Exhibit 10.1
	 
	
FLUSHING FINANCIAL CORPORATION

  EMPLOYMENT AGREEMENT


[Explanatory Note: This agreement
supersedes and is identical to the agreement of the parties filed under Form 8-K on April
26, 2006, except that (i) the date of this agreement and the commencement date herein has
been corrected from May 15, 2006 to May 1, 2006, and (ii) certain other immaterial
corrections have been made.] 




                                This EMPLOYMENT AGREEMENT (“Agreement”) is made and entered into as of the 1st day of May 2006, by and between Flushing Financial Corporation, a Delaware corporation having its
executive offices at 1979 Marcus Avenue Suite E140, Lake Success, New York 11042 (the “Holding
Company”), and Maria A. Grasso residing at <address on file> (“Officer”).

W I T N E S S E T H:

                                WHEREAS, the Holding Company considers the availability of the Officer’s services to be important to the successful management and conduct of the Holding Company’s business and desires to secure
for itself the availability of her services; and

                                WHEREAS, for purposes of securing for the Holding Company the Officer’s continued services, the Board of Directors of the Holding Company (“Board”) has authorized the proper officers
of the Holding Company to enter into an employment agreement with the Officer on the terms and conditions
set forth herein; and

                                WHEREAS, the Officer is willing to make her services available to the Holding Company on the terms and conditions set forth herein;

                                NOW, THEREFORE, in consideration of the premises and the mutual covenants and obligations hereinafter set forth, the Holding Company and the Officer hereby agree as follows:

	 


	                                Section 1.               Employment.


	 
	
                                The Holding Company hereby agrees to employ the Officer, and the Officer hereby agrees to accept such employment, during the period and upon the terms and conditions set forth in this Agreement.

	 


	                                Section 2.               Employment Period.


	 
	
                                (a)           Except as otherwise provided in this Agreement to the contrary, the terms and conditions of this Agreement shall be and remain in
effect during the period of employment (“Employment Period”) established under this section
2. The Employment Period under this Agreement shall be for a term commencing on May 1, 2006 and ending
on November 21, 2008, plus such extensions as are provided pursuant to section 2(b) of this Agreement.

                                (b)           On or as of July 1, 2007, and on or as of each July 1 thereafter, the Employment Period shall be extended for one additional
year if and only if the Board shall have authorized the extension of the Employment Period prior
to July 1 of such year and the Officer 



	

  







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	shall not have notified the Holding Company prior to July 1 of such year that the Employment Period shall not be so extended. If the Board shall not have authorized the extension of the Employment
Period prior to July 1 of any such year, or if the Officer shall have given notice of nonextension
to the Holding Company prior to July 1 of such year, then the Employment Period shall not be extended
pursuant to this section 2(b) at any time thereafter and shall end on the last day of its term as
then in effect.

                                (c)           Upon the termination of the Officer’s
employment with the Holding Company, the extensions provided pursuant to section 2(b) shall cease
(if such extensions have not previously ceased).

	 


	                                Section 3.               Title and Duties.


	 
	
                                On the date on which the Employment Period commences, the Officer shall hold the position of Executive
Vice President/Chief Operating Officer of the Holding Company with all of the powers and duties incident
to such position under law and under the by-laws of the Holding Company. During the Employment Period,
the Officer shall: (a) devote her full business time and attention (other than during weekends,
holidays, vacation periods and periods of illness or approved leaves of absence) to the business
and affairs of the Holding Company and its subsidiaries and use her best efforts to advance the interests
of the Holding Company and its subsidiaries, including reasonable periods of service as an officer
and/or board member of trade associations, their related entities and charitable organizations; and
(b) perform such reasonable additional duties as may be assigned to him by or under the authority
of the Board. The Officer shall also serve as an officer of Flushing Savings Bank, FSB (the “Bank”)
pursuant to the Amended and Restated Employment Agreement between the Officer and the Bank dated
as of the date hereof (“Bank Employment Agreement”). The Holding Company hereby acknowledges
that the Officer’s service under this Agreement shall not be deemed to materially interfere
with the Officer’s performance under the Bank Employment Agreement or otherwise result in a
breach of the Bank Employment Agreement. The Officer shall have such authority as is necessary or
appropriate to carry out her duties under this Agreement.

