment Period expressed as a number of years
(rounded, if such period is not a whole number, to the next highest whole
number); and

      


      “UVB” is
the actual balance credited to the Executive's account under the applicable plan
at the date of his or her termination of employment that is not vested and does
not become vested as a consequence of such termination of
employment.

       

      
        
           

        

        
          Page 11
of 30

          
            

          

        

        
           

        

      

       

      The
Defined Contribution Severance Payment shall be converted into the same form,
and paid at the same time, and in the same manner, as benefits under the
corresponding non-qualified plan. and, if there is no such non-qualified plan in
effect on the date of this Agreement, in a lump sum.

       

      (vii)         thirty
(30) days following the Executive's termination of employment with the
Association, the Association shall make a lump sum payment to the Executive in
an amount equal to the estimated potential annual bonuses or incentive
compensation that the Executive could have earned if the Executive had continued
working for the Association during the Unexpired Employment Period at the
highest annual rate of salary achieved during that portion of the Employment
Period which is prior to the Executive's termination of employment with the
Association (the "Bonus Severance Payment"). The Bonus Severance Payment shall
be computed using the following formula:

      


      BSP = (BS
x TIO 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 during that portion of the Employment
Period which is prior to the Executive's termination of employment with the
Association;

      


      "TIO" is
the highest target incentive opportunity established by the Compensation
Committee of the Board for the Executive pursuant to the Astoria Financial
Corporation Executive Officer Annual Incentive Plan during that portion of the
Employment Period which is prior to the Executive's termination of employment
with the Association;

      


      "AP" is
the highest award percentage available to the Executive with respect to the
financial performance of the Association (expressed as a percentage of the TIO)
established by the Compensation Committee of the Board for the Executive
pursuant to the Astoria Financial Corporation Executive Officer Annual Incentive
Plan during the period during that portion of the Employment Period which is
prior to the Executive's termination of employment with the Association;
and

      


      "NY" is
the Remaining Unexpired Employment Period expressed as a number of years
(rounded, if such period is not a whole number, to the next highest whole
number).

      


      (viii)       
at the election of the Association made within thirty (30) days following the
Executive's termination of employment with the Association, upon
the

       

      
        
           

        

        
          Page 12
of 30

          
            

          

        

        
           

        

      

       

      surrender
of options or appreciation rights issued to the Executive under any stock option
and appreciation rights plan or program maintained by, or covering employees of,
the Association, a lump sum payment (the "Option Surrender Payment"). The Option
Surrender Payment shall be calculated as follows:

      


      OSP =
(FMV - EP) x N

      


      where:

      


      "OSP" is
the amount of the Option Surrender Payment, before the deduction of applicable
federal, state and local withholding taxes;

      


      "FMV" is the closing price of the
Association's common stock on the NYSE, or on whatever other stock exchange or
market such stock is publicly traded, on the date the Executive's employment
terminates or, if such day is not a day on which such securities are traded, on
the preceding trading day on which a trade occurs, provided however that if the
option or stock appreciation right is for a security other than the
Association's common stock, the fair market value of a share of stock of the
same class as the stock subject to the option or appreciation right, determined
as of the date of termination of employment shall be utilized;

      


      "EP" is
the exercise price per share for such option or appreciation right, as specified
in or under the relevant plan or program; and

      


      "N" is
the number of shares with respect to which options or appreciation rights are
being surrendered.

      


      
        	
                 
      

              	
                For
      purposes of determining the Option Severance Payment and for purposes of
      determining the Executive's right following his or her termination of
      employment with the Association to exercise any options or appreciation
      rights not surrendered pursuant hereto, the Executive shall be deemed
      fully vested in all options and appreciation rights under any stock option
      or appreciation rights plan or program maintained by, or covering
      employees of, the Association, even if he or she is not vested under such
      plan or program;

              


      

      


      (ix)           at
the election of the Association made within thirty (30) days following the
Executive's termination of employment with the Association, upon the surrender
of any shares awarded to the Executive under any restricted stock plan
maintained by, or covering employees of, the Association, a lump sum payment
(the "RRP Surrender Payment") The RRP Surrender Payment shall be calculated as
follows:

      


      RSP
= FMV x N

      


      where:

      


      "RSP" is
the amount of the RRP Surrender Payment, before the deduction of applicable
federal, state and local withholding taxes;

       

      
        
           

        

        
          Page 13
of 30

          
            

          

        

        
           

        

      

       

      "FMV" is
the closing price of the Association's common stock on the NYSE, or on whatever
other stock exchange or market such stock is publicly traded, on the date the
Executive's employment terminates or, if such day is not a day on which such
securities are traded, on the preceding trading day on which a trade occurs,
provided however that if the restricted stock is a security other than the
Association's common stock, the fair market value of a share of stock of the
same class as the stock granted under such plan, determined as of the date of
termination of employment shall be utilized; and

       

      "N" is
the number of shares which are being surrendered.

