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                                                                   Exhibit 10.12

                              EMPLOYMENT AGREEMENT

      EMPLOYMENT AGREEMENT dated as of January 30, 1998 between THE DIME SAVINGS
BANK OF NEW YORK, FSB (the "Bank"), a federal stock savings bank having its
principal executive offices at 589 Fifth Avenue, New York, New York 10017, and
Carlos R. Munoz (the "Officer").

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      A. The Bank is desirous of employing the Officer upon the terms and
conditions set forth in this Agreement.

      B. The Officer is desirous of being employed by the Bank upon the terms
and conditions set forth in this Agreement.

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      Therefore, the Bank and the Officer, intending to be legally bound, agree
as follows:

            1. Employment. Subject to the terms and conditions of this
Agreement, the Bank hereby employs the Officer, and the Officer hereby accepts
such employment.

            2. Term of Employment. (a) The initial term of the Officer's
employment under this Agreement shall be deemed to have commenced on the date of
this Agreement and shall continue until March 1, 2001. This Agreement shall be
renewed automatically for one additional year on March 1, 1999, and on each
March 1 thereafter, unless (x) the Officer or the Bank gives contrary written
notice to the other, at least 10 days prior to any such renewal date, or (y)
this Agreement has been otherwise terminated in accordance with its provisions.
During each
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calendar year of the term of this Agreement beginning with 1999 (unless notice
of non-renewal of this Agreement shall have previously been given by the Bank or
the Officer pursuant to the immediately preceding sentence), the Board of
Directors of the Bank (or a duly authorized committee of the Board or
subcommittee of such committee) shall, no later than the last day in each such
year on which the Bank may give the Officer notice of non-renewal pursuant to
the immediately preceding sentence, review and determine whether the Bank shall
give the Officer such notice of non-renewal with respect to the March 1 renewal
date in such year; provided, however, that nothing in this sentence shall be
construed as limiting the Bank's ability to give notice of non-renewal pursuant
to the immediately preceding sentence at any other time. A determination by the
Board of Directors of the Bank (or a duly authorized committee of the Board or
subcommittee of such committee) in any year that the Bank shall not give notice
of non-renewal with respect to the March 1 renewal date in such year shall be
deemed to be the Board's approval of the renewal of this Agreement on such
renewal date. Except as otherwise provided in Section 11(c)(iv) of this
Agreement, neither the giving of notice of non-renewal pursuant to clause (x) of
the second sentence of this Section 2(a), nor the subsequent expiration of the
Term of this Agreement as a result of the giving of such notice, shall be deemed
to be a termination of the Officer's employment under this Agreement. (As used
in this Agreement, (i) "Term" shall mean the initial term and any renewal term
of this Agreement and (ii) "remaining Term" shall mean the balance of the Term
in effect at a specified time without regard to potential future renewals under
the renewal provision of this Section 2(a).)

            (b) The Officer's employment may be terminated during the Term of
this Agreement by the Bank or the Officer in the manner specified in this
Agreement. Any such


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termination of employment shall result in a termination of this Agreement on the
Effective Date of Termination (as defined in Section 13); provided that,
notwithstanding anything to the contrary in the foregoing, any right of the
Officer to any payments or benefits as a result of a termination of the
Officer's employment (as provided in this Agreement) shall survive the
termination of this Agreement.

            3. Office. During the Term, the Officer shall serve as an officer of
the Bank. In addition, during the Term, the Officer shall serve, for the period
for which the Officer may from time to time be elected, as an officer or
director of any subsidiary or affiliate of the Bank.

            4. Duties. The Officer initially shall serve as Chief Credit & Risk
Management Officer of the Bank; provided, that the Officer shall hold comparable
or additional positions, and perform comparable or additional duties, as may
from time to time be assigned to the Officer. During the Term (except for
periods of illness and vacation), substantially all of the Officer's business
time, attention, skill and efforts shall be devoted to the performance of the
Officer's duties under this Agreement.

            5. Compensation. (a) The annual salary of the Officer during the
Term shall be fixed by the Board of Directors of the Bank (or a duly authorized
committee of the Board or subcommittee of such committee) and shall be payable
in installments in accordance with the prevailing general payroll practice of
the Bank as it may exist from time to time. The initial annual salary of the
Officer during the Term shall be the Officer's annual salary on the date of this
Agreement. The Board of Directors of the Bank (or a duly authorized committee of
the Board or subcommittee of such committee) may increase or decrease the
Officer's annual salary from time to time; provided that, except for decreases
that are applied generally to officers of comparable


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rank, such annual salary shall not be decreased by more than 25% in any one
calendar year. As used in this Agreement, "annual salary" shall mean, at any
time, the annual rate of salary then payable to the Officer pursuant to this
Section 5(a) (before deduction of any amounts deferred under any deferred
compensation plan of the Bank, any voluntary contributions to the Retirement
401(k) Investment Plan of Dime Bancorp, Inc. (the "Company"), or any other
similar qualified plan or any other deductions from income) and shall be
exclusive of bonuses, incentive compensation or other compensation or benefits
paid to or accrued for the Officer other than pursuant to this Section 5(a).

            (b) The Officer shall not have or acquire by virtue of this
Agreement any rights to participate in, or receive benefits with respect to, any
compensation or benefit plan or program of the Bank, except (i) that while
employed by the Bank the Officer may participate in such plans or programs to
the extent provided in such plans and programs and on the same basis as if the
Officer's employment were not subject to the terms and conditions of this
Agreement, or (ii) as otherwise specifically provided in this Agreement. The
Officer shall participate in the Company's Supplemental Executive Retirement
Plan (the "SERP") with a "Pension Goal" under such plan of not less that 50% of
"Average Compensation" (with each such term as defined in the SERP), subject to
the vesting provisions under the SERP, or, solely as applicable, Section
11(g)(i).

