Document:

Exh 10.10 Emp Agmt AB & Fusco

EXHIBIT 10.10

ASTORIA BANK
AMENDED AND RESTATED
EMPLOYMENT AGREEMENT WITH EXECUTIVE OFFICER
This AMENDED AND RESTATED EMPLOYMENT AGREEMENT (the “Agreement”) is made and entered into as of October 16, 2014 by and between ASTORIA BANK, a savings association organized and operating under the federal laws of the United States and having an office at One Astoria Bank Plaza, Lake Success, New York 11042-1085 (the “Bank”) and, Frank E. Fusco, an individual residing at 6 Philson Court, Commack, New York 11725 (the “Executive”).
WITNESSETH:
WHEREAS, the Executive currently serves the Bank in the capacity of Senior Executive Vice President, Treasurer and Chief Financial Officer and as Senior Executive Vice President, Treasurer and Chief Financial Officer of the Bank’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 Bank 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 Bank on the terms and conditions hereinafter set forth; and
WHEREAS, the Executive currently has an Employment Agreement with the Bank entered into on January 1, 1996 (the “Initial Effective Date”), amended and restated on January 1, 2000, further amended as of August 15, 2007, further amended and restated as of January 1, 2009 and further amended as of April 21, 2010 (such agreement, as amended, the “Prior Agreement”);
NOW, THEREFORE, in consideration of the premises and the mutual covenants and conditions hereinafter set forth, the Bank and the Executive hereby amend and restate in its entirety the Employment Agreement by and between the Bank and the Executive as amended through April 21, 2010 so as to provide as follows from and after the date hereof:
Section 1.    Employment.
The Bank 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 Bank (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 (or, if earlier the Executive’s seventieth (70th) birthday.  In no event shall any extension cause the Employment Period to end later than the Executive’s seventieth (70th) birthday.  Unless sooner terminated by non-extension, the Employment Period will end automatically, and without the requirement of any notice or other action, on the Executive’s seventieth (70th) birthday.   
(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 earlier of (i) the Anniversary Date on which the Employment Period (as extended pursuant to Section 2(a) of this Agreement) is then scheduled to expire and (ii) the Executive’s seventieth (70th) birthday. 
(c)    Nothing in this Agreement shall be deemed to prohibit the Bank 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 Bank 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 Senior Executive Vice President, Treasurer and Chief Financial Officer of the Bank, having such power, authority and responsibility and performing such duties as are prescribed by or pursuant to the By-Laws of the Bank and as are customarily associated with such position. The Executive shall devote his or her 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 Bank and shall use his or her best efforts to advance the interests of the Bank.
Section 4.    Cash Compensation.
In consideration for the services to be rendered by the Executive hereunder, the Bank shall pay to him or her a salary at an initial annual rate of FIVE HUNDRED THIRTY FIVE THOUSAND DOLLARS ($535,000.00), payable in approximately equal installments in accordance with the Bank’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 

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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 Bank 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 Bank and shall be entitled to participate in and receive benefits under any and all qualified and 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 Bank, including those for Senior Executive Vice Presidents, in accordance with the terms and conditions of such employee benefit plans and programs and compensation plans and programs and consistent with the Bank’s customary practices.
Section 6.    Indemnification and Insurance.
(a)    During the Employment Period and for a period of six (6) years thereafter, the Bank 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 Bank or service in other capacities at the request of the Bank. 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 Bank.
(b)    To the maximum extent permitted under applicable law, during the Employment Period and for the maximum period allowed under applicable law thereafter, the Bank shall indemnify the Executive against, defend and hold him or her harmless from any costs, liabilities, losses and exposures for acts or omissions in connection with service as an officer or director of the Bank or service in other capacities at the request of the Bank, to the fullest extent and on the most favorable terms and conditions that similar indemnification is offered to any director or officer of the Bank or any subsidiary or affiliate thereof.  No provision of this Agreement nor any termination or expiration of this Agreement is intended to authorize the elimination or impairment of any right to indemnification or to advancement of expenses arising under a provision of the charter or a bylaw of the Bank by amendment to such a provision after the occurrence of an act or omission that is the subject of an action, suit or proceeding for which indemnification is sought.
Section 7.    Other Activities.
(a)    The Executive may serve as a member of the board of directors of such business, community and charitable organizations as he or she may disclose to and as may be approved by the Board (which approval shall not be unreasonably withheld or delayed); 

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provided, however, that such service shall not materially interfere with the performance of his or her 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 or her duties hereunder; provided, however, that such activities are not prohibited under any code of conduct or investment or securities trading policy established by the Bank 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 Bank and the Company may mutually agree upon, and such service shall not be deemed to materially interfere with the Executive’s performance of his or her 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 Bank’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 Bank shall maintain its principal executive offices, or at such other location as the Bank and the Executive may mutually agree upon. The Bank shall provide the Executive at his or her principal place of employment with a private office, secretarial services and other support services and facilities suitable to his or her position with the Bank and necessary or appropriate in connection with the performance of his or her assigned duties under this Agreement. The Bank shall provide to the Executive for his or her exclusive use an automobile owned or leased by the Bank and appropriate to his or her position, to be used in the performance of his or her duties hereunder, including commuting to and from his or her personal residence and which may be used by Executive for personal purposes. The Bank 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 Bank shall mutually agree are  appropriate for business purposes, in each case upon presentation to the Bank of an itemized account of such expenses in such form as the Bank 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 or her personal use of the automobile provided by the Bank and on account of any other benefit provided herein.
Section 9.    Termination of Employment with Separation Benefits.
(a)    The Executive shall be entitled to the Separation benefits described herein in the event that his or her employment with the Bank terminates during the Employment Period under any of the following circumstances:
(i)    the Executive’s voluntary resignation from employment with the Bank within six (6) months following:

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(A)    the failure of the Board to appoint or re-appoint or elect or re-elect the Executive to the office of Senior Executive Vice President, Treasurer and Chief Financial Officer (or a more senior office) of the Bank;
(B)    if the Executive is or becomes a member of the Board, the failure of the stockholders of the Bank 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 Bank of its material failure, whether by amendment of the Bank’s Charter or By-laws, action of the Board or the Bank’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 Bank 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 Bank 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 or her total compensation package), unless, during such thirty (30) day period, the Bank 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 Bank for any other reason not described in Section 10(a).
In such event and subject to Section 27 of this Agreement, the Bank 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 Bank under circumstances described in Section 9(a) of this Agreement, the Bank 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):

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(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 Bank, 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 Bank’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 Bank) 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 Bank 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 Bank;
(iv)    thirty (30) days following the Executive’s termination of employment with the Bank, 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 Bank during the Remaining 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 Bank (the “Salary Separation Payment”). The Salary Separation Payment shall be computed using the following formula:
SSP    =    BS x NY
where:

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“SSP” is the amount of the Salary Separation 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 Bank;
“NY” is the Remaining Unexpired Employment Period expressed as a number of years and fractions of years.
The Salary  Separation 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 “401(k)  Separation Payment”) equal to 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 Bank or any of its affiliates or subsidiaries as if he or she were 100% vested thereunder and had continued working for the Bank during the Remaining Unexpired Employment Period.
The 401(k) Separation Payment shall be calculated as follows:
401KSP   =   (401KC x NY) + UVB
where:
“401KSP” is the amount of the 401(k) Separation Payment, before the deduction of applicable federal, state and local withholding taxes;
 “401KC” is the sum of the ”Company Contributions” as defined in the Bank’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 Bank; 
“NY” is the Remaining Unexpired Employment Period expressed as a number of years and fractions of years; 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 401(k) Separation Payment shall be converted into the same form, and paid at the same time, and in the same manner, as benefits under the 

