EXHIBIT 10.25

FORM OF EMPLOYEE RESTRICTED STOCK AWARD LETTER

      DATE OF GRANT    

EMPLOYEE NAME

EMPLOYEE ADDRESS

Dear Name:

                 This letter sets forth the terms and conditions of the shares
of restricted stock granted to you by Flushing Financial Corporation (the
“Company”), in accordance with the provisions of its 1996 Restricted Stock
Incentive Plan (the “Plan”). You have been granted NUMBER shares (the
“Restricted Shares”) of the Company’s Common Stock (“Common Stock”). Your
Restricted Shares are subject to the terms and conditions set forth in the Plan,
any rules and regulations adopted by the Board of Directors (the “Board”), and
this letter. Any terms used in this letter and not defined have the meanings set
forth in the Plan.

                 This grant is intended to fulfill the Plan’s purpose of
providing additional incentives to employees such as yourself through the award
of Restricted Shares, thereby increasing your personal stake in the continued
success and growth of the Company and encouraging you to remain in the Company’s
employ.

                 In addition to serving as a grant letter, this document
constitutes part of a prospectus covering securities that have been registered
under the Securities Act of 1933. The date of this part of the prospectus is
DATE.

1.             Vesting of Restricted Shares

 

(a) Unless they vest on an earlier date as provided in paragraphs 4 and 5 below,
none of your Restricted Shares will vest until DATE .   (b) Unless they vest on
an earlier date as provided in paragraphs 4 and 5 below, your Restricted Shares
will vest in installments as follows, provided that you are an employee or
director of the Company or its subsidiaries on each such date:  

Vesting Date Cumulative Percentage
of Restricted Shares Vested

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Date
20%
Date
40%
Date
60%
Date
80%
Date
100%

    (c) You do not need to pay any purchase price to receive the Restricted
Shares granted to you by this letter.

 

2.             Restrictions on the Restricted Shares

                 Until your Restricted Shares have vested, you may not sell,
transfer, assign or pledge them. Stock certificates representing your Restricted
Shares will be registered in your name as of the date of this letter, but such
certificates will be held by the Company on your behalf until such shares vest.
When all or a portion of your Restricted Shares vest, a certificate representing
such shares (minus any shares retained to satisfy your tax withholding
obligations, as described in paragraph 7) will be delivered to you (or, in the
event of your death, to the executor or administrator of your estate) as soon as
practicable. To the extent your Restricted Shares have vested, they shall be
fully transferable and not subject to forfeiture upon termination of employment
or otherwise.

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3.             Dividends and Voting

                 From the date of this letter, you will receive, with respect to
your Restricted Shares, payments equal to the amount of dividends paid on Common
Stock. Such payments will be paid directly to you at the same time dividends are
paid with respect to all other shares of Common Stock. You will have the right
to vote your Restricted Shares.

4.             Termination of Employment

 

(a) General.  Special rules apply to the vesting of your Restricted Shares in
the event of your death, disability, retirement, or other termination of
employment.   (b) Death or Disability.  Notwithstanding the provisions of
paragraph 1, if your employment terminates by reason of death or Disability, all
of your Restricted Shares will immediately vest. For this purpose, “Disability”
means that you have been unable to perform the essential functions of your
employment (or, if you have retired and are serving as a director, are unable to
perform the essential functions of that position) due to disability or
incapacity for 270 consecutive days or such lesser period as may be determined
by the Board (upon recommendation of the Committee).   (c) Retirement.
Notwithstanding the provisions of paragraph 1, if your employment terminates by
reason of Retirement, all of your Restricted Shares will immediately vest. For
purposes of this provision, “Retirement” means termination of employment with
the Company or its subsidiaries at a time when you are eligible to retire under
a retirement program of the Company or one of its subsidiaries or as otherwise
determined by the Board upon recommendation of the Committee.   (d) Other
Termination of Employment.  If your employment terminates for any reason other
than death, Disability, or Retirement, any of your Restricted Shares which have
not vested prior to your termination of employment will be forfeited.   (e)
Acceleration of Vesting.  If permitted by the OTS, the Board (upon
recommendation of the Committee) may, in its discretion, exercised before or
after your termination of employment, declare all or any portion of your
Restricted Shares immediately vested.   (f) Board Determinations. The Board
shall have absolute discretion to determine the date and circumstances of
termination of your employment, and its determination shall be final, conclusive
and binding upon you.

