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                                                                   Exhibit 10.46

                               DIME BANCORP, INC.
                 1997 STOCK INCENTIVE PLAN FOR OUTSIDE DIRECTORS

               (As Amended and Restated Effective March 27, 1998)

            1. Establishment and Purpose of the Plan. The Dime Bancorp, Inc.
1997 Stock Incentive Plan for Outside Directors (the "Plan") is established by
Dime Bancorp, Inc. (the "Company"). The Plan is designed to enable the Company
to attract, retain and motivate members of the Boards of Directors of the
Company and certain of its subsidiaries who are not employees of the Company or
certain of its subsidiaries by providing for or increasing their proprietary
interest in the Company and to enable such directors to participate in the
long-term success and growth of the Company. Awards under the Plan may be in the
form of (i) options ("NonQualified Options") to purchase common stock of the
Company, par value $.01 per share ("Common Stock"), which do not qualify as
incentive stock options under Section 422 of the Internal Revenue Code of 1986,
as amended (the "Code"), (ii) stock appreciation rights ("SARs"), (iii) rights
to purchase shares of restricted Common Stock ("Restricted Stock"), and (iv)
shares of Common Stock, the issuance of which is deferred to a date following
the grant date of the award ("Deferred Stock").

            2. Stock Subject to Plan. The maximum number of shares of Common
Stock that may be issued with respect to awards hereunder shall not, in the
aggregate, exceed 350,000 shares of Common Stock, subject to the adjustments
under Section 8. Notwithstanding the limitation described in the preceding
sentence, grants of rights to purchase Restricted Stock under the Plan shall be
limited so that the sum of (i) the aggregate number of shares of Restricted
Stock that are outstanding as of April 30, 1998 (but that have not thereafter
been forfeited or repurchased) and (ii) the number of shares of Restricted Stock
made available after such date for purchase under the Plan or under any other
stock incentive plans maintained by the Company or any of its subsidiaries shall
not exceed 2% of the total number of shares of Common Stock that are outstanding
(inclusive of shares of Restricted Stock otherwise then outstanding) at the time
the grant of the right to purchase the Restricted Stock is made. The shares of
Common Stock that are issuable under the Plan may consist of authorized but
unissued shares or treasury shares. To the extent a Non-Qualified Option is
surrendered, canceled or terminated without having been exercised, or an award
other than a Non-Qualified Option is surrendered, canceled or terminated without
the holder having received payment of the award in Common Stock, or shares of
Restricted Stock are repurchased by the Company at less than fair market value
or forfeited, the shares of Common Stock subject to such Non-Qualified Option or
other award or the Restricted Stock shall again be available for distribution in
connection with future awards under the Plan.

            3. Eligibility. Members of the Board of Directors of the Company or
of any Eligible Subsidiary (as defined below) who are not employees of the
Company or any entity in which the Company owns, directly or indirectly, at
least a twenty percent (20%) beneficial ownership interest (an "Outside
Director") are eligible to be granted awards under the Plan. For purposes of
this Section 3, an "Eligible Subsidiary" shall mean any corporation,
partnership, joint
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venture or other entity in which the Company has, directly or indirectly, a
greater than fifty percent (50%) beneficial ownership interest. An Outside
Director to whom a Non-Qualified Option is granted under the Plan is sometimes
referred to herein as an "Optionee."

            4. Administration of the Plan. The Plan shall be administered by the
Board of Directors of the Company (the "Board"). The Board shall have the
authority to adopt, amend, and rescind such rules and regulations as, in its
opinion, may be advisable in the administration of the Plan, to construe and
interpret the Plan, the rules and regulations, and the instruments evi dencing
awards under the Plan and to make all other determinations deemed necessary or
advisable for the administration of the Plan. All decisions, determinations, and
interpretations of the Board shall be binding on all Plan participants. The
Board may from time to time delegate to one or more officers of the Company or
any of its subsidiaries, or to one or more committees or subcommittees of the
Board, any or all of its authorities granted hereunder, except that no such
authority shall be delegated by the Board if the possession or exercise thereof
by such other person or committee could cause any transaction, if it occurred or
were to occur under the Plan, to fail to qualify for an exemption under Section
16(b) of the Securities Exchange Act of 1934, as amended (the "Act").

            5. Formula-Based Awards.

            Prior to the Restatement Effective Date (as defined in Section 16),
awards to Outside Directors under the Plan consisted of formula-based,
nondiscretionary initial and annual grants of Non-Qualified Options and rights
to purchase Restricted Stock.

