Document:

Exhibit 10.3

                                  TRADEON, INC.

                       REGULATION S SUBSCRIPTION AGREEMENT
                          AND INVESTMENT REPRESENTATION

                                   SECTION 1.

1.1 Subscription.

     (a) The  undersigned,  intending to be legally  bound,  hereby  irrevocably
subscribes for and agrees to purchase ______ shares (the "Shares") of the common
stock (the "Common Stock") of TradeOn, Inc, a Nevada corporation (the "Company")
in a transaction exempt from the registration requirements of the Securities Act
of 1933, as amended (the "Securities Act"). The undersigned understands that the
Shares  are being  sold in  connection  with an  offering  by the  Company of an
aggregate of up to 3,600,000  shares of Common Stock for total proceeds of up to
$90,000.00

1.2 Purchase of Shares.

     The undersigned  understands and acknowledges that the purchase price to be
remitted  to the Company in exchange  for the Shares  shall be  ________________
dollars  ($_______) or $0.025 per Share. The Company shall deliver the Shares to
the undersigned promptly after the acceptance of this Subscription  Agreement by
the Company.

1.3 Acceptance or Rejection.

     (a) The undersigned  understands  and agrees that the Company  reserves the
right to reject this subscription for the Shares if, in its reasonable judgment,
it deems such action in the best  interest of the Company,  at any time prior to
the  Closing,  notwithstanding  prior  receipt by the  undersigned  of notice of
acceptance of the undersigned's subscription.

     (b) The undersigned  understands and agrees that its  subscription  for the
Shares is irrevocable.

     (c) In the event the sale of the Shares  subscribed for by the  undersigned
is  not  consummated  by the  Company  for  any  reason  (in  which  event  this
Subscription  Agreement  shall be  deemed  to be  rejected),  this  Subscription
Agreement and any other  agreement  entered into between the undersigned and the
Company relating to this  subscription  shall thereafter have no force or effect
and the Company shall promptly return or cause to be returned to the undersigned
the purchase price remitted to the Company by the undersigned,  without interest
thereon or deduction therefrom, in exchange for the Shares.
<PAGE>
                                   SECTION 2.

2.1 Closing. The closing (the "Closing") of the purchase and sale of the Shares,
shall  occur   simultaneously   with  the  acceptance  by  the  Company  of  the
undersigned's  subscription,  as  evidenced by the  Company's  execution of this
Subscription Agreement.

                                   SECTION 3.

3.1  Investor   Representations   and   Warranties.   The   undersigned   hereby
acknowledges,  represents  and warrants to, and agrees with, the Company and its
affiliates as follows:

     (a) Investment  Purposes.  The  undersigned is acquiring the Shares for his
own account as principal,  not as a nominee or agent,  for  investment  purposes
only, and not with a view to, or for, resale,  distribution or fractionalization
thereof  in  whole  or in part and no other  person  has a  direct  or  indirect
beneficial  interest  in  such  Shares  or any  portion  thereof.  Further,  the
undersigned  does not have any contract,  undertaking,  agreement or arrangement
with any person to sell,  transfer or grant  participations to such person or to
any third  person,  with  respect  to the Shares  for which the  undersigned  is
subscribing or any part of the Shares.

     (b) Authority.  The  undersigned has full power and authority to enter into
this  Agreement,  the  execution  and delivery of this  Agreement  has been duly
authorized,  if applicable,  and this Agreement  constitutes a valid and legally
binding obligation of the undersigned.

     (c) No General  Solicitation.  The  undersigned is not  subscribing for the
Shares as a result of or subsequent  to any  advertisement,  article,  notice or
other  communication  published in any  newspaper,  magazine or similar media or
broadcast over television or radio,  or presented at any seminar or meeting,  or
any  solicitation  of a  subscription  by  person  previously  not  known to the
undersigned in connection with investment securities generally.

     (d) No Obligation to Register Shares. The undersigned  understands that the
Company is under no obligation to register the Shares under the Securities  Act,
or to  assist  the  undersigned  in  complying  with the  Securities  Act or the
securities   laws  of  any  state  of  the  United  States  or  of  any  foreign
jurisdiction.

     (e) Investment  Experience.  The  undersigned is (i)  experienced in making
investments of the kind described in this Agreement, (ii) able, by reason of the
business  and   financial   experience  of  its  officers  (if  an  entity)  and
professional  advisors (who are not affiliated with or compensated in any way by
the  Company or any of its  affiliates  or selling  agents),  to protect its own
interests in connection with the transactions  described in this Agreement,  and
(iii) able to afford the entire loss of its investment in the Shares.

     (f)  Exemption  from   Registration.   The  undersigned   acknowledges  his
understanding  that the offering and sale of the Shares is intended to be exempt
from registration under the Securities Act. In furtherance  thereof, in addition
to the other  representations and warranties of the undersigned made herein, the

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undersigned  further  represents and warrants to and agrees with the Company and
its affiliates as follows:

          (1) The undersigned  realizes that the basis for the exemption may not
be present if, notwithstanding such representations, the undersigned has in mind
merely acquiring the Shares for a fixed or determinable period in the future, or
for a market rise, or for sale if the market does not rise. The undersigned does
not have any such intention;

          (2) The  undersigned  has the  financial  ability to bear the economic
risk of his  investment,  has adequate means for providing for his current needs
and personal  contingencies  and has no need for  liquidity  with respect to his
investment in the Company; and

          (3) The undersigned has such knowledge and experience in financial and
business  matters  as to be capable  of  evaluating  the merits and risks of the
prospective investment in the Shares. The undersigned also represents it has not
been organized for the purpose of acquiring the Shares; and

          (4) The  undersigned has been provided an opportunity for a reasonable
period  of time  prior to the  date  hereof  to  obtain  additional  information
concerning the offering of the Shares,  the Company and all other information to
the extent the  Company  possesses  such  information  or can acquire it without
unreasonable effort or expense.

     (g) Economic Considerations. The undersigned is not relying on the Company,
or its affiliates or agents with respect to economic  considerations involved in
this investment. The undersigned has relied solely on its own advisors.

     (h) No Other Company Representations. No representations or warranties have
been made to the undersigned by the Company,  or any officer,  employee,  agent,
affiliate or subsidiary of the Company,  other than the  representations  of the
Company contained  herein,  and in subscribing for Shares the undersigned is not
relying upon any representations other than those contained herein.

     (i) Compliance with Laws. Any resale of the Shares during the `distribution
compliance  period' as defined in Rule 902(f) to Regulation S shall only be made
in  compliance  with  exemptions  from  registration  afforded by  Regulation S.
Further,  any such sale of the Shares in any jurisdiction  outside of the United
States will be made in compliance with the securities laws of such jurisdiction.
The  Investor  will not  offer to sell or sell the  Shares  in any  jurisdiction
unless the Investor obtains all required consents, if any.

     (j) Regulation S Exemption. The undersigned understands that the Shares are
being offered and sold to him in reliance on an exemption from the  registration
requirements of United States federal and state securities laws under Regulation
S promulgated  under the Securities Act and that the Company is relying upon the
truth   and   accuracy   of   the   representations,   warranties,   agreements,
acknowledgments  and understandings of the Investor set forth herein in order to

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determine  the  applicability  of such  exemptions  and the  suitability  of the
Investor to acquire the Shares.  In this  regard,  the  undersigned  represents,
warrants and agrees that:

          (1) The undersigned is not a U.S. Person (as defined below) and is not
an affiliate (as defined in Rule 501(b) under the Securities Act) of the Company
and is not acquiring the Shares for the account or benefit of a U.S.  Person.  A
U.S. Person means any one of the following:

               (A) any natural person resident in the United States of America;

               (B) any  partnership  or  corporation  organized or  incorporated
under the laws of the
United States of America;

               (C) any estate of which any executor or  administrator  is a U.S.
person;

               (D) any trust of which any trustee is a U.S. person;

               (E) any  agency  or branch of a  foreign  entity  located  in the
United States of
America;

               (F) any non-discretionary  account or similar account (other than
an estate  or trust)  held by a dealer or other  fiduciary  for the  benefit  or
account of a U.S.
person;

               (G) any  discretionary  account or similar account (other than an
estate or trust) held by a dealer or other fiduciary organized,  incorporated or
(if an individual) resident in the United States of America; and

               (H) any partnership or corporation if:

                    (i) organized or incorporated  under the laws of any foreign
jurisdiction; and

                    (ii) formed by a U.S. person  principally for the purpose of
investing in securities not registered  under the Securities  Act,  unless it is
organized or  incorporated,  and owned,  by accredited  investors (as defined in
Rule 501(a) under the Securities  Act) who are not natural  persons,  estates or
trusts.

