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Exhibit 10.7 Flushing Savings Bank Assistant
Vice President and Vice President Change in Control Severance Policy


FLUSHING SAVINGS BANK

ASSISTANT VICE PRESIDENT AND VICE PRESIDENT

CHANGE IN CONTROL SEVERANCE POLICY


Name: _________________________


Commencement Date:
_____________ 


Signature: ________________________


	
 

	
 

	
 


	
 

	
1.

	
Term; Policy
Effectiveness.





                    (a)          This
Policy shall apply to each Assistant Vice President and Vice President in good
standing (an “Employee”) of Flushing Savings Bank (the “Bank”) for the period
that both (i) such Employee is employed as such and (ii) this Policy is in
effect in accordance with Section 1(b) below (conjunctively, the “Term”);
provided that if prior to January 1, 2009 such Employee is party to a written
Special Termination Agreement with the Company, then the term (without renewal)
of such agreement shall continue in full force and effect until terminated in
accordance with the terms thereof and the Term hereof, if applicable, for such
Employee shall commence immediately upon such termination; and provided further
that, notwithstanding the provisions of Section 1(b), the Term shall continue
for such Employee for a period of two years following a Change in Control (as
defined in Section 2(b) below) that otherwise occurs during the Term.


                    (b)          This
Policy shall be in effect for the one-year period commencing on January 1, 2008
and such effectiveness shall automatically be renewed on each successive
anniversary thereof for an additional one-year period, unless the Board of
Directors or any officer of the Bank, acting upon the authority thereof, shall
resolve to not renew the Policy as of the next such anniversary date; provided
that such resolution is adopted prior to such anniversary date and the
participants under the Policy are notified of such non-renewal within 60 days
after such anniversary date. 


                    (c)          Upon
the expiration of the Term, all rights, benefits and obligations of Flushing
Savings Bank (the “Bank”) and Flushing Financial Corporation (the “Holding
Company”) hereunder shall terminate.


	
 

	
 

	
 


	
 

	
2.

	
Definitions.





                    (a)          “Cause”
means the Employee’s (i) intentional engagement in dishonest conduct or willful
misconduct, (ii) breach of fiduciary duty involving personal profit, (iii)
insubordination or intentional failure to perform stated duties, (iv) willful
violation of the Bank’s rules and policies and other applicable laws, rules, or
regulations,







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(v) conviction (including entry of a guilty or
nolo contendere plea) of a felony or any
crime involving dishonesty or moral turpitude, (vi) material breach of any
provision of any Bank policy or employment agreement with the Bank, or (vii)
poor performance.


                  (b)          “Change
of Control” means:


	
 

	
 


	
 

	
                (i)          the
 acquisition of all or substantially all of the assets of the Bank or the
 Holding Company by any person or entity, or by any persons or entities acting
 in concert;


	
 

	
 


	
 

	
                (ii)          the
 occurrence of any event if, immediately following such event, a majority of
 the members of the Board of Directors of the Bank or the Holding Company, as
 the case may be, or of any successor corporation shall consist of persons
 other than Current Members, respectively (for these purposes, a “Current
 Member” shall mean any member of the Board of Directors of the Bank or the
 Holding Company as of the Commencement Date and any successor of a Current
 Member whose nomination or election has been approved by a majority of the
 Current Members then on the respective Board of Directors);


	
 

	
 


	
 

	
                (iii)          the
 acquisition of beneficial ownership, directly or indirectly (as provided in
 Rule 13d-3 under the Securities Exchange Act of 1934 (the “Act”), or any
 successor rule), of 25% or more of the total combined voting power of all
 classes of stock of the Bank or the Holding Company by any person or group
 deemed a person under Section 13(d)(3) of the Act; or


	
 

	
 


	
 

	
                (iv)          approval
 by the stockholders of the Bank or the Holding Company of an agreement
 providing for the merger or consolidation of the Bank or the Holding Company
 with another corporation where the stockholders of the Bank or the Holding
 Company, immediately prior to the merger or consolidation, would not
 beneficially own, directly or indirectly, immediately after the merger or
 consolidation, shares entitling such stockholders to 50% or more of the total
 combined voting power of all classes of stock of the surviving corporation.





