EXHIBIT 10.21
 
Amended and Restated
Employment Agreement
between
Hudson City Bancorp, Inc.
and
Ronald E. Hermance Jr.
Made and Entered into
as of June 7, 2005
 

 

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Hudson City Bancorp, Inc.
Amended and Restated Employment Agreement
     This Amended And Restated Employment Agreement (the “Agreement”) is made
and entered into as of June 7, 2005 between Hudson City Bancorp, Inc., a
business corporation organized and operating under the laws of the State of
Delaware and having an office at West 80 Century Road, Paramus, New Jersey
07562-1473 (the “Company”) and Ronald E. Hermance Jr., an individual residing at
4634 Carlton Dunes 2, Fernandina Beach, Florida 32034 (the “Executive”).
Introductory Statement
     The Executive currently serves the Company and Hudson City Savings Bank, a
savings bank organized and operating under the federal laws of the United States
with an office at West 80 Century Road, Paramus, New Jersey 07652-1473, and a
wholly owned subsidiary of the Company (the “Bank”), in an executive capacity
pursuant to an Employment Agreement between the Executive, the Company and the
Bank made and entered into as of July 13, 1999 (the “Prior Agreement”). The
Board of Directors of the Company (“Board”) has determined that it is in the
best interests of the Company to amend and restate the Prior Agreement to
reflect the Bank’s conversion from a New Jersey chartered savings bank to a
federal savings association and to reflect other changes in the Bank’s operating
environment. The Executive has agreed to this amendment and restatement.
     The terms and conditions which the Company and the Executive have agreed to
are as follows.
Agreement
     Section 1. Employment.
     The Company hereby continues to employ the Executive, and the Executive
hereby accepts such continued employment, during the period and upon the terms
and conditions set forth in this Agreement.
     Section 2. Employment Period; Remaining Unexpired Employment Period.
     (a) The Company shall employ the Executive during an initial period of
three (3) years beginning on the date hereof (the “Employment Commencement
Date”) and ending on the day before the third (3rd) anniversary of the
Employment Commencement Date, and during the period of any additional extensions
described in section 2(b) (the “Employment Period”).
     (b) On the day after the Employment Commencement Date and on each day
thereafter, the Employment Period shall be extended by one day, such that on any
date the Employment Period will expire on the day before the third (3rd)
anniversary of such date. These extensions shall continue in perpetuity until
discontinued by: (i) notice to the Executive given by the Company that it has
elected to discontinue the extensions; (ii) notice by the Executive to the
Company that he has elected to discontinue the extensions; or (iii) termination
of the Executive’s employment with the Company, whether by resignation,
discharge or otherwise. On the date on which such a notice is deemed given, or
on the effective date of a termination of the Executive’s employment with the
Company, the Employment Period shall be converted to a fixed period of three
(3) years ending on the day before the third (3rd) anniversary of such date.

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EXHIBIT 10.21
     (c) Except as otherwise expressly provided in this Agreement, any reference
in this Agreement to the term “Remaining Unexpired Employment Period” as of any
date shall mean the period beginning on such date and ending on the day before
the third (3rd) anniversary of the earliest of the date in question, any earlier
date on which the Executive or the Company is deemed to have given a notice to
discontinue extensions of the Employment Period, and any earlier date on which
the Executive’s employment with the Company was terminated.
     (d) Nothing in this Agreement shall be deemed to prohibit the Company from
terminating the Executive’s employment before the end of the Employment Period
with or without notice for any reason. This Agreement shall determine the
relative rights and obligations of the Company and the Executive in the event of
any such termination. In addition, nothing in this Agreement shall require the
termination of the Executive’s employment at the expiration of the Employment
Period. If the Executive’s employment continues beyond the expiration of the
Employment Period, any such continuation shall be on an “at-will” basis unless
the Company and the Executive agree otherwise.
     Section 3. Duties.
     (a) The Executive shall serve as Chairman, President and Chief Executive
Officer of the Company. The Executive shall have such power, authority and
responsibility and perform such duties as are prescribed by or under the By-Laws
of the Company, and as are customarily associated with such positions. The
Executive shall devote his full business time and attention (other than during
weekends, holidays, approved vacation periods, and periods of illness or
approved leaves of absence, and other than his performance of services pursuant
to the terms of the employment agreement between the Bank and the Executive,
dated as of the date hereof (“Bank Agreement”)) to the business and affairs of
the Company and shall use his best efforts to advance its best interests.
     (b) If duly elected, the Executive shall serve as a member of the Board and
as Chairman of the Board (or in another position as a member of the Board),
without additional remuneration therefor; provided, however, that failure to
elect the Executive to the position of Chairman of the Board (or other position
as a member of the Board) shall not by itself constitute a breach of the
Agreement or entitle the Executive to severance benefits hereunder.
     Section 4. Cash Compensation.
     In consideration for the services to be rendered by the Executive
hereunder, the Company shall pay to him a salary at an initial annual rate of
Nine Hundred Fifty Thousand dollars ($950,000), payable in approximately equal
installments in accordance with the Company’s customary payroll practices for
senior officers. The Board shall review the Executive’s annual rate of salary at
such times during the Employment Period as it deems appropriate, but not less
frequently than once every twelve (12) months, and may, in its discretion,
approve a salary increase. In addition to salary, the Executive may receive
other cash compensation from the Company for services hereunder at such times,
in such amounts and on such terms and conditions as the Board may determine. If
the Executive is discharged or suspended, or is subject to any regulatory
prohibition or restriction with respect to participation in the affairs of the
Bank, he shall continue to perform services for the Company in accordance with
the terms of this Agreement, but shall not directly or indirectly provide
services to or participate in the affairs of the Bank in a manner inconsistent
with the terms of such discharge or suspension or any applicable regulatory
order.

