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                                                                   EXHIBIT 10.16

                IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE

                          IN AND FOR NEW CASTLE COUNTY

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IN RE CARVER BANCORP, INC.           :                 Cons. C.A. No. 17743
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                STIPULATION AND ORDER OF DISMISSAL WITH PREJUDICE

         IT IS HEREBY STIPULATED AND AGREED by the parties to this action listed
below by and through their undersigned counsel, that pursuant to Court of
Chancery Rule 41(a), the action filed by BBC Capital Market, Inc. in C.A. No.
17743 be and hereby is dismissed with prejudice as to the parties listed below.
Each party will bear its own court costs. It is further stipulated between BBC
Capital Market, Inc., and Carver Bancorp, Inc., Deborah C. Wright, David N.
Dinkins, Linda H. Dunham, Robert J. Franz, Pazel G. Jackson, Jr., Herman
Johnson, David R. Jones (collectively, the "Carver Parties), and it is ordered
by the Court, that:

         1.       Effective May 19, 2000, Kevin Cohee and Teri Williams will be
                  appointed by Carver to serve (a) on the Carver Board of
                  Directors (the "Carver Board") for a term expiring at the
                  annual meeting of stockholders for the fiscal year ending
                  March 31, 2002 and (b) on the Board of Directors of Carver
                  Federal Savings Bank ("Carver Bank Board") for a coterminous
                  period, irrespective of whether the Carver Bank Board is
                  classified.

         2.       Carver will hold its annual meeting of stockholders for the
                  fiscal year ending March 31, 2000 on or before March 24, 2001
                  (the "2000 Annual Meeting").

         3.       In connection with the 2000 Annual Meeting, Carver will ensure
                  that a sufficient number of directors are made eligible for
                  election to the Carver Board so that the sum of (a) the number
                  two and (b) the number of directorships up for election at the
                  2000 Annual Meeting will constitute a majority of the number
                  of directors on the Carver Board as of the date of the 2000
                  Annual Meeting. The foregoing provision will apply under all
                  circumstances including, without limitation, in the event that
                  the holders of


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                  Carver's Series A Preferred Stock and/or Series B Preferred
                  Stock are permitted to designate one or more additional
                  directors to the Carver Board at any time before the 2000
                  Annual Meeting pursuant to the terms of those securities.

Dated:  May      , 2000     BOUCHARD MARGULES & FRIEDLANDER
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                            By: Andre G. Bouchard
                                Attorneys for Plaintiff BBC Capital Market, Inc.

Dated:  May      , 2000     RICHARDS, LAYTON & FINGER
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                            ---------------------------------------
                            By: Jesse A. Finkelstein
                                Attorneys for Defendants Carver Bancorp, Inc.,
                                Deborah C. Wright, David N. Dinkins,
                                Linda H. Dunham, Robert J. Franz,
                                Pazel G. Jackson, Jr., Herman Johnson
                                and David R. Jones

Dated:  May      , 2000     YOUNG CONAWAY STARGATT & TAYLOR LLP
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                            ---------------------------------------
                            By:  Martin S. Lessner
                                 Attorneys for Provender Opportunities
                                 Fund L.P. and Frederick O. Terrell

Dated:  May      , 2000     MORRIS, NICHOLS, ARSHT & TUNNELL
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                            By:  Jon E. Abramczyk
                            Attorneys for Morgan Stanley  & Co., Incorporated

IT IS SO ORDERED on this _______ day of __________, 2000.


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Vice Chancellor