Unassociated Document


    
      Exhibit
10-48

       

    

    AMENDED
AND RESTATED

    CHANGE
OF CONTROL SEVERANCE AGREEMENT

    


    This
AMENDED AND RESTATED CHANGE OF CONTROL SEVERANCE AGREEMENT (the "Agreement") is
made and entered into as of January 1, 2009 by and among ASTORIA FEDERAL SAVINGS
AND LOAN ASSOCIATION, a savings and loan association organized and existing
under the laws of the United States of America and having an office at One
Astoria Federal Plaza, Lake Success, New York 11042 (the "Association"), ASTORIA
FINANCIAL CORPORATION, a business corporation organized and existing under the
laws of the State of Delaware and having an office at One Astoria Federal Plaza,
Lake Success, New York 11042 (the "Company") and Thomas E. Lavery, an individual
residing at 18 Polly Drive, Huntington, New York 11743 (the
"Officer").

    


    INTRODUCTORY
STATEMENT

    


    WHEREAS, the Officer is a key
officer of the Association;

    


    WHEREAS, should the
possibility of a Pending Change of Control or Change of Control of the
Association or the Company arise, the Boards of Directors of the Association and
the Company believe it is imperative that the Association, the Company and the
Boards of Directors of the Association and the Company should be able to rely
upon the Officer to continue in his or her position, and that the Association
and the Company should be able to receive and rely upon the Officer's advice, if
requested, as to the best interests of the Association and the Company and their
respective shareholders without concern that the Officer might be distracted by
the personal uncertainties and risks created by the possibility of a Pending
Change of Control or Change of Control;

    


    WHEREAS, should the
possibility of a Pending Change of Control or Change of Control arise, in
addition to his or her regular duties, the Officer may be called upon to assist
in the assessment of such possible Pending Change of Control or Change of
Control, advise management and the Board as to whether such Pending Change of
Control or Change of Control would be in the best interests of the Association,
the Company and their respective shareholders, and to take such other actions as
the Boards of Directors of the Association and the Company might determine to be
appropriate;

    


    WHEREAS, the Officer currently
has a Change of Control Severance Agreement with the Association and the Company
entered into on December 21, 2005 (such date, the "Initial Effective Date," and
such agreement, the "Prior Agreement"); and

    


    WHEREAS, the Officer, the
Association and the Company wish to amend and modify the Prior Agreement
pursuant to section 26 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, the Company and the Officer hereby amend


     

    
      
        
        

      

      
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    and restate in its entirety the Prior Agreement so as to provide as
follows from and after the date hereof:

     

    AGREEMENT

    


    
      Section
1. Effective Date; Term;
Pending Change of Control and Change of Control
Defined.

    

    


    (a) This
Agreement has been in effect since the Initial Effective Date  and
shall remain in effect during the period (the "Term") beginning on the Initial
Effective Date and ending on the earlier of:

    


    (i) the
date, prior to the occurrence of a Pending Change of Control or a Change of
Control, as defined below, respectively, on which the Officer's employment by
the Association terminates whether by discharge, resignation, death, disability
or retirement, or

    


    (ii) the
later of:

    


    (A) the
first anniversary of the date on which the Association notifies the Officer of
its intent to discontinue the Agreement (the "Initial Expiration Date")
or,

    


    (B) the
second anniversary of the latest Change of Control, as defined below, that
occurs after the Initial Effective Date and before the Initial Expiration
Date.

     

    
      (b) For
purposes of this Agreement, a "Change of Control" shall be deemed to have
occurred upon the happening of any of the following events:

      


      (i) the
consummation of a transaction that results in the reorganization, merger or
consolidation of the Company with one or more other persons, other than a
transaction following which:

      


      (A) at
least 51% of the equity ownership interests of the entity resulting from such
transaction are beneficially owned (within the meaning of Rule 13d-3 promulgated
under the Securities Exchange Act of 1934, as amended (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 Company; 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

    

     

     

    
      
        
        

      

      
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    proportions by persons who, immediately prior to such transaction,
beneficially owned (within the meaning of Rule 13d-3 promulgated under the
Exchange Act) at least 51% of the securities entitled to vote generally in the
election of directors of the Company;

     

    
      (ii) the
acquisition of all or substantially all of the assets of the Company or
beneficial ownership (within the meaning of Rule 13d-3 promulgated under the
Exchange Act) of 20% or more of the outstanding securities of the Company
entitled to vote generally in the election of directors by any person or by any
persons acting in concert;

      


      (iii) a
complete liquidation or dissolution of the Company, or approval by the
shareholders of the Company 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 of Directors of the Company do not belong to any of the
following groups:

      


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

      


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

      


      (I) upon
election to serve as a member of the Board of Directors of the Company by
affirmative vote of three-quarters of the members of such Board, or of a
nominating committee thereof, in office at the time of such first election;
or

      


      (II) upon
election by the stockholders of the Company to serve as a member of such Board,
but only if nominated for election by affirmative vote of three-quarters of the
members of the Board of Directors of the Company, or of a nominating committee
thereof, in office at the time of such first nomination;

      


      provided,
however, that such individual's election or nomination did not result from an
actual or threatened election contest (within the meaning of Rule 14a-11 of
Regulation 14A promulgated under the Exchange Act) or other actual or threatened
solicitation of proxies or consents (within the meaning of Rule 14a-11 of
Regulation 14A promulgated under the Exchange Act) other than by or on behalf of
the Board of Directors of the Company; or

       

    

    (v) any
event which would be described in section 1(b)(i), (ii), (iii) or (iv) if the
term "Association" were substituted for the term "Company" therein.

     

    
      
        
        

      

      
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    In no
event, however, shall a Change of Control be deemed to have occurred as a result
of any acquisition of securities or assets of the Company, the Association, or
an affiliate or subsidiary of either of them, by any employee benefit plan
maintained by any of them. For purposes of this section 1(b), the term "person"
shall have the meaning assigned to it under sections 13(d)(3) or 14(d)(2) of the
Exchange Act.

    


    (c) For
purposes of this Agreement, a "Pending Change of Control" shall
mean:

    


    (i) the
approval by the shareholders of the Association or the Company of a definitive
agreement for a transaction which, if consummated, would result in a Change of
Control; or

    


    (ii) the
approval by the shareholders of the Association or the Company of a transaction
which, if consummated, would result in a Change of Control.