            (c) Notwithstanding anything to the contrary in the foregoing
provisions, the payment of any amounts that would otherwise be payable to the
Officer but which would be in excess of the amount which the Company or the Bank
could deduct for federal income tax purposes if then paid, on account of the
operation of Section 162(m) of the Internal Revenue


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Code of 1986, as amended (the "Code"), shall be deferred to the extent such
deferral is required pursuant to a policy adopted by the Compensation Committee
or the Board of Directors of the Company or the Bank and, to the extent so
deferred, shall be payable pursuant to the relevant terms of the Dime Bancorp,
Inc. Voluntary Deferred Compensation Plan; provided, however, that, if a Change
in Control (as defined in Section 11(a)) has occurred, deferral of amounts
payable hereunder to the Officer on or after the date of such Change in Control
will only be required if and to the extent such policy in effect immediately
prior to the Change in Control (without taking into consideration any changes
therein made in contemplation of the occurrence of the Change in Control)
requires or would have required such deferral.

            6. Disability. (a) The Bank may terminate the Officer's employment
under this Agreement for "permanent disability" if (i) the Officer shall become
physically or mentally disabled or incapacitated to the extent that the Officer
has been absent from the Officer's duties with the Bank on account of such
disabilities or incapacitation as determined in a manner consistent with the
policy which applies generally to employees of the Bank on a full-time basis for
a period of six consecutive months, and (ii) within 30 days after written notice
of proposed termination for permanent disability is given by the Bank to the
Officer, the Officer shall not have returned to full-time performance of the
Officer's duties.

            (b) In the event of termination for "permanent disability," the Bank
shall continue to pay the Officer an amount equal to the Officer's then annual
salary pursuant to Section 5(a) (less any benefits that would have been payable
to the Officer had the Officer elected the maximum available amount of
disability insurance coverage available from the Bank) for a period commencing
on the Effective Date of Termination and ending on the first anniversary
thereof (or


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the end of the remaining Term in effect immediately prior to the Effective Date
of Termination, if earlier). Notwithstanding the first sentence of this Section
6(b), any such payment shall terminate upon the earliest to occur of (A) the
date the Officer returns to full-time employment with the Bank; (B) the
Officer's full-time employment by another employer; or (C) the Officer's death.
In the event of termination for "permanent disability," the Bank also shall
continue to provide until the end of the remaining Term in effect immediately
prior to the Effective Date of Termination (or the Officer's earlier death) all
life, medical and dental insurance coverage as is otherwise maintained by the
Bank for full-time employees, provided that the Officer shall continue to pay
all amounts in respect of such coverage that an employee receiving the same
level of coverage is or would be required to pay. In the event of a termination
of the Officer's employment for "permanent disability" at any time during the
remaining Term in effect at the time of a Change in Control (as defined in
Section 11(a)), the provisions of Section 11 shall apply in lieu of the
provisions of this Section 6(b).

            (c) There shall be no reduction in the compensation payable to the
Officer or the Officer's other rights under this Agreement during any period
when the Officer is incapable of performing some or all of the Officer's duties
by reason of temporary or partial disability.

            7. Death. In the event of the Officer's death during the Term, this
Agreement and all of the Bank's obligations under this Agreement shall
terminate.

            8. Termination by the Bank. (a) The Bank may terminate the Officer's
employment under this Agreement at any time by giving the Officer written notice
of such termination, provided that, except where termination is for "cause" (as
defined in Section 8(b)(ii)), such notice shall be provided at least 30 days
prior to the Effective Date of Termination. In the


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event of a termination of the Officer's employment by the Bank, other than a
termination for "cause" (as defined in Section 8(b)(ii)), the Bank shall
(subject to the provisions of Section 8(c)) continue from the Effective Date of
Termination through the end of the Severance Period (as defined in Section
8(b)(i)) to (1) pay the Officer's annual salary in effect immediately prior to
the Effective Date of Termination to the Officer and (2) maintain (for the
Officer and, during such period but prior to the Officer's death, for the
Officer's spouse and dependents, as applicable) all life, medical and dental
insurance coverage as is otherwise maintained by the Bank for full-time
employees, provided that the Officer shall continue to pay any amounts in
respect of such coverage that an employee receiving the same level of coverage
is or would be required to pay. In the event of a termination of the Officer's
employment by the Bank at any time during the remaining Term in effect at the
time of a Change in Control, the provisions of Section 11 shall apply in lieu of
the provisions of the immediately preceding sentence of this Section 8(a).

            (b)(i) As used in Section 8(a) above, the term "Severance Period"
shall mean the period of time equal to the Length of Service Factor multiplied
by the Age Multiplier. The Length of Service Factor shall be (i) six months if
the Officer has been employed by the Bank for a total of two years or less or
(ii) 12 months if the Officer has been employed by the Bank for a total of over
two years. The Age Multiplier shall be (A) 1.0 if the Officer is under age 50,
(B) 1.25 if the Officer is age 50 or over but below age 55, (C) 1.375 if the
Officer is age 55 or over but below age 60 and (D) 1.5 if the Officer is age 60
or over. In calculating the Length of Service Factor and the Age Multiplier, the
length of the Officer's employment by the Bank and the Officer's age shall be
the Officer's length of employment and age (as the case may be) at the time
notice of termination of the Officer's employment is given by the Bank.


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            (ii) The Officer shall have no right to receive compensation or
other benefits under this Agreement for any period after the Effective Date of
Termination if the Officer's employment is terminated for cause. As used in this
Agreement, "cause" shall mean the Officer's personal dishonesty, incompetence,
willful misconduct, breach of fiduciary duty involving personal profit,
intentional failure to perform assigned duties, willful violation of any law,
rule or regulation (other than traffic violations or similar offenses) or final
cease and desist order or material breach of any provision of this Agreement.

