Document:

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EXHIBIT 10.1

                                    AGREEMENT

         This  Agreement  ("Agreement")  is made and entered into as of December
28, 2000, by and between ASTORIA FEDERAL SAVINGS AND LOAN ASSOCIATION, a federal
savings  association  ("AFSL");   ASTORIA  FINANCIAL  CORPORATION,   a  Delaware
corporation  ("AFC");  the ASTORIA FEDERAL SAVINGS AND LOAN ASSOCIATION EMPLOYEE
STOCK  OWNERSHIP  PLAN TRUST  (the  "AFSL  Trust"),  acting by and  through  its
trustee,  State Street Bank and Trust  Company  ("AFSL  Trustee");  and THE LONG
ISLAND  SAVINGS BANK FSB EMPLOYEE  STOCK  OWNERSHIP  PLAN TRUST ("LISB  Trust"),
acting by and through its trustee,  CG Trust Company ("LISB  Trustee") (The AFSL
Trust and the LISB Trust are  hereinafter  referred to individually as a "Trust"
and collectively as the "Trusts",  and the AFSL Trustee and the LISB Trustee are
hereinafter  referred to  individually  as a "Trustee" and  collectively  as the
"Trustees").

                              PRELIMINARY STATEMENT

         AFSL adopted the Astoria Federal Savings and Loan Association  Employee
Stock Ownership Plan ("AFSL ESOP") and the AFSL Trust on November 18, 1993, as a
tax-qualified and tax-exempt plan and trust. AFC and the AFSL Trust entered into
a Loan Agreement and related documents as of November 18, 1993 (as amended,  the
"Existing AFSL Loan  Documents")  pursuant to which AFC lent  $33,029,425 to the
AFSL Trust ("AFSL  Loan") for the purpose of acquiring  2,642,354  shares (after
giving effect to stock splits and stock  dividends)  of common stock,  par value
$.01 per share,  of AFC ("AFC Common  Stock").  The Long Island Savings Bank FSB
("LISB")  adopted The Long Island Savings Bank FSB Employee Stock Ownership Plan
("LISB  ESOP")  and the LISB Trust on March 31,  1994,  as a  tax-qualified  and
tax-exempt plan and trust. Long Island Bancorp,  Inc. ("LIB") and the LISB Trust
entered  into a Loan  Agreement  and related  documents as of April 14, 1994 (as
amended,  the  "Existing  LISB  Loan  Documents")  pursuant  to  which  LIB lent
$23,784,300  to the LISB  Trust  ("LISB  Loan")  for the  purpose  of  acquiring
2,070,000 shares of common stock of LIB.

         Pursuant to an  Agreement  and Plan of Merger dated as of April 2, 1998
by and  between AFC and LIB, as amended  ("Merger  Agreement"),  LIB merged into
AFC, LISB merged into AFSL, each share of common stock of LIB was converted into
1.15 shares AFC Common Stock,  and AFSL became the sponsor of the LISB ESOP, all
as of September 30, 1998. As of the date of this Agreement,  AFSL maintains both
the AFSL ESOP and the LISB ESOP. At January 1, 2000, the outstanding balance due
on the AFSL Loan was  $18,614,833.29  (the "Initial AFSL Principal  Amount") and
the number of shares of AFC Common Stock pledged as collateral security therefor
was 1,269,161 (the "Initial AFSL Unallocated  Shares").  At January 1, 2000, the
outstanding  balance due on the LISB Loan was $20,978,881.02  (the "Initial LISB
Principal  Amount")  and the  number of shares of AFC  Common  Stock  pledged as
collateral  security  therefor was  1,728,337  (the  "Initial  LISB  Unallocated
Shares").  In furtherance of the integration of the staff and operations of AFSL
and LISB, and pursuant to the Merger Agreement, AFSL wishes to provide a uniform
benefits program for all employees of the combined  entity,  including a single,
tax-qualified employee stock ownership plan with an appropriate contribution and
benefit structure based on a restructuring of the

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terms of the AFSL Loan and the LISB Loan.  AFSL is  willing  to provide  certain
benefit  enhancements  for  participants to secure the Trustees'  consent to the
loan restructuring.

         The  Trustees,  with the  benefit  of the advice of their  counsel  and
independent  financial  advisors,  have reviewed various proposals  presented by
AFSL and AFC and  have  negotiated  with  AFSL and AFC to  establish  terms  and
conditions for a loan restructuring that are mutually  acceptable to the parties
and considered by each Trustee to be in the interest of the  participants in the
AFSL ESOP and LISB ESOP and their respective beneficiaries to which such Trustee
owes a fiduciary duty pursuant to the Employee Retirement Income Security Act of
1974, as amended.

         In consideration  of the premises and the mutual covenants  hereinafter
set forth, AFC, AFSL and the Trustees have reached the following agreement.

                                    AGREEMENT

1.       Amended and Restated Loan Agreements.

         (a) As soon as practicable  after the execution of this Agreement,  and
in any  event  prior  to  December  31,  2000,  AFC and  the  AFSL  Trust  shall
restructure  the  AFSL  Loan by  entering  into an  amended  and  restated  loan
agreement,  substantially in the form attached hereto as Exhibit A (the "Amended
AFSL Loan Documents"), to give effect to the following:

                  (i)  The  terms  of  the  Amended  AFSL  Loan  Documents  will
         supersede the terms of the Existing AFSL Loan  Documents,  effective as
         of January 1, 2000.

                  (ii) The Initial AFSL Principal Amount,  plus accrued interest
         from December 31, 1999 at the rate of 6.00% per annum,  shall be repaid
         in 30 annual  payments,  due on the last  business  day of December for
         each  calendar  year in which the AFSL Loan is  outstanding,  beginning
         December  2000,  and each such payment  (the  "Minimum  Scheduled  AFSL
         Payment") shall be equal to an amount which would result in the release
         of a number  of  shares  of AFC  Common  Stock  pledged  as  collateral
         security for the AFCL Loan as of the first day of the calendar  year in
         which the payment is made (the "AFSL Unallocated  Shares") equal to the
         product  of (A) the  number  of  AFSL  Unallocated  Shares  and (B) the
         fraction specified in Column II:

            Column I           Column II

                              Fraction of
         Year of Payment    Collateral Released

              2000             1/30
              2001             1/29
              2002             1/28
              2003             1/27
              2004             1/26

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            Column I           Column II

                              Fraction of
         Year of Payment    Collateral Released

              2005             1/25
              2006             1/24
              2007             1/23
              2008             1/22
              2009             1/21
              2010             1/20
              2011             1/19
              2012             1/18
              2013             1/17
              2014             1/16
              2015             1/15
              2016             1/14
              2017             1/13
              2018             1/12
              2019             1/11
              2020             1/10
              2021             1/9
              2022             1/8
              2023             1/7
              2024             1/6
              2025             1/5
              2026             1/4
              2027             1/3
              2028             1/2
              2029             1

                  (iii) For each  calendar year after 1999 during which the AFSL
         Loan is  outstanding  AFSL shall make a mandatory  prepayment of all or
         part  of  the  AFSL  Loan  (the  "Mandatory  AFSL  Prepayment")  if the
         aggregate  Fair Market  Value (as  hereinafter  defined) of the Initial
         AFSL Unallocated  Shares and Initial LISB Unallocated  Shares allocated
         to  participant  accounts  as a result of the  Minimum  Scheduled  AFSL
         Payment and Minimum Scheduled LISB Payment (as hereinafter defined) and
         the  Mandatory  LISB  Prepayment  (as  hereinafter  defined)  for  such
         calendar  year  is  less  than  an  amount  equal  to 14% of the  total
         compensation  taken into account under the AFSL ESOP for the purpose of
         allocations  of  Initial  AFSL  Unallocated  Shares  and  Initial  LISB
         Unallocated Shares ("Minimum Annual Release Value").  The amount of the
         Mandatory AFSL  Prepayment for any calendar year shall be equal to that
         amount of principal and/or interest which, when added to the

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          Minimum  Scheduled AFSL Payment and Minimum Scheduled LISB Payment and
          any Mandatory LISB  Prepayment  previously made or then being made for
          such  calendar  year,  will result in the release  for  allocation  to
          participant  accounts  of the lesser of (A) a number of  Initial  AFSL
          Unallocated  Shares  and  Initial  LISB  Unallocated  Shares  with  an
          aggregate  Fair Market Value equal to the Minimum Annual Release Value
          or (B) the  entire  number of  Initial  AFSL  Unallocated  Shares  and
          Initial LISB Unallocated Shares that are currently unallocated.

                  (iv) The number of the Initial AFSL  Unallocated  Shares to be
         released  annually  for  allocation  to the  accounts of  participating
         employees  in  accordance  with the  terms of the  AFSL  ESOP  shall be
         determined  in  accordance  with 26 C.F.R.  ss.54.4975-7(b)(8)(i)  (the
         "Minimum Scheduled AFSL Share Allocation").

                  (v)   Any mandatory or optional  prepayments  shall be applied
         to reduce the outstanding principal balance.

                  (vi) Neither the AFSL  Unallocated  Shares nor the proceeds of
         sale thereof shall be used to make any payments due on the  outstanding
         loan except as provided section  1(a)(vii) or in the event of a default
         in payment  resulting  from the failure of the trustee of the AFSL ESOP
         to use dividend income on AFSL  Unallocated  Shares or LISB Unallocated
         Shares and employer contributions made for purposes of debt service, in
         each case actually received by such trustee.

                  (vii)  The  entire   outstanding   principal   amount  of  the
         outstanding loan shall become  immediately due and payable in the event
         of a termination of the AFSL ESOP or a Change in Control (as defined in
         the  Amended  AFSL Loan  Documents).  In such  event,  neither the AFSL
         Unallocated  Shares nor the proceeds of sales  thereof shall be used to
         repay any  portion  of the  outstanding  loan  except in the event of a
         Change in Control (as defined in the Amended AFSL Loan Documents) prior
         to January 1, 2010.  In the event of a Change in Control (as defined in
         the Amended AFSL Loan Documents)  prior to January 1, 2010, the maximum
         number of AFSL  Unallocated  Shares (or  proceeds of the sale  thereof)
         that may be used to repay the  outstanding  loan  shall be equal to the
         total  number  of  AFSL  Baseline  Shares  for the  year  in  question,
         determined  with  reference  to the table set forth in section  3(b) of
         this Agreement.

         (b) As soon as practicable  after the execution of this Agreement,  and
in any  event  prior  to  December  31,  2000,  AFC and  the  LISB  Trust  shall
restructure  the  LISB  Loan by  entering  into an  amended  and  restated  loan
agreement,  substantially in the form attached hereto as Exhibit B (the "Amended
LISB Loan Documents"), to give effect to the following:

                  (i)  The  terms  of  the  Amended  LISB  Loan  Documents  will
         supersede the terms of the Existing LISB Loan  Documents,  effective as
         of January 1, 2000.

                  (ii) The Initial LISB Principal Amount,  plus accrued interest
         from December 31, 1999 at the rate of 6.00% per annum,  shall be repaid
         in 30 annual  payments,  due on the last  business  day of December for
         each  calendar  year in which the LISB Loan is  outstanding,  beginning
         December  2000,  and each such payment  (the  "Minimum  Scheduled  LISB
         Payment") shall be equal to or greater than an

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amount  which  would  result in the  release of a number of shares of AFC Common
Stock  pledged as  collateral  security for the LISB Loan as of the first day of
the calendar year in which the payment is made (the "LISB  Unallocated  Shares")
equal to the  product of (A) the number of LISB  Unallocated  Shares and (B) the
fraction specified in Column II

            Column I          Column II

                              Fraction of
        Year of Payment    Collateral Released

              2000             1/30
              2001             1/29
              2002             1/28
              2003             1/27
              2004             1/26
              2005             1/25
              2006             1/24
              2007             1/23
              2008             1/22
              2009             1/21
              2010             1/20
              2011             1/19
              2012             1/18
              2013             1/17
              2014             1/16
              2015             1/15
              2016             1/14
              2017             1/13
              2018             1/12
              2019             1/11
              2020             1/10
              2021             1/9
              2022             1/8
              2023             1/7
              2024             1/6
              2025             1/5
              2026             1/4
              2027             1/3
              2028             1/2
              2029             1

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                  (iii) For each  calendar year after 1999 during which the LISB
         Loan is  outstanding  AFSL shall make a mandatory  prepayment of all or
         part  of  the  LISB  Loan  (the  "Mandatory  LISB  Prepayment")  if the
         aggregate  Fair Market  Value (as  hereinafter  defined) of the Initial
         AFSL Unallocated  Shares and Initial LISB Unallocated  Shares allocated
         to  participant  accounts  as a result of the  Minimum  Scheduled  AFSL
         Payment and Minimum  Scheduled  LISB  Payment  and the  Mandatory  AFSL
         Prepayment  for such  calendar  year is less  than the  Minimum  Annual
         Release  Value.  The amount of the Mandatory  AFSL  Prepayment  for any
         calendar  year  shall be  equal  to that  amount  of  principal  and/or
         interest  which,  when added to the Minimum  Scheduled AFSL Payment and
         Minimum  Scheduled  LISB  Payment  and any  Mandatory  AFSL  Prepayment
         previously  made or then being made for such calendar year, will result
         in the release for allocation to participant  accounts of the lesser of
         (A) a number of  Initial  AFSL  Unallocated  Shares  and  Initial  LISB
         Unallocated  Shares with an  aggregate  Fair Market  Value equal to the
         Minimum  Annual  Release  Value or (B) the entire  number  Initial AFSL
         Unallocated  Shares  and  Initial  LISB  Unallocated  Shares  that  are
         currently unallocated.

                  (iv) The number of the Initial LISB  Unallocated  Shares to be
         released  annually  for  allocation  to the  accounts of  participating
         employees  in  accordance  with the  terms of the  AFSL  ESOP  shall be
         determined  in  accordance  with 26 C.F.R.  ss.54.4975-7(b)(8)(i)  (the
         "Minimum Scheduled LISB Share Allocation").

                  (v)    Any mandatory or optional prepayments shall be applied
          to reduce the outstanding principal balance.

                  (vi) Neither the AFSL  Unallocated  Shares nor the proceeds of
         sale thereof shall be used to make any payments due on the  outstanding
         loan except as provided section  1(a)(vii) or in the event of a default
         in payment  resulting  from the failure of the trustee of the AFSL ESOP
         to use dividend income on AFSL  Unallocated  Shares or LISB Unallocated
         Shares and employer contributions made for purposes of debt service, in
         each case actually received by such trustee.

                  (vii)  The  entire   outstanding   principal   amount  of  the
         outstanding loan shall become  immediately due and payable in the event
         of a termination of the AFSL ESOP or a Change in Control (as defined in
         the  Amended  LISB Loan  Documents).  In such  event,  neither the LISB
         Unallocated  Shares nor the proceeds of sales  thereof shall be used to
         repay any  portion  of the  outstanding  loan  except in the event of a
         Change in Control (as defined in the Amended LISB Loan Documents) prior
         to January 1, 2010.  In the event of a Change in Control (as defined in
         the Amended LISB Loan Documents)  prior to January 1, 2010, the maximum
         number of LISB  Unallocated  Shares (or  proceeds of the sale  thereof)
         that may be used to repay the  outstanding  loan  shall be equal to the
         total  number  of  LISB  Baseline  Shares  for the  year  in  question,
         determined  with  reference  to the table set forth in section  3(b) of
         this Agreement.

                  (vi) The Minimum  Scheduled LISB Payment and the Minimum LISB
         prepayment  for  calendar  year 2000  shall be  reduced  to the  extent
         necessary  to reflect   (A)  payments on the LISB Loan  pursuant to the
         terms of the Existing LISB Loan

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          Documents during such year and (B) the value of  allocations  of LISB
          Unallocated Shares during such year to employees  participating in the
          LISB ESOP.

         (c) AFC and AFSL may,  in their sole and  absolute  discretion,  direct
that the  transactions  described in sections  1(a) and (b) be  restructured  as
extensions  of new loans by AFSL,  the proceeds of which are required to be used
to prepay in full the Trusts'  indebtedness to AFC pursuant to the Existing AFSL
Loan Documents and the Existing LISB Loan Documents.

2.       Merger of AFSL ESOP and LISB ESOP.
         ---------------------------------

         As soon as practicable following the execution of this Agreement,  AFSL
shall take such  actions as are  necessary to effect the merger of the LISB ESOP
with and into the Astoria  ESOP,  effective no later than December 31, 2000 (the
"ESOP Merger Effective  Date").  Effective as of the ESOP Merger Effective Date,
the LISB Trust shall be deemed to form, and shall be continued as, a part of the
AFSL ESOP.  Nothing in this Agreement  shall be construed to require or preclude
the  continuation  of the LISB  Trust and AFSL  Trust as  separate  trusts  with
separate trustees or their merger into a single trust with a single trustee.  In
the event of a merger of the AFSL Trust with the LISB Trust,  AFC and AFSL shall
have the right to require that the loans  described  section 1 of this Agreement
be combined into a single loan and that all of the  collateral  given for either
of such loan serve as collateral for the combined loan.

3.       Amendment of AFSL ESOP.
         ----------------------

         In  consideration  for the execution and delivery of this  Agreement by
the AFSL Trust and the LISB Trust and the performance of the Trusts'  respective
obligations hereunder, AFSL shall adopt an amendment to the AFSL ESOP as soon as
practicable after the execution of this Agreement and in no event later than the
ESOP Merger Effective Date, substantially in the form attached hereto as Exhibit
C, to effect the following  additional benefit  enhancements and protections for
the benefit of participants in the AFSL ESOP:

                  (a) On or before  December 31, 2000:  (i) AFSL shall cause the
         LISB Trustee and the AFSL Trustee to apply all  dividends on AFC Common
         Stock  held by them  that  have not  previously  been used to make loan
         payments on the AFSL Loan or the LISB Loan or allocated to  participant
         accounts as investment income ("2000  Unallocated  Dividends"):  (A) to
         make  Minimum  Scheduled  AFSL  Payments  and  Minimum  Scheduled  LISB
         Payments, respectively; and (B) to make additional payments on the AFSL
         Loan  and/or  the LISB Loan if and to the extent  necessary  to satisfy
         section 4(c) of this Agreement for 2000; and (C) to the extent that the
         2000  Unallocated   Dividends  exceed  the  aggregate  of  the  Minimum
         Scheduled LISB Payment and the Minimum  Scheduled AFSL Payment for 2000
         and the amount applied to additional  loan payments in accordance  with
         section  4(a) of this  Agreement,  to the accounts of  participants  as
         additional  investment  income;  and (ii) to the extent  the  dividends
         applied to participant  accounts  pursuant to clause  (a)(i)(c) of this
         paragraph  are less  than  one  million  dollars,  AFSL  shall  make an
         additional   contribution  to  participants'  accounts  equal  to  this
         deficit.

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                  (b) On or before  December  31st of 2001,  2002,  2003,  2004,
         2005,  2006,  2007,  2008 and 2009,  AFSL shall  cause the  accounts of
         participants  in the AFSL ESOP to be credited with an aggregate  amount
         (the "Pre-2010 Dividend Make-Whole Amount") equal to the product of (i)
         the  aggregate  dividends  paid by AFC with  respect  to a Share of AFC
         Common Stock during such year,  multiplied  by (ii) the excess (if any)
         of the total number of Initial AFSL Unallocated Shares and Initial LISB
         Unallocated  Shares that remain unallocated as of the first day of such
         year (the "Actual Unallocated Shares") over the total number of Initial
         AFSL Unallocated  Shares and Initial LISB Unallocated Shares that would
         have been  unallocated  as of such date under the terms of the Existing
         AFSL Loan Documents and the Existing LISB Loan Documents (the "Baseline
         Shares").  The  number of  Baseline  Shares  for any such year shall be
         determined by reference to the following table:

 Year        Baseline Shares              Year         Baseline Shares

           Total     AFSL       LISB                Total     AFSL      LISB
 2001   2,757,166  1,048,266   1,708,900  2006    1,611,725    0      1,611,725
 2002   2,516,834    827,371   1,689,463  2007    1,592,288    0      1,592,288
 2003   2,276,502    606,476   1,670,026  2008    1,572,851    0      1,572,851
 2004   2,036,170    385,581   1,650,589  2009    1,553,414    0      1,553,414
 2005   1,755,838    164,686   1,591,152  2010 &          0    0      0
                                          later

         For calendar years 2010 through 2029,  AFSL shall cause the accounts of
         participants  in the AFSL ESOP to be credited with an amount,  in cash,
         equal to the aggregate dividends paid by AFC with respect to the entire
         number  of  Actual  Unallocated  Shares  (together  with  the  Pre-2010
         Dividend  Make-Whole Amount,  the "Dividend  Make-Whole  Amount").  The
         crediting  of the Dividend  Make-Whole  Amount for any year shall be in
         the form of an allocation of dividends on Actual  Unallocated Shares to
         participants'  accounts as investment  income,  an additional  employer
         contribution,  or a  combination  thereof,  as  AFSL,  in it  sole  and
         absolute discretion, may determine.

                  (c) For so long as the Amended  AFSL Loan or the Amended  LISB
         Loan remains outstanding, AFSL shall take such actions as are necessary
         to ensure that the Fair Market Value of the AFC Common Stock  allocated
         to participants' accounts each year as a consequence of payments on the
         Amended  AFSL Loan and the Amended LISB Loan is no less than the lesser
         of 14% of the  aggregate  "Cash  Compensation"  (as defined in the AFSL
         ESOP) of the  "Active  Participants"  (as defined in the AFSL ESOP) for
         the year in question  and 100% of the Fair  Market  Value of the entire
         number of Actual Unallocated Shares. Such actions may include,  but are
         not limited to, making additional employer  contributions to be used to
         make partial  prepayments of principal on the AFSL Loan and/or the LISB
         Loan and using  dividends  received with respect to Actual  Unallocated
         Shares to make partial prepayments of principal on the AFSL Loan and/or
         the LISB Loan.  For  purposes of this  section  4(c),  the "Fair Market
         Value" of a share of AFC  Common  Stock for any year  shall be equal to
         the average of the closing sales prices for a share of AFC Common Stock
         on the Nasdaq Stock Market National Market System (or other

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<PAGE>   9

          principal  national  securities  exchange on which AFC Common Stock is
          then  listed or  admitted  to  trading) on each of the last 20 trading
          days preceding December 1st of such year on which a sale of AFC Common
          Stock  occurs,  as reported in the New York City  edition  Wall Street
          Journal or such other reputable source of stock quotations as AFSL may
          select.

                  (d) For calendar years 2001,  2002,  2003,  2004,  2005, 2006,
         2007,  2008 and 2009,  AFSL shall  make a  additional  annual  employer
         contribution to the AFSL ESOP of $1,200,000 in addition to the employer
         contributions   (if  any)  under   sections  4(a),  (b)  and  (c)  (the
         "Additional Contribution"). Such additional annual contribution for any
         year shall be reduced by the amount (if any) of the dividend income for
         such  year  with  respect  to  Baseline  Shares  that is  allocated  to
         participants' accounts as investment income to the extent not in excess
         of payments  made on the AFSL Loan and the LISB Loan for such year (the
         "Offsetting  Dividends").  If the Astoria ESOP is  terminated  prior to
         December 31, 2009,  AFSL shall,  as of the date of  termination  of the
         ESOP,  make an additional  employer  contribution in an amount equal to
         the  excess of $10.8  million  over the  aggregate  amount  of  Minimum
         Contributions  and Offsetting  Dividend Income made and allocated as of
         or prior to the date of  termination.  In no event shall the Additional
         Contributions  be used to make  payments  on the AFSL  Loan or the LISB
         Loan.

                  (e) To the extent that  dividends  paid by AFC with respect to
         Actual  Unallocated  Shares for any year are allocated to participants'
         accounts as investment  income,  such dividends  shall not be available
         for current  distribution to participants and shall instead be retained
         in each participant's  account for subsequent  distribution at the same
         time and in the same  manner  as the  remainder  of such  participant's
         vested account balance.

                  (f) Neither the Actual  Unallocated Shares nor the proceeds of
         the sale thereof shall be used to make payment of principal or interest
         on the AFSL Loan or the LISB  Loan;  provided,  however,  that (i) AFSL
         Unallocated  Shares and the LISB Unallocated  Shares or the proceeds of
         sale thereof shall be available to the lender in the event of a default
         in payment  resulting  from the failure of the trustee of the AFSL ESOP
         to use dividend income on AFSL  Unallocated  Shares or LISB Unallocated
         Shares and employer contributions made for purposes of debt service, in
         each case  actually  received  by such  trustee,  if and to the  extent
         provided under the Amended AFSL Loan Documents or the Amended LISB Loan
         Documents,  as  applicable;  and  (ii) in the  event  of a  "Change  in
         Control"  (as defined in the AFSL ESOP)  prior to January 1, 2010,  the
         AFSL ESOP shall be terminated and the number of Baseline Shares for the
         year in which the termination  occurs may be used, if and to the extent
         necessary,  to prepay all or part of the AFSL Loan and the LISB Loan to
         facilitate the allocation of any Actual  Unallocated  Shares  remaining
         after such  prepayment  to the accounts of  participants  as additional
         investment  income.  In the event of (i) a termination of the AFSL ESOP
         without  a Change  in  Control  prior to  January  1,  2010 or (ii) any
         termination  of  the  AFSL  ESOP  on or  after  January  1,  2010,  any
         outstanding  debt  under the AFSL Loan  and/or  the LISB Loan  shall be
         immediately  forgiven  and any  AFSL  Unallocated  Shares  and/or  LISB
         Unallocated  Shares or proceeds of the sale  thereof  allocated to AFSL
         ESOP participants.

                                  Page 9 of 13

<PAGE>   10

                  (g)  Dividend  income on AFC Common Stock that is allocated to
         participants'  accounts  shall in no event be used to make principal or
         interest  payments on the loans  described  in section 1 for any period
         beginning after December 31, 1999.

                  (h) The provisions  included in the AFSL ESOP in  satisfaction
         of this Agreement shall not be subject to amendment without the written
         consent of the LISB  Trustee and the AFSL  Trustee or their  respective
         successor.

