Exhibit 10.26 - Employment Agreement


    Exhibit
      10.26


     

    


    EMPLOYEE
      RETENTION AGREEMENT

    


    


    


    


    by
      and among

    


    


    


    


    THE
      DIME SAVINGS BANK OF WILLIAMSBURGH,

    


    


    


    


    DIME
      COMMUNITY BANCSHARES, INC.

    


    


    


    


    and

    


    


    CHRISTOPHER
      D. MAHER

     

    
 

    made
      and entered into as of

    


    June
      30, 2006

    


    



    


    EMPLOYEE
      RETENTION AGREEMENT

    


    This
      EMPLOYEE
      RETENTION AGREEMENT (“Agreement”)
      is made
      and entered into as of June 30, 2006 by and among THE
      DIME SAVINGS BANK of WILLIAMSBURGH,
      a
      savings bank organized and operating under the federal laws of the United States
      and having its executive offices at 209 Havemeyer Street, Brooklyn, New York
      11211 (“Bank”); DIME
      COMMUNITY BANCSHARES, INC.,
      a
      business corporation organized and existing under the laws of the State of
      Delaware and having its executive offices at 209 Havemeyer Street, Brooklyn,
      New
      York 11211 (“Holding Company”); and Christopher D. Maher, an individual residing
      at 2 Helene Drive, Randolph, New Jersey 07869 (“Officer”).

    


    


    W I T N E S S E T H:

    


    


    


    WHEREAS,
      the
      Bank desires to secure for itself the Officer’s services; and 

    


    WHEREAS,
      the
      Bank recognizes that a third party may at some time in the future pursue a
      Change of Control of the Bank or the Holding Company and that this possibility
      may result in the departure or distraction of the Bank’s officers;
      and

    


    WHEREAS,
      the
      Bank has determined that appropriate steps should be taken to encourage the
      continued attention and dedication of the Bank’s officers, including the
      Officer, to their duties for the Bank without the distraction that may arise
      from the possibility of a Change of Control of the Bank or the Holding Company;
      and

    


    WHEREAS,
      the
      Bank believes that, by assuring certain officers, including the Officer, of
      reasonable financial security in the event of a Change of Control of the Bank
      or
      the Holding Company, such officers will be in a position to perform their duties
      free from financial self interest and in the best interests of the Bank and
      its
      shareholders; and 

    


    WHEREAS,
      for
      purposes of securing the Officer’s services for the Bank, the Board of Directors
      of the Bank (“Board”) has authorized the proper officers of the Bank to enter
      into an employee retention agreement with the Officer on the terms and
      conditions set forth herein; and

    


    WHEREAS,
      the
      Board of Directors of the Holding Company has authorized the Holding Company
      to
      guarantee the Bank’s obligations under such an employee retention agreement and
      to provide for certain tax indemnification payments; and

    


    WHEREAS,
      the
      Officer is willing to make the Officer’s services available to the Bank on the
      terms and conditions set forth herein;

     

          NOW,
      THEREFORE,
      in
      consideration of the premises and the mutual covenants and obligations
      hereinafter set forth, the Bank, the Holding Company and the Officer hereby
      agree as follows-

     

        Section
      1. Effective
      Date

    


    (a) This
      Agreement shall be effective as of the date first above written and shall remain
      in effect during the term of this Agreement which shall be for a period of
      three
      (3) years commencing on the date of this Agreement, plus such extensions as
      are
      provided pursuant to section 1(b); provided,
      however, that
      if
      the term of this Agreement has not 

     

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

     

    otherwise
      terminated, the term of this Agreement will terminate on the date of the
      Officer’s termination of employment with the Bank; and provided,
      further, that
      the
      obligations under section 8 of this Agreement shall survive the term of this
      Agreement if payments become due hereunder.

    


    (b) Prior
      to
      each anniversary date of this Agreement, the Board shall consider the
      advisability of an extension of the term in light of the circumstances then
      prevailing and may, in its discretion, approve an extension to take effect
      as of
      the upcoming anniversary date. If an extension is approved, the term of this
      Agreement shall be extended so that it will expire three (3) years after such
      anniversary date.

    


    (c) Notwithstanding
      anything herein contained to the contrary: (i) the Officer’s employment with the
      Bank may be terminated at any time, subject to the terms and conditions of
      this
      Agreement; and (ii) nothing in this Agreement shall mandate or prohibit a
      continuation of the Officer’s employment following the expiration of the
      Assurance Period upon such terms and conditions as the Bank and the Officer
      may
      mutually agree upon. 

    


    Section
      2.  Assurance
      Period.