	 


	                                Section 4.               Compensation.


	 
	
                                In consideration for services rendered by the Officer under this Agreement:

                                (a)           The Holding Company shall pay
to the Officer a salary at an annual rate equal to the greater of (i) $250,000 or (ii) such
higher annual rate as may be prescribed by or under the authority of the Board (the “Current
Salary”). The Officer will undergo an annual salary and performance review on or about June 30
of each year commencing in 2006 The Current Salary payable under this section 4 shall be paid in
approximately equal installments in accordance with the Holding Company’s customary payroll
practices.

                                (b)           The Officer shall be eligible
to participate in any bonus plan maintained by the Holding Company for its officers and employees.
If the Officer shall earn any bonus under any bonus plan of the Bank but such bonus shall not be
paid by the Bank, the Holding Company shall pay such bonus to the Officer.



	

  







	
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	                                Section 5.               Employee Benefits and Other Compensation.


	 
	
                                (a)           Except as otherwise provided in
this Agreement, the Officer shall, during the Employment Period, be treated as an employee of the
Holding Company and be entitled to participate in and receive benefits under the Holding Company’s
employee benefit plans and programs, as well as such other compensation plans or programs (whether
or not employee benefit plans or programs), as the Holding Company may maintain from time to time,
in accordance with the terms and conditions of such employee benefit plans and programs and compensation
plans and programs and with the Holding Company’s customary practices.

                                (b)           The Holding Company shall provide
the Officer with a suitable automobile for use in the performance of the Officer’s duties hereunder
and shall reimburse the Officer for all expenses incurred in connection therewith.

                                (c)           The Officer shall be entitled,
without loss of pay, to vacation time in accordance with the policies periodically established by
the Board for senior management officials of the Holding Company, which shall in no event be less
than four weeks in each calendar year. Except as provided in section 7(b), the Officer shall not
be entitled to receive any additional compensation from the Holding Company on account of her failure
to take a vacation, nor shall she be entitled to accumulate unused vacation from one calendar year
to the next except to the extent authorized by the Board for senior management officials of the Holding
Company.

	 


	                                Section 6.               Working Facilities and Expenses.


	 
	
                                The Officer’s principal place of employment shall be at the offices of the Holding Company in
Nassau County or Queens County, New York or at such other location upon which the Holding Company
and the Officer may mutually agree. The Holding Company shall provide the Officer, at her principal
place of employment, with a private office, stenographic services and other support services and
facilities consistent with her position with the Holding Company and necessary or appropriate in
connection with the performance of her duties under this Agreement. The Holding Company shall reimburse
the Officer for her ordinary and necessary business expenses, including, without limitation, travel
and entertainment expenses, incurred in connection with the performance of her duties under this
Agreement, upon presentation to the Holding Company of an itemized account of such expenses in such
form as the Holding Company may reasonably require.

	 


	                                Section 7.               Termination
with Holding Company Liability.


	 
	
                                (a)           In the event that the Officer’s
employment with the Bank and/or the Holding Company shall terminate during the Employment Period
on account of:

	 


	 	                                (i)            the Officer’s voluntary
  resignation from employment with the Bank and the Holding Company within one year following an event
  that constitutes “Good Reason,” which is defined as:

		 


	 	                                (A)          the failure of the Bank to elect or
  to reelect the Officer to serve as its Executive Vice President/Chief Operating Officer or such other 



	

  







	
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	 	position as the Officer consents to hold, or the failure of the Holding Company to elect or reelect
  the Officer to serve as its Executive Vice President/Chief Operating Officer or such other position
  as the Officer consents to hold;

	 	 

	 	                                (B)           the failure of the Bank or the
  Holding Company to cure a material adverse change made by it in the Officer’s functions, duties,
  or responsibilities in her position with the Bank or the Holding Company, respectively, within sixty
  days following written notice thereof from the Officer;

	 	 

