<PAGE>   1
EXHIBIT 10.20

                        ASTORIA FINANCIAL CORPORATION
                             AMENDED AND RESTATED
                  EMPLOYMENT AGREEMENT WITH EXECUTIVE OFFICER

      This AMENDED AND RESTATED EMPLOYMENT AGREEMENT (the "Agreement") is made
and entered into as of January 1, 2000 by and between ASTORIA FINANCIAL
CORPORATION, a business corporation organized and operating under the laws of
the State of Delaware and having an office at One Astoria Federal Plaza, Lake
Success, New York 11042-1085 (the "Company"), and GERARD C. KEEGAN, an
individual residing at 89 Eleventh Street, Garden City, New York 11530 (the
"Executive").

                                  WITNESSETH:

      WHEREAS, the Executive currently serves the Company in the capacity of
Vice Chairman and Chief Administrative Officer and as Vice Chairman and Chief
Administrative Officer of its wholly owned subsidiary, ASTORIA FEDERAL SAVINGS
AND LOAN ASSOCIATION (the "Association"); and

      WHEREAS, the Executive currently has an Employment Agreement with the
Company dated March 29, 1997 which the Executive and the Company wish to amend
and modify; and

      WHEREAS, the Company desires to assure for itself the continued
availability of the Executive's services and the ability of the Executive to
perform such services with a minimum of personal distraction in the event of a
pending or threatened Change of Control (as hereinafter defined); and

      WHEREAS, the Executive is willing to continue to serve the Company on the
terms and conditions hereinafter set forth;

      NOW, THEREFORE, in consideration of the premises and the mutual covenants
and conditions hereinafter set forth, the Company and the Executive hereby amend
and restate in its entirety the Employment Agreement by and between the Company
and the Executive dated as of March 29, 1997 so as to provide as follows from
and after the date hereof:

      Section 1.  Employment.
                  ----------

      The Company agrees to continue to employ the Executive, and the Executive
hereby agrees to such continued employment, during the period and upon the terms
and conditions set forth in this Agreement.




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      Section 2.  Employment Period; Remaining Unexpired Employment Period.
                  --------------------------------------------------------

      (a)   The terms and conditions of this Agreement shall be and remain in
            effect during the period of employment established under this
            Section 2 (the "Employment Period"). The Employment Period shall be
            for an initial term of three years beginning on the date of this
            Agreement and ending on the day before the third anniversary date of
            this Agreement, plus such extensions, if any, as are provided by the
            Board of Directors of the Company (the "Board") pursuant to Section
            2(b).

      (b)   Beginning on the date of this Agreement, the Employment Period shall
            automatically be extended for one (1) additional day each day,
            unless either the Company or the Executive elects not to extend the
            Agreement further by giving written notice to the other party, in
            which case the Employment Period shall end on the day before the
            third anniversary of the date on which such written notice is given.
            For all purposes of this Agreement, the term "Remaining Unexpired
            Employment Period" as of any date shall mean the period beginning on
            such date and ending on:

            (i)   if a notice of non-extension has been given in accordance with
                  this Section 2(b), the day before the third anniversary of the
                  date on which such notice is given; and

            (ii)  in all other cases, the day before the third anniversary of
                  the date as of which the Remaining Unexpired Employment Period
                  is being determined.

            Upon termination of the Executive's employment with the Company for
            any reason whatsoever, any daily extensions provided pursuant to
            this Section 2(b), if not previously discontinued, shall
            automatically cease.

      (c)   Nothing in this Agreement shall be deemed to prohibit the Company
            from terminating the Executive's employment at any time during the
            Employment Period with or without notice for any reason; provided,
            however, that the relative rights and obligations of the Company and
            the Executive in the event of any such termination shall be
            determined pursuant to this Agreement.

      Section 3.  Duties.
                  ------

      The Executive shall serve as Vice Chairman and Chief Administrative
Officer of the Company, having such power, authority and responsibility and
performing such duties as are prescribed by or pursuant to the By-Laws of the
Company and as are customarily associated with such position. The Executive
shall devote his or her full business time and attention (other than during
weekends, holidays, approved vacation periods, and periods of illness or
approved leaves of absence) to the business and affairs of the Company, its
affiliates and subsidiaries and shall use his







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or her best efforts to advance the interests of the Company.

      Section 4.  Cash Compensation.
                  -----------------

      In consideration for the services to be rendered by the Executive
hereunder, the Company shall pay to him or her a salary at an initial annual
rate of THREE HUNDRED SEVENTY FIVE THOUSAND DOLLARS ($375,000), payable in
approximately equal installments in accordance with the Company's customary
payroll practices for senior officers. At least annually during the Employment
Period, the Board shall review the Executive's annual rate of salary and may, in
its discretion, approve an increase therein. In no event shall the Executive's
annual rate of salary under this Agreement in effect at a particular time be
reduced without his or her prior written consent and any such reduction in the
absence of such consent shall be a material breach of this Agreement. In
addition to salary, the Executive may receive other cash compensation from the
Company for services hereunder at such times, in such amounts and on such terms
and conditions as the Board may determine from time to time.

      Section 5.  Employee Benefit Plans and Programs.
                  -----------------------------------

      During the Employment Period, the Executive shall be treated as an
employee of the Company and shall be entitled to participate in and receive
benefits under any and all qualified or non-qualified retirement, pension,
savings, profit-sharing or stock bonus plans, any and all group life, health
(including hospitalization, medical and major medical), dental, accident and
long term disability insurance plans, and any other employee benefit and
compensation plans (including, but not limited to, any incentive compensation
plans or programs, stock option and appreciation rights plans and restricted
stock plans) as may from time to time be maintained by, or cover employees of,
the Company, in accordance with the terms and conditions of such employee
benefit plans and programs and compensation plans and programs and consistent
with the Company's customary practices.

      Section 6.  Indemnification and Insurance.
                  -----------------------------

      (a)   During the Employment Period and for a period of six (6) years
            thereafter, the Company shall cause the Executive to be covered by
            and named as an insured under any policy or contract of insurance
            obtained by it to insure its directors and officers against personal
            liability for acts or omissions in connection with service as an
            officer or director of the Company or service in other capacities at
            the request of the Company. The coverage provided to the Executive
            pursuant to this Section 6 shall be of the same scope and on the
            same terms and conditions as the coverage (if any) provided to other
            officers or directors of the Company.

      (b)   To the maximum extent permitted under applicable law, during the
            Employment Period and for a period of six (6) years thereafter, the
            Company shall indemnify the Executive against, and hold him or her
            harmless from, any costs, liabilities, losses




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            and exposures to the fullest extent and on the most favorable terms
            and conditions that similar indemnification is offered to any
            director or officer of the Company or any subsidiary or affiliate
            thereof.

      Section 7.  Other Activities.
                  ----------------

      (a)   The Executive may serve as a member of the boards of directors of
            such business, community and charitable organizations as he or she
            may disclose to and as may be approved by the Board (which approval
            shall not be unreasonably withheld); provided, however, that such
            service shall not materially interfere with the performance of his
            or her duties under this Agreement. The Executive may also engage in
            personal business and investment activities which do not materially
            interfere with the performance of his or her duties hereunder;
            provided, however, that such activities are not prohibited under any
            code of conduct or investment or securities trading policy
            established by the Company and generally applicable to all similarly
            situated executives.

      (b)   The Executive may also serve as an officer or director of the
            Association on such terms and conditions as the Company and the
            Association may mutually agree upon, and such service shall not be
            deemed to materially interfere with the Executive's performance of
            his or her duties hereunder or otherwise result in a material breach
            of this Agreement. If the Executive is discharged or suspended, or
            is subject to any regulatory prohibition or restriction with respect
            to participation in the affairs of the Association, he or she shall
            (subject to the Company's powers of termination hereunder) continue
            to perform services for the Company in accordance with this
            Agreement but shall not directly or indirectly provide services to
            or participate in the affairs of the Association in a manner
            inconsistent with the terms of such discharge or suspension or any
            applicable regulatory order.