                  (a) Initial Grant. Each Outside Director who first became an
Outside Director of the Company on or after the Initial Effective Date (as
defined in Section 16) and prior to the Restatement Effective Date received a
one-time grant on the date of his or her election to the Board or, if later, on
the date of the meeting of the shareholders of the Company at which the Plan was
initially approved, of: (i) a Non-Qualified Option to purchase 3,000 shares of
Common Stock under the terms and conditions set forth in Section 5(c); and (ii)
the right to purchase 1,000 shares of Restricted Stock under the terms and
conditions set forth in Section 5(d), in each case subject to adjustment under
Section 8.

                  (b) Annual Grant. On the date that was one month following the
an nual meeting of the shareholders of the Company occurring immediately
following the Initial Effective Date, each Outside Director then elected to the
Board or continuing to serve on the Board immediately following such shareholder
meeting received a grant of a Non-Qualified Option to purchase 1,500 shares of
Common Stock under the terms and conditions set forth in Section 5(c), subject
to adjustment under Section 8.
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                  (c) Terms and Conditions of Non-Qualified Options. The
NonQualified Options granted under Section 5(a) or 5(b) of the Plan are subject
to the following terms and conditions:

                        (i) Written Documentation. Each such Non-Qualified
Option granted is evidenced by a grant letter executed by the Company.

                        (ii) Option Term. Each such Non-Qualified Option has a
term of eleven (11) years.

                        (iii) Exercisability. Each such Non-Qualified Option
shall become exercisable to the extent of one-third of the shares covered by
such Non-Qualified Option from and after the first anniversary of the date on
which such Non-Qualified Option was granted and an additional one-third of the
shares covered by such Non-Qualified Option from and after each of the second
and third anniversaries of such grant date, provided in each case that the
Optionee is in continuous service as an Outside Director from the grant date
through the applicable anniversary of such grant date. Notwithstanding the
foregoing, each Non-Qualified Option shall become one hundred percent (100%)
exercisable (A) in the event the Optionee terminates his or her status as an
Outside Director by reason of (i) termination of service as an Outside Director
upon or after the later of (1) the attainment of age sixty-five (65) or (2) the
rendering of service as an Outside Director for at least five (5) full years
(including, for this purpose, service rendered as an Outside Director prior to
the Initial Effective Date of the Plan, and service rendered as a member of the
Board of Directors of Anchor Bancorp, Inc. or any of its subsidiaries, provided
such member was not an employee of Anchor Bancorp, Inc. or any of its
subsidiaries during such service period (herein, an "Anchor Outside Director"),
(ii) death, or (iii) disability, or (B) upon the occurrence of (w) a Terminating
Event (as defined in Section 13(b)), (x) a Change in Control (as defined in
Section 13(c)), (y) the dissemination of a proxy statement soliciting proxies
from stockholders of the Company, by someone other than the Company, seeking
stockholder approval of a Terminating Event of the type described in clause (i)
of Section 13(b), or (z) the publication or dissemination of an announcement of
action intended to result in a Terminating Event of the type described in clause
(ii) or (iii) of Section 13(b), provided the Optionee is in service as an
Outside Director at the time of the occurrence of such event. Notwithstanding
anything in the Plan to the contrary, no Non-Qualified Option that had been
granted to an Optionee shall be exercisable if the Optionee's status as an
Outside Director is terminated for cause.

                        (iv) Exercise Price. The exercise price per share of
Common Stock purchasable under such Non-Qualified Options is equal to the
closing price of the Common Stock, as reported on the New York Stock Exchange,
on the date the Non-Qualified Option was granted (subject to adjustment under
Section 8).

                        (v) Method of Exercise. Such Non-Qualified Options may
be exercised, in whole or in part and to the extent then vested, during the
relevant option period by
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giving written notice of exercise to the Company specifying the number of shares
of Common Stock to be purchased and accompanied by payment of the applicable
exercise price. Payment of the exercise price may be made in cash (including
cash equivalents), by delivery of unrestricted shares of Common Stock that have
been owned by the Optionee or, as applicable, by a permissible transferee (as
provided in Section 10) for at least six (6) months, or in any combination of
the foregoing.