     

    (a) The
      assurance period (“Assurance Period”) shall be for a period commencing on the
      date of a Change of Control, as defined in section 10 of this Agreement, and
      ending on the third anniversary of the date on which the Assurance Period
      commences, plus such extensions as are provided pursuant to the following
      sentence. The Assurance Period shall be automatically extended for one (1)
      additional day each day, unless either the Bank or the Officer elects not to
      extend the Assurance Period further by giving written notice to the other party,
      in which case the Assurance Period shall become fixed and shall end on the
      third
      anniversary of the date on which such written notice is given; provided,
      however, that
      if
      following a Change of Control, the Office of Thrift Supervision (or its
      successor) is the Bank’s primary federal regulator, the Agreement shall be
      subject to extension not more frequently than annually and only upon review
      and
      approval of the Board.

    


    (b) Upon
      termination of the Officer’s employment with the Bank, any daily extensions
      provided pursuant to the preceding sentence, if not theretofore discontinued,
      shall cease and the remaining unexpired Assurance Period under this Agreement
      shall be a fixed period ending on the later of the third anniversary of the
      date
      of the Change of Control, as defined in section 10 of this Agreement, or the
      third anniversary of the date on which the daily extensions were
      discontinued.

    


    Section
      3. Duties.

    


    During
      the period of the Officer’s employment that falls within the Assurance Period,
      the Officer shall: (a) except to the extent allowed under section 6 of this
      Agreement, devote his full business time and attention (other than during
      weekends, holidays, vacation per-iods, and periods of illness, disability or
      approved leave of absence) to the business and affairs of the Bank and use
      his
      best efforts to advance the Bank’s interests; (b) serve in the position to which
      the Officer is appointed by the Bank, which, during the Assurance Period, shall
      be the position that the Officer held on the day before the Assurance Period
      commenced or any higher office at the Bank to which he may subsequently be
      appointed; and (c) subject to the direction of the Board and the By-laws of
      the
      Bank, have such functions, duties, responsibilities and authority commonly
      associated with such position.

    


    
      
         

      

      
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    Section
      4. Compensation.

    


    In
      consideration for the services rendered by the Officer during the Assurance
      Period, the Bank shall pay to the Officer during the Assurance Period a salary
      at an annual rate equal to the greater of:

    


    (a) the
      annual rate of salary in effect for the Officer on the day before 

    the
      Assurance Period commenced; or

    


    (b) such
      higher annual rate as may be prescribed by or under the

    authority
      of the Board;

     

    provided,
      however,
      that in
      no event shall the Officer’s annual rate of salary under this Agreement in
      effect at a particular time during the Assurance Period be reduced without
      the
      Officer’s prior written consent. The annual salary payable under this section 4
      shall be subject to review at least once annually and shall be paid in
      approximately equal installments in accordance with the Bank’s customary payroll
      practices. Nothing in this section 4 shall be deemed to prevent the Officer
      from
      receiving additional compensation other than salary for his services to the
      Bank, or additional compensation for his services to the Holding Company, upon
      such terms and conditions as may be prescribed by or under the authority of
      the
      Board or the Board of Directors of the Holding Company.

    


    Section
      5. Employee
      Benefit Plans and Programs

    


    Except
      as
      otherwise provided in this Agreement, the Officer shall, during the Assurance
      Period, be treated as an employee of the Bank and be eligible to participate
      in
      and receive benefits under any qualified or non-qualified defined benefit or
      defined contribution retirement plan, group life, health (including
      hospitalization, medical and major medical), dental, accident and long term
      disability insurance plans, and such other employee benefit plans and programs,
      including, but not limited to, any incentive compensation plans or programs
      (whether or not employee benefit plans or programs), any stock option and
      appreciation rights plan, em-ployee stock ownership plan and restricted stock
      plan, as may from time to time be maintained by, or cover employees of, the
      Bank, in accordance with the terms and conditions of such employee benefit
      plans
      and programs and compensation plans and programs and with the Bank’s customary
      practices.

     

    Section
      6. Board
      Memberships.

    


    The
      Officer may serve as a member of the boards of directors of such business,
      community and charitable organizations as he may disclose to and as may be
      approved by the Board (which approval shall not be unreasonably withheld),
      and
      he may engage in personal business and investment activities for his own
      account; provided,
      however, that
      such
      service and personal business and investment activities shall not materially
      interfere with the performance of his duties under this Agreement.

     

    Section
      7. Working
      Facilities and Expenses.

    


    During
      the Assurance Period, the Officer’s principal place of employment shall be at
      the Bank’s executive offices at the address first above written, or at such
      other location within the City of New York at which the Bank shall maintain
      its
      principal executive offices, or at such other location as the Bank and the
      Officer may mutually agree upon. The Bank shall provide the Officer, at his
      principal place of employment, with a private office and support services and
      facilities suitable to his position with the Bank and necessary or appropriate
      in connection with the performance of his assigned duties under this Agreement.
      The Bank shall reimburse the Officer for his ordinary and necessary business
      expenses, 

     

    
      
        
           

        

        
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    including,
      without lim-itation, the Officer’s travel and entertainment expenses, incurred
      in connection with the perfor-mance of the Officer’s duties under this
      Agreement, upon presentation to the Bank of an itemized account of such expenses
      in such form as the Bank may reasonably require.