4.       Conditions of Effectiveness.

         (a)      AFSL's and AFC's obligations under this Agreement shall be
conditioned upon the following:

               (i)     the AFSL Trust's and the LISB Trust's  execution and
         delivery to AFSL and AFC, prior to December 31, 2000,of this Agreement;

               (ii) the AFSL Trust's and LISB Trust's  execution and delivery to
          AFC,  prior to December 31, 2000,  of the Amended AFSL Loan  Documents
          and the Amended LISB Loan Documents, respectively;

               (iii)    receipt  of  written  certification  (A)  from the AFSL
         Trustee, in form and substance  satisfactory to AFSL and AFC, that such
         Trustee has received the opinion of its financial advisor,  in form and
         substance  satisfactory  to such Trustee,  substantially  to the effect
         that:  (I) the  interest  rate  established  by the  Amended  AFSL Loan
         Documents is not in excess of a reasonable  rate; (II) the terms of the
         Amended AFSL Loan Documents are at least as favorable to the applicable
         Trust as would be the terms of a comparable  loan  resulting from arm's
         length  negotiations   between  independent   parties;  and  (III)  the
         transactions  described in this Agreement are fair to the AFSL ESOP and
         (B) from the LISB  Trustee that it has been  directed by United  States
         Trust Company, in its capacity as investment manager to the LISB Trust,
         to execute this Agreement; and

               (iv)    receipt  from the AFSL  Trustee and the LISB  Trustee of
         evidence  satisfactory to AFSL and AFC that the documents  described in
         section  5(a)(i)  and (ii) have been duly  authorized  and  executed on
         behalf of the applicable  Trust by all requisite  action on the part of
         the applicable Trustee;

         (b)      Each Trustee's obligations hereunder shall be conditioned on
the following:

               (i)     AFSL's and AFC's execution and delivery of this Agreement
         to such Trustee prior to December 31, 2000;

               (ii)    AFC's  execution  and delivery to such  Trustee  prior to
         December  31, 2000 of the Amended  AFSL Loan  Documents or Amended LISB
         Loan Documents, as applicable;

                                  Page 10 of 13

<PAGE>   11

               (iii)    in the case of the LISB Trust, receipt of a direction by
         United States Trust Company,  in its capacity as investment  manager to
         the LISB Trust, to execute this Agreement,  and in the case of the AFSL
         Trust,  receipt from its financial  advisor of an opinion,  in form and
         substance satisfactory to it, substantially to the effect that: (A) the
         interest rate  established by the Amended AFSL Loan Documents is not in
         excess of a  reasonable  rate;  (B) the terms of the Amended  AFSL Loan
         Documents are at least as favorable to the applicable Trust as would be
         the terms of a comparable loan resulting from arm's length negotiations
         between independent parties; and (C) the transactions described in this
         Agreement are fair to the AFSL ESOP.

         6.  Changes  in  AFC  Common  Stock.   In  the  event  of  any  merger,
consolidation,  or other business  reorganization  in which shares of AFC Common
Stock are exchanged for or converted into other  securities or property,  and in
the event of any stock split, stock dividend or other event generally  affecting
the  number of shares of AFC  Common  Stock  held by each  person  who is then a
holder of record of shares of AFC Common  Stock,  each  reference to a number of
shares of AFC Common Stock in this Agreement shall be adjusted to give effect to
such event, it being intended that any such adjustment  preclude the enlargement
or  diminution  of the  rights  and  obligations  each  party to this  Agreement
relative to the other parties to this Agreement.

         7. Amendments.  This Agreement contains the entire understanding of the
parties  with  respect to the  subject  matter  hereof and  supersedes  in their
entirety any and all prior agreements,  understandings or arrangements,  whether
or not in  writing,  concerning  the  subject  matter  hereof,  other  than  the
engagement  letters  dated July 18,  2000,  June 23,  2000,  and June 30,  2000,
between  AFSL  and/or AFL, on the one hand,  and U. S. Trust  Company,  National
Association,  in its capacity as financial  advisor to CG Trust  Company,  State
Street  Bank and Trust  Company and Duff & Phelps,  LLC,  on the other hand.  No
amendment  to this  Agreement  shall  be  effective  unless  made  in a  written
instrument  that  specifically  refers  to this  Agreement  and is signed by all
parties hereto.

         8.   Descriptive Headings.  Descriptive headings are for convenience
only and shall not control or affect the meaning or construction of any
provision of this Agreement.

         9.    Counterparts.  For the convenience of the parties hereto, this
Agreement may be executed by the parties in two or more counterparts, all of
which shall be deemed one and the same instrument and each of which shall be
deemed to be an original.

         10.    Notices.  Except as otherwise specifically provided for herein,
all  notices,  requests,  reports  and  other  communications  pursuant  to this
Agreement shall be in writing, either by letter (delivered by hand or commercial
messenger  service or sent by  registered  or  certified  mail,  return  receipt
requested)  or telex or  facsimile,  addressed  as  follows:

               (a) If to the AFSL Trust:

                           State Street Bank and Trust Company
                           Investment Services Office
                           200 Newport Avenue
                           North Quincy, Massachusetts   02171

                                  Page 11 of 13

<PAGE>   12

               (b)  If to the LISB ESOP Trust

                           CG Trust Company
                           525 W. Monroe, Suite 1900
                           Chicago, Illinois     60601

               (c)  If to AFSL:

                           Astoria Federal Savings and Loan Association
                           One Astoria Federal Plaza
                           Lake Success, New York  11042-1085
                           Attention: General Counsel

               (d)  If to AFC:

                           Astoria Financial Corporation
                           One Astoria Federal Plaza
                           Lake Success, New York 11042
                           Attention: General Counsel

Any  notice,  request or  communication  hereunder  shall be deemed to have been
given on the day on which it is  delivered  by hand or by  commercial  messenger
service,  or sent by telex or facsimile,  to such party at its address specified
above, or, if sent by mail, on the third business day after the day deposited in
the mail,  postage  prepaid,  addressed as  aforesaid.  Any party may change the
person or address to whom or which notices are to be given hereunder,  by notice
duly given hereunder; provided, however, that any such notice shall be deemed to
have  been  given  only  when  actually  received  by the  party  to  whom it is
addressed.

         11.  Governing Law. This  Agreement  shall be governed by and construed
and enforced in accordance  with the laws of the State of New York applicable to
contracts  to be  performed  wholly  within the State of New York  entered  into
between parties all of whom are citizens and residents of the State of New York.
Nothing  contained herein shall be deemed to require any action that would cause
the AFSL ESOP to lose its  tax-qualified  status under the Code.  Nothing herein
shall be deemed to confer any rights,  whether as a third-party  beneficiary  or
otherwise, on any person or entity other than the signatories to this Agreement.

                                  Page 12 of 13

<PAGE>   13

                  IN WITNESS WHEREOF,  the AFSL Trust, the LISB Trust,  AFSL and
AFC have caused this Agreement to be executed in their names and on their behalf
by officers or representatives thereunto duly authorized.

                             ASTORIA FEDERAL SAVINGS AND LOAN
                             ASSOCIATION EMPLOYEE STOCK OWNERSHIP PLAN TRUST

                             By      STATE STREET BANK AND TRUST COMPANY, solely
                                     as Trustee and not in any other capacity

                             By:      /S/ Marianne E. Sullivan
                                     ------------------------------------------

                             Name:    Marianne E. Sullivan
                                      -----------------------------------------

                             Title:   Vice President
                                      -----------------------------------------

                             THE LONG ISLAND SAVINGS BANK FSB
                             EMPLOYEE STOCK OWNERSHIP PLAN TRUST

                             By     CG TRUST COMPANY, solely as Trustee and not
                                    in any other capacity

                             By:     /S/ Mary Lou Filiault
                                     ------------------------------------------

                             Name:   Mary Lou Filiault
                                     ------------------------------------------

                             Title:  Vice President
                                     ------------------------------------------

                             ASTORIA FEDERAL SAVINGS AND LOAN
                             ASSOCIATION

                             By:    /S/ Alan P. Eggleston
                                    --------------------------------------------

                             Name:  Alan P. Eggleston
                                    --------------------------------------------

                             Title: Executive Vice President and General Counsel
                                     -------------------------------------------

                             ASTORIA FINANCIAL CORPORATION

                             By:    /S/ Alan P. Eggleston
                                    --------------------------------------------

                             Name:  Alan P. Eggleston
                                    -------------------------------------------

                             Title: Executive Vice President and General Counsel
                                    --------------------------------------------

                                  Page 13 of 13

<PAGE>   14

                                                                      EXHIBIT A

                              AMENDED AND RESTATED
                                 LOAN AGREEMENT

                                 by and between

                  ASTORIA FEDERAL SAVINGS AND LOAN ASSOCIATION
                       EMPLOYEE STOCK OWNERSHIP PLAN TRUST

                                       and

                          ASTORIA FINANCIAL CORPORATION

                           Made and Entered Into as of
                                 January 1, 2000

<PAGE>   15

                                TABLE OF CONTENTS
                                                                            Page

                                    ARTICLE I

                                   DEFINITIONS

             Section 1.1       Business Day....................................1

             Section 1.2       Code............................................2

             Section 1.3       Default.........................................2

             Section 1.4       ERISA...........................................2

             Section 1.5       Event of Default................................2

             Section 1.6       Independent Counsel.............................2

             Section 1.7       Loan............................................2

             Section 1.8       Loan Documents..................................2

             Section 1.9       Pledge Agreement................................2

             Section 1.10      Principal Amount................................2

             Section 1.11      Promissory Note.................................2

             Section 1.12      Register........................................2

                                   ARTICLE II

                           THE LOAN; PRINCIPAL AMOUNT;
                               INTEREST; SECURITY

             Section 2.1       The Loan; Principal Amount; Repayment of
                               Outstanding Indebtedness........................2

             Section 2.2       Interest........................................3

             Section 2.3       Promissory Note.................................4

             Section 2.4       Payment of Loan.................................4

             Section 2.5       Prepayment......................................4

             Section 2.6       Method of Payments..............................6

             Section 2.7       Security........................................7

             Section 2.8       Registration of the Promissory Note.............8

                                   ARTICLE III

                 REPRESENTATIONS AND WARRANTIES OF THE BORROWER

             Section 3.1       Power, Authority, Consents......................8

             Section 3.2       Due Execution, Validity, Enforceability.........8

             Section 3.3       Properties, Priority of Liens...................9

             Section 3.4       No Defaults, Compliance with Laws...............9

             Section 3.5       Marketable Title; Legality......................9

                                       (i)

<PAGE>   16

                                                                            Page

                                   ARTICLE IV

                  REPRESENTATIONS AND WARRANTIES OF THE LENDER

             Section 4.1       Power, Authority, Consents......................9

             Section 4.2       Due Execution, Validity, Enforceability........10

             Section 4.3       ESOP; Contributions............................10

             Section 4.4       Compliance with Laws; Actions..................10

                                    ARTICLE V

                                EVENTS OF DEFAULT

             Section 5.1       Events of Default under Loan Agreement.........10

             Section 5.2       Lender's Rights upon Event of Default..........11

                                   ARTICLE VI

                            MISCELLANEOUS PROVISIONS

             Section 6.1       Payments.......................................11

             Section 6.2       Survival.......................................12

             Section 6.3       Modifications, Consents and Waivers; Entire
                               Agreement......................................12

             Section 6.4       Remedies Cumulative............................12

             Section 6.5       Further Assurances; Compliance with Covenants..12

             Section 6.6       Notices........................................13

             Section 6.8       Counterparts...................................13

             Section 6.9       Construction; Governing Law....................14

             Section 6.10      Severability...................................14

             Section 6.11      Binding Effect; No Assignment or Delegation....14

     EXHIBIT 1 Form of Promissory Note.......................................1-1
     EXHIBIT 2 Form of Pledge Agreement......................................2-1

                                      (ii)

<PAGE>   17

                                 LOAN AGREEMENT

                  This LOAN AGREEMENT (the "Loan Agreement") is made and entered
into as of the 1st day of January,  2000, by and between ASTORIA FEDERAL SAVINGS
AND LOAN  ASSOCIATION  EMPLOYEE STOCK OWNERSHIP PLAN TRUST (the  "Borrower"),  a
trust forming part of the ASTORIA FEDERAL SAVINGS AND LOAN ASSOCIATION  EMPLOYEE
STOCK OWNERSHIP PLAN ("ESOP"),  acting through and by its Trustee,  STATE STREET
BANK AND TRUST COMPANY (the "Trustee"),  a banking  corporation  organized under
the laws of the state of Massachusetts;  and ASTORIA FINANCIAL  CORPORATION (the
"Lender"),  a corporation  organized and existing under the laws of the state of
Delaware.

                              W I T N E S S E T H :
                               -------------------

                  WHEREAS, the Lender's wholly-owned subsidiary, ASTORIA FEDERAL
SAVINGS AND LOAN  ASSOCIATION  (the  "Association"),  maintains the ESOP for the
benefit of eligible employees; and

                  WHEREAS,  the  Borrower  and the Lender are  parties to a Loan
Agreement dated November 18, 1993 (the "Prior Agreement"), pursuant to which the
Borrower has borrowed funds from the Lender to finance the purchase of shares of
common  stock,  par value $.01 per share,  of the Lender  ("Shares")  and has an
outstanding  indebtedness in the amount of EIGHTEEN MILLION SIX HUNDRED FOURTEEN
THOUSAND   EIGHT   HUNDRED    THIRTY-THREE   DOLLARS   AND   TWENTY-NINE   CENTS
($18,614,833.29)  (the  "Outstanding  Indebtedness"),  plus  accrued  and unpaid
interest from December 31, 1999; and

                  WHEREAS,  the Borrower and the Lender have  determined that it
is in their mutual interests to modify the terms of repayment of the Outstanding
Indebtedness in the manner set forth in this Agreement;

                  NOW,  THEREFORE,  the  parties  hereto  agree  that the  Prior
Agreement shall be amended and restated in its entirety  effective as of January
1, 2000, as follows:

                                    ARTICLE I

                                   DEFINITIONS

                  The  following  definitions  shall apply for  purposes of this
Loan  Agreement,  except to the  extent  that a  different  meaning  is  plainly
indicated by the context:

                  Section 1.1  Business Day means any day other than a Saturday,
Sunday or other day on which  banks are  authorized  or  required to close under
federal law or the laws of the State of New York.

<PAGE>   18

                                       -2-

                  Section  1.2 Code  means  the  Internal  Revenue  Code of 1986
(including the cor responding provisions of any succeeding law).

                  Section 1.3 Default  means an event or  condition  which would
constitute  an Event of  Default.  The  determination  as to whether an event or
condition  would  constitute  an Event of Default  shall be  determined  without
regard to any applicable requirement of notice or lapse of time.

                  Section  1.4  ERISA  means  the  Employee   Retirement  Income
Security Act of 1974, as amended (including the corresponding  provisions of any
succeeding law).

                  Section  1.5  Event of  Default  means  an event or  condition
described in Article V.

                  Section 1.6 Independent  Counsel means legal counsel  mutually
satisfactory to both the Lender and the Borrower.

                  Section 1.7 Loan means the loan described in section 2.1.

                  Section  1.8 Loan  Documents  means,  collectively,  this Loan
Agreement,  the Promissory Note and the Pledge Agreement and all other documents
now or hereafter  executed  and  delivered in  connection  with such  documents,
including  all  amendments,  modifications  and  supplements  of or to all  such
documents.

                  Section 1.9 Pledge Agreement means the agreement  described in
section 2.7.

                  Section  1.10  Principal  Amount  means the face amount of the
Promissory Note, determined as set forth in section 2.1(a).

                  Section  1.11   Promissory  Note  means  the  promissory  note
described in section 2.3.

                  Section 1.12 Register means the register  described in section
2.8.

                                   ARTICLE II

                           THE LOAN; PRINCIPAL AMOUNT;
                               INTEREST; SECURITY

                  Section 2.1       The Loan; Principal Amount; Repayment of
                                    Outstanding Indebtedness.

                    (a) The Lender hereby lends to the Borrower EIGHTEEN MILLION
SIX HUNDRED FOURTEEN THOUSAND EIGHT HUNDRED THIRTY-THREE DOLLARS AND TWENTY-NINE
CENTS

<PAGE>   19

                                       -3-

($18,614,833.29).  For all purposes of this Loan Agreement, the Principal Amount
on any date shall be equal to the excess, if any, of:

                    (i)    the aggregate amount lent by the Lender pursuant to
         this section 2.1; over

                    (ii)   the aggregate amount of any repayments of such amount
         made before such date.

The Lender  shall  maintain on the Register a record of, and shall record on the
Promissory Note, the Principal  Amount,  any changes in the Principal Amount and
the effective date of any changes in the Principal Amount.

                  (b)  Concurrently  with the  execution  and  delivery  of this
Agreement,  the Lender shall  deliver to the Borrower  the  Borrower's  original
promissory  note  issued  pursuant to the Prior  Agreement  and  evidencing  the
Outstanding Indebtedness marked "PAID IN FULL".

                  (c) The  transactions  contemplated by this Agreement shall be
deemed a refinancing of the  Outstanding  Indebtedness  for purposes of Treasury
Regulation ss. 54.4975-7.

                  Section 2.2       Interest.

                  (a) The  Borrower  shall  pay to the  Lender  interest  on the
Principal  Amount,  for the period commencing on the date of this Loan Agreement
and continuing  until the Principal Amount shall be paid in full, at the rate of
six percent  (6.00%) per annum.  Interest  payable under this  Agreement for any
calendar  month  period shall be computed on the basis of a year of 360 days and
months  consisting  of 30 days each.  For any period  shorter  than one calendar
month, interest payable under this Loan Agreement shall be computed on the basis
of a rate equal to six percent  (6.00%)  multiplied  by a fraction  equal to the
actual number of days in the period  (including  the first day but excluding the
last) divided by 360. The Lender shall remit to the Borrower, at least three (3)
Business Days before the end of each  calendar  year, a statement of the accrued
interest for such calendar year and the aggregate accrued and unpaid interest as
of the  last  day of such  calendar  year;  provided,  however,  that a delay or
failure by the Lender in providing  the Borrower with such  statement  shall not
alter the Borrower's  obligation to make any payment of interest that may be due
but shall excuse any error in the computation of the amount of interest due that
is promptly  cured upon receipt of written notice of such error from the Lender.
Accrued  and  unpaid  interest  shall  cumulate  until  paid  but  shall  not be
compounded.

                  (b) Anything in this Loan Agreement or the Promissory  Note to
the contrary notwithstanding, the obligation of the Borrower to make payments of
interest shall be subject to the limitation  that payments of interest shall not
be  required to be made to the Lender to the extent  that the  Lender's  receipt
thereof would not be permissible  under the law or laws applicable to the Lender
limiting rates of interest which may be charged or collected by the Lender.  Any
such payment referred to in the preceding sentence shall be made by the Borrower
to the  Lender  on the  earliest  interest  payment  date or dates on which  the
receipt thereof would be permissible under the laws

<PAGE>   20

                                       -4-

applicable  to the Lender  limiting  rates of  interest  which may be charged or
collected by the Lender. Such deferred interest shall not bear interest.

                  Section 2.3       Promissory Note.

                  The  Loan  shall  be  evidenced  by a  Promissory  Note of the
Borrower in substantially  the form of Exhibit 1 attached hereto,  dated January
1,  2000,  payable  to the  order of the  Lender  in the  Principal  Amount  and
otherwise duly completed.

                  Section 2.4       Payment of Loan.

                  The Loan shall be repaid in annual installments payable on the
last Business Day of each December ending after the date of this Agreement.  The
amount (if any) of each such  annual  installment  shall be equal to the maximum
amount of  principal  and  interest  accrued  to and  including  the date of the
payment that may be paid  without  resulting  in the release for  allocation  to
participants in the ESOP, pursuant to the Pledge Agreement, of a fraction of the
Shares pledged as collateral security pursuant to the Pledge Agreement as of the
first day of the calendar year in which the payment is made that is greater than
the fraction set forth in Column II below:

                  Column I            Column II
                                     Fraction of
              Year of Payment    Collateral Released

                    2000             1/30
                    2001             1/29
                    2002             1/28
                    2003             1/27
                    2004             1/26
                    2005             1/25
                    2006             1/24
                    2007             1/23
                    2008             1/22
                    2009             1/21
                    2010             1/20
                    2011             1/19
                    2012             1/18
                    2013             1/17
                    2014             1/16
                    2015             1/15
                    2016             1/14
                    2017             1/13

<PAGE>   21

                                       -5-

                 Column I            Column II
                                     Fraction of
              Year of Payment    Collateral Released

                    2018             1/12
                    2019             1/11
                    2020             1/10
                    2021             1/9
                    2022             1/8
                    2023             1/7
                    2024             1/6
                    2025             1/5
                    2026             1/4
                    2027             1/3
                    2028             1/2
                    2029             1

provided,  however,  that the Borrower shall not be required to make any payment
of principal  due to be made in any period to the extent that such payment would
not be deductible for federal income tax purposes under section 404 of the Code.
Payments may be deferred to the extent that such payments  would be in excess of
the amount  described  above or  otherwise  would be  nondeductible  for federal
income  tax  purposes.  Any  payment  shall be applied  first to the  payment of
accrued interest and second,  if and to the extent that all accrued interest has
been or is then  being  paid,  to the  payment  of all or part of the  Principal
Amount.

                  Section 2.5       Prepayment.

                  (a) The Borrower may,  with the prior  written  consent of the
Lender,  prepay the Loan in whole or in part, at any time and from time to time.
Any such prepayment shall be: (i) permanent and  irrevocable;  (ii) made without
premium or penalty;  and (iii) applied first to the payment of accrued  interest
and second,  if and to the extent that all accrued  interest has been or is then
being paid, to the payment of all or part of the Principal Amount.

                  (b) For each calendar year after 1999 during which the Loan is
outstanding,  a mandatory  prepayment of all or part of the Loan (the "Mandatory
Prepayment")  shall be made if the aggregate  Fair Market Value (as  hereinafter
defined) of the Shares pledged  pursuant to the Pledge Agreement and pursuant to
the Pledge  Agreement of even date herewith between The Long Island Savings Bank
FSB Employee Stock Ownership Plan Trust,  acting by and through its Trustee,  CG
Trust  Company  and the  Lender  (the "LISB  Pledge  Agreement"),  and  released
pursuant to sections 4(b) and 7 of the Pledge Agreement and pursuant to sections
4(b) and 7 of the LISB  Pledge  Agreement,  and  allocated  to the  accounts  of
participants in the ESOP as a result of the payments

<PAGE>   22

                                       -6-

described  in sections  2.4 and 2.5(a) of this Loan  Agreement  and the payments
described in Section 2.4 and 2.5(a) of the Loan  Agreement of even date herewith
between The Long Island  Savings Bank FSB Employee  Stock  Ownership Plan Trust,
acting by and through its  Trustee,  CG Trust  Company and the Lender (the "LISB
Loan  Agreement")  for such calendar year is less than an amount equal to 14% of
the total  compensation  taken into  account  under the ESOP for the  purpose of
allocations  to the  accounts  of  participants  in the ESOP of  Shares  pledged
pursuant to the Pledge Agreement and the LISB Pledge Agreement  ("Minimum Annual
Release  Value").  The amount of the Mandatory  Prepayment for any calendar year
shall be equal to that amount of principal and/or interest which,  when added to
the payment  described in sections 2.4 and 2.5(a) of this Loan Agreement and the
payments described in sections 2.4, 2.5(a) and 2.5(b) of the LISB Loan Agreement
made or then being made for such calendar  year,  will result in the release for
allocation  to  participant  accounts  of the  lesser  of (A) a number of Shares
pledged  pursuant to the Pledge  Agreement and the LISB Pledge Agreement with an
aggregate Fair Market Value equal to the Minimum Annual Release Value or (B) the
entire number of Shares  pledged  pursuant to the Pledge  Agreement and the LISB
Pledge  Agreement that are currently  unallocated.  For purposes of this section
4(c),  the "Fair  Market  Value"  of a Share for any year  shall be equal to the
average of the  closing  sales  prices for a share of Share on the Nasdaq  Stock
Market National Market System (or other principal national  securities  exchange
on which  Shares are then  listed or admitted to trading) on each of the last 20
trading  days  preceding  December  1st of such  year on which a sale of a Share
occurs,  as reported in the New York City  edition  Wall Street  Journal or such
other reputable  source of stock  quotations as Astoria Federal Savings and Loan
Association may select.

                  (c) In  the  event  of the  termination  of  the  ESOP  or the
occurrence  of a  "Change  in  Control  (as  hereinafter  defined),  the  entire
outstanding Principal Amount and all accrued but unpaid interest shall thereupon
become immediately due and payable. A "Change of Control shall be deemed to have
occurred upon the happening of any of the following events:

                  (i) any event upon which any "person" (as such term is used in
         sections  13(d) and 14(d) of the  Securities  Exchange Act of 1934,  as
         amended),   other  than  (A)  a  trustee  or  other  fiduciary  holding
         securities  under any employee  benefit plan maintained for the benefit
         of employees of Astoria Financial Corporation; (B) a corporation owned,
         directly  or  indirectly,  by the  stockholders  of  Astoria  Financial
         Corporation in substantially the same proportions as their ownership of
         stock of Astoria Financial Corporation; or (C) any group constituting a
         person  in  which  employees  of  Astoria  Financial   Corporation  are
         substantial members, becomes the "beneficial owner" (as defined in Rule
         13d-3 promulgated under the Exchange Act),  directly or indirectly,  of
         securities issued by Astoria Financial Corporation  representing 25% or
         more  of  the  combined  voting  power  of  all  of  Astoria  Financial
         Corporation's then outstanding securities; or

                  (ii) any event upon which the  individuals who on December 30,
         2000  were  members  of the Board of  Directors  of  Astoria  Financial
         Corporation,  together with individuals whose election by such Board or
         nomination for election by Astoria Financial Corporation's stockholders
         was  approved by the  affirmative  vote of at least  two-thirds  of the
         members of such Board then in office who were either members of

<PAGE>   23

                                       -7-

          such Board on December 30, 2000 or whose  nomination  or election was
          previously so approved,  cease for any reason to constitute a majority
          of the members of such Board,  but  excluding,  for this purpose,  any
          such  individual  whose initial  assumption of office is in connection
          with an actual or threatened election contest relating to the election
          of directors of Astoria Financial  Corporation (as such terms are used
          in Rule 14a-11 of  Regulation  14A  promulgated  under the  Securities
          Exchange Act of 1934);as amended or

                  (iii)    the consummation of either:

                  (A) a merger or consolidation of Astoria Financial Corporation
         with  any  other  corporation,  other  than a merger  or  consolidation
         following which both of the following conditions are satisfied:

                        (I)    either (1) the members of the Board of  Directors
                  of Astoria  Financial  Corporation  immediately  prior to such
                  merger or consolidation  constitute at least a majority of the
                  members of the  governing  body of the  institution  resulting
                  from such merger or consolidation;  or (2) the shareholders of
                  Astoria   Financial   Corporation   own   securities   of  the
                  institution   resulting  from  such  merger  or  consolidation
                  representing  60% or more of the combined  voting power of all
                  such securities  then  outstanding in  substantially  the same
                  proportions as their ownership of voting securities of Astoria
                  Financial Corporation before such merger or consolidation; and

                        (II)    the entity  which  results  from such  merger or
                  consolidation  expressly  agrees  in  writing  to  assume  and
                  perform Astoria Financial Corporation's  obligations under the
                  ESOP; or

                  (B)    a complete liquidation of Astoria Financial Corporation
          or an  agreement  for the sale or  disposition  by  Astoria  Financial
          Corporation of all or substantially all of its assets; or

                  (iv)     any event that would be described in this section if
          "Astoria  Federal Savings and Loan  Association"  were substituted for
          "Astoria Financial Corporation." therein.

