<PAGE> 1
EXHIBIT 10.2
LOAN AGREEMENT
--------------
THIS LOAN AGREEMENT ("Loan Agreement") is made and entered into as
of
the 3rd day of March, 2004, by and between
the CLIFTON SAVINGS BANK, S.L.A.
EMPLOYEE STOCK OWNERSHIP PLAN TRUST
("Borrower"), a trust forming part of the
Clifton Savings Bank, S.L.A. Employee Stock
Ownership Plan ("ESOP"); and CLIFTON
SAVINGS BANCORP, INC. ("Lender"), a
corporation organized and existing under the
laws of the United States of America.
W I T N E S S E T H
WHEREAS, the Borrower is authorized to purchase shares of common
stock
of Clifton Savings Bancorp, Inc. ("Common
Stock"), either directly from Clifton
Savings Bancorp, Inc. or in open market
purchases in an amount not to exceed
1,099,100 shares of Common Stock.
WHEREAS, the Borrower is authorized to borrow funds from the Lender
for
the purpose of financing authorized
purchases of Common Stock; and
WHEREAS, the Lender is willing to make a loan to the Borrower for
such
purpose.
NOW, THEREFORE, the parties agree hereto 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:
BUSINESS DAY means any day other than a Saturday, Sunday or other
day
------------
on which banks are authorized or required
to close under federal or local law or
regulation.
CODE means the Internal Revenue Code of 1986, as amended (including
the
----
corresponding provisions of any succeeding
law).
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
requirements of notice or lapse of
time.
ERISA means the Employee Retirement Income Security Act of 1974,
as
-----
amended (including the corresponding
provisions of any succeeding law).
EVENT OF DEFAULT means an event or condition described in Article
5.
----------------
LOAN means the loan described in section 2.1
----
LOAN DOCUMENTS means, collectively, the 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.
PLEDGE AGREEMENT means the agreement described in section
2.8(a).
----------------
1
<PAGE> 2
PRINCIPAL AMOUNT means the face amount of the Promissory Note,
---------------
determined as set forth in section
2.1(c).
PROMISSORY NOTE means the promissory note described in section
2.3.
---------------
REGISTER means the register described in section 2.9.
--------
ARTICLE II
----------
THE LOAN; PRINCIPAL AMOUNT;
INTEREST; SECURITY; INDEMNIFICATION
-----------------------------------
SECTION 2.1 THE
LOAN; PRINCIPAL AMOUNT.
--------------------------
(a) The Lender hereby agrees to lend to the Borrower such amount,
and
at such time, as shall be determined under
this Section 2.1; provided, however,
that in no event shall the aggregate amount
lent under this Loan Agreement from
time to time exceed the greater of (i)
$10,991,000 or (ii) the aggregate amount
paid by the Borrower to purchase up to
1,099,100 shares of Common Stock.
(b) Subject to the limitations of Section 2.1(a), the Borrower
shall
determine the amounts borrowed under this
Agreement, and the time at which such
borrowings are effected. Each such
determination shall be evidenced in a writing
which shall set forth the amount to be
borrowed and the date on which the Lender
shall disburse such amount, and such
writing shall be furnished to the Lender by
notice from the Borrower. The Lender shall
disburse to the Borrower the amount
specified in each such notice on the date
specified therein or, if later, as
promptly as practicable following the
Lender's receipt of such notice; provided,
however, that the Lender shall have no
obligation to disburse funds pursuant to
this Agreement following the occurrence of
a Default or an Event of Default
until such time as such Default or Event of
Default shall have been cured.
(c) 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 disbursed by the Lender pursuant to
section 2.1(b) on or before such date; over
(ii) the aggregate amount of any repayments of such amounts
made
before such date.
The Lender shall maintain on the Register a
record of, and shall record in the
Promissory Note, the Principal Amount, any
changes in the Principal Amount and
the effective date of any changes in the
Principal Amount.
2
<PAGE> 3
SECTION 2.2
INTEREST.
--------
(a) The Borrower shall pay to the Lender interest on the
Principal
Amount, for the period commencing with the
first disbursement of funds under
this Loan Agreement and continuing until
the Principal Amount shall be paid in
full, at the rate of four percent (4%) per
annum. Interest payable under this
Agreement shall be computed on the basis of
a year of 365 days and actual days
elapsed (including the first day but
excluding the last) occurring during the
period to which the computation
relates.
(b) Accrued interest on the Principal Amount shall be payable by
the
Borrower on the dates set forth in Schedule
I to the Promissory Note. All
interest on the Principal Amount shall be
paid by the Borrower in immediately
available funds.
(c) Anything in the 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 the Promissory Note of the
Borrower
attached hereto as an exhibit payable to
the order of the lender in the
Principal Amount and otherwise duly
completed.
SECTION 2.4
PAYMENT OF TRUST LOAN.
---------------------
The Principal Amount of the Loan shall be repaid in accordance with
Schedule I to the Promissory Note on the dates specified therein until fully
paid.
SECTION 2.5
PREPAYMENT.
