Employment Agreement


                  This EMPLOYMENT AGREEMENT ("Agreement") is made and entered
into as of October 26, 1999 by and among WARWICK COMMUNITY BANCORP, INC., a
business corporation organized and existing under the laws of the State of
Delaware and having an office at 18 Oakland Avenue, Warwick, New York 10990-0591
("Company"), THE TOWNE CENTER BANK, a commercial bank organized and existing
under the laws of the State of New Jersey and a subsidiary of the Company
("Commercial Bank"), and FRED G. KOWAL, an individual residing at 15 Rutland
Road, Glen Rock, New Jersey 07452 ("Executive").

                              W I T N E S S E T H :

                  WHEREAS, the Executive has accepted the Company's offer to
become the President and Chief Executive Officer of the Commercial Bank; and

                  WHEREAS, the Company and the Commercial Bank desire to assure
for themselves and their respective subsidiaries and affiliates the continued
availability of the Executive's services as provided in this Agreement and the
ability of the Executive to perform such services with a minimum of personal
distraction in the event of a pending or threatened Change of Control (as
hereinafter defined); and

                  WHEREAS, the Executive is willing to continue to serve the
Company, the Commercial Bank and their respective subsidiaries and affiliates on
the terms and conditions hereinafter set forth;

                  NOW, THEREFORE, in consideration of the premises and the
mutual covenants and conditions hereinafter set forth, the Company, the
Commercial Bank and the Executive hereby agree as follows:

                  SECTION 1.        EMPLOYMENT.

                  The Company and the Commercial Bank agree to continue to
employ the Executive, and the Executive hereby agrees to 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 terms and conditions of this Agreement shall be and
remain in effect during the period of employment established under this section
2 ("Employment Period"). The Employment Period shall be for a term of two years
beginning on the date of this Agreement and ending on the second anniversary
date of this Agreement, plus such extensions, if any, as are provided pursuant
to section 2(b).

                  (b) Except as provided in section 2(c) and subject to section
11(b), in the event a Change of Control as defined in section 11 has occurred,
beginning on the date of such Change of Control, the Employment Period shall
automatically be extended to the second anniversary of the date of the Change of
Control, and the Employment Period shall automatically be extended for one
additional day each day, unless the Company or the Commercial Bank or the
Executive elects not to extend the Agreement further by giving written notice
thereof to the other two parties, in which case the Employment


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Period shall end on the second anniversary of the date on which such written
notice is given. For all purposes of this Agreement, the term "Remaining
Unexpired Employment Period" as of any date shall mean the period beginning on
such date and ending on the last day of the Employment Period taking into
account any extensions under this section 2(b). Upon termination of the
Executive's employment with the Company or the Commercial Bank for any reason
whatsoever, any daily extensions provided pursuant to this section 2(b), if not
theretofore discontinued, shall automatically cease.

                  (c) Nothing in this Agreement shall be deemed to prohibit the
Company or the Commercial Bank at any time from terminating the Executive's
employment during the Employment Period with or without notice for any reason;
PROVIDED, HOWEVER, that the relative rights and obligations of the Company, the
Commercial Bank and the Executive in the event of any such termination shall be
determined under this Agreement.

                  SECTION 3.        DUTIES.

                  The Executive shall serve as President and Chief Executive
Officer of the Commercial Bank, having such power, authority and responsibility
and performing such duties as are prescribed by or under the By-Laws of the
Commercial Bank and as are customarily associated with such position. 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) to the business and affairs of the Commercial Bank
and shall use his best efforts to advance the interests of the Company and the
Commercial Bank. In the event that the business and affairs of the Commercial
Bank do not require the Executive's full business time and attention, as
reasonably determined by the Board of Directors of the Company ("Company
Board"), the Executive shall, in addition to performing the duties as President
and Chief Executive Officer of the Commercial Bank described above, have such
power, authority and responsibility and perform such duties for the Company, or
any subsidiary or affiliate of the Company, as may be reasonably assigned to him
by the Company Board in its discretion, or the board of directors of such
subsidiary or affiliate in its discretion, as the case may be.

                  SECTION 4.        CASH COMPENSATION.