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EXHIBIT 10.21
     Section 5. Employee Benefit Plans and Programs.
     During the Employment Period, the Executive shall be treated as an employee
of the Company and shall be entitled to participate in and receive benefits
under any and all qualified or non-qualified retirement, pension, savings,
profit-sharing or stock bonus plans, any and all group life, health (including
hospitalization, medical and major medical), dental, accident and long-term
disability insurance plans, and any other employee benefit and compensation
plans (including, but not limited to, any incentive compensation plans or
programs, stock option and appreciation rights plans and restricted stock plans)
as may from time to time be maintained by, or cover employees of, the Company,
in accordance with the terms and conditions of such employee benefit plans and
programs and compensation plans and programs and consistent with the Company’s
customary practices in each case as applied to senior executive officers of the
Company.
     Section 6. Indemnification and Insurance.
     (a) During the Employment Period and for a period of six years thereafter,
the Company shall cause the Executive to be covered by and named as an insured
under any policy or contract of insurance obtained by it to insure its directors
and officers against personal liability for acts or omissions in connection with
service as an officer or director of the Company or service in other capacities
at the Company’s request. The coverage provided to the Executive pursuant to
this section 6 shall be of the same scope and on the same terms and conditions
as the coverage (if any) provided to other officers or directors of the Company.
     (b) To the maximum extent permitted under applicable law, during the
Employment Period and for a period of six years thereafter, the Company shall
indemnify the Executive against and hold him harmless from any costs,
liabilities, losses and exposures to the fullest extent and on the most
favorable terms and conditions that similar indemnification is offered to any
director or officer of the Company or any subsidiary or affiliate thereof.
     Section 7. Outside Activities.
     The Executive may serve as a member of the boards of directors of such
business, community and charitable organizations as he may disclose to and as
may be approved by the Board (which approval shall not be unreasonably
withheld); provided, however, that such service shall not materially interfere
with the performance of his duties under this Agreement. The Executive may also
engage in personal business and investment activities which do not materially
interfere with the performance of his duties hereunder; provided, however, that
such activities are not prohibited under any code of conduct or investment or
securities trading policy established by the Company and generally applicable to
all similarly situated executives.
     Section 8. Working Facilities and Expenses.
     The Executive’s principal place of employment shall be at the Bank’s
executive offices at the address first above written, or at such other location
as the Company and the Executive may mutually agree upon. The Company shall
provide the Executive at his principal place of employment with a private
office, secretarial services and other support services and facilities suitable
to his positions with the Company and necessary or appropriate in connection
with the performance of his assigned duties under this Agreement. The Company
shall provide to the Executive for his exclusive use an automobile owned or
leased by the Company and appropriate to his position, to be used in the
performance of his duties hereunder, including commuting to and from his
personal residence. The Company shall reimburse the Executive for his ordinary
and necessary business expenses, including, without limitation, all expenses

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     EXHIBIT 10.21
associated with his business use of the aforementioned automobile, fees for
memberships in such clubs and organizations as the Executive and the Company
shall mutually agree are necessary and appropriate for business purposes, and
his travel and entertainment expenses incurred in connection with the
performance of his duties under this Agreement, in each case upon presentation
to the payer of an itemized account of such expenses in such form as the Company
may reasonably require.
     Section 9. Termination of Employment Due to Death.
     The Executive’s employment with the Company shall terminate, automatically
and without any further action on the part of any party to this Agreement, on
the date of the Executive’s death. In such event:
     (a) The Company shall pay to the Executive’s estate his earned but unpaid
compensation (including, without limitation, salary and all other items which
constitute wages under applicable law) as of the date of his termination of
employment. This payment shall be made at the time and in the manner prescribed
by law applicable to the payment of wages but in no event later than 30 days
after the date of the Executive’s termination of employment.
     (b) The Company shall provide the benefits, if any, due to the Executive’s
estate, surviving dependents or designated beneficiaries under the employee
benefit plans and programs and compensation plans and programs maintained for
the benefit of the officers and employees of the Company. The time and manner of
payment or other delivery of these benefits and the recipients of such benefits
shall be determined according to the terms and conditions of the applicable
plans and programs.
     The payments and benefits described in sections 9(a) and (b) shall be
referred to in this Agreement as the “Standard Termination Entitlements.”
     Section 10. Termination Due to Disability.
     The Company may terminate the Executive’s employment upon a determination,
by vote of a majority of the members of the Board, acting in reliance on the
written advice of a medical professional acceptable to them, that the Executive
is suffering from a physical or mental impairment which, at the date of the
determination, has prevented the Executive from performing his assigned duties
on a substantially full-time basis for a period of at least one hundred and
eighty (180) days during the period of one (1) year ending with the date of the
determination or is likely to result in death or prevent the Executive from
performing his assigned duties on a substantially full-time basis for a period
of at least one hundred and eighty (180) days during the period of one (1) year
beginning with the date of the determination. In such event:
     (a) The Company shall pay and deliver to the Executive (or in the event of
his death before payment, to his estate and surviving dependents and
beneficiaries, as applicable) the Standard Termination Entitlements.
     (b) In addition to the Standard Termination Entitlements, the Company shall
continue to pay the Executive his base salary, at the annual rate in effect for
him immediately prior to the termination of his employment, during a period
ending on the earliest of: (i) the expiration of one hundred and eighty
(180) days after the date of termination of his employment; (ii) the date on
which long-term disability insurance benefits are first payable to him under any
long-term disability insurance plan covering employees of the Bank or the
Company (the “LTD Eligibility Date”); (iii) the date of his death; and (iv) the
expiration of the Remaining Unexpired Employment Period (the “Initial
Continuation Period”). If the end of the Initial Continuation Period is neither
the LTD Eligibility Date nor the date of

