Document:

exhibit10-5.htm

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    AMENDED
AND RESTATED EMPLOYMENT AGREEMENT

    

    This AMENDED AND RESTATED EMPLOYMENT
AGREEMENT (“Agreement”) is made and entered into as of ____________, 2008, by
and between Dime Community Bancshares, Inc., a savings and loan holding company
organized and operating under the laws of the State of Delaware and having an
office at 209 Havemeyer Street, Brooklyn, New York 11211 (“Company”) and Michael
P. Devine ("Mr. Devine").

    

    

    W I T N E
S S E T H :

    

    WHEREAS, Mr. Devine and the Company are
parties to an Employment Agreement made and entered into as of June 26, 1996
(the “Initial Effective Date”) pursuant to which Mr. Devine serves the Company
in the capacity of President and Chief Operating Officer of the Company and its
wholly owned subsidiary, The Dime Savings Bank of Williamsburgh ( “Bank “);
and

    

    WHEREAS, such Agreement was amended as
of January 1, 2003 (the “Prior Agreement”); 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 Company desires to assure
for itself the continued availability of Mr. Devine’s services and the ability
of Mr. Devine to perform such services with a minimum of personal distraction in
the event of a pending or threatened Change in Control (as hereinafter defined);
and

    

    WHEREAS, Mr. Devine is willing to
continue to serve the Company on the terms and conditions hereinafter set
forth;

    

    NOW, THEREFORE, in consideration of the
premises and the mutual covenants and obligations hereinafter set forth, the
Company and Mr. Devine hereby agree as follows:

    

    1.           Representations
and Warranties of the Parties.

    

    (a)           The
Company hereby represents and warrants to Mr. Devine that:

    

    (i)           it
has all requisite power and authority to execute, enter into and deliver this
Agreement and to perform each and every one of its obligations hereunder;
and

    

    (ii)           the
execution, delivery and performance of this Agreement have been duly authorized
by all requisite corporate action on the part of the Company; and

    

    (iii)           neither
the execution or delivery of this Agreement, nor the performance of or
compliance with any of the terms and conditions hereof, is prevented or in any
way limited by (A) any agreement or instrument to which the Company is a party
or by which it is bound, or (B) any provision of law, including, without
limitation, any statute, rule or regulation or any order of any court or
administrative agency, applicable to the Company or its business.

    

    (b)           Mr.
Devine hereby represents and warrants to the Company that:

    

    (i)           he
has all requisite power and authority to execute, enter into and deliver this
Agreement and to perform each and every one of his obligations hereunder;
and

    

    (ii)           neither
the execution or delivery of this Agreement, nor the performance of or
compliance with any of the terms and conditions hereof, is prevented or in any
way limited by (A) any agreement or instrument to which he is a party or by
which he is bound, or (B) any provision of law, including, without limitation,
any statute, rule or regulation or any order of any court or administrative
agency, applicable to him.

    

    2.           Employment.

    

    The Company hereby continues the
employment of Mr. Devine, and Mr. Devine hereby accepts such continued
employment, during the period and upon the terms and conditions set forth in
this Agreement.

    

    3.           Employment
Period.

    

    (a)           The
terms and conditions of this Agreement shall be and remain in effect during the
period of employment established under this section 3 (“Employment
Period”).  The Employment Period shall be for an initial term of three
years beginning on the Initial Effective Date and ending on the third
anniversary date of the Initial Effective Date, plus such extensions, if any, as
are provided pursuant to section 3(b).

    

    (b)           Except
as provided in section 3(c), beginning on the Initial Effective Date, the
Employment Period shall automatically be extended for one (1) additional day
each day, unless either the Company or Mr. Devine elects not to extend the
Agreement further by giving written notice to the other party, in which case the
Employment Period shall end on the third anniversary of the date on which such
written notice is given.  Upon termination of Mr. Devine’s employment
with the Company for any reason whatsoever, any daily extensions provided
pursuant to this section 3(b), if not therefore discontinued, shall
automatically cease.

    

    (c)           If,
prior to the date on which the Employment Period would end pursuant to section
3(a) or (b) of this Agreement, a Change in Control (as defined in section 13 of
this Agreement) occurs, then the Employment Period shall be extended through and
including the second anniversary of the earliest date after the effective date
of such Change in Control on which either the Company or Mr. Devine elects, by
written notice pursuant to section 3(d) of this Agreement to the non-electing
party, to discontinue the Employment Period; provided, however, that this
section shall not apply in the event that, prior to the Change in Control (as
defined in section 13 of this Agreement), Mr. Devine has provided written notice
to the Company of his intent to discontinue the Employment Period.

    

    (d)           The
Company or Mr. Devine may, at any time by written notice given to the other,
elect to discontinue the daily extension of the Employment
Period.  Any such notice given by the Company shall be accompanied by
a certified copy of a resolution, adopted by the affirmative vote of a majority
of the entire membership of the Board at a meeting of the Board duly called and
held, authorizing the giving of such notice.

    

    (e)           Notwithstanding
anything herein contained to the contrary:  (i) Mr. Devine’s
employment with the Company may be terminated during the Employment Period, in
accordance with the terms and conditions of this Agreement; and (ii) nothing in
this Agreement shall mandate or prohibit a continuation of Mr. Devine’s
employment following the expiration of the Employment Period upon such terms and
conditions as the Company and Mr. Devine may mutually agree upon.

    

    (f)           For
all purposes of this Agreement, any reference to the “Remaining Unexpired
Employment Period” as of any specified date shall mean (i) prior to the
occurrence of a Change in Control (as hereinafter defined) the period commencing
on the date specified and ending on the later of the third anniversary of the
Initial Effective Date, the third anniversary of any earlier date on which
either the Company or Mr. Devine has elected to discontinue the daily extensions
of the Employment Period, or the third anniversary of Mr. Devine’s termination
of employment for any reason; and (ii) following a Change in Control (as
hereinafter defined) a period commencing on the date specified and ending on the
later of the second anniversary of the effective date of the Change in Control,
the second anniversary of any earlier date following the occurrence of the
Change in Control on which either Mr. Devine or the Company has elected to
discontinue the daily extensions of the Employment Period, or the second
anniversary of Mr. Devine’s termination of employment for any reason
whatsoever.

    

    4.           Duties.

    

    During the Employment Period, Mr.
Devine shall:

    

    (a)           except
to the extent allowed under section 7 of this Agreement, devote his full
business time and attention to the business and affairs of the Company and use
his best efforts to advance the Company’s interests;

    

    (b)           serve
as President and Chief Operating Officer if duly appointed and/or elected to
serve in such position; and

    

    (c)           have
such functions, duties and responsibilities not inconsistent with his title and
office as may be assigned to him by or under the authority of the Board of
Directors of the Company (“Board”), in accordance with organization Certificate,
By-laws, Applicable Laws, Statutes and Regulations, custom and practice of the
Company as in effect on the date first above written. Mr. Devine shall have such
authority as is necessary or appropriate to carry out his assigned duties. Mr.
Devine shall report to and be subject to direction and supervision by the
Board.

    

    (d)           none
of the functions, duties and responsibilities to be performed by Mr. Devine
pursuant to this Agreement shall be deemed to include those functions, duties
and responsibilities performed by Mr. Devine in his capacity as director of the
Company.

    

    5.           Compensation
-- Salary and Bonus.

    

    In consideration for services rendered
by Mr. Devine under this Agreement, the Company shall pay to Mr. Devine a salary
at an annual rate equal to:

    

    (a)           during
the period beginning on January 1, 2009 and ending on December 31, 2009, no less
than $________;

    

    (b)           during
each calendar year that begins after December 31, 2009, such amount as the Board
may, in its discretion, determine, but in no event less than the rate in effect
on December 31, 2009; or

    

    (c)           for
each calendar year that begins on or after a Change in Control, the product of
Mr. Devine’s annual rate of salary in effect immediately prior to such calendar
year, multiplied by the greatest of:

    

    (i)           1.06;

    

    (ii)           the
quotient of (A) the U.S. City Average All Items Consumer Price Index for All
Urban Consumers (or, if such index shall cease to be published, such other
measure of general consumer price levels as the Board may, in good faith,
prescribe) for October of the immediately preceding calendar year, divided by
(B) the U.S. City Average All Items Consumer Price Index for All Urban Consumers
(or, if such index shall cease to be published, such other measure of general
consumer price levels as the Board may, in good faith, prescribe) for October of
the second preceding calendar year; and

    

    (iii)           the
quotient of (A) the average annual rate of salary, determined as of the first
day of such calendar year, of the officers of the Company (other than Mr.
Devine) who are assistant vice presidents or more senior officers, divided by
(B) the average annual rate of salary, determined as of the first day of the
immediately preceding calendar year, of the officers of the Company (other than
Mr. Devine) who are assistant vice presidents or more senior
officers;

    

    The
salary payable under this section 5 shall be paid in approximately equal
installments in accordance with the Company’s customary payroll
practices.  Nothing in this section 5 shall be construed as
prohibiting the payment to Mr. Devine of a salary in excess of that prescribed
under this section 5 or of additional cash or non-cash compensation in a form
other than salary, to the extent that such payment is duly authorized by or
under the authority of the Board. No portion of the compensation paid to Mr.
Devine pursuant to this Agreement shall be deemed to be compensation received by
Mr. Devine in his capacity as director of the Company.

    

    6.           Employee
Benefit Plans and Programs; Other Compensation.

    

    Except as otherwise provided in this
Agreement, Mr. Devine shall be treated as an employee of the Company and be
entitled to participate in and receive benefits under the Company’s Retirement
Plan, Incentive Savings Plan, group life and health (including medical and major
medical) and disability insurance plans, and such other employee benefit plans
and programs, including but not limited to any long-term or short-term incentive
compensation plans or programs (whether or not employee benefit plans or
programs), as the Company may maintain from time to time, in accordance with the
terms and conditions of such employee benefit plans and programs and
compensation plans and programs and with the Company’s customary
practices.  Following a Change in Control, all such benefits to Mr.
Devine shall be continued on terms and conditions substantially identical to,
and in no event less favorable than, those in effect prior to the Change in
Control.

    

    7.           Board
Memberships and Personal Activities.

    

    (a)           Mr.
Devine may serve as a member of the board of directors of such business,
community and charitable organizations as he may disclose to the Board from time
to time, 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.

    

    (b)           Mr.
Devine may also serve as an officer or director of the Bank on such terms and
conditions as the Company and the Bank may mutually agree upon, and such service
shall not be deemed to materially interfere with Mr. Devine’s performance of his
duties hereunder or otherwise result in a material breach of this
Agreement.  If Mr. Devine is discharged or suspended, or is subject to
any regulatory prohibition or restriction with respect to participation in the
affairs of the Bank, he shall (subject to the Company’s powers of termination
hereunder) continue to perform services for the Company in accordance with this
Agreement but shall not directly or indirectly provide services to or
participate in the affairs of the Bank in a manner inconsistent with the terms
of such discharge or suspension or any applicable regulatory order.