      


      
        	
                 
      

              	
                For
      purposes of determining the RRP Surrender Payment and for purposes of
      determining the Executive's right following his or her termination of
      employment with the Association to any stock not surrendered pursuant
      hereto, the Executive shall be deemed fully vested in all shares awarded
      under any restricted stock plan maintained by, or covering employees of,
      the Association, even if he or she is not vested under such plan provided,
      however, that any shares of restricted stock for which vesting is
      conditioned on the attainment of one or more performance goals, with the
      intent that the award of such shares should satisfy the requirements of
      qualified performance-based compensation (within the meaning of Treasury
      Regulation section 1.162-27(e)), shall vest only in accordance with the
      terms of the associated plan and award, and the Company’s right to elect
      to purchase such shares pursuant to this Section 9(b)(ix) shall not expire
      until thirty (30) days after such time as the vesting of such shares is no
      longer conditioned on the attainment of any such performance
      goal..

              


      

      


      The
Salary Severance Payment, the DB Severance Payment, the Defined Contribution
Severance Payment, the Bonus Severance Payment, the Option Surrender Payment and
the RRP Surrender Payment shall be computed at the expense of the Association by
an attorney of the firm of Thacher Proffitt & Wood, Two World Financial
Center, New York, New York 10281 or, if such firm is unavailable or unwilling to
perform such calculation, by a firm of independent certified public accountants
selected by the Executive and reasonably satisfactory to the Association (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.

      


      The
Association and the Executive hereby stipulate that the damages which may be
incurred by the Executive following any such termination of employment are not
capable of accurate measurement as of the date first above written and that the
payments and benefits contemplated by this Section 9(b) constitute reasonable
damages under the circumstances and shall be payable without any requirement of
proof of actual damage and without regard to the Executive's efforts, if any, to
mitigate damages. The Association and the Executive further agree that the
Association may condition the payment of the Salary Severance Payment, the DB
Severance Payment, the Defined Contribution Severance Payment, the Bonus
Severance Payment, the Option Surrender Payment and the RRP Surrender Payment on
the receipt of the Executive's resignation from any and all positions which he
or she holds as an officer, director or committee member with respect to the
Association, the Company or any subsidiary or affiliate of either of them;
provided,

       

      
        
           

        

        
          Page 14
of 30

          
            

          

        

        
           

        

      

       

      however,
that such election will only be effective if the Association notifies the
Executive of its election in writing within five (5) days of the Executive's
termination of employment.

      


      
        	
              	
                Section
      10.

              	
                Termination without
      Additional Association
Liability.

              


      

      


      (a)           In
the event that the Executive's employment with the Association shall terminate
during the Employment Period on account of:

      


      (i)           the
discharge of the Executive for Cause, which, for purposes of this Agreement
shall mean personal dishonesty, incompetence, willful misconduct, breach of
fiduciary duty involving personal profit, intentional failure to perform stated
duties, willful 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;

      


      (ii)           the
Executive's voluntary resignation from employment with the Association for
reasons other than those specified in Section 9(a) or 11(b);

      


      (iii)           the
Executive's death;

      


      (iv)           a
determination that the Executive is Disabled;

       

      then the
Association, except as otherwise specifically provided herein, shall have no
further obligations under this Agreement, other than the payment to the
Executive (or, in the event of his or her death, to his or her estate) of the
amounts or benefits provided in Section 9(b)(i) and (ii) of this Agreement (the
“Standard Termination Entitlements”).

      


      (b)           The
cessation of employment of the Executive shall not be deemed to be for Cause
within the meaning of Section 10(a)(i) unless and until:

      


      (i)           the
Board, by the affirmative vote of 75% of its entire membership, determines that
the Executive is guilty of the conduct described in Section 10(a)(i) above
measured against standards generally prevailing at the relevant time in the
savings and community banking industry;

      


      (ii)           prior
to the vote contemplated by Section 10(b)(i), the Board shall provide the
Executive with notice of the Association's intent to discharge the Executive for
Cause, detailing with particularity the facts and circumstances which are
alleged to constitute Cause (the "Notice of Intent to Discharge");
and

      


      
        (iii)           after
the giving of the Notice of Intent to Discharge and before the taking of the
vote contemplated by Section 10(b)(i), the Executive, together with the
Executive's legal counsel, if the Executive so desires, are afforded a
reasonable opportunity to make both written and oral presentations before the
Board for the purpose of refuting the alleged grounds for Cause for the
Executive's discharge; and

         

        
          
             

          

          
            Page 15
of 30

            
              

            

          

          
             

          

        

         

        (iv)           after
the vote contemplated by Section 10(b)(i), the Association has furnished to the
Executive a notice of termination which shall specify the effective date of the
Executive'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, certified by its corporate
secretary, authorizing the termination of the Executive's employment with Cause
and stating with particularity the facts and circumstances found to constitute
Cause for the Executive's discharge (the "Final Discharge
Notice").