            (c)(i) Notwithstanding any other provision of this Section 8 or of
Section 11, if at the Effective Date of Termination any statute, regulation,
order, agreement, or regulatory interpretation thereof that is valid and binding
upon the Bank (a "Regulatory Restriction") shall restrict, prohibit or limit the
amount of any payment or the provision of any benefit that the Bank would
otherwise be liable for under this Section 8 or under Section 11, then the
amount that the Bank shall pay to the Officer hereunder shall not exceed the
maximum amount permissible under such Regulatory Restriction; provided, that if
such Regulatory Restriction shall subsequently be rescinded, superseded, amended
or otherwise determined not to restrict, limit or prohibit payment by the Bank
of amounts otherwise due the Officer hereunder, then the Bank shall promptly
thereafter pay to such Officer any amounts (or the value of any benefit)
previously withheld from such Officer as a result of such Regulatory
Restriction.

            (ii) Notwithstanding any other provision of this Section 8 or of
Section 11, in the event that any amount otherwise payable hereunder, other than
on account of events described in Sections 11(c)(i) or 11(c)(ii) following a
Change in Control (as hereinafter defined), would be deemed to constitute a
parachute payment (a "Parachute Payment") within the meaning of Section


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280G of the Code, and if any such Parachute Payment, when added to any other
payments which are deemed to constitute Parachute Payments, would otherwise
result in the imposition of an excise tax under Section 4999 of the Code, the
amounts payable hereunder (other than amounts payable under the SERP or
otherwise payable on account of events described in Sections 11(c)(i) or
11(c)(ii) following a Change in Control) shall be reduced by the smallest amount
necessary to avoid the imposition of such excise tax. Any such limitation shall
be applied to such compensation and benefit amounts, and in such order, as the
Bank shall determine in its sole discretion. References to the Code in this
Agreement shall be to the Code as presently in effect or to the corresponding
provisions of any succeeding law.

            9. Voluntary Termination by the Officer. The Officer shall have the
right to terminate the Officer's employment under this Agreement at any time
upon at least 30 but not more than 60 days' prior written notice to the Bank. If
this Agreement is terminated pursuant to the immediately preceding sentence, all
of the Bank's obligations under this Agreement shall terminate and the Officer
shall not be entitled to any compensation or benefits after the Effective Date
of Termination, except to the extent provided in Section 11.

            10. Additional Termination and Suspension Provisions. (a) If the
Officer is removed and/or permanently prohibited from participating in the
conduct of the Bank's affairs by an order issued under Section 8(e)(3) or (g)(1)
of the Federal Deposit Insurance Act (12 U.S.C. 1818(e)(3) or (g)(1)), all
obligations of the Bank under this Agreement shall terminate as of the effective
date of the order, but vested rights of the parties shall not be affected.


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            (b) If the Bank is in default (as defined in Section 3(x)(1) of the
Federal Deposit Insurance Act), all obligations under this Agreement shall
terminate as of the date of default, but this paragraph shall not affect any
vested rights of the parties.

            (c) All obligations under this Agreement shall be terminated, except
to the extent determined that continuation of this Agreement is necessary for
the continued operation of the Bank, (i) by the Director of Thrift Supervision
or his or her designee (the "Director"), at the time the Federal Deposit
Insurance Corporation enters into an agreement to provide assistance to or on
behalf of the Bank under the authority contained in Section 13(c) of the Federal
Deposit Insurance Act; or (ii) by the Director, at the time the Director
approves a supervisory merger to resolve problems related to operation of the
Bank or when the Bank is determined by the Director to be in an unsafe or
unsound condition. Any rights of the parties that have already vested, however,
shall not be affected by such action.

            (d) If the Officer is suspended and/or temporarily prohibited from
participating in the conduct of the Bank's affairs by a notice served under
Section 8(e)(3) or (g)(1) of the Federal Deposit Insurance Act (12 U.S.C.
1818(e)(3) and (g)(1)), the Bank's obligations under this Agreement shall be
suspended as of the date of service unless stayed by appropriate proceedings. If
the charges in the notice are dismissed, the Bank may in its discretion (a) pay
the Officer all or part of the compensation withheld while its contract
obligations were suspended and (b) reinstate (in whole or in part) any of its
obligations which were suspended.

            (e) The provisions of paragraphs (a) through (d) of this Section 10
are required to be set forth in this Agreement by regulations applicable to the
Bank on the date of this Agreement. If any such regulation shall hereafter be
amended or modified, or if any new


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regulation applicable to the Bank and effective after the date of this Agreement
shall require the inclusion in this Agreement of a provision not presently
included in this Agreement, then the foregoing provisions of paragraphs (a)
through (d) of this Section 10 shall be deemed amended to the extent necessary
to give effect in this Agreement to any such amended, modified or new
regulation.