          (2)  At the  time  of  the  origination  of  contact  concerning  this
Agreement  and the date of the  execution  and delivery of this  Agreement,  the
undersigned was outside of the United States.

          (3) The undersigned will not, during the period commencing on the date
of issuance of the Shares and ending on the first  anniversary  of such date, or
such  shorter  period as may be permitted  by  Regulation S or other  applicable
securities  law (the  "Restricted  Period"),  offer,  sell,  pledge or otherwise
transfer the Shares in the United States, or to a U.S. Person for the account or

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<PAGE>
for the  benefit  of a U.S.  Person,  or  otherwise  in a manner  that is not in
compliance with Regulation S.

          (4) The undersigned  will, after expiration of the Restricted  Period,
offer,   sell,  pledge  or  otherwise  transfer  the  Shares  only  pursuant  to
registration under the Securities Act or an available  exemption  therefrom and,
in accordance with all applicable state and foreign securities laws.

          (5) The  undersigned  was not in the United  States,  engaged  in, and
prior to the expiration of the  Restricted  Period will not engage in, any short
selling of or any hedging  transaction  with  respect to the  Shares,  including
without limitation, any put, call or other option transaction, option writing or
equity swap.

          (6) Neither the undersigned nor or any person acting on his behalf has
engaged,  nor will engage, in any directed selling efforts to a U.S. Person with
respect to the Shares and the Investor and any person  acting on his behalf have
complied  and will  comply  with the  "offering  restrictions"  requirements  of
Regulation S under the Securities Act.

          (7) The  transactions  contemplated  by this  Agreement  have not been
pre-arranged  with a buyer located in the United  States or with a U.S.  Person,
and are not part of a plan or scheme to evade the  registration  requirements of
the Securities Act.

          (8) Neither the  undersigned  nor any person  acting on his behalf has
undertaken  or  carried  out any  activity  for the  purpose  of, or that  could
reasonably  be  expected to have the effect of,  conditioning  the market in the
United  States,  its  territories  or  possessions,  for any of the Shares.  The
undersigned  agrees not to cause any advertisement of the Shares to be published
in any  newspaper or  periodical  or posted in any public place and not to issue
any circular relating to the Shares, except such advertisements that include the
statements  required by Regulation S under the Securities Act, and only offshore
and not in the U.S. or its  territories,  and only in compliance  with any local
applicable securities laws.

          (9) Each  certificate  representing  the Shares shall be endorsed with
the  following  legends,  in addition to any other legend  required to be placed
thereon by applicable federal or state securities laws:

               (A) "THE  SECURITIES  ARE BEING  OFFERED TO INVESTORS WHO ARE NOT
U.S.  PERSONS (AS DEFINED IN REGULATION S UNDER THE  SECURITIES  ACT OF 1933, AS
AMENDED ("THE SECURITIES ACT")) AND WITHOUT  REGISTRATION WITH THE UNITED STATES
SECURITIES  AND EXCHANGE  COMMISSION  UNDER THE  SECURITIES ACT IN RELIANCE UPON
REGULATION S PROMULGATED UNDER THE SECURITIES ACT."

               (B)  "TRANSFER  OF THESE  SECURITIES  IS  PROHIBITED,  EXCEPT  IN
ACCORDANCE WITH THE PROVISIONS OF REGULATION S, PURSUANT TO  REGISTRATION  UNDER

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<PAGE>
THE  SECURITIES  ACT, OR  PURSUANT TO  AVAILABLE  EXEMPTION  FROM  REGISTRATION.
HEDGING  TRANSACTIONS  MAY  NOT BE  CONDUCTED  UNLESS  IN  COMPLIANCE  WITH  THE
SECURITIES ACT."

          (10) The undersigned  consents to the Company making a notation on its
records or giving  instructions to any transfer agent of the Company in order to
implement the  restrictions  on transfer of the Shares set forth in this Section
3.

     (k) Accredited  Investor.  The  undersigned is an "accredited  investor" as
that term is defined in Rule 501 of the General Rules and Regulations  under the
Securities Act by reason of Rule 501(a)(3).

     (l) Potential Loss of Investment; Risk Factors. The undersigned understands
that an investment in the Shares is a speculative  investment  which  involves a
high  degree  of risk  and the  potential  loss of his  entire  investment.  The
undersigned  understands that the following factors,  among others,  could cause
the loss of any or all of his investment.

          (1) The  Company is a  development  stage  company  with no  operating
history  for  the  undersigned  to  evaluate  its  business.   The  Company  was
incorporated in the State of Nevada in June 2006, and as a result is only in the
very early stages of development.  Because the Company has no operating history,
it is difficult to evaluate its business and future  prospects.  The undersigned
has also considered the uncertainties and difficulties frequently encountered by
companies,  such as the  Company,  in their  early  stages of  development.  The
Company's  revenue and income  potential is unproven  and its business  model is
still  emerging.  If its  business  model does not prove to be  profitable,  the
undersigned may lose all of his investment.

          (2) The  Company  currently  does not have enough  working  capital to
satisfy its capital needs.  The Company is dependent upon its management team to
fund its ongoing operations, and cannot be certain that future financing will be
available  to it on  acceptable  terms when it needs it. The Company can give no
assurances  that it will be able to sell any  portion of this  offering  or that
management will continue to fund its ongoing  operations.  This,  along with the
possibility of other factors and circumstances  the Company cannot predict,  may
require it to seek additional financing faster than anticipated.  If the Company
is unable to obtain financing to meet its needs, the undersigned may lose of his
investment.

          (3) The Company's  officers and  directors  will only devote a limited
amount of time to the Company.  Their divided interests may hinder the Company's
ability to generate revenue. This could result in missed business  opportunities
and  worse-than-expected  operating results. The undersigned may lose his entire
investment.

          (4)  Management has never operated in the industry in which it intends
to  operate.  This lack of  experience  may result in the  Company's  needing to
employ outside  experts that have such  experience.  The  additional  cost could
result in a net operating  loss and,  ultimately,  could result in the Company's
failure.  Management's  inexperience may limit the Company's ability to generate
revenues.  The  Company  may  never  achieve  successful  operations,   and  the
undersigned may lose his entire investment.

                                       6
<PAGE>
     (m)  Investment   Commitment.   The  undersigned's  overall  commitment  to
investments  which are not readily  marketable  is not  disproportionate  to the
undersigned's  net worth,  and an  investment  in the Shares will not cause such
overall commitment to become excessive.

     (n) Receipt of  Information.  The  undersigned  has received all documents,
records, books and other information pertaining to the undersigned's  investment
in the Company that has been requested by the undersigned.

     (o) Investor Questionnaire.  The undersigned represents and warrants to the
Company that all  information  that the undersigned has provided to the Company,
including,  without  limitation,  the information in the Investor  Questionnaire
attached  hereto  as  Exhibit  1 or  previously  provided  to the  Company  (the
"Investor Questionnaire"), is correct and complete as of the date hereof.

     (p) No Reliance.  Other than as set forth herein,  the  undersigned  is not
relying upon any other information, representation or warranty by the Company or
any officer,  director,  stockholder,  agent or representative of the Company in
determining  to invest in the Shares.  The  undersigned  has  consulted,  to the
extent  deemed  appropriate  by the  undersigned,  with  the  undersigned's  own
advisers as to the  financial,  tax,  legal and related  matters  concerning  an
investment in the Shares and on that basis  believes that his or its  investment
in the Shares is suitable and appropriate for the undersigned.

     (q) No  Governmental  Review.  The  undersigned is aware that no federal or
state  agency has (i) made any finding or  determination  as to the  fairness of
this investment,  (ii) made any  recommendation  or endorsement of the Shares or
the Company,  or (iii) guaranteed or insured any investment in the Shares or any
investment made by the Company.

     (r) Price of  Shares.  The  undersigned  understands  that the price of the
Shares offered hereby bear no relation to the assets, book value or net worth of
the Company and were  determined  arbitrarily  by the Company.  The  undersigned
further  understands that there is a substantial risk of further dilution on his
or its investment in the Company.

