1
EXHIBIT 10.1
AGREEMENT
This Agreement ("Agreement") is made and entered into as of December
28, 2000, by and between ASTORIA FEDERAL SAVINGS AND LOAN ASSOCIATION, a federal
savings association ("AFSL"); ASTORIA FINANCIAL CORPORATION, a Delaware
corporation ("AFC"); the ASTORIA FEDERAL SAVINGS AND LOAN ASSOCIATION EMPLOYEE
STOCK OWNERSHIP PLAN TRUST (the "AFSL Trust"), acting by and through its
trustee, State Street Bank and Trust Company ("AFSL Trustee"); and THE LONG
ISLAND SAVINGS BANK FSB EMPLOYEE STOCK OWNERSHIP PLAN TRUST ("LISB Trust"),
acting by and through its trustee, CG Trust Company ("LISB Trustee") (The AFSL
Trust and the LISB Trust are hereinafter referred to individually as a "Trust"
and collectively as the "Trusts", and the AFSL Trustee and the LISB Trustee are
hereinafter referred to individually as a "Trustee" and collectively as the
"Trustees").
PRELIMINARY STATEMENT
AFSL adopted the Astoria Federal Savings and Loan Association Employee
Stock Ownership Plan ("AFSL ESOP") and the AFSL Trust on November 18, 1993, as a
tax-qualified and tax-exempt plan and trust. AFC and the AFSL Trust entered into
a Loan Agreement and related documents as of November 18, 1993 (as amended, the
"Existing AFSL Loan Documents") pursuant to which AFC lent $33,029,425 to the
AFSL Trust ("AFSL Loan") for the purpose of acquiring 2,642,354 shares (after
giving effect to stock splits and stock dividends) of common stock, par value
$.01 per share, of AFC ("AFC Common Stock"). The Long Island Savings Bank FSB
("LISB") adopted The Long Island Savings Bank FSB Employee Stock Ownership Plan
("LISB ESOP") and the LISB Trust on March 31, 1994, as a tax-qualified and
tax-exempt plan and trust. Long Island Bancorp, Inc. ("LIB") and the LISB Trust
entered into a Loan Agreement and related documents as of April 14, 1994 (as
amended, the "Existing LISB Loan Documents") pursuant to which LIB lent
$23,784,300 to the LISB Trust ("LISB Loan") for the purpose of acquiring
2,070,000 shares of common stock of LIB.
Pursuant to an Agreement and Plan of Merger dated as of April 2, 1998
by and between AFC and LIB, as amended ("Merger Agreement"), LIB merged into
AFC, LISB merged into AFSL, each share of common stock of LIB was converted into
1.15 shares AFC Common Stock, and AFSL became the sponsor of the LISB ESOP, all
as of September 30, 1998. As of the date of this Agreement, AFSL maintains both
the AFSL ESOP and the LISB ESOP. At January 1, 2000, the outstanding balance due
on the AFSL Loan was $18,614,833.29 (the "Initial AFSL Principal Amount") and
the number of shares of AFC Common Stock pledged as collateral security therefor
was 1,269,161 (the "Initial AFSL Unallocated Shares"). At January 1, 2000, the
outstanding balance due on the LISB Loan was $20,978,881.02 (the "Initial LISB
Principal Amount") and the number of shares of AFC Common Stock pledged as
collateral security therefor was 1,728,337 (the "Initial LISB Unallocated
Shares"). In furtherance of the integration of the staff and operations of AFSL
and LISB, and pursuant to the Merger Agreement, AFSL wishes to provide a uniform
benefits program for all employees of the combined entity, including a single,
tax-qualified employee stock ownership plan with an appropriate contribution and
benefit structure based on a restructuring of the
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terms of the AFSL Loan and the LISB Loan. AFSL is willing to provide certain
benefit enhancements for participants to secure the Trustees' consent to the
loan restructuring.
The Trustees, with the benefit of the advice of their counsel and
independent financial advisors, have reviewed various proposals presented by
AFSL and AFC and have negotiated with AFSL and AFC to establish terms and
conditions for a loan restructuring that are mutually acceptable to the parties
and considered by each Trustee to be in the interest of the participants in the
AFSL ESOP and LISB ESOP and their respective beneficiaries to which such Trustee
owes a fiduciary duty pursuant to the Employee Retirement Income Security Act of
1974, as amended.
In consideration of the premises and the mutual covenants hereinafter
set forth, AFC, AFSL and the Trustees have reached the following agreement.
AGREEMENT
1. Amended and Restated Loan Agreements.
(a) As soon as practicable after the execution of this Agreement, and
in any event prior to December 31, 2000, AFC and the AFSL Trust shall
restructure the AFSL Loan by entering into an amended and restated loan
agreement, substantially in the form attached hereto as Exhibit A (the "Amended
AFSL Loan Documents"), to give effect to the following:
(i) The terms of the Amended AFSL Loan Documents will
supersede the terms of the Existing AFSL Loan Documents, effective as
of January 1, 2000.
(ii) The Initial AFSL Principal Amount, plus accrued interest
from December 31, 1999 at the rate of 6.00% per annum, shall be repaid
in 30 annual payments, due on the last business day of December for
each calendar year in which the AFSL Loan is outstanding, beginning
December 2000, and each such payment (the "Minimum Scheduled AFSL
Payment") shall be equal to an amount which would result in the release
of a number of shares of AFC Common Stock pledged as collateral
security for the AFCL Loan as of the first day of the calendar year in
which the payment is made (the "AFSL Unallocated Shares") equal to the
product of (A) the number of AFSL Unallocated Shares and (B) the
fraction specified in Column II:
Column I Column II
Fraction of
Year of Payment Collateral Released
2000 1/30
2001 1/29
2002 1/28
2003 1/27
2004 1/26
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Column I Column II
Fraction of
Year of Payment Collateral Released
2005 1/25
2006 1/24
2007 1/23
2008 1/22
2009 1/21
2010 1/20
2011 1/19
2012 1/18
2013 1/17
2014 1/16
2015 1/15
2016 1/14
2017 1/13
2018 1/12
2019 1/11
2020 1/10
2021 1/9
2022 1/8
2023 1/7
2024 1/6
2025 1/5
2026 1/4
2027 1/3
2028 1/2
2029 1
(iii) For each calendar year after 1999 during which the AFSL
Loan is outstanding AFSL shall make a mandatory prepayment of all or
part of the AFSL Loan (the "Mandatory AFSL Prepayment") if the
aggregate Fair Market Value (as hereinafter defined) of the Initial
AFSL Unallocated Shares and Initial LISB Unallocated Shares allocated
to participant accounts as a result of the Minimum Scheduled AFSL
Payment and Minimum Scheduled LISB Payment (as hereinafter defined) and
the Mandatory LISB Prepayment (as hereinafter defined) for such
calendar year is less than an amount equal to 14% of the total
compensation taken into account under the AFSL ESOP for the purpose of
allocations of Initial AFSL Unallocated Shares and Initial LISB
Unallocated Shares ("Minimum Annual Release Value"). The amount of the
Mandatory AFSL Prepayment for any calendar year shall be equal to that
amount of principal and/or interest which, when added to the
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Minimum Scheduled AFSL Payment and Minimum Scheduled LISB Payment and
any Mandatory LISB Prepayment previously made or then being made for
such calendar year, will result in the release for allocation to
participant accounts of the lesser of (A) a number of Initial AFSL
Unallocated Shares and Initial LISB Unallocated Shares with an
aggregate Fair Market Value equal to the Minimum Annual Release Value
or (B) the entire number of Initial AFSL Unallocated Shares and
Initial LISB Unallocated Shares that are currently unallocated.
(iv) The number of the Initial AFSL Unallocated Shares to be
released annually for allocation to the accounts of participating
employees in accordance with the terms of the AFSL ESOP shall be
determined in accordance with 26 C.F.R. ss.54.4975-7(b)(8)(i) (the
"Minimum Scheduled AFSL Share Allocation").
(v) Any mandatory or optional prepayments shall be applied
to reduce the outstanding principal balance.
(vi) Neither the AFSL Unallocated Shares nor the proceeds of
sale thereof shall be used to make any payments due on the outstanding
loan except as provided section 1(a)(vii) or in the event of a default
in payment resulting from the failure of the trustee of the AFSL ESOP
to use dividend income on AFSL Unallocated Shares or LISB Unallocated
Shares and employer contributions made for purposes of debt service, in
each case actually received by such trustee.
(vii) The entire outstanding principal amount of the
outstanding loan shall become immediately due and payable in the event
of a termination of the AFSL ESOP or a Change in Control (as defined in
the Amended AFSL Loan Documents). In such event, neither the AFSL
Unallocated Shares nor the proceeds of sales thereof shall be used to
repay any portion of the outstanding loan except in the event of a
Change in Control (as defined in the Amended AFSL Loan Documents) prior
to January 1, 2010. In the event of a Change in Control (as defined in
the Amended AFSL Loan Documents) prior to January 1, 2010, the maximum
number of AFSL Unallocated Shares (or proceeds of the sale thereof)
that may be used to repay the outstanding loan shall be equal to the
total number of AFSL Baseline Shares for the year in question,
determined with reference to the table set forth in section 3(b) of
this Agreement.
(b) As soon as practicable after the execution of this Agreement, and
in any event prior to December 31, 2000, AFC and the LISB Trust shall
restructure the LISB Loan by entering into an amended and restated loan
agreement, substantially in the form attached hereto as Exhibit B (the "Amended
LISB Loan Documents"), to give effect to the following:
(i) The terms of the Amended LISB Loan Documents will
supersede the terms of the Existing LISB Loan Documents, effective as
of January 1, 2000.
(ii) The Initial LISB Principal Amount, plus accrued interest
from December 31, 1999 at the rate of 6.00% per annum, shall be repaid
in 30 annual payments, due on the last business day of December for
each calendar year in which the LISB Loan is outstanding, beginning
December 2000, and each such payment (the "Minimum Scheduled LISB
Payment") shall be equal to or greater than an
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amount which would result in the release of a number of shares of AFC Common
Stock pledged as collateral security for the LISB Loan as of the first day of
the calendar year in which the payment is made (the "LISB Unallocated Shares")
equal to the product of (A) the number of LISB Unallocated Shares and (B) the
fraction specified in Column II
Column I Column II
Fraction of
Year of Payment Collateral Released
2000 1/30
2001 1/29
2002 1/28
2003 1/27
2004 1/26
2005 1/25
2006 1/24
2007 1/23
2008 1/22
2009 1/21
2010 1/20
2011 1/19
2012 1/18
2013 1/17
2014 1/16
2015 1/15
2016 1/14
2017 1/13
2018 1/12
2019 1/11
2020 1/10
2021 1/9
2022 1/8
2023 1/7
2024 1/6
2025 1/5
2026 1/4
2027 1/3
2028 1/2
2029 1
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(iii) For each calendar year after 1999 during which the LISB
Loan is outstanding AFSL shall make a mandatory prepayment of all or
part of the LISB Loan (the "Mandatory LISB Prepayment") if the
aggregate Fair Market Value (as hereinafter defined) of the Initial
AFSL Unallocated Shares and Initial LISB Unallocated Shares allocated
to participant accounts as a result of the Minimum Scheduled AFSL
Payment and Minimum Scheduled LISB Payment and the Mandatory AFSL
Prepayment for such calendar year is less than the Minimum Annual
Release Value. The amount of the Mandatory AFSL Prepayment for any
calendar year shall be equal to that amount of principal and/or
interest which, when added to the Minimum Scheduled AFSL Payment and
Minimum Scheduled LISB Payment and any Mandatory AFSL Prepayment
previously made or then being made for such calendar year, will result
in the release for allocation to participant accounts of the lesser of
(A) a number of Initial AFSL Unallocated Shares and Initial LISB
Unallocated Shares with an aggregate Fair Market Value equal to the
Minimum Annual Release Value or (B) the entire number Initial AFSL
Unallocated Shares and Initial LISB Unallocated Shares that are
currently unallocated.
(iv) The number of the Initial LISB Unallocated Shares to be
released annually for allocation to the accounts of participating
employees in accordance with the terms of the AFSL ESOP shall be
determined in accordance with 26 C.F.R. ss.54.4975-7(b)(8)(i) (the
"Minimum Scheduled LISB Share Allocation").
(v) Any mandatory or optional prepayments shall be applied
to reduce the outstanding principal balance.
(vi) Neither the AFSL Unallocated Shares nor the proceeds of
sale thereof shall be used to make any payments due on the outstanding
loan except as provided section 1(a)(vii) or in the event of a default
in payment resulting from the failure of the trustee of the AFSL ESOP
to use dividend income on AFSL Unallocated Shares or LISB Unallocated
Shares and employer contributions made for purposes of debt service, in
each case actually received by such trustee.
(vii) The entire outstanding principal amount of the
outstanding loan shall become immediately due and payable in the event
of a termination of the AFSL ESOP or a Change in Control (as defined in
the Amended LISB Loan Documents). In such event, neither the LISB
Unallocated Shares nor the proceeds of sales thereof shall be used to
repay any portion of the outstanding loan except in the event of a
Change in Control (as defined in the Amended LISB Loan Documents) prior
to January 1, 2010. In the event of a Change in Control (as defined in
the Amended LISB Loan Documents) prior to January 1, 2010, the maximum
number of LISB Unallocated Shares (or proceeds of the sale thereof)
that may be used to repay the outstanding loan shall be equal to the
total number of LISB Baseline Shares for the year in question,
determined with reference to the table set forth in section 3(b) of
this Agreement.
(vi) The Minimum Scheduled LISB Payment and the Minimum LISB
prepayment for calendar year 2000 shall be reduced to the extent
necessary to reflect (A) payments on the LISB Loan pursuant to the
terms of the Existing LISB Loan
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Documents during such year and (B) the value of allocations of LISB
Unallocated Shares during such year to employees participating in the
LISB ESOP.
(c) AFC and AFSL may, in their sole and absolute discretion, direct
that the transactions described in sections 1(a) and (b) be restructured as
extensions of new loans by AFSL, the proceeds of which are required to be used
to prepay in full the Trusts' indebtedness to AFC pursuant to the Existing AFSL
Loan Documents and the Existing LISB Loan Documents.
2. Merger of AFSL ESOP and LISB ESOP.
---------------------------------
As soon as practicable following the execution of this Agreement, AFSL
shall take such actions as are necessary to effect the merger of the LISB ESOP
with and into the Astoria ESOP, effective no later than December 31, 2000 (the
"ESOP Merger Effective Date"). Effective as of the ESOP Merger Effective Date,
the LISB Trust shall be deemed to form, and shall be continued as, a part of the
AFSL ESOP. Nothing in this Agreement shall be construed to require or preclude
the continuation of the LISB Trust and AFSL Trust as separate trusts with
separate trustees or their merger into a single trust with a single trustee. In
the event of a merger of the AFSL Trust with the LISB Trust, AFC and AFSL shall
have the right to require that the loans described section 1 of this Agreement
be combined into a single loan and that all of the collateral given for either
of such loan serve as collateral for the combined loan.
3. Amendment of AFSL ESOP.
----------------------
In consideration for the execution and delivery of this Agreement by
the AFSL Trust and the LISB Trust and the performance of the Trusts' respective
obligations hereunder, AFSL shall adopt an amendment to the AFSL ESOP as soon as
practicable after the execution of this Agreement and in no event later than the
ESOP Merger Effective Date, substantially in the form attached hereto as Exhibit
C, to effect the following additional benefit enhancements and protections for
the benefit of participants in the AFSL ESOP:
(a) On or before December 31, 2000: (i) AFSL shall cause the
LISB Trustee and the AFSL Trustee to apply all dividends on AFC Common
Stock held by them that have not previously been used to make loan
payments on the AFSL Loan or the LISB Loan or allocated to participant
accounts as investment income ("2000 Unallocated Dividends"): (A) to
make Minimum Scheduled AFSL Payments and Minimum Scheduled LISB
Payments, respectively; and (B) to make additional payments on the AFSL
Loan and/or the LISB Loan if and to the extent necessary to satisfy
section 4(c) of this Agreement for 2000; and (C) to the extent that the
2000 Unallocated Dividends exceed the aggregate of the Minimum
Scheduled LISB Payment and the Minimum Scheduled AFSL Payment for 2000
and the amount applied to additional loan payments in accordance with
section 4(a) of this Agreement, to the accounts of participants as
additional investment income; and (ii) to the extent the dividends
applied to participant accounts pursuant to clause (a)(i)(c) of this
paragraph are less than one million dollars, AFSL shall make an
additional contribution to participants' accounts equal to this
deficit.