                  Section 2.6       Method of Payments.

                  (a) All payments of  principal,  interest,  other  charges and
other amounts payable by the Borrower hereunder shall be made in lawful money of
the United States, in immediately  available funds, to the Lender at the address
specified in or pursuant to this Loan  Agreement for notices to the Lender,  not
later than 3:00 P.M.,  Eastern  Standard time, on the date on which such payment
shall  become due. Any such payment made on such date but after such time shall,
if the amount  paid bears  interest,  and except as  expressly  provided  to the
contrary herein,  be deemed to have been made on, and interest shall continue to
accrue and be payable thereon until, the next

<PAGE>   24

                                       -8-

succeeding  Business Day. If any payment of principal or interest becomes due on
a day other than a Business Day, such payment may be made on the next succeeding
Business Day.

                  (b) Notwithstanding anything to the contrary contained in this
Loan  Agreement  or the  Promissory  Note,  neither the Borrower nor the Trustee
shall  be  obligated  to  make  any  payment,  repayment  or  prepayment  on the
Promissory  Note or take or refrain  from taking any other  action  hereunder or
under  the  Promissory  Note if doing so would  cause the ESOP to cease to be an
employee stock  ownership  plan within the meaning of section  4975(e)(7) of the
Code or  qualified  under  section  401(a) of the Code or cause the  Borrower to
cease to be a tax exempt trust under  section  501(a) of the Code or if such act
or  failure  to act would  cause the  Borrower  or the  Trustee to engage in any
"prohibited  transaction" as such term is defined in section 4975(c) of the Code
and the  regulations  promulgated  thereunder  which is not  exempted by section
4975(c)(2) or (d) of the Code and the regulations  promulgated  thereunder or in
section 406 of ERISA and the  regulations  promulgated  thereunder  which is not
exempted by section 408(b) of ERISA and the regulations  promulgated thereunder;
provided,  however,  that in each case,  the Borrower or the Trustee or both, as
the case may be,  shall have acted or  refrained  from  acting  pursuant to this
section 2.6(b) in reliance on an opinion of Independent  Counsel. Any opinion of
such Independent Counsel shall be full and complete authorization and protection
in respect  of any action  taken or  suffered  or omitted by the  Trustee or the
Borrower  hereunder  in good  faith  and in  accordance  with  such  opinion  of
Independent Counsel. Nothing contained in this section 2.6(b) shall be construed
as  imposing  a duty on either the  Borrower  or the  Trustee  to  consult  with
Independent  Counsel.  Any obligation of the Borrower or the Trustee to make any
payment,  repayment or prepayment on the  Promissory  Note or to take or refrain
from  taking  any other act  hereunder  or under the  Promissory  Note  which is
excused pursuant to this section 2.6(b) shall be considered a binding obligation
of the Borrower or the Trustee, or both, as the case may be, for the purposes of
determining  whether a Default or Event of Default  has  occurred  hereunder  or
under the Promissory  Note and nothing in this section 2.6(b) shall be construed
as providing a defense to any remedies otherwise  available upon a Default or an
Event of Default hereunder (other than the remedy of specific performance).

                  Section 2.7       Security.

                  (a) In order to secure the due payment and  performance by the
Borrower of all of its  obligations  under this Loan  Agreement,  simultaneously
with the  execution  and delivery of this Loan  Agreement by the  Borrower,  the
Borrower shall:

                  (i)  pledge to the  Lender as  Collateral  (as  defined in the
         Pledge Agreement), and grant to the Lender a first priority lien on and
         security  interest in, all assets pledged by the Borrower as collateral
         security for the Outstanding Indebtedness by the execution and delivery
         to the  Lender of a Pledge  Agreement  in the form  attached  hereto as
         Exhibit 2; and

                  (ii)  execute  and  deliver,  or  cause  to  be  executed  and
         delivered,  such other  agreements,  instruments  and  documents as the
         Lender may  reasonably  require in order to effect the  purposes of the
         Pledge Agreement and this Loan Agreement.

<PAGE>   25

                                       -9-

                  (b) The Lender shall release from encumbrance under the Pledge
Agreement and transfer to the  Borrower,  as of the date on which any payment or
prepayment  is made,  an amount of  Collateral  determined  pursuant  to section
Treasury Regulation ss. 54.4975-7(b)(8)(i).

                  Section 2.8       Registration of the Promissory Note.

                  (a) The Lender  shall  maintain a Register  providing  for the
registration of the Principal Amount and any stated interest and of transfer and
exchange of the Promissory Note. Transfer of the Promissory Note may be effected
only by the  surrender of the old  instrument  and either the  reissuance by the
Borrower of the old instrument to the new holder or the issuance by the Borrower
of a new instrument to the new holder.  The old  Promissory  Note so surrendered
shall be  canceled  by the  Lender  and  returned  to the  Borrower  after  such
cancellation.

                  (b) Any new Promissory  Note issued pursuant to section 2.8(a)
shall carry the same rights to  interest  (unpaid and to accrue)  carried by the
Promissory  Note so transferred or ex changed so that there will not be any loss
or gain of interest on the note  surrendered.  Such new Promissory Note shall be
subject to all of the  provisions  and  entitled to all of the  benefits of this
Agreement.  Prior to due presentment for registration or transfer,  the Borrower
may deem and treat the registered  holder of any  Promissory  Note as the holder
thereof for purposes of payment and all other purposes. A notation shall be made
on each new  Promissory  Note of the amount of all  payments  of  principal  and
interest theretofore paid.

                                   ARTICLE III

                 REPRESENTATIONS AND WARRANTIES OF THE BORROWER

                  The Borrower hereby represents and warrants to the Lender as
follows:

                  Section 3.1       Power, Authority, Consents.

                  The  Borrower  has the power to  execute,  deliver and perform
this Loan Agreement,  the Promissory Note and the Pledge Agreement, all of which
have been  duly  authorized  by all neces  sary and  proper  corporate  or other
action.

                  Section 3.2       Due Execution, Validity, Enforceability.

                  Each of the Loan  Documents,  including,  without  limitation,
this Loan  Agreement,  the Promissory Note and the Pledge  Agreement,  have been
duly executed and delivered by the Borrower;  and each constitutes the valid and
legally binding  obligation of the Borrower,  enforceable in accordance with its
terms.

<PAGE>   26

                                      -10-

                  Section 3.3       Properties, Priority of Liens.

                  The liens  which have been  created  and granted by the Pledge
Agreement  constitute valid, first liens on the properties and assets covered by
the Pledge Agreement, subject to no prior or equal lien.

                  Section 3.4       No Defaults, Compliance with Laws.

                  The Borrower is not in default in any material  respect  under
any agreement,  ordinance,  resolution,  decree, bond, note, indenture, order or
judgment to which it is a party or by which it is bound,  or any other agreement
or other  instrument  by which any of the  properties  or assets  owned by it is
materially affected.

                  Section 3.5       Marketable Title; Legality.

                  The Borrower has valid,  legal and marketable  title to all of
the  Shares  and other  assets  pledged  as  collateral  pursuant  to the Pledge
Agreement,  free and clear of any  liens,  other  than a pledge to the Lender of
such assets pursuant to the Pledge Agreement. Neither the execution and delivery
of the Loan Documents nor the performance of any obligation  thereunder violates
any  provision  of law or  conflicts  with or  results in a breach of or creates
(with or without the giving of notice or lapse of time, or both) a default under
any agreement to which the Borrower is a party or by which it is bound or any of
its  properties  is  affected.  No  consent  of  any  federal,  state  or  local
governmental  authority,  agency or other  regulatory body, the absence of which
could have a materially adverse effect on the Borrower or the Trustee, is or was
required  to  be  obtained  in  connection  with  the  execution,   delivery  or
performance of the Loan Documents and the transactions  contemplated  therein or
in connection  therewith,  including,  without  limitation,  with respect to the
transfer of the Shares purchased with the proceeds of the Loan pursuant thereto.

                                   ARTICLE IV

                  REPRESENTATIONS AND WARRANTIES OF THE LENDER

                  The Lender hereby  represents  and warrants to the Borrower as
follows:

                  Section 4.1       Power, Authority, Consents.

                  The Lender has the power to execute,  deliver and perform this
Loan Agreement, the Pledge Agreement and all documents executed by the Lender in
connection  with the  Loan,  all of  which  have  been  duly  authorized  by all
necessary and proper  corporate or other action.  No consent,  authorization  or
approval or other action by any  governmental  authority or regulatory body, and
no

<PAGE>   27

                                      -11-

notice  by the  Lender  to,  or  filing by the  Lender  with,  any  governmental
authority or  regulatory  body is required for the due  execution,  delivery and
performance of this Loan Agreement.

                  Section 4.2       Due Execution, Validity, Enforceability.

                  This Loan  Agreement and the Pledge  Agreement  have been duly
executed and delivered by the Lender;  and each  constitutes a valid and legally
binding obligation of the Lender, enforceable in accordance with its terms.

                  Section 4.3       ESOP; Contributions.

                  The ESOP and the Borrower  have been duly  created,  organized
and maintained by the Lender in compliance with all applicable laws, regulations
and rulings. The ESOP qualifies as an "employee stock ownership plan" as defined
in  section  4975(e)(7)  the Code.  The ESOP  provides  that the Lender may make
contributions  to the ESOP in an amount  necessary  to  enable  the  Trustee  to
amortize the Loan in accordance  with the terms of the Promissory  Note and this
Loan Agreement, and the Lender will make such contributions;  provided, however,
that no such contributions  shall be required if they would adversely affect the
qualification of the ESOP under section 401(a) of the Code.

                  Section 4.4       Compliance with Laws; Actions.

                  Neither the  execution and delivery by the Lender of this Loan
Agreement or any instruments required thereby, nor compliance with the terms and
provisions of any such  documents by the Lender,  constitutes a violation of any
provision of any law or any regulation, order, writ, injunction or decree of any
court  or  governmental  instrumentality,  or an  event  of  default  under  any
agreement,  to which the Lender is a party or by which the Lender is bound or to
which the Lender is subject,  which  violation or event of default  would have a
material adverse effect on the Lender.  There is no action or proceeding pending
or  threatened  against  either of the ESOP or the Borrower  before any court or
administrative agency.

                                    ARTICLE V

                                EVENTS OF DEFAULT

                  Section 5.1       Events of Default under Loan Agreement.

                  Each of the  following  events shall  constitute  an "Event of
Default" hereunder:

                  (a) Failure to make any  payment or  mandatory  prepayment  of
principal of the Promissory  Note, or failure to make any payment of interest on
the Promissory Note, within five (5)

<PAGE>   28

                                      -12-

Business Days after the date when due; provided,  however,  that a default shall
be deemed to have  occurred  only if and to the  extent  that the  Borrower  has
received a  contribution  from the Lender to be used to make such payment or the
Borrower  has  received  dividends  which it is  permitted to apply to make such
payment and the Borrower fails to apply such  contribution  or dividends to such
payment.

                  Section 5.2       Lender's Rights upon Event of Default.

                  If an Event of Default under this Loan  Agreement  shall occur
and be  continuing,  the Lender  shall have no rights to assets of the  Borrower
other than: (a)  contributions  (other than  contributions of Common Stock) that
are made by the Lender to enable the Borrower to meet its  obligations  pursuant
to this Loan  Agreement  and earnings  attributable  to the  investment  of such
contributions   and  (b)  "Eligible   Collateral"  (as  defined  in  the  Pledge
Agreement);  provided,  however,  that: (i) the value of the  Borrower's  assets
transferred to the Lender  following an Event of Default in  satisfaction of the
due and  unpaid  amount  of the Loan  shall not  exceed  the  amount in  default
(without  regard to amounts owing solely as a result of any  acceleration of the
Loan);  (ii) the Borrower's  assets shall be transferred to the Lender following
an Event of Default  only to the extent of the  failure of the  Borrower to meet
the payment  schedule of the Loan  resulting from the failure of the Borrower to
use dividend income received by it on Pledged Shares and employer  contributions
received by it for purposes of debt service to make Loan  payments when due; and
(iii) all rights of the Lender to the Collateral covered by the Pledge Agreement
following  an Event of  Default  shall be  governed  by the terms of the  Pledge
Agreement.

                                   ARTICLE VI

                            MISCELLANEOUS PROVISIONS

                  Section 6.1       Payments.

                  All payments  hereunder and under the Promissory Note shall be
made without set-off or counterclaim  and in such amounts as may be necessary in
order  that all such  payments  shall  not be less  than the  amounts  otherwise
specified to be paid under this Loan Agreement and the Promissory Note,  subject
to any  applicable  tax  withholding  requirements.  Upon payment in full of the
Promissory  Note, the Lender shall mark such  Promissory Note "PAID IN FULL" and
return it to the Borrower.

                  Section 6.2       Survival.

                  All  agreements,  representations  and warranties  made herein
shall survive the delivery of this Loan Agreement and the Promissory Note.

<PAGE>   29

                                      -13-

                  Section 6.3       Modifications, Consents and Waivers; Entire
 Agreement.

                  No modification, amendment or waiver of or with respect to any
provision of this Loan Agreement,  the Promissory Note, the Pledge Agreement, or
any of the other Loan  Documents,  nor consent to any departure  from any of the
terms or conditions thereof,  shall in any event be effective unless it shall be
in writing and signed by the party against whom  enforcement  thereof is sought.
Any such waiver or consent shall be effective only in the specific  instance and
for the purpose for which given.  No consent to or demand on a party in any case
shall, of itself, entitle it to any other or further notice or demand in similar
or other  circumstances.  This Loan Agreement  embodies the entire agreement and
understanding  between  the Lender and the  Borrower  and  supersedes  all prior
agreements and understandings relating to the subject matter hereof.

                  Section 6.4       Remedies Cumulative.

                  Each and every right granted to the Lender  hereunder or under
any other document delivered hereunder or in connection herewith,  or allowed it
by law or equity, shall be cumulative and may be exercised from time to time. No
failure  on the part of the  Lender  or the  holder  of the  Promissory  Note to
exercise,  and no delay in  exercising,  any  right  shall  operate  as a waiver
thereof,  nor shall any single or partial  exercise  of any right  preclude  any
other or future  exercise  thereof or the exercise of any other  right.  The due
payment and  performance of the  obligations  under the Loan Documents  shall be
without  regard  to  any  counterclaim,  right  of  offset  or any  other  claim
whatsoever  which the Borrower may have against the Lender and without regard to
any other  obligation of any nature  whatsoever which the Lender may have to the
Borrower,  and no such  counterclaim or offset shall be asserted by the Borrower
in any  action,  suit or  proceeding  instituted  by the Lender  for  payment or
performance of such obligations.

                  Section 6.5     Further Assurances; Compliance with Covenants.

                  At any time and from  time to time,  upon the  request  of the
Lender,  the Borrower  shall  execute,  deliver and  acknowledge  or cause to be
executed, delivered and acknowledged, such further documents and instruments and
do such other acts and things as the Lender may  reasonably  request in order to
fully effect the terms of this Loan Agreement,  the Promissory  Note, the Pledge
Agree ment, the other Loan Documents and any other  agreements,  instruments and
documents delivered pursuant hereto or in connection with the Loan.

                  Section 6.6       Notices.

                  Except as  otherwise  specifically  provided  for herein,  all
notices,  requests,  reports  and  other  communications  pursuant  to this Loan
Agreement shall be in writing, either by letter (delivered by hand or commercial
messenger  service or sent by  registered  or  certified  mail,  return  receipt
requested,  except for routine  reports  delivered in compliance with Article VI
hereof which may be sent by ordinary  first-class  mail) or telex or  facsimile,
addressed as follows:

                  (a)      If to the Borrower:

<PAGE>   30

                                      -14-

                                Astoria Federal Savings and Loan Association
                                     Employee Stock Ownership Plan Trust
                                c/o State Street Bank and Trust Company
                                Investment Services Office
                                200 Newport Avenue
                                North Quincy, Massachusetts   02171

                           with copies to:

                                Astoria Federal Savings and Loan Association
                                     Employee Stock Ownership Plan Trust
                                c/o Astoria Federal Savings and Loan Association
                                One Astoria Federal Plaza
                                Lake Success, New York 11042
                                Attention:       General Counsel

                  (b)      If to the Lender:

                                Astoria Financial Corporation
                                One Astoria Federal Plaza
                                Lake Success, New York 11042
                                Attention: General Counsel

Any  notice,  request or  communication  hereunder  shall be deemed to have been
given on the day on which it is  delivered  by hand or by  commercial  messenger
service,  or sent by telex or facsimile,  to such party at its address specified
above, or, if sent by mail, on the third Business Day after the day deposited in
the mail,  postage  prepaid,  addressed as  aforesaid.  Any party may change the
person or address to whom or which notices are to be given hereunder,  by notice
duly given hereunder; provided, however, that any such notice shall be deemed to
have  been  given  only  when  actually  received  by the  party  to  whom it is
addressed.

                  Section 6.8       Counterparts.

                  This  Loan   Agreement   may  be  signed  in  any   number  of
counterparts  which,  when taken  together,  shall  constitute  one and the same
document.

                  Section 6.9       Construction; Governing Law.

                  The  headings  used in the table of contents  and in this Loan
Agreement are for convenience  only and shall not be deemed to constitute a part
hereof.  All uses herein of any gender or of  singular or plural  terms shall be
deemed to include uses of the other genders or plural or singular  terms, as the
context may  require.  All  references  in this Loan  Agreement to an Article or
section  shall be to an  Article  or  section  of this  Loan  Agreement,  unless
otherwise specified.  This Loan Agreement shall be governed by and construed and
enforced in accordance with the laws of

<PAGE>   31

                                      -15-

the State of New York applicable to contracts to be performed  wholly within the
State of New York  entered  into  between  parties all of whom are  citizens and
residents  of the  State of New  York.  It is  intended  that  the  transactions
contemplated  by this Loan  Agreement  constitute  an "exempt  loan"  within the
meaning of Treasury Regulation ss.  54.4975-7(b)(1)(iii) and Department of Labor
Regulation ss.  2550.408b-3,  and the  provisions  hereof shall be construed and
enforced in such manner as shall be necessary to give effect to such intent.

                  Section 6.10      Severability.

                  Wherever possible, each provision of this Loan Agreement shall
be interpreted in such manner as to be effective and valid under applicable law;
however, the provisions of this Loan Agreement are severable,  and if any clause
or provision  hereof shall be held invalid or  unenforceable in whole or in part
in any jurisdiction,  then such invalidity or unenforceability shall affect only
such clause or provision, or part thereof, in such jurisdiction and shall not in
any manner  affect such clause or  provision in any other  jurisdiction,  or any
other clause or provision in this Loan  Agreement in any  jurisdiction.  Each of
the covenants,  agreements  and  conditions  contained in this Loan Agreement is
independent,  and  compliance  by a party  with  any of them  shall  not  excuse
non-compliance  by such party with any other.  The  Borrower  shall not take any
action  the  effect  of which  shall  constitute  a breach or  violation  of any
provision of this Loan Agreement.

                  Section 6.11      Binding Effect; No Assignment or Delegation.

                  This Loan  Agreement  shall be  binding  upon and inure to the
benefit of the Borrower and its successors and the Lender and its successors and
assigns.  The rights and  obligations of the Borrower under this Agreement shall
not be assigned or delegated  without the prior  written  consent of the Lender,
and any purported assignment or delegation without such consent shall be void.

<PAGE>   32

                                      -16-

                  IN WITNESS  WHEREOF,  the parties hereto have caused this Loan
Agreement to be duly executed as of the date first above written.

                                  ASTORIA FEDERAL SAVINGS AND LOAN ASSOCIATION
                                  EMPLOYEE STOCK OWNERSHIP PLAN TRUST

                                  By     STATE STREET BANK AND TRUST COMPANY,
                                         solely as Trustee and not in any other
                                         capacity

                                  By:
                                         ---------------------------------------

                                  Name:
                                         ---------------------------------------

                                  Title:
                                         ---------------------------------------

                                  ASTORIA FINANCIAL CORPORATION

                                  By:
                                         ---------------------------------------

                                  Name:
                                         ---------------------------------------

                                  Title:
                                         ---------------------------------------

<PAGE>   33

                                                                       EXHIBIT 1

                                 PROMISSORY NOTE

$18,614,833.29                                            Lake Success, New York
                                                                 January 1, 2000

                  FOR VALUE RECEIVED,  the undersigned,  ASTORIA FEDERAL SAVINGS
AND LOAN  ASSOCIATION  EMPLOYEE  STOCK  OWNERSHIP  PLAN TRUST (the  "Borrower"),
acting  through and by its  Trustee,  STATE  STREET BANK AND TRUST  COMPANY (the
"Trustee"), hereby promises to pay to the order of ASTORIA FINANCIAL CORPORATION
(the "Lender") the sum of EIGHTEEN MILLION SIX HUNDRED  FOURTEEN  THOUSAND EIGHT
HUNDRED THIRTY-THREE DOLLARS AND TWENTY-NINE CENTS  ($18,614,833.29)  payable in
annual installments, each of which shall be in the amount determined pursuant to
sections  2.4 and 2.5(b) of the Amended and  Restated  Loan  Agreement  made and
entered  into as of January 1, 2000 by and between the  Borrower  and the Lender
(the "Loan Agreement"),  as of the last Business Day of December, 2000 and as of
the last  Business Day of each  December  thereafter,  through and including the
last business day of December  2029, at which date the entire  principal  amount
then outstanding shall be due and payable.  Principal  payments may be deferred,
in whole or in part, to the extent provided in the Loan Agreement.

                  This  Promissory  Note shall bear  interest at the rate of six
percent (6.00%) per annum set forth or established under the Loan Agreement from
the date of the Loan  Agreement,  such interest to be payable at the time and in
the manner set forth in the Loan  Agreement  commencing on the last Business Day
of 2000 and  thereafter  on the last  Business Day of each  succeeding  calendar
year. Interest accrued shall cumulate until paid but shall not be compounded.

                  Anything   herein  to  the   contrary   notwithstanding,   the
obligation of the Borrower to make payments of interest  shall be subject to the
limitation  that  payments of  interest  shall not be required to be made to the
Lender to the extent that the Lender's  receipt thereof would not be permissible
under the law or laws  applicable to the Lender limiting rates of interest which
may be charged or collected by the Lender.  Any such payments of interest  which
are not made as a result of the limitation referred to in the preceding sentence
shall be made by the  Borrower to the Lender on the  earliest  interest  payment
date or dates on which the receipt  thereof would be permissible  under the laws
applicable  to the Lender  limiting  rates of  interest  which may be charged or
collected by the Lender. Such deferred interest shall not bear interest.

                  Payments of both  principal  and  interest on this  Promissory
Note are to be made at the principal office of the Lender at One Astoria Federal
Plaza,  Lake  Success,  New York 11042 or such other place as the holder  hereof
shall designate to the Borrower in writing, in lawful money of the United States
of America in immediately available funds.

<PAGE>   34

                  Failure to make any payment of  principal  on this  Promissory
Note, or failure to make any payment of interest on this  Promissory  Note,  not
later than five (5) Business  Days after the date when due,  shall  constitute a
default  hereunder,  whereupon the principal  amount of and accrued  interest on
this  Promissory  Note shall  immediately  become due and payable in  accordance
with,  but also subject to the  limitations  set forth in, the terms of the Loan
Agreement.

                  This Promissory Note is subject, in all respects, to the terms
and  provisions  of the Loan  Agreement,  which is  incorporated  herein by this
reference,  and is secured by a Pledge  Agreement  between the  Borrower and the
Lender of even date herewith and is entitled to the benefits thereof.

                                  ASTORIA FEDERAL SAVINGS AND LOAN ASSOCIATION
                                  EMPLOYEE STOCK OWNERSHIP PLAN TRUST

                                  By:     State Street Bank and Trust Company,
                                          solely as Trustee and not in any other
                                          capacity

                                  By:
                                         ---------------------------------------

                                  Name:
                                         ---------------------------------------

                                  Title:
                                         ---------------------------------------

<PAGE>   35

                                                                       EXHIBIT 2
                                PLEDGE AGREEMENT

                  This PLEDGE AGREEMENT  ("Pledge  Agreement") is made as of the
1st day of January,  2000, by and between the ASTORIA  FEDERAL  SAVINGS AND LOAN
ASSOCIATION  EMPLOYEE  STOCK  OWNERSHIP  PLAN  TRUST,  acting by and through its
Trustee,  STATE STREET BANK AND TRUST COMPANY, a banking  corporation  organized
under  the  laws  of  the  Massachusetts  ("Pledgor"),   and  ASTORIA  FINANCIAL
CORPORATION ("Pledgee"),  a corporation organized and existing under the laws of
the State of Delaware.

                              W I T N E S S E T H :
                              --------------------

                  WHEREAS, this Pledge Agreement is being executed and delivered
to the Pledgee  pursuant to the terms of An Amended and Restated Loan  Agreement
of even date  herewith  ("Loan  Agreement"),  by and between the Pledgor and the
Pledgee;

                  NOW,  THEREFORE,  in  consideration  of the mutual  agreements
contained  herein  and in the Loan  Agreement,  the  parties  hereto  do  hereby
covenant and agree as follows:

                  Section 1. Definitions.  The following definitions shall apply
for  purposes  of this Pledge  Agreement,  except to the extent that a different
meaning is plainly indicated by the context;  all capitalized terms used but not
defined herein shall have the respective  meanings  assigned to them in the Loan
Agreement:

                  (a)      "Collateral" shall mean the Pledged Shares and the
          Pledged  Assets  and,  subject to section 5 hereof,  and to the extent
          permitted by applicable law, all rights with respect thereto,  and all
          proceeds of such Pledged Shares, Pledged Assets and rights.

                  (b)      "Event of Default" shall mean an event so defined in
         the Loan Agreement.

                  (c)      "Liabilities" shall mean  all the  obligations of the
         Pledgor  to the  Pledgee,  howsoever  created,  arising  or  evidenced,
         whether direct or indirect,  absolute or  contingent,  now or hereafter
         existing,  or due or to become due,  under the Loan  Agreement  and the
         Promissory Note.