                  In consideration for the services to be rendered by the
Executive hereunder, the Commercial Bank shall pay to him a salary at an initial
annual rate of one hundred and twenty-five thousand dollars ($125,000), payable
in approximately equal installments in accordance with the Company's customary
payroll practices for senior officers. The Board of Directors of the Commercial
Bank ("Commercial Bank 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 months, and may, in its discretion,
approve an increase therein. In addition to salary, the Executive may receive
other cash compensation from the Company or the Commercial Bank for services
hereunder at such times, in such amounts and on such terms and conditions as the
Company Board or the Commercial Bank Board, as applicable, may determine from
time to time.

                  SECTION 5.        EMPLOYEE BENEFIT PLANS AND PROGRAMS.

                  During the Employment Period, the Executive shall be treated
as an employee of the Company and the Commercial Bank and shall be entitled to
participate in and receive benefits under


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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
and the Commercial Bank, 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 and the Commercial Bank's customary practices.

                  SECTION 6.        INDEMNIFICATION AND INSURANCE.

                  (a) During the Employment Period and for a period of six years
thereafter, the Company or the Commercial Bank 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 the Commercial Bank or service in other capacities at the request
of the Company or the Commercial Bank. 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 and the Commercial Bank.

                  (b) To the maximum extent permitted under applicable law,
during the Employment Period and for a period of six years thereafter, the
Company and the Commercial Bank 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 and the
Commercial Bank 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 Company Board or the Commercial Bank 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 or the Commercial Bank and generally applicable to all similarly
situated Executives. The Executive may also serve as an officer or director of
the Company or any subsidiary or affiliate of the Company on such terms and
conditions as the Company and the Commercial Bank may mutually agree upon, and
such service shall not be deemed to materially interfere with the Executive's
performance of his duties hereunder or otherwise result in a material breach of
this Agreement. 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 Commercial Bank, he shall continue to perform services for the
Company in accordance with this Agreement but shall not directly or indirectly
provide services to or participate in the affairs of the Commercial Bank in a
manner inconsistent with the terms of such discharge or suspension or any
applicable regulatory order.



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                  SECTION 8.        WORKING FACILITIES AND EXPENSES.

                  The Executive's principal places of employment shall be at
either the Company's or the Commercial Bank's principal executive offices, or at
such other location within 50 miles of the addresses at which the Company and
the Commercial Bank shall maintain their respective principal executive offices,
or at such other location as the Company, the Commercial Bank and the Executive
may mutually agree upon. The Commercial Bank 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 position with the
Commercial Bank and necessary or appropriate in connection with the performance
of his assigned duties under this Agreement. The Commercial Bank shall reimburse
the Executive for his ordinary and necessary business expenses, including,
without limitation, the Executive's travel and entertainment expenses incurred
in connection with the performance of his duties under this Agreement, in each
case upon presentation to the Commercial Bank of an itemized account of such
expenses in such form as the Commercial Bank may reasonably require.

                  SECTION 9.        TERMINATION OF EMPLOYMENT WITH SEVERANCE
                                    BENEFITS.

                  (a)      The Executive shall be entitled to the severance
benefits described in section 9(b) in the event that:

                  (i) his employment with the Company or the Commercial Bank
         terminates during the Employment Period as a result of the Executive's
         voluntary resignation within 90 days following:

                           (A) the failure of the Commercial Bank Board to
                  appoint or re- appoint or elect or re-elect the Executive to
                  the position with the Commercial Bank stated in section 3 of
                  this Agreement (or a more senior office);

                           (B)      the failure of the shareholders of the
                  Commercial Bank to elect or re-elect the Executive to the
                  Commercial Bank Board;

                           (C) the expiration of a 30-day period following the
                  date on which the Executive gives written notice to the
                  Company of its or the Commercial Bank's material failure,
                  whether by amendment of the Company's Certificate of
                  Incorporation, the Commercial Bank's Certificate of
                  Incorporation, the Company's By-Laws or the Commercial Bank's
                  By-Laws, action of the Company Board or the Commercial Bank
                  Board or the Company's shareholders or the Commercial Bank's
                  shareholders or otherwise, to vest in the Executive the
                  functions, duties, or responsibilities prescribed in section 3
                  of this Agreement, unless, during such 30-day period, the
                  Company or the Commercial Bank cures such failure; or