     

    Section
      8. Termination
      of Employment with Severance Benefits.

    


    (a) In
      the
      event that the Officer’s employment with the Bank shall terminate during the
      Assurance Period, or prior to the commencement of the Assurance Period but
      within three (3) months of and in connection with a Change of Control as defined
      in section 10 of this Agreement on account of:

    


    (i) The
      Officer’s voluntary resignation from employment with the Bank within ninety (90)
      days following:

    


    (A) the
      failure of the Bank’s Board to appoint or re-appoint or elect or re-elect the
      Officer to serve in the same position in which the Officer was serving, on
      the
      day before the Assurance Period commenced or a more senior office;

    


    (B) the
      failure of the stockholders of the Holding Company to elect or re-elect the
      Officer as a member of the Board, if he was a member of the Board on the day
      before the Assurance Period commenced;

    


    (C) the
      expiration of a thirty (30) day period following the date on which the Officer
      gives written notice to the Bank of its material failure, whether by amendment
      of the Bank’s Organization Certificate or By-laws, action of the Board or the
      Holding Company’s stockholders or otherwise, to vest in the Officer the
      functions, duties, or responsibilities vested in the Officer on the day before
      the Assurance Period commenced (or the functions, duties and responsibilities
      of
      a more senior office to which the Officer may be appointed), unless during
      such
      thirty (30) day period, the Bank fully cures such failure;

    


    (D) the
      failure of the Bank to cure a material breach of this Agreement by the Bank,
      within thirty (30) days following written notice from the Officer of such
      material breach;

    


    (E) a
      reduction in the compensation provided to the Officer, or a material reduction
      in the benefits provided to the Officer under the Bank’s program of employee
      benefits, compared with the compensation and benefits that were provided to
      the
      Officer on the day before the Assurance Period commenced;

    


    (F) a
      change
      in the Officer’s principal place of employment that would result in a one-way
      commuting time in excess of the greater of (I) 30 minutes or (II) the Officer’s
      commuting time immediately prior to such change; or

     

    (ii) the
      discharge of the Officer by the Bank for any reason other than for “cause” as
      provided in section 9(a);

    


    then,
      subject to section 21, the Bank shall provide the benefits and pay to the
      Officer the amounts provided for under section 8(b) of this Agreement;
provided,
      however, that
      if
      benefits or payments become due hereunder as a result of the Officer’s
      termination of employment prior to the commencement of the Assurance Period,
      the
      benefits and payments provided for under section 8(b) of this Agreement shall
      be
      determined as though the Officer had remained in the service of the Bank (upon
      the terms and conditions in effect at the time of his actual termination of
      service) and had not terminated employment with the Bank until the date on
      which
      the Officer’s Assurance Period would have commenced.

     

    
      
        
           

        

        
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    (b) Upon
      the
      termination of the Officer’s employment with the Bank under circumstances
      described in section 8(a) of this Agreement, the Bank shall pay and provide
      to
      the Officer (or, in the event of the Officer’s death, to the Officer’s
      estate):

    


    (i) the
      Officer’s earned but unpaid compensation (including, without limitation, all
      items which constitute wages under section 190.1 of the New York Labor Law
      and
      the payment of which is not otherwise provided for under this section 8(b))
      as
      of the date of the termination of the Officer’s employment with the Bank, such
      payment to be made at the time and in the manner prescribed by law applicable
      to
      the payment of wages but in no event later than thirty (30) days after
      termination of employment;

    


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

    


    (iii) continued
      group life, health (including hospitalization, medical and major medical),
      accident and long term disability insurance benefits, in addition to that
      provided pursuant to section 8(b)(ii) and after taking into account the coverage
      provided by any subsequent employer, if and to the extent necessary to provide
      for the Officer, for the remaining unexpired Assurance Period, coverage
      equivalent to the coverage to which the Officer would have been entitled under
      such plans (as in effect on the date of his termination of employment, or,
      if
      his termination of employment occurs after a Change of Control, on the date
      of
      such Change of Control, whichever benefits are greater) if the Officer had
      continued working for the Bank during the remaining unexpired Assurance Period
      at the highest annual rate of compensation achieved during the Officer’s period
      of actual employment with the Bank;

     