    

    

    8.           Working
Facilities and Expenses.

    

    Mr. Devine’s principal place of
employment shall be at the Company’s executive offices at the address first
above written, or at such other location in the New York metropolitan area as
determined by the Board.  The Company shall provide Mr. Devine, at his
principal place of employment, with a private office, stenographic services and
other support services and facilities suitable to his position with the Company
and necessary or appropriate in connection with the performance of his assigned
duties under this Agreement.  The Company shall provide Mr. Devine
with an automobile  suitable to his position with the Company in
accordance with its prior practices, and such automobile shall be used by Mr.
Devine in carrying out his duties under this Agreement, including commuting
between his residence and his principal place of employment.  The
Company shall (i) reimburse Mr. Devine for the cost of maintenance and servicing
such automobile and, for instance, gasoline and oil for such automobile; (ii)
reimburse Mr. Devine for his ordinary and necessary business expenses, incurred
in the performance of his duties under this Agreement (including but not limited
to travel and entertainment expenses); and (iii) reimburse Mr. Devine for fees
for memberships in such clubs and organizations as Mr. Devine and the Company
and such other expenses as Mr. Devine and the Company shall mutually agree are
necessary and appropriate for business purposes, upon presentation to the
Company of an itemized account of such expenses in such form as the Company 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 day of the year following the year in which the expense was
incurred.  Mr. Devine shall be entitled to no less than four (4) weeks
of paid vacation during each year in the Employment Period.  Mr.
Devine shall be responsible for the payment of any taxes on account of his
personal use of the automobile provided by the Company and on account of any
other benefit provided herein.

    

    9.           Termination
Giving Rise to Severance Benefits.

    

    (a)           In
the event that Mr. Devine’s employment with the Company shall terminate during
the Employment Period other than on account of:

    

    (i)           a
Termination for Cause (within the meaning of section 12(a) of this
Agreement);

    

    (ii)           a
voluntary resignation by Mr. Devine other than a Resignation for Good Reason
(within the meaning of section 12(b) of this Agreement);

    

    (iii)           a
termination on account of Mr. Devine’s death; or

    

    (iv)           a
termination after both of the following conditions exist: (A) Mr. Devine has
been absent from the full-time service of the Company on account of his
Disability (as defined in section 11(b) of this Agreement) for at least six (6)
consecutive months; and (B) Mr. Devine shall have failed to return to work in
the full-time service of the Company within thirty (30) days after written
notice requesting such return is given to Mr. Devine by the
Company;

    

    then the
Company shall provide to Mr. Devine the benefits and pay to Mr. Devine the
amounts provided under section 9(b) of this Agreement.

    

    (b)           In
the event that Mr. Devine’s employment with the Company shall terminate under
circumstances described in section 9(a) of this Agreement, the following
benefits and amounts shall be paid or provided to Mr. Devine (or, in the event
of his death, to his estate) , in accordance with section 30, on his termination
of employment:

    

    (i)           his
earned but unpaid salary as of the date of the termination of his employment
with the Company, payable when due but in no event later than thirty (30) days
following his termination of employment with the Company;

    

    (ii)           (A)
the benefits, if any, to which Mr. Devine and his family and dependents are
entitled as a former employee, or family or dependents of a former employee,
under the employee benefit plans and programs and compensation plans and
programs maintained for the benefit of the Company’s officers and employees, in
accordance with the terms of such plans and programs in effect on the date of
his termination of employment, or if his termination of employment occurs after
a Change in Control, on the date of his termination of employment or on the date
of such Change in Control, whichever results in more favorable benefits as
determined by Mr. Devine, where credit is given for three additional years of
service and age in determining eligibility and benefits for any plan and program
where age and service are relevant factors, and (B) payment for all unused
vacation days and floating holidays in the year in which his employment is
terminated, at his highest annual rate of salary for such year;

    

    (iii)           continued
group life, health (including hospitalization, medical and major medical,
dental, accident and long-term disability insurance benefits), in addition to
that provided pursuant to section 9(b)(ii) of this Agreement and after taking
into account the coverage provided by any subsequent employer, if and to the
extent necessary to provide Mr. Devine and his family and dependents for a
period of three years following termination of employment, coverage identical to
and in any event no less favorable than the coverage to which they 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 in
Control, on the date of his termination of employment or during the one-year
period ending on the date of such Change in Control, whichever results in more
favorable benefits as determined by Mr. Devine) if he had continued working for
the Company during the Remaining Unexpired Employment Period at the highest
annual rate of compensation (assuming, if a Change in Control has occurred, that
the annual increases under section 5(c) would apply) under the
Agreement;

    

    (iv)           a
lump sum payment in an amount equal to the present value of the salary and the
bonus that Mr. Devine would have earned if he had worked for the Company during
the Remaining Unexpired Employment Period at the highest annual rate of salary
(assuming, if a Change in Control has occurred, that the annual increases under
section 5(c) would apply) and the highest bonus as a percentage of the rate of
salary provided for under this Agreement, where such present value is to be
determined using a discount rate of six percent (6%) per annum, compounded, in
the case of salary, with the frequency corresponding to the Company’s regular
payroll periods with respect to its officers, and, in the case of bonus,
annually;

    

    (v)           a
lump sum payment in an amount equal to the excess, if any, of: (A) the present
value of the benefits to which he would be entitled under any defined benefit
plans maintained by, or covering employees of, the Company (including any
“excess benefit plan” within the meaning of section 3(36) of the Employee
Retirement Income Security Act of 1974, as amended (“ERISA”), or other special
or supplemental plan) as in effect on the date of his termination, if he had
worked for the Company during the Remaining Unexpired Employment Period at the
highest annual rate of compensation (assuming, if a Change in Control has
occurred, that the annual increases under section 5(c) would apply) under the
Agreement and been fully vested in such plan or plans and had continued working
for the Company during the Remaining Unexpired Employment 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 Employment 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 9(b)(i), (iv) and (vii), over (B) the
present value of the benefits to which he is actually entitled under any such
plans maintained by, or covering employees of, the Company as of the date of his
termination where  such present values are to be determined using a
discount rate of six percent (6%) per annum, compounded monthly, and the
mortality tables prescribed under section 72 of the Internal Revenue Code of
1986 (“Code”); provided, however, that if payments are made under this section
9(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 excess, if any, of (A) the present
value of the benefits attributable to the Company’s contribution to which he
would be entitled under any defined contribution plans maintained by, or
covering employees of, the Company (including any “excess benefit plan” within
the meaning of section 3(36) of ERISA, or other special or supplemental plan) as
in effect on the date of his termination, if he had worked for the Company
during the Remaining Unexpired Employment Period at the highest annual rate of
compensation (assuming, if a Change in Control has occurred, that the annual
increases under section 5(c) would apply) under the Agreement, and made the
maximum amount of employee contributions, if any, required or permitted under
such plan or plans, and been eligible for the highest rate in matching
contributions under such plan or plans during the Remaining Unexpired Employment
Period which is prior to Mr. Devine’s termination of employment with the
Company, and been fully vested in such plan or plans, over (B) the present value
of the benefits attributable to the Company’s contributions to which he is
actually entitled under such plans as of the date of his termination of
employment with the Company, where such present values are to be determined
using a discount rate of six percent (6%) per annum, compounded with the
frequency corresponding to the Company’s regular payroll periods with respect to
its officers; provided, however, that if payments are made under this section
9(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 Mr. Devine under any incentive
compensation plan maintained by, or covering employees of, the Company (other
than bonus payments to which section 9(b)(iv) of this Agreement is applicable)
if he had continued working for the Company during the Remaining Unexpired
Employment Period and had earned an incentive award in each calendar year that
ends during the Remaining Unexpired Employment Period in an amount equal to the
product of (A) the maximum percentage rate of compensation at which an award was
ever available to Mr. Devine under such incentive compensation plan, multiplied
by (B) the compensation that would have been paid to Mr. Devine during each
calendar year at the highest annual rate of compensation (assuming, if a Change
in Control has occurred, that the annual increases under section 5(c) would
apply) under the Agreement, such payments to be made at the same time and in the
same manner as payments are made to other officers of the Company pursuant to
the terms of such incentive compensation plan; provided, however, that payments
under this section 9(b)(vii) shall not be made to Mr. Devine for any year on
account of which no payments are made to any of the Company’s officers under any
such incentive compensation plan; and

    

    (viii)                      the
benefits to which Mr. Devine is entitled under the Company’s Supplemental
Executive Retirement Plan (or other excess benefits plan with the meaning of
section 3(36) of ERISA or other special or supplemental plan) shall be paid to
him in a lump sum, where such lump sum is computed using the mortality tables
under the Company’s tax-qualified pension plan and a discount rate of 6% per
annum. If the amount may be increased by a subsequent Change in Control, any
additional payment shall be made at the time and in the form provided under the
relevant plan, or, if no such time or form is provided, upon the first of the
following events to occur on or after the date of such Change in Control: a
change in control event (within the meaning of Treasury Regulation section
1.409A-3(i)(5)) with respect to Mr. Devine, Mr. Devine’s separation from service
(within the meaning of section 1.409A-1(h)), Mr. Devine’s death or Mr. Devine’s
disability (within the meaning of Treasury Regulation section
1.409A-3(i)(4)).  From the date of such Change of Control until the
date of payment, any additional payment so deferred shall be held in trust for
Mr. Devine, the terms of which trust shall be those set forth in section
30.

    

    (c)           Mr.
Devine shall not be required to mitigate the amount of any payment provided for
in this section 9 by seeking other employment or otherwise, nor shall the amount
of any payment or benefit provided for in this section 9 be reduced by any
compensation earned by Mr. Devine as the result of employment by another
employer, by retirement benefits, by offset against any amount claimed to be
owed by Mr. Devine to the Company, or otherwise except as specifically provided
in section 9(b) (iii) of this Agreement or except as provided in section 28 to
avoid duplication of payments.  The Company and Mr. Devine hereby
stipulate that the damages which may be incurred by Mr. Devine as a consequence
of any such termination of employment are not capable of accurate measurement as
of the date first above written and that the benefits and payments provided for
in this Agreement 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.

    

    10.           Termination
Without Severance Benefits.

    

    In the event that Mr. Devine’s
employment with the Company shall terminate during the Employment Period on
account of:

    

    (a)           Termination
for Cause (within the meaning of section 12(a) of this Agreement);

    

    (b)           voluntary
resignation by Mr. Devine other than a Resignation for Good Reason (within the
meaning of section 12(b) of this Agreement); or

    

    (c)           Mr.
Devine’s death;

    

    then the
Company shall have no further obligations under this Agreement, other than the
payment to Mr. Devine (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 he is entitled as a
former employee under the Company’s employee benefit plans and programs and
compensation plans and programs and payment for all unused vacation days and
floating holidays in the year in which his employment is terminated, at his
highest annual salary for such year.

    

    11.           Death
and Disability.

    

    (a)           Death.  If
Mr. Devine’s employment is terminated by reason of Mr. Devine’s death during the
Employment Period, this Agreement shall terminate without further obligations to
Mr. Devine’s legal representatives under this Agreement, other than for payment
of amounts and provision of benefits under sections 9(b) (i) and (ii); provided,
however, that if Mr. Devine dies while in the employment of the Company, his
designated beneficiary(ies) shall receive a death benefit, payable through life
insurance or otherwise, which is the equivalent on a net after-tax basis of the
death benefit payable under a term life insurance policy, with a stated death
benefit of three times Mr. Devine’s then Annual Base Salary.

    

    (b)           Disability.  If
Mr. Devine’s employment is terminated by reason of Mr. Devine’s Disability as
defined in section 11(c) during the Employment Period, this Agreement shall
terminate without further obligations to Mr. Devine, other than for payment of
amounts and provision of benefits under section 9(b) (i) and (ii); provided,
however, that in the event of Mr. Devine’s Disability while in the employment of
the Company, the Company will pay to him, in accordance with section 30, a lump
sum amount equal to three times his then annual base salary.

    

    (c)           For
purposes of this Agreement, “Disability” shall be defined in accordance with the
terms of the Company’s long term disability policy.