                           (D) the expiration of a 30-day period following the
                  date on which the Executive gives written notice to the
                  Company of its or the Commercial Bank's material breach of any
                  term, condition or covenant contained in this Agreement
                  (including, without limitation, any reduction of the
                  Executive's rate of base salary in effect from time to time
                  and any change in the terms and


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                  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), unless,
                  during such 30-day period, the Company or the Commercial Bank
                  cures such failure; or

                  (ii) the Executive's employment with the Commercial Bank is
         terminated by the Company or the Commercial Bank for any reason other
         than for "cause" as provided in section 10(a); or

                  (iii) a Change of Control as defined in section 11 has
         occurred.

                  (b) Upon the occurrence of any of the events described in
section 9(a) of this Agreement, the Company or the Commercial Bank shall pay and
provide to the Executive (or, in the event of his death, to his estate):

                  (i) his earned but unpaid salary (including, without
         limitation, all items which constitute wages under applicable law and
         the payment of which is not otherwise provided for in this section
         9(b)) as of the date of the termination of his employment with the
         Commercial Bank, such payment to 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 termination of employment;

                  (ii) the benefits, if any, to which he is entitled as a former
         employee under the employee benefit plans and programs and compensation
         plans and programs maintained for the benefit of the Company's and the
         Commercial Bank's officers and employees;

                  (iii) continued group life, health (including hospitalization,
         medical and major medical), dental, accident and long term disability
         insurance benefits, in addition to that provided pursuant to section
         9(b)(ii), and after taking into account the coverage provided by any
         subsequent employer, if and to the extent necessary to provide for the
         Executive, for the Remaining Unexpired Employment Period, coverage
         equivalent to the coverage to which he would have been entitled under
         such plans (as in effect on the date of his termination of employment,
         or, if his termination of employment occurs after a Change of Control,
         on the date of such Change of Control, whichever benefits are greater),
         if he had continued working for the Commercial Bank during the
         Remaining Unexpired Employment Period at the highest annual rate of
         salary achieved during the Employment Period;

                  (iv) within 30 days following the Executive's termination of
         employment with the Commercial Bank, a lump sum payment, in an amount
         equal to the present value of the salary (excluding any additional
         payments made to the Executive in lieu of the use of an automobile)
         that the Executive would have earned if he had continued working for
         the Commercial Bank during the Remaining Unexpired Employment Period at
         the highest annual rate of salary achieved during the Employment
         Period, where such present value is to be determined using a discount
         rate equal to the applicable short-term federal rate prescribed under
         section 1274(d)


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         of the Internal Revenue Code of 1986, as amended ("Code"), compounded
         using the compounding periods corresponding to the Company's regular
         payroll periods for its officers, such lump sum to be paid in lieu of
         all other payments of salary provided for under this Agreement in
         respect of the period following any such termination;

                  (v) within 30 days following the Executive's termination of
         employment with the Commercial Bank, 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, if any, under The Warwick Savings
                  Bank Defined Benefit Pension Plan (together with the defined
                  benefit portion of the Benefit Restoration Plan of The Warwick
                  Savings Bank and any other supplemental defined benefit plan)
                  and any and all other qualified and non-qualified defined
                  benefit pension plans maintained by, or covering employees of,
                  the Company, the Commercial Bank or The Warwick Savings Bank,
                  if he were 100% vested thereunder and had continued working
                  for the Commercial Bank during the Remaining Unexpired
                  Employment Period at the highest annual rate of salary
                  achieved during the Employment Period; over

                           (B) the present value of the benefits to which he is
                  actually entitled under such defined benefit pension plans as
                  of the date of his termination;

         where such present values are to be determined using the mortality
         tables prescribed under section 415(b)(2)(E)(v) of the Code and a
         discount rate, compounded monthly equal to the annualized rate of
         interest prescribed by the Pension Benefit Guaranty Corporation for the
         valuation of immediate annuities payable under terminating
         single-employer defined benefit plans for the month in which the
         Executive's termination of employment occurs ("Applicable PBGC Rate");

