exhibit10-7.htm


    
      
         


      

      
         


        
          

        

      

      
         


      

    


    


     

    AMENDED
AND RESTATED

    


    


    EMPLOYEE
RETENTION AGREEMENT

    


    


    


    


    by
and among

    


    


    


    


    THE
DIME SAVINGS BANK OF WILLIAMSBURGH,

    


    


    


    


    DIME
COMMUNITY BANCSHARES, INC.

    


    


    


    


    and

    


    


    


    TIMOTHY
B. KING / MICHAEL PUCELLA

    


    


    


    made and
entered into as of

    _________________,
2008


    
      
        
          


           

        

         


      

      
         


        
          

        

      

      
         


      

    


    AMENDED
AND RESTATED

    EMPLOYEE
RETENTION AGREEMENT

     

    This
AMENDED AND RESTATED
EMPLOYEE RETENTION
AGREEMENT (“Agreement”)
is made and entered into as of ________, 2008 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 Timothy B. King, an individual
residing at __________________ (“Officer”)

     

    W I T N E S S E T H:

     

    WHEREAS, the Officer and the
Bank are parties to an Employee Retention Agreement (“Prior Agreement”) made and
entered into as of June 26, 1999 (“Initial Effective Date”), pursuant to which
the Bank has agreed to provide certain payments to the Officer in the event that
his employment is terminated under certain circumstances as a result of a Change
of Control; and

     

    WHEREAS, the parties desire to
amend and restate the Prior Agreement for the purpose, among others, of
compliance with the applicable requirements of section 409A of the Internal
Revenue Code of 1986 (“the Code”); and

     

    WHEREAS, the Bank desires to
assure for itself the continued availability of the Officer’s services and the
ability of the Officer to perform such services with a minimum of personal
distraction in the event of a pending or threatened Change of Control,
and

     

    WHEREAS, the Officer is
willing to continue to serve 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 Initial Effective Date and shall remain
in effect during the term of this Agreement which shall be for a period of three
(3) years commencing on the Initial Effective Date, plus such extensions as are
provided pursuant to section 1(b); provided, however, that if
the term of this Agreement has not 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 per­iods, 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.

     

    
      	
               
      

            	
              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, em­ployee 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, including, without limi­tation, the Officer’s travel and
entertainment expenses, incurred in connection with the perfor­mance 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, each such reimbursement payment to be made promptly following receipt
of the itemized account and in any event not later than the last year in which
the expense was incurred.

     

    
      	
               
      

            	
              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.

     

    (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)
on his termination of employment, subject to section 24 :

     

    (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)           
a lump sum payment, in an amount equal to the pre­sent 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)           
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 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; provided,
however, that if payments are made under this section 8(b)(v) as a result of
this section deeming otherwise unvested amounts under such defined benefit plans
to be vested, the payments, if any, attributable to such deemed vesting shall be
paid in the same form, and paid at the same time, and in the same manner, as
benefits under the corresponding non-qualified plan;

     

    (vi)           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; provided,
however, that if payments are made under this section 8(b)(vi) as a
result of this section deeming otherwise unvested amounts under such defined
contribution plans to be vested, the payments, if any, attributable to such
deemed vesting shall be paid in the same form, and paid at the same time, and in
the same manner, as benefits under the corresponding non-qualified
plan;

     

    (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
..

     

    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 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 pro­grams 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)           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 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;

     

    (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.

            


    

     

    (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 deter­mined under the following formula:

     

    
      	
              X

            	
              =

            	
              E x
      P

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

            


    

    where

     

    
      	
               
      

            	
              E
      =

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

            


    

     

    
      	
               
      

            	
              P
      =

            	
              the
      amount with respect to which such excise tax is assessed, determined
      without regard to this section 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 appli­cable state and local laws for the taxable year in
      ques­tion; 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 Agree­ment, or otherwise,
and on which an excise tax under sec­tion 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 subse­quently determined to be different than the amount deter­mined
by the formula (X + P) x E, where X, P and E have the
meanings provided in section 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
ex­cise tax is final­ly 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. Any
payment pursuant to this Section 11(b) shall in any case be made no later than
the last day of the calendar year following the calendar year in which any
additional taxes for which the payment is to be made are remitted to the
Internal Revenue Service.