    


    
      Section
2. Discharge Prior to a
Pending Change of Control.

    

    


    The
Association may discharge the Officer at any time prior to the occurrence of a
Pending Change of Control or, if no Pending Change of Control has occurred, a
Change of Control, for any reason or for no reason. In such event:

    


    (a) The
Association shall pay to the Officer or the Officer's estate his or her earned
but unpaid compensation, including, without limitation, salary and all other
items which constitute wages under applicable law, as of the date of the
Officer's termination of employment. This payment shall be made at the time and
in the manner prescribed by law applicable to the payment of wages but in no
event later than 30 days after the date of the Officer's termination of
employment.

    


    (b) The
Association shall provide the benefits due, if any, to the Officer or the
Officer's estate, surviving dependents or designated beneficiaries, as
applicable, under the employee benefit plans and programs and compensation plans
and programs maintained for the benefit of the officers and employees of the
Association, 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 ate same time and on
the terms and conditions (including but not limited to achievement of
performance goals) applicable under the relevant plan. The time and manner of
payment or other delivery of these benefits and the recipients of such benefits
shall be determined according to the terms and conditions of the applicable
plans and programs.

    


    The
payments and benefits described in sections 2(a) and (b) shall be referred to in
this Agreement as the "Standard Termination Entitlements."

     

    
      
        
        

      

      
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      Section
3. Termination of Employment
Due to Death.

    

    


    The
Officer's employment with the Association shall terminate automatically, and
without any further action on the part of any party to this Agreement, on the
date of the Officer's death. In such event, the Association shall pay and
deliver to the Officer's estate and surviving dependents and designated
beneficiaries, as applicable, the Standard Termination
Entitlements.

    


    
      Section
4. Termination Due to
Disability after a Pending Change of Control or a Change of
Control.

    

    


    The
Association may terminate the Officer's employment during the Term and after the
occurrence of a Pending Change of Control or a Change of Control upon a
determination by the Board of Directors of the Association, by the affirmative
vote of 75% of its entire membership, acting in reliance on the written advice
of a medical professional acceptable to it, that the Officer is suffering from a
physical or mental impairment which, at the date of the determination, has
prevented the Officer from performing the Officer's assigned duties on a
substantially full-time basis for a period of at least one hundred and eighty
(180) days during the period of one (1) year ending with the date of the
determination or is likely to result in death or prevent the Officer from
performing the Officer's assigned duties on a substantially full-time basis for
a period of at least one hundred and eighty (180) days during the period of one
(1) year beginning with the date of the determination. In such
event:

    


    (a) The
Association shall pay and deliver the Standard Termination Entitlements to the
Officer or, in the event of the Officer's death following such termination but
before payment, to the Officer's estate, surviving dependents or designated
beneficiaries, as applicable.

    


    (b) In
addition to the Standard Termination Entitlements, the Association shall
continue to pay the Officer his or her base salary, at the annual rate in effect
for the Officer immediately prior to the termination of the Officer's
employment, during a period ending on the earliest of: (i) the expiration of one
hundred and eighty (180) days after the date of termination of the Officer's
employment; (ii) the date on which long-term disability insurance benefits are
first payable to the Officer under any long-term disability insurance plan
covering employees of the Association; or (iii) the date of the Officer's
death.

    


    A
termination of employment due to disability under this section 4 shall be
effected by a notice of termination given to the Officer by the 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 Officer.

    


    
      Section
5. Discharge with Cause after
a Pending Change of Control or Change of Control.

    

    


    (a) The
Association may terminate the Officer's employment with "Cause" during the Term
and after the occurrence of a Pending Change of Control or a Change of Control,
but a termination shall be deemed to have occurred with "Cause" only
if:

     

    
      
        
        

      

      
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    (i) (A)
the Board of Directors of the Association, by the affirmative vote of 75% of its
entire membership, determines that the Officer is guilty of 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;

    


    (B) prior
to the vote contemplated by section 5(a)(i)(A), the Board of Directors of the
Association shall provide the Officer with notice of the Association's intent to
discharge the Officer for Cause, detailing with particularity the facts and
circumstances which are alleged to constitute Cause (the "Notice of Intent to
Discharge"); and

    


    (C) after
the giving of the Notice of Intent to Discharge and before the taking of the
vote contemplated by section 5(a)(i)(A), the Officer, together with the
Officer's legal counsel, if he so desires, are afforded a reasonable opportunity
to make both written and oral presentations before the Board of Directors of the
Association for the purpose of refuting the alleged grounds for Cause for the
Officer's discharge; and

    


    (D) after
the vote contemplated by section 5(a)(i)(A), the Association has furnished to
the Officer a notice of termination which shall specify the effective date of
the Officer's termination of employment (which shall in no event be earlier than
the date on which such notice is deemed given) and include a copy of a
resolution or resolutions adopted by the Board of Directors of the Association,
certified by its corporate secretary, authorizing the termination of the
Officer's employment with Cause and stating with particularity the facts and
circumstances found to constitute Cause for the Officer's discharge (the "Final
Discharge Notice"); or

    


    (ii)  the
Officer, during the 90 day period commencing on the delivery to the Officer by
the Association of the Notice of Intent to Discharge specified in section
5(a)(i)(B), resigns his or her employment with the Association prior to the
delivery to the Officer by the Association of the Final Discharge Notice
specified in section 5(a)(i)(D).  For purposes of this section 5, no
act or failure to act, on the part of the Officer, shall be considered "willful"
unless it is done, or omitted to be done, by the Officer in bad faith or without
reasonable belief that the Officer's action or omission was in the best
interests of the Association or the Company, respectively. Any act or failure to
act based upon authority given pursuant to a resolution duly adopted by the
Board of Directors of the Association or the Company or based upon the written
advice of counsel for the Association or the Company shall be conclusively
presumed to be done or omitted to be done by the Officer in good faith and in
the best interests of the Association or the Company, respectively.