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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.
(vi)    thirty (30) days following the Executive’s termination of employment with the Bank, the Bank 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 was targeted to have earned if the Executive had continued working for the Bank 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 Bank (the “Bonus  Separation Payment”). The Bonus  Separation Payment shall be computed using the following formula:
BSP   =   (BS x TIO x NY)
where:
“BSP” is the amount of the Bonus  Separation 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 Bank;
“TIO” is the target incentive opportunity (expressed as a percentage of base salary) established by the Compensation Committee of the Board for the Executive pursuant to the Astoria Financial Corporation Executive Officer Annual Incentive Plan in effect at the time immediately prior to the Executive’s termination of employment with the Bank; provided, however, that in the event of the Executive’s voluntary resignation pursuant to Section 9(a)(i) above following written notice of a reduction in the Executive’s target incentive opportunity that results in or contributes to a material adverse effect on the aggregate value of the Executive’s total compensation package, that is the basis for such resignation under Section 9(a)(i)(D) above, “TIO” is the target incentive opportunity in effect at the time immediately prior to the reduction that is the subject of such written notice; and
“NY” is the Remaining Unexpired Employment Period expressed as a number of years and fractions of years.
(vii)    at the election of the Bank made within thirty (30) days following the Executive’s termination of employment with the Bank, upon the 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 Bank, a lump sum payment (the “Option Surrender Payment”). The Option Surrender Payment shall be calculated as follows:
OSP   =   (FMV - EP) x N

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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 Bank’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 most recent 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 Bank’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  Surrender Payment and for purposes of determining the Executive’s right following his or her termination of employment with the Bank 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 Bank, even if he or she is not vested under such plan or program;
(viii)    at the election of the Bank made within thirty (30) days following the Executive’s termination of employment with the Bank, upon the surrender of any shares or share units awarded to the Executive under any equity compensation plan maintained by, or covering employees of, the Bank, 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;
“FMV” is the closing price of the Bank’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 Bank’s common stock, the fair market value of a share of stock of the 

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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 or share units 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 Bank 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 Bank, 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  Separation Payment, the 401(k)  Separation Payment, the Bonus  Separation Payment, the Option Surrender Payment and the RRP Surrender Payment shall be computed at the expense of the Bank by an attorney of the firm of Arnold & Porter LLP, 399 Park Avenue, New York, New York 10022 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 Bank (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 Bank 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 Bank and the Executive further agree that the Bank may elect to condition the payment of the Salary  Separation Payment, the 401(k)  Separation Payment, the Bonus  Separation 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 Bank, the Company or any subsidiary or affiliate of either of them; provided, however, that such election will only be effective if the Bank notifies the Executive of its election in writing within five (5) days of the Executive’s termination of employment.

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Section 10.    Termination without Additional Bank Liability.
(a)    In the event that the Executive’s employment with the Bank 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 Bank 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 Bank, 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 Bank’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
(iv)     after the vote contemplated by Section 10(b)(i), the Bank has furnished to the Executive a notice of termination which shall specify the 

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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 Bank to the Executive of the Notice of Intent to Discharge specified in Section 10(b)(ii), resigns his or her employment with the Bank prior to the delivery to the Executive by the Bank of the Final Discharge Notice specified in Section 10(b)(iv), then 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 Bank 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  New York State licensed medical doctor 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 and eighty (180) days during the period of one (1) year beginning with the date of the determination. In such event:

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(A)    The Bank shall pay and provide the Standard Termination Entitlements to the Executive;
(B)    In addition to the Standard Termination Entitlements, the Bank 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 Bank and shall take effect on the later of the effective date of termination specified in such notice or, if no such date is specified, the date on which the notice of termination is deemed given to the Executive.
Section 11.    Termination Upon or Following a Change of Control.
(a)    A Change of Control of the Bank (“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 Bank 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 Bank; 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, 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 Bank;

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(ii)    the acquisition of all or substantially all of the assets of the Bank 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 Bank 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 Bank, or approval by the stockholders of the Bank 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 Bank 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 “Bank” 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 Bank, the Company, or an affiliate or subsidiary of either of them, by the Bank, 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.

Page 14 of 24

(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 of employment with the Bank 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 Bank 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 Bank 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 Bank 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 Bank (or, if less, for the Remaining Unexpired Employment Period), the Executive shall not, without the written consent of the Bank, 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 Bank 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 for avoidance of doubt including 11(b); and provided, further, that if the Executive’s 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:

Page 15 of 24

(a)    he or she first offers, by written notice, to accept a similar position with or perform similar services for the Bank on substantially the same terms and conditions and
(b)    the Bank 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 Bank, the Executive shall keep confidential and shall refrain from using for the benefit of the Executive or any person or entity other than the Bank, any entity which is a subsidiary of the Bank or any entity which the Bank is a subsidiary of, any material document or information obtained from the Bank, 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 Bank’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 Bank, he or she shall not, without the written consent of the Bank, 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 Bank, the Company or any affiliate or subsidiary of either 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 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 Bank 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, 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 Bank 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 

Page 16 of 24

circumstances would expect, to have the effect of causing any officer or employee of the Bank, 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 Bank, the Company, or any affiliate or subsidiary of either of them to terminate an existing business or commercial relationship with the Bank, 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 Bank or by the Executive, shall have no effect on the rights and obligations of the parties hereto under the Bank’s qualified or non-qualified retirement, pension, savings, thrift, profit-sharing or stock bonus plans, group life, health (including hospitalization, medical and major medical), dental, accident and long term disability insurance plans or such other employee benefit plans or programs, or compensation plans or programs, as may be maintained by, or cover employees of, the Bank from time to time.
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 Bank 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 Bank may be sold or otherwise transferred. Failure of the Bank to obtain from any successor its express written assumption of the Bank’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 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:

Page 17 of 24

If to the Executive:
Frank E. Fusco 
6 Philson Court 
Commack, New York 11725
If to the Bank:
Astoria Bank 
One Astoria Bank Plaza 
Lake Success, New York 11042-1085
Attention: General Counsel
with a copy to:
Arnold & Porter LLP 
399 Park Avenue 
New York, New York 10022
Attention:    Robert C. Azarow, Esq.
Section 18.    Indemnification for Attorneys’ Fees.
The Bank shall advance, 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 Bank’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.
Section 19.    Severability.
A determination that any provision of this Agreement is invalid or unenforceable shall not affect the validity or enforceability of any other provision hereof.

Page 18 of 24

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 Bank 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.
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.

Page 19 of 24

Section 26.    Equitable Remedies.
The Bank 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 Bank:
(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 Bank (or for the Executive’s entire period of employment with the Bank if less than five calendar years).
(b)    Notwithstanding anything herein contained to the contrary, any payments to the Executive by the Bank, whether pursuant to this Agreement or otherwise, are subject to and conditioned upon their compliance with Section 18(k) of the Federal Deposit Insurance Act (“FDI Act”), 12 U.S.C. §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 Bank 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 Bank’s obligations under this Agreement shall be suspended as of the date of service of such notice, unless stayed by appropriate proceedings. If the charges in such notice are dismissed, the Bank, in its discretion, may (i) pay to the Executive all or part of the compensation withheld while the Bank’s obligations hereunder were suspended and (ii) reinstate, in whole or in part, any of the obligations which were suspended.
(d)    Notwithstanding anything herein contained to the contrary, if the Executive is removed and/or permanently prohibited from participating in the conduct of the Bank’s affairs by an order issued under Section 8(e)(4) or 8(g)(1) of the FDI Act, 12 U.S.C. §1818(e)(4) or (g)(1), all prospective obligations of the Bank under this Agreement shall terminate as of the effective date of the order, but vested rights and obligations of the Bank and the Executive shall not be affected.
(e)    Notwithstanding anything herein contained to the contrary, if the Bank is in default (within the meaning of Section 3(x)(1) of the FDI Act, 12 U.S.C. §1813(x)(1), all prospective obligations of the Bank under this Agreement shall terminate as of the date of default, but vested rights and obligations of the Bank and the Executive shall not be affected.
(f)    Notwithstanding anything herein contained to the contrary, all prospective obligations of the Bank hereunder shall be terminated, except to the extent that a 

Page 20 of 24

continuation of this Agreement is necessary for the continued operation of the Bank: (i) by the Comptroller of the Currency  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 Bank under the authority contained in Section 13(c) of the FDI Act, 12 U.S.C. §1823(c); or (ii) by the Comptroller of the Currency or his or her designee at the time such Comptroller or designee approves a supervisory merger to resolve problems related to the operation of the Bank or when the Bank is determined by such Comptroller 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 Bank’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 Bank 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 Bank 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 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;

Page 21 of 24

(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 Bank 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 Bank with the approval of the 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.

