<PAGE>
                                                                    EXHIBIT 10.2





                                                                               1



                             EMPLOYMENT AGREEMENT

            This Employment Agreement (this "Agreement"), dated as of March 1,
1997, is made by and between The Long Island Savings Bank, FSB, a federal stock
savings bank organized under the laws of the United States, having its principal
offices at 201 Old Country Road, Melville, New York 11747 (the "Bank"), and Mr.
Lawrence W. Peters, residing at 143 Cabot Road, Massapequa, New York, 11758 (the
"Executive").

                                   RECITALS

            1. The Bank desires to employ the Executive as President and Chief
Operating Officer of the Bank, and to enter into an employment agreement
embodying the terms of such relationship.

            2. The Executive is willing to be employed as President and Chief
Operating Officer of the Bank on the terms set forth herein.


                                   AGREEMENT

            NOW, THEREFORE, in consideration of the premises and mutual
covenants herein contained, and for other good and valuable consideration, the
Bank and the Executive hereby agree as follows.

            1.    DEFINITIONS

            1.1 "AFFILIATE" means any person or entity of any kind effectively
controlling, effectively controlled by or effectively under common control with
the Bank, including, without limitation, Long Island Bancorp, Inc. (the
"Corporation").

            1.2   "BOARD" means the board of directors of the Bank.

            1.3 "CAUSE" means termination due to the Executive's (a) personal
dishonesty, (b) incompetence, (c) willful misconduct, (d) breach of fiduciary
duty involving personal profit, (e) intentional failure to perform stated
duties, (f) willful violation of any law, rule or regulation (other than traffic
violations or similar offenses), or final cease-and-

<PAGE>
                                                                               2

desist order, or (g) material breach of any provision of this Agreement.


<PAGE>
                                                                               3


            1.4 "CHANGE IN CONTROL" means, after the date of this Agreement, (a)
a change in control of the Corporation and/or the Bank of a nature that would be
required to be reported in response to Item 1 of the current report on Form 8-K,
as in effect on the date hereof, pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"); (b) a change
in control of the Bank within the meaning of 12 U.S.C. ss. 1817(i), the Change
in Bank Control Act, and 12 C.F.R. ss. 574.4 of the Acquisition of Control of
Savings Association regulations of the Office of Thrift Supervision; (c)
individuals who constitute the Board as of the date of this Agreement (the
"Incumbent Board") cease for any reason to constitute at least a majority
thereof, provided that any person becoming a director subsequent to the date of
this Agreement whose election was approved by a vote of at least three-quarters
of the directors then comprising the Incumbent Board, or whose nomination for
election by the Bank's shareholders was approved by the Bank's nominating
committee then serving under the Board, shall be, for purposes of this clause
(c), considered as though he or she was a member of the Incumbent Board (but
excluding, for this purpose, any such individual whose initial assumption of
office occurs as a result of either an actual or threatened election contest (as
such terms are used in Rule 14a-11 of Regulation 14A promulgated under the
Exchange Act) or other actual or threatened solicitation of proxies or
consents); (d) approval by the shareholders of the Corporation and/or the Bank,
as the case may be, of a reorganization, merger or consolidation, or the
consummation of any such reorganization, merger or consolidation, other than a
reorganization, merger or consolidation with respect to which all or
substantially all of the individuals and entities who were the beneficial
owners, immediately prior to such reorganization, merger or consolidation, of
the Voting Interest in the Corporation and/or the Bank, as the case may be,
beneficially own, directly or indirectly, immediately after such reorganization,
merger or consolidation more than 80% of the Voting Interest of the corporation
or other entity resulting from such reorganization, merger or consolidation in
substantially the same proportions as their respective ownership, immediately
prior to such reorganization, merger or consolidation, of the Voting Interest in
the Corporation and/or the Bank, as the case may be; (e) approval by the
shareholders of the Corporation and/or the Bank, as the case may be, of (i) a
complete liquidation or dissolution of the Corporation and/or the Bank, or (ii)
the sale or other disposition of all or substantially all of the assets of the
Corporation and/or the Bank, or the occurrence of any such liquidation,
dissolution, sale or other disposition, other than, in any case, to a
Subsidiary, directly or indirectly, of the Corporation or any Affiliate; and/or
(f) the solicitation of proxies from shareholders of the Corporation by someone
other than the current management of the Bank and without the approval of the
Board, seeking shareholder approval of a plan of 

<PAGE>
                                                                               4


reorganization, merger or consolidation of the Corporation and/or the Bank with
one or more corporations as a result of which the shareholders' interests in the
Corporation and/or the Bank, as the case may be, are actually exchanged for or
converted into securities not issued by the Corporation and/or the Bank, as the
case may be. No failure on the part of the Executive to exercise any rights upon
the occurrence of a Change in Control shall be deemed a waiver of or otherwise
impair the rights of the Executive in respect of any subsequent events or
circumstances constituting a Change in Control.

            1.5 "CODE" means the Internal Revenue Code of 1986, as amended, and
as in effect from time to time, and/or any successor code thereto.

            1.6 "DATE OF TERMINATION" means the date specified in the Notice of
Termination (as defined in Section 6.8 of this Agreement); PROVIDED, HOWEVER,
that if, within thirty (30) days after any Notice of Termination is given, the
party receiving such Notice of Termination notifies the other party in writing
that a dispute exists concerning the termination, the Date of Termination shall
be the date on which the dispute is finally determined, either by mutual written
agreement of the parties, by a binding arbitration award, or by a final
judgment, order or decree of a court of competent jurisdiction, including all
appeals, unless the time for appeal therefrom has expired and no appeal has been
perfected; PROVIDED, FURTHER, HOWEVER, that the Date of Termination shall (a) in
no case be later than the date on which the Term of Employment expires, and (b)
be extended by a notice of dispute only if such notice is given in good faith
and the party giving such notice pursues the resolution of such dispute with
reasonable diligence.

            1.7 "EXCISE TAX" means any excise tax imposed under Section 4999 of
the Code and/or any successor section thereto.

            1.8 "GOOD REASON" means, and shall be deemed to exist if, without
the written consent of the Executive, (a) there occurs any reduction of Base
Salary or material reduction in other benefits or any material change by the
Bank to the Executive's function, duties, or responsibilities in effect on the
date hereof and/or as set forth in Section 4.1 of this Agreement, which change
would cause the Executive's position with the Bank to become one of lesser
responsibility, importance, or scope from the position and attributes thereof in
effect on the date hereof and/or as set forth in Section 4.1 of this Agreement
(and any such material change shall be deemed a continuing breach of this
Agreement), (b) there occurs any material breach of this Agreement by the Bank,
(c) a Change in Control occurs, or (d) the Bank, if and after a Suspension for
Disability (as defined in Section 6.2(a)) occurs and after a Change in Control
occurs, 

<PAGE>
                                                                               5


fills the Executive's position (in the manner set forth in Section
6.2(b) of this Agreement).

            1.9 "PARENT" means any corporation which has a direct or indirect
legal or beneficial ownership interest in the Bank, but only if any such
corporation owns or controls, directly or indirectly, securities possessing at
least 50% of the total combined voting power of all classes of securities of the
Bank.

            1.10 "SUBSIDIARY" means any corporation (other than the Bank) in
which the Bank or any Parent has a direct or indirect legal or beneficial
ownership interest, but only if the Bank or the Parent, as the case may be, owns
or controls, directly or indirectly, securities possessing at least 50% of the
total combined voting power of all classes of securities in any such
corporation.

            1.11 "VOTING INTEREST" means securities of any class or classes or
other ownership interests having general voting power under ordinary
circumstances to elect members of a board of directors or trustees of any
entity.

            2.    EMPLOYMENT.

            2.1 GENERAL. Subject to the terms and provisions set forth in this
Agreement, the Bank, during the Term of Employment, agrees to continue to employ
the Executive as President and Chief Operating Officer of the Bank and the
Executive hereby accepts such continued employment.

            2.2 OTS SUSPENSION. If the Executive is suspended from office and/or
temporarily prohibited from participating in the conduct of the Bank's affairs
by a notice served under Section 8(e)(3) or (g)(1) of the Federal Deposit
Insurance Act (12 U.S.C. ss.ss. 1818(e)(3) and (g)(1)), the Bank's obligations
under this Agreement shall be suspended as of the date of service, unless stayed
by appropriate proceedings. If the charges in the notice are dismissed, the Bank
may in its discretion (i) pay the Executive all or part of the compensation
withheld while its contract obligations were suspended, and (ii) reinstate (in
whole or in part) any of its obligations which were suspended.

            3.    TERM OF EMPLOYMENT

            3.1 TERM. The term of employment under this Agreement shall commence
as of March 1, 1997 (the "Commencement Date") and, unless extended as provided
below or earlier terminated by the Bank or the Executive under Section 6 of this
Agreement, shall continue until December 31, 1998 (the "Term of Employment").
The 

<PAGE>
                                                                               6


Term of Employment may be extended upon written agreement of both parties.

            3.2 OTS REMOVAL. Notwithstanding anything to the contrary in this
Agreement, if the Executive is removed and/or permanently prohibited from
participating in the conduct of the Bank's affairs by an order issued under
Section 8(e)(4) or (g)(1) of the Federal Deposit Insurance Act (12 U.S.C. ss.ss.
1818(e)(4) or (g)(1)), all obligations of the Bank under this Agreement shall
terminate as of the effective date of the order, but vested rights of the Bank
and/or the Executive, if any, shall not be affected.

            4.    POSITIONS, RESPONSIBILITIES AND DUTIES.

            4.1 POSITIONS AND DUTIES. During the Term of Employment, the
Executive shall be employed and shall serve as President and Chief Operating
Officer of the Bank. In such position(s), the Executive shall have the duties,
responsibilities and authority as determined and designated from time to time by
the Board. The Executive shall serve under the direction and supervision of the
Bank's Chief Executive Officer and shall report only to such Chief Executive
Officer. Notwithstanding the above, the Executive shall not be required to
perform any duties and responsibilities (a) which would result in a
non-compliance with or violation of any applicable law, regulation, regulatory
bulletin, and/or any other regulatory requirement or (b) on a regular basis in
any locations outside the counties of Nassau, Suffolk or the City of New York
unless agreed upon by the Executive.