      Section 8.  Working Facilities and Expenses.
                  -------------------------------

      The Executive's principal place of employment shall be at the Company's
executive offices at the address first above written, or at such other location
within Queens County or Nassau County, New York at which the Company shall
maintain its principal executive offices, or at such other location as the
Company and the Executive may mutually agree upon. The Company shall provide the
Executive at his or her principal place of employment with a private office,
secretarial services and other support services and facilities suitable to his
or her position with the Company and necessary or appropriate in connection with
the performance of his or her assigned duties under this Agreement. The Company
shall provide to the Executive for his or her exclusive use an automobile owned
or leased by the Company and appropriate to his or her position, to be used in
the performance of his or her duties hereunder, including commuting to and from
his or her personal residence. The Company shall reimburse the Executive for his
or her ordinary and necessary business expenses, including, without limitation,
all expenses associated with his or her business use





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of the aforementioned automobile, fees for memberships in such clubs and
organizations as the Executive and the Company shall mutually agree are
necessary and appropriate for business purposes, and his or her travel and
entertainment expenses incurred in connection with the performance of his or her
duties under this Agreement, in each case upon presentation to the Company of an
itemized account of such expenses in such form as the Company may reasonably
require.

      Section 9.  Termination of Employment with Severance Benefits.
                  -------------------------------------------------

      (a)   The Executive shall be entitled to the severance benefits described
            herein in the event that his or her employment with the Company
            terminates during the Employment Period under any of the following
            circumstances:

            (i)   the Executive's voluntary resignation from employment with the
                  Company within six (6) months following:

                  (A)   the failure of the Board to appoint or re-appoint or
                        elect or re-elect the Executive to the office of Vice
                        Chairman and Chief Administrative Officer (or a more
                        senior office) of the Company;

                  (B)   if the Executive is or becomes a member of the Board,
                        the failure of the stockholders of the Company to elect
                        or re-elect the Executive to the Board or the failure of
                        the Board (or the nominating committee thereof) to
                        nominate the Executive for such election or re-election;

                  (C)   the expiration of a thirty (30) day period following the
                        date on which the Executive gives written notice to the
                        Company of its material failure, whether by amendment of
                        the Company's Certificate of Incorporation or By-laws,
                        action of the Board or the Company's stockholders or
                        otherwise, to vest in the Executive the functions,
                        duties, or responsibilities prescribed in Section 3 of
                        this Agreement as of the date hereof, unless, during
                        such thirty (30) day period, the Company cures such
                        failure in a manner determined by the Executive, in his
                        or her discretion, to be satisfactory;

                  (D)   the expiration of a thirty (30) day period following the
                        date on which the Executive gives written notice to the
                        Company of its material breach of any term, condition or
                        covenant contained in this Agreement (including, without
                        limitation, any reduction of the Executive's rate of
                        base salary in effect from time to time and any change
                        in the terms and conditions of any compensation or
                        benefit program in which the Executive participates
                        which, either individually or together with other
                        changes, has a material adverse





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                        effect on the aggregate value of his or her total
                        compensation package), unless, during such thirty (30)
                        day period, the Company cures such failure in a manner
                        determined by the Executive, in his or her discretion,
                        to be satisfactory; or

                  (E)   the relocation of the Executive's principal place of
                        employment, without his or her written consent, to a
                        location outside of Nassau County and Queens County, New
                        York;

            (ii)  the termination of the Executive's employment with the Company
                  for any other reason not described in Section 10(a).

            In such event, the Company shall provide the benefits and pay to the
            Executive the amounts described in Section 9(b).

      (b)   Upon the termination of the Executive's employment with the Company
            under circumstances described in Section 9(a) of this Agreement, the
            Company shall pay and provide to the Executive (or, in the event of
            the Executive's death following the Executive's termination of
            employment, to his or her estate):

            (i)   his or her earned but unpaid compensation (including, without
                  limitation, all items which constitute wages under Section
                  190.1 of the New York Labor Law and the payment of which is
                  not otherwise provided for under this Section 9(b)) as of the
                  date of the termination of his or her employment with the
                  Company, such payment to be made at the time and in the manner
                  prescribed by law applicable to the payment of wages but in
                  any event not later than thirty (30) days after termination of
                  employment;

            (ii)  the benefits, if any, to which he or she is entitled as a
                  former employee under the employee benefit plans and programs
                  and compensation plans and programs maintained for the
                  benefit of the Company's officers and employees;

            (iii) continued group life, health (including hospitalization,
                  medical and major medical), dental, accident and long term
                  disability insurance benefits, in addition to that provided
                  pursuant to Section 9(b)(ii), and after taking into account
                  the coverage provided by any subsequent employer, if and to
                  the extent necessary to provide for the Executive, for the
                  Remaining Unexpired Employment Period, coverage (including any
                  co-payments and deductibles, but excluding any premium sharing
                  arrangements, it being the intention of the parties to this
                  Agreement that the premiums for such insurance benefits shall
                  be the sole cost and expense of the Company) equivalent to the
                  coverage to which he or she would have been entitled under
                  such plans (as in effect on the date of his or her termination
                  of employment, or, if his or her





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                  termination of employment occurs after a Change of Control, on
                  the date of such Change of Control, whichever benefits are
                  greater), if he or she had continued working for the Company
                  during the Remaining Unexpired Employment Period at the
                  highest annual rate of salary or compensation, as applicable,
                  achieved during that portion of the Employment Period which is
                  prior to the Executive's termination of employment with the
                  Company;

            (iv)  within thirty (30) days following the Executive's termination
                  of employment with the Company, a lump sum payment in an
                  amount representing an estimate of the salary that the
                  Executive would have earned if he or she had continued working
                  for the Company during the Remaining Unexpired Employment
                  Period at the highest annual rate of salary achieved during
                  that portion of the Employment Period which is prior to the
                  Executive's termination of employment with the Company (the
                  "Salary Severance Payment"). The Salary Severance Payment
                  shall be computed using the following formula:

                        SSP     =   BS x NY

                  where:

                  "SSP" is the amount of the Salary Severance Payment, before
                  the deduction of applicable federal, state and local
                  withholding taxes;

                  "BS" is the highest annual rate of salary achieved during that
                  portion of the Employment Period which is prior to the
                  Executive's termination of employment with the Company;

                  "NY" is the Remaining Unexpired Employment Period expressed as
                  a number of years (rounded, if such period is not a whole
                  number, to the next highest whole number).

                  The Salary Severance Payment shall be paid in lieu of all
                  other payments of salary provided for under this Agreement in
                  respect of the period following any such termination.

            (v)   within thirty (30) days following the Executive's termination
                  of employment with the Company, a lump sum payment (the "DB
                  Severance Payment") in an amount equal to the excess, if any,
                  of:

                  (A)   the present value of the aggregate benefits to which he
                        or she would be entitled under any and all qualified and
                        non-qualified defined benefit pension plans maintained
                        by, or covering employees of, the




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                        Company, if he or she were 100% vested thereunder and
                        had continued working for the Company during the
                        Remaining Unexpired Employment Period, such benefits to
                        be determined as of the date of termination of
                        employment by adding to the service actually recognized
                        under such plans an additional period equal to the
                        Remaining Unexpired Employment Period and by adding to
                        the compensation recognized under such plans for the
                        most recent year recognized all amounts payable pursuant
                        to Sections 9(b)(i), (iv), (vii), (viii) and (ix) of
                        this Agreement; over

                  (B)   the present value of the benefits to which he or she is
                        actually entitled under such defined benefit pension
                        plans as of the date of his or her termination;

                  The DB Severance Payment shall be computed using the following
formula:

                        DBSP     =  SEVLS - LS

                  where:

                  "DBSP" is the amount of the DB Severance Payment, before the
                  deduction of applicable federal, state and local withholding
                  taxes;

