S-8

As filed with the Securities and Exchange Commission on August 16, 2006

Registration No. 333-

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM S-8

REGISTRATION STATEMENT

UNDER

THE SECURITIES ACT OF 1933

FLUSHING FINANCIAL CORPORATION

(Exact name of registrant as specified in its charter)

Delaware	6035	11-3209278
(State or other jurisdiction of incorporation or organization)	(Primary Standard Industrial Classification Code Number)	(I.R.S. Employer Identification Number)

1979 Marcus Avenue, Suite E140

Lake Success, New York 11042

(718) 961-5400

(Address, Including Zip Code, and Telephone Number, Including Area Code, of

Registrant’s Principal Executive Offices)

ATLANTIC LIBERTY FINANCIAL CORP. 2003 INCENTIVE STOCK BENEFIT PLAN

(Full title of the Plan)

______________________

Mr. John R. Buran

President and Chief Executive Officer

Flushing Financial Corporation

1979 Marcus Avenue, Suite E140

Lake Success, New York 11042

(718) 961-5400

(Address, Including Zip Code, and Telephone Number,

Including Area Code, of Agent for Service)

Copy to:

Douglas J. McClintock, Esq.

Thacher Proffitt & Wood LLP

Two World Financial Center

New York, NY 10281

(212) 912-7400

(Name and address, including Zip Code, telephone number and area code, of agent for service)

______________________

CALCULATION OF REGISTRATION FEE

Title of Securities to be Registered	Amount to be Registered (1)	Proposed Maximum Offering Price Per Share (2)	Proposed Maximum Aggregate Offering Price (2)	Amount of Registration Fee
Common Stock, $0.01 par value	212,687	$17.02	$ 3,618,869.31	$387

(1)   This Form S-8 is registering 212,687 shares of common stock of Flushing Financial Corporation representing the number of shares to be issued upon the exercise of options outstanding under the Atlantic Liberty Financial Corp. 2003 Incentive Stock Benefit Plan, after giving effect to the exchange ratio used in the merger of Flushing Financial with Atlantic Liberty Financial Corp. of 1.43 of a share of Flushing Financial common stock for each share of Atlantic Liberty common stock outstanding at the effective time of the merger.

(2)   Estimated solely for the purpose of calculating the registration fee in accordance with Rule 457 of the Securities Act of 1933 (“Securities Act”), based on the average of the daily high and low sales prices of common stock of the Flushing Financial on the Nasdaq National Market at the close of trading as of August 14, 2006.

EXPLANATORY NOTE

On June 30, 2006, Atlantic Liberty Financial Corp. (“Atlantic Liberty”) merged with and into Flushing Financial Corporation (the “Registrant”), with the Registrant as the surviving corporation. As a result of the merger, each outstanding share of Atlantic Liberty common stock was converted into the right to receive 1.43 shares of the Registrant’s common stock, or a cash payment of $24.00, or a combination of the Registrant’s common stock and cash.

This registration statement covers 212,687 shares of common stock of the Registrant, available for issuance upon exercise of outstanding options granted under the Atlantic Liberty Financial Corp. 2003 Incentive Stock Benefit Plan, which the Registrant assumed pursuant to the Agreement and Plan of Merger, dated December 20, 2005, by and between the Registrant and Atlantic Liberty.

Each outstanding stock option issued pursuant to the Atlantic Liberty Financial Corp. 2003 Incentive Stock Benefit Plan prior to the effective time of the merger is no longer exercisable for shares of Atlantic Liberty common stock, but instead, constitutes an option to acquire, on the same terms and conditions as were applicable under such option immediately prior to the consummation of the merger, that number of shares of the Registrant’s common stock equal to the product of the number of shares of Atlantic Liberty and the exchange ratio of 1.43. The exercise price per share of the Registrant’s common stock under each new option will be equal to the quotient of (i) the per share exercise price of the Atlantic Liberty option being converted and (ii) the exchange ratio of 1.43, rounded up to the next whole cent.

PART I

INFORMATION REQUIRED IN THE SECTION 10(a) PROSPECTUS

Item 1.Plan Information.

Not required to be filed with the Securities and Exchange Commission (the “Commission”) pursuant to the Note to Part I of Form S-8.

Item 2.Registrant Information and Employee Plan Annual Information.

Not required to be filed with the Commission pursuant to the Note to Part I of Form S-8.

The documents containing the information specified in this Part I will be sent or given to employees of the Registrant as specified by Rule 428(b)(1) of the Securities Exchange Act of 1934, as amended (“Exchange Act”). Such documents need not be filed with the Commission either as part of this registration statement or as prospectuses or prospectus supplements pursuant to Rule 424 of the Exchange Act. The Registrant will provide without charge to each person to whom the prospectus is delivered, upon request of any such person, a copy of any or all of the documents incorporated herein by reference in Item 3 below (other than exhibits to such documents). Written requests should be directed to:

Human Resources Department

Flushing Financial Corporation

1979 Marcus Avenue, Suite E140

Lake Success, NY 11042

Telephone requests may be directed to (718) 961-5400. These documents and the documents incorporated by reference in this registration statement pursuant to Item 3 of Part II of this form, taken together, constitute a prospectus that meets the requirements of Section 10(a) of the Securities Act.

PART II

Item 3.Incorporation of Documents by Reference.

This document incorporates by reference the following documents that have previously been filed with the Commission by the Registrant:

·   Annual Report on Form 10-K for the year ended December 31, 2005;

·   Quarterly Report on Form 10-Q for the quarter ended March 31, 2006;

·   Quarterly Report on Form 10-Q for the quarter ended June 30, 2006;

·   Current Report on Form 8-K filed on February 22, 2006;

·   Current Report on Form 8-K filed on April 26, 2006;

·   Current Report on Form 8-K filed on May 16, 2006;

·   Current Report on Form 8-K filed on May 17, 2006;

·   Current Report on Form 8-K filed on June 8, 2006;

·   Current Report on Form 8-K filed on June 22, 2006;

·   Current Report on Form 8-K filed on July 3, 2006;

·   Current Report on Form 8-K filed on August 16, 2006; and

·   The description of the Registrant’s common stock set forth in the registration statement on Form 8-A, filed on September 25, 1995 pursuant to Section 12 of the Exchange Act, including any amendment or report filed with the Commission for the purpose of updating this description.

All documents filed by the Registrant pursuant to Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act after the date of this registration statement and prior to the filing of a post-effective amendment which indicates that all securities offered hereby have been sold or which deregisters all securities then remaining unsold, shall be deemed to be incorporated by reference in this registration statement and to be a part hereof from the date of the filing of such documents.

Any statement contained in a document incorporated by reference herein shall be deemed to be modified or superseded for purposes of this registration statement to the extent that a statement contained in a subsequently filed document which is also incorporated by reference herein modifies or supersedes such statement.

Item 4.Description of Securities.

Not Applicable.

Item 5.Interests of Named Experts and Counsel.

Not Applicable.

Item 6.Indemnification of Directors and Officers.