            4.2 ATTENTION TO DUTIES AND RESPONSIBILITIES. During the Term of
Employment, the Executive shall, except for periods of absence occasioned by
illness, vacation in accordance with Section 5.6, and reasonable leaves of
absence in accordance with the practices of the Bank and the Corporation as of
the date of this Agreement, devote substantially all of his business time to the
business and affairs of the Bank and the Corporation and the Executive shall use
his best efforts, business skills, ability and fidelity to perform faithfully
and efficiently the duties and responsibilities contemplated by this Agreement;
PROVIDED, HOWEVER, that the Executive shall be allowed, to the extent such
activities do not present a conflict or substantially interfere with the
performance by the Executive of his duties and responsibilities hereunder, (a)
to manage the Executive's personal affairs, and (b)(i) to serve on boards or
committees of civic or charitable organizations or trade associations, and (ii)
after obtaining the consent of the Board, as evidenced by a written resolution
of the Board and under the terms and conditions specified in any such
resolution, to serve on the 

<PAGE>
                                                                               7


boards of directors or trustees of companies or other organizations and
associations; PROVIDED, FURTHER, HOWEVER, that such offices or positions which
the Executive holds on the date of this Agreement and which are set forth on
Exhibit "A", annexed hereto are designated as currently consented to positions.

            5.    COMPENSATION AND OTHER BENEFITS.

            5.1 BASE SALARY. During the Term of Employment, the Executive shall
receive a base salary of $325,000 per annum ("Base Salary") payable in
accordance with the Bank's normal payroll practices.

            5.2 ANNUAL BONUS. During the Term of Employment, the Executive shall
be entitled to an annual bonus payment in an amount not less than $125,000;
PROVIDED, HOWEVER, that, to the extent not prohibited by applicable law,
regulation, regulatory bulletin, and/or any other regulatory requirement, as the
same exists or may hereafter be promulgated or amended, the annual bonus paid to
the Executive following a Change in Control shall not be less than the highest
annual bonus paid to the Executive during the Term of Employment. No other
compensation or additional benefits provided for in this Agreement shall be
deemed a substitute for the Executive's right, to receive such bonuses.

            5.3 INCENTIVE, RETIREMENT, AND SAVINGS PLANS. During the Term of
Employment, the Executive shall participate in all incentive, pension,
retirement, savings and other employee benefit plans and programs, if any,
maintained from time to time by the Corporation and/or the Bank for the benefit
of senior executives and/or other employees of the Corporation and/or the Bank.

            5.4 WELFARE BENEFIT PLANS. During the Term of Employment, the
Executive, the Executive's spouse, if any, and their eligible dependents, if
any, shall participate in and be covered by all the welfare benefit plans and
programs, if any, maintained by the Corporation and/or the Bank for the benefit
of senior executives and/or other employees of the Corporation and/or the Bank.

            5.5 EXPENSE REIMBURSEMENT. During and in respect of the Term of
Employment, the Executive shall be entitled to receive prompt reimbursement for
all reasonable expenses, including reasonable business travel expenses, incurred
by the Executive in performing his duties and responsibilities hereunder in
accordance with the policies and procedures of the Bank as in effect at the time
the expense was incurred, as the same may be changed from time to time.

<PAGE>
                                                                               8

            5.6 VACATION AND FRINGE BENEFITS. During the Term of Employment, the
Executive shall be entitled to five weeks paid vacation each calendar year at
such times which do not materially interfere with the performance of the
Executive's duties hereunder. In addition, during the Term of Employment, the
Executive shall be eligible to benefit from such fringe benefits and
perquisites, if any, including automobile usage, in accordance with the policies
of the Bank and as in effect and provided from time to time to senior executives
of the Corporation and/or the Bank.

            6.    TERMINATION.

            6.1 TERMINATION DUE TO DEATH. In the event of the Executive's death
during the Term of Employment, the Term of Employment shall thereupon end and
his estate or other legal representative, as the case may be, shall, subject to
Sections 2.2, 3.2, 6.9, 6.11, and 6.12 of this Agreement, only be entitled to:

            (a)(i)(A) Base Salary continuation at two-thirds (2/3) of the rate
      in effect (as provided in Section 5.1 of this Agreement) on the Date of
      Termination for a three-month period commencing on such Date of
      Termination, or (B), if the Board so determines in its sole discretion and
      in lieu of such three-month salary continuation described above in (A), a
      lump sum payment equal in amount to the present value of such Base Salary
      continuation (reasonably determined using a discount rate equal to the
      most recent quote available for the three-month United States Treasury
      Bill rate on the Date of Termination) payable within thirty business days
      after the Date of Termination, and (ii) a pro-rata annual bonus for the
      fiscal year in which such termination occurs, such pro-rata bonus amount
      to be (I) pro-rated based on the number of calendar days transpired during
      the fiscal year of the Bank (prior to the Date of Termination) in which
      such termination occurs over 365, (II) subject to Section 5.2, determined
      in good faith by the Board (but in its sole discretion), and (III) if any
      such bonus is payable, paid on or about the same date that the annual
      bonus amounts payable in respect of such fiscal year, if any, to the
      senior executives of the Corporation and/or the Bank are actually paid to
      them;

            (b) any Base Salary accrued to the Date of Termination or any bonus
      actually awarded, but not yet paid as of the Date of Termination;

<PAGE>
                                                                               9


            (c) reimbursement for all expenses (under Section 5.5) incurred as
      of the Date of Termination, but not yet paid as of the Date of 
      Termination;

            (d) payment of the per diem value of any unused vacation days
      accruing during the Term of Employment and the unused, unaccrued portion
      of any vacation days available through the end (but not beyond) of the
      calendar year of the Bank in which such termination occurs;

            (e) any other compensation and benefits as may be provided in
      accordance with the terms and provisions of any applicable plans and
      programs, if any, of the Bank or any Subsidiary; and

            (f) any rights to indemnification in accordance with Section 11 of
      this Agreement.

            6.2  SUSPENSION FOR DISABILITY.

            (a) If, during the Term of Employment, the Executive shall have been
absent from his duties hereunder on a full-time basis due to physical or mental
illness for six (6) consecutive months, the Bank may give thirty (30) days
written notice of potential suspension. If the Executive shall not have returned
to the full-time performance of his duties within such 30-day period, the Bank
may suspend the Executive's employment for "Disability" (a "Suspension for
Disability").

            (b) If a Suspension for Disability occurs during the Term of
Employment, the Bank will pay the Executive a bi-weekly payment equal to
two-thirds (2/3) of the Executive's bi-weekly rate of Base Salary on the
effective date of the Suspension for Disability. These payments shall commence
on the effective date of the Executive's Suspension for Disability and will end
on the earlier of (i) the date the Executive returns to full-time employment
hereunder; (ii) the Executive's equivalent full-time employment by another
employer; (iii) the Executive's death; or (iv) the expiration or earlier end of
the Term of Employment (the "Term of Suspension"). After a Suspension for
Disability occurs, the Bank shall be free to fill the Executive's position, but
such action by the Bank, shall constitute Good Reason if it occurs after a
Change in Control. Upon the Executive being able to return to full-time
employment hereunder before the expiration or end of the Term of Employment, the
Executive shall be offered an equivalent available position and otherwise be
subject to the provisions of this Agreement. The disability payments hereunder
will be in addition to any benefit payable from any qualified or nonqualified
retirement plans or programs maintained by the Corporation and/or the Bank but
will be reduced by payments received by the Executive on account of such
disability under any 

<PAGE>
                                                                              10


long-term disability plan maintained for the Corporation's and/or the Bank's
employees.

            (c) During the Term of Suspension, the Bank will cause to be
continued life and health coverage and such other benefits substantially
identical to the coverage and benefits maintained by the Bank for the Executive
prior to the occurrence of any Suspension for Disability.

            (d) Notwithstanding the foregoing, there will be no reduction in the
compensation (except as otherwise provided in Section 6.2(b) above), accrued
benefits or pension granted or accruing to the Executive during the Term of
Suspension. Nothing in this Section 6.2 shall abrogate or limit other provisions
of this Agreement granting rights to the Executive or the Executive's spouse or
the Executive's estate following death, or termination, if applicable.

            6.3 TERMINATION BY THE BOARD FOR CAUSE. The Board may terminate the
Executive's employment hereunder for Cause, as provided below. If the Board
terminates the Executive's employment hereunder for Cause, the Term of
Employment (if not already expired) shall thereupon end as set forth below and
the Executive shall, subject to Sections 2.2, 3.2, 6.9, 6.11, and 6.12 of this
Agreement, only be entitled to:

            (a)   Base Salary up to and including the Date of Termination;

            (b) any bonus actually awarded, but not yet paid as of the Date of
      Termination;

            (c) reimbursement for all expenses (under Section 5.5) incurred as
      of the Date of Termination, but not yet paid as of the Date of 
      Termination;

            (d) payment of the per diem value of any unused vacation days
      accruing during the Term of Employment and, to the extent not prohibited
      by applicable law, regulation, regulatory bulletin, and/or any other
      regulatory requirement, as the same exists or may hereafter be promulgated
      or amended, the unused, unaccrued portion of any vacation days available
      through the end (but not beyond) of the calendar year of the Bank in which
      such termination occurs;

            (e) to the extent not prohibited by applicable law, regulation,
      regulatory bulletin, and/or any other regulatory requirement, as the same
      exists or may hereafter be promulgated or amended, any other compensation
      and benefits as may be provided in accordance with the terms and

<PAGE>
                                                                              11



      provisions of any applicable plans and programs, if any, of the Bank or
      any Subsidiary; and

            (f) any rights to indemnification in accordance with Section 11 of
      this Agreement.