                  "SEVLS" is the sum of the present value of the defined benefit
                  pension benefits that have been or would be accrued by the
                  Executive under all qualified and non-qualified defined
                  benefit pension plans of which the Company or any of its
                  affiliates or subsidiaries are a sponsor and in which the
                  Executive is or, but for the completion of any service
                  requirement that would have been completed during the
                  Remaining Unexpired Employment Period, would be a participant
                  utilizing the following assumptions:

                        (I)   the executive is 100% vested in the plans
                              regardless of actual service,

                        (II)  the benefit to be valued shall be a single life
                              annuity with monthly payments due on the first day
                              of each month and with a guaranteed payout of not
                              less than 120 monthly payments,

                        (III) the calculation shall be made utilizing the same
                              mortality table and interest rate as would be
                              utilized by the plan on the date of termination as
                              if the calculation were being made pursuant to
                              Section 417(e)(3)(A)(ii) of the Internal Revenue





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                              Code, as amended, (the "Code");

                        (IV)  for purpose of calculating the Executive's monthly
                              or annual benefit under the defined benefit plans,
                              additional service equal to the Remaining
                              Unexpired Employment Period (rounded up to the
                              next whole year if such period is not a whole
                              number when expressed in years) shall be added to
                              the Executive's actual service to calculate the
                              amount of the benefit; and

                        (V)   for purpose of calculating the Executive's monthly
                              or annual benefit under the defined benefit plans,
                              the following sums shall be added to the
                              Executive's compensation recognized under such
                              plans for the most recent year recognized:

                              (1)   payments made pursuant to Section 9(b)(i);

                              (2)   the Salary Severance Payment;

                              (3)   the Bonus Severance Payment;

                              (4)   the Option Surrender Payment; and

                              (5)   the RRP Surrender Payment.

                  "LS" is the sum of the present value of the defined benefit
                  pension benefits that are vested benefits actually accrued by
                  the Executive under all qualified and non-qualified defined
                  benefit pension plans maintained by, or covering employees of,
                  the Company or any of its affiliates or subsidiaries in which
                  the Executive is or, but for the completion of any service
                  requirement, would be a participant utilizing the following
                  assumptions:

                        (I)   the benefit to be valued shall be a single life
                              annuity with monthly payments due on the first day
                              of each month and with a guaranteed payout of not
                              less than 120 monthly payments, and

                        (II)  the calculation shall be made utilizing the same
                              mortality table and interest rate as would be
                              utilized by the plan on the date of termination as
                              if the calculation were being made pursuant to
                              Section 417(e)(3)(A)(ii) of the Code;

            (vi)  within thirty (30) days following the Executive's termination
                  of employment with the Company, a lump sum payment (the
                  "Defined Contribution Severance Payment") equal to the sum of:

                  (A)   an estimate of the additional employer contributions to
                        which he or





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                        she would have been entitled under any and all qualified
                        and non- qualified defined contribution pension plans,
                        excluding the employee stock ownership plans, maintained
                        by, or covering employees of, the Company or any of its
                        affiliates or subsidiaries as if he or she were 100%
                        vested thereunder and had continued working for the
                        Company during the Remaining Unexpired Employment Period
                        (the "401K Severance Payment"); and

                  (B)   an estimate of the value of the additional assets which
                        would have been allocable to him or her through debt
                        service or otherwise under any and all qualified and
                        non-qualified employee stock ownership plans, maintained
                        by, or covering employees of, the Company or any of its
                        affiliates or subsidiaries as if he or she were 100%
                        vested thereunder and had continued working for the
                        Company during the Remaining Unexpired Employment
                        Period, based on the fair market value of such assets at
                        termination of employment (the "ESOP Severance
                        Payment").

                  The Defined Contribution Severance Payment shall be calculated
as follows:

                        DCSP      = 401KSP  +  ESOPSP

                  where:

                  "DCSP" is the amount of the Defined Contribution Severance
                  Payment, before the deduction of applicable federal, state and
                  local withholding taxes;

                  "401KSP" is the amount of the 401K Severance Payment, before
                  the deduction of applicable federal, state and local
                  withholding taxes; and

                  "ESOPSP" is the amount of the ESOP Severance Payment, before
                  the deduction of applicable federal, state and local
                  withholding taxes.

                  The 401KSP shall be calculated as follows:

                        401KSP      =     (401KC x NY) + UVB

                  where

                  "401KC" is the sum of the Company Contributions as defined in
                  the Association's Incentive Savings Plan or, if made under
                  another defined contribution pension plan other than an
                  employee stock ownership plan, the comparable contribution
                  made for the benefit of the Executive during the one





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                  year period which shall end on the date of his or her
                  termination of his or her employment with the Company;

                  "NY" is the Remaining Unexpired Employment Period expressed as
                  a number of years (rounded, if such period is not a whole
                  number, to the next highest whole number); and

                  "UVB" is the actual balance credited to the Executive's
                  account under the applicable plan at the date of his or her
                  termination of employment that is not vested and does not
                  become vested as a consequence of such termination of
                  employment.

                  The ESOPSP shall be calculated as follows:

                        ESOPSP      =     (((ALL x FMV) + C) x NY) + UVB

                  where:

                  "ALL" is the sum of the number of shares of the Company's
                  common stock or, if applicable, phantom shares of such stock
                  by whatever term it is described allocated to the Executive's
                  accounts under all qualified and non- qualified employee stock
                  ownership plans maintained by the Company or any of its
                  affiliates or subsidiaries during or for the last complete
                  plan year in which the Executive participated in such plans
                  and received such an allocation whether the allocation
                  occurred as a result of contributions made by the Company, the
                  payment by the Company or any of its affiliates or
                  subsidiaries of any loan payments under a leveraged employee
                  stock ownership plan, the allocation of forfeitures under the
                  terms of such plan or as a result of the use of cash or
                  earnings allocated to the Executive's account during such plan
                  year to make loan payments that result in share allocations,
                  provided however, that excluded shall be any shares or phantom
                  shares allocated to the Executive's account under any
                  qualified and non-qualified employee stock ownership plans
                  maintained by the Company or any of its affiliates or
                  subsidiaries solely as a result of the termination of such
                  plans, provided further, that if the shares allocated are not
                  shares of the Association's common stock or phantom shares of
                  such stock than shares of whatever securities are so allocated
                  shall be utilized, and provided further, that in the event
                  that there shall be any shares or phantom shares allocated
                  during the then current plan year or the last complete plan
                  year to the Executive's account under any qualified and
                  non-qualified employee stock ownership plans maintained by the
                  Association or any of its affiliates or subsidiaries solely as
                  a result of the termination of such plans, the ALL shall be
                  reduced (but not to an amount less than zero (0)) by an amount
                  calculated




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<PAGE>   12
                  by multiplying the number of shares or phantom shares
                  allocated to the Executive's account solely as a result of the
                  termination of such plans times the FMV utilized to calculate
                  the ESOPSP;

                  "C" is the sum of all cash allocated to the Executive's
                  accounts under all qualified and non-qualified employee stock
                  ownership plans maintained by the Company during or for the
                  last complete plan year in which the Executive participated in
                  such plans whether the allocation occurred as a result of
                  contributions made by the Company, the payment by the Company
                  or the Association of any loan payments under a leveraged
                  employee stock ownership plan or the allocation of forfeitures
                  under the terms of such plan during such plan year;

                  "FMV" is the closing price of the Company's common stock on
                  The Nasdaq Stock Market or on whatever other stock exchange or
                  market such stock is publicly traded on the date the
                  Executive's employment terminates or, if such day is not a day
                  on which such securities are traded, on the most recent
                  preceding trading day on which a trade occurs, provided
                  however that if the security allocated to the Executive's
                  account during the last completed plan year is other than the
                  Company's common stock the closing price of such other
                  security on the date the Executive's employment terminates
                  shall be utilized.

                  "NY" is the Remaining Unexpired Employment Period expressed as
                  a number of years (rounded, if such period is not a whole
                  number, to the next highest whole number); and

                  "UVB" is the actual balance credited to the Executive's
                  account under the applicable plan at the date of his or her
                  termination of employment that is not vested and does not
                  become vested as a consequence of such termination of
                  employment.