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EXHIBIT 10.21
his death, the Company shall continue to pay the Executive his base salary, at
an annual rate equal to sixty percent (60%) of the annual rate in effect for him
immediately prior to the termination of his employment, during an additional
period ending on the earliest of the LTD Eligibility Date, the date of his death
and the expiration of the Remaining Unexpired Employment Period.
A termination of employment due to disability under this section 10 shall be
effected by notice of termination given to the Executive by the Company and
shall take effect on the later of the effective date of termination specified in
such notice or the date on which the notice of termination is deemed given to
the Executive.
          Section 11. Discharge with Cause.
          (a) The Company may terminate the Executive’s employment during the
Employment Period, and such termination shall be deemed to have occurred with
“Cause” only if:
     (i) the Board, by a majority vote of its membership, determines that the
Executive (A) has willfully and intentionally failed to perform his assigned
duties under this Agreement in any material respect (including, for these
purposes, the Executive’s inability to perform such duties as a result of drug
or alcohol dependency); (B) has willfully and intentionally engaged in dishonest
or illegal conduct in connection with his performance of services for the
Company or has been convicted of a felony; (C) has willfully violated, in any
material respect, any law, rule, regulation, written agreement or final
cease-and-desist order with respect to his performance of services for the
Company; or (D) has willfully and intentionally breached the material terms of
this Agreement in any material respect; and
     (ii) at least forty-five (45) days prior to the votes contemplated by
section 11(a)(i), the Company has provided the Executive with notice of intent
to discharge the Executive for Cause, detailing with particularity the facts and
circumstances which are alleged to constitute Cause (the “Notice of Intent to
Discharge”); and
     (iii) after the giving of the Notice of Intent to Discharge and before the
taking of the votes contemplated by section 11(a)(i), the Executive (together
with his legal counsel, if he so desires) is afforded a reasonable opportunity
to make both written and oral presentations before the Board for the purpose of
refuting the alleged grounds for Cause for his discharge; and
     (iv) after the votes contemplated by section 11(a)(i), the Company has
furnished to the Executive a notice of termination which shall specify the
effective date of his termination of employment (which shall in no event be
earlier than the date on which such notice is deemed given) and include a copy
of a resolution adopted by the Board, certified by the corporate secretary and
signed by each member of the Board voting in favor of adoption of the
resolution, authorizing the termination of the Executive’s employment with Cause
and stating with particularity the facts and circumstances found to constitute
Cause for his discharge (the “Final Discharge Notice”).

    For purposes of this section 11, no act or failure to act on the part of the
Executive shall be considered “willful” unless it is done, or omitted to be
done, by the Executive in bad faith or without reasonable belief that the
Executive’s action or omission was in the best interests of the Company. Any
act, or failure to act, based upon authority given pursuant to a resolution duly
adopted by the Board or based upon the

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EXHIBIT 10.21
written advice of counsel for the Company shall be conclusively presumed to be
done, or omitted to be done, by the Executive in good faith and in the best
interests of the Company.
          (b) If the Executive is discharged during the Employment Period with
Cause, the Company shall pay and provide to him (or, in the event of his death,
to his estate, his surviving beneficiaries and his dependents) the Standard
Termination Entitlements only. Following the giving of a Notice of Intent to
Discharge, the Company may temporarily suspend the Executive’s duties and
authority and, in such event, may also suspend the payment of salary and other
cash compensation, but not the Executive’s participation in retirement,
insurance and other employee benefit plans. If the Executive is not discharged,
or is discharged without Cause, within forty-five (45) days after the giving of
a Notice of Intent to Discharge, all payments withheld during the period of
suspension shall be promptly restored and, if no termination has occurred,
payments of salary and cash compensation shall resume. If the Executive is
discharged with Cause not later than forty-five (45) days after the giving of
the Notice of Intent to Discharge, all payments withheld during the period of
suspension shall be deemed forfeited and shall not be included in the Standard
Termination Entitlements. If a Final Discharge Notice is given later than
forty-five (45) days, but sooner than ninety (90) days, after the giving of the
Notice of Intent to Discharge, all payments made to the Executive during the
period beginning with the giving of the Notice of Intent to Discharge and ending
with the Executive’s discharge with Cause shall be retained by the Executive and
shall not be applied to offset the Standard Termination Entitlements. If the
Company does not give a Final Discharge Notice to the Executive within ninety
(90) days after giving a Notice of Intent to Discharge, the Notice of Intent to
Discharge shall be deemed withdrawn and any future action to discharge the
Executive with Cause shall require the giving of a new Notice of Intent to
Discharge.
          Section 12. Discharge without Cause.
          The Company may discharge the Executive at any time during the
Employment Period and, unless such discharge constitutes a discharge with Cause:
          (a) The Company shall pay and deliver to the Executive (or in the
event of his death before payment, to his estate and surviving dependents and
beneficiaries, as applicable) the Standard Termination Entitlements.
          (b) In addition to the Standard Termination Entitlements:
     (i) During the Remaining Unexpired Employment Period, the Company shall
provide for the Executive and his dependents continued group life, health
(including hospitalization, medical and major medical), dental, accident and
long-term disability insurance benefits on substantially the same terms and
conditions (including any required premium-sharing arrangements, co-payments and
deductibles) in effect for them immediately prior to the Executive’s
termination. The coverage provided under this section 12(b)(i) may, at the
election of the Company, be secondary to the coverage provided as part of the
Standard Termination Entitlements and to any employer-paid coverage provided by
a subsequent employer or through Medicare, with the result that benefits under
the other coverages will offset the coverage required by this section 12(b)(i).
     (ii) The Company shall make a lump sum payment to the Executive (or, in the
event of his death before payment, to his estate), in an amount equal to the
estimated present value of the salary that the Executive would have earned if he
had continued working for the Company during the Remaining Unexpired Employment
Period at the highest annual rate of salary achieved during the period of three
(3) years ending

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EXHIBIT 10.21
immediately prior to the date of termination (the “Salary Severance Payment”).
The Salary Severance Payment shall be computed using the following formula:
(EQUATION) [y18482y1848209.gif]
where: “SSP” is the amount of the Salary Severance Payment (before the deduction
of applicable federal, state and local withholding taxes); “BS” is the highest
annual rate of salary achieved by the Executive during the period of three
(3) years ending immediately prior to the date of termination; “PR” is the
number of payroll periods that occur during a year under the Company’s normal
payroll practices; “I” equals the applicable federal short term rate established
under section 1274 of the Internal Revenue Code of 1986 (the “Code”) for the
month in which the Executive’s termination of employment occurs (the “Short Term
AFR”) and “n” equals the product of the Remaining Unexpired Employment Period at
the Executive’s termination of employment (expressed in years and fractions of
years) multiplied by the number of payroll periods that occur during a year
under the Company’s normal payroll practices. The Salary Severance Payment shall
be made within five (5) business days after the Executive’s termination of
employment and shall be in lieu of any claim to a continuation of base salary
which the Executive might otherwise have and in lieu of cash severance benefits
under any severance benefits program which may be in effect for officers or
employees of the Company.
     (iii) The Company shall make a lump sum payment to the Executive (or, in
the event of his death before payment, to his estate), in an amount equal to the
estimated present value of the annual bonuses (if any) that the Executive would
have earned if he had continued working for the Company during the Remaining
Unexpired Employment Period at the highest annual rate of salary achieved during
the period of three (3) years ending immediately prior to the date of
termination (the “Bonus Severance Payment”). The Bonus Severance Payment shall
be computed using the following formula:
BSP = SSP x (ABP / ASP)
where: “BSP” is the amount of the Bonus Severance Payment (before the deduction
of applicable federal, state and local withholding taxes); “SSP” is the amount
of the Salary Severance Payment (before the deduction of applicable federal,
state and local withholding taxes); “ABP” is the aggregate of the annual bonuses
paid or declared (whether or not paid) for the most recent period of three
(3) calendar years to end on or before the Executive’s termination of
employment; and “ASP” is the aggregate base salary actually paid to the
Executive during such period of three (3) calendar years (excluding any year for
which no bonus was declared or paid). The Bonus Severance Payment shall be made
within five (5) business days after the Executive’s termination of employment
and shall be in lieu of any claim to a continuation of participation in annual
bonus plans of the Company which the Executive might otherwise have.
     (iv) The Company shall pay to the Executive (or in the event of his death,
to his estate), a lump sum payment in an amount equal to the excess (if any) of:
(A) the present value of the aggregate benefits to which he would be entitled
under any and all tax-qualified and non-tax-qualified defined benefit plans
maintained by, or covering employees of, the Company (the “Pension Plans”) if he
had continued working for the Company during the Remaining Unexpired Employment
Period; over (B) the present value of the benefits to which the Executive and
his spouse and/or designated