Page 22 of 24

IN WITNESS WHEREOF, the Bank 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 BANK

	 
	 
	 
	 
	 

	Name:
	/s/ David J. DeBaun
	 
	By:
	/s/ Monte N. Redman

	 
	David J. DeBaun
	 
	Name:
	Monte N. Redman

	 
	 
	 
	Title:
	President and Chief Executive Officer

	[Seal]
	 
	 
	 
	 

	 
	 
	 
	 
	 

	 
	 
	 
	 
	 

	 
	 
	 
	 
	 

	 
	 
	 
	 
	 

	 
	 
	 
	 
	/s/ Frank E. Fusco

	 
	 
	 
	 
	Frank E. Fusco

	 
	 
	 
	 
	 

	 
	 
	 
	 
	 

Page 23 of 24

STATE OF NEW YORK )    ss.:
COUNTY OF NASSAU  )
On this 16th day of October, 2014, before me, the undersigned, personally appeared Monte N. Redman, 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/ Anna Knice                
Notary Public

 
Anna Knice
Notary Public, State of New York
No. 4980431
Qualified in Suffolk County
Commission Expires: April 22, 2015

STATE OF NEW YORK )    ss.:
COUNTY OF NASSAU  )
On this 16th day of October, 2014, before me, the undersigned, personally appeared Frank E. Fusco, 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/ Anna Knice                
Notary Public

 
Anna Knice
Notary Public, State of New York
No. 4980431
Qualified in Suffolk County
Commission Expires: April 22, 2015

Page 24 of 24EX 10.1 - 2014.9.30

Exhibit 10.1

CERTAIN MATERIAL (INDICATED BY AN ASTERISK) HAS BEEN OMITTED FROM THIS DOCUMENT PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT. THE OMITTED MATERIAL HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

THIRD AMENDMENT TO LICENSE AGREEMENT

This Third Amendment to the License Agreement (as defined below) (the "Third Amendment") is made and entered into as of the 12th day of September 2014 (“Third Amendment Effective Date”).  

BETWEEN:

(1)    Alkermes Science One Limited, a company incorporated under the laws of Ireland, having its registered office at Connaught House, 1 Burlington Road, Dublin 4, Ireland, which has changed its name to Daravita Limited (“Daravita”); AND 

(2)    Zogenix, Inc., a Delaware corporation, having its principal place of business at 12400 High Bluff Drive, Ste. 650, San Diego, California, USA 92130 (“Zogenix”).

RECITALS:

WHEREAS, Elan Pharma International Limited (“EPIL”) and Zogenix entered into a license agreement on November 27, 2007, which was amended pursuant to the First Amendment to License Agreement dated September 28, 2009 and the Second Amendment to License Agreement dated March 12, 2013 (“License Agreement”), wherein EPIL granted Zogenix a license under Elan Intellectual Property to import, use, offer for sale and sell the Product (as defined in the License Agreement) in the Field (as defined in the License Agreement) in the Territory (as defined in the License Agreement), and, in certain limited circumstances, to make or have made Product in the Field in the Territory, in each case on the terms and conditions set forth in the License Agreement (capitalized terms used in this Third Amendment but not defined herein shall have the meaning set forth in the License Agreement);  

WHEREAS, on August 2, 2011, EPIL assigned all of its rights and obligations to the License Agreement to EDT Pharma Holdings Limited, which has subsequently changed its name to Alkermes Pharma Ireland Limited (“APIL”); and

WHEREAS, on May 8, 2014, pursuant to Clause 16.3.1 of the License Agreement, APIL assigned all of its rights and obligations to the License Agreement to its Affiliate, Daravita;

WHEREAS, Zogenix and Daravita desire to amend the License Agreement as set forth herein, subject to the terms and conditions set forth herein.  

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Daravita and Zogenix hereby agree as follows:

		
	1.
	Amendments.  As of the Third Amendment Effective Date, Daravita and Zogenix hereby amend the following sections of the License Agreement:

1

		
	1.1.
	 The following definitions are as set forth below (and to the extent previously defined in the License Agreement, shall supersede such previous definitions):

“ “Altus” means Altus Formulation Inc., and its successors, assigns or transferees under the Altus Agreement.”

“ “Altus Agreement” means (a) as of the Third Amendment Effective Date, the Development and Option Agreement dated November 1, 2013 between Altus and Zogenix, as amended or supplemented pursuant to the terms thereof (the “D&O Agreement”), and (b) following the exercise by Zogenix of the Option under the D&O Agreement, includes the License Agreement (as defined in the D&O Agreement), as amended or supplemented pursuant to the terms thereof (the “Altus License Agreement”).” 

“ “Altus Know-How” means scientific, pharmaceutical or technical information, data, discovery, invention (whether patentable or not), know-how, show-how, substances, techniques, processes, systems, formulations, designs and expertise which is not generally known to the public and not included in the Altus Patents that Altus owns, licenses or controls during the Option Period (as defined in the D&O Agreement) and/or throughout the term of the Altus License Agreement that is necessary or useful for the development, manufacture or commercialization of the Altus Product.  It is expressly acknowledged by the Parties that Altus Know-How shall not include (i) Zogenix Patents or Zogenix Know-How or (ii) Elan Patents or Elan Know-How.”

“ Altus Patents” means all Patents that Altus owns, licenses or controls during the Option Period (as defined in the D&O Agreement) and/or throughout the term of the Altus License Agreement that claim or cover the development, manufacture or commercialization of the Altus Product.  For the avoidance of doubt, Altus Patents do not include (a) the Elan Patents or other patent rights granted to Zogenix by Elan or its Affiliates under this Agreement or any Related Agreement or (b) the Zogenix Patents.”

“ “Altus Product” means Licensed Product (as defined in the Altus Agreement).”

“ “Altus Product NSP” means the total Net Sales of the Altus Product for a given strength of the Altus Product divided by the number of units of such Altus Product sold for the given period.”

“ "Altus Product Regulatory Approval" means the final approval to market the Altus Product in the Territory, including any approval which is required to launch the Altus Product in the normal course of business.”

“ “Competitive Product” means [***].” 

***Certain information on this page has been omitted and filed separately with the Commission. Confidential treatment has been requested with respect to the omitted portions.

2

“ “Elan Know-How” means any and all rights owned, licensed or controlled by Elan as of the Effective Date or during the Term to any scientific, pharmaceutical or technical information, data, discovery, invention (whether patentable or not), know-how, show-how, substances, techniques, processes, systems, formulations, designs and expertise which is not generally known to the public and is exclusively related to (a) the Product and/or the Altus Product or (b) the manufacturing processes used in making the Product and/or the Altus Product.  It is expressly acknowledged by the Parties that Elan Know-How shall not include (i) Zogenix Patents or Zogenix Know-How or (ii) Altus Patents or Altus Know-How.”