            (vii) within thirty (30) days following the Executive's termination
                  of employment with the Company, the Company shall make a lump
                  sum payment to the Executive in an amount equal to the
                  estimated potential annual bonuses or incentive compensation
                  that the Executive could have earned if the Executive had
                  continued working for the Company during the Unexpired
                  Employment Period at the highest annual rate of salary
                  achieved during that portion of the Employment Period which is
                  prior to the Executive's termination of employment with the
                  Company (the "Bonus Severance Payment"). The Bonus Severance
                  Payment shall be computed using the following formula:

                        BSP     =   (BS x TIO x AP x NY)





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                  where:

                  "BSP" is the amount of the Bonus Severance Payment, before the
                  deduction of applicable federal, state and local withholding
                  taxes;

                  "BS" is the highest annual rate of salary achieved during that
                  portion of the Employment Period which is prior to the
                  Executive's termination of employment with the Company;

                  "TIO" is the highest target incentive opportunity (expressed
                  as a percentage of base salary) established by the
                  Compensation Committee of the Board for the Executive pursuant
                  to the Astoria Financial Corporation Executive Officer Annual
                  Incentive Plan during that portion of the Employment Period
                  which is prior to the Executive's termination of employment
                  with the Company;

                  "AP" is the highest award percentage available to the
                  Executive with respect to the financial performance of the
                  Company (expressed as a percentage of the TIO) established by
                  the Compensation Committee of the Board for the Executive
                  pursuant to the Astoria Financial Corporation Executive
                  Officer Annual Incentive Plan during the period during that
                  portion of the Employment Period which is prior to the
                  Executive's termination of employment with the Company; and

                  "NY" is the Remaining Unexpired Employment Period expressed as
                  a number of years (rounded, if such period is not a whole
                  number, to the next highest whole number).

          (viii)  at the election of the Company made within thirty (30) days
                  following the Executive's termination of employment with the
                  Company, upon the surrender of options or appreciation rights
                  issued to the Executive under any stock option and
                  appreciation rights plan or program maintained by, or covering
                  employees of, the Company, a lump sum payment (the "Option
                  Surrender Payment"). The Option Surrender Payment shall be
                  calculated as follows:

                        OSP   =     (FMV - EP) x N

                  where:

                  "OSP" is the amount of the Option Surrender Payment, before
                  the deduction of applicable federal, state and local
                  withholding taxes;




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<PAGE>   14
                  "FMV" is the closing price of the Company's common stock on
                  The Nasdaq Stock Market, or on whatever other stock exchange
                  or market such stock is publicly traded, on the date the
                  Executive's employment terminates or, if such day is not a day
                  on which such securities are traded, on the most recent
                  preceding trading day on which a trade occurs, provided
                  however that if the option or stock appreciation right is for
                  a security other than the Company's common stock, the fair
                  market value of a share of stock of the same class as the
                  stock subject to the option or appreciation right, determined
                  as of the date of termination of employment shall be utilized;

                  "EP" is the exercise price per share for such option or
                  appreciation right, as specified in or under the relevant plan
                  or program; and

                  "N" is the number of shares with respect to which options or
                  appreciation rights are being surrendered.

                  For purposes of determining the Option Severance Payment and
                  for purposes of determining the Executive's right following
                  his or her termination of employment with the Company to
                  exercise any options or appreciation rights not surrendered
                  pursuant hereto, the Executive shall be deemed fully vested in
                  all options and appreciation rights under any stock option or
                  appreciation rights plan or program maintained by, or covering
                  employees of, the Company, even if he or she is not vested
                  under such plan or program;

            (ix)  at the election of the Company made within thirty (30) days
                  following the Executive's termination of employment with the
                  Company, upon the surrender of any shares awarded to the
                  Executive under any restricted stock plan maintained by, or
                  covering employees of, the Company, a lump sum payment (the
                  "RRP Surrender Payment") The RRP Surrender Payment shall be
                  calculated as follows:

                        RSP   =     FMV x N

                  where:

                  "RSP" is the amount of the RRP Surrender Payment, before the
                  deduction of applicable federal, state and local withholding
                  taxes;

                  "FMV" is the closing price of the Company's common stock on
                  The Nasdaq Stock Market, or on whatever other stock exchange
                  or market such stock is publicly traded, on the date the
                  Executive's employment terminates or, if such day is not a day
                  on which such securities are traded, on the preceding trading
                  day on which a trade occurs, provided however that if the
                  restricted stock is




                                 Page 14 of 31
<PAGE>   15
                  a security other than the Company's common stock, the fair
                  market value of a share of stock of the same class as the
                  stock granted under such plan, determined as of the date of
                  termination of employment shall be utilized; and

                  "N" is the number of shares which are being surrendered.

                  For purposes of determining the RRP Surrender Payment and for
                  purposes of determining the Executive's right following his or
                  her termination of employment with the Company to any stock
                  not surrendered pursuant hereto, the Executive shall be deemed
                  fully vested in all shares awarded under any restricted stock
                  plan maintained by, or covering employees of, the Company,
                  even if he or she is not vested under such plan.

            The Salary Severance Payment, the DB Severance Payment, the Defined
            Contribution Severance Payment, the Bonus Severance Payment, the
            Option Surrender Payment and the RRP Surrender Payment shall be
            computed at the expense of the Company by an attorney of the firm of
            Thacher Proffitt & Wood, Two World Trade Center, New York, New York
            10048 or, if such firm is unavailable or unwilling to perform such
            calculation, by a firm of independent certified public accountants
            selected by the Executive and reasonably satisfactory to the Company
            (the "Computation Advisor"). The determination of the Computation
            Advisor as to the amount of such payments shall be final and binding
            in the absence of manifest error.

            The Company and the Executive hereby stipulate that the damages
            which may be incurred by the Executive following any such
            termination of employment are not capable of accurate measurement as
            of the date first above written and that the payments and benefits
            contemplated by this Section 9(b) constitute reasonable damages
            under the circumstances and shall be payable without any requirement
            of proof of actual damage and without regard to the Executive's
            efforts, if any, to mitigate damages. The Company and the Executive
            further agree that the Company may condition the payment of the
            Salary Severance Payment, the DB Severance Payment, the Defined
            Contribution Severance Payment, the Bonus Severance Payment, the
            Option Surrender Payment and the RRP Surrender Payment on the
            receipt of the Executive's resignation from any and all positions
            which he or she holds as an officer, director or committee member
            with respect to the Company, the Association or any subsidiary or
            affiliate of either of them.

      Section 10. Termination without Additional Company Liability.
                  ------------------------------------------------

      (a)   In the event that the Executive's employment with the Company shall
            terminate during the Employment Period on account of:





                                 Page 15 of 31
<PAGE>   16
            (i)   the discharge of the Executive for Cause, which, for purposes
                  of this Agreement shall mean:

                  (A)   the Executive intentionally engages in dishonest conduct
                        in connection with the Executive's performance of
                        services for the Company resulting in the Executive's
                        conviction of a felony;

                  (B)   the Executive is convicted of, or pleads guilty or nolo
                        contendere to, a felony or any crime involving moral
                        turpitude;

                  (C)   the Executive willfully fails or refuses to perform the
                        Executive's duties under this Agreement and fails to
                        cure such breach within sixty (60) days following
                        written notice thereof from the Company;

                  (D)   the Executive breaches the Executive's fiduciary duties
                        to the Company for personal profit;

                  (E)   the Executive's willful breach or violation of any law,
                        rule or regulation (other than traffic violations or
                        similar offenses), or final cease and desist order in
                        connection with the Executive's performance of services
                        for the Company; or

                  (F)   the Executive's material breach of any material
                        provision of this Agreement which is not substantially
                        cured within 60 days after written notice of such breach
                        is received by the Executive from the Company.