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EXHIBIT 10.21
beneficiaries are actually entitled under such plans (the “Pension Severance
Payment”). The Pension Severance Payment shall be computed according to the
following formula:
PSP = PPB – APB
where: “PSP” is the amount of the Pension Severance Payment (before deductions
for applicable federal, state and local withholding taxes); “APB” is the
aggregate lump sum present value of the actual vested pension benefits payable
under the Pension Plans in the form of a straight life annuity beginning at the
earliest date permitted under the Pension Plans, computed on the basis of the
Executive’s life expectancy at the earliest date on which payments under the
Pension Plans could begin, determined by reference to Table VI of section 1.72-9
of the Income Tax Regulations (the “Assumed Life Expectancy”), and on the basis
of an interest rate assumption equal to the “applicable interest rate”
determined in accordance with section 417(e)(3)(A)(II) of the Code (the “417(e)
Rate”); and “PPB” is the lump sum present value of the pension benefits (whether
or not vested) that would be payable under the Pension Plans in the form of a
straight life annuity beginning at the earliest date permitted under the Pension
Plans, computed on the basis that the Executive’s actual age at termination of
employment is his attained age as of his last birthday that would occur during
the Remaining Unexpired Employment Period, that his service for benefit accrual
purposes under the Pension Plans is equal to the aggregate of his actual service
plus the Remaining Unexpired Employment Period, that his average compensation
figure used in determining his accrued benefit is equal to the highest annual
rate of salary achieved by the Executive during the period of three (3) years
ending immediately prior to the date of termination, that the Executive’s life
expectancy at the earliest date on which payments under the Pension Plans could
begin is the Assumed Life Expectancy and that the interest rate assumption used
is equal to the 417(e) Rate. The Pension Severance Payment shall be made within
five (5) business days after the Executive’s termination of employment and shall
be in lieu of any claim to any actual increase in his accrued benefits under the
Pension Plans in respect of the Remaining Unexpired Employment Period.
     (v) The Company shall pay to the Executive (or in the event of his death,
to his estate) a lump sum payment in an amount equal to the present value of the
additional employer contributions that would have been credited directly to his
account(s) under any and all tax-qualified and non-tax qualified defined
contribution plans maintained by, or covering employees of, the Company (the
“Non-ESOP DC Plans”), plus the fair market value of the additional shares of
employer securities or other property that would have been allocated to his
account as a result of employer contributions or dividends under any
tax-qualified leveraged employee stock ownership plan and any related
non-tax-qualified supplemental plan maintained by, or covering employees of, the
Company (the “ESOP Plans”) if he had continued in employment during the
Remaining Unexpired Employment Period (the “Defined Contribution Severance
Payment”). The Defined Contribution Severance Payment shall be computed
according to the following formula:
DCSP = [SSP x (EC / BS)] + [(STK + PROP) x Y]
where: “DCSP” is the amount of the Defined Contribution Severance Payment
(before deductions for applicable federal, state and local withholding taxes);
“SSP” is the amount of the Salary Severance Payment (before deductions for
applicable federal, state and local withholding taxes); “EC” is the amount of
employer contributions actually credited to the Executive’s accounts under the
Non-ESOP Plans for the last plan year to end before his

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EXHIBIT 10.21
termination of employment; “BS” is the Executive’s compensation taken into
account in computing EC; “Y” is the aggregate (expressed in years and fractions
of years) of the Remaining Unexpired Employment Period and the number of years
and fractions of years that have elapsed between the end of plan year for which
EC was computed and the date of the Executive’s termination of employment; “STK”
is the fair market value (determined by the final reported sales price for stock
of the same class on the last trading day before the Executive’s termination of
employment) of the employer securities actually allocated to the Executive’s
accounts under the ESOP Plans in respect of employer contributions and dividends
applied to loan amortization payments for the last plan year to end before his
termination of employment; and “PROP” is the fair market value (determined as of
the day before the Executive’s termination of employment using the same
valuation methodology used to value the assets of the ESOP Plans) of the
property other than employer securities actually allocated to the Executive’s
accounts under the ESOP Plans in respect of employer contributions and dividends
applied to loan amortization payments for the last plan year to end before his
termination of employment. The Defined Contribution Severance Payment shall be
made within five (5) business days after the Executive’s termination of
employment and shall be in lieu of any claim to any actual increase in his
accounts under the Non-ESOP DC Plans and the ESOP Plans in respect of the
Remaining Unexpired Employment Period.
     (vi) At the election of the Company made within 30 days following the
Executive’s termination of employment, upon the surrender of options or
appreciation rights issued to the Executive under any stock option or
appreciation rights plan or program maintained by, or covering employees of, the
Company, the Company shall make a lump sum payment in an amount equal to the
product of:
     (A) the excess of (I) the fair market value of a share of stock of the same
class as the stock subject to the option or appreciation right, determined as of
the date of termination of employment, over (II) the exercise price per share
for such option or appreciation right, as specified in or under the relevant
plan or program; multiplied by
     (B) the number of shares with respect to which options or appreciation
rights are being surrendered.
For the purpose of computing this payment, the Executive shall be deemed fully
vested in all options and appreciation rights under any stock option or
appreciation rights plan or program maintained by, or covering employees of, the
Company, even if he is not vested under such plan or program.
     (vii) At the election of the Company made within 30 days following the
Executive’s termination of employment, upon the surrender of any shares awarded
to the Executive under any restricted stock plan maintained by, or covering
employees of, the Company, the Company shall make a lump sum payment in an
amount equal to the product of:
     (A) the fair market value of a share of stock of the same class of stock
granted under such plan, determined as of the date of the Executive’s
termination of employment; multiplied by
     (B) the number of shares which are being surrendered.