     

    (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.
Timothy B. King

    ___________

    ______________

     

    If to the
Bank:

     

    The Dime
Savings Bank of Williamsburgh

    209
Havemeyer Street

    Brooklyn,
New York 11211

    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 rea­sonable 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. Any payment or reimbursement to effect such
indemnification shall be made no later than the last day of the calendar year
following the calendar year in which the Officer incurs the expense or, if
later, within sixty (60) days after the settlement or resolution that gives rise
to the Officer’s right to reimbursement; provided, however, that the Officer
shall have submitted to the Bank documentation supporting such expenses at such
time and in such manner as the Bank may reasonably require.

     

    
      	
              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.

     

    
      	
              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 rep­resentations relating to the subject matter hereof
including the Employee Retention Agreement made and entered into as of June 26,
1996. No modifications of this Agreement shall be valid unless made in writing
and signed by the parties hereto; provided, however, that this
Agreement shall be subject to amendment in the future in such manner as the Bank
and the Holding Company shall reasonably deem necessary or appropriate to effect
compliance with section 409A of the Code and the regulations thereunder, and to
avoid the imposition of penalties and additional taxes under section 409A of the
Code, it being the express intent of the parties that any such amendment shall
not diminish the economic benefit of the Agreement to the Officer on a present
value basis.

     

    
      	
              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) 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.

     

    Section
24.Compliance with
Section 409A of the Code.

     

    The
Officer, the Bank and the Holding Company acknowledge that each of the payments
and benefits promised to the Officer under this Agreement must either comply
with the requirements of section 409A of the Code ("Section 409A") and the
regulations thereunder or qualify for an exception from compliance. To that end,
the Officer, the Bank and the Holding Company agree that:

     

    (a)           the
expense reimbursements described in section 7 and legal fee reimbursements
described in section 15 are intended to satisfy the requirements for a
"reimbursement plan" described in Treasury Regulation section
1.409A-3(i)(1)(iv)(A) and shall be administered to satisfy such
requirements;

     

    (b)           the
payment described in section 8(b)(i) is intended to be excepted from compliance
with Section 409A pursuant to Treasury Regulation section 1.409A-1(b)(3) as
payment made pursuant to the Bank’s customary payment timing
arrangement;

     

    (c)           the
benefits and payments described in section 8(b)(ii) are expected to comply with
or be excepted from compliance with Section 409A on their own
terms;

     

    (d)           the
welfare benefits provided in kind under section 8(b)(iii) are intended to be
excepted from compliance with Section 409A as welfare benefits pursuant to
Treasury Regulation section 1.409A-1(a)(5) and/or as benefits not includible in
gross income; and

     

    (e)           the
tax indemnity payment provided under section 11 is intended to satisfy the
requirements for a “tax gross-up payment” described in Treasury Regulation
section 1.409A-3(i)(1)(v).

     