 

5.             Change of Control

 

(a) In general, a Change of Control will be deemed to have occurred if:  

(i) any person or group becomes the owner of (or obtains the right to acquire)
25% of the voting securities of the Company or Flushing Savings Bank, FSB (the
“Bank”);   (ii) there is a change in the composition of a majority of the Board
of Directors of the Company or the Bank which change was not approved by a
majority of the Board of Directors as previously constituted;   (iii) any entity
acquires all or substantially all of the assets of the Bank or the Company; or  
(iv) the Company’s or the Bank’s shareholders approve a merger or consolidation
with another company where such shareholders would not own 50% or more of the
surviving corporation.  

  This description of a Change of Control is only a summary, and the definition
contained in the Plan is controlling.  

(b) Notwithstanding the provisions of paragraph 1, upon the occurrence of a
Change of Control, all of your Restricted Shares will vest immediately if you
are an employee or director of the Company or its subsidiaries at such time.

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6.             Federal Income Tax Consequences

 

(a) General.  The following description of the federal income tax consequences
of your Restricted Shares is based on currently applicable provisions of the
Internal Revenue Code of 1986, as amended (the “Code”) and related regulations,
and is intended to be only a general summary. The summary does not discuss state
and local tax laws, which may differ from the federal tax law, or federal
estate, gift and employment tax law. For these reasons, you are urged to consult
your own tax advisor regarding the application of the tax laws to your
particular situation.   (b) Income Recognition Date.  Except as noted below, the
grant of Restricted Shares is not taxable to you. As a general matter, you will
recognize ordinary compensation income on the date your Restricted Shares vest
in an amount equal to the fair market value of the Restricted Shares on that
date. You may, however, elect to recognize income with respect to some or all of
your Restricted Shares as of the date of grant of such Restricted Shares in an
amount equal to the fair market value of the Restricted Shares on that date. In
order to make this election, you must file an election under Section 83(b) of
the Code with the Internal Revenue Service no later than 30 days after the date
of this letter. Further information about Section 83(b) and a copy of the
election form can be obtained from the Company’s Human Resources Department.  

  If you make a Section 83(b) election and subsequently forfeit some or all of
the Restricted Shares that were subject to the election, you will not be able to
claim a deduction or capital loss with respect to the forfeited shares.     As
used in this letter, the “income recognition date” of your Restricted Shares is
the date the shares vest, unless you make a Section 83(b) election as described
above, in which case the income recognition date is the date of this letter.  

(c) Valuation of Shares for Tax Purposes.  For purposes of determining the
amount of income to be recognized by you (and the tax basis of the shares), the
fair market value of your Restricted Shares on the income recognition date will
be calculated as the mean between the highest and lowest quoted selling price,
regular way, of the Company’s Common Stock on the Nasdaq National Market (or the
principal exchange upon which the Common Stock is listed) on the day before such
date or, if no such sale of Common Stock occurs on such date, the mean between
the highest and lowest quoted selling price on the nearest trading day before
such date.   (d) Basis and Holding Period.  Your tax basis in the shares
acquired upon the vesting of your Restricted Shares will be equal to the fair
market value of the shares on their income recognition date.  

  You will recognize capital gain or loss on your sale or exchange of the shares
to the extent of any difference between the amount realized and your tax basis
in the shares. The tax treatment of such gain or loss will depend on the length
of time you have held the shares after their income recognition date and certain
other factors.  

(e) Dividends.  You will receive payments equal to the dividends on the full
number of Restricted Shares granted, regardless of whether you have made a
Section 83(b) election. If you have made a Section 83(b) election, or if your
Restricted Shares have vested, such payments will be treated for tax purposes as
dividend income (in certain years eligible for the lower tax rates generally
applicable to net capital gains); otherwise, they are taxable as compensation
income. In either case, such payments will be taxable in the year received.  
(f) Company Deductions.  As a general rule, the Company or one of its
subsidiaries will be entitled to a deduction for federal income tax purposes at
the same time and in the same amount that you recognize compensation income in
connection with the receipt of Restricted Shares (including your receipt of
dividend equivalents on your Restricted Stock before they vest if you have not
made a Section 83(b) election), to the extent that such income is considered
reasonable compensation under the Code. However, Section 162(m) of the Code
limits to $1 million the annual tax deduction that the Company and its
subsidiaries can take with respect to the compensation of each of certain
officers unless the compensation is performance based or certain

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  other exceptions apply. The Company believes that awards of Restricted Shares
will not be treated as performance-based compensation for this purpose.
Furthermore, the Company will not be entitled to a deduction with respect to
payments that constitute “excess parachute payments” pursuant to Section 280G of
the Code and that do not qualify as reasonable compensation pursuant to that
section. Such payments will also subject the recipients to a 20% excise tax.  