    (iv) within
      thirty (30) days following the Officer’s termination of employment with the
      Bank, a lump sum payment, in an amount equal to the pre-sent value of the salary
      that the Officer would have earned if the Officer had continued working for
      the
      Bank during the remaining unexpired Assurance Period at the highest annual
      rate
      of salary achieved during the Officer’s period of actual employment with the
      Bank, where such present value is to be determined using a discount rate equal
      to the applicable short-term federal rate prescribed under section 1274(d)
      of
      the Internal Revenue Code of 1986 (“Code”) (“Applicable Short-Term Rate”),
      compounded using the compounding periods corresponding to the Bank’s regular
      payroll periods for its officers, such lump sum to be paid in lieu of all other
      payments of salary provided for under this Agreement in respect of the period
      following any such termination;

    


    (v) within
      thirty (30) days following the Officer’s termination of employment with the
      Bank, a lump sum payment in an amount equal to the excess, if any,
      of:

    


    (A) the
      present value of the aggregate benefits to which the Officer would be entitled
      under any and all qualified and non-qualified defined benefit pension plans
      maintained by, or covering employees of, the Bank if the Officer were 100%
      vested thereunder and had continued working for the Bank during the remaining
      unexpired Assurance Period, such benefits to be determined as of the date of
      termination of employment by adding to the service actually recognized under
      such plans an additional period equal to the remaining unexpired Assurance
      Period and by adding to the 

     

    
      
         

      

      
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    compensation
      recognized under such plans for the year in which termination of employment
      occurs all amounts payable under sections 8(b)(I), (iv) and (vii);

    


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

    


    where
      such present values are to be determined using the mortality tables prescribed
      under section 415(b)(2)(E)(v) of the Code and a discount rate, compounded
      monthly, equal to the applicable long-term federal rate prescribed under section
      1274(d) of the Code for the month in which his employment terminates;
      .

    (vi) within
      thirty (30) days following the Officer’s termination of employment with the
      Bank, a lump sum payment in an amount equal to the present value of the
      additional employer contributions (or if greater in the case of a leveraged
      employee stock ownership plan or similar arrangement, the additional assets
      allocable to him through debt service, based on the fair market value of such
      assets at termination of employment) to which he would have been entitled under
      any and all qualified and non-qualified defined contribution plans maintained
      by, or covering employees of, the Bank, if he were 100% vested thereunder and
      had continued working for the Bank during the remaining unexpired Assurance
      Period at the highest annual rate of compensation achieved during the Officer’s
      period of actual employment with the Bank, and making the maximum amount of
      employee contributions, if any, required under such plan or plans, such present
      value to be determined on the basis of the discount rate, compounded using
      the
      compounding period that corresponds to the frequency with which employer
      contributions are made to the relevant plan, equal to the Applicable Short-Term
      Rate;

    


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

    


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

    


    (B) the
      salary that would have been paid to the Officer during each such calendar year
      at the highest annual rate of salary achieved during the remaining unexpired
      Assurance Period, such payments to be made (without discounting for early
      payment) within thirty (30) days following the Officer’s termination of
      employment.

    


    The
      Bank
      and the Officer hereby stipulate that the damages which may be incurred by
      the
      Officer following any such termination of employment are not capable of accurate
      measurement as of the date first above written and that the payments and
      benefits contemplated by this section 8(b) constitute a reasonable estimate
      under the circumstances of all damages sustained as a consequence of any such
      termination of employment, other than damages arising under or out of any stock
      option, restricted stock or other non-qualified stock acquisition or investment
      plan or program, it being understood and agreed that this Agreement shall not
      determine the measurement of damages under any such plan or program in respect
      of any termination of employment. Such damages shall be payable without any
      requirement of proof of actual damage and without regard to the Officer’s
      efforts, if any, to 

     

    
      
        
           

        

        
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    mitigate
      damages. The Bank and the Officer further agree that the Bank may condition
      the
      payments and benefits (if any) due under sections 8(b)(iii), (iv), (v), (vi)
      and
      (vii) on the receipt of the Officer’s resignation from any and all positions
      which he holds as an officer, director or committee member with respect to
      the
      Bank, the Company or any subsidiary or affiliate of either of them.

    


    Section
      9. Termination
      without Severance Benefits.