                  (vi) within 30 days following the Executive's termination of
         employment with the Commercial Bank, a lump sum payment in an amount
         equal to the present value of the estimated employer contributions
         which would have been made to his account, if any, under The Warwick
         Savings Bank 401(k) Savings Plan, and the estimated value of the annual
         allocations that would have been made to his account in the Employee
         Stock Ownership Plan of Warwick Community Bancorp, Inc. (together with
         the defined contribution portion of the Benefit Restoration Plan of The
         Warwick Savings Bank or any other supplemental defined contribution
         plan) and any and all other qualified and non-qualified defined
         contribution plans maintained by, or covering employees of, the
         Commercial Bank, as if he were 100% vested thereunder and had continued
         working for the Commercial Bank during the Remaining Unexpired
         Employment Period at the highest annual rate of salary achieved during
         the Employment Period, making the maximum amount of employee
         contributions, if any, required under any such plan or plans and taking
         into account his estimated compensation as determined under any such
         plan or plans, such present value to be determined on the basis of a
         discount rate, compounded using the


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         compounding period that corresponds to the frequency with which
         employer contributions are made to the relevant plan, equal to the
         Applicable PBGC Rate;

                  (vii) the payments that would have been made, if any, to the
         Executive under any cash or stock bonus or long-term or short-term cash
         incentive compensation plan maintained by, or covering employees of,
         the Commercial Bank if he had continued working for the Commercial Bank
         during the Remaining Unexpired Employment Period and had earned the
         maximum bonus or incentive award in each calendar year that ends during
         the Remaining Unexpired Employment Period, such payments to be equal to
         the product of:

                           (A) the maximum percentage rate at which an award was
                  ever available to the Executive under such incentive
                  compensation plan; multiplied by

                           (B) the salary that would have been paid to the
                  Executive during each such calendar year at the highest annual
                  rate of salary achieved during the Employment Period;

         such payments to be made (without discounting for early payment) within
         30 days following the Executive's termination of employment;

                  (viii) at the election of the Company made within 30 days
         following the occurrence of the event described in section 9(a), upon
         the surrender of options or appreciation rights issued to the
         Executive, if any, under any stock option and appreciation rights plan
         or program maintained by, or covering employees of, the Company or the
         Commercial Bank, 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 purposes of this section 9(b)(viii), 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 or the Commercial Bank, even if he
         is not vested under such plan or program; and

                  (ix) at the election of the Company made within 30 days
         following the occurrence of the event described in section 9(a), upon
         the surrender of any shares awarded to the Executive, if any, under any
         restricted stock plan maintained by, or covering employees of, the
         Company or the Commercial Bank, a lump sum payment in an amount equal
         to the product of:


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                           (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.

         For purposes of this section 9(b)(ix), the Executive shall be deemed
         fully vested in all shares awarded under any restricted stock plan
         maintained by, or covering employees of, the Company or the Commercial
         Bank, even if he is not vested under such plan.

The Company, the Commercial Bank and the Executive hereby stipulate that the
damages which may be incurred by the Executive following any such termination of
employment are not capable of accurate measurement as of the date first above
written and that the payments and benefits contemplated by this section 9(b)
constitute reasonable damages 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, the Commercial
Bank and the Executive further agree that the Company or the Commercial Bank may
condition the payments and benefits (if any) due under sections 9(b)(iii), (iv),
(v), (vi) and (vi) 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 Commercial Bank or any subsidiary or affiliate of
either of them.

                  SECTION 10.       TERMINATION WITHOUT ADDITIONAL COMPANY
LIABILITY. In the event that the Executive's employment with the Company or the
Commercial Bank shall terminate during the Employment Period on account of:

