Document:

EXHIBIT 10.4

                         FLUSHING FINANCIAL CORPORATION
                    AMENDED AND RESTATED EMPLOYMENT AGREEMENT

     This AMENDED AND RESTATED  EMPLOYMENT  AGREEMENT  ("Agreement") is made and
entered  into as of the 28th day of  November,  2000,  by and  between  Flushing
Financial  Corporation,  a Delaware  corporation having its executive offices at
144-51 Northern Boulevard, Flushing, New York 11354 (the "Holding Company"), and
Michael J. Hegarty, residing at [ADDRESS ON FILE] ("Officer").

                                   WITNESSETH:

     WHEREAS,  the Holding  Company and the Officer are parties to an Employment
Agreement dated as of November 21, 1995 as amended as of June 18, 1996, July 16,
1996, and November 26, 1996; and

     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 continued  availability
of his 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 amended
and restated  employment  agreement with the Officer on the terms and conditions
set forth herein; and

     WHEREAS,  the  Officer  is willing to make his  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 Amended and Restated Employment  Agreement shall be
for a term commencing on November 28, 2000 and ending on November 21, 2003, plus
such extensions as are provided pursuant to section 2(b) of this Agreement.

     (b) On or as of July 1, 2001,  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 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.
Notwithstanding the foregoing provisions of this Section 2(b), there shall be no
extension of the term of this  Agreement as of July 1, 2003 and July 1, 2004, so
as to reduce the remaining term of the Agreement,  and annual  extensions  shall
begin again as of July 1, 2005.

<PAGE>

     (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  President  and Chief  Executive  Officer of the  Holding
Company  and shall be a member of the Board  with all of the  powers  and duties
incident  to such  positions  under  law and under the  by-laws  of the  Holding
Company.  During the Employment  Period,  the Officer shall: (a) devote his 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 his 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;  provided,  however,  that the  Officer  shall be
permitted  to  devote a  reasonable  amount of time to  service  on the Board of
Directors of EDO  Corporation,  so long as such service shall not interfere with
his obligations under this Agreement. The Officer shall also serve as an officer
and  director  of  Flushing  Savings  Bank,  FSB (the  "Bank")  pursuant  to the
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
his 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)  $420,000 or (ii) such higher  annual rate as may be
prescribed  by or under the authority of the Board (the  "Current  Salary").  In
addition,  the Holding Company shall credit to the Officer 10% of the greater of
the amounts  described in the  preceding  clauses (i) and (ii) to be deferred in
accordance  with section  5(b).  The Officer  will undergo an annual  salary and
performance  review on or about  June 30 of each year  commencing  in 2001.  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.

     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) If and to the  extent  that the  Bank has not on or prior to such  date
credited such amounts,  as of the last day of each regular payroll period during
the Employment Period, the Holding Company shall credit to a bookkeeping account
maintained by the Holding  Company (such Holding Company account and the account
established  by the Bank under  section 5(b) of the Bank  Employment  Agreement,
collectively,  the "Deferred  Compensation  Account") 10% of the Current  Salary
payable to the Officer  during such period  pursuant to section 4. The  deferred
compensation  provided under this section 5(b) shall be deemed to be invested in
one or more of the investment  funds offered by Retirement  System Fund, Inc. or
in such other funds as may be specified by the Holding

<PAGE>

Company with the consent of the Officer  ("Investment  Funds"),  in multiples of
10%, as directed by the Officer from time to time no more  frequently  than once
each calendar  quarter.  The Officer's  Deferred  Compensation  Account shall be
credited at least  quarterly with the earnings (or losses) on such  investments.
The amount credited to the Officer's  Deferred  Compensation  Account (including
earnings or losses)  shall be paid by the Holding  Company to the Officer (or in
the event of his death to his designated beneficiaries or, in the absence of any
designation,  his  estate)  in a cash  lump sum  promptly  after  the  Officer's
termination of employment  with the Holding  Company or the Bank  (whichever may
occur first) for any reason.  For the purpose of determining  the amount of such
payment,  the value of the account  balance  shall be  determined  ten (10) days
prior  to  the  payment  date.  The  Officer   acknowledges  that  the  deferred
compensation  provided  for in this section 5(b) shall not be taken into account
for purposes of computing  any pension or other  retirement  benefit to which he
may be entitled under the Holding Company's benefit plans or programs.

     (c)  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.

     (d) 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 his failure to take a  vacation,  nor shall he 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.