In each case, in determining Cause the alleged acts or omissions of the
Executive shall be measured against standards generally prevailing in the
savings institution industry and the ultimate existence of Cause must be
confirmed by not less than 51% of the Incumbent Board (as constituted in
accordance with Section 1.4(c) of this Agreement) at a meeting called for such
purpose prior to any termination therefor; PROVIDED, HOWEVER, that it shall be
the Bank's burden to prove the alleged facts and omissions and the prevailing
nature of the standards the Bank shall have alleged are violated by such acts
and/or omissions of the Executive. In the event of such a confirmation by 51% or
more of the Incumbent Board, the Bank shall notify the Executive that the Bank
intends to terminate the Executive's employment for Cause under this Section 6.3
(the "Confirmation Notice"). The Confirmation Notice shall specify the act, or
acts, upon the basis of which the Incumbent Board has confirmed the existence of
Cause and the Confirmation Notice must be delivered to the Executive within
fourteen (14) days after the Incumbent Board so confirms the existence of Cause.
If the Executive notifies the Bank in writing (the "Opportunity Notice") within
thirty (30) days after the Executive has received the Confirmation Notice, the
Executive (together with counsel) shall be provided one opportunity to meet with
the Incumbent Board (or a sufficient quorum thereof) to discuss such act or
acts. Such opportunity to meet with the Incumbent Board shall be fixed and shall
occur on a date selected by the Incumbent Board, such date being not less than
ten (10) nor more than thirty (30) days after the Bank receives the Opportunity
Notice from the Executive; PROVIDED, HOWEVER, that the Bank may in good faith
select a later date if, and only if, such later date is necessary to convene a
sufficient quorum of the Incumbent Board to act in respect of the Executive's
Opportunity Notice. Such meeting shall take place at the principal offices of
the Bank or such other location as agreed to by the Executive and the Bank.
During the period commencing on the date the Bank receives the Opportunity
Notice and ending on the date next succeeding the date on which such meeting
between the Incumbent Board (or a sufficient quorum thereof) and the Executive
is scheduled to occur, and not withstanding anything to the contrary in this
Agreement, the Executive shall be suspended from employment with the Bank (with
pay, to the extent not prohibited by applicable law, regulation, regulatory
bulletin, and/or any other regulatory requirement, as the same exists or may
hereafter be promulgated or amended) and the Incumbent Board may, during such
suspension period, reasonably limit the Executive's access to the principal
offices of the Bank or any of its assets. If the Incumbent Board properly sets
the date of 

<PAGE>
                                                                              12


such meeting and if the Incumbent Board (or a sufficient quorum thereof) attends
such meeting and in good faith does not rescind its confirmation of Cause at
such meeting or if the Executive fails to attend such meeting for any reason,
the Executive's employment by the Bank shall, immediately upon the closing of
such meeting and the delivery to the Executive of the Notice of Termination, be
terminated for Cause under this Section 6.3. If the Executive does not respond
in writing to the Confirmation Notice in the manner and within the time period
specified in this Section 6.3, the Executive's employment with the Bank shall,
upon the thirty-first day after the receipt by the Executive of the Confirmation
Notice, be terminated for Cause under this Section 6.3. In the event of any
dispute hereunder, the Executive shall be entitled, to the extent not prohibited
by applicable law, regulation, regulatory bulletin, and/or any other regulatory
requirement, as the same exists or may hereafter be promulgated or amended,
until the earlier to occur of (i) the Date of Termination, (ii) the expiration
of the current stated Term of Employment, or (iii) the resolution of such
dispute to (A) be paid bi-weekly his then Base Salary, and (B) continue to
receive all other benefits; and there shall be no reduction whatsoever of any
amounts subsequently paid to the Executive upon resolution of such dispute as a
result of, or in respect to, such interim payments or coverage. The procedure
set forth in this Section 6.3 to determine the existence of Cause shall at all
times be subject to the requirements of applicable law, regulation, regulatory
bulletin or other regulatory requirements.

            6.4 TERMINATION WITHOUT CAUSE OR FOR GOOD REASON. The Bank may
terminate the Executive's employment hereunder at any time without Cause. The
Executive may terminate his employment hereunder for Good Reason at any time by
delivery of written notice to the Bank within the six-month period commencing
after the occurrence of the Good Reason effective forty-five (45) days after
such written notice is delivered. If the Bank terminates the Executive's
employment hereunder without Cause (other than due to Retirement, death,
Disability or the normal expiration of the full Term of Employment), or if the
Executive terminates his employment hereunder for Good Reason, the Term of
Employment shall thereupon end (if not already expired) and the Executive shall,
subject to Sections 2.2, 3.2, 6.8, 6.10, and 6.11 of this Agreement, only be
entitled to:

            (a) as liquidated damages, a cash lump sum equal to the sum of I)
      the Base Salary that would have accrued from the Date of Termination
      through the remaining Term of Employment but for the Termination and ii)
      subject to Section 5.2, an annual bonus for the fiscal year in which the
      Termination occurs;


<PAGE>
                                                                              13


            (b) any Base Salary accrued to the Date of Termination or any bonus
      actually awarded, but not yet paid as of the Date of Termination;

            (c) reimbursement for all expenses (under Section 5.5) incurred as
      of the Date of Termination, but not yet paid as of the Date of 
      Termination;

            (d) payment of the per diem value of any unused vacation days
      accruing during the Term of Employment and the unused, unaccrued portion
      of any vacation days available through the end (but not beyond) of the
      calendar year of the Bank in which such termination occurs;

            (e) continuation of the welfare benefits of the Executive, at the
      level in effect (as provided for by Section 5.4 of this Agreement) on, and
      at the same out-of-pocket cost to the Executive as of, the Date of
      Termination for the three-year period commencing on the Date of
      Termination (or, if such continuation is not permitted by applicable law
      or if the Board so determines in its sole discretion, the Bank shall
      provide the economic equivalent in lieu thereof);

            (f) any other compensation and benefits as may be provided in
      accordance with the terms and provisions of any applicable plans or
      programs, if any, of the Bank or any Subsidiary; and

            (g) any rights to indemnification in accordance with Section 11 of
      this Agreement.

In the event of any dispute hereunder, the Executive shall be entitled until the
earlier to occur of (i) the Date of Termination, (ii) the expiration of the
current stated Term of Employment, or (iii) the resolution of such dispute to
(A) be paid bi-weekly his then Base Salary, and (B) continue to receive all
other benefits; and there shall be no reduction whatsoever of any amounts
subsequently paid to the Executive upon resolution of such dispute as a result
of, or in respect to, such interim payments or coverage.

            6.5 VOLUNTARY TERMINATION. During the Term of Employment, the
Executive may effect, upon thirty (30) days prior written notice to the Bank, a
Voluntary Termination of his employment hereunder and thereupon the Term of
Employment (if not already expired) shall end. A "Voluntary Termination" shall
mean a termination of employment by the Executive on his own initiative other
than (a) a termination due to death or Disability, (b) a termination for Good
Reason, (c) a termination 

<PAGE>
                                                                              14


as a result of the normal expiration of the full Term of Employment. A Voluntary
Termination shall, subject to Sections 2.2, 3.2, 6.8, 6.10, and 6.11 of this
Agreement, entitle the Executive only to all of the payments and benefits which
the Executive would be entitled to in the event of a termination of his
employment by the Bank for Cause.

            6.6 NO MITIGATION; NO OFFSET. In the event of any termination of
employment under this Section 6, the Executive shall be under no obligation to
seek other employment or to mitigate damages and there shall be no offset
against any amounts due the Executive under this Agreement for any reason,
including, without limitation, on account of any remuneration attributable to
any subsequent employment that the Executive may obtain. Any amounts due under
this Section 6 are in the nature of severance payments, or liquidated damages,
or both, and are not in the nature of a penalty.

            6.7 NOTICE OF TERMINATION. Any termination of the Executive's
employment under this Section 6 requiring advance written notice shall be
communicated by a notice of termination to the other party hereto given in
accordance with Section 12.3 of this Agreement (the "Notice of Termination").
The Notice of Termination, in the case of a termination by the Bank for Cause,
or a termination by the Executive for Good Reason, shall (a) indicate the
specific termination provision in this Agreement relied upon, and (b) set forth
in reasonable detail the dates, facts and circumstances claimed to provide a
basis for termination of the Executive's employment under the provision so
indicated.

            6.8 CODE SECTION 280G REDUCTION. Notwithstanding any other
provisions of this Agreement or of any other agreement, contract, understanding,
plan or program entered into or maintained by the Bank, if any payment or
benefit received or to be received by the Executive in connection with a Change
in Control or the termination of the Executive's employment (whether pursuant to
the terms of this Agreement or any other plan, arrangement or agreement with (a)
the Bank or any Affiliate, Parent or Subsidiary of the Bank, (b) any person
whose actions result in a Change in Control, or (c) any person affiliated with
the Bank or any such person) (all such payments and/or benefits, including the
payments and benefits, if any, under this Section 6, being hereinafter referred
to as the "Total Payments") would subject the Executive to an Excise Tax, and if
such Total Payments less the Excise Tax is less than the maximum amount of Total
Payments which would otherwise be payable to the Executive without imposition of
an Excise Tax, then, to the extent necessary to eliminate the imposition of an
Excise Tax (and after taking into account any reduction in the Total Payments
provided 

<PAGE>
                                                                              15


by reason of Section 280G of the Code in such other plan, arrangement or
agreement), (i) the cash and non-cash payments and benefits payable under this
Agreement shall first be reduced (but not below zero), and (ii) all other cash
and non-cash payments and benefits shall next be reduced (but not below zero);
but only if, by reason of any such reduction, the Total Payments with any such
reduction shall exceed the Total Payments without any such reduction. For
purposes of this Section 6.8, (A) no portion of the Total Payments the receipt
or enjoyment of which the Executive shall have effectively waived in writing
prior to the Date of Termination shall be taken into account, (B) no portion of
the Total Payments shall be taken into account which in the opinion of tax
counsel selected in good faith by the Bank does not constitute a "parachute
payment" within the meaning of Section 280G(b)(2) of the Code, including
(without limitation) by reason of Section 280G(b)(4)(A) of the Code, (C) the
payments and/or benefits under this Agreement shall be reduced only to the
extent necessary so that the Total Payments (other than those referred to in
clauses (A) and (B) above) in their entirety constitute reasonable compensation
for services actually rendered within the meaning of Section 280G(b)(4)(B) of
the Code or are otherwise not subject to disallowance as deductions, in the
opinion of the tax counsel referred to above in clause (B), and (D) the value of
any non-cash payment or benefit or any deferred payment or benefit included in
the Total Payments shall be determined by the Bank's independent auditors in
accordance with the principles of Sections 280G(d)(3) and (4) of the Code.
Except as otherwise provided above, the foregoing calculations and
determinations shall be made in good faith by the Bank and the Executive. If no
agreement on the calculations is reached, then the Executive and the Bank will
agree to the selection of an accounting firm to make the calculations. If no
agreement can be reached regarding the selection of an accounting firm the Bank
will select a prominent national accounting firm which has no current or recent
business relationship with the Bank. The Bank shall pay all costs and expenses
incurred in connection with any such calculations or determinations. Any
calculations or determinations made in accordance with this Section 6.8 shall be
conclusive and binding on all parties.

            6.9 PAYMENT. Except as otherwise provided in this Agreement, any
payments to which the Executive shall be entitled to under this Section 6,
including, without limitation, any economic equivalent of any benefit, shall be
made, to the extent practicable, within five (5) business days following the
Date of Termination.


<PAGE>
                                                                              16


            6.10  BANK REGULATORY LIMITATIONS.

            6.10.1 Any payments made to the Executive pursuant to this
Agreement, or otherwise, are subject to and conditioned upon their compliance
with 12 U.S.C. ss. 1828(k) and any regulations promulgated thereunder.