                  (a) the discharge of the Executive for "cause," which, for
         purposes of this Agreement, shall mean a discharge because the Company
         Board or the Commercial Bank Board, as the case may be, determines that
         the Executive: (i) has willfully and intentionally failed to perform
         his assigned duties under this Agreement (including for these purposes,
         the Executive's inability to perform such duties as a result of drug or
         alcohol dependency); (ii) has willfully and intentionally engaged in
         dishonest or illegal conduct in connection with his performance of
         services for the Company or the Commercial Bank or has been convicted
         of a felony; (iii) 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
         the Commercial Bank, as determined by the Company Board or the
         Commercial Bank Board, as the case may be; or (iv) has willfully and
         intentionally breached the material terms of this Agreement; PROVIDED,
         HOWEVER, that, if the Executive engages in any of the acts described in
         section 10(a)(i) or (a)(iv) above, the Company or the Commercial Bank,
         as the case may be, shall provide the Executive with written notice of
         its intent to discharge the Executive for cause, and the Executive
         shall have 30 days from the date on which the Executive receives such
         notice to cure any such acts; AND PROVIDED, FURTHER, that on and after
         the date that a Change of Control occurs, a determination under this
         section 10 shall require the affirmative vote of at least three-fourths
         of the members of the Company Board or the Commercial Bank Board, as
         the case may be, acting in good faith and such vote shall not be made
         prior to the expiration of a 60-day period following the date on which
         the Company Board or the Commercial Bank Board, as the case may be,
         shall, by written notice to the Executive, furnish to him a statement
         of its grounds for proposing to make such


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         determination, during which period the Executive shall be afforded a
         reasonable opportunity to make oral and written presentations to the
         members of the Company Board or the Commercial Bank Board, as the case
         may be, and to be represented by his legal counsel at such
         presentations, to refute the grounds for the proposed determination;

                  (b) the Executive's voluntary resignation from employment with
         the Company or the Commercial Bank, as the case may be, for reasons
         other than those specified in section 9(a)(i); or

                  (c) the death of the Executive while employed by the Company
         or the Commercial Bank or the termination of the Executive's employment
         because of "total and permanent disability" within the meaning of the
         long-term disability plan covering employees of the Commercial Bank;

then the Company and the Commercial Bank shall have no further obligations under
this Agreement, other than the payment to the Executive of his earned but unpaid
salary as of the date of the termination of his employment and the provision of
such other benefits, if any, to which he is entitled as a former employee under
the Company's and the Commercial Bank's employee benefit plans and programs and
compensation plans and programs. For purposes of this section 10, 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 and the Commercial Bank. Any act, or failure to
act, based upon authority given pursuant to a resolution duly adopted by the
Company Board or the Commercial Bank Board or based upon the written advice of
counsel for the Company or the Commercial Bank 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 and the Commercial Bank. The cessation of employment of
the Executive shall not be deemed to be for "cause" within the meaning of
section 10(a) unless and until there shall have been delivered to the Executive
a copy of a resolution duly adopted by the affirmative vote of three-fourths of
the members of the Company Board or the Commercial Bank Board, as the case may
be, at a meeting of the Company Board or the Commercial Bank Board called and
held for such purpose (after reasonable notice is provided to the Executive and
the Executive is given an opportunity, together with counsel, to be heard before
the Company Board or the Commercial Bank Board), finding that, in the good faith
opinion of the Company Board or the Commercial Bank Board, the Executive is
guilty of the conduct described in section 10(a) above, and specifying the
particulars thereof in detail.

                  SECTION 11. TERMINATION UPON OR FOLLOWING A CHANGE OF CONTROL.

                  (a) A Change of Control of the Company ("Change of Control")
shall be deemed to have occurred upon the happening of any of the following
events:

                  (i) the 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


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                  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 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 Company Board do not
         belong to any of the following groups:

                           (A)      individuals who were members of the Company
                  Board on the date of this Agreement; or

                           (B) individuals who first became members of the
                  Company Board after the date of this Agreement either:

                                    (1) upon election to serve as a member of
                           the Company Board 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
                           Company to serve as a member of the Company Board,
                           but only if nominated for election 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 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 Company Board; or


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                  (v) any event which would be described in section 11(a)(i),
         (ii), (iii) or (iv) if the term "Commercial Bank" were substituted for
         the term "Company" therein and the term "Commercial Bank Board" were
         substituted for the term "Company Board" 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 Commercial
Bank, or a subsidiary of either of them, by the Company, the Commercial Bank, or
any subsidiary of either of them, or by any employee benefit plan or trust
maintained by any of them. For purposes of this section 11(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) In the event of a Change of Control, the Executive shall
be entitled to the payments and benefits described in section 9(b), regardless
of whether his employment terminates; PROVIDED, HOWEVER, that the term
"Remaining Unexpired Employment Period" shall mean the period beginning on the
effective date of the Change of Control and ending on the second anniversary of
such date.