    In the
case of a payment that is not excepted from compliance with Section 409A, and
that is not otherwise designated to be paid immediately upon a permissible
payment event within the meaning of Treasury Regulation section 1.409A-3(a), the
payment shall not be made prior to, and shall, if necessary, be deferred (with
interest at the annual rate of 6%, compounded monthly from the date of the
Officer’s termination of employment to the date of actual payment) to and paid
on the later of the date sixty (60) days after the Officer’s earliest separation
from service (within the meaning of Treasury Regulation section 1.409A-1(h))
and, if the Officer is a specified employee (within the meaning of Treasury
Regulation section 1.409A-1(i)) on the date of his separation from service, the
first day of the seventh month following the Officer’s separation from service.
Each amount payable under this plan that is required to be deferred beyond the
Officer’s separation from service, shall be deposited on the date on which, but
for such deferral, the Holding Company would have paid such amount to the
Officer, in a grantor trust which meets the requirements of Revenue Procedure
92-65 (as amended or superseded from time to time), the trustee of which shall
be a financial institution selected by the Holding Company with the approval of
the Officer (which approval shall not be unreasonably withheld or delayed),
pursuant to a trust agreement the terms of which are approved by the Officer
(which approval shall not be unreasonably withheld or delayed) (the “Rabbi
Trust”), and payments made shall include earnings on the investments made with
the assets of the Rabbi Trust, which investments shall consist of short-term
investment grade fixed income securities or units of interest in mutual funds or
other pooled investment vehicles designed to invest primarily in such
securities. Furthermore, this Agreement shall be construed and administered in
such manner as shall be necessary to effect compliance with Section
409A.

     

    
      	
              Section
    25.

            	
              Compliance with the Emergency
      Economic Stabilization Act of
2008.

            


    

     

    In the
event the Holding Company issues any debt or equity to the United States
Treasury ("UST") pursuant to the Capital Purchase Program (the "CPP")
implemented under the Emergency Economic Stabilization Act of 2008 ("EESA"), the
following provisions shall take precedence over any contrary provisions of this
Agreement or any other compensation or benefit plan, program, agreement or
arrangement in which the Officer participates:

     

    (a)           The
Officer shall repay to the Holding Company any bonus or incentive compensation
paid to the Officer while (i) the Officer is a senior executive officer (within
the meaning of 31 C.F.R. Part 30) ("Senior Executive Officer") and (ii) the UST
holds any debt or equity interest in the Holding Company acquired under the CPP
(such period, the "CPP Compliance Period"), if and to the extent that such bonus
or incentive compensation was paid on the basis of a statement of earnings,
gains, or other criteria (each, a "Performance Criterion," and in the aggregate,
"Performance Criteria") that are later proven to be materially
inaccurate.  A Performance Criterion shall be proven to be materially
inaccurate if so determined by a court of competent jurisdiction or in the
written opinion of an independent attorney or firm of certified public
accountants selected by the Holding Company and approved by the Officer (which
approval shall not be unreasonably withheld or delayed), which determination
shall both state the accurate Performance Criterion and that the difference
between the accurate Performance Criterion and the Performance Criterion on
which the payment was based is material (a "Determination").  Upon
receipt of a Determination, the Holding Company may supply to the Officer a copy
of the Determination, a computation of the bonus or other incentive compensation
that would have been payable on the basis of the accurate Performance Criterion
set forth in the Determination (the "Determination Amount") and a written demand
for repayment of the amount (if any) by which the bonus or incentive
compensation actually paid exceeded the Determination Amount.

     

    (b)           (i)           If
the Officer's employment terminates in an “applicable severance from employment”
(within the meaning of 31 C.F.R. Part 30) while (A) the Officer is a Senior
Executive Officer, and (B) the UST holds a debt or equity interest in the
Holding Company issued under the CPP, then payments to the Officer that are
contingent on such applicable severance from employment and designated to be
paid during the CPP Compliance Period shall be limited, if necessary, to the
maximum amount which may be paid without causing any amount paid to be an
"excess parachute payment" within the meaning of section 280G(b)(1) of the Code,
as modified by section 280G(e) of the Code, referred to as a "golden parachute
payment" under 31 C.F.R. Part 30 (the "Maximum Payment Amount").  Any
reduction in payments required to achieve such limit shall be applied to all
payments otherwise due hereunder in the reverse chronological order of their
payment dates, and where multiple payments are due on the same date, the
reduction shall be apportioned ratably among the affected
payments.  The required reduction (if any) shall be determined in
writing by an independent attorney or firm of certified public accountants
selected by the Holding Company and approved by the Officer (which approval
shall not be unreasonably withheld or delayed).