                  (d)      "Pledged Assets" means all assets of the Borrower
          pledged,  as of  January  1,  2000,  as  collateral  security  for the
          Borrower's  performance  of its  obligations  under that  certain Loan
          Agreement  between the  Borrower  and the Lender dated April 14, 1994,
          excluding any Pledged Shares.

                                      -19-

<PAGE>   36

                  (e)    "Pledged  Shares" shall mean all the  shares  of common
         stock,  par value $ .01 per  share,  of Astoria  Financial  Corporation
         purchased  by the  Pledgor  with the  proceeds  of the loan made by the
         Pledgee to the Pledgor  pursuant to the Loan Agreement  dated April 14,
         1994,  but excluding any such shares  previously  released  pursuant to
         section 4.

                  Section 2.      Pledge.   To secure the payment of and
performance of all the  Liabilities,  the Pledgor hereby pledges to the Pledgee,
and grants to the Pledgee a security interest in and lien upon the Collateral.

                  Section 3.      Representations and Warranties of the Pledgor.
The Pledgor represents, warrants, and covenants to the Pledgee as follows:

                  (a) to the actual  knowledge  of the Trustee,  the  execution,
         delivery and  performance of this Pledge  Agreement and the pledging of
         the Collateral hereunder do not and will not conflict with, result in a
         violation of, or constitute a default under any agreement  binding upon
         the Pledgor;

                  (b) the  Pledged  Shares are and will  continue to be owned by
         the Pledgor  free and clear of any liens or rights of any other  person
         except the lien  hereunder and under the Loan Agreement in favor of the
         Pledgee, and the security interest of the Pledgee in the Pledged Shares
         and the proceeds thereof is and will continue to be prior to and senior
         to the rights of all others;

                  (c) to  the  actual  knowledge  of the  Trustee,  this  Pledge
         Agreement is the legal, valid and binding obligation of the Pledgor and
         is enforceable against the Pledgor in accordance with its terms;

                  (d) the Pledgor shall,  from time to time, upon request of the
         Pledgee,  promptly  deliver to the Pledgee such  financing  statements,
         stock powers, proxies, and similar documents,  satisfactory in form and
         substance to the Pledgee, with respect to the Collateral as the Pledgee
         may reasonably request; and

                  (e) subject to the first sentence of section 4(b), the Pledgor
         shall not, so long as any Liabilities are  outstanding,  sell,  assign,
         exchange, pledge or otherwise transfer or encumber any of its rights in
         and to any of the Collateral.

                  Section 4.        Eligible Collateral.

                  (a) As used herein the term "Eligible  Collateral"  shall mean
that amount of Collateral  which has an aggregate fair market value equal to the
amount by which the Pledgor is in default  (without  regard to any amounts owing
solely as the result of an  acceleration  of the Loan  Agreement) or such lesser
amount of  Collateral  as may be required  pursuant to section 12 of this Pledge
Agreement.

                                       -2-

<PAGE>   37

                  (b)  The  Collateral   shall  be  released  from  this  Pledge
Agreement in a manner conforming to the requirements of Treasury  Regulation ss.
54.4975-7(b)(8)(i),   as  the  same  may  be  from  time  to  time   amended  or
supplemented.  In the event of a termination  of the ESOP or the occurrence of a
Change in Control after December 31, 2009, all Pledged Shares shall be forthwith
released  from this  Pledge  Agreement  and shall not be applied to satisfy  any
Liabilities.  In the event of a Change in Control prior to January 1, 2010,  all
Pledged  Shares in excess of the number  determined  under the  following  table
shall be forthwith  released from this Pledge Agreement and shall not be applied
to satisfy any Liabilities:

       YEAR OF       PLEDGED       YEAR OF        PLEDGED
        CHANGE        SHARES       CHANGE          SHARES
          IN                         IN
        CONTROL                    CONTROL

         2001      1,048,266         2006           0
         2002        827,371         2007           0
         2003        606,476         2008           0
         2004        385,581         2009           0
         2005        164,686

To the extent that the  Collateral  consists of assets other than or in addition
to  Pledged  Shares,  the  provisions  of  such  Regulations  shall  be  applied
separately  to each  class of  security  or each  class  or other  type of asset
included in the Collateral.  Subject to such  Regulations,  the Pledgee may from
time to time, after any Default or Event of Default, and without prior notice to
the Pledgor,  transfer all or any part of the Eligible  Collateral into the name
of the Pledgee or its nominee,  with or without  disclosing  that such  Eligible
Collateral  is subject to any rights of the  Pledgor  and may from time to time,
whether  before or after any of the  Liabilities  shall  become due and payable,
without  notice to the Pledgor,  take all or any of the following  actions:  (i)
notify the parties  obligated  on any of the  Collateral  to make payment to the
Pledgee of any amounts due or to become due thereunder, (ii) release or exchange
all or any part of the  Collateral,  or  compromise  or  extend or renew for any
period  (whether or not longer than the original  period) any obligations of any
nature of any party with respect thereto, and (iii) take control of any proceeds
of the Collateral.

                  Section 5.        Delivery; Further Assurances.

                  (a) The Pledgor shall deliver to the Pledgee upon execution of
this Pledge  Agreement an assignment by the Pledgor of all the Pledgor's  rights
to and interest in the Collateral.

                  (b) So long as no  Default  or Event  of  Default  shall  have
occurred and be  continuing,  (i) the Pledgor  shall be entitled to exercise any
and all voting and other rights pertaining to the Collateral or any part thereof
for any purpose not inconsistent  with the terms of this Pledge  Agreement,  and
(ii) the Pledgor  shall be entitled  to receive  any and all cash  dividends  or
other distributions paid in respect of the Collateral.

                                       -3-

<PAGE>   38

                  (c) For so long as this Pledge  Agreement  shall be in effect,
the Pledgor  shall take such other  actions  and execute and deliver  such other
documents  as the  Pledgee  may  reasonably  request  in order to secure for the
Pledgee's  benefit a perfected first priority lien and security  interest in any
or all of the Collateral under the New York Uniform  Commercial Code;  provided,
however, that the Pledgee shall not be required to take any action or execute or
deliver  any  document  pursuant  to this  section  5(c) to the  extent  that it
determines,  in reliance on an opinion of legal counsel, that the taking of such
action  or the  execution  or  delivery  of  such  document  would  result  in a
prohibited  transaction  under section 4975 of the Code or section 406 of ERISA,
impair the status of the ESOP as a  tax-qualified  plan under section  401(a) of
the Code or an employee  stock  ownership  plan under  section 4975 of the Code,
impair the tax-exempt status of the Borrower under section 501(a) of the Code or
violate any other requirement of ERISA applicable to the ESOP.

                  Section 6.        Events of Default.

                  (a) If a Default or an Event of Default shall be existing,  in
addition  to the rights it may have  under the Loan  Agreement,  the  Promissory
Note, and this Pledge Agreement,  or by virtue of any other instrument,  (i) the
Pledgee may exercise, with respect to Eligible Collateral, from time to time any
rights and  remedies  available  to it under the Uniform  Commercial  Code as in
effect from time to time in the State of New York or  otherwise  available to it
and (ii) the Pledgee shall have the right,  for and in the name, place and stead
of the Pledgor,  to execute  endorsements,  assignments,  stock powers and other
instruments of conveyance or transfer with respect to all or any of the Eligible
Collateral.  Written notification of intended disposition of any of the Eligible
Collateral  shall be given by the  Pledgee  to the  Pledgor  at least  three (3)
Business Days before such disposition. Subject to section 13 below, any proceeds
of any  disposition of Eligible  Collateral may be applied by the Pledgee to the
payment of expenses  in  connection  with the  Eligible  Collateral,  including,
without  limitation,  reasonable  attorneys'  fees and legal  expenses,  and any
balance of such  proceeds  may be applied by the  Pledgee  toward the payment of
such of the Liabilities as are in Default, and in such order of application,  as
the  Pledgee may from time to time  elect.  No action of the  Pledgee  permitted
hereunder  shall impair or affect its rights in and to the Eligible  Collateral.
All rights and remedies of the Pledgee  expressed  hereunder  are in addition to
all other rights and remedies  possessed by it, including,  without  limitation,
those contained in the documents referred to in the definition of Liabilities in
section 1 hereof.

                  (b) In any  sale  of any of the  Eligible  Collateral  after a
Default  or an Event of  Default  shall  have  occurred,  the  Pledgee is hereby
authorized to comply with any limitation or restriction in connection  with such
sale as it may be  advised  by  counsel  is  necessary  in order  to  avoid  any
violation of applicable law (including, without limitation, compliance with such
procedures as may restrict the number of  prospective  bidders and purchasers or
further  restrict  such  prospective  bidders or  purchasers to persons who will
represent  and  agree  that  they are  purchasing  for  their  own  account  for
investment  and not with a view to the  distribution  or resale of such Eligible
Collateral),  or in order to obtain such required approval of the sale or of the
purchase by any governmental  regulatory authority or official,  and the Pledgor
further  agrees  that such  compliance  shall not  result in such  sale's  being
considered or deemed not to have been made in a commercially  reasonable manner,
nor shall the Pledgee be liable or  accountable  to the Pledgor for any discount
allowed  by  reason  of the  fact  that  such  Eligible  Collateral  is  sold in
compliance with any such limitation or

                                       -4-

<PAGE>   39

restriction.

                  Section 7.  Payment in Full.  Upon the  payment in full of all
outstanding  Liabili ties, this Pledge Agreement shall terminate and the Pledgee
shall forthwith assign, transfer and deliver to the Pledgor, against receipt and
without  recourse  to the  Pledgee,  all  Collateral  then  held by the  Pledgee
pursuant to this Pledge Agreement.

                  Section 8. No  Waiver.  No failure or delay on the part of the
Pledgee in exercising any right or remedy  hereunder or under any other document
which confers or grants any rights in the Pledgee in respect of the  Liabilities
shall  operate as a waiver  thereof nor shall any single or partial  exercise of
any such right or remedy preclude any other or further  exercise  thereof or the
exercise of any other right or remedy of the Pledgee.

                  Section 9. Binding Effect;  No Assignment or Delegation.  This
Pledge  Agreement shall be binding upon and inure to the benefit of the Pledgor,
the Pledgee and their respective successors and assigns, except that the Pledgor
may not  assign or  transfer  its rights  hereunder  without  the prior  written
consent of the Pledgee (which consent shall not unreasonably be withheld).  Each
duty or obligation of the Pledgor to the Pledgee  pursuant to the  provisions of
this  Pledge  Agreement  shall be  performed  in favor of any  person  or entity
designated  by the  Pledgee,  and any duty or  obligation  of the Pledgee to the
Pledgor  may be  performed  by any  other  person or  entity  designated  by the
Pledgee.

                  Section 10.  Governing  Law.  This Pledge  Agreement  shall be
governed by and construed and enforced in accordance  with the laws of the State
of New York  applicable to contracts to be performed  wholly within the State of
New York entered into between  parties all of whom are citizens and residents of
the State of New York.

                  Section 11. Notices.  All notices,  requests,  instructions or
documents  hereunder  shall be in writing and  delivered  by hand or  commercial
messenger service or sent by United States mail, registered or certified, return
receipt  requested,  with  proper  postage  prepaid,  or by telex or  facsimile,
addressed as follows:

                  (a)      If to the Pledgee:

                                 Astoria Financial Corporation
                                 One Astoria Federal Plaza
                                 Lake Success, New York 11042
                                 Attention: General Counsel

                  (b)      If to the Pledgor:

                                 Astoria Federal Savings and Loan Association
                                    Employee Stock Ownership Plan Trust

                                       -5-

<PAGE>   40

                                 State Street Bank and  Trust Company
                                 Investment Services Office
                                 200 Newport Avenue
                                 North Quincy, Massachusetts   02171

                           with copies to:

                                Astoria Federal Savings and Loan Association
                                Employee Stock Ownership Plan Trust
                                c/o Astoria Federal Savings and Loan Association
                                One Astoria Federal Plaza
                                Lake Success, New York  11042
                                Attention:       General Counsel

Any  notice,  request or  communication  hereunder  shall be deemed to have been
given on the day on which it is  delivered  by hand or by  commercial  messenger
service,  or sent by telex or facsimile,  to such party at its address specified
above, or, if sent by mail, on the third Business Day after the day deposited in
the mail,  postage  prepaid,  addressed as  aforesaid.  Any party may change the
person or address to whom or which notices are to be given hereunder,  by notice
duly given hereunder; provided, however, that any such notice shall be deemed to
have  been  given  only  when  actually  received  by the  party  to  whom it is
addressed.

                  Section 12.  Interpretation.  Wherever possible each provision
of this Pledge  Agreement shall be interpreted in such manner as to be effective
and valid under  applicable law, but if any provision hereof shall be prohibited
by or invalid under such law, such provisions shall be ineffective to the extent
of such  prohibition or invalidity,  without  invalidating the remainder of such
provision or the remaining provisions hereof.

                  Section  13.  Construction.  All  provisions  hereof  shall be
construed so as to maintain (a) the ESOP as a qualified leveraged employee stock
ownership plan under section 401(a) and 4975(e)(7) of the Internal  Revenue Code
of 1986 (the "Code"), (b) the Trust as exempt from taxation under section 501(a)
of the Code and (c) the loan made  pursuant to the Loan  Agreement  as an exempt
loan under Treasury  Regulation ss.  54.4975-7(b) and as described in Department
of Labor Regulation ss. 2550.408b-3.

                                       -6-

<PAGE>   41

                  IN  WITNESS  WHEREOF,  this  Pledge  Agreement  has been  duly
executed by the parties hereto as of the day and year first above written.

                                  ASTORIA FEDERAL SAVINGS AND LOAN
                                  ASSOCIATION EMPLOYEE STOCK OWNERSHIP PLAN
                                  TRUST

                                  By      STATE STREET BANK AND  TRUST COMPANY
                                          solely as Trustee and not in any other
                                          capacity

                                  By:
                                          --------------------------------------

                                  Name:
                                          --------------------------------------

                                  Title:
                                          --------------------------------------

                                  ASTORIA FINANCIAL CORPORATION

                                  By:
                                          --------------------------------------

                                  Name:
                                          --------------------------------------

                                  Title:
                                          --------------------------------------

                                       -7-

<PAGE>   42

                                                                       EXHIBIT B

                              AMENDED AND RESTATED

                                 LOAN AGREEMENT

                                 by and between

                          THE LONG ISLAND SAVINGS BANK
                       EMPLOYEE STOCK OWNERSHIP PLAN TRUST

                                       and

                          ASTORIA FINANCIAL CORPORATION

                           Made and Entered Into as of
                                 January 1, 2000

<PAGE>   43

                                TABLE OF CONTENTS

                                                   .                        Page

                                    ARTICLE I

                                   DEFINITIONS

Section 1.1       Business Day.................................................1
Section 1.2       Code.........................................................2
Section 1.3       Default......................................................2
Section 1.4       ERISA........................................................2
Section 1.5       Event of Default.............................................2
Section 1.6       Independent Counsel..........................................2
Section 1.7       Loan.........................................................2
Section 1.8       Loan Documents...............................................2
Section 1.9       Pledge Agreement.............................................2
Section 1.10      Principal Amount.............................................2
Section 1.11      Promissory Note..............................................2
Section 1.12      Register.....................................................2

                                   ARTICLE II

                           THE LOAN; PRINCIPAL AMOUNT;
                               INTEREST; SECURITY

Section 2.1       The Loan; Principal Amount; Repayment of
                    Outstanding Indebtedness...................................2
Section 2.2       Interest.....................................................3
Section 2.3       Promissory Note..............................................4
Section 2.4       Payment of Loan..............................................4
Section 2.5       Prepayment...................................................5
Section 2.6       Method of Payments...........................................6
Section 2.7       Security.....................................................7
Section 2.8       Registration of the Promissory Note..........................7

                                   ARTICLE III

                 REPRESENTATIONS AND WARRANTIES OF THE BORROWER

Section 3.1       Power, Authority, Consents...................................8
Section 3.2       Due Execution, Validity, Enforceability......................8
Section 3.3       Properties, Priority of Liens................................8

                                       (i)

<PAGE>   44

                                                                            Page

Section 3.4       No Defaults, Compliance with Laws............................8
Section 3.5       Marketable Title; Legality...................................8

                                   ARTICLE IV

                  REPRESENTATIONS AND WARRANTIES OF THE LENDER

Section 4.1       Power, Authority, Consents...................................9
Section 4.2       Due Execution, Validity, Enforceability......................9
Section 4.3       ESOP; Contributions..........................................9
Section 4.4       Compliance with Laws; Actions................................9

                                    ARTICLE V

                                EVENTS OF DEFAULT

Section 5.1       Events of Default under Loan Agreement......................10
Section 5.2       Lender's Rights upon Event of Default.......................10

                                   ARTICLE VI

                            MISCELLANEOUS PROVISIONS

Section 6.1       Payments....................................................11
Section 6.2       Survival....................................................11
Section 6.3       Modifications, Consents and Waivers; Entire Agreement.......11
Section 6.4       Remedies Cumulative.........................................11
Section 6.5       Further Assurances; Compliance with Covenants...............12
Section 6.6       Notices.....................................................12
Section 6.7       Counterparts................................................13
Section 6.8       Construction; Governing Law.................................13
Section 6.9       Severability................................................13
Section 6.10      Binding Effect; No Assignment or Delegation.................13

EXHIBIT 1         Form of Promissory Note ...................................1-1
EXHIBIT 2         Form of Pledge Agreement ..................................2-1

                                      (ii)

<PAGE>   45

                                       -1-

                                 LOAN AGREEMENT

                  This LOAN AGREEMENT (the "Loan Agreement") is made and entered
into as of the 1st day of January,  2000, by and between THE LONG ISLAND SAVINGS
BANK EMPLOYEE FSB STOCK OWNERSHIP PLAN TRUST (the  "Borrower"),  a trust forming
part of THE LONG ISLAND SAVINGS BANK FSB EMPLOYEE STOCK OWNERSHIP PLAN ("ESOP"),
acting through and by its Trustee,  CG TRUST COMPANY (the "Trustee"),  a banking
corporation  organized  under the laws of the  state of  Illinois;  and  ASTORIA
FINANCIAL CORPORATION (the "Lender"), a corporation organized and existing under
the laws of the state of Delaware.

                              W I T N E S S E T H:
                               -------------------

         WHEREAS, the Lender's wholly-owned subsidiary,  ASTORIA FEDERAL SAVINGS
AND LOAN ASSOCIATION (the "Association"),  maintains the ESOP for the benefit of
eligible  employees as successor by merger to The Long Island  Savings Bank FSB;
and

         WHEREAS,  the Borrower and the Lender,  in its capacity as successor by
merger to Long Island Bancorp, Inc., are parties to a Loan Agreement dated April
14, 1994 (the "Prior  Agreement"),  pursuant to which the  Borrower has borrowed
funds from the Lender to finance  the  purchase of shares of common  stock,  par
value  $.01  per  share,  of  the  Lender  ("Shares")  and  has  an  outstanding
indebtedness in the amount of TWENTY MILLION NINE HUNDRED SEVENTY-EIGHT THOUSAND
EIGHT  HUNDRED   EIGHTY-ONE   DOLLARS  AND  TWO  CENTS   ($20,978,881.02)   (the
"Outstanding Indebtedness"),  plus accrued and unpaid interest from December 31,
1999; and

         WHEREAS,  the  Borrower  and the Lender have  determined  that it is in
their  mutual  interests  to modify the terms of  repayment  of the  Outstanding
Indebtedness in the manner set forth in this Agreement;

         NOW, THEREFORE, the parties hereto agree that the Prior Agreement shall
be amended and  restated in its  entirety  effective  as of January 1, 2000,  as
follows:

         Article I         Definitions

                  The  following  definitions  shall apply for  purposes of this
Loan  Agreement,  except to the  extent  that a  different  meaning  is  plainly
indicated by the context:

                  Section 1.1  Business Day means any day other than a Saturday,
Sunday or other day on which  banks are  authorized  or  required to close under
federal law or the laws of the State of New York.

                  Section  1.2 Code  means  the  Internal  Revenue  Code of 1986
(including the corresponding provisions of any succeeding law).

                  Section 1.3 Default  means an event or  condition  which would
constitute  an Event of  Default.  The  determination  as to whether an event or
condition  would  constitute  an Event of Default  shall be  determined  without
regard to any applicable requirement of notice or lapse of time.

<PAGE>   46

                                       -2-

                  Section  1.4  ERISA  means  the  Employee   Retirement  Income
Security Act of 1974, as amended (including the corresponding  provisions of any
succeeding law).

                  Section  1.5  Event of  Default  means  an event or  condition
described in Article V.

                  Section 1.6 Independent  Counsel means legal counsel  mutually
satisfactory to both the Lender and the Borrower.

                  Section 1.7 Loan means the loan described in section 2.1.

                  Section  1.8 Loan  Documents  means,  collectively,  this Loan
Agreement,  the Promissory Note and the Pledge Agreement and all other documents
now or hereafter  executed  and  delivered in  connection  with such  documents,
including  all  amendments,  modifications  and  supplements  of or to all  such
documents.

                  Section 1.9 Pledge Agreement means the agreement  described in
section 2.7.

                  Section  1.10  Principal  Amount  means the face amount of the
Promissory Note, determined as set forth in section 2.1(a).

                  Section  1.11   Promissory  Note  means  the  promissory  note
described in section 2.3.

                  Section 1.12 Register means the register  described in section
2.8.

         Article II        The Loan; Principal Amount;
                               INTEREST; SECURITY

                  Section 2.1       The Loan; Principal Amount; Repayment of
                                    Outstanding Indebtedness.

                  (a)      The  Lender  hereby  lends  to  the  Borrower  TWENTY
                           MILLION NINE  HUNDRED  SEVENTY-EIGHT  THOUSAND  EIGHT
                           HUNDRED    EIGHTY-ONE    DOLLARS    AND   TWO   CENTS
                           ($20,978,881.02).  For  all  purposes  of  this  Loan
                           Agreement,  the Principal Amount on any date shall be
                           equal to the excess, if any, of:

                  (i)      the aggregate amount lent by the Lender pursuant to
 this section 2.1; over

                  (ii)     the aggregate amount of any repayments of such amount
 made before such date.

The Lender  shall  maintain on the Register a record of, and shall record on the
Promissory Note, the Principal  Amount,  any changes in the Principal Amount and
the effective date of any changes in the Principal Amount.

<PAGE>   47

                                       -3-

                  (b)      Concurrently  with the execution and delivery of this
                           Agreement,  the Lender shall  deliver to the Borrower
                           the  Borrower's   original   promissory  note  issued
                           pursuant to the Prior  Agreement and  evidencing  the
                           Outstanding Indebtedness marked "PAID IN FULL".

                  (c)      The transactions contemplated by this Agreement shall
                           be   deemed   a   refinancing   of  the   Outstanding
                           Indebtedness for purposes of Treasury  Regulation ss.
                           54.4975-7.

                  Section 2.2       Interest.

                  (a)      The Borrower shall pay to the Lender interest on the
     Principal  Amount,  for the  period  commencing  on the  date of this  Loan
     Agreement and continuing  until the Principal Amount shall be paid in full,
     at the rate of six percent (6.00%) per annum.  Interest  payable under this
     Agreement for any calendar month period shall be computed on the basis of a
     year of 360 days and  months  consisting  of 30 days  each.  For any period
     shorter than one calendar month, interest payable under this Loan Agreement
     shall be  computed  on the  basis of a rate  equal to six  percent  (6.00%)
     multiplied  by a fraction  equal to the actual number of days in the period
     (including the first day but excluding the last) divided by 360. The Lender
     shall remit to the  Borrower,  at least three (3) Business  Days before the
     end of each  calendar  year, a statement  of the accrued  interest for such
     calendar year and the aggregate  accrued and unpaid interest as of the last
     day of such calendar year;  provided,  however,  that a delay or failure by
     the Lender in providing  the Borrower with such  statement  shall not alter
     the  Borrower's  obligation to make any payment of interest that may be due
     but shall excuse any error in the computation of the amount of interest due
     that is promptly  cured upon  receipt of written  notice of such error from
     the Lender. Accrued and unpaid interest shall cumulate until paid but shall
     not be  compounded.
                  (b) Anything in this Loan  Agreement or the Promissory
     Note to the contrary  notwithstanding,  the  obligation  of the Borrower to
     make payments of interest shall be subject to the limitation  that payments
     of  interest  shall not be  required to be made to the Lender to the extent
     that the Lender's receipt thereof would not be permissible under the law or
     laws  applicable  to the Lender  limiting  rates of  interest  which may be
     charged or  collected by the Lender.  Any such  payment  referred to in the
     preceding  sentence  shall be made by the  Borrower  to the  Lender  on the
     earliest  interest payment date or dates on which the receipt thereof would
     be permissible  under the laws  applicable to the Lender  limiting rates of
     interest  which may be charged or  collected by the Lender.  Such  deferred
     interest shall not bear interest.

                  Section 2.3       Promissory Note.

                  The Loan shall be evidenced by a Promissory Note of the
Borrower in substantially

<PAGE>   48

                                       -4-

the form of Exhibit 1 attached  hereto,  dated  January 1, 2000,  payable to the
order of the Lender in the Principal Amount and otherwise duly completed.

                  Section 2.4       Payment of Loan.

                  The Loan shall be repaid in annual installments payable on the
last Business Day of each December ending after the date of this Agreement.  The
amount (if any) of each such  annual  installment  shall be equal to the maximum
amount of  principal  and  interest  accrued  to and  including  the date of the
payment that may be paid  without  resulting  in the release for  allocation  to
participants in the ESOP, pursuant to the Pledge Agreement, of a fraction of the
Shares pledged as collateral security pursuant to the Pledge Agreement as of the
first day of the calendar year in which the payment is made that is greater than
the fraction set forth in Column II below:

   Column I                            Column II

Year of Payment                       Fraction of
                                   Collateral Released

      2000                               1/30
      2001                               1/29
      2002                               1/28
      2003                               1/27
      2004                               1/26
      2005                               1/25
      2006                               1/24
      2007                               1/23
      2008                               1/22
      2009                               1/21
      2010                               1/20
      2011                               1/19
      2012                               1/18
      2013                               1/17
      2014                               1/16
      2015                               1/15
      2016                               1/14
      2017                               1/13
      2018                               1/12
      2019                               1/11
      2020                               1/10
      2021                               1/9
      2022                               1/8

<PAGE>   49

                                      -5-

   Column I                            Column II

Year of Payment                       Fraction of
                                   Collateral Released

      2023                               1/7
      2024                               1/6
      2025                               1/5
      2026                               1/4
      2027                               1/3
      2028                               1/2
      2029                                 1

provided,  however,  that the Borrower shall not be required to make any payment
of principal  due to be made in any period to the extent that such payment would
not be deductible for federal income tax purposes under section 404 of the Code.
Payments may be deferred to the extent that such payments  would be in excess of
the amount  described  above or  otherwise  would be  nondeductible  for federal
income  tax  purposes.  Any  payment  shall be applied  first to the  payment of
accrued interest and second,  if and to the extent that all accrued interest has
been or is then  being  paid,  to the  payment  of all or part of the  Principal
Amount.