    

    (d)           Payments
under this section 11 shall be made upon Mr. Devine’s death or termination due
to Disability.

    

    12.           Definition
of Termination for Cause and Resignation for Good Reason.

    

    (a)           Mr.
Devine’s termination of employment with the Company shall be deemed a
“Termination for Cause” if such termination occurs upon:

    

    (i)           Mr.
Devine’s willful and continued failure to substantially perform his duties with
the Company (other than any failure resulting from incapacity due to physical or
mental illness or any actual or anticipated failure following notice by Mr.
Devine of an intended Resignation for Good Reason) after a written demand for
substantial performance is delivered to him by the Board, which demand
specifically identifies the manner in which the Board believes Mr. Devine has
not substantially performed his duties, and the failure to cure such breach
within sixty (60) days following written notice thereof from the Company;
or

    

    (ii) the intentional and willful
engaging in dishonest conduct in connection with his performance of services for
the Company resulting in his conviction of or plea of guilty or nolo contendere
to a felony, fraud, personal dishonesty, incompetence, willful misconduct,
breach of fiduciary duty involving personal profit, willful violation of any
law, rule or regulation (other than traffic violations or similar offenses), or
final cease-and-desist order.

    

    No act,
or failure to act, on Mr. Devine’s part shall be deemed willful unless done, or
omitted to be done, not in good faith and without reasonable belief that such
action or omission was in the best interest of the Company. Any act, or failure
to act, based upon authority given pursuant to a resolution duly adopted by the
Board or based upon the written advice of counsel for the Company shall be
conclusively presumed to be done, or omitted to be done, by Mr. Devine in good
faith and in the best interests of the Company.  Notwithstanding the
foregoing, no termination of Mr. Devine’s employment shall be a Termination for
Cause unless there shall have been delivered to Mr. Devine a copy of a
resolution duly adopted by the affirmative vote of a majority of the Board of
Directors (or, following a Change in Control, an affirmative vote of
three-quarters of the Board of Directors) at a meeting of the Board called and
held for such purpose (after reasonable notice to Mr. Devine and an opportunity
for Mr. Devine, together with his counsel, to be heard before the Board) finding
that in good faith opinion of the Board circumstances described in section 12(a)
(i) or (ii) exist and specifying the particulars thereof in detail.

    

    (b)           Mr.
Devine’s termination of employment with the Company shall be deemed a
Resignation for Good Reason if such termination occurs following any one or more
of the following events:

    

    (i)           (A)
the assignment to Mr. Devine of any duties inconsistent with Mr. Devine’s status
as Chairman of the Board and Chief Executive Officer of the Company or (B) a
substantial adverse alteration in the nature or status of Mr. Devine’s
responsibilities from those in effect immediately prior to the
alteration;

    

    (ii)           a
reduction by the Company in Mr. Devine’s annual base salary as in effect on the
date first above written or as the same may be increased from time to time,
unless such reduction was mandated at the initiation of any regulatory authority
having jurisdiction over the Company;

    

    (iii)           the
relocation of the Company’s principal executive offices to a location outside
the New York metropolitan area or the Company’s requiring Mr. Devine to be based
anywhere other than the Company’s principal executive offices except for
required travel on the Company’s business to an extent substantially consistent
with Mr. Devine’s business travel obligations at the date first above
written;

    

    (iv)           the
failure by the Company, without Mr. Devine’s consent, to pay to Mr. Devine,
within seven (7) days of the date when due, (A) any portion of his compensation,
or (B) any portion of an installment of deferred compensation under any deferred
compensation program of the Company;

    

    (v)           the
failure by the Company to continue in effect any compensation plan in which Mr.
Devine participates on or after January 1, 2003 which is material to his total
compensation, including but not limited to the Retirement Plan and the Company’s
Incentive Savings Plan or any substitute plans unless an equitable arrangement
(embodied in an ongoing substitute or alternative plan) has been made with
respect to such plan, or the failure by the Company to continue his
participation therein (or in such substitute or alternative plan) on a basis not
materially less favorable, both in terms of the amount of benefits provided and
the level of his participation relative to other participants, unless such
failure is the result of action mandated at the initiation of any regulatory
authority having jurisdiction over the Company;

    

    (vi)           the
failure by the Company to continue to provide Mr. Devine with benefits
substantially similar to those enjoyed by Mr. Devine as of January 1, 2003 under
the Retirement Plan and the Company’s Incentive Savings Plan or under any of the
Company’s life, health (including hospitalization, medical and major medical),
dental, accident, and long-term disability insurance benefits, in which Mr.
Devine is participating, or the taking of any action by the Company which would
directly or indirectly materially reduce any of such benefits or deprive Mr.
Devine of the number of paid vacation days to which he is entitled, on the basis
of years of service with the Company, rank or otherwise, in accordance with the
Company’s normal vacation policy, unless such failure is the result of action
mandated at the initiation of any regulatory authority having jurisdiction over
the Company;

    

    (vii)           the
failure of the Company to obtain a satisfactory agreement from any successor to
assume and agree to perform this Agreement, as contemplated in section 15(a) of
this Agreement;

    

    (viii)                      any
purported termination of employment by the Company which is not effected
pursuant the provisions of section 12(a) regarding Termination for Cause or on
account of Disability;

    

    (ix)           a
material breach of this Agreement by the Company, which the Company fails to
cure within thirty (30) days following written notice thereof from Mr.
Devine;

    (x)           a
change in the position to which Mr. Devine reports.

    

    13.           Definition
of Change in Control; Payment in the Event of a Change in Control.

    

    (a)           For
purposes of this Agreement, a Change in Control of the Company shall
mean:

    

    (i)           the
occurrence of any event upon which any “person” (as such term is used in
sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended
(“Exchange Act”)), other than (A) a trustee or other fiduciary holding
securities under an employee benefit plan maintained for the benefit of
employees of the Company; (B) a corporation owned, directly or indirectly, by
the stockholders of the Company in substantially the same proportions as their
ownership of stock of the Company; or (C) Mr. Devine, or any group otherwise
constituting a person in which Mr. Devine is a member, becomes the “beneficial
owner” (as defined in Rule 13d-3 promulgated under the Exchange Act), directly
or indirectly, of securities issued by the Company representing 25% or more of
the combined voting power of all of the Company’s then outstanding securities;
or

    

    (ii)           the
occurrence of any event upon which the individuals who on the Initial Effective
Date are members of the Board, together with individuals (other than any
individual designated by a person who has entered into an agreement with the
Company to effect a transaction described in section 13(a) or 13(c) of this
Agreement) whose election by the Board or nomination for election by the
Company’s stockholders was approved by the affirmative vote of at least
two-thirds of the members of Board then in office who were either members of the
Board on the Initial Effective Date or whose nomination or election was
previously so approved cease for any reason to constitute a majority of the
members of the Board, but excluding, for this purpose, any such individual whose
initial assumption of office is in connection with an actual or threatened
election contest relating to the election of directors of the Company (as such
terms are used in Rule 14a-11 of Regulation 14A promulgated under the Exchange
Act); or

    

    (iii)           (A)           the
consummation of a merger or consolidation of the Company with any other
corporation, other than a merger or consolidation following which both of the
following conditions are satisfied:

    

    (1)           either
(I) the members of the Board of the Company immediately prior to such merger or
consolidation constitute at least a majority of the members of the governing
body of the institution resulting from such merger or consolidation; or (II) the
shareholders of the Company own securities of the institution resulting from
such merger or consolidation representing 80% or more of the combined voting
power of all such securities then outstanding in substantially the same
proportions as their ownership of voting securities of the Company before such
merger or consolidation; and

    

    (2)           the
entity which results from such merger or consolidation expressly agrees in
writing to assume and perform the Company’s obligations under this Agreement;
or

    

    (B)           the
shareholders of the Company approve either a plan of complete liquidation of the
Company or an agreement for the sale or disposition by the Company of all or
substantially all of its assets; and

    

    (iv)           any
event which would be described in section 13(a)(i), (ii) or (iii) if the term
“Bank” were substituted for the term “Company” therein. Such event shall be
deemed to be a Change in Control under the relevant provision of section
13(a)(i), (ii) or (iii).

    

    It is
understood and agreed that more than one Change in Control may occur at the same
or different times during the Employment Period and that the provisions of this
Agreement shall apply with equal force and effect with respect to each such
Change in Control.

    

    (b)           Upon
the occurrence during the Employment Period of a Change in Control, the Company
shall pay the following sums into a trust for the benefit of Mr.
Devine:

    

    (i)           a
lump sum amount equal to the aggregate amount that would be payable to Mr.
Devine under sections 9(b)(i), (iv), (v), (vi), (vii) and (viii) of this
Agreement computed as if Mr. Devine had terminated employment in a Resignation
for Good Reason on the date of the Change in Control but as if no Change in
Control had occurred; plus

    

    (ii)           a
lump sum amount equal to the present value of the excess of:

    

    (A)           a
single life annuity, payable commencing immediately, in an amount equal to 25%
of the aggregate base salary and annual bonus for the period of thirty-six
consecutive calendar months of employment during the final 120 months of
employment that yields the highest aggregate figure; over

    

    (B)           the
aggregate single life annuity benefits, payable commencing immediately under any
qualified and non-qualified defined benefit plans of the Company or the
Bank.

    

    where
base salary shall be determined without regard to pre-tax or after-tax
deductions for benefits under sections 401(k), 401(m), 125 or 132(f) of the Code
or otherwise and value shall be determined using the mortality table prescribed
under section 72 of the Code and a discount rate of 6% per annum compounded
annually.

    

    Such
payments shall be paid to the trust whether or not Mr. Devine's employment has
terminated.  The entire amount in the trust shall be paid to Mr.
Devine on the first day of the seventh month following his separation from
service within the meaning of section 409A of the Code.  The terms of
the trust shall be those set forth in section 30.  The Company may
require, as a condition of its obligation to make such payments, that Mr. Devine
execute and deliver to the Company a release, in such form and manner as the
Company may reasonably require, relieving the Bank of any obligation it might
then have, whether pursuant to an employment contract or otherwise, to pay
severance benefits to Mr. Devine in connection with a subsequent termination of
employment.  Such a release shall not relieve the Bank of any
obligation that it may have to provide for Mr. Devine and his family and
dependents the accrued post-termination benefits to which they are entitled
under any compensation or benefit plan or program of the Bank.

    

    14.           No Effect on Employee Benefit Plans
or Programs.

    

    Except as expressly provided in this
Agreement, the termination of Mr. Devine’s employment during the Employment
Period or thereafter, whether by the Company or by Mr. Devine, shall have no
effect on the rights and obligations of the parties hereto under the Company’s
or the Bank’s Retirement Plan and the Company’s Incentive Savings Plan, 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, following the conversion of the Company to stock
form, any stock option and appreciation rights plan, employee stock ownership
plan and restricted stock plan, as may be maintained by, or cover employees of,
the Company from time to time.

    

    15.           Successors
and Assigns.

    

    (a)           The
Company shall require any successor (whether direct or indirect, by purchase,
merger, consolidation or otherwise) to all or substantially all of the business
and/or assets of the Company to expressly assume and agree to perform this
Agreement in the same manner and to the same extent that the Company would be
required to perform it if no such succession had taken place.  Failure
of the Company to obtain such assumption and agreement prior to the
effectiveness of any such succession shall be deemed to constitute a material
breach of the Company’s obligations under this Agreement.

    

    (b)           This
Agreement will inure to the benefit of and be binding upon Mr. Devine, his legal
representatives and testate or intestate distributees, and the 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
Company may be sold or otherwise transferred.

