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Exhibit 10.3  


 
 

AMERICAN FEDERAL SAVINGS BANK
  1998 STOCK OPTION PLAN    
  


        American Federal Savings Bank (the "Bank") sets forth herein the terms of this 1998 Stock Option Plan (the "Plan") as follows: 



 1.    PURPOSE; TYPES OF OPTIONS  




        The Plan is intended to advance the interests of the Bank by providing eligible individuals (as designated pursuant to Section 4 below) with an opportunity
to acquire or increase a proprietary interest in the Bank, which thereby will create a stronger incentive to expend maximum effort for the growth and success of the Bank, and will encourage such
eligible individuals to remain in the employ or service of the Bank or any subsidiary. Each stock option granted under the Plan (an "Option") shall be specifically designated either as an "incentive
stock option" within the meaning of Section 422 of the Internal Revenue Code of 1986, or the corresponding provision of any subsequently-enacted tax statute, as amended from time to time (the
"Code") ("Incentive Stock Option") or as an Option not so qualifying (a "Nonqualified Option"). Notwithstanding the foregoing, any Option granted hereunder shall be a Nonqualified Option (i) to
the extent that any such Option would exceed the limitations set forth in Section 7 below or (ii) if such Option is granted to directors of the Bank who are not officers or other
salaried employees of the Bank or any of its subsidiaries ("Non-Employee Directors") or to directors of any subsidiary of the Bank who are not Non-Employee Directors and who
are not officers or other salaried employees of the Bank or any of its subsidiaries ("Subsidiary Directors"). 



 2.    ADMINISTRATION  




        (a)  Board.
The Plan shall be administered by the Board of Directors of the Bank (the "Board"), which shall have the full power and authority to take all actions and to make
all determinations required or provided for under the Plan or any Option granted or Option Agreement (as defined in Section 8 below) entered into hereunder and all such other actions and
determinations not inconsistent with the specific terms and provisions of the Plan deemed by the Board to be necessary or appropriate to the administration of the Plan or any Option granted or Option
Agreement entered into hereunder. All such actions and determinations shall be by the affirmative vote of a majority of the members of the Board present at a meeting at which any issue relating to the
Plan is properly raised for consideration or without a meeting by written consent of the Board executed in accordance with the Bank's Federal Stock Charter and Bylaws, and with applicable law. The
interpretation and construction by the Board of any provision of the Plan or of any Option granted or Option Agreement entered into hereunder shall be final and conclusive. 



        (b)  Committee.
The Board may from time to time appoint a Stock Option Committee (the "Committee") consisting of not less than two members of the Board. In the discretion of
the Board, the Committee may be comprised of members each of whom qualifies as a "non-employee director" as defined in Rule 16b-3 of the Securities and Exchange
Commission under the Securities Exchange Act of 1934 (the "Exchange Act") and an "outside director" for purposes of Section 162(m) of the Code, in order to qualify grants under the Plan for the
exemption provided by such Rule and as "qualified performance-based compensation" under such Section, respectively. The Board, in its sole discretion, may provide that the role of the Committee shall
be limited to making recommendations to the Board concerning any determinations to be made and actions to be taken by the Board pursuant to or with respect to the Plan, or the Board may delegate to
the Committee such powers and authorities related to the administration of the Plan, as set forth in Section 2(a) above, as the Board shall determine, consistent with the Federal Stock Charter
and Bylaws of the Bank and applicable law. The Board may 


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remove members, add members, and fill vacancies on the Committee from time to time, all in accordance with the Bank's Federal Stock Charter and Bylaws, and with applicable law. The majority vote of
the Committee, or acts reduced to or approved in writing by a majority of the members of the Committee, shall be the valid acts of the Committee. 



        (c)  No
Liability. No member of the Board or of the Committee shall be liable for any action or determination made in good faith with respect to the Plan or any Option
granted or Option Agreement entered into hereunder. 


        (d)  Delegation
to the Committee. In the event that the Plan or any Option granted or Option Agreement entered into hereunder provides for any action to be taken by or
determination to be made by the Board, such action may be taken by or such determination may be made by the Committee if
the power and authority to do so has been delegated to the Committee by the Board as provided for in Section 2(b) above. Unless otherwise expressly determined by the Board, any such action or
determination by the Committee shall be final and conclusive. 