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(b) On or before December 31st of 2001, 2002, 2003, 2004,
2005, 2006, 2007, 2008 and 0000, XXXX shall cause the accounts of
participants in the AFSL ESOP to be credited with an aggregate amount
(the "Pre-2010 Dividend Make-Whole Amount") equal to the product of (i)
the aggregate dividends paid by AFC with respect to a Share of AFC
Common Stock during such year, multiplied by (ii) the excess (if any)
of the total number of Initial AFSL Unallocated Shares and Initial LISB
Unallocated Shares that remain unallocated as of the first day of such
year (the "Actual Unallocated Shares") over the total number of Initial
AFSL Unallocated Shares and Initial LISB Unallocated Shares that would
have been unallocated as of such date under the terms of the Existing
AFSL Loan Documents and the Existing LISB Loan Documents (the "Baseline
Shares"). The number of Baseline Shares for any such year shall be
determined by reference to the following table:
Year Baseline Shares Year Baseline Shares
Total AFSL LISB Total XXXX XXXX
0000 2,757,166 1,048,266 1,708,900 2006 1,611,725 0 1,611,725
2002 2,516,834 827,371 1,689,463 2007 1,592,288 0 1,592,288
2003 2,276,502 606,476 1,670,026 2008 1,572,851 0 1,572,851
2004 2,036,170 385,581 1,650,589 2009 1,553,414 0 1,553,414
2005 1,755,838 164,686 1,591,152 2010 & 0 0 0
later
For calendar years 2010 through 0000, XXXX shall cause the accounts of
participants in the AFSL ESOP to be credited with an amount, in cash,
equal to the aggregate dividends paid by AFC with respect to the entire
number of Actual Unallocated Shares (together with the Pre-2010
Dividend Make-Whole Amount, the "Dividend Make-Whole Amount"). The
crediting of the Dividend Make-Whole Amount for any year shall be in
the form of an allocation of dividends on Actual Unallocated Shares to
participants' accounts as investment income, an additional employer
contribution, or a combination thereof, as AFSL, in it sole and
absolute discretion, may determine.
(c) For so long as the Amended AFSL Loan or the Amended LISB
Loan remains outstanding, AFSL shall take such actions as are necessary
to ensure that the Fair Market Value of the AFC Common Stock allocated
to participants' accounts each year as a consequence of payments on the
Amended AFSL Loan and the Amended LISB Loan is no less than the lesser
of 14% of the aggregate "Cash Compensation" (as defined in the AFSL
ESOP) of the "Active Participants" (as defined in the AFSL ESOP) for
the year in question and 100% of the Fair Market Value of the entire
number of Actual Unallocated Shares. Such actions may include, but are
not limited to, making additional employer contributions to be used to
make partial prepayments of principal on the AFSL Loan and/or the LISB
Loan and using dividends received with respect to Actual Unallocated
Shares to make partial prepayments of principal on the AFSL Loan and/or
the LISB Loan. For purposes of this section 4(c), the "Fair Market
Value" of a share of AFC Common Stock for any year shall be equal to
the average of the closing sales prices for a share of AFC Common Stock
on the Nasdaq Stock Market National Market System (or other
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principal national securities exchange on which AFC Common Stock is
then listed or admitted to trading) on each of the last 20 trading
days preceding December 1st of such year on which a sale of AFC Common
Stock occurs, as reported in the New York City edition Wall Street
Journal or such other reputable source of stock quotations as AFSL may
select.
(d) For calendar years 2001, 2002, 2003, 2004, 2005, 2006,
2007, 2008 and 0000, XXXX shall make a additional annual employer
contribution to the AFSL ESOP of $1,200,000 in addition to the employer
contributions (if any) under sections 4(a), (b) and (c) (the
"Additional Contribution"). Such additional annual contribution for any
year shall be reduced by the amount (if any) of the dividend income for
such year with respect to Baseline Shares that is allocated to
participants' accounts as investment income to the extent not in excess
of payments made on the AFSL Loan and the LISB Loan for such year (the
"Offsetting Dividends"). If the Astoria ESOP is terminated prior to
December 31, 0000, XXXX shall, as of the date of termination of the
ESOP, make an additional employer contribution in an amount equal to
the excess of $10.8 million over the aggregate amount of Minimum
Contributions and Offsetting Dividend Income made and allocated as of
or prior to the date of termination. In no event shall the Additional
Contributions be used to make payments on the AFSL Loan or the LISB
Loan.
(e) To the extent that dividends paid by AFC with respect to
Actual Unallocated Shares for any year are allocated to participants'
accounts as investment income, such dividends shall not be available
for current distribution to participants and shall instead be retained
in each participant's account for subsequent distribution at the same
time and in the same manner as the remainder of such participant's
vested account balance.
(f) Neither the Actual Unallocated Shares nor the proceeds of
the sale thereof shall be used to make payment of principal or interest
on the AFSL Loan or the LISB Loan; provided, however, that (i) AFSL
Unallocated Shares and the LISB Unallocated Shares or the proceeds of
sale thereof shall be available to the lender in the event of a default
in payment resulting from the failure of the trustee of the AFSL ESOP
to use dividend income on AFSL Unallocated Shares or LISB Unallocated
Shares and employer contributions made for purposes of debt service, in
each case actually received by such trustee, if and to the extent
provided under the Amended AFSL Loan Documents or the Amended LISB Loan
Documents, as applicable; and (ii) in the event of a "Change in
Control" (as defined in the AFSL ESOP) prior to January 1, 2010, the
AFSL ESOP shall be terminated and the number of Baseline Shares for the
year in which the termination occurs may be used, if and to the extent
necessary, to prepay all or part of the AFSL Loan and the LISB Loan to
facilitate the allocation of any Actual Unallocated Shares remaining
after such prepayment to the accounts of participants as additional
investment income. In the event of (i) a termination of the AFSL ESOP
without a Change in Control prior to January 1, 2010 or (ii) any
termination of the AFSL ESOP on or after January 1, 2010, any
outstanding debt under the AFSL Loan and/or the LISB Loan shall be
immediately forgiven and any AFSL Unallocated Shares and/or LISB
Unallocated Shares or proceeds of the sale thereof allocated to AFSL
ESOP participants.
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(g) Dividend income on AFC Common Stock that is allocated to
participants' accounts shall in no event be used to make principal or
interest payments on the loans described in section 1 for any period
beginning after December 31, 1999.
(h) The provisions included in the AFSL ESOP in satisfaction
of this Agreement shall not be subject to amendment without the written
consent of the LISB Trustee and the AFSL Trustee or their respective
successor.
4. Conditions of Effectiveness.
(a) AFSL's and AFC's obligations under this Agreement shall be
conditioned upon the following:
(i) the AFSL Trust's and the LISB Trust's execution and
delivery to AFSL and AFC, prior to December 31, 2000,of this Agreement;
(ii) the AFSL Trust's and LISB Trust's execution and delivery to
AFC, prior to December 31, 2000, of the Amended AFSL Loan Documents
and the Amended LISB Loan Documents, respectively;
(iii) receipt of written certification (A) from the AFSL
Trustee, in form and substance satisfactory to AFSL and AFC, that such
Trustee has received the opinion of its financial advisor, in form and
substance satisfactory to such Trustee, substantially to the effect
that: (I) the interest rate established by the Amended AFSL Loan
Documents is not in excess of a reasonable rate; (II) the terms of the
Amended AFSL Loan Documents are at least as favorable to the applicable
Trust as would be the terms of a comparable loan resulting from arm's
length negotiations between independent parties; and (III) the
transactions described in this Agreement are fair to the AFSL ESOP and
(B) from the LISB Trustee that it has been directed by United States
Trust Company, in its capacity as investment manager to the LISB Trust,
to execute this Agreement; and
(iv) receipt from the AFSL Trustee and the LISB Trustee of
evidence satisfactory to AFSL and AFC that the documents described in
section 5(a)(i) and (ii) have been duly authorized and executed on
behalf of the applicable Trust by all requisite action on the part of
the applicable Trustee;
(b) Each Trustee's obligations hereunder shall be conditioned on
the following:
(i) AFSL's and AFC's execution and delivery of this Agreement
to such Trustee prior to December 31, 2000;
(ii) AFC's execution and delivery to such Trustee prior to
December 31, 2000 of the Amended AFSL Loan Documents or Amended LISB
Loan Documents, as applicable;
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(iii) in the case of the LISB Trust, receipt of a direction by
United States Trust Company, in its capacity as investment manager to
the LISB Trust, to execute this Agreement, and in the case of the AFSL
Trust, receipt from its financial advisor of an opinion, in form and
substance satisfactory to it, substantially to the effect that: (A) the
interest rate established by the Amended AFSL Loan Documents is not in
excess of a reasonable rate; (B) the terms of the Amended AFSL Loan
Documents are at least as favorable to the applicable Trust as would be
the terms of a comparable loan resulting from arm's length negotiations
between independent parties; and (C) the transactions described in this
Agreement are fair to the AFSL ESOP.
6. Changes in AFC Common Stock. In the event of any merger,
consolidation, or other business reorganization in which shares of AFC Common
Stock are exchanged for or converted into other securities or property, and in
the event of any stock split, stock dividend or other event generally affecting
the number of shares of AFC Common Stock held by each person who is then a
holder of record of shares of AFC Common Stock, each reference to a number of
shares of AFC Common Stock in this Agreement shall be adjusted to give effect to
such event, it being intended that any such adjustment preclude the enlargement
or diminution of the rights and obligations each party to this Agreement
relative to the other parties to this Agreement.
7. Amendments. This Agreement contains the entire understanding of the
parties with respect to the subject matter hereof and supersedes in their
entirety any and all prior agreements, understandings or arrangements, whether
or not in writing, concerning the subject matter hereof, other than the
engagement letters dated July 18, 2000, June 23, 2000, and June 30, 2000,
between AFSL and/or AFL, on the one hand, and U. S. Trust Company, National
Association, in its capacity as financial advisor to CG Trust Company, State
Street Bank and Trust Company and Duff & Xxxxxx, LLC, on the other hand. No
amendment to this Agreement shall be effective unless made in a written
instrument that specifically refers to this Agreement and is signed by all
parties hereto.
8. Descriptive Headings. Descriptive headings are for convenience
only and shall not control or affect the meaning or construction of any
provision of this Agreement.
9. Counterparts. For the convenience of the parties hereto, this
Agreement may be executed by the parties in two or more counterparts, all of
which shall be deemed one and the same instrument and each of which shall be
deemed to be an original.
10. Notices. Except as otherwise specifically provided for herein,
all notices, requests, reports and other communications pursuant to this
Agreement shall be in writing, either by letter (delivered by hand or commercial
messenger service or sent by registered or certified mail, return receipt
requested) or telex or facsimile, addressed as follows:
(a) If to the AFSL Trust:
State Street Bank and Trust Company
Investment Services Xxxxxx
000 Xxxxxxx Xxxxxx
Xxxxx Xxxxxx, Xxxxxxxxxxxxx 00000
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(b) If to the LISB ESOP Trust
CG Trust Company
000 X. Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
(c) If to AFSL:
Astoria Federal Savings and Loan Association
Xxx Xxxxxxx Xxxxxxx Xxxxx
Xxxx Xxxxxxx, Xxx Xxxx 00000-0000
Attention: General Counsel
(d) If to AFC:
Astoria Financial Corporation
Xxx Xxxxxxx Xxxxxxx Xxxxx
Xxxx Xxxxxxx, Xxx Xxxx 00000
Attention: General Counsel
Any notice, request or communication hereunder shall be deemed to have been
given on the day on which it is delivered by hand or by commercial messenger
service, or sent by telex or facsimile, to such party at its address specified
above, or, if sent by mail, on the third business day after the day deposited in
the mail, postage prepaid, addressed as aforesaid. Any party may change the
person or address to whom or which notices are to be given hereunder, by notice
duly given hereunder; provided, however, that any such notice shall be deemed to
have been given only when actually received by the party to whom it is
addressed.
11. Governing Law. This Agreement shall be governed by and construed
and enforced in accordance with the laws of the State of New York applicable to
contracts to be performed wholly within the State of New York entered into
between parties all of whom are citizens and residents of the State of New York.
Nothing contained herein shall be deemed to require any action that would cause
the AFSL ESOP to lose its tax-qualified status under the Code. Nothing herein
shall be deemed to confer any rights, whether as a third-party beneficiary or
otherwise, on any person or entity other than the signatories to this Agreement.
Page 12 of 13
13
IN WITNESS WHEREOF, the AFSL Trust, the LISB Trust, AFSL and
AFC have caused this Agreement to be executed in their names and on their behalf
by officers or representatives thereunto duly authorized.
ASTORIA FEDERAL SAVINGS AND LOAN
ASSOCIATION EMPLOYEE STOCK OWNERSHIP PLAN TRUST
By STATE STREET BANK AND TRUST COMPANY, solely
as Trustee and not in any other capacity
By: /S/ Xxxxxxxx X. Xxxxxxxx
------------------------------------------
Name: Xxxxxxxx X. Xxxxxxxx
-----------------------------------------
Title: Vice President
-----------------------------------------
THE LONG ISLAND SAVINGS BANK FSB
EMPLOYEE STOCK OWNERSHIP PLAN TRUST
By CG TRUST COMPANY, solely as Trustee and not
in any other capacity
By: /S/ Xxxx Xxx Xxxxxxxx
------------------------------------------
Name: Xxxx Xxx Xxxxxxxx
------------------------------------------
Title: Vice President
------------------------------------------
ASTORIA FEDERAL SAVINGS AND LOAN
ASSOCIATION
By: /S/ Xxxx X. Xxxxxxxxx
--------------------------------------------
Name: Xxxx X. Xxxxxxxxx
--------------------------------------------
Title: Executive Vice President and General Counsel
-------------------------------------------
ASTORIA FINANCIAL CORPORATION
By: /S/ Xxxx X. Xxxxxxxxx
--------------------------------------------
Name: Xxxx X. Xxxxxxxxx
-------------------------------------------
Title: Executive Vice President and General Counsel
--------------------------------------------
Page 13 of 13
14
EXHIBIT A
AMENDED AND RESTATED
LOAN AGREEMENT
by and between
ASTORIA FEDERAL SAVINGS AND LOAN ASSOCIATION
EMPLOYEE STOCK OWNERSHIP PLAN TRUST
and
ASTORIA FINANCIAL CORPORATION
Made and Entered Into as of
January 1, 2000
15
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS
Section 1.1 Business Day....................................1
Section 1.2 Code............................................2
Section 1.3 Default.........................................2
Section 1.4 ERISA...........................................2
Section 1.5 Event of Default................................2
Section 1.6 Independent Counsel.............................2
Section 1.7 Loan............................................2
Section 1.8 Loan Documents..................................2
Section 1.9 Pledge Agreement................................2
Section 1.10 Principal Amount................................2
Section 1.11 Promissory Note.................................2
Section 1.12 Register........................................2
ARTICLE II
THE LOAN; PRINCIPAL AMOUNT;
INTEREST; SECURITY
Section 2.1 The Loan; Principal Amount; Repayment of
Outstanding Indebtedness........................2
Section 2.2 Interest........................................3
Section 2.3 Promissory Note.................................4
Section 2.4 Payment of Loan.................................4
Section 2.5 Prepayment......................................4
Section 2.6 Method of Payments..............................6
Section 2.7 Security........................................7
Section 2.8 Registration of the Promissory Note.............8
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE BORROWER
Section 3.1 Power, Authority, Consents......................8
Section 3.2 Due Execution, Validity, Enforceability.........8
Section 3.3 Properties, Priority of Liens...................9
Section 3.4 No Defaults, Compliance with Laws...............9
Section 3.5 Marketable Title; Legality......................9
(i)
16
Page
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE LENDER
Section 4.1 Power, Authority, Consents......................9
Section 4.2 Due Execution, Validity, Enforceability........10
Section 4.3 ESOP; Contributions............................10
Section 4.4 Compliance with Laws; Actions..................10
ARTICLE V
EVENTS OF DEFAULT
Section 5.1 Events of Default under Loan Agreement.........10
Section 5.2 Lender's Rights upon Event of Default..........11
ARTICLE VI
MISCELLANEOUS PROVISIONS
Section 6.1 Payments.......................................11
Section 6.2 Survival.......................................12
Section 6.3 Modifications, Consents and Waivers; Entire
Agreement......................................12
Section 6.4 Remedies Cumulative............................12
Section 6.5 Further Assurances; Compliance with Covenants..12
Section 6.6 Notices........................................13
Section 6.8 Counterparts...................................13
Section 6.9 Construction; Governing Law....................14
Section 6.10 Severability...................................14
Section 6.11 Binding Effect; No Assignment or Delegation....14
EXHIBIT 1 Form of Promissory Note.......................................1-1
EXHIBIT 2 Form of Pledge Agreement......................................2-1
(ii)
17
LOAN AGREEMENT
This LOAN AGREEMENT (the "Loan Agreement") is made and entered
into as of the 1st day of January, 2000, by and between ASTORIA FEDERAL SAVINGS
AND LOAN ASSOCIATION EMPLOYEE STOCK OWNERSHIP PLAN TRUST (the "Borrower"), a
trust forming part of the ASTORIA FEDERAL SAVINGS AND LOAN ASSOCIATION EMPLOYEE
STOCK OWNERSHIP PLAN ("ESOP"), acting through and by its Trustee, STATE STREET
BANK AND TRUST COMPANY (the "Trustee"), a banking corporation organized under
the laws of the state of Massachusetts; and ASTORIA FINANCIAL CORPORATION (the
"Lender"), a corporation organized and existing under the laws of the state of
Delaware.