      

      


      If the
Executive, during the ninety (90) day period commencing on the delivery by the
Association to the Executive of the Notice of Intent to Discharge specified in
Section 10(b)(ii), resigns his or her employment with the Association prior to
the delivery to the Executive by the Association of the Final Discharge Notice
specified in Section 10(b)(iv), than the cessation of employment of the
Executive shall be deemed to be for Cause.

      


      Following
the giving of a Notice of Intent to Discharge, the Bank may temporarily suspend
the Executive's duties and authority and, in such event, may also suspend the
payment of salary and other cash compensation, but not the Executive's
participation in retirement, insurance and other employee benefit plans. If the
Executive 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 Executive 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 Executive during the period beginning
with the giving of the Notice of Intent to Discharge and ending with the
Executive's discharge with Cause shall be retained by the Executive and shall
not be applied to offset the Standard Termination Entitlements. If the Bank does
not give a Final Discharge Notice to the Executive 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 Executive with Cause
shall require the giving of a new Notice of Intent to Discharge. If the
Executive resigns pursuant to Section 10(b), the Executive shall forfeit his or
her right to suspended amounts that have not been restored as of the date of the
Executive's resignation or notice of resignation, whichever is
earlier.

      


      (c)           The
Association may terminate the Executive's employment on the basis that the
Executive is Disabled during the Employment Period upon a determination by the
Board, 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 Executive is suffering from a physical or mental impairment which, at the
date of the determination, has prevented the Executive from performing the
Executive'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 Executive from performing the Executive's assigned duties on a
substantially full-time basis for a period of at least one hundred

       

      
        
           

        

        
          Page 16
of 30

          
            

          

        

        
           

        

      

       

      and
eighty (180) days during the period of one (1) year beginning with the date of
the determination. In such event:

      


      (A)           The
Association shall pay and provide the benefits provided the Standard Termination
Entitlements to the Executive;

      


      (B)           In
addition to the Standard Termination Entitlements, the Association shall
continue to pay to the Executive the Executive's base salary, at the annual rate
in effect for the Executive immediately prior to the termination of the
Executive'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 Executive's employment;

      


      (II)           the
date on which long-term disability insurance benefits are first payable to the
Executive under any long-term disability insurance plan covering the Executive;
or

      


      (III)           the
date of the Executive's death.

       

      A
termination of employment due to Disability under this Section shall be effected
by a notice of termination given to the Executive by the Association 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 Executive.

      


      
        	
              	
                Section
      11.

              	
                Termination Upon or
      Following a Change of
Control.

              


      

      


      (a)           A
Change of Control of the Association ("Change of Control") shall be deemed to
have occurred upon the happening of any of the following events:

      


      (i)           the
consummation of a transaction that results in the reorganization, merger or
consolidation of the Association 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 (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 outstanding equity
ownership interests in the Association; and

      


      (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,

       

      
        
           

        

        
          Page 17
of 30

          
            

          

        

        
           

        

      

       

      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 Association;

      


      (ii)           the
acquisition of all or substantially all of the assets of the Association 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 Association
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 Association, or approval by the
stockholders of the Association of a plan for such liquidation or
dissolution;

      


      (iv)           the
occurrence of any event if, immediately following such event, at least 50% of
the members of the Board do not belong to any of the following
groups:

      


      (A)           individuals
who were members of the Board on the Initial Effective Date; or

      


      (B)           individuals
who first became members of the Board after the Initial Effective Date
either:

      


      (I)           upon
election to serve as a member of the Board 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

      


      (II)           upon
election by the stockholders of the Association to serve as a member of the
Board, but only if nominated for election by affirmative vote of three-quarters
of the members of the Board, 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; or

      


      (v)           any
event which would be described in Section 11(a)(i), (ii), (iii) or (iv) if the
term "Company" were substituted for the term "Association" therein or the term
"Board of Directors of the Company" were substituted for the term
"Board".

      


      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 Association, the Company, or
an affiliate or subsidiary of 

       

      
        
           

        

        
          Page 18
of 30

          
            

          

        

        
           

        

      

       

      either of
them, by the Association, the Company, or a subsidiary of either of them, or by
any employee benefit plan maintained by any of them. For purposes of this
Section 11 (a), the term "person" shall have the meaning assigned to it under
Sections 13(d)(3) or 14(d)(2) of the Exchange Act.