                                   SECTION 4.

4.1  Company's  Representations  and  Warranties.  The  Company  represents  and
warrants to the undersigned as follows:

     (a)  Organization  of  the  Company.  The  Company  is a  corporation  duly
organized and validly  existing and in good standing under the laws of the State
of Nevada.

     (b)  Authority.  (a) The  Company  has the  requisite  corporate  power and
authority to enter into and perform its obligations  under this Agreement and to
issue the  Shares;  (b) the  execution  and  delivery of this  Agreement  by the
Company and the consummation by it of the transactions  contemplated  hereby and
thereby  have been duly  authorized  by all  necessary  corporate  action and no
further  consent or  authorization  of the Company or its Board of  Directors or

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<PAGE>
stockholders  is required;  and (c) this  Agreement  has been duly  executed and
delivered by the Company and  constitutes a valid and binding  obligation of the
Company  enforceable against the Company in accordance with its terms, except as
such  enforceability  may be limited by applicable  bankruptcy,  insolvency,  or
similar laws relating to, or affecting  generally the enforcement of, creditors'
rights and remedies or by other equitable principles of general application.

     (c) Exemption from Registration;  Valid Issuances. The sale and issuance of
the Shares, in accordance with the terms and on the bases of the representations
and warranties of the  undersigned  set forth herein,  may and shall be properly
issued by the Company to the undersigned  pursuant to any applicable  federal or
state law. When issued and paid for as herein provided, the Shares shall be duly
and validly  issued,  fully paid,  and  nonassessable.  Neither the sales of the
Shares pursuant to, nor the Company's performance of its obligations under, this
Agreement shall (a) result in the creation or imposition of any liens,  charges,
claims  or  other  encumbrances  upon the  Shares  or any of the  assets  of the
Company,  or (b) entitle the other holders of the Common Stock of the Company to
preemptive  or other rights to subscribe to or acquire the Common Stock or other
securities  of the  Company.  The Shares  shall not subject the  undersigned  to
personal liability by reason of the ownership thereof.

     (d) No General  Solicitation or Advertising in Regard to this  Transaction.
Neither the Company nor any of its  affiliates  nor any person  acting on its or
their behalf (a) has conducted or will conduct any general solicitation (as that
term is used in Rule 502(c) of Regulation D) or general advertising with respect
to any of the  Shares,  or (b) made any  offers  or  sales  of any  security  or
solicited  any offers to buy any  security  under any  circumstances  that would
require registration of the Common Stock under the Securities Act.

                                   SECTION 5.

5.1  Indemnity.  The  undersigned  agrees to  indemnify  and hold  harmless  the
Company,  its officers and  directors,  employees and its  affiliates  and their
respective  successors  and assigns and each other person,  if any, who controls
any thereof,  against any loss, liability,  claim, damage and expense whatsoever
(including,  but not  limited  to, any and all  expenses  whatsoever  reasonably
incurred  in  investigating,  preparing  or  defending  against  any  litigation
commenced or  threatened or any claim  whatsoever)  arising out of or based upon
any false  representation or warranty or breach or failure by the undersigned to
comply with any covenant or agreement made by the  undersigned  herein or in any
other  document  furnished  by  the  undersigned  to any  of  the  foregoing  in
connection with this transaction.

5.2  Modification.  Neither this  Agreement nor any  provisions  hereof shall be
modified,  discharged or terminated except by an instrument in writing signed by
the party against whom any waiver, change, discharge or termination is sought.

5.3 Notices.  Any notice,  demand or other  communication which any party hereto
may be required,  or may elect, to give to anyone interested  hereunder shall be
sufficiently  given if (a) deposited,  postage prepaid,  in a United States mail
letter box, registered or certified mail, return receipt requested, addressed to

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such  address  as may be  given  herein,  or (b)  delivered  personally  at such
address.

5.4  Counterparts.  This  Agreement may be executed  through the use of separate
signature pages or in any number of counterparts  and by facsimile,  and each of
such counterparts  shall, for all purposes,  constitute one agreement binding on
all parties,  notwithstanding  that all parties are not  signatories to the same
counterpart. Signatures may be facsimiles.

5.5 Binding Effect. Except as otherwise provided herein, this Agreement shall be
binding upon and inure to the benefit of the parties and their heirs, executors,
administrators,   successors,   legal   representatives   and  assigns.  If  the
undersigned is more than one person,  the obligation of the undersigned shall be
joint  and  several  and  the   agreements,   representations,   warranties  and
acknowledgments  herein  contained  shall be deemed to be made by and be binding
upon each such person and his heirs, executors, administrators and successors.

5.6 Entire Agreement. This Agreement and the documents referenced herein contain
the entire agreement of the parties and there are no representations,  covenants
or other agreements except as stated or referred to herein and therein.

5.7  Assignability.  This  Agreement is not  transferable  or  assignable by the
undersigned.

5.8  Applicable  Law.  This  Agreement  shall be  governed by and  construed  in
accordance  with the laws of the State of New  York,  without  giving  effect to
conflicts of law principles.

5.9 Pronouns. The use herein of the masculine pronouns "him" or "his" or similar
terms shall be deemed to include the feminine and neuter genders as well and the
use herein of the  singular  pronoun  shall be deemed to  include  the plural as
well.

5.10 Further  Assurances.  Upon request from time to time, the undersigned shall
execute and deliver all documents, take all rightful oaths and do all other acts
that may be necessary or desirable,  in the reasonable opinion of the Company or
its counsel, to effect the subscription for the Shares in accordance herewith.

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<PAGE>
     IN WITNESS  WHEREOF,  the  undersigned  has executed this  Agreement on the
______ day of _________________, 200_.

Amount of Investment:

$_______________

INDIVIDUAL INVESTOR:

By:      ________________

Address: _________________

------------------------
     (Signature)

PARTNERSHIP, CORPORATION, TRUST,
CUSTODIAL ACCOUNT, OTHER INVESTOR

------------------------------
 (Name of Entity)

By:      __________________
Name:
Title:
Address:

Taxpayer Identification Number:_____________

                                       10
<PAGE>
                             INVESTOR QUESTIONNAIRE

A. General Information

     1. Print Full Name of Investor: Individual:

                                             ---------------------
                                             First, Middle, Last

                                             Partnership, Corporation,
                                             Trust,
                                             Custodial Account, Other:

                                             ----------------------
                                             Name of Entity

     2. Address for Notices:

     3. Name of Primary Contact Person: ______________________ Title:

     4. Telephone Number: ______________________

     5. E-Mail Address: ______________________

     6. Facsimile Number: ______________________

     7. Permanent Address: ______________________ (if different from Address for
     Notices above)

     8. Authorized Signatory: ______________________

     9.  U.S. Investors Only: U.S. Taxpayer Identification or
     Social Security Number: ______________________

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The Investor  understands that the foregoing  information will be relied upon by
the Company for the purpose of  determining  the  eligibility of the Investor to
purchase the Shares.  The Investor  agrees to notify the Company  immediately if
any  representation  or  warranty  contained  in  this  Subscription  Agreement,
including this Investor Questionnaire,  becomes untrue at any time. The Investor
agrees to provide, if requested,  any additional information that may reasonably
be required to substantiate the Investor's  status as an accredited  investor or
to otherwise  determine the  eligibility of the Investor to purchase the Shares.
The Investor agrees to indemnify and hold harmless the Company and each officer,
director,  shareholder,  agent  and  representative  of the  Company  and  their
respective  affiliates  and  successors  and assigns  from and against any loss,
damage or  liability  due to or arising  out of a breach of any  representation,
warranty or agreement of the Investor contained herein.