     (e) On May 27 of each of the years 1996  through  2000,  either the Bank or
the Holding Company has credited to a bookkeeping account maintained by it (such
Holding  Company  account and the account  established by the Bank under section
5(e)  of  the  Bank  Employment  Agreement,   collectively,   the  "Supplemental
Retirement Account") a supplemental  retirement benefit of $30,000. Prior to May
27, 2000, any interest or earnings  obtained from investment of the supplemental
retirement  benefit provided under this section 5(e) shall accrue to the Holding
Company.  Following May 27, 2000, the supplemental  retirement  benefit shall be
deemed to be invested in one or more of the  Investment  Funds,  in multiples of
10%, as directed by the Officer from time to time no more  frequently  than once
each calendar quarter, and the Officer's  Supplemental  Retirement Account shall
be  credited  at  least   quarterly  with  the  earnings  (or  losses)  on  such
investments.  Upon the  Officer's  termination  of  employment  with the Holding
Company  or the Bank  (whichever  may occur  first) for any  reason,  the amount
credited to the Officer's Supplemental Retirement Account (including earnings or
losses  credited  as  described  above)  shall be  promptly  paid by the Holding
Company  to the  Officer  (or in  the  event  of  his  death  to his  designated
beneficiaries or, in the absence of any designation,  his estate) in a cash lump
sum. For the purpose of determining the amount of such payment, the value of the
account balance shall be determined ten (10) days prior to payment date.

     (f) If and to the  extent  that the  Bank has not on or prior to such  date
credited  such  amount,  on May 27 of each of the years 2001 through  2011,  the
Holding Company shall credit to a bookkeeping  account maintained by the Holding
Company (such Holding  Company  account and the account  established by the Bank
under  section  5(f)  of  the  Bank  Employment  Agreement,   collectively,  the
"Additional  SERP  Account") an additional  supplemental  retirement  benefit of
$50,000.  Prior to May 27, 2011,  any interest or earnings (or losses)  obtained
from investment of the additional supplemental retirement benefit provided under
this section 5(f) shall accrue to the Holding  Company and shall not be credited
to the Officer's  Additional  SERP  Account,  but may be utilized by the Holding
Company to discharge its obligations under this section 5(f).  Following May 27,
2011,  the  additional  supplemental  retirement  benefit  shall be deemed to be
invested  in one or  more of the  Investment  Funds,  in  multiples  of 10%,  as
directed  by the  Officer  from time to time no more  frequently  than once each
calendar quarter, and the Officer's Additional SERP Account shall be credited at
least  quarterly  with the  earnings (or losses) on such  investments.  Upon the
Officer's  termination  of  employment  with  the  Holding  Company  or the Bank
(whichever  may  occur  first) by reason  of his  death,  or upon his  voluntary
resignation without Good Reason, or upon his termination for "Cause" (as defined
in section 8(b) of this  Agreement),  the amount then  credited to the Officer's
Additional SERP Account (disregarding earnings and losses prior to May 27, 2011)
shall be promptly paid by the Holding  Company to the Officer (or in the case of
his  death,  to  his  designated   beneficiaries  or,  in  the  absence  of  any
designation,  to his estate) in a cash lump sum, and  thereafter  no  additional
amounts shall be credited to the  Officer's  Additional  SERP

<PAGE>

Account.  Upon the Officer's  termination of employment with the Holding Company
or the Bank  (whichever  may occur first) by reason of  retirement  (which shall
mean termination of employment at a time when the Officer is eligible to receive
an Early,  Normal, or Postponed  Retirement  Benefit under the Bank's Retirement
Plan), Disability (as defined in section 9(a)), voluntary resignation within one
year  following  an event that  constitutes  Good  Reason (as defined in section
7(a)(i)),  or  discharge  without  "Cause",  or in the  event  of the  Officer's
termination  of  employment  for any reason  following a Change of Control,  the
Holding  Company shall  promptly pay to the Officer a cash lump sum equal to (i)
$500,000,  without  regard to the amount then  credited to his  Additional  SERP
Account, or (ii) the amount then credited to his Additional SERP Account if such
amount is greater than $500,000 and  termination of employment  occurs after May
27, 2011.  Upon such  payment,  no further  amount  shall be payable  under this
section 5(f).

     (g) If and to the extent that the Bank has not funded such  benefits  under
the Bank Employment Agreement, the Holding Company shall fund in a "rabbi trust"
on an ongoing and current  basis (i) the deferred  compensation  provided  under
section 5(b) hereof,  (ii) the  supplemental  retirement  benefit provided under
section 5(e) hereof,  and (iii) the additional  supplemental  retirement benefit
provided  under section 5(f) hereof.  The Trustee of such "rabbi trust" shall be
an independent bank or trust company.