 3.    STOCK  




        The stock that may be issued pursuant to Options granted under the Plan shall be shares of common stock, par value $1.00 per share, of the Bank (the "Stock"),
which shares may be treasury shares or authorized but unissued shares. The number of shares of Stock that may be issued pursuant to Options granted under the Plan shall not exceed in the aggregate
141,000 shares; provided, however, that Options for no more than 50,000 shares of Stock, in the aggregate, shall be granted pursuant to Section 4(b) below. The foregoing number of shares are
subject to adjustment as provided in Section 17 below. If any Option expires, terminates, or is terminated or canceled for any reason prior to exercise in full, the shares of Stock that were
subject to the unexercised portion of such Option shall be available for future Options granted under the Plan. 



 4.    ELIGIBILITY  




        (a)  Employees
and Subsidiary Directors. On and after the effective date specified in Section 5(a) hereof, Options may be granted under the Plan to any employee of the
Bank or any "subsidiary corporation" (a "Subsidiary") thereof within the meaning of Section 424(f) of the Code (including any such employee who is an officer or director of the Bank or any
subsidiary) or to any Subsidiary Director as the Board shall determine and designate from time to time prior to the expiration or termination of the Plan. The maximum number of shares of Stock subject
to Options that may be granted in any calendar year under the Plan to any executive officer or other employee of the Bank or any Subsidiary is 25,000 shares (subject to adjustment as provided in
Section 17 hereof). 


        (b)  Non-Employee
Directors. Subject to the availability of shares issued under Section 3 of the Plan, (i) on the effective date (as specified in
Section 5(a) hereof) an Option to purchase up to the number of shares of Stock specified below (subject to adjustment as provided in Section 17 hereof), at the price and upon the other
terms and conditions specified in the Plan, shall be granted under the Plan to the following Non-Employee Directors: 



	Name
 
	 	Number of Shares

	William B. Blanken	 	3,000
	Stuart A. Kaufman	 	3,000
	Howard J. Postal	 	3,000
	Richard A. Schuman	 	3,000






and
(ii) after the effective date, an Option to purchase up to 1,000 shares of Stock (subject to adjustment as provided in Section 17 hereof), at the price and upon the other terms and
conditions specified in the Plan, shall be granted under the Plan to each Non-Employee Director who is first 


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elected to the Board of Directors of the Bank after the date of adoption of the Plan by the Board and before such effective date, as of the date such Non-Employee Director completes one
year of service on the Board of Directors. In addition, subject to the availability of shares, on each anniversary of the effective date of the Plan, each Non-Employee Director, including
any Director who becomes a Non-Employee Director prior to such anniversary, shall be granted under the Plan an Option to purchase up to 1,000 shares of Stock (subject to adjustment as
provided in Section 17 hereof), at the price and upon the other terms and conditions specified in the Plan. 



        (c)  Multiple
Grants. An individual may hold more than one Option, subject to such restrictions as are provided herein. 



 5.    EFFECTIVE DATE AND TERM OF THE PLAN  




        (a)  Effective
Date. The Plan shall be effective following the date of adoption by the Board; and the later to occur of: (i) within 12 months of the date of
adoption of the Plan by the Board, approval of the Plan by a majority of the votes eligible to be cast at a duly held meeting of the Bank's stockholders at which a quorum representing a majority of
all outstanding voting stock is present, either in person or by proxy; and (ii) no later than December 31, 1998, the issuance by the Bank of no less than 500,000
shares of Stock in an offering of such Stock registered with the Office of Thrift Supervision. If the Plan shall not have become effective on or before December 31, 1998, the Plan shall be null
and void. 


        (b)  Term.
The Plan shall terminate on the date 10 years from the effective date, unless earlier terminated pursuant to Section 16 or 17 hereof. 



 6.    GRANT OF OPTIONS  




        Subject to the terms and conditions of the Plan, on and after the effective date pursuant to Section 5(a) above, the Board may, at any time and from time
to time, prior to the date of termination of the Plan, grant to such eligible individuals as the Board may determine ("Optionees"), Options to purchase such number of shares of the Stock on such terms
and conditions as the Board may determine, including any terms or conditions which may be necessary to qualify such Options as Incentive Stock Options. The date on which the Board approves the grant
of an Option (or such later date as is specified by the Board) shall be considered the date on which such Option is granted. 