“ “[***]” means [***].”

“ “In Market” means the sale of the Product or the Altus Product, as applicable, in the Territory by Zogenix, a Zogenix Affiliate or, where applicable, by a permitted sublicensee or subcontractor, to an unaffiliated Third Party, such as a wholesaler, distributor, managed care organisation, hospital or pharmacy which effects the final commercial sale to the end-user consumer of the Product or the Altus Product, as the case may be, and shall exclude (a) the transfer of the Product or the Altus Product by one Zogenix Affiliate to another Zogenix Affiliate or a permitted sublicensee or subcontractor, (b) the transfer of the Product in connection with the R&D Program or other clinical studies conducted by or on behalf of Zogenix, a Zogenix Affiliate or permitted sublicensee, or (c) the transfer of the Altus Product in connection with clinical studies conducted by or on behalf of Zogenix, a Zogenix Affiliate or permitted sublicensee.”

“ "Net Sales" means, subject to the provisions of Clause 10.4, the aggregate gross In Market sales amounts billed in accordance with Zogenix's standard accounting principles that are in accordance with US GAAP, calculated separately on a Product and Altus Product basis, less the following deductions determined in accordance with Zogenix's standard accounting principles that are in accordance with US GAAP, with such deductions made separately on a Product and Altus Product basis:  

[***]”

“ “Notional Altus Product NSP” means the estimated Altus Product NSP of a given strength of the Altus Product at the applicable time, which shall be provided by Zogenix to Elan, if the Parties have executed an Altus Product Supply Agreement, within [***] prior to commencement of [***] (or, for the launch year of the Altus Product, within [***] prior to the [***]). “

“ “Option” means the option set forth in Section 2.2 of the D&O Agreement.”

***Certain information on this page has been omitted and filed separately with the Commission. Confidential treatment has been requested with respect to the omitted portions.

3

“ “Product” means the oral controlled release capsule or tablet formulation(s) incorporating Elan Intellectual Property and/or the technology of the Elan Oral Controlled Release Patents and Compound where Compound is the sole active ingredient in the formulation.  Notwithstanding the foregoing, the Altus Product is not a Product and the Product is not an Altus Product.”  

“ “[***]” means [***].”

“ “Zogenix Know-How” means any and all rights owned, licensed or controlled by Zogenix as of the Effective Date or during the Term to any scientific, pharmaceutical or technical information, data, discovery, invention (whether patentable or not), know-how, show-how, substances, techniques, processes, systems, formulations, designs and expertise which is not generally known to the public and is not exclusively related to (a) the Product, (b) the manufacturing processes used in making the Product, (c) Elan Oral Controlled Release Patents or (d) Altus Patents.  It is expressly acknowledged by the Parties that Zogenix Know-How shall not include (i) Elan Patents, Elan Know-How or any other license or other rights granted to Zogenix by Elan or its Affiliates under this Agreement or any Related Agreement or (ii) Altus Patents or Altus Know-How.”

“ "Zogenix Patents" means any Patents owned, licensed or controlled by Zogenix as of the Effective Date or during the Term claiming subject matter that is related to the sale or offer for sale of the Compound within the Field or methods of use of the Compound within the Field or packaging of the Product and/or the Altus Product.  For the avoidance of doubt, Zogenix Patents do not include (a) the Elan Patents or other patent rights granted to Zogenix by Elan or its Affiliates under this Agreement or any Related Agreement or (b) the Altus Patents.  As of the Effective Date, there are no Zogenix Patents.”

		
	1.2.
	Clause 2.1, by adding the third and fourth sentences set forth below:

“Subject to the terms of this Agreement, Elan hereby grants to Zogenix for the Term (i) an exclusive license to the Elan Know-How to develop, manufacture, use, offer for sale, sell and import the Altus Product in the Field in the Territory, (ii) a non-exclusive license to the Elan Know-How to develop the Altus Product in Canada for manufacture, use, offer for sale, sale and import in the Field in the Territory, and (iii) a non-exclusive license to [***].  This license shall terminate if Zogenix does not exercise the Option under the D&O Agreement or upon the termination of the Altus Agreement.  If at any time the license of the [***] for [***] granted by [***], then [***].  For the avoidance of doubt, the license granted pursuant to this Clause 2.1 does not include any right to practice and use the Elan Know-How, [***] outside the parameters explicitly set forth in
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this license grant.  In addition, Zogenix agrees that it will amend the Altus Agreement to obligate Altus to use commercially reasonable efforts to negotiate with [***] a license under the Altus Know-How and Altus Patents for the Altus Product in [***] to use commercially reasonable efforts to negotiate such a license with Altus.  For clarity, if either Altus or [***] fails to agree to use such commercially reasonable efforts, then the other shall have no obligation to do so.”

		
	1.3.
	The lead-in of Clause 2.2 as set forth below:

“Sublicensing.  Zogenix shall be entitled to grant sublicenses in respect of its rights to the Elan Intellectual Property granted pursuant to Clause 2.1.  Sublicenses with respect to Product shall be subject to the conditions set forth in Clauses 2.2.1 and 2.2.2 below.  Any sublicense to Altus or other sublicensee with respect to only the Altus Product shall be subject to the conditions set forth in Clause 2.2.2, other than the limitation set forth in Clause 2.2.2.4.1 on granting a sub-sublicense with respect to the Altus Product.  Any sub-sublicense with respect to only the Altus Product shall be subject only to the following conditions:  (a) Altus or any other sublicensee shall enter into a written agreement with each Altus Product sub-sublicensee which is consistent with the terms of this Agreement insofar as they are applicable, mutatis mutandis (with Altus or such sublicensee permitted to grant a sub-sublicense with respect to the Altus Product), and which contains terms that are no less restrictive than those contained in this Agreement on audit, inspection, and confidentiality; and (b) Altus or any other sublicensee shall ensure that Elan Confidential Information is only disclosed to permitted Altus Product sub-sublicensees to the extent that each such sub-sublicensee needs it to fulfil obligations and exercise rights under its sub-sublicense agreement.” 

		
	1.4.
	Clause 2.3 as set forth below:

“Elan Covenant.  Elan covenants for itself and its Affiliates not to assert any claim of Patent infringement (including direct infringement, contributory infringement and inducing infringement) in the Territory against Zogenix, any Affiliate of Zogenix or any permitted sublicensee under [***] as a result of Zogenix, any Affiliate of Zogenix, or any permitted sublicensee exercising the rights granted to Zogenix under this Agreement or any Related Agreement or under the D&O Agreement (as it exists on the Third Amendment Effective Date), for so long as (i) Zogenix and its Affiliates, sublicensees and subcontractors are not in material breach of this Agreement or any Related Agreements and/or (ii) this Agreement has not been terminated.  

In addition, Elan covenants for itself and its Affiliates not to enter into an agreement granting rights to a Third Party that would enable said Third Party to assert any claim of Patent infringement (including direct

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infringement, contributory infringement and inducing infringement) in the Territory under [***] against Zogenix, any Affiliate of Zogenix, or any permitted sublicense as a result of Zogenix, any Affiliate of Zogenix or any permitted sublicensee exercising the rights granted to Zogenix under this Agreement or any Related Agreement or under the D&O Agreement (as it exists on the Third Amendment Effective Date), for so long as (i) Zogenix and its Affiliates, sublicensees and subcontractors are not in material breach of this Agreement or any Related Agreements and/or (ii) this Agreement has not been terminated. “

		
	1.5.
	Clause 3.3.2.1 as set forth below:

“Subject to Clause 3.3.3, Elan shall have the first right to enforce Elan Patents or Elan Know-How against Third Parties (other than the Elan Know-How with respect to the Altus Product)  Elan shall keep Zogenix reasonably informed of and shall not settle any administrative proceedings or litigation relating to Elan Patents or such Elan Know-How (the "Proceedings") in a manner which would materially adversely affect the rights licensed to Zogenix under this Agreement without the prior consent of Zogenix, not to be unreasonably withheld, conditioned or delayed.”