     (h) If any  amounts  deferred  pursuant  to this  Agreement  are found in a
"determination"  (within the meaning of Section 1313(a) of the Internal  Revenue
Code of 1986, as amended) to have been includible in gross income by the Officer
prior to payment of such amounts  under this  Agreement,  such amounts  shall be
immediately  paid to the Officer,  notwithstanding  any other  provision of this
Agreement providing for deferral.

     Section 6. Working Facilities and Expenses.

     The  Officer's  principal  place of  employment  shall be at the  executive
offices  of the  Holding  Company  in 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 his principal place of employment,
with a private  office,  stenographic  services and other  support  services and
facilities  consistent  with his position with the Holding Company and necessary
or  appropriate  in  connection  with the  performance  of his duties under this
Agreement.  The Holding Company shall reimburse the Officer for his ordinary and
necessary  business  expenses,   including,   without  limitation,   travel  and
entertainment  expenses,  incurred in  connection  with the  performance  of his
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  President  and  Chief  Executive
                    Officer  and a member  of its  board of  directors,  or such
                    other  position  as the  Officer  consents  to hold,  or the
                    failure  of the  Holding  Company  to elect or  reelect  the
                    Officer  to  serve  as its  President  and  Chief  Executive
                    Officer and a member of its Board, 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 his position with
                    the Bank or the Holding Company, respectively,  within sixty
                    days following written notice thereof from the Officer;

<PAGE>

                         (C) the failure of the Bank or the  Holding  Company to
                    maintain the Officer's  principal place of employment at its
                    executive  offices  in  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,  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:

                    (i) his 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 his 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 he 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;

<PAGE>

                    (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/or 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 his termination of employment, he 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  his  dependents)  by  a
               subsequent employer of the Officer;

                    (v) if the  Officer  is age 55 or  older  at the  end of the
               Severance  Period,  he shall be  entitled to elect  coverage  for
               himself  and his  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 his pension  benefit at such time,  and shall  continue
               for the life of each of the  Officer  and his  spouse  and for so
               long as any of his other covered dependents remain eligible.  The
               coverage  and  cost-sharing  percentage  of the  Officer  and his
               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;

                    (vi)  within  thirty  days  following  his   termination  of
               employment with the Bank or the Holding Company,  a cash lump sum
               payment in an amount  equal to the  Current  Salary,  bonus,  and
               deferred compensation that the Officer would have earned pursuant
               to  sections  4(a),  4(b),  and  5(b),  respectively,  if he  had
               continued  working for the  Holding  Company and the Bank for the
               Severance Period. For purposes of this paragraph,  (A) the amount
               of bonus shall be 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  and (B) the  amount of
               deferred compensation shall be determined without any earnings on
               the  additional  deferred   compensation  that  would  have  been
               credited  under  section 5(b) during the  Severance  Period.  The
               calculation of the amount payable pursuant to this clause (vi) is
               set forth on Schedule A hereto; and

                    (vii)  payment of the deferred  compensation  to which he is
               entitled  pursuant to section 5(b), the  supplemental  retirement
               benefit to which he is entitled pursuant to section 5(e), and the
               additional   supplemental  retirement  benefit  to  which  he  is
               entitled  pursuant to Section 5(f) (in each case after  crediting
               to his Accounts  established under such sections any amount which
               was  required  to be credited  to such  Account  pursuant to such
               sections as of the date of his  termination of employment but was
               not so credited).

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,   bonus,  and  deferred
compensation  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 Holding
Company's

<PAGE>

Stock-Based  Profit  Sharing Plan had he continued  working for the Bank and the
Holding Company for the Severance Period.

     (c) For purposes of section 7, the Severance Period means:

                    (i) in the case of  termination  of employment  prior to May
               27, 2004, a period of 36 months;

                    (ii) in the case of  termination  of  employment on or after
               May 27,  2004,  but prior to a Change of Control,  a period of 12
               months; and

                    (iii)  in the  case of  termination  of  employment  after a
               Change of Control, a period of 36 months.

     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 his  earned but unpaid  Current
Salary as of the date of the termination of his employment; (B) the provision of
such other benefits,  if any, to which he 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;   and  (C)  the  payment  of  the  deferred
compensation to which he is entitled  pursuant to section 5(b), the supplemental
retirement  benefit to which he is entitled  pursuant to section  5(e),  and the
additional  supplemental  retirement benefit to which he is entitled pursuant to
Section 5(f) (in each case after  crediting to his  Accounts  established  under
such  sections  any amount  which was  required to be  credited to such  Account
pursuant to such sections as of the date of his  termination  of employment  but
was not so credited).

