EXHIBIT 10.4
                                                                    ------------

                              EMPLOYMENT AGREEMENT


                  This EMPLOYMENT AGREEMENT ("Agreement") is made and entered
into as of December 23, 1997 by and between 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") and NANCY L. SOBOTOR- LITTELL, an individual residing at 76 Maple
Avenue, Warwick, New York 10990 ("Executive").

                              W I T N E S S E T H :

                  WHEREAS, the Executive currently serves as the Corporate
Secretary and Director of Human Resources of the Company and as the Corporate
Secretary and Director of Human Resources of The Warwick Savings Bank ("Bank")
and effective as of the date of this Agreement, the Bank has converted from a
mutual savings bank to a stock savings bank and has become the wholly owned
subsidiary of the Company; and

                  WHEREAS, the Company desires to assure for itself, the Bank
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 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 Bank and
the Executive hereby agree as follows:

                  SECTION 1. EMPLOYMENT.

                  The Company and the 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 an initial term of
three years beginning on the date of this Agreement and ending on the third
anniversary date of this Agreement (each, an "Anniversary Date"), 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), beginning on the date of this Agreement, the Employment Period shall
automatically be extended for one additional day each day, unless either the
Company or the Executive elects not to extend the




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Agreement further by giving written notice thereof to the other party, in which
case the Employment Period shall end on the third anniversary of the date on
which such written notice is given; PROVIDED, HOWEVER, that notwithstanding the
foregoing, the Employment Period shall end on the last day of the month in which
the Executive attains the age of 68. 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 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 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 and the
Executive in the event of any such termination shall be determined under this
Agreement.

                  SECTION 3. DUTIES.

                  The Executive shall serve as Corporate Secretary and Director
of Human Resources of the Company and as Corporate Secretary and Director of
Human Resources of the Bank, having such power, authority and responsibility and
performing such duties as are prescribed by or under the By-Laws of the Company
and as are customarily associated with such position. The Executive shall devote
her 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 Company and shall use her best efforts to
advance the interests of the Company.

                  SECTION 4. CASH COMPENSATION.

                  In consideration for the services to be rendered by the
Executive hereunder, the Company shall pay to her a salary at an initial annual
rate of sixty-three thousand dollars ($63,000), 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 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 Bank for services hereunder at such times,
in such amounts and on such terms and conditions as the Board 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 Bank 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



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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 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 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 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,
the Bank or service in other capacities at the request of the Company. 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 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 Bank shall indemnify the Executive against and hold her 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 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 her 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 her duties under this Agreement. The Executive may also
engage in personal business and investment activities which do not materially
interfere with the performance of her 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 Bank and generally
applicable to all similarly situated Executives. The Executive may also serve as
an officer or director of the Bank on such terms and conditions as the Company
and the Bank may mutually agree upon, and such service shall not be deemed to
materially interfere with the Executive's performance of her 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 Bank, her 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 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 place of employment shall be at the
Company's and the Bank's executive offices at the address first above written,
or at such other location within 50 miles of the address at which the Company
shall maintain its principal executive offices, or at such other location as the
Company and the executive may mutually agree upon. The Company shall provide the
Executive at her principal place of employment with a private office,
secretarial services and other support services and facilities suitable to her
position with the Company and the Bank and necessary or appropriate in
connection with the performance of her assigned duties under this Agreement. The
Company shall reimburse the Executive for her ordinary and necessary business
expenses, including, without limitation, the Executive's travel and entertain
ment expenses incurred in connection with the performance of her duties under
this Agreement, in each case upon presentation to the Company of an itemized
account of such expenses in such form as the Company may reasonably require.

                  SECTION 9. TERMINATION OF EMPLOYMENT WITH SEVERANCE BENEFITS.

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

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

                           (A) the failure of the Board or the Board of
                  Directors of the Bank ("Bank Board") as the case may be, to
                  appoint or re-appoint or elect or re-elect the Executive to
                  the position with the Company or the Bank stated in section 3
                  of this Agreement (or a more senior office);

                           (B) if the Executive is a member of the Board or the
                  Bank Board as the case may be, the failure of the shareholders
                  of the Company or the Bank to elect or re-elect the Executive
                  to the Board or the Bank Board or the failure of the Board or
                  the Bank Board (or the nominating committee thereof) to
                  nominate the Executive for such election or re-election;

                           (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 Bank's material failure, whether by
                  amendment of the Company's Certificate of Incorporation, the
                  Bank's Restated Organization Certificate, the Company's
                  By-Laws or the Bank's By-Laws, action of the Board or the Bank
                  Board or the Company's shareholders or the 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 Bank
                  cures such failure; or