                  Section 2.5       Prepayment.

                  (a) The Borrower may,  with the prior  written  consent of the
Lender,  prepay the Loan in whole or in part, at any time and from time to time.
Any such prepayment shall be: (i) permanent and  irrevocable:  (ii) made without
premium or penalty;  and (iii) applied first to the payment of accrued  interest
and second,  if and to the extent that all accrued  interest has been or is then
being paid, to the payment of all or part of the Principal Amount.

                  (b) For each calendar year after 1999 during which the Loan is
outstanding,  a mandatory  prepayment of all or part of the Loan (the "Mandatory
Prepayment")  shall be made if the aggregate  Fair Market Value (as  hereinafter
defined) of the Shares pledged  pursuant to the Pledge Agreement and pursuant to
the Pledge  Agreement of even date herewith  between the Astoria Federal Savings
and Loan Association  Employee Stock Ownership Plan Trust, acting by and through
its  Trustee,  State  Street  Bank and Trust  Company  and the Lender (the "ASFL
Pledge  Agreement"),  and released pursuant to Sections 4(b) and 7 of the Pledge
Agreement and pursuant to Sections 4(b) and 7 of the AFSL Pledge Agreement,  and
allocated  to the  accounts  of  participants  in the  ESOP as a  result  of the
payments  described  in Sections 2.4 and 2.5(a) of this Loan  Agreement  and the
payments  described in Section 2.4 and 2.5(a) of the Loan Agreement of even date
herewith between the Astoria Federal Savings and Loan Association Employee Stock
Ownership Plan Trust,  acting by and through its Trustee,  State Street Bank and
Trust Company and the Lender (the "AFSL Loan  Agreement") for such calendar year
is less than an amount equal to 14% of the total compensation taken into account
under the ESOP for the purpose of allocations to the accounts of participants in
the ESOP of Shares pledged  pursuant to the Pledge Agreement and the AFSL Pledge
Agreement ("Minimum Annual

<PAGE>   50

                                       -6-

Release  Value").  The amount of the Mandatory  Prepayment for any calendar year
shall be equal to that amount of principal and/or interest which,  when added to
the payment  described in Sections 2.4 and 2.5(a) of this Loan Agreement and the
payments described in Sections 2.4, 2.5(a) and 2.5(b) of the AFSL Loan Agreement
made or then being made for such calendar  year,  will result in the release for
allocation  to  participant  accounts  of the  lesser  of (A) a number of Shares
pledged  pursuant to the Pledge  Agreement and the AFSL Pledge Agreement with an
aggregate Fair Market Value equal to the Minimum Annual Release Value or (B) the
entire number of Shares  pledged  pursuant to the Pledge  Agreement and the AFSL
Pledge  Agreement that are currently  unallocated.  For purposes of this section
4(c),  the "Fair  Market  Value"  of a Share for any year  shall be equal to the
average of the  closing  sales  prices for a share of Share on the Nasdaq  Stock
Market National Market System (or other principal national  securities  exchange
on which  Shares are then  listed or admitted to trading) on each of the last 20
trading  days  preceding  December  1st of such  year on which a sale of a Share
occurs,  as reported in the New York City  edition  Wall Street  Journal or such
other reputable  source of stock  quotations as Astoria Federal Savings and Loan
Association may select.

                  (c) In  the  event  of the  termination  of  the  ESOP  or the
occurrence  of a  "Change  in  Control  (as  hereinafter  defined),  the  entire
outstanding Principal Amount and all accrued but unpaid interest shall thereupon
become immediately due and payable. A "Change of Control shall be deemed to have
occurred upon the happening of any of the following events:

                  (i) any event upon which any "person" (as such term is used in
         sections  13(d) and 14(d) of the  Securities  Exchange Act of 1934,  as
         amended),   other  than  (A)  a  trustee  or  other  fiduciary  holding
         securities  under any employee  benefit plan maintained for the benefit
         of employees of Astoria Financial Corporation; (B) a corporation owned,
         directly  or  indirectly,  by the  stockholders  of  Astoria  Financial
         Corporation in substantially the same proportions as their ownership of
         stock of Astoria Financial Corporation; or (C) any group constituting a
         person  in  which  employees  of  Astoria  Financial   Corporation  are
         substantial members, becomes the "beneficial owner" (as defined in Rule
         13d-3 promulgated under the Exchange Act),  directly or indirectly,  of
         securities issued by Astoria Financial Corporation  representing 25% or
         more  of  the  combined  voting  power  of  all  of  Astoria  Financial
         Corporation's then outstanding securities; or

                  (ii) any event upon which the  individuals who on December 30,
         2000  were  members  of the Board of  Directors  of  Astoria  Financial
         Corporation,  together with individuals whose election by such Board or
         nomination for election by Astoria Financial Corporation's stockholders
         was  approved by the  affirmative  vote of at least  two-thirds  of the
         members of such Board  then in office who were  either  members of such
         Board  on  December  30,  2000 or  whose  nomination  or  election  was
         previously  so approved,  cease for any reason to constitute a majority
         of the members of such Board, but excluding, for this purpose, any such
         individual whose initial  assumption of office is in connection with an
         actual or  threatened  election  contest  relating  to the  election of
         directors of Astoria  Financial  Corporation (as such terms are used in
         Rule 14a-11 of Regulation 14A promulgated under the Securities Exchange
         Act of 1934);as amended or

<PAGE>   51

                                       -7-

                  (iii)    the consummation of either:

                  (A) a merger or consolidation of Astoria Financial Corporation
         with  any  other  corporation,  other  than a merger  or  consolidation
         following which both of the following conditions are satisfied:

                           (I) either (1) the members of the Board of  Directors
                  of Astoria  Financial  Corporation  immediately  prior to such
                  merger or consolidation  constitute at least a majority of the
                  members of the  governing  body of the  institution  resulting
                  from such merger or consolidation;  or (2) the shareholders of
                  Astoria   Financial   Corporation   own   securities   of  the
                  institution   resulting  from  such  merger  or  consolidation
                  representing  60% or more of the combined  voting power of all
                  such securities  then  outstanding in  substantially  the same
                  proportions as their ownership of voting securities of Astoria
                  Financial Corporation before such merger or consolidation; and

                           (II) the entity  which  results  from such  merger or
                  consolidation  expressly  agrees  in  writing  to  assume  and
                  perform Astoria Financial Corporation's  obligations under the
                  ESOP; or

                  (B)      a complete liquidation of Astoria Financial
         Corporation or an agreement for the sale or disposition by Astoria
         Financial Corporation of all or substantially all of its assets; or

                  (iv)     any event that would be described in this section if
                  "Astoria Federal Savings and Loan Association" were
                  substituted for "Astoria Financial Corporation." therein.

                  Section 2.6       Method of Payments.

                  (a)      All payments of principal, interest, other charges
          and other amounts  payable by the Borrower  hereunder shall be made in
          lawful money of the United States, in immediately  available funds, to
          the  Lender  at the  address  specified  in or  pursuant  to this Loan
          Agreement for notices to the Lender, not later than 3:00 P.M., Eastern
          Standard time, on the date on which such payment shall become due. Any
          such  payment  made on such date but after  such  time  shall,  if the
          amount paid bears  interest,  and except as expressly  provided to the
          contrary  herein,  be deemed to have been made on, and interest  shall
          continue to accrue and be payable  thereon until,  the next succeeding
          Business Day. If any payment of principal or interest becomes due on a
          day other than a Business  Day,  such  payment may be made on the next
          succeeding Business Day.

                  (b) Notwithstanding  anything to the contrary contained in
          this Loan Agreement or the Promissory  Note,  neither the Borrower nor
          the Trustee shall be

<PAGE>   52

                                       -8-

     obligated to make any payment,  repayment or prepayment  on the  Promissory
     Note or take or refrain from taking any other action hereunder or under the
     Promissory Note if doing so would cause the ESOP to cease to be an employee
     stock  ownership plan within the meaning of section  4975(e)(7) of the Code
     or  qualified  under  section  401(a) of the Code or cause the  Borrower to
     cease to be a tax exempt trust under section  501(a) of the Code or if such
     act or failure to act would cause the  Borrower or the Trustee to engage in
     any "prohibited  transaction" as such term is defined in section 4975(c) of
     the Code and the regulations  promulgated  thereunder which is not exempted
     by section  4975(c)(2) or (d) of the Code and the  regulations  promulgated
     thereunder  or in  section  406 of ERISA  and the  regulations  promulgated
     thereunder  which is not  exempted  by  section  408(b)  of  ERISA  and the
     regulations promulgated thereunder;  provided,  however, that in each case,
     the  Borrower or the Trustee or both,  as the case may be, shall have acted
     or refrained from acting  pursuant to this section 2.6(b) in reliance on an
     opinion of Independent  Counsel.  Any opinion of such  Independent  Counsel
     shall be full and complete  authorization  and protection in respect of any
     action  taken  or  suffered  or  omitted  by the  Trustee  or the  Borrower
     hereunder in good faith and in accordance  with such opinion of Independent
     Counsel.  Nothing  contained in this  section  2.6(b) shall be construed as
     imposing  a duty on either the  Borrower  or the  Trustee  to consult  with
     Independent  Counsel. Any obligation of the Borrower or the Trustee to make
     any payment,  repayment or prepayment on the Promissory  Note or to take or
     refrain from taking any other act  hereunder or under the  Promissory  Note
     which is excused  pursuant to this  section  2.6(b)  shall be  considered a
     binding obligation of the Borrower or the Trustee, or both, as the case may
     be, for the purposes of  determining  whether a Default or Event of Default
     has  occurred  hereunder or under the  Promissory  Note and nothing in this
     section  2.6(b)  shall be  construed as providing a defense to any remedies
     otherwise  available upon a Default or an Event of Default hereunder (other
     than the remedy of specific performance).

                  Section 2.7 Security.

In order to secure the due payment and performance by the Borrower of all of its
obligations  under this Loan  Agreement,  simultaneously  with the execution and
delivery of this Loan Agreement by the Borrower, the Borrower shall:

                  (i)  pledge to the  Lender as  Collateral  (as  defined in the
         Pledge Agreement), and grant to the Lender a first priority lien on and
         security  interest in, all assets pledged by the Borrower as collateral
         security for the Outstanding Indebtedness by the execution and delivery
         to the  Lender of a Pledge  Agreement  in the form  attached  hereto as
         Exhibit 2; and

                  (ii)  execute  and  deliver,  or  cause  to  be  executed  and
         delivered,  such other  agreements,  instruments  and  documents as the
         Lender may  reasonably  require in order to effect the  purposes of the
         Pledge Agreement and this Loan Agreement.

<PAGE>   53

                                       -9-

                  (a)      The Lender shall release from  encumbrance  under the
                           Pledge Agreement and transfer to the Borrower,  as of
                           the date on which any payment or  prepayment is made,
                           an  amount  of  Collateral   determined  pursuant  to
                           section Treasury Regulation ss. 54.4975-7(b)(8)(i).

                  Section 2.8       Registration of the Promissory Note.

                  (a)      The Lender shall maintain a Register providing for
     the  registration  of the Principal  Amount and any stated  interest and of
     transfer and exchange of the  Promissory  Note.  Transfer of the Promissory
     Note may be effected only by the surrender of the old instrument and either
     the  reissuance by the Borrower of the old  instrument to the new holder or
     the issuance by the Borrower of a new instrument to the new holder. The old
     Promissory Note so surrendered shall be canceled by the Lender and returned
     to the Borrower after such cancellation.

                  (b) Any new Promissory Note issued pursuant to section 2.8(a)
     shall carry the same rights to interest  (unpaid and to accrue)  carried by
     the  Promissory  Note so transferred or exchanged so that there will not be
     any loss or gain of interest on the note  surrendered.  Such new Promissory
     Note shall be subject to all of the  provisions  and entitled to all of the
     benefits of this Agreement.  Prior to due  presentment for  registration or
     transfer,  the  Borrower  may deem and treat the  registered  holder of any
     Promissory Note as the holder thereof for purposes of payment and all other
     purposes.  A  notation  shall  be made on each new  Promissory  Note of the
     amount of all payments of principal and interest  theretofore paid.

           Article III Representations and Warranties of the Borrower

                  The Borrower  hereby  represents and warrants to the Lender as
follows:

                  Section 3.1       Power, Authority, Consents.

                  The  Borrower  has the power to  execute,  deliver and perform
this Loan Agreement,  the Promissory Note and the Pledge Agreement, all of which
have been duly authorized by all necessary and proper corporate or other action.

                  Section 3.2       Due Execution, Validity, Enforceability.

                  Each of the Loan  Documents,  including,  without  limitation,
this Loan  Agreement,  the Promissory Note and the Pledge  Agreement,  have been
duly executed and delivered by the Borrower;  and each constitutes the valid and
legally binding  obligation of the Borrower,  enforceable in accordance with its
terms.

<PAGE>   54

                                      -10-

                  Section 3.3       Properties, Priority of Liens.

                  The liens  which have been  created  and granted by the Pledge
Agreement  constitute valid, first liens on the properties and assets covered by
the Pledge Agreement, subject to no prior or equal lien.

                  Section 3.4       No Defaults, Compliance with Laws.

                  The Borrower is not in default in any material  respect  under
any agreement,  ordinance,  resolution,  decree, bond, note, indenture, order or
judgment to which it is a party or by which it is bound,  or any other agreement
or other  instrument  by which any of the  properties  or assets  owned by it is
materially affected.

                  Section 3.5       Marketable Title; Legality.

                  The Borrower has valid,  legal and marketable  title to all of
the  Shares  and other  assets  pledged  as  collateral  pursuant  to the Pledge
Agreement,  free and clear of any  liens,  other  than a pledge to the Lender of
such assets pursuant to the Pledge Agreement. Neither the execution and delivery
of the Loan Documents nor the performance of any obligation  thereunder violates
any  provision  of law or  conflicts  with or  results in a breach of or creates
(with or without the giving of notice or lapse of time, or both) a default under
any agreement to which the Borrower is a party or by which it is bound or any of
its  properties  is  affected.  No  consent  of  any  federal,  state  or  local
governmental  authority,  agency or other  regulatory body, the absence of which
could have a materially adverse effect on the Borrower or the Trustee, is or was
required  to  be  obtained  in  connection  with  the  execution,   delivery  or
performance of the Loan Documents and the transactions  contemplated  therein or
in connection  therewith,  including,  without  limitation,  with respect to the
transfer of the Shares purchased with the proceeds of the Loan pursuant thereto.

         Article IV        Representations and Warranties of the Lender

                  The Lender hereby  represents  and warrants to the Borrower as
follows:

                  Section 4.1       Power, Authority, Consents.

                  The Lender has the power to execute,  deliver and perform this
Loan Agreement, the Pledge Agreement and all documents executed by the Lender in
connection  with the  Loan,  all of  which  have  been  duly  authorized  by all
necessary and proper  corporate or other action.  No consent,  authorization  or
approval or other action by any  governmental  authority or regulatory body, and
no notice by the  Lender  to, or filing by the  Lender  with,  any  governmental
authority or  regulatory  body is required for the due  execution,  delivery and
performance of this Loan Agreement.

                  Section 4.2       Due Execution, Validity, Enforceability.

                  This Loan  Agreement and the Pledge  Agreement  have been duly
executed and delivered by the Lender;  and each  constitutes a valid and legally
binding obligation of the Lender,

<PAGE>   55

                                      -11-

enforceable in accordance with its terms.

                  Section 4.3       ESOP; Contributions.

                  The ESOP and the Borrower  have been duly  created,  organized
and maintained by the Lender in compliance with all applicable laws, regulations
and rulings. The ESOP qualifies as an "employee stock ownership plan" as defined
in  section  4975(e)(7)  the Code.  The ESOP  provides  that the Lender may make
contributions  to the ESOP in an amount  necessary  to  enable  the  Trustee  to
amortize the Loan in accordance  with the terms of the Promissory  Note and this
Loan Agreement, and the Lender will make such contributions;  provided, however,
that no such contributions  shall be required if they would adversely affect the
qualification of the ESOP under section 401(a) of the Code.

                  Section 4.4       Compliance with Laws; Actions.

                  Neither the  execution and delivery by the Lender of this Loan
Agreement or any instruments required thereby, nor compliance with the terms and
provisions of any such  documents by the Lender,  constitutes a violation of any
provision of any law or any regulation, order, writ, injunction or decree of any
court  or  governmental  instrumentality,  or an  event  of  default  under  any
agreement,  to which the Lender is a party or by which the Lender is bound or to
which the Lender is subject,  which  violation or event of default  would have a
material adverse effect on the Lender.  There is no action or proceeding pending
or  threatened  against  either of the ESOP or the Borrower  before any court or
administrative agency.

                           Article V Events of Default

                  Section 5.1       Events of Default under Loan Agreement.

                  Each of the  following  events shall  constitute  an "Event of
Default" hereunder:

               (a)  Failure  to make any  payment  or  mandatory  prepayment  of
                    principal  of the  Promissory  Note,  or failure to make any
                    payment of interest on the Promissory Note,  within five (5)
                    Business  Days after the date when due,  provided,  however,
                    that a default  shall be deemed to have occurred only if and
                    to the extent that the Borrower has received a  contribution
                    from  the  Lender  to be used to make  such  payment  or the
                    Borrower  has  received  dividends  which it is permitted to
                    apply to make such payment and the  Borrower  fails to apply
                    such contribution or dividends to such payment.

                  Section 5.2       Lender's Rights upon Event of Default.

                  If an Event of Default under this Loan  Agreement  shall occur
and be  continuing,  the Lender  shall have no rights to assets of the  Borrower
other than: (a)  contributions  (other than  contributions of Common Stock) that
are made by the Lender to enable the Borrower to meet its  obligations  pursuant
to this Loan Agreement and earnings attributable to the investment of such

<PAGE>   56

                                      -12-

contributions   and  (b)  "Eligible   Collateral"  (as  defined  in  the  Pledge
Agreement);  provided,  however,  that: (i) the value of the  Borrower's  assets
transferred to the Lender  following an Event of Default in  satisfaction of the
due and  unpaid  amount  of the Loan  shall not  exceed  the  amount in  default
(without  regard to amounts owing solely as a result of any  acceleration of the
Loan);  (ii) the Borrower's  assets shall be transferred to the Lender following
an Event of Default  only to the extent of the  failure of the  Borrower to meet
the payment  schedule of the Loan  resulting from the failure of the Borrower to
use dividend income received by it on Pledged Shares and employer  contributions
received by it for purposes of debt service to make loan  payments when due; and
(iii) all rights of the Lender to the Collateral covered by the Pledge Agreement
following  an Event of  Default  shall be  governed  by the terms of the  Pledge
Agreement.

                       Article VI Miscellaneous Provisions

                  Section 6.1       Payments.

                  All payments  hereunder and under the Promissory Note shall be
made without set-off or counterclaim  and in such amounts as may be necessary in
order  that all such  payments  shall  not be less  than the  amounts  otherwise
specified to be paid under this Loan Agreement and the Promissory Note,  subject
to any  applicable  tax  withholding  requirements.  Upon payment in full of the
Promissory  Note, the Lender shall mark such  Promissory Note "PAID IN FULL" and
return it to the Borrower.

                  Section 6.2       Survival.

                  All  agreements,  representations  and warranties  made herein
shall survive the delivery of this Loan Agreement and the Promissory Note.

                  Section 6.3       Modifications, Consents and Waivers; Entire
                                    Agreement.

                  No modification, amendment or waiver of or with respect to any
provision of this Loan Agreement,  the Promissory Note, the Pledge Agreement, or
any of the other Loan  Documents,  nor consent to any departure  from any of the
terms or conditions thereof,  shall in any event be effective unless it shall be
in writing and signed by the party against whom  enforcement  thereof is sought.
Any such waiver or consent shall be effective only in the specific  instance and
for the purpose for which given.  No consent to or demand on a party in any case
shall, of itself, entitle it to any other or further notice or demand in similar
or other  circumstances.  This Loan Agreement  embodies the entire agreement and
understanding  between  the Lender and the  Borrower  and  supersedes  all prior
agreements and understandings relating to the subject matter hereof.

                  Section 6.4       Remedies Cumulative.

                  Each and every right granted to the Lender  hereunder or under
any other document delivered hereunder or in connection herewith,  or allowed it
by law or equity, shall be cumulative and may be exercised from time to time. No
failure  on the part of the  Lender  or the  holder  of the  Promissory  Note to
exercise,  and no delay in  exercising,  any  right  shall  operate  as a waiver
thereof,

<PAGE>   57

                                      -13-

nor shall any  single or partial  exercise  of any right  preclude  any other or
future exercise  thereof or the exercise of any other right. The due payment and
performance of the obligations  under the Loan Documents shall be without regard
to any  counterclaim,  right of offset or any other claim  whatsoever  which the
Borrower may have against the Lender and without regard to any other  obligation
of any nature whatsoever which the Lender may have to the Borrower,  and no such
counterclaim or offset shall be asserted by the Borrower in any action,  suit or
proceeding  instituted  by  the  Lender  for  payment  or  performance  of  such
obligations.

                  Section 6.5       Further Assurances; Compliance with
                                    Covenants.

                  At any time and from  time to time,  upon the  request  of the
Lender,  the Borrower  shall  execute,  deliver and  acknowledge  or cause to be
executed, delivered and acknowledged, such further documents and instruments and
do such other acts and things as the Lender may  reasonably  request in order to
fully effect the terms of this Loan Agreement,  the Promissory  Note, the Pledge
Agreement,  the other Loan Documents and any other  agreements,  instruments and
documents delivered pursuant hereto or in connection with the Loan.

                  Section 6.6       Notices.

                  Except as  otherwise  specifically  provided  for herein,  all
notices,  requests,  reports  and  other  communications  pursuant  to this Loan
Agreement shall be in writing, either by letter (delivered by hand or commercial
messenger  service or sent by  registered  or  certified  mail,  return  receipt
requested,  except for routine  reports  delivered in compliance with Article VI
hereof which may be sent by ordinary  first-class  mail) or telex or  facsimile,
addressed as follows:

                  (a)      If to the Borrower:
                           The Long Island Savings Bank FSB
                               Employee Stock Ownership Plan Trust
                           CG Trust Company
                           525 W. Monroe, Suite 1900
                           Chicago, Illinois     60601

         with copies to:

                           The Long Island Savings Bank FSB
                           Employee Stock Ownership Plan Trust
                           c/o Astoria Federal Savings and Loan Association
                           One Astoria Federal Plaza
                           Lake Success, New York 11042
                           Attention:   General Counsel
                                        ---------------

                  (b)      If to the Lender:

                           Astoria Financial Corporation
                           One Astoria Federal Plaza

<PAGE>   58

                                      -14-

                           Lake Success, New York 11042
                           Attention:  General Counsel
                                       ---------------

Any  notice,  request or  communication  hereunder  shall be deemed to have been
given on the day on which it is  delivered  by hand or by  commercial  messenger
service,  or sent by telex or facsimile,  to such party at its address specified
above, or, if sent by mail, on the third Business Day after the day deposited in
the mail,  postage  prepaid,  addressed as  aforesaid.  Any party may change the
person or address to whom or which notices are to be given hereunder,  by notice
duly given hereunder; provided, however, that any such notice shall be deemed to
have  been  given  only  when  actually  received  by the  party  to  whom it is
addressed.

                  Section 6.7       Counterparts.

         This Loan Agreement may be signed in any number of counterparts  which,
when taken together, shall constitute one and the same document.

                  Section 6.8       Construction; Governing Law.

                  The  headings  used in the table of contents  and in this Loan
Agreement are for convenience  only and shall not be deemed to constitute a part
hereof.  All uses herein of any gender or of  singular or plural  terms shall be
deemed to include uses of the other genders or plural or singular  terms, as the
context may  require.  All  references  in this Loan  Agreement to an Article or
section  shall be to an  Article  or  section  of this  Loan  Agreement,  unless
otherwise specified.  This Loan Agreement shall be governed by and construed and
enforced  in  accordance  with the laws of the State of New York  applicable  to
contracts  to be  performed  wholly  within the State of New York  entered  into
between parties all of whom are citizens and residents of the State of New York.
It is  intended  that  the  transactions  contemplated  by this  Loan  Agreement
constitute  an "exempt  loan"  within the  meaning of  Treasury  Regulation  ss.
54.4975-7(b)(1)(iii) and Department of Labor Regulation ss. 2550.408b-3, and the
provisions  hereof  shall be  construed  and enforced in such manner as shall be
necessary to give effect to such intent.

                  Section 6.9       Severability.

                  Wherever possible, each provision of this Loan Agreement shall
be interpreted in such manner as to be effective and valid under applicable law;
however, the provisions of this Loan Agreement are severable,  and if any clause
or provision  hereof shall be held invalid or  unenforceable in whole or in part
in any jurisdiction,  then such invalidity or unenforceability shall affect only
such clause or provision, or part thereof, in such jurisdiction and shall not in
any manner  affect such clause or  provision in any other  jurisdiction,  or any
other clause or provision in this Loan  Agreement in any  jurisdiction.  Each of
the covenants,  agreements  and  conditions  contained in this Loan Agreement is
independent,  and  compliance  by a party with any of them shall not excuse non-
compliance by such party with any other.  The Borrower shall not take any action
the effect of which shall  constitute a breach or violation of any  provision of
this Loan Agreement.

                  Section 6.10      Binding Effect; No Assignment or Delegation.

<PAGE>   59

                                      -15-

                  This Loan  Agreement  shall be  binding  upon and inure to the
benefit of the Borrower and its successors and the Lender and its successors and
assigns.  The rights and  obligations of the Borrower under this Agreement shall
not be assigned or delegated  without the prior  written  consent of the Lender,
and any purported assignment or delegation without such consent shall be void.

<PAGE>   60

                                      -16-

[This page intentionally left blank.]

<PAGE>   61

                                      -17-

                  IN WITNESS  WHEREOF,  the parties hereto have caused this Loan
Agreement to be duly executed as of the date first above written.