    

    16.           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 Mr. Devine:

    

    _______________________

    _______________________

    _______________________

    

    

    If to the Company:

    

    Dime Community Bancshares,
Inc.

    209 Havemeyer Street

    Brooklyn, New York 11211

    Attention: Corporate
Secretary

    

    with a copy to:

    

    Thacher Proffitt & Wood
LLP

    Two World Financial
Center

    New York, New York 10281

    Attention: W. Edward Bright,
Esq.

    

    17.           Indemnification
and Attorneys’ Fees.

    

    The Company shall pay to or on behalf
of Mr. Devine all reasonable costs, including legal fees, incurred by him in
connection with or arising out of his consultation with legal counsel or in
connection with or arising out of any action, suit or proceeding in which he may
be involved, as a result of his efforts, in good faith, to defend or enforce the
terms of this Agreement; provided, however, that this section 17 shall not
obligate the Company to pay costs and legal fees on behalf of Mr. Devine under
this Agreement in excess of $50,000. .  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 Mr. Devine incurs the expense
or, if later, within sixty (60) days after the settlement or resolution that
gives rise to Mr. Devine’s right to reimbursement; provided, however, that Mr.
Devine shall have submitted to the Company documentation supporting such
expenses at such time and in such manner as the Company may reasonably
require

    

    18.           Excise
Tax Indemnification.

    

    (a)           If
Mr. Devine’s employment terminates under circumstances entitling him (or in the
event of his death, his estate) to the Additional Termination Entitlements, the
Company shall pay to Mr. Devine (or in the event of his death, his estate) an
additional amount intended to indemnify him against the financial effects of the
excise tax imposed on excess parachute payments under section 280G of the Code
(the “Tax Indemnity Payment”).  The Tax Indemnity Payment shall be
determined under the following formula:

    

    X         =          E x
P                                

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

    

    where

    

    
      	
               
      

            	
              E

            	
              =

            	
              the
      percentage rate at which an 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 16;

            

    

    

    
      	
               
      

            	
              FI

            	
              =

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

            

    

    

    
      	
               
      

            	
              SLI

            	
              =

            	
              the
      sum of the highest marginal rates of income tax applicable to Mr. Devine
      under all applicable state and local laws for the taxable year in
      question; and

            

    

    

    
      	
               
      

            	
              M

            	
              =

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

            

    

    

    Such
computation shall be made at the expense of the Company by a member of the firm
of Thacher Proffitt & Wood, or by an attorney or a firm of independent
certified public accountants selected by Mr. Devine and reasonably satisfactory
to the Company (the “Tax Advisor”) and shall be based on the following
assumptions: (i) that a change in ownership, a change in effective ownership or
control, or a change in ownership of a substantial portion of assets, of the
Bank or the Company has occurred within the meaning of section 280G of the Code
(a “280G Change of Control”); (ii) that all direct or indirect payments made to
or benefits conferred upon Mr. Devine on account of his termination of
employment are “parachute payments” within the meaning of section 280G of the
Code; and (iii) that no portion of such payments is reasonable compensation for
services rendered prior to Mr. Devine’s termination of employment.

    

    (b)           With
respect to any payment that is presumed to be a parachute payment for purposes
of section 280G of the Code, the Tax Indemnity Payment shall be made to Mr.
Devine on the earlier of the date the Company, the Bank or any direct or
indirect subsidiary or affiliate of the Company or the Bank is required to
withhold such tax or the date the tax is required to be paid by Mr. Devine,
unless, prior to such date, the Company delivers to Mr. Devine the written
opinion, in form and substance reasonably satisfactory to Mr. Devine, of the Tax
Advisor or of an attorney or firm of independent certified public accountants
selected by the Company and reasonably satisfactory to Mr. Devine, to the effect
that Mr. Devine has a reasonable basis on which to conclude that (i) no 280G
Change in Control has occurred, or (ii) all or part of the payment or benefit in
question is not a parachute payment for purposes of section 280G of the Code, or
(iii) all or a part of such payment or benefit constitutes reasonable
compensation for services rendered prior to the 280G Change of Control, or (iv)
for some other reason which shall be set forth in detail in such letter, no
excise tax is due under section 4999 of the Code with respect to such payment or
benefit (the “Opinion Letter”). If the Company delivers an Opinion Letter, the
Tax Advisor shall recompute, and the Company shall make, the Tax Indemnity
Payment in reliance on the information contained in the Opinion
Letter.

    

    (c)           In
the event that Mr. Devine’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 with respect to which the Tax Indemnity Payment is made, Mr. Devine or
the Company, as the case may be, shall pay to the other party at the time that
the amount of such excise tax is finally determined, an appropriate amount, plus
interest, such that the payment made under section 18(b), when increased by the
amount of the payment made to Mr. Devine under this section 18(c), or when
reduced by the amount of the payment made to the Company under this section
18(c), equals the amount that should have properly been paid to Mr. Devine under
section 18(a).  The interest paid to the Company under this section
18(c) shall be determined at the rate provided under section 1274(b)(2)(B) of
the Code.  The payment made to Mr. Devine shall include such amount of
interest as is necessary to satisfy any interest assessment made by the Internal
Revenue Service and an additional amount equal to any monetary penalties
assessed by the Internal Revenue Service on account of an underpayment of the
excise tax.  To confirm that the proper amount, if any, was paid to
Mr. Devine under this section 18, Mr. Devine shall furnish to the Company a copy
of each tax return which reflects a liability for an excise tax, at least 20
days before the date on which such return is required to be filed with the
Internal Revenue Service. Nothing in this Agreement shall give the Company any
right to control or otherwise participate in any action, suit or proceeding to
which Mr. Devine is a party as a result of positions taken on his federal income
tax return with respect to his liability for excise taxes under section 4999 of
the Code.  Any payment pursuant to this section 18(c) 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 Tax Indemnity Payment
is to be made are remitted to the Internal Revenue Service.

    

    

    19.           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.

    

    20.           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 who its enforcement is sought.  Any waiver
or relinquishment of such right or power 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.

    

    21.           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.

    

    22.           Governing
Law.

    

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

    

    23.           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.

    

    24.           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 Employment Agreement dated
June 26, 1996 between the Bank and Mr. Devine, as amended.  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 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 Mr. Devine on a present value basis.

    

    25.           Arbitration
Clause.

    

    Any dispute or controversy arising
under or in connection with this Agreement shall be settled exclusively by
arbitration, conducted before a panel of three arbitrators in New York, New
York, in accordance with the rules of the American Arbitration Association then
in effect.  Judgment may be entered on the arbitrator’s award in any
court having jurisdiction; the expense of such arbitration shall be borne by the
Company.

    

    26.           Provisions
of Law.

    

    Notwithstanding
anything herein contained to the contrary, any payments to Mr. Devine by the
Company, whether pursuant to this Agreement or otherwise, are subject to and
conditioned upon their compliance with section 18(k) of the Federal Deposit
Insurance Act, 12 U.S.C. Section 1828(k), and any regulations promulgated
thereunder.

    

    27.           Guarantee.

    

    The Company hereby agrees to guarantee
the payment by the Bank of any benefits and compensation to which Mr. Devine is
or may be entitled to under the terms and conditions of the employment agreement
dated as of the _____ day of ________, 2008 between the Bank and Mr. Devine, a
copy of which is attached hereto as Exhibit A.

    

    28.           Non-duplication.

    

    In the event that Mr. Devine shall
perform services for the Bank or any other direct or indirect subsidiary of the
Company, any compensation or benefits provided to Mr. Devine by such other
employer shall be applied to offset the obligations of the Company hereunder, it
being intended that this Agreement set forth the aggregate compensation and
benefits payable to Mr. Devine for all services to the Company and all of its
direct or indirect subsidiaries.

    

    29.           Waiver
of Prior Rights.

    

    Mr. Devine hereby permanently and
irrevocably waives any right that he now has or may have had to collect
termination benefits under the Amended and Restated Employment Agreement between
the Company and Mr. Devine made and entered into as of June 26, 1996, as
amended, or the Amended and Restated Employment Agreement between the Bank and
Mr. Devine made and entered into as of June 26, 1996, as amended, by virtue of
any act, omission, fact, event or circumstance whatsoever, whether or not known
to Mr. Devine, that occurred or was in existence on December 31, 2002, including
but not limited to the cessation of benefit accruals under the qualified and
non-qualified defined benefit plans of the Company and the Bank and the
renegotiation of the outstanding securities acquisition loan under the Company's
Employee Stock Ownership Plan.  The Bank shall be a third party
beneficiary of this Agreement with full powers to enforce the waiver contained
herein for its benefit.

    

    30.           Compliance
with Section 409A of the Code.

     

    Mr.
Devine and the Company acknowledge that each of the payments and benefits
promised to Mr. Devine 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,
Mr. Devine and the Company agree that:

     

    (a)           the
expense reimbursements described in Section 8 and legal fee reimbursements
described in Section 17 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 9(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 Company’s customary payment timing
arrangement;

     

    (c)           the
benefits and payments described in Section 9(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 9(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 18 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 Mr.
Devine’s termination of employment to the date of actual payment) to and paid on
the later of the date sixty (60) days after Mr. Devine’s earliest separation
from service (within the meaning of Treasury Regulation Section 1.409A-1(h))
and, if Mr. Devine 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 Mr. Devine’s separation from
service.  Each amount payable under this plan that is required to be
deferred beyond Mr. Devine’s separation from service, shall be deposited on the
date on which, but for such deferral, the Company would have paid such amount to
Mr. Devine, 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 Company with the approval of Mr.
Devine (which approval shall not be unreasonably withheld or delayed), pursuant
to a trust agreement the terms of which are approved by Mr. Devine (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.

     

    31.           Compliance
with the Emergency Economic Stabilization Act of 2008.

     

    In the
event the 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 Mr. Devine participates:

     

    (a)           Mr.
Devine shall repay to the Company any bonus or incentive compensation paid to
Mr. Devine while (i) Mr. Devine 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 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 Company and approved by Mr. Devine (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 Company may supply to Mr. Devine 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
Mr. Devine's employment terminates in an “applicable severance from employment”
(within the meaning of 31 C.F.R. Part 30) while (A) Mr. Devine is a Senior
Executive Officer, and (B) the UST holds a debt or equity interest in the
Company issued under the CPP, then payments to Mr. Devine 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 Company and approved by Mr.
Devine (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 31(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 31 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 Company, under which the UST acquires equity or debt
securities of the 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 31(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 31(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 31(b)(ii) shall be
paid on the earliest date on which the Company reasonably anticipates that such
amount may be paid without violating such limitation.

     

    IN WITNESS WHEREOF, the Company has
caused this Agreement to be executed and Mr. Devine has hereto set his hand, all
as of the day and year first above written.

     

    

                                                                                                              
______________________________________

    MICHAEL P. DEVINE

     

    
      	
              ATTEST

            	
              DIME
      COMMUNITY BANCSHARES, INC.

            

    

     

    By:                              By:                         

    Assistant
Secretary                                                                           for
the Board of Directors

     

    [Seal]exhibit10-6.htm

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    AMENDED
AND RESTATED EMPLOYMENT AGREEMENT

    

    This AMENDED AND RESTATED EMPLOYMENT
AGREEMENT (“Agreement”) is made and entered into as of _____________, 2008, by
and between Dime Community Bancshares, Inc., a savings and loan holding company
organized and operating under the laws of the State of Delaware and having an
office at 209 Havemeyer Street, Brooklyn, New York 11211 (“Company”) and Kenneth
J. Mahon ("Mr. Mahon").