                                                  INDIVIDUAL:

                                                  --------------------------
                                                  (Signature)

                                                  --------------------------
                                                  (Print Name)

                                     PARTNERSHIP, CORPORATION, TRUST,
                                     CUSTODIAL ACCOUNT, OTHER:

                                                 --------------------------
                                                       (Name of Entity)

                                              By: __________________________
                                                          (Signature)

                                                 --------------------------
                                                    (Print Name and Title)

                                       12Exhibit 4.2 Warrant for Purchase of Shares of Common Stock

            FORM OF WARRANT TO PURCHASE COMMON STOCK

            THE SECURITIES REPRESENTED BY THIS INSTRUMENT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE TRANSFERRED, SOLD OR OTHERWISE DISPOSED OF EXCEPT WHILE A REGISTRATION STATEMENT RELATING THERETO IS IN EFFECT UNDER SUCH ACT AND APPLICABLE STATE SECURITIES LAWS OR PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER SUCH ACT OR SUCH LAWS.
            THIS INSTRUMENT IS ISSUED SUBJECT TO THE RESTRICTIONS ON TRANSFER AND OTHER PROVISIONS OF A SECURITIES PURCHASE AGREEMENT BETWEEN THE ISSUER OF THESE SECURITIES AND THE INVESTOR REFERRED TO THEREIN, A COPY OF WHICH IS ON FILE WITH THE ISSUER. THE SECURITIES REPRESENTED BY THIS INSTRUMENT MAY NOT BE SOLD OR OTHERWISE TRANSFERRED EXCEPT IN COMPLIANCE WITH SAID AGREEMENT. ANY SALE OR OTHER TRANSFER NOT IN COMPLIANCE WITH SAID AGREEMENT WILL BE VOID.

             

            WARRANT

            to purchase

            751,611

            Shares of Common Stock

             

            of FLUSHING FINANCIAL CORPORATION

             

            
                	
                             

                        	
                            Issue Date: December 19, 2008

                        

            

            1.         Definitions. Unless the context otherwise requires, when used herein the following terms shall have the meanings indicated.

            “Affiliate” has the meaning ascribed to it in the Purchase Agreement.

            “Appraisal Procedure” means a procedure whereby two independent appraisers, one chosen by the Company and one by the Original Warrantholder, shall mutually agree upon the determinations then the subject of appraisal. Each party shall deliver a notice to the other appointing its appraiser within 15 days after the Appraisal
            Procedure is invoked. If within 30 days after appointment of the two appraisers they are unable to agree upon the amount in question, a third independent appraiser shall be chosen within 10 days thereafter by the mutual consent of such first two appraisers. The decision of the third appraiser so appointed and chosen shall be given within 30 days after the selection of such third appraiser. If three appraisers shall be appointed and the determination of one appraiser is disparate
            from the middle determination by more than twice the amount by which the other determination is disparate from the middle determination, then the determination of such appraiser shall be excluded, the remaining two

             

            
                

                 

                

            

             

            
                

            

            determinations shall be averaged and such average shall be binding and conclusive upon the Company and the Original Warrantholder; otherwise, the average of all three determinations shall be binding upon the Company and the Original Warrantholder. The costs of conducting any Appraisal Procedure shall be borne by the Company.

            “Board of Directors” means the board of directors of the Company, including any duly authorized committee thereof.

            “Business Combination” means a merger, consolidation, statutory share exchange or similar transaction that requires the approval of the Company’s stockholders.

            “business day” means any day except Saturday, Sunday and any day on which banking institutions in the State of New York generally are authorized or required by law or other governmental actions to close.

            “Capital Stock” means (A) with respect to any Person that is a corporation or company, any and all shares, interests, participations or other equivalents (however designated) of capital or capital stock of such Person and (B) with respect to any Person that is not a corporation or company, any and all partnership or other
            equity interests of such Person.

            “Charter” means, with respect to any Person, its certificate or articles of incorporation, articles of association, or similar organizational document.

            “Common Stock” has the meaning ascribed to it in the Purchase Agreement.

            “Company” means the Person whose name, corporate or other organizational form and jurisdiction of organization is set forth in Item 1 of Schedule A hereto.

            “conversion” has the meaning set forth in Section 13(B).

            “convertible securities” has the meaning set forth in Section 13(B).

            “CPP” has the meaning ascribed to it in the Purchase Agreement.

            “Exchange Act” means the Securities Exchange Act of 1934, as amended, or any successor statute, and the rules and regulations promulgated thereunder.

            “Exercise Price” means the amount set forth in Item 2 of Schedule A hereto.

            “Expiration Time” has the meaning set forth in Section 3.

            “Fair Market Value” means, with respect to any security or other property, the fair market value of such security or other property as determined by the Board of Directors, acting in good faith or, with respect to Section 14, as determined by the Original Warrantholder acting in good faith. For so long as the Original
            Warrantholder holds this Warrant or any portion thereof, it may object in writing to the Board of Director’s calculation of fair market value within 10 days of receipt of written notice thereof. If the Original Warrantholder and the Company are unable to agree on fair market value during the 10-day period following the delivery of the

             

            
                

                
                    	
                                 

                            	
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            Original Warrantholder’s objection, the Appraisal Procedure may be invoked by either party to determine Fair Market Value by delivering written notification thereof not later than the 30th day after delivery of the Original Warrantholder’s objection.

            “Governmental Entities” has the meaning ascribed to it in the Purchase Agreement.

            “Initial Number” has the meaning set forth in Section 13(B).

            “Issue Date” means the date set forth in Item 3 of Schedule A hereto.

            “Market Price” means, with respect to a particular security, on any given day, the last reported sale price regular way or, in case no such reported sale takes place on such day, the average of the last closing bid and ask prices regular way, in either case on the principal national securities exchange on which the
            applicable securities are listed or admitted to trading, or if not listed or admitted to trading on any national securities exchange, the average of the closing bid and ask prices as furnished by two members of the Financial Industry Regulatory Authority, Inc. selected from time to time by the Company for that purpose. “Market Price” shall be determined without reference to after hours or extended hours trading. If such security is not listed and traded in a manner that
            the quotations referred to above are available for the period required hereunder, the Market Price per share of Common Stock shall be deemed to be (i) in the event that any portion of the Warrant is held by the Original Warrantholder, the fair market value per share of such security as determined in good faith by the Original Warrantholder or (ii) in all other circumstances, the fair market value per share of such security as determined in good faith by the Board of Directors in
            reliance on an opinion of a nationally recognized independent investment banking corporation retained by the Company for this purpose and certified in a resolution to the Warrantholder. For the purposes of determining the Market Price of the Common Stock on the "trading day" preceding, on or following the occurrence of an event, (i) that trading day shall be deemed to commence immediately after the regular scheduled closing time of trading on the New York Stock Exchange or, if
            trading is closed at an earlier time, such earlier time and (ii) that trading day shall end at the next regular scheduled closing time, or if trading is closed at an earlier time, such earlier time (for the avoidance of doubt, and as an example, if the Market Price is to be determined as of the last trading day preceding a specified event and the closing time of trading on a particular day is 4:00 p.m. and the specified event occurs at 5:00 p.m. on that day, the Market Price would
            be determined by reference to such 4:00 p.m. closing price).

            “Ordinary Cash Dividends” means a regular quarterly cash dividend on shares of Common Stock out of surplus or net profits legally available therefor (determined in accordance with generally accepted accounting principles in effect from time to time), provided that
            Ordinary Cash Dividends shall not include any cash dividends paid subsequent to the Issue Date to the extent the aggregate per share dividends paid on the outstanding Common Stock in any quarter exceed the amount set forth in Item 4 of Schedule A hereto, as adjusted for any stock split, stock dividend, reverse stock split, reclassification or similar transaction.

            “Original Warrantholder” means the United States Department of the Treasury. Any actions specified to be taken by the Original Warrantholder hereunder may only be taken by such Person and not by any other Warrantholder.

             

            
                

                
                    	
                                 

                            	
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            “Permitted Transactions” has the meaning set forth in Section 13(B).

            “Person” has the meaning given to it in Section 3(a)(9) of the Exchange Act and as used in Sections 13(d)(3) and 14(d)(2) of the Exchange Act.

            “Per Share Fair Market Value” has the meaning set forth in Section 13(C).

            “Preferred Shares” means the perpetual preferred stock issued to the Original Warrantholder on the Issue Date pursuant to the Purchase Agreement.

            “Pro Rata Repurchases” means any purchase of shares of Common Stock by the Company or any Affiliate thereof pursuant to (A) any tender offer or exchange offer subject to Section 13(e) or 14(e) of the Exchange Act or Regulation 14E promulgated thereunder or (B) any other offer available to substantially all holders of
            Common Stock, in the case of both (A) or (B), whether for cash, shares of Capital Stock of the Company, other securities of the Company, evidences of indebtedness of the Company or any other Person or any other property (including, without limitation, shares of Capital Stock, other securities or evidences of indebtedness of a subsidiary), or any combination thereof, effected while this Warrant is outstanding. The “Effective
            Date” of a Pro Rata Repurchase shall mean the date of acceptance of shares for purchase or exchange by the Company under any tender or exchange offer which is a Pro Rata Repurchase or the date of purchase with respect to any Pro Rata Repurchase that is not a tender or exchange offer.