                                      THE LONG ISLAND SAVINGS BANK
                                      EMPLOYEE STOCK OWNERSHIP PLAN TRUST

                                      By  CG TRUST COMPANY,
                                          solely as Trustee and not in any other
                                          capacity

                                      By:
                                            ------------------------------------

                                      Name:
                                            ------------------------------------

                                      Title:
                                            ------------------------------------

                                      ASTORIA FINANCIAL CORPORATION

                                      By:
                                            ------------------------------------

                                      Name:
                                            ------------------------------------

                                      Title:
                                            ------------------------------------

<PAGE>   62

                                                                       EXHIBIT 1

                                 PROMISSORY NOTE

$20,978,881.02                                            Lake Success, New York
                                                                 January 1, 2000

                  FOR VALUE RECEIVED,  the undersigned,  THE LONG ISLAND SAVINGS
BANK FSB EMPLOYEE  STOCK  OWNERSHIP PLAN TRUST (the  "Borrower"),  acting by and
through its Trustee, CG TRUST COMPANY (the "Trustee"), hereby promises to pay to
the order of ASTORIA  FINANCIAL  CORPORATION  (the  "Lender")  the sum of TWENTY
MILLION NINE HUNDRED SEVENTY-EIGHT THOUSAND EIGHT HUNDRED EIGHTY-ONE DOLLARS AND
TWO CENTS ($20,978,881.02)  payable in annual installments,  each of which shall
be in the amount  determined  pursuant to sections 2.4 and 2.5(b) of the Amended
and Restated Loan  Agreement  made and entered into as of January 1, 2000 by and
between  the  Borrower  and the Lender  (the "Loan  Agreement"),  as of the last
Business Day of December,  2000 and as of the last Business Day of each December
thereafter,  through and including  the last  business day of December  2029, at
which  date  the  entire  principal  amount  then  outstanding  shall be due and
payable.  Principal payments may be deferred, in whole or in part, to the extent
provided in the Loan Agreement.

                  This  Promissory  Note shall bear  interest at the rate of six
percent (6.00%) per annum set forth or established under the Loan Agreement from
the date of the Loan  Agreement,  such interest to be payable at the time and in
the manner set forth in the Loan  Agreement  commencing on the last Business Day
of 2000 and  thereafter  on the last  Business Day of each  succeeding  calendar
year. Interest accrued shall cumulate until paid but shall not be compounded.

                  Anything   herein  to  the   contrary   notwithstanding,   the
obligation of the Borrower to make payments of interest  shall be subject to the
limitation  that  payments of  interest  shall not be required to be made to the
Lender to the extent that the Lender's  receipt thereof would not be permissible
under the law or laws  applicable to the Lender limiting rates of interest which
may be charged or collected by the Lender.  Any such payments of interest  which
are not made as a result of the limitation referred to in the preceding sentence
shall be made by the  Borrower to the Lender on the  earliest  interest  payment
date or dates on which the receipt  thereof would be permissible  under the laws
applicable  to the Lender  limiting  rates of  interest  which may be charged or
collected by the Lender. Such deferred interest shall not bear interest.

                  Payments of both  principal  and  interest on this  Promissory
Note are to be made at the principal office of the Lender at One Astoria Federal
Plaza,  Lake  Success,  New York 11042 or such other place as the holder  hereof
shall designate to the Borrower in writing, in lawful money of the United States
of America in immediately available funds.

                  Failure to make any payment of principal on this Promissory
Note, or failure to make

<PAGE>   63

any  payment  of  interest  on this  Promissory  Note,  not later  than five (5)
Business  Days after the date when due,  shall  constitute a default  hereunder,
whereupon the principal  amount of and accrued  interest on this Promissory Note
shall immediately become due and payable in accordance with, but also subject to
the limitations set forth in, the terms of the Loan Agreement.

                  This Promissory Note is subject, in all respects, to the terms
and  provisions  of the Loan  Agreement,  which is  incorporated  herein by this
reference,  and is secured by a Pledge  Agreement  between the  Borrower and the
Lender of even date herewith and is entitled to the benefits thereof.

                                 THE LONG ISLAND SAVINGS BANK FSB EMPLOYEE STOCK
                                 OWNERSHIP PLAN TRUST

                                 By:      CG Trust Company,
                                          solely as Trustee and not in any other
                                          capacity

                                 By:
                                          --------------------------------------

                                 Name:
                                          --------------------------------------

                                 Title:
                                          --------------------------------------

<PAGE>   64

                                                                       EXHIBIT 2
                                PLEDGE AGREEMENT

                  This PLEDGE AGREEMENT  ("Pledge  Agreement") is made as of the
1st day of  January,  2000,  by and between  THE LONG  ISLAND  SAVINGS  BANK FSB
EMPLOYEE STOCK OWNERSHIP PLAN TRUST, acting by and through its Trustee, CG TRUST
COMPANY,  a  banking  corporation  organized  under  the  laws  of the  Illinois
("Pledgor"),  and  ASTORIA  FINANCIAL  CORPORATION  ("Pledgee"),  a  corporation
organized and existing under the laws of the State of Delaware.

                              W I T N E S S E T H :
                              --------------------

                  WHEREAS, this Pledge Agreement is being executed and delivered
to the Pledgee  pursuant to the terms of An Amended and Restated Loan  Agreement
of even date  herewith  ("Loan  Agreement"),  by and between the Pledgor and the
Pledgee;

                  NOW,  THEREFORE,  in  consideration  of the mutual  agreements
contained  herein  and in the Loan  Agreement,  the  parties  hereto  do  hereby
covenant and agree as follows:

                  Section 1. Definitions.  The following definitions shall apply
for  purposes  of this Pledge  Agreement,  except to the extent that a different
meaning is plainly indicated by the context;  all capitalized terms used but not
defined herein shall have the respective  meanings  assigned to them in the Loan
Agreement:

                  (a) "Collateral" shall mean the Pledged Shares and the Pledged
         Assets and, subject to section 5 hereof, and to the extent permitted by
         applicable  law, all rights with respect  thereto,  and all proceeds of
         such Pledged Shares, Pledged Assets and rights.

                  (b)      "Event of Default" shall mean an event so defined in
         the Loan Agreement.

                  (c)  "Liabilities"  shall  mean  all  the  obligations  of the
         Pledgor  to the  Pledgee,  howsoever  created,  arising  or  evidenced,
         whether direct or indirect,  absolute or  contingent,  now or hereafter
         existing,  or due or to become due,  under the Loan  Agreement  and the
         Promissory Note.

                  (d) "Pledged Assets" means all assets of the Borrower pledged,
         as of  January 1,  2000,  as  collateral  security  for the  Borrower's
         performance  of its  obligations  under  that  certain  Loan  Agreement
         between the Borrower and the Lender dated April 14, 1994, excluding any
         Pledged Shares.

<PAGE>   65

                  (e)  "Pledged  Shares"  shall  mean all the  shares  of common
         stock,  par value $ .01 per  share,  of Astoria  Financial  Corporation
         issued in exchange for shares of common  stock of Long Island  Bancorp,
         Inc.  pursuant  to the  acquisition  of Long  Island  Bancorp,  Inc. by
         Astoria  Federal  Corporation,  which  shares of  common  stock of Long
         Island Bancorp, Inc. were purchased by the Pledgor with the proceeds of
         the  loan  made by the  Pledgee  to the  Pledgor  pursuant  to the Loan
         Agreement   dated  April  14,  1994,  but  excluding  any  such  shares
         previously released pursuant to section 4.

                  Section 2. Pledge.  To secure the payment of and performance
of all the Liabilities, the Pledgor hereby pledges to the Pledgee, and grants to
the  Pledgee a security  interest  in and lien upon the  Collateral.

                  Section 3.Representations and Warranties of the Pledgor. The
Pledgor represents, warrants, and covenants to the Pledgee as follows:

                  (a) to the actual  knowledge  of the Trustee,  the  execution,
         delivery and  performance of this Pledge  Agreement and the pledging of
         the Collateral hereunder do not and will not conflict with, result in a
         violation of, or constitute a default under any agreement  binding upon
         the Pledgor;

                  (b) the  Pledged  Shares are and will  continue to be owned by
         the Pledgor  free and clear of any liens or rights of any other  person
         except the lien  hereunder and under the Loan Agreement in favor of the
         Pledgee, and the security interest of the Pledgee in the Pledged Shares
         and the proceeds thereof is and will continue to be prior to and senior
         to the rights of all others;

                  (c) to  the  actual  knowledge  of the  Trustee,  this  Pledge
         Agreement is the legal, valid and binding obligation of the Pledgor and
         is enforceable against the Pledgor in accordance with its terms;

                  (d) the Pledgor shall,  from time to time, upon request of the
         Pledgee,  promptly  deliver to the Pledgee such  financing  statements,
         stock powers, proxies, and similar documents,  satisfactory in form and
         substance to the Pledgee, with respect to the Collateral as the Pledgee
         may reasonably request; and

                  (e) subject to the first sentence of section 4(b), the Pledgor
         shall not, so long as any Liabilities are  outstanding,  sell,  assign,
         exchange, pledge or otherwise transfer or encumber any of its rights in
         and to any of the Collateral.

                  Section 4.        Eligible Collateral.

                  (a) As used herein the term "Eligible  Collateral"  shall mean
that amount of Collateral  which has an aggregate fair market value equal to the
amount by which the Pledgor is in

                                       -2-

<PAGE>   66

default  (without  regard  to any  amounts  owing  solely  as the  result  of an
acceleration  of the Loan  Agreement) or such lesser amount of Collateral as may
be required pursuant to section 12 of this Pledge Agreement.

                  (b)  The  Collateral   shall  be  released  from  this  Pledge
Agreement in a manner conforming to the requirements of Treasury  Regulation ss.
54.4975-7(b)(8)(i),   as  the  same  may  be  from  time  to  time   amended  or
supplemented.
In the  event of a  termination  of the ESOP or the  occurrence  of a Change  in
Control after December 31, 2009, all Pledged Shares shall be forthwith  released
from this Pledge  Agreement and shall not be applied to satisfy any Liabilities.
In the event of a Change in Control prior to January 1, 2010, all Pledged Shares
in excess of the number  determined under the following table shall be forthwith
released  from this  Pledge  Agreement  and shall not be applied to satisfy  any
Liabilities:

           YEAR OF       PLEDGED      YEAR OF      PLEDGED
            CHANGE        SHARES       CHANGE      SHARES
              IN                         IN
           CONTROL                    CONTROL
            2001        1,708,900       2006      1,611,725
            2002        1,689,463       2007      1,592,288
            2003        1,670,026       2008      1,572,851
            2004        1,650,589       2009      1,553,414
            2005        1,591,152

To the extent that the  Collateral  consists of assets other than or in addition
to  Pledged  Shares,  the  provisions  of  such  Regulations  shall  be  applied
separately  to each  class of  security  or each  class  or other  type of asset
included in the Collateral.  Subject to such  Regulations,  the Pledgee may from
time to time, after any Default or Event of Default, and without prior notice to
the Pledgor,  transfer all or any part of the Eligible  Collateral into the name
of the Pledgee or its nominee,  with or without  disclosing  that such  Eligible
Collateral  is subject to any rights of the  Pledgor  and may from time to time,
whether  before or after any of the  Liabilities  shall  become due and payable,
without  notice to the Pledgor,  take all or any of the following  actions:  (i)
notify the parties  obligated  on any of the  Collateral  to make payment to the
Pledgee of any amounts due or to become due thereunder, (ii) release or exchange
all or any part of the  Collateral,  or  compromise  or  extend or renew for any
period  (whether or not longer than the original  period) any obligations of any
nature of any party with respect thereto, and (iii) take control of any proceeds
of the Collateral.

                  Section 5.        Delivery; Further Assurances.

                  (a) The Pledgor shall deliver to the Pledgee upon execution of
this Pledge  Agreement an assignment by the Pledgor of all the Pledgor's  rights
to and interest in the Collateral.

                  (b) So long as no  Default  or Event  of  Default  shall  have
occurred and be  continuing,  (i) the Pledgor  shall be entitled to exercise any
and all voting and other rights pertaining to the

                                       -3-

<PAGE>   67

Collateral or any part thereof for any purpose not  inconsistent  with the terms
of this Pledge Agreement,  and (ii) the Pledgor shall be entitled to receive any
and all cash dividends or other distributions paid in respect of the Collateral.

                  (c) For so long as this Pledge  Agreement  shall be in effect,
the Pledgor  shall take such other  actions  and execute and deliver  such other
documents  as the  Pledgee  may  reasonably  request  in order to secure for the
Pledgee's  benefit a perfected first priority lien and security  interest in any
or all of the Collateral under the New York Uniform  Commercial Code;  provided,
however, that the Pledgee shall not be required to take any action or execute or
deliver  any  document  pursuant  to this  section  5(c) to the  extent  that it
determines,  in reliance on an opinion of legal counsel, that the taking of such
action  or the  execution  or  delivery  of  such  document  would  result  in a
prohibited  transaction  under section 4975 of the Code or section 406 of ERISA,
impair the status of the ESOP as a  tax-qualified  plan under section  401(a) of
the Code or an employee  stock  ownership  plan under  section 4975 of the Code,
impair the tax-exempt status of the Borrower under section 501(a) of the Code or
violate any other requirement of ERISA applicable to the ESOP.

                  Section 6.        Events of Default.

                  (a) If a Default or an Event of Default shall be existing,  in
addition  to the rights it may have  under the Loan  Agreement,  the  Promissory
Note, and this Pledge Agreement,  or by virtue of any other instrument,  (i) the
Pledgee may exercise, with respect to Eligible Collateral, from time to time any
rights and  remedies  available  to it under the Uniform  Commercial  Code as in
effect from time to time in the State of New York or  otherwise  available to it
and (ii) the Pledgee shall have the right,  for and in the name, place and stead
of the Pledgor,  to execute  endorsements,  assignments,  stock powers and other
instruments of conveyance or transfer with respect to all or any of the Eligible
Collateral.  Written notification of intended disposition of any of the Eligible
Collateral  shall be given by the  Pledgee  to the  Pledgor  at least  three (3)
Business Days before such disposition. Subject to section 13 below, any proceeds
of any  disposition of Eligible  Collateral may be applied by the Pledgee to the
payment of expenses  in  connection  with the  Eligible  Collateral,  including,
without  limitation,  reasonable  attorneys'  fees and legal  expenses,  and any
balance of such  proceeds  may be applied by the  Pledgee  toward the payment of
such of the Liabilities as are in Default, and in such order of application,  as
the  Pledgee may from time to time  elect.  No action of the  Pledgee  permitted
hereunder  shall impair or affect its rights in and to the Eligible  Collateral.
All rights and remedies of the Pledgee  expressed  hereunder  are in addition to
all other rights and remedies  possessed by it, including,  without  limitation,
those contained in the documents referred to in the definition of Liabilities in
section 1 hereof.

                  (b) In any  sale  of any of the  Eligible  Collateral  after a
Default  or an Event of  Default  shall  have  occurred,  the  Pledgee is hereby
authorized to comply with any limitation or restriction in connection  with such
sale as it may be  advised  by  counsel  is  necessary  in order  to  avoid  any
violation of applicable law (including, without limitation, compliance with such
procedures as may restrict the number of  prospective  bidders and purchasers or
further  restrict  such  prospective  bidders or  purchasers to persons who will
represent  and  agree  that  they are  purchasing  for  their  own  account  for
investment  and not with a view to the  distribution  or resale of such Eligible
Collateral),  or in order to obtain such required approval of the sale or of the
purchase by any governmental

                                       -4-

<PAGE>   68

regulatory  authority  or  official,  and the Pledgor  further  agrees that such
compliance  shall not result in such sale's  being  considered  or deemed not to
have been made in a  commercially  reasonable  manner,  nor shall the Pledgee be
liable or accountable  to the Pledgor for any discount  allowed by reason of the
fact  that  such  Eligible  Collateral  is  sold in  compliance  with  any  such
limitation or restriction.

                  Section 7.  Payment in Full.  Upon the  payment in full of all
outstanding  Liabili ties, this Pledge Agreement shall terminate and the Pledgee
shall forthwith assign, transfer and deliver to the Pledgor, against receipt and
without  recourse  to the  Pledgee,  all  Collateral  then  held by the  Pledgee
pursuant to this Pledge Agreement.

                  Section 8. No  Waiver.  No failure or delay on the part of the
Pledgee in exercising any right or remedy  hereunder or under any other document
which confers or grants any rights in the Pledgee in respect of the  Liabilities
shall  operate as a waiver  thereof nor shall any single or partial  exercise of
any such right or remedy preclude any other or further  exercise  thereof or the
exercise of any other right or remedy of the Pledgee.

                  Section 9. Binding Effect;  No Assignment or Delegation.  This
Pledge  Agreement shall be binding upon and inure to the benefit of the Pledgor,
the Pledgee and their respective successors and assigns, except that the Pledgor
may not  assign or  transfer  its rights  hereunder  without  the prior  written
consent of the Pledgee (which consent shall not unreasonably be withheld).  Each
duty or obligation of the Pledgor to the Pledgee  pursuant to the  provisions of
this  Pledge  Agreement  shall be  performed  in favor of any  person  or entity
designated  by the  Pledgee,  and any duty or  obligation  of the Pledgee to the
Pledgor  may be  performed  by any  other  person or  entity  designated  by the
Pledgee.

                  Section  10.  Governing  Law.  This  Loan  Agreement  shall be
governed by and construed and enforced in accordance  with the laws of the State
of New York  applicable to contracts to be performed  wholly within the State of
New York entered into between  parties all of whom are citizens and residents of
the State of New York.

                  Section 11. Notices.  All notices,  requests,  instructions or
documents  hereunder  shall be in writing and  delivered  by hand or  commercial
messenger service or sent by United States mail, registered or certified, return
receipt  requested,  with  proper  postage  prepaid,  or by telex or  facsimile,
addressed as follows:

                  (a)      If to the Pledgee:

                          Astoria Financial Corporation
                          One Astoria Federal Plaza
                          Lake Success, New York 11042
                          Attention: General Counsel
                                     ---------------

                                       -5-

<PAGE>   69

                  (b)      If to the Pledgor:

                        The Long Island Savings Bank FSB
                          Employee Stock Ownership Plan Trust
                        CG Trust Company
                        525 W. Monroe, Suite 1900
                        Chicago, Illinois     60601

                           with copies to:

                        The Long Island Savings Bank FSB
                          Employee Stock Ownership Plan Trust
                        c/o Astoria Federal Savings and Loan Association
                        One Astoria Federal Plaza
                        Lake Success, New York  11042
                        Attention:       General Counsel
                                         ---------------

Any  notice,  request or  communication  hereunder  shall be deemed to have been
given on the day on which it is  delivered  by hand or by  commercial  messenger
service,  or sent by telex or facsimile,  to such party at its address specified
above, or, if sent by mail, on the third Business Day after the day deposited in
the mail,  postage  prepaid,  addressed as  aforesaid.  Any party may change the
person or address to whom or which notices are to be given hereunder,  by notice
duly given hereunder; provided, however, that any such notice shall be deemed to
have  been  given  only  when  actually  received  by the  party  to  whom it is
addressed.

                  Section 12.  Interpretation.  Wherever possible each provision
of this Pledge  Agreement shall be interpreted in such manner as to be effective
and valid under  applicable law, but if any provision hereof shall be prohibited
by or invalid under such law, such provisions shall be ineffective to the extent
of such  prohibition or invalidity,  without  invalidating the remainder of such
provision or the remaining provisions hereof.

                  Section  13.  Construction.  All  provisions  hereof  shall be
construed so as to maintain (a) the ESOP as a qualified leveraged employee stock
ownership plan under section 401(a) and 4975(e)(7) of the Internal  Revenue Code
of 1986 (the "Code"), (b) the Trust as exempt from taxation under section 501(a)
of the Code and (c) the loan made  pursuant to the Loan  Agreement  as an exempt
loan under Treasury  Regulation ss.  54.4975-7(b) and as described in Department
of Labor Regulation ss. 2550.408b-3.

                  IN  WITNESS  WHEREOF,  this  Pledge  Agreement  has been  duly
executed by the parties hereto as of the day and year first above written.

                                       -6-

<PAGE>   70

                                       -7-

<PAGE>   71

                                 THE LONG ISLAND SAVINGS BANK FSB EMPLOYEE
                                 STOCK OWNERSHIP PLAN TRUST

                                 By       CG TRUST COMPANY
                                          solely as Trustee and not in any other
                                          capacity

                                 By:
                                          --------------------------------------

                                 Name:
                                          --------------------------------------

                                 Title:
                                          --------------------------------------

                                 ASTORIA FINANCIAL CORPORATION

                                 By:
                                          --------------------------------------

                                 Name:
                                          --------------------------------------

                                 Title:
                                          --------------------------------------

                                       -8-<PAGE>   1
EXHIBIT 10.2

                              AMENDED AND RESTATED
                                 LOAN AGREEMENT

                                 by and between

                  ASTORIA FEDERAL SAVINGS AND LOAN ASSOCIATION
                       EMPLOYEE STOCK OWNERSHIP PLAN TRUST

                                       and

                          ASTORIA FINANCIAL CORPORATION

                           Made and Entered Into as of
                                 January 1, 2000

<PAGE>   2

                                TABLE OF CONTENTS
                                      Page

                                    ARTICLE I

                                   DEFINITIONS

Section 1.1 Business Day......................................................1

Section 1.2 Code..............................................................2

Section 1.3 Default...........................................................2

Section 1.4 ERISA.............................................................2

Section 1.5 Event of Default..................................................2

Section 1.6 Independent Counsel...............................................2

Section 1.7 Loan..............................................................2

Section 1.8 Loan Documents....................................................2

Section 1.9 Pledge Agreement..................................................2

Section 1.10 Principal Amount.................................................2

Section 1.11 Promissory Note..................................................2

Section 1.12 Register.........................................................2

                                   ARTICLE II

                           THE LOAN; PRINCIPAL AMOUNT;
                               INTEREST; SECURITY

Section 2.1 The Loan; Principal Amount; Repayment of
Outstanding Indebtedness......................................................2

Section 2.2 Interest..........................................................3

Section 2.3 Promissory Note...................................................4

Section 2.4 Payment of Loan...................................................4

Section 2.5 Prepayment........................................................4

Section 2.6 Method of Payments................................................6

Section 2.7 Security..........................................................7

Section 2.8 Registration of the Promissory Note...............................8

                                   ARTICLE III

                 REPRESENTATIONS AND WARRANTIES OF THE BORROWER

Section 3.1 Power, Authority, Consents........................................8

Section 3.2 Due Execution, Validity, Enforceability...........................8

Section 3.3 Properties, Priority of Liens.....................................9

Section 3.4 No Defaults, Compliance with Laws.................................9

Section 3.5 Marketable Title; Legality........................................9

                                       (i)

<PAGE>   3

                                   ARTICLE IV

                  REPRESENTATIONS AND WARRANTIES OF THE LENDER

Section 4.1 Power, Authority, Consents........................................9

Section 4.2 Due Execution, Validity, Enforceability..........................10

Section 4.3 ESOP; Contributions..............................................10

Section 4.4 Compliance with Laws; Actions....................................10

                                    ARTICLE V

                                EVENTS OF DEFAULT

Section 5.1 Events of Default under Loan Agreement...........................10

Section 5.2 Lender's Rights upon Event of Default............................11

                                   ARTICLE VI

                            MISCELLANEOUS PROVISIONS

Section 6.1 Payments.........................................................11

Section 6.2 Survival.........................................................12

Section 6.3 Modifications, Consents and Waivers; Entire Agreement............12

Section 6.4 Remedies Cumulative..............................................12

Section 6.5 Further Assurances; Compliance with Covenants....................12

Section 6.6 Notices..........................................................13

Section 6.8 Counterparts.....................................................13

Section 6.9 Construction; Governing Law......................................14

Section 6.10 Severability....................................................14

Section 6.11 Binding Effect; No Assignment or Delegation.....................14

EXHIBIT 1 Form of Promissory Note...........................................1-1
EXHIBIT 2 Form of Pledge Agreement..........................................2-1

                                      (ii)

<PAGE>   4

                                       1-

                                 LOAN AGREEMENT

                  This LOAN AGREEMENT (the "Loan Agreement") is made and entered
into as of the 1st day of January,  2000, by and between ASTORIA FEDERAL SAVINGS
AND LOAN  ASSOCIATION  EMPLOYEE STOCK OWNERSHIP PLAN TRUST (the  "Borrower"),  a
trust forming part of the ASTORIA FEDERAL SAVINGS AND LOAN ASSOCIATION  EMPLOYEE
STOCK OWNERSHIP PLAN ("ESOP"),  acting through and by its Trustee,  STATE STREET
BANK AND TRUST COMPANY (the "Trustee"),  a banking  corporation  organized under
the laws of the state of Massachusetts;  and ASTORIA FINANCIAL  CORPORATION (the
"Lender"),  a corporation  organized and existing under the laws of the state of
Delaware.

                              W I T N E S S E T H :
                               -------------------

                  WHEREAS, the Lender's wholly-owned subsidiary, ASTORIA FEDERAL
SAVINGS AND LOAN  ASSOCIATION  (the  "Association"),  maintains the ESOP for the
benefit of eligible employees; and

                  WHEREAS,  the  Borrower  and the Lender are  parties to a Loan
Agreement dated November 18, 1993 (the "Prior Agreement"), pursuant to which the
Borrower has borrowed funds from the Lender to finance the purchase of shares of
common  stock,  par value $.01 per share,  of the Lender  ("Shares")  and has an
outstanding  indebtedness in the amount of EIGHTEEN MILLION SIX HUNDRED FOURTEEN
THOUSAND   EIGHT   HUNDRED    THIRTY-THREE   DOLLARS   AND   TWENTY-NINE   CENTS
($18,614,833.29)  (the  "Outstanding  Indebtedness"),  plus  accrued  and unpaid
interest from December 31, 1999; and

                  WHEREAS,  the Borrower and the Lender have  determined that it
is in their mutual interests to modify the terms of repayment of the Outstanding
Indebtedness in the manner set forth in this Agreement;

                  NOW,  THEREFORE,  the  parties  hereto  agree  that the  Prior
Agreement shall be amended and restated in its entirety  effective as of January
1, 2000, as follows:

                                    ARTICLE I

                                   DEFINITIONS

                  The  following  definitions  shall apply for  purposes of this
Loan  Agreement,  except to the  extent  that a  different  meaning  is  plainly
indicated by the context:

<PAGE>   5

                                       2-

                  Section 1.1  Business Day means any day other than a Saturday,
Sunday or other day on which  banks are  authorized  or  required to close under
federal law or the laws of the State of New York.

                  Section  1.2 Code  means  the  Internal  Revenue  Code of 1986
(including the cor responding provisions of any succeeding law).

