Document:

<PAGE>   1
EXHIBIT 10.5

                              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

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

                                       (i)

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                                   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)

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                                       -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.

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                                       -2-

                  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.

                  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

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                                       -3-

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

<PAGE>   7

                                       -4-

                  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
                   2014                    1/16
                   2015                    1/15
                   2016                    1/14
                   2017                    1/13
                   2018                    1/12
                   2019                    1/11
                   2020                    1/10

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                                       -5-

                 Column I               Column II

              Year of Payment          Fraction of
                                   Collateral Released
             -----------------     -------------------

                   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 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

<PAGE>   9

                                      -6-

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  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

<PAGE>   10

                                       -7-

          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  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.

<PAGE>   11

                                       -8-

                  (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.

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.

                  (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).

<PAGE>   12

                                       -9-

                  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.

                  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.

<PAGE>   13

                                      -10-

                  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, enforceable in accordance with its terms.

<PAGE>   14

                                      -11-

                  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
contributions   and  (b)  "Eligible   Collateral"  (as  defined  in  the  Pledge
Agreement); provided, however,

<PAGE>   15

                                      -12-

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

<PAGE>   16

                                      -13-

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
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

<PAGE>   17

                                      -14-

                           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 6.7       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.

<PAGE>   18

                                      -15-

                  Section 6.10      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-

[This page intentionally left blank.]

<PAGE>   20

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

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

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

                                  ASTORIA FINANCIAL CORPORATION

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

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

                                  Title:   Executive Vice President and General
                                           Counsel

<PAGE>   21

                                                                      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.

<PAGE>   22

                  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.

                                 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>   23

                                                                       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.

                                      -20-

<PAGE>   24

                  (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>   25

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>   26

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>   27

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  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>   28

                  (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.

                                       -6-

<PAGE>   29

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

                                       -7-

<PAGE>   30

                                       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 10.6

                                 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.

<PAGE>   2

                  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.

                        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
                                 ---------------------------------------------

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