            6.11  OTHER REQUIRED PROVISIONS.

            6.11.1 If the Bank is in default (as defined in Section 3(x)(1) of
the Federal Deposit Insurance Act), all obligations under this Agreement shall
terminate as of the date of default, but this Section 6.11.1 shall not affect
the vested rights of the Bank and/or the Executive, if any.

            6.11.2 All obligations under this Agreement shall be terminated,
except to the extent determined that continuation of this Agreement is necessary
for the continued operation of the Bank, (i) by the director, or his or her
designee, at the time the Federal Deposit Insurance Corporation or the
Resolution Trust Corporation enters into an agreement to provide assistance to
or on behalf of the Bank under the authority contained in Section 13(c) of the
Federal Deposit Insurance Act; or (ii) by the director, or his designee, at the
time the director, or his or her designee, approves a supervisory merger to
resolve problems related to operation of the Bank or when the Bank is determined
by such director to be in an unsafe or unsound condition. Any rights of the
parties that have already vested, however, shall not be affected by any such
actions.

            6.12 POST-TERMINATION OBLIGATIONS. During the Term of Employment and
for one (1) full year after the expiration or termination thereof, the Executive
shall, upon reasonable notice, use his reasonable best efforts to cooperate with
the Corporation and/or the Bank by providing such information and assistance to
the Corporation and/or the Bank as may reasonably be required by the Corporation
and/or the Bank at the Bank's expense in connection with any litigation not
commenced by or involving the Executive in which the Corporation and/or the Bank
or any of their Subsidiaries or Affiliates is, or may become, a party.


<PAGE>
                                                                              17


            7.    NON-EXCLUSIVITY OF RIGHTS; NON-EXTENSION SEVERANCE.

            7.1 OTHER BENEFITS. Except as is otherwise specifically provided in
this Agreement, the Executive's continuing or future participation in any
benefit, bonus, incentive or other plan or program provided or maintained by the
Bank, and for which the Executive may be eligible and qualify, shall not be
prevented or limited, and the Executive's rights under any future agreements
with the Corporation and/or the Bank and/or any Affiliate thereof, including,
without limitation, any stock option agreements shall not be limited or
prejudiced. This Agreement shall not affect or operate to reduce any benefit or
compensation inuring to the Executive of a kind elsewhere provided. Except as
otherwise specifically provided in this Agreement, no provision of this
Agreement shall be interpreted to mean or result in the Executive receiving
fewer benefits than those available to him without reference to this Agreement.

            8. RESOLUTION OF DISPUTES. With the exception of proceedings for
equitable relief brought pursuant to this Section or Section 9.2 of this
Agreement, any dispute or controversy arising under or in connection with this
Agreement may, at the Executive's option, be settled exclusively by arbitration
in Melville, Long Island in accordance with the rules of the American
Arbitration Association then in effect and at the Bank's expense. Judgment may
be entered on the arbitrator's award in any court having jurisdiction; PROVIDED,
HOWEVER, that the Executive shall be entitled to seek specific performance in
court of his right to be paid until the Date of Termination during the pendency
of any dispute or controversy arising under or in connection with this
Agreement. If a claim for any payments or benefits under this Agreement or any
other provision of this Agreement is disputed by the Bank and the Executive, the
Executive shall, to the extent and at such time or times as is not prohibited by
applicable law, regulation, regulatory bulletin, and/or any other regulatory
requirement, as the same exists or may be hereafter promulgated or amended, be
reimbursed for all reasonable attorney's fees and expenses incurred by the
Executive in pursuing such claim.

            9.    CONFIDENTIAL INFORMATION.

            9.1 CONFIDENTIALITY. The Executive will not, during or after the
Term of Employment, disclose any confidential information relating to the
business activities of the Bank or any Affiliate thereof which has not been
previously disclosed by any person to any person, firm, corporation, bank or
other entity for any reason or purpose whatsoever. Notwithstanding the
foregoing, the Executive may disclose any knowledge or other 

<PAGE>
                                                                              18

information relating to banking, financial and/or economic principles, concepts
or ideas which are based on experience and which are not derived from the
business plans and activities of the Bank, and may disclose such confidential
information in connection with legal and/or regulatory proceedings (which shall
include, but not be limited to, formal or informal exams, investigations or
inquiries conducted by the Office of Thrift Supervision).

            9.2 INJUNCTIVE RELIEF. The Executive acknowledges and agrees that
the Bank will have no adequate remedy at law, and would be irreparably harmed,
if the Executive breaches or threatens to breach any of the provisions of this
Section 9 of this Agreement. The Executive agrees that the Bank shall be
entitled to equitable and/or injunctive relief to prevent any breach or
threatened breach of this Section 9, and to specific performance of each of the
terms of such Section in addition to any other legal or equitable remedies that
the Bank may have. The Executive further agrees that he shall not, in any equity
proceeding relating to the enforcement of the terms of this Section 9, raise the
defense that the Bank has an adequate remedy at law.

            9.3 SPECIAL SEVERABILITY. The terms and provisions of this Section 9
are intended to be separate and divisible provisions and if, for any reason, any
one or more of them is held to be invalid or unenforceable, neither the validity
nor the enforceability of any other provision of this Agreement shall thereby be
affected.

            10.   SUCCESSORS.

            10.1 THE EXECUTIVE. This Agreement is personal to the Executive and,
without the prior express written consent of the Bank, shall not be assignable
by the Executive, except that the Executive's rights to receive any compensation
or benefits under this Agreement may be transferred or disposed of pursuant to
testamentary disposition, intestate succession or pursuant to a qualified
domestic relations order. This Agreement shall inure to the benefit of and be
enforceable by the Executive's heirs, beneficiaries and/or legal
representatives.

            10.2 THE BANK. This Agreement shall inure to the benefit of and be
binding upon the Bank and its successors and assigns; PROVIDED, HOWEVER, that no
assignment of this Agreement may be made without the written consent of the
Executive.

            11. INDEMNIFICATION. The Executive (and his heirs, executors and
administrators) shall be indemnified and held harmless by the Bank to the
fullest extent permitted by 

<PAGE>
                                                                              19


applicable law, regulation, regulatory bulletin, and/or any other regulatory
requirement, as the same exists or may hereafter be promulgated or amended,
against all expense, liability and loss (including, without limitation,
attorneys' fees, judgments, fines, excise taxes or penalties and amounts paid or
to be paid in settlement) reasonably incurred or suffered by the Executive as a
consequence of the Executive being or having been made a party to, or being or
having been involved, in any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or investigative, by reason
of the fact that the Executive is or was a trustee, director or officer of the
Bank or is or was serving at the request of the Bank as a trustee, director or
officer of another corporation (including, but not limited to, a subsidiary or
an Affiliate of the Bank), and such indemnification shall continue after the
Executive shall cease to be an officer, director or trustee. The right to
indemnification conferred hereby shall be a contract right and shall also
include, to the extent permitted by applicable regulation, the right to be paid
by the Bank the expenses incurred in defending any such proceeding in advance of
the final disposition upon receipt by the Bank of an undertaking by or on behalf
of the Executive to repay such amount or a portion thereof, if it shall
ultimately be determined that the Executive is not entitled to be indemnified by
the Bank pursuant hereto or as otherwise authorized by law but such repayment by
the Executive shall only be in an amount ultimately determined to exceed the
amount to which the Executive was entitled to be indemnified.

            12.   MISCELLANEOUS.

            12.1 APPLICABLE LAW. This Agreement shall, to the extent not
superseded by federal law, be governed by and construed in accordance with the
laws of the State of New York, without regard to principles of conflict of laws.

            12.2 AMENDMENTS/WAIVER. This Agreement may not be amended, waived,
or modified otherwise than by a written agreement executed by the parties to
this Agreement or their respective successors and legal representatives. No
waiver by any party to this Agreement of any breach of any term, provision or
condition of this Agreement by the other party shall be deemed a waiver of a
similar or dissimilar condition or provision at the same time, or any prior or
subsequent time.


<PAGE>
                                                                              20


            12.3 NOTICES. All notices and other communications hereunder shall
be in writing and shall be deemed given when received by hand-delivery to the
other party, by facsimile transmission, by overnight courier, or by registered
or certified mail, return receipt requested, postage prepaid, addressed as
follows:

            If to the Executive:    Mr. Lawrence W. Peters
                                    143 Cabot Road
                                    Massapequa, New York  11758

            If to the Bank:         The Long Island Savings Bank, FSB
                                    201 Old Country Road
                                    Melville, New York  11747
                                    Attn:  Corporate Secretary

<PAGE>
                                                                              21


            with a copy to:         Mel M. Immergut, Esq.
                                    Milbank, Tweed, Hadley & McCloy
                                    1 Chase Manhattan Plaza
                                    New York, New York  10005

or to such other address as either party shall have furnished to the other in
writing in accordance herewith. Notices and communications shall be effective
when actually received by the addressee.

            12.4 WITHHOLDING. The Bank may withhold from any amounts payable
under this Agreement such taxes as shall be required to be withheld pursuant to
any applicable law or regulation.

            12.5 SEVERABILITY. The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement.

            12.6 CAPTIONS. The captions of this Agreement are not part of the
provisions hereof and shall have no force or effect.

            12.7 ENTIRE AGREEMENT. This Agreement contains the entire agreement
between the parties to this Agreement concerning the subject matter hereof and
supersedes all prior agreements, understandings, discussions, negotiations and
undertakings, whether written or oral, between the parties with respect thereto.

            12.8 REPRESENTATION. The Executive represents and warrants that the
performance of the Executive's duties and obligations under this Agreement will
not violate any agreement between the Executive and any other person, firm,
partnership, corporation, or organization.

            12.9 SURVIVORSHIP. The respective rights and obligations of the
parties to this Agreement, including, without limitation, any rights of the
Executive and the Bank under Section 11 of this Agreement, shall survive any
termination of this Agreement or the Executive's employment hereunder for any
reason to the extent necessary to the intended preservation of such rights and
obligations.

            12.10 EFFECT OF PAYMENTS UNDER CORPORATION AGREEMENT.
Notwithstanding any provision herein to the contrary, to the extent that
payments, entitlements and benefits are paid to or received by the Executive
under the Employment Agreement dated 

<PAGE>
                                                                              22


March 1, 1997, between the Executive and the Corporation, the amount of any such
payments, entitlements and benefits actually made by the Corporation shall
reduce, to the extent so made, the same payment, entitlement or benefit due to
the Executive under the provisions of this Agreement.

            IN WITNESS WHEREOF, the Executive has hereunto set the Executive's
hand and the Bank has caused this Agreement to be executed in its name on its
behalf, and its corporate seal to be hereunto affixed and attested by its
Secretary, all as of the day and year first above written.