                        (vi) Termination of Outside Director Status. Except as
provided below, if an Optionee's status as an Outside Director is terminated for
any reason other than (i) termination of service as an Outside Director upon or
after the later of (A) the attainment of age sixty-five (65) or (B) the
rendering of service as an Outside Director for at least five (5) full years
(including, for this purpose, service as an Anchor Non-Employee Director), (ii)
death, (iii) disability, (iv) for cause, or (v) in connection with the
occurrence of a Terminating Event (as defined in Section 13(b)) or a Change in
Control (as defined in Section 13(c)), such NonQualified Options that had been
granted to such Optionee may be exercised only within twelve (12) months after
such termination of his or her status as an Outside Director, but only to the
extent the Non-Qualified Options were exercisable on the date of his or her
termination, and in no event may such options be exercisable following the end
of the applicable option term. Except as provided below, if an Optionee's status
as an Outside Director is terminated by reason of (i) termination of service as
an Outside Director upon or after the later of (A) the attainment of age
sixty-five (65) or (B) the rendering of service as an Outside Director for at
least five (5) full years (including, for this purpose, service rendered as an
Outside Director prior to the Initial Effective Date of the Plan, and service
rendered as Anchor Outside Director), (ii) death, or (iii) disability, the
Non-Qualified Options that had been granted to such Optionee may be exercised
only within thirty-six (36) months after such termination of his or her status
as an Outside Director, but in no event may such options be exercisable
following the end of the applicable option term. Notwithstanding the foregoing,
if an Optionee's status as an Outside Director is terminated at any time within
the two (2) - year period immediately following the occurrence of a Terminating
Event (as defined in Section 13(b)) or a Change in Control (as defined in
Section 13(c)) that occurred while the Optionee was an Outside Director, the
vested Non-Qualified Options that had been granted to such Optionee may be
exercised at any time during the remainder of the applicable option term.
Notwithstanding anything in the Plan to the contrary, if an Optionee's status as
an Outside Director is terminated for cause, the Non-Qualified Options that have
been granted to such Optionee shall immediately terminate and cease to be
exercisable upon the giving of notice of such termination for cause.

                        (vii) No Shareholder Rights. An Optionee or, as
applicable, a permissible transferee of a Non-Qualified Option hereunder (as
provided in Section 10) shall not have any rights of a shareholder with respect
to shares of Common Stock relating to the NonQualified Option granted under the
Plan, including, but not limited to, rights to any dividends that may be
declared and paid with respect to such Common Stock, until written notice of
exercise of such option has been given and the exercise price has been paid for
such shares.
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                  (d) Terms and Conditions of Rights to Purchase Restricted
Stock. The grant of rights to purchase Restricted Stock under Section 5(a) of
the Plan is subject to the following terms and conditions:

                        (i) Purchase Period. The right to purchase such
Restricted Stock under the Plan expired sixty (60) days after it was granted.

                        (ii) Purchase Price. The purchase price per share
required to be paid upon exercise of the right to purchase such Restricted Stock
was equal to $1.00 per share or the par value of the shares purchased if greater
than $1.00 per share.

                        (iii) Lapse of Restrictions. No shares of such
Restricted Stock may be sold or otherwise transferred or hypothecated until the
restrictions applicable thereto have lapsed pursuant to this Section 5(d)(iii).
The restrictions applicable to such shares of Restricted Stock purchased shall
lapse as to one-third of the shares of Restricted Stock so purchased on the
third anniversary of the date of grant of the right to purchase such shares,
with the restrictions lapsing as to an additional one-third of the shares on the
fourth anniversary of such grant date for the shares, and the restrictions
lapsing as to the remaining one-third of the shares on the fifth anni versary of
such grant date for the shares, provided that, in each such case, the holder is
in continu ous service as an Outside Director from the grant date through the
applicable anniversary of such grant date. Notwithstanding the foregoing, the
restrictions applicable to such shares of Restricted Stock purchased shall
immediately lapse upon the earlier of (A) the holder's (i) death, (ii)
disability, or (iii) termination of service as an Outside Director upon or after
the later of (1) the attainment of age sixty-five (65) or (2) the rendering of
service as an Outside Director for at least five (5) full years (including, for
this purpose, service rendered as an Outside Director prior to the Initial
Effective Date of the Plan, and service rendered as an Anchor Outside Director),
or (B) the occurrence of (w) a Terminating Event (as defined in Section 13(b)),
(x) a Change in Control (as defined in Section 13(c)), (y) the dissemination of
a proxy statement soliciting proxies from stockholders of the Company, by
someone other than the Company, seeking stockholder approval of a Terminating
Event of the type described in clause (i) of Section 13(b), (z) the publication
or dissemination of an announcement of action intended to result in a
Terminating Event of the type described in clause (ii) or (iii) of Section
13(b), provided the holder is in service as an Outside Director at the time of
the occurrence of such event. Notwithstanding anything in the Plan to the
contrary, if such Restricted Stock holder's service as an Outside Director is
terminated for cause, then all shares of Restricted Stock for which the
restrictions had not then lapsed shall be immediately forfeited.