      


      (b)           In
the event of a Change of Control, the Executive shall be entitled to the
payments and benefits contemplated by Section 9(b) in the event of his or her
termination employment with the Association under any of the circumstances
described in Section 9(a) of this Agreement or under any of the following
circumstances:

      


      
        (i)           resignation,
voluntary or otherwise, by the Executive at any time during the Employment
Period within six (6) months following his or her demotion, loss of title,
office or significant authority or responsibility or following any reduction in
any element of his or her package of compensation and benefits;

        


        (ii)           resignation,
voluntary or otherwise, by the Executive at any time during the Employment
Period within six (6) months following any relocation of his or her principal
place of employment or any change in working conditions at such principal place
of employment which the Executive, in his or her reasonable discretion,
determines to be embarrassing, derogatory or otherwise adverse;

        


        (iii)           resignation,
voluntary or otherwise, by the Executive at any time during the Employment
Period within six (6) months following the failure of any successor to the
Association in the Change of Control to include the Executive in any
compensation or benefit program maintained by it or covering any of its
executive officers, unless the Executive is already covered by a substantially
similar plan of the Association which is at least as favorable to him or her;
or

        


        (iv)           resignation,
voluntary or otherwise, for any reason whatsoever during the Employment Period
within six months following the effective date of the Change of
Control.



      
        	
              	
                Section 12.

              	
                Covenant Not To
      Compete.

              


      

      


      The Executive hereby covenants and
agrees that, in the event of his or her termination of employment with the
Association prior to the expiration of the Employment Period, for a period of
one (1) year following the date of his or her termination of employment with the
Association (or, if less, for the Remaining Unexpired Employment Period), the
Executive shall not, without the written consent of the Association, become an
officer, employee, consultant, director or trustee of any savings bank, savings
and loan association, savings and loan holding company, bank or bank holding
company, or any direct or indirect subsidiary or affiliate of any such entity,
that entails working in any city, town or county in which the Association or the
Company has an office or has filed an application for regulatory approval to
establish an office, determined as of the effective date of the Executive's
termination of employment; provided, however, that this Section 12
shall not apply if the Executive's employment is terminated for the reasons set
forth in Section 9(a); and provided, further, that if the Executive's


       

      
        
           

        

        
          Page 19
of 30

          
            

          

        

        
           

        

      

       

      employment
shall be terminated on account of Disability as provided in Section 10(c) of
this Agreement, this Section 12 shall not prevent the Executive from accepting
any position or performing any services if:

      


      (a)           he
or she first offers, by written notice, to accept a similar position with or
perform similar services for the Association on substantially the same terms and
conditions and

      


      (b)           the
Association declines to accept such offer within ten (10) days after such notice
is given.

      


      
        	
              	
                Section
      13.

              	
                Confidentiality.

              


      

      


      Unless the Executive obtains the prior
written consent of the Association, the Executive shall keep confidential and
shall refrain from using for the benefit of the Executive or any person or
entity other than the Association, any entity which is a subsidiary of the
Association or any entity which the Association is a subsidiary of, any material
document or information obtained from the Association, or from its affiliates or
subsidiaries, in the course of the Executive'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 his or her own) until the same ceases to be material (or becomes so
ascertainable or available); provided, however that nothing in this
Section 13 shall prevent the Executive, with or without the Association'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
      14.

              	
                Solicitation.

              


      

      


      The Executive hereby covenants and
agrees that, for a period of one (1) year following the Executive's termination
of employment with the Association, he or she shall not, without the written
consent of the Association, either directly or indirectly:

       

      
        (a)           solicit,
offer employment to or take any other action intended, or that a reasonable
person acting in like circumstances would expect, to have the effect of causing
any officer or employee of the Association, the Company or any affiliate or
subsidiary of ether of them, to terminate his or her employment and accept
employment or become affiliated with, or provide services for compensation in
any capacity whatsoever to, any savings bank, savings and loan association,
bank, bank holding Association, savings and loan holding company, or other
institution engaged in the business of accepting deposits and making loans,
doing business in any city, town or county in which the Association or the
Company has an office or has filed an application for regulatory approval to
establish an office;

        


        (b)           provide
any information, advice or recommendation with respect to any such officer or
employee to any savings bank, savings and loan association, bank,

         

        
          
             

          

          
            Page 20
of 30

            
              

            

          

          
             

          

        

         

        bank
holding company, savings and loan holding company, or other institution engaged
in the business of accepting deposits and making loans, doing business in any
city, town or county in which the Association or the Company has an office or
has filed an application for regulatory approval to establish an office that is
intended, or that a reasonable person acting in like circumstances would expect,
to have the effect of causing any officer or employee of the Association, the
Company, or any affiliate or subsidiary of either of them, to terminate his or
her employment and accept employment, become affiliated with or provide services
for compensation in any capacity whatsoever to any such savings bank, savings
and loan association, bank, bank holding company, savings and loan holding
company or other institution engaged in the business of accepting deposits and
making loans; or

        


        (c)           solicit,
provide any information, advice or recommendation or take any other action
intended, or that a reasonable person acting in like circumstances would expect,
to have the effect of causing any customer of the Association, the Company, or
any affiliate or subsidiary of either of them to terminate an existing business
or commercial relationship with the Association, the Company, or any affiliate
or subsidiary of either of them.

         

      

      
        	
              	
                Section
      15.

              	
                No Effect on Employee
      Benefit Plans or Programs.