    


    In
      the
      event that the Officer’s employment with the Bank shall terminate during the
      Assurance Period on account of:

    


    (a) the
      discharge of the Officer for “cause,” which, for purposes of this Agreement
      shall mean personal dishonesty, incompetence, willful misconduct, breach of
      fiduciary duty involving personal profit, intentional failure to perform stated
      duties, willful violation of any law, rule or regulation (other than traffic
      violations or similar offenses) or final cease and desist order, or any material
      breach of this Agreement, in each case as measured against standards generally
      prevailing at the relevant time in the savings and community banking industry;
      provided,
      however, that
      the
      Officer shall not be deemed to have been discharged for cause unless and until
      he shall have received a written notice of termination from the Board,
      accompanied by a resolution duly adopted by affirmative vote of a majority
      of
      the entire Board at a meeting called and held for such purpose (after reasonable
      notice to the Officer and a reasonable opportunity for the Officer to make
      oral
      and written presentations to the members of the Board, on his own behalf, or
      through a representative, who may be his legal counsel, to refute the grounds
      for the proposed determination) finding that in the good faith opinion of the
      Board grounds exist for discharging the Officer for cause; or

    


    (b) the
      Officer’s voluntary resignation from employment with the Bank for reasons other
      than those specified in section 8(a)(I); or

    


    (c) the
      Officer’s death; or

    


    (d) a
      determination that the Officer is eligible for long-term disability


    benefits
      under the Bank’s long-term disability insurance program or, if there is no such
      program, under the federal Social Security Act; then the Bank shall have no
      further obligations under this Agreement, other than the payment to the Officer
      (or, in the event of his death, to his estate) of his earned but unpaid salary
      as of the date of the termination of his employment, and the provision of such
      other benefits, if any, to which the Officer is entitled as a former employee
      under the employee benefit plans and pro-grams and compensation plans and
      programs maintained by, or covering employees of, the Bank.

    


    Section
      10. Change
      of Control.

    


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

    


    (i) approval
      by the stockholders of the Bank of a transaction that would result in the
      reorganization, merger or consolidation of the Bank, respectively, with one
      or
      more other persons, other than a transaction following which:

    


    (A) at
      least
      51% of the equity ownership interests of the entity resulting from such
      transaction are beneficially owned (within the meaning of Rule 13d-3 promulgated
      under the Exchange Act) in substantially the same relative proportions by
      persons who, immediately prior to such transaction, beneficially owned (within
      the meaning of Rule 13d-3 promulgated 

     

    
      
        
           

        

        
          8

          
            

          

        

        
           

        

      

    

     

    under
      the
      Exchange Act) at least 51% of the outstanding equity ownership interests in
      the
      Bank; and

    


    (B) at
      least
      51% of the securities entitled to vote generally in the election of directors
      of
      the entity resulting from such transaction are beneficially owned (within the
      meaning of Rule 13d-3 promulgated under the Exchange Act) in substantially
      the
      same relative proportions by persons who, immediately prior to such transaction,
      beneficially owned (within the meaning of Rule 13d-3 promulgated under the
      Exchange Act) at least 51% of the securities entitled to vote generally in
      the
      election of directors of the Bank;

    


    (ii) the
      acquisition of substantially all of the assets of the Bank or beneficial
      ownership (within the meaning of Rule 13d-3 promulgated under the Exchange
      Act)
      of 20% or more of the outstanding securities of the Bank entitled to vote
      generally in the election of directors by any person or by any persons acting
      in
      concert, or approval by the stockholders of the Bank of any transaction which
      would result in an acquisition; 

    


    (iii) a
      complete liquidation or dissolution of the Bank, or approval by the stockholders
      of the Bank of a plan for such liquidation or dissolution;

    


    (iv) the
      occurrence of any event if, immediately following such event, at least fifty
      percent (50%) of the members of the Board do not belong to any of the following
      groups:

    


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

    


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

    


    (1) upon
      election to serve as a member of the Board by affirmative vote of three-quarters
      (3/4) of the members of such Board, or a nominating committee thereof, in office
      at the time of such first election; or

    


    (2) upon
      election by the stockholders of the Board to serve as a member of the Board,
      but
      only if nominated for election by affirmative vote of three quarters(3/4) of
      the
      members of the Board, or of a nominating committee thereof, in office at the
      time of such first nomination;

    


    provided,
      however, that
      such
      individual’s election or nomination did not result from an actual or threatened
      election contest (within the meaning of Rule 14a-11 of Regulation 14A
      promulgated under the Exchange Act) or other actual or threatened solicitation
      of proxies or consents (within the meaning of Rule 14a-11 of Regulation 14A
      promulgated under the Exchange Act) other than by or on behalf of the Board
      of
      the Bank; or

    


    (v) any
      event
      which would be described in section 10(a)(i), (ii), (iii) or (iv) if the term
      “Holding Company” were substituted for the term “Bank” therein.

    


    (b) In
      no
      event, however, shall a Change of Control be deemed to have occurred as a result
      of any acquisition of securities or assets of the Holding Company, the Bank
      or
      any subsidiary of either of them, by the Holding Company, the Bank or any
      subsidiary of either of them, or by any employee benefit plan maintained by
      any
      of them.

    


     

    Section
      11. Excise
      Tax Indemnification.