                  Section 1.3 Default  means an event or  condition  which would
constitute  an Event of  Default.  The  determination  as to whether an event or
condition  would  constitute  an Event of Default  shall be  determined  without
regard to any applicable requirement of notice or lapse of time.

                  Section  1.4  ERISA  means  the  Employee   Retirement  Income
Security Act of 1974, as amended (including the corresponding  provisions of any
succeeding law).

                  Section  1.5  Event of  Default  means  an event or  condition
described in Article V.

                  Section 1.6 Independent  Counsel means legal counsel  mutually
satisfactory to both the Lender and the Borrower.

                  Section 1.7 Loan means the loan described in section 2.1.

                  Section  1.8 Loan  Documents  means,  collectively,  this Loan
Agreement,  the Promissory Note and the Pledge Agreement and all other documents
now or hereafter  executed  and  delivered in  connection  with such  documents,
including  all  amendments,  modifications  and  supplements  of or to all  such
documents.

                  Section 1.9 Pledge Agreement means the agreement  described in
section 2.7.

                  Section  1.10  Principal  Amount  means the face amount of the
Promissory Note, determined as set forth in section 2.1(a).

                  Section  1.11   Promissory  Note  means  the  promissory  note
described in section 2.3.

                  Section 1.12 Register means the register  described in section
2.8.

                                   ARTICLE II

                           THE LOAN; PRINCIPAL AMOUNT;
                               INTEREST; SECURITY

                  Section 2.1       The Loan; Principal Amount; Repayment of
                                    Outstanding Indebtedness.

<PAGE>   6

                                       3-

                  (a) The Lender hereby lends to the Borrower  EIGHTEEN  MILLION
SIX HUNDRED FOURTEEN THOUSAND EIGHT HUNDRED THIRTY-THREE DOLLARS AND TWENTY-NINE
CENTS ($18,614,833.29).  For all purposes of this Loan Agreement,  the Principal
Amount on any date shall be equal to the excess, if any, of:

                         (i) the aggregate amount lent by the Lender pursuant to
                    this section 2.1; over

                         (ii) the  aggregate  amount of any  repayments  of such
                    amount made before such date.

The Lender  shall  maintain on the Register a record of, and shall record on the
Promissory Note, the Principal  Amount,  any changes in the Principal Amount and
the effective date of any changes in the Principal Amount.

                  (b)  Concurrently  with the  execution  and  delivery  of this
Agreement,  the Lender shall  deliver to the Borrower  the  Borrower's  original
promissory  note  issued  pursuant to the Prior  Agreement  and  evidencing  the
Outstanding Indebtedness marked "PAID IN FULL".

                  (c) The  transactions  contemplated by this Agreement shall be
deemed a refinancing of the  Outstanding  Indebtedness  for purposes of Treasury
Regulation ss. 54.4975-7.

                  Section 2.2       Interest.

                  (a) The  Borrower  shall  pay to the  Lender  interest  on the
Principal  Amount,  for the period commencing on the date of this Loan Agreement
and continuing  until the Principal Amount shall be paid in full, at the rate of
six percent  (6.00%) per annum.  Interest  payable under this  Agreement for any
calendar  month  period shall be computed on the basis of a year of 360 days and
months  consisting  of 30 days each.  For any period  shorter  than one calendar
month, interest payable under this Loan Agreement shall be computed on the basis
of a rate equal to six percent  (6.00%)  multiplied  by a fraction  equal to the
actual number of days in the period  (including  the first day but excluding the
last) divided by 360. The Lender shall remit to the Borrower, at least three (3)
Business Days before the end of each  calendar  year, a statement of the accrued
interest for such calendar year and the aggregate accrued and unpaid interest as
of the  last  day of such  calendar  year;  provided,  however,  that a delay or
failure by the Lender in providing  the Borrower with such  statement  shall not
alter the Borrower's  obligation to make any payment of interest that may be due
but shall excuse any error in the computation of the amount of interest due that
is promptly  cured upon receipt of written notice of such error from the Lender.
Accrued  and  unpaid  interest  shall  cumulate  until  paid  but  shall  not be
compounded.

                  (b) Anything in this Loan Agreement or the Promissory  Note to
the contrary notwithstanding, the obligation of the Borrower to make payments of
interest shall be subject to the limitation  that payments of interest shall not
be  required to be made to the Lender to the extent  that the  Lender's  receipt
thereof would not be permissible under the law or laws applicable to the Lender

<PAGE>   7

                                       4-

limiting rates of interest which may be charged or collected by the Lender.  Any
such payment referred to in the preceding sentence shall be made by the Borrower
to the  Lender  on the  earliest  interest  payment  date or dates on which  the
receipt  thereof would be  permissible  under the laws  applicable to the Lender
limiting rates of interest which may be charged or collected by the Lender. Such
deferred interest shall not bear interest.

                  Section 2.3       Promissory Note.

                  The  Loan  shall  be  evidenced  by a  Promissory  Note of the
Borrower in substantially  the form of Exhibit 1 attached hereto,  dated January
1,  2000,  payable  to the  order of the  Lender  in the  Principal  Amount  and
otherwise duly completed.

                  Section 2.4       Payment of Loan.

                  The Loan shall be repaid in annual installments payable on the
last Business Day of each December ending after the date of this Agreement.  The
amount (if any) of each such  annual  installment  shall be equal to the maximum
amount of  principal  and  interest  accrued  to and  including  the date of the
payment that may be paid  without  resulting  in the release for  allocation  to
participants in the ESOP, pursuant to the Pledge Agreement, of a fraction of the
Shares pledged as collateral security pursuant to the Pledge Agreement as of the
first day of the calendar year in which the payment is made that is greater than
the fraction set forth in Column II below:

           Column I                                       Column II
       Year of Payment                                   Fraction of
                                                     Collateral Released

            2000                                             1/30
            2001                                             1/29
            2002                                             1/28
            2003                                             1/27
            2004                                             1/26
            2005                                             1/25
            2006                                             1/24
            2007                                             1/23
            2008                                             1/22
            2009                                             1/21
            2010                                             1/20
            2011                                             1/19
            2012                                             1/18
            2013                                             1/17

<PAGE>   8

                                       5-

           Column I                                       Column II
       Year of Payment                                   Fraction of
                                                     Collateral Released

            2014                                             1/16
            2015                                             1/15
            2016                                             1/14
            2017                                             1/13
            2018                                             1/12
            2019                                             1/11
            2020                                             1/10
            2021                                              1/9
            2022                                              1/8
            2023                                              1/7
            2024                                              1/6
            2025                                              1/5
            2026                                              1/4
            2027                                              1/3
            2028                                              1/2
            2029                                               1

provided,  however,  that the Borrower shall not be required to make any payment
of principal  due to be made in any period to the extent that such payment would
not be deductible for federal income tax purposes under section 404 of the Code.
Payments may be deferred to the extent that such payments  would be in excess of
the amount  described  above or  otherwise  would be  nondeductible  for federal
income  tax  purposes.  Any  payment  shall be applied  first to the  payment of
accrued interest and second,  if and to the extent that all accrued interest has
been or is then  being  paid,  to the  payment  of all or part of the  Principal
Amount.

                  Section 2.5       Prepayment.

                  (a) The Borrower may,  with the prior  written  consent of the
Lender,  prepay the Loan in whole or in part, at any time and from time to time.
Any such prepayment shall be: (i) permanent and  irrevocable;  (ii) made without
premium or penalty;  and (iii) applied first to the payment of accrued  interest
and second,  if and to the extent that all accrued  interest has been or is then
being paid, to the payment of all or part of the Principal Amount.

                  (b) For each calendar year after 1999 during which the Loan is
outstanding,  a mandatory  prepayment of all or part of the Loan (the "Mandatory
Prepayment") shall be made if the

<PAGE>   9

                                       6-

aggregate  Fair Market  Value (as  hereinafter  defined)  of the Shares  pledged
pursuant to the Pledge  Agreement  and pursuant to the Pledge  Agreement of even
date herewith  between The Long Island Savings Bank FSB Employee Stock Ownership
Plan Trust,  acting by and through its Trustee,  CG Trust Company and the Lender
(the "LISB Pledge  Agreement"),  and released pursuant to sections 4(b) and 7 of
the Pledge  Agreement  and  pursuant to  sections  4(b) and 7 of the LISB Pledge
Agreement, and allocated to the accounts of participants in the ESOP as a result
of the payments  described in sections 2.4 and 2.5(a) of this Loan Agreement and
the payments  described in Section 2.4 and 2.5(a) of the Loan  Agreement of even
date herewith  between The Long Island Savings Bank FSB Employee Stock Ownership
Plan Trust,  acting by and through its Trustee,  CG Trust Company and the Lender
(the "LISB Loan  Agreement") for such calendar year is less than an amount equal
to 14% of the  total  compensation  taken  into  account  under the ESOP for the
purpose of  allocations  to the accounts of  participants  in the ESOP of Shares
pledged pursuant to the Pledge Agreement and the LISB Pledge Agreement ("Minimum
Annual Release Value").  The amount of the Mandatory Prepayment for any calendar
year shall be equal to that amount of  principal  and/or  interest  which,  when
added to the payment described in sections 2.4 and 2.5(a) of this Loan Agreement
and the payments  described in sections 2.4,  2.5(a) and 2.5(b) of the LISB Loan
Agreement  made or then being made for such  calendar  year,  will result in the
release for allocation to participant  accounts of the lesser of (A) a number of
Shares pledged  pursuant to the Pledge  Agreement and the LISB Pledge  Agreement
with an aggregate Fair Market Value equal to the Minimum Annual Release Value or
(B) the entire number of Shares pledged pursuant to the Pledge Agreement and the
LISB Pledge  Agreement  that are  currently  unallocated.  For  purposes of this
section 4(c),  the "Fair Market Value" of a Share for any year shall be equal to
the average of the closing sales prices for a share of Share on the Nasdaq Stock
Market National Market System (or other principal national  securities  exchange
on which  Shares are then  listed or admitted to trading) on each of the last 20
trading  days  preceding  December  1st of such  year on which a sale of a Share
occurs,  as reported in the New York City  edition  Wall Street  Journal or such
other reputable  source of stock  quotations as Astoria Federal Savings and Loan
Association may select.

                  (c) In  the  event  of the  termination  of  the  ESOP  or the
occurrence  of a  "Change  in  Control  (as  hereinafter  defined),  the  entire
outstanding Principal Amount and all accrued but unpaid interest shall thereupon
become immediately due and payable. A "Change of Control shall be deemed to have
occurred upon the happening of any of the following events:

                  (i) any event upon which any "person" (as such term is used in
         sections  13(d) and 14(d) of the  Securities  Exchange Act of 1934,  as
         amended),   other  than  (A)  a  trustee  or  other  fiduciary  holding
         securities  under any employee  benefit plan maintained for the benefit
         of employees of Astoria Financial Corporation; (B) a corporation owned,
         directly  or  indirectly,  by the  stockholders  of  Astoria  Financial
         Corporation in substantially the same proportions as their ownership of
         stock of Astoria Financial Corporation; or (C) any group constituting a
         person  in  which  employees  of  Astoria  Financial   Corporation  are
         substantial members, becomes the "beneficial owner" (as defined in Rule
         13d-3 promulgated under the Exchange Act),  directly or indirectly,  of
         securities issued by Astoria Financial Corporation  representing 25% or
         more  of  the  combined  voting  power  of  all  of  Astoria  Financial
         Corporation's then outstanding securities; or

<PAGE>   10

                                       7-

                  (ii) any event upon which the  individuals who on December 30,
         2000  were  members  of the Board of  Directors  of  Astoria  Financial
         Corporation,  together with individuals whose election by such Board or
         nomination for election by Astoria Financial Corporation's stockholders
         was  approved by the  affirmative  vote of at least  two-thirds  of the
         members of such Board  then in office who were  either  members of such
         Board  on  December  30,  2000 or  whose  nomination  or  election  was
         previously  so approved,  cease for any reason to constitute a majority
         of the members of such Board, but excluding, for this purpose, any such
         individual whose initial  assumption of office is in connection with an
         actual or  threatened  election  contest  relating  to the  election of
         directors of Astoria  Financial  Corporation (as such terms are used in
         Rule 14a-11 of Regulation 14A promulgated under the Securities Exchange
         Act of 1934);as amended or

                  (iii)    the consummation of either:

                  (A) a merger or consolidation of Astoria Financial Corporation
         with  any  other  corporation,  other  than a merger  or  consolidation
         following which both of the following conditions are satisfied:

                           (I) either (1) the members of the Board of  Directors
                  of Astoria  Financial  Corporation  immediately  prior to such
                  merger or consolidation  constitute at least a majority of the
                  members of the  governing  body of the  institution  resulting
                  from such merger or consolidation;  or (2) the shareholders of
                  Astoria   Financial   Corporation   own   securities   of  the
                  institution   resulting  from  such  merger  or  consolidation
                  representing  60% or more of the combined  voting power of all
                  such securities  then  outstanding in  substantially  the same
                  proportions as their ownership of voting securities of Astoria
                  Financial Corporation before such merger or consolidation; and

                           (II) the entity  which  results  from such  merger or
                  consolidation  expressly  agrees  in  writing  to  assume  and
                  perform Astoria Financial Corporation's  obligations under the
                  ESOP; or

                  (B) a complete liquidation of Astoria Financial Corporation
         or an agreement  for  the  sale  or  disposition  by  Astoria
         Financial Corporation of all or substantially all of its assets; or

                           (iv) any event that would be described in this
                  section if "Astoria Federal Savings and Loan  Association"
                  were substituted for "Astoria Financial Corporation." therein.

                  Section 2.6       Method of Payments.

<PAGE>   11

                                       8-

                  (a) All payments of  principal,  interest,  other  charges and
other amounts payable by the Borrower hereunder shall be made in lawful money of
the United States, in immediately  available funds, to the Lender at the address
specified in or pursuant to this Loan  Agreement for notices to the Lender,  not
later than 3:00 P.M.,  Eastern  Standard time, on the date on which such payment
shall  become due. Any such payment made on such date but after such time shall,
if the amount  paid bears  interest,  and except as  expressly  provided  to the
contrary herein,  be deemed to have been made on, and interest shall continue to
accrue and be payable thereon until,  the next  succeeding  Business Day. If any
payment of principal or interest becomes due on a day other than a Business Day,
such payment may be made on the next succeeding Business Day.

                  (b) Notwithstanding anything to the contrary contained in this
Loan  Agreement  or the  Promissory  Note,  neither the Borrower nor the Trustee
shall  be  obligated  to  make  any  payment,  repayment  or  prepayment  on the
Promissory  Note or take or refrain  from taking any other  action  hereunder or
under  the  Promissory  Note if doing so would  cause the ESOP to cease to be an
employee stock  ownership  plan within the meaning of section  4975(e)(7) of the
Code or  qualified  under  section  401(a) of the Code or cause the  Borrower to
cease to be a tax exempt trust under  section  501(a) of the Code or if such act
or  failure  to act would  cause the  Borrower  or the  Trustee to engage in any
"prohibited  transaction" as such term is defined in section 4975(c) of the Code
and the  regulations  promulgated  thereunder  which is not  exempted by section
4975(c)(2) or (d) of the Code and the regulations  promulgated  thereunder or in
section 406 of ERISA and the  regulations  promulgated  thereunder  which is not
exempted by section 408(b) of ERISA and the regulations  promulgated thereunder;
provided,  however,  that in each case,  the Borrower or the Trustee or both, as
the case may be,  shall have acted or  refrained  from  acting  pursuant to this
section 2.6(b) in reliance on an opinion of Independent  Counsel. Any opinion of
such Independent Counsel shall be full and complete authorization and protection
in respect  of any action  taken or  suffered  or omitted by the  Trustee or the
Borrower  hereunder  in good  faith  and in  accordance  with  such  opinion  of
Independent Counsel. Nothing contained in this section 2.6(b) shall be construed
as  imposing  a duty on either the  Borrower  or the  Trustee  to  consult  with
Independent  Counsel.  Any obligation of the Borrower or the Trustee to make any
payment,  repayment or prepayment on the  Promissory  Note or to take or refrain
from  taking  any other act  hereunder  or under the  Promissory  Note  which is
excused pursuant to this section 2.6(b) shall be considered a binding obligation
of the Borrower or the Trustee, or both, as the case may be, for the purposes of
determining  whether a Default or Event of Default  has  occurred  hereunder  or
under the Promissory  Note and nothing in this section 2.6(b) shall be construed
as providing a defense to any remedies otherwise  available upon a Default or an
Event of Default hereunder (other than the remedy of specific performance).

                  Section 2.7       Security.

                  (a) In order to secure the due payment and  performance by the
Borrower of all of its  obligations  under this Loan  Agreement,  simultaneously
with the  execution  and delivery of this Loan  Agreement by the  Borrower,  the
Borrower shall:

                    (i) pledge to the Lender as  Collateral  (as  defined in the
               Pledge Agreement),  and grant to the Lender a first priority lien
               on and security interest in,

<PAGE>   12

                                       9-

               all assets pledged by the Borrower as collateral security for the
               Outstanding  Indebtedness  by the  execution  and delivery to the
               Lender  of a Pledge  Agreement  in the form  attached  hereto  as
               Exhibit 2; and

                    (ii)  execute  and  deliver,  or  cause to be  executed  and
               delivered,  such other  agreements,  instruments and documents as
               the Lender may reasonably require in order to effect the purposes
               of the Pledge Agreement and this Loan Agreement.

                  (b) The Lender shall release from encumbrance under the Pledge
Agreement and transfer to the  Borrower,  as of the date on which any payment or
prepayment  is made,  an amount of  Collateral  determined  pursuant  to section
Treasury Regulation ss. 54.4975-7(b)(8)(i).

                  Section 2.8       Registration of the Promissory Note.

                  (a) The Lender  shall  maintain a Register  providing  for the
registration of the Principal Amount and any stated interest and of transfer and
exchange of the Promissory Note. Transfer of the Promissory Note may be effected
only by the  surrender of the old  instrument  and either the  reissuance by the
Borrower of the old instrument to the new holder or the issuance by the Borrower
of a new instrument to the new holder.  The old  Promissory  Note so surrendered
shall be  canceled  by the  Lender  and  returned  to the  Borrower  after  such
cancellation.

                  (b) Any new Promissory  Note issued pursuant to section 2.8(a)
shall carry the same rights to  interest  (unpaid and to accrue)  carried by the
Promissory  Note so transferred or ex changed so that there will not be any loss
or gain of interest on the note  surrendered.  Such new Promissory Note shall be
subject to all of the  provisions  and  entitled to all of the  benefits of this
Agreement.  Prior to due presentment for registration or transfer,  the Borrower
may deem and treat the registered  holder of any  Promissory  Note as the holder
thereof for purposes of payment and all other purposes. A notation shall be made
on each new  Promissory  Note of the amount of all  payments  of  principal  and
interest theretofore paid.

                                   ARTICLE III

                 REPRESENTATIONS AND WARRANTIES OF THE BORROWER

      The Borrower hereby represents and warrants to the Lender as follows:

                  Section 3.1       Power, Authority, Consents.

<PAGE>   13

                                       10-

                  The  Borrower  has the power to  execute,  deliver and perform
this Loan Agreement,  the Promissory Note and the Pledge Agreement, all of which
have been  duly  authorized  by all neces  sary and  proper  corporate  or other
action.

                  Section 3.2       Due Execution, Validity, Enforceability.

                  Each of the Loan  Documents,  including,  without  limitation,
this Loan  Agreement,  the Promissory Note and the Pledge  Agreement,  have been
duly executed and delivered by the Borrower;  and each constitutes the valid and
legally binding  obligation of the Borrower,  enforceable in accordance with its
terms.

                  Section 3.3       Properties, Priority of Liens.

                  The liens  which have been  created  and granted by the Pledge
Agreement  constitute valid, first liens on the properties and assets covered by
the Pledge Agreement, subject to no prior or equal lien.

                  Section 3.4       No Defaults, Compliance with Laws.

                  The Borrower is not in default in any material  respect  under
any agreement,  ordinance,  resolution,  decree, bond, note, indenture, order or
judgment to which it is a party or by which it is bound,  or any other agreement
or other  instrument  by which any of the  properties  or assets  owned by it is
materially affected.

                  Section 3.5       Marketable Title; Legality.

                  The Borrower has valid,  legal and marketable  title to all of
the  Shares  and other  assets  pledged  as  collateral  pursuant  to the Pledge
Agreement,  free and clear of any  liens,  other  than a pledge to the Lender of
such assets pursuant to the Pledge Agreement. Neither the execution and delivery
of the Loan Documents nor the performance of any obligation  thereunder violates
any  provision  of law or  conflicts  with or  results in a breach of or creates
(with or without the giving of notice or lapse of time, or both) a default under
any agreement to which the Borrower is a party or by which it is bound or any of
its  properties  is  affected.  No  consent  of  any  federal,  state  or  local
governmental  authority,  agency or other  regulatory body, the absence of which
could have a materially adverse effect on the Borrower or the Trustee, is or was
required  to  be  obtained  in  connection  with  the  execution,   delivery  or
performance of the Loan Documents and the transactions  contemplated  therein or
in connection  therewith,  including,  without  limitation,  with respect to the
transfer of the Shares purchased with the proceeds of the Loan pursuant thereto.

                                   ARTICLE IV

<PAGE>   14

                                       11-

                  REPRESENTATIONS AND WARRANTIES OF THE LENDER

      The Lender hereby represents and warrants to the Borrower as follows:

                  Section 4.1       Power, Authority, Consents.

                  The Lender has the power to execute,  deliver and perform this
Loan Agreement, the Pledge Agreement and all documents executed by the Lender in
connection  with the  Loan,  all of  which  have  been  duly  authorized  by all
necessary and proper  corporate or other action.  No consent,  authorization  or
approval or other action by any  governmental  authority or regulatory body, and
no notice by the  Lender  to, or filing by the  Lender  with,  any  governmental
authority or  regulatory  body is required for the due  execution,  delivery and
performance of this Loan Agreement.

                  Section 4.2       Due Execution, Validity, Enforceability.

                  This Loan  Agreement and the Pledge  Agreement  have been duly
executed and delivered by the Lender;  and each  constitutes a valid and legally
binding obligation of the Lender, enforceable in accordance with its terms.

                  Section 4.3       ESOP; Contributions.

                  The ESOP and the Borrower  have been duly  created,  organized
and maintained by the Lender in compliance with all applicable laws, regulations
and rulings. The ESOP qualifies as an "employee stock ownership plan" as defined
in  section  4975(e)(7)  the Code.  The ESOP  provides  that the Lender may make
contributions  to the ESOP in an amount  necessary  to  enable  the  Trustee  to
amortize the Loan in accordance  with the terms of the Promissory  Note and this
Loan Agreement, and the Lender will make such contributions;  provided, however,
that no such contributions  shall be required if they would adversely affect the
qualification of the ESOP under section 401(a) of the Code.

                  Section 4.4       Compliance with Laws; Actions.

                  Neither the  execution and delivery by the Lender of this Loan
Agreement or any instruments required thereby, nor compliance with the terms and
provisions of any such  documents by the Lender,  constitutes a violation of any
provision of any law or any regulation, order, writ, injunction or decree of any
court  or  governmental  instrumentality,  or an  event  of  default  under  any
agreement,  to which the Lender is a party or by which the Lender is bound or to
which the Lender is subject,  which  violation or event of default  would have a
material adverse effect on the Lender.  There is no action or proceeding pending
or  threatened  against  either of the ESOP or the Borrower  before any court or
administrative agency.

<PAGE>   15

                                       12-

                                    ARTICLE V

                                EVENTS OF DEFAULT

                  Section 5.1       Events of Default under Loan Agreement.

 Each of the following events shall constitute an "Event of Default" hereunder:

                  (a) Failure to make any  payment or  mandatory  prepayment  of
principal of the Promissory  Note, or failure to make any payment of interest on
the  Promissory  Note,  within five (5)  Business  Days after the date when due;
provided,  however,  that a default shall be deemed to have occurred only if and
to the extent that the Borrower has received a  contribution  from the Lender to
be used to make such payment or the Borrower has received  dividends which it is
permitted  to apply to make such  payment and the  Borrower  fails to apply such
contribution or dividends to such payment.

                  Section 5.2       Lender's Rights upon Event of Default.

                  If an Event of Default under this Loan  Agreement  shall occur
and be  continuing,  the Lender  shall have no rights to assets of the  Borrower
other than: (a)  contributions  (other than  contributions of Common Stock) that
are made by the Lender to enable the Borrower to meet its  obligations  pursuant
to this Loan  Agreement  and earnings  attributable  to the  investment  of such
contributions   and  (b)  "Eligible   Collateral"  (as  defined  in  the  Pledge
Agreement);  provided,  however,  that: (i) the value of the  Borrower's  assets
transferred to the Lender  following an Event of Default in  satisfaction of the
due and  unpaid  amount  of the Loan  shall not  exceed  the  amount in  default
(without  regard to amounts owing solely as a result of any  acceleration of the
Loan);  (ii) the Borrower's  assets shall be transferred to the Lender following
an Event of Default  only to the extent of the  failure of the  Borrower to meet
the payment  schedule of the Loan  resulting from the failure of the Borrower to
use dividend income received by it on Pledged Shares and employer  contributions
received by it for purposes of debt service to make Loan  payments when due; and
(iii) all rights of the Lender to the Collateral covered by the Pledge Agreement
following  an Event of  Default  shall be  governed  by the terms of the  Pledge
Agreement.

                                   ARTICLE VI

                            MISCELLANEOUS PROVISIONS

<PAGE>   16

                                       13-

                  Section 6.1       Payments.

                  All payments  hereunder and under the Promissory Note shall be
made without set-off or counterclaim  and in such amounts as may be necessary in
order  that all such  payments  shall  not be less  than the  amounts  otherwise
specified to be paid under this Loan Agreement and the Promissory Note,  subject
to any  applicable  tax  withholding  requirements.  Upon payment in full of the
Promissory  Note, the Lender shall mark such  Promissory Note "PAID IN FULL" and
return it to the Borrower.

                  Section 6.2       Survival.

                  All  agreements,  representations  and warranties  made herein
shall survive the delivery of this Loan Agreement and the Promissory Note.

                  Section 6.3       Modifications, Consents and Waivers; Entire
 Agreement.