              


      

      


      The termination of the Executive's
employment during the term of this Agreement or thereafter, whether by the
Association or by the Executive, shall have no effect on the rights and
obligations of the parties hereto under the Association'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 Association from time to
time.

      


      
        	
              	
                Section
      16.

              	
                Successors and
      Assigns.

              


      

      


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

      


      
        	
              	
                Section
      17.

              	
                Notices.

              


      

      


      Any communication required or permitted
to be given under this Agreement, including any notice, direction, designation,
consent, instruction, objection or waiver, shall be in writing and shall be
deemed to have been given at such time as it is delivered personally, or five
(5) days after mailing if mailed, postage prepaid, by registered or certified
mail, return receipt

       

      
        
           

        

        
          Page 21
of 30

          
            

          

        

        
           

        

      

       

      requested,
addressed to such party at the address listed below or at such other address as
one such party may by written notice specify to the other party:

      


      If to the
Executive:

      


      Gerard C. Keegan

      89
Eleventh Street

      Garden City, New York
11530

      


      If to the
Association:

      


      Astoria Federal Savings and Loan
Association

      One Astoria Federal Plaza

      Lake Success, New York
11042-1085

      


      Attention: General Counsel

      


      with a
copy to:

      


      Thacher Proffitt &
Wood

      Two World Financial Center

      New York, New York 10281

      


      Attention:              W.
Edward Bright, Esq.

      


      
        	
              	
                Section
      18.

              	
                Indemnification for
      Attorneys' Fees.

              


      

      


      The Association shall indemnify, hold
harmless and defend the Executive against reasonable costs, including legal
fees, incurred by him or her in connection with or arising out of any action,
suit or proceeding in which he or she may be involved, as a result of his or her
efforts, in good faith, to defend or enforce the terms of this Agreement;
provided, however, that in the case of any
action, suit or proceeding instituted prior to a Change of Control, the
Executive 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 Association's obligations hereunder shall be
conclusive evidence of the Executive's entitlement to indemnification hereunder,
and any such indemnification payments shall be in addition to amounts payable
pursuant to such settlement agreement, unless such settlement agreement
expressly provides otherwise. Any payment or reimbursement to effect such
indemnification shall be made no later than the last day of the calendar year
following the calendar year in which the Executive incurs the expense or, if
later, within sixty (60) days after the settlement or resolution that gives rise
to the Executive’s right to reimbursement; provided, however, that the Executive
shall have submitted to the Company documentation supporting such expenses at
such time and in such manner as the Company may reasonably require.

       

      
        
           

        

        
          Page 22
of 30

          
            

          

        

        
           

        

      

       

      
        	
              	
                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.

              	
                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
      21.

              	
                Counterparts.

              


      

      


      This Agreement may be executed in two
(2) or more counterparts, each of which shall be deemed an original, and all of
which shall constitute one and the same Agreement.

      


      
        	
              	
                Section
      22.

              	
                Governing
      Law.

              


      

      


      This Agreement shall be governed by and
construed and enforced in accordance with the federal laws of the United States
and, to the extent that federal law is inapplicable, 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
      23.

              	
                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
      24.

              	
                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; provided,
however, that this Agreement shall be subject to amendment in the future in such
manner as the Association shall reasonably deem necessary or appropriate to
effect compliance with Section 409A of the Code and the regulations thereunder,
and to avoid the imposition of penalties and additional taxes under Section 409A
of the Code, it being the express intent of the parties that any such amendment
shall not diminish the economic benefit of the Agreement to the Executive on a
present value basis.



      
        
           


        

        
          Page 23
of 30

          
            

          

        

        
           


        

      


      
        	
              	
                Section
      25.

              	
                Survival.

              


      

      


      The
provisions of any sections of this Agreement which by its terms contemplates
performance after the expiration or termination of this Agreement (including,
but not limited to, Sections 6, 9, 10, 11, 12, 13, 14, 15, 16, 17, 18, 20, 26,
27, 28, 30 and 31) shall survive the expiration of the Employment Period or
termination of this Agreement.

      


      
        	
              	
                Section
      26.

              	
                Equitable
      Remedies.

              


      

      


      The Association and the Executive
hereby stipulate that money damages are an inadequate remedy for violations of
Sections 6(a), 12, 13 or 14 of this Agreement and agree that equitable remedies,
including, without limitations, the remedies of specific performance and
injunctive relief, shall be available with respect to the enforcement of such
provisions.

      


      
        	
              	
                Section 27. 

              	
                Required Regulatory
      Provisions.

              


      

      


      The following provisions are included
for the purposes of complying with various laws, rules and regulations
applicable to the Association:

       

      
        (a)           Notwithstanding
anything herein contained to the contrary, in no event shall the aggregate
amount of compensation payable to the Executive pursuant to Section 9(b) of this
Agreement (exclusive of amounts described in Section 9(b)(i), (ii), (viii) or
(ix)) exceed three times the Executive's average annual total compensation for
the last five consecutive calendar years to end prior to the Executive's
termination of employment with the Association (or for the Executive's entire
period of employment with the Association if less than five calendar
years).