Section 145 of the Delaware General Corporation Law inter alia, empowers a Delaware corporation to indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal administrative or investigative (other than an action by or in the right of the corporation) by reason of the fact that such person is or was a director, officer, employee or agent of the corporation, or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by him in connection with such action, suit or proceeding if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interest of the corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful. Similar indemnity is authorized for such person against expenses (including attorneys’ fees) actually and reasonably incurred in connection with the defense or settlement of any threatened, pending or completed action or suit by or in the right of the corporation if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the corporation, and provided further that (unless a court of competent jurisdiction otherwise provides) he shall not have been adjudged liable to the corporation. Any such indemnification (unless ordered by a court) may be made by the corporation only as authorized in each specific case by the corporation upon a determination that indemnification of the present or former director, officer, employee or agent is proper because such person has met the applicable standard of conduct, which indemnification shall be made in the case of a director or officer at the time of the determination by the shareholders, a majority vote of disinterested directors, a committee of disinterested directors or by independent legal counsel in a written opinion, if there are no such directors or if such directors so direct.

Section 145 further authorizes a corporation to purchase and maintain insurance on behalf of any person who is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation or enterprise, against any liability asserted against him, and incurred by him in any such capacity, or arising out of his status as such, whether or not the corporation would otherwise have the power to indemnify him against such liability under Section 145.

Article TENTH of the Registrant’s Certificate of Incorporation sets forth circumstances under which directors, officers, employees and agents of the Registrant may be insured or indemnified against liability which they incur in their capacities as such:

TENTH.

(A)No director of the Corporation shall be personally liable to the Corporation or its stockholders for monetary damages for breach of fiduciary duty as a director, except for liability (i) for any breach of the director’s duty of loyalty to the Corporation or its stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) under Section 174 of the Delaware General Corporation Law, or (iv) for any transaction from which the director derived an improper personal benefit. If the Delaware General Corporation Law is amended after the date of this Certificate of Incorporation to authorize corporate action further eliminating or limiting the personal liability of directors, then the liability of a director of the Corporation shall be eliminated or limited to the fullest extent permitted by the Delaware General Corporation law, as so amended.

(B)The Corporation shall indemnify to the fullest extent permitted by the laws of the State of Delaware as from time to time in effect any person who was or is a party or is threatened to be made a party to, or otherwise requires representation by counsel in connection with, any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative, including an action by or in the right of the Corporation (a “Proceeding”), by reason of the fact that such person is or was a director or officer of the Corporation, or, while serving as a director or officer of the Corporation, is or was serving, in any capacity, at the request of the Corporation, any other corporation, partnership, joint venture, trust, association or other enterprise, including service with respect to an employee benefit plan, or by reason of any action alleged to have been taken or omitted in such capacity, against judgments, fines, penalties, amounts paid in settlement, and expenses (including attorneys’ fees and expenses, expenses and cost of investigations, and expenses of enforcement of such person’s rights under this Article TENTH) incurred by such person in connection with such Proceeding; provided, however, that no such indemnification shall be required for amounts paid in any settlement or other nonadjudicated disposition of any Proceeding unless the Board of Directors of the Corporation has given its prior consent to such settlement or disposition.

(C)The right to indemnification conferred by this Article TENTH shall also include the right of such persons to be paid in advance by the Corporation for their expenses to the full extent permitted by the laws of the State of Delaware as from time to time in effect. The right to indemnification conferred on such persons by this Article TENTH shall be a contract right and shall inure to the benefit of the indemnitee’s heirs, executors and administrators.

(D)The Corporation may, to the extent authorized from time to time by the Board of Directors, indemnify to the fullest extent permitted by the laws of the State of Delaware as from time to time in effect any person who was or is party or is threatened to be made a party to, or otherwise requires representation by counsel in connection with, any Proceeding, by reason of the fact that such person is or was an employee (other than an officer) or agent of the Corporation, or is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, including service with respect to an employee benefit plan, or by reason of any action alleged to have been taken or omitted in such capacity.

The rights and authority conferred in this Article TENTH shall not be exclusive of any other right which any person may have or hereafter acquire under any statute, provision of this Certificate of Incorporation or the By-Laws of the Corporation, agreement, vote of stockholders or disinterested directors or otherwise.

Notwithstanding anything to the contrary contained in this Article TENTH, the Corporation shall not indemnify any person in connection with any Proceeding initiated by such person against any other person or entity other than the Corporation or any Subsidiary unless such Proceeding was authorized by the Board of Directors of the Corporation.

Neither the amendment nor repeal of this Article TENTH, nor the adoption of any provision of the Certificate of Incorporation or By-Laws or of any statute inconsistent with this Article TENTH, shall eliminate or reduce the effect of this Article TENTH in respect of any acts or omissions occurring prior to such amendment, repeal or adoption of an inconsistent provision.

Item 7.Exemption from Registration Claimed.

Not Applicable.

Item 8.Exhibits.

4.1	Atlantic Liberty Financial Corp. 2003 Incentive Stock Benefit Plan
4.2	Certificate of Incorporation of the Registrant*
4.3	Form of Stock Option Assumption Agreement
4.4	Bylaws of Flushing Financial Corporation*
5.1	Opinion of Thacher Proffitt & Wood LLP, counsel for the Registrant, as to legality
23.1	Consent of Thacher Proffitt & Wood LLP (included in Exhibit 5.1)
23.2	Consent of PricewaterhouseCoopers LLP

___________

* Incorporated by reference to the Exhibits to Flushing Financial Corporation’s Registration Statement on Form S-1 (Registration No. 333-96488).

Item 9.Undertakings.

(a)Rule 415 offering. The undersigned Registrant hereby undertakes;

(1)To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement:

(i)To include any prospectus required by Section 10(a)(3) of the Securities Act;

(ii)To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement; and

(iii)To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement.

Provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if the registration statement is on Form S-8, and the information required to be included in a post-effective amendment by those paragraphs is contained in reports filed with or furnished to the Commission by the Registrant pursuant to Section 13 or 15(d) of the Exchange Act that are incorporated by reference in the registration statement.

(2)That, for the purpose of determining liability under the Securities Act, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

(3)To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering.

(b)Filings incorporating subsequent Exchange Act documents by reference. The undersigned Registrant hereby undertakes that, for purposes of determining any liability under the Securities Act, each filing of the Registrant’s annual report pursuant to Section 13(a) or 15(d) of the Exchange Act (and, where applicable, each filing of an employee benefit plan’s annual report pursuant to Section 15(d) of the Exchange Act) that is incorporated by reference in the registration statement shall be deemed to be a new registration statement relating to the securities offered therein and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

(c)Incorporated annual and quarterly reports. The undersigned Registrant hereby undertakes to deliver or cause to be delivered with the prospectus, to each person to whom the prospectus is sent or given, the latest annual report to security holders that is incorporated by reference in the prospectus and furnished pursuant to and meeting the requirements of Rule 14a-3 or Rule 14c-3 under the Securities Exchange Act of 1934; and, where interim financial information required to be presented by Article 3 of Regulation S-X is not set forth in the prospectus, to deliver, or cause to be delivered to each person to whom the prospectus is sent or given, the latest quarterly report that is specifically incorporated by reference in the prospectus to provide such interim financial information.

(d)Filing of registration on Form S-8. Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the Registrant pursuant to the foregoing provisions, or otherwise, the Registrant has been advised that in the opinion of the Commission such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant for expenses incurred or paid by a director, officer or controlling person of the Registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.

SIGNATURES

Pursuant to the requirements of the Securities Act, the Registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-8 and has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the Village of Lake Success, State of New York, on August 15, 2006.