 7.    LIMITATION ON INCENTIVE STOCK OPTIONS  




        An Option shall constitute an Incentive Stock Option only to the extent that the aggregate fair market value (determined at the time the option is granted) of the
stock with respect to which Incentive Stock Options are exercisable for the first time by any Optionee during any calendar year (under the Plan and all other plans of the Optionee's employer
corporation and its parent and subsidiary corporations within the meaning of Section 422(d) of the Code) does not exceed $100,000. This limitation shall be applied by taking Options into
account in the order in which they were granted. 



 8.    OPTION AGREEMENTS  




        All Options granted pursuant to the Plan shall be evidenced by written agreements ("Option Agreements"), to be executed by the Bank and by the Optionee, in such
form or forms as the Board shall from time to time determine. Option Agreements covering Options granted from time to time or at the same time need not contain similar provisions; provided, however,
that all such Option Agreements shall comply with all terms of the Plan. Any amendment or modification to an Option Agreement shall be made by a written instrument approved by the Board and executed
by or on behalf of the Bank and the Optionee (or permitted transferee of the Optionee). 


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 9.    OPTION PRICE  




        The purchase price of each share of the Stock subject to an Option (the "Option Price") shall be fixed by the Board and stated in each Option Agreement, and shall
not be less than the greater of the par value of the Stock or 100 percent of the fair market value of a share of the Stock on the date the Option is granted (as determined in good faith by the
Board); provided, however, that in the event the Optionee would otherwise be ineligible to receive an Incentive Stock Option by reason of the provisions of Sections 422(b)(6) and 424(d) of the Code
(relating to stock ownership of more than 10 percent), the Option Price of an Option that is intended to be an Incentive Stock Option shall be not less than 110 percent of the fair
market value of a share of Stock at the time such Option is granted. In the event that the Stock is listed on an established national or regional stock exchange, is quoted on the National Association
of Securities Dealers' Nasdaq Stock Market, or is otherwise publicly traded on an established securities market, in determining the fair market value of the Stock, the Board shall use the closing
price of the Stock on such exchange or in such market (the highest such closing price if there is more than one such exchange or market) on the trading date immediately before the Option is granted
(or, if there is no such closing price, then the Board shall use the mean between the high and low prices on such date), or, if no sale of the Stock had been made on such day, on the next preceding
day on which any such sale shall have been made. 



 10.    TERM AND EXERCISE OF OPTIONS  




        (a)  Term.
Each Option granted under the Plan shall terminate and all rights to purchase shares thereunder shall cease upon the expiration of 10 years from the date
such Option is granted, or, with respect to Options granted to persons other than Non-Employee Directors or Subsidiary Directors, on such date prior thereto as may be fixed by the Board
and stated in the Option Agreement relating to such Option; provided, however, that in the event the Optionee would otherwise be ineligible to receive an Incentive Stock Option by reason of the
provisions of Sections 422(b)(6) and 424(d) of the Code (relating to stock ownership of more than 10 percent), an Option granted to such Optionee that is intended to be an Incentive Stock
Option shall in no event be exercisable after the expiration of five years from the date it is granted. 


        (b)  Option
Period and Limitations on Exercise. Each Option granted to persons other than Non-Employee Directors or Subsidiary Directors under the Plan shall be
exercisable, in whole or in part, at any time and from time to time, over a period commencing on or after the date of grant and ending upon the expiration or termination of the Option, as the Board
shall determine and set forth in the Option Agreement relating to such Option. Without limiting the foregoing, the Board, subject to the terms and conditions of the Plan, may in its sole discretion
provide that an Option may not be
exercised in whole or in part for any period or periods of time during which such Option is outstanding; provided, however, that any such limitation on the exercise of an Option contained in any
Option Agreement may be rescinded, modified or waived by the Board, in its sole discretion, at any time and from time to time after the date of grant of such Option, so as to accelerate the time at
which the Option may be exercised. Each Option granted to Non-Employee Directors or Subsidiary Directors shall be exercisable, in whole or in part, at any time and from time to time, over
a period commencing on the date of grant and ending upon the expiration of the Option. 