        


        (b)           Notwithstanding
anything herein contained to the contrary, any payments to the Executive by the
Association, 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. §1828(k), and any regulations promulgated
thereunder.

        


        (c)           Notwithstanding
anything herein contained to the contrary, if the Executive is suspended from
office and/or temporarily prohibited from participating in the conduct of the
affairs of the Association pursuant to a notice served under Section 8(e)(3) or
8(g)(1) of the FDI Act, 12 U.S.C. §1818(e)(3) or 1818(g)(1), the Association'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 Association, in its discretion, may (i) pay to
the Executive all or part of the compensation withheld while the Association'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 Executive is removed and/or
permanently  prohibited from participating in the conduct of the
Association's affairs by an order issued under Section 8(e)(4) or 8(g)(1) of the
FDI

         

        
          
             

          

          
            Page 24
of 30

            
              

            

          

          
             

          

        

         

        Act, 12
U.S.C. §1818(e)(4) or (g)(1), all prospective obligations of the Association
under this Agreement shall terminate as of the effective date of the order, but
vested rights and obligations of the Association and the Executive shall not be
affected.

        


        (e)           Notwithstanding
anything herein contained to the contrary, if the Association is in default
(within the meaning of Section 3(x)(1) of the FDI Act, 12 U.S.C. §1813(x)(1),
all prospective obligations of the Association under this Agreement shall
terminate as of the date of default, but vested rights and obligations of the
Association and the Executive shall not be affected.

        


        (f)           Notwithstanding
anything herein contained to the contrary, all prospective obligations of the
Association hereunder shall be terminated, except to the extent that a
continuation of this Agreement is necessary for the continued operation of the
Association:  (i) by the Director of the Office of Thrift Supervision
("OTS") or his or her 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 Association under the authority contained in Section 13(c)
of the FDI Act, 12 U.S.C. §1823(c); (ii) by the Director of the OTS or his or
her designee at the time such Director or designee approves a supervisory merger
to resolve problems related to the operation of the Association or when the
Association 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.

      


      
        	
              	
                Section
      28.

              	
                No Offset or
      Recoupment; No Attachment.

              


      

      


      The Association's obligation to make
the payments provided for in this Agreement and otherwise to perform its
obligations under this Agreement shall not be affected by any set-off,
counterclaim, recoupment, defense or other claim, right or action which the
Association or any of its affiliates or subsidiaries may have against the
Executive. In no event shall the Executive be obligated to seek other employment
or take any other action by way of mitigation of the amounts payable to the
Executive under any of the provisions of this Agreement and such amounts shall
not be reduced whether or not the Executive obtains other employment. 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 29.

                	
                  Compliance with Section 409A
      of the Code.

                


        

      

       

      The
Executive and the Association acknowledge that each of the payments and benefits
promised to the Executive under this Agreement must either comply with the
requirements of Section 409A of the Code ("Section 409A") and the regulations
thereunder or

       

      
        
           

        

        
          Page 25
of 30

          
            

          

        

        
           

        

      

       

      qualify
for an exception from compliance.  To that end, the Executive and the
Company agree that

       

      (a)           the
insurance benefits provided in section 6(a) and the indemnification provided in
section 6(b) are intended to be excepted from compliance with Section 409A
pursuant to Treasury Regulation section 1.409A-1(b)(10) as insurance and
indemnification against claims based on acts or omissions as a service
provider;

       

      (b)           the
expense reimbursements described in Section 8 and legal fee reimbursements
described in Section 18 are intended to satisfy the requirements for a
"reimbursement plan" described in Treasury Regulation section
1.409A-3(i)(1)(iv)(A) and shall be administered to satisfy such
requirements;

       

      (c)           the
payment described in Section 9(b)(i) is intended to be excepted from compliance
with Section 409A pursuant to Treasury Regulation section 1.409A-1(b)(3) as
payment made pursuant to the Company’s customary payment timing
arrangement;

       

      (d)           the
benefits and payments described in Section 9(b)(ii) are expected to comply with
or be excepted from compliance with Section 409A on their own
terms;

       

      (e)           the
welfare benefits provided in kind under section 9(b)(iii) are intended to be
excepted from compliance with Section 409A as welfare benefits pursuant to
Treasury Regulation Section 1.409A-1(a)(5) and/or as benefits not includible in
gross income; and

       

      (f)        
   the benefits and payments on a disability described in Section
10(c) are expected to be excepted from compliance with Section 409A as
“disability pay” pursuant to Treasury Regulation section
1.409A-1(a)(5).