            “Purchase Agreement” means the Securities Purchase Agreement – Standard Terms incorporated into the Letter Agreement, dated as of the date set forth in Item 5 of Schedule A hereto, as amended from time to time, between the Company and the United States Department of the Treasury (the
            “Letter Agreement”), including all annexes and schedules thereto.

            “Qualified Equity Offering” has the meaning ascribed to it in the Purchase Agreement.

            “Regulatory Approvals” with respect to the Warrantholder, means, to the extent applicable and required to permit the Warrantholder to exercise this Warrant for shares of Common Stock and to own such Common Stock without the Warrantholder being in violation of applicable law, rule or regulation, the receipt of any
            necessary approvals and authorizations of, filings and registrations with, notifications to, or expiration or termination of any applicable waiting period under, the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the rules and regulations thereunder.

            “SEC” means the U.S. Securities and Exchange Commission.

            “Securities Act” means the Securities Act of 1933, as amended, or any successor statute, and the rules and regulations promulgated thereunder.

            “Shares” has the meaning set forth in Section 2.

            “trading day” means (A) if the shares of Common Stock are not traded on any national or regional securities exchange or association or over-the-counter market, a business day or (B) if the shares of Common Stock are traded on any national or regional securities exchange or

             

            
                

                
                    	
                                 

                            	
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            association or over-the-counter market, a business day on which such relevant exchange or quotation system is scheduled to be open for business and on which the shares of Common Stock (i) are not suspended from trading on any national or regional securities exchange or association or over-the-counter market for any period or periods aggregating one half hour or longer; and (ii) have traded at least once
            on the national or regional securities exchange or association or over-the-counter market that is the primary market for the trading of the shares of Common Stock.

            
                	
                             

                        	
                            “U.S. GAAP” means United States generally accepted accounting principles.

                        

            

            “Warrantholder” has the meaning set forth in Section 2.

            “Warrant” means this Warrant, issued pursuant to the Purchase Agreement.

            2.         Number of Shares; Exercise Price. This certifies that, for value received, the United States Department of the Treasury or its permitted assigns (the “Warrantholder”) is entitled, upon the terms and subject to the
            conditions hereinafter set forth, to acquire from the Company, in whole or in part, after the receipt of all applicable Regulatory Approvals, if any, up to an aggregate of the number of fully paid and nonassessable shares of Common Stock set forth in Item 6 of Schedule A hereto, at a purchase price per share of Common Stock equal to the Exercise Price. The number of shares of Common Stock (the “Shares”) and the Exercise
            Price are subject to adjustment as provided herein, and all references to “Common Stock,” “Shares” and “Exercise Price” herein shall be deemed to include any such adjustment or series of adjustments.

            3.         Exercise of Warrant; Term. Subject to Section 2, to the extent permitted by applicable laws and regulations, the right to purchase the Shares represented by this Warrant is exercisable, in whole or in part by the Warrantholder, at any time or from time to time after the
            execution and delivery of this Warrant by the Company on the date hereof, but in no event later than 5:00 p.m., New York City time on the tenth anniversary of the Issue Date (the “Expiration Time”), by (A) the surrender of this Warrant and Notice of Exercise annexed hereto, duly completed and executed on behalf of the Warrantholder, at the principal executive office of the Company located at the address set forth in Item
            7 of Schedule A hereto(or such other office or agency of the Company in the United States as it may designate by notice in writing to the Warrantholder at the address of the Warrantholder appearing on the books of the Company), and (B) payment of the Exercise Price for the Shares thereby purchased:

            (i) by having the Company withhold, from the shares of Common Stock that would otherwise be delivered to the Warrantholder upon such exercise, shares of Common stock issuable upon exercise of the Warrant equal in value to the aggregate Exercise Price as to which this Warrant is so exercised based on the Market Price of the Common Stock on the trading day on which this Warrant is
            exercised and the Notice of Exercise is delivered to the Company pursuant to this Section 3, or

             

            (ii) with the consent of both the Company and the Warrantholder, by tendering in cash, by certified or cashier’s check payable to the order of the Company, or by wire transfer of immediately available funds to an account designated by the Company.

             

            
                

                
                    	
                                 

                            	
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            If the Warrantholder does not exercise this Warrant in its entirety, the Warrantholder will be entitled to receive from the Company within a reasonable time, and in any event not exceeding three business days, a new warrant in substantially identical form for the purchase of that number of Shares equal to the difference between the number of Shares subject to this Warrant and the
            number of Shares as to which this Warrant is so exercised. Notwithstanding anything in this Warrant to the contrary, the Warrantholder hereby acknowledges and agrees that its exercise of this Warrant for Shares is subject to the condition that the Warrantholder will have first received any applicable Regulatory Approvals.

            4.         Issuance of Shares; Authorization; Listing. Certificates for Shares issued upon exercise of this Warrant will be issued in such name or names as the Warrantholder may designate and will be delivered to such named Person or Persons within a reasonable time, not to exceed three
            business days after the date on which this Warrant has been duly exercised in accordance with the terms of this Warrant. The Company hereby represents and warrants that any Shares issued upon the exercise of this Warrant in accordance with the provisions of Section 3 will be duly and validly authorized and issued, fully paid and nonassessable and free from all taxes, liens and charges (other than liens or charges created by the Warrantholder, income and franchise taxes incurred in
            connection with the exercise of the Warrant or taxes in respect of any transfer occurring contemporaneously therewith). The Company agrees that the Shares so issued will be deemed to have been issued to the Warrantholder as of the close of business on the date on which this Warrant and payment of the Exercise Price are delivered to the Company in accordance with the terms of this Warrant, notwithstanding that the stock transfer books of the Company may then be closed or certificates
            representing such Shares may not be actually delivered on such date. The Company will at all times reserve and keep available, out of its authorized but unissued Common Stock, solely for the purpose of providing for the exercise of this Warrant, the aggregate number of shares of Common Stock then issuable upon exercise of this Warrant at any time. The Company will (A) procure, at its sole expense, the listing of the Shares issuable upon exercise of this Warrant at any time, subject
            to issuance or notice of issuance, on all principal stock exchanges on which the Common Stock is then listed or traded and (B) maintain such listings of such Shares at all times after issuance. The Company will use reasonable best efforts to ensure that the Shares may be issued without violation of any applicable law or regulation or of any requirement of any securities exchange on which the Shares are listed or traded.

            5.         No Fractional Shares or Scrip. No fractional Shares or scrip representing fractional Shares shall be issued upon any exercise of this Warrant. In lieu of any fractional Share to which the Warrantholder would otherwise be entitled, the Warrantholder shall be entitled to receive a
            cash payment equal to the Market Price of the Common Stock on the last trading day preceding the date of exercise less the pro-rated Exercise Price for such fractional share.

            6.         No Rights as Stockholders; Transfer Books. This Warrant does not entitle the Warrantholder to any voting rights or other rights as a stockholder of the Company prior to the date of exercise hereof. The Company will at no time close its transfer books against transfer of this
            Warrant in any manner which interferes with the timely exercise of this Warrant.

             

            
                

                
                    	
                                 

                            	
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            7.         Charges, Taxes and Expenses. Issuance of certificates for Shares to the Warrantholder upon the exercise of this Warrant shall be made without charge to the Warrantholder for any issue or transfer tax or other incidental expense in respect of the issuance of such certificates,
            all of which taxes and expenses shall be paid by the Company.

            
                	
                             

                        	
                            8.

                        	
                            Transfer/Assignment.

                        

            

            (A)      Subject to compliance with clause (B) of this Section 8, this Warrant and all rights hereunder are transferable, in whole or in part, upon the books of the Company by the registered holder hereof in person or by duly authorized attorney, and a new warrant shall be made and delivered by the Company, of the same tenor and date as this Warrant but
            registered in the name of one or more transferees, upon surrender of this Warrant, duly endorsed, to the office or agency of the Company described in Section 3. All expenses (other than stock transfer taxes) and other charges payable in connection with the preparation, execution and delivery of the new warrants pursuant to this Section 8 shall be paid by the Company.

            (B)      The transfer of the Warrant and the Shares issued upon exercise of the Warrant are subject to the restrictions set forth in Section 4.4 of the Purchase Agreement. If and for so long as required by the Purchase Agreement, this Warrant shall contain the legends as set forth in Sections 4.2(a) and 4.2(b) of the Purchase Agreement.

