Employment Agreement With Peyton R. Patterson

EMPLOYMENT AGREEMENT


EMPLOYMENT AGREEMENT dated as of January 30, 1998 between THE DIME SAVINGS BANK OF NEW YORK, FSB (the "Bank"), a federal stock savings bank having its principal executive offices at 589 Fifth Avenue, New York, New York 10017, and Peyton R. Patterson (the "Officer").
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A. The Bank is desirous of employing the Officer upon the terms and conditions set forth in this Agreement.


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


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


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


2. Term of Employment. (a) The initial term of the Officer's employment under this Agreement shall be deemed to have commenced on the date of this Agreement and shall continue until March 1, 2001. This Agreement shall be renewed automatically for one additional year on March 1, 1999, and on each March 1 thereafter, unless (x) the Officer or the Bank gives contrary written notice to the other, at least 10 days prior to any such renewal date, or (y) this Agreement has been otherwise terminated in accordance with its provisions. During each calendar year of the term of this Agreement beginning with 1999 (unless notice of non-renewal of


2 this Agreement shall have previously been given by the Bank or the Officer pursuant to the immediately preceding sentence), the Board of Directors of the Bank (or a duly authorized committee of the Board or subcommittee of such committee) shall, no later than the last day in each such year on which the Bank may give the Officer notice of non-renewal pursuant to the immediately preceding sentence, review and determine whether the Bank shall give the Officer such notice of non-renewal with respect to the March 1 renewal date in such year; provided, however, that nothing in this sentence shall be construed as limiting the Bank's ability to give notice of non-renewal pursuant to the immediately preceding sentence at any other time. A determination by the Board of Directors of the Bank (or a duly authorized committee of the Board or subcommittee of such committee) in any year that the Bank shall not give notice of non-renewal with respect to the March 1 renewal date in such year shall be deemed to be the Board's approval of the renewal of this Agreement on such renewal date. Except as otherwise provided in Section 11(c)(iv) of this Agreement, neither the giving of notice of non-renewal pursuant to clause (x) of the second sentence of this Section 2(a), nor the subsequent expiration of the Term of this Agreement as a result of the giving of such notice, shall be deemed to be a termination of the Officer's employment under this Agreement. (As used in this Agreement, (i) "Term" shall mean the initial term and any renewal term of this Agreement and (ii) "remaining Term" shall mean the balance of the Term in effect at a specified time without regard to potential future renewals under the renewal provision of this Section 2(a).)


(b) The Officer's employment may be terminated during the Term of this Agreement by the Bank or the Officer in the manner specified in this Agreement. Any such termination of employment shall result in a termination of this Agreement on the Effective Date of


2 3 Termination (as defined in Section 13); provided that, notwithstanding anything to the contrary in the foregoing, any right of the Officer to any payments or benefits as a result of a termination of the Officer's employment (as provided in this Agreement) shall survive the termination of this Agreement.


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


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


5. Compensation. (a) The annual salary of the Officer during the Term shall be fixed by the Board of Directors of the Bank (or a duly authorized committee of the Board or subcommittee of such committee) and shall be payable in installments in accordance with the prevailing general payroll practice of the Bank as it may exist from time to time. The initial annual salary of the Officer during the Term shall be the Officer's annual salary on the date of this Agreement. The Board of Directors of the Bank (or a duly authorized committee of the Board or subcommittee of such committee) may increase or decrease the Officer's annual salary from time to time; provided that, except for decreases that are applied generally to officers of comparable rank, such annual salary shall not be decreased by more than 25% in any one calendar year. As


3 4 used in this Agreement, "annual salary" shall mean, at any time, the annual rate of salary then payable to the Officer pursuant to this Section 5(a) (before deduction of any amounts deferred under any deferred compensation plan of the Bank, any voluntary contributions to the Retirement 401(k) Investment Plan of Dime Bancorp, Inc. (the "Company"), or any other similar qualified plan or any other deductions from income) and shall be exclusive of bonuses, incentive compensation or other compensation or benefits paid to or accrued for the Officer other than pursuant to this Section 5(a).