     (b) For purposes of this  Agreement,  the term "Cause"  means the Officer's
(i) willful failure to perform his 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 his 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 he has been unable to perform the essential
functions of his  employment  for 270  consecutive  days.  Upon a termination of
employment  for  "Disability",  the Holding  Company shall pay to the Officer in
cash the following  percentages of his Current Salary and deferred  compensation
under  sections 4 and 5(b) of this  Agreement,  until the end of the  Employment
Period:  100% for the  first six  months,  75% for the next six  months  and 60%
thereafter  for the remaining  term, if any, 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).  In addition the Officer  shall receive a cash lump sum equal to the
amount of the Officer's Supplemental  Retirement Account established pursuant to
section 5(e),  and payment of his Deferred  Compensation  Account as provided in
section 5(b) and the additional  supplemental  retirement benefit to which he is
entitled  pursuant to section 5(f) (in each case after

<PAGE>

crediting to the Accounts established under such sections any amounts which were
required to be credited to such Accounts  pursuant to sections  5(b),  5(e), and
5(f) as of the date of his termination of employment but were not so credited).

     (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,  his  estate a cash lump sum  payment  equal to his earned but
unpaid  Current  Salary plus the amount of the Officer's  Deferred  Compensation
Account,  Supplemental  Retirement  Account,  and  Additional  SERP  Account  as
provided in sections 5(b),  5(e), and 5(f) (after crediting to such Accounts any
amounts which were required to be credited to such Accounts pursuant to sections
5(b), 5(e), and 5(f) as of the date of his death but were not so credited).

     (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  Company shall pay
such  bonus  to  the  Officer  or,  in  the  event  of  death,   his  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, his designated  beneficiaries  or estate,  as
the case may be, a pro rata  portion  of his 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 Internal Revenue Code of 1986,

<PAGE>

as amended (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 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 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.

<PAGE>

     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 shall
constitute a loan by the Holding  Company to the  Officer,  payable on the fifth
day after  demand by the Holding  Company  (together  with  interest at the rate
provided  in  Section  1274(b)(2)(B)  of the  Code).  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.

     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, his 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:

               Michael J. Hegarty
               [ADDRESS ON FILE]

<PAGE>

          If to the Holding Company:

               Flushing Financial Corporation
               144-51 Northern Boulevard
               Flushing, New York 11354
               Attention: 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.

     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, including the Employment Agreement dated as of November 21, 1995, by and
between the  Holding  Company and the  Officer,  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 has agreed to fund certain of its  obligations  to the
Officer under this Agreement in a "rabbi  trust";  provided,  however,  that all
assets used 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.

<PAGE>

     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/ GERARD P. TULLY, SR.
                                            ---------------------------------
                                         Name: Gerard P. Tully, Sr
                                         Title: Chairman

                                         /S/ MICHAEL J. HEGARTY
                                         ------------------------------------
                                         Michael J. Hegarty

<PAGE>

                                   Schedule A

       Calculation of Amount Payable pursuant to Section 7(b), Clause (vi)
               Assuming Termination of Employment December 1, 2000

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

     (1)   Current Salary is greater of
              (a)  $420,000
              (b)  annual salary in effect
                                                                $  420,000

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

     (2)   Bonus is greatest of bonus paid in last 3 years
           before termination
              (a)  $140,000        (1999 bonus)
              (b)    90,000        (1998 bonus)
              (c)    78,000        (1997 bonus)
                                                                $  140,000

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

     (3)   Deferred Compensation
              10% of amount in Step (1)                         $   42,000

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

     (4)   Severance Period
              36 months = 3 years

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

     (5)   Amount Payable
              3 times (1)+(2)+(3)                               $1,806,000

     ----------------------------------------------------------------------EXHIBIT 10.5

                           FLUSHING SAVINGS BANK, FSB
                    AMENDED AND RESTATED EMPLOYMENT AGREEMENT

     This AMENDED AND RESTATED  EMPLOYMENT  AGREEMENT  ("Agreement") is made and
entered  into as of the 28th day of  November,  2000,  by and  between  Flushing
Savings Bank,  FSB, a savings bank  organized and existing under Federal law and
having its executive offices at 144-51 Northern  Boulevard,  Flushing,  New York
11354 (the  "Bank"),  and  Michael J.  Hegarty,  residing  at  [ADDRESS ON FILE]
("Officer").

                                   WITNESSETH:

     WHEREAS,  the Bank and the Officer are parties to an  Employment  Agreement
dated as of November  21, 1995 and amended as of June 18, 1996 and  November 26,
1996; and

     WHEREAS,  the Bank considers the availability of the Officer's  services to
be important to the successful management and conduct of the Bank's business and
desires to secure for itself the continued availability of his services; and

     WHEREAS,  for  purposes of securing  for the Bank the  Officer's  continued
services, the Board of Directors of the Bank ("Board") has authorized the proper
officers of the Bank to enter into an amended and restated employment  agreement
with the Officer on the terms and conditions set forth herein; and

     WHEREAS,  the Officer is willing to make his services available to the Bank
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 Bank and the Officer hereby agree as
follows:

     Section 1. Employment.