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EXHIBIT 10.21
For purposes of computing this payment, the Executive shall be deemed fully
vested in all shares awarded under any restricted stock plan maintained by, or
covering employees of, the Company, even if he is not vested under such plan.
The payments and benefits described in section 12(b) are referred to in this
Agreement as the “Additional Termination Entitlements”.
          Section 13. Resignation.
          (a) The Executive may resign from his employment with the Company at
any time. A resignation under this section 13 shall be effected by notice of
resignation given by the Executive to the Company and shall take effect on the
later of the effective date of termination specified in such notice or the date
on which the notice of termination is deemed given by the Executive. The
Executive’s resignation from any of the positions within the Company to which he
has been assigned shall be deemed a resignation from all such positions.
          (b) The Executive’s resignation shall be deemed to be for “Good
Reason” if the effective date of resignation occurs within ninety (90) days
after any of the following:
     (i) the failure of the Company (whether by act or omission of the Board, or
otherwise) to appoint or re-appoint or elect or re-elect the Executive to the
position(s) with the Company specified in section 3 of this Agreement (other
than to any such position as an officer of the Board) or to a more senior
office;
     (ii) if the Executive is or becomes a member of the Board, the failure of
the Company’s shareholders (whether in an election in which the Executive stands
as a nominee or in an election where the Executive is not a nominee) to elect or
re-elect the Executive to membership at the expiration of his term of
membership, unless such failure is a result of the Executive’s refusal to stand
for election;
     (iii) a material failure by the Company, whether by amendment of its
certificate of incorporation or organization, by-laws, action of the Board or
otherwise, to vest in the Executive the functions, duties, or responsibilities
prescribed in section 3 of this Agreement (other than such functions, duties or
responsibilities associated with a position as an officer of the Board);
provided that the Executive shall have given notice of such failure to the
Company, and the Company has not fully cured such failure within thirty
(30) days after such notice is deemed given;
     (iv) any reduction of the Executive’s rate of base salary in effect from
time to time, whether or not material, or any failure (other than due to
reasonable administrative error that is cured promptly upon notice) to pay any
portion of the Executive’s compensation as and when due;
     (v) any change in the terms and conditions of any compensation or benefit
program in which the Executive participates which, either individually or
together with other changes, has a material adverse effect on the aggregate
value of his total compensation package, disregarding for this purpose any
change that results from an across-the-board reduction that affects all
similarly situated employees in a similar manner; provided that the Executive
shall have given notice of such material adverse effect to the Company, and the
Company has not fully cured such failure within thirty (30) days after such
notice is deemed given;

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EXHIBIT 10.21
     (vi) any material breach by the Company of any material term, condition or
covenant contained in this Agreement; provided that the Executive shall have
given notice of such material adverse effect to the Company, and the Company has
not fully cured such failure within thirty (30) days after such notice is deemed
given; or
     (vii) a change in the Executive’s principal place of employment, without
his consent, to a place that is not the principal executive office of the Bank,
or a relocation of the Bank’s principal executive office to a location that is
both more than twenty-five (25) miles away from the Executive’s principal
residence and more than twenty-five (25) miles away from the location of the
Bank’s principal executive office on the date of this Agreement.
In all other cases, a resignation by the Executive shall be deemed to be without
Good Reason.
          (c) In the event of the Executive’s resignation before the expiration
of the Employment Period, the Company shall pay and deliver the Standard
Termination Entitlements. In addition, if the Executive’s resignation is deemed
to be a resignation with Good Reason, the Company shall also pay and deliver the
Additional Termination Entitlements.
          Section 14. Terms and Conditions of the Additional Termination
Entitlements.
          The Company and the Executive hereby stipulate that the damages which
may be incurred by the Executive following any termination of employment are not
capable of accurate measurement as of the date first above written and that the
Additional Termination Entitlements constitute reasonable damages therefor under
the circumstances and shall be payable without any requirement of proof of
actual damage and without regard to the Executive’s efforts, if any, to mitigate
damages. The Company and the Executive further agree that the Company may
condition the payment and delivery of the Additional Termination Entitlements on
the receipt of the Executive’s resignation from any and all positions which he
holds as an officer, director or committee member with respect to the Company,
the Bank or any subsidiary or affiliate of either of them.
          Section 15. Termination Upon or Following a Change of Control.
          (a) A “Change of Control” shall be deemed to have occurred upon the
happening of any of the following events:
     (i) the consummation of a reorganization, merger or consolidation of the
Company with one or more other persons, other than a transaction following
which:
     (A) at least 51% of the equity ownership interests of the entity resulting
from such transaction are beneficially owned (within the meaning of Rule 13d-3
promulgated under the Securities Exchange Act of 1934, as amended (“Exchange
Act”)) in substantially the same relative proportions by persons who,
immediately prior to such transaction, beneficially owned (within the meaning of
Rule 13d-3 promulgated under the Exchange Act) at least 51% of the outstanding
equity ownership interests in the Company; and
     (B) at least 51% of the securities entitled to vote generally in the
election of directors of the entity resulting from such transaction are
beneficially owned (within the meaning of Rule 13d-3 promulgated under the
Exchange Act) in substantially the same relative proportions by persons who,
immediately prior