W I T N E S S E T H :
-------------------
WHEREAS, the Lender's wholly-owned subsidiary, ASTORIA FEDERAL
SAVINGS AND LOAN ASSOCIATION (the "Association"), maintains the ESOP for the
benefit of eligible employees; and
WHEREAS, the Borrower and the Lender are parties to a Loan
Agreement dated November 18, 1993 (the "Prior Agreement"), pursuant to which the
Borrower has borrowed funds from the Lender to finance the purchase of shares of
common stock, par value $.01 per share, of the Lender ("Shares") and has an
outstanding indebtedness in the amount of EIGHTEEN MILLION SIX HUNDRED FOURTEEN
THOUSAND EIGHT HUNDRED THIRTY-THREE DOLLARS AND TWENTY-NINE CENTS
($18,614,833.29) (the "Outstanding Indebtedness"), plus accrued and unpaid
interest from December 31, 1999; and
WHEREAS, the Borrower and the Lender have determined that it
is in their mutual interests to modify the terms of repayment of the Outstanding
Indebtedness in the manner set forth in this Agreement;
NOW, THEREFORE, the parties hereto agree that the Prior
Agreement shall be amended and restated in its entirety effective as of January
1, 2000, as follows:
ARTICLE I
DEFINITIONS
The following definitions shall apply for purposes of this
Loan Agreement, except to the extent that a different meaning is plainly
indicated by the context:
Section 1.1 Business Day means any day other than a Saturday,
Sunday or other day on which banks are authorized or required to close under
federal law or the laws of the State of New York.
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Section 1.2 Code means the Internal Revenue Code of 1986
(including the cor responding provisions of any succeeding law).
Section 1.3 Default means an event or condition which would
constitute an Event of Default. The determination as to whether an event or
condition would constitute an Event of Default shall be determined without
regard to any applicable requirement of notice or lapse of time.
Section 1.4 ERISA means the Employee Retirement Income
Security Act of 1974, as amended (including the corresponding provisions of any
succeeding law).
Section 1.5 Event of Default means an event or condition
described in Article V.
Section 1.6 Independent Counsel means legal counsel mutually
satisfactory to both the Lender and the Borrower.
Section 1.7 Loan means the loan described in section 2.1.
Section 1.8 Loan Documents means, collectively, this Loan
Agreement, the Promissory Note and the Pledge Agreement and all other documents
now or hereafter executed and delivered in connection with such documents,
including all amendments, modifications and supplements of or to all such
documents.
Section 1.9 Pledge Agreement means the agreement described in
section 2.7.
Section 1.10 Principal Amount means the face amount of the
Promissory Note, determined as set forth in section 2.1(a).
Section 1.11 Promissory Note means the promissory note
described in section 2.3.
Section 1.12 Register means the register described in section
2.8.
ARTICLE II
THE LOAN; PRINCIPAL AMOUNT;
INTEREST; SECURITY
Section 2.1 The Loan; Principal Amount; Repayment of
Outstanding Indebtedness.
(a) The Lender hereby lends to the Borrower EIGHTEEN MILLION
SIX HUNDRED FOURTEEN THOUSAND EIGHT HUNDRED THIRTY-THREE DOLLARS AND TWENTY-NINE
CENTS
19
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($18,614,833.29). For all purposes of this Loan Agreement, the Principal Amount
on any date shall be equal to the excess, if any, of:
(i) the aggregate amount lent by the Lender pursuant to
this section 2.1; over
(ii) the aggregate amount of any repayments of such amount
made before such date.
The Lender shall maintain on the Register a record of, and shall record on the
Promissory Note, the Principal Amount, any changes in the Principal Amount and
the effective date of any changes in the Principal Amount.
(b) Concurrently with the execution and delivery of this
Agreement, the Lender shall deliver to the Borrower the Borrower's original
promissory note issued pursuant to the Prior Agreement and evidencing the
Outstanding Indebtedness marked "PAID IN FULL".
(c) The transactions contemplated by this Agreement shall be
deemed a refinancing of the Outstanding Indebtedness for purposes of Treasury
Regulation ss. 54.4975-7.
Section 2.2 Interest.
(a) The Borrower shall pay to the Lender interest on the
Principal Amount, for the period commencing on the date of this Loan Agreement
and continuing until the Principal Amount shall be paid in full, at the rate of
six percent (6.00%) per annum. Interest payable under this Agreement for any
calendar month period shall be computed on the basis of a year of 360 days and
months consisting of 30 days each. For any period shorter than one calendar
month, interest payable under this Loan Agreement shall be computed on the basis
of a rate equal to six percent (6.00%) multiplied by a fraction equal to the
actual number of days in the period (including the first day but excluding the
last) divided by 360. The Lender shall remit to the Borrower, at least three (3)
Business Days before the end of each calendar year, a statement of the accrued
interest for such calendar year and the aggregate accrued and unpaid interest as
of the last day of such calendar year; provided, however, that a delay or
failure by the Lender in providing the Borrower with such statement shall not
alter the Borrower's obligation to make any payment of interest that may be due
but shall excuse any error in the computation of the amount of interest due that
is promptly cured upon receipt of written notice of such error from the Lender.
Accrued and unpaid interest shall cumulate until paid but shall not be
compounded.
(b) Anything in this Loan Agreement or the Promissory Note to
the contrary notwithstanding, the obligation of the Borrower to make payments of
interest shall be subject to the limitation that payments of interest shall not
be required to be made to the Lender to the extent that the Lender's receipt
thereof would not be permissible under the law or laws applicable to the Lender
limiting rates of interest which may be charged or collected by the Lender. Any
such payment referred to in the preceding sentence shall be made by the Borrower
to the Lender on the earliest interest payment date or dates on which the
receipt thereof would be permissible under the laws
20
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applicable to the Lender limiting rates of interest which may be charged or
collected by the Lender. Such deferred interest shall not bear interest.
Section 2.3 Promissory Note.
The Loan shall be evidenced by a Promissory Note of the
Borrower in substantially the form of Exhibit 1 attached hereto, dated January
1, 2000, payable to the order of the Lender in the Principal Amount and
otherwise duly completed.
Section 2.4 Payment of Loan.
The Loan shall be repaid in annual installments payable on the
last Business Day of each December ending after the date of this Agreement. The
amount (if any) of each such annual installment shall be equal to the maximum
amount of principal and interest accrued to and including the date of the
payment that may be paid without resulting in the release for allocation to
participants in the ESOP, pursuant to the Pledge Agreement, of a fraction of the
Shares pledged as collateral security pursuant to the Pledge Agreement as of the
first day of the calendar year in which the payment is made that is greater than
the fraction set forth in Column II below:
Column I Column II
Fraction of
Year of Payment Collateral Released
2000 1/30
2001 1/29
2002 1/28
2003 1/27
2004 1/26
2005 1/25
2006 1/24
2007 1/23
2008 1/22
2009 1/21
2010 1/20
2011 1/19
2012 1/18
2013 1/17
2014 1/16
2015 1/15
2016 1/14
2017 1/13
21
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Column I Column II
Fraction of
Year of Payment Collateral Released
2018 1/12
2019 1/11
2020 1/10
2021 1/9
2022 1/8
2023 1/7
2024 1/6
2025 1/5
2026 1/4
2027 1/3
2028 1/2
2029 1
provided, however, that the Borrower shall not be required to make any payment
of principal due to be made in any period to the extent that such payment would
not be deductible for federal income tax purposes under section 404 of the Code.
Payments may be deferred to the extent that such payments would be in excess of
the amount described above or otherwise would be nondeductible for federal
income tax purposes. Any payment shall be applied first to the payment of
accrued interest and second, if and to the extent that all accrued interest has
been or is then being paid, to the payment of all or part of the Principal
Amount.
Section 2.5 Prepayment.
(a) The Borrower may, with the prior written consent of the
Lender, prepay the Loan in whole or in part, at any time and from time to time.
Any such prepayment shall be: (i) permanent and irrevocable; (ii) made without
premium or penalty; and (iii) applied first to the payment of accrued interest
and second, if and to the extent that all accrued interest has been or is then
being paid, to the payment of all or part of the Principal Amount.
(b) For each calendar year after 1999 during which the Loan is
outstanding, a mandatory prepayment of all or part of the Loan (the "Mandatory
Prepayment") shall be made if the aggregate Fair Market Value (as hereinafter
defined) of the Shares pledged pursuant to the Pledge Agreement and pursuant to
the Pledge Agreement of even date herewith between The Long Island Savings Bank
FSB Employee Stock Ownership Plan Trust, acting by and through its Trustee, CG
Trust Company and the Lender (the "LISB Pledge Agreement"), and released
pursuant to sections 4(b) and 7 of the Pledge Agreement and pursuant to sections
4(b) and 7 of the LISB Pledge Agreement, and allocated to the accounts of
participants in the ESOP as a result of the payments
22
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described in sections 2.4 and 2.5(a) of this Loan Agreement and the payments
described in Section 2.4 and 2.5(a) of the Loan Agreement of even date herewith
between The Long Island Savings Bank FSB Employee Stock Ownership Plan Trust,
acting by and through its Trustee, CG Trust Company and the Lender (the "LISB
Loan Agreement") for such calendar year is less than an amount equal to 14% of
the total compensation taken into account under the ESOP for the purpose of
allocations to the accounts of participants in the ESOP of Shares pledged
pursuant to the Pledge Agreement and the LISB Pledge Agreement ("Minimum Annual
Release Value"). The amount of the Mandatory Prepayment for any calendar year
shall be equal to that amount of principal and/or interest which, when added to
the payment described in sections 2.4 and 2.5(a) of this Loan Agreement and the
payments described in sections 2.4, 2.5(a) and 2.5(b) of the LISB Loan Agreement
made or then being made for such calendar year, will result in the release for
allocation to participant accounts of the lesser of (A) a number of Shares
pledged pursuant to the Pledge Agreement and the LISB Pledge Agreement with an
aggregate Fair Market Value equal to the Minimum Annual Release Value or (B) the
entire number of Shares pledged pursuant to the Pledge Agreement and the LISB
Pledge Agreement that are currently unallocated. For purposes of this section
4(c), the "Fair Market Value" of a Share for any year shall be equal to the
average of the closing sales prices for a share of Share on the Nasdaq Stock
Market National Market System (or other principal national securities exchange
on which Shares are then listed or admitted to trading) on each of the last 20
trading days preceding December 1st of such year on which a sale of a Share
occurs, as reported in the New York City edition Wall Street Journal or such
other reputable source of stock quotations as Astoria Federal Savings and Loan
Association may select.
(c) In the event of the termination of the ESOP or the
occurrence of a "Change in Control (as hereinafter defined), the entire
outstanding Principal Amount and all accrued but unpaid interest shall thereupon
become immediately due and payable. A "Change of Control shall be deemed to have
occurred upon the happening of any of the following events:
(i) any event upon which any "person" (as such term is used in
sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as
amended), other than (A) a trustee or other fiduciary holding
securities under any employee benefit plan maintained for the benefit
of employees of Astoria Financial Corporation; (B) a corporation owned,
directly or indirectly, by the stockholders of Astoria Financial
Corporation in substantially the same proportions as their ownership of
stock of Astoria Financial Corporation; or (C) any group constituting a
person in which employees of Astoria Financial Corporation are
substantial members, becomes the "beneficial owner" (as defined in Rule
13d-3 promulgated under the Exchange Act), directly or indirectly, of
securities issued by Astoria Financial Corporation representing 25% or
more of the combined voting power of all of Astoria Financial
Corporation's then outstanding securities; or
(ii) any event upon which the individuals who on December 30,
2000 were members of the Board of Directors of Astoria Financial
Corporation, together with individuals whose election by such Board or
nomination for election by Astoria Financial Corporation's stockholders
was approved by the affirmative vote of at least two-thirds of the
members of such Board then in office who were either members of
23
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such Board on December 30, 2000 or whose nomination or election was
previously so approved, cease for any reason to constitute a majority
of the members of such Board, but excluding, for this purpose, any
such individual whose initial assumption of office is in connection
with an actual or threatened election contest relating to the election
of directors of Astoria Financial Corporation (as such terms are used
in Rule 14a-11 of Regulation 14A promulgated under the Securities
Exchange Act of 1934);as amended or
(iii) the consummation of either:
(A) a merger or consolidation of Astoria Financial Corporation
with any other corporation, other than a merger or consolidation
following which both of the following conditions are satisfied:
(I) either (1) the members of the Board of Directors
of Astoria Financial Corporation immediately prior to such
merger or consolidation constitute at least a majority of the
members of the governing body of the institution resulting
from such merger or consolidation; or (2) the shareholders of
Astoria Financial Corporation own securities of the
institution resulting from such merger or consolidation
representing 60% or more of the combined voting power of all
such securities then outstanding in substantially the same
proportions as their ownership of voting securities of Astoria
Financial Corporation before such merger or consolidation; and
(II) the entity which results from such merger or
consolidation expressly agrees in writing to assume and
perform Astoria Financial Corporation's obligations under the
ESOP; or
(B) a complete liquidation of Astoria Financial Corporation
or an agreement for the sale or disposition by Astoria Financial
Corporation of all or substantially all of its assets; or
(iv) any event that would be described in this section if
"Astoria Federal Savings and Loan Association" were substituted for
"Astoria Financial Corporation." therein.
Section 2.6 Method of Payments.
(a) All payments of principal, interest, other charges and
other amounts payable by the Borrower hereunder shall be made in lawful money of
the United States, in immediately available funds, to the Lender at the address
specified in or pursuant to this Loan Agreement for notices to the Lender, not
later than 3:00 P.M., Eastern Standard time, on the date on which such payment
shall become due. Any such payment made on such date but after such time shall,
if the amount paid bears interest, and except as expressly provided to the
contrary herein, be deemed to have been made on, and interest shall continue to
accrue and be payable thereon until, the next
24
-8-
succeeding Business Day. If any payment of principal or interest becomes due on
a day other than a Business Day, such payment may be made on the next succeeding
Business Day.