            (ii)  the Executive's voluntary resignation from employment with the
                  Company for reasons other than those specified in Section 9(a)
                  or 11(b);

            (iii) the Executive's death;

            (iv)  a determination that the Executive is Disabled;

            (v)   the Executive's termination of employment for any reason at or
                  after attainment of mandatory retirement age under the
                  Company's mandatory retirement policy for executive officers
                  in effect as of the date of this Agreement;

            then the Company, except as otherwise specifically provided herein,
            shall have no further obligations under this Agreement, other than
            the payment to the Executive (or, in the event of his or her death,
            to his or her estate) of the amounts or benefits provided in Section
            9(b)(i) and (ii) of this Agreement (the "Standard Termination




                                 Page 16 of 31
<PAGE>   17
            Entitlements").

      (b)   For purposes of Section 10(a)(i), no act or failure to act, on the
            part of the Executive, shall be considered "intentional" or
            "willful" unless it is done, or omitted to be done, by the Executive
            in bad faith or without reasonable belief that the Executive's
            action or omission was in the best interests of the Company. Any
            act, or failure to act, based upon authority given pursuant to a
            resolution duly adopted by the Board or based upon the written
            advice of counsel for the Company shall be conclusively presumed to
            be done, or omitted to be done, by the Executive in good faith and
            in the best interests of the Company. Except as specifically
            provided below, the cessation of employment of the Executive shall
            not be deemed to be for Cause within the meaning of Section 10(a)(i)
            unless and until:

            (i)   the Board, by the affirmative vote of 75% of its entire
                  membership, determines that the Executive is guilty of the
                  conduct described in Section 10(a)(i) above measured against
                  standards generally prevailing at the relevant time in the
                  savings and community banking industry;

            (ii)  prior to the vote contemplated by Section 10(b)(i), the Board
                  shall provide the Executive with notice of the Company's
                  intent to discharge the Executive for Cause, detailing with
                  particularity the facts and circumstances which are alleged to
                  constitute Cause (the "Notice of Intent to Discharge"); and

            (iii) after the giving of the Notice of Intent to Discharge and
                  before the taking of the vote contemplated by Section
                  10(b)(i), the Executive, together with the Executive's legal
                  counsel, if the Executive so desires, are afforded a
                  reasonable opportunity to make both written and oral
                  presentations before the Board for the purpose of refuting the
                  alleged grounds for Cause for the Executive's discharge; and

            (iv)  after the vote contemplated by Section 10(b)(i), the Company
                  has furnished to the Executive a notice of termination which
                  shall specify the effective date of the Executive's
                  termination of employment (which shall in no event be earlier
                  than the date on which such notice is deemed given) and
                  include a copy of a resolution or resolutions adopted by the
                  Board, certified by its corporate secretary, authorizing the
                  termination of the Executive's employment with Cause and
                  stating with particularity the facts and circumstances found
                  to constitute Cause for the Executive's discharge (the "Final
                  Discharge Notice").

            If the Executive, during the 90 (ninety) day period commencing on
            the delivery by the Company to the Executive of the Notice of Intent
            to Discharge specified in Section 10(b)(ii), resigns his or her
            employment with the Company prior to the





                                 Page 17 of 31
<PAGE>   18
            delivery to the Executive by the Company of the Final Discharge
            Notice specified in Section 10(b)(iv), then the cessation of
            employment of the Executive shall be deemed to be for Cause.

            Following the giving of a Notice of Intent to Discharge, the Bank
            may temporarily suspend the Executive's duties and authority and, in
            such event, may also suspend the payment of salary and other cash
            compensation, but not the Executive's participation in retirement,
            insurance and other employee benefit plans. If the Executive is not
            discharged or is discharged without Cause within forty-five (45)
            days after the giving of a Notice of Intent to Discharge, payments
            of salary and cash compensation shall resume, and all payments
            withheld during the period of suspension shall be promptly restored.
            If the Executive is discharged with Cause not later than forty-five
            (45) days after the giving of the Notice of Intent to Discharge, all
            payments withheld during the period of suspension shall be deemed
            forfeited and shall not be included in the Standard Termination
            Entitlements. If a Final Discharge Notice is given later than
            forty-five (45) days, but sooner than ninety (90) days, after the
            giving of the Notice of Intent to Discharge, all payments made to
            the Executive during the period beginning with the giving of the
            Notice of Intent to Discharge and ending with the Executive's
            discharge with Cause shall be retained by the Executive and shall
            not be applied to offset the Standard Termination Entitlements. If
            the Bank does not give a Final Discharge Notice to the Executive
            within ninety (90) days after giving a Notice of Intent to
            Discharge, the Notice of Intent to Discharge shall be deemed
            withdrawn and any future action to discharge the Executive with
            Cause shall require the giving of a new Notice of Intent to
            Discharge. If the Executive resigns pursuant to Section 10(b), the
            Executive shall forfeit his or her right to suspended amounts that
            have not been restored as of the date of the Executive's resignation
            or notice of resignation, whichever is earlier.

      (c)   The Company may terminate the Executive's employment on the basis
            that the Executive is Disabled during the Employment Period upon a
            determination by the Board, by the affirmative vote of 75% of its
            entire membership, acting in reliance on the written advice of a
            medical professional acceptable to it, that the Executive is
            suffering from a physical or mental impairment which, at the date of
            the determination, has prevented the Executive from performing the
            Executive's assigned duties on a substantially full-time basis for a
            period of at least one hundred and eighty (180) days during the
            period of one (1) year ending with the date of the determination or
            is likely to result in death or prevent the Executive from
            performing the Executive's assigned duties on a substantially
            full-time basis for a period of at least one hundred and eighty
            (180) days during the period of one (1) year beginning with the date
            of the determination. In such event:

            (A)   The Company shall pay and provide the Standard Termination
                  Entitlements to the Executive;





                                 Page 18 of 31
<PAGE>   19
                  (B)   In addition to the Standard Termination Entitlements,
                        the Company shall continue to pay to the Executive the
                        Executive's base salary, at the annual rate in effect
                        for the Executive immediately prior to the termination
                        of the Executive's employment, during a period ending on
                        the earliest of:

                        (I)   the expiration of one hundred and eighty (180)
                              days after the date of termination of the
                              Executive's employment;

                        (II)  the date on which long-term disability insurance
                              benefits are first payable to the Executive under
                              any long-term disability insurance plan covering
                              the Executive; or

                        (III) the date of the Executive's death.

                  A termination of employment due to Disability under this
                  Section shall be effected by a notice of termination given to
                  the Executive by the Company and shall take effect on the
                  later of the effective date of termination specified in such
                  notice or, if no such date is specified, the date on which the
                  notice of termination is deemed given to the Executive.

      Section 11. Termination Upon or Following a Change of Control.
                  -------------------------------------------------

      (a)   A Change of Control of the Company ("Change of Control") shall be
            deemed to have occurred upon the happening of any of the following
            events:

            (i)   approval by the stockholders of the Company of a transaction
                  that would result in the reorganization, merger or
                  consolidation of the Company with one or more other persons,
                  other than a transaction following which:

                  (A)   at least 51% of the equity ownership interests of the
                        entity resulting from such transaction are beneficially
                        owned (within the meaning of Rule 13d-3 promulgated
                        under the Securities Exchange Act of 1934, as amended
                        (the "Exchange Act")) in substantially the same relative
                        proportions by persons who, immediately prior to such
                        transaction, beneficially owned (within the meaning of
                        Rule 13d-3 promulgated under the Exchange Act) at least
                        51% of the outstanding equity ownership interests in the
                        Company; and

                  (B)   at least 51% of the securities entitled to vote
                        generally in the election of directors of the entity
                        resulting from such transaction are beneficially owned
                        (within the meaning of Rule 13d-3 promulgated





                                 Page 19 of 31
<PAGE>   20
                        under the Exchange Act) in substantially the same
                        relative proportions by persons who, immediately prior
                        to such transaction, beneficially owned (within the
                        meaning of Rule 13d-3 promulgated under the Exchange
                        Act) at least 51 % of the securities entitled to vote
                        generally in the election of directors of the Company;