	 	                                (C)           the failure of the Bank or the
  Holding Company to maintain the Officer’s principal place of employment at its offices in Nassau
  County or Queens County, New York or at such other location upon which the Bank or the Holding Company
  and the Officer may mutually agree;

	 	 

	 	                                (D)          the failure of the Board to extend the
  Employment Period within the times provided in section 2(b) or the failure of the Bank’s board
  of directors to extend the Employment Period under the Bank Employment Agreement within the times
  provided in section 2(b) of such Agreement; provided, however, that such failure shall not constitute
  Good Reason until the earlier of 30 days after any determination by the Board or the Bank’s
  board of directors that the Employment Period shall not be so extended or August 1 of such year; 

	 	 

	 	                                (E)           the failure of the Bank or the
  Holding Company to cure a material breach of the Bank Employment Agreement or this Agreement by the
  Bank or the Holding Company, respectively, within sixty days following written notice thereof from
  the Officer; or

	 	 

	 	                                (F)           after a Change of Control (as
  defined in section 10), the failure of any successor company to the Bank to assume the Bank Employment
  Agreement or of any successor company to the Holding Company to assume this Agreement. 

	 	 



	 	                                (ii)          the discharge of the Officer
  by the Bank or the Holding Company for any reason other than (A) for “Cause” as defined
  in section 8(b) of this Agreement or (B) the Officer’s death or “Disability” as defined
  in section 9(a) of this Agreement; or 

	 	 

	 	                                (iii)         the Officer’s voluntary resignation
  from employment with the Bank and the Holding Company for any reason within the sixty-day period
  commencing six months following a Change of Control, as defined in section 10;



	 
	
then the Holding Company shall provide the benefits and pay to the Officer as liquidated damages the
amounts provided for under section 7(b).

                                (b)           Upon the termination of the Officer’s
employment with the Bank and/or the Holding Company under circumstances described in section 7(a),
the Holding Company shall pay and provide to the Officer:



	

  







	
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	 	                                (i)            her earned but unpaid Current
  Salary as of the date of termination, plus an amount representing any accrued but unpaid vacation
  time and floating holidays;

		 
	 	                                (ii)           if the Officer’s termination
  of employment occurs after a Change of Control, a pro rata portion of her bonus for the year of termination,
  determined by multiplying the amount of the bonus earned by the Officer for the preceding calendar
  year by the number of full months of employment during the year of termination, and dividing by 12.
  If the Officer’s termination of employment occurs prior to a Change of Control, the Compensation
  Committee of the Bank or of the Holding Company may, in its sole discretion, award the Officer a
  bonus for the year of termination, in an amount determined by such Committee either at the time of
  termination of employment or at the time bonuses to active employees are awarded, which the Holding
  Company shall pay to the Officer promptly after it has been awarded;

		 
	 	                                (iii)          the benefits, if any, to which she
  is entitled as a former employee under the Bank’s and the Holding Company’s employee benefit
  plans and programs and compensation plans and programs;

		 
	 	                                (iv)          continued health and welfare benefits
  (including group life, disability, medical and dental benefits), in addition to that provided pursuant
  to section 7(b)(iii), to the extent necessary to provide coverage for the Officer for the Severance
  Period (as defined in section 7(c)). 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 and the Holding Company (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 Officer based on the highest annual rate of Current Salary achieved
  by the Officer during the Employment Period. If the Officer had dependent coverage in effect at the
  time of her termination of employment, she shall have the right to elect to continue such dependent
  coverage for the Severance Period. The benefits to be provided under this paragraph (iv) shall cease
  to the extent that substantially equivalent benefits are provided to the Officer (and/or her dependents)
  by a subsequent employer of the Officer;

		 
	 	                                (v)           if the Officer is age 55 or older
  at the end of the Severance Period, she shall be entitled to elect coverage for himself and her dependents
  under the Bank’s and the Holding Company’s retiree medical and retiree life insurance programs.
  Such coverage, if elected, shall commence upon the expiration of the Severance Period, without regard
  to whether the Officer commences her pension benefit at such time, and shall continue for the life
  of each of the Officer and her spouse and for so long as any other of her covered dependents remain
  eligible. The coverage and cost-sharing percentage of the Officer and her dependents under such programs
  shall be those in effect under such programs on the date of the Officer’s termination of employment
  with the Bank or the Holding Company, and shall not be adversely modified without the Officer’s
  written consent; and