                  (c)          “Disability”
means termination under circumstances in which the Employee would qualify for
disability benefits under one or more disability programs maintained by the
Holding Company or any subsidiary (including the Bank) employing the Employee.


                  (d)         “Good
Reason” means:


	
 

	
 


	
 

	
                (i)          a
 reduction by the Holding Company or any subsidiary (including the Bank) in
 the Employee’s annual base salary as in effect immediately prior to a Change
 of Control;













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             (ii)          the
 failure of the bank to cure, within 60 days following written notice thereof
 from the Employee, a material adverse change by the Holding Company or any
 subsidiary (including the Bank) in the Employee’s principal functions,
 duties, or responsibilities as in effect immediately prior to a Change of
 Control, provided, however, that a change shall not be deemed to be
 materially adverse if the Employee is assigned a position having
 substantially comparable functions, duties or responsibilities; or


	
 

	
 


	
 

	
             (iii)          the
 failure of the Holding Company or any subsidiary (including the Bank) to
 maintain the Employee’s principal place of employment within 50 miles as in
 effect immediately prior to a Change of Control.








	
 

	
 

	
 


	
 

	
3.

	
Severance Benefits.





                  In
the event the Employee’s employment with the Holding Company and any of its
subsidiaries (including the Bank) is terminated within two years following a
Change of Control (i) by the Holding Company or any of its subsidiaries
(including the Bank) other than by reason of the death or Disability of the
Employee and other than for Cause, or (ii) by the Employee for Good
Reason, the Bank shall provide and pay to the Employee the following:


	
 

	
 


	
 

	
                      (a)          the
 Employee’s earned but unpaid current salary as of the date of termination,
 plus an amount representing any accrued but unpaid vacation time, which
 amounts shall be paid within thirty days of termination;


	
 

	
 


	
 

	
                      (b)          the
 benefits, if any, to which the Employee is entitled as a former employee
 under the Holding Company’s and subsidiaries’ (including the Bank’s) employee
 benefit plans and programs and compensation plans and programs, which shall
 be paid in accordance with the terms of such plans and programs;


	
 

	
 


	
 

	
                      (c)          continued
 health and welfare benefits (including group life, disability, medical and
 dental benefits), in addition to that provided in paragraph (b) above,
 to the extent necessary to provide coverage for the Employee for the number
 of months equal to the number of months of salary payable to the Employee
 pursuant to paragraph (d) below (the “Severance Period”). Such benefits
 shall be provided through the purchase of insurance, and shall be equivalent
 to the health and welfare benefits (including cost-sharing percentages)
 provided to active employees of the Bank (or any successor thereof) as from
 time to time in effect during the Severance Period. Where the amount of such
 benefits is based on salary, they shall be provided to the Employee based on
 the highest annual rate of salary achieved by the Employee during the period
 of the Employee’s employment with the Bank or its subsidiaries. If the
 Employee had dependent coverage in effect at the time of his or her
 termination of employment, the Employee shall have the right to elect to
 continue such 













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dependent coverage for the Severance Period.
The benefits to be
 provided under this paragraph (c) shall cease to the extent that in the
 judgment of the Bank substantially equivalent benefits are provided to the
 Employee (and/or his/her dependents) by a subsequent employer of the
 Employee, who shall certify a description thereof to the Bank; and


	
 

	
 


	
 

	
                       (d)          within
 thirty days following the Employee’s termination of employment, a cash lump
 sum payment in an amount equal to one month’s salary for each full year of
 continuous service completed with the Holding Company or any of its subsidiaries
 (including the Bank or any predecessor of the Bank), but in no event less
 than 12 months’ salary or more than 18 months’ salary, such salary to be the
 greater of the Employee’s salary immediately prior to the Change of Control
 or the Employee’s salary at the date of such termination.