     The Bank 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 Amended and Restated Employment  Agreement shall be
for a term commencing on November 28, 2000 and ending on November 21, 2003, plus
such extensions as are provided pursuant to section 2(b) of this Agreement.

     (b) On or as of July 1, 2001,  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  shall not have notified the Bank 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 Bank 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.  Notwithstanding  the  foregoing
provisions of this Section 2(b), there shall be no extension of the term of this
Agreement  as of July 1, 2003 and July 1, 2004,  so as to reduce  the  remaining
term of the  Agreement,  and annual  extensions  shall begin again as of July 1,
2005.

<PAGE>

     (c) Upon the  termination  of the Officer's  employment  with the Bank, 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 President and Chief Executive Officer of the Bank and shall
be a member of the Board  with all of the powers  and  duties  incident  to such
positions  under law and under the  by-laws of the Bank.  During the  Employment
Period,  the Officer  shall:  (a) devote his 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 Bank and use
his best efforts to advance the Bank's interests,  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;  provided,  however,  that the  Officer  shall be  permitted  to devote a
reasonable  amount  of  time  to  service  on  the  Board  of  Directors  of EDO
Corporation,  so long as such service shall not interfere  with his  obligations
under this  Agreement.  The Officer shall have such authority as is necessary or
appropriate to carry out his duties under this Agreement.

     Section 4. Compensation.

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

     (a) The Bank shall pay to the  Officer a salary at an annual  rate equal to
the greater of (i) $420,000 or (ii) such higher annual rate as may be prescribed
by or under the authority of the Board (the "Current Salary"). In addition,  the
Bank shall credit to the Officer 10% of the greater of the amounts  described in
the  preceding  clauses (i) and (ii) to be deferred in  accordance  with section
5(b).  The Officer will undergo an annual  salary and  performance  review on or
about June 30 of each year  commencing in 2001. The Current Salary payable under
this section 4 shall be paid in approximately  equal  installments in accordance
with the Bank's customary payroll practices.

     (b) The  Officer  shall  be  eligible  to  participate  in any  bonus  plan
maintained by the Bank for its officers and employees.

     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 Bank and be
entitled  to  participate  in and  receive  benefits  under the Bank'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 Bank 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
Bank's customary practices.

     (b) On the last day of each regular  payroll  period during the  Employment
Period,  the Bank shall credit to a bookkeeping  account  maintained by the Bank
(the "Deferred  Compensation  Account") 10% of the Current Salary payable to the
Officer  during such period  pursuant  to section 4. The  deferred  compensation
provided  under this  section 5(b) shall be deemed to be invested in one or more
of the investment funds offered by Retirement System Fund, Inc. or in such other
funds  as  may  be  specified  by the  Bank  with  the  consent  of the  Officer
("Investment  Funds") in  multiples of 10%, as directed by the Officer from time
to time no more  frequently  than  once each  calendar  quarter.  The  Officer's
Deferred  Compensation  Account  shall be credited at least  quarterly  with the
earnings (or losses) on such  investments.  The amount credited to the Officer's
Deferred  Compensation  Account (including  earnings or losses) shall be paid by
the  Bank  to the  Officer  (or in the  event  of his  death  to his  designated
beneficiaries or, in the absence of any designation,  his estate) in a cash lump
sum promptly after the Officer's termination of employment with the Bank for any
reason. For the purpose of determining the amount of such payment,  the value of
the account balance shall be determined ten (10) days prior to the payment date.
The Officer  acknowledges  that the deferred  compensation  provided for in this
section 5(b) shall not be taken into account for

<PAGE>

purposes of computing any pension or other retirement benefit to which he may be
entitled under the Bank's benefit plans or programs.

     (c) The Bank 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.

     (d) 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  Bank,  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 Bank on
account  of his  failure  to  take a  vacation,  nor  shall  he 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 Bank.

     (e) On May 27 of each of the years 1996 through 2000, the Bank has credited
to a  bookkeeping  account  maintained  by the  Bank  ("Supplemental  Retirement
Account") a supplemental  retirement benefit of $30,000.  Prior to May 27, 2000,
any interest or earnings obtained from investment of the supplemental retirement
benefit provided under this section 5(e) shall accrue to the Bank. Following May
27, 2000, the supplemental  retirement benefit shall be deemed to be invested in
one or more of the  Investment  Funds in  multiples  of 10%,  as directed by the
Officer from time to time no more  frequently  than once each calendar  quarter,
and the  Officer's  Supplemental  Retirement  Account shall be credited at least
quarterly with the earnings (or losses) on such investments.  Upon the Officer's
termination of employment  with the Bank for any reason,  the amount credited to
the Officer's  Supplemental  Retirement  Account  (including  earnings or losses
credited as described above) shall be paid by the Bank to the Officer (or in the
event of his death to his  designated  beneficiaries  or, in the  absence of any
designation,  his estate) in a cash lump sum. For the purpose of determining the
amount of such payment, the value of the account balance shall be determined ten
(10) days prior to the payment date.