        (c)  Method
of Exercise. An Option that is exercisable hereunder may be exercised by delivery to the Bank on any business day, at its principal office, addressed to the
attention of the Committee, of written notice of exercise, which notice shall specify the number of shares with respect to which the Option is being exercised. The minimum number of shares of Stock
with respect to which an Option may be exercised, in whole or in part, at any time shall be the lesser of 100 shares or the maximum number of shares available for purchase under the Option at the time
of exercise. Payment of the Option Price for the shares of Stock purchased pursuant to the exercise of an Option shall be made (i) in cash or in cash equivalents; (ii) through the tender
to the Bank of shares of Stock, which shares 


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shall be valued, for purposes of determining the extent to which the Option Price has been paid thereby, at their fair market value (determined in the manner described in Section 9 above) on
the date of exercise; (iii) by delivering a written direction to the Bank that the Option be exercised pursuant to a "cashless" exercise/sale procedure (pursuant to which funds to pay for
exercise of the option are delivered to the Bank by a broker upon receipt of stock certificates from the Bank) or a cashless exercise/loan procedure (pursuant to which the optionees would obtain a
margin loan from a broker to fund the exercise) through a licensed broker acceptable to the Bank whereby the stock certificate or certificates for the shares of Stock for which the Option is exercised
will be delivered to such broker as the agent for the individual exercising the Option and the broker will deliver to the Bank cash (or cash equivalents acceptable to the Bank) equal to the Option
Price for the shares of Stock purchased pursuant to the exercise of the Option plus the amount (if any) of federal and other taxes that the Bank, may, in its judgment, be required to withhold with
respect to the exercise of the Option; or (iv) by a combination of the methods described in (i), (ii), and (iii); provided, however, that the Board may in its discretion impose and set forth in
the Option Agreement such limitations or prohibitions on the use of shares of Stock to exercise Options as it deems appropriate. Payment in full of the Option Price need not accompany the written
notice of exercise if the Option is exercised pursuant to the cashless exercise/sale procedure described above. If shares of Stock that are acquired by the Optionee through exercise of an Option or an
option issued under another stock option plan maintained by the Bank are surrendered in payment of the Option Price, the Stock surrendered in payment must have been (i) held by the Optionee for
more than six months at the time of surrender, or (ii) acquired under an Option granted not less than six months prior to the time of surrender. Promptly after the exercise of an Option and the
payment in full of the Option Price of the shares of Stock covered thereby, the individual exercising the Option shall be entitled to the issuance of a Stock certificate or certificates evidencing his
ownership of such shares. A separate Stock certificate or certificates shall be issued for any shares purchased pursuant to the exercise of an Option which is an Incentive Stock Option, which
certificate or certificates shall not include any shares which were purchased pursuant to the exercise of an Option which is not an Incentive Stock Option. An individual holding or exercising an
Option shall have none of the rights of a shareholder until the shares of Stock covered thereby are fully paid and issued to him and, except as provided in Section 17 below, no adjustment shall
be made for dividends or other rights for which the record date is prior to the date of such issuance. 


        (d)  Restrictions
on Transfer of Stock. If an Option is exercised prior to the date that is six months from the date of grant of the Option and a sale of the shares of Stock
acquired thereby would subject the individual exercising the Option to liability under Section 16 of the Exchange Act, then the certificate or certificates representing such shares shall bear a
legend restricting the transfer of the Stock covered thereby until the expiration of six months from such date, or for such other period during which such a transfer would subject such individual to
such liability. 



 11.    TRANSFERABILITY OF OPTIONS  




        During the lifetime of an Optionee to whom an Incentive Stock Option is granted, only such Optionee (or, in the event of legal incapacity or incompetence, the
Optionee's guardian or legal representative) may exercise the Incentive Stock Option. No Option shall be assignable or transferable by the Optionee to whom it is granted, other than by will or the
laws of descent and distribution, except that the Optionee may transfer a Nonqualified Option by gift: to a member of his "Family" (as defined below), to or for the benefit of one or more
organizations qualifying under Code §§ 501(c)(3) and 170(c)(2) (a "Charitable Organization") or to a trust for the exclusive benefit of the Optionee, one or more members of the
Optionee's Family, one or more Charitable Organizations, or any combination of the foregoing, provided that any such transferee shall enter into a written agreement to be bound by the terms of the
Plan. For this purpose, "Family" shall mean the siblings, lineal ancestors and descendants and spouse of the Optionee. 