	

  







	
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	 	                                (vi)          within thirty days following her termination of employment with the Bank or the Holding Company, a cash lump sum payment in an amount equal to
  the Current Salary and bonus that the Officer would have earned pursuant to sections 4(a) and
  4(b), respectively, if she had continued working for the Holding Company and the Bank for the Severance
  Period (basing such bonus on the highest bonus, if any, paid to the Officer by the Bank or the Holding
  Company under section 4(b) of the Bank Employment Agreement or this Agreement within the three-year
  period prior to the date of termination).



	 
	
The lump sum payable pursuant to clause (vi) of this section 7(b) is to be paid in lieu of
all other payments of Current Salary and bonus provided for under this Agreement relating to the
period following any such termination and shall be payable without proof of damages and without regard
to the Officer’s efforts, if any, to mitigate damages. The Holding Company and the Officer hereby
stipulate that the damages which may be incurred by the Officer 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 provided under this section 7(b) are reasonable under the circumstances
as a combination of liquidated damages and severance benefits. The Officer shall not be entitled
to any payment under this Agreement to make up for benefits that would have been earned under the
Bank’s Retirement Plan, 401(k) Savings Plan, and Supplemental Savings Incentive Plan (SSIP),
and the Flushing Financial Corporation (“Holding Company”) Stock-Based Profit Sharing Plan
had she continued working for the Bank for the Severance Period.


	 


	                                (c)           	For purposes of section 7, the
Severance Period means:
		 	 
		(i)	in the case of termination of employment prior to November 1, 2006, a period of 6 months;

			 
		(ii)	in the case of termination of employment on or after November 1, 2006, but prior to the second
  anniversary of this Agreement, a period of 12 months;

			 
		(iii)	in the case of termination of employment on or after the second anniversary of this Agreement, a period
  of 24 months; and

			 
		(iv)	notwithstanding clauses (i), (ii), and (iii) of this section 7(c), in the case of termination
  of employment after a Change of Control, a period of 24 months, without regard to the date of such
  termination of employment.



	 
	
                                (d)           Notwithstanding any contrary provision
in this section 7 or in section 8 or 9, to the extent necessary in order to avoid penalties under
Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”), payments scheduled
to be paid upon termination of employment shall instead be paid six (6) months after termination
of employment.



	

  







	
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	                                Section 8.               Termination
  for Cause or Voluntary Resignation Without Good Reason.



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

	 


		(i)	the discharge of the Officer by the Holding Company for Cause; or

		 	 
		(ii)	the Officer’s voluntary resignation from employment with the Holding Company for reasons other
  than those constituting a Good Reason;



	 
	
then the Holding Company shall have no further obligations under this Agreement, other than (A) the
payment to the Officer of her earned but unpaid Current Salary as of the date of the termination
of her employment; and (B) the provision of such other benefits, if any, to which she is entitled
as a former employee under the Bank’s and the Holding Company’s employee benefit plans
and programs and compensation plans and programs.

                                (b)           For purposes of this Agreement,
the term “Cause” means the Officer’s (i) willful failure to perform her duties
under this Agreement or under the Bank Employment Agreement and failure to cure such failure within
sixty days following written notice thereof from the Holding Company or the Bank, or (ii) intentional
engagement in dishonest conduct in connection with her performance of services for the Holding Company
or the Bank or conviction of a felony.

	 


	                                Section 9.               Disability or Death.


	 
	
                                (a)           The Officer’s employment
with the Holding Company may be terminated for “Disability” if the Officer shall become
disabled or incapacitated during the Employment Period to the extent that she has been unable to
perform the essential functions of her employment for 270 consecutive days, subject to the Officer’s
right to receive from the Holding Company following her termination due to Disability the following
percentages of her Current Salary under section 4 of this Agreement: 100% for the first
six months, 75% for the next six months and 60% thereafter for the remaining term of the Employment
Period (less in each case any benefits which may be payable to the Officer under the provisions of
disability insurance coverage in effect for Bank and/or Holding Company employees). 