    

    

    W I T N E
S S E T H :

    

    WHEREAS, Mr. Mahon and the Company are
parties to an Employment Agreement made and entered into as of June 26, 1996
(the “Initial Effective Date”) pursuant to which Mr. Mahon serves the Company in
the capacity of First Executive Vice President and Chief Financial Officer of
the Company and its wholly owned subsidiary, The Dime Savings Bank of
Williamsburgh ( “Bank “); and

    

    WHEREAS, such Agreement was amended as
of January 1, 2003 (the “Prior Agreement”); 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 Company desires to assure
for itself the continued availability of Mr. Mahon’s services and the ability of
Mr. Mahon to perform such services with a minimum of personal distraction in the
event of a pending or threatened Change in Control (as hereinafter defined);
and

    

    WHEREAS, Mr. Mahon is willing to
continue to serve the Company on the terms and conditions hereinafter set
forth;

    

    NOW, THEREFORE, in consideration of the
premises and the mutual covenants and obligations hereinafter set forth, the
Company and Mr. Mahon hereby agree as follows:

    

    1.           Representations
and Warranties of the Parties.

    

    (a)           The
Company hereby represents and warrants to Mr. Mahon that:

    

    (i)           it
has all requisite power and authority to execute, enter into and deliver this
Agreement and to perform each and every one of its obligations hereunder;
and

    

    (ii)           the
execution, delivery and performance of this Agreement have been duly authorized
by all requisite corporate action on the part of the Company; and

    

    (iii)           neither
the execution or delivery of this Agreement, nor the performance of or
compliance with any of the terms and conditions hereof, is prevented or in any
way limited by (A) any agreement or instrument to which the Company is a party
or by which it is bound, or (B) any provision of law, including, without
limitation, any statute, rule or regulation or any order of any court or
administrative agency, applicable to the Company or its business.

    

    (b)           Mr.
Mahon hereby represents and warrants to the Company that:

    

    (i)           he
has all requisite power and authority to execute, enter into and deliver this
Agreement and to perform each and every one of his obligations hereunder;
and

    

    (ii)           neither
the execution or delivery of this Agreement, nor the performance of or
compliance with any of the terms and conditions hereof, is prevented or in any
way limited by (A) any agreement or instrument to which he is a party or by
which he is bound, or (B) any provision of law, including, without limitation,
any statute, rule or regulation or any order of any court or administrative
agency, applicable to him.

    

    2.           Employment.

    

    The Company hereby continues the
employment of Mr. Mahon, and Mr. Mahon hereby accepts such continued employment,
during the period and upon the terms and conditions set forth in this
Agreement.

    

    3.           Employment
Period.

    

    (a)           The
terms and conditions of this Agreement shall be and remain in effect during the
period of employment established under this section 3 (“Employment
Period”).  The Employment Period shall be for an initial term of three
years beginning on the Initial Effective Date and ending on the third
anniversary date of the Initial Effective Date, plus such extensions, if any, as
are provided pursuant to section 3(b).

    

    (b)           Except
as provided in section 3(c), beginning on the Initial Effective Date, the
Employment Period shall automatically be extended for one (1) additional day
each day, unless either the Company or Mr. Mahon elects not to extend the
Agreement further by giving written notice to the other party, in which case the
Employment Period shall end on the third anniversary of the date on which such
written notice is given.  Upon termination of Mr. Mahon’s employment
with the Company for any reason whatsoever, any daily extensions provided
pursuant to this section 3(b), if not therefore discontinued, shall
automatically cease.

    

    (c)           If,
prior to the date on which the Employment Period would end pursuant to section
3(a) or (b) of this Agreement, a Change in Control (as defined in section 13 of
this Agreement) occurs, then the Employment Period shall be extended through and
including the second anniversary of the earliest date after the effective date
of such Change in Control on which either the Company or Mr. Mahon elects, by
written notice pursuant to section 3(d) of this Agreement to the non-electing
party, to discontinue the Employment Period; provided, however, that this
section shall not apply in the event that, prior to the Change in Control (as
defined in section 13 of this Agreement), Mr. Mahon has provided written notice
to the Company of his intent to discontinue the Employment Period.

    

    (d)           The
Company or Mr. Mahon may, at any time by written notice given to the other,
elect to discontinue the daily extension of the Employment
Period.  Any such notice given by the Company shall be accompanied by
a certified copy of a resolution, adopted by the affirmative vote of a majority
of the entire membership of the Board at a meeting of the Board duly called and
held, authorizing the giving of such notice.

    

    (e)           Notwithstanding
anything herein contained to the contrary:  (i) Mr. Mahon’s employment
with the Company may be terminated during the Employment Period, in accordance
with the terms and conditions of this Agreement; and (ii) nothing in this
Agreement shall mandate or prohibit a continuation of Mr. Mahon’s employment
following the expiration of the Employment Period upon such terms and conditions
as the Company and Mr. Mahon may mutually agree upon.

    

    (f)           For
all purposes of this Agreement, any reference to the “Remaining Unexpired
Employment Period” as of any specified date shall mean (i) prior to the
occurrence of a Change in Control (as hereinafter defined) the period commencing
on the date specified and ending on the later of the third anniversary of the
Initial Effective Date, the third anniversary of any earlier date on which
either the Company or Mr. Mahon has elected to discontinue the daily extensions
of the Employment Period, or the third anniversary of Mr. Mahon’s termination of
employment for any reason; and (ii) following a Change in Control (as
hereinafter defined) a period commencing on the date specified and ending on the
later of the second anniversary of the effective date of the Change in Control,
the second anniversary of any earlier date following the occurrence of the
Change in Control on which either Mr. Mahon or the Company has elected to
discontinue the daily extensions of the Employment Period, or the second
anniversary of Mr. Mahon’s termination of employment for any reason
whatsoever.

    

    4.           Duties.

    

    During the Employment Period, Mr. Mahon
shall:

    

    (a)           except
to the extent allowed under section 7 of this Agreement, devote his full
business time and attention to the business and affairs of the Company and use
his best efforts to advance the Company’s interests;

    

    (b)           serve
as First Executive Vice President and Chief Financial Officer if duly appointed
and/or elected to serve in such position; and

    

    (c)           have
such functions, duties and responsibilities not inconsistent with his title and
office as may be assigned to him by or under the authority of the Board of
Directors of the Company (“Board”), in accordance with organization Certificate,
By-laws, Applicable Laws, Statutes and Regulations, custom and practice of the
Company as in effect on the date first above written. Mr. Mahon shall have such
authority as is necessary or appropriate to carry out his assigned duties. Mr.
Mahon shall report to and be subject to direction and supervision by the
Board.

    

    (d)           none
of the functions, duties and responsibilities to be performed by Mr. Mahon
pursuant to this Agreement shall be deemed to include those functions, duties
and responsibilities performed by Mr. Mahon in his capacity as director of the
Company.

    

    5.           Compensation
-- Salary and Bonus.

    

    In consideration for services rendered
by Mr. Mahon under this Agreement, the Company shall pay to Mr. Mahon a salary
at an annual rate equal to:

    

    (a)           during
the period beginning on January 1, 2009 and ending on December 31, 2009, no less
than $________;

    

    (b)           during
each calendar year that begins after December 31, 2009, such amount as the Board
may, in its discretion, determine, but in no event less than the rate in effect
on December 31, 2009; or

    

    (c)           for
each calendar year that begins on or after a Change in Control, the product of
Mr. Mahon’s annual rate of salary in effect immediately prior to such calendar
year, multiplied by the greatest of:

    

    (i)           1.06;

    

    (ii)           the
quotient of (A) the U.S. City Average All Items Consumer Price Index for All
Urban Consumers (or, if such index shall cease to be published, such other
measure of general consumer price levels as the Board may, in good faith,
prescribe) for October of the immediately preceding calendar year, divided by
(B) the U.S. City Average All Items Consumer Price Index for All Urban Consumers
(or, if such index shall cease to be published, such other measure of general
consumer price levels as the Board may, in good faith, prescribe) for October of
the second preceding calendar year; and

    

    (iii)           the
quotient of (A) the average annual rate of salary, determined as of the first
day of such calendar year, of the officers of the Company (other than Mr. Mahon)
who are assistant vice presidents or more senior officers, divided by (B) the
average annual rate of salary, determined as of the first day of the immediately
preceding calendar year, of the officers of the Company (other than Mr. Mahon)
who are assistant vice presidents or more senior officers;

    

    The
salary payable under this section 5 shall be paid in approximately equal
installments in accordance with the Company’s customary payroll
practices.  Nothing in this section 5 shall be construed as
prohibiting the payment to Mr. Mahon of a salary in excess of that prescribed
under this section 5 or of additional cash or non-cash compensation in a form
other than salary, to the extent that such payment is duly authorized by or
under the authority of the Board. No portion of the compensation paid to Mr.
Mahon pursuant to this Agreement shall be deemed to be compensation received by
Mr. Mahon in his capacity as director of the Company.

    

    6.           Employee
Benefit Plans and Programs; Other Compensation.

    

    Except as otherwise provided in this
Agreement, Mr. Mahon shall be treated as an employee of the Company and be
entitled to participate in and receive benefits under the Company’s Retirement
Plan, Incentive Savings Plan, group life and health (including medical and major
medical) and disability insurance plans, and such other employee benefit plans
and programs, including but not limited to any long-term or short-term incentive
compensation plans or programs (whether or not employee benefit plans or
programs), as the Company may maintain from time to time, in accordance with the
terms and conditions of such employee benefit plans and programs and
compensation plans and programs and with the Company’s customary
practices.  Following a Change in Control, all such benefits to Mr.
Mahon shall be continued on terms and conditions substantially identical to, and
in no event less favorable than, those in effect prior to the Change in
Control.

    

    7.           Board
Memberships and Personal Activities.

    

    (a)           Mr.
Mahon may serve as a member of the board of directors of such business,
community and charitable organizations as he may disclose to the Board from time
to time, 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.

    

    (b)           Mr.
Mahon may also serve as an officer or director of the Bank on such terms and
conditions as the Company and the Bank may mutually agree upon, and such service
shall not be deemed to materially interfere with Mr. Mahon’s performance of his
duties hereunder or otherwise result in a material breach of this
Agreement.  If Mr. Mahon is discharged or suspended, or is subject to
any regulatory prohibition or restriction with respect to participation in the
affairs of the Bank, he shall (subject to the Company’s powers of termination
hereunder) continue to perform services for the Company in accordance with this
Agreement but shall not directly or indirectly provide services to or
participate in the affairs of the Bank in a manner inconsistent with the terms
of such discharge or suspension or any applicable regulatory order.

    

    8.           Working
Facilities and Expenses.

    

    Mr. Mahon’s principal place of
employment shall be at the Company’s executive offices at the address first
above written, or at such other location in the New York metropolitan area as
determined by the Board.  The Company shall provide Mr. Mahon, at his
principal place of employment, with a private office, stenographic services and
other support services and facilities suitable to his position with the Company
and necessary or appropriate in connection with the performance of his assigned
duties under this Agreement.  The Company shall provide Mr. Mahon with
an automobile  suitable to his position with the Company in accordance
with its prior practices, and such automobile shall be used by Mr. Mahon in
carrying out his duties under this Agreement, including commuting between his
residence and his principal place of employment.  The Company shall
(i) reimburse Mr. Mahon for the cost of maintenance and servicing such
automobile and, for instance, gasoline and oil for such automobile; (ii)
reimburse Mr. Mahon for his ordinary and necessary business expenses, incurred
in the performance of his duties under this Agreement (including but not limited
to travel and entertainment expenses); and (iii) reimburse Mr. Mahon for fees
for memberships in such clubs and organizations as Mr. Mahon and the Company and
such other expenses as Mr. Mahon and the Company shall mutually agree are
necessary and appropriate for business purposes, upon presentation to the
Company of an itemized account of such expenses in such form as the Company 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 day of the year following the year in which the expense was
incurred.  Mr. Mahon shall be entitled to no less than four (4) weeks
of paid vacation during each year in the Employment Period.  Mr. Mahon
shall be responsible for the payment of any taxes on account of his personal use
of the automobile provided by the Company and on account of any other benefit
provided herein.

