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                                                                   Exhibit 10.40

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

            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. The Plan provides for the grant of
options ("Non-Qualified 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"), and for the sale of shares of restricted Common Stock ("Restricted
Stock").

            2. Stock Subject to Plan. The maximum number of shares of Common
Stock that may be subject to Non-Qualified Options granted hereunder and the
number of shares of Common Stock that may be sold as Restricted Stock hereunder
shall not, in the aggregate, exceed 350,000 shares of Common Stock, subject to
the adjustments under Section 6. The shares of Common Stock that are issuable
under the Plan may consist of authorized but unissued shares or treasury shares.
Shares of Common Stock subject to the unexercised portions of any Non-Qualified
Options granted under the Plan that expire or terminate or are canceled or
surrendered, and shares of Restricted Stock sold under the Plan that are
repurchased by the Company or, as applicable, any Eligible Subsidiary (as
defined below), may again become available for the grant of Non-Qualified
Options and the sale of Restricted Stock under the Plan.

            3. Eligibility. Each person who shall be eligible for the grant of
Non-Qualified Options and the purchase of Restricted Stock hereunder shall be a
member of the Board of Directors of the Company or of any Eligible Subsidiary
(as defined below) who is not an employee 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"). For purposes of this
Section 3, an "Eligible Subsidiary" shall mean any corporation, partnership,
joint venture or other entity in which the Company has, directly or indirectly,
a greater than fifty percent (50%) beneficial ownership interest. The Outside
Director to whom a Non-Qualified Option is granted under the Plan is 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 evidencing
Non-Qualified Options granted and Restricted Stock sold under the Plan and to
make all other determinations deemed necessary or advisable for the
administration of the Plan. All deci-
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sions, 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 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 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"). Notwithstanding anything in this Section 4 to the contrary,
the Compensation Committee of the Board or a subcommittee appointed for this
purpose by the Board or the Compensation Committee and the Benefits Committee of
the Company (herein any such committee shall be referred to as the "Committee")
shall be authorized to exercise any of the administrative authorities otherwise
available to the Board under the Plan, except (i) with respect to the right to
make initial and annual grants to an Outside Director of an Eligible Subsidiary,
(ii) with respect to the right to alter, amend, suspend or terminate the Plan,
and (iii) to the extent the possession or exercise of any such authority by the
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 Act.

            5.    Types of Awards.

                  (a) Initial Grant. Each Outside Director who first becomes an
Outside Director of the Company on or after the Effective Date of the Plan, as
provided in Section 15, shall receive, automatically and without further action
of the Board or the Committee, 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 is 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 8; and (ii) the right to purchase 1,000
shares of Restricted Stock under the terms and conditions set forth in Section
9, in each case subject to adjustment under Section 6. The Board may make an
initial, one-time grant of any number of Non-Qualified Options and rights to
purchase Restricted Stock to any Outside Director of an Eligible Subsidiary upon
his or her first becoming an Outside Director of the Eligible Subsidiary on or
after the Effective Date of the Plan as the Board may in its sole discretion
determine; provided, however, that in no event may any such Outside Director
receive an initial grant of Non-Qualified Options or rights to purchase
Restricted Stock in an amount greater than the amount that is otherwise granted
to an Outside Director of the Company under this Section 5(a), and in no event
may any Outside Director receive more than one initial grant award under the
Plan.

                  (b) Annual Grant. On the date that is one month following each
annual meeting of the shareholders of the Company occurring on or after the
Effective Date of the Plan (or, if on such date the Common Stock does not trade
on the New York Stock Exchange, on the next following day on which the Common
Stock trades on the New York Stock Exchange), each Outside Director then elected
to the Board or continuing to serve on the Board immediately following such
shareholder meeting shall receive, automatically and without further action of
the Board or the Committee, a grant of a Non-Qualified Option to purchase 1,500
shares of Common Stock under the terms and conditions set forth in Section 8,
subject to adjustment under Section
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6. The Board may make annual grants of any number of Non-Qualified Options to
any Outside Director of an Eligible Subsidiary as the Board may in its sole
discretion determine; provided, however, that in no event may any such Outside
Director receive in any year an annual grant of Non-Qualified Options in an
amount greater than the amount that is otherwise granted annually to an Outside
Director of the Company under this Section 5(b), and in no event may any Outside
Director receive in any year more than one annual grant award under the Plan.

            6. 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 Common Stock reserved for issuance under the Plan, the identity of the stock
to be issued under the Plan, the initial and annual grants of Non-Qualified
Options and Restricted Stock 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 outstanding awards.

            7. Duration of Plan. No Non-Qualified Options may be granted or
Restricted Stock sold following the tenth anniversary of the date on which the
Plan is initially approved by the shareholders of the Company.