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 12.    TERMINATION OF EMPLOYMENT OR SERVICE  




        (a)  Employees.
Upon the termination of the employment of an Optionee (other than as to a Non-Employee Director or Subsidiary Director) with the Bank or a
Subsidiary, other than by reason of the death or "permanent and total disability" (within the meaning of Section 22(e)(3) of the Code) of such Optionee, any Option granted to an Optionee
pursuant to the Plan shall terminate one year after the date of such termination of employment, unless earlier terminated pursuant to Section 10(a) above or 17(c) below, and such Optionee shall
have no further right to purchase shares of Stock pursuant to such Option; provided, however, that the Board may provide, by inclusion of appropriate language in any Option Agreement, that the
Optionee may (subject to the general limitations on exercise set forth in Section 10(b) above), in the event of termination of employment of the Optionee with the Bank or a Subsidiary, exercise
an Option, in whole or in part, at any time subsequent to such termination of employment and prior to termination of the Option pursuant to Section 10(a) above or 17(c) below, either subject to
or without regard to any installment limitation on exercise imposed pursuant to Section 10(b) above. Whether a leave of absence or leave on military or government service shall constitute a
termination of employment for purposes of the Plan shall be determined by the Board,
which determination shall be final and conclusive. For purposes of the Plan, a termination of employment with the Bank or a Subsidiary shall not be deemed to occur if the Optionee is immediately
thereafter employed by the Bank or any Subsidiary. 


        (b)  Non-Employee
Directors and Subsidiary Directors. Any Option granted to a Non-Employee Director or a Subsidiary Director shall not terminate until
the expiration of the 10-year term of the Option or termination of the Option pursuant to Section 10(a) above or 17(c) below, regardless of whether the Non-Employee
Director or a Subsidiary Director continues to serve as a director of the Bank or any subsidiary of the Bank, as applicable. 



 13.    RIGHTS IN THE EVENT OF DEATH OR DISABILITY  




        (a)  Death
of an Employee. If an Optionee dies while in the employ (not including service as a Non-Employee Director or a Subsidiary Director) of the Bank or a
Subsidiary or within the period following the termination of employment during which the Option is exercisable under Section 12(a) above or Section 13(b) below, the executors or
administrators or legatees or distributees of such Optionee's estate shall have the right (subject to the general limitations on exercise set forth in Section 10(b) above), at any time within
one year after the date of such Optionee's death and prior to termination of the Option pursuant to Section 10(a) above or 17(c) below, to exercise any Option held by such Optionee at the date
of such Optionee's death, whether or not such Option was exercisable immediately prior to such Optionee's death; provided, however, that the Board may provide by inclusion of appropriate language in
any Option Agreement that, in the event of the death of the Optionee, the executors or administrators or legatees or distributees of such Optionee's estate may exercise an Option (subject to the
general limitations on exercise set forth in Section 10(b) above), in whole or in part, at any time subsequent to such Optionee's death and prior to termination of the Option pursuant to
Section 10(a) above or 17(c) below, either subject to or without regard to any installment limitation on exercise imposed pursuant to Section 10(b) above. 


        (b)  Disability
of an Employee. If an Optionee terminates employment (not including service as a Non-Employee Director or a Subsidiary Director) with the Bank or
a Subsidiary by reason of the "permanent and total disability" (within the meaning of Section 22(e)(3) of the Code) of such Optionee, then such Optionee shall have the right (subject to the
general limitations on exercise set forth in Section 10(b) above), at any time within one year after such termination of employment and prior to termination of the Option pursuant to
Section 10(a) above or 17(c) below, to exercise, in whole or in part, any Option held by such Optionee at the date of such termination of employment, whether or not such Option was exercisable
immediately prior to such termination of employment; provided, however, that the Board may provide, by inclusion of appropriate language in any Option 


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Agreement, that the Optionee may (subject to the general limitations on exercise set forth in Section 10(b) above), in the event of the termination of employment of the Optionee with the Bank
or
a Subsidiary by reason of the "permanent and total disability" (within the meaning of Section 22(e)(3) of the Code) of such Optionee, exercise an Option in whole or in part, at any time
subsequent to such termination of employment and prior to termination of the Option pursuant to Section 10(a) above or 17(c) below, either subject to or without regard to any installment
limitation on exercise imposed pursuant to Section 10(b) above. Whether a termination of employment is to be considered by reason of "permanent and total disability" for purposes of this Plan
shall be determined by the Board, which determination shall be final and conclusive. 