Flushing Financial Corporation

By: /s/ John R. Buran

John R. Buran

President & Chief Executive Officer

POWER OF ATTORNEY

We, the undersigned directors and officers of Flushing Financial Corporation (the “Registrant”) severally constitute and appoint John R. Buran with full power of substitution, our true and lawful attorney and agent, to do any and all things and acts in our names in the capacities indicated below which said John R. Buran may deem necessary or advisable to enable the Registrant to comply with the Securities Act of 1933, and any rules, regulations and requirements of the Securities and Exchange Commission, in connection with this registration statement on Form S-8, including specifically, but not limited to, power and authority to sign for us or any of us in our names in the capacities indicated below the registration statement and any and all amendments (including post-effective amendments) thereto; and we hereby ratify and confirm all that said John R. Buran shall do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities and on the dates indicated.

Name	Title	Date
/s/ John R. Buran                     John R. Buran	Director, President and Chief Executive Officer	August 15, 2006
/s/ Gerard P. Tully                    Gerard P. Tully	Director and Chairman of the Board	August 15, 2006
/s/ David W. Fry                      David W. Fry	Senior Vice President and Chief Financial Officer	August 15, 2006
/s/ Steven J. D’Iorio                Steven J. D’Iorio	Director	August 15, 2006
/s/ Louis C. Grassi                   Louis C. Grassi	Director	August 15, 2006
/s/ Michael J. Hegarty             Michael J. Hegarty	Director	August 15, 2006
/s/ John J. McCabe                  John J. McCabe	Director	August 15, 2006
/s/ Vincent F. Nicolosi            Vincent F. Nicolosi	Director	August 15, 2006
/s/ Donna M. O’ Brien            Donna M. O’Brien	Director	August 15, 2006
/s/ Franklin F. Regan, Jr.         Franklin F. Regan, Jr.	Director	August 15, 2006
/s/ John E. Roe, Sr.                  John E. Roe, Sr.	Director	August 15, 2006
/s/ Michael J. Russo               Michael J. Russo	Director	August 15, 2006

EXHIBIT INDEX

Exhibit Number	Description
4.1	Atlantic Liberty Financial Corp. 2003 Incentive Stock Benefit Plan
4.2	Certificate of Incorporation of the Registrant*
4.3	Form of Stock Option Assumption Agreement
4.4	Bylaws of Flushing Financial Corporation*
5.1	Opinion of Thacher Proffitt & Wood LLP, counsel for the Registrant, as to legality
23.1	Consent of Thacher Proffitt & Wood LLP (included in Exhibit 5.1)
23.2	Consent of PricewaterhouseCoopers LLP
24.1	Power of attorney (included on the signature pages of this registration statement)

_________

* Incorporated by reference to the Exhibits to Flushing Financial Corporation’s Registration Statement on Form S-1 (Registration No. 333-96488).

EX-4.1

Exhibit 4.1

ATLANTIC LIBERTY FINANCIAL CORP.

2003 INCENTIVESTOCK BENEFIT PLAN

1.PURPOSE. The purpose of the Atlantic Liberty Financial Corp. 2003 Incentive Stock Benefit Plan (the “Plan”) is to (i) provide employees, officers and directors of Atlantic Liberty Financial Corp. (the “Company”), Atlantic Liberty Savings, F. A. (the “Association”) and any Affiliates of the Company (as defined below), with additional incentives to improve the growth and performance of the Company, and (ii) to attract and retain qualified and experienced personnel to the Company and its Affiliates.

2.TERM. The Plan shall be effective as of the date of stockholder approval (the “Effective Date”), and shall remain in effect for ten years thereafter, unless sooner terminated by the Company’s Board of Directors (the “Board”). After termination of the Plan, no additional awards may be granted, but previously granted awards shall remain outstanding in accordance with their applicable terms and conditions and the terms and conditions of the Plan.

3.PLAN ADMINISTRATION.

(a)Role of the Committee. The Plan shall be administered by the Committee. The Committee shall consist of either (i) at least two “Non-Employee Directors” of the Company, or (ii) the entire Board of the Company. A “Non-Employee Director” means, for purposes of the Plan, a director who: (a) is not employed by the Company or an Affiliate; (b) does not receive compensation directly or indirectly from the Company as a consultant (or in any capacity other than as a director) greater than $60,000; (c) does not have an interest in a transaction requiring disclosure under Item 404(a) of Regulation S-K; or (d) is not engaged in a business relationship for which disclosure would be required pursuant to Item 404(b) of Regulation S-K. The interpretation and construction by the Committee of any provisions of the Plan or of any Award granted hereunder shall be final and binding, except as set forth herein below. The Committee shall act by vote or written consent of a majority of its members. Subject to the express provisions and limitations of the Plan, the Committee may adopt such rules and procedures as it deems appropriate for the conduct of its affairs. The Committee shall have the power to interpret and implement the Plan and any rules, regulations, guidelines or agreements adopted hereunder, and to adopt such rules, regulations and guidelines for carrying out the Plan as it may deem necessary or proper. These powers shall include, but not be limited to: (i) determination of the type or types of awards to be granted under the Plan; (ii) determination of the terms and conditions of any awards under the Plan; (iii) determination of whether, to what extent and under what circumstances awards may be settled, paid or exercised in cash, shares, other securities, other awards, other property, or accelerated, canceled, extended, forfeited or suspended; (iv) adoption of modifications, amendments, procedures, and subplans as may be necessary; (v) subject to the rights of participants, modification, amendment or cancellation of any award to correct an administrative error; and (vi) taking any other action the Committee deems necessary or desirable for the administration of the Plan. The Committee shall report its actions and decisions with respect to the Plan to the Board at appropriate times, but in no event less than one time per calendar year.

(b)Role of the Board. The members of the Committee shall be appointed or approved by, and will serve at the pleasure of, the Board of Directors of the Company. The Board may in its discretion from time to time remove members from, or add members to, the Committee, subject to the requirements set forth in subsection (a) above. The Board shall have all of the powers allocated to it in the Plan, may take any action under or with respect to the Plan that the Committee is authorized to take, and may reverse or override any action taken or decision made by the Committee under or with respect to the Plan;provided, however, that the Board may not revoke any Award except in the event of revocation for Cause or with respect to unearned Awards in the event the Recipient of an Award voluntarily terminates employment with the Company or its Affiliates prior to Normal Retirement.

(c)Plan Administration Restrictions. All transactions involving a grant, award or other acquisitions from the Company shall:

(i)           be approved by the Company’s full Board or by the Committee;

(ii) be approved, or ratified, in compliance with Section 14 of the Exchange Act, by either: the affirmative vote of the holders of a majority of the shares present, or represented and entitled to vote at a meeting duly held in accordance with the laws under which the Company is incorporated; or the written consent of the holders of a majority of the securities of the issuer entitled to vote, provided that such ratification occurs no later than the date of the next annual meeting of stockholders; or

(iii) result in the acquisition of an Option or Limited Right that is held by the Recipient for a period of six months following the date of such acquisition.

(d)Limitation on Liability. No member of the Board or the Committee shall be liable for any determination made in good faith with respect to the Plan or any Awards granted under it. If a member of the Board or the Committee is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative, by reason of anything done or not done by him in such capacity under or with respect to the Plan, the Company or its Affiliates shall indemnify such member against all expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by him in connection with such action, suit or proceeding if he acted in good faith and in a manner he reasonably believed to be in the best interests of the Company and its Affiliates and, with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful.