                              THE LONG ISLAND SAVINGS BANK, FSB

                              By: _____________________________
                                    John J. Conefry, Jr.
                                    Chief Executive Officer




                              ---------------------------------
                                    Lawrence W. Peters
<PAGE>

                                                                    EXHIBIT 99.3


                              EMPLOYMENT AGREEMENT

            This Employment Agreement (this "Agreement"), dated as of August 4,
1997, is made by and between The Long Island Savings Bank, FSB, a federal stock
savings bank organized under the laws of the United States, having its principal
offices at 201 Old Country Road, Melville, New York 11747 (the "Bank"), and Ms.
Karen M. Cullen, residing at 20 East Ninth Street, New York, New York 10003 (the
"Executive").

                                    RECITALS

            1. The Bank desires to employ the Executive as an Executive Vice
President and the General Counsel of the Bank, and to enter into an employment
agreement embodying the terms of such relationship.

            2. The Executive is willing to be employed as an Executive Vice
President and the General Counsel of the Bank on the terms set forth herein.

                                    AGREEMENT

            NOW, THEREFORE, in consideration of the premises and mutual
covenants herein contained, and for other good and valuable consideration, the
Bank and the Executive hereby agree as follows.

      1.    Definitions.

            1.1 "AFFILIATE" means any person or entity of any kind effectively
controlling, effectively controlled by or effectively under common control with
the Bank, including, without limitation, Long Island Bancorp, Inc. (the
"Corporation").

            1.2   "BOARD" means the board of directors of the Bank.

            1.3 "CAUSE" means termination due to the Executive's (a) personal
dishonesty, (b) incompetence, (c) willful misconduct, (d) breach of fiduciary
duty involving personal profit, (e) intentional failure to perform stated
duties, (f) willful violation of any law, rule or regulation (other than traffic
violations or similar offenses), or final cease-and-desist order, or (g)
material breach of any provision of this Agreement.

            1.4 "CHANGE IN CONTROL" means, after the date of this Agreement, (a)
a change in control of the Corporation and/or the Bank of a nature that would be
required to be reported in response to Item 1 of the current report on Form 8-K,
as in effect on the date hereof, pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934, as 

<PAGE>

amended (the "Exchange Act"); (b) a change in control of the Bank within the 
meaning of 12 U.S.C. ss. 1817(i), the Change in Bank Control Act, and 12 
C.F.R. ss. 574.4 of the Acquisition of Control of Savings Association 
regulations of the Office of Thrift Supervision; (c) individuals who 
constitute the Board as of the date of this Agreement (the "Incumbent Board") 
cease for any reason to constitute at least a majority thereof, provided that 
any person becoming a director subsequent to the date of this Agreement whose 
election was approved by a vote of at least three-quarters of the directors 
then comprising the Incumbent Board, or whose nomination for election by the 
Bank's shareholders was approved by the Bank's nominating committee then 
serving under the Board, shall be, for purposes of this clause (c), 
considered as though she or he was a member of the Incumbent Board (but 
excluding, for this purpose, any such individual whose initial assumption of 
office occurs as a result of either an actual or threatened election contest 
(as such terms are used in Rule 14a-11 of Regulation 14A promulgated under 
the Exchange Act) or other actual or threatened solicitation of proxies or 
consents); (d) approval by the shareholders of the Corporation and/or the 
Bank, as the case may be, of a reorganization, merger or consolidation, or 
the consummation of any such reorganization, merger or consolidation, other 
than a reorganization, merger or consolidation with respect to which all or 
substantially all of the individuals and entities who were the beneficial 
owners, immediately prior to such reorganization, merger or consolidation, of 
the Voting Interest in the Corporation and/or the Bank, as the case may be, 
beneficially own, directly or indirectly, immediately after such 
reorganization, merger or consolidation more than 80% of the Voting Interest 
of the corporation or other entity resulting from such reorganization, merger 
or consolidation in substantially the same proportions as their respective 
ownership, immediately prior to such reorganization, merger or consolidation, 
of the Voting Interest in the Corporation and/or the Bank, as the case may 
be; (e) approval by the shareholders of the Corporation and/or the Bank, as 
the case may be, of (i) a complete liquidation or dissolution of the 
Corporation and/or the Bank, or (ii) the sale or other disposition of all or 
substantially all of the assets of the Corporation and/or the Bank, or the 
occurrence of any such liquidation, dissolution, sale or other disposition, 
other than, in any case, to a Subsidiary, directly or indirectly, of the 
Corporation or any Affiliate; and/or (f) the solicitation of proxies from 
shareholders of the Corporation by someone other than the current management 
of the Bank and without the approval of the Board, seeking shareholder 
approval of a plan of reorganization, merger or consolidation of the 
Corporation and/or the Bank with one or more corporations as a result of 
which the shareholders' interests in the Corporation and/or the Bank, as the 
case may be, are actually exchanged for or converted into securities not 
issued by the Corporation and/or the Bank, as the case may be. No failure on 
the part of the Executive to exercise any rights upon the occurrence of a 
Change in Control shall be deemed a waiver of or otherwise impair the rights 
of the Executive in respect of any subsequent events or circumstances 
constituting a Change in Control.

<PAGE>


            1.5 "CODE" means the Internal Revenue Code of 1986, as amended, and
as in effect from time to time, and/or any successor code thereto.

            1.6 "EXCISE TAX" means any excise tax imposed under Section 4999 of
the Code and/or any successor section thereto.

            1.7 "GOOD REASON" means, and shall be deemed to exist if, without
the written consent of the Executive, (a) the Bank fails to appoint or reappoint
the Executive as an Executive Vice President and the General Counsel of the
Bank, (b) there occurs any reduction of Base Salary or material reduction in
other benefits or any material change by the Bank to the Executive's function,
duties, or responsibilities in effect on the date hereof and/or as set forth in
Section 4.1 of this Agreement, which change would cause the Executive's position
with the Bank to become one of lesser responsibility, importance, or scope from
the position and attributes thereof in effect on the date hereof and/or as set
forth in Section 4.1 of this Agreement (and any such material change shall be
deemed a continuing breach of this Agreement), (c) there occurs any material
breach of this Agreement by the Bank, (d) a Change in Control occurs, or (e) the
Bank, if and after a Suspension for Disability (as defined in Section 6.2(a))
occurs and after a Change in Control occurs, fills the Executive's position (in
the manner set forth in Section 6.2(b) of this Agreement).

            1.8 "PARENT" means any corporation which has a direct or indirect
legal or beneficial ownership interest in the Bank, but only if any such
corporation owns or controls, directly or indirectly, securities possessing at
least 50% of the total combined voting power of all classes of securities of the
Bank.

            1.9 "SUBSIDIARY" means any corporation (other than the Bank) in
which the Bank or any Parent has a direct or indirect legal or beneficial
ownership interest, but only if the Bank or the Parent, as the case may be, owns
or controls, directly or indirectly, securities possessing at least 50% of the
total combined voting power of all classes of securities in any such
corporation.

            1.10 "RETIREMENT" means the termination of the Executive's
employment with the Bank for any reason by the Executive at any time after the
Executive attains age 65.

            1.11 "VOTING INTEREST" means securities of any class or classes or
other ownership interests having general voting power under ordinary
circumstances to elect members of a board of directors or trustees of any
entity.

      2.    EMPLOYMENT.

            2.1 GENERAL. Subject to the terms and provisions set forth in this
Agreement, the Bank, during the Term of Employment, agrees to employ the
Executive as an Executive Vice President and the General Counsel of the Bank and
the Executive hereby accepts such continued employment.

<PAGE>

            2.2 OTS SUSPENSION. If the Executive is suspended from office and/or
temporarily prohibited from participating in the conduct of the Bank's affairs
by a notice served under Section 8(e)(3) or (g)(1) of the Federal Deposit
Insurance Act (12 U.S.C. ss.ss. 1818(e)(3) and (g)(1)), the Bank's obligations
under this Agreement shall be suspended as of the date of service, unless stayed
by appropriate proceedings. If the charges in the notice are dismissed, the Bank
may in its discretion (i) pay the Executive all or part of the compensation
withheld while its contract obligations were suspended, and (ii) reinstate (in
whole or in part) any of its obligations which were suspended.

      3.    TERM OF EMPLOYMENT.

            3.1 TERM. The term of employment under this Agreement shall commence
as of August 4, 1997 (the "Commencement Date") and, unless extended as provided
below or earlier terminated by the Bank or the Executive under Section 6 of this
Agreement, shall continue until the third anniversary of the Commencement Date
(the "Term of Employment"). After adequate and explicit review of the terms of
this Agreement and the Executive's performance of her duties, the Board, in its
sole discretion, may approve, as of each anniversary of the date of this
Agreement, a one year extension of the then Term of Employment.

            3.2 OTS REMOVAL. Notwithstanding anything to the contrary in this
Agreement, if the Executive is removed and/or permanently prohibited from
participating in the conduct of the Bank's affairs by an order issued under
Section 8(e)(4) or (g)(1) of the Federal Deposit Insurance Act (12 U.S.C. ss.ss.
1818(e)(4) or (g)(1)), all obligations of the Bank under this Agreement shall
terminate as of the effective date of the order, but vested rights of the Bank
and/or the Executive, if any, shall not be affected.

      4.    POSITIONS, RESPONSIBILITIES AND DUTIES.

            4.1 POSITIONS AND DUTIES. During the Term of Employment, the
Executive shall be employed and shall serve as an Executive Vice President and
the General Counsel of the Bank. In such position(s), the Executive shall have
the duties, responsibilities and authority as determined and designated from
time to time by the Board. The Executive shall serve under the direction and
supervision of the Bank's chief executive officer and shall report only to such
chief executive officer or his designees. Notwithstanding the above, the
Executive shall not be required to perform any duties and responsibilities (a)
which would result in a non-compliance with or violation of any applicable law,
regulation, regulatory bulletin, and/or any other regulatory requirement or (b)
on a regular basis in any locations outside the counties of Nassau, Suffolk or
the City of New York unless agreed upon by the Executive.