            (ii)  the acquisition of all or substantially all of the assets of
                  the Company or beneficial ownership (within the meaning of
                  Rule 13d-3 promulgated under the Exchange Act) of 20% or more
                  of the outstanding securities of the Company entitled to vote
                  generally in the election of directors by any person or by any
                  persons acting in concert, or approval by the stockholders of
                  the Company of any transaction which would result in such an
                  acquisition;

            (iii) a complete liquidation or dissolution of the Company, or
                  approval by the stockholders of the Company of a plan for such
                  liquidation or dissolution;

            (iv)  the occurrence of any event if, immediately following such
                  event, at least 50% of the members of the Board do not belong
                  to any of the following groups:

                  (A)   individuals who were members of the Board on the date of
                        this Agreement; or

                  (B)   individuals who first became members of the Board after
                        the date of this Agreement either:

                        (I)   upon election to serve as a member of the Board by
                              affirmative vote of three-quarters of the members
                              of such Board, or of a nominating committee
                              thereof, in office at the time of such first
                              election; or

                        (II)  upon election by the stockholders of the Company
                              to serve as a member of the Board, but only if
                              nominated for election by affirmative vote of
                              three-quarters of the members of the Board, or of
                              a nominating committee thereof, in office at the
                              time of such first nomination;

                        provided, however, that such individual's election or
                        nomination did not result from an actual or threatened
                        election contest (within the meaning of Rule 14a-11 of
                        Regulation 14A promulgated under the Exchange Act) or
                        other actual or threatened solicitation of proxies or
                        consents (within the meaning of Rule 14a-11 of
                        Regulation 14A promulgated under the Exchange Act) other
                        than by or on behalf of





                                 Page 20 of 31
<PAGE>   21
                        the Board; or

            (v)   any event which would be described in Section 11(a)(i), (ii),
                  (iii) or (iv) if the term "Association" were substituted for
                  the term "Company" therein or the term "Board of Directors of
                  the Association" were substituted for the term "Board".

            In no event, however, shall a Change of Control be deemed to have
            occurred as a result of any acquisition of securities or assets of
            the Company, the Association, or an affiliate or subsidiary of
            either of them, by the Company, the Association, or a subsidiary of
            either of them, or by any employee benefit plan maintained by any of
            them. For purposes of this Section 11 (a), the term "person" shall
            have the meaning assigned to it under Sections 13(d)(3) or 14(d)(2)
            of the Exchange Act.

      (b)   In the event of a Change of Control, the Executive shall be entitled
            to the payments and benefits contemplated by Section 9(b) in the
            event of his or her termination of employment with the Company under
            any of the circumstances described in Section 9(a) of this Agreement
            or under any of the following circumstances:

            (i)   resignation, voluntary or otherwise, by the Executive at any
                  time during the Employment Period within six (6) months
                  following his or her demotion, loss of title, office or
                  significant authority or responsibility or following any
                  reduction in any element of his or her package of compensation
                  and benefits;

            (ii)  resignation, voluntary or otherwise, by the Executive at any
                  time during the Employment Period within six (6) months
                  following any relocation of his or her principal place of
                  employment or any change in working conditions at such
                  principal place of employment which the Executive, in his or
                  her reasonable discretion, determines to be embarrassing,
                  derogatory or otherwise adverse;

            (iii) resignation, voluntary or otherwise, by the Executive at any
                  time during the Employment Period within six (6) months
                  following the failure of any successor to the Company in the
                  Change of Control to include the Executive in any compensation
                  or benefit program maintained by it or covering any of its
                  executive officers, unless the Executive is already covered by
                  a substantially similar plan of the Company which is at least
                  as favorable to him or her; or

            (iv)  resignation, voluntary or otherwise, for any reason whatsoever
                  during the Employment Period within six months following the
                  effective date of the Change of Control.





                                 Page 21 of 31
<PAGE>   22
      Section 12. Tax Indemnification.
                  -------------------

      (a)   This Section 12 shall apply if the Executive's employment is
            terminated upon or following:

            (i)   a Change of Control (as defined in Section 11 of this
                  Agreement); or

            (ii)  a change "in the ownership or effective control" of the
                  Company or the Association or "in the ownership of a
                  substantial portion of the assets" of the Company or the
                  Association within the meaning of Section 28OG of the Code.

            If this Section 12 applies, then, if for any taxable year, the
            Executive shall be liable for the payment of an excise tax under
            Section 4999 of the Code with respect to any payment in the nature
            of compensation made by the Company, the Association or any direct
            or indirect subsidiary or affiliate of the Company or the
            Association to (or for the benefit of) the Executive, the Company
            shall pay to the Executive an amount intended to indemnify the
            Executive against the financial effects of the excise tax imposed on
            excess parachute payments under Section 28OG of the Code (the "Tax
            Indemnity Payment"). The Tax Indemnity Payment shall be determined
            under the following formula:

                                          E x P
                   TIP   =    ------------------------------
                              1 - (( FI x ( 1 - SLI )) + SLI + E + M )


            where:

            "TIP" is the Tax Indemnity Payment, before the deduction of
            applicable federal, state and local withholding taxes;

            "E" is the percentage rate at which an excise tax is assessed under
            Section 4999 of the Code;

            "P" is the amount with respect to which such excise tax is assessed,
            determined without regard to any amount payable pursuant to this
            Section 12;

            "FI" is the highest marginal rate of income tax applicable to the
            Executive under the Code for the taxable year in question;

            "SLI" is the sum of the highest marginal rates of income tax
            applicable to the Executive under all applicable state and local
            laws for the taxable year in question; and





                                 Page 22 of 31
<PAGE>   23
            "M" is the highest marginal rate of Medicare tax applicable to the
            Executive under the Code for the taxable year in question.

      (b)   The computation of the Tax Indemnity Payment shall be made at the
            expense of the Company by the Computation Advisor and shall be based
            on the following assumptions:

            (i)   that a change in ownership, a change in effective ownership or
                  control or a change in the ownership of a substantial portion
                  of the assets of the Association or the Company has occurred
                  within the meaning of Section 28OG of the Code (a "28OG Change
                  of Control");

            (ii)  that all direct or indirect payments made to or benefits
                  conferred upon the Executive on account of the Executive's
                  termination of employment are "parachute payments" within the
                  meaning of Section 28OG of the Code; and

            (iii) that no portion of such payments is reasonable compensation
                  for services rendered prior to the Executive's termination of
                  employment.

      (c)   With respect to any payment that is presumed to be a parachute
            payment for purposes of Section 28OG of the Code, the Tax Indemnity
            Payment shall be made to the Executive on the earlier of the date
            the Company, the Association or any direct or indirect subsidiary or
            affiliate of the Company or the Association is required to withhold
            such tax or the date the tax is required to be paid by the
            Executive, unless, prior to such date, the Company delivers to the
            Executive the written opinion (the "Opinion Letter"), in form and
            substance reasonably satisfactory to the Executive, of the
            Computation Advisor or, if the Computation Advisor is unable to
            provide such opinion, of an attorney or firm of independent
            certified public accountants selected by the Company and reasonably
            satisfactory to the Executive, to the effect that the Executive has
            a reasonable basis on which to conclude that:

            (i)   no 28OG Change in Control has occurred, or

            (ii)  all or part of the payment or benefit in question is not a
                  parachute payment for purposes of Section 28OG of the Code, or

            (iii) all or a part of such payment or benefit constitutes
                  reasonable compensation for services rendered prior to the
                  28OG Change of Control, or

            (iv)  for some other reason which shall be set forth in detail in
                  such letter, no excise tax is due under Section 4999 of the
                  Code with respect to such payment or benefit.





                                 Page 23 of 31
<PAGE>   24
            If the Company delivers an Opinion Letter, the Computation Advisor
            shall re- compute, and the Company shall make, the Tax Indemnity
            Payment, if any, in reliance on the information contained in the
            Opinion Letter.