(b) Notwithstanding anything to the contrary contained in this
Loan Agreement or the Promissory Note, neither the Borrower nor the Trustee
shall be obligated to make any payment, repayment or prepayment on the
Promissory Note or take or refrain from taking any other action hereunder or
under the Promissory Note if doing so would cause the ESOP to cease to be an
employee stock ownership plan within the meaning of section 4975(e)(7) of the
Code or qualified under section 401(a) of the Code or cause the Borrower to
cease to be a tax exempt trust under section 501(a) of the Code or if such act
or failure to act would cause the Borrower or the Trustee to engage in any
"prohibited transaction" as such term is defined in section 4975(c) of the Code
and the regulations promulgated thereunder which is not exempted by section
4975(c)(2) or (d) of the Code and the regulations promulgated thereunder or in
section 406 of ERISA and the regulations promulgated thereunder which is not
exempted by section 408(b) of ERISA and the regulations promulgated thereunder;
provided, however, that in each case, the Borrower or the Trustee or both, as
the case may be, shall have acted or refrained from acting pursuant to this
section 2.6(b) in reliance on an opinion of Independent Counsel. Any opinion of
such Independent Counsel shall be full and complete authorization and protection
in respect of any action taken or suffered or omitted by the Trustee or the
Borrower hereunder in good faith and in accordance with such opinion of
Independent Counsel. Nothing contained in this section 2.6(b) shall be construed
as imposing a duty on either the Borrower or the Trustee to consult with
Independent Counsel. Any obligation of the Borrower or the Trustee to make any
payment, repayment or prepayment on the Promissory Note or to take or refrain
from taking any other act hereunder or under the Promissory Note which is
excused pursuant to this section 2.6(b) shall be considered a binding obligation
of the Borrower or the Trustee, or both, as the case may be, for the purposes of
determining whether a Default or Event of Default has occurred hereunder or
under the Promissory Note and nothing in this section 2.6(b) shall be construed
as providing a defense to any remedies otherwise available upon a Default or an
Event of Default hereunder (other than the remedy of specific performance).
Section 2.7 Security.
(a) In order to secure the due payment and performance by the
Borrower of all of its obligations under this Loan Agreement, simultaneously
with the execution and delivery of this Loan Agreement by the Borrower, the
Borrower shall:
(i) pledge to the Lender as Collateral (as defined in the
Pledge Agreement), and grant to the Lender a first priority lien on and
security interest in, all assets pledged by the Borrower as collateral
security for the Outstanding Indebtedness by the execution and delivery
to the Lender of a Pledge Agreement in the form attached hereto as
Exhibit 2; and
(ii) execute and deliver, or cause to be executed and
delivered, such other agreements, instruments and documents as the
Lender may reasonably require in order to effect the purposes of the
Pledge Agreement and this Loan Agreement.
25
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(b) The Lender shall release from encumbrance under the Pledge
Agreement and transfer to the Borrower, as of the date on which any payment or
prepayment is made, an amount of Collateral determined pursuant to section
Treasury Regulation ss. 54.4975-7(b)(8)(i).
Section 2.8 Registration of the Promissory Note.
(a) The Lender shall maintain a Register providing for the
registration of the Principal Amount and any stated interest and of transfer and
exchange of the Promissory Note. Transfer of the Promissory Note may be effected
only by the surrender of the old instrument and either the reissuance by the
Borrower of the old instrument to the new holder or the issuance by the Borrower
of a new instrument to the new holder. The old Promissory Note so surrendered
shall be canceled by the Lender and returned to the Borrower after such
cancellation.
(b) Any new Promissory Note issued pursuant to section 2.8(a)
shall carry the same rights to interest (unpaid and to accrue) carried by the
Promissory Note so transferred or ex changed so that there will not be any loss
or gain of interest on the note surrendered. Such new Promissory Note shall be
subject to all of the provisions and entitled to all of the benefits of this
Agreement. Prior to due presentment for registration or transfer, the Borrower
may deem and treat the registered holder of any Promissory Note as the holder
thereof for purposes of payment and all other purposes. A notation shall be made
on each new Promissory Note of the amount of all payments of principal and
interest theretofore paid.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE BORROWER
The Borrower hereby represents and warrants to the Lender as
follows:
Section 3.1 Power, Authority, Consents.
The Borrower has the power to execute, deliver and perform
this Loan Agreement, the Promissory Note and the Pledge Agreement, all of which
have been duly authorized by all neces sary and proper corporate or other
action.
Section 3.2 Due Execution, Validity, Enforceability.
Each of the Loan Documents, including, without limitation,
this Loan Agreement, the Promissory Note and the Pledge Agreement, have been
duly executed and delivered by the Borrower; and each constitutes the valid and
legally binding obligation of the Borrower, enforceable in accordance with its
terms.
26
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Section 3.3 Properties, Priority of Liens.
The liens which have been created and granted by the Pledge
Agreement constitute valid, first liens on the properties and assets covered by
the Pledge Agreement, subject to no prior or equal lien.
Section 3.4 No Defaults, Compliance with Laws.
The Borrower is not in default in any material respect under
any agreement, ordinance, resolution, decree, bond, note, indenture, order or
judgment to which it is a party or by which it is bound, or any other agreement
or other instrument by which any of the properties or assets owned by it is
materially affected.
Section 3.5 Marketable Title; Legality.
The Borrower has valid, legal and marketable title to all of
the Shares and other assets pledged as collateral pursuant to the Pledge
Agreement, free and clear of any liens, other than a pledge to the Lender of
such assets pursuant to the Pledge Agreement. Neither the execution and delivery
of the Loan Documents nor the performance of any obligation thereunder violates
any provision of law or conflicts with or results in a breach of or creates
(with or without the giving of notice or lapse of time, or both) a default under
any agreement to which the Borrower is a party or by which it is bound or any of
its properties is affected. No consent of any federal, state or local
governmental authority, agency or other regulatory body, the absence of which
could have a materially adverse effect on the Borrower or the Trustee, is or was
required to be obtained in connection with the execution, delivery or
performance of the Loan Documents and the transactions contemplated therein or
in connection therewith, including, without limitation, with respect to the
transfer of the Shares purchased with the proceeds of the Loan pursuant thereto.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE LENDER
The Lender hereby represents and warrants to the Borrower as
follows:
Section 4.1 Power, Authority, Consents.
The Lender has the power to execute, deliver and perform this
Loan Agreement, the Pledge Agreement and all documents executed by the Lender in
connection with the Loan, all of which have been duly authorized by all
necessary and proper corporate or other action. No consent, authorization or
approval or other action by any governmental authority or regulatory body, and
no
27
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notice by the Lender to, or filing by the Lender with, any governmental
authority or regulatory body is required for the due execution, delivery and
performance of this Loan Agreement.
Section 4.2 Due Execution, Validity, Enforceability.
This Loan Agreement and the Pledge Agreement have been duly
executed and delivered by the Lender; and each constitutes a valid and legally
binding obligation of the Lender, enforceable in accordance with its terms.
Section 4.3 ESOP; Contributions.
The ESOP and the Borrower have been duly created, organized
and maintained by the Lender in compliance with all applicable laws, regulations
and rulings. The ESOP qualifies as an "employee stock ownership plan" as defined
in section 4975(e)(7) the Code. The ESOP provides that the Lender may make
contributions to the ESOP in an amount necessary to enable the Trustee to
amortize the Loan in accordance with the terms of the Promissory Note and this
Loan Agreement, and the Lender will make such contributions; provided, however,
that no such contributions shall be required if they would adversely affect the
qualification of the ESOP under section 401(a) of the Code.
Section 4.4 Compliance with Laws; Actions.
Neither the execution and delivery by the Lender of this Loan
Agreement or any instruments required thereby, nor compliance with the terms and
provisions of any such documents by the Lender, constitutes a violation of any
provision of any law or any regulation, order, writ, injunction or decree of any
court or governmental instrumentality, or an event of default under any
agreement, to which the Lender is a party or by which the Lender is bound or to
which the Lender is subject, which violation or event of default would have a
material adverse effect on the Lender. There is no action or proceeding pending
or threatened against either of the ESOP or the Borrower before any court or
administrative agency.
ARTICLE V
EVENTS OF DEFAULT
Section 5.1 Events of Default under Loan Agreement.
Each of the following events shall constitute an "Event of
Default" hereunder:
(a) Failure to make any payment or mandatory prepayment of
principal of the Promissory Note, or failure to make any payment of interest on
the Promissory Note, within five (5)
28
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Business Days after the date when due; provided, however, that a default shall
be deemed to have occurred only if and to the extent that the Borrower has
received a contribution from the Lender to be used to make such payment or the
Borrower has received dividends which it is permitted to apply to make such
payment and the Borrower fails to apply such contribution or dividends to such
payment.
Section 5.2 Lender's Rights upon Event of Default.
If an Event of Default under this Loan Agreement shall occur
and be continuing, the Lender shall have no rights to assets of the Borrower
other than: (a) contributions (other than contributions of Common Stock) that
are made by the Lender to enable the Borrower to meet its obligations pursuant
to this Loan Agreement and earnings attributable to the investment of such
contributions and (b) "Eligible Collateral" (as defined in the Pledge
Agreement); provided, however, that: (i) the value of the Borrower's assets
transferred to the Lender following an Event of Default in satisfaction of the
due and unpaid amount of the Loan shall not exceed the amount in default
(without regard to amounts owing solely as a result of any acceleration of the
Loan); (ii) the Borrower's assets shall be transferred to the Lender following
an Event of Default only to the extent of the failure of the Borrower to meet
the payment schedule of the Loan resulting from the failure of the Borrower to
use dividend income received by it on Pledged Shares and employer contributions
received by it for purposes of debt service to make Loan payments when due; and
(iii) all rights of the Lender to the Collateral covered by the Pledge Agreement
following an Event of Default shall be governed by the terms of the Pledge
Agreement.
ARTICLE VI
MISCELLANEOUS PROVISIONS
Section 6.1 Payments.
All payments hereunder and under the Promissory Note shall be
made without set-off or counterclaim and in such amounts as may be necessary in
order that all such payments shall not be less than the amounts otherwise
specified to be paid under this Loan Agreement and the Promissory Note, subject
to any applicable tax withholding requirements. Upon payment in full of the
Promissory Note, the Lender shall xxxx 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.
29
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Section 6.3 Modifications, Consents and Waivers; Entire
Agreement.
No modification, amendment or waiver of or with respect to any
provision of this Loan Agreement, the Promissory Note, the Pledge Agreement, or
any of the other Loan Documents, nor consent to any departure from any of the
terms or conditions thereof, shall in any event be effective unless it shall be
in writing and signed by the party against whom enforcement thereof is sought.
Any such waiver or consent shall be effective only in the specific instance and
for the purpose for which given. No consent to or demand on a party in any case
shall, of itself, entitle it to any other or further notice or demand in similar
or other circumstances. This Loan Agreement embodies the entire agreement and
understanding between the Lender and the Borrower and supersedes all prior
agreements and understandings relating to the subject matter hereof.
Section 6.4 Remedies Cumulative.
Each and every right granted to the Lender hereunder or under
any other document delivered hereunder or in connection herewith, or allowed it
by law or equity, shall be cumulative and may be exercised from time to time. No
failure on the part of the Lender or the holder of the Promissory Note to
exercise, and no delay in exercising, any right shall operate as a waiver
thereof, nor shall any single or partial exercise of any right preclude any
other or future exercise thereof or the exercise of any other right. The due
payment and performance of the obligations under the Loan Documents shall be
without regard to any counterclaim, right of offset or any other claim
whatsoever which the Borrower may have against the Lender and without regard to
any other obligation of any nature whatsoever which the Lender may have to the
Borrower, and no such counterclaim or offset shall be asserted by the Borrower
in any action, suit or proceeding instituted by the Lender for payment or
performance of such obligations.
Section 6.5 Further Assurances; Compliance with Covenants.
At any time and from time to time, upon the request of the
Lender, the Borrower shall execute, deliver and acknowledge or cause to be
executed, delivered and acknowledged, such further documents and instruments and
do such other acts and things as the Lender may reasonably request in order to
fully effect the terms of this Loan Agreement, the Promissory Note, the Pledge
Agree ment, the other Loan Documents and any other agreements, instruments and
documents delivered pursuant hereto or in connection with the Loan.
Section 6.6 Notices.
Except as otherwise specifically provided for herein, all
notices, requests, reports and other communications pursuant to this Loan
Agreement shall be in writing, either by letter (delivered by hand or commercial
messenger service or sent by registered or certified mail, return receipt
requested, except for routine reports delivered in compliance with Article VI
hereof which may be sent by ordinary first-class mail) or telex or facsimile,
addressed as follows:
(a) If to the Borrower:
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Astoria Federal Savings and Loan Association
Employee Stock Ownership Plan Trust
c/o State Street Bank and Trust Company
Investment Services Xxxxxx
000 Xxxxxxx Xxxxxx
Xxxxx Xxxxxx, Xxxxxxxxxxxxx 00000
with copies to:
Astoria Federal Savings and Loan Association
Employee Stock Ownership Plan Trust
c/o Astoria Federal Savings and Loan Association
Xxx Xxxxxxx Xxxxxxx Xxxxx
Xxxx Xxxxxxx, Xxx Xxxx 00000
Attention: General Counsel
(b) If to the Lender:
Astoria Financial Corporation
Xxx Xxxxxxx Xxxxxxx Xxxxx
Xxxx Xxxxxxx, Xxx Xxxx 00000
Attention: General Counsel
Any notice, request or communication hereunder shall be deemed to have been
given on the day on which it is delivered by hand or by commercial messenger
service, or sent by telex or facsimile, to such party at its address specified
above, or, if sent by mail, on the third Business Day after the day deposited in
the mail, postage prepaid, addressed as aforesaid. Any party may change the
person or address to whom or which notices are to be given hereunder, by notice
duly given hereunder; provided, however, that any such notice shall be deemed to
have been given only when actually received by the party to whom it is
addressed.
Section 6.8 Counterparts.
This Loan Agreement may be signed in any number of
counterparts which, when taken together, shall constitute one and the same
document.
Section 6.9 Construction; Governing Law.
The headings used in the table of contents and in this Loan
Agreement are for convenience only and shall not be deemed to constitute a part
hereof. All uses herein of any gender or of singular or plural terms shall be
deemed to include uses of the other genders or plural or singular terms, as the
context may require. All references in this Loan Agreement to an Article or
section shall be to an Article or section of this Loan Agreement, unless
otherwise specified. This Loan Agreement shall be governed by and construed and
enforced in accordance with the laws of
31
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the State of New York applicable to contracts to be performed wholly within the
State of New York entered into between parties all of whom are citizens and
residents of the State of New York. It is intended that the transactions
contemplated by this Loan Agreement constitute an "exempt loan" within the
meaning of Treasury Regulation ss. 54.4975-7(b)(1)(iii) and Department of Labor
Regulation ss. 2550.408b-3, and the provisions hereof shall be construed and
enforced in such manner as shall be necessary to give effect to such intent.
Section 6.10 Severability.
Wherever possible, each provision of this Loan Agreement shall
be interpreted in such manner as to be effective and valid under applicable law;
however, the provisions of this Loan Agreement are severable, and if any clause
or provision hereof shall be held invalid or unenforceable in whole or in part
in any jurisdiction, then such invalidity or unenforceability shall affect only
such clause or provision, or part thereof, in such jurisdiction and shall not in
any manner affect such clause or provision in any other jurisdiction, or any
other clause or provision in this Loan Agreement in any jurisdiction. Each of
the covenants, agreements and conditions contained in this Loan Agreement is
independent, and compliance by a party with any of them shall not excuse
non-compliance by such party with any other. The Borrower shall not take any
action the effect of which shall constitute a breach or violation of any
provision of this Loan Agreement.
Section 6.11 Binding Effect; No Assignment or Delegation.
This Loan Agreement shall be binding upon and inure to the
benefit of the Borrower and its successors and the Lender and its successors and
assigns. The rights and obligations of the Borrower under this Agreement shall
not be assigned or delegated without the prior written consent of the Lender,
and any purported assignment or delegation without such consent shall be void.
32
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IN WITNESS WHEREOF, the parties hereto have caused this Loan
Agreement to be duly executed as of the date first above written.