            11. Change in Control. (a) As used in this Agreement, a "Change in
Control" shall be deemed to have occurred if the event set forth in any one of
the following paragraphs shall have occurred:

            (I) any Person is or becomes the Beneficial Owner, directly or
      indirectly, of securities of the Company (not including in the securities
      beneficially owned by such Person any securities acquired directly from
      the Company or its Affiliates) representing 35% or more of the combined
      voting power of the Company's then outstanding securities; or

            (II) the following individuals cease for any reason to constitute a
      majority of the number of directors then serving as directors of the
      Company: individuals who, on July 24, 1997, constitute the Board of
      Directors of the Company and any new director (other than a director whose
      initial assumption of office is in connection with the settlement of an
      actual or threatened election contest, including but not limited to a
      consent solicitation, relating to the election of directors of the
      Company) whose appointment or election by the Board of Directors of the
      Company or nomination for election by the Company's stockholders was
      approved or recommended by a vote of at least two-thirds (2/3) of the
      directors then still in office who either were directors on July


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      24, 1997 or whose appointment, election or nomination for election was
      previously so approved or recommended; or

            (III) there is consummated a merger or consolidation of the Company
      or any direct or indirect subsidiary of the Company with any other
      corporation or entity, other than (i) a merger or consolidation which
      would result in the voting securities of the Company outstanding
      immediately prior to such merger or consolidation continuing to represent
      (either by remaining outstanding or by being converted into voting
      securities of the surviving entity or any Parent thereof), in combination
      with the ownership of any trustee or other fiduciary holding securities
      under an employee benefit plan of the Company or any subsidiary of the
      Company, at least 65% of the combined voting power of the securities of
      the Company, such surviving entity or any Parent thereof outstanding
      immediately after such merger or consolidation or (ii) a merger or
      consolidation effected solely to implement a recapitalization of the
      Company or the Bank (or similar transaction) in which no Person is or
      becomes the Beneficial Owner, directly or indirectly, of securities of the
      Company or the Bank (not including in the securities beneficially owned by
      such Person any securities acquired directly from the Company or its
      Affiliates) representing 35% or more of the combined voting power of the
      Company's or the Bank's then outstanding securities; or

            (IV) the stockholders of the Company or the Bank approve a plan of
      complete liquidation or dissolution of the Company or the Bank,
      respectively, or there is consummated a sale or disposition by the Company
      or any of its subsidiaries of any assets which individually or as part of
      a series of related transactions constitute all or


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      substantially all of the Company's consolidated assets (provided that, for
      these purposes, a sale of all or substantially all of the voting
      securities of the Bank or a Parent of the Bank shall be deemed to
      constitute a sale of substantially all of the Company's consolidated
      assets), other than any such sale or disposition to an entity at least 65%
      of the combined voting power of the voting securities of which are owned
      by stockholders of the Company in substantially the same proportions as
      their ownership of the voting securities of the Company immediately prior
      to such sale or disposition; or

            (V) the execution of a binding agreement that if consummated would
      result in a Change in Control of a type specified in clause (I) or (III)
      of this Section 11(a) (an "Acquisition Agreement") or of a binding
      agreement for the sale or disposition of assets that, if consummated,
      would result in a Change in Control of a type specified in clause (IV) of
      this Section 11(a) (an "Asset Sale Agreement") or the adoption by the
      Board of Directors of the Company or the Bank of a plan of complete
      liquidation or dissolution of the Company or the Bank that, if
      consummated, would result in a Change in Control of a type specified in
      clause (IV) of this Section 11(a) (a "Plan of Liquidation"), provided
      however, that a Change in Control of the type specified in this clause (V)
      shall not be deemed to exist or have occurred as a result of the execution
      of such Acquisition Agreement or Asset Sale Agreement, or the adoption of
      such a Plan of Liquidation, from and after the Abandonment Date if the
      Effective Date of Termination of the Officer's employment has not occurred
      on or prior to the Abandonment Date. As used in this Section, the term
      "Abandonment Date" shall mean the date on which (A) an Acquisition
      Agreement, Asset Sale Agreement or Plan of Liquidation is terminated
      (pursuant to its


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      terms or otherwise) without having been consummated, (B) the parties to an
      Acquisition Agreement or Asset Sale Agreement abandon the transactions
      contemplated thereby, (C) the Bank or the Company abandons a Plan of
      Liquidation or (D) a court or regulatory body having competent
      jurisdiction enjoins or issues a cease and desist or stop order with
      respect to or otherwise prevents the consummation of, or a regulatory body
      notifies the Bank or the Company that it will not approve, an Acquisition
      Agreement, Asset Sale Agreement or Plan of Liquidation or the transactions
      contemplated thereby and such injunction, order or notice has become final
      and not subject to appeal.

            As used in connection with the foregoing definition of Change in
Control, "Affiliate" shall have the meaning set forth in Rule 12b-2 promulgated
under Section 12 of the Exchange Act; "Beneficial Owner" shall have the meaning
set forth in Rule 13d-3 under the Exchange Act; "Exchange Act" shall mean the
Securities Exchange Act of 1934, as amended from time to time; "Parent" shall
mean any entity that becomes the Beneficial Owner of at least 80% of the voting
power of the outstanding voting securities of the Company or of an entity that
survives any merger or consolidation of the Company or any direct or indirect
subsidiary of the Company; and "Person" shall have the meaning given in Section
3(a)(9) of the Exchange Act, as modified and used in Sections 13(d) and 14(d)
thereof, except that such term shall not include (i) the Company or any of its
subsidiaries, (ii) a trustee or other fiduciary holding securities under an
employee benefit plan of the Company or any of its Affiliates, (iii) an
underwriter temporarily holding securities pursuant to an offering of such
securities, or (iv) a corporation or entity owned, directly or indirectly, by
the stockholders of the Company in substantially the same proportions as their
ownership of stock of the Company.


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            (b) If the Bank or the Company shall relocate its principal
executive offices after a Change in Control, and if the Officer shall, as a
result, change the Officer's principal residence, the Bank shall (i) promptly
pay (or reimburse the Officer for) all reasonable moving expenses incurred by
the Officer as a result of such change in the Officer's principal residence, and
(ii) indemnify the Officer against, and reimburse the Officer for, any loss
incurred as the result of the sale of the Officer's principal residence (which
loss shall be computed for the purpose of this Agreement as the difference
between the actual sales price (net of closing costs and brokerage fees) of such
residence and the fair market value of such residence (computed as of the time
the Bank or the Company relocates its principal executive offices) as determined
by an independent real estate appraiser designated and paid by the Bank or the
Company and acceptable to the Officer), provided that such sale of the Officer's
principal residence occurs within six months after the Bank or the Company
relocates its principal executive offices.