     

    
      
         

      

      
        9

        
          

        

      

      
         

      

    

     

            (a) This
      section 11 shall apply if the Officer’s employment is terminated in
      circumstances giving rise to liability for excise taxes under section 4999
      of
      the Code. If this Section 11 applies, then, if for any taxable year, the Officer
      shall be liable for the payment of an excise tax under section 4999 of the
      Code
      with respect to any payment in the nature of compensation made by the Company
      or
      any direct or indirect subsidiary or affiliate of the Holding Company to (or
      for
      the benefit of) the Officer, the Holding Company shall pay to the Officer an
      amount equal to X deter-mined under the following formula:

    


    
      	
              X

            	
              =

            	
              E
                x
                P

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

            


    

    where

    
      	 	
              E
                =
                

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

            


    

    


    
      	 	
              P
                =

            	
              the
                amount with respect to which such excise tax is assessed, determined
                without regard to this section 11;

            


    

    


    
      	 	
              FI
                =

            	
              the
                highest marginal rate of income tax applicable to the Officer under
                the
                Code for the taxable year in
                question;

            


    

    


    
      	 	 	
              SLI
                =

            	
              the
                sum of the highest marginal rates of income tax applicable to the
                Officer
                under all appli-cable state and local laws for the taxable year in
                ques-tion; and

            


    

    


    
      	 	
              M
                =

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

            


    

    


    With
      respect to any payment in the nature of compensation that is made to (or for
      the
      benefit of) the Officer under the terms of this Agree-ment, or otherwise, and
      on
      which an excise tax under sec-tion 4999 of the Code will be assessed, the
      payment determined under this section 11(a) shall be made to the Officer on
      the earlier of (i) the date the Holding Company or any direct or indirect
      subsidiary or affiliate of the Holding Company is required to withhold such
      tax,
      or (ii) the date the tax is required to be paid by the Officer.

    


    (b) Notwithstanding
      anything in this section 11 to the contrary, in the event that the Officer’s
      liability for the excise tax under section 4999 of the Code for a taxable year
      is subse-quently determined to be different than the amount deter-mined by
      the
      formula (X + P) x E, where X, P and E have the meanings
      provided in section 11(a), the Officer or the Holding Company, as the case
      may
      be, shall pay to the other party at the time that the amount of such ex-cise
      tax
      is final-ly determined, an appropriate amount, plus interest, such that the
      payment made under section 11(a), when increased by the amount of the payment
      made to the Officer under this section 11(b) by the Holding Company, or when
      reduced by the amount of the payment made to the Company under this section
      11(b) by the Officer, equals the amount that should have properly been paid
      to
      the Officer under section 11(a). The interest paid under this section 11(b)
      shall be determined at the rate provided under section 1274(b)(2)(B) of the
      Code. To confirm that the proper amount, if any, was paid to the Officer under
      this section 11, the Officer shall furnish to the Holding Company a copy of
      each
      tax return which reflects a liability for an excise tax payment made by the
      Holding Company, at least 20 days before the date on which such return is
      required to be filed with the Internal Revenue Service.

     

    
      
        
           

        

        
          10

          
            

          

        

        
           

        

      

    

    
(c) The
      provisions of this section 11 are designed to reflect the provisions of
      applicable federal, state and local tax laws in effect on the date of this
      Agreement. If, after the date hereof, there shall be any change in any such
      laws, this section 11 shall be modified in such manner as the Officer and the
      Holding Company may mutually agree upon if and to the extent necessary to assure
      that the Officer is fully indemnified against the economic effects of the tax
      imposed under section 4999 of the Code or any similar federal, state or local
      tax.

    


    Section
      12
      . No
      Effect on Employee Benefit Plans or Programs.

    


    The
      termination of the Officer’s employment during the Assurance Period or
      thereafter, whether by the Bank or by the Officer, shall have no effect on
      the
      rights and obligations of the parties hereto under the Bank’s qualified and
      non-qualified defined benefit or defined contribution retirement plans, group
      life, health (including hospitalization, medical and major medical), dental,
      accident and long term disability insurance plans or such other employee benefit
      plans or programs, or compensation plans or programs (whether or not employee
      benefit plans or programs) and any defined contribution plan, employee stock
      ownership plan, stock option and appreciation rights plan, and restricted stock
      plan, as may be maintained by, or cover employees of, the Bank from time to
      time; provided,
      however, that
      nothing in this Agreement shall be deemed to duplicate any compensation or
      benefits provided under any agreement, plan or program covering the Officer
      to
      which the Bank or the Holding Company is a party and any duplicative amount
      payable under any such agreement, plan or program shall be applied as an offset
      to reduce the amounts otherwise payable hereunder.

    


    Section
      13. Successors
      and Assigns.