     

    
      
        
        

      

      
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    (b) If
the Officer is discharged with Cause during the Term and after a Pending Change
of Control or a Change of Control, the Association shall pay and provide to him
or, in the event of the Officer's death following such discharge but prior to
payment and providing, to the Officer's estate, surviving dependents or
designated beneficiaries, as applicable, the Standard Termination Entitlements
only.

    


    (c)
Following the giving of a Notice of Intent to Discharge, the Association may
temporarily suspend the Officer's duties and authority and, in such event, may
also suspend the payment of salary and other cash compensation, but not the
Officer's participation in retirement, insurance and other employee benefit
plans. If the Officer is not discharged or is discharged without Cause within
forty-five (45) days after the giving of a Notice of Intent to Discharge,
payments of salary and cash compensation shall resume, and all payments withheld
during the period of suspension shall be promptly restored.  If the
Officer is discharged with Cause not later than forty-five (45) days after the
giving of the Notice of Intent to Discharge, all payments withheld during the
period of suspension shall be deemed forfeited and shall not be included in the
Standard Termination Entitlements. If a Final Discharge Notice is given later
than forty-five (45) days, but sooner than ninety (90) days, after the giving of
the Notice of Intent to Discharge, all payments made to the Officer during the
period beginning with the giving of the Notice of Intent to Discharge and ending
with the Officer's discharge with Cause shall be retained by the Officer and
shall not be applied to offset the Standard Termination Entitlements. If the
Association does not give a Final Discharge Notice to the Officer within ninety
(90) days after giving a Notice of Intent to Discharge, the Notice of Intent to
Discharge shall be deemed withdrawn and any future action to discharge the
Officer with Cause shall require the giving of a new Notice of Intent to
Discharge. If the Officer resigns pursuant to section 5(a)(ii), the Officer
shall forfeit his or her right to suspended amounts that have not been restored
as of the date of the Officer's resignation or notice of resignation, whichever
is earlier.

    


    
      Section
6. Discharge Without Cause
after a Pending Change of Control or Change of
Control.

    

    


    The
Association may discharge the Officer without Cause at any time after the
occurrence of a Pending Change of Control or a Change of Control, and in such
event:

    


    (a) The
Association shall pay and deliver the Standard Termination Entitlements to the
Officer or, in the event of the Officer's death following the Officer's
discharge but before payment, to the Officer's estate, surviving dependents or
designated beneficiaries, as applicable.

    


    (b) In
addition to the Standard Termination Entitlements:

    


    (i) the
Association shall provide for a period of two years following the date of the
Officer's discharge (the "Assurance Period") for the benefit of the Officer and
the Officer's spouse and dependents continued group life, health (including
hospitalization, medical and major medical), dental, accident and long-term
disability insurance benefits on substantially the same terms and conditions
(including any co-payments and deductibles, but excluding any premium
sharing

     

    
      
        
        

      

      
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    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) in effect for them immediately prior to the
Officer's discharge. The coverage provided under this section 6(b)(i) may, at
the election of the Association, be secondary to the coverage provided as part
of the Standard Termination Entitlements and to any employer-paid coverage
provided by a subsequent employer or through Medicare, with the result that
benefits under the other coverages will offset the coverage required by this
section 6(b)(i), provided, however, that for purposes of this section 6(b)(i)
benefits provided at the cost of the Officer or the Officer's spouse or
dependants pursuant to the Comprehensive Omnibus Budget Reconciliation Act, as
amended, shall not be considered Standard Termination Entitlements.

     

    
      (ii) The
Association shall make a lump sum payment to the Officer or, in the event of the
Officer's death following the Officer's discharge but before payment, to the
Officer's estate in an amount equal to the salary that the Officer would have
earned if he had continued working for the Association during the Assurance
Period at the highest annual rate of salary achieved during the period of three
(3) years ending immediately prior to the date of termination (the "Salary
Severance Payment"). The Salary Severance Payment shall be computed using the
following formula:

      


      SSP.  =
  BS x NY

      


      where:

       

    

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

    


    "BS" is
the highest annual rate of salary achieved by the Officer during the period of
three (3) years ending immediately prior to the date of termination;
and

    


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

    


    The
Salary Severance Payment shall be made sixty (60) days after the Officer's
termination of employment and shall be in lieu of any claim to a continuation of
base salary which the Officer might otherwise have and in lieu of cash severance
benefits under any severance benefits program which may be in effect for
officers or employees of the Association.

    


    (iii) The
Association shall make a lump sum payment to the Officer or, in the event of the
Officer's death following the Officer's discharge but before payment, to the
Officer's estate in an amount equal to the potential annual bonuses that the
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    Officer had continued working for the Association during the
period of the same length as the Assurance Period, beginning on the date after
the end of the current performance period under the Association’s Annual
Incentive Plan for Select Executives at the highest annual rate of salary
achieved during the period of three (3) years ending immediately prior to the
date of termination (the "Bonus Severance Payment"). The Bonus Severance Payment
shall be computed using the following formula:

     

    
      BSP   =
   ((BS x TIO x IP) + ( BS x TIO x FP x AP)) x NY

      


      where:


       

    

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

    


    "BS" is
the highest annual rate of salary achieved by the Officer during the period of
three (3) years ending immediately prior to the date of
termination;

    


    "TIO" is
the target incentive opportunity for the Officer expressed as a percentage as
established by the Compensation Committee of the Board of Directors of the
Association pursuant to the Association's Annual Incentive Plan for Select
Executives for the year in which the employment of the Officer by the
Association terminates or, if no target incentive opportunity is established by
the Compensation Committee of the Board of Directors of the Association for such
year with respect to the Officer, then the highest target incentive opportunity
established by the Compensation Committee of the Board of Directors of the
Association for the Officer pursuant to the Annual Incentive Plan for Select
Executives during the period of three (3) years ending immediately prior to the
date of termination;

    


    "IP" is
either (i) the percentage of the TIO which is to be determined by the individual
performance of the Officer as established by the Compensation Committee of the
Board of Directors of the Association pursuant to the Association's Annual
Incentive Plan for Select Executives for the year in which the employment of the
Officer by the Association terminates or, (ii) if no target incentive
opportunity has been established with respect to the Officer by the Compensation
Committee of the Board of Directors of the Association for the year in which the
employment of the Officer by the Association terminates, then the lowest
percentage of the target incentive opportunity to be determined by the
individual performance of the Officer established by the Compensation Committee
of the Board of Directors of the Association for the Officer pursuant to the
Annual Incentive Plan for Select Executives during the period of three (3) years
ending immediately prior to the date of termination;