            9.         Exchange and Registry of Warrant. This Warrant is exchangeable, upon the surrender hereof by the Warrantholder to the Company, for a new warrant or warrants of like tenor and representing the right to purchase the same aggregate number of Shares. The Company shall maintain a
            registry showing the name and address of the Warrantholder as the registered holder of this Warrant. This Warrant may be surrendered for exchange or exercise in accordance with its terms, at the office of the Company, and the Company shall be entitled to rely in all respects, prior to written notice to the contrary, upon such registry.

            10.       Loss, Theft, Destruction or Mutilation of Warrant. Upon receipt by the Company of evidence reasonably satisfactory to it of the loss, theft, destruction or mutilation of this Warrant, and in the case of any such loss, theft or destruction, upon receipt of a bond, indemnity or security
            reasonably satisfactory to the Company, or, in the case of any such mutilation, upon surrender and cancellation of this Warrant, the Company shall make and deliver, in lieu of such lost, stolen, destroyed or mutilated Warrant, a new Warrant of like tenor and representing the right to purchase the same aggregate number of Shares as provided for in such lost, stolen, destroyed or mutilated Warrant.

            11.       Saturdays, Sundays, Holidays, etc. If the last or appointed day for the taking of any action or the expiration of any right required or granted herein shall not be a business day, then such action may be taken or such right may be exercised on the next succeeding day that is a business
            day.

            12.       Rule 144 Information. The Company covenants that it will use its reasonable best efforts to timely file all reports and other documents required to be filed by it under the Securities Act and the Exchange Act and the rules and regulations promulgated by the SEC thereunder (or, if the
            Company is not required to file such reports, it will, upon the request of any

             

            
                

                
                    	
                                 

                            	
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            Warrantholder, make publicly available such information as necessary to permit sales pursuant to Rule 144 under the Securities Act), and it will use reasonable best efforts to take such further action as any Warrantholder may reasonably request, in each case to the extent required from time to time to enable such holder to, if permitted by the terms of this Warrant and the Purchase Agreement, sell this
            Warrant without registration under the Securities Act within the limitation of the exemptions provided by (A) Rule 144 under the Securities Act, as such rule may be amended from time to time, or (B) any successor rule or regulation hereafter adopted by the SEC. Upon the written request of any Warrantholder, the Company will deliver to such Warrantholder a written statement that it has complied with such requirements.

            13.       Adjustments and Other Rights. The Exercise Price and the number of Shares issuable upon exercise of this Warrant shall be subject to adjustment from time to time as follows; provided, that if more than one subsection of this Section 13 is
            applicable to a single event, the subsection shall be applied that produces the largest adjustment and no single event shall cause an adjustment under more than one subsection of this Section 13 so as to result in duplication:

            (A)      Stock Splits, Subdivisions, Reclassifications or Combinations. If the Company shall (i) declare and pay a dividend or make a distribution on its Common Stock in shares of Common Stock, (ii) subdivide or reclassify the outstanding shares of Common Stock into a greater number of shares, or (iii)
            combine or reclassify the outstanding shares of Common Stock into a smaller number of shares, the number of Shares issuable upon exercise of this Warrant at the time of the record date for such dividend or distribution or the effective date of such subdivision, combination or reclassification shall be proportionately adjusted so that the Warrantholder after such date shall be entitled to purchase the number of shares of Common Stock which such holder would have owned or been
            entitled to receive in respect of the shares of Common Stock subject to this Warrant after such date had this Warrant been exercised immediately prior to such date. In such event, the Exercise Price in effect at the time of the record date for such dividend or distribution or the effective date of such subdivision, combination or reclassification shall be adjusted to the number obtained by dividing (x) the product of (1) the number of Shares issuable upon the exercise of this
            Warrant before such adjustment and (2) the Exercise Price in effect immediately prior to the record or effective date, as the case may be, for the dividend, distribution, subdivision, combination or reclassification giving rise to this adjustment by (y) the new number of Shares issuable upon exercise of the Warrant determined pursuant to the immediately preceding sentence.

            (B)      Certain Issuances of Common Shares or Convertible Securities. Until the earlier of (i) the date on which the Original Warrantholder no longer holds this Warrant or any portion thereof and (ii) the third anniversary of the Issue Date, if the Company shall issue shares of Common Stock (or rights
            or warrants or other securities exercisable or convertible into or exchangeable (collectively, a “conversion”) for shares of Common Stock) (collectively, “convertible securities”) (other than in Permitted Transactions (as defined below) or a transaction to which subsection (A) of this Section 13 is applicable) without consideration or at a consideration per
            share (or having a conversion price per share) that is less than 90% of the Market Price on the last trading day preceding the date of the agreement on pricing such shares (or such convertible securities) then, in such event:

             

            
                

                
                    	
                                 

                            	
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            (A) the number of Shares issuable upon the exercise of this Warrant immediately prior to the date of the agreement on pricing of such shares (or of such convertible securities) (the “Initial Number”) shall be increased to the number obtained by multiplying the Initial Number by a fraction (A) the numerator of which shall be
            the sum of (x) the number of shares of Common Stock of the Company outstanding on such date and (y) the number of additional shares of Common Stock issued (or into which convertible securities may be exercised or convert) and (B) the denominator of which shall be the sum of (I) the number of shares of Common Stock outstanding on such date and (II) the number of shares of Common Stock which the aggregate consideration receivable by the Company for the total number of shares of Common
            Stock so issued (or into which convertible securities may be exercised or convert) would purchase at the Market Price on the last trading day preceding the date of the agreement on pricing such shares (or such convertible securities); and

            (B) the Exercise Price payable upon exercise of the Warrant shall be adjusted by multiplying such Exercise Price in effect immediately prior to the date of the agreement on pricing of such shares (or of such convertible securities) by a fraction, the numerator of which shall be the number of shares of Common Stock issuable upon exercise of this Warrant prior to such date and the
            denominator of which shall be the number of shares of Common Stock issuable upon exercise of this Warrant immediately after the adjustment described in clause (A) above.

            For purposes of the foregoing, the aggregate consideration receivable by the Company in connection with the issuance of such shares of Common Stock or convertible securities shall be deemed to be equal to the sum of the net offering price (including the Fair Market Value of any non-cash consideration and after deduction of any related expenses payable to third parties) of all such
            securities plus the minimum aggregate amount, if any, payable upon exercise or conversion of any such convertible securities into shares of Common Stock; and “Permitted Transactions” shall mean issuances (i) as consideration for or to fund the acquisition of businesses and/or related assets, (ii) in connection with employee benefit plans and compensation related arrangements in the ordinary course and consistent with
            past practice approved by the Board of Directors, (iii) in connection with a public or broadly marketed offering and sale of Common Stock or convertible securities for cash conducted by the Company or its affiliates pursuant to registration under the Securities Act or Rule 144A thereunder on a basis consistent with capital raising transactions by comparable financial institutions and (iv) in connection with the exercise of preemptive rights on terms existing as of the Issue Date.
            Any adjustment made pursuant to this Section 13(B) shall become effective immediately upon the date of such issuance.

            (C)      Other Distributions. In case the Company shall fix a record date for the making of a distribution to all holders of shares of its Common Stock of securities, evidences of indebtedness, assets, cash, rights or warrants (excluding Ordinary Cash Dividends, dividends of its Common Stock and other
            dividends or distributions referred to in Section 13(A)), in each such case, the Exercise Price in effect prior to such record date shall be reduced immediately thereafter to the price determined by multiplying the Exercise Price in effect immediately prior to the reduction by the quotient of (x) the Market Price of the Common Stock on the last trading day preceding the first date on which the Common Stock trades regular way on the principal

             

            
                

                
                    	
                                 

                            	
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            national securities exchange on which the Common Stock is listed or admitted to trading without the right to receive such distribution, minus the amount of cash and/or the Fair Market Value of the securities, evidences of indebtedness, assets, rights or warrants to be so distributed in respect of one share of Common Stock (such amount and/or Fair Market Value, the “Per
            Share Fair Market Value”) divided by (y) such Market Price on such date specified in clause (x); such adjustment shall be made successively whenever such a record date is fixed. In such event, the number of Shares issuable upon the exercise of this Warrant shall be increased to the number obtained by dividing (x) the product of (1) the number of Shares issuable upon the exercise of this Warrant before such adjustment, and (2) the Exercise Price in
            effect immediately prior to the distribution giving rise to this adjustment by (y) the new Exercise Price determined in accordance with the immediately preceding sentence. In the case of adjustment for a cash dividend that is, or is coincident with, a regular quarterly cash dividend, the Per Share Fair Market Value would be reduced by the per share amount of the portion of the cash dividend that would constitute an Ordinary Cash Dividend. In the event that such distribution is not
            so made, the Exercise Price and the number of Shares issuable upon exercise of this Warrant then in effect shall be readjusted, effective as of the date when the Board of Directors determines not to distribute such shares, evidences of indebtedness, assets, rights, cash or warrants, as the case may be, to the Exercise Price that would then be in effect and the number of Shares that would then be issuable upon exercise of this Warrant if such record date had not been
            fixed.