    


    This
      Agreement will inure to the benefit of and be binding upon the Officer, his
      legal representatives and testate or intestate distributes, and the Bank and
      the
      Holding Company, their respective successors and assigns, including any
      successor by merger or consolidation or a statutory receiver or any other person
      or firm or corporation to which all or substantially all of the respective
      assets and business of the Bank or the Holding Company may be sold or otherwise
      transferred.

    


    Section
      14. Notices.

    


    Any
      communication required or permitted to be given under this Agreement, including
      any notice, direction, designation, consent, instruction, objection or waiver,
      shall be in writing and shall be deemed to have been given at such time as
      it is
      delivered personally, or five (5) days after mailing if mailed, postage prepaid,
      by registered or certified mail, return receipt requested, addressed to such
      party at the address listed below or at such other address as one such party
      may
      by written notice specify to the other party:

    


    


    If
      to the
      Officer:

    


    Mr.
      Christopher D. Maher

    2
      Helene
      Drive

    Randolph,
      New Jersey 07869

    


    If
      to the
      Bank: 

     

    The
      Dime
      Savings Bank of Williamsburgh

    209
      Havemeyer Street    

    Brooklyn,
      New York 11211

     

    
      
        
           

        

        
          11

          
            

          

        

        
           

        

      

    

    Attention:
      Corporate
      Secretary

    


    


    


    


    If
      to the
      Holding Company:

    


    Dime
      Community Bancshares, Inc.

    209
      Havemeyer Street

    Brooklyn,
      New York 11211

    


    Attention:
      Corporate
      Secretary 

    


    


    Section
      15. Indemnification
      and Attorneys’ Fees.   

     

    The
      Bank
      shall indemnify, hold harmless and defend the Officer against rea-sonable costs,
      including legal fees, incurred by the Officer in connection with or arising
      out
      of any action, suit or proceeding in which the Officer may be involved, as
      a
      result of the Officer’s efforts, in good faith, to defend or enforce the terms
      of this Agreement; provided, however, that the Officer shall have substantially
      prevailed on the merits pursuant to a judgment, decree or order of a court
      of
      competent jurisdiction or of an arbitrator in an arbitration proceeding, or
      in a
      settlement; provided,
      further, that
      this
      section 15 shall not obligate the Bank to pay costs and legal fees on behalf
      of
      the Officer under this Agreement in excess of $20,000. For purposes of this
      Agreement, any settlement agreement which provides for payment of any amounts
      in
      settlement of the Bank’s obligations hereunder shall be conclusive evidence of
      the Officer’s entitlement to indemnification hereunder, and any such
      indemnification payments shall be in addition to amounts payable pursuant to
      such settlement agreement, unless such settlement agreement expressly provides
      otherwise.

    


    Section
      16. Severability.

    


    A
      determination that any provision of this Agreement is invalid or unenforceable
      shall not affect the validity or enforceability of any other provision
      hereof.

    


    Section
      17. Waiver.

    


    Failure
      to insist upon strict compliance with any of the terms, covenants or conditions
      hereof shall not be deemed a waiver of such term, covenant, or condition. A
      waiver of any provision of this Agreement must be made in writing, designated
      as
      a waiver, and signed by the party against whom its enforcement is sought. Any
      waiver or relinquishment of any right or power hereunder at any one or more
      times shall not be deemed a waiver or relinquishment of such right or power
      at
      any other time or times.

    


    


    
      
         

      

      
        12

        
          

        

      

      
         



    

    Section
      18. Counterparts.

    


    This
      Agreement may be executed in two (2) or more counterparts, each of which shall
      be deemed an original, and all of which shall constitute one and the same
      Agreement.

    


    Section
      19. Governing
      Law.

    


    This
      Agreement shall be governed by and construed and enforced in accordance with
      the
      federal laws of the United States, and in the absence of controlling federal
      law, the laws of the State of New York, without reference to conflicts of law
      principles.

    


    Section
      20. Headings
      and Construction.

    


    The
      headings of sections in this Agreement are for convenience of reference only
      and
      are not intended to qualify the meaning of any section. Any reference to a
      section number shall refer to a section of this Agreement, unless otherwise
      stated.

    


    Section
      21. Entire
      Agreement; Modifications.

    


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

    


    Section
      22. Required
      Regulatory Provisions.

    


    The
      following provisions are included for the purposes of complying with various
      laws, rules and regulations applicable to the Bank:

    


    (a) Notwithstanding
      anything herein contained to the contrary, in no event shall the aggregate
      amount of compensation payable to the Officer by the Bank under section 8(b)
      hereof (exclusive of amounts described in section 8(b) (i)) exceed the three
      times the Officer’s average annual total compensation for the last five
      consecutive calendar years to end prior to his termination of employment with
      the Bank (or for his entire period of employment with the Bank if less than
      five
      calendar years). This section 22(a) shall not affect or limit payments made
      by
      the Holding Company hereunder pursuant to sections 8(b), 11 or otherwise. The
      Holding Company agrees that, if this section 22(a) would limit payments by
      the
      Bank to the Officer pursuant to section 8(b) or otherwise, the Holding Company
      shall make such payments to the Officer.