----------
The Borrower shall be entitled to prepay the Loan in whole or in
part,
at any time and from time to time;
provided, however, that the Borrower shall
give notice to the Lender of any such
prepayment; and provided, further, that
any partial prepayment of the Loan shall be
in an amount not less than $1,000.
Any such prepayment shall be: (a) permanent
and irrevocable; (b) accompanied by
all accrued interest through the date of
such prepayment; (c) made without
premium or penalty; and (d) applied on the
inverse order of the maturity of the
installment thereof unless the Lender and
the Borrower agree to apply such
prepayments in some other order.
SECTION 2.6
METHOD OF PAYMENTS.
------------------
(a) All payments of principal, interest, other charges
(including
indemnities) 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, 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
3
<PAGE> 4
Business Day, and when paid, such payment
shall include interest to the day on
which payment is in fact made.
(b) Notwithstanding anything to the contrary contained in this
Loan
Agreement or the Promissory Note, the
Borrower shall not be obligated to make
any payment, repayment or prepayment on 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 to
engage in any "prohibited transaction" as
such term is defined in the 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, may act or refrain from acting
pursuant to this section 2.6(b) on the
basis of an opinion of counsel, and any
opinion of such counsel. The Borrower
may consult with counsel, and any opinion
of such counsel shall be full and
complete authorization and protection in
respect of any action taken or suffered
or omitted by it hereunder in good faith
and in accordance with such opinion of
counsel. Nothing contained in this section
2.6(b) shall be construed as imposing
a duty on the Borrower to consult with
counsel. Any obligation of the Borrower
to make any payment, repayment or
prepayment on the Promissory Note 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 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 USE
OF PROCEEDS OF LOAN.
-----------------------
The entire proceeds of the Loan shall be used solely for
acquiring
shares of Common Stock, and for no other
purpose whatsoever.
SECTION 2.8
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, the Common
Stock purchased with the Principal Amount, by the
execution and delivery to the lender of the Pledge
Agreement attached hereto as an exhibit; and
(ii)
execute and deliver, or cause to be executed and
delivered, such other agreement, instruments and
documents as the Lender may reasonably require in
order to effect the purposes of the Pledge Agreement
and this Loan Agreement.
(b) The Lender shall release from encumbrance under the Pledge
Agreement and transfer to the Borrower, as
of the date on which any payment or
repayment of the Principal
4
<PAGE> 5
Amount is made, a number of shares of
Common Stock held as Collateral determined
pursuant to the applicable provisions of
the ESOP.
SECTION 2.9
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 2.9(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 surrender.
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 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 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, has been duly executed
and delivered by the Borrower; and each
constitutes the valid and legally
binding obligation of the Borrower,
enforceable in accordance with its terms.
SECTION 3.3
PROPERTIES, PRIORITY OF LIENS.
-----------------------------
The liens which have been created and granted by the Pledge
Agreement
constitute valid, first liens on the
properties and assets covered by the Pledge
Agreement, subject to no prior or equal
lien.
SECTION 3.4 NO
DEFAULTS, COMPLIANCE WITH LAWS.
---------------------------------
The Borrower is not in default in any material respect under
any
agreement, ordinance, resolution, decree,
bond, note, indenture, order or
judgement 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.
5
<PAGE> 6
SECTION 3.5
PURCHASE OF COMMON STOCK.
------------------------
Upon consummation of any purchase of Common Stock by the Borrower
with
the proceeds of the Loan, the Borrower
shall acquire valid, legal and marketable
title to all of the Common Stock so
purchased, free and clear of any liens,
other than a pledge to the Lender of the
Common Stock so purchased pursuant to
the Pledge Agreement. Neither the execution
and delivery of the Loan Documents
nor the performance of any obligation
thereunder violates any provisions of law
or conflicts with or results in a breach of
or creates (with or without the
giving of notice of 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 transaction contemplated therein or
in connection therewith, including
without limitation, with respect to the
transfer of the shares of Common Stock
purchased with the proceeds of the Loan
pursuant thereto.
SECTION 3.6
ESOP; CONTRIBUTIONS.
-------------------
As of the effective date of the ESOP sponsor's conversion, the ESOP
and
the Borrower will be duly created,
organized and maintained by the ESOP sponsor
in compliance with all applicable laws,
regulations and rulings. The ESOP will
qualify as an "employee stock ownership
plan" as defined in section 4975(e)(7)
of the Code. The ESOP provides that the
ESOP sponsor 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; 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 3.7
TRUSTEE.
-------
The trustee of the ESOP has been duly appointed by the ESOP
sponsor.
SECTION 3.8
COMPLIANCE WITH LAWS; ACTIONS.
-----------------------------
Neither the execution and delivery by the Borrower 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 Borrower is a
party, to which the Borrower is bound or
to which the Borrower is subject, which
violation or event of default would have
a material adverse effect on the Borrower.
There is no action or proceeding
pending or threatened against either the
ESOP or the Borrower before any court
or administrative agency.
6
<PAGE> 7
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 g