<PAGE>

            4.2 ATTENTION TO DUTIES AND RESPONSIBILITIES. During the Term of
Employment, the Executive shall, except for periods of absence occasioned by
illness, vacation in accordance with Section 5.6, and reasonable leaves of
absence in accordance with the practices of the Bank and the Corporation as of
the date of this Agreement, devote substantially all of her business time to the
business and affairs of the Bank and the Corporation and the Executive shall use
her best efforts, business skills, ability and fidelity to perform faithfully
and efficiently the duties and responsibilities contemplated by this Agreement;
provided, however, that the Executive shall be allowed, to the extent such
activities do not present a conflict or substantially interfere with the
performance by the Executive of her duties and responsibilities hereunder, (a)
to manage the Executive's personal affairs, and (b)(i) to serve on boards or
committees of civic or charitable organizations or trade associations, and (ii)
after obtaining the consent of the Board, as evidenced by a written resolution
of the Board and under the terms and conditions specified in any such
resolution, to serve on the boards of directors or trustees of companies or
other organizations and associations; provided, further, however, that all
offices or positions which the Executive currently holds or has held prior to
the date of this Agreement and those set forth on Exhibit "A", annexed hereto
are designated as currently consented to positions.

      5.    COMPENSATION AND OTHER BENEFITS.

            5.1 BASE SALARY. During the Term of Employment, the Executive shall
receive a base salary of $185,000 per annum ("Base Salary") payable in
accordance with the Bank's normal payroll practices. Such Base Salary shall be
reviewed from time to time by the Board at its convenience, but no less
frequently than annually, for increase by the Board in its sole discretion. Such
Base Salary as so increased shall then constitute the Executive's "Base Salary"
for purposes of this Agreement.

            5.2 ANNUAL BONUS. During the Term of Employment, the Executive shall
be entitled to participate in an equitable manner with other executive officers
of the Bank in such discretionary bonus payments or awards as may be authorized,
declared, and paid by the Board to the Bank's executive employees; provided,
however, that, to the extent not prohibited by applicable law, regulation,
regulatory bulletin, and/or any other regulatory requirement, as the same exists
or may hereafter be promulgated or amended, the annual bonus paid to the
Executive following a Change in Control shall not be less than the highest
annual bonus paid during the Term of Employment. No other compensation or
additional benefits provided for in this Agreement shall be deemed a substitute
for the Executive's right, if any, to receive such bonuses if, when and as
declared by the Board.


<PAGE>

            5.3 INCENTIVE, RETIREMENT, AND SAVINGS PLANS. During the Term of
Employment, the Executive shall participate in all incentive, pension,
retirement, savings and other employee benefit plans and programs, if any,
maintained from time to time by the Corporation and/or the Bank for the benefit
of senior executives and/or other employees of the Corporation and/or the Bank.

            5.4 WELFARE BENEFIT PLANS. During the Term of Employment, the
Executive, the Executive's spouse, if any, and their eligible dependents, if
any, shall participate in and be covered by all the welfare benefit plans and
programs, if any, maintained by the Corporation and/or the Bank for the benefit
of senior executives and/or other employees of the Corporation and/or the Bank.

            5.5 EXPENSE REIMBURSEMENT. During the Term of Employment, the
Executive shall be entitled to receive prompt reimbursement for all reasonable
expenses, including reasonable business travel expenses, incurred by the
Executive in performing her duties and responsibilities hereunder in accordance
with the policies and procedures of the Bank as in effect at the time the
expense was incurred, as the same may be changed from time to time.

            5.6 VACATION AND FRINGE BENEFITS. During the Term of Employment, the
Executive shall be entitled to five weeks paid vacation each calendar year at
such times which do not materially interfere with the performance of the
Executive's duties hereunder. In addition, during the Term of Employment, the
Executive shall be eligible to benefit from such fringe benefits and
perquisites, if any, in accordance with the policies of the Bank and as in
effect and provided from time to time to senior executives of the Corporation
and/or the Bank. Notwithstanding the above, the Executive, during the Term of
Employment, shall retain, pursuant to current policy and practice of the
Corporation and/or the Bank, all privileges, if any, including club memberships
and automobile usage to which she is entitled on the date of this Agreement.

      6.    TERMINATION.

            6.1 TERMINATION DUE TO DEATH. In the event of the Executive's death
during the Term of Employment, the Term of Employment shall thereupon end and
her estate or other legal representative, as the case may be, shall, subject to
Sections 2.2, 3.2, 6.9, 6.11, and 6.12 of this Agreement, only be entitled to:

            (a)(i)(A) Base Salary continuation at two-thirds (2/3) of the rate
in effect (as provided in Section 5.1 of this Agreement) on the date of
termination for a three-month period commencing on such date of termination, or
(B), if the Board so determines in its sole discretion and in lieu of such
three-month salary continuation described above in (A), a lump sum payment equal
in amount to the present value of such Base Salary continuation (reasonably
determined using a discount rate equal to the most recent quote available for
the three-month United States Treasury Bill rate on the date of termination)

<PAGE>

payable within thirty business days after the date of termination, and (ii) a
pro-rata annual bonus for the fiscal year in which such termination occurs, such
pro-rata bonus amount to be (I) pro-rated based on the number of calendar days
transpired during the fiscal year of the Bank (prior to the date of termination)
in which such termination occurs over 365, (II) determined in good faith by the
Board (but in its sole discretion), and (III) if any such bonus is payable, paid
on or about the same date that the annual bonus amounts payable in respect of
such fiscal year, if any, to the senior executives of the Corporation and/or the
Bank are actually paid to them;

            (b) any Base Salary accrued to the date of termination or any bonus
actually awarded, but not yet paid as of the date of termination;

            (c) reimbursement for all expenses (under Section 5.5) incurred as
of the date of termination, but not yet paid as of the date of termination;

            (d) payment of the per diem value of any unused vacation days
accruing during the Term of Employment and the unused, unaccrued portion of any
vacation days available through the end (but not beyond) of the calendar year of
the Bank in which such termination occurs;

            (e) any other compensation and benefits as may be provided in
accordance with the terms and provisions of any applicable plans and programs,
if any, of the Bank or any Subsidiary; and

            (f) any rights to indemnification in accordance with Section 11 of
this Agreement.

            6.2  SUSPENSION FOR DISABILITY.

            (a) If, during the Term of Employment, the Executive shall have been
absent from her duties hereunder on a full-time basis due to physical or mental
illness for six (6) consecutive months, the Bank may give thirty (30) days
written notice of potential suspension. If the Executive shall not have returned
to the full-time performance of her duties within such 30-day period, the Bank
may suspend the Executive's employment for "Disability" (a "Suspension for
Disability").

            (b) If a Suspension for Disability occurs during the Term of
Employment, the Bank will pay the Executive a bi-weekly payment equal to
two-thirds (2/3) of the Executive's bi-weekly rate of Base Salary on the
effective date of the Suspension for Disability. These payments shall commence
on the effective date of the Executive's Suspension for Disability and will end
on the earlier of (i) the date the Executive returns to full-time employment
hereunder; (ii) the Executive's equivalent full-time employment by another
employer; (iii) the Executive's retirement; (iv) the 

<PAGE>

Executive's death; or (v) the expiration or earlier end of the Term of 
Employment (the "Term of Suspension"). After a Suspension for Disability 
occurs, the Bank shall be free to fill the Executive's position, but such 
action by the Bank, shall constitute Good Reason if it occurs after a Change 
in Control. Upon the Executive being able to return to full-time employment 
hereunder before the expiration or end of the Term of Employment, the 
Executive shall be offered an equivalent available position and otherwise be 
subject to the provisions of this Agreement. The disability payments 
hereunder will be in addition to any benefit payable from any qualified or 
nonqualified retirement plans or programs maintained by the Corporation 
and/or the Bank but will be reduced by payments received by the Executive on 
account of such disability under any long-term disability plan maintained for 
the Corporation's and/or the Bank's employees.

            (c) During the Term of Suspension, the Bank will cause to be
continued life and health coverage and such other benefits substantially
identical to the coverage and benefits maintained by the Bank for the Executive
prior to the occurrence of any Suspension for Disability.

            (d) Notwithstanding the foregoing, there will be no reduction in the
compensation (except as otherwise provided in Section 6.2(b) above), accrued
benefits or pension granted or accruing to the Executive during the Term of
Suspension. Nothing in this Section 6.2 shall abrogate or limit other provisions
of this Agreement granting rights to the Executive or the Executive's spouse or
the Executive's estate following death, retirement or termination, if
applicable.

            6.3 TERMINATION FOR CAUSE. The Bank may terminate the Executive's
employment hereunder for Cause, upon fifteen (15) days prior written notice to
the Executive. If the Bank terminates the Executive's employment hereunder for
Cause, the Term of Employment (if not already expired) shall thereupon end as
set forth below and the Executive shall, subject to Sections 2.2, 3.2, 6.9,
6.11, and 6.12 of this Agreement, only be entitled to:

            (a) Base Salary up to and including the date of termination;

            (b) any bonus actually awarded, but not yet paid as of the date of
termination;

            (c) reimbursement for all expenses (under Section 5.5) incurred as
of the date of termination, but not yet paid as of the date of termination;

            (d) payment of the per diem value of any unused vacation days
accruing during the Term of Employment and, to the extent not prohibited by
applicable law, regulation, regulatory bulletin, and/or any other regulatory
requirement, as the same exists or may hereafter be promulgated or amended, the
unused, unaccrued portion of any vacation days available through the end (but
not beyond) of the calendar year of the Bank in which such termination occurs;

<PAGE>

            (e) to the extent not prohibited by applicable law, regulation,
regulatory bulletin, and/or any other regulatory requirement, as the same exists
or may hereafter be promulgated or amended, any other compensation and benefits
as may be provided in accordance with the terms and provisions of any applicable
plans and programs, if any, of the Bank or any Subsidiary; and

            (f) any rights to indemnification in accordance with Section 11 of
this Agreement.

            6.4 TERMINATION WITHOUT CAUSE OR FOR GOOD REASON. The Bank may
terminate the Executive's employment hereunder at any time without Cause. The
Executive may terminate her employment hereunder for Good Reason at any time by
delivery of written notice to the Bank within the six-month period commencing
after the occurrence of the Good Reason effective forty-five (45) days after
such written notice is delivered. If the Bank terminates the Executive's
employment hereunder without Cause (other than due to Retirement, death,
Disability or the normal expiration of the full Term of Employment), or if the
Executive terminates her employment hereunder for Good Reason, the Term of
Employment shall thereupon end (if not already expired) and the Executive shall,
subject to Sections 2.2, 3.2, 6.9, 6.11, and 6.12 of this Agreement, only be
entitled to:

            (a) as liquidated damages, a cash lump sum equal to three (3) times
the Executive's "Highest Annual Compensation" (as herein defined). For purposes
of this Agreement, "Highest Annual Compensation" shall mean the sum of (i) the
highest per annum rate of Base Salary, and (ii) the aggregate bonus amounts paid
to the Executive (or which would have been paid but for an election to defer
payment to a later period), in respect of any fiscal year of the Bank at any
time during the Term of Employment;

            (b) any Base Salary accrued to the date of termination or any bonus
actually awarded, but not yet paid as of the date of termination;

            (c) reimbursement for all expenses (under Section 5.5) incurred as
of the date of termination, but not yet paid as of the date of termination;

            (d) payment of the per diem value of any unused vacation days
accruing during the Term of Employment and the unused, unaccrued portion of any
vacation days available through the end (but not beyond) of the calendar year of
the Bank in which such termination occurs;

            (e) continuation of the welfare benefits of the Executive, at the
level in effect (as provided for by Section 5.4 of this Agreement) on, and at
the same out-of-pocket cost to the Executive as of, the date of termination for
the three-year period commencing on the date of termination (or, if such
continuation is not permitted by applicable law or if the Board so determines in
its sole discretion, the Bank shall provide the economic equivalent in lieu
thereof);

<PAGE>

            (f) any other compensation and benefits as may be provided in
accordance with the terms and provisions of any applicable plans or programs, if
any, of the Bank or any Subsidiary; and

            (g) any rights to indemnification in accordance with Section 11 of
this Agreement.

