Exhibit 10 (m) (i)
 

STATE BANCORP, INC.

NONQUALIFIED STOCK OPTION AGREEMENT

NONQUALIFIED STOCK OPTION AGREEMENT dated as of November 13, 2006, (the "Date of
Grant"), between STATE BANCORP, INC. (the "Company") and THOMAS M. O’BRIEN (the
"Grantee").

1.  Grant of Options. Pursuant to the Employment Agreement dated November 6,
2006 (the “Employment Agreement”) by and among the Grantee, the Company and
State Bank of Long Island (the “Bank”), the Company hereby grants the Grantee
options (the “Options”) to purchase 164,745 shares of its common stock, par
value $5.00 per share (the "Optioned Shares").

2.  Term of Options. The Options shall be an effective and binding obligation of
the Company only during the Option Term (as hereinafter defined) and, upon the
expiration of the Option Term, the Options shall become null and void to the
extent of the Optioned Shares not theretofore purchased. The "Option Term", for
purposes of this Agreement, shall be the period commencing with the Date of
Grant and ending with the earlier of the following dates: (i) the tenth
anniversary of November 6, 2006 (the “Announcement Date”) or (ii) the Company’s
termination of the Grantee’s employment with Cause (as defined in the Employment
Agreement).

3.  Exercise Price. The exercise price per share shall be $17.84.

4.  Exercise of Options. Subject to the terms and conditions set forth in this
Agreement, including the accelerated vesting and forfeiture provisions set forth
in Section 5 below, the Options will become exercisable ("vest") as follows:
twenty (20%) percent of the Optioned Shares shall vest and become exercisable on
each anniversary of the Announcement Date until all of the Optioned Shares have
become exercisable.

5.  Termination. Notwithstanding anything to the contrary herein, the following
provisions shall govern the treatment of the Options following the termination
of the Grantee’s employment:

a.  Death. If the Grantee’s termination of employment is due to death, the
entire unvested portion of the Options shall vest as of the date of the
Grantee’s death.

b.  Disability. If the Grantee’s termination of employment is due to the
determination of the Grantee’s disability pursuant to Section 10 of the
Employment Agreement, the Options shall continue to vest as if the Grantee
remained in the active service of the Company and the Bank and, in the event of
the Grantee’s death prior to full vesting of the Options, any unvested portion
of the Options shall vest as of the date of the Grantee’s death.
 
c.  Termination With Cause. If the Grantee’s employment is terminated by the
Bank with Cause (as defined in the Employment Agreement), any unexercised
Options, whether or not vested, shall be forfeited. If the Board of Directors of
the Company (the “Board”) shall have temporarily suspended the Grantee’s duties
pursuant to the Employment Agreement while any proceeding to discharge the
Grantee with Cause is pending, the Board may, by written notice to the Grantee,
also temporarily suspend the exercise of the Option.
 
d.  Termination without Cause. If the Grantee’s employment is terminated by the
Bank for any reason other than Cause or disability, any unvested Options shall
vest as of the date of such termination of employment.
 
e.  Resignation with Good Reason. If the Grantee resigns with Good Reason (as
defined in the Employment Agreement), any unvested Options shall vest as of the
date of termination of employment.
 
f.  Resignation without Good Reason. If the Grantee resigns without Good Reason,
any unvested Options shall be forfeited and shall terminate and be of no further
force or effect as of the date of termination of employment.

6.  Method of Exercise. An Option may be exercised in whole or in part at any
time by written notice to the Company, at its principal office at 699 Hillside
Avenue, New Hyde Park, New York (or such other place as may hereafter be
designated by the Company), which notice shall specify the number of Optioned
Shares as to which the Grantee desires to exercise. The notice shall be
accompanied by an unendorsed certified or official bank check or money order for
the full exercise price, in United States dollars, payable to the order of the
Company or, if the Grantee so elects, in whole or in part by delivery to the
Company of shares of unrestricted common stock of the Company then owned by the
Grantee, provided such shares have been beneficially owned by the Grantee for at
least one (1) year. Any shares to be used in full or partial payment of the
exercise price shall be valued at the Fair Market Value of the shares on the
date of exercise of the Option. “Fair Market Value” of a share for purposes of
this Agreement shall mean (i) if, on such date, the Company’s stock is listed on
a securities exchange or quoted on a market system, the closing price of a share
of stock as quoted on such securities exchange or market system constituting the
primary market for the Company’s stock on the last trading day prior to the day
of determination, as reported in The Wall Street Journal or such other source as
the Company deems reliable or (ii) if, on such date, the Company’s stock is not
listed on a securities exchange or quoted on a market system, the Fair Market
Value of a share of the Company’s stock shall be as determined by the Board of
Directors of the Company in good faith without regard to any restriction other
than a restriction which, by its terms, will never lapse. In the event the
exercise price is to be paid in full or in part by surrender of the Grantee’s
shares, in lieu of actual surrender of certificates representing shares owned by
the Grantee the Company may waive such surrender and instead deliver to or on
behalf of the Grantee a certificate representing a number of shares equal to the
total number of shares as to which the Option is then being exercised less the
number of shares which would otherwise have been surrendered by the Grantee to
the Company. The Company’s Board of Directors (or any committee of such Board of
Directors with authority over the Company’s stock option plans) may permit the
Grantee to make payment by wire transfer and may permit electronic delivery of
notice in lieu of written notice. Notwithstanding the foregoing, an Option may
not be exercised by tender to the Company, or attestation to the ownership, of
shares to the extent such tender or attestation would constitute a violation of
the provisions of any law, regulation or agreement restricting the redemption of
the Company’s Stock.