     

    (ii)           To
the extent not prohibited by law, the aggregate amount by which payments
designated to be paid during the CPP Compliance Period are reduced pursuant to
section 25(b)(i) (the "Unpaid Amount") shall be delayed to and shall be paid on
the first business day following the last day of the CPP Compliance
Period.  Pending payment, the Unpaid Amount shall be deposited in a
Rabbi Trust.  Payment of the Unpaid Amount shall include any
investment earnings on the assets of the Rabbi Trust attributable to the Unpaid
Amount.

     

    This
section 25 shall be operated, administered and construed to comply with section
111(b) of EESA as implemented by guidance or regulation thereunder that has been
issued and is in effect as of the closing date of the agreement, if any, by and
between the UST and the Holding Company, under which the UST acquires equity or
debt securities of the Holding Company under the CPP (such date, if any, the
"Closing Date," and such implementation, the "Relevant
Implementation").  If after the Closing Date the clawback requirement
of section 25(a) shall not be required by the Relevant Implementation of section
111(b) of EESA, such requirement shall have no further effect.  If
after the Closing Date the limitation on golden parachute payments under section
25(b)(i) shall not be required by the Relevant Implementation of section 111(b)
of EESA, such limitation shall have no further effect and any Unpaid Amount
delayed under section 25(b)(ii) shall be paid on the earliest date on which the
Holding Company reasonably anticipates that such amount may be paid without
violating such limitation.

    


    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.

     

    _______________________________________

    TIMOTHY
B. KING / MICHAEL PUCELLA

    


    


    
      	
              ATTEST:

            	
              THE
      DIME SAVINGS BANK of WILLIAMSBURGH

            


    

     

    By:
________________________

    Secretary

    [Seal]                                                                           By:
___________________________________

    Name : Vincent F.
Palagiano

    Title : Chairman of the Board &
CEO

     

    ATTEST:                                                                           DIME
COMMUNITY BANCSHARES, INC.

     

    By:
________________________

    Secretary                                                            By:
___________________________________

    [Seal]                                                                                Name : Vincent F.
Palagiano

    Title : Chairman of the Board &
CEO


    
      
        
           

        

         


      

      
         


        
          

        

      

      
         


      

    


    STATE OF
NEW YORK   )

    :ss.:

    COUNTY OF
KINGS     )

    


    On this ____day of ______, 2008 before
me personally came Timothy B. King, to me known, and known to me to be the
individual described in the foregoing instrument, who, being by me duly sworn,
did depose and say that he resides at the address set forth in said instrument,
and that he signed his name to the foregoing instrument.

     

    


    Notary Public

     

    STATE OF
NEW YORK   )

    :ss.:

    COUNTY OF
KINGS     )

    


    On this___ day of ______, 2008 before
me personally came Vincent F. Palagiano to me known, who, being by me duly
sworn, did depose and say that he resides at 44 Direnzo Court, Staten Island,
N.Y., that he is a member of the Board of Directors of THE DIME SAVINGS BANK OF
WILLIAMSBURGH, the savings bank described in and which executed the foregoing
instrument; that he knows the seal of said mutual savings bank; that the seal
affixed to said instrument is such seal; that it was so affixed by authority of
the Board of Directors of said savings bank; and that he signed his name thereto
by like authority.

     

    


    Notary Public

     

    STATE OF
NEW YORK   )

    :ss.:

    COUNTY OF
KINGS     )

    


    On this ____day of _______, 2008 before
me personally came Vincent F. Palagiano, to me known, who, being by me duly
sworn, did depose and say that he resides at 44 Direnzo Court, Staten Island, N.
Y., that he is a member of the Board of Directors of DIME COMMUNITY BANCSHARES,
INC., the corporation described in and which executed the foregoing instrument;
that he knows the seal of said corporation; that the seal affixed to said
instrument is such seal; that it was so affixed by order of the Board of
Directors of said corporation; and that he signed his name thereto by like
order.

     

    


    Notary Public