		
	1.6.
	Clause 3.6.2.1 as set forth below:

“At Elan’s request, Zogenix shall prominently display the Elan Trademark on the packaging and labelling of the Product and on promotional materials in relation to the Product to acknowledge that the Elan Intellectual Property has been applied in developing and manufacturing the Product; provided, however, on and after the Third Amendment Effective Date, at Elan’s request, Zogenix shall use Commercially Reasonable Efforts to remove, to the extent permitted by law, the Elan Trademark from the packaging and labelling of the Product and from promotional materials in relation to the Product, taking into account Zogenix’s inventory of such packaging, labelling and promotional materials as of the Third Amendment Effective Date.”

		
	1.7.
	Clause 4.1 as set forth below:

“Zogenix Obligation.  Zogenix shall not, and shall ensure that its Affiliates and permitted sublicensees do not license (except by way of settlement Proceedings in accordance with Clause 3.3.2.2), market or sell any oral prescription only controlled release capsule or tablet formulation (other than the Product or the Altus Product) whose sole active ingredient is the Compound in the Territory for use in the Field during the Term. “

		
	1.8.
	Clause 6.6 as set forth below:

“Access.  

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6.6.1    Upon Elan's prior written notice, Zogenix shall permit Elan to have access to and use of all Regulatory Applications, Regulatory Approvals, all supplements and related filings related thereto and all clinical trial data relating to the Product and to take photocopies of same as may be required by Elan (i) to fulfill reporting requirements or as otherwise may reasonably be required by Elan in connection with this Agreement, and/or (ii) to support the registration, marketing and/or manufacture of the Product for sale outside the Territory.  Zogenix shall also permit Elan to have access to and use of the Elan IND, all other INDs that may be filed in relation to the Product during the Term, and all pre-clinical data (including all carcinogenicity data created by or on behalf of Zogenix during the Term) relating to the Product for use in the development and commercialization of other products (other than the Altus Product) both within and outside the Territory.  For the avoidance of doubt, Elan's exclusive right to use clinical trial data relating to the Product generated by or on behalf of Zogenix is as set forth in the first sentence of this Clause 6.6.1 and in Clauses 3.2.3, 15.11 and 13.2.4.  

6.6.2    During the period from the Third Amendment Effective Date through the earlier of (a) the lapse of the Option under the D&O Agreement without the exercise thereof by Zogenix, or (b) following the exercise of the Option under the D&O Agreement, the expiration or termination of the Altus Agreement, but only during the period during which [***] or the [***] have rights to the Altus Product under the [***], upon Elan's prior written notice, Zogenix shall permit Elan (or, at Elan’s request, [***] or the [***]) to have access to and use of (including taking photocopies of) all INDs relating to the Altus Product, regulatory applications for the Altus Product in the Territory, Altus Product Regulatory Approvals (including all supplements and related filings related thereto), all Development Results (as defined in the D&O Agreement), and all other clinical trial data and pre-clinical data relating to the Altus Product (but only if such clinical trial data and pre-clinical data is owned, licensed or controlled by Zogenix during the Term), in each case which would reasonably be required to support the development and registration of the Altus Product in [***] or the [***].  For the avoidance of doubt, Elan's (or [***] or the [***]) right to use such INDs, regulatory applications, Altus Product Regulatory Approvals (including all supplements and related filings related thereto), Development Results or such other clinical trial data and pre-clinical data relating to the Altus Product is solely as set forth in the first sentence of this Clause 6.6.2 and in Clause 13.2.6 and in Section 4 of the Third Amendment.

6.6.3    Any data, filings or other information provided by Zogenix to Elan under this Clause 6.6 shall be treated as Confidential Information belonging to Zogenix in accordance with Clause 15.”
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	1.9.
	Clause 7.5.1 as set forth below:

“(i) to the extent permitted by law and at Elan’s request, include the Elan Trademark and due acknowledgement that the Product is developed by Elan; provided, however, on and after the Third Amendment Effective Date, at Elan’s request, Zogenix shall use Commercially Reasonable Efforts to remove, to the extent permitted by law, the Elan Trademark and the acknowledgement that the Product is developed by Elan from the package insert and all trade packaging for the Product, taking into account Zogenix’s inventory of such package insert and trade packaging as of the Third Amendment Effective Date, and (ii) to the extent required by law, include due acknowledgement that the Product is manufactured by Elan (or an Elan Affiliate); and”

		
	1.10.
	Clause 7.7.1 as set forth below:

“Reports.  During the Term, Zogenix shall submit to Elan the following reports:

		
	7.7.1.1
	within 30 days of the end of each calendar quarter prior to the launch of the Altus Product in the Territory, a report summarizing the development and the regulatory status of the Altus Product in the Territory during such calendar quarter; provided, however, the reporting obligation set forth in this Section 7.7.1.1 shall terminate if Zogenix does not exercise the Option under the D&O Agreement or if the Altus Agreement is otherwise terminated;

		
	7.7.1.2
	within 90 days after the filing of the first regulatory application for the Altus Product in the Territory and within 30 days of the end of each calendar quarter thereafter until receipt of the Altus Product Regulatory Approval, a report summarizing the primary promotional activities to be carried out by Zogenix for the period up to the first launch of the Altus Product in the Territory and for a period of 1 year thereafter; provided, however, the reporting obligation set forth in this Section 7.7.1.2 shall terminate if Zogenix does not exercise the Option under the D&O Agreement or if the Altus Agreement is otherwise terminated; and

		
	7.7.1.3
	within 90 days of the end of each calendar year subsequent to the receipt of Regulatory Approval until Zogenix ceases selling the Product in the Territory, a report setting forth in reasonable detail Zogenix's objectives for the coming calendar year and performance of the Product in the Territory in the prior calendar year; and

8

		
	7.7.1.4
	within 90 days of the end of each calendar year subsequent to the receipt of the Altus Product Regulatory Approval until Zogenix ceases selling the Altus Product in the Territory, a report setting forth in reasonable detail Zogenix's objectives for the coming calendar year and performance of the Altus Product in the Territory in the prior calendar year; provided, however, the reporting obligation set forth in this Section 7.7.1.4 shall terminate if Zogenix does not exercise the Option under the D&O Agreement or if the Altus Agreement is otherwise terminated.”  

		
	1.11.
	Clause 7.7.2 as set forth below:

“Meetings.  During the Term, the Parties (or their respective Affiliates) shall meet as often as reasonably requested by the other to discuss the status of all development, regulatory and commercialization activities for the Product and the Altus Product.  Such meetings shall take place not more than once per calendar quarter.  Such meetings may be held by telephone or videoconference.  If held in person, each Party shall be responsible for its own costs in respect of travel and accommodation expenses in attending such meetings. “

		
	1.12.
	Clause 10.3 as set forth below:

“ Royalty on Sales.  

		
	10.3.1
	In further consideration of the grant of the Elan License, Zogenix shall pay to Elan (i) a royalty of [***] of Net Sales of Product for the Initial Term and (ii) a royalty of [***] of Net Sales of Product for the Extended Term.