Notwithstanding the foregoing, the benefits
provided to the Employee
under this Section 3 shall be reduced if and to the extent that a nationally
recognized firm of compensation consultants or auditors designated by the
Holding Company or the Bank determines that such reduction will result in a
greater net after-tax benefit to the Employee than the Employee would obtain in
the absence of such reduction, taking into account any excise tax payable by
the Employee under Internal Revenue Code Section 4999.


	
 

	
 

	
 


	
 

	
4.

	
No Effect on Employee Benefit Plans or
 Compensation Programs.





                    Except as expressly provided in this Policy,
the termination of the
Employee’s employment, whether by the Holding Company or any of its subsidiaries
(including the Bank) or by the Employee, shall have no effect on the rights and
obligations of the parties hereto under the employee benefit plans or programs
or compensation plans or programs (whether or not employee benefit plans or
programs) that the Holding Company or any subsidiary (including the Bank) may
maintain from time to time.


	
 

	
 

	
 


	
 

	
5.

	
No Right to
Employment.





                    Nothing
in this Policy shall be construed as giving the Employee the right to be
retained in the employment of the Holding Company or any of its subsidiaries
(including the Bank), nor shall it affect the right of the Holding Company or
any of its subsidiaries (including the Bank) to terminate the Employee’s
employment with or without cause.


	
 

	
 

	
 


	
 

	
6.

	
Regulatory Action.





                    (a)        Notwithstanding
any other provision of this Policy to the contrary, this Section 6 shall apply
at all times, during the Term.


                    (b)        If
the Employee is suspended and/or temporarily prohibited from participating in
the conduct of the affairs of the Bank by a notice served under 12 U.S.C.
§ 1818(e)(3) and (g)(1), the Bank’s obligations to the Employee under this
Policy shall be 







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suspended as of the date of such service
unless stayed by appropriate
proceedings. If the charges in such notice are dismissed, the Bank shall
(i) pay the Employee all of the compensation payable under this Policy
that was withheld while the Bank’s obligations under this Policy were so
suspended, and (ii) reinstate in whole any of its obligations to the
Employee which were suspended.


                    (c)          If
the Employee is removed and/or permanently prohibited from participating in the
conduct of the Bank’s affairs by an order issued under 12 U.S.C.
§ 1818(e)(4) or (g)(1), all obligations of the Bank to the Employee under
this Policy shall terminate as of the effective date of the order, other than
vested rights of the parties accrued as of such effective date, which shall not
be affected.


                    (d)          If
the Bank is in default (as defined in section 3(x)(1) of the Federal Deposit
Insurance Act), all obligations of the Bank under this Policy shall terminate
as of the date of such default, but this Section 6(d) shall not affect any
vested rights of the Employee accrued as of such date of default.


                    (e)          All
obligations of the Bank under this Policy shall be terminated, except to the
extent it is determined that continuation of the Policy is necessary to the
continued operation of the Bank, (i) by the Regional Director of the
Office of Thrift Supervision or his or her designee (“Director”) at the time
the Federal Deposit Insurance Corporation or Resolution Trust Corporation
enters into an agreement to provide assistance to or on behalf of the Bank
under the authority contained in Section 13(c) of the Federal Deposit Insurance
Act; or (ii) by the Director at the time the Director approves a
supervisory merger to resolve problems related to operation of the Bank or when
the Bank is determined by the Director to be in an unsafe or unsound condition;
provided, however, that this Section 6(e) shall not affect any vested rights of
the Employee accrued as of such date of termination.


                    (f)          Any
payments made to the Employee pursuant to this Policy or otherwise are subject
to and conditioned upon their compliance with 12 U.S.C. § 1828(k) and any
regulations promulgated thereunder.