    

    9.           Termination
Giving Rise to Severance Benefits.

    

    (a)           In
the event that Mr. Mahon’s employment with the Company shall terminate during
the Employment Period other than on account of:

    

    (i)           a
Termination for Cause (within the meaning of section 12(a) of this
Agreement);

    

    (ii)           a
voluntary resignation by Mr. Mahon other than a Resignation for Good Reason
(within the meaning of section 12(b) of this Agreement);

    

    (iii)           a
termination on account of Mr. Mahon’s death; or

    

    (iv)           a
termination after both of the following conditions exist: (A) Mr. Mahon has been
absent from the full-time service of the Company on account of his Disability
(as defined in section 11(b) of this Agreement) for at least six (6) consecutive
months; and (B) Mr. Mahon shall have failed to return to work in the full-time
service of the Company within thirty (30) days after written notice requesting
such return is given to Mr. Mahon by the Company;

    

    then the
Company shall provide to Mr. Mahon the benefits and pay to Mr. Mahon the amounts
provided under section 9(b) of this Agreement.

    

    (b)           In
the event that Mr. Mahon’s employment with the Company shall terminate under
circumstances described in section 9(a) of this Agreement, the following
benefits and amounts shall be paid or provided to Mr. Mahon (or, in the event of
his death, to his estate), in accordance with section 30, on his termination of
employment:

    

    (i)           his
earned but unpaid salary as of the date of the termination of his employment
with the Company, payable when due but in no event later than thirty (30) days
following his termination of employment with the Company;

    

    (ii)           (A)
the benefits, if any, to which Mr. Mahon and his family and dependents are
entitled as a former employee, or family or dependents of a former employee,
under the employee benefit plans and programs and compensation plans and
programs maintained for the benefit of the Company’s officers and employees, in
accordance with the terms of such plans and programs in effect on the date of
his termination of employment, or if his termination of employment occurs after
a Change in Control, on the date of his termination of employment or on the date
of such Change in Control, whichever results in more favorable benefits as
determined by Mr. Mahon, where credit is given for three additional years of
service and age in determining eligibility and benefits for any plan and program
where age and service are relevant factors, and (B) payment for all unused
vacation days and floating holidays in the year in which his employment is
terminated, at his highest annual rate of salary for such year;

    

    (iii)           continued
group life, health (including hospitalization, medical and major medical,
dental, accident and long-term disability insurance benefits), in addition to
that provided pursuant to section 9(b)(ii) of this Agreement and after taking
into account the coverage provided by any subsequent employer, if and to the
extent necessary to provide Mr. Mahon and his family and dependents for a period
of three years following termination of employment, coverage identical to and in
any event no less favorable than the coverage to which they 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 in
Control, on the date of his termination of employment or during the one-year
period ending on the date of such Change in Control, whichever results in more
favorable benefits as determined by Mr. Mahon) if he had continued working for
the Company during the Remaining Unexpired Employment Period at the highest
annual rate of compensation (assuming, if a Change in Control has occurred, that
the annual increases under section 5(c) would apply) under the
Agreement;

    

    (iv)           a
lump sum payment in an amount equal to the present value of the salary and the
bonus that Mr. Mahon would have earned if he had worked for the Company during
the Remaining Unexpired Employment Period at the highest annual rate of salary
(assuming, if a Change in Control has occurred, that the annual increases under
section 5(c) would apply) and the highest bonus as a percentage of the rate of
salary provided for under this Agreement, where such present value is to be
determined using a discount rate of six percent (6%) per annum, compounded, in
the case of salary, with the frequency corresponding to the Company’s regular
payroll periods with respect to its officers, and, in the case of bonus,
annually;

    

    (v)           a
lump sum payment in an amount equal to the excess, if any, of: (A) the present
value of the benefits to which he would be entitled under any defined benefit
plans maintained by, or covering employees of, the Company (including any
“excess benefit plan” within the meaning of section 3(36) of the Employee
Retirement Income Security Act of 1974, as amended (“ERISA”), or other special
or supplemental plan) as in effect on the date of his termination, if he had
worked for the Company during the Remaining Unexpired Employment Period at the
highest annual rate of compensation (assuming, if a Change in Control has
occurred, that the annual increases under section 5(c) would apply) under the
Agreement and been fully vested in such plan or plans and had continued working
for the Company during the Remaining Unexpired Employment 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 Employment 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 9(b)(i), (iv) and (vii), over (B) the
present value of the benefits to which he is actually entitled under any such
plans maintained by, or covering employees of, the Company as of the date of his
termination where  such present values are to be determined using a
discount rate of six percent (6%) per annum, compounded monthly, and the
mortality tables prescribed under section 72 of the Internal Revenue Code of
1986 (“Code”); provided, however, that if payments are made under this section
9(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 excess, if any, of (A) the present
value of the benefits attributable to the Company’s contribution to which he
would be entitled under any defined contribution plans maintained by, or
covering employees of, the Company (including any “excess benefit plan” within
the meaning of section 3(36) of ERISA, or other special or supplemental plan) as
in effect on the date of his termination, if he had worked for the Company
during the Remaining Unexpired Employment Period at the highest annual rate of
compensation (assuming, if a Change in Control has occurred, that the annual
increases under section 5(c) would apply) under the Agreement, and made the
maximum amount of employee contributions, if any, required or permitted under
such plan or plans, and been eligible for the highest rate in matching
contributions under such plan or plans during the Remaining Unexpired Employment
Period which is prior to Mr. Mahon’s termination of employment with the Company,
and been fully vested in such plan or plans, over (B) the present value of the
benefits attributable to the Company’s contributions to which he is actually
entitled under such plans as of the date of his termination of employment with
the Company, where such present values are to be determined using a discount
rate of six percent (6%) per annum, compounded with the frequency corresponding
to the Company’s regular payroll periods with respect to its officers; provided,
however, that if payments are made under this section 9(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 Mr. Mahon under any incentive compensation
plan maintained by, or covering employees of, the Company (other than bonus
payments to which section 9(b)(iv) of this Agreement is applicable) if he had
continued working for the Company during the Remaining Unexpired Employment
Period and had earned an incentive award in each calendar year that ends during
the Remaining Unexpired Employment Period in an amount equal to the product of
(A) the maximum percentage rate of compensation at which an award was ever
available to Mr. Mahon under such incentive compensation plan, multiplied by (B)
the compensation that would have been paid to Mr. Mahon during each calendar
year at the highest annual rate of compensation (assuming, if a Change in
Control has occurred, that the annual increases under section 5(c) would apply)
under the Agreement, such payments to be made at the same time and in the same
manner as payments are made to other officers of the Company pursuant to the
terms of such incentive compensation plan; provided, however, that payments
under this section 9(b)(vii) shall not be made to Mr. Mahon for any year on
account of which no payments are made to any of the Company’s officers under any
such incentive compensation plan; and

    

    (viii)                      the
benefits to which Mr. Mahon is entitled under the Company’s Supplemental
Executive Retirement Plan (or other excess benefits plan with the meaning of
section 3(36) of ERISA or other special or supplemental plan) shall be paid to
him in a lump sum, where such lump sum is computed using the mortality tables
under the Company’s tax-qualified pension plan and a discount rate of 6% per
annum. If the amount may be increased by a subsequent Change in Control, any
additional payment shall be made at the time and in the form provided under the
relevant plan, or, if no such time or form is provided, upon the first of the
following events to occur on or after the date of  such Change in
Control: a change in control event (within the meaning of Treasury Regulation
section 1.409A-3(i)(5)) with respect to Mr. Mahon, Mr. Mahon’s separation from
service (within the meaning of section 1.409A-1(h)), Mr. Mahon’s death or Mr.
Mahon’s disability (within the meaning of Treasury Regulation section
1.409A-3(i)(4)).  From the date of such Change of Control until the
date of payment, any additional payment so deferred shall be held in trust for
Mr. Mahon, the terms of which trust shall be those set forth in section
30.

    

    (c)           Mr.
Mahon shall not be required to mitigate the amount of any payment provided for
in this section 9 by seeking other employment or otherwise, nor shall the amount
of any payment or benefit provided for in this section 9 be reduced by any
compensation earned by Mr. Mahon as the result of employment by another
employer, by retirement benefits, by offset against any amount claimed to be
owed by Mr. Mahon to the Company, or otherwise except as specifically provided
in section 9(b) (iii) of this Agreement or except as provided in section 28 to
avoid duplication of payments.  The Company and Mr. Mahon hereby
stipulate that the damages which may be incurred by Mr. Mahon as a consequence
of any such termination of employment are not capable of accurate measurement as
of the date first above written and that the benefits and payments provided for
in this Agreement 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.

    

    10.           Termination
Without Severance Benefits.

    

    In the event that Mr. Mahon’s
employment with the Company shall terminate during the Employment Period on
account of:

    

    (a)           Termination
for Cause (within the meaning of section 12(a) of this Agreement);

    

    (b)           voluntary
resignation by Mr. Mahon other than a Resignation for Good Reason (within the
meaning of section 12(b) of this Agreement); or

    

    (c)           Mr.
Mahon’s death;

    

    then the
Company shall have no further obligations under this Agreement, other than the
payment to Mr. Mahon (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 he is entitled as a
former employee under the Company’s employee benefit plans and programs and
compensation plans and programs and payment for all unused vacation days and
floating holidays in the year in which his employment is terminated, at his
highest annual salary for such year.

    

    11.           Death
and Disability.

    

    (a)           Death.  If
Mr. Mahon’s employment is terminated by reason of Mr. Mahon’s death during the
Employment Period, this Agreement shall terminate without further obligations to
Mr. Mahon’s legal representatives under this Agreement, other than for payment
of amounts and provision of benefits under sections 9(b) (i) and (ii); provided,
however, that if Mr. Mahon dies while in the employment of the Company, his
designated beneficiary(ies) shall receive a death benefit, payable through life
insurance or otherwise, which is the equivalent on a net after-tax basis of the
death benefit payable under a term life insurance policy, with a stated death
benefit of three times Mr. Mahon’s then Annual Base Salary.

    

    (b)           Disability.  If
Mr. Mahon’s employment is terminated by reason of Mr. Mahon’s Disability as
defined in section 11(c) during the Employment Period, this Agreement shall
terminate without further obligations to Mr. Mahon, other than for payment of
amounts and provision of benefits under section 9(b) (i) and (ii); provided,
however, that in the event of Mr. Mahon’s Disability while in the employment of
the Company, the Company will pay to him, in accordance with section 30, a lump
sum amount equal to three times his then annual base salary.

    

    (c)           For
purposes of this Agreement, “Disability” shall be defined in accordance with the
terms of the Company’s long term disability policy.

    

    (d)           Payments
under this section 11 shall be made upon Mr. Mahon’s death or termination due to
Disability.