                        (iv) Repurchase of Shares. In the event of the
termination of the status of the holder of such Restricted Stock as an Outside
Director for any reason other than (i) death, (ii) disability, or (iii)
termination of service as an Outside Director upon or after the later of (A) the
attainment of age sixty-five (65) or (B) the rendering of service as an Outside
Director for at least five (5) full years (including, for this purpose, service
rendered as an Outside Director prior to the Initial Effective Date of the Plan,
and service rendered as an Anchor Outside
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Director), unless the restrictions on such stock have lapsed prior to such
termination, the Company (or any Eligible Subsidiary designated by it) shall,
unless then prohibited from pur chasing or acquiring shares of its stock,
repurchase for cash all of the holder's Restricted Stock at the lesser of (x)
the price paid by the holder (without interest) or (y) the fair market value
(deter mined without regard to any restrictions) of the Restricted Stock on the
date of such termination.

                        (v) Shareholder Rights. The holder of such Restricted
Stock shall have the right to vote with respect to such Restricted Stock and
shall be entitled to divi dends, if any, paid with respect to shares of Common
Stock. If dividends are paid with respect to the shares of Common Stock, an
amount equal to the amount of any such dividends will be paid to the holder of
the Restricted Stock currently. If dividends paid on Common Stock are payable in
the form of shares of Common Stock, or if shares of Common Stock are to be
received by the holder of Restricted Stock in connection with a stock split
regarding the Common Stock, the shares received as a result of such dividend or
stock split shall be subject to the same restrictions as the Restricted Stock
with respect to which they were paid.

            6. Nonformula-Based Awards.

            On and after the Restatement Effective Date, no further
formula-based awards under Section 5 shall be made, and awards under the Plan
shall, in the sole discretion of the Board, consist of nonformula-based,
discretionary grants of one or more of the following: (1) Non-Qualified Options,
(2) SARs, (3) rights to purchase Restricted Stock, and (4) Deferred Stock.

                  (a) Terms and Conditions of Non-Qualified Options. Subject to
the following provisions, Non-Qualified Options awarded under this Section 6
shall have such terms and conditions as the Board may determine.

                        (i) Option Price. The option price per share of Common
Stock purchasable under a Non-Qualified Option shall be determined by the Board.

                        (ii) Option Term. The term of each Non-Qualified Option
shall be determined by the Board.

                        (iii) Exercisability. Non-Qualified Options shall be
exercisable at such time or times and subject to such terms and conditions as
shall be determined by the Board. If the Board provides that any Non-Qualified
Option is exercisable only in installments, the Board may waive such installment
exercise provisions at any time in whole or in part.

                        (iv) Method of Exercise. Non-Qualified Options may be
exercised in whole or in part at any time during the option period by giving
written notice of exercise to the Company specifying the number of shares to be
purchased, accompanied by payment of the purchase price. Payment of the purchase
price shall be made in such manner as
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the Board may provide in the award, which may include cash (including cash
equivalents), delivery of shares of Common Stock already owned by the Optionee
or subject to awards hereunder, any other manner permitted by law as determined
by the Board, or any combination of the foregoing. The Board may provide that
all or part of the shares received upon the exercise of a Non-Qualified Option
that are paid for using Restricted Stock or Deferred Stock shall be restricted
or deferred in accordance with the original terms of the Restricted Stock or
Deferred Stock so used.

                        (v) No Stockholder Rights. Except as provided in Section
14, an Optionee (or permitted transferee pursuant to Section 10) shall have
neither rights to dividends nor other rights of a holder of Common Stock with
respect to shares subject to a Non-Qualified Option until the Optionee (or
permitted transferee) has given written notice of exercise and has paid for such
shares to the number of shares.

                        (vi) Surrender Rights. The Board may provide that
options may be surrendered for cash upon any terms and conditions set by the
Board.