4.ELIGIBILITY TO PARTICIPATE. Officers and employees of the Company and its Affiliates shall be eligible to receive Incentive Stock Options, Non-Statutory Stock Options, Stock Awards, Limited Rights, Reload Options and /or Dividend Equivalent Rights under the Plan (collectively, “awards”). Outside directors shall be eligible to receive Non-Statutory Stock Options, Reload Options, Dividend Equivalent Rights and Stock Awards under the Plan. The term “Company”includes any entity that is directly or indirectly controlled by the Company or any entity in which the Company has a significant equity interest, as determined by the Committee. The term “Affiliate” means any “parent corporation” or “subsidiary corporation” of the Company within the meaning of Sections 424(e) and (f) of the Internal Revenue Code (“Code”), respectively. An “outside director” means a director of the Company or an Affiliate who is not an employee of the Company or an Affiliate.

5.SHARES OF STOCK SUBJECT TO THE PLAN. 256,648 shares of common stock of the Company (“Common Stock”) in the aggregate are reserved for issuance under the Plan, which shares shall be available for issuance (subject to adjustment as provided in Section 6) pursuant to the exercise of Stock Options, granted under Sections 7(a) and 7(c) of the Plan, or Stock Awards, under Section 7(d) of the Plan. The maximum number of Stock Options that may be granted to any one employee of the Company is 60,000.

Any shares that are issued by the Company, and any awards that are granted by, or become obligations of, the Company, through the assumption by the Company or an Affiliate thereof, or in substitution for, outstanding awards previously granted by an acquired company, shall not be counted against the shares available for issuance under the Plan. In addition, any shares that are used for the full or partial payment of the exercise price of any option or in full or partial payment of a tax-withholding obligation under the Plan will not be counted as issued under the Plan and will be available for future grants under the Plan.

Any shares issued under the Plan may consist, in whole or in part, of authorized and unissued shares, treasury shares or shares purchased by the Plan. No fractional shares shall be issued under the Plan. Cash may be paid in lieu of any fractional shares in settlement of awards under the Plan.

6.ADJUSTMENTS.

If the number of outstanding shares of Common Stock is increased or decreased or the shares of Common Stock are changed into or exchanged for a different number or kind of shares or other securities of the Company on account of any recapitalization, reclassification, stock split, reverse split, combination of shares, exchange of shares, stock dividend or other distribution payable in capital stock, or other increase or decrease in such shares effected without receipt of consideration by the Company occurring after the Effective Date, the number and kinds of shares for which grants of awards may be made under the Plan shall be adjusted proportionately and accordingly by the Company. In addition, the number and kind of shares for which grants are outstanding shall be adjusted proportionately and accordingly so that the proportionate interest of the grantee immediately following such event shall, to the extent practicable, be the same as immediately before such event. Any such adjustment in outstanding Stock Options shall not change the aggregate Stock Option purchase price payable with respect to shares that are subject to the unexercised portion of the Stock Option outstanding but shall include a corresponding proportionate adjustment in the Stock Option purchase price per share.

Adjustments under this Section 6 relating to shares of Common Stock or securities of the Company shall be made by the Committee, whose determination in that respect shall be final, binding and conclusive. No fractional shares or other securities shall be issued pursuant to any such adjustment, and any fractions resulting from any such adjustment shall be eliminated in each case by rounding downward to the nearest whole share. The granting of awards pursuant to the Plan shall not affect or limit in any way the right or power of the Company to make adjustments, reclassifications, reorganizations, or changes of its capital or business structure or to merge, consolidate, dissolve, or liquidate, or to sell or transfer all or any part of its business or assets.

7.AWARDS. The Committee shall determine the type or types of award(s) to be made to each participant under the Plan and shall approve the terms and conditions governing these awards in accordance with Section 11. Awards may be granted singly, in combination or in tandem so that the settlement or payment of one automatically reduces or cancels the other. The types of awards that may be made under the Plan are set forth below.

(a)“Stock Option” - means a grant of a right to purchase a specified number of shares of Common Stock under the Plan during a specified period. A Stock Option may be in the form of an “Incentive Stock Option”, which means a Stock Option granted by the Committee that complies with Section 422 of the Code, as amended, and the regulations thereunder at the time of grant, or of a Non-Statutory Stock Option, as defined in this paragraph. A “Non-Statutory Stock Option” means a Stock Option granted by the Committee to (i) an outside director or (ii) to any other participant, and such option is either (A) not designated by the Committee as an Incentive Stock Option, or (B) fails to satisfy the requirements of an Incentive Stock Option as set forth in Section 422 of the Code and the regulations thereunder. The exercise price of each Stock Option shall be the per share Fair Market Value of Common Stock on the date the award is granted. However, if a key employee owns stock possessing more than 10% of the total combined voting power of all classes of stock of the Company or its Affiliates (or under Section 424(d) of the Code, is deemed to own stock representing more than 10% of the total combined voting power of all classes of stock of the Company or its Affiliates by reason of the ownership of such classes of stock, directly or indirectly, by or for any brother, sister, spouse, ancestor or lineal descendent of such key employee, or by or for any corporation, partnership, estate or trust of which such key employee is a shareholder, partner or beneficiary), the purchase price per share of Common Stock deliverable upon the exercise of each Incentive Stock Option shall not be less than 110% of the Fair Market Value of the Company’s Common Stock on the date the Incentive Stock Option is granted. A Stock Option may be exercised in whole or in installments, which may be cumulative. The price at which shares of Common Stock may be purchased under a Stock Option shall be paid in full at the time of the exercise, in either cash or such other methods as provided by the Committee at the time of grant or as provided in the form of agreement approved in accordance herewith, including tendering (either actually or by attestation) Common Stock at Fair Market Value on the date of surrender, or any combination thereof.

(b)“Limited Right” - means the right to receive an amount of cash based upon the terms set forth in Section 12.

(c)“Reload Option” - means an additional Stock Option granted pursuant to Section 13.

(d)“Dividend Equivalent Right” means the right to receive an amount of cash based upon the terms set forth in Section 14 hereof.

(e)“Stock Award” - means an award under the Plan, made in stock or denominated in units of stock. All or part of any Stock Award may be subject to conditions established by the Committee, and set forth in the award agreement, which may include, but are not limited to, continuous service with the Company, achievement of specific business objectives, and other measurements of individual, business unit or Company performance.

8.DEFERRALS AND SETTLEMENTS. Payment of awards may be in the form of Common Stock or other awards, or in the case of Limited Rights, cash, or in combinations thereof as the Committee determines at the time of grant, and with such restrictions as it may impose. No Stock Option is to be considered exercised until payment in full is accepted by the Committee. The means by which a recipient of an award may make payment is set forth below.

(a)Cash Payment. The exercise price may be paid in cash or by certified check. To the extent permitted by law, the Committee may permit all or a portion of the exercise price of a Stock Option to be paid from borrowed funds.

