AMENDED AND RESTATED EMPLOYMENT
AGREEMENT
This AMENDED AND RESTATED EMPLOYMENT AGREEMENT
("Agreement") is made and entered into as of the 31st day of
December, 2008, by and between The Dime Savings Bank of
Williamsburgh, a mutual savings bank organized and operating under
the federal laws of the United States and having an office at 209
Havemeyer Street, Brooklyn, New York 11211 ("Bank") and Vincent F.
Palagiano, residing at 44 Direnzo Court, Staten Island, New York
10309 and amends and restates the Amended and Restated Employment
Agreement made as of June 26, 1996 between the Bank and Mr.
Palagiano.
W I T N E S S E T H :
WHEREAS, Mr. Palagiano currently serves the Bank
in the capacity of Chairman of the Board and Chief Executive
Officer; and
WHEREAS, the Bank is a wholly owned subsidiary
of 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
WHEREAS, the Bank and Mr. Palagiano are parties
to an Employment Agreement made and entered into as of the 1st day
of January, 1992 (the “Initial Effective Date”) and
amended and restated as of the 1st day of October, 1995, and
further amended on the 26th day of June, 1996 ("Prior Agreement");
and
WHEREAS, the Bank and Mr. Palagiano 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, for purposes of securing for the Bank
Mr. Palagiano's continued services, the Board of Directors of the
Bank ("Board") has approved and authorized the execution of this
Agreement with Mr. Palagiano; and
WHEREAS, Mr. Palagiano is willing to continue to
make his services available to the Bank on the terms and conditions
set forth herein.
NOW, THEREFORE, in consideration of the premises
and the mutual covenants and obligations hereinafter set forth, the
Bank and Mr. Palagiano hereby agree as follows:
1. Representations
and Warranties of the Parties.
(a) The
Bank hereby represents and warrants to Mr. Palagiano
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 Bank; 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 Bank 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 order of any court or
administrative agency, applicable to the Bank or its
business.
(b) Mr.
Palagiano hereby represents and warrants to the Bank
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) including,
without limitation, any statute, rule or regulation or any order of
any court or administrative agency, applicable to him.
The Bank hereby continues the employment of Mr.
Palagiano, and Mr. Palagiano hereby accepts such continued
employment, during the period and upon the terms and conditions set
forth in this Agreement.
(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 by
the Board pursuant to section 3(b).
(b) Prior
to the first anniversary of the Initial Effective Date and each
anniversary date thereafter (each, an "Anniversary Date"), the
Board shall review the terms of this Agreement and Mr. Palagiano's
performance of services hereunder and may, in the absence of
objection from Mr. Palagiano, approve an extension of the
Employment Period. In such event, the Employment Period shall be
extended to the third anniversary of the relevant Anniversary
Date.
(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 and the Bank is not
subject to rules and regulations of the Office of Thrift
Supervision, then the Employment Period shall be extended through
and including the third anniversary of the earliest date after the
effective date of such Change of Control on which either the Bank
or Mr. Palagiano 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 of Control (as defined
in section 13 of this Agreement), Mr. Palagiano has provided
written notice to the Bank of his intent to discontinue the
Employment Period.
(d) The
Bank or Mr. Palagiano may, at any time by written notice given to
the other, elect to terminate this Agreement. Any such notice given
by the Bank 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. Palagiano's
employment with the Bank 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. Palagiano's employment following the
expiration of the Employment Period upon such terms and conditions
as the Bank and Mr. Palagiano 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 a
period commencing on the date specified and ending on the last day
of the third (3rd) year from the date specified, or, if neither
party has given notice electing a discontinuance of the Employment
Period, on the third (3rd) anniversary of the date
specified.
During the Employment Period, Mr. Palagiano
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
Bank and use his best efforts to advance the Bank's
interests;
(b) serve
as Chairman of the Board and Chief Executive 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, in accordance with organization
Certificate, By-laws, Applicable Laws, Statutes and Regulations,
custom and practice of the Bank as in effect on the date first
above written. Mr. Palagiano shall have such authority as is
necessary or appropriate to carry out his assigned duties. Mr.
Palagiano 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. Palagiano pursuant to this Agreement shall be deemed to include
those functions, duties and responsibilities performed by Mr.
Palagiano in his capacity as director of the Bank.
5. Compensation
-- Salary and Bonus.
In consideration for services rendered by Mr.
Palagiano under this Agreement, the Bank shall pay to Mr. Palagiano
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 $686,000;
(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. Palagiano's annual rate of salary in effect
immediately prior to such calendar year, multiplied by the greatest
of:
(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 Bank
(other than Mr. Palagiano) 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 Bank (other than Mr.
Palagiano) 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 Bank's customary payroll
practices. Nothing in this section 5 shall be construed as
prohibiting the payment to Mr. Palagiano 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.
(d) no
portion of the compensation paid to Mr. Palagiano pursuant to this
Agreement shall be deemed to be compensation received by Mr.
Palagiano in his capacity as director of the Bank.
6. Employee
Benefits Plans and Programs; Other Compensation.
Except as otherwise provided in this Agreement,
Mr. Palagiano shall be treated as an employee of the Bank and be
entitled to participate in and receive benefits under the Bank'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 Bank 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
Bank's customary practices. Following a Change in Control, all such
benefits to Mr. Palagiano 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.