	
 

	
 

	
 


	
 

	
7.

	
 Miscellaneous
Provisions.





                    (a)         Successors.
This Policy shall inure to the benefit of and be binding upon the Employee and
his legal representatives and the Holding Company and the Bank, their
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 Holding Company or the Bank
may be sold or otherwise transferred.


                    (b)         Waiver.
The Waiver by any party of a breach of any provision of this Policy shall not
operate or be construed as a waiver of any subsequent breach of this Policy.







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                    (c)          Severability.
The invalidity or unenforceability of any provision of this Policy shall not
affect the validity or enforceability of any other provision of this Policy,
which shall remain in full force and effect.


                    (d)          Headings
and References. The headings of the sections of this Policy are inserted
for convenience only and shall not be deemed to constitute a part of this
Policy. 


                    (e)          Entire
Policy. This Policy constitutes the entire policy, agreement and
understanding of the parties with respect to the matters contemplated herein,
and supersedes all prior policies, agreements, arrangements and understandings
related to the subject matter hereof.


                    (f)          No
Modification. This Policy may not be modified other than by a writing
signed by all the parties hereto.


                    (g)          Governing
Law. This Policy shall be governed by the laws of the State of New York,
without reference to conflicts of law principles.


                    (h)          Withholding.
The Employee agrees that the Bank may withhold from any payment required to be
made to the Employee pursuant to this Policy all federal, state, local and/or
other taxes which the Bank determines are required to be withheld in accordance
with applicable statutes and/or regulations in effect from time to time.


	
 

	
 

	
 


	
 

	
8.

	
 Guarantee.





                    The Holding Company hereby agrees to guarantee
the payment by the Bank
of any benefits and compensation to which the Employee is entitled under this
Policy.


	
 

	
 

	
 


	
 

	
9.

	
Signature; Notices.





                    This Policy
shall not be in effect with respect to any Employee unless and until such
Employee has signed this Policy where indicated above and delivered an original
copy thereof to the Bank. Notices to the Employee under this Policy shall be
deemed received by the Employee to the extent given in accordance with the
terms of required notice as may otherwise be required by any other policy of
the Bank under its employee manual of which this forms a part.


	
 

	
 

	
 


	
 

	
10.

	
Compliance with Code Section
409A.





                    (a)        Notwithstanding
the provisions of section 3, if the Employee is a specified employee within the
meaning of Section 409A of the Internal Revenue Code of 1986, as amended
(“Section 409A”), as determined by the Board in accordance with the election
made by the Bank for determining specified employees, any amounts payable under
sections 3(d) (and any other payments to which the Employee may be entitled)







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which constitute “deferred
compensation” within the meaning of Section
409A and which are otherwise scheduled to be paid during the first six months
following the Employee’s termination of employment (other than any payments
that are permitted under Section 409A to be paid within six months following
termination of employment of a specified employee) shall be suspended until the
six-month anniversary of the Employee’s termination of employment (or the
Employee’s death if sooner), at which time all payments that were suspended
shall be paid to the Employee (or his estate) in a lump sum, together with
interest on each suspended payment at the prime rate (as reported in the Wall
Street Journal) from the date of suspension to the date of payment.


                    (b)          A
termination of employment shall not be deemed to have occurred for purposes of
any provision of this Policy providing for the payment of any amounts or
benefits upon or following a termination of employment unless such termination
is also a “separation from service” (within the meaning of Code Section 409A).


                    (c)          For
purposes of Section 409A, each payment under sections 3(d) will be treated as a
separate payment.


                    (d)          It
is intended that this Policy comply with the provisions of Section 409A and the
regulations and guidance of general applicability issued thereunder so as to
not subject the Employee to the payment of additional interest and taxes under
Section 409A, and in furtherance of this intent, this Policy shall be
interpreted, operated and administered in a manner consistent with these
intentions.