ASTORIA FEDERAL SAVINGS AND LOAN ASSOCIATION
EMPLOYEE STOCK OWNERSHIP PLAN TRUST
By STATE STREET BANK AND TRUST COMPANY,
solely as Trustee and not in any other
capacity
By:
---------------------------------------
Name:
---------------------------------------
Title:
---------------------------------------
ASTORIA FINANCIAL CORPORATION
By:
---------------------------------------
Name:
---------------------------------------
Title:
---------------------------------------
33
EXHIBIT 1
PROMISSORY NOTE
$18,614,833.29 Lake Success, New York
January 1, 2000
FOR VALUE RECEIVED, the undersigned, ASTORIA FEDERAL SAVINGS
AND LOAN ASSOCIATION EMPLOYEE STOCK OWNERSHIP PLAN TRUST (the "Borrower"),
acting through and by its Trustee, STATE STREET BANK AND TRUST COMPANY (the
"Trustee"), hereby promises to pay to the order of ASTORIA FINANCIAL CORPORATION
(the "Lender") the sum of EIGHTEEN MILLION SIX HUNDRED FOURTEEN THOUSAND EIGHT
HUNDRED THIRTY-THREE DOLLARS AND TWENTY-NINE CENTS ($18,614,833.29) payable in
annual installments, each of which shall be in the amount determined pursuant to
sections 2.4 and 2.5(b) of the Amended and Restated Loan Agreement made and
entered into as of January 1, 2000 by and between the Borrower and the Lender
(the "Loan Agreement"), as of the last Business Day of December, 2000 and as of
the last Business Day of each December thereafter, through and including the
last business day of December 2029, at which date the entire principal amount
then outstanding shall be due and payable. Principal payments may be deferred,
in whole or in part, to the extent provided in the Loan Agreement.
This Promissory Note shall bear interest at the rate of six
percent (6.00%) per annum set forth or established under the Loan Agreement from
the date of the Loan Agreement, such interest to be payable at the time and in
the manner set forth in the Loan Agreement commencing on the last Business Day
of 2000 and thereafter on the last Business Day of each succeeding calendar
year. Interest accrued shall cumulate until paid but shall not be compounded.
Anything herein to the contrary notwithstanding, the
obligation of the Borrower to make payments of interest shall be subject to the
limitation that payments of interest shall not be required to be made to the
Lender to the extent that the Lender's receipt thereof would not be permissible
under the law or laws applicable to the Lender limiting rates of interest which
may be charged or collected by the Lender. Any such payments of interest which
are not made as a result of the limitation referred to in the preceding sentence
shall be made by the Borrower to the Lender on the earliest interest payment
date or dates on which the receipt thereof would be permissible under the laws
applicable to the Lender limiting rates of interest which may be charged or
collected by the Lender. Such deferred interest shall not bear interest.
Payments of both principal and interest on this Promissory
Note are to be made at the principal office of the Lender at One Xxxxxxx Xxxxxxx
Xxxxx, Xxxx Xxxxxxx, Xxx Xxxx 00000 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.
34
Failure to make any payment of principal on this Promissory
Note, or failure to make any payment of interest on this Promissory Note, not
later than five (5) Business Days after the date when due, shall constitute a
default hereunder, whereupon the principal amount of and accrued interest on
this Promissory Note shall immediately become due and payable in accordance
with, but also subject to the limitations set forth in, the terms of the Loan
Agreement.
This Promissory Note is subject, in all respects, to the terms
and provisions of the Loan Agreement, which is incorporated herein by this
reference, and is secured by a Pledge Agreement between the Borrower and the
Lender of even date herewith and is entitled to the benefits thereof.
ASTORIA FEDERAL SAVINGS AND LOAN ASSOCIATION
EMPLOYEE STOCK OWNERSHIP PLAN TRUST
By: State Street Bank and Trust Company,
solely as Trustee and not in any other
capacity
By:
---------------------------------------
Name:
---------------------------------------
Title:
---------------------------------------
35
EXHIBIT 2
PLEDGE AGREEMENT
This PLEDGE AGREEMENT ("Pledge Agreement") is made as of the
1st day of January, 2000, by and between the ASTORIA FEDERAL SAVINGS AND LOAN
ASSOCIATION EMPLOYEE STOCK OWNERSHIP PLAN TRUST, acting by and through its
Trustee, STATE STREET BANK AND TRUST COMPANY, a banking corporation organized
under the laws of the Massachusetts ("Pledgor"), and ASTORIA FINANCIAL
CORPORATION ("Pledgee"), a corporation organized and existing under the laws of
the State of Delaware.
W I T N E S S E T H :
--------------------
WHEREAS, this Pledge Agreement is being executed and delivered
to the Pledgee pursuant to the terms of An Amended and Restated Loan Agreement
of even date herewith ("Loan Agreement"), by and between the Pledgor and the
Pledgee;
NOW, THEREFORE, in consideration of the mutual agreements
contained herein and in the Loan Agreement, the parties hereto do hereby
covenant and agree as follows:
Section 1. Definitions. The following definitions shall apply
for purposes of this Pledge Agreement, except to the extent that a different
meaning is plainly indicated by the context; all capitalized terms used but not
defined herein shall have the respective meanings assigned to them in the Loan
Agreement:
(a) "Collateral" shall mean the Pledged Shares and the
Pledged Assets and, subject to section 5 hereof, and to the extent
permitted by applicable law, all rights with respect thereto, and all
proceeds of such Pledged Shares, Pledged Assets and rights.
(b) "Event of Default" shall mean an event so defined in
the Loan Agreement.
(c) "Liabilities" shall mean all the obligations of the
Pledgor to the Pledgee, howsoever created, arising or evidenced,
whether direct or indirect, absolute or contingent, now or hereafter
existing, or due or to become due, under the Loan Agreement and the
Promissory Note.
(d) "Pledged Assets" means all assets of the Borrower
pledged, as of January 1, 2000, as collateral security for the
Borrower's performance of its obligations under that certain Loan
Agreement between the Borrower and the Lender dated April 14, 1994,
excluding any Pledged Shares.
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36
(e) "Pledged Shares" shall mean all the shares of common
stock, par value $ .01 per share, of Astoria Financial Corporation
purchased by the Pledgor with the proceeds of the loan made by the
Pledgee to the Pledgor pursuant to the Loan Agreement dated April 14,
1994, but excluding any such shares previously released pursuant to
section 4.
Section 2. Pledge. To secure the payment of and
performance of all the Liabilities, the Pledgor hereby pledges to the Pledgee,
and grants to the Pledgee a security interest in and lien upon the Collateral.
Section 3. Representations and Warranties of the Pledgor.
The Pledgor represents, warrants, and covenants to the Pledgee as follows:
(a) to the actual knowledge of the Trustee, the execution,
delivery and performance of this Pledge Agreement and the pledging of
the Collateral hereunder do not and will not conflict with, result in a
violation of, or constitute a default under any agreement binding upon
the Pledgor;
(b) the Pledged Shares are and will continue to be owned by
the Pledgor free and clear of any liens or rights of any other person
except the lien hereunder and under the Loan Agreement in favor of the
Pledgee, and the security interest of the Pledgee in the Pledged Shares
and the proceeds thereof is and will continue to be prior to and senior
to the rights of all others;
(c) to the actual knowledge of the Trustee, this Pledge
Agreement is the legal, valid and binding obligation of the Pledgor and
is enforceable against the Pledgor in accordance with its terms;
(d) the Pledgor shall, from time to time, upon request of the
Pledgee, promptly deliver to the Pledgee such financing statements,
stock powers, proxies, and similar documents, satisfactory in form and
substance to the Pledgee, with respect to the Collateral as the Pledgee
may reasonably request; and
(e) subject to the first sentence of section 4(b), the Pledgor
shall not, so long as any Liabilities are outstanding, sell, assign,
exchange, pledge or otherwise transfer or encumber any of its rights in
and to any of the Collateral.
Section 4. Eligible Collateral.
(a) As used herein the term "Eligible Collateral" shall mean
that amount of Collateral which has an aggregate fair market value equal to the
amount by which the Pledgor is in default (without regard to any amounts owing
solely as the result of an acceleration of the Loan Agreement) or such lesser
amount of Collateral as may be required pursuant to section 12 of this Pledge
Agreement.
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37
(b) The Collateral shall be released from this Pledge
Agreement in a manner conforming to the requirements of Treasury Regulation ss.
54.4975-7(b)(8)(i), as the same may be from time to time amended or
supplemented. In the event of a termination of the ESOP or the occurrence of a
Change in Control after December 31, 2009, all Pledged Shares shall be forthwith
released from this Pledge Agreement and shall not be applied to satisfy any
Liabilities. In the event of a Change in Control prior to January 1, 2010, all
Pledged Shares in excess of the number determined under the following table
shall be forthwith released from this Pledge Agreement and shall not be applied
to satisfy any Liabilities:
YEAR OF PLEDGED YEAR OF PLEDGED
CHANGE SHARES CHANGE SHARES
IN IN
CONTROL CONTROL
2001 1,048,266 2006 0
2002 827,371 2007 0
2003 606,476 2008 0
2004 385,581 2009 0
2005 164,686
To the extent that the Collateral consists of assets other than or in addition
to Pledged Shares, the provisions of such Regulations shall be applied
separately to each class of security or each class or other type of asset
included in the Collateral. Subject to such Regulations, the Pledgee may from
time to time, after any Default or Event of Default, and without prior notice to
the Pledgor, transfer all or any part of the Eligible Collateral into the name
of the Pledgee or its nominee, with or without disclosing that such Eligible
Collateral is subject to any rights of the Pledgor and may from time to time,
whether before or after any of the Liabilities shall become due and payable,
without notice to the Pledgor, take all or any of the following actions: (i)
notify the parties obligated on any of the Collateral to make payment to the
Pledgee of any amounts due or to become due thereunder, (ii) release or exchange
all or any part of the Collateral, or compromise or extend or renew for any
period (whether or not longer than the original period) any obligations of any
nature of any party with respect thereto, and (iii) take control of any proceeds
of the Collateral.
Section 5. Delivery; Further Assurances.
(a) The Pledgor shall deliver to the Pledgee upon execution of
this Pledge Agreement an assignment by the Pledgor of all the Pledgor's rights
to and interest in the Collateral.
(b) So long as no Default or Event of Default shall have
occurred and be continuing, (i) the Pledgor shall be entitled to exercise any
and all voting and other rights pertaining to the Collateral or any part thereof
for any purpose not inconsistent with the terms of this Pledge Agreement, and
(ii) the Pledgor shall be entitled to receive any and all cash dividends or
other distributions paid in respect of the Collateral.
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38
(c) For so long as this Pledge Agreement shall be in effect,
the Pledgor shall take such other actions and execute and deliver such other
documents as the Pledgee may reasonably request in order to secure for the
Pledgee's benefit a perfected first priority lien and security interest in any
or all of the Collateral under the New York Uniform Commercial Code; provided,
however, that the Pledgee shall not be required to take any action or execute or
deliver any document pursuant to this section 5(c) to the extent that it
determines, in reliance on an opinion of legal counsel, that the taking of such
action or the execution or delivery of such document would result in a
prohibited transaction under section 4975 of the Code or section 406 of ERISA,
impair the status of the ESOP as a tax-qualified plan under section 401(a) of
the Code or an employee stock ownership plan under section 4975 of the Code,
impair the tax-exempt status of the Borrower under section 501(a) of the Code or
violate any other requirement of ERISA applicable to the ESOP.
Section 6. Events of Default.
(a) If a Default or an Event of Default shall be existing, in
addition to the rights it may have under the Loan Agreement, the Promissory
Note, and this Pledge Agreement, or by virtue of any other instrument, (i) the
Pledgee may exercise, with respect to Eligible Collateral, from time to time any
rights and remedies available to it under the Uniform Commercial Code as in
effect from time to time in the State of New York or otherwise available to it
and (ii) the Pledgee shall have the right, for and in the name, place and stead
of the Pledgor, to execute endorsements, assignments, stock powers and other
instruments of conveyance or transfer with respect to all or any of the Eligible
Collateral. Written notification of intended disposition of any of the Eligible
Collateral shall be given by the Pledgee to the Pledgor at least three (3)
Business Days before such disposition. Subject to section 13 below, any proceeds
of any disposition of Eligible Collateral may be applied by the Pledgee to the
payment of expenses in connection with the Eligible Collateral, including,
without limitation, reasonable attorneys' fees and legal expenses, and any
balance of such proceeds may be applied by the Pledgee toward the payment of
such of the Liabilities as are in Default, and in such order of application, as
the Pledgee may from time to time elect. No action of the Pledgee permitted
hereunder shall impair or affect its rights in and to the Eligible Collateral.
All rights and remedies of the Pledgee expressed hereunder are in addition to
all other rights and remedies possessed by it, including, without limitation,
those contained in the documents referred to in the definition of Liabilities in
section 1 hereof.
(b) In any sale of any of the Eligible Collateral after a
Default or an Event of Default shall have occurred, the Pledgee is hereby
authorized to comply with any limitation or restriction in connection with such
sale as it may be advised by counsel is necessary in order to avoid any
violation of applicable law (including, without limitation, compliance with such
procedures as may restrict the number of prospective bidders and purchasers or
further restrict such prospective bidders or purchasers to persons who will
represent and agree that they are purchasing for their own account for
investment and not with a view to the distribution or resale of such Eligible
Collateral), or in order to obtain such required approval of the sale or of the
purchase by any governmental regulatory authority or official, and the Pledgor
further agrees that such compliance shall not result in such sale's being
considered or deemed not to have been made in a commercially reasonable manner,
nor shall the Pledgee be liable or accountable to the Pledgor for any discount
allowed by reason of the fact that such Eligible Collateral is sold in
compliance with any such limitation or
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39
restriction.
Section 7. Payment in Full. Upon the payment in full of all
outstanding Liabili ties, this Pledge Agreement shall terminate and the Pledgee
shall forthwith assign, transfer and deliver to the Pledgor, against receipt and
without recourse to the Pledgee, all Collateral then held by the Pledgee
pursuant to this Pledge Agreement.
Section 8. No Waiver. No failure or delay on the part of the
Pledgee in exercising any right or remedy hereunder or under any other document
which confers or grants any rights in the Pledgee in respect of the Liabilities
shall operate as a waiver thereof nor shall any single or partial exercise of
any such right or remedy preclude any other or further exercise thereof or the
exercise of any other right or remedy of the Pledgee.
Section 9. Binding Effect; No Assignment or Delegation. This
Pledge Agreement shall be binding upon and inure to the benefit of the Pledgor,
the Pledgee and their respective successors and assigns, except that the Pledgor
may not assign or transfer its rights hereunder without the prior written
consent of the Pledgee (which consent shall not unreasonably be withheld). Each
duty or obligation of the Pledgor to the Pledgee pursuant to the provisions of
this Pledge Agreement shall be performed in favor of any person or entity
designated by the Pledgee, and any duty or obligation of the Pledgee to the
Pledgor may be performed by any other person or entity designated by the
Pledgee.
Section 10. Governing Law. This Pledge Agreement shall be
governed by and construed and enforced in accordance with the laws of the State
of New York applicable to contracts to be performed wholly within the State of
New York entered into between parties all of whom are citizens and residents of
the State of New York.
Section 11. Notices. All notices, requests, instructions or
documents hereunder shall be in writing and delivered by hand or commercial
messenger service or sent by United States mail, registered or certified, return
receipt requested, with proper postage prepaid, or by telex or facsimile,
addressed as follows:
(a) If to the Pledgee:
Astoria Financial Corporation
Xxx Xxxxxxx Xxxxxxx Xxxxx
Xxxx Xxxxxxx, Xxx Xxxx 00000
Attention: General Counsel
(b) If to the Pledgor:
Astoria Federal Savings and Loan Association
Employee Stock Ownership Plan Trust
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40
State Street Bank and Trust Company
Investment Services Xxxxxx
000 Xxxxxxx Xxxxxx
Xxxxx Xxxxxx, Xxxxxxxxxxxxx 00000
with copies to:
Astoria Federal Savings and Loan Association
Employee Stock Ownership Plan Trust
c/o Astoria Federal Savings and Loan Association
Xxx Xxxxxxx Xxxxxxx Xxxxx
Xxxx Xxxxxxx, Xxx Xxxx 00000
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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41
IN WITNESS WHEREOF, this Pledge Agreement has been duly
executed by the parties hereto as of the day and year first above written.