            (D)      Certain Repurchases of Common Stock. In case the Company effects a Pro Rata Repurchase of Common Stock, then the Exercise Price shall be reduced to the price determined by multiplying the Exercise Price in effect immediately prior to the Effective Date of such Pro Rata Repurchase by a fraction
            of which the numerator shall be (i) the product of (x) the number of shares of Common Stock outstanding immediately before such Pro Rata Repurchase and (y) the Market Price of a share of Common Stock on the trading day immediately preceding the first public announcement by the Company or any of its Affiliates of the intent to effect such Pro Rata Repurchase, minus (ii) the aggregate purchase price of the Pro Rata Repurchase, and of which the denominator shall be the product of (i)
            the number of shares of Common Stock outstanding immediately prior to such Pro Rata Repurchase minus the number of shares of Common Stock so repurchased and (ii) the Market Price per share of Common Stock on the trading day immediately preceding the first public announcement by the Company or any of its Affiliates of the intent to effect such Pro Rata Repurchase. In such event, the number of shares of Common Stock issuable upon the exercise of this Warrant shall be increased to the
            number obtained by dividing (x) the product of (1) the number of Shares issuable upon the exercise of this Warrant before such adjustment, and (2) the Exercise Price in effect immediately prior to the Pro Rata Repurchase giving rise to this adjustment by (y) the new Exercise Price determined in accordance with the immediately preceding sentence. For the avoidance of doubt, no increase to the Exercise Price or decrease in the number of Shares issuable upon exercise of this Warrant
            shall be made pursuant to this Section 13(D).

            (E)       Business Combinations. In case of any Business Combination or reclassification of Common Stock (other than a reclassification of Common Stock referred to in Section 13(A)), the Warrantholder’s right to receive Shares upon exercise of this Warrant shall be converted into the right to
            exercise this Warrant to acquire the number of shares of stock or other securities or property (including cash) which the Common Stock issuable (at the time of such Business Combination or reclassification) upon exercise of this Warrant immediately prior to such

             

            
                

                
                    	
                                 

                            	
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            Business Combination or reclassification would have been entitled to receive upon consummation of such Business Combination or reclassification; and in any such case, if necessary, the provisions set forth herein with respect to the rights and interests thereafter of the Warrantholder shall be appropriately adjusted so as to be applicable, as nearly as may reasonably be, to the Warrantholder’s
            right to exercise this Warrant in exchange for any shares of stock or other securities or property pursuant to this paragraph. In determining the kind and amount of stock, securities or the property receivable upon exercise of this Warrant following the consummation of such Business Combination, if the holders of Common Stock have the right to elect the kind or amount of consideration receivable upon consummation of such Business Combination, then the consideration that the
            Warrantholder shall be entitled to receive upon exercise shall be deemed to be the types and amounts of consideration received by the majority of all holders of the shares of common stock that affirmatively make an election (or of all such holders if none make an election).

            (F)       Rounding of Calculations; Minimum Adjustments. All calculations under this Section 13 shall be made to the nearest one-tenth (1/10th) of a cent or to the nearest one-hundredth (1/100th) of a share, as the case may be. Any provision of this Section 13 to the contrary notwithstanding, no
            adjustment in the Exercise Price or the number of Shares into which this Warrant is exercisable shall be made if the amount of such adjustment would be less than $0.01 or one-tenth (1/10th) of a share of Common Stock, but any such amount shall be carried forward and an adjustment with respect thereto shall be made at the time of and together with any subsequent adjustment which, together with such amount and any other amount or amounts so carried forward, shall aggregate $0.01 or
            1/10th of a share of Common Stock, or more.

            (G)      Timing of Issuance of Additional Common Stock Upon Certain Adjustments. In any case in which the provisions of this Section 13 shall require that an adjustment shall become effective immediately after a record date for an event, the Company may defer until the occurrence of such event (i)
            issuing to the Warrantholder of this Warrant exercised after such record date and before the occurrence of such event the additional shares of Common Stock issuable upon such exercise by reason of the adjustment required by such event over and above the shares of Common Stock issuable upon such exercise before giving effect to such adjustment and (ii) paying to such Warrantholder any amount of cash in lieu of a fractional share of Common Stock;
            provided, however, that the Company upon request shall deliver to such Warrantholder a due bill or other appropriate instrument evidencing such Warrantholder’s right to receive such additional shares, and such cash, upon the occurrence of the event requiring such adjustment.

            (H)      Completion of Qualified Equity Offering. In the event the Company (or any successor by Business Combination) completes one or more Qualified Equity Offerings on or prior to December 31, 2009 that result in the Company (or any such successor ) receiving aggregate gross proceeds of not less than
            100% of the aggregate liquidation preference of the Preferred Shares (and any preferred stock issued by any such successor to the Original Warrantholder under the CPP), the number of shares of Common Stock underlying the portion of this Warrant then held by the Original Warrantholder shall be thereafter reduced by a number of shares of Common Stock equal to the product of (i) 0.5 and (ii) the number of shares underlying

             

            
                

                
                    	
                                 

                            	
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            the Warrant on the Issue Date (adjusted to take into account all other theretofore made adjustments pursuant to this Section 13).

            (I)        Other Events. For so long as the Original Warrantholder holds this Warrant or any portion thereof, if any event occurs as to which the provisions of this Section 13 are not strictly applicable or, if strictly applicable, would not, in the good faith judgment of the Board of Directors
            of the Company, fairly and adequately protect the purchase rights of the Warrants in accordance with the essential intent and principles of such provisions, then the Board of Directors shall make such adjustments in the application of such provisions, in accordance with such essential intent and principles, as shall be reasonably necessary, in the good faith opinion of the Board of Directors, to protect such purchase rights as aforesaid. The Exercise Price or the number of Shares
            into which this Warrant is exercisable shall not be adjusted in the event of a change in the par value of the Common Stock or a change in the jurisdiction of incorporation of the Company.

            (J)       Statement Regarding Adjustments. Whenever the Exercise Price or the number of Shares into which this Warrant is exercisable shall be adjusted as provided in Section 13, the Company shall forthwith file at the principal office of the Company a statement showing in reasonable detail the
            facts requiring such adjustment and the Exercise Price that shall be in effect and the number of Shares into which this Warrant shall be exercisable after such adjustment, and the Company shall also cause a copy of such statement to be sent by mail, first class postage prepaid, to each Warrantholder at the address appearing in the Company’s records.

            (K)      Notice of Adjustment Event. In the event that the Company shall propose to take any action of the type described in this Section 13 (but only if the action of the type described in this Section 13 would result in an adjustment in the Exercise Price or the number of Shares into which this Warrant
            is exercisable or a change in the type of securities or property to be delivered upon exercise of this Warrant), the Company shall give notice to the Warrantholder, in the manner set forth in Section 13(J), which notice shall specify the record date, if any, with respect to any such action and the approximate date on which such action is to take place. Such notice shall also set forth the facts with respect thereto as shall be reasonably necessary to indicate the effect on the
            Exercise Price and the number, kind or class of shares or other securities or property which shall be deliverable upon exercise of this Warrant. In the case of any action which would require the fixing of a record date, such notice shall be given at least 10 days prior to the date so fixed, and in case of all other action, such notice shall be given at least 15 days prior to the taking of such proposed action. Failure to give such notice, or any defect therein, shall not affect the
            legality or validity of any such action.