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EXHIBIT 10.21
to such transaction, beneficially owned (within the meaning of Rule 13d-3
promulgated under the Exchange Act) at least 51% of the securities entitled to
vote generally in the election of directors of the Company;
     (ii) the acquisition of all or substantially all of the assets of the
Company or beneficial ownership (within the meaning of Rule 13d-3 promulgated
under the Exchange Act) of 25% or more of the outstanding securities of the
Company entitled to vote generally in the election of directors by any person or
by any persons acting in concert;
     (iii) a complete liquidation or dissolution of the Company;
     (iv) the occurrence of any event if, immediately following such event, at
least 50% of the members of the Board of Directors of the Company do not belong
to any of the following groups:
     (A) individuals who were members of the Board of Directors of the Company
on the date of this Agreement; or
     (B) individuals who first became members of the Board of Directors of the
Company after the date of this Agreement either:
     (1) upon election to serve as a member of the Board of Directors of the
Company by affirmative vote of three-quarters of the members of such board, or
of a nominating committee thereof, in office at the time of such first election;
or
     (2) upon election by the shareholders of the Board of Directors of the
Company to serve as a member of such board, but only if nominated for election
by affirmative vote of three-quarters of the members of the Board of Directors
of the Company, or of a nominating committee thereof, in office at the time of
such first nomination;
provided, however, that such individual’s election or nomination did not result
from an actual or threatened election contest (within the meaning of Rule 14a-11
of Regulation 14A promulgated under the Exchange Act) or other actual or
threatened solicitation of proxies or consents (within the meaning of
Rule 14a-11 of Regulation 14A promulgated under the Exchange Act) other than by
or on behalf of the Board of Directors of the Company; or
     (v) any event which would be described in section 15(a)(i), (ii), (iii) or
(iv) if the term “Bank” were substituted for the term “Company” therein.
In no event, however, shall a Change of Control be deemed to have occurred as a
result of any acquisition of securities or assets of the Company, the Bank, or a
subsidiary of either of them, by the Company, the Bank, or any subsidiary of
either of them, or by any employee benefit plan maintained by any of them. For
purposes of this section 15(a), the term “person” shall have the meaning
assigned to it under sections 13(d)(3) or 14(d)(2) of the Exchange Act.
          (b) For purposes of this Agreement, a “Pending Change of Control”
shall mean: (i) the signing of a definitive agreement for a transaction which,
if consummated, would result in a Change of Control; (ii) the commencement of a
tender offer which, if successful, would result in a Change of

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EXHIBIT 10.21
Control; or (iii) the circulation of a proxy statement seeking proxies in
opposition to management in an election contest which, if successful, would
result in a Change of Control.
          (c) Notwithstanding anything in this Agreement to the contrary, if the
Executive’s employment with the Company terminates due to death or disability
within one (1) year after the occurrence of a Pending Change of Control and if a
Change of Control occurs within two (2) years after such termination of
employment, he (or in the event of his death, his estate) shall be entitled to
receive the Standard Termination Entitlements and the Additional Termination
Entitlements that would have been payable if a Change of Control had occurred on
the date of his termination of employment and he had resigned with Good Reason
immediately thereafter; provided, that payment shall be deferred without
interest until, and shall be payable immediately upon, the actual occurrence of
a Change of Control.
          (d) Notwithstanding anything in this Agreement to the contrary: (i) in
the event of the Executive’s resignation within sixty (60) days after the
occurrence of a Change of Control, he shall be entitled to receive the Standard
Termination Entitlements and Additional Termination Entitlements that would be
payable if his resignation were a resignation for Good Reason, without regard to
the actual circumstances of his resignation; and (ii) for a period of one
(1) year after the occurrence of a Change of Control, no discharge of the
Executive shall be deemed a discharge with Cause unless the votes contemplated
by section 11(a) of this Agreement are supported by at least two-thirds of the
members of the Board at the time the vote is taken who were also members of the
Board immediately prior to the Change of Control.
          (e) Notwithstanding anything in this Agreement to the contrary, for
purposes of computing the Additional Termination Entitlements due upon a
termination of employment that occurs, or is deemed to have occurred, after a
Change of Control, the Remaining Unexpired Employment Period shall be deemed to
be three (3) full years.
          Section 16. Tax Indemnification.
          (a) If the Executive’s employment terminates under circumstances
entitling him (or in the event of his death, his estate) to the Additional
Termination Entitlements, the Company shall pay to the Executive (or in the
event of his death, his estate) an additional amount intended to indemnify him
against the financial effects of the excise tax imposed on excess parachute
payments under section 280G of the Code (the “Tax Indemnity Payment”). The Tax
Indemnity Payment shall be determined under the following formula:

X   =                           E x P
 
1–[FI x (1–SLI) + SLI + E+ M]

         
 
  where:    
 
       
 
  E =   the percentage rate at which an excise tax is assessed under section
4999 of the Code;
 
       
 
  P =   the amount with respect to which such excise tax is assessed, determined
without regard to this section 16;
 
       
 
  FI =   the highest marginal rate of income tax applicable to the Executive
under the Code for the taxable year in question;

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EXHIBIT 10.21

         
 
  SLI =   the sum of the highest marginal rates of income tax applicable to the
Executive under all applicable state and local laws for the taxable year in
question; and
 
       
 
  M =   the highest marginal rate of Medicare tax applicable to the Executive
under the Code for the taxable year in question.