     

    
      
        
        

      

      
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    "FP" is
either (i) the percentage of the TIO with respect to the Officer which is to be
determined by the financial performance of the Company as established by the
Compensation Committee of the Board of Directors of the Association pursuant to
the Association's Annual Incentive Plan for Select Executives for the year in
which the employment of the Officer by the Association terminates or, (ii) if no
target incentive opportunity has been established with respect to the Officer by
the Compensation Committee of the Board of Directors of the Association for the
year in which the employment of the Officer by the Association terminates, then
a percentage equal to 100% minus the IP;

    


    "AP" is
the highest award percentage available to the Officer with respect to the
financial performance of the Company as established by the Compensation
Committee of the Board of Directors of the Association pursuant to the
Association's Annual Incentive Plan for Select Executives during the period of
three (3) years ending immediately prior to the date of
termination;

    


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

    


    The Bonus
Severance Payment shall be made on the date sixty (60) days after the Officer's
termination of employment and shall be in lieu of any claim to a continuation of
participation in any cash-based annual bonus or performance-based compensation
plans of the Association which the Officer might otherwise have, other than any
claim based on rights the Officer may have with regard to any performance period
under any such plan that begins before the effective date of the Officer's
termination of employment.

    


    The
payments and benefits described in section 6(b) are referred to in this
Agreement as the "Additional Termination Entitlements". The payments described
in section 6(b)(ii) and (iii) shall be computed at the expense of the Company by
an attorney of the firm of 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 Officer and reasonably satisfactory to the Company (the
"Computation Advisor"). The determination of the Computation Advisor as to the
amount of such payments shall be final and binding in the absence of manifest
error.

    


    
      Section
7. Tax
Indemnification.

    

    


    (a) If
the Officer's employment terminates under circumstances entitling the Officer
or, in the event of the Officer's death following such termination but before
payment, his or her estate to the Additional Termination Entitlements, the
Company shall pay to the Officer or, in the event of the Officer's death, his or
her estate an additional amount (the “Tax Indemnity Payment”) intended to
indemnify the Officer against the financial effects of the excise tax imposed on
excess parachute payments under section 280G of the Internal Revenue Code of


     

    
      
        
        

      

      
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    1986, as amended (the "Code"). The Tax Indemnity Payment shall be
determined under the following formula:

     

    
      	
              TIP   =

            	
              E x
      P

            
	
              1 -
      (( FI x ( 1 - SLI )) + SLI + E + M
)

            


    

     

    where:

    


    "TIP" is
the Tax Indemnity Payment, before the deduction of applicable federal, state and
local withholding taxes;

    


    "E" is
the percentage rate at which an excise tax is assessed under section 4999 of the
Code;

    


    "P" is
the amount with respect to which such excise tax is assessed, determined without
regard to this section 16;

    


    "FI" is
the highest marginal rate of income tax applicable to the Officer under the Code
for the taxable year in question;

    


    "SLI" is
the sum of the highest marginal rates of income tax applicable to the Officer
under all applicable state and local laws for the taxable year in question;
and

    


    "M" is
the highest marginal rate of Medicare tax applicable to the Officer under the
Code for the taxable year in question.

    


    Such
computation shall be made at the expense of the Company by the Computation
Advisor and shall be based on the following assumptions:

    


    (i) that
a change in ownership, a change in effective ownership or control or a change in
the ownership of a substantial portion of the assets of the Association or the
Company has occurred within the meaning of section 280G of the Code (a "280G
Change of Control");

    


    (ii) that
all direct or indirect payments made to or benefits conferred upon the Officer
on account of the Officer's termination of employment are "parachute payments"
within the meaning of section 280G of the Code; and

    


    (iii)
that no portion of such payments is reasonable compensation for services
rendered prior to the Officer's termination of employment.

    


    (b) With
respect to any payment that is presumed to be a parachute payment for purposes
of section 280G of the Code, the Tax Indemnity Payment shall be made to the
Officer on the earlier of the date the Company, the Association or any direct or
indirect subsidiary or affiliate of the Company or the Association is required
to withhold such tax or the date the tax is required to be paid by the Officer,
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    to the Officer the written opinion (the "Opinion Letter"), in form
and substance reasonably satisfactory to the Officer, of the Computation Advisor
or, if the Computation Advisor is unable to provide such opinion, of an attorney
or firm of independent certified public accountants selected by the Company and
reasonably satisfactory to the Officer, to the effect that the Officer has a
reasonable basis on which to conclude that:

     

    (i) no
280G Change in Control has occurred, or

    


    (ii) all
or part of the payment or benefit in question is not a parachute payment for
purposes of section 280G of the Code, or

    


    (iii) all
or a part of such payment or benefit constitutes reasonable compensation for
services rendered prior to the 280G Change of Control, or

    


    (iv) for
some other reason which shall be set forth in detail in such letter, no excise
tax is due under section 4999 of the Code with respect to such payment or
benefit.

    


    If the
Company delivers an Opinion Letter, the Computation Advisor shall re-compute,
and the Company shall make, the Tax Indemnity Payment in reliance on the
information contained in the Opinion Letter.

    


    (c) In
the event that the Officer's liability for the excise tax under section 4999 of
the Code for a taxable year is subsequently determined to be different than the
amount with respect to which the Tax Indemnity Payment is made, the Officer or
the Company, as the case may be, shall pay to the other party at the time that
the amount of such excise tax is finally determined, an appropriate amount, plus
interest, such that the payment made pursuant to sections 7(a) or 7(b), when
increased by the amount of the payment made to the Officer pursuant to this
section 7(c), or when reduced by the amount of the payment made to the Company
pursuant to this section 7(c), equals the amount that should have properly been
paid to the Officer under section 7(a). The interest paid to the Company under
this section 7(c) shall be determined at the rate provided under section
1274(b)(2)(B) of the Code. The payment made to the Officer shall include such
amount of interest as is necessary to satisfy any interest assessment made by
the Internal Revenue Service and an additional amount equal to any monetary
penalties assessed by the Internal Revenue Service on account of an underpayment
of the excise tax. To confirm that the proper amount, if any, was paid to the
Officer under this section 7, the Officer shall furnish to the Company a copy of
each tax return which reflects a liability for an excise tax, at least 20 days
before the date on which such return is required to be filed with the Internal
Revenue Service. Nothing in this Agreement shall give the Company any right to
control or otherwise participate in any action, suit or proceeding to which the
Officer is a party as a result of positions taken on the Officer's federal
income tax return with respect to the Officer's liability for excise taxes under
section 4999 of the Code.  Any payment pursuant to this section 7(c)
shall be made promptly following the relevant subsequent determination, and
shall in any case be made no later than the last day of the calendar year
following the calendar year in which any additional taxes for which the Tax
Indemnity Payment is to be made are remitted to the Internal Revenue
Service.