       

      In the
case of a payment that is not excepted from compliance with Section 409A, and
that is not otherwise designated to be paid immediately upon a permissible
payment event within the meaning of Treasury Regulation Section 1.409A-3(a), the
payment shall not be made prior to, and shall, if necessary, be deferred (with
interest at the annual rate of 6%, compounded monthly from the date of the
Executive’s termination of employment to the date of actual payment) to and paid
on the later of the date sixty (60) days after the Executive’s earliest
separation from service (within the meaning of Treasury Regulation Section
1.409A-1(h)) and, if the Executive is a specified employee (within the meaning
of Treasury Regulation Section 1.409A-1(i)) on the date of his or her separation
from service, the first day of the seventh month following the Executive’s
separation from service.  Each amount payable under this plan that is
required to be deferred beyond the Executive’s separation from service, shall be
deposited on the date on which, but for such deferral, the Association would
have paid such amount to the Executive, in a grantor trust which meets the
requirements of Revenue Procedure 92-65 (as amended or superseded from time to
time), the trustee of which shall be a financial institution selected by the
Association with the approval of the

       

      
        
           

        

        
          Page 26
of 30

          
            

          

        

        
           

        

      

       

      Executive
(which approval shall not be unreasonably withheld or delayed), pursuant to a
trust agreement the terms of which are approved by the Executive (which approval
shall not be unreasonably withheld or delayed) (the “Rabbi Trust”), and payments
made shall include earnings on the investments made with the assets of the Rabbi
Trust, which investments shall consist of short-term investment grade fixed
income securities or units of interest in mutual funds or other pooled
investment vehicles designed to invest primarily in such
securities.  Furthermore, this Agreement shall be construed and
administered in such manner as shall be necessary to effect compliance with
Section  409A.

       

      
        	
              	
                Section
      30.

              	
                Compliance with Section
      280G(e) of the Code.

              


      

       

      In the event the Company or the
Association issues any debt or equity to the United States Treasury ("UST")
pursuant to the Capital Purchase Program (the "CPP") implemented under the
Emergency Economic Stabilization Act of 2008 ("EESA"), the following provisions
shall take precedence over any contrary provisions of this Agreement or any
other compensation or benefit plan, program, agreement or arrangement in which
the Executive participates:

       

      (a)           The
Executive shall repay to the Association any bonus or incentive compensation
paid to the Executive while (i) the Executive is a senior executive officer
(within the meaning 31 C.F.R Part 30 ("Senior Executive Officer") and (ii) the
UST holds any debt or equity interest in the Company or the Association acquired
under the CPP (such Period the “CPP Compliance Period”) if and to the extent
that such bonus or incentive compensation was paid on the basis of a statement
of earnings, gains, or other criteria (each, a "Performance Criteria," and in
the aggregate, "Performance Criteria") that are later proven to be materially
inaccurate.  A Performance Criterion shall be proven to be materially
inaccurate if so determined by a court of competent jurisdiction or in the
written opinion of the Computation Advisor or, if the Computation Advisor is
unable to provide the determination, an independent attorney or firm of
certified public accountants selected by the Association and approved by the
Executive (which approval shall not be unreasonably withheld or delayed), which
determination shall both state the accurate Performance Criterion and that the
difference between the accurate Performance Criterion and the Performance
Criterion on which the payment was based is material (the
"Determination").  Upon receipt of a Determination, the Association
may supply to the Executive a copy of the Determination, a computation of the
bonus or other incentive compensation that would have been payable on the basis
of the accurate Performance Criterion set forth in the Determination (the
"Determination Amount") and a written demand for repayment of the amount (if
any) by which the bonus or incentive compensation actually
paid  exceeded the Determination Amount.

       

      (b)           (i)           If
the Executive’s employment terminates in an “applicable severance from
employment” (within the meaning of 31 C.F.R.Code Part 30) while (A) the
Executive is a Senior Executive Officer and (B) the UST holds any debt or equity
interest in the Company or the Association acquired under the CPP, then payments
to the Executive that are contingent on such applicable severance from
employment and are designated to be paid during the CPP Compliance Period shall
be limited, if necessary, to the maximum amount which may be paid without
causing any amount paid to be an "excess parachute payment" within the


       

      
        
           

        

        
          Page 27
of 30

          
            

          

        

        
           

        

      

       

      meaning
of section 280G(b)(1) of the Code, as modified by section 280G(e) of the Code,
referred to as a “golden Parachute Payment” under 31 C.F.R Part 30 (the "Maximum
Payment Amount").  Any reduction in payments required to achieve such
limit shall be applied to all payments otherwise due hereunder in the reverse
chronological order of their payment dates, and where multiple payments are due
on the same date, the reduction shall be apportioned ratably among the affected
payments.  The required reduction (if any) shall be determined in
writing by the Computation Advisor or, if the Computation Advisor is unable to
provide the determination, by an independent attorney or firm of certified
public accountants selected by the Association and approved by the Executive
(which approval shall not be unreasonably withheld or
delayed).