(g) ERISA.  The Plan is not qualified under Section 401(a) of the Code and is
not subject to any of the provisions of the Employee Retirement Income Security
Act of 1974.

 

7.             Income Tax Withholding

                 You must make arrangements satisfactory to the Company to
satisfy any applicable federal, state, or local withholding tax liability
arising with respect to the Restricted Shares. You can either make a cash
payment to the Company of the required amount or, if you do not make a
Section 83(b) election, you can elect to satisfy your withholding obligation by
having the Company retain Common Stock having a value equal to the amount of
your withholding obligation from the shares otherwise deliverable to you upon
the vesting of your Restricted Shares. If you fail to satisfy your withholding
obligation in a time and manner satisfactory to the Company, the Company shall
have the right to withhold the required amount from your salary or other amounts
payable to you.

                 Any election to have shares withheld must be made on or before
the vesting date of your Restricted Shares. A copy of the withholding election
form is attached.

                 The amount of withholding tax retained by the Company or paid
by you to the Company will be paid to the appropriate federal, state and local
tax authorities in satisfaction of the withholding obligations under the tax
laws. The total amount of income you recognize with respect to your Restricted
Shares will be reported on your Form W-2 in the year in which you recognize
income with respect to such shares. Whether you owe additional tax will depend
on your overall taxable income for the applicable year and the total tax
remitted for that year through withholding or by estimated payments.

8.             Administration of the Plan

                 The Plan is administered by the Board of Directors of the
Company. The Board has authority to interpret the Plan, to adopt rules for
administering the Plan, to decide all questions of fact arising under the Plan,
and generally to make all other determinations necessary or advisable for
administration of the Plan. Grants of awards under the Plan will be made by the
Board only upon recommendation of the Compensation Committee of the Board. The
Board can reduce, but cannot increase, an award from the level recommended by
the Committee. Members of the Committee, which consists of at least two
directors, are appointed annually by the Board and may be removed by the Board.
All decisions and acts of the Board are final and binding on all affected Plan
participants.

9.             Adjustment in Certain Events

                 In the event of specified changes in the Company’s capital
structure, the Board is required to make appropriate adjustment in the number
and kind of shares authorized by the Plan, and the number and kind of shares
covered by outstanding awards. This letter will continue to apply to your awards
as so adjusted.

10.          Amendment

                 The Board (upon recommendation of the Committee) may from time
to time amend the terms of this award in accordance with the terms of the Plan
in effect at the time of such amendment, but no amendment which is unfavorable
to you can be made without your written consent (except for (i) amendments or
updates to this letter that describe changes in the law that apply to your
Restricted Shares, and (ii) any changes that may be required by the OTS). The
Plan and your Restricted Shares are expressly subject to any terms and
conditions that may be required by the OTS.

                 The Plan is of unlimited duration, but may be amended,
terminated or discontinued by the Board of Directors at any time. However, no
amendment, termination or discontinuance of the Plan (other than an amendment or
termination that may be required by the OTS) will unfavorably affect any
Restricted Shares previously granted to you.

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11.          Section 16(b) Considerations

                 If you are deemed to be an officer of the Company for purposes
of Section 16(b) (“Section 16(b)”) of the Securities Exchange Act of 1934 (the
“Exchange Act”), you will be required to return to the Company any “profit” you
realize from the “purchase” and “sale”, or “sale” and “purchase”, of Common
Stock within any six month period. Under current law, neither the grant nor the
vesting of your Restricted Shares is a “purchase” for purposes of Section 16(b).
Accordingly, your receipt of the Restricted Shares will not affect your ability
to sell any other shares of Common Stock you may own.

                 The sale of your Restricted Shares in a private transaction or
on the open market will generally be a “sale” for purposes of Section 16(b).
However, a sale of shares to the Company which has been authorized in advance by
the Board of Directors will not be a “sale

                 The withholding of shares to satisfy your tax liability in
connection with the vesting of Restricted Shares (as described in paragraph 7)
will not be a “sale”.

                 Reporting requirements apply with respect to the above
transactions. In most cases, such reports must be received by the Securities and
Exchange Commission (the “SEC”) by the second business day after the date of the
transaction. Beginning June 30, 2003, all such reports must be filed
electronically. If you are subject to Section 16(b), you should consult the
Company’s Senior Vice President/Human Resources with respect to these
provisions.