     

    
      
        
        

      

      
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    Section
8. Indemnification upon and
following a Change of Control.

    


    (a) From
and after the effective date of a Change of Control through the sixth
anniversary of such effective date, the Association and the Company agree to
indemnify and hold harmless the Officer, against any costs or expenses
(including reasonable attorneys' fees), judgments, fines, losses, claims,
damages or liabilities (collectively, "Costs") incurred in connection with any
claim, action, suit, proceeding or investigation, whether civil, criminal,
administrative or investigative, for acts or omissions in connection with
service as an officer of the Association or service in other capacities at the
request of the Association or the Company at or prior to the time the Change of
Control became effective, whether asserted or claimed prior to, at or after the
effective date of the Change of Control, and to advance any such Costs to the
Officer as they are from time to time incurred, in each case to the fullest
extent the Officer would have been indemnified as a director or officer of the
Association or the Company, as applicable, and as then permitted under
applicable law.

    


    (b) The
Officer, seeking to claim indemnification under section 8(a) of this Agreement
and upon learning of any such claim, action, suit, proceeding or investigation,
shall promptly notify the Association thereof, but the failure to so notify
shall not relieve the Association or the Company of any liability it may have
pursuant to this Agreement to the Officer if such failure does not materially
and substantially prejudice the Association or the Company. In the event of any
such claim, action, suit, proceeding or investigation,

    


    (i) the
Association and the Company shall have the right to assume the defense thereof
with counsel reasonably acceptable to the Officer, and the Association and the
Company shall not be liable to the Officer for any legal expenses of other
counsel subsequently incurred by the Officer in connection with the defense
thereof, except that if the Association and the Company do not elect to assume
such defense within a reasonable time or counsel for the Officer at any time
advises that there are issues which raise conflicts of interest between the
Association or the Company and the Officer (and counsel for the Association or
the Company does not disagree), the Officer may retain counsel satisfactory to
the Officer, and the Association and the Company shall remain responsible for
the reasonable fees and expenses of such counsel as set forth above, to be paid
promptly as statements therefor are received; provided, however, that the
Association and the Company shall be obligated pursuant to this paragraph (b)(i)
to pay for only one firm of counsel for all indemnified parties in any one
jurisdiction with respect to any given claim, action, suit, proceeding or
investigation unless the use of one counsel for such indemnified parties,
including the Officer, would present such counsel with a conflict of
interest;

    


    (ii) the
Officer will reasonably cooperate in the defense of any such matter;
and

    


    (iii) the
Association and the Company shall not be liable for any settlement effected by
the Officer without their prior written consent, which shall not be unreasonably
withheld.

     

    
      
        
        

      

      
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      Section
9. Resignation.

    

    


    (a) The
Officer may resign from the Officer's employment with the Association at any
time. A resignation under this section 9 shall be effected by notice of
resignation given by the Officer to the Association and shall take effect on the
later of the effective date of termination specified in such notice or the date
on which the notice of termination is deemed given by the Officer. For purposes
of this Agreement, retirement of the Officer from the employment of the
Association or the Company under circumstances defined as "normal retirement" or
"early retirement" pursuant to any qualified defined benefit or qualified
defined contribution pension plan maintained by the Association shall be deemed
a resignation by the Officer of the Officer's employment with the Association. A
resignation by the Officer as described in section 5(a)(ii) of this Agreement,
for purposes of this Agreement shall be deemed to be termination with "Cause".
The Officer's resignation of any of the positions within the Association or the
Company to which he has been assigned shall be deemed a resignation from all
such positions.

    


    (b) The
Officer's resignation shall be deemed to be for "Good Reason" if the effective
date of resignation occurs during the Term, but on or after the effective date
of a Pending Change of Control or Change of Control, and is on account
of:

    


    (i) the
failure of the Association (whether by act or omission of the Board of
Directors, or otherwise) to appoint, re-appoint, elect or re-elect the Officer
to the office and position with the Association that he held immediately prior
to the Change of Control or Pending Change of Control (the "Assigned Office") or
to a more senior office and position;

    


    (ii) if
the Officer is or becomes a member of the Board of Directors of the Association,
the failure of the shareholders of the Association (whether in an election in
which the Officer stands as a nominee or in an election where the Officer is not
a nominee), to elect or re-elect the Officer to such directorship at the
expiration of the Officer's term as a director, unless such failure is a result
of the Officer's refusal to stand for election;

    


    (iii) a
material failure by the Association, whether by amendment of the charter or
organization, by-laws, action of the Board of Directors of the Association or
otherwise, to vest in the Officer the functions, duties, or responsibilities
customarily associated with the Assigned Office; provided that the Officer shall
have given notice of such failure to the Association, and the Association has
not fully cured such failure within thirty (30) days after such notice is deemed
given;

     

    (iv) any
reduction of the Officer's rate of base salary in effect from time to time,
whether or not material, or any failure, other than due to reasonable
administrative error that is fully cured within 5 days after notice of such
administrative error is deemed given, to pay any portion of the Officer's
compensation as and when due;

     

    
      
        
        

      

      
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    (v) any
change in the terms and conditions of any compensation or benefit program in
which the Officer participates which, either individually or together with other
changes, has a material adverse effect on the aggregate value of the Officer's
total compensation package; provided that the Officer shall have given notice of
such material adverse effect to the Association, and the Association has not
fully cured such failure within thirty (30) days after such notice is deemed
given;

    


    (vi) any
material breach by the Company or the Association of any material term,
condition or covenant contained in this Agreement; provided that the Officer
shall have given notice to the Company and the Association of such material
adverse effect, and the Company or the Association have not fully cured such
failure within thirty (30) days after such notice is deemed given;
or

    


    (vii) a
change in the Officer's principal place of employment to a location that is
outside of Nassau County or Queens County, New York.  In all other
cases, a resignation by the Officer shall be deemed to be without Good Reason.
In the event of resignation, the Officer shall state in the Officer's notice of
resignation whether the Officer considers his or her resignation to be a
resignation with Good Reason, and if he does, he shall state in such notice the
grounds which constitute Good Reason. The Officer's determination of the
existence of Good Reason shall be conclusive in the absence of fraud, bad faith
or manifest error.