                  (c) Notwithstanding any contrary provision in this Agreement,
if, prior to the occurrence of a Change of Control, the Executive's employment
with the Company or the Commercial Bank is terminated (other than for "cause" as
defined in section 10(a)) and if it is reasonably demonstrated by the Executive
that such termination of employment (i) was at the request of any person, party
or entity who has taken steps reasonably calculated to effect a Change of
Control or (ii) otherwise arose in connection with or anticipation of a Change
of Control, then, for all purposes of this Agreement, the "Change of Control"
shall be deemed to have occurred on the date immediately prior to the date of
the Executive's termination of employment.

                  SECTION 12.       TAX INDEMNIFICATION.

                  (a) This section 12 shall apply if the Executive's employment
is terminated upon or following (i) a Change of Control (as defined in section
11 of this Agreement); or (ii) a change "in the ownership or effective control"
of the Company or the Commercial Bank or "in the ownership of a substantial
portion of the assets" of the Company or the Commercial Bank within the meaning
of section 280G of the Code. If this section 12 applies, then, if for any
taxable year, the Executive shall be liable for the payment of an excise tax
under section 4999 of the Code with respect to any payment in the nature of
compensation made by the Company, the Commercial Bank or any direct or indirect
subsidiary or affiliate of the Company or the Commercial Bank to (or for the
benefit of) the Executive, the Company shall pay to the Executive an amount
equal to X determined under the following formula:



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

                  where

                  E =      the rate at which the excise tax is assessed under
                           section 4999 of the Code;



                                      -11-

<PAGE>



                  P  =     the amount with respect to which such excise tax is
                           assessed, determined without regard to this section
                           12;

                  FI =     the highest marginal rate of income tax applicable
                           to the Executive under the Code for the taxable year
                           in question (taking into account any phase-out or
                           loss of deductions, personal exemptions and other
                           similar adjustments);

                  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
                           (taking into account any phase-out or loss of
                           deductions, personal exemptions and other similar
                           adjustments); and

                  M =      the highest marginal rate of Medicare tax
                           applicable to the Executive under the Code for the
                           taxable year in question.

With respect to any payment in the nature of compensation that is made to (or
for the benefit of) the Executive under the terms of this Agreement, or
otherwise, and on which an excise tax under section 4999 of the Code will be
assessed, the payment determined under this 12(a) shall be made to the Executive
on the earlier of (i) the date the Company, the Commercial Bank or any direct or
indirect subsidiary or affiliate of the Company or the Commercial Bank is
required to withhold such tax, or (ii) the date the tax is required to be paid
by the Executive.

                  (b) Notwithstanding anything in this section 12 to the
contrary, 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 determined by the formula (X + P) x E, where X, P and
E have the meanings provided in section 12(a), 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 12(a), when increased by the amount of
the payment made to the Executive under this section 12(b) by the Company or the
Commercial Bank, or when reduced by the amount of the payment made to the
Company or the Commercial Bank under this section 12(b) by the Executive, equals
the amount that should have properly been paid to the Executive under section
12(a). The interest paid under this section 12(b) shall be determined at the
rate provided under section 1274(b)(2)(B) of the Code. To confirm that the
proper amount, if any, was paid to the Executive under this section 12, the
Executive shall furnish to the Company and the Commercial Bank a copy of each
tax return which reflects a liability for an excise tax payment made by the
Company or the Commercial Bank, at least 20 days before the date on which such
return is required to be filed with the Internal Revenue Service.

                  SECTION 13.       [Reserved]



                                      -12-

<PAGE>

                  SECTION 14.       CONFIDENTIALITY.

                  Unless he obtains the prior written consent of the Company and
the Commercial Bank, the Executive shall keep confidential and shall refrain
from using for the benefit of himself, or any person or entity other than the
Company, the Commercial Bank or any entity which is a subsidiary or affiliate of
the Company, the Commercial Bank or of which the Company or the Commercial Bank
is a subsidiary or affiliate, any material document or information obtained from
the Company, the Commercial Bank or from any of their respective parents,
subsidiaries or affiliates, 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 14
shall prevent the Executive, with or without the Company's or the Commercial
Bank'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 15.       SOLICITATION.