    


    (b) Notwithstanding
      anything herein contained to the contrary, any payments to the Officer by the
      Bank, whether pursuant to this agreement or otherwise, are subject to and
      conditioned upon their compliance with section 18(k) of the Federal Deposit
      Insurance Act (“FDI Act”),
      12
      U.S.C. Sec. 1828(k), and any regulations promulgated thereunder.

    


    (c) Notwithstanding
      anything herein contained to the contrary, if the Officer is suspended from
      office and/or temporarily prohibited from participating in the conduct of the
      affairs of the Bank pursuant to a notice served under section 8
      (e) (3)
      or 8 (g) (1) of the FDI Act, 12 U.S.C. Sec. 1818 (e) (3) or 1818 (g) (1), the
      Bank’s obligations under this Agreement shall be suspended as of the date of
      Service of such notice, unless stayed by appropriate proceedings. If the charges
      in such notice are dismissed, the Bank, in its discretion, may (i) 

     

    
      
        
           

        

        
          13

          
            

          

        

        
           

        

      

    

     

    pay
      to
      the Officer all or part of the compensation withheld while the Bank’s
      obligations hereunder were suspended and (ii) reinstate, in whole or in part,
      any of the obligations which were suspended.

    


    (d) Notwithstanding
      anything herein contained to the contrary, 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) (4) or 8 (g) (1) of the FDI Act, 12
      U.S.C. sec. 1818 (e) (4) or (g) (1), all prospective obligations of the order,
      but vested rights and obligations of the Bank and the Officer shall not be
      effected.

    


    (e) Notwithstanding
      anything herein contained to the contrary, if the Bank is in default (within
      the
      meaning of section 3(x)(1) of the FDI Act, 12 U.S.C. Sec. 1813 (x) (1), all
      prospective obligations of the Bank under this Agreement shall terminate as
      of
      the date of default, but vested rights and obligations of the Bank and the
      Officer shall not be effected.

    


    (f) Notwithstanding
      anything herein contained to the contrary, all prospective obligations of the
      Bank hereunder shall be terminated, except to the extent that a continuation
      of
      this Agreement is necessary for the continued operation of the Bank: (i) by
      the
      Director of the Office of Thrift Supervision (“OTS”) or his designee or the
      Federal Deposit Insurance Corporation (“FDIC”), at the time the FDIC enters into
      an agreement to provide assistance to or on behalf of the Bank under the
      authority contained in section 13(c) of the FDI Act, 12 U.S.C. sec. 1823(c);
      (ii) by the Director of the OTS or his designee at the time such Director or
      designee approves a supervisory merger to resolve problems related to the
      operation of the Bank or when the Bank is determined by such Director to be
      in
      an unsafe or unsound condition. The vested rights and obligations of the parties
      shall not be affected.

    


    If
      and to
      the extent any of the foregoing provisions shall cease to be required by
      applicable law, rule or regulation, the same shall become inoperative as though
      eliminated by formal amendment of this Agreement.

    


    Section
      23. Guaranty.

    


    The
      Holding Company hereby irrevocably and unconditionally guarantees to the Officer
      the payment of all amounts, and the performance of all other obligations, due
      from the Bank in accordance with the terms of this Agreement as and when due
      without any requirement of presentment, demand of payment, protest or notice
      of
      dishonor or nonpayment. For purposes of this section 23,
      the
      application of sections 21(a), (c), (d), (e) or (f) to the Bank shall have
      no
      effect on the Holding Company’s obligations hereunder.

    
 

    
      
        
           

        

        
          14

          
            

          

        

        
           

        

      

    

    
 

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

    


     

                                                /s/
      CHRISTOPHER D.
      MAHER                        


                                                                            Christopher
      D.
      Maher

    


    


    ATTEST:              THE
      DIME
      SAVINGS of WILLIAMSBURGH

    


    By: 
      /s/ LANCE BENNETT

    Secretary

    [Seal]       By: 
      /s/ VINCENT F. PALAGIANO

                                        Name
      : Vincent F.
      Palagiano

                            Title
      : Chairman of the Board & CEO

    


    


    


    


    


    ATTEST:             DIME
      COMMUNITY BANCSHARES, INC.

    


    By: /s/
      LANCE BENNETT

         
      Secretary          By: 
      /s/ VINCENT F. PALAGIANO

    [Seal]                    Name
      : Vincent F. Palagiano

                            Title
      : Chairman of the Board & CEO

     

    
 

    
      
         

      

      
        15