ADDENDUM TO
                              EMPLOYMENT AGREEMENT
                                 BY AND BETWEEN
                        ATLANTIC LIBERTY FINANCIAL CORP.
                                       AND
                              WILLIAM M. GILFILLAN

     This Addendum (the  "Addendum") to that certain  employment  agreement (the
"Company Employment Agreement") by and between Atlantic Liberty Financial Corp.,
a Delaware corporation (the "Company"), with its principal administrative office
at 186 Montague Street, Brooklyn, New York 11201-3001,  and William M. Gilfillan
("Executive") is made effective as of this 20th day of December, 2005.

     WHEREAS, Executive is currently employed as Executive Vice President, Chief
Financial Officer and Corporate Secretary of the Company, which owns 100% of the
common  stock of  Atlantic  Liberty  Savings,  F.A.,  a  federal  stock  savings
association (the "Association"); and

     WHEREAS,  new Section 409A of the Internal Revenue Code of 1986, as amended
("Code"),  which is initially  effective in 2005, has deemed certain  employment
agreements to be deferred compensation, subject to its provisions; and

     WHEREAS,  the Company and Executive desire to update the Company Employment
Agreement to conform to the provisions and requirements of Code Section 409A.

     NOW,  THEREFORE,  in consideration of the premises and the mutual covenants
and conditions  hereinafter set forth, the Company and Executive hereby agree to
the  following  amendments  to  the  Company  Employment  Agreement,   it  being
understood  and agreed that except to the amendments  specifically  provided for
herein, the remaining terms of the Company Employment  Agreement shall remain in
full force and effect:

     1. Section 6 of the Company Employment Agreement is hereby renamed:

     "PAYMENTS TO EXECUTIVE UPON AN EVENT OF TERMINATION OR CHANGE IN CONTROL."

     2. Section 6(a)(iii) of the Company Employment Agreement is hereby replaced
        in its entirety with the following:

         "(iii)   Upon the occurrence of an Event of Termination,  as defined in
                  Section  6(a)(i)  or  (ii),  on the  Date of  Termination,  as
                  defined in Section 9(b), the Company shall pay Executive,  or,
                  in the  event of his  subsequent  death,  his  beneficiary  or
                  beneficiaries, or his estate, as the case may be, as severance
                  pay or liquidated  damages,  or both, a sum equal to three (3)
                  times the sum of (x) the  average  annual  rate of Base Salary
                  paid  in the  last  three  (3)  years  ending  in the  year of
                  termination  and (y) the  average  rate of  bonus  awarded  to
                  Executive during the prior three years. Payment of


<PAGE>

                  the amount  required  hereunder shall be made on the first day
                  of the seventh month  following  Executive's  Separation  from
                  Service if Executive is a Specified Employee and such delay is
                  required by Code Section 409A. For these  purposes,  the terms
                  `Specified  Employee' and `Separation from Service' shall have
                  the meaning required by Code Section 409A. Such payments shall
                  not be reduced in the event Executive obtains other employment
                  following termination of employment."

     3. Section 6(b) of the Company  Employment  Agreement is hereby replaced in
        its entirety with the following:

     "(b) The  provisions  of Section 6(b) shall apply upon the  occurrence of a
Change in Control during the term of this Agreement. In the event of a Change in
Control of the  Association  or  Company,  Executive  shall be entitled to a sum
equal to three (3) times the sum of (x) the  highest  annual rate of Base Salary
and (y) the highest  annual bonus  awarded to  Executive  during the prior three
years.  Payment of the amount required  hereunder shall be made on the effective
date of the Change in Control.  Notwithstanding anything to the contrary herein,
only  if  required  by Code  Section  409A,  if the  Executive  is a  "Specified
Employee"  within  the  meaning  of Code  Section  409A,  the  payment  required
hereunder  shall be made no  earlier  than the  first day of the  seventh  month
following Executive's  Separation from Service, as defined in Code Section 409A.
For the  purposes of this  Agreement,  a Change in Control of the Company or the
Association  shall mean a change in ownership of the Company or the  Association
under  paragraph (i) below, a change in effective  control of the Company or the
Association  under  paragraph  (ii)  below,  or a change in the  ownership  of a
substantial  portion  of the  assets of the  Company  or the  Association  under
paragraph (iii) below:

         (i)      Change in the ownership of the Company or the  Association.  A
                  change in the  ownership  of the  Company  or the  Association
                  shall occur on the date that any one person,  or more than one
                  person  acting as a group (as  defined  in  Proposed  Treasury
                  Regulation   Section    1.409A-3(g)(5)(v)(B)   or   subsequent
                  guidance),  acquires  ownership  of stock  of the  corporation
                  that,  together  with  stock  held by such  person  or  group,
                  constitutes  more than 50  percent  of the total  fair  market
                  value or total voting power of the stock of such corporation.