Such computation shall be made at the expense of the Company by an attorney or a
firm of independent certified public accountants selected by the Executive and
reasonably satisfactory to the Company (the “Tax Advisor”) and shall be based on
the following assumptions: (i) that a change in ownership, a change in effective
ownership or control, or a change in the ownership of a substantial portion of
the assets, of the Bank or the Company has occurred within the meaning of
section 280G of the Code (a “280G Change of Control”); (ii) that all direct or
indirect payments made to or benefits conferred upon the Executive on account of
his termination of employment are “parachute payments” within the meaning of
section 280G of the Code; and (iii) that no portion of such payments is
reasonable compensation for services rendered prior to the Executive’s
termination of employment.
          (b) With respect to any payment that is presumed to be a parachute
payment for purposes of section 280G of the Code, the Tax Indemnity Payment
shall be made to the Executive on the earlier of the date the Company, the Bank
or any direct or indirect subsidiary or affiliate of the Company or the Bank is
required to withhold such tax or the date the tax is required to be paid by the
Executive, unless, prior to such date, the Company delivers to the Executive the
written opinion, in form and substance reasonably satisfactory to the Executive,
of the Tax Advisor or of an attorney or firm of independent certified public
accountants selected by the Company and reasonably satisfactory to the
Executive, to the effect that the Executive has a reasonable basis on which to
conclude that (i) no 280G Change in Control has occurred, or (ii) all or part of
the payment or benefit in question is not a parachute payment for purposes of
section 280G of the Code, or (iii) all or a part of such payment or benefit
constitutes reasonable compensation for services rendered prior to the 280G
Change of Control, or (iv) for some other reason which shall be set forth in
detail in such letter, no excise tax is due under section 4999 of the Code with
respect to such payment or benefit (the “Opinion Letter”). If the Company
delivers an Opinion Letter, the Tax Advisor shall recompute, and the Company
shall make, the Tax Indemnity Payment in reliance on the information contained
in the Opinion Letter.
          (c) In the event that the Executive’s liability for the excise tax
under section 4999 of the Code for a taxable year is subsequently determined to
be different than the amount with respect to which the Tax Indemnity Payment is
made, the Executive or the Company, as the case may be, shall pay to the other
party at the time that the amount of such excise tax is finally determined, an
appropriate amount, plus interest, such that the payment made under section
16(b), when increased by the amount of the payment made to the Executive under
this section 16(c), or when reduced by the amount of the payment made to the
Company under this section 16(c), equals the amount that should have properly
been paid to the Executive under section 16(a). The interest paid to the Company
under this section 16(c) shall be determined at the rate provided under section
1274(b)(2)(B) of the Code. The payment made to the Executive shall include such
amount of interest as is necessary to satisfy any interest assessment made by
the Internal Revenue Service and an additional amount equal to any monetary
penalties assessed by the Internal Revenue Service on account of an underpayment
of the excise tax. To confirm that the proper amount, if any, was paid to the
Executive under this section 16, the Executive shall furnish to the Company a
copy of each tax return which reflects a liability for an excise tax, at least
20 days before the date on which such return is required to be filed with the
Internal Revenue Service. Nothing in this Agreement shall give the Company any
right to control or otherwise participate in any action, suit or

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EXHIBIT 10.21
proceeding to which the Executive is a party as a result of positions taken on
his federal income tax return with respect to his liability for excise taxes
under section 4999 of the Code.
          Section 17. Covenant Not To Compete.
          The Executive hereby covenants and agrees that, in the event of his
termination of employment with the Company prior to the expiration of the
Employment Period, for a period of one year following the date of his
termination of employment with the Company, he shall not, without the written
consent of the Company, become an officer, employee, consultant, director or
trustee of any savings bank, savings and loan association, savings and loan
holding company, bank or bank holding company, or any direct or indirect
subsidiary or affiliate of any such entity, that entails working within any city
or county in the State of New Jersey or any other county in which the Company or
the Bank maintains an office (“Competitive Market”); provided, however, that
this section 17 shall not apply if the Executive is entitled to the Additional
Termination Entitlements.
          Section 18. Confidentiality.
          Unless he obtains the prior written consent of the Company, the
Executive shall keep confidential and shall refrain from using for the benefit
of himself, or any person or entity other than the Company or any entity which
is a subsidiary of the Company or of which the Company is a subsidiary, any
material document or information obtained from the Company, or from its parent
or subsidiaries, in the course of his employment with any of them concerning
their properties, operations or business (unless such document or information is
readily ascertainable from public or published information or trade sources or
has otherwise been made available to the public through no fault of his own)
until the same ceases to be material (or becomes so ascertainable or available);
provided, however, that nothing in this section 18 shall prevent the Executive,
with or without the Company’s consent, from participating in or disclosing
documents or information in connection with any judicial or administrative
investigation, inquiry or proceeding to the extent that such participation or
disclosure is required under applicable law.
          Section 19. Solicitation.
          The Executive hereby covenants and agrees that, for a period of one
year following his termination of employment with the Company, he shall not,
without the written consent of the Company and the Bank, either directly or
indirectly:
          (a) solicit, offer employment to, or take any other action intended,
or that a reasonable person acting in like circumstances would expect, to have
the effect of causing any officer or employee of the Company, the Bank or any of
their respective subsidiaries or affiliates to terminate his or her employment
and accept employment or become affiliated with, or provide services for
compensation in any capacity whatsoever to, any savings bank, savings and loan
association, bank, bank holding company, savings and loan holding company, or
other institution engaged in the business of accepting deposits or making loans,
that conducts business within the Competitive Market;
          (b) provide any information, advice or recommendation with respect to
any such officer or employee to any savings bank, savings and loan association,
bank, bank holding company, savings and loan holding company, or other
institution engaged in the business of accepting deposits, or making loans, that
conducts business within the Competitive Market, that is intended, or that a
reasonable person acting in like circumstances would expect, to have the effect
of causing such officer to terminate his employment and accept employment or
become affiliated with, or provide services for compensation in any capacity
whatsoever to such other entity;

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EXHIBIT 10.21
     (c) solicit, provide any information, advice or recommendation or take any
other action intended, or that a reasonable person acting in like circumstances
would expect, to have the effect of causing any customer of the Company to
terminate an existing business or commercial relationship with the Company.
     Section 20. No Effect on Employee Benefit Plans or Programs.
     The termination of the Executive’s employment during the term of this
Agreement or thereafter, whether by the Company or by the Executive, shall have
no effect on the rights and obligations of the parties hereto under the
Company’s qualified or non-qualified retirement, pension, savings, thrift,
profit-sharing or stock bonus plans, group life, health (including
hospitalization, medical and major medical), dental, accident and long term
disability insurance plans or such other employee benefit plans or programs, or
compensation plans or programs, as may be maintained by, or cover employees of,
the Company from time to time; provided, however, that nothing in this Agreement
shall be deemed to duplicate any compensation or benefits provided under any
agreement, plan or program covering the Executive to which the Company is a
party and any duplicative amount payable under any such agreement, plan or
program shall be applied as an offset to reduce the amounts otherwise payable
hereunder.
     Section 21. Successors and Assigns.
     This Agreement will inure to the benefit of and be binding upon the
Executive, his legal representatives and testate or intestate distributees, and
the Company and its successors and assigns, including any successor by merger or
consolidation or a statutory receiver or any other person or firm or corporation
to which all or substantially all of the assets and business of the Company may
be sold or otherwise transferred. Failure of the Company to obtain from any
successor its express written assumption of the Company’s obligations hereunder
at least 60 days in advance of the scheduled effective date of any such
succession shall be deemed a material breach of this Agreement.
     Section 22. Notices.
     Any communication required or permitted to be given under this Agreement,
including any notice, direction, designation, consent, instruction, objection or
waiver, shall be in writing and shall be deemed to have been given at such time
as it is delivered personally, or five days after mailing if mailed, postage
prepaid, by registered or certified mail, return receipt requested, addressed to
such party at the address listed below or at such other address as one such
party may by written notice specify to the other party:
If to the Executive:
4634 Carlton Dunes 2
Fernandina Beach, Florida 32034
If to the Company:
Hudson City Bancorp, Inc.
West 80 Century Road
Paramus, New Jersey 07652-1473
Attention: Chairman, Compensation Committee