            (c) (i) If a Change in Control shall occur, the Officer shall be
entitled to the compensation and benefits provided in paragraphs (d), (e), (f)
and (g) of this Section 11 upon the subsequent termination of the Officer's
employment, at any time during the remaining Term in effect at the time of the
Change in Control, by the Bank (including, without limitation, a termination for
permanent disability), other than a termination for cause, provided that the
rights to any such compensation and benefits shall be subject to the limitations
and provisions set forth in Section 8(c).

            (ii) If (A) a Change in Control shall occur, and thereafter the Bank
(notwithstanding its right to do so under Section 4 or Section 5) either (B)
makes a material change in the Officer's functions, duties or responsibilities,
which change would cause the Officer's


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position with the Bank to become one of lesser responsibility, importance or
scope from that in effect immediately prior to the time of the Change in
Control, or (C) reduces the Officer's annual salary to a level below that in
effect immediately prior to the Change in Control (an event specified in clause
(B) or (C) is hereafter referred to as a "Material Change"), the Officer shall
be entitled to the compensation and benefits provided in paragraphs (d), (e),
(f) and (g) of this Section 11 (subject to the limitations and provisions set
forth in Section 8(c)) upon the subsequent termination of the Officer's
employment, at any time during the remaining Term in effect at the time of the
Change in Control, by the Officer.

            (iii) If the Officer's employment is terminated by the Bank or by
reason of the Officer's permanent disability during the Term but after the
expiration of the remaining Term in effect at the time of the Change in Control,
then the provisions of Section 6 or 8 (as the case may be) shall apply in lieu
of the provisions of paragraphs (d), (e), (f) and (g) of this Section 11. If the
Officer's employment is terminated by the Officer during the Term but after the
expiration of the remaining Term in effect at the time of the Change in Control
(or if the Officer's employment is terminated by the Officer during the
remaining Term in effect at the time of the Change in Control and no Material
Change shall have occurred), then the provisions of Section 9 shall apply in
lieu of the provisions of paragraphs (d), (e), (f) and (g) of this Section 11.

            (iv) Only for purposes of determining whether there has been a
termination of the Officer's employment during the remaining Term in effect at
the time of a Change in Control (as specified in paragraphs (c)(i) and (c)(ii)
of this Section 11, as the case may be) so as to entitle the Officer to the
compensation and benefits provided in paragraphs (d), (e), (f) and (g) of this
Section 11, a termination of the Officer's employment following such a Change in
Control shall


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be deemed to have occurred on such date during the remaining Term that (A)
notice of termination is given by the Bank or the Officer to the other
(regardless of the Effective Date of Termination specified in such notice) or
(B) notice of non-renewal pursuant to Section 2(a) is given by the Bank to the
Officer (regardless of the date on which the Term expires). In the event that
notice of non-renewal pursuant to Section 2(a) is given by the Bank to the
Officer during the remaining Term in effect at the time of a Change in Control,
the termination of employment in connection with such notice of non-renewal
shall, for purposes of Sections 8(c) and 11(h), be treated as a termination of
employment described by paragraph (c)(i) of this Section 11. Notwithstanding the
immediately preceding sentences, the Officer shall continue to be employed by
the Bank pursuant to this Agreement until (1) the Effective Date of Termination
specified in the notice of termination or (2) the end of the remaining Term in
effect when notice of non-renewal is given pursuant to Section 2 of this
Agreement.

            (d)(i) Upon the occurrence of a Change in Control followed by any
termination of the Officer's employment pursuant to Section 11(c)(i) or (c)(ii),
to the extent not otherwise limited pursuant to Section 8(c), the Bank shall pay
the Officer, as a severance payment for services previously rendered to the
Bank, a lump sum equal to three times the Officer's Annual Compensation, as in
effect immediately prior to the Effective Date of Termination (without regard to
any decrease in the Officer's Annual Compensation made after the Change in
Control). As used in this Section 11(d)(i), the term "Annual Compensation" shall
mean, at any time, an amount equal to the sum of (A) the Officer's annual salary
(as defined in Section 5(a)) at such time, plus (B) 100% of the target bonus or
other cash incentive that the Officer is eligible to earn in such year pursuant
to each plan or program (whether or not such plan or program has been


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formalized or is in written form) of the Bank in effect for such year that
provides for bonuses or other cash incentives, or if no such plan or program has
been adopted with respect to such year, 100% of the target bonus or other cash
incentive that the Officer was eligible to earn in the most recent year in which
such a plan or program was in effect.