         (ii)     Change  in  the  effective  control  of  the  Company  or  the
                  Association.  A change in the effective control of the Company
                  or the Association shall occur on the date that either (i) any
                  one  person,  or more  than one  person  acting as a group (as
                  defined    in    Proposed    Treasury    Regulation    Section
                  1.409A-3(g)(5)(v)(B) or subsequent guidance), acquires (or has
                  acquired  during the 12-month period ending on the date of the
                  most recent  acquisition by such person or persons)  ownership
                  of stock of the  corporation  possessing 35 percent or more of
                  the total  voting power of the stock of such  corporation;  or
                  (ii) a  majority  of  members  of the  corporation's  Board of
                  Directors is replaced  during any 12-month period by directors
                  whose appointment or election is not endorsed by a majority of
                  the members of the  corporation's  Board of Directors prior to
                  the date of the  appointment  or election,  provided that this
                  sub-section (ii) is inapplicable where a majority  shareholder
                  of the Company or the Association is another corporation.



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<PAGE>

         (iii)    Change  in  the  ownership  of a  substantial  portion  of the
                  Company's  or  the  Association's  assets.  A  change  in  the
                  ownership  of a  substantial  portion  of the  Company  or the
                  Association's  assets  shall  occur on the  date  that any one
                  person,  or more than one person acting as a group (as defined
                  in Proposed Treasury  Regulation Section  1.409A-3(g)(5)(v)(B)
                  or subsequent guidance),  acquires (or has acquired during the
                  12-month  period  ending  on  the  date  of  the  most  recent
                  acquisition  by  such  person  or  persons)  assets  from  the
                  corporation that have a total gross fair market value equal to
                  or more than 40 percent of the total gross fair  market  value
                  of (i) all of the assets of the Company or the Association, or
                  (ii) the value of the  assets  being  disposed  of,  either of
                  which  is  determined   without  regard  to  any   liabilities
                  associated with such assets.

         (iv)     For all  purposes  hereunder,  the  definition  of  Change  in
                  Control  shall  be  construed  to  be   consistent   with  the
                  requirements   of   Proposed   Treasury   Regulation   Section
                  1.409A-3(g) or subsequent guidance."

     4. Section 6(c) of the Company  Employment  Agreement  shall be replaced in
        its entirety with the following:

     "(c) Upon the occurrence of an Event of Termination under Section 6(a) or a
Change in Control under Section 6(b), the Company and/or its  subsidiaries  will
cause  to  be  continued   life,   medical,   dental  and  disability   coverage
substantially  identical to the coverage  maintained  by the Company  and/or the
Association  for  Executive  prior to such  event or  Change  in  Control.  Such
coverage,  or in lieu  thereof,  a payment of not less than  $12,000  per annum,
shall continue until thirty-six (36) months following Executive's termination of
employment."

     5. Section  6(d) of the Company  Employment  Agreement  shall be amended by
        replacing  the  introductory   clause  "Upon  the  occurrence  of  an
        Event  of Termination," with the following clause:

     "Upon the occurrence of an Event of Termination or a Change in Control,"

     6.  Sections  6(e) and 6(f) of the Company  Employment  Agreement  shall be
         amended by replacing the introductory clause "Upon the occurrence of an
         Event of Termination, within sixty (60) days (or within such shorter
         period to the extent that information can reasonably be obtained)
         following  Executive's  termination of employment with the Company,"
         with the following clause:

     "Upon the  occurrence  of an Event of  Termination  or a Change in Control,
     within  sixty (60) days (or within such  shorter  period to the extent that
     information  can  reasonably  be  obtained)  of the event which  triggers a
     distribution hereunder,"


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<PAGE>

     7. A new Section  6(h) shall be added to the Company  Employment  Agreement
        which shall read as follows:

     "(h) Payments made under Section 6(b) above shall be made  irrespective  of
     whether  termination of employment has occurred.  Notwithstanding  anything
     herein to the contrary, Executive shall only be entitled to a payment under
     the first to occur of an Event of  Termination  under  Section  6(a),  or a
     Change  in  Control  under  Section  6(b).  Payments  under  one  of  these
     alternatives shall preclude payments under the other."

     8. Section 10 of the Company Employment Agreement is hereby renamed:

     "POST-PAYMENT OBLIGATIONS."


     IN WITNESS WHEREOF,  the Company has caused this Addendum to be executed on
its behalf by its duly authorized officers, and Executive has set his hand as of
the date first written above.

                                            EXECUTIVE




Dated:   December 20, 2005                  By: /s/ William M. Gilfillan
         ---------------------------            -------------------------------
                                                William M. Gilfillan


                                            ATLANTIC LIBERTY FINANCIAL CORP.




Dated:   December 20, 2005                  By: /s/ Richard T. Arkwright
         ---------------------------            -------------------------------





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