                        (vii) Termination of Service. If an Optionee's service
as an Outside Director with the Company or terminates by reason of death,
disability, termination of service as an Outside Director upon or after the
later of (1) the attainment of age sixty-five (65) or (2) the rendering of
service as an Outside Director for at least five (5) full years (including, for
this purpose, service rendered as an Outside Director prior to the Initial
Effective Date of the Plan, and service as an Anchor Outside Director), or
otherwise, the Non-Qualified Option shall be exercisable to the extent
determined by the Board. The Board may provide that, notwithstanding the option
term determined pursuant to Section 6(a)(ii), a Non-Qualified Option that is
outstanding on the date of an optionee's death shall remain outstanding for an
additional period after the date of such death.

                  (b) Terms and Conditions of Stock Appreciation Rights.

                        (i) An SAR shall entitle the holder thereof to receive
payment of an amount, in cash, shares of Common Stock or a combination thereof,
as determined by the Board, equal in value to the excess of the fair market
value of the shares as to which the award is granted on the date of exercise
over an amount specified by the Board. Any such award shall be in such form and
shall have such terms and conditions as the Board may determine.

                        (ii) The Board may provide that an SAR may be exercised
only within the 60-day period following the occurrence of a Terminating Event
(as defined in Section 13(b)) or a Change in Control (as defined in Section
13(c)). The Board may also provide that in the event of the occurrence of a
Terminating Event or a Change in Control the amount to be paid upon the exercise
of an SAR shall be based on the Terminating Event Price (as defined in Section
13(d)).
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                  (c) Terms and Conditions of Restricted Stock. Subject to the
following provisions, all awards of rights to purchase Restricted Stock shall be
in such form and shall have such terms and conditions as the Board may
determine:

                        (i) The Restricted Stock award shall specify the number
of shares of Restricted Stock to be awarded, the price, if any, to be paid by
the holder of the rights to purchase the Restricted Stock (which shall in no
event be less than par value) and the date or dates on which, or the conditions
upon the satisfaction of which, the Restricted Stock will vest. The vesting of
Restricted Stock may be conditioned upon the completion of a specified period of
service as an Outside Director, upon the attainment of specified performance
goals or upon such other criteria as the Board may determine.

                        (ii) Stock certificates representing the Restricted
Stock purchased by an Outside Director shall be registered in the Outside
Director's name, but the Board may direct that such certificates be held by the
Company on behalf of the Outside Director. Except as may be permitted by the
Board, Restricted Stock may not be sold, transferred, assigned, pledged or
otherwise encumbered by the Outside Director until such stock has vested in
accordance with the terms of the Restricted Stock award. At the time Restricted
Stock vests, a certificate for such vested shares shall be delivered to the
Outside Director (or his or her designated beneficiary in the event of death),
free of all restrictions.

                        (iii) The Board may provide that the Outside Director
shall have the right to vote with respect to the shares of Restricted Stock so
purchased. The Board may provide that Common Stock received as a dividend on, or
in connection with a stock split of, Restricted Stock shall be subject to the
same restrictions as the Restricted Stock.

                        (iv) Except as may be provided by the Board, in the
event of an Outside Director's termination of service as an Outside Director
before all of his or her Restricted Stock has vested, or in the event any
conditions to the vesting of Restricted Stock have not been satisfied prior to
any deadline for the satisfaction of such conditions set forth in the award, the
shares of Restricted Stock which have not vested shall be forfeited, and the
Board shall provide that (A) the purchase price paid by the Outside Director
with respect to such shares shall be returned to the Outside Director or (B) a
cash payment equal to such Restricted Stock's fair market value on the date of
forfeiture, if lower, shall be paid to the Outside Director.

                        (v) The Board may waive, in whole or in part, any or all
of the conditions to receipt of, or restrictions with respect to, any or all of
the Outside Director's Restricted Stock.

                  (d) Terms and Conditions of Deferred Stock Awards. Subject to
the following provisions, all awards of Deferred Stock shall be in such form and
shall have such terms and conditions as the Board may determine:
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                        (i) The Deferred Stock award shall specify the number of
shares of Deferred Stock to be awarded to any Outside Director and the duration
or the period (the "Deferred Period") during which, and the conditions under
which, receipt of the Stock will be deferred. The Board may condition the award
of Deferred Stock, or receipt of Common Stock or cash at the end of the Deferral
Period, upon the attainment of specified performance goals or such other
criteria as the Board may determine.

                        (ii) Except as may be permitted by the Board, Deferred
Stock awards may not be sold, assigned, transferred, pledged or otherwise
encumbered during the Deferral Period.