            8. Terms and Conditions of Non-Qualified Options.

            Non-Qualified Options granted under the Plan shall be subject to the
following terms and conditions:

                  (a) Written Documentation. Each Non-Qualified Option granted
pursuant to the Plan shall be evidenced by a grant letter executed by the
Company.

                  (b) Option Term. Each Non-Qualified Option shall have a term
of eleven (11) years.

                  (c) Exercisability. Each 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 is 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
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for at least five (5) full years (including, for this purpose, service rendered
as an Outside Director prior to the 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 (x) a Terminating Event (as defined in Section 13), (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 (a) of Section 13, or (z) the publication
or dissemination of an announcement of action intended to result in a
Terminating Event of the type described in clause (b) or (c) of Section 13,
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.

                  (d) Exercise Price. The exercise price per share of Common
Stock purchasable under a Non-Qualified Option shall be equal to the closing
price of the Common Stock, as reported on the New York Stock Exchange, on the
date the Non-Qualified Option is granted.

                  (e) Method of Exercise. Non-Qualified Options may be
exercised, in whole or in part and to the extent then vested, during the
relevant option period by 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.

                (f) 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 provided below), the Non-Qualified 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 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
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only within thirty-six (36) months after such termination 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) 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 had been granted to such Optionee shall immediately
terminate and cease to be exercisable upon the giving of notice of such
termination for cause.

                  (g) No Shareholder Rights. An Optionee or, as appropriate, 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 Non-Qualified 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.

            9. Terms and Conditions of Rights to Purchase Restricted Stock.

            All grants of Restricted Stock under the Plan shall be subject to
the following terms and conditions:

                  (a) Purchase Period. Each right to purchase Restricted Stock
under the Plan shall expire sixty (60) days after it is granted.

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

                  (c) Lapse of Restrictions. No shares of Restricted Stock may
be sold or otherwise transferred or hypothecated until the restrictions
applicable thereto have lapsed pursuant to this Section 9(c). The restrictions
applicable to 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 anniversary of such grant date for the
shares, provided that, in each such case, the holder is in continuous service as
an Outside Director from the grant date through the applicable anniversary of
such grant date. Notwithstanding the foregoing, the restrictions applicable to
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 (includ-
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ing, for this purpose, service rendered as an Outside Director prior to the
Effective Date of the Plan, and service rendered as an Anchor Outside Director),
or (B) upon the occurrence of (x) a Terminating Event (as defined in Section
13), (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 (a)
of Section 13, or (z) the publication or dissemination of an announcement of
action intended to result in a Terminating Event of the type described in clause
(b) or (c) of Section 13, provided the holder is in service as an Outside
Director at the time of the occurrence of such event. In addition, if any of the
events described in clause (x), (y), or (z) above occurs while an Outside
Director holds rights to purchase Restricted Stock, then, upon the exercise of
such rights and the purchase of shares of Restricted Stock, the restrictions
applicable to such shares shall immediately lapse. Notwithstanding anything in
the Plan to the contrary, if the 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 and all rights to purchase Restricted Stock
that had not then been exercised shall be immediately forfeited.

                  (d) Repurchase of Shares. In the event of the termination of
the status of the holder of 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 Effective Date of the Plan, and service rendered
as an Anchor Outside 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 purchasing 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 (determined without regard to any restrictions) of the
Restricted Stock on the date of such termination.

                  (e) Shareholder Rights. The holder of Restricted Stock shall
have the right to vote with respect to such Restricted Stock and shall be
entitled to dividends, 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.

            10. Nontransferability. Except as provided in this Section 10,
Non-Qualified Options 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 Optionee's lifetime only by the Optionee or by the Optionee'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 Committee
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or its designee, elect to transfer, without consideration therefor, all or any
portion of the Non-Qualified 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. Any purported assignment, alienation, pledge,
attachment, sale, transfer, or encumbrance that does not qualify as a
permissible transfer under this Section 10 shall be void and unenforceable
against the Plan and the Company. 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 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 granted under the
Plan may be exercised and no Restricted Stock may be sold prior to approval of
the Plan 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 approval 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 or grants of rights to purchase,
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
Non-Qualified Option or right to purchase Restricted 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 (or, as applicable,
permissible transferee's (as provided in Section 10)) or holder's consent, alter
or impair any rights or obligations under any Non-Qualified Option theretofore
granted, or Restricted Stock theretofore sold, to him or her under the Plan.

            13.   Terminating Event.

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

                  (b) 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

                  (c) the occurrence of any circumstance having the effect that
directors of the Company who were nominated for election as directors by the
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.

            14.   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 the Committee, nor any officer
or employee of the Company or any of its subsidiaries acting on behalf of the
Board or the Committee, 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 the Committee 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.

            15. Effective Date. Subject to the approval of the Plan by the
affirmative votes of the holders of a majority of the shares of Common Stock
present, or represented, and entitled to vote at a meeting of shareholders, the
Plan shall be effective as of January 1, 1997.