            (ii) Upon the occurrence of a Change in Control followed by any
termination of the Officer's employment pursuant to Section 11(c)(i) or (c)(ii),
to the extent not otherwise limited pursuant to Section 8(c): (A) each
Non-Accelerated Stock Option held by the Officer shall (to the extent permitted
by the plan under which such Non-Accelerated Stock Option was granted),
notwithstanding anything to the contrary in the grant letter or option agreement
related to such Non-Accelerated Stock Option and regardless of the actual
Effective Date of Termination, vest and become exercisable in accordance with
the provisions of, and remain exercisable for the term specified in, such grant
letter or option agreement as if there had been no termination of the Officer's
employment and the Officer remained in the employment of the Bank for the entire
term of such Non-Accelerated Stock Option and (B) each Vested Stock Option held
by the Officer shall (to the extent permitted by the plan under which such
Vested Stock Option was granted), notwithstanding anything to the contrary in
the grant letter or option agreement related to such Vested Stock Option and
regardless of the actual Effective Date of Termination, remain exercisable for
the term specified in such grant letter or option agreement as if there had been
no termination of the Officer's employment and the Officer remained in the
employment of the Bank for the entire term of such Vested Stock Option. As used
in this Section 11(d)(ii), the term (I) "Non-Accelerated Stock Option" shall
mean any stock option (including any tandem stock appreciation right) previously
or hereafter granted to the Officer under a stock incentive or


                                       18
<PAGE>   19

stock option plan of the Company that has not, pursuant to the provisions of
such stock incentive or stock option plan or the grant letter or option
agreement pursuant to which such stock option was granted to the Officer, vested
and become exercisable prior to the Effective Date of Termination and (II)
"Vested Stock Option" shall mean any stock option (including any tandem stock
appreciation right) previously or hereafter granted to the Officer under a stock
incentive or stock option plan of the Company that vests and becomes exercisable
prior to the Effective Date of Termination.

            (e) Any payment pursuant to Section 11(d)(i) or 11(g)(ii) shall be
made to the Officer within 30 days after the Effective Date of Termination.

            (f) Upon the occurrence of a Change in Control followed by any
termination of the Officer's employment pursuant to Section 11(c)(i) or (c)(ii),
to the extent not otherwise limited pursuant to Section 8(c), the Bank shall
cause to be continued until the end of the remaining Term in effect immediately
prior to the giving of notice of termination or non-renewal (or the Officer's
earlier death) life, disability, medical and dental insurance coverage as is
otherwise maintained by the Bank for full-time employees, provided that the
Officer shall continue to pay all amounts in respect of such coverage that an
employee receiving the same level of coverage is or would be required to pay.

            (g)(i)(A) On and after any Change in Control, to the extent not
otherwise limited pursuant to Section 8(c)(i), the Officer shall be eligible to
be paid, under the SERP, a SERP benefit, to the extent vested (and subject to
additional vesting in accordance with the terms of the SERP as such plan
provided immediately prior to the Change in Control, or if it results in a
greater vested percentage, with vesting determined otherwise pursuant to this
Section 11(g)(i)),


                                       19
<PAGE>   20

that is not less than a benefit calculated based upon the amount of the
Officer's "Pension Goal" and "Average Compensation" and the otherwise applicable
terms of the SERP, each as determined immediately prior to the Change in
Control. The rights of the Officer and the obligations of the Bank with respect
to the benefits described under this Section 11(g)(i)(A) shall survive the
termination of this Agreement.

                  (B) In the event of termination of the Officer's employment
pursuant to Section 11(c)(i) or (c)(ii), to the extent not otherwise limited
pursuant to Section 8(c), notwithstanding any vesting provisions that would in
other circumstances require further service under the SERP, the Officer shall be
fully vested in the Officer's SERP benefit, which shall otherwise be payable in
accordance with the terms of the SERP and, as applicable, Section 11(g)(i)(A).

            (ii) In the event of termination of the Officer's employment
pursuant to Section 11(c)(i) or (c)(ii), to the extent not otherwise limited
pursuant to Section 8(c), the Officer shall be entitled to receive in a lump sum
payment an amount equal to any amounts forfeited by the Officer under the
Company's qualified defined contribution plan(s) and under the Bank's Benefit
Restoration Plan (solely to the extent such Benefit Restoration Plan supplements
benefits under a defined contribution plan) as in effect immediately prior to
the Change in Control (or, if more favorable to the Officer, as in effect
immediately prior to the Effective Date of Termination).

            (h)(i) If, on account of events described in Sections 11(c)(i) or
11(c)(ii) following a Change in Control, any payment or other benefit paid or to
be paid or any property transferred or to be transferred (collectively, a
"Severance Payment") with respect to one or more calendar years by or on behalf
of the Bank (or any affiliate of the Bank) to the Officer pursuant to this


                                       20
<PAGE>   21

Agreement in connection with such Change in Control shall constitute an "excess
parachute payment" within the meaning of Section 280G(b) of the Code subject to
the tax imposed by Section 4999 of the Code (the "Excise Tax"), then the Bank
shall pay to the Officer an additional amount (the "Gross Up Payment") such that
the amount paid or transferred to the Officer, after deduction of any Excise Tax
on the Severance Payment, and any federal, state and local income tax,
employment tax and Excise Tax upon the Gross Up Payment, shall be equal to the
Severance Payment. In addition, if, absent a Change in Control or in other
circumstances following a Change in Control, notwithstanding the reductions
mandated by Section 8(c), the SERP benefits otherwise payable to the Officer
shall constitute an "excess parachute payment" within the meaning of Section
280G(b) of the Code subject to the Excise Tax, then the Bank shall pay to the
Officer one or more Gross Up Payments such that the amount of such Gross Up
Payments, when combined with such SERP benefits, after deduction of any Excise
Tax on the SERP benefits, and any federal, state and local income tax,
employment tax and Excise Tax upon the Gross Up Payments, shall be equal to such
SERP benefits.