ASTORIA FEDERAL SAVINGS AND LOAN
ASSOCIATION EMPLOYEE STOCK OWNERSHIP PLAN
TRUST
By STATE STREET BANK AND TRUST COMPANY
solely as Trustee and not in any other
capacity
By:
--------------------------------------
Name:
--------------------------------------
Title:
--------------------------------------
ASTORIA FINANCIAL CORPORATION
By:
--------------------------------------
Name:
--------------------------------------
Title:
--------------------------------------
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42
EXHIBIT B
AMENDED AND RESTATED
LOAN AGREEMENT
by and between
THE LONG ISLAND SAVINGS BANK
EMPLOYEE STOCK OWNERSHIP PLAN TRUST
and
ASTORIA FINANCIAL CORPORATION
Made and Entered Into as of
January 1, 2000
43
TABLE OF CONTENTS
. Page
ARTICLE I
DEFINITIONS
Section 1.1 Business Day.................................................1
Section 1.2 Code.........................................................2
Section 1.3 Default......................................................2
Section 1.4 ERISA........................................................2
Section 1.5 Event of Default.............................................2
Section 1.6 Independent Counsel..........................................2
Section 1.7 Loan.........................................................2
Section 1.8 Loan Documents...............................................2
Section 1.9 Pledge Agreement.............................................2
Section 1.10 Principal Amount.............................................2
Section 1.11 Promissory Note..............................................2
Section 1.12 Register.....................................................2
ARTICLE II
THE LOAN; PRINCIPAL AMOUNT;
INTEREST; SECURITY
Section 2.1 The Loan; Principal Amount; Repayment of
Outstanding Indebtedness...................................2
Section 2.2 Interest.....................................................3
Section 2.3 Promissory Note..............................................4
Section 2.4 Payment of Loan..............................................4
Section 2.5 Prepayment...................................................5
Section 2.6 Method of Payments...........................................6
Section 2.7 Security.....................................................7
Section 2.8 Registration of the Promissory Note..........................7
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE BORROWER
Section 3.1 Power, Authority, Consents...................................8
Section 3.2 Due Execution, Validity, Enforceability......................8
Section 3.3 Properties, Priority of Liens................................8
(i)
44
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Section 3.4 No Defaults, Compliance with Laws............................8
Section 3.5 Marketable Title; Legality...................................8
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE LENDER
Section 4.1 Power, Authority, Consents...................................9
Section 4.2 Due Execution, Validity, Enforceability......................9
Section 4.3 ESOP; Contributions..........................................9
Section 4.4 Compliance with Laws; Actions................................9
ARTICLE V
EVENTS OF DEFAULT
Section 5.1 Events of Default under Loan Agreement......................10
Section 5.2 Lender's Rights upon Event of Default.......................10
ARTICLE VI
MISCELLANEOUS PROVISIONS
Section 6.1 Payments....................................................11
Section 6.2 Survival....................................................11
Section 6.3 Modifications, Consents and Waivers; Entire Agreement.......11
Section 6.4 Remedies Cumulative.........................................11
Section 6.5 Further Assurances; Compliance with Covenants...............12
Section 6.6 Notices.....................................................12
Section 6.7 Counterparts................................................13
Section 6.8 Construction; Governing Law.................................13
Section 6.9 Severability................................................13
Section 6.10 Binding Effect; No Assignment or Delegation.................13
EXHIBIT 1 Form of Promissory Note ...................................1-1
EXHIBIT 2 Form of Pledge Agreement ..................................2-1
(ii)
45
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LOAN AGREEMENT
This LOAN AGREEMENT (the "Loan Agreement") is made and entered
into as of the 1st day of January, 2000, by and between THE LONG ISLAND SAVINGS
BANK EMPLOYEE FSB STOCK OWNERSHIP PLAN TRUST (the "Borrower"), a trust forming
part of THE LONG ISLAND SAVINGS BANK FSB EMPLOYEE STOCK OWNERSHIP PLAN ("ESOP"),
acting through and by its Trustee, CG TRUST COMPANY (the "Trustee"), a banking
corporation organized under the laws of the state of Illinois; and ASTORIA
FINANCIAL CORPORATION (the "Lender"), a corporation organized and existing under
the laws of the state of Delaware.
W I T N E S S E T H:
-------------------
WHEREAS, the Lender's wholly-owned subsidiary, ASTORIA FEDERAL SAVINGS
AND LOAN ASSOCIATION (the "Association"), maintains the ESOP for the benefit of
eligible employees as successor by merger to The Long Island Savings Bank FSB;
and
WHEREAS, the Borrower and the Lender, in its capacity as successor by
merger to Long Island Bancorp, Inc., are parties to a Loan Agreement dated April
14, 1994 (the "Prior Agreement"), pursuant to which the Borrower has borrowed
funds from the Lender to finance the purchase of shares of common stock, par
value $.01 per share, of the Lender ("Shares") and has an outstanding
indebtedness in the amount of TWENTY MILLION NINE HUNDRED SEVENTY-EIGHT THOUSAND
EIGHT HUNDRED EIGHTY-ONE DOLLARS AND TWO CENTS ($20,978,881.02) (the
"Outstanding Indebtedness"), plus accrued and unpaid interest from December 31,
1999; and
WHEREAS, the Borrower and the Lender have determined that it is in
their mutual interests to modify the terms of repayment of the Outstanding
Indebtedness in the manner set forth in this Agreement;
NOW, THEREFORE, the parties hereto agree that the Prior Agreement shall
be amended and restated in its entirety effective as of January 1, 2000, as
follows:
Article I Definitions
The following definitions shall apply for purposes of this
Loan Agreement, except to the extent that a different meaning is plainly
indicated by the context:
Section 1.1 Business Day means any day other than a Saturday,
Sunday or other day on which banks are authorized or required to close under
federal law or the laws of the State of New York.
Section 1.2 Code means the Internal Revenue Code of 1986
(including the corresponding provisions of any succeeding law).
Section 1.3 Default means an event or condition which would
constitute an Event of Default. The determination as to whether an event or
condition would constitute an Event of Default shall be determined without
regard to any applicable requirement of notice or lapse of time.
46
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Section 1.4 ERISA means the Employee Retirement Income
Security Act of 1974, as amended (including the corresponding provisions of any
succeeding law).
Section 1.5 Event of Default means an event or condition
described in Article V.
Section 1.6 Independent Counsel means legal counsel mutually
satisfactory to both the Lender and the Borrower.
Section 1.7 Loan means the loan described in section 2.1.
Section 1.8 Loan Documents means, collectively, this Loan
Agreement, the Promissory Note and the Pledge Agreement and all other documents
now or hereafter executed and delivered in connection with such documents,
including all amendments, modifications and supplements of or to all such
documents.
Section 1.9 Pledge Agreement means the agreement described in
section 2.7.
Section 1.10 Principal Amount means the face amount of the
Promissory Note, determined as set forth in section 2.1(a).
Section 1.11 Promissory Note means the promissory note
described in section 2.3.
Section 1.12 Register means the register described in section
2.8.
Article II The Loan; Principal Amount;
INTEREST; SECURITY
Section 2.1 The Loan; Principal Amount; Repayment of
Outstanding Indebtedness.
(a) The Lender hereby lends to the Borrower TWENTY
MILLION NINE HUNDRED SEVENTY-EIGHT THOUSAND EIGHT
HUNDRED EIGHTY-ONE DOLLARS AND TWO CENTS
($20,978,881.02). For all purposes of this Loan
Agreement, the Principal Amount on any date shall be
equal to the excess, if any, of:
(i) the aggregate amount lent by the Lender pursuant to
this section 2.1; over
(ii) the aggregate amount of any repayments of such amount
made before such date.
The Lender shall maintain on the Register a record of, and shall record on the
Promissory Note, the Principal Amount, any changes in the Principal Amount and
the effective date of any changes in the Principal Amount.
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(b) Concurrently with the execution and delivery of this
Agreement, the Lender shall deliver to the Borrower
the Borrower's original promissory note issued
pursuant to the Prior Agreement and evidencing the
Outstanding Indebtedness marked "PAID IN FULL".
(c) The transactions contemplated by this Agreement shall
be deemed a refinancing of the Outstanding
Indebtedness for purposes of Treasury Regulation ss.
54.4975-7.
Section 2.2 Interest.
(a) The Borrower shall pay to the Lender interest on the
Principal Amount, for the period commencing on the date of this Loan
Agreement and continuing until the Principal Amount shall be paid in full,
at the rate of six percent (6.00%) per annum. Interest payable under this
Agreement for any calendar month period shall be computed on the basis of a
year of 360 days and months consisting of 30 days each. For any period
shorter than one calendar month, interest payable under this Loan Agreement
shall be computed on the basis of a rate equal to six percent (6.00%)
multiplied by a fraction equal to the actual number of days in the period
(including the first day but excluding the last) divided by 360. The Lender
shall remit to the Borrower, at least three (3) Business Days before the
end of each calendar year, a statement of the accrued interest for such
calendar year and the aggregate accrued and unpaid interest as of the last
day of such calendar year; provided, however, that a delay or failure by
the Lender in providing the Borrower with such statement shall not alter
the Borrower's obligation to make any payment of interest that may be due
but shall excuse any error in the computation of the amount of interest due
that is promptly cured upon receipt of written notice of such error from
the Lender. Accrued and unpaid interest shall cumulate until paid but shall
not be compounded.
(b) Anything in this Loan Agreement or the Promissory
Note to the contrary notwithstanding, the obligation of the Borrower to
make payments of interest shall be subject to the limitation that payments
of interest shall not be required to be made to the Lender to the extent
that the Lender's receipt thereof would not be permissible under the law or
laws applicable to the Lender limiting rates of interest which may be
charged or collected by the Lender. Any such payment referred to in the
preceding sentence shall be made by the Borrower to the Lender on the
earliest interest payment date or dates on which the receipt thereof would
be permissible under the laws applicable to the Lender limiting rates of
interest which may be charged or collected by the Lender. Such deferred
interest shall not bear interest.
Section 2.3 Promissory Note.
The Loan shall be evidenced by a Promissory Note of the
Borrower in substantially
48
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the form of Exhibit 1 attached hereto, dated January 1, 2000, payable to the
order of the Lender in the Principal Amount and otherwise duly completed.
Section 2.4 Payment of Loan.
The Loan shall be repaid in annual installments payable on the
last Business Day of each December ending after the date of this Agreement. The
amount (if any) of each such annual installment shall be equal to the maximum
amount of principal and interest accrued to and including the date of the
payment that may be paid without resulting in the release for allocation to
participants in the ESOP, pursuant to the Pledge Agreement, of a fraction of the
Shares pledged as collateral security pursuant to the Pledge Agreement as of the
first day of the calendar year in which the payment is made that is greater than
the fraction set forth in Column II below:
Column I Column II
Year of Payment Fraction of
Collateral Released
2000 1/30
2001 1/29
2002 1/28
2003 1/27
2004 1/26
2005 1/25
2006 1/24
2007 1/23
2008 1/22
2009 1/21
2010 1/20
2011 1/19
2012 1/18
2013 1/17
2014 1/16
2015 1/15
2016 1/14
2017 1/13
2018 1/12
2019 1/11
2020 1/10
2021 1/9
2022 1/8
49
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Column I Column II
Year of Payment Fraction of
Collateral Released
2023 1/7
2024 1/6
2025 1/5
2026 1/4
2027 1/3
2028 1/2
2029 1
provided, however, that the Borrower shall not be required to make any payment
of principal due to be made in any period to the extent that such payment would
not be deductible for federal income tax purposes under section 404 of the Code.
Payments may be deferred to the extent that such payments would be in excess of
the amount described above or otherwise would be nondeductible for federal
income tax purposes. Any payment shall be applied first to the payment of
accrued interest and second, if and to the extent that all accrued interest has
been or is then being paid, to the payment of all or part of the Principal
Amount.
Section 2.5 Prepayment.
(a) The Borrower may, with the prior written consent of the
Lender, prepay the Loan in whole or in part, at any time and from time to time.
Any such prepayment shall be: (i) permanent and irrevocable: (ii) made without
premium or penalty; and (iii) applied first to the payment of accrued interest
and second, if and to the extent that all accrued interest has been or is then
being paid, to the payment of all or part of the Principal Amount.
(b) For each calendar year after 1999 during which the Loan is
outstanding, a mandatory prepayment of all or part of the Loan (the "Mandatory
Prepayment") shall be made if the aggregate Fair Market Value (as hereinafter
defined) of the Shares pledged pursuant to the Pledge Agreement and pursuant to
the Pledge Agreement of even date herewith between the Astoria Federal Savings
and Loan Association Employee Stock Ownership Plan Trust, acting by and through
its Trustee, State Street Bank and Trust Company and the Lender (the "ASFL
Pledge Agreement"), and released pursuant to Sections 4(b) and 7 of the Pledge
Agreement and pursuant to Sections 4(b) and 7 of the AFSL Pledge Agreement, and
allocated to the accounts of participants in the ESOP as a result of the
payments described in Sections 2.4 and 2.5(a) of this Loan Agreement and the
payments described in Section 2.4 and 2.5(a) of the Loan Agreement of even date
herewith between the Astoria Federal Savings and Loan Association Employee Stock
Ownership Plan Trust, acting by and through its Trustee, State Street Bank and
Trust Company and the Lender (the "AFSL Loan Agreement") for such calendar year
is less than an amount equal to 14% of the total compensation taken into account
under the ESOP for the purpose of allocations to the accounts of participants in
the ESOP of Shares pledged pursuant to the Pledge Agreement and the AFSL Pledge
Agreement ("Minimum Annual
50
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Release Value"). The amount of the Mandatory Prepayment for any calendar year
shall be equal to that amount of principal and/or interest which, when added to
the payment described in Sections 2.4 and 2.5(a) of this Loan Agreement and the
payments described in Sections 2.4, 2.5(a) and 2.5(b) of the AFSL Loan Agreement
made or then being made for such calendar year, will result in the release for
allocation to participant accounts of the lesser of (A) a number of Shares
pledged pursuant to the Pledge Agreement and the AFSL Pledge Agreement with an
aggregate Fair Market Value equal to the Minimum Annual Release Value or (B) the
entire number of Shares pledged pursuant to the Pledge Agreement and the AFSL
Pledge Agreement that are currently unallocated. For purposes of this section
4(c), the "Fair Market Value" of a Share for any year shall be equal to the
average of the closing sales prices for a share of Share on the Nasdaq Stock
Market National Market System (or other principal national securities exchange
on which Shares are then listed or admitted to trading) on each of the last 20
trading days preceding December 1st of such year on which a sale of a Share
occurs, as reported in the New York City edition Wall Street Journal or such
other reputable source of stock quotations as Astoria Federal Savings and Loan
Association may select.