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                           (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 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 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 her total compensation package),
                  unless, during such 30-day period, the Company or the Bank
                  cures such failure;

                           (F) a change in the Executive's principal place of
                  employment for a distance in excess of 50 miles from the
                  Bank's principal office in Warwick, New York; or

                  (ii) the Executive's employment with the Company or the Bank
         is terminated by the Company or the 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 shall pay and provide to the
Executive (or, in the event of her death, to her estate):

                  (i) her 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 her employment with the
         Company and the 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 her is entitled as a
         former employee under the employee benefit plans and programs and
         compensation plans and pro grams maintained for the benefit of the
         Company's and the 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 her would have been entitled under
         such plans (as in effect on the date of her termination of employment,
         or, if her termination of employment occurs after a Change of Control,
         on the date of such



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         Change of Control, whichever benefits are greater), if her had
         continued working for the Company and the 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 Company or the 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 her had continued
         working for the Company and the 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 dis count rate equal to the applicable short-term federal rate
         prescribed under section 1274(d) 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 Company or the 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 her would be entitled 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 or the Bank, if her were 100% vested thereunder
                  and had con tinued working for the Company and the 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 her is
                  actually entitled under such defined benefit pension plans as
                  of the date of her termination;

         where such present values are to be determined using the mortality
         tables prescr ibed 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");




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                  (vi) within 30 days following the Executive's termination of
         employment with the Company or the Bank, a lump sum payment in an
         amount equal to the present value of the additional employer
         contributions to which her would have been entitled under The Warwick
         Savings Bank 401(k) Savings Plan, 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 Company or the Bank, as if her were 100%
         vested thereunder and had continued working for the Company and the
         Bank during the Remaining Unexpired Employment Period at the highest
         annual rate of salary achieved during the Employment Period and making
         the maximum amount of em ployee contributions, if any, required under
         such plan or plans, such present value to be determined on the basis of
         a discount rate, compounded using the 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 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 Company
         or the Bank if her had continued working for the Company and the 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
         under any stock option and appreciation rights plan or program
         maintained by, or covering employees of, the Company or the 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



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                  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 Bank, even if her 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 under any
         restricted stock plan maintained by, or covering employees of, the
         Company or the Bank, 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.

         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 Bank, even
         if her is not vested under such plan.

The Company 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 and the Executive further agree that the Company
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 her 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 10. TERMINATION WITHOUT ADDITIONAL COMPANY LIABILITY.
In the event that the Executive's employment with the Company 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 Board
         and the Bank Board determine that the Executive: (i) has willfully and
         intentionally failed to perform her assigned duties under



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         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 her performance of services for the Company or the
         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 her performance of
         services for the Company or the Bank, as determined by the Board and
         the Bank Board; 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 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 Board and the Bank Board 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 Board and the Bank Board
         shall, by written notice to the Executive, furnish to her a statement
         of its grounds for proposing to make such determination, during which
         period the Executive shall be afforded a reasonable opportunity to make
         oral and written presentations to the members of the Board and the Bank
         Board, and to be represented by her legal counsel at such
         presentations, to refute the grounds for the pro posed determination;

                  (b) the Executive's voluntary resignation from employment with
         the Company and the Bank 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 termination of the Executive's employment because of "total and
         permanent disability" within the meaning of the Company's long-term
         disability plan for employees;

then the Company shall have no further obligations under this Agreement, other
than the payment to the Executive of her earned but unpaid salary as of the date
of the termination of her employment and the provision of such other benefits,
if any, to which her is entitled as a former employee under the Company's and
the 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
Bank. Any act, or failure to act, based upon authority given pursuant to a
resolution duly adopted by the Board and the Bank Board or based upon the
written advice of counsel for the Company or the 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 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 Board and the Bank Board at a meeting of the Board and the
Bank Board called and held for such purpose (after reasonable notice is provided
to the Executive and the Executive



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is given an opportunity, together with counsel, to be heard before the Board and
the Bank Board), finding that, in the good faith opinion of the Board and the
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 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 Board do not belong to
         any of the following groups:

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




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

                                    (1) upon election to serve as a member of
                           the 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
                           Board to serve as a member of the Board, but only if
                           nominated for election by affirmative vote of
                           three-quarters of the members of the board of
                           directors of the 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 Board of the Company; or

                  (v) any event which would be described in section 11(a)(i),
         (ii), (iii) or (iv) if the term "Bank" were substituted for the term
         "Company" therein and the term "Bank Board" were substituted for the
         term "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 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 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 her employment terminates; PROVIDED, HOWEVER, that the term
"Remaining Unexpired Employment Period" shall mean three years beginning on the
effective date of the Change of Control, even if such three-year period extends
beyond the date the Executive attains age 68.