                        (iii) At the expiration of the Deferral Period, the
Outside Director (or his or her designated beneficiary in the event of death)
shall receive (A) certificates for the number of shares of Common Stock equal to
the number of shares covered by the Deferred Stock award, (B) cash equal to the
fair market value of such Common Stock or (C) a combination of shares and cash,
as the Board may determine.

                        (iv) Except as may be provided by the Board, in the
event of an Outside Director's termination of service before the end of the
Deferral Period, his or her Deferred Stock award shall be forfeited.

                        (v) The Board may waive, in whole or in part, any or all
of the conditions to receipt of, or restrictions with respect to, Common Stock
or cash under a Deferred Stock award.

            7. Election to Defer Awards. The Board may permit an Outside
Director to elect to defer receipt of an award for a specified period or until a
specified event, upon such terms as are determined by the Board

            8. Adjustments. In the event of any merger, reorganization,
consolidation, sale of all or substantially all of the assets, recapitalization,
Common Stock dividend, Common Stock split, spin-off, split-up, split-off,
distribution of assets (including cash) or other change in corporate structure
of the Company affecting the Common Stock, a substitution or adjustment, as may
be determined to be appropriate, shall be made in the aggregate number of shares
of Com mon Stock reserved for issuance under the Plan, the identity of the stock
or other securities to be issued under the Plan, the number of shares of Common
Stock subject to outstanding awards and the amounts to be paid by an Outside
Director, a permissible transferee (as provided in Section 10), the Company or
any Eligible Subsidiary, as the case may be, with respect to out standing
awards.

            9. Duration of Plan. No Non-Qualified Options, SARs or Deferred
Stock may be granted or Restricted Stock sold under the Plan after April 30,
2008.
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            10. Nontransferability. Except as provided in this Section 10,
Non-Qualified Options, SARs, and rights to acquire Deferred Stock or purchase
Restricted Stock granted under the Plan shall not be transferable other than by
will or the laws of descent and distribution and shall be exercisable during the
Outside Director's lifetime only by the Outside Director or by the Outside
Director's guardian or legal representative. Subject to such administrative
conditions as the Board may prescribe, an Outside Director may, upon providing
written notice to the Board or its designee, elect to transfer, without
consideration therefor, all or any portion of the Non-Quali fied Options granted
to the Outside Director under the Plan to members of his or her "immediate
family" (as defined below), to a trust or trusts maintained solely for the
benefit of the Outside Director and/or the members of his or her immediate
family, or to such other entities as may be determined by the Board (each, a
"permissible transferee"). Any purported assignment, alienation, pledge,
attachment, sale, transfer, or encumbrance that does not qualify as a permis
sible transfer under this Section 10 shall be void and unenforceable against the
Plan and the Com pany. For purposes of this Section 10, the term "immediate
family" shall mean, with respect to a particular Outside Director, the Outside
Director's spouse, parents, children, stepchildren, legally adopted children,
and grandchildren, and such other persons as may be determined by the Board. The
terms of any such Non-Qualified Option, as set forth under the Plan or
otherwise, shall be binding upon the beneficiaries, executors, administrators,
heirs and successors of the Optionee and, as applicable, a permissible
transferee hereunder. The exercise of a Non-Qualified Option that is transferred
pursuant to this Section 10 and the shares of Common Stock acquired thereby
shall be subject to the applicable provisions of the Plan and to all applicable
requirements of law, including, but not limited to, the registration
requirements under the Securities Act of 1933, as amended. Upon any transfer of
a Non-Qualified Option, as provided in this Section 10, the permissible
transferee with respect to such option shall be subject to the provisions of the
Plan that otherwise would apply to such option if it was still held by the
Optionee.

            11. Shareholder Approval. No Non-Qualified Options , SARs, rights to
purchase Restricted Stock or Deferred Stock may be granted under Section 6 of
the Plan prior to the approval of the Plan, as herein amended and restated, by
the holders of a majority of the shares of Common Stock present, or represented,
and entitled to vote at a meeting of shareholders of the Company.