12.          Restrictions on Resale

                 There are no restrictions imposed by the Plan on the resale of
Common Stock acquired under the Plan. However, the Company’s insider trading
policy imposes certain restrictions on transactions in securities of the
Company. In addition, under the provisions of the Securities Act of 1933 (the
“Securities Act”) and the rules and regulations of the SEC, resales of stock
acquired under the Plan by certain officers and directors of the Company who may
be deemed to be “affiliates” of the Company must be made pursuant to an
appropriate effective registration statement filed with the SEC, pursuant to the
provisions of Rule 144 issued under the Securities Act, or pursuant to another
exemption from registration provided in the Securities Act. At the present time,
the Company does not have a currently effective registration statement pursuant
to which such resales may be made by affiliates. There are no restrictions
imposed by the SEC on the resale of stock acquired under the Plan by persons who
are not affiliates of the Company.

13.          Effect on Other Benefits

                 Income recognized by you as a result of the grant or vesting of
Restricted Shares or the receipt of dividends on your Restricted Shares will not
be included in the formula for calculating benefits under the Company’s other
benefit plans.

14.          Stockholder Rights Plan

                 On September 17, 1996, the Company adopted a Stockholder Rights
Plan pursuant to which it declared a dividend of one Right (a “Right”) for each
outstanding share of Common Stock. The Rights Plan provides that the Company
will issue one Right together with each share of Common Stock issued by it in
the future. Each Right entitles the holder to purchase from the Company a
fraction of a share of the Company’s Series A Junior Participating Preferred
Stock. The Rights included in your award will vest when the underlying
Restricted Shares vest.

                 The Rights are not exercisable at the present time. At the
present time the Rights are represented by certificates for the Common Stock and
can only be transferred together with the Common Stock. However, if certain
events occur, the Rights will become exercisable and at that time will be able
to be transferred separately from the Common Stock. If the Rights become
exercisable, you will receive more detailed information about how they affect
your awards under the Plan.

15.          Regulatory Compliance

                 Under the Plan, the Company is not required to deliver
Restricted Shares or Common Stock if such delivery would violate any applicable
law or regulation. If required by any federal or state securities law or
regulation, the Company may impose restrictions on your ability to transfer
shares received under the Plan.

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16.          Company and Plan Documents

                 You may obtain a copy of the Company’s most recent Annual
Report to Stockholders and all other communications distributed by the Company
to its shareholders, without charge, by written or oral request to the Senior
Vice President/Human Resources, Flushing Financial Corporation, 1979 Marcus
Avenue, Suite E140, Lake Sucess, New York 11042 (telephone (718) 961-5400).

                 The following documents filed by the Company with the SEC under
the Exchange Act are incorporated herein by reference:

 

(1) The Company’s most recent Annual Report on Form 10-K;   (2) All other
reports filed by the Company under Section 13(a) or 15(d) of the Exchange Act
after the end of the period covered by its most recent Annual Report on
Form 10-K; and   (3) The description of the Common Stock and the Rights
contained in the registration statements therefor under Section 12 of the
Exchange Act, included any amendments filed for the purpose of updating such
descriptions.

 

                 All documents filed by the Company pursuant to Sections 13(a),
13(c), 14 and 15(d) of the Exchange Act after the date of this letter and prior
to the filing of a post-effective amendment, which indicates that all securities
offered under the Plan have been sold or which deregisters all securities then
remaining unsold, shall be deemed to be incorporated by reference herein and to
be a part hereof from the date of the filing of such documents.

                 You may obtain a copy of any or all of the documents referred
to above, as well as any documents constituting part of a prospectus covering
shares offered to you under the Plan, without charge, by written or oral request
to the Senior Vice President/Human Resources, Flushing Financial Corporation,
1979 Marcus Avenue, Suite E140, Lake Sucess, New York 11042 (telephone (718)
961-5400).

17.          Experts

                 The consolidated financial statements of the Company appearing
in the Company’s Annual Report on Form 10-K for the year ended December 31, 20XX
have been audited by NAME OF AUDITING FIRM, independent auditors, as set forth
in their report thereon included therein and incorporated herein by reference.
Such financial statements are, and audited financial statements to be included
in subsequently filed documents will be, incorporated herein in reliance upon
the reports of a firm of independent accountants pertaining to such financial
statements (to the extent covered by consents filed with the SEC) given upon the
authority of such firm as experts in accounting and auditing.

*             *             *             *             *

                 If you have any questions regarding your grant of Restricted
Shares or would like to obtain additional information about the Plan or its
administration, please contact the Company’s Senior Vice President/Human
Resources, Flushing Financial Corporation, 1979 Marcus Avenue, Suite E140, Lake
Success, New York 11042 (telephone (718) 961-5400). This letter contains the
formal terms and conditions of your award and accordingly should be retained in
your files for future reference.

 

  Very truly yours,     Anna M. Piacentini   Senior Vice President and  
Corporate Secretary

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