                                (b)           In the event that the Officer’s
employment with the Holding Company shall terminate during the Employment Period on account of death,
the Holding Company shall promptly pay the Officer’s designated beneficiaries or, failing any
designation, her estate a cash lump sum payment equal to her earned but unpaid Current Salary.

                                (c)           In the event of the Officer’s
termination of employment on account of death or Disability prior to a Change of Control, the Compensation
Committee of the Bank or of the Holding Company may, in its sole discretion, award the Officer a
bonus for the year of termination, in an amount determined by such Committee either at the time of
termination of employment or at the time bonuses to active employees are awarded, in which case the
Holding 



	

  







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	Company shall pay such bonus to the Officer or, in the event of death, her designated beneficiaries
or estate, as the case may be, promptly after it is awarded. In the event of the Officer’s termination
of employment on account of death or Disability after a Change of Control, the Holding Company shall
promptly pay the Officer, or in the event of death, her designated beneficiaries or estate, as the
case may be, a pro rata portion of her bonus for the year of termination, determined by multiplying
the amount of the bonus earned by the Officer for the preceding calendar year by the number of full
months of employment during the year of termination, and dividing by 12.


	 


	                                Section 10.             Change of Control.


	 
	
                                For purposes of this Agreement, the term “Change of Control” means:

                                (a)           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;

                                (b)           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 or of any successor corporation shall consist of persons other than Current
Members (for these purposes, a “Current Member” shall mean any member of the Board of Directors
of the Bank or the Holding Company as of July 18, 2000 and any successor of a Current Member whose
nomination or election has been approved by a majority of the Current Members then on the Board of
Directors);

                                (c)           the acquisition of beneficial
ownership, directly or indirectly (as provided in Rule 13d-3 of 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

                                (d)           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.

	 


	                                Section 11.             Excise Tax Gross-up.


	 
	
                                In the event that the Officer becomes entitled to one or more payments (with a “payment”
including, without limitation, the vesting of an option or other non-cash benefit or property, whether
pursuant to the terms of this Agreement or any other plan, arrangement or agreement with the Bank
or the Holding Company or any affiliated company or from or pursuant to the terms of the Flushing
Financial Corporation Employee Benefit Trust) (the “Total Payments”), which are or become
subject to the tax imposed by Section 4999 of the Code (or any similar tax that may hereafter
be imposed) (the “Excise Tax”), the Holding Company shall pay to the Officer at the time
specified below an additional amount (the “Gross-up Payment”) (which 



	

  







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	shall include, without limitation, reimbursement for any penalties and interest that may accrue in
respect of such Excise Tax) such that the net amount retained by the Officer, after reduction for
any Excise Tax (including any penalties or interest thereon) on the Total Payments and any federal,
state and local income or employment tax and Excise Tax on the Gross-up Payment provided for by this
section 11, but before reduction for any federal, state or local income or employment tax on
the Total Payments, shall be equal to the sum of (a) the Total Payments, and (b) an amount
equal to the product of any deductions disallowed for federal, state or local income tax purposes
because of the inclusion of the Gross-up Payment in the Officer’s adjusted gross income multiplied
by the highest applicable marginal rate of federal, state or local income taxation, respectively,
for the calendar year in which the Gross-up Payment is to be made.

                                For purposes of determining whether any of the Total Payments will be subject to the Excise Tax and
the amount of such Excise Tax,

	 


	 	                                (i)            the Total Payments shall
  be treated as “parachute payments” within the meaning of Section 280G(b)(2) of the
  Code, and all “excess parachute payments” within the meaning of Section 280G(b)(1)
  of the Code shall be treated as subject to the Excise Tax, unless, and except to the extent that,
  in the written opinion of independent compensation consultants or auditors of nationally recognized
  standing selected by the Holding Company and reasonably acceptable to the Officer (“Independent
  Auditors”), the Total Payments (in whole or in part) do not constitute parachute payments, or
  such excess parachute payments (in whole or in part) represent reasonable compensation for services
  actually rendered within the meaning of Section 280G(b)(4) of the Code in excess of the base
  amount within the meaning of Section 280G(b)(3) of the Code or are otherwise not subject to the Excise Tax,