		
	10.3.2
	In addition, following exercise by Zogenix of the Option under the D&O Agreement and in consideration of the revision of the Zogenix obligation in Clause 4.1, the grant of the license with respect to the Altus Product in Clause 2.1 and/or the covenant with respect to the rights granted to Zogenix under the D&O Agreement in Clause 2.3, Zogenix shall pay to Elan the following royalties with respect to Net Sales of Altus Product:  

		
	10.3.2.1
	If Elan (or an Affiliate) is manufacturing and supplying the Altus Product to Zogenix, any Affiliate of Zogenix or any permitted Zogenix sublicensee for sale in the Territory: (i) a royalty of [***] of Net Sales of Altus Product through December 31, 2019 and (ii) a royalty of [***] of Net Sales of Altus Product after December 31, 2019 through fifteen (15) years following first commercial sale of the Altus Product in the Territory; or

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	10.3.2.2
	If a Third Party is manufacturing and supplying the Altus Product to Zogenix, any Affiliate of Zogenix or any permitted Zogenix sublicensee for sale in the Territory: (i) a royalty of [***] of Net Sales of Altus Product through December 31, 2019 and (ii) a royalty of [***] of Net Sales of Altus Product after December 31, 2019 through fifteen (15) years following first commercial sale of the Altus Product in the Territory.

		
	10.3.2.3
	If the Altus Product is sold outside the Territory [***].  Zogenix agrees for the benefit of, and at the expense and direction of, Elan (i) to utilize any audit rights it may have pursuant to the Altus Agreement with respect to such payments and (ii) to exercise any other rights it may have pursuant to the Altus Agreement with respect to the collection of any such payments which are late or unpaid.”

		
	1.13.
	Clause 10.4 as set forth below:

“Bundling.  In the event that Zogenix (or a Zogenix Affiliate or permitted sublicensee or subcontractor) shall sell the Product or Altus Product together with other products of Zogenix (or any Zogenix Affiliate) or other products of any such permitted sublicensee or permitted subcontractor, as the case may be, to Third Parties (by the method commonly known in the pharmaceutical industry as "bundling") and the price attributable to the Product or the Altus Product is less than the average price of "arms length" sales to similar customers for the reporting period in which sales occur (such sales to be excluded from the calculation of the average price of "arms length" sales), the sales price for any such sales used in calculating Net Sales shall be the average price of "arms length" sales by Zogenix or a Zogenix Affiliate or a permitted sublicensee or a permitted subcontractor to similar customers during the reporting period in which such sales occur.”

		
	1.14.
	Clause 11.1 as set forth below:

“Records.  Zogenix shall keep true and accurate records of gross sales of the Product, gross sales of the Altus Product, the items deducted from the gross amount in calculating the Net Sales for the Product and for the Altus Product, the Net Sales for the Product and the Altus Product and the royalties payable to Elan under Clause 10.3.  Zogenix shall deliver to Elan a written statement (the "Statement") thereof within [***] days following the end of each calendar quarter (or any part thereof in the first or last calendar quarter of this Agreement) for each calendar quarter after the receipt of Regulatory Approval.  The Statement shall outline the calculation of the Net Sales from gross revenues during that calendar

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10

quarter, the applicable percentage rate, and a computation of the sums due to Elan.  In addition to Zogenix providing Elan the Statement, Zogenix shall use its Commercially Reasonable Efforts to deliver to Elan a non-binding written sales estimate within [***] days in advance of the start of each calendar year beginning with calendar year 2014, setting forth its estimate of Product and Altus Product sales for such calendar year, which estimate shall be updated by Zogenix within [***] days of [***] of each year thereafter.  The Parties' financial officers shall agree upon the format of the Statement and the annual sales estimate. “

		
	1.15.
	Clause 11.8 as set forth below:

“Audit.  For the [***] period following the close of each calendar year of the Agreement, Elan and Zogenix will, in the event that the other Party reasonably requests such access, provide each other's independent certified accountants (reasonably acceptable to the other Party) with access, during regular business hours and subject to the confidentiality provisions as contained in this Agreement, to such Party's books and records relating to the Product and the Altus Product, solely for the purpose of verifying the accuracy and reasonable composition of the calculations under this Agreement for the calendar year then ended.”

		
	1.16.
	Clause 12.4 as set forth below:

“Additional Elan Termination Rights.  In furtherance of and in addition to the rights and termination provided for elsewhere in this Agreement, Elan shall be entitled to terminate:

		
	12.4.1
	[intentionally deleted]

		
	12.4.2
	this Agreement and all Related Agreements, in the event that Zogenix fails to generate Net Sales of the Product of at least [***] per quarter in [***] consecutive calendar quarters beginning [***] months after the date of first commercial launch of the Product in the Territory until the earlier of (i) the end of the Term or (ii) the commercial launch of the Altus Product by Zogenix in the Territory; provided that sufficient quantities of commercial Product have been made available pursuant to the Commercial Manufacture and Supply Agreement; provided further that Elan shall have a termination right under this Section 12.4.2 only if (a) the Option under the D&O Agreement has expired without Zogenix exercising such Option or (b) Zogenix has exercised the Option under the D&O Agreement and is no longer using Commercially Reasonable Efforts to develop the Altus Product in the Territory; or

		
	12.4.3
	this Agreement and all Related Agreements, in the event that Zogenix, its Affiliates or any permitted sublicensees or

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subcontractors in connection with this Agreement knowingly challenges the validity and/or ownership of any of the Elan Patents and/or the scope of any claims therein in a formal proceeding, mediation or binding arbitration; provided, however, that Elan’s termination right under this Clause 12.4.3 may only be exercised with respect to any such challenge by a permitted sublicensee or subcontractor if the applicable agreement with the challenging sublicensee or subcontractor has not been terminated within [***] of receipt by Zogenix of written notice from Elan of such challenge.”

		
	1.17.
	Clause 12.5 as set forth below:

“Additional Zogenix Termination Rights.  In furtherance of and in addition to the rights and termination provided for elsewhere in this Agreement, Zogenix shall be entitled to terminate:  

		
	12.5.1
	this Agreement and all Related Agreements, where the sale of the Product is prohibited by the Regulatory Authorities in the Territory unless Zogenix has exercised the Option under the D&O Agreement or has an ongoing right to exercise the Option under the D&O Agreement, in which case Zogenix may not terminate this Agreement (but may terminate the Related Agreements) under this Clause 12.5.1; 

		
	12.5.2
	this Agreement, all Related Agreements and the Altus Product Supply Agreement, if any, if Zogenix has commenced the sale of the Altus Product in the Territory and no longer sells the Product in the Territory, where the sale of the Altus Product is prohibited by the Regulatory Authorities in the Territory; 

		
	12.5.3
	this Agreement, all Related Agreements and the Altus Product Supply Agreement, if any, at any time without cause upon [***] written notice to Elan, provided, however, that if Zogenix has exercised the Option under the D&O Agreement, or has an ongoing right to exercise the Option under the D&O Agreement, and the sale of the Altus Product is not prohibited by the Regulatory Authorities in the Territory, Zogenix may not terminate this Agreement (but may terminate the Related Agreements and the Altus Product Supply Agreement, if any) under this Clause 12.5.3; or

		
	12.5.4
	this Agreement, all Related Agreements and the Altus Product Supply Agreement, if any, in the event that Elan or its Affiliates knowingly challenges (i) the validity and/or ownership in the Territory of any of the Altus Patents (as listed in the D&O Agreement on the Third Amendment Effective Date), and/or the scope of any claims therein in a formal proceeding, mediation or binding arbitration or (ii) the ownership in the Territory of any of 

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the Altus Product Patents (as defined in the D&O Agreement),
the validity of any claim of the Altus Product Patents that covers and is exclusively related to the Altus Product and/or the scope of any such claim in a formal proceeding, mediation or binding arbitration.