(c) In the event of the termination of the ESOP or the
occurrence of a "Change in Control (as hereinafter defined), the entire
outstanding Principal Amount and all accrued but unpaid interest shall thereupon
become immediately due and payable. A "Change of Control shall be deemed to have
occurred upon the happening of any of the following events:
(i) any event upon which any "person" (as such term is used in
sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as
amended), other than (A) a trustee or other fiduciary holding
securities under any employee benefit plan maintained for the benefit
of employees of Astoria Financial Corporation; (B) a corporation owned,
directly or indirectly, by the stockholders of Astoria Financial
Corporation in substantially the same proportions as their ownership of
stock of Astoria Financial Corporation; or (C) any group constituting a
person in which employees of Astoria Financial Corporation are
substantial members, becomes the "beneficial owner" (as defined in Rule
13d-3 promulgated under the Exchange Act), directly or indirectly, of
securities issued by Astoria Financial Corporation representing 25% or
more of the combined voting power of all of Astoria Financial
Corporation's then outstanding securities; or
(ii) any event upon which the individuals who on December 30,
2000 were members of the Board of Directors of Astoria Financial
Corporation, together with individuals whose election by such Board or
nomination for election by Astoria Financial Corporation's stockholders
was approved by the affirmative vote of at least two-thirds of the
members of such Board then in office who were either members of such
Board on December 30, 2000 or whose nomination or election was
previously so approved, cease for any reason to constitute a majority
of the members of such Board, but excluding, for this purpose, any such
individual whose initial assumption of office is in connection with an
actual or threatened election contest relating to the election of
directors of Astoria Financial Corporation (as such terms are used in
Rule 14a-11 of Regulation 14A promulgated under the Securities Exchange
Act of 1934);as amended or
51
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(iii) the consummation of either:
(A) a merger or consolidation of Astoria Financial Corporation
with any other corporation, other than a merger or consolidation
following which both of the following conditions are satisfied:
(I) either (1) the members of the Board of Directors
of Astoria Financial Corporation immediately prior to such
merger or consolidation constitute at least a majority of the
members of the governing body of the institution resulting
from such merger or consolidation; or (2) the shareholders of
Astoria Financial Corporation own securities of the
institution resulting from such merger or consolidation
representing 60% or more of the combined voting power of all
such securities then outstanding in substantially the same
proportions as their ownership of voting securities of Astoria
Financial Corporation before such merger or consolidation; and
(II) the entity which results from such merger or
consolidation expressly agrees in writing to assume and
perform Astoria Financial Corporation's obligations under the
ESOP; or
(B) a complete liquidation of Astoria Financial
Corporation or an agreement for the sale or disposition by Astoria
Financial Corporation of all or substantially all of its assets; or
(iv) any event that would be described in this section if
"Astoria Federal Savings and Loan Association" were
substituted for "Astoria Financial Corporation." therein.
Section 2.6 Method of Payments.
(a) All payments of principal, interest, other charges
and other amounts payable by the Borrower hereunder shall be made in
lawful money of the United States, in immediately available funds, to
the Lender at the address specified in or pursuant to this Loan
Agreement for notices to the Lender, not later than 3:00 P.M., Eastern
Standard time, on the date on which such payment shall become due. Any
such payment made on such date but after such time shall, if the
amount paid bears interest, and except as expressly provided to the
contrary herein, be deemed to have been made on, and interest shall
continue to accrue and be payable thereon until, the next succeeding
Business Day. If any payment of principal or interest becomes due on a
day other than a Business Day, such payment may be made on the next
succeeding Business Day.
(b) Notwithstanding anything to the contrary contained in
this Loan Agreement or the Promissory Note, neither the Borrower nor
the Trustee shall be
52
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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.
53
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(a) The Lender shall release from encumbrance under the
Pledge Agreement and transfer to the Borrower, as of
the date on which any payment or prepayment is made,
an amount of Collateral determined pursuant to
section Treasury Regulation ss. 54.4975-7(b)(8)(i).
Section 2.8 Registration of the Promissory Note.
(a) The Lender shall maintain a Register providing for
the registration of the Principal Amount and any stated interest and of
transfer and exchange of the Promissory Note. Transfer of the Promissory
Note may be effected only by the surrender of the old instrument and either
the reissuance by the Borrower of the old instrument to the new holder or
the issuance by the Borrower of a new instrument to the new holder. The old
Promissory Note so surrendered shall be canceled by the Lender and returned
to the Borrower after such cancellation.
(b) Any new Promissory Note issued pursuant to section 2.8(a)
shall carry the same rights to interest (unpaid and to accrue) carried by
the Promissory Note so transferred or exchanged so that there will not be
any loss or gain of interest on the note surrendered. Such new Promissory
Note shall be subject to all of the provisions and entitled to all of the
benefits of this Agreement. Prior to due presentment for registration or
transfer, the Borrower may deem and treat the registered holder of any
Promissory Note as the holder thereof for purposes of payment and all other
purposes. A notation shall be made on each new Promissory Note of the
amount of all payments of principal and interest theretofore paid.
Article III Representations and Warranties of the Borrower
The Borrower hereby represents and warrants to the Lender as
follows:
Section 3.1 Power, Authority, Consents.
The Borrower has the power to execute, deliver and perform
this Loan Agreement, the Promissory Note and the Pledge Agreement, all of which
have been duly authorized by all necessary and proper corporate or other action.
Section 3.2 Due Execution, Validity, Enforceability.
Each of the Loan Documents, including, without limitation,
this Loan Agreement, the Promissory Note and the Pledge Agreement, have been
duly executed and delivered by the Borrower; and each constitutes the valid and
legally binding obligation of the Borrower, enforceable in accordance with its
terms.
54
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Section 3.3 Properties, Priority of Liens.
The liens which have been created and granted by the Pledge
Agreement constitute valid, first liens on the properties and assets covered by
the Pledge Agreement, subject to no prior or equal lien.
Section 3.4 No Defaults, Compliance with Laws.
The Borrower is not in default in any material respect under
any agreement, ordinance, resolution, decree, bond, note, indenture, order or
judgment to which it is a party or by which it is bound, or any other agreement
or other instrument by which any of the properties or assets owned by it is
materially affected.
Section 3.5 Marketable Title; Legality.
The Borrower has valid, legal and marketable title to all of
the Shares and other assets pledged as collateral pursuant to the Pledge
Agreement, free and clear of any liens, other than a pledge to the Lender of
such assets pursuant to the Pledge Agreement. Neither the execution and delivery
of the Loan Documents nor the performance of any obligation thereunder violates
any provision of law or conflicts with or results in a breach of or creates
(with or without the giving of notice or lapse of time, or both) a default under
any agreement to which the Borrower is a party or by which it is bound or any of
its properties is affected. No consent of any federal, state or local
governmental authority, agency or other regulatory body, the absence of which
could have a materially adverse effect on the Borrower or the Trustee, is or was
required to be obtained in connection with the execution, delivery or
performance of the Loan Documents and the transactions contemplated therein or
in connection therewith, including, without limitation, with respect to the
transfer of the Shares purchased with the proceeds of the Loan pursuant thereto.
Article IV Representations and Warranties of the Lender
The Lender hereby represents and warrants to the Borrower as
follows:
Section 4.1 Power, Authority, Consents.
The Lender has the power to execute, deliver and perform this
Loan Agreement, the Pledge Agreement and all documents executed by the Lender in
connection with the Loan, all of which have been duly authorized by all
necessary and proper corporate or other action. No consent, authorization or
approval or other action by any governmental authority or regulatory body, and
no notice by the Lender to, or filing by the Lender with, any governmental
authority or regulatory body is required for the due execution, delivery and
performance of this Loan Agreement.
Section 4.2 Due Execution, Validity, Enforceability.
This Loan Agreement and the Pledge Agreement have been duly
executed and delivered by the Lender; and each constitutes a valid and legally
binding obligation of the Lender,
55
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enforceable in accordance with its terms.
Section 4.3 ESOP; Contributions.
The ESOP and the Borrower have been duly created, organized
and maintained by the Lender in compliance with all applicable laws, regulations
and rulings. The ESOP qualifies as an "employee stock ownership plan" as defined
in section 4975(e)(7) the Code. The ESOP provides that the Lender may make
contributions to the ESOP in an amount necessary to enable the Trustee to
amortize the Loan in accordance with the terms of the Promissory Note and this
Loan Agreement, and the Lender will make such contributions; provided, however,
that no such contributions shall be required if they would adversely affect the
qualification of the ESOP under section 401(a) of the Code.
Section 4.4 Compliance with Laws; Actions.
Neither the execution and delivery by the Lender of this Loan
Agreement or any instruments required thereby, nor compliance with the terms and
provisions of any such documents by the Lender, constitutes a violation of any
provision of any law or any regulation, order, writ, injunction or decree of any
court or governmental instrumentality, or an event of default under any
agreement, to which the Lender is a party or by which the Lender is bound or to
which the Lender is subject, which violation or event of default would have a
material adverse effect on the Lender. There is no action or proceeding pending
or threatened against either of the ESOP or the Borrower before any court or
administrative agency.
Article V Events of Default
Section 5.1 Events of Default under Loan Agreement.
Each of the following events shall constitute an "Event of
Default" hereunder:
(a) Failure to make any payment or mandatory prepayment of
principal of the Promissory Note, or failure to make any
payment of interest on the Promissory Note, within five (5)
Business Days after the date when due, provided, however,
that a default shall be deemed to have occurred only if and
to the extent that the Borrower has received a contribution
from the Lender to be used to make such payment or the
Borrower has received dividends which it is permitted to
apply to make such payment and the Borrower fails to apply
such contribution or dividends to such payment.
Section 5.2 Lender's Rights upon Event of Default.
If an Event of Default under this Loan Agreement shall occur
and be continuing, the Lender shall have no rights to assets of the Borrower
other than: (a) contributions (other than contributions of Common Stock) that
are made by the Lender to enable the Borrower to meet its obligations pursuant
to this Loan Agreement and earnings attributable to the investment of such
56
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contributions and (b) "Eligible Collateral" (as defined in the Pledge
Agreement); provided, however, that: (i) the value of the Borrower's assets
transferred to the Lender following an Event of Default in satisfaction of the
due and unpaid amount of the Loan shall not exceed the amount in default
(without regard to amounts owing solely as a result of any acceleration of the
Loan); (ii) the Borrower's assets shall be transferred to the Lender following
an Event of Default only to the extent of the failure of the Borrower to meet
the payment schedule of the Loan resulting from the failure of the Borrower to
use dividend income received by it on Pledged Shares and employer contributions
received by it for purposes of debt service to make loan payments when due; and
(iii) all rights of the Lender to the Collateral covered by the Pledge Agreement
following an Event of Default shall be governed by the terms of the Pledge
Agreement.
Article VI Miscellaneous Provisions
Section 6.1 Payments.
All payments hereunder and under the Promissory Note shall be
made without set-off or counterclaim and in such amounts as may be necessary in
order that all such payments shall not be less than the amounts otherwise
specified to be paid under this Loan Agreement and the Promissory Note, subject
to any applicable tax withholding requirements. Upon payment in full of the
Promissory Note, the Lender shall xxxx such Promissory Note "PAID IN FULL" and
return it to the Borrower.
Section 6.2 Survival.
All agreements, representations and warranties made herein
shall survive the delivery of this Loan Agreement and the Promissory Note.
Section 6.3 Modifications, Consents and Waivers; Entire
Agreement.
No modification, amendment or waiver of or with respect to any
provision of this Loan Agreement, the Promissory Note, the Pledge Agreement, or
any of the other Loan Documents, nor consent to any departure from any of the
terms or conditions thereof, shall in any event be effective unless it shall be
in writing and signed by the party against whom enforcement thereof is sought.
Any such waiver or consent shall be effective only in the specific instance and
for the purpose for which given. No consent to or demand on a party in any case
shall, of itself, entitle it to any other or further notice or demand in similar
or other circumstances. This Loan Agreement embodies the entire agreement and
understanding between the Lender and the Borrower and supersedes all prior
agreements and understandings relating to the subject matter hereof.
Section 6.4 Remedies Cumulative.
Each and every right granted to the Lender hereunder or under
any other document delivered hereunder or in connection herewith, or allowed it
by law or equity, shall be cumulative and may be exercised from time to time. No
failure on the part of the Lender or the holder of the Promissory Note to
exercise, and no delay in exercising, any right shall operate as a waiver
thereof,
57
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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
000 X. Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
with copies to:
The Long Island Savings Bank FSB
Employee Stock Ownership Plan Trust
c/o Astoria Federal Savings and Loan Association
Xxx Xxxxxxx Xxxxxxx Xxxxx
Xxxx Xxxxxxx, Xxx Xxxx 00000
Attention: General Counsel
---------------
(b) If to the Lender:
Astoria Financial Corporation
One Astoria Federal Xxxxx
00
-00-
Xxxx Xxxxxxx, Xxx Xxxx 00000
Attention: General Counsel
---------------
Any notice, request or communication hereunder shall be deemed to have been
given on the day on which it is delivered by hand or by commercial messenger
service, or sent by telex or facsimile, to such party at its address specified
above, or, if sent by mail, on the third Business Day after the day deposited in
the mail, postage prepaid, addressed as aforesaid. Any party may change the
person or address to whom or which notices are to be given hereunder, by notice
duly given hereunder; provided, however, that any such notice shall be deemed to
have been given only when actually received by the party to whom it is
addressed.
Section 6.7 Counterparts.
This Loan Agreement may be signed in any number of counterparts which,
when taken together, shall constitute one and the same document.
Section 6.8 Construction; Governing Law.
The headings used in the table of contents and in this Loan
Agreement are for convenience only and shall not be deemed to constitute a part
hereof. All uses herein of any gender or of singular or plural terms shall be
deemed to include uses of the other genders or plural or singular terms, as the
context may require. All references in this Loan Agreement to an Article or
section shall be to an Article or section of this Loan Agreement, unless
otherwise specified. This Loan Agreement shall be governed by and construed and
enforced in accordance with the laws of the State of New York applicable to
contracts to be performed wholly within the State of New York entered into
between parties all of whom are citizens and residents of the State of New York.
It is intended that the transactions contemplated by this Loan Agreement
constitute an "exempt loan" within the meaning of Treasury Regulation ss.
54.4975-7(b)(1)(iii) and Department of Labor Regulation ss. 2550.408b-3, and the
provisions hereof shall be construed and enforced in such manner as shall be
necessary to give effect to such intent.
Section 6.9 Severability.
Wherever possible, each provision of this Loan Agreement shall
be interpreted in such manner as to be effective and valid under applicable law;
however, the provisions of this Loan Agreement are severable, and if any clause
or provision hereof shall be held invalid or unenforceable in whole or in part
in any jurisdiction, then such invalidity or unenforceability shall affect only
such clause or provision, or part thereof, in such jurisdiction and shall not in
any manner affect such clause or provision in any other jurisdiction, or any
other clause or provision in this Loan Agreement in any jurisdiction. Each of
the covenants, agreements and conditions contained in this Loan Agreement is
independent, and compliance by a party with any of them shall not excuse non-
compliance by such party with any other. The Borrower shall not take any action
the effect of which shall constitute a breach or violation of any provision of
this Loan Agreement.
Section 6.10 Binding Effect; No Assignment or Delegation.
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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.
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61
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IN WITNESS WHEREOF, the parties hereto have caused this Loan
Agreement to be duly executed as of the date first above written.
THE LONG ISLAND SAVINGS BANK
EMPLOYEE STOCK OWNERSHIP PLAN TRUST
By CG TRUST COMPANY,
solely as Trustee and not in any other
capacity
By:
------------------------------------
Name:
------------------------------------
Title:
------------------------------------
ASTORIA FINANCIAL CORPORATION
By:
------------------------------------
Name:
------------------------------------
Title:
------------------------------------
62
EXHIBIT 1
PROMISSORY NOTE
$20,978,881.02 Lake Success, New York
January 1, 2000
FOR VALUE RECEIVED, the undersigned, THE LONG ISLAND SAVINGS
BANK FSB EMPLOYEE STOCK OWNERSHIP PLAN TRUST (the "Borrower"), acting by and
through its Trustee, CG TRUST COMPANY (the "Trustee"), hereby promises to pay to
the order of ASTORIA FINANCIAL CORPORATION (the "Lender") the sum of TWENTY
MILLION NINE HUNDRED SEVENTY-EIGHT THOUSAND EIGHT HUNDRED EIGHTY-ONE DOLLARS AND
TWO CENTS ($20,978,881.02) payable in annual installments, each of which shall
be in the amount determined pursuant to sections 2.4 and 2.5(b) of the Amended
and Restated Loan Agreement made and entered into as of January 1, 2000 by and
between the Borrower and the Lender (the "Loan Agreement"), as of the last
Business Day of December, 2000 and as of the last Business Day of each December
thereafter, through and including the last business day of December 2029, at
which date the entire principal amount then outstanding shall be due and
payable. Principal payments may be deferred, in whole or in part, to the extent
provided in the Loan Agreement.
This Promissory Note shall bear interest at the rate of six
percent (6.00%) per annum set forth or established under the Loan Agreement from
the date of the Loan Agreement, such interest to be payable at the time and in
the manner set forth in the Loan Agreement commencing on the last Business Day
of 2000 and thereafter on the last Business Day of each succeeding calendar
year. Interest accrued shall cumulate until paid but shall not be compounded.