                  The Executive hereby covenants and agrees that, for a period
of one year following his termination of employment with the Commercial Bank, he
shall not, without the written consent of the Commercial Bank, directly 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 executive officer of the Company, the Commercial 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, commercial bank, bank holding company, savings and loan holding
company, credit union, any other institution engaged in the business of
accepting deposits, making loans or doing a banking business within the counties
in which the Company or the Commercial Bank maintains an office or any direct or
indirect subsidiary or affiliate of any of the foregoing;


                                      -13-

<PAGE>


                  SECTION 16. 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, by the Commercial Bank
or by the Executive, shall have no effect on the rights and obligations of the
parties hereto under the Company's or the Commercial Bank'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 or the Commercial Bank
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 17.       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 the Commercial Bank and their respective
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 or the Commercial
Bank may be sold or otherwise transferred. Failure of the Company or the
Commercial Bank to obtain from any successor its express written assumption of
the Company's or the Commercial Bank'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 18.       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,


                                      -14-

<PAGE>



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:

                           Fred G. Kowal
                           15 Rutland Road
                           Glen Rock, New Jersey  07452

                  If to the Company or the Commercial Bank:

                           Warwick Community Bancorp, Inc.
                           18 Oakland Avenue
                           Warwick, New York 10990-0591

                           Attention: President

                           WITH A COPY TO:

                           Thacher Proffitt & Wood
                           Two World Trade Center
                           New York, New York 10048

                           Attention:       Douglas J. McClintock, Esq.
                                            --------------------------

                  SECTION 19.       INDEMNIFICATION FOR ATTORNEYS' FEES.

                  (a) The Company and the Commercial Bank shall indemnify, hold
harmless and defend the Executive against reasonable costs, including legal fees
and expenses, incurred by him in connection with or arising out of any action,
suit or proceeding in which he may be involved, as a result of his efforts, in
good faith, to defend or enforce the terms of this Agreement. For purposes of
this Agreement, any settlement agreement which provides for payment of any
amounts in settlement of the Company's or the Commercial Bank's obligations
hereunder shall be conclusive evidence of the Executive's entitlement to
indemnification hereunder, and any such indemnification payments shall be in
addition to amounts payable pursuant to such settlement agreement, unless such
settlement agreement expressly provides otherwise.

                  (b) The Company's and the Commercial Bank's obligations to
make the payments provided for in this Agreement and otherwise to perform their
respective obligations hereunder shall not be affected by any set-off,
counterclaim, recoupment, defense or other claim, right or action which the
Company or the Commercial Bank 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 a claim made by the Executive was either frivolous or made in bad faith,
the Company and the Commercial Bank agree to 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 or contest


                                      -15-

<PAGE>



(regardless of the outcome thereof) by the Company or the Commercial Bank, 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 19(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 20.       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 21.       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 22.       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 23.       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 York applicable to contracts entered into and to be performed
entirely within the State of New York.

                  SECTION 24.       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 25.       ENTIRE AGREEMENT; MODIFICATIONS.

                  This instrument contains the entire agreement of the parties
relating to the subject matter hereof, and supersedes in its entirety any and
all prior agreements, understandings or representations relating to the subject
matter hereof. No modifications of this Agreement shall be valid unless made in
writing and signed by the parties hereto.



                                      -16-

<PAGE>



                  SECTION 26.       NON-DUPLICATION.

                  In the event that the Executive shall perform services for any
direct or indirect subsidiary or affiliate of the Company or the Commercial
Bank, any compensation or benefits provided to the Executive by such other
employer shall be applied to offset the obligations of the Company and the
Commercial Bank 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 Commercial Bank and all of their respective direct or indirect
subsidiaries and affiliates.

                  SECTION 27.       IF THE COMMERCIAL BANK SHALL CEASE TO EXIST.