(b)Cashless Exercise. Subject to vesting requirements, if applicable, a participant may engage in a “cashless exercise” of the Stock Option. Upon a cashless exercise, the participant shall give the Company written notice of the exercise of the Stock Option together with an order to a registered broker-dealer or equivalent third party, to sell part or all of the Common Stock subject to the Stock Option and to deliver enough of the proceeds to the Company to pay the Stock Option exercise price and any applicable withholding taxes. If the participant does not sell the Common Stock subject to the Stock Option through a registered broker-dealer or equivalent third party, the participant may give the Company written notice of the exercise of the Stock Option and the third-party purchaser of the Common Stock subject to the Stock Option shall pay the Stock Option exercise price plus applicable withholding taxes to the Company.

(c)Exchange of Common Stock. The Committee may permit payment of the Stock Option exercise price by the tendering of previously acquired shares of Common Stock. All shares of Common Stock tendered in payment of the exercise price of a Stock Option shall be valued at the Fair Market Value of the Common Stock. No tendered shares of Common Stock which were acquired by the participant upon the prior exercise of a Stock Option or as awards under this or any other stock award plan sponsored by the Company shall be accepted for exchange unless the participant has held such shares (without restrictions imposed by said plan or award) for at least six months prior to the exchange.

9.FAIR MARKET VALUE.“Fair Market Value” for all purposes under the Plan shall mean the reported closing price of Common Stock as reported by the Nasdaq stock market on such date (as reported in The Wall Street Journal, if published), or if the Common Stock was not traded on such date, on the next preceding day on which Common Stock was traded thereon. If the Common Stock is not reported on the Nasdaq stock market, Fair Market Value shall mean the average sale price of all shares of Common Stock sold during the 30-day period immediately preceding the date on which such stock option was granted, and if no shares of stock have been sold within such 30-day period, the average sale price of the last three sales of Common Stock sold during the 90-day period immediately preceding the date on which such stock option was granted. In the event Fair Market Value cannot be determined in the manner described above, then Fair Market Value shall be determined by the Committee. The Committee is authorized, but is not required, to obtain an independent appraisal to determine the Fair Market Value of the Common Stock.

Under no circumstances shall Fair Market Value be less than the par value of the Common Stock.

10.TRANSFERABILITY AND EXERCISABILITY. All awards under the Plan, other than Non-Statutory Stock Options, will be nontransferable and shall not be assignable, alienable, saleable or otherwise transferable by the participant other than by will or the laws of descent and distribution, except pursuant to a domestic relations order entered by a court of competent jurisdiction or as otherwise determined by the Committee.

If so permitted by the Committee, a participant may designate a beneficiary or beneficiaries to exercise his rights under any Stock Option, Reload Option, Limited Right or Dividend Equivalent Right who would be entitled to and receive any distributions under the Plan upon the participant’s death. However, in the case of participants who are subject to Section 16 of the Securities Exchange Act 1934 (the “1934 Act”), any contrary requirements of Rule 16b-3 under the 1934 Act, or any successor rule, shall prevail over the provisions of this Section.

Awards granted pursuant to the Plan may be exercisable pursuant to a vesting schedule as determined by the Committee. The Committee may, in its sole discretion, accelerate or extend the time during which any Stock Option may be exercised, or any Stock Award may vest, in whole or in part, provided, however, that with respect to an Incentive Stock Option, it must be consistent with the terms of Section 422 of the Code in order to continue to qualify as an Incentive Stock Option. Notwithstanding the above, in the event of Retirement (as defined in Section 26 hereof), death or Disability (as defined in Section 26 hereof), all awards shall immediately vest.

11.AWARD AGREEMENTS. Each award of Stock Options, Reload Options, Limited Rights, Dividend Equivalent Rights and Stock Award under the Plan shall be evidenced by an agreement that is approved by the Committee. The agreement must set forth the terms, conditions and limitations to an award and the provisions applicable in the event the participant’s employment terminates, provided, however, in no event shall the term of any Incentive Stock Option exceed a period of ten years from the date of its grant. If any key employee, at the time an Incentive Stock Option is granted to him, owns stock representing more than 10% of the total combined voting power of all classes of stock of the Company or its Affiliate (or, under Section 424(d) of the Code, is deemed to own stock representing more than 10% of the total combined voting power of all classes of stock, by reason of the ownership of such classes of stock, directly or indirectly, by or for any brother, sister, spouse, ancestor or lineal descendent of such key employee, or by or for any corporation, partnership, estate or trust of which such key employee is a shareholder, partner or beneficiary), the Incentive Stock Option granted to him shall not be exercisable after the expiration of five years from the date of grant.

In addition, to the extent required by Section 422 of the Code, the aggregate Fair Market Value (determined at the time the option is granted) of the Common Stock for which Incentive Stock Options are exercisable for the first time by a participant during any calendar year (under all plans of the Company and its Affiliates) shall not exceed $100,000. In the event the amount exercisable shall exceed $100,000, the first $100,000 of Incentive Stock Options (determined as of the date of grant) shall be exercisable as Incentive Stock Options and any excess shall be exercisable as Non-Statutory Stock Options.

12.LIMITED RIGHTS. The Committee may grant a Limited Right simultaneously with the grant of any Stock Option, with respect to all or some of the shares covered by such option. Limited Rights granted under the Plan are subject to the following terms and conditions:

(a)Terms of Limited Rights. A Limited Right shall not be exercisable in whole or in part before the expiration of six months from the date of grant of the Limited Right. A Limited Right may be exercised only in the event of a Change in Control of the Company or the Association.

The Limited Right may be exercised only when the underlying Stock Option is eligible to be exercised; provided that the Fair Market Value of the underlying shares on the day of exercise is greater than the exercise price of the related Stock Option.

Upon exercise of a Limited Right, the related Stock Option shall cease to be exercisable. Upon exercise or termination of a Stock Option, any related Limited Rights shall terminate. The Limited Right may be for no more than 100% of the difference between the exercise price and the Fair Market Value of the Common Stock subject to the underlying Stock Option. The Limited Right is transferable only when the underlying Stock Option is transferable and under the same conditions.

(b)Payment. Upon exercise of a Limited Right, the holder shall promptly receive from the Company an amount of cash equal to the positive difference between the Fair Market Value on the date of grant of the related Stock Option and the Fair Market Value of the underlying shares on the date the Limited Right is exercised, multiplied by the number of shares with respect to which such Limited Right is being exercised. In the event of a merger transaction, the Limited Right shall be exercisable solely for shares of the acquiring corporation or its parent, as applicable. The number of shares to be received on the exercise of such Limited Right shall be determined by dividing the amount of cash that would have been available under the first sentence above by the Fair Market Value at the time of exercise of the shares underlying the option subject to the Limited Right.

13.RELOAD OPTION. Simultaneously with the grant of any Stock Option to a participant, the Committee may grant a Reload Option with respect to all or some of the shares covered by such Stock Option. A Reload Option may be granted to a participant who satisfies all or part of the exercise price of the Stock Option with shares of Common Stock. The Reload Option represents an additional Stock Option to acquire the same number of shares of Common Stock used by the participant to pay for the original Stock Option. Reload Options may also be granted to replace Common Stock withheld by the Company for payment of a participant’s withholding tax under Section 16. A Reload Option is subject to all of the same terms and conditions as the original Stock Option, including the remaining option exercise term, except that (i) the exercise price of the shares of Common Stock subject to the Reload Option will be determined at the time the original Stock Option is exercised, and (ii) such Reload Option will conform to all provisions of the Plan at the time the original option is exercised.