In the event of a conversion of the Bank from a
mutual savings bank to a form of organization owned by stockholders
("Conversion"), the Bank will provide, or cause to be provided, to
Mr. Palagiano in connection with such Conversion, stock-based
compensation and benefits, including, without limitation, stock
options, restricted stock awards, and participation in
tax-qualified stock bonus plans which, in the aggregate, are either
(A) accepted by Mr. Palagiano in writing as being satisfactory for
purposes of this Agreement or (B) in the written, good faith
opinion of a nationally recognized executive compensation
consulting firm selected by the Bank and satisfactory to Mr.
Palagiano, whose agreement shall not be unreasonably withheld, are
no less favorable than the stock-based compensation and benefits
usually and customarily provided to similarly situated executives
of similar financial institutions in connection with similar
transactions.
7. Board
Memberships and Personal Activities.
Mr. Palagiano 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.
Mr. Palagiano may also serve as an officer or director of any
parent of the Bank on such terms and conditions as the Bank and its
parent may mutually agree upon, and such service shall not be
deemed to materially interfere with Mr. Palagiano's performance of
his duties hereunder or otherwise result in a material breach of
this Agreement.
8. Working
Facilities and Expenses.
Mr. Palagiano's principal place of employment
shall be at the Bank'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 Bank shall provide Mr.
Palagiano, at his principal place of employment, with a private
office, stenographic services and other support services and
facilities suitable to his position with the Bank and necessary or
appropriate in connection with the performance of his assigned
duties under this Agreement. The Bank shall provide Mr. Palagiano
with an automobile suitable to his position with the Bank in
accordance with its prior practices, and such automobile shall be
used by Mr. Palagiano in carrying out his duties under this
Agreement, including commuting between his residence and his
principal place of employment. The Bank shall (i) reimburse Mr.
Palagiano for the cost of maintenance and servicing such automobile
and, for instance, gasoline and oil for such automobile; (ii)
reimburse Mr. Palagiano 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. Palagiano for fees for
memberships in such clubs and organizations as Mr. Palagiano and
the Bank, and such other expenses as Mr. Palagiano and the Bank,
shall mutually agree are necessary and appropriate for business
purposes, upon presentation to the Bank of an itemized account of
such expenses in such form as the Bank may reasonably require, each
such reimbursement payment to be made promptly following receipt of
the itemized account and in any event not later than the last day
of the year following the year in which the expense was incurred.
Mr. Palagiano shall be entitled to no less than four (4) weeks of
paid vacation during each year in the Employment Period. Mr.
Palagiano shall be responsible for the payment of any taxes on
account of his personal use of the automobile provided by the Bank
and on account of any other benefit provided herein.
9. Termination
Giving Rise to Severance Benefits.
(a) In
the event that Mr. Palagiano's employment with the Bank shall
terminate during the Employment Period on account of the
termination of Mr. Palagiano's employment with the Bank other
than:
(i) a
Termination for Cause (within the meaning of section 12(a) of this
Agreement);
(ii) a
voluntary resignation by Mr. Palagiano other than a Resignation for
Good Reason (within the meaning of section 12(b) of this
Agreement);
(iii) a
termination on account of Mr. Palagiano's death; or
(iv) a
termination after both of the following conditions exist: (A) Mr.
Palagiano has been absent from the full-time service of the Bank on
account of his Disability (as defined in section 11(b) of this
Agreement) for at least six (6) consecutive months; and (B) Mr.
Palagiano shall have failed to return to work in the full-time
service of the Bank within thirty (30) days after written notice
requesting such return is given to Mr. Palagiano by the Bank; then
the Bank shall provide to Mr. Palagiano the benefits and pay to Mr.
Palagiano the amounts provided under section 9(b) of this
Agreement.
(b) In
the event that Mr. Palagiano's employment with the Bank shall
terminate under circumstances described in section 9(a) of this
Agreement or if the Bank terminates this Agreement pursuant to
section 3(d), the following benefits and amounts shall be paid or
provided to Mr. Palagiano (or, in the event of his death, to his
estate), in accordance with section 26, on his termination of
employment:
(i) his
earned but unpaid salary as of the date of the termination of his
employment with the Bank, payable when due but in no event later
than thirty (30) days following his termination of employment with
the Bank;
(ii) (A)
the benefits, if any, to which Mr. Palagiano 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 Bank'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. Palagiano,
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. Palagiano and his family and dependents
for the Remaining Unexpired Employment Period, 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. Palagiano) if he had
continued working for the Bank 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. Palagiano would have earned if he had
worked for the Bank 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 Bank'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 Bank (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 Bank 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 Bank 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 Bank 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 Bank's
contribution to which he would be entitled under any defined
contribution plans maintained by, or covering employees of, the
Bank (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
Bank 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. Palagiano's
termination of employment with the Bank, and been fully vested in
such plan or plans, over (B) the present value of the benefits
attributable to the Bank's contributions to which he is actually
entitled under such plans as of the date of his termination of
employment with the Bank, 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 Bank'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. Palagiano under any
incentive compensation plan maintained by, or covering employees
of, the Bank (other than bonus payments to which section 9(b)(iv)
of this Agreement is applicable) if he had continued working for
the Bank during the Remaining Unexpired Employment Period and had
earned an incentive award in each calendar year that ends during
the Remaining Unexpired Employment Period
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