            12. Amendment and Termination of the Plan. The Board may, at any
time, alter, amend, suspend, or terminate the Plan. No such action of the Board
shall require the ap proval of the shareholders of the Company, unless required
by applicable law or by the rules or regulations of any securities exchange or
regulatory agency, or otherwise required in order to enable transactions
associated with grants of Non-Qualified Options, SARs, rights to purchase
Restricted Stock or Deferred Stock, and purchases of Restricted Stock to qualify
for an exemption from Section 16(b) of the Act or, to the extent desirable, to
qualify for the exception for qualified performance-based compensation under
Section 162(m) of the Code. No NonQualified Options, SARs, rights to purchase
Restricted Stock or Deferred Stock may be granted, or Restricted Stock sold,
during any suspension of the Plan or after the termination of the Plan, and no
alteration, amendment, suspension, or termination of the Plan shall, without the
Optionee's
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(or, as applicable, permissible transferee's (as provided in Section 10)) or
holder's consent, alter or impair any rights or obligations any such person
under any Non-Qualified Option, SAR, rights to purchase Restricted Stock or
Deferred Stock theretofore granted, or Restricted Stock theretofore sold, under
the Plan.

            13. Terminating Event and Change in Control.

                  (a) Unless otherwise determined by the Board at the time of
grant or by amendment (with the holder's consent) of such grant, in the event of
the earliest of (i) the occurrence of a Terminating Event (as defined in Section
13(b)), (ii) the occurrence of a Change in Control (as defined in Section
13(c)), (iii) the dissemination of a proxy statement soliciting proxies from
stockholders of the Company, by someone other than the Company, seeking
stockholder approval of a Terminating Event of the type described in Section
13(b)(i), or (iv) the publication or dissemination of an announcement of action
intended to result in a Terminating Event of the type described in Section
13(b)(ii) or (iii), and solely with respect to awards held by an Outside
Director in service as an Outside Director at the time of any such event
described in (i) through (iv) above (or then held by a permissible transferee of
such Outside Director pursuant to Section 10):

                        (A)   all outstanding Non-Qualified Options and all
                              outstanding SARs awarded under Section 6 of the
                              Plan shall become fully exercisable and vested;

                        (B)   the restrictions and deferral limitations
                              applicable to any outstanding Restricted Stock and
                              Deferred Stock awards under Section 6 of the Plan
                              shall lapse and such shares and awards shall be
                              deemed fully vested; and

                        (C)   to the extent the cash payment of any award under
                              Section 6 of the Plan is based on the fair market
                              value of Common Stock, such fair market value
                              shall be the Terminating Event Price.

                  (b) As used in this Plan, a "Terminating Event" shall be:

                        (i) the reorganization, merger, or consolidation of the
Company with or into any other entity as a result of which the Common Stock is
exchanged for or converted into cash or property or securities not issued by the
Company, unless the reorganization, merger, or consolidation shall have been
affirmatively recommended to the Company's shareholders by a majority of the
members of the Board and provision shall have been made for Non-Qualified
Options and rights to purchase Restricted Stock then outstanding to be continued
in effect following the reorganization, merger, or consideration;
<PAGE>   12

                                                                            12

                        (ii) the acquisition of all or substantially all of the
property or of more than thirty-five percent (35%) of the voting power of the
Company by any person or entity; or

                        (iii) the occurrence of any circumstance having the
effect that directors of the Company who were nominated for election as
directors by the Governance and Nominating Committee of the Board shall cease
for any reason to constitute a majority of the authorized number of directors of
the Company's Board.

                  (c) As used in this Plan, a "Change in Control" shall mean the
occurrence of any of the following events:

                        (i) any Person is or becomes the Beneficial Owner,
directly or indirectly, of securities of the Company (not including in the
securities beneficially owned by such Person any securities acquired directly
from the Company or its Affiliates) representing 35% or more of the combined
voting power of the Company's then outstanding securities;

                        (ii) the following individuals cease for any reason to
constitute a majority of the number of directors then serving as directors of
the Company: individuals who, on July 24, 1997, constitute the Board and any new
director (other than a director whose initial assumption of office is in
connection with the settlement of an actual or threatened election contest,
including but not limited to a consent solicitation, relating to the election of
directors of the Company) whose appointment or election by the Board or
nomination for election by the Company's stockholders was approved or
recommended by a vote of at least two-thirds (2/3) of the directors then still
in office who either were directors on July 24, 1997 or whose appointment,
election or nomination for election was previously so approved or recommended;

                        (iii) there is consummated a merger or consolidation of
the Company or any direct or indirect subsidiary of the Company with any other
corporation or entity, other than (A) a merger or consolidation which would
result in the voting securities of the Company outstanding immediately prior to
such merger or consolidation continuing to represent (either by remaining
outstanding or by being converted into voting securities of the surviving entity
or any Parent thereof), in combination with the ownership of any trustee or
other fiduciary holding securities under an employee benefit plan of the Company
or any subsidiary of the Company, at least 65% of the combined voting power of
the securities of the Company, such surviving entity or any Parent thereof
outstanding immediately after such merger or consolidation or (B) a merger or
consolidation effected solely to implement a recapitalization of the Company or
The Dime Savings Bank of New York, FSB (the "Bank") (or similar transaction) in
which no Person is or becomes the Beneficial Owner, directly or indirectly, of
securities of the Company or the Bank (not including in the securities
beneficially owned by such Person any securities acquired directly from the
Company or its Affiliates) representing 35% or more of the combined voting power
of the Company's or the Bank's then outstanding securities; or
<PAGE>   13