            (ii) For purposes of determining under Section 11(h)(i) whether any
portion of a Severance Payment or SERP benefit will be subject to the Excise Tax
and the amount of such Excise Tax, (A) the Severance Payment or SERP benefit and
payment provided for in Section 11(h)(i) shall be treated as "parachute
payments" within the meaning of Section 280G(b)(2) of the Code, and all "excess
parachute payments" within the meaning of Section 280(G)(b)(1) of the Code shall
be treated as subject to the Excise Tax, unless and to the extent that tax
counsel selected by the Bank's independent auditors and acceptable to the
Officer is of the opinion that the Severance Payment or SERP benefit (in whole
or in part) does not constitute a "parachute


                                       21
<PAGE>   22

payment" or such "excess parachute payment" (in whole or in part) represents
reasonable compensation for services actually rendered within the meaning of
Section 280G(b)(4) of the Code in excess of the allocable base amount within the
meaning of Section 280G(b)(3) of the Code, or the Severance Payment or SERP
benefit is otherwise not subject to the Excise Tax, (B) the amount of the
Severance Payment or SERP benefit that is treated as subject to the Excise Tax
shall be equal to the lesser of (X) the total amount of the Severance Payment or
SERP benefit, as applicable, and (Y) the amount of "excess parachute payments"
within the meaning of Section 280G(b)(1) of the Code (after applying clause (A)
above), (C) any Gross Up Payment pursuant to Section 11(h)(i) shall be treated
as subject to the Excise Tax in its entirety and (D) the value of any non-cash
benefits or any deferred payment or benefit shall be determined by the Bank's
independent auditors in accordance with the principles of Sections 280G(d)(3)
and (4) of the Code.

            (iii) If in circumstances described in Section 11(h)(i), by reason
of the filing by the Officer of an amended tax return, an audit by the Internal
Revenue Service or other taxing authority, or a final determination by a court
of competent jurisdiction, it is determined that "excess parachute payments"
exceeding those previously reported in the Officer's tax returns were received
by the Officer and as a result an additional Excise Tax (the "Additional Excise
Tax") shall become due, the Bank shall pay the Officer an additional amount (the
"Subsequent Gross Up Payment") such that the amount paid or transferred to the
Officer, after deduction of (A) any Additional Excise Tax and (B) on an after
tax basis, any interest, additions and penalties with respect to the Additional
Excise Tax and (C) any federal, state and local income tax, employment tax and
Excise Tax upon the Subsequent Gross up Payment and (D) the payments


                                       22
<PAGE>   23

provided for in Section 11(h)(i), shall be equal to the Severance Payment or
SERP benefits, as appropriate.

            (iv) Any Gross Up Payment required hereunder shall be made at least
ten days prior to the due date (without regard to extensions) of the Officer's
federal income tax return for the year with respect to which the "excess
parachute payment" is deemed made under the Code. Any Subsequent Gross Up
Payment required hereunder shall be made to the Officer within 30 days after the
amount thereof is determined. Notwithstanding the two immediately preceding
sentences, the Bank shall pay any federal, state and local tax or taxes and
employment taxes required to be withheld from the Officer's wages (within the
meaning of Section 3121 and 3402 of the Code) with respect to the "excess
parachute payment" and any such tax or taxes paid by the Company or the Bank to
the Internal Revenue Service or state or local taxing authority shall constitute
payment to the Officer.

            (v) If the Excise Tax is finally determined (whether by the filing
of an amended tax return by the Officer by audit of the Internal Revenue Service
or other taxing authority, or by a final determination of a court of competent
jurisdiction) to be less than the amount paid to or on behalf of the Officer
under the provisions of Sections 11(h)(i)-(iv) and the overpayment is refunded
to the Officer, the Officer shall repay to the Bank, promptly following the
receipt of the refund, the portion of the Gross Up Payment (and/or Subsequent
Gross Up Payment) attributable to such reduction of the Excise Tax (plus the
portion attributable to federal, state and local income tax and employment taxes
imposed on the portion being repaid by the Officer but only to the extent that
the repayment may result in a tax benefit to the Officer under Section 1341 of
the Code and similar provisions of applicable state and local law).


                                       23
<PAGE>   24

            (vi) The provisions of this Section 11(h) shall inure to the benefit
of the Officer during the Term of this Agreement regardless of whether or not
the Officer's employment is terminated, and if the Officer's employment is
terminated, the rights and obligations of the Officer and the Bank under this
Section 11(h) shall survive the termination of this Agreement.

            12. Post-Termination Obligations of the Officer. (a) Upon any
termination of the Officer's employment during the Term of this Agreement or
upon termination of the Officer's employment after the expiration of the Term of
this Agreement or upon retirement, the Officer agrees (i) not to make any
disclosure in violation of Section 12(b), (ii) to return to the Bank all
material documents relating to the business of the Bank that are in the
Officer's possession or under the Officer's control, and (iii) except if the
termination or retirement occurs after a Change in Control, not to solicit
(directly or indirectly), for one year following the Effective Date of
Termination (or date of termination after the expiration of the Term) or
retirement, the employment of any person who is an employee of the Bank on the
Effective Date of Termination (or date of termination after the expiration of
the Term) or retirement or who, within six months prior to the Effective Date of
Termination (or date of termination after the expiration of the Term) or
retirement, was an employee of the Bank, unless the Officer receives written
permission from the Bank to engage in the activities proscribed by this Section
12(a) or by Section 12(b) or to be relieved of any obligation under Section
12(a)(ii).

            (b) The Officer recognizes and acknowledges that the confidential
business activities and plans for business activities of the Bank and its
subsidiaries and affiliates, as they may exist from time to time, are valuable,
special and unique assets of the Bank. The Officer shall not, during or at any
time after the Officer's employment, disclose any knowledge of the past,


                                       24
<PAGE>   25

present or planned business activities of the Bank or its subsidiaries or
affiliates that are of a confidential nature (collectively, the "Bank's
Confidential Activities") to any person, firm, corporation, bank, thrift
institution or other entity for any reason or purposes whatsoever.
Notwithstanding anything in this Section 12(b) to the contrary, the Officer (i)
may disclose any knowledge of banking, financial and/or economic principles,
concepts or ideas that are not derived from the Bank's Confidential Activities,
and (ii) shall not be precluded from disclosures respecting the Bank's
Confidential Activities that are (A) made pursuant to compulsory legal process
or when required by an appropriate governmental agency; (B) public knowledge or
become public without the Officer's breach of this Section 12(b); (C) already
known to the party to whom the Officer makes such disclosures; or (D) approved
by the Bank for disclosure.