    


    (c) In
the event of the Officer's resignation for any reason, the Association shall pay
and deliver the Standard Termination Entitlements. In the event of the Officer's
resignation with Good Reason and such resignation is effective within six (6)
months of the effective date of the Change of Control (the "Resignation Window
Period"), the Association shall also pay and deliver the Additional Termination
Entitlements.  In the event the Officer's resignation with Good Reason
is based upon section 9(b)(iii),(iv),(v) or (vi) and the notice required by such
provision has been given within six months of the effective date of the Change
of Control but the applicable cure period will not expire until on or after the
date which is six months following the effective date of the Change of Control,
the Resignation Window Period shall be extended so as expire 30 days following
the expiration of the applicable cure period.

    


    Section
10. Terms and Conditions of
the Additional Termination Entitlements.

    


    The
Association and the Officer hereby stipulate that the damages which may be
incurred by the Officer following any termination of employment are not capable
of accurate measurement as of the date first above written and that the
Additional Termination Entitlements constitute reasonable damages under the
circumstances and shall be payable without any requirement of proof of actual
damage and without regard to the Officer's efforts, if any, to mitigate
damages.  The Association and the Officer further agree that the
Association may elect to condition the payment and delivery of the Additional
Termination Entitlements on the receipt and effectiveness of:

     

    
      
        
        

      

      
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    (a) the
Officer's resignation from any and all positions which he holds as an officer,
director or committee member with respect to the Association or any subsidiary
or affiliate of the Association; and

    


    (b) a
release of the Association and the Company and their officers, directors,
shareholders, subsidiaries and affiliates, in form and substance satisfactory to
the Association, of any liability to the Officer, whether for compensation or
damages, in connection with the Officer's employment with the Association and
the termination of such employment, except for the Standard Termination
Entitlements, the Additional Termination Entitlements, the Tax Indemnity Payment
and indemnification payments due the Officer pursuant to section 6 or section 7
of this Agreement;

    


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

    


    To the
extent the Association timely elects to condition the payment and delivery of
the Additional Termination Entitlements or any other amount due under this
Agreement upon the receipt and effectiveness of the Officer's resignation or
release provided in section 10(b) of this Agreement, neither the Additional
Termination Entitlements nor any other amount due so conditioned shall be paid
to the Officer if any resignation or release so required is not both received by
the Association and effective before the first date upon which such payments are
to be paid under this Agreement.

    


    
      Section
11. Confidentiality.

    

    


    Unless
the Officer obtains the prior written consent of the Association or the Company,
the Officer shall keep confidential and shall refrain from using for the benefit
of himself or herself, or any person or entity other than the Company or any
entity which is a subsidiary of the Company or of which the Company is a
subsidiary, any material document or information obtained from the Company, or
from its parent or subsidiaries, in the course of the Officer's employment with
any of them concerning their properties, operations or business (unless such
document or information is readily ascertainable from public or published
information or trade sources or has otherwise been made available to the public
through no fault of the Officer) until the same ceases to be material (or
becomes so ascertainable or available); provided, however, that nothing in this
section 11 shall prevent the Officer, with or without the Company's consent,
from participating in or disclosing documents or information in connection with
any judicial or administrative investigation, inquiry or proceeding to the
extent that such participation or disclosure is required under applicable
law.

    


    
      Section
12. No Effect on Employee
Benefit Plans or Programs.

    

    


    Except to
the extent specifically provided herein, the termination of the Officer's
employment during the Term or thereafter, whether by the Association or by the
Officer, 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 

     

    
      
        
        

      

      
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      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;
provided, however, that nothing in this Agreement shall be deemed to duplicate
any compensation or benefits provided under any severance agreement, plan or
program covering the Officer to which the Association or Company is a party and
any duplicative amount payable under any such agreement, plan or program shall
be applied as an offset to reduce the amounts otherwise payable hereunder. The
Additional Termination Entitlements provided hereunder, when due and payable or
provided to the Officer, or in the case of the Officer's death, to his or her
estate, surviving dependants or designated beneficiaries, as applicable, are
acknowledged to be in lieu of any benefits that would otherwise be provided
under such circumstances pursuant to the Association's Severance Pay Plan, as
amended, or Severance Compensation Plan, as amended.

       

      Section
13. Successors and
Assigns.

    

    


    This
Agreement will inure to the benefit of and be binding upon the Officer, the
Officer's legal representatives and testate or intestate distributees, and the
Company and the Association and their respective successors and assigns,
including any successor by merger or consolidation or a statutory receiver or
any other person or firm or corporation to which all or substantially all of the
assets and business of the Company or the Association may be sold or otherwise
transferred. Failure of the Company to obtain from any successor its express
written assumption of the Company's or Association's obligations hereunder at
least 60 days in advance of the scheduled effective date of any such succession
shall, if such succession constitutes a Change of Control, constitute Good
Reason for the Officer's resignation on or at any time during the Term following
the occurrence of such succession.

    


    
      Section
14. No
Attachment.

    

    


    Except as
required by law, no right to receive payments under this Agreement shall be
subject to anticipation, commutation, alienation, sale, assignment, encumbrance,
charge, pledge, or hypothecation, or to execution, attachment, levy, or similar
process or assignment by operation of law, and any attempt, voluntary or
involuntary, to affect any such action shall be null, void, and of no
effect.

    


    
      Section
15. Notices.