            6.5 VOLUNTARY TERMINATION. During the Term of Employment, the
Executive may effect, upon thirty (30) days prior written notice to the Bank, a
Voluntary Termination of her employment hereunder and thereupon the Term of
Employment (if not already expired) shall end. A "Voluntary Termination" shall
mean a termination of employment by the Executive on her own initiative other
than (a) a termination due to death or Disability, (b) a termination for Good
Reason, (c) a termination due to Retirement, or (d) a termination as a result of
the normal expiration of the full Term of Employment. A Voluntary Termination
shall, subject to Sections 2.2, 3.2, 6.9, 6.11, and 6.12 of this Agreement,
entitle the Executive only to all of the payments and benefits which the
Executive would be entitled to in the event of a termination of her employment
by the Bank for Cause.

            6.6 TERMINATION DUE TO RETIREMENT. The Executive may terminate the
Executive's employment hereunder due to Retirement upon thirty (30) days prior
written notice to the Bank. If, during the Term of Employment, the Executive's
employment is so terminated due to Retirement, the Term of Employment shall
thereupon end and the Executive shall, subject to Sections 2.2, 3.2, 6.9, 6.11,
and 6.12 of this Agreement, only be entitled to:

            (a) Base Salary up to and including the date of termination;

            (b) any bonus actually awarded, but not yet paid as of the date of
termination;

            (c) reimbursement for all expenses (under Section 5.5) incurred as
of the date of termination, but not yet paid as of the date of termination;

            (d)(i) continuation of the Executive's welfare benefits (as
described in Section 5.4 of this Agreement) at the level in effect on the date
of termination for the one-year period following the termination of the
Executive's employment due to Retirement (or, if such continuation is not
permitted by applicable law or if the Board so determines in its sole
discretion, the Bank shall provide the economic equivalent in lieu thereof), and
(ii) any other compensation and benefits as may be provided in accordance with
the terms and provisions of any applicable plans and programs, if any, of the
Bank or any Subsidiary;

<PAGE>

            (e) payment of the per diem value of any unused vacation days
accruing during the Term of Employment and the unused, unaccrued portion of any
vacation days available through the end (but not beyond) of the calendar year of
the Bank in which such termination occurs; and

            (f) any rights to indemnification in accordance with Section 11 of
this Agreement.

            6.7 NO MITIGATION; NO OFFSET. In the event of any termination of
employment under this Section 6, the Executive shall be under no obligation to
seek other employment or to mitigate damages and there shall be no offset
against any amounts due the Executive under this Agreement for any reason,
including, without limitation, on account of any remuneration attributable to
any subsequent employment that the Executive may obtain. Any amounts due under
this Section 6 are in the nature of severance payments, or liquidated damages,
or both, and are not in the nature of a penalty.

            6.8 NOTICE OF TERMINATION. Any termination of the Executive's
employment under this Section 6 requiring advance written notice shall be
communicated by a notice of termination to the other party hereto given in
accordance with Section 12.3 of this Agreement (the "Notice of Termination").
The Notice of Termination, in the case of a termination by the Bank for Cause,
or a termination by the Executive for Good Reason, shall (a) indicate the
specific termination provision in this Agreement relied upon, and (b) set forth
in reasonable detail the dates, facts and circumstances claimed to provide a
basis for termination of the Executive's employment under the provision so
indicated.

            6.9 CODE SECTION 280G REDUCTION. Notwithstanding any other
provisions of this Agreement or of any other agreement, contract, understanding,
plan or program entered into or maintained by the Bank, if any payment or
benefit received or to be received by the Executive in connection with a Change
in Control or the termination of the Executive's employment (whether pursuant to
the terms of this Agreement or any other plan, arrangement or agreement with (a)
the Bank or any Affiliate, Parent or Subsidiary of the Bank, (b) any person
whose actions result in a Change in Control, or (c) any person affiliated with
the Bank or any such person) (all such payments and/or benefits, including the
payments and benefits, if any, under this Section 6, being hereinafter referred
to as the "Total Payments") would subject the Executive to an Excise Tax, and if
such Total Payments less the Excise Tax is less than the maximum amount of Total
Payments which would otherwise be payable to the Executive without imposition of
an Excise Tax, then, to the extent necessary to eliminate the imposition of an
Excise Tax (and after taking into account any reduction in the Total Payments
provided by reason of Section 280G of the Code in such other plan, arrangement
or agreement), (i) the cash and non-cash payments and benefits payable under
this Agreement shall first be reduced (but not below zero), and (ii) all other
cash and non-cash payments and benefits 


<PAGE>

shall next be reduced (but not below zero); but only if, by reason of any such
reduction, the Total Payments with any such reduction shall exceed the Total
Payments without any such reduction. For purposes of this Section 6.9, (A) no
portion of the Total Payments the receipt or enjoyment of which the Executive
shall have effectively waived in writing prior to the date of termination shall
be taken into account, (B) no portion of the Total Payments shall be taken into
account which in the opinion of tax counsel selected in good faith by the Bank
does not constitute a "parachute payment" within the meaning of Section
280G(b)(2) of the Code, including (without limitation) by reason of Section
280G(b)(4)(A) of the Code, (C) the payments and/or benefits under this Agreement
shall be reduced only to the extent necessary so that the Total Payments (other
than those referred to in clauses (A) and (B) above) in their entirety
constitute reasonable compensation for services actually rendered within the
meaning of Section 280G(b)(4)(B) of the Code or are otherwise not subject to
disallowance as deductions, in the opinion of the tax counsel referred to above
in clause (B), and (D) the value of any non-cash payment or benefit or any
deferred payment or benefit included in the Total Payments shall be determined
by the Bank's independent auditors in accordance with the principles of Sections
280G(d)(3) and (4) of the Code. Except as otherwise provided above, the
foregoing calculations and determinations shall be made in good faith by the
Bank and the Executive. If no agreement on the calculations is reached, then the
Executive and the Bank will agree to the selection of an accounting firm to make
the calculations. If no agreement can be reached regarding the selection of an
accounting firm the Bank will select a prominent national accounting firm which
has no current or recent business relationship with the Bank. The Bank shall pay
all costs and expenses incurred in connection with any such calculations or
determinations. Any calculations or determinations made in accordance with this
Section 6.9 shall be conclusive and binding on all parties.

            6.10 PAYMENT. Except as otherwise provided in this Agreement, any
payments to which the Executive shall be entitled to under this Section 6,
including, without limitation, any economic equivalent of any benefit, shall be
made, to the extent practicable, within five (5) business days following the
date of termination.


<PAGE>

            6.11  BANK REGULATORY LIMITATIONS.

            6.11. Any payments made to the Executive pursuant to this Agreement,
or otherwise, are subject to and conditioned upon their compliance with 12
U.S.C. ss. 1828(k) and any regulations promulgated thereunder.

            6.11.2 To the extent required by applicable law, regulation,
regulatory bulletin, and/or any other regulatory requirement, the aggregate
amount and/or value of the Compensation paid as a result of any termination of
the Executive's employment with the Bank, regardless of the reason for any such
termination of employment, shall not exceed three (3) times the Executive's
Average Annual Compensation. For purposes of this Section 6.11.2, "Average
Annual Compensation" means the average of the Executive's Compensation for the
five (5) taxable years immediately preceding the taxable year in which occurs
the date of termination and "Compensation" shall have the same meaning as is
ascribed to such term in OTS Regulatory Bulletin 27a, dated March 5, 1993, or
any subsequent bulletin that supersedes or revokes OTS RB27a.

            6.12  Other Required Provisions.

            6.12.1 If the Bank is in default (as defined in Section 3(x)(1) of
the Federal Deposit Insurance Act), all obligations under this Agreement shall
terminate as of the date of default, but this Section 6.12.1 shall not affect
the vested rights of the Bank and/or the Executive, if any.

            6.12.2 All obligations under this Agreement shall be terminated,
except to the extent determined that continuation of this Agreement is necessary
for the continued operation of the Bank, (i) by the director, or his or her
designee, at the time the Federal Deposit Insurance Corporation or the
Resolution Trust Corporation enters into an agreement to provide assistance to
or on behalf of the Bank under the authority contained in Section 13(c) of the
Federal Deposit Insurance Act; or (ii) by the director, or his designee, at the
time the director, or his or her designee, approves a supervisory merger to
resolve problems related to operation of the Bank or when the Bank is determined
by such director to be in an unsafe or unsound condition. Any rights of the
parties that have already vested, however, shall not be affected by any such
actions.

            6.13 Post-Termination Obligations. During the Term of Employment and
for one (1) full year after the expiration or termination thereof, the Executive
shall, upon reasonable notice, use her reasonable best efforts to cooperate with
the Corporation and/or the Bank by providing such information and assistance to
the Corporation and/or the Bank as may reasonably be required by the Corporation
and/or the Bank at the Bank's expense in connection with any litigation not
commenced by or involving the Executive in which the Corporation and/or the Bank
or any of their Subsidiaries or Affiliates is, or may become, a party.


<PAGE>

      7.    NON-EXCLUSIVITY OF RIGHTS; NON-EXTENSION SEVERANCE.

            7.1 OTHER BENEFITS. Except as is otherwise specifically provided in
this Agreement, the Executive's continuing or future participation in any
benefit, bonus, incentive or other plan or program provided or maintained by the
Bank, and for which the Executive may be eligible and qualify, shall not be
prevented or limited, and the Executive's rights under any future agreements
with the Corporation and/or the Bank and/or any Affiliate thereof, including,
without limitation, any stock option agreements shall not be limited or
prejudiced. Subject to Section 7.2 below, this Agreement shall not affect or
operate to reduce any benefit or compensation inuring to the Executive of a kind
elsewhere provided. Except as otherwise specifically provided in this Agreement,
no provision of this Agreement shall be interpreted to mean or result in the
Executive receiving fewer benefits than those available to her without reference
to this Agreement.