            (c) The parties, recognizing that irreparable injury will result to
the Bank, its business and property in the event of the Officer's breach or
threatened breach of Section 12(a) or (b), agree that in the event of such
breach or threatened breach by the Officer, the Bank will be entitled, in
addition to any other remedies and damages that may be available, to seek and
obtain an injunction to restrain the violation of Section 12(a) or (b) by the
Officer.

            13. Notices. All notices under this Agreement shall be in writing
and shall be delivered personally or sent by registered or certified mail,
return receipt requested, (a) to the Bank, at its address set forth above (to
the attention of its Chief Executive Officer), and (b) to the Officer, at the
Officer's residence address as appearing in the records of the Bank, or to such
other address as either party may hereafter designate in writing in the manner
provided in this Section 13. All notices under this Agreement shall be deemed
given (i) upon receipt if delivered


                                       25
<PAGE>   26

personally or (ii) two days after deposit in a facility of the U.S. Postal
Service with postage prepaid. As used in this Agreement, the term "Effective
Date of Termination" shall mean (A) the date specified in a notice hereunder on
which such Officer's employment is to terminate, provided, however, that no such
notice shall specify an Effective Date of Termination that is prior to the date
on which any such notice is given or (B) for purposes of Section 11 only, the
date on which the Term is to expire as a result of a notice of non-renewal given
by the Bank to the Officer pursuant to Section 2 of this Agreement.

            14. Complete Understanding. On and after the date as of which this
Agreement is effective, this Agreement constitutes the complete understanding
between the parties with respect to the subject matter hereof and merges and
supersedes all prior oral and written agreements and understandings (including,
but not limited to, the Agreement between the parties that was initially signed
by the Officer on May 19, 1997 and was dated as of March 1, 1998) and all
contemporaneous oral agreements and understandings with respect to the subject
matter hereof, including without limitation any other employment agreement
heretofore executed by the Officer and the Bank or any of its subsidiaries or
affiliates. This Agreement may not be amended, terminated or rescinded except in
a writing signed by the party to be charged.

            15. No Duty to Mitigate. Except as otherwise expressly provided
herein, if the Officer shall continue to receive compensation or benefits or
severance pay pursuant to this Agreement after its termination, (a) the Officer
shall have no duty to mitigate such payments by seeking or obtaining other
employment or otherwise, and (b) in the event the Officer does obtain other
employment, such payments from the Bank shall not be reduced by compensation
received from such other employment.


                                       26
<PAGE>   27

            16. No Waiver. The failure of either party at any time to require
performance by the other party of a provision of this Agreement or to resort to
a remedy at law or in equity or otherwise shall in no way affect the right of
such party to require full performance or to resort to such remedy at any time
thereafter nor shall a waiver by either party of the breach of any provision of
this Agreement be taken or held to be a waiver of any subsequent breach of such
provision unless expressly so stated in writing. No waiver of any of the
provisions of this Agreement shall be effective unless in writing and signed by
the party to be charged.

            17. Governing Law. This Agreement shall be governed by the laws of
the State of New York, without regard to conflict of laws principles applied in
the State of New York.

            18. Headings. The headings to the Sections of this Agreement are for
convenience of reference only and shall not be given any effect in the
construction or interpretation of this Agreement.

            19. Severability. If any provision of this Agreement is held by a
court or other authority having competent jurisdiction to be invalid, void or
otherwise unenforceable, in whole or in part, by reason of any applicable law,
statute or regulation or any interpretation thereof, then (a) the remainder of
the provisions of this Agreement shall remain in full force and effect and in no
way be affected, impaired or invalidated and (b) the provision so held to be
invalid, void or otherwise unenforceable shall be deemed modified in amount,
duration, scope or otherwise to the minimum extent necessary so that such
provision shall not be invalid, void or otherwise unenforceable by reason of
such law, statute, regulation or interpretation and such provision, as so
modified, shall remain in full force and effect.


                                       27
<PAGE>   28

            20. Payment of Legal Fees. If, following a Change in Control, any
legal action or proceeding is commenced to enforce or interpret the provisions
of this Agreement, or to recover damages for its breach, all reasonable legal
fees, disbursements and court costs paid or incurred by the Officer arising out
of or resulting from such action or proceeding shall be paid or reimbursed to
the Officer by the Bank, provided the Officer shall be the prevailing party in
such action or proceeding.

            21. Assumption by Company. This Agreement shall be assumable by the
Company at its election. Following any such election, the obligations of the
Bank under this Agreement shall become the obligations of the Company.

            22. Taxes. Any payments due to the Officer pursuant to this
Agreement shall be reduced by all applicable federal, state, city or other taxes
required by law to be withheld with respect to such payments.

                  [Remainder of Page Intentionally Left Blank]


                                       28
<PAGE>   29

            23. Limitation on Payments. Any payments made to the Officer
pursuant to this Agreement, or otherwise, are subject to and conditioned upon
their compliance with 12 USC ss. 1828(k) and any regulations promulgated
thereunder.

                              THE DIME SAVINGS BANK OF NEW YORK, FSB


                              By: /s/LAWRENCE J. TOAL
                                  ----------------------------
                                    Lawrence J. Toal
                                    Chief Executive Officer


Dated: February 6, 1998           /s/CARLOS R. MUNOZ
       -------------------        ----------------------------
                                       Carlos R. Munoz


                                       29