14.DIVIDEND EQUIVALENT RIGHTS. Simultaneously with the grant of any Stock Option to a participant, the Committee may grant a Dividend Equivalent Right with respect to all or some of the shares covered by such Stock Option. Dividend Equivalent Rights granted under this Plan are subject to the following terms and conditions:

(a)Terms of Rights. The Dividend Equivalent Right provides the participant with a cash benefit per share for each share underlying the unexercised portion of the related Stock Option equal to the amount of any extraordinary dividend (as defined in Section 14 (c)) per share of Common Stock declared by the Company. The terms and conditions of any Dividend Equivalent Right shall be evidenced in the option agreement entered into with the participant and shall be subject to the terms and conditions of the Plan. The Dividend Equivalent Right is transferable only when the related option is transferable and under the same conditions.

(b)Payment. Upon the payment of an extraordinary dividend, the participant holding a Dividend Equivalent Right with respect to Stock Options or portions thereof which have vested shall promptly receive from the Company or its Affiliate, as applicable, the amount of cash equal to the difference between the amount of the extraordinary dividend per share of Common Stock and the average dividend per share of Common Stock based on the current and preceding three quarters (assuming dividends were paid in each quarter, and if not then based on the average of the quarters in the last four quarters in which dividends were paid), multiplied by the number of shares of Common Stock underlying the unexercised portion of the related Stock Option. With respect to Stock Options or portions thereof which have not vested, the amount that would have been received pursuant to the Dividend Equivalent Right with respect to the shares underlying such unvested Stock Option or portion thereof shall be paid to the participant holding such Dividend Equivalent Right together with earnings thereon, on such date as the Stock Option or portion thereof becomes vested. Payment of an extraordinary dividend will be decreased by the amount of any applicable tax withholding prior to distribution to the participant as set forth in Section 16.

(c)Extraordinary Dividend. For purposes of this Section 14, an extraordinary dividend is any cash dividend paid on shares of Common Stock where (i) the dividend rate exceeds 200% of the Association’s weighted average cost of funds on interest-bearing liabilities for the current quarter and preceding three quarters, and (ii) the annualized aggregate dollar amount of the dividend exceeds the Association’s net income after taxes for the current quarter and preceding three quarters. For purposes of this Section 14, the dividend rate equals the quotient, expressed as a percentage, of (i) the annualized dollar amount of the dividend, and (ii) the last trade price of the Company’s Common Stock on the day immediately before the dividend is declared.

15.PLAN AMENDMENT. The Board or the Committee may modify or amend the Plan as it deems necessary or appropriate or modify or amend an award received by key employees and/or outside directors. No such amendment shall adversely affect any outstanding awards under the Plan without the consent of the holders thereof.

16.TAX WITHHOLDING. The Company may deduct from any settlement of an award made under the Plan, including the delivery or vesting of shares, an amount sufficient to cover the minimum withholding required by law for any federal, state or local taxes or to take such other action as may be necessary to satisfy any such withholding obligations. The Committee may permit shares to be used to satisfy the minimum required tax withholding and such shares shall be valued at the Fair Market Value as of the settlement date of the applicable award.

17.OTHER COMPANY BENEFIT AND COMPENSATION PROGRAMS. Settlements of awards received by participants under the Plan shall not be deemed a part of a participant’s regular, recurring compensation for purposes of calculating payments or benefits from any Company benefit plan, severance program or severance pay law of any country, unless otherwise determined by the Committee, or unless the contrary is specifically provided in a Company benefit plan that is exempt from tax under Section 401(a) of the Code.

18.UNFUNDED PLAN. Unless otherwise determined by the Committee, the Plan is an unfunded plan. The Plan shall not create (or be construed to create) a trust or a separate fund or funds. The Plan shall not establish any fiduciary relationship between the Company and any participant or other person. To the extent any person holds any rights by virtue of a grant awarded under the Plan, such right (unless otherwise determined by the Committee) shall be no greater than the right of an unsecured general creditor of the Company.

19.FUTURE RIGHTS. No person shall have any claim or right to be granted an award under the Plan, and no participant shall have any rights by reason of the grant of any award under the Plan to continued employment by the Company or any subsidiary of the Company.

20.GENERAL RESTRICTION. Each award shall be subject to the requirement that, if at any time the Committee shall determine, in its sole discretion, that the listing, registration or qualification of any award under the Plan upon any securities exchange or under any state or federal law, or the consent or approval of any government regulatory body, is necessary or desirable as a condition of, or in connection with, the granting of such award or the grant or settlement thereof, such award may not be exercised or settled in whole or in part unless such listing, registration, qualification, consent or approval shall have been effected or obtained free of any conditions not acceptable to the Committee.

21.GOVERNING LAW. The validity, construction and effect of the Plan and any actions taken or relating to the Plan shall be determined in accordance with the laws of the State of Delaware.

22.SUCCESSORS AND ASSIGNS. The Plan shall be binding on all successors and permitted assigns of a participant, including, without limitation, the guardian or estate of such participant and the executor, administrator or trustee of such estate, or any receiver or trustee in bankruptcy or representative of the participant’s creditors.

23.RIGHTS AS A SHAREHOLDER. A participant shall have no rights as a shareholder with respect to awards under the Plan until he or she becomes the holder of record of shares granted under the Plan.

24.CHANGE IN CONTROL. Notwithstanding anything to the contrary in the Plan, the following shall apply to all outstanding awards granted under the Plan in the event of a Change in Control:

(a)Definition. A “Change in Control” of the Association or the Company means a change in control of a nature that: (i) would be required to be reported in response to Item 1(a) of the current report on Form 8-K, as in effect on the date hereof, pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 (the “Exchange Act”); or (ii) results in a Change in Control of the Association or the Company within the meaning of the Home Owners’ Loan Act, as amended (“HOLA”), and applicable rules and regulations promulgated thereunder, as in effect at the time of the Change in Control; or (iii) without limitation such a Change in Control shall be deemed to have occurred at such time as (a) any “person” (as the term is used in Sections 13(d) and 14(d) of the Exchange Act) is or becomes the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing 25% or more of the combined voting power of Company’s outstanding securities except for any securities purchased by the Association’s employee stock ownership plan or trust; or (b) individuals who constitute the Board on the date hereof (the “Incumbent Board”) cease for any reason to constitute at least a majority thereof, provided that any person becoming a director subsequent to the date hereof whose election was approved by a vote of at least three-quarters of the directors comprising the Incumbent Board, or whose nomination for election by the Company’s stockholders was approved by the same Nominating Committee serving under an Incumbent Board, shall be, for purposes of this clause (b), considered as though he were a member of the Incumbent Board; or (c) a plan of reorganization, merger, consolidation, sale of all or substantially all the assets of the Association or the Company or similar transaction in which the Association or Company is not the surviving corporation occurs; or (d) a proxy statement soliciting proxies from stockholders of the Company, by someone other than the current Board of Directors of the Company, seeking stockholder approval of a plan of reorganization, merger or consolidation of the Company or similar transaction with one or more corporations as a result of which the outstanding shares of the common stock of the Company are exchanged for or converted into cash or property or securities not issued by the Company; or (e) a tender offer is made for 25% or more of the voting securities of the Company and the shareholders owning beneficially or of record 25% or more of the outstanding securities of the Company have tendered or offered to sell their shares pursuant to such tender offer and such tendered shares have been accepted by the tender offeror.

