<PAGE>   1
                                                                   Exhibit 10.10

                              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 Peyton R. Patterson (the "Officer").
                                   -----------

         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.

                                  ------------

         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 calendar year of the term of this Agreement beginning with 1999
(unless notice of non-renewal of


<PAGE>   2
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 termination of employment shall result in a termination of
this Agreement on the Effective Date of

                                        2
<PAGE>   3
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 General
Manager, General Manager of Consumer Financial Services 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
rank, such annual salary shall not be decreased by more than 25% in any one
calendar year. As

                                        3
<PAGE>   4
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 than 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 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

                                        4
<PAGE>   5
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 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

                                        5
<PAGE>   6
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 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))

                                        6
<PAGE>   7
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.

         (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

                                        7
<PAGE>   8
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 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

                                        8
<PAGE>   9
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.

                  (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.

                                        9
<PAGE>   10
                  (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 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

                                       10
<PAGE>   11
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 24, 1997 or whose appointment, election or nomination
         for election was previously so approved or recommended; or

                                       11
<PAGE>   12
                  (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
         substantially all of the Company's consolidated assets (provided that,
         for these purposes, a

                                       12
<PAGE>   13
         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 terms or otherwise)
         without having been consummated, (B) the parties to an Acquisition

                                       13
<PAGE>   14
         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.

                                       14
<PAGE>   15
                  (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

                                       15
<PAGE>   16
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

                                       16
<PAGE>   17
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 formalized

                                       17
<PAGE>   18
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
Agreement in connection with such Change in Control shall constitute an "excess
parachute

                                       20
<PAGE>   21
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 payment" or such "excess
parachute payment" (in whole or in part) represents reasonable

                                       21
<PAGE>   22
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 provided for in Section 11(h)(i), shall be equal to the Severance
Payment or SERP benefits, as appropriate.

                                       22
<PAGE>   23
                  (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).

                  (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

                                       23
<PAGE>   24
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).

                                       24
<PAGE>   25
                  (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, 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

                                       25
<PAGE>   26
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 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, together with the Agreement
Regarding Initial Employment Terms dated June 11, 1996 ("Initial Agreement")
attached hereto as Exhibit A, constitute the complete understanding between the
parties with respect to the subject matter hereof and thereof and merge and
supersede all prior oral and written agreements and understandings and all
contemporaneous oral agreements and understandings with respect to the subject
matter hereof and thereof, including without limitation any other employment
agreement heretofore executed by the Officer and the Bank or any of its
subsidiaries or affiliates; provided that all references in the Initial
Agreement to your prior Employment Agreement with the Bank, dated as of June 11,
1996, shall be deemed, on and after the date as of which this Agreement is
effective, to constitute references to this Agreement. In the event of any
conflict between the express provisions of this Agreement and the Initial
Agreement, the express provisions of this Agreement shall be controlling. This

                                       26
<PAGE>   27
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.

                  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.


                                       27
<PAGE>   28
                  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.

                  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.

                                       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 Section 1828(k) and any regulations promulgated
thereunder.

                                      THE DIME SAVINGS BANK OF NEW YORK, FSB


                                      By: ______________________________________
                                               Lawrence J. Toal
                                               Chief Executive Officer


Dated: ___________________                ______________________________________
                                               Peyton R. Patterson

                                       29