        (b)  Death
or Disability of a Non-Employee Director or a Subsidiary Director. Any Option granted to a Non-Employee Director or a Subsidiary Director
shall not terminate until the termination of the Option under Section 10(a) above or 17(c) below. 



 14.    USE OF PROCEEDS  




        The proceeds received by the Bank from the sale of Stock pursuant to Options granted under the Plan shall constitute general funds of the Bank. 



 15.    REQUIREMENTS OF LAW  




        The Bank shall not be required to sell or issue any shares of Stock under any Option if the sale or issuance of such shares would constitute a violation by the
individual exercising the Option or the Bank of any provisions of any law or regulation of any governmental authority, including without limitation any federal or state securities laws or regulations.
Any determination in this connection by the Board shall be final, binding, and conclusive. The Bank shall not be obligated to take any affirmative action in order to cause the exercise of an Option or
the issuance of shares pursuant thereto to comply with any law or regulation of any governmental authority. As to any jurisdiction that expressly imposes the requirement that an Option shall not be
exercisable unless and until the shares of Stock covered by such Option are registered or are subject to an available exemption from registration, the exercise of such Option (under circumstances in
which the laws of such jurisdiction apply) shall be deemed conditioned upon the effectiveness of such registration or the availability of such an exemption. The Plan is intended to comply with
Rule 16b-3 or its successor under the Exchange Act. With respect to persons subject to Section 16 of the Exchange Act, any provision of the Plan or action of the Plan
administrators that is inconsistent with such Rule shall be deemed null and void to the extent permitted by law and deemed advisable by the Plan administrators. 



 16.    AMENDMENT AND TERMINATION OF THE PLAN  




        The Board may, at any time and from time to time, amend, suspend or terminate the Plan as to any shares of Stock as to which Options have not been granted;
provided, however, that no amendment by the Board shall, without approval by a majority of the votes entitled to vote at a duly held meeting of the shareholders of the Bank at which a quorum
representing a majority of all outstanding voting stock is, either in person or by proxy, present and voting on the amendment, or by written consent in accordance with applicable law and the Federal
Stock Charter of the Bank, (a) change the requirements as to eligibility to receive Options; (b) increase the maximum number of shares of Stock in the aggregate that may be issued
pursuant to Options granted under the Plan (except as permitted under Section 17 hereof) or (c) materially increase the benefits accruing to eligible individuals under the Plan, and
provided, further, that no Option shall be granted to any officer, director, or controlling person of the Bank pursuant to any amendment to the Plan unless such amendment or such grant shall have been
approved by a majority of the total votes eligible to be cast at a legal meeting of the stockholders of the Bank in accordance with the Federal Stock Charter of the Bank. Except as permitted under
Section 17 hereof, no amendment, suspension or termination of the Plan shall, without 


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the consent of the holder of the Option, alter or impair rights or obligations under any Option theretofore granted under the Plan. 



 17.    EFFECT OF CHANGES IN CAPITALIZATION  




        (a)  Changes
in Stock. If the outstanding shares of Stock are increased or decreased or changed into or exchanged for a different number or kind of shares or other securities
of the Bank by reason of any recapitalization, reclassification, stock split, reverse split, combination of shares, exchange of shares, stock dividend or other distribution payable in capital stock,
or other increase or decrease in such shares effected without receipt of consideration by the Bank, occurring after the effective date of the Plan, the number and kinds of shares for the purchase of
which Options may be granted under the Plan shall be adjusted proportionately and accordingly by the Bank. In addition, the number and kind of shares for which Options are outstanding shall be
adjusted proportionately and accordingly so that the proportionate interest of the holder of the Option immediately following such event shall, to the extent practicable, be the same as immediately
prior to such event. Any such adjustment in outstanding Options shall not change the aggregate Option Price payable with respect to shares subject to the unexercised portion of the Option outstanding
but shall include a corresponding proportionate adjustment in the Option Price per share. If there is a distribution payable in the capital stock of a subsidiary corporation of the Bank
("Spin-off Shares"), to the extent consistent with Treasury Regulation Section 1.425-1(a)(6) or the corresponding provision of any subsequent regulation, each
outstanding Option shall thereafter additionally pertain to the number of Spin-off Shares that would have been received in such distribution by a shareholder of the Bank who owned a number
of shares of Common Stock equal to the number of shares that are subject to the Option at the time of such distribution, and the aggregate Option Price of the Option shall be allocated between the
Spin-off
Shares and the Common Stock in proportion to the relative fair market values of a Spin-off Share and a share of Common Stock immediately after the distribution of Spin-off
Shares. 