    

    


    Any
communication required or permitted to be given under this Agreement, including
any notice, direction, designation, consent, instruction, objection or waiver,
shall be in writing and shall be deemed to have been given at such time as it is
delivered personally, or five days after mailing if mailed, postage prepaid, by
registered or certified mail, return receipt requested, addressed to such party
at the address listed below or at such other address as one such party may by
written notice specify to the other party:

     

    
      
        
        

      

      
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    If to the
Officer:

    


    Thomas E.
Lavery

    18 Polly
Drive

    Huntington,
New York 11743

    


    If to the
Company or the Association:

    


    Astoria
Financial Corporation

    One
Astoria Federal Plaza

    Lake
Success, New York 11042

    


    Attention:  Chairman
and Chief Executive Officer

    


    with a
copy to:

    


    Thacher
Proffitt & Wood

    Two World
Financial Center

    New York,
New York 10281

    


    Attention:  W.
Edward Bright, Esq.

    


    
      Section
16. Indemnification for
Attorneys' Fees.

    

    


    (a) The
Association shall indemnify, hold harmless and defend the Officer against
reasonable costs, including legal fees, incurred by him in connection with or
arising out of any action, suit or proceeding in which he may be involved, as a
result of the Officer's efforts, in good faith, to defend or enforce the terms
of this Agreement; provided, however, that the Officer shall have substantially
prevailed on the merits pursuant to a judgment, decree or order of a court of
competent jurisdiction or of an arbitrator in an arbitration proceeding, or in a
settlement. For purposes of this Agreement, any settlement agreement which
provides for payment of any amounts in settlement of the Association's
obligations under this Agreement shall be conclusive evidence of the Officer's
entitlement to indemnification under this Agreement, and any such
indemnification payments shall be in addition to amounts payable pursuant to
such settlement agreement, unless such settlement agreement expressly provides
otherwise.

    


    (b) The
Association's or the Company's obligation to make the payments provided for in
this Agreement and otherwise to perform their respective obligations under this
Agreement shall not be affected by any set-off, counterclaim, recoupment,
defense or other claim, right or action which the Association or the Company may
have against the Officer or others. In no event shall the Officer be obligated
to seek other employment or take any other action by way of mitigation of the
amounts payable to the Officer under any of the provisions of this Agreement and
such amounts shall not be reduced whether or not the Officer obtains other
employment. Unless it is determined that the Officer has acted frivolously or in
bad faith, the Association shall pay as incurred, to the full extent permitted
by law, all legal fees and expenses which the Officer may reasonably incur as a
result of or in connection with the Officer's 

     

    
      
        
        

      

      
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    consultation with legal counsel or arising out of any action,
suit, proceeding, tax controversy, appeal or contest (regardless of the outcome
thereof) by the Association, the Company, the Officer or others regarding the
validity or enforceability of, or liability under, any provision of this
Agreement or any guarantee of performance thereof (including as a result of any
contest by the Officer about the amount of any payment pursuant to this
Agreement), plus in each case interest on any delayed payment at the applicable
Federal rate provided for in section 7872(f)(2)(A) of the Code.

     

    (c) Any
payment or reimbursement by the Association or the Company pursuant to this
section 16 shall be made no later than the last day of the calendar year
following (i) the calendar year in which the Officer incurs the expense, or (ii)
if later, in the case of fees or expenses incurred due to a tax audit or
litigation addressing the existence or amount of a tax liability regarding any
excise tax that is subject to indemnification by the Officer under section 7 of
this Agreement, (A) the calendar year in which such tax liability is paid, or
(B), if no tax liability is to be paid as a result of such tax audit or
litigation, the calendar year in which the audit is completed or there is a
final and nonappealable settlement or other resolution of the litigation, or
(iii), if later, within sixty (60) days after the settlement or resolution that
gives rise to the Officer's right to reimbursement; provided, however, that the
Officer shall have submitted to the Association or the Company documentation
supporting such expenses at such time and in such manner as the Association or
the Company may reasonably require.

    


    
      Section
17. Employment Rights and
Funding Obligations.

    

    


    (a)
Nothing expressed or implied in this Agreement shall create any right or duty on
the part of the Association, the Company or the Officer to have the Officer
continue as an officer of the Association or the Company or to remain in the
employment of the Association, the Company.

    


    (b)
Nothing expressed or implied in this Agreement shall create any right or duty on
the part of the Association, the Company or the Officer to create a trust of any
kind to fund any benefits which may be payable pursuant to this Agreement, and
to the extent that the Officer acquires a right to receive benefits from the
Association or the Company pursuant to this Agreement, such right shall be no
greater than the right of any unsecured general creditor of the Association or
the Company, respectively.

    


    
      Section
18. Withholding.

    

    


    The
Association or the Company, as applicable, shall have the right to deduct and
withhold from any amounts paid in cash pursuant to this Agreement by the
Association or the Company, respectively, any taxes or other amounts required by
law to be withheld with respect to such payment.

    


    
      Section
19. Compliance with Section
409A of the Code.

    

    


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

     

    
      
        
        

      

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

     

    (a) the
payment described in section 2(a) 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;

    


    (b) the
benefits and payments described in section 2(b) are expected to comply with or
be excepted from compliance with Section 409A on their own terms;

    


    (c) the
payments on a disability described in section 4(b) are expected to be excepted
from compliance with Section 409A as “disability pay” pursuant to Treasury
Regulation section 1.409A-1(a)(5);

    


    (d) the
welfare benefits provided in kind under section 6(b)(i) 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;

    


    (e) the
Tax Indemnity Payment provided under section 7 is intended to satisfy the
requirements for a “tax gross-up payment” described in Treasury Regulation
section 1.409A-3(i)(1)(v);

    


    (f) the
indemnification provided in section 8(a) is intended to be excepted from
compliance with Section 409A pursuant to Treasury Regulation section
1.409A-1(b)(10) as indemnification against claims based on acts or omissions as
a service provider;

    


    (g) the
general indemnification and reimbursements described in section 16 are intended
to satisfy the requirements for a "reimbursement plan" described in Treasury
Regulation section 1.409A-3(i)(1)(iv) and shall be administered to satisfy such
requirements; and

    


    (h) the
reimbursements of expenses incurred due to a tax audit or litigation addressing
a tax liability in section 16 are intended to satisfy the requirements for
reimbursement of expenses incurred under such audits or litigation described in
Treasury Regulation section 1.409A-3(i)(1)(v).