(b)Acceleration of Vesting and Payment of Limited Rights.

(1) Upon the occurrence of an event constituting a Change in Control, all Limited Rights, Stock Options, Stock Awards or any other award granted pursuant to this Plan outstanding on such date shall become 100% vested.

(2)            Upon the occurrence of an event constituting a Change in Control involving an exchange of stock, all Stock Options shall become options to purchase the exchanged stock at the applicable exchange ratio (with no change in the aggregate exercise price).

(c)Effect of a Change in Control on Stock Option Awards. In the event of a Change in Control, the Committee and the Board of Directors will take one or more of the following actions to be effective as of the date of such Change in Control:

(1) provide that such Stock Options shall be assumed, or equivalent stock options shall be substituted (“Substitute Options”) by the acquiring or succeeding corporation (or an affiliate thereof), provided that: (A) any such Substitute Options exchanged for Incentive Stock Options shall meet the requirements of Section 424(a) of the Code, and (B) the shares of stock issuable upon the exercise of such Substitute Options shall be registered in accordance with the Securities Act of 1933, as amended (“1933 Act”) or such securities shall be exempt from such registration in accordance with Sections 3(a)(2) or 3(a)(5) of the 1933 Act, (collectively, “Registered Securities”), or in the alternative, if the securities issuable upon the exercise of such Substitute Options shall not constitute Registered Securities, then the participant will receive upon consummation of the Change in Control a cash payment for each Stock Option surrendered equal to the difference between (1) the fair market value of the consideration to be received for each share of Common Stock in the Change in Control times the number of shares of Common Stock subject to such surrendered Stock Options, and (2) the aggregate exercise price of all such surrendered Stock Options; or

(2) in the event of a Change in Control transaction whereby the holders of Common Stock will receive a cash payment (the “Merger Price”) for each share of Common Stock exchanged in the Change in Control transaction, make or provide for a cash payment to the participants equal to the difference between (1) the Merger Price times the number of shares of Common Stock subject to such Stock Options held by each participant (to the extent then exercisable at prices not in excess of the Merger Price), and (2) the aggregate exercise price of all such surrendered Stock Options.

25.COMPLIANCE WITH SECTION 16. With respect to persons subject to Section 16 of the 1934 Act, transactions under this Plan are intended to comply with all applicable conditions of Rule 16b-3 or its successors under the 1934 Act. To the extent any provisions of the Plan or actions of the Committee fail to so comply, it shall be deemed null and void, to the extent permitted by law and deemed advisable by the Committee.

26.TERMINATION OF EMPLOYMENT. Upon the termination of an employee’s employment for any reason other than Disability, Retirement, Change in Control, death or Termination for Cause, the employee’s Stock Options shall be exercisable, but only as to those shares that were immediately purchasable by, or vested in, such employee at the date of termination, and such options may be exercised only for a period of three (3) months following such termination. Upon the termination of an employee’s service because of Disability, Retirement, Change in Control or death, the employee’s Stock Options shall be exercisable as to all shares whether or not then exercisable, and the employee’s Stock Awards shall vest as to all shares subject to an outstanding award, whether or not otherwise immediately vested in such employee at the date of termination and options may be exercised for a period of five (5) years following termination. Notwithstanding anything to the contrary herein, in no event shall the exercise period extend beyond the expiration of the Stock Option term. In the event of termination of employment or service for Cause (as defined herein) all rights and awards granted to an employee or director under the Plan not exercised or vested shall expire upon termination.

No option shall be eligible for treatment as an Incentive Stock Option in the event such option is exercised more than three (3) months following the date of the employee’s Retirement or termination of employment following a Change in Control; and provided further, that no option shall be eligible for treatment as an Incentive Stock Option in the event such option is exercised more than one year following termination of employment due to Disability, and provided further, in order to obtain Incentive Stock Option treatment for options exercised by heirs or devisees of an optionee, the optionee’s death must have occurred while employed or within three (3) months of termination of employment.

“Disability” means, with respect to an employee, the permanent and total inability by reason of mental or physical infirmity or both, of an employee to perform the work customarily assigned to him. Additionally, a medical doctor selected or approved by the Board of Directors must advise the Committee that it is either not possible to determine when such Disability will terminate or that it appears probable that such Disability will be permanent during the remainder of the employee’s lifetime.

“Retirement” means, with respect to an employee, retirement at the normal or early retirement date set forth in the Association’s employee stock ownership plan, or as determined by the Board of Directors, or such other time as determined by written resolution of the Committee.

Termination “for Cause” means the termination upon personal dishonesty, willful misconduct, any breach of fiduciary duty involving personal profit, intentional failure to perform stated duties, or the willful violation of any law, rule or regulation (other than traffic violations or similar offenses) or a final cease-and-desist order, any of which results in a material loss to the Company or an Affiliate.

27.TERMINATION OF SERVICE AS A DIRECTOR. Upon the termination of a director’s service for any reason other than Disability, Retirement, Change in Control, death or Termination for Cause, the director’s Stock Options shall be exercisable, but only as to those shares that were immediately purchasable by, or vested in, such director at the date of termination, and options may be exercised for a period of one (1) year following termination of service, and all of the director’s unvested Stock Awards shall be forfeited. In the event of termination of service for Cause (as defined above) all rights granted to the director under the Plan not exercised by or vested in such director shall expire upon termination of service. Upon the termination of a director’s service because of Retirement, Disability, Change in Control or death, the director’s Stock Options shall be exercisable as to all shares, whether or not then exercisable, and the director’s Stock Awards shall vest as to all shares subject to an outstanding award, whether or not otherwise immediately vested in such director at the date of termination, and options may be exercised for a period of five (5) years following such termination. In no event shall the exercise period extend beyond the expiration of the Stock Option term.

“Disability” means, with respect to an outside director, the permanent and total inability by reason of mental or physical infirmity or both, of a director to carry out the responsibilities of a director of the Company or an Affiliate, as required by applicable state and federal law.

“Retirement” means, with respect to a director, retirement on or after attainment of age sixty-five (65) or seven (7) years of service at the Company or an Affiliate, or such other time as determined by written resolution of the Committee.

“Termination for Cause” has the same meaning as set forth under Paragraph 26 above.

EX-4.3

Exhibit 4.3

Flushing Financial Corporation

1979 Marcus Avenue, Suite E140

Lake Success, New York 11042

July 1, 2006

STOCK OPTION ASSUMPTION AGREEMENT

Dear Optionee:

As you know, on June 30, 2006 (the “Closing Date”), Atlantic Liberty Financial Corp. (“ALFC”) merged with and into Flushing Financial Corporation (“FFC”), a Delaware corporation (the “Merger”) pursuant to the Agreement and Plan of Merger by and between FFC and ALFC dated December 20, 2005 (the “Merger Agreement”). In the Merger, each holder of shares of ALFC common stock could elect to receive (i) $24.00 in cash (the “Cash Consideration”), (ii) 1.43 shares (the “Exchange Ratio”) of FFC common stock (the “Stock Consideration”), or (iii) a combination of Cash Consideration and the Stock Consideration for each share of ALFC common stock. On the Closing Date you held one or more outstanding options to purchase shares of ALFC common stock granted to you under the ALFC 2003 Incentive Stock Benefit Plan (the “Plan”) and documented with a Stock Option Agreement(s) and any amendment(s) or waiver(s) thereto (collectively, the “Option Agreement”) issued to you under the Plan (the “ALFC Options”). In accordance with Section 3.4.2 of the Merger Agreement, on the Closing Date, FFC assumed all obligations of ALFC and succeeded to the rights of ALFC under the Plan. ALFC Options which holders thereof elected to convert into options to acquire shares of FFC common stock (the “FFC Options”) pursuant to Section 3.4.1(ii) of the Merger Agreement will be converted into FFC Options upon execution and delivery of this Stock Option Assumption Agreement (the “Agreement”). This Agreement evidences the assumption of the ALFC Options, including the necessary adjustments to the ALFC Options required by the Merger.