    

     

    
      (ii)           To
the extent not prohibited by law, the aggregate amount by which payments
designated to be paid during the CPP Compliance Period are reduced pursuant to
section 30(b)(i) (the "Unpaid Amount") shall be delayed to and shall be paid on
the first business day following the last day of the CPP Compliance
Period.  Pending payment, the Unpaid Amount shall be deposited in a
Rabbi Trust.  Payment of the Unpaid Amount shall include any
investment earnings on the assets of the Rabbi Trust attributable to the Unpaid
Amount.


      
        
           


        

        
          Page 28
of 30

          
            

          

        

        
           


        

      


      This
section 30 shall be operated, administered and construed to comply with section
111(b) of EESA as implemented by guidance or regulation thereunder that has been
issued and is in effect as of the closing date of the agreement, if any, by and
between the Company, under which the UST acquires equity or debt securities of
the Company or the Association under the CPP (such date, if any, the “Closing
Date” and such implementation, the “Relevant Implementation”). If after such
Closing Date the clawback requirement of section 30(a) shall not be required by
the Relevant Implementation of Section 111(b) of EESA, such requirement shall
have no further effect. If after such Closing Date the limitation on golden
parachute payments under section 30(b)(i) shall not be required by the Relevant
Implementation of section 111(b) of EESA, such limitation shall have no further
effect and any Unpaid Amount delayed under section 30(b)(ii) shall be paid on
the earliest date on which the Association reasonably anticipates that such
amount may be paid and without violating such limitation.

      


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


       

      
        
          
            
              
                
                  
                    
                      
                        
                          
                            
                              
                                
                                  
                                    
                                      
                                        
                                          	
                                                  ATTEST:

                                                	 	
                                                  Astoria
      Federal Savings and Loan

                                                  Association

                                                
	 
      	 	 
      	 
	 	 	 	 
	      
                                                  /S/ Alan P.
Eggleston

                                                	 	
                                                  By:

                                                	
                                                  /S/ George L. Engelke, Jr.

                                                	 
	
                                                  Alan
      P. Eggleston

                                                	 	
                                                  Name:

                                                	
                                                  George
      L. Engelke, Jr.

                                                	 
	
                                                  [Seal]

                                                	 	
                                                  Title:

                                                	
                                                  Chairman
      and Chief Executive

                                                  Officer

                                                	 
	 
      	 	 
      	 
	 	 	 	 
	 
      	 	
                                                  /S/ Gerard C. Keegan

                                                	 
	 
      	 	
                                                  Gerard
      C. Keegan

                                                	 


                                        

                                      

                                    

                                  

                                

                              

                            

                          

                        

                      

                    

                  

                

              

            

          

        

      

       

      
        
           

        

        
          Page 29
of 30

          
            

          

        

        
           

        

      

       

      
        
          	
                  STATE
      OF NEW YORK

                	
                  )

                
	 	)           ss.: 


        

      

      
        	
                COUNTY
      OF NASSAU

              	
                )

              


      

      


      On this 31 day of December, 2008,
before me, the undersigned, personally appeared George L. Engelke,
Jr., personally known to me or proved to me on the basis of satisfactory
evidence to be the individual(s) whose name(s) is (are) subscribed to the within
instrument and acknowledged to me that he/she/they executed the same in
his/her/their capacity(ies), and that by his/her/their signature(s) on the
instrument, the individual(s), or the person upon behalf of which the
individual(s) acted, executed the instrument.

      


      
        
          	 
      	
                  /S/ Marygrace Farruggia

                
	 
      	
                  Notary
      Public

                
	 
      	 
      
	 
      	
                  Marygrace
      Farruggia

                
	 
      	
                  Notary
      Public, State of New York

                
	 
      	
                  No.
      4998931

                
	 
      	
                  Qualified
      in Suffolk County

                
	 
      	
                  Commission
      Expires 7/13/2010

                


        

      

       

      
        
          	
                  STATE
      OF NEW YORK

                	
                  )

                


        

        
          	
                   

                	
                  )           ss.:

                


        

        
          	
                  COUNTY
      OF NASSAU

                	
                  )

                


        

      

       

      On this 31 day of December, 2008,
before me, the undersigned, personally appeared Gerard C. Keegan, personally
known to me or proved to me on the basis of satisfactory evidence to be the
individual(s) whose name(s) is (are) subscribed to the within instrument and
acknowledged to me that he/she/they executed the same in his/her/their
capacity(ies), and that by his/her/their signature(s) on the instrument, the
individual(s), or the person upon behalf of which the individual(s) acted,
executed the instrument.

      


      
        
          	 
      	
                  /S/ Marygrace Farruggia

                
	 
      	
                  Notary
      Public

                
	 
      	 
      
	 
      	
                  Marygrace
      Farruggia

                
	 
      	
                  Notary
      Public, State of New York

                
	 
      	
                  No.
      4998931

                
	 
      	
                  Qualified
      in Suffolk County

                
	 
      	
                  Commission
      Expires 7/13/2010

                


        

      

       

      
        
           


        

        
          Page 30
of 30