        (b)  Reorganization
in Which the Bank Is the Surviving Bank. Subject to Subsection (c) hereof, if the Bank shall be the surviving bank in any reorganization, merger,
or consolidation of the Bank with one or more other banks, any Option theretofore granted pursuant to the Plan shall pertain to and apply to the securities to which a holder of the number of shares of
Stock subject to such Option would have been entitled immediately following such reorganization, merger, or consolidation, with a corresponding proportionate adjustment of the Option Price per share
so that the aggregate Option Price thereafter shall be the same as the aggregate Option Price of the shares remaining subject to the Option immediately prior to such reorganization, merger, or
consolidation. 


        (c)  Reorganization
in Which the Bank Is Not the Surviving Bank or Sale of Assets or Stock. Upon the dissolution or liquidation of the Bank, or upon a merger, consolidation,
reorganization or other business combination of the Bank with one or more other entities in which the Bank is not the surviving entity, or upon a sale of all or substantially all of the assets of the
Bank to another entity, or upon any transaction (including, without limitation, a merger or reorganization in which the Bank is the surviving bank) approved by the Board which results in any person or
entity (or persons or entities acting as a group or otherwise in concert) owning 80 percent or more of the combined voting power of all classes of stock of the Bank, the Plan and all Options
outstanding hereunder shall terminate, except to the extent provision is made in writing in connection with such transaction for the continuation of the Plan and/or the assumption of the Options
theretofore granted, or for the substitution for such Options of new options covering the stock of a successor entity, or a parent or subsidiary thereof, with appropriate adjustments as to the number
and kinds of shares and exercise prices, in which event the Plan and Options theretofore granted shall continue in the manner and under the terms so provided. In the event of any such termination of
the Plan, each individual holding an Option shall have the right (subject to the general limitations on exercise set forth in Section 10(b) above and except as otherwise specifically provided
in the Option Agreement relating to such Option), immediately prior to the 


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occurrence of such termination and during such period occurring prior to such termination as the Board in its sole discretion shall determine and designate, to exercise such Option in whole or in
part, whether or not such Option was otherwise exercisable at the time such termination occurs and without regard to any installment limitation on exercise imposed pursuant to Section 10(b)
above. The Board shall send written notice of an event that will result in such a termination to all individuals who hold Options not later than the time at which the Bank gives notice thereof to its
shareholders. 


        (d)  Adjustments.
Adjustments under this Section 17 related to stock or securities of the Bank shall be made by the Board, whose determination in that respect shall be
final, binding, and conclusive. No fractional shares of Stock or units of other securities shall be issued pursuant to any such adjustment, and any fractions resulting from any such adjustment shall
be eliminated in each case by rounding downward to the nearest whole share or unit. 


        (e)  No
Limitations on Bank. The grant of an Option pursuant to the Plan shall not affect or limit in any way the right or power of the Bank to make adjustments,
reclassifications, reorganizations or changes
of its capital or business structure or to merge, consolidate, dissolve or liquidate, or to sell or transfer all or any part of its business or assets. 



 18.    DISCLAIMER OF RIGHTS  




        No provision in the Plan or in any Option granted or Option Agreement entered into pursuant to the Plan shall be construed to confer upon any individual the right
to remain in the employ or service of the Bank or any Subsidiary, or to interfere in any way with the right and authority of the Bank or any Subsidiary either to increase or decrease the compensation
of any individual at any time, or to terminate any employment or other relationship between any individual and the Bank or any Subsidiary. 



 19.    NONEXCLUSIVITY OF THE PLAN  




        Neither the adoption of the Plan nor the submission of the Plan to the shareholders of the Bank for approval shall be construed as creating any limitations upon
the right and authority of the Board to adopt such other incentive compensation arrangements (which arrangements may be applicable either generally to a class or classes of individuals or specifically
to a particular individual or individuals) as the Board in its discretion determines desirable, including, without limitation, the granting of stock options or stock appreciation rights otherwise than
under the Plan. 


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AMERICAN FEDERAL SAVINGS BANK 1998 STOCK OPTION PLAN