     (f) On May 27 of each of the years 2001 through 2011, the Bank shall credit
to a bookkeeping  account maintained by the Bank (the "Additional SERP Account")
an additional supplemental retirement benefit of $50,000. Prior to May 27, 2011,
any interest or earnings (or losses)  obtained from investment of the additional
supplemental retirement benefit provided under this section 5(f) shall accrue to
the Bank and shall not be credited to the Officer's Additional SERP Account, but
may be utilized by the Bank to  discharge  its  obligations  under this  section
5(f).  Following May 27, 2011, the additional  supplemental  retirement  benefit
shall be  deemed  to be  invested  in one or more of the  Investment  Funds,  in
multiples  of  10%,  as  directed  by the  Officer  from  time  to  time no more
frequently than once each calendar  quarter,  and the Officer's  Additional SERP
Account  shall be credited at least  quarterly  with the earnings (or losses) on
such investments.  Upon the Officer's termination of employment with the Bank by
reason of his death, or upon his voluntary  resignation  without Good Reason, or
upon his termination for "Cause" (as defined in section 8(b) of this Agreement),
the amount then credited to the Officer's Additional SERP Account  (disregarding
earnings and losses prior to May 27, 2011) shall be promptly paid by the Bank to
the Officer (or in the case of his death, to his designated beneficiaries or, in
the  absence  of  any  designation,  to his  estate)  in a cash  lump  sum,  and
thereafter no additional  amounts shall be credited to the Officer's  Additional
SERP Account.  Upon the  Officer's  termination  of employment  with the Bank by
reason of retirement  (which shall mean termination of employment at a time when
the Officer is eligible to receive an Early,  Normal,  or  Postponed  Retirement
Benefit under the Bank's  Retirement  Plan),  Disability  (as defined in section
9(a)), voluntary resignation within one year following an event that constitutes
Good Reason (as defined in section 7(a)(i)), or discharge without "Cause", or in
the event of the Officer's  termination of employment for any reason following a
Change of Control,  the Bank shall  promptly  pay to the Officer a cash lump sum
equal to (i)  $500,000,  without  regard  to the  amount  then  credited  to his
Additional SERP Account, or (ii) the amount then credited to his Additional SERP
Account if such amount is greater than  $500,000 and  termination  of employment
occurs after May 27, 2011. Upon such payment, no further amount shall be payable
under this section 5(f).

     (g) The Bank shall fund in a "rabbi  trust" on an ongoing and current basis
(i) the deferred  compensation  provided  under  section  5(b) hereof,  (ii) the
supplemental  retirement  benefit provided under section 5(e) hereof,  (iii) the
additional  supplemental  retirement benefit provided under section 5(f) hereof,
and  (iv)  the  amount  credited  to the  Officer's  account  under  the  Bank's
Supplemental  Savings Incentive Plan. The Trustee of such "rabbi trust" shall be
an independent bank or trust company.

<PAGE>

     (h) If any  amounts  deferred  pursuant  to this  Agreement  are found in a
"determination"  (within the meaning of Section 1313(a) of the Internal  Revenue
Code of 1986, as amended) to have been includible in gross income by the Officer
prior to payment of such amounts  under this  Agreement,  such amounts  shall be
immediately  paid to the Officer,  notwithstanding  any other  provision of this
Agreement providing for deferral.

     Section 6. Working Facilities and Expenses.

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

     Section 7. Termination with Bank Liability.

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

                    (i) the Officer's voluntary resignation from employment with
               the Bank  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  President  and  Chief  Executive
                    Officer  and a member  of its  Board of  Directors,  or such
                    other position as the Officer consents to hold;

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

                         (C) the failure of the Bank to maintain  the  Officer's
                    principal  place of employment  at the executive  offices of
                    the  Bank in  Queens  County,  New  York  or at  such  other
                    location  upon which the Bank 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);  provided,
                    however,  that such failure shall not constitute Good Reason
                    until the earlier of 30 days after any  determination by the
                    Board that the Employment Period shall not be so extended or
                    August 1 of such year;

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

                         (F)  after a Change  of  Control,  the  failure  of any
                    successor company to the Bank to assume this Agreement.