		 
	 	                                (ii)           the amount of the Total Payments
  which shall be treated as subject to the Excise Tax shall be equal to the lesser of (A) the
  total amount of the Total Payments or (B) the amount of excess parachute payments within the
  meaning of Section 280G(b)(1) of the Code (after applying clause (i) above), and

		 
	 	                                (iii)          the value of any non-cash benefits
  or any deferred payment or benefit shall be determined by the Holding Company’s Independent
  Auditors appointed pursuant to clause (i) above in accordance with the principles of Sections 280G(d)(3)
  and (4) of the Code.



	 
	
                                For purposes of determining the amount of the Gross-up Payment, the Officer shall be deemed (A) to
pay federal income taxes at the highest marginal rate of federal income taxation for the calendar
year in which the Gross-up Payment is to be made; (B) to pay any applicable state and local
income taxes at the highest marginal rate of taxation for the calendar year in which the Gross-up
Payment is to be made, net of the maximum reduction in federal income taxes which could be obtained
from deduction of such state and local taxes if paid in such year (determined without regard to limitations
on deductions based upon the amount of the Officer’s adjusted gross income); and (C) to
have otherwise allowable deductions for federal, state and local income tax purposes at least equal
to those disallowed because of the inclusion of the Gross-up Payment in the Officer’s adjusted
gross income. In the event that the Excise Tax is subsequently determined 



	

  







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to be less than the amount taken into account hereunder at the time the Gross-up Payment is made, the
Officer shall repay to the Holding Company at the time that the amount of such reduction in Excise
Tax is finally determined (but, if previously paid to the taxing authorities, not prior to the
time the amount of such reduction is refunded to the Officer or otherwise realized as a benefit by
the Officer) the portion of the Gross-up Payment that would not have been paid if such Excise Tax
had been applied in initially calculating the Gross-up Payment, plus interest on the amount of such
repayment at the rate provided in Section 1274(b)(2)(B) of the Code. In the event that the Excise
Tax is determined to exceed the amount taken into account hereunder at the time the Gross-up Payment
is made (including by reason of any payment the existence or amount of which cannot be determined
at the time of the Gross-up Payment), the Holding Company shall make an additional Gross-up Payment
in respect of such excess (plus any interest and penalties payable with respect to such excess) at
the time that the amount of such excess is finally determined.

                                The Gross-up Payment provided for above shall be paid on the thirtieth day (or such earlier date as
the Excise Tax becomes due and payable to the taxing authorities) after it has been determined that
the Total Payments (or any portion thereof) are subject to the Excise Tax; provided, however, that if the amount of such Gross-up Payment or portion thereof cannot be finally determined on or
before such day, the Holding Company shall pay to the Officer on such day an estimate, as determined
by the Holding Company’s Independent Auditors appointed pursuant to clause (i) above, of
the minimum amount of such payments and shall pay the remainder of such payments (together with interest
at the rate provided in Section 1274(b)(2)(B) of the Code), as soon as the amount thereof can
be determined. In the event that the amount of the estimated payments exceeds the amount subsequently
determined to have been due, such excess (amount together with interest at the rate provided in Section 1274(b)(2)(B)
of the Code), shall be repaid by the Officer to the Holding Company within five (5) days after notice
from the Holding Company of such determination. If more than one Gross-up Payment is made, the amount
of each Gross-up Payment shall be computed so as not to duplicate any prior Gross-up Payment. The
Holding Company shall have the right to control all proceedings with the Internal Revenue Service
that may arise in connection with the determination and assessment of any Excise Tax and, at its
sole option, the Holding Company may pursue or forego any and all administrative appeals, proceedings,
hearings and conferences with any taxing authority in respect of such Excise Tax (including any interest
or penalties thereon); provided, however, that the Holding Company’s control over any such proceedings shall be limited to issues with
respect to which a Gross-up Payment would be payable hereunder and the Officer shall be entitled
to settle or contest any other issue raised by the Internal Revenue Service or any other taxing authority.
The Officer shall cooperate with the Holding Company in any proceedings relating to the determination
and assessment of any Excise Tax and shall not take any position or action that would materially
increase the amount of any Gross-up Payment hereunder.