      (d)   In the event that the Executive's liability for the excise tax under
            Section 4999 of the Code for a taxable year is subsequently
            determined to be different than the amount with respect to which the
            Tax Indemnity Payment is made, the Executive or the Company, as the
            case may be, shall pay to the other party at the time that the
            amount of such excise tax is finally determined, an appropriate
            amount, plus interest, such that the payment made pursuant to
            Sections 12(a) and 12(c), when increased by the amount of the
            payment made to the Executive pursuant to this Section 12(d), or
            when reduced by the amount of the payment made to the Company
            pursuant to this Section 12(d), equals the amount that should have
            properly been paid to the Executive under Sections 12(a) and 12(c).
            The interest paid to the Company under this Section 12(d) shall be
            determined at the rate provided under Section 1274(b)(2)(B) of the
            Code. The payment made to the Executive shall include such amount of
            interest as is necessary to satisfy any interest assessment made by
            the Internal Revenue Service and an additional amount equal to any
            monetary penalties assessed by the Internal Revenue Service on
            account of an underpayment of the excise tax. To confirm that the
            proper amount, if any, was paid to the Executive under this Section
            12, the Executive shall furnish to the Company a copy of each tax
            return which reflects a liability for an excise tax, at least 20
            days before the date on which such return is required to be filed
            with the Internal Revenue Service. Nothing in this Agreement shall
            give the Company any right to control or otherwise participate in
            any action, suit or proceeding to which the Executive is a party as
            a result of positions taken on the Executive's federal income tax
            return with respect to the Executive's liability for excise taxes
            under Section 4999 of the Code.

      (e)   The provisions of this Section 12 are designed to reflect the
            provisions of applicable federal, state and local tax laws in effect
            on the date of this Agreement. If, after the date hereof, there
            shall be any change in any such laws, this Section 12 shall be
            modified in such manner as the Executive and the Company may
            mutually agree upon if and to the extent necessary to assure that
            the Executive is fully indemnified against the economic effects of
            the tax imposed under Section 4999 of the Code or any similar
            federal, state or local tax.

      Section 13. Covenant Not To Compete.
                  -----------------------

      The Executive hereby covenants and agrees that, in the event of his or her
termination of employment with the Company prior to the expiration of the
Employment Period, for a period of one (1) year following the date of his or her
termination of employment with the Company (or, if less, for the Remaining
Unexpired Employment Period), the Executive shall not, without the written
consent of the Company, become an officer, employee, consultant, director or
trustee of any savings





                                 Page 24 of 31
<PAGE>   25
bank, savings and loan association, savings and loan holding company, bank or
bank holding company, or any direct or indirect subsidiary or affiliate of any
such entity, that entails working in any city, town or county in which the
Association or the Company has an office or has filed an application for
regulatory approval to establish an office, determined as of the effective date
of the Executive's termination of employment; provided, however, that this
Section 13 shall not apply if the Executive's employment is terminated for the
reasons set forth in Section 9(a); and provided, further, that if the
Executive's employment shall be terminated on account of Disability as provided
in Section 10(c) of this Agreement, this Section 13 shall not prevent the
Executive from accepting any position or performing any services if:

      (a)   he or she first offers, by written notice, to accept a similar
            position with or perform similar services for the Company on
            substantially the same terms and conditions and

      (b)   the Company declines to accept such offer within ten (10) days after
            such notice is given.

      Section 14. Confidentiality.
                  ---------------

      Unless the Executive obtains the prior written consent of the Company, the
Executive shall keep confidential and shall refrain from using for the benefit
of the Executive or any person or entity other than the Company, any entity
which is a subsidiary of the Company or any entity which the Company is a
subsidiary of, any material document or information obtained from the Company,
or from its affiliates or subsidiaries, in the course of the Executive's
employment with any of them concerning their properties, operations or business
(unless such document or information is readily ascertainable from public or
published information or trade sources or has otherwise been made available to
the public through no fault of his or her own) until the same ceases to be
material (or becomes so ascertainable or available); provided, however, that
nothing in this Section 14 shall prevent the Executive, with or without the
Company's consent, from participating in or disclosing documents or information
in connection with any judicial or administrative investigation, inquiry or
proceeding to the extent that such participation or disclosure is required under
applicable law.

      Section 15. Solicitation.
                  ------------

      The Executive hereby covenants and agrees that, for a period of one (1)
year following the Executive's termination of employment with the Company, he or
she shall not, without the written consent of the Company, either directly or
indirectly:

      (a)   solicit, offer employment to or take any other action intended, or
            that a reasonable person acting in like circumstances would expect,
            to have the effect of causing any officer or employee of the
            Company, the Association or any affiliate or subsidiary of ether of
            them, to terminate his or her employment and accept employment or
            become affiliated with, or provide services for compensation in any
            capacity whatsoever to, any savings bank, savings and loan
            association, bank, bank holding





                                 Page 25 of 31
<PAGE>   26
            company, savings and loan holding company, or other institution
            engaged in the business of accepting deposits and making loans,
            doing business in any city, town or county in which the Association
            or the Company has an office or has filed an application for
            regulatory approval to establish an office;

      (b)   provide any information, advice or recommendation with respect to
            any such officer or employee to any savings bank, savings and loan
            association, bank, bank holding company, savings and loan holding
            company, or other institution engaged in the business of accepting
            deposits and making loans, doing business in any city, town or
            county in which the Association or the Company has an office or has
            filed an application for regulatory approval to establish an office
            that is intended, or that a reasonable person acting in like
            circumstances would expect, to have the effect of causing any
            officer or employee of the Company, the Association, or any
            affiliate or subsidiary of either of them, to terminate his or her
            employment and accept employment, become affiliated with or provide
            services for compensation in any capacity whatsoever to any such
            savings bank, savings and loan association, bank, bank holding
            company, savings and loan holding company or other institution
            engaged in the business of accepting deposits and making loans; or

      (c)   solicit, provide any information, advice or recommendation or take
            any other action intended, or that a reasonable person acting in
            like circumstances would expect, to have the effect of causing any
            customer of the Company, the Association, or any affiliate or
            subsidiary of either of them to terminate an existing business or
            commercial relationship with the Company, the Association, or any
            affiliate or subsidiary of either of them.

      Section 16. No Effect on Employee Benefit Plans or Programs.
                  -----------------------------------------------

      The termination of the Executive's employment during the term of this
Agreement or thereafter, whether by the Company or by the Executive, shall have
no effect on the rights and obligations of the parties hereto under the
Company's qualified or non-qualified retirement, pension, savings, thrift,
profit-sharing or stock bonus plans, group life, health (including
hospitalization, medical and major medical), dental, accident and long term
disability insurance plans or such other employee benefit plans or programs, or
compensation plans or programs, as may be maintained by, or cover employees of,
the Company from time to time.

      Section 17. Successors and Assigns.
                  ----------------------

      This Agreement will inure to the benefit of and be binding upon the
Executive, his or her legal representatives and testate or intestate
distributees, and the Company and its successors and assigns, including any
successor by merger or consolidation or a statutory receiver or any other person
or firm or corporation to which all or substantially all of the assets and
business of the Company may be sold or otherwise transferred. Failure of the
Company to obtain from any successor





                                 Page 26 of 31
<PAGE>   27
its express written assumption of the Company's obligations under this Agreement
at least sixty (60) days in advance of the scheduled effective date of any such
succession shall be deemed a material breach of this Agreement.

      Section 18. Notices.
                  -------

      Any communication required or permitted to be given under this Agreement,
including any notice, direction, designation, consent, instruction, objection or
waiver, shall be in writing and shall be deemed to have been given at such time
as it is delivered personally, or five (5) days after mailing if mailed, postage
prepaid, by registered or certified mail, return receipt requested, addressed to
such party at the address listed below or at such other address as one such
party may by written notice specify to the other party:

      If to the Executive:

      Gerard C. Keegan
      89 Eleventh Street

      Garden City, New York 11530

      If to the Company:

      Astoria Financial Corporation
      One Astoria Federal Plaza
      Lake Success, New York 11042-1085

      Attention: General Counsel

      with a copy to:

      Thacher Proffitt & Wood
      Two World Trade Center
      New York, New York 10048

      Attention:  W. Edward Bright, Esq.