For the avoidance of doubt, other than pursuant to Clause 12.3 or Clause 12.5.4, Zogenix may not terminate this Agreement, any Related Agreement (except pursuant to the provisions of any such Related Agreement) or the Altus Product Supply Agreement, if any, during the period following Zogenix’s exercise of the Option under the D&O Agreement or while Zogenix has an ongoing right to exercise the Option under the D&O Agreement  unless Zogenix is unable to develop and/or commercialize, or has no further intention of developing and/or commercializing and has permanently ceased to sell, either directly or through any Zogenix Affiliate, sublicensee, subcontractor or other intermediate, both the Product and the Altus Product in the Territory.”

		
	1.18.
	Clause 13.2.4 as set forth below:

		
	“13.2.4
	if termination of this Agreement is effected by Elan under Clauses 12.3 or 12.4 or by Zogenix under Clauses 12.5.1, 12.5.2 or 12.5.3:

13.2.4.1 Elan shall be entitled to research, develop and commercialise the Product for its own benefit in the Territory;

		
	13.2.4.2 
	Elan shall be entitled to file for Regulatory Approval in the Territory;

		
	13.2.4.3 
	Zogenix shall transfer or procure the transfer to Elan (or such other entity as Elan may specify) of all relevant INDs (including the Elan IND), Regulatory Applications and Regulatory Approvals at no cost to Elan, insofar as such transfer is permitted by applicable laws, and permit Elan to access and/or reference such of its data (including but not limited to Product Data) as is necessary to enable Elan to market the Product in the Territory;

		
	13.2.4.4 
	Elan shall be granted an irrevocable, perpetual, royalty-free, exclusive license to use the Zogenix Intellectual Property (other than pursuant to a Third Party License which is addressed in Clause 13.2.4.5 hereunder) and the trademark Zogenix has used during the Term to commercialize the Product in the Territory in connection with any subsequent commercialization of the Product in the Territory;

13

		
	13.2.4.5 
	Zogenix shall assign Elan, at Elan’s request (to the extent contractually permitted by such Third Party Licenses), any Third Party Licenses granted to Zogenix in relation to the Product and Elan will be responsible for any payments thereunder in respect of activities related to the Product by Elan following termination or expiration; and

		
	13.2.4.6
	Elan shall either:

13.2.4.6.1    give notice to Zogenix that it wishes Zogenix to cease to commercialise the Product in the Territory, in which event Zogenix shall do so except for meeting any uncancellable orders which cannot be transferred to Elan and Elan shall purchase Zogenix’s saleable inventory of Product at cost; or

13.2.4.6.2    permit Zogenix for a period not exceeding [***] months to exhaust its stock of Product –

subject always to the relevant provisions of this Agreement including those as to the use of trademarks and the financial provisions.” 

		
	1.19.
	New Clauses 13.2.6 and 13.2.7 as set forth below:

		
	“13.2.6
	In addition to the rights set forth in Clause 13.2.4 above, if termination is effected by Elan under Clauses 12.3 or 12.4 and only if Zogenix (i) has exercised the Option under the D&O Agreement, or (ii) has an ongoing right to exercise the Option under the D&O Agreement:

		
	13.2.6.1
	subject to Clause 13.2.6.6, Zogenix shall cease all research, development or commercialization of the Altus Product in the Territory;

		
	13.2.6.2
	if Zogenix has an ongoing right to exercise the Option under the D&O Agreement, Zogenix shall not exercise the Option, unless Elan requests Zogenix to do so in connection with an assignment of the Altus Agreement pursuant to Clause 13.2.6.5;

		
	13.2.6.3
	Zogenix shall transfer or procure the transfer to Elan (or such other entity as Elan may specify) of all INDs relating to the Altus Product, regulatory applications for the Altus Product in the Territory, Altus Product Regulatory Approvals (including all supplements and related filings related thereto), all Development Results, and all other clinical trial data and pre-clinical data relating to the Altus

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Product (but only if such clinical trial data and pre-clinical data is owned, licensed or controlled by Zogenix during the Term), at no cost to Elan, insofar as such transfer is permitted by applicable laws, and permit Elan to access and/or reference such of its Development Results and such other clinical trial data and pre-clinical data relating to the Altus Product as is necessary to enable Elan to market the Altus Product in the Territory;

		
	13.2.6.4 
	Elan shall be granted an irrevocable, perpetual, royalty-free, exclusive license to use the Zogenix Intellectual Property (other than pursuant to the Altus Agreement or Third Party intellectual property licenses for the Altus Product which are addressed in Clause 13.2.6.5) and the trademark Zogenix has used during the Term to commercialize the Altus Product in the Territory in connection with any subsequent commercialization of the Altus Product in the Territory;

		
	13.2.6.5
	Zogenix shall assign Elan, at Elan’s request, the Altus Agreement and (to the extent contractually permitted by such Third Party licenses) any Third Party intellectual property licenses granted to Zogenix in relation to the Altus Product in the Territory, and Elan will be responsible for any payments thereunder in respect of activities related to the Altus Product by Elan following termination or expiration; and

		
	13.2.6.6
	Elan shall either:

13.2.6.6.1    give notice to Zogenix that it wishes Zogenix to cease to commercialise the Altus Product in the Territory, in which event Zogenix shall do so except for meeting any uncancellable orders which cannot be transferred to Elan and Elan shall purchase Zogenix’s saleable inventory of the Altus Product at cost; or

13.2.6.6.2    permit Zogenix for a period not exceeding [***] months to exhaust its stock of the Altus Product.

subject always to the relevant provisions of this Agreement including the financial provisions.

		
	13.2.7
	If termination is effected by Zogenix under Clause 12.5.4, at Zogenix’s option:

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	13.2.7.1
	all rights and licenses under this Agreement, including the Elan License and the Manufacturing License, shall terminate in their entirety and be of no further effect; or

		
	13.2.7.2
	if the notice of termination so specifies, this Agreement shall continue in full force and effect, save that the royalty payable under Clause 10.3.2 by Zogenix to Elan shall be reduced to [***] of the amount otherwise payable thereunder for the Net Sales of any Altus Product sold in the Territory by Zogenix, any Affiliate of Zogenix or any permitted Zogenix sublicensee after termination is effected by Zogenix under Clause 12.5.4.”

		
	1.20.
	Clause 14.6 as set forth below:

“Indemnification (Medical Claims).  Zogenix shall indemnify Elan against all Claims made or brought against Elan by a Third Party seeking damages for personal injury (including death) and/or for the cost of medical treatment, caused by or attributed to the use of Product or Altus Product administered or sold by Zogenix, its Affiliates, a permitted sublicensee or a permitted subcontractor in the Territory, but without prejudice to any right of indemnification Zogenix may have against Elan or an Elan Affiliate under the Services Agreement, Commercial Manufacture and Supply Agreement or Altus Product Supply Agreement; provided, however, Zogenix shall not so indemnify Elan or its Affiliates to the extent that Zogenix is entitled to be indemnified by Elan or an Elan Affiliate.”

		
	1.21.
	Clause 14.9 as set forth below:

“Exclusion of Implied Warranties.  EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT, ZOGENIX ACKNOWLEDGES THAT THE ELAN LICENSE, THE LICENSE FOR THE ALTUS PRODUCT AND THE MANUFACTURING LICENSE ARE GRANTED AND THAT THE ELAN IND SHALL BE TRANSFERRED ON AN "AS IS" BASIS, WITHOUT REPRESENTATION OR WARRANTY WHETHER EXPRESS OR IMPLIED INCLUDING WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, OR INFRINGEMENT OF THIRD PARTY RIGHTS, AND ALL SUCH WARRANTIES ARE EXPRESSLY DISCLAIMED TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAWS.”

		
	1.22.
	The first sentence of Clause 14.13 as set forth below:

“Zogenix shall maintain comprehensive general liability insurance in respect of all activities conducted by it with respect to the Product or Altus Product appropriate for a company of its size engaged in similar commercial activities,

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including product liability insurance on the Product and Altus Product.”