                                Notwithstanding any contrary provision in this section 11 to the extent necessary in order to avoid
penalties under Section 409A of the Code, payments scheduled to be paid upon termination of employment
shall instead be paid six (6) months after termination of employment.



	

  







	
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	                                Section 12.             No Effect on Employee
Benefit Plans or Compensation Programs


	 
	
                                Except as expressly provided in this Agreement, the termination of the Officer’s employment during
the term of this Agreement or thereafter, whether by the Holding Company or by the Officer, shall
have no effect on the rights and obligations of the parties hereto under the Holding Company’s
employee benefit plans or programs or compensation plans or programs (whether or not employee benefit
plans or programs) that the Holding Company may maintain from time to time.

	 


	                                Section 13.             Successors and Assigns.


	 
	
                                This Agreement will inure to the benefit of and be binding upon the Officer, her legal representatives
and estate or intestate distributees, and the Holding 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 Holding Company may be sold or
otherwise transferred.

	 


	                                Section 14.             Notices.


	 
	
                                Any communication to a party required or permitted 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 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 Officer:

	 


	 	Maria A. Grasso
	 	<address on file>


	 
	 
	 
	
                                If to the Holding Company:

	 


	 	Flushing Financial Corporation
	 	1979 Marcus Avenue  Suite E140
	 	Lake Success, New York 11042
	 	Attention:  Corporate Secretary
		 


	                                Section 15.             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.



	

  







	
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	                                Section 16.             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 17.             Counterparts.


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

	 


	                                Section 18.             Governing Law.


	 
	
                                This Agreement shall be governed by and construed and enforced in accordance with the laws of the State
of New York, without reference to conflicts of law principles.

	 


	                                Section 19.             Headings.


	 
	
                                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 20.             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 relating
to the subject matter hereof, other than the Bank Employment Agreement. No modifications of this
Agreement shall be valid unless made in writing and signed by the parties hereto.

	 


	                                Section 21.             Funding.


	 
	
                                The Holding Company may elect in its sole discretion to fund all or part of its obligations to the
Officer under this Agreement; provided, however, that should it elect to do so, all assets acquired
by the Holding Company to fund its obligations shall be part of the general assets of the Holding
Company and shall be subject to all claims of the Holding Company’s creditors.

	 


	                                Section 22.             Guarantee.


	 
	
                                The Holding Company guarantees the payment by the Bank of any and all benefits and compensation to
which the Officer is entitled under the Bank Employment Agreement.



	

  







	
13

	 


	                                Section 23.             Non-duplication.


	 
	
                                In the event that the Officer shall perform services for the Bank or any other direct or indirect subsidiary
of the Holding Company, any compensation or benefits provided to the Officer by such other employer
shall be applied to offset the obligations of the Holding Company hereunder, it being intended that
this Agreement set forth the aggregate compensation and benefits payable to the Officer for all services
to the Holding Company and all of its direct or indirect subsidiaries. The Officer hereby acknowledges
that if any payment made or benefit provided by the Holding Company under this Agreement is also
required to be made or provided by the Bank under the Bank Employment Agreement, such payment or
benefit by the Holding Company under this Agreement shall offset the payment required to be made
or benefit required to be provided by the Bank under the Bank Employment Agreement.

	 


	                                Section 24.             Required Regulatory Provisions.


	 
	
                                Notwithstanding any other provision of this Agreement to the contrary, any payments made to the Officer
pursuant to this Agreement or otherwise are subject to and conditioned upon their compliance with
12 U.S.C. section 1828(k) and any regulations promulgated thereunder.

                                IN WITNESS WHEREOF, the parties have signed this Agreement as of the day and year first above written.

	 
	 


	 	FLUSHING FINANCIAL CORPORATION
	 	 
	 	 
	 	By:/s/John R. Buran
	 	Name:  John R. Buran
	 	Title:    President and CEO
	 	 
	 	 
	 	/s/Maria A.Grasso
	 	Maria A. Grasso