    


    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
Officer’s termination of employment to the date of actual payment) to and paid
on the later of the date sixty (60) days after the Officer’s earliest separation
from service (within the meaning of Treasury Regulation section 1.409A-1(h))
and, if the Officer is a 

     

    
      
        
        

      

      
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      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 Officer’s separation from
service.  Each amount payable under this plan that is required to be
deferred beyond the Officer’s separation from service, shall be deposited on the
date on which, but for such deferral, the Association or the Company would have
paid such amount to the Officer, 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 or
the Company with the approval of the Officer (which approval shall not be
unreasonably withheld or delayed), pursuant to a trust agreement the terms of
which are approved by the Officer (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
20. 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
21. Survival.

    

    


    The
rights and obligations of the Association, the Company and the Officer under
this Agreement, unless otherwise expressly provided in this Agreement, shall
survive the expiration of the term or other termination of this
Agreement.

    


    
      Section
22. 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
23. Counterparts.

    

    


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

    


    
      Section
24. Governing
Law.

    

    


    Except to
the extent preempted by federal law, this Agreement shall be governed by and
construed and enforced in accordance with the laws of the State of New York
applicable to contracts entered into and to be performed entirely within the
State of New York.

     

    
      
        
        

      

      
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      Section
25. 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
26. 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 or the Company shall reasonably deem necessary or appropriate to
effect compliance with Section 409A, and to avoid the imposition of penalties
and additional taxes under Section 409A, it being the express intent of the
parties that any such amendment shall not diminish the economic benefit of the
Agreement to the Officer on a present value basis.

    


    
      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 Officer on account of the
Officer's termination of employment exceed three times the Officer's average
annual total compensation for the last five consecutive calendar years to end
prior to the Officer's termination of employment with the Association (or for
the Officer'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
Officer 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. Section 1828(k), and any
regulations promulgated thereunder.

    


    (c)
Notwithstanding anything herein contained to the contrary, if the Officer is
suspended from office and/or temporarily prohibited from participating in the
conduct of the affairs of the Association pursuant to a notice served under
section 8(e)(3) or 8(g)(1) of the FDI Act, 12 U.S.C. Section 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 Officer 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.

     

    
      
        
        

      

      
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    (d)
Notwithstanding anything herein contained to the contrary, if the Officer 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 Act, 12 U.S.C. Section 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 Officer
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.
Section 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 Officer 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 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. Section 1823(c); (ii) by the Director of the OTS or
his designee at the time such Director or designee approves a supervisory merger
to resolve problems related to the operation of the 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. None of the foregoing
provisions, other than section 27(b) shall limit any obligations of the Company
under this Agreement.

    


    
      Section
28. Guaranty.

    

    


    The
Company hereby irrevocably and unconditionally guarantees to the Officer the
payment of all amounts, and the performance of all other obligations, due from
the Association in accordance with the terms of this Agreement as and when due
without any requirement of presentment, demand of payment, protest or notice of
dishonor or nonpayment. Solely for purposes of determining the extent of the
Company's guarantee, the obligations of the Association under this Agreement
shall be determined as though section 27(a), (c), (d), (e) and (f) did not apply
to the Association.

    


    
      Section
29. Compliance with the
Emergency Economic Stabilization Act of 2008.

    

    


    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


     

    
      
        
        

      

      
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    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 Officer participates:

     

    (a) The Officer shall repay to the
Company any bonus or incentive compensation paid to the Officer while (i) the
Officer is a senior executive officer (within the meaning of 31 C.F.R. Part 30
("Senior Executive Officer") and (ii) the UST holds any debt or equity interest
in the Company or 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 Criterion," 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 Company and approved by the Officer (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 (a "Determination").  Upon receipt of a
Determination, the Company may supply to the Officer 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 Officer’s employment
terminates in an “applicable severance from employment” (within the meaning of
31 C.F.R. Part 30) while (A) the Officer 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 Officer that are contingent on such
applicable severance from employment and 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 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 

     

    
      
        
        

      

      
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    selected by the
Company and approved by the Officer (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 29(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 Computation 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.

    


    This
section 29 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 or the Association, 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 29(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 29(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 33(b)(ii) shall be paid on the earliest date on which the Company
reasonably anticipates that such amount may be paid and without violating such
limitation.

     

    
      
        
        

      

      
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    IN WITNESS WHEREOF, the Association and
the Company have caused this Agreement to be executed and the Officer has
hereunto set the Officer's hand, all as of the day and year first above
written.

    


     

    
      	 	
              /S/
      Thomas E. Lavery

            
	 	
              THOMAS
      E. LAVERY

            


    

     

     

    
      	
              Attest:

            	 
      	 
      	
              ASTORIA
      FEDERAL SAVINGS AND LOAN ASSOCIATION

            
	 	 	 	 
	 	 	 	 
	
              By: 
      

            	
              /S/
      Alan P. Eggleston

            	
              By: 
      

            	
              /S/
      George L. Engelke, Jr.

            
	
              Name: 
      

            	
              Alan
      P. Eggleston

            	
              Name: 
      

            	
              George
      L. Engelke, Jr.

            
	 	 	 	 
	
              Title: 
      

            	
              Executive
      Vice President, Secretary and General Counsel

            	
              Title: 
      

            	
              Chairman
      and Chief Executive Officer

            


    

     

     

    
      	
              Attest:

            	 
      	 
      	
              ASTORIA
      FINANCIAL CORPORATION

            
	 	 	 	 
	 	 	 	 
	
              By: 
      

            	
              /S/
      Alan P. Eggleston

            	
              By: 
      

            	
              /S/
      George L. Engelke, Jr.

            
	
              Name: 
      

            	
              Alan
      P. Eggleston

            	
              Name: 
      

            	
              George
      L. Engelke, Jr.

            
	 	 	 	 
	
              Title: 
      

            	
              Executive
      Vice President, Secretary and General Counsel

            	
              Title: 
      

            	
              Chairman
      and Chief Executive Officer

            


    

     

    
      
        
        

      

      
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