                    (ii) the discharge of the Officer by the Bank for any reason
               other than (A) for "Cause" as defined in section  8(b) or (B) the
               Officer's death or "Disability" as defined in section 9(a); or

<PAGE>

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

then the Bank 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 under
circumstances  described in section 7(a),  the Bank shall pay and provide to the
Officer:

                    (i) his 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 his 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  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 Bank shall pay to the Officer  promptly after
               it has been awarded;

                    (iii) the  benefits,  if any,  to which he is  entitled as a
               former  employee  under the  Bank'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 (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 his  termination of employment,
               he 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 his dependents) by a subsequent employer of the Officer;

                    (v) if the  Officer  is age 55 or  older  at the  end of the
               Severance  Period,  he shall be  entitled to elect  coverage  for
               himself and his dependents  under the Bank'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  his pension  benefit at
               such time, and shall continue for the life of each of the Officer
               and  his  spouse  and for so  long  as any of his  other  covered
               dependents,   remain  eligible.  The  coverage  and  cost-sharing
               percentage of the Officer and his 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, and shall not
               be adversely modified without the Officer's written consent; and

                    (vi)  within  thirty  days  following  his   termination  of
               employment  with the Bank,  a cash lump sum  payment in an amount
               equal to the Current Salary, bonus, and

<PAGE>

               deferred compensation that the Officer would have earned pursuant
               to  sections  4(a),  4(b),  and  5(b),  respectively,  if he  had
               continued  working  for the Bank for the  Severance  Period.  For
               purposes of this paragraph,  (A) the amount of bonus shall be the
               highest  bonus,  if any,  paid to the  Officer  by the Bank under
               section  4(b) within the  three-year  period prior to the date of
               termination, and (B) the amount of deferred compensation shall be
               determined  without  any  earnings  on  the  additional  deferred
               compensation  that would have been  credited  under  section 5(b)
               during  the  Severance  Period.  The  calculation  of the  amount
               payable  pursuant  to this clause (vi) is set forth on Schedule A
               hereto; and

                    (vii)  payment of the deferred  compensation  to which he is
               entitled  pursuant to section 5(b), the  supplemental  retirement
               benefit to which he is entitled pursuant to section 5(e), and the
               additional   supplemental  retirement  benefit  to  which  he  is
               entitled  pursuant to Section 5(f) (in each case after  crediting
               to his Accounts  established under such sections any amount which
               was  required  to be credited  to such  Account  pursuant to such
               sections as of the date of his  termination of employment but was
               not so credited).

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,   bonus,  and  deferred
compensation  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 Bank 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 he 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 May
               27, 2004, a period of 36 months;

                    (ii) in the case of  termination  of  employment on or after
               May 27,  2004,  but prior to a Change of Control,  a period of 12
               months; and

                    (iii)  in the  case of  termination  of  employment  after a
               Change of Control, a period of 36 months.

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

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

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

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

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

<PAGE>

entitled pursuant to section 5(b), the supplemental  retirement benefit to which
he is  entitled  pursuant  to  section  5(e),  and the  additional  supplemental
retirement  benefit to which he is entitled  pursuant  to Section  5(f) (in each
case after crediting to his Accounts  established under such sections any amount
which was required to be credited to such Account  pursuant to such  sections as
of the date of his termination of employment but was not so credited).

     (b) For purposes of this  Agreement,  the term "Cause"  means the Officer's
personal dishonesty,  incompetence, willful misconduct, breach of fiduciary duty
involving personal profit, intentional failure to perform stated duties, willful
violation of any law,  rule,  or  regulation  (other than traffic  violations or
similar  offenses) or final  cease-and-desist  order,  or material breach of any
provision of this Agreement.

     Section 9. Disability or Death.

     (a)  The  Officer's   employment  with  the  Bank  may  be  terminated  for
"Disability"  if the Officer shall become disabled or  incapacitated  during the
Employment Period to the extent that he has been unable to perform the essential
functions of his  employment  for 270  consecutive  days.  Upon a termination of
employment  for  "Disability,"  the Bank  shall pay to the  Officer  in cash the
following  percentages  of his Current  Salary and deferred  compensation  under
sections 4 and 5(b) of this Agreement  until the end of the  Employment  Period:
100% for the first six  months,  75% for the next six months and 60%  thereafter
for the remaining term, if any, 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 employees). In addition, the Officer shall
receive  a  cash  lump  sum  payment  equal  to  the  amount  of  the  Officer's
Supplemental  Retirement  Account  established  pursuant  to section  5(e),  and
payment of his Deferred Compensation Account as provided in section 5(b) and the
additional  supplemental  retirement benefit to which he is entitled pursuant to
section 5(f) (in each case after  crediting to the  Accounts  established  under
such  sections any amounts  which were  required to be credited to such Accounts
pursuant to sections 5(b),  5(e), and 5(f) as of the date of his  termination of
employment but were not so credited).

