Document:

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EXHIBIT 10.3

                                 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.

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

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

                       Title:   Vice President
                                -------------------------------------------<PAGE>   1
EXHIBIT 10.4

                                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.

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          (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.

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     (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.

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     (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

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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

               (b)     If to the Pledgor:

                              Astoria Federal Savings and Loan Association
                              Employee Stock Ownership Plan Trust
                              State Street Bank and Trust Company

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                              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.

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               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:     /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

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