            (L)       Proceedings Prior to Any Action Requiring Adjustment. As a condition precedent to the taking of any action which would require an adjustment pursuant to this Section 13, the Company shall take any action which may be necessary, including obtaining regulatory, New York Stock Exchange,
            NASDAQ Stock Market or other applicable national securities exchange or stockholder approvals or exemptions, in order that the Company may thereafter validly and legally issue as fully paid and nonassessable all shares of Common Stock that the Warrantholder is entitled to receive upon exercise of this Warrant pursuant to this Section 13.

             

            
                

                
                    	
                                 

                            	
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            (M)     Adjustment Rules. Any adjustments pursuant to this Section 13 shall be made successively whenever an event referred to herein shall occur. If an adjustment in Exercise Price made hereunder would reduce the Exercise Price to an amount below par value of the Common Stock, then such adjustment in
            Exercise Price made hereunder shall reduce the Exercise Price to the par value of the Common Stock.

            14.       Exchange. At any time following the date on which the shares of Common Stock of the Company are no longer listed or admitted to trading on a national securities exchange (other than in connection with any Business Combination), the Original Warrantholder may cause the Company to exchange
            all or a portion of this Warrant for an economic interest (to be determined by the Original Warrantholder after consultation with the Company) of the Company classified as permanent equity under U.S. GAAP having a value equal to the Fair Market Value of the portion of the Warrant so exchanged. The Original Warrantholder shall calculate any Fair Market Value required to be calculated pursuant to this Section 14, which shall not be subject to the Appraisal Procedure.

            15.       No Impairment. The Company will not, by amendment of its Charter or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms to be
            observed or performed hereunder by the Company, but will at all times in good faith assist in the carrying out of all the provisions of this Warrant and in taking of all such action as may be necessary or appropriate in order to protect the rights of the Warrantholder.

            16.       Governing Law. This Warrant will be governed by and construed in accordance with the federal law of the United States if and to the extent such law is applicable, and otherwise in accordance with the laws of the State of New York applicable to contracts made and to
            be performed entirely within such State. Each of the Company and the Warrantholder agrees (a) to submit to the exclusive jurisdiction and venue of the United States District Court for the District of Columbia for any civil action, suit or proceeding arising out of or relating to this Warrant or the transactions contemplated hereby, and (b) that notice may be served upon the Company at the address in Section 20 below and upon the Warrantholder at the address for the Warrantholder set
            forth in the registry maintained by the Company pursuant to Section 9 hereof. To the extent permitted by applicable law, each of the Company and the Warrantholder hereby unconditionally waives trial by jury in any civil legal action or proceeding relating to the Warrant or the transactions contemplated hereby or thereby.

            17.       Binding Effect. This Warrant shall be binding upon any successors or assigns of the Company.

            18.       Amendments. This Warrant may be amended and the observance of any term of this Warrant may be waived only with the written consent of the Company and the Warrantholder.

            19.       Prohibited Actions. The Company agrees that it will not take any action which would entitle the Warrantholder to an adjustment of the Exercise Price if the total number of shares of Common Stock issuable after such action upon exercise of this Warrant, together with

             

            
                

                
                    	
                                 

                            	
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            all shares of Common Stock then outstanding and all shares of Common Stock then issuable upon the exercise of all outstanding options, warrants, conversion and other rights, would exceed the total number of shares of Common Stock then authorized by its Charter.

            20.       Notices. Any notice, request, instruction or other document to be given hereunder by any party to the other will be in writing and will be deemed to have been duly given (a) on the date of delivery if delivered personally, or by facsimile, upon confirmation of receipt, or (b) on the second
            business day following the date of dispatch if delivered by a recognized next day courier service. All notices hereunder shall be delivered as set forth in Item 8 of Schedule A hereto, or pursuant to such other instructions as may be designated in writing by the party to receive such notice.

            21.       Entire Agreement. This Warrant, the forms attached hereto and Schedule A hereto (the terms of which are incorporated by reference herein), and the Letter Agreement (including all documents incorporated therein), contain the entire agreement between the parties with respect to the subject
            matter hereof and supersede all prior and contemporaneous arrangements or undertakings with respect thereto.

            [Remainder of page intentionally left blank]

             

            
                

                
                    	
                                 

                            	
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            [Form of Notice of Exercise]

            Date: _________

            
                	
                            TO:

                        	
                            Flushing Financial Corporation

                        

            

            
                	
                            RE:

                        	
                            Election to Purchase Common Stock

                        

            

            The undersigned, pursuant to the provisions set forth in the attached Warrant, hereby agrees to subscribe for and purchase the number of shares of the Common Stock set forth below covered by such Warrant. The undersigned, in accordance with Section 3 of the Warrant, hereby agrees to pay the aggregate Exercise Price for such shares of Common Stock in the manner set forth below. A new
            warrant evidencing the remaining shares of Common Stock covered by such Warrant, but not yet subscribed for and purchased, if any, should be issued in the name set forth below.

            
                	
                            Number of Shares of Common Stock

                        

            

            Method of Payment of Exercise Price (note if cashless exercise pursuant to Section 3(i) of the Warrant or cash exercise pursuant to Section 3(ii) of the Warrant, with consent of the Company and the Warrantholder)              

            
                	
                            Aggregate Exercise Price:

                        

            

            
                	
                             

                        	
                            Holder:

                        

            

            
                	
                             

                        	
                            By:

                        

            

            
                	
                             

                        	
                            Name:

                        

            

            
                	
                             

                        	
                            Title:

                        

            

             

            
                

                
                    	
                                 

                            	
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            IN WITNESS WHEREOF, the Company has caused this Warrant to be duly executed by a duly authorized officer.

            Dated: December 19, 2008

            COMPANY: Flushing Financial Corporation

             

            
                	
                             

                        	
                            By:

                        	
                            /s/Maria A. Grasso

                        

            

            
                	
                             

                        	
                            Name: Maria A. Grasso

                        

            

            Title: Executive Vice President, Chief Operating Officer and Corporate Secretary

             

            Attest:

             

            
                	
                             

                        	
                            By:

                        	
                            /s/ David W. Fry

                        

            

            
                	
                             

                        	
                            Name: David W. Fry

                        

            

            Title: Executive Vice President and Chief Financial Officer

            [Signature Page to Warrant]

             

            
                

                
                    	
                                 

                            	
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            SCHEDULE A

             

            Item 1  

            Name: Flushing Financial Corporation

            Corporate or other organizational form: Corporate

            Jurisdiction of organization: Delaware

             

            Item 2

            Exercise Price: $13.97

             

            Item 3

            Issue Date: December 19, 2008

             

            Item 4

            Amount of last dividend declared prior to the Issue Date: $0.13 per Common Share, Declared 11/18/2008 and payable 12/30/2008

             

            Item 5

            Date of Letter Agreement between the Company and the United States Department of the Treasury: December 19, 2008

             

            Item 6

            Number of shares of Common Stock: 751,611

             

            Item 7

            
                	
                            Company’s address:

                        	
                            Flushing Financial Corporation

                        

            

            
                	
                             

                        	
                            1979 Marcus Avenue, Suite E140

                        

            

            
                	
                             

                        	
                            Lake Success, NY 11042

                        

            

             

            Item 8

            
                	
                            Notice information:

                        	
                            Flushing Financial Corporation

                        

            

            
                	
                             

                        	
                            1979 Marcus Avenue, Suite E140

                        

            

            
                	
                             

                        	
                            Lake Success, NY 11042

                        

            

             

            
                	
                             

                        	
                            With a copy to:

                        

            

             

            
                	
                             

                        	
                            Putney Twombly Hall & Hirson, LLP

                        

            

            
                	
                             

                        	
                            521 Fifth Avenue

                        

            

            
                	
                             

                        	
                            New York, NY 10175

                        

            

            
                 
            

            
                 

                
                    

                

            

             

            
                	
                             

                        	
                            The Bank of New York Mellon

                        

            

            
                	
                             

                        	
                            101 Barclay Street, 4 West

                        

            

            
                	
                             

                        	
                            Capital Purchase Program

                        

            

            
                	
                             

                        	
                            New York, NY 1286

                        

            

            
                	
                             

                        	
                            Attn: Courtney Bartholomew

                        

            

            
                 
            

            
                 
            

            
                 
            

            
                Initial exercise price to be calculated based on the average of closing prices of the Common Stock on the 20 trading days ending on the last trading day prior to the date the Company's application for participation in the Capital Purchase Program was approved by the United States Department of the Treasury.

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