    

    12.           Definition
of Termination for Cause and Resignation for Good Reason.

    

    (a)           Mr.
Mahon’s termination of employment with the Company shall be deemed a
“Termination for Cause” if such termination occurs upon:

    

    (i)           Mr.
Mahon’s willful and continued failure to substantially perform his duties with
the Company (other than any failure resulting from incapacity due to physical or
mental illness or any actual or anticipated failure following notice by Mr.
Mahon of an intended Resignation for Good Reason) after a written demand for
substantial performance is delivered to him by the Board, which demand
specifically identifies the manner in which the Board believes Mr. Mahon has not
substantially performed his duties, and the failure to cure such breach within
sixty (60) days following written notice thereof from the Company;
or

    

    (ii)           the
intentional and willful engaging in dishonest conduct in connection with his
performance of services for the Company resulting in his conviction of or plea
of guilty or nolo contendere to a felony, fraud, personal dishonesty,
incompetence, willful misconduct, breach of fiduciary duty involving personal
profit, willful violation of any law, rule or regulation (other than traffic
violations or similar offenses), or final cease-and-desist order.

    

    No act,
or failure to act, on Mr. Mahon’s part shall be deemed willful unless done, or
omitted to be done, not in good faith and without reasonable belief that such
action or omission was in the best interest of the Company. Any act, or failure
to act, based upon authority given pursuant to a resolution duly adopted by the
Board or based upon the written advice of counsel for the Company shall be
conclusively presumed to be done, or omitted to be done, by Mr. Mahon in good
faith and in the best interests of the Company.  Notwithstanding the
foregoing, no termination of Mr. Mahon’s employment shall be a Termination for
Cause unless there shall have been delivered to Mr. Mahon a copy of a resolution
duly adopted by the affirmative vote of a majority of the Board of Directors
(or, following a Change in Control, an affirmative vote of three-quarters of the
Board of Directors) at a meeting of the Board called and held for such purpose
(after reasonable notice to Mr. Mahon and an opportunity for Mr. Mahon, together
with his counsel, to be heard before the Board) finding that in good faith
opinion of the Board circumstances described in section 12(a) (i) or (ii) exist
and specifying the particulars thereof in detail.

    

    (b)           Mr.
Mahon’s termination of employment with the Company shall be deemed a Resignation
for Good Reason if such termination occurs following any one or more of the
following events:

    

    (i)           (A)
the assignment to Mr. Mahon of any duties inconsistent with Mr. Mahon’s status
as Chairman of the Board and Chief Executive Officer of the Company or (B) a
substantial adverse alteration in the nature or status of Mr. Mahon’s
responsibilities from those in effect immediately prior to the
alteration;

    

    (ii)           a
reduction by the Company in Mr. Mahon’s annual base salary as in effect on the
date first above written or as the same may be increased from time to time,
unless such reduction was mandated at the initiation of any regulatory authority
having jurisdiction over the Company;

    

    (iii)           the
relocation of the Company’s principal executive offices to a location outside
the New York metropolitan area or the Company’s requiring Mr. Mahon to be based
anywhere other than the Company’s principal executive offices except for
required travel on the Company’s business to an extent substantially consistent
with Mr. Mahon’s business travel obligations at the date first above
written;

    

    (iv)           the
failure by the Company, without Mr. Mahon’s consent, to pay to Mr. Mahon, within
seven (7) days of the date when due, (A) any portion of his compensation, or (B)
any portion of an installment of deferred compensation under any deferred
compensation program of the Company;

    

    (v)           the
failure by the Company to continue in effect any compensation plan in which Mr.
Mahon participates on or after January 1, 2003 which is material to his total
compensation, including but not limited to the Retirement Plan and the Company’s
Incentive Savings Plan or any substitute plans unless an equitable arrangement
(embodied in an ongoing substitute or alternative plan) has been made with
respect to such plan, or the failure by the Company to continue his
participation therein (or in such substitute or alternative plan) on a basis not
materially less favorable, both in terms of the amount of benefits provided and
the level of his participation relative to other participants, unless such
failure is the result of action mandated at the initiation of any regulatory
authority having jurisdiction over the Company;

    

    (vi)           the
failure by the Company to continue to provide Mr. Mahon with benefits
substantially similar to those enjoyed by Mr. Mahon as of January 1, 2003 under
the Retirement Plan and the Company’s Incentive Savings Plan or under any of the
Company’s life, health (including hospitalization, medical and major medical),
dental, accident, and long-term disability insurance benefits, in which Mr.
Mahon is participating, or the taking of any action by the Company which would
directly or indirectly materially reduce any of such benefits or deprive Mr.
Mahon of the number of paid vacation days to which he is entitled, on the basis
of years of service with the Company, rank or otherwise, in accordance with the
Company’s normal vacation policy, unless such failure is the result of action
mandated at the initiation of any regulatory authority having jurisdiction over
the Company;

    

    (vii)           the
failure of the Company to obtain a satisfactory agreement from any successor to
assume and agree to perform this Agreement, as contemplated in section 15(a) of
this Agreement;

    

    (viii)                      any
purported termination of employment by the Company which is not effected
pursuant the provisions of section 12(a) regarding Termination for Cause or on
account of Disability;

    

    (ix)           a
material breach of this Agreement by the Company, which the Company fails to
cure within thirty (30) days following written notice thereof from Mr.
Mahon;

    

    (x)           a
change in the position to which Mr. Mahon reports.

    

    13.           Definition
of Change in Control; Payment in the Event of a Change in Control.

    

    (a)           For
purposes of this Agreement, a Change in Control of the Company shall
mean:

    

    (i)           the
occurrence of any event upon which any “person” (as such term is used in
sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended
(“Exchange Act”)), other than (A) a trustee or other fiduciary holding
securities under an employee benefit plan maintained for the benefit of
employees of the Company; (B) a corporation owned, directly or indirectly, by
the stockholders of the Company in substantially the same proportions as their
ownership of stock of the Company; or (C) Mr. Mahon, or any group otherwise
constituting a person in which Mr. Mahon is a member, becomes the “beneficial
owner” (as defined in Rule 13d-3 promulgated under the Exchange Act), directly
or indirectly, of securities issued by the Company representing 25% or more of
the combined voting power of all of the Company’s then outstanding securities;
or

    

    (ii)           the
occurrence of any event upon which the individuals who on the Initial Effective
Date are members of the Board, together with individuals (other than any
individual designated by a person who has entered into an agreement with the
Company to effect a transaction described in section 13(a) or 13(c) of this
Agreement) whose election by the Board or nomination for election by the
Company’s stockholders was approved by the affirmative vote of at least
two-thirds of the members of Board then in office who were either members of the
Board on the Initial Effective Date or whose nomination or election was
previously so approved cease for any reason to constitute a majority of the
members of the Board, but excluding, for this purpose, any such individual whose
initial assumption of office is in connection with an actual or threatened
election contest relating to the election of directors of the Company (as such
terms are used in Rule 14a-11 of Regulation 14A promulgated under the Exchange
Act); or

    

    (iii)

    

    (A)           the
consummation of a merger or consolidation of the Company with any other
corporation, other than a merger or consolidation following which both of the
following conditions are satisfied:

    

    (1)           either
(I) the members of the Board of the Company immediately prior to such merger or
consolidation constitute at least a majority of the members of the governing
body of the institution resulting from such merger or consolidation; or (II) the
shareholders of the Company own securities of the institution resulting from
such merger or consolidation representing 80% or more of the combined voting
power of all such securities then outstanding in substantially the same
proportions as their ownership of voting securities of the Company before such
merger or consolidation; and

    

    (2)           the
entity which results from such merger or consolidation expressly agrees in
writing to assume and perform the Company’s obligations under this Agreement;
or

    

    (B)           the
shareholders of the Company approve either a plan of complete liquidation of the
Company or an agreement for the sale or disposition by the Company of all or
substantially all of its assets; and

    

    (iv)           any
event which would be described in section 13(a)(i), (ii) or (iii) if the term
“Bank” were substituted for the term “Company” therein. Such event shall be
deemed to be a Change in Control under the relevant provision of section
13(a)(i), (ii) or (iii).

    

    It is
understood and agreed that more than one Change in Control may occur at the same
or different times during the Employment Period and that the provisions of this
Agreement shall apply with equal force and effect with respect to each such
Change in Control.

    

    (b)           Upon
the occurrence during the Employment Period of a Change in Control, the Company
shall pay the following sums into a trust for the benefit of Mr.
Mahon:

    

    (i)           a
lump sum amount equal to the aggregate amount that would be payable to Mr. Mahon
under sections 9(b)(i), (iv), (v), (vi), (vii) and (viii) of this Agreement
computed as if Mr. Mahon had terminated employment in a Resignation for Good
Reason on the date of the Change in Control but as if no Change in Control had
occurred; plus

    

    (ii)           a
lump sum amount equal to the present value of the excess of:

    

    (A)           a
single life annuity, payable commencing at the earliest date on which Mr. Mahon
would, if he retired, be eligible for unreduced early retirement benefits under
the Bank's qualified defined benefit plan, in an amount equal to 16-2/3% of the
aggregate base salary and annual bonus for the period of thirty-six consecutive
calendar months of employment during the final 120 months of employment that
yields the highest aggregate figure; over

    

    (B)           the
aggregate single life annuity benefits, payable commencing at the earliest date
on which Mr. Mahon would, if he retired, be eligible for unreduced early
retirement benefits under the Bank's qualified defined benefit plan, under any
qualified and non-qualified defined benefit plans of the Company or the
Bank.

    

    where
base salary shall be determined without regard to pre-tax or after-tax
deductions for benefits under sections 401(k), 401(m), 125 or 132(f) of the Code
or otherwise and value shall be determined using the mortality table prescribed
under section 72 of the Code and a discount rate of 6% per annum compounded
annually.

    

    Such
payments shall be paid to the trust whether or not Mr. Mahon's employment has
terminated.  The entire amount in the trust shall be paid to Mr. Mahon
on the first day of the seventh month following his separation from service
within the meaning of section 409A of the Code.  The terms of the
trust shall be those set forth in section 30.  The Company may
require, as a condition of its obligation to make such payments, that Mr. Mahon
execute and deliver to the Company a release, in such form and manner as the
Company may reasonably require, relieving the Bank of any obligation it might
then have, whether pursuant to an employment contract or otherwise, to pay
severance benefits to Mr. Mahon in connection with a subsequent termination of
employment.  Such a release shall not relieve the Bank of any
obligation that it may have to provide for Mr. Mahon and his family and
dependents the accrued post-termination benefits to which they are entitled
under any compensation or benefit plan or program of the Bank.

    

    14.           No Effect on Employee Benefit Plans
or Programs.

    

    Except as expressly provided in this
Agreement, the termination of Mr. Mahon’s employment during the Employment
Period or thereafter, whether by the Company or by Mr. Mahon, shall have no
effect on the rights and obligations of the parties hereto under the Company’s
or the Bank’s Retirement Plan and the Company’s Incentive Savings Plan, 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, following the conversion of the Company to stock
form, any stock option and appreciation rights plan, employee stock ownership
plan and restricted stock plan, as may be maintained by, or cover employees of,
the Company from time to time.

    

    15.           Successors
and Assigns.

    

    (a)           The
Company shall require any successor (whether direct or indirect, by purchase,
merger, consolidation or otherwise) to all or substantially all of the business
and/or assets of the Company to expressly assume and agree to perform this
Agreement in the same manner and to the same extent that the Company would be
required to perform it if no such succession had taken place.  Failure
of the Company to obtain such assumption and agreement prior to the
effectiveness of any such succession shall be deemed to constitute a material
breach of the Company’s obligations under this Agreement.