Anything herein to the contrary notwithstanding, the
obligation of the Borrower to make payments of interest shall be subject to the
limitation that payments of interest shall not be required to be made to the
Lender to the extent that the Lender's receipt thereof would not be permissible
under the law or laws applicable to the Lender limiting rates of interest which
may be charged or collected by the Lender. Any such payments of interest which
are not made as a result of the limitation referred to in the preceding sentence
shall be made by the Borrower to the Lender on the earliest interest payment
date or dates on which the receipt thereof would be permissible under the laws
applicable to the Lender limiting rates of interest which may be charged or
collected by the Lender. Such deferred interest shall not bear interest.
Payments of both principal and interest on this Promissory
Note are to be made at the principal office of the Lender at One Xxxxxxx Xxxxxxx
Xxxxx, Xxxx Xxxxxxx, Xxx Xxxx 00000 or such other place as the holder hereof
shall designate to the Borrower in writing, in lawful money of the United States
of America in immediately available funds.
Failure to make any payment of principal on this Promissory
Note, or failure to make
63
any payment of interest on this Promissory Note, not later than five (5)
Business Days after the date when due, shall constitute a default hereunder,
whereupon the principal amount of and accrued interest on this Promissory Note
shall immediately become due and payable in accordance with, but also subject to
the limitations set forth in, the terms of the Loan Agreement.
This Promissory Note is subject, in all respects, to the terms
and provisions of the Loan Agreement, which is incorporated herein by this
reference, and is secured by a Pledge Agreement between the Borrower and the
Lender of even date herewith and is entitled to the benefits thereof.
THE LONG ISLAND SAVINGS BANK FSB EMPLOYEE STOCK
OWNERSHIP PLAN TRUST
By: CG Trust Company,
solely as Trustee and not in any other
capacity
By:
--------------------------------------
Name:
--------------------------------------
Title:
--------------------------------------
64
EXHIBIT 2
PLEDGE AGREEMENT
This PLEDGE AGREEMENT ("Pledge Agreement") is made as of the
1st day of January, 2000, by and between THE LONG ISLAND SAVINGS BANK FSB
EMPLOYEE STOCK OWNERSHIP PLAN TRUST, acting by and through its Trustee, CG TRUST
COMPANY, a banking corporation organized under the laws of the Illinois
("Pledgor"), and ASTORIA FINANCIAL CORPORATION ("Pledgee"), a corporation
organized and existing under the laws of the State of Delaware.
W I T N E S S E T H :
--------------------
WHEREAS, this Pledge Agreement is being executed and delivered
to the Pledgee pursuant to the terms of An Amended and Restated Loan Agreement
of even date herewith ("Loan Agreement"), by and between the Pledgor and the
Pledgee;
NOW, THEREFORE, in consideration of the mutual agreements
contained herein and in the Loan Agreement, the parties hereto do hereby
covenant and agree as follows:
Section 1. Definitions. The following definitions shall apply
for purposes of this Pledge Agreement, except to the extent that a different
meaning is plainly indicated by the context; all capitalized terms used but not
defined herein shall have the respective meanings assigned to them in the Loan
Agreement:
(a) "Collateral" shall mean the Pledged Shares and the Pledged
Assets and, subject to section 5 hereof, and to the extent permitted by
applicable law, all rights with respect thereto, and all proceeds of
such Pledged Shares, Pledged Assets and rights.
(b) "Event of Default" shall mean an event so defined in
the Loan Agreement.
(c) "Liabilities" shall mean all the obligations of the
Pledgor to the Pledgee, howsoever created, arising or evidenced,
whether direct or indirect, absolute or contingent, now or hereafter
existing, or due or to become due, under the Loan Agreement and the
Promissory Note.
(d) "Pledged Assets" means all assets of the Borrower pledged,
as of January 1, 2000, as collateral security for the Borrower's
performance of its obligations under that certain Loan Agreement
between the Borrower and the Lender dated April 14, 1994, excluding any
Pledged Shares.
65
(e) "Pledged Shares" shall mean all the shares of common
stock, par value $ .01 per share, of Astoria Financial Corporation
issued in exchange for shares of common stock of Long Island Bancorp,
Inc. pursuant to the acquisition of Long Island Bancorp, Inc. by
Astoria Federal Corporation, which shares of common stock of Long
Island Bancorp, Inc. were purchased by the Pledgor with the proceeds of
the loan made by the Pledgee to the Pledgor pursuant to the Loan
Agreement dated April 14, 1994, but excluding any such shares
previously released pursuant to section 4.
Section 2. Pledge. To secure the payment of and performance
of all the Liabilities, the Pledgor hereby pledges to the Pledgee, and grants to
the Pledgee a security interest in and lien upon the Collateral.
Section 3.Representations and Warranties of the Pledgor. The
Pledgor represents, warrants, and covenants to the Pledgee as follows:
(a) to the actual knowledge of the Trustee, the execution,
delivery and performance of this Pledge Agreement and the pledging of
the Collateral hereunder do not and will not conflict with, result in a
violation of, or constitute a default under any agreement binding upon
the Pledgor;
(b) the Pledged Shares are and will continue to be owned by
the Pledgor free and clear of any liens or rights of any other person
except the lien hereunder and under the Loan Agreement in favor of the
Pledgee, and the security interest of the Pledgee in the Pledged Shares
and the proceeds thereof is and will continue to be prior to and senior
to the rights of all others;
(c) to the actual knowledge of the Trustee, this Pledge
Agreement is the legal, valid and binding obligation of the Pledgor and
is enforceable against the Pledgor in accordance with its terms;
(d) the Pledgor shall, from time to time, upon request of the
Pledgee, promptly deliver to the Pledgee such financing statements,
stock powers, proxies, and similar documents, satisfactory in form and
substance to the Pledgee, with respect to the Collateral as the Pledgee
may reasonably request; and
(e) subject to the first sentence of section 4(b), the Pledgor
shall not, so long as any Liabilities are outstanding, sell, assign,
exchange, pledge or otherwise transfer or encumber any of its rights in
and to any of the Collateral.
Section 4. Eligible Collateral.
(a) As used herein the term "Eligible Collateral" shall mean
that amount of Collateral which has an aggregate fair market value equal to the
amount by which the Pledgor is in
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66
default (without regard to any amounts owing solely as the result of an
acceleration of the Loan Agreement) or such lesser amount of Collateral as may
be required pursuant to section 12 of this Pledge Agreement.
(b) The Collateral shall be released from this Pledge
Agreement in a manner conforming to the requirements of Treasury Regulation ss.
54.4975-7(b)(8)(i), as the same may be from time to time amended or
supplemented.
In the event of a termination of the ESOP or the occurrence of a Change in
Control after December 31, 2009, all Pledged Shares shall be forthwith released
from this Pledge Agreement and shall not be applied to satisfy any Liabilities.
In the event of a Change in Control prior to January 1, 2010, all Pledged Shares
in excess of the number determined under the following table shall be forthwith
released from this Pledge Agreement and shall not be applied to satisfy any
Liabilities:
YEAR OF PLEDGED YEAR OF PLEDGED
CHANGE SHARES CHANGE SHARES
IN IN
CONTROL CONTROL
2001 1,708,900 2006 1,611,725
2002 1,689,463 2007 1,592,288
2003 1,670,026 2008 1,572,851
2004 1,650,589 2009 1,553,414
2005 1,591,152
To the extent that the Collateral consists of assets other than or in addition
to Pledged Shares, the provisions of such Regulations shall be applied
separately to each class of security or each class or other type of asset
included in the Collateral. Subject to such Regulations, the Pledgee may from
time to time, after any Default or Event of Default, and without prior notice to
the Pledgor, transfer all or any part of the Eligible Collateral into the name
of the Pledgee or its nominee, with or without disclosing that such Eligible
Collateral is subject to any rights of the Pledgor and may from time to time,
whether before or after any of the Liabilities shall become due and payable,
without notice to the Pledgor, take all or any of the following actions: (i)
notify the parties obligated on any of the Collateral to make payment to the
Pledgee of any amounts due or to become due thereunder, (ii) release or exchange
all or any part of the Collateral, or compromise or extend or renew for any
period (whether or not longer than the original period) any obligations of any
nature of any party with respect thereto, and (iii) take control of any proceeds
of the Collateral.
Section 5. Delivery; Further Assurances.
(a) The Pledgor shall deliver to the Pledgee upon execution of
this Pledge Agreement an assignment by the Pledgor of all the Pledgor's rights
to and interest in the Collateral.
(b) So long as no Default or Event of Default shall have
occurred and be continuing, (i) the Pledgor shall be entitled to exercise any
and all voting and other rights pertaining to the
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67
Collateral or any part thereof for any purpose not inconsistent with the terms
of this Pledge Agreement, and (ii) the Pledgor shall be entitled to receive any
and all cash dividends or other distributions paid in respect of the Collateral.
(c) For so long as this Pledge Agreement shall be in effect,
the Pledgor shall take such other actions and execute and deliver such other
documents as the Pledgee may reasonably request in order to secure for the
Pledgee's benefit a perfected first priority lien and security interest in any
or all of the Collateral under the New York Uniform Commercial Code; provided,
however, that the Pledgee shall not be required to take any action or execute or
deliver any document pursuant to this section 5(c) to the extent that it
determines, in reliance on an opinion of legal counsel, that the taking of such
action or the execution or delivery of such document would result in a
prohibited transaction under section 4975 of the Code or section 406 of ERISA,
impair the status of the ESOP as a tax-qualified plan under section 401(a) of
the Code or an employee stock ownership plan under section 4975 of the Code,
impair the tax-exempt status of the Borrower under section 501(a) of the Code or
violate any other requirement of ERISA applicable to the ESOP.
Section 6. Events of Default.
(a) If a Default or an Event of Default shall be existing, in
addition to the rights it may have under the Loan Agreement, the Promissory
Note, and this Pledge Agreement, or by virtue of any other instrument, (i) the
Pledgee may exercise, with respect to Eligible Collateral, from time to time any
rights and remedies available to it under the Uniform Commercial Code as in
effect from time to time in the State of New York or otherwise available to it
and (ii) the Pledgee shall have the right, for and in the name, place and stead
of the Pledgor, to execute endorsements, assignments, stock powers and other
instruments of conveyance or transfer with respect to all or any of the Eligible
Collateral. Written notification of intended disposition of any of the Eligible
Collateral shall be given by the Pledgee to the Pledgor at least three (3)
Business Days before such disposition. Subject to section 13 below, any proceeds
of any disposition of Eligible Collateral may be applied by the Pledgee to the
payment of expenses in connection with the Eligible Collateral, including,
without limitation, reasonable attorneys' fees and legal expenses, and any
balance of such proceeds may be applied by the Pledgee toward the payment of
such of the Liabilities as are in Default, and in such order of application, as
the Pledgee may from time to time elect. No action of the Pledgee permitted
hereunder shall impair or affect its rights in and to the Eligible Collateral.
All rights and remedies of the Pledgee expressed hereunder are in addition to
all other rights and remedies possessed by it, including, without limitation,
those contained in the documents referred to in the definition of Liabilities in
section 1 hereof.
(b) In any sale of any of the Eligible Collateral after a
Default or an Event of Default shall have occurred, the Pledgee is hereby
authorized to comply with any limitation or restriction in connection with such
sale as it may be advised by counsel is necessary in order to avoid any
violation of applicable law (including, without limitation, compliance with such
procedures as may restrict the number of prospective bidders and purchasers or
further restrict such prospective bidders or purchasers to persons who will
represent and agree that they are purchasing for their own account for
investment and not with a view to the distribution or resale of such Eligible
Collateral), or in order to obtain such required approval of the sale or of the
purchase by any governmental
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68
regulatory authority or official, and the Pledgor further agrees that such
compliance shall not result in such sale's being considered or deemed not to
have been made in a commercially reasonable manner, nor shall the Pledgee be
liable or accountable to the Pledgor for any discount allowed by reason of the
fact that such Eligible Collateral is sold in compliance with any such
limitation or restriction.
Section 7. Payment in Full. Upon the payment in full of all
outstanding Liabili ties, this Pledge Agreement shall terminate and the Pledgee
shall forthwith assign, transfer and deliver to the Pledgor, against receipt and
without recourse to the Pledgee, all Collateral then held by the Pledgee
pursuant to this Pledge Agreement.
Section 8. No Waiver. No failure or delay on the part of the
Pledgee in exercising any right or remedy hereunder or under any other document
which confers or grants any rights in the Pledgee in respect of the Liabilities
shall operate as a waiver thereof nor shall any single or partial exercise of
any such right or remedy preclude any other or further exercise thereof or the
exercise of any other right or remedy of the Pledgee.
Section 9. Binding Effect; No Assignment or Delegation. This
Pledge Agreement shall be binding upon and inure to the benefit of the Pledgor,
the Pledgee and their respective successors and assigns, except that the Pledgor
may not assign or transfer its rights hereunder without the prior written
consent of the Pledgee (which consent shall not unreasonably be withheld). Each
duty or obligation of the Pledgor to the Pledgee pursuant to the provisions of
this Pledge Agreement shall be performed in favor of any person or entity
designated by the Pledgee, and any duty or obligation of the Pledgee to the
Pledgor may be performed by any other person or entity designated by the
Pledgee.
Section 10. Governing Law. This Loan Agreement shall be
governed by and construed and enforced in accordance with the laws of the State
of New York applicable to contracts to be performed wholly within the State of
New York entered into between parties all of whom are citizens and residents of
the State of New York.
Section 11. Notices. All notices, requests, instructions or
documents hereunder shall be in writing and delivered by hand or commercial
messenger service or sent by United States mail, registered or certified, return
receipt requested, with proper postage prepaid, or by telex or facsimile,
addressed as follows:
(a) If to the Pledgee:
Astoria Financial Corporation
Xxx Xxxxxxx Xxxxxxx Xxxxx
Xxxx Xxxxxxx, Xxx Xxxx 00000
Attention: General Counsel
---------------
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69
(b) If to the Pledgor:
The Long Island Savings Bank FSB
Employee Stock Ownership Plan Trust
CG Trust Company
000 X. Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
with copies to:
The Long Island Savings Bank FSB
Employee Stock Ownership Plan Trust
c/o Astoria Federal Savings and Loan Association
Xxx Xxxxxxx Xxxxxxx Xxxxx
Xxxx Xxxxxxx, Xxx Xxxx 00000
Attention: General Counsel
---------------
Any notice, request or communication hereunder shall be deemed to have been
given on the day on which it is delivered by hand or by commercial messenger
service, or sent by telex or facsimile, to such party at its address specified
above, or, if sent by mail, on the third Business Day after the day deposited in
the mail, postage prepaid, addressed as aforesaid. Any party may change the
person or address to whom or which notices are to be given hereunder, by notice
duly given hereunder; provided, however, that any such notice shall be deemed to
have been given only when actually received by the party to whom it is
addressed.
Section 12. Interpretation. Wherever possible each provision
of this Pledge Agreement shall be interpreted in such manner as to be effective
and valid under applicable law, but if any provision hereof shall be prohibited
by or invalid under such law, such provisions shall be ineffective to the extent
of such prohibition or invalidity, without invalidating the remainder of such
provision or the remaining provisions hereof.
Section 13. Construction. All provisions hereof shall be
construed so as to maintain (a) the ESOP as a qualified leveraged employee stock
ownership plan under section 401(a) and 4975(e)(7) of the Internal Revenue Code
of 1986 (the "Code"), (b) the Trust as exempt from taxation under section 501(a)
of the Code and (c) the loan made pursuant to the Loan Agreement as an exempt
loan under Treasury Regulation ss. 54.4975-7(b) and as described in Department
of Labor Regulation ss. 2550.408b-3.
IN WITNESS WHEREOF, this Pledge Agreement has been duly
executed by the parties hereto as of the day and year first above written.
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71
THE LONG ISLAND SAVINGS BANK FSB EMPLOYEE
STOCK OWNERSHIP PLAN TRUST
By CG TRUST COMPANY
solely as Trustee and not in any other
capacity
By:
--------------------------------------
Name:
--------------------------------------
Title:
--------------------------------------
ASTORIA FINANCIAL CORPORATION
By:
--------------------------------------
Name:
--------------------------------------
Title:
--------------------------------------
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