7.  Tax Withholding. No shares will be issued pursuant to the exercise of an
Option unless and until the Grantee pays to the Company, or makes provision
satisfactory to the Company for payment of, any federal, state or local
withholding taxes required by law to be withheld in respect of an Option. The
Grantee shall have the right to direct the Company to deduct from the shares
issuable to the Grantee upon the exercise of an Option, or to accept from the
Grantee the tender of, a number of whole shares having a Fair Market Value equal
to all or any part of the tax withholding obligations of the Grantee. 

8.  Compliance with Securities Law. The issuance of shares pursuant to this
Agreement shall be subject to compliance with all applicable requirements of
Federal, state and foreign law with respect to such securities and the
requirements of any stock exchange or market system upon which the Company’s
stock may then be listed or quoted. In addition, no Option may be exercised or
shares issued pursuant to this Agreement unless (a) a registration statement
under the Securities Act of 1933 shall at the time of such exercise or issuance
be in effect with respect to the shares issuable or (b) in the opinion of legal
counsel to the Company, the shares issuable pursuant to this Agreement may be
issued in accordance with the terms of an applicable exemption from the
registration requirements of the Securities Act. As soon as practicable, the
Company shall prepare and file with the Securities and Exchange Commission a
registration statement on Form S-8 covering a sufficient number of shares of the
Company’s common stock to provide for all of the common stock contemplated to be
issued the under this Agreement. Thereafter, the Company shall take all actions
required to maintain the effectiveness of such registration statement until all
common stock issuable under this Agreement has been so issued or the Option Term
has expired. Subject to the Company’s compliance with the foregoing provisions
of this Agreement, the inability of the Company to obtain from any regulatory
body having jurisdiction the authority, if any, deemed by the Company’s legal
counsel to be necessary to the lawful issuance of any shares hereunder shall
relieve the Company of any liability in respect of the failure to issue such
shares as to which such requisite authority shall not have been obtained.

9.  Reclassification, Consolidation, or Merger. In the event of any
recapitalization, forward or reverse split, reorganization, merger,
consolidation, spin-off, combination, repurchase, or exchange of Company stock
of the same class as the Optioned Shares for other securities, stock dividend or
other special and nonrecurring dividend or distribution (whether in the form of
cash, securities or other property) that has a material effect on the fair
market value of the Company stock, liquidation, dissolution, or other similar
corporate transaction or event that has a material effect on the fair market
value of the Company stock, such that an adjustment is appropriate in order to
prevent the dilution or enlargement of the rights of the Grantee with respect to
the Options, the Company's Board of Directors or any committee of such Board of
Directors with authority to administer the Company's stock option plans shall,
in such manner as it may determine, adjust any or all of (i) the number and kind
of securities underlying the Options and (ii) the exercise price of the Options,
to prevent such dilution or enlargement.

10.  Rights Prior to Exercise of Options. The Grantee shall have no rights as a
shareholder with respect to the Optioned Shares as to which the Options shall
not have been exercised and payment made as herein provided, and shall have no
rights with respect to such shares other than those rights that are expressly
conferred by this Agreement.

11.  Nonassignability. This Options shall not be transferred, assigned, pledged
or hypothecated in any way (whether by operation of law or otherwise) by the
Grantee otherwise than by will or laws of descent and distribution and shall be
exercisable during his or her lifetime only by the Grantee, and shall not be
subject to execution, attachment or similar process. The Grantee may, by written
notice delivered to the Company prior to the Grantee's death, designate a
beneficiary or beneficiaries who shall, upon the Grantee's death, succeed to his
rights in respect of any unexercised Options and may revoke a prior designation
by similar subsequent notice.

12.  Binding Effect, Modification. This Agreement is binding upon the heirs,
executors, administrators, successors and permitted assigns of the parties
hereto. This Agreement may only be altered, modified or amended by a writing
signed by the Company and the Grantee.

13.  Non-qualified Stock Options. The Options are not intended to be incentive
stock options within the meaning of Section 422(b) of the Internal Revenue Code.

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
Date of Grant.

STATE BANCORP, INC.

BY:___________________________

______________________________
THOMAS M. O’BRIEN (Grantee)

(Form of Notice to be Given When
Foregoing Options is Exercised)

State Bancorp, Inc.
699 Hillside Avenue
New Hyde Park, New York 11040

The Undersigned, Thomas M. O’Brien, as Grantee under the Non-Qualified Stock
Option Agreement dated as of November 13, 2006, hereby exercises the option
contained in said Agreement for the purchase of __________ shares of the common
stock of the Company. The undersigned delivers to you herewith in payment of the
shares:
 
__________a certified official bank check or money order payable to the order of
the Company, in the amount of $______________;
 
________ shares of unrestricted common stock of the Company.

Dated: _______________, 2006

__________________________________
Signature

__________________________________
Address

__________________________________

Note: If the option is exercised either by a legatee under the Grantee's last
will or by the personal representative of the Grantee or designated beneficiary
of the Grantee, evidence must be submitted satisfactory to the Company that such
person is the personal representative or beneficiary, as applicable of the
Grantee.