                  No modification, amendment or waiver of or with respect to any
provision of this Loan Agreement,  the Promissory Note, the Pledge Agreement, or
any of the other Loan  Documents,  nor consent to any departure  from any of the
terms or conditions thereof,  shall in any event be effective unless it shall be
in writing and signed by the party against whom  enforcement  thereof is sought.
Any such waiver or consent shall be effective only in the specific  instance and
for the purpose for which given.  No consent to or demand on a party in any case
shall, of itself, entitle it to any other or further notice or demand in similar
or other  circumstances.  This Loan Agreement  embodies the entire agreement and
understanding  between  the Lender and the  Borrower  and  supersedes  all prior
agreements and understandings relating to the subject matter hereof.

                  Section 6.4       Remedies Cumulative.

                  Each and every right granted to the Lender  hereunder or under
any other document delivered hereunder or in connection herewith,  or allowed it
by law or equity, shall be cumulative and may be exercised from time to time. No
failure  on the part of the  Lender  or the  holder  of the  Promissory  Note to
exercise,  and no delay in  exercising,  any  right  shall  operate  as a waiver
thereof,  nor shall any single or partial  exercise  of any right  preclude  any
other or future  exercise  thereof or the exercise of any other  right.  The due
payment and  performance of the  obligations  under the Loan Documents  shall be
without  regard  to  any  counterclaim,  right  of  offset  or any  other  claim
whatsoever  which the Borrower may have against the Lender and without regard to
any other  obligation of any nature  whatsoever which the Lender may have to the
Borrower,  and no such  counterclaim or offset shall be asserted by the Borrower
in any  action,  suit or  proceeding  instituted  by the Lender  for  payment or
performance of such obligations.

                  Section 6.5     Further Assurances; Compliance with Covenants.

                  At any time and from  time to time,  upon the  request  of the
Lender,  the Borrower  shall  execute,  deliver and  acknowledge  or cause to be
executed, delivered and acknowledged, such

<PAGE>   17

                                       14-

further  documents  and  instruments  and do such  other  acts and things as the
Lender may  reasonably  request in order to fully  effect the terms of this Loan
Agreement,  the Promissory Note, the Pledge Agreement,  the other Loan Documents
and any other agreements, instruments and documents delivered pursuant hereto or
in connection with the Loan.

                  Section 6.6       Notices.

                  Except as  otherwise  specifically  provided  for herein,  all
notices,  requests,  reports  and  other  communications  pursuant  to this Loan
Agreement shall be in writing, either by letter (delivered by hand or commercial
messenger  service or sent by  registered  or  certified  mail,  return  receipt
requested,  except for routine  reports  delivered in compliance with Article VI
hereof which may be sent by ordinary  first-class  mail) or telex or  facsimile,
addressed as follows:

                  (a)      If to the Borrower:

                                Astoria Federal Savings and Loan Association
                                    Employee Stock Ownership Plan Trust
                                c/o State Street Bank and Trust Company
                                Investment Services Office
                                200 Newport Avenue
                                North Quincy, Massachusetts   02171

                           with copies to:

                                Astoria Federal Savings and Loan Association
                                Employee Stock Ownership Plan Trust
                                c/o Astoria Federal Savings and Loan Association
                                One Astoria Federal Plaza
                                Lake Success, New York 11042
                                Attention:       General Counsel

                  (b)      If to the Lender:

                                Astoria Financial Corporation
                                One Astoria Federal Plaza
                                Lake Success, New York 11042
                                Attention: General Counsel

Any  notice,  request or  communication  hereunder  shall be deemed to have been
given on the day on which it is  delivered  by hand or by  commercial  messenger
service,  or sent by telex or facsimile,  to such party at its address specified
above, or, if sent by mail, on the third Business Day after the day deposited in
the mail,  postage  prepaid,  addressed as  aforesaid.  Any party may change the
person or address to whom or which notices are to be given hereunder,  by notice
duly given hereunder;

<PAGE>   18

                                       15-

provided,  however, that any such notice shall be deemed to have been given only
when actually received by the party to whom it is addressed.

                  Section 6.8       Counterparts.

                  This  Loan   Agreement   may  be  signed  in  any   number  of
counterparts  which,  when taken  together,  shall  constitute  one and the same
document.

                  Section 6.9       Construction; Governing Law.

                  The  headings  used in the table of contents  and in this Loan
Agreement are for convenience  only and shall not be deemed to constitute a part
hereof.  All uses herein of any gender or of  singular or plural  terms shall be
deemed to include uses of the other genders or plural or singular  terms, as the
context may  require.  All  references  in this Loan  Agreement to an Article or
section  shall be to an  Article  or  section  of this  Loan  Agreement,  unless
otherwise specified.  This Loan Agreement shall be governed by and construed and
enforced  in  accordance  with the laws of the State of New York  applicable  to
contracts  to be  performed  wholly  within the State of New York  entered  into
between parties all of whom are citizens and residents of the State of New York.
It is  intended  that  the  transactions  contemplated  by this  Loan  Agreement
constitute  an "exempt  loan"  within the  meaning of  Treasury  Regulation  ss.
54.4975-7(b)(1)(iii) and Department of Labor Regulation ss. 2550.408b-3, and the
provisions  hereof  shall be  construed  and enforced in such manner as shall be
necessary to give effect to such intent.

                  Section 6.10      Severability.

                  Wherever possible, each provision of this Loan Agreement shall
be interpreted in such manner as to be effective and valid under applicable law;
however, the provisions of this Loan Agreement are severable,  and if any clause
or provision  hereof shall be held invalid or  unenforceable in whole or in part
in any jurisdiction,  then such invalidity or unenforceability shall affect only
such clause or provision, or part thereof, in such jurisdiction and shall not in
any manner  affect such clause or  provision in any other  jurisdiction,  or any
other clause or provision in this Loan  Agreement in any  jurisdiction.  Each of
the covenants,  agreements  and  conditions  contained in this Loan Agreement is
independent,  and  compliance  by a party  with  any of them  shall  not  excuse
non-compliance  by such party with any other.  The  Borrower  shall not take any
action  the  effect  of which  shall  constitute  a breach or  violation  of any
provision of this Loan Agreement.

                  Section 6.11      Binding Effect; No Assignment or Delegation.

                  This Loan  Agreement  shall be  binding  upon and inure to the
benefit of the Borrower and its successors and the Lender and its successors and
assigns.  The rights and  obligations of the Borrower under this Agreement shall
not be assigned or delegated  without the prior  written  consent of the Lender,
and any purported assignment or delegation without such consent shall be void.

<PAGE>   19

                                       16-

                  IN WITNESS  WHEREOF,  the parties hereto have caused this Loan
Agreement to be duly executed as of the date first above written.

                           ASTORIA FEDERAL SAVINGS AND LOAN ASSOCIATION
                           EMPLOYEE STOCK OWNERSHIP PLAN TRUST

                           By      STATE STREET BANK AND TRUST COMPANY,
                                   solely as Trustee and not in any other
                                   capacity

                           By:     /S/ Marianne E. Sullivan

                           Name:   Marianne E. Sullivan

                           Title:  Vice President

                           ASTORIA FINANCIAL CORPORATION

                           By:     /S/ Alan P. Eggleston

                           Name:   Alan P. Eggleston

                           Title:  Executive Vice President and General Counsel

<PAGE>   20

                                                                       EXHIBIT 1

                                 PROMISSORY NOTE

$18,614,833.29                                            Lake Success, New York
                                                                 January 1, 2000

                  FOR VALUE RECEIVED,  the undersigned,  ASTORIA FEDERAL SAVINGS
AND LOAN  ASSOCIATION  EMPLOYEE  STOCK  OWNERSHIP  PLAN TRUST (the  "Borrower"),
acting  through and by its  Trustee,  STATE  STREET BANK AND TRUST  COMPANY (the
"Trustee"), hereby promises to pay to the order of ASTORIA FINANCIAL CORPORATION
(the "Lender") the sum of EIGHTEEN MILLION SIX HUNDRED  FOURTEEN  THOUSAND EIGHT
HUNDRED THIRTY-THREE DOLLARS AND TWENTY-NINE CENTS  ($18,614,833.29)  payable in
annual installments, each of which shall be in the amount determined pursuant to
sections  2.4 and 2.5(b) of the Amended and  Restated  Loan  Agreement  made and
entered  into as of January 1, 2000 by and between the  Borrower  and the Lender
(the "Loan Agreement"),  as of the last Business Day of December, 2000 and as of
the last  Business Day of each  December  thereafter,  through and including the
last business day of December  2029, at which date the entire  principal  amount
then outstanding shall be due and payable.  Principal  payments may be deferred,
in whole or in part, to the extent provided in the Loan Agreement.

                  This  Promissory  Note shall bear  interest at the rate of six
percent (6.00%) per annum set forth or established under the Loan Agreement from
the date of the Loan  Agreement,  such interest to be payable at the time and in
the manner set forth in the Loan  Agreement  commencing on the last Business Day
of 2000 and  thereafter  on the last  Business Day of each  succeeding  calendar
year. Interest accrued shall cumulate until paid but shall not be compounded.

                  Anything   herein  to  the   contrary   notwithstanding,   the
obligation of the Borrower to make payments of interest  shall be subject to the
limitation  that  payments of  interest  shall not be required to be made to the
Lender to the extent that the Lender's  receipt thereof would not be permissible
under the law or laws  applicable to the Lender limiting rates of interest which
may be charged or collected by the Lender.  Any such payments of interest  which
are not made as a result of the limitation referred to in the preceding sentence
shall be made by the  Borrower to the Lender on the  earliest  interest  payment
date or dates on which the receipt  thereof would be permissible  under the laws
applicable  to the Lender  limiting  rates of  interest  which may be charged or
collected by the Lender. Such deferred interest shall not bear interest.

                  Payments of both  principal  and  interest on this  Promissory
Note are to be made at the principal office of the Lender at One Astoria Federal
Plaza,  Lake  Success,  New York 11042 or such other place as the holder  hereof
shall designate to the Borrower in writing, in lawful money of the United States
of America in immediately available funds.

<PAGE>   21

                  Failure to make any payment of  principal  on this  Promissory
Note, or failure to make any payment of interest on this  Promissory  Note,  not
later than five (5) Business  Days after the date when due,  shall  constitute a
default  hereunder,  whereupon the principal  amount of and accrued  interest on
this  Promissory  Note shall  immediately  become due and payable in  accordance
with,  but also subject to the  limitations  set forth in, the terms of the Loan
Agreement.

                  This Promissory Note is subject, in all respects, to the terms
and  provisions  of the Loan  Agreement,  which is  incorporated  herein by this
reference,  and is secured by a Pledge  Agreement  between the  Borrower and the
Lender of even date herewith and is entitled to the benefits thereof.

                                    ASTORIA FEDERAL SAVINGS AND LOAN ASSOCIATION
                                    EMPLOYEE STOCK OWNERSHIP PLAN TRUST

                                    By:  State Street Bank and Trust Company,
                                         solely as Trustee and not in any other
                                         capacity

                                    By:

                                    Name:

                                    Title:

<PAGE>   22

                                                                       EXHIBIT 2
                                PLEDGE AGREEMENT

                  This PLEDGE AGREEMENT  ("Pledge  Agreement") is made as of the
1st day of January,  2000, by and between the ASTORIA  FEDERAL  SAVINGS AND LOAN
ASSOCIATION  EMPLOYEE  STOCK  OWNERSHIP  PLAN  TRUST,  acting by and through its
Trustee,  STATE STREET BANK AND TRUST COMPANY, a banking  corporation  organized
under  the  laws  of  the  Massachusetts  ("Pledgor"),   and  ASTORIA  FINANCIAL
CORPORATION ("Pledgee"),  a corporation organized and existing under the laws of
the State of Delaware.

                              W I T N E S S E T H :
                              --------------------

                  WHEREAS, this Pledge Agreement is being executed and delivered
to the Pledgee  pursuant to the terms of An Amended and Restated Loan  Agreement
of even date  herewith  ("Loan  Agreement"),  by and between the Pledgor and the
Pledgee;

                  NOW,  THEREFORE,  in  consideration  of the mutual  agreements
contained  herein  and in the Loan  Agreement,  the  parties  hereto  do  hereby
covenant and agree as follows:

                  Section 1. Definitions.  The following definitions shall apply
for  purposes  of this Pledge  Agreement,  except to the extent that a different
meaning is plainly indicated by the context;  all capitalized terms used but not
defined herein shall have the respective  meanings  assigned to them in the Loan
Agreement:

                  (a) "Collateral" shall mean the Pledged Shares and the Pledged
         Assets and, subject to section 5 hereof, and to the extent permitted by
         applicable  law, all rights with respect  thereto,  and all proceeds of
         such Pledged Shares, Pledged Assets and rights.

                  (b) "Event of Default" shall mean an event so defined in the
         Loan Agreement.

                  (c)  "Liabilities"  shall  mean  all  the  obligations  of the
         Pledgor  to the  Pledgee,  howsoever  created,  arising  or  evidenced,
         whether direct or indirect,  absolute or  contingent,  now or hereafter
         existing,  or due or to become due,  under the Loan  Agreement  and the
         Promissory Note.

                  (d) "Pledged Assets" means all assets of the Borrower pledged,
         as of  January 1,  2000,  as  collateral  security  for the  Borrower's
         performance  of its  obligations  under  that  certain  Loan  Agreement
         between the Borrower and the Lender dated April 14, 1994, excluding any
         Pledged Shares.

                                       1

<PAGE>   23

                  (e)  "Pledged  Shares"  shall  mean all the  shares  of common
         stock,  par value $ .01 per  share,  of Astoria  Financial  Corporation
         purchased  by the  Pledgor  with the  proceeds  of the loan made by the
         Pledgee to the Pledgor  pursuant to the Loan Agreement  dated April 14,
         1994,  but excluding any such shares  previously  released  pursuant to
         section 4.

                  Section 2. Pledge.  To secure the payment of and performance
of all the Liabilities, the Pledgor hereby pledges to the Pledgee, and grants to
the Pledgee a security interest in and lien upon the Collateral.

                  Section 3. Representations and Warranties of the Pledgor.  The
Pledgor represents, warrants, and covenants to the Pledgee as follows:

                  (a) to the actual  knowledge  of the Trustee,  the  execution,
         delivery and  performance of this Pledge  Agreement and the pledging of
         the Collateral hereunder do not and will not conflict with, result in a
         violation of, or constitute a default under any agreement  binding upon
         the Pledgor;

                  (b) the  Pledged  Shares are and will  continue to be owned by
         the Pledgor  free and clear of any liens or rights of any other  person
         except the lien  hereunder and under the Loan Agreement in favor of the
         Pledgee, and the security interest of the Pledgee in the Pledged Shares
         and the proceeds thereof is and will continue to be prior to and senior
         to the rights of all others;

                  (c) to  the  actual  knowledge  of the  Trustee,  this  Pledge
         Agreement is the legal, valid and binding obligation of the Pledgor and
         is enforceable against the Pledgor in accordance with its terms;

                  (d) the Pledgor shall,  from time to time, upon request of the
         Pledgee,  promptly  deliver to the Pledgee such  financing  statements,
         stock powers, proxies, and similar documents,  satisfactory in form and
         substance to the Pledgee, with respect to the Collateral as the Pledgee
         may reasonably request; and

                  (e) subject to the first sentence of section 4(b), the Pledgor
         shall not, so long as any Liabilities are  outstanding,  sell,  assign,
         exchange, pledge or otherwise transfer or encumber any of its rights in
         and to any of the Collateral.

                  Section 4.        Eligible Collateral.

                  (a) As used herein the term "Eligible  Collateral"  shall mean
that amount of Collateral  which has an aggregate fair market value equal to the
amount by which the Pledgor is in default  (without  regard to any amounts owing
solely as the result of an acceleration of the Loan

                                        2

<PAGE>   24

Agreement) or such lesser  amount of  Collateral as may be required  pursuant to
section 12 of this Pledge Agreement.

                  (b)  The  Collateral   shall  be  released  from  this  Pledge
Agreement in a manner conforming to the requirements of Treasury  Regulation ss.
54.4975-7(b)(8)(i),   as  the  same  may  be  from  time  to  time   amended  or
supplemented.  In the event of a termination  of the ESOP or the occurrence of a
Change in Control after December 31, 2009, all Pledged Shares shall be forthwith
released  from this  Pledge  Agreement  and shall not be applied to satisfy  any
Liabilities.  In the event of a Change in Control prior to January 1, 2010,  all
Pledged  Shares in excess of the number  determined  under the  following  table
shall be forthwith  released from this Pledge Agreement and shall not be applied
to satisfy any Liabilities:

  YEAR OF         PLEDGED        YEAR OF      PLEDGED
   CHANGE          SHARES        CHANGE        SHARES
     IN                            IN
  CONTROL                        CONTROL
  --------        ---------     --------       -------
    2001          1,048,266      2006             0
    2002            827,371      2007             0
    2003            606,476      2008             0
    2004            385,581      2009             0
    2005            164,686

To the extent that the  Collateral  consists of assets other than or in addition
to  Pledged  Shares,  the  provisions  of  such  Regulations  shall  be  applied
separately  to each  class of  security  or each  class  or other  type of asset
included in the Collateral.  Subject to such  Regulations,  the Pledgee may from
time to time, after any Default or Event of Default, and without prior notice to
the Pledgor,  transfer all or any part of the Eligible  Collateral into the name
of the Pledgee or its nominee,  with or without  disclosing  that such  Eligible
Collateral  is subject to any rights of the  Pledgor  and may from time to time,
whether  before or after any of the  Liabilities  shall  become due and payable,
without  notice to the Pledgor,  take all or any of the following  actions:  (i)
notify the parties  obligated  on any of the  Collateral  to make payment to the
Pledgee of any amounts due or to become due thereunder, (ii) release or exchange
all or any part of the  Collateral,  or  compromise  or  extend or renew for any
period  (whether or not longer than the original  period) any obligations of any
nature of any party with respect thereto, and (iii) take control of any proceeds
of the Collateral.

                  Section 5.        Delivery; Further Assurances.

                  (a) The Pledgor shall deliver to the Pledgee upon execution of
this Pledge  Agreement an assignment by the Pledgor of all the Pledgor's  rights
to and interest in the Collateral.

                  (b) So long as no  Default  or Event  of  Default  shall  have
occurred and be  continuing,  (i) the Pledgor  shall be entitled to exercise any
and all voting and other rights pertaining to the

                                        3

<PAGE>   25

Collateral or any part thereof for any purpose not  inconsistent  with the terms
of this Pledge Agreement,  and (ii) the Pledgor shall be entitled to receive any
and all cash dividends or other distributions paid in respect of the Collateral.

                  (c) For so long as this Pledge  Agreement  shall be in effect,
the Pledgor  shall take such other  actions  and execute and deliver  such other
documents  as the  Pledgee  may  reasonably  request  in order to secure for the
Pledgee's  benefit a perfected first priority lien and security  interest in any
or all of the Collateral under the New York Uniform  Commercial Code;  provided,
however, that the Pledgee shall not be required to take any action or execute or
deliver  any  document  pursuant  to this  section  5(c) to the  extent  that it
determines,  in reliance on an opinion of legal counsel, that the taking of such
action  or the  execution  or  delivery  of  such  document  would  result  in a
prohibited  transaction  under section 4975 of the Code or section 406 of ERISA,
impair the status of the ESOP as a  tax-qualified  plan under section  401(a) of
the Code or an employee  stock  ownership  plan under  section 4975 of the Code,
impair the tax-exempt status of the Borrower under section 501(a) of the Code or
violate any other requirement of ERISA applicable to the ESOP.

                  Section 6.        Events of Default.

                  (a) If a Default or an Event of Default shall be existing,  in
addition  to the rights it may have  under the Loan  Agreement,  the  Promissory
Note, and this Pledge Agreement,  or by virtue of any other instrument,  (i) the
Pledgee may exercise, with respect to Eligible Collateral, from time to time any
rights and  remedies  available  to it under the Uniform  Commercial  Code as in
effect from time to time in the State of New York or  otherwise  available to it
and (ii) the Pledgee shall have the right,  for and in the name, place and stead
of the Pledgor,  to execute  endorsements,  assignments,  stock powers and other
instruments of conveyance or transfer with respect to all or any of the Eligible
Collateral.  Written notification of intended disposition of any of the Eligible
Collateral  shall be given by the  Pledgee  to the  Pledgor  at least  three (3)
Business Days before such disposition. Subject to section 13 below, any proceeds
of any  disposition of Eligible  Collateral may be applied by the Pledgee to the
payment of expenses  in  connection  with the  Eligible  Collateral,  including,
without  limitation,  reasonable  attorneys'  fees and legal  expenses,  and any
balance of such  proceeds  may be applied by the  Pledgee  toward the payment of
such of the Liabilities as are in Default, and in such order of application,  as
the  Pledgee may from time to time  elect.  No action of the  Pledgee  permitted
hereunder  shall impair or affect its rights in and to the Eligible  Collateral.
All rights and remedies of the Pledgee  expressed  hereunder  are in addition to
all other rights and remedies  possessed by it, including,  without  limitation,
those contained in the documents referred to in the definition of Liabilities in
section 1 hereof.

                  (b) In any  sale  of any of the  Eligible  Collateral  after a
Default  or an Event of  Default  shall  have  occurred,  the  Pledgee is hereby
authorized to comply with any limitation or restriction in connection  with such
sale as it may be  advised  by  counsel  is  necessary  in order  to  avoid  any
violation of applicable law (including, without limitation, compliance with such
procedures as may restrict the number of  prospective  bidders and purchasers or
further  restrict  such  prospective  bidders or  purchasers to persons who will
represent  and  agree  that  they are  purchasing  for  their  own  account  for
investment  and not with a view to the  distribution  or resale of such Eligible
Collateral),

                                        4

<PAGE>   26

or in order to obtain such  required  approval of the sale or of the purchase by
any  governmental  regulatory  authority  or official,  and the Pledgor  further
agrees that such compliance  shall not result in such sale's being considered or
deemed not to have been made in a commercially  reasonable manner, nor shall the
Pledgee be liable or  accountable  to the  Pledgor for any  discount  allowed by
reason of the fact that such Eligible  Collateral is sold in compliance with any
such limitation or restriction.

                  Section 7.  Payment in Full.  Upon the  payment in full of all
outstanding  Liabili ties, this Pledge Agreement shall terminate and the Pledgee
shall forthwith assign, transfer and deliver to the Pledgor, against receipt and
without  recourse  to the  Pledgee,  all  Collateral  then  held by the  Pledgee
pursuant to this Pledge Agreement.

                  Section 8. No  Waiver.  No failure or delay on the part of the
Pledgee in exer cising any right or remedy hereunder or under any other document
which confers or grants any rights in the Pledgee in respect of the  Liabilities
shall  operate as a waiver  thereof nor shall any single or partial  exercise of
any such right or remedy preclude any other or further  exercise  thereof or the
exercise of any other right or remedy of the Pledgee.

                  Section 9. Binding Effect;  No Assignment or Delegation.  This
Pledge  Agreement shall be binding upon and inure to the benefit of the Pledgor,
the Pledgee and their respective successors and assigns, except that the Pledgor
may not  assign or  transfer  its rights  hereunder  without  the prior  written
consent of the Pledgee (which consent shall not unreasonably be withheld).  Each
duty or obligation of the Pledgor to the Pledgee  pursuant to the  provisions of
this  Pledge  Agreement  shall be  performed  in favor of any  person  or entity
designated  by the  Pledgee,  and any duty or  obligation  of the Pledgee to the
Pledgor  may be  performed  by any  other  person or  entity  designated  by the
Pledgee.

                  Section 10.  Governing  Law.  This Pledge  Agreement  shall be
governed by and construed and enforced in accordance  with the laws of the State
of New York  applicable to contracts to be performed  wholly within the State of
New York entered into between  parties all of whom are citizens and residents of
the State of New York.

                  Section 11. Notices.  All notices,  requests,  instructions or
documents  hereunder  shall be in writing and  delivered  by hand or  commercial
messenger service or sent by United States mail, registered or certified, return
receipt  requested,  with  proper  postage  prepaid,  or by telex or  facsimile,
addressed as follows:

                  (a)      If to the Pledgee:

                                Astoria Financial Corporation
                                One Astoria Federal Plaza
                                Lake Success, New York 11042
                                Attention: General Counsel

                                        5

<PAGE>   27

                  (b)     If to the Pledgor:

                               Astoria Federal Savings and Loan Association
                               Employee Stock Ownership Plan Trust
                               State Street Bank and  Trust Company
                               Investment Services Office
                               200 Newport Avenue
                               North Quincy, Massachusetts   02171

                          with copies to:

                               Astoria Federal Savings and Loan Association
                               Employee Stock Ownership Plan Trust
                               c/o Astoria Federal Savings and Loan Association
                               One Astoria Federal Plaza
                               Lake Success, New York  11042
                               Attention:       General Counsel

Any  notice,  request or  communication  hereunder  shall be deemed to have been
given on the day on which it is  delivered  by hand or by  commercial  messenger
service,  or sent by telex or facsimile,  to such party at its address specified
above, or, if sent by mail, on the third Business Day after the day deposited in
the mail,  postage  prepaid,  addressed as  aforesaid.  Any party may change the
person or address to whom or which notices are to be given hereunder,  by notice
duly given hereunder; provided, however, that any such notice shall be deemed to
have  been  given  only  when  actually  received  by the  party  to  whom it is
addressed.

                  Section 12.  Interpretation.  Wherever possible each provision
of this Pledge  Agreement shall be interpreted in such manner as to be effective
and valid under  applicable law, but if any provision hereof shall be prohibited
by or invalid under such law, such provisions shall be ineffective to the extent
of such  prohibition or invalidity,  without  invalidating the remainder of such
provision or the remaining provisions hereof.

                  Section  13.  Construction.  All  provisions  hereof  shall be
construed so as to maintain (a) the ESOP as a qualified leveraged employee stock
ownership plan under section 401(a) and 4975(e)(7) of the Internal  Revenue Code
of 1986 (the "Code"), (b) the Trust as exempt from taxation under section 501(a)
of the Code and (c) the loan made  pursuant to the Loan  Agreement  as an exempt
loan under Treasury  Regulation ss.  54.4975-7(b) and as described in Department
of Labor Regulation ss. 2550.408b-3.

                                        6

<PAGE>   28

                  IN  WITNESS  WHEREOF,  this  Pledge  Agreement  has been  duly
executed by the parties hereto as of the day and year first above written.

                                    ASTORIA FEDERAL SAVINGS AND LOAN
                                    ASSOCIATION EMPLOYEE STOCK OWNERSHIP PLAN
                                    TRUST

                                    By    STATE STREET BANK AND  TRUST COMPANY
                                          solely as Trustee and not in any other
                                          capacity

                                    By:

                                    Name:

                                    Title:

                                    ASTORIA FINANCIAL CORPORATION

                                    By:

                                    Name:

                                    Title:

                                        7

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