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EXHIBIT 10.21
with a copy to:
Thacher Proffitt & Wood llp
Two World Financial Center
New York, New York 10281
Attention: W. Edward Bright, Esq.
          Section 23. Indemnification for Attorneys’ Fees.
          The Company’s obligation to make the payments provided for in this
Agreement and otherwise to perform its obligations hereunder shall not be
affected by any set-off, counterclaim, recoupment, defense or other claim, right
or action which the Company may have against the Executive or others. In no
event shall the Executive be obligated to seek other employment or take any
other action by way of mitigation of the amounts payable to the Executive under
any of the provisions of this Agreement and such amounts shall not be reduced
whether or not the Executive obtains other employment. Unless it is determined
that the Executive has acted frivolously or in bad faith, the Company shall pay
as incurred, to the full extent permitted by law, all legal fees and expenses
which the Executive may reasonably incur as a result of or in connection with
his consultation with legal counsel or arising out of any action, suit,
proceeding, tax controversy or contest (regardless of the outcome thereof) by
the Company, the Executive or others regarding the validity or enforceability
of, or liability under, any provision of this Agreement or any guarantee of
performance thereof (including as a result of any contest by the Executive about
the amount of any payment pursuant to this Agreement), plus in each case
interest on any delayed payment at the applicable Federal rate provided for in
section 7872(f)(2)(A) of the Code. This section 23(b) shall apply whether such
consultation, action, suit, proceeding or contest arises before, on, after or as
a result of a Change of Control.
          Section 24. Severability.
          A determination that any provision of this Agreement is invalid or
unenforceable shall not affect the validity or enforceability of any other
provision hereof.
          Section 25. Waiver.
          Failure to insist upon strict compliance with any of the terms,
covenants or conditions hereof shall not be deemed a waiver of such term,
covenant, or condition. A waiver of any provision of this Agreement must be made
in writing, designated as a waiver, and signed by the party against whom its
enforcement is sought. Any waiver or relinquishment of any right or power
hereunder at any one or more times shall not be deemed a waiver or
relinquishment of such right or power at any other time or times.
          Section 26. Counterparts.
          This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original, and all of which shall constitute one and the
same Agreement.
          Section 27. Governing Law.
          Except to the extent preempted by federal law, this Agreement shall be
governed by and construed and enforced in accordance with the laws of the State
of New Jersey applicable to contracts entered into and to be performed entirely
within the State of New Jersey. The federal and state courts

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EXHIBIT 10.21
having jurisdiction in Bergen County, New Jersey shall have exclusive
jurisdiction over any claim, action, complaint or lawsuit brought under the
terms of this Agreement or in any way relating to the rights or obligations of
any person under or the acts or omissions of the Bank, the Board or any duly
authorized person acting on their behalf in relation to the Agreement. By
executing this Agreement, the Executive, for himself and any other person
claiming any rights under the Agreement though him, agrees to submit himself,
and any such legal action described herein that he shall bring, to the sole
jurisdiction of such courts for the adjudication and resolution of such
disputes.
          Section 28. Headings and Construction.
          The headings of sections in this Agreement are for convenience of
reference only and are not intended to qualify the meaning of any section. Any
reference to a section number shall refer to a section of this Agreement, unless
otherwise stated.
          Section 29. Entire Agreement; Modifications.
          This instrument contains the entire agreement of the parties relating
to the subject matter hereof, and supersedes in its entirety any and all prior
agreements (including, without limitation, the Prior Agreement), understandings
or representations relating to the subject matter hereof. No modifications of
this Agreement shall be valid unless made in writing and signed by the parties
hereto.
          Section 30. Non-Duplication.
          In the event that the Executive shall perform services for the Bank or
any other direct or indirect subsidiary or affiliate of the Company or the Bank,
any compensation or benefits provided to the Executive by such other employer
shall be applied to offset the obligations of the Company hereunder, it being
intended that this Agreement set forth the aggregate compensation and benefits
payable to the Executive for all services to the Company, the Bank and all of
their respective direct or indirect subsidiaries and affiliates.
          Section 31. Relative Obligations of the Bank and the Company.
          If the Executive performs services for both the Bank and the Company,
any entitlement of the Executive to severance compensation and other termination
benefits under this Agreement shall be determined on the basis of the aggregate
compensation payable to the Executive by the Bank and the Company, and liability
therefor shall be apportioned between the Bank and the Company in the same
manner as compensation paid to the Executive for services to each of them;
provided, however, that the Company shall be jointly and severally liable with
the Bank for all obligations of the Bank under the Bank Agreement. It is the
intent and purpose of this section 31 that the Executive have the same legal and
economic rights that he would have if all of his services were rendered to and
all of his compensation was paid by the Company. This section 31 shall be
construed and enforced to give effect to such intent and purpose.
          Section 32. Required Regulatory Provisions.
          Notwithstanding anything herein contained to the contrary, any
payments to the Executive by the Company, whether pursuant to this Agreement or
otherwise, are subject to and conditioned upon their compliance with section
18(k) of the Federal Deposit Insurance Act, 12 U.S.C. §1828(k), and any
regulations promulgated thereunder and Federal Deposit Insurance Corporation
regulation 12 CFR Part 359, Golden Parachute and Indemnification Payments.

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EXHIBIT 10.21
          IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed and the Executive has hereunto set his hand, all as of the day and year
first above written.

                                                    Ronald E. Hermance Jr.    
 
                                Hudson City Bancorp, Inc.    
 
                   
Attest:
          Attest:        
 
                   
By
          By        
 
                   
 
  Veronica Olszewski           Michael W. Azzara    
 
  Senior Vice President and Corporate           Chairman of the Compensation    
 
  Secretary           Committee of the Board of Directors    
 
                   
[Seal]
                   

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