                  Notwithstanding any other provision in this Agreement to the
contrary, in the event that the Commercial Bank shall, for whatever reason,
cease to exist, whether by merger into The Warwick Savings Bank ("Savings Bank")
or another entity, dissolution, liquidation, sale or other transfer of assets
and liabilities or otherwise, then the Company Board may, in its sole
discretion, cause the election or appointment of the Executive to what it
reasonably believes to be an equivalent officer's position with equivalent
compensation at the Savings Bank, as compared to his position and compensation
at the Commercial Bank, and such action shall not be considered to be a
violation or a breach of this Agreement and shall not permit the Executive to
resign under section 9(a)(i). In such case, this Agreement shall continue in
full force and effect, but (i) the words "The Warwick Savings Bank" and "Savings
Bank," respectively, shall be substituted for "The Towne Center Bank" and
"Commercial Bank," respectively, where applicable, (ii) references to the
Executive's position and compensation at the Commercial Bank shall become
references to the Executive's position and compensation at the Savings Bank
(except that the Company Board shall not be required to elect the Executive to
the Board of Directors of the Savings Bank) and (iii) such other adjustments to
this Agreement as are necessary shall be made so as to continue this Agreement
in effect, the intent being that, if the Commercial Bank shall cease to exist,
the rights and obligations under this Agreement shall be shifted from the
Commercial Bank to the Savings Bank and otherwise continue to protect the
Executive, the Company and the Savings Bank.

                  SECTION 28.       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. ss.1828(k), and any
regulations promulgated thereunder.




                                      -17-

<PAGE>



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




                                           /s/ Fred G. Kowal
                                           -----------------
                                           Fred G. Kowal



                                           WARWICK COMMUNITY BANCORP, INC.

Attest:


By  /s/ Nancy L. Sobotor-Littell           By /s/ Timothy A. Dempsey
  -------------------------------------      -----------------------
         Nancy L. Sobotor-Littell                   Timothy A. Dempsey
         Corporate Secretary                        Chairman of the Board and
                                                         Chief Executive Officer


[Seal]




                                           THE TOWNE CENTER BANK

Attest:


By  /s/ Lois E. Ulatowski                  By  /s/ Timothy A. Dempsey
  -------------------------------------      ------------------------
         Lois E. Ulatowski                          Timothy A. Dempsey
         Corporate Secretary                        Chairman of the Board



[Seal]


                                      -18-

<PAGE>



STATE OF NEW YORK          )
                           : ss.:
COUNTY OF ORANGE           )


                  On this 26th day of October, 1999, before me personally came
FRED G. KOWAL, to me known, and known to me to be the individual described in
the foregoing instrument, who, being by me duly sworn, did depose and say that
he resides at the address set forth in said instrument, and that he signed his
name to the foregoing instrument.





                                             /s/ Lisette Cuba
                                             -----------------
                                                 Notary Public


STATE OF NEW YORK          )
                           : ss.:
COUNTY OF ORANGE           )

                  On this 26th day of October, 1999, before me personally came
Timothy A. Dempsey, to me known, who, being by me duly sworn, did depose and say
that he resides at 36 Waterbury Road, Warwick, New York 10990, that he is
Chairman of the Board and Chief Executive Officer of WARWICK COMMUNITY BANCORP,
INC., the Delaware corporation described in and which executed the foregoing
instrument; that he knows the seal of said corporation; that the seal affixed to
said instrument is such seal; that it was so affixed by order of the Board of
Directors of said corporation; and that he signed his name thereto by like
order.





                                             /s/ Lisette Cuba
                                             -----------------
                                                 Notary Public


STATE OF NEW YORK          )
                           : ss.:
COUNTY OF ORANGE           )

                  On this 26th day of October, 1999, before me personally came
Timothy A. Dempsey, to me known, who, being by me duly sworn, did depose and say
that he resides at 36 Waterbury Road, Warwick, New York 10990, that he is
Chairman of the Board of THE TOWNE CENTER BANK, the New Jersey commercial bank
described in and which executed the foregoing instrument; that he knows the seal
of said commercial bank; that the seal affixed to said instrument is such seal;
that it was so affixed by order of the Board of Directors of said commercial
bank; and that he signed his name thereto by like order.




                                             /s/ Lisette Cuba
                                             -----------------
                                                 Notary Public


                                      -19-