                  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 Bank or "in the ownership of a substantial portion of the
assets" of the Company or the 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



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the nature of compensation made by the Company, the Bank or any direct or
indirect subsidiary or affiliate of the Company or the 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;

                  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;

                  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.

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 Bank or any direct or indirect
subsidiary or affiliate of the Company or the 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
when reduced by the amount of the payment made to the Company 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 a copy of each tax
return which reflects a liability for an excise tax payment made



                                      -12-

<PAGE>



by the Company, at least 20 days before the date on which such return is
required to be filed with the Internal Revenue Service.

                  SECTION 13. COVENANT NOT TO COMPETE.

                  The Executive hereby covenants and agrees that, in the event
of her termination of employment with the Company prior to the expiration of the
Employment Period, for a period of one year following the date of her
termination of employment with the Company or the Bank (or, if less, for the
Remaining Unexpired Employment Period), her shall not, without the written con
sent 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 com pany, or any direct or indirect
subsidiary or affiliate of any such entity, that entails working within Orange,
Dutchess, Rockland or Putnam counties or any other county in which the Company
or the Bank maintains an office; PROVIDED, HOWEVER, that this section 13 shall
not apply if the Executive's employment is terminated for the reasons set forth
in section 9(a).

                  SECTION 14. CONFIDENTIALITY.

                  Unless her obtains the prior written consent of the Company,
the Executive shall keep confidential and shall refrain from using for the
benefit of herself, 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 her 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 her 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 consent, from
participating in or disclosing documents or information in connection with any
judicial or administrative investigation, inquiry or proceed ing 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 her termination of employment with the Company or the
Bank, her 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 her 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 Bank, bank,
         bank holding company, savings and loan holding company, or other
         institution engaged



                                      -13-

<PAGE>



         in the business of accepting deposits, making loans or doing business
         within the counties specified in section 13;

                  (b) provide any information, advice or recommendation with
         respect to any such officer or employee of any savings bank, savings
         and loan Bank, bank, bank holding company, savings and loan holding
         company, or other institution engaged in the business of accepting
         deposits, making loans or doing business within the counties specified
         in section 13; that is 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 her employment and
         accept employment or become affiliated with, or provide services for
         compensation in any capacity what soever 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, making loans or doing business within the counties
         specified in section 13;

                  (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 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 Bank or by the
Executive, shall have no effect on the rights and obligations of the parties
hereto under the Company's or the 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 dis ability 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 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, her legal representatives and testate or intestate
distributees, and the Company and the Bank and their respective successors and
assigns, including any successor by merger or consolidation or a statu tory
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



                                      -14-

<PAGE>



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, 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:

                           Nancy L. Sobotor-Littell
                           76 Maple Avenue
                           Warwick, New York 10990

                  If to the Company or the 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 shall indemnify, hold harmless and defend the
Executive against reasonable costs, including legal fees and expenses, incurred
by her in connection with or arising out of any action, suit or proceeding in
which her may be involved, as a result of her 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 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.



                                      -15-

<PAGE>



                  (b) 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 a claim made by the Executive was either frivolous or made in bad faith,
the Company agrees 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 her consultation with legal counsel or arising out of any
action, suit, proceeding 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 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.




                                      -16-

<PAGE>



                  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 rep resentations 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 26. 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 27. 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.

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



                                                /s/ Nancy L. Sobotor-Littell
                                                ----------------------------
                                                    NANCY L. SOBOTOR-LITTELL



                                                WARWICK COMMUNITY BANCORP, INC.

Attest:

By /s/ Lois E. Ulatowski                        By /s/ Henry L. Nielsen, Jr.
   -------------------------                       -------------------------
       Lois E. Ulatowski                               Henry L. Nielsen, Jr.
       Assistant Secretary                             Director

[Seal]



                                      -17-

<PAGE>



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

                  On this 22nd day of December, 1997, before me personally came
Nancy L. Sobotor- -Littell, 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 she resides at the address set forth in said instrument, and that
her signed her name to the foregoing instrument.



                                                     /s/ Lisette D. Cuba
                                                     --------------------------
                                                         Notary Public






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

                  On this 22nd day of December, 1997, before me personally came
Henry L. Nielsen, Jr., to me known, who, being by me duly sworn, did depose and
say that he resides at 85 Kings Highway, P.O. Box 848, Warwick, New York 10990,
that he is a member of the Board of Directors 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 D. Cuba
                                                     --------------------------
                                                         Notary Public




                                      -18-