    

    (b)           This
Agreement will inure to the benefit of and be binding upon Mr. Mahon, his legal
representatives and testate or intestate distributees, and the 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
Company may be sold or otherwise transferred.

    

    16.           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 Mr. Mahon:

    

    ________________________

    ________________________

    ________________________

    

    If to the Company:

    

    Dime Community Bancshares,
Inc.

    209 Havemeyer Street

    Brooklyn, New York 11211

    Attention: Corporate
Secretary

    

    with a copy to:

    

    Thacher Proffitt & Wood
LLP

    Two World Financial
Center

    New York, New York 10281

    Attention: W. Edward Bright,
Esq.

    

    17.           Indemnification
and Attorneys’ Fees.

    

    The Company shall pay to or on behalf
of Mr. Mahon all reasonable costs, including legal fees, incurred by him in
connection with or arising out of his consultation with legal counsel or in
connection with or arising out of any action, suit or proceeding in which he may
be involved, as a result of his efforts, in good faith, to defend or enforce the
terms of this Agreement; provided, however, that this section 17 shall not
obligate the Company to pay costs and legal fees on behalf of Mr. Mahon under
this Agreement in excess of $50,000.  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 Mr. Mahon incurs the expense
or, if later, within sixty (60) days after the settlement or resolution that
gives rise to Mr. Mahon’s right to reimbursement; provided, however, that Mr.
Mahon shall have submitted to the Company documentation supporting such expenses
at such time and in such manner as the Company may reasonably
require.

    

    18.           Excise Tax
Indemnification.

    

    (a)           If
Mr. Mahon’s employment terminates under circumstances entitling him (or in the
event of his death, his estate) to the Additional Termination Entitlements, the
Company shall pay to Mr. Mahon (or in the event of his death, his estate) an
additional amount intended to indemnify him against the financial effects of the
excise tax imposed on excess parachute payments under section 280G of the Code
(the “Tax Indemnity Payment”).  The Tax Indemnity Payment shall be
determined under the following formula:

    

    X         =          E x
P                                

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

    

    where

    

    
      	
               
      

            	
              E

            	
              =

            	
              the
      percentage rate at which an 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 16;

            

    

    

    
      	
               
      

            	
              FI

            	
              =

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

            

    

    

    
      	
               
      

            	
              SLI

            	
              =

            	
              the
      sum of the highest marginal rates of income tax applicable to Mr. Mahon
      under all applicable state and local laws for the taxable year in
      question; and

            

    

    

    
      	
               
      

            	
              M

            	
              =

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

            

    

    

    Such
computation shall be made at the expense of the Company by a member of the firm
of Thacher Proffitt & Wood, or by an attorney or a firm of independent
certified public accountants selected by Mr. Mahon and reasonably satisfactory
to the Company (the “Tax Advisor”) and shall be based on the following
assumptions: (i) that a change in ownership, a change in effective ownership or
control, or a change in ownership of a substantial portion of assets, of the
Bank or the Company has occurred within the meaning of section 280G of the Code
(a “280G Change of Control”); (ii) that all direct or indirect payments made to
or benefits conferred upon Mr. Mahon on account of his termination of employment
are “parachute payments” within the meaning of section 280G of the Code; and
(iii) that no portion of such payments is reasonable compensation for services
rendered prior to Mr. Mahon’s termination of employment.

    

    (b)           With
respect to any payment that is presumed to be a parachute payment for purposes
of section 280G of the Code, the Tax Indemnity Payment shall be made to Mr.
Mahon on the earlier of the date the Company, the Bank or any direct or indirect
subsidiary or affiliate of the Company or the Bank is required to withhold such
tax or the date the tax is required to be paid by Mr. Mahon, unless, prior to
such date, the Company delivers to Mr. Mahon the written opinion, in form and
substance reasonably satisfactory to Mr. Mahon, of the Tax Advisor or of an
attorney or firm of independent certified public accountants selected by the
Company and reasonably satisfactory to Mr. Mahon, to the effect that Mr. Mahon
has a reasonable basis on which to conclude that (i) no 280G Change in Control
has occurred, or (ii) all or part of the payment or benefit in question is not a
parachute payment for purposes of section 280G of the Code, or (iii) all or a
part of such payment or benefit constitutes reasonable compensation for services
rendered prior to the 280G Change of Control, or (iv) for some other reason
which shall be set forth in detail in such letter, no excise tax is due under
section 4999 of the Code with respect to such payment or benefit (the “Opinion
Letter”). If the Company delivers an Opinion Letter, the Tax Advisor shall
recompute, and the Company shall make, the Tax Indemnity Payment in reliance on
the information contained in the Opinion Letter.

    

    (c)           In
the event that Mr. Mahon’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 with respect to which the Tax Indemnity Payment is made, Mr. Mahon or the
Company, as the case may be, shall pay to the other party at the time that the
amount of such excise tax is finally determined, an appropriate amount, plus
interest, such that the payment made under section 18(b), when increased by the
amount of the payment made to Mr. Mahon under this section 18(c), or when
reduced by the amount of the payment made to the Company under this section
18(c), equals the amount that should have properly been paid to Mr. Mahon under
section 18(a).  The interest paid to the Company under this section
18(c) shall be determined at the rate provided under section 1274(b)(2)(B) of
the Code.  The payment made to Mr. Mahon shall include such amount of
interest as is necessary to satisfy any interest assessment made by the Internal
Revenue Service and an additional amount equal to any monetary penalties
assessed by the Internal Revenue Service on account of an underpayment of the
excise tax.  To confirm that the proper amount, if any, was paid to
Mr. Mahon under this section 18, Mr. Mahon shall furnish to the Company a copy
of each tax return which reflects a liability for an excise tax, at least 20
days before the date on which such return is required to be filed with the
Internal Revenue Service. Nothing in this Agreement shall give the Company any
right to control or otherwise participate in any action, suit or proceeding to
which Mr. Mahon is a party as a result of positions taken on his federal income
tax return with respect to his liability for excise taxes under section 4999 of
the Code.  Any payment pursuant to this section 18(c) 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 Tax Indemnity Payment
is to be made are remitted to the Internal Revenue Service.

    

    19.           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.

    

    20.           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 who its enforcement is sought.  Any waiver
or relinquishment of such right or power 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.

    

    21.           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.

    

    22.           Governing
Law.

    

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

    

    23.           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.

    

    24.           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 Employment Agreement dated
June 26, 1996 between the Bank and Mr. Mahon, as amended.  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 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 Mr. Mahon on a present value basis.

    

    25.           Arbitration
Clause.

    

    Any dispute or controversy arising
under or in connection with this Agreement shall be settled exclusively by
arbitration, conducted before a panel of three arbitrators in New York, New
York, in accordance with the rules of the American Arbitration Association then
in effect.  Judgment may be entered on the arbitrator’s award in any
court having jurisdiction; the expense of such arbitration shall be borne by the
Company.

    

    26.           Provisions
of Law.

    

    Notwithstanding
anything herein contained to the contrary, any payments to Mr. Mahon by the
Company, whether pursuant to this Agreement or otherwise, are subject to and
conditioned upon their compliance with section 18(k) of the Federal Deposit
Insurance Act, 12 U.S.C. Section 1828(k), and any regulations promulgated
thereunder.

    

    27.           Guarantee.

    

    The Company hereby agrees to guarantee
the payment by the Bank of any benefits and compensation to which Mr. Mahon is
or may be entitled to under the terms and conditions of the employment agreement
dated as of the ______ day of __________, 2008 between the Bank and Mr. Mahon, a
copy of which is attached hereto as Exhibit A.

    

    28.           Non-duplication.

    

    In the event that Mr. Mahon shall
perform services for the Bank or any other direct or indirect subsidiary of the
Company, any compensation or benefits provided to Mr. Mahon by such other
employer shall be applied to offset the obligations of the Company hereunder, it
being intended that this Agreement set forth the aggregate compensation and
benefits payable to Mr. Mahon for all services to the Company and all of its
direct or indirect subsidiaries.

    

    29.           Waiver
of Prior Rights.

    

    Mr. Mahon hereby permanently and
irrevocably waives any right that he now has or may have had to collect
termination benefits under the Amended and Restated Employment Agreement between
the Company and Mr. Mahon made and entered into as of June 26, 1996, as amended,
or the Amended and Restated Employment Agreement between the Bank and Mr. Mahon
made and entered into as of June 26, 1996, as amended, by virtue of any act,
omission, fact, event or circumstance whatsoever, whether or not known to Mr.
Mahon, that occurred or was in existence on December 31, 2002, including but not
limited to the cessation of benefit accruals under the qualified and
non-qualified defined benefit plans of the Company and the Bank and the
renegotiation of the outstanding securities acquisition loan under the Company's
Employee Stock Ownership Plan.  The Bank shall be a third party
beneficiary of this Agreement with full powers to enforce the waiver contained
herein for its benefit.

    

    30.           Compliance
with Section 409A of the Code.

     

    Mr. Mahon
and the Company acknowledge that each of the payments and benefits promised to
Mr. Mahon 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, Mr. Mahon and
the Company agree that:

     

    (a)           the
expense reimbursements described in Section 8 and legal fee reimbursements
described in Section 17 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 9(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 Company’s customary payment timing
arrangement;

     

    (c)           the
benefits and payments described in Section 9(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 9(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 18 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 Mr.
Mahon’s termination of employment to the date of actual payment) to and paid on
the later of the date sixty (60) days after Mr. Mahon’s earliest separation from
service (within the meaning of Treasury Regulation Section 1.409A-1(h)) and, if
Mr. Mahon 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 Mr. Mahon’s separation from
service.  Each amount payable under this plan that is required to be
deferred beyond Mr. Mahon’s separation from service, shall be deposited on the
date on which, but for such deferral, the Company would have paid such amount to
Mr. Mahon, 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 Company with the approval of Mr.
Mahon (which approval shall not be unreasonably withheld or delayed), pursuant
to a trust agreement the terms of which are approved by Mr. Mahon (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.

     

    

     

    31.           Compliance
with the Emergency Economic Stabilization Act of 2008.

     

    In the
event the 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 Mr. Mahon participates:

     

    (a)           Mr.
Mahon shall repay to the Company any bonus or incentive compensation paid to Mr.
Mahon while (i) Mr. Mahon 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 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
Company and approved by Mr. Mahon (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
Company may supply to Mr. Mahon 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
Mr. Mahon's employment terminates in an “applicable severance from employment”
(within the meaning of 31 C.F.R. Part 30) while (A) Mr. Mahon is a Senior
Executive Officer, and (B) the UST holds a debt or equity interest in the
Company issued under the CPP, then payments to Mr. Mahon 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 Company and approved by Mr.
Mahon (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 31(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 31 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 Company, under which the UST acquires equity or debt
securities of the 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 31(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 31(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 31(b)(ii) shall be
paid on the earliest date on which the Company reasonably anticipates that such
amount may be paid without violating such limitation.

     

    IN WITNESS WHEREOF, the Company has
caused this Agreement to be executed and Mr. Mahon has hereto set his hand, all
as of the day and year first above written.

     

    

                                                                                                               
__________________________________

    KENNETH J. MAHON

     

    
      	
              ATTEST

            	
              DIME
      COMMUNITY BANCSHARES, INC.

            

    

     

    By:                              By:                         

    Assistant
Secretary                                                                           for
the Board of Directors

     

    [Seal]

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