            7.2 NON-EXTENSION SEVERANCE. If (a)(i) the Executive's employment
hereunder is not terminated or suspended under Sections 6.1, 6.2, 6.3, 6.4, 6.5
or 6.6 of this Agreement prior to the expiration of the Term of Employment, or
(ii) any such termination or suspension of the Executive's employment is not
initiated prior to the expiration of the Term of Employment, (b) the Term of
Employment is not extended by the Bank, and (c) the Executive's employment with
the Bank terminates after the expiration of the Term of Employment (other than
for Cause), the Executive shall be entitled to receive, in lieu of any severance
payments or severance benefits under any other plan or program maintained by the
Bank or any Affiliate, (1) Base Salary continuation at the rate in effect (as
provided in Section 5.1 of this Agreement) as of the expiration of the Term of
Employment, and (2) welfare benefit continuation, at the level in effect (as
provided for by Section 5.4 of this Agreement) on, and at the same out-of-pocket
cost to the Executive as of, the expiration of the Term of Employment, in each
case (1) and (2), for the period ending six (6) months after the Executive's
employment terminates. Notwithstanding the above, if the Board determines in its
sole discretion and in lieu only of such Base Salary continuation in (1), a lump
sum payment, equal to the present value of such Base Salary continuation
(reasonably determined using the discount rate specified in Section 6.1(a)(1)),
shall be paid to the Executive within thirty (30) days after the date the
Executive's employment terminates. Notwithstanding anything to the contrary in
this Section 7.2, if (x) there occurs a Change in Control during the Term of
Employment, (y) the Term of Employment is not extended by the Bank up to and/or
through the second anniversary of any such Change of Control, and (z) the
Executive's employment with the Bank is subsequently terminated (other than for
Cause), the Executive, in lieu of the Base Salary and welfare benefits
continuation under this Section 7.2, shall be entitled to receive the payments
and benefits set forth in Section 6.4 of this Agreement.

      8. RESOLUTION OF DISPUTES. With the exception of proceedings for equitable
relief brought pursuant to this Section or Section 9.2 of this Agreement, any
dispute or controversy arising under or in connection with this Agreement may,
at the Executive's 

<PAGE>

option, be settled exclusively by arbitration in Melville, Long Island in
accordance with the rules of the American Arbitration Association then in effect
and at the Bank's expense. Judgment may be entered on the arbitrator's award in
any court having jurisdiction. If a claim for any payments or benefits under
this Agreement or any other provision of this Agreement is disputed by the Bank
and the Executive, the Executive shall, to the extent and at such time or times
as is not prohibited by applicable law, regulation, regulatory bulletin, and/or
any other regulatory requirement, as the same exists or may be hereafter
promulgated or amended, be reimbursed for all reasonable attorney's fees and
expenses incurred by the Executive in pursuing such claim.

       9.   CONFIDENTIAL INFORMATION.

            9.1 CONFIDENTIALITY. The Executive will not, during or after the
Term of Employment, disclose any confidential information relating to the
business activities of the Bank or any Affiliate thereof which has not been
previously disclosed by any person to any person, firm, corporation, bank or
other entity for any reason or purpose whatsoever. Notwithstanding the
foregoing, the Executive may disclose any knowledge or other information
relating to banking, financial and/or economic principles, concepts or ideas
which are based on experience and which are not derived from the business plans
and activities of the Bank, and may disclose such confidential information in
connection with legal and/or regulatory proceedings (which shall include, but
not limited to, formal or informal exams, investigations or inquiries conducted
by the Office of Thrift Supervision).

            9.2 INJUNCTIVE RELIEF. The Executive acknowledges and agrees that
the Bank will have no adequate remedy at law, and would be irreparably harmed,
if the Executive breaches or threatens to breach any of the provisions of this
Section 9 of this Agreement. The Executive agrees that the Bank shall be
entitled to equitable and/or injunctive relief to prevent any breach or
threatened breach of this Section 9, and to specific performance of each of the
terms of such Section in addition to any other legal or equitable remedies that
the Bank may have. The Executive further agrees that she shall not, in any
equity proceeding relating to the enforcement of the terms of this Section 9,
raise the defense that the Bank has an adequate remedy at law.

            9.3 SPECIAL SEVERABILITY. The terms and provisions of this Section 9
are intended to be separate and divisible provisions and if, for any reason, any
one or more of them is held to be invalid or unenforceable, neither the validity
nor the enforceability of any other provision of this Agreement shall thereby be
affected.

      10.   SUCCESSORS.

            10.1 THE EXECUTIVE. This Agreement is personal to the Executive and,
without the prior express written consent of the Bank, shall not be assignable
by the Executive, except that the Executive's rights to receive any compensation
or benefits 

<PAGE>

under this Agreement may be transferred or disposed of pursuant to testamentary
disposition, intestate succession or pursuant to a qualified domestic relations
order. This Agreement shall inure to the benefit of and be enforceable by the
Executive's heirs, beneficiaries and/or legal representatives.

            10.2 THE BANK. This Agreement shall inure to the benefit of and be
binding upon the Bank and its successors and assigns; provided, however, that no
assignment of this Agreement may be made without the written consent of the
Executive.

      11. INDEMNIFICATION. The Executive (and her heirs, executors and
administrators) shall be indemnified and held harmless by the Bank to the
fullest extent permitted by applicable law, regulation, regulatory bulletin,
and/or any other regulatory requirement, as the same exists or may hereafter be
promulgated or amended, against all expense, liability and loss (including,
without limitation, attorneys' fees, judgments, fines, excise taxes or penalties
and amounts paid or to be paid in settlement) reasonably incurred or suffered by
the Executive as a consequence of the Executive being or having been made a
party to, or being or having been involved, in any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative or
investigative, by reason of the fact that the Executive is or was a trustee,
director or officer of the Bank or is or was serving at the request of the Bank
as a trustee, director or officer of another corporation (including, but not
limited to, a subsidiary or an Affiliate of the Bank), and such indemnification
shall continue after the Executive shall cease to be an officer, director or
trustee. The right to indemnification conferred hereby shall be a contract right
and shall also include, to the extent permitted by applicable regulation, the
right to be paid by the Bank the expenses incurred in defending any such
proceeding in advance of the final disposition upon receipt by the Bank of an
undertaking by or on behalf of the Executive to repay such amount or a portion
thereof, if it shall ultimately be determined that the Executive is not entitled
to be indemnified by the Bank pursuant hereto or as otherwise authorized by law
but such repayment by the Executive shall only be in an amount ultimately
determined to exceed the amount to which the Executive was entitled to be
indemnified.

      12.   MISCELLANEOUS.

            12.1 APPLICABLE LAW. This Agreement shall, to the extent not
superseded by federal law, be governed by and construed in accordance with the
laws of the State of New York, without regard to principles of conflict of laws.

            12.2 AMENDMENTS/WAIVER. This Agreement may not be amended, waived,
or modified otherwise than by a written agreement executed by the parties to
this Agreement or their respective successors and legal representatives. No
waiver by any party to this Agreement of any breach of any term, provision or
condition of this Agreement by the other party shall be deemed a waiver of a
similar or dissimilar condition or provision at the same time, or any prior or
subsequent time.


<PAGE>

            12.3 NOTICES. All notices and other communications hereunder shall
be in writing and shall be deemed given when received by hand-delivery to the
other party, by facsimile transmission, by overnight courier, or by registered
or certified mail, return receipt requested, postage prepaid, addressed as
follows:

            If to the Executive:    Ms. Karen M. Cullen
                                    20 East Ninth Street
                                    New York, New York  10003

            with a copy to:         Mel M. Immergut, Esq.
                                    Milbank, Tweed, Hadley & McCloy
                                    1 Chase Manhattan Plaza
                                    New York, New York  10005

            If to the Bank:         The Long Island Savings Bank, FSB
                                    201 Old Country Road
                                    Melville, New York  11747

                                    Attn:  Corporate Secretary

            with a copy to:         Mel M. Immergut, Esq.

                                    Milbank, Tweed, Hadley & McCloy
                                    1 Chase Manhattan Plaza
                                    New York, New York  10005

or to such other address as either party shall have furnished to the other in
writing in accordance herewith. Notices and communications shall be effective
when actually received by the addressee.

            12.4 WITHHOLDING. The Bank may withhold from any amounts payable
under this Agreement such taxes as shall be required to be withheld pursuant to
any applicable law or regulation.


<PAGE>

            12.5 SEVERABILITY. The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement.

            12.6 CAPTIONS. The captions of this Agreement are not part of the
provisions hereof and shall have no force or effect.

            12.7 ENTIRE AGREEMENt. This Agreement contains the entire agreement
between the parties to this Agreement concerning the subject matter hereof and
supersedes all prior agreements, understandings, discussions, negotiations and
undertakings, whether written or oral, between the parties with respect thereto.

            12.8 REPRESENTATION. The Executive represents and warrants that the
performance of the Executive's duties and obligations under this Agreement will
not violate any agreement between the Executive and any other person, firm,
partnership, corporation, or organization.

            12.9 SURVIVORSHIP. The respective rights and obligations of the
parties to this Agreement, including, without limitation, any rights of the
Executive and the Bank under Section 11 of this Agreement, shall survive any
termination of this Agreement or the Executive's employment hereunder for any
reason to the extent necessary to the intended preservation of such rights and
obligations.

            12.10 EFFECT OF PAYMENTS UNDER CORPORATION AGREEMENT.
Notwithstanding any provision herein to the contrary, to the extent that
payments, entitlements and benefits are paid to or received by the Executive
under the Employment Agreement dated as of August 4, 1997, between the Executive
and the Corporation, the amount of any such payments, entitlements and benefits
actually made by the Corporation shall reduce, to the extent so made, the same
payment, entitlement or benefit due to the Executive under the provisions of
this Agreement.


<PAGE>

            IN WITNESS WHEREOF, the Executive has hereunto set the Executive's
hand and the Bank has caused this Agreement to be executed in its name on its
behalf, and its corporate seal to be hereunto affixed and attested by its
Secretary, all as of the day and year first above written.

                        THE LONG ISLAND SAVINGS BANK, FSB



                        By: _____________________________

                        Name:

                        Title:

                        ---------------------------------

                                    Karen M. Cullen