      Section 19. Indemnification for Attorneys' Fees.
                  -----------------------------------

      The Company shall indemnify, hold harmless and defend the Executive
against reasonable costs, including legal fees, incurred by him or her in
connection with or arising out of any action, suit or proceeding in which he or
she may be involved, as a result of his or her efforts, in good faith, to defend
or enforce the terms of this Agreement; provided, however, that in the case of
any action, suit or proceeding instituted prior to a Change of Control, the
Executive shall have substantially prevailed on the merits pursuant to a
judgment, decree or order of a court of competent jurisdiction






                                 Page 27 of 31
<PAGE>   28
or of an arbitrator in an arbitration proceeding, or in a settlement. For
purposes of this Agreement, any settlement agreement which provides for payment
of any amounts in settlement of the Company's obligations hereunder shall be
conclusive evidence of the Executive's entitlement to indemnification hereunder,
and any such indemnification payments shall be in addition to amounts payable
pursuant to such settlement agreement, unless such settlement agreement
expressly provides otherwise.

      Section 20. Severability.
                  ------------

      A determination that any provision of this Agreement is invalid or
unenforceable shall not affect the validity or enforceability of any other
provision hereof.

      Section 21. Waiver.
                  ------

      Failure to insist upon strict compliance with any of the terms, covenants
or conditions hereof shall not be deemed a waiver of such term, covenant, or
condition. A waiver of any provision of this Agreement must be made in writing,
designated as a waiver, and signed by the party against whom its enforcement is
sought. Any waiver or relinquishment of any right or power hereunder at any one
or more times shall not be deemed a waiver or relinquishment of such right or
power at any other time or times.

      Section 22. Counterparts.
                  ------------

      This Agreement may be executed in two (2) or more counterparts, each of
which shall be deemed an original, and all of which shall constitute one and the
same Agreement.

      Section 23. Governing Law.
                  -------------

      This Agreement shall be governed by and construed and enforced in
accordance with the federal laws of the United States and, to the extent that
federal law is inapplicable, in accordance with the laws of the State of New
York applicable to contracts entered into and to be performed entirely within
the State of New York.

      Section 24. Headings and Construction.
                  -------------------------

      The headings of sections in this Agreement are for convenience of
reference only and are not intended to qualify the meaning of any section. Any
reference to a section number shall refer to a section of this Agreement, unless
otherwise stated.

      Section 25. Entire Agreement: Modifications.
                  --------------------------------

      This instrument contains the entire agreement of the parties relating to
the subject matter hereof, and supersedes in its entirety any and all prior
agreements, understandings or representations





                                 Page 28 of 31
<PAGE>   29
relating to the subject matter hereof. No modifications of this Agreement shall
be valid unless made in writing and signed by the parties hereto.

      Section 26. Guarantee.
                  ---------

      The Company hereby agrees to guarantee the payment by the Association of
any benefits and compensation to which the Executive is or may be entitled to
under the terms and conditions of the Amended and Restated Employment Agreement
dated as of the lst day of January, 2000 between the Association and the
Executive.

      Section 27. Non-duplication.
                  ---------------

      In the event that the Executive shall perform services for the Association
or any other affiliate or subsidiary of the Company, any compensation or
benefits provided to the Executive by such other employer shall be applied to
offset the obligations of the Company hereunder, it being intended that this
Agreement set forth the aggregate compensation and benefits payable to the
Executive for all services to the Company and all of its affiliates and
subsidiaries.

      Section 28. Survival.
                  --------

      The provisions of any sections of this Agreement which by its terms
contemplates performance after the expiration or termination of this Agreement
(including, but not limited to, Sections 6, 9, 10, 11, 12, 13, 14, 15, 16, 17,
18, 19, 21, 26, 27, 29, 30 and 31) shall survive the expiration of the
Employment Period or termination of this Agreement.

      Section 29. Equitable Remedies.
                  ------------------

      The Company and the Executive hereby stipulate that money damages are an
inadequate remedy for violations of Sections 6(a), 13, 14 or 15 of this
Agreement and agree that equitable remedies, including, without limitations, the
remedies of specific performance and injunctive relief, shall be available with
respect to the enforcement of such provisions.

      Section 30. Required Regulatory Provisions.
                  ------------------------------

      Notwithstanding anything herein contained to the contrary, any payments to
the Executive by the Company, whether pursuant to this Agreement or otherwise,
are subject to and conditioned upon their compliance with Section 18(k) of the
Federal Deposit Insurance Act, 12 U.S.C. Section 1828(k), and any regulations
promulgated thereunder.

      Section 31. No Offset or Recoupment; No Attachment.
                  --------------------------------------

      The Company's obligation to make the payments provided for in this
Agreement and otherwise to perform its obligations under this Agreement shall
not be affected by any set-off,






                                 Page 29 of 31
<PAGE>   30
counterclaim, recoupment, defense or other claim, right or action which the
Company or any of its affiliates or subsidiaries may have against the Executive.
In no event shall the Executive be obligated to seek other employment or take
any other action by way of mitigation of the amounts payable to the Executive
under any of the provisions of this Agreement and such amounts shall not be
reduced whether or not the Executive obtains other employment. Except as
required by law, no right to receive payments under this Agreement shall be
subject to anticipation, commutation, alienation, sale, assignment, encumbrance,
charge, pledge, or hypothecation, or to execution, attachment, levy, or similar
process or assignment by operation of law, and any attempt, voluntary or
involuntary, to affect any such action shall be null, void, and of no effect.

      Section 32. LISB Transaction.
                  ----------------

      The Executive hereby waives any claim the Executive may have pursuant to
his or her Employment Agreements each dated March 29, 1997 with the Company and
the Association, respectively, that the acquisition by and the merger of Long
Island Bancorp, Inc. and The Long Island Savings Bank, FSB with and into the
Company and the Association, respectively, constituted a "change of control" of
the Company or the Association as defined in such Employment Contracts.

      IN WITNESS WHEREOF, the Company has caused this Agreement to be executed
and the Executive has hereunto set his or her hand, all as of the day and year
first above written.

ATTEST:

/S/ William K. Sheerin
----------------------
William K. Sheerin

[Seal]



ASTORIA FINANCIAL CORPORATION

By: /S/ George L. Engelke, Jr.
    --------------------------
Name: George L. Engelke, Jr.
Title:Chairman, President and Chief
      Executive Officer

/S/ Gerard C. Keegan
------------------------------
GERARD C. KEEGAN





                                 Page 30 of 31
<PAGE>   31
STATE OF NEW YORK       )
                        )     ss.:
COUNTY OF NASSAU        )

      On this 20 day of March, 2000, before me, the undersigned, personally
appeared Gerard C. Keegan, personally known to me or proved to me on the basis
of satisfactory evidence to be the individual(s) whose name(s) is (are)
subscribed to the within instrument and acknowledged to me that he/she/they
executed the same in his/her/their capacity(ies), and that by his/her/their
signature(s) on the instrument, the individual(s), or the person upon behalf of
which the individual(s) acted, executed the instrument.

                                            /S/ Anna Knice
                                            --------------
                                            Notary Public

                                            Anna Knice

                                            Notary Public, State of New York
                                            No. 4980431
                                            Qualified in Suffolk County
                                            Commission Expires April 22, 2001

STATE OF NEW YORK       )
                        )     ss.:
COUNTY OF NASSAU        )

      On this 20 day of March, 2000, before me, the undersigned, personally
appeared George L. Engelke, Jr., personally known to me or proved to me on the
basis of satisfactory evidence to be the individual(s) whose name(s) is (are)
subscribed to the within instrument and acknowledged to me that he/she/they
executed the same in his/her/their capacity(ies), and that by his/her/their
signature(s) on the instrument, the individual(s), or the person upon behalf of
which the individual(s) acted, executed the instrument.

                                            /S/ Anna Knice
                                            --------------
                                            Notary Public

                                            Anna Knice

                                            Notary Public, State of New York
                                            No. 4980431
                                            Qualified in Suffolk County
                                            Commission Expires April 22, 2001





                                 Page 31 of 31