		
	1.23.
	The first sentence of Clause 15.1 as set forth below:

“The Parties agree that it will be necessary, from time to time, to disclose to each other confidential and proprietary information, including inventions, trade secrets, specifications, designs, data, know-how and other proprietary information relating to the Product, the Altus Product, processes, services and business of the disclosing Party or its Affiliates.”

		
	1.24.
	Clause 16.3.4 and a new Clause 16.3.5 (which was Clause 16.3.4 prior to this Third Amendment) as set forth below:

		
	“16.3.4
	Notwithstanding Clause 16.3.2 above, following the exercise by Zogenix of the Option under the D&O Agreement, the commercial launch of the Altus Product in the Territory and the discontinuation of the sale of the Product in the Territory, Zogenix may assign this Agreement to any Third Party without Elan’s prior written consent, subject to the conditions set out below:

		
	16.3.4.1
	Zogenix must make Elan whole for any tax consequence associated with any such assignment;

		
	16.3.4.2
	On or before the date of assignment, Elan shall receive all monies due and owing from Zogenix as of the assignment date;

		
	16.3.4.3
	Zogenix must identify all Elan Confidential Information in its possession, and either return to Elan or forward to its assignee, as directed by Elan; and

		
	16.3.4.4
	Each Party must cooperate as required with the other Party and Zogenix’s assignee both before and after the assignment to ensure the smooth transition between Zogenix and assignee on all regulatory and operational matters relating to this Agreement and, if applicable, all Related Agreements.

		
	16.3.5
	Elan may assign this Agreement along with each of the Related Agreements without Zogenix's consent to any Third Party which (a) succeeds to the ownership of the Elan Patents in their entirety and (b) agrees to fulfil all of Elan’s responsibilities under this Agreement and, if applicable, each of the Related Agreements.”

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	2.
	Additional Amendments to License Agreement.  

		
	2.1.
	Upon and from the commercial launch of the Altus Product in the Territory, Zogenix’s obligations to use Commercially Reasonable Efforts under the License Agreement with respect to the Product shall be deemed to have been satisfied.  Following the commercial launch of the Altus Product, Zogenix shall use Commercially Reasonable Efforts to market and promote the Altus Product throughout the Territory.

		
	2.2.
	Daravita acknowledges that Zogenix intends to enter into an agreement with Halo Pharmaceuticals Inc. and/or one or more of its Affiliates (altogether, "Halo") for the manufacturing development and primary commercial supply of Altus Product.  Nonetheless, if at any time during the Term, Zogenix desires and is permitted under its agreement with Halo, if such agreement is in effect, or otherwise if such agreement is not in effect, to (i) qualify a back-up supplier for Altus Product or (ii) switch its primary supply for Altus Product to an alternate supplier, then Zogenix shall notify Daravita of the same and the parties shall evaluate and discuss in good faith an arrangement whereby Daravita (or an Affiliate) would serve as a back-up manufacturer or alternate primary supplier for the commercial supply of Altus Product to Zogenix, any Affiliate of Zogenix or any permitted Zogenix sublicensee for sale in the Territory (the “Altus Product Supply Agreement”).  For clarity, neither Zogenix nor Daravita shall be obligated to have Daravita (or an Affiliate) manufacture commercial supplies of Altus Product for Zogenix, any Affiliate of Zogenix or any permitted Zogenix sublicensee.  If Daravita and Zogenix agree to the terms of such an arrangement, the Altus Product Supply Agreement shall be negotiated and executed by the Parties.  Zogenix shall not enter into any definitive agreement with any Third Party (other than Halo) for manufacture and commercial supply of the Altus Product prior to discussing with Daravita pursuant to this Clause 2.2 an arrangement whereby Daravita (or an Affiliate) would perform such manufacture and commercial supply.

		
	3.
	Daravita Consent.  Daravita acknowledges and agrees that the [***] may be disclosed to Altus pursuant to the D&O Agreement and by its signature on this Third Amendment Daravita provides its written consent to such disclosure, as required pursuant to Clause 2.2.2.5 of the License Agreement.  For clarity, the [***] shall be treated as Confidential Information belonging to Elan and shall be subject to Clause 15. 

		
	4.
	[***].  During the period from the Third Amendment Effective Date through the earlier of (a) the lapse of the Option under the D&O Agreement without the exercise thereof by Zogenix, or (b) following the exercise of the Option under the D&O Agreement, the expiration or termination of the Altus Agreement, but only during the period during which [***] or the [***] have rights to the Altus Product under the [***], in addition to the rights set forth in Clause 6.6.2 of the License Agreement, Daravita may request that Zogenix provide (if owned, licensed or controlled by Zogenix), or otherwise use Commercially Reasonable Efforts to require Altus to provide, to Daravita or directly to [***] or the [***]:  (i) any data and information relating to post-marketing clinical studies (including investigator sponsored studies), publications, pharmacovigilance, safety monitoring, recalls or seizures with respect

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18

to the Altus Product and other comparable data and information with respect to the Altus Product, and (ii) at Daravita’s cost and expense, such technical assistance related to the rights and items provided under the License Agreement and this Third Amendment with respect to the development and manufacture of the Altus Product for [***] and the registration and commercialization of the Altus Product in [***] or the [***].  At Daravita’s request, Zogenix shall also use its Commercially Reasonable Efforts to cause any Third Party who may be selected as the manufacturer and supplier of the Altus Product to Zogenix, any Affiliate of Zogenix or any permitted Zogenix sublicensee for sale in the Territory to manufacture and supply the Altus Product to [***] or the [***] for sale in [***], with such manufacture and supply to be on substantially the same terms and conditions as those on which such Third Party so manufactures and supplies the Altus Product to Zogenix, any Affiliate of Zogenix or any permitted Zogenix sublicensee, taking into account volume and other customary discounts that may be applicable to Zogenix (its Affiliates or permitted Zogenix sublicensees) based on quantities or other patterns of ordering the Altus Product.

		
	5.
	Simultaneous Amendment to Commercial Manufacture and Supply Agreement.  In connection with this Third Amendment, Daravita and Zogenix shall enter into an amendment to the Commercial Manufacture and Supply Agreement.

		
	6.
	Deletion of Schedule 2.  Schedule 2 of the License Agreement is hereby deleted in its entirety.

		
	7.
	Altus Agreement.  Zogenix hereby represents and warrants to Daravita, as of the Third Amendment Effective Date, that Zogenix has provided to Daravita a true, complete and correct copy of the Altus Agreement as in effect on the Third Amendment Effective Date (with financial, commercial or proprietary terms redacted, but only to the extent that Daravita is still able to estimate the impact of the Altus Agreement upon Daravita).

		
	8.
	No Other Amendments.  All other terms and conditions of the License Agreement remain unchanged and continue to be in full force and effect.

		
	9.
	Counterparts; Signatures.  This Third Amendment may be executed in any number of counterparts, each of which when so executed shall be deemed to be an original and all of which when taken together shall constitute this Third Amendment.  Signatures provided by facsimile transmission or in AdobeTM Portable Document Format (PDF) sent by electronic mail shall be deemed to be original signatures.

		
	10.
	Governing Law; Jurisdiction.  This Third Amendment shall be governed by and construed in accordance with the laws of the State of New York, without regard to its conflict of laws rules, and shall be subject to the exclusive jurisdiction of the State and Federal Courts located in New York, New York.

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IN WITNESS WHEREOF Daravita and Zogenix have caused this Third Amendment to be executed by their duly authorized representatives to be effective as of the Third Amendment Effective Date.

DARAVITA LIMITED

By: /s/ Tom Riordan                       

Title: Director                    

ZOGENIX, INC.

By: /s/ Roger L. Hawley            

Title: CEO                    

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