Michael J. Hegarty
Two Central Drive
Glen Head, New York 11354

Dear Mike:

                                                          Re: Retirement
Agreement

This letter sets forth the terms of the agreement between Flushing Financial
Corporation (the "Company"), Flushing Savings Bank, FSB (the "Bank") and you
regarding your pending retirement. Capitalized terms used in this letter and not
otherwise defined have the meanings given to them in your employment agreement
with the Company dated as of November 28, 2000. For purposes of this letter,
your employment agreement with the Company and your employment agreement with
the Bank dated as of November 28, 2000 are collectively referred to as your
"Employment Agreements."

1. In order to provide for an orderly succession process, the Board of Directors
of the Company and the Bank and you agree that on June 30, 2005 (your
"Retirement Date") you will retire from your positions as President and Chief
Executive Officer of the Company and the Bank and from any other positions you
may have with subsidiaries or benefit plans of the Company or the Bank other
than your position as a member of the Board of Directors of the Company and the
Bank
2.
The parties acknowledge that upon your retirement on your Retirement Date, the
amounts you are entitled to receive under your Employment Agreements are the
following:

 
(i)
your earned but unpaid Current Salary as of your Retirement Date, plus an amount
representing any accrued but unpaid vacation time and floating holidays;  
(ii)
a one-time payment of $ 769,500;  
(iii)
payment of your Deferred Compensation Account and Supplemental Retirement
Account to which you are entitled pursuant to sections 5(b) and 5(e) of your
Employment Agreements;  
(iv)
payment of the $500,000 additional supplemental retirement benefit to which you
are entitled pursuant to section 5(f) of your Employment Agreements;  
(v)
all benefits to which you are entitled as a former employee under the Company's
and the Bank's employee benefit plans and programs and compensation plans and
programs; and  
(vi)
the health and welfare benefits described in sections 7(b)(iv) and (v) of your
Employment Agreements.

3.
The amounts referred to in clauses (i), (ii), (iii), and (iv) of paragraph 2 of
this letter shall be paid to you in a lump sum in cash upon your Retirement Date
to the extent permitted under Internal Revenue Code Section 409A. Any amounts
not permitted to be paid upon your Retirement Date shall be paid as soon as
permitted under Section 409A. To the extent payment of your Deferred
Compensation Account and/or Supplemental Retirement Account is made after your
Retirement Date in order to comply with Section 409A, the unpaid portion of such
Accounts shall continue to be credited with earnings (or losses) as provided in
sections 5(b) and 5(e) of your Employment Agreements
4.
As consideration for entering into this Retirement Agreement and the waiver and
release contained herein, in the event of your death before your Retirement
Date, the Company and/or the Bank shall pay or provide to your designated
beneficiaries (or failing any designation, to your estate):

 
(i)
a lump sum death benefit in the amount of $1,069,500 in the event of death prior
to May 27, 2005, or $1,019,500 in the event of death on or after May 27, 2005
but before your Retirement Date; and  
(ii)
your spouse and dependents shall be provided with the health and welfare
benefits identical to those described in sections 7(b)(iv) and (v) of your
Employment Agreements as applicable to your spouse and dependents

 
Of course, you will also be entitled to receive the amounts you are entitled to
receive under your Employment Agreements in the event your employment terminates
on account of death, as well as all benefits to which you would be entitled as a
deceased employee under the Company's and the Bank's employee benefit plans and
programs and compensation plans and programs
5.
The amounts payable by the Company or the Bank under this Agreement shall be
reduced by all required tax withholding with respect to such amounts
6.
In the event that a Change of Control occurs before your Retirement Date or in
the event your employment with the Company or the Bank is terminated (by you or
by the Company or the Bank) before your Retirement Date (other than by reason of
your death) , this letter agreement shall become null and void, and your rights
shall be determined under your Employment Agreements
7.
Upon payment by the Company or the Bank of the amounts set forth in paragraph 2
or 4 of this letter, the Company and the Bank shall have no further obligations
to you under this letter agreement or your Employment Agreements
8.
In exchange for the consideration provided for in this Agreement, you, for
yourself and your heirs, executors, administrators and assigns, forever waive,
release and discharge the Company and the Bank and their respective
subsidiaries, affiliates, successors and assigns, past and present officers,
directors, employees and agents, and any fiduciaries of any employee benefit
plan or policy of the Company or the Bank (collectively the "Bank Parties"),
from any and all claims, cases, demands, causes of actions, fees and liabilities
and expenses (including attorneys' fees) of any kind whatsoever, whether known
or unknown, which you or they ever had or now have against the Bank Parties by
reason of any actual or alleged act, omission, transaction, practice, conduct,
occurrence, or other matter up to and including the date of your execution of
this agreement, including, but not limited to any tort and/or contract claims
and any claims under Title VII of the Civil Rights Act of 1964, the Age
Discrimination in Employment Act (ADEA), the Americans with Disabilities Act,
the Family Medical Leave Act, the Employee Retirement Income Security Act of
1974 (ERISA), the Civil Rights Act of 1991, and/or any other Federal, state or
local law (statutory or decisional), regulation, or ordinance; provided,
however, that this waiver and release shall not waive, release or discharge any
of the Bank Parties against any claim, case, demand, cause of action, fee,
liability or expense relating to indemnification or limitation of liability
under the Company's or the Bank's charter or bylaws, or under any
indemnification agreement between you and the Company or the Bank
 
You acknowledge that you have been urged by the Company to consult an attorney
before signing this agreement and that you have executed this agreement after
having had the opportunity to consult with an attorney. You further acknowledge
that: you have read this agreement in its entirety; you understand all of its
terms; you knowingly and voluntarily assent to all of the terms and conditions
contained herein including, without limitation, the waiver and release; you are
executing this agreement, including the waiver and release, in exchange for
consideration in addition to anything of value to which you are already
entitled; you are not waiving or releasing rights or claims that may arise after
your execution of this agreement; and that you understand that the waiver and
release in this agreement is being requested in connection with your retirement
from the Company and the Bank and in exchange for your receipt of consideration
to which you otherwise would not be entitled

This letter agreement may not be altered, revised or amended except by an
instrument in writing signed by you, the Company and the Bank.

This letter agreement, including the waiver and release contained herein, shall
become effective on the eighth day following your execution of this agreement,
and you may revoke it at any time prior to the effective date by giving written
notice of such revocation to Anna Piacentini, the Company's Senior Vice
President and Corporate Secretary.

Please indicate your agreement with the foregoing by signing in the space
provided below and returning a signed copy of this letter. Please be advised
that you have the right to consider this Agreement for 21 days, although you can
sign it at any time before the expiration of this period.

      Sincerely,
 
FLUSHING FINANCIAL CORPORATION
 
By: /s/ Anna M. Piacentini
 
FLUSHING SAVINGS BANK, FSB
 
By: /s/ John R. Buran 

AGREED AND ACCEPTED  
/s/ Michael J. Hegarty Date: December 23, 2004 Michael J. Hegarty