     (b) In the  event  that  the  Officer's  employment  with  the  Bank  shall
terminate  during the  Employment  Period on  account  of death,  the Bank shall
promptly pay the Officer's designated beneficiaries or, failing any designation,
his estate a cash lump sum payment equal to his earned but unpaid Current Salary
plus the amount of the Officer's  Deferred  Compensation  Account,  Supplemental
Retirement  Account,  and Additional  SERP Account as provided in sections 5(b),
5(e), and 5(f) (after crediting to such Accounts any amounts which were required
to be credited to such Accounts  pursuant to sections 5(b), 5(e), and 5(f) as of
the date of his death but were not so credited).

     (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 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 Bank shall pay such bonus to the  Officer or, in the
event of death,  his  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 Bank
shall  promptly  pay the  Officer  or,  in the event of  death,  his  designated
beneficiaries or estate, as the case may be, a pro rata portion of his 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 Flushing Financial  Corporation  ("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

<PAGE>

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. 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 Bank or by the Officer,  shall have no effect on the rights and  obligations
of the parties  hereto under the Bank's  employee  benefit  plans or programs or
compensation  plans  or  programs  (whether  or not  employee  benefit  plans or
programs) that the Bank may maintain from time to time.

     Section 12. Successors and Assigns.

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

     Section 13. 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:
               Michael J. Hegarty
               [ADDRESS ON FILE]

          If to the Bank:
               Flushing Savings Bank, FSB
               144-51 Northern Boulevard
               Flushing, New York  11354
               Attention:  Secretary of the Bank

     Section 14. 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.

<PAGE>

     Section 15. 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 16. 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 17. 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 18. 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 19. 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, including the Employment Agreement dated as of November 21, 1995, by and
between the Bank and the Officer.  No  modifications  of this Agreement shall be
valid unless made in writing and signed by the parties hereto.

     Section 20. Funding.

     The Bank has agreed to fund certain of its obligations to the Officer under
this Agreement in a "rabbi trust";  provided,  however,  that all assets used by
the Bank to fund its obligations shall be part of the general assets of the Bank
and shall be subject to all claims of the Bank's creditors.

     Section 21. Regulatory Action.

     (a)  Notwithstanding any other provision of this Agreement to the contrary,
this Section 21 shall apply at all times during the Employment Period.

     (b)  If  the  Officer  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 Officer under
this  Agreement  shall be suspended  as of the date of such service  unless such
service is stayed by appropriate proceedings.  If the charges in such notice are
dismissed,  the Bank shall (i) pay the Officer all of the compensation  withheld
while the Bank's  obligations  under this Agreement were so suspended,  and (ii)
reinstate in whole any of its obligations to the Officer which were suspended.

     (c)  If  the  Officer  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 Officer under
this Agreement 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.

<PAGE>

     (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 Agreement shall
terminate  as of the date of such  default,  but this  Section  21(d)  shall not
affect any vested rights of the Officer accrued as of such date of default.

     (e) All  obligations of the Bank under this Agreement  shall be terminated,
except to the extent it is  determined  that  continuation  of the  Agreement 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  21(e)  shall not affect  any vested  rights of the
Officer accrued as of such date of termination.

     (f) 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.
ss. 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 SAVINGS BANK, FSB

                                           By: /S/ GERARD P. TULLY, SR.
                                              -------------------------------
                                           Name: Gerard P. Tully, Sr
                                           Title: Chairman

                                           /S/ MICHAEL J. HEGARTY
                                           ----------------------------------
                                           Michael J. Hegarty

<PAGE>

                                   Schedule A

     Calculation  of Amount  Payable  pursuant  to  Section  7(b),  Clause  (vi)
Assuming Termination of Employment December 1, 2000

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

     (1)   Current Salary is greater of
              (a)  $420,000
              (b)  annual salary in effect
                                                                $  420,000

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

     (2)   Bonus is greatest of bonus paid in last 3 years
           before termination
              (a)  $140,000        (1999 bonus)
              (b)    90,000        (1998 bonus)
              (c)    78,000        (1997 bonus)
                                                                $  140,000

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

     (3)   Deferred Compensation
              10% of amount in Step (1)                         $   42,000

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

     (4)   Severance Period
              36 months = 3 years

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

     (5)   Amount Payable
              3 times (1)+(2)+(3)                               $1,806,000

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

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00022-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00022-of-00352.parquet"}]]