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


(c) Notwithstanding anything to the contrary in the foregoing provisions, the payment of any amounts that would otherwise be payable to the Officer but which would be in excess of the amount which the Company or the Bank could deduct for federal income tax purposes if then paid, on account of the operation of Section 162(m) of the Internal Revenue Code of 1986, as amended (the "Code"), shall be deferred to the extent such deferral is required pursuant to a policy adopted by the Compensation Committee or the Board of Directors of the


4 5 Company or the Bank and, to the extent so deferred, shall be payable pursuant to the relevant terms of the Dime Bancorp, Inc. Voluntary Deferred Compensation Plan; provided, however, that, if a Change in Control (as defined in Section 11(a)) has occurred, deferral of amounts payable hereunder to the Officer on or after the date of such Change in Control will only be required if and to the extent such policy in effect immediately prior to the Change in Control (without taking into consideration any changes therein made in contemplation of the occurrence of the Change in Control) requires or would have required such deferral.
6. Disability. (a) The Bank may terminate the Officer's employment under this Agreement for "permanent disability" if (i) the Officer shall become physically or mentally disabled or incapacitated to the extent that the Officer has been absent from the Officer's duties with the Bank on account of such disabilities or incapacitation as determined in a manner consistent with the policy which applies generally to employees of the Bank on a full-time basis for a period of six consecutive months, and (ii) within 30 days after written notice of proposed termination for permanent disability is given by the Bank to the Officer, the Officer shall not have returned to full-time performance of the Officer's duties.
(b) In the event of termination for "permanent disability," the Bank shall continue to pay the Officer an amount equal to the Officer's then annual salary pursuant to Section 5(a) (less any benefits that would have been payable to the Officer had the Officer elected the maximum available amount of disability insurance coverage available from the Bank) for a period commencing on the Effective Date of Termination and ending on the first anniversary thereof (or the end of the remaining Term in effect immediately prior to the Effective Date of Termination, if earlier). Notwithstanding the first sentence of this Section 6(b), any such payment shall terminate


5 6 upon the earliest to occur of (A) the date the Officer returns to full-time employment with the Bank; (B) the Officer's full-time employment by another employer; or (C) the Officer's death. In the event of termination for "permanent disability," the Bank also shall continue to provide until the end of the remaining Term in effect immediately prior to the Effective Date of Termination (or the Officer's earlier death) all life, medical and dental insurance coverage as is otherwise maintained by the Bank for full-time employees, provided that the Officer shall continue to pay all amounts in respect of such coverage that an employee receiving the same level of coverage is or would be required to pay. In the event of a termination of the Officer's employment for "permanent disability" at any time during the remaining Term in effect at the time of a Change in Control (as defined in Section 11(a)), the provisions of Section 11 shall apply in lieu of the provisions of this Section 6(b).


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


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


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


6 7 continue from the Effective Date of Termination through the end of the Severance Period (as defined in Section 8(b)(i)) to (1) pay the Officer's annual salary in effect immediately prior to the Effective Date of Termination to the Officer and (2) maintain (for the Officer, and, during such period but prior to the Officer's death, for the Officer's spouse and dependents, as applicable) all life, medical and dental insurance coverage as is otherwise maintained by the Bank for full-time employees, provided that the Officer shall continue to pay any amounts in respect of such coverage that an employee receiving the same level of coverage is or would be required to pay. In the event of a termination of the Officer's employment by the Bank at any time during the remaining Term in effect at the time of a Change in Control, the provisions of Section 11 shall apply in lieu of the provisions of the immediately preceding sentence of this Section 8(a).


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


(ii) The Officer shall have no right to receive compensation or other benefits under this Agreement for any period after the Effective Date of Termination if the Officer's employment is


7 8 terminated for cause. As used in this Agreement, "cause" shall mean the Officer's personal dishonesty, incompetence, willful misconduct, breach of fiduciary duty involving personal profit, intentional failure to perform assigned duties, willful violation of any law, rule or regulation (other than traffic violations or similar offenses) or final cease and desist order or material breach of any provision of this Agreement.


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


(ii) Notwithstanding any other provision of this Section 8 or of Section 11, in the event that any amount otherwise payable hereunder, other than on account of events described in Sections 11(c)(i) or 11(c)(ii) following a Change in Control (as hereinafter defined), would be deemed to constitute a parachute payment (a "Parachute Payment") within the meaning of Section 280G of the Code, and if any such Parachute Payment, when added to any other payments which are deemed to constitute Parachute Payments, would otherwise result in the imposition of an


8 9 excise tax under Section 4999 of the Code, the amounts payable hereunder (other than amounts payable under the SERP or otherwise payable on account of events described in Sections 11(c)(i) or 11(c)(ii) following a Change in Control) shall be reduced by the smallest amount necessary to avoid the imposition of such excise tax. Any such limitation shall be applied to such compensation and benefit amounts, and in such order, as the Bank shall determine in its sole discretion. References to the Code in this Agreement shall be to the Code as presently in effect or to the corresponding provisions of any succeeding law.


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


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


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


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


(d) If the Officer is suspended and/or temporarily prohibited from participating in the conduct of the Bank's affairs by a notice served under Section 8(e)(3) or (g ...