                                                                            13

                        (iv) the stockholders of the Company or the Bank approve
a plan of complete liquidation or dissolution of the Company or the Bank,
respectively, or there is consummated a sale or disposition by the Company or
any of its subsidiaries of any assets which individually or as part of a series
of related transactions constitute all or substantially all of the Company's
consolidated assets (provided that, for these purposes, a sale of all or
substantially all of the voting securities of the Bank or a Parent of the Bank
shall be deemed to constitute a sale of substantially all of the Company's
consolidated assets), other than any such sale or disposition to an entity at
least 65% of the combined voting power of the voting securities of which are
owned by stockholders of the Company in substantially the same proportions as
their ownership of the voting securities of the Company immediately prior to
such sale or disposition.

                  (d) As used in connection with the definition of Change in
Control (as set forth in subsection (c) of this Section 13), "Affiliate" shall
have the meaning set forth in Rule 12b-2 promulgated under Section 12 of the
Act; "Beneficial Owner" shall have the meaning set forth in Rule 13d-3 under the
Act; "Parent" shall mean any entity that becomes the Beneficial Owner of at
least 80% of the voting power of the outstanding voting securities of the
Company or of an entity that survives any merger or consolidation of the Company
or any direct or indirect subsidiary of the Company; and "Person" shall have the
meaning given in Section 3(a)(9) of the Act, as modified and used in Sections
13(d) and 14(d) thereof, except that such term shall not include (i) the Company
or any of its subsidiaries, (ii) a trustee or other fiduciary holding securities
under an employee benefit plan of the Company or any of its Affiliates, (iii) an
underwriter temporarily holding securities pursuant to an offering of such
securities, or (iv) a corporation or entity owned, directly or indirectly, by
the stockholders of the Company in substantially the same proportions as their
ownership of stock of the Company.

                  (e) As used in this Plan, "Terminating Event Price" means the
highest price per share paid for Common Stock in any transaction reported on the
New York Stock Exchange Composite Index, or paid or offered for the Common Stock
in any transaction related to a Terminating Event or a Change in Control, at any
time during the 90-day period ending with the day on which the Terminating Event
or Change in Control occurs, or, if a shorter period, at any time during the
period commencing with the date of grant and ending with the day on which the
Terminating Event or Change in Control occurs.

      14. Dividends and Dividend Equivalents. Except as otherwise provided in
Section 5(d), the Board shall have the authority to determine that amounts equal
to the amount of any dividends declared with respect to the number of shares of
Common Stock covered by an award (including Non-Qualified Options) (i) will be
paid to the holder currently, (ii) will be deferred and deemed to be reinvested,
(iii) will otherwise be credited to the holder, or (iv) that the holder has no
rights with respect to such dividends.
<PAGE>   14

                                                                            14

      15.   General Provisions.

            (a) Each grant under the Plan shall, as applicable, be subject to
(i) the listing, registration or qualification of the Common Stock upon any
securities exchange or under any state or federal law and (ii) the consent or
approval of any governmental regulatory body.

            (b) Neither the adoption of the Plan nor any grant hereunder shall
confer upon any Outside Director any right to continue in the service as a
director of the Company or any of its subsidiaries.

            (c) No member of the Board or any committee of the Board, nor any
officer or employee of the Company or any of its subsidiaries acting on behalf
of the Board or any committee of the Board, shall be personally liable for any
action, determination or interpretation taken or made with respect to the Plan,
and all members of the Board or any such committee of the Board and all officers
or employees of the Company and any of its subsidiaries acting on their behalf
shall, to the extent permitted by law, be fully indemnified and protected by the
Company in respect of any such action, determination or interpretation.

      16. Effective Date. The Plan was initially effective as of January 1, 1997
(the "Initial Effective Date"), and was amended effective as of June 27, 1997
and September 19, 1997, respectively. The Plan, as herein amended and restated,
shall be effective as of March 27, 1998 (the "Restatement Effective Date").