A schedule of your ALFC Options immediately before and after the Merger is attached to this Agreement. The post-merger adjustments are based on the Exchange Ratio and are intended to: (i) to preserve, on a per share basis, the ratio of exercise price to fair market value that existed immediately prior to the Merger; and (ii) to the extent applicable by law, to retain incentive stock option (“ISO”) status under the Federal tax laws.

Following the Merger, unless the context otherwise requires, any references in the Plan and the Option Agreement (i) to the “Company” means FFC, (ii) to “Stock,” or “Common Stock” means shares of FFC common stock, (iii) to the “Board of Directors” or the “Board” means the Board of Directors of FFC and (iv) to the “Committee” means the Compensation Committee of the FFC Board of Directors. All references in the Option Agreement and the Plan relating to your status as an employee of ALFC will now refer to your status as an employee of FFC or any present or future FFC subsidiary. To the extent the Option Agreement allowed you to deliver shares of ALFC common stock as payment for the exercise price, shares of FFC common stock may be delivered in payment of the adjusted exercise price, and the period for which such shares were held as ALFC common stock prior to the Merger will be taken into account.

The grant date and the expiration date of your converted FFC Options remain the same as set forth in your Option Agreement, but all of your converted FFC Options are fully vested as a result of the Merger. All other provisions which govern either the exercise or the termination of your converted FFC Options remain the same as set forth in your Option Agreement, and the provisions of the Option Agreement (except as expressly modified by this Agreement and the Merger) will govern and control your rights under this Agreement to purchase shares of FFC common stock. Upon your termination of employment with FFC you will have the limited time period specified in your Option Agreement to exercise your converted FFC Options. Incentive Stock Options exercised more than three months after the date you cease to be an employee of FFC (one year in the case of death or disability) will be treated as Non-Statutory Stock Options for tax purposes.

To exercise your converted FFC Options, you must deliver to the FFC Human Resources Department (i) a written notice of exercise for the number of shares of FFC common stock you want to purchase, (ii) the adjusted exercise price, and (iii) all applicable taxes. The exercise notice and payment should be delivered to the following address:

Flushing Financial Corporation

Human Resources Department

1979 Marcus Avenue, Suite 140

Lake Success, New York 11042

Attention: Russ Fleishman

Nothing in this Agreement or your Option Agreement interferes in any way with your rights and FFC’s rights, which rights are expressly reserved, to terminate your employment at any time for any reason. Any future options, if any, you may receive from FFC will be governed by the terms of the FFC stock option plan, and such terms may be different from the terms of your converted FFC Options, including, but not limited to, the time period in which you have to exercise vested options after your termination of employment.

Please sign and date this Agreement and return it promptly to the address listed above. If you have any questions regarding this Agreement or your assumed ALFC Options, please contact Russ Fleishman at (718) 512-2717.

FLUSHING FINANCIAL CORPORATION
By:
	A duly authorized officer of FFC

ACKNOWLEDGMENT

The undersigned acknowledges receipt of the foregoing Stock Option Assumption Agreement and understands that all rights and liabilities with respect to each of his or her ALFC Options hereby assumed by FFC are as set forth in the Option Agreement, the Plan, and such Stock Option Assumption Agreement.

Date:	By:
		Optionee

EXHIBIT A

Optionee’s Outstanding Options to Purchase Shares

of Atlantic Liberty Financial Corp. Common Stock under the

Atlantic Liberty Financial Corp. 2003 Incentive Stock Benefit Plan

(Pre-Merger)

Date of Option Agreement	Number of Incentive Stock Options (ISOs)	Number of Non-Statutory Stock Options (NSSOs)	Total Number of Options (ISOs and NSSOs)	Exercise Price
				$18.50

Optionee’s Outstanding Options to Purchase Shares

of Flushing Financial Corporation Common Stock under the

Atlantic Liberty Financial Corp. 2003 Incentive Stock Benefit Plan

(Post-Merger)

Date of Stock Option Assumption Agreement	Number of Incentive Stock Options (ISOs)	Number of Non-Statutory Stock Options (NSSOs)	Total Number of Options (ISOs and NSSOs)	Exercise Price
July 1, 2006				$12.94

EX-5.1

Exhibit 5.1

[Thacher Proffitt & Wood LLP letterhead]

August 16, 2006

Flushing Financial Corporation

1979 Marcus Avenue, Suite E140

Lake Success, New York 11042

Re:Atlantic Liberty Financial Corp. 2003 Incentive Stock Benefit Plan

Ladies and Gentlemen:

We have acted as counsel for Flushing Financial Corporation (“Corporation”), a Delaware corporation and successor by merger to Atlantic Liberty Financial Corp., in connection with the filing of a registration statement on Form S-8 under the Securities Act of 1933, as amended (“Registration Statement”), with respect to 212,687 shares of its common stock, par value $.01 per share (“Shares”), which have been reserved for issuance upon the exercise of options under the Atlantic Liberty Financial Corp. 2003 Incentive Stock Benefit Plan (“Plan”). In rendering the opinion set forth below, we do not express any opinion concerning law other than the federal law of the United States and the corporate law of the State of Delaware.

We have examined originals or copies, certified or otherwise identified, of such documents, corporate records and other instruments, and we have examined such matters of law, as we have deemed necessary or advisable for purposes of this opinion. We have assumed the authenticity of all documents submitted to us as originals, the genuineness of all signatures, the legal capacity of natural persons and the conformity to the originals of all documents submitted to us as copies.

Based on the foregoing, we are of the opinion that the Shares which are being registered pursuant to the Registration Statement have been duly authorized and that, when issued and paid for in accordance with the terms of the Plan, such Shares will be validly issued, fully paid and non-assessable.

In rendering the opinion set forth above, we have not passed upon and do not purport to pass upon the application of “doing business” or securities or “blue-sky” laws of any jurisdiction (except federal securities law).

This opinion is given solely for the benefit of the Corporation and purchasers of shares under the Plan, and no other person or entity is entitled to rely hereon without express written consent.

We hereby consent to the filing of this opinion as an exhibit to the Registration Statement and to the references to our Firm’s name therein.

Very truly yours,

/s/ Thacher Proffitt & Wood LLP

EX-23.2

Exhibit 23.2

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We hereby consent to the incorporation by reference in this Registration Statement on Form S-8 of Flushing Financial Corporation of our reportdated March 9, 2006 relating to the consolidated financial statements, management’s assessment of the effectiveness of internal control over financial reporting and the effectiveness of internal control over financial reporting, which appears in Flushing Financial Corporation’s Annual Report on Form 10-K for the year ended December 31, 2005.

/s/ PricewaterhouseCoopers LLP

New York, New York

August 15, 2006