EXHIBIT 10.3
<PAGE>

                                                                   

                             FIRST CARNEGIE DEPOSIT

                             1998 STOCK OPTION PLAN


         1. Purpose of the Plan.  The Plan shall be known as the First  Carnegie
Deposit ("Bank") 1998 Stock Option Plan (the "Plan"). The purpose of the Plan is
to  attract  and  retain  qualified   personnel  for  positions  of  substantial
responsibility and to provide additional incentive to officers,  directors,  key
employees  and other persons  providing  services to the Bank, or any present or
future  parent or subsidiary of the Bank to promote the success of the business.
The Plan is  intended  to provide for the grant of  "Incentive  Stock  Options,"
within the  meaning of Section  422 of the  Internal  Revenue  Code of 1986,  as
amended (the "Code") and  Non-Incentive  Stock  Options,  options that do not so
qualify. The provisions of the Plan relating to Incentive Stock Options shall be
interpreted to conform to the requirements of Section 422 of the Code.

          2. Definitions. The following words and phrases when used in this Plan
with an initial capital letter,  unless the context clearly indicates otherwise,
shall have the meaning as set forth below. Wherever  appropriate,  the masculine
pronoun  shall include the feminine  pronoun and the singular  shall include the
plural.

                  (a) "Award"  means the grant by the  Committee of an Incentive
Stock Option or a Non-Incentive  Stock Option,  or any combination  thereof,  as
provided in the Plan.

                  (b) "Board"  shall mean the Board of Directors of the Bank, or
any successor or parent corporation thereto.

                  (c) "Change in Control"  shall mean: (i) the sale of all, or a
material portion, of the assets of the Bank; (ii) the merger or recapitalization
of the Bank  whereby  the Bank is not the  surviving  entity;  (iii) a change in
control of the Bank, as otherwise  defined or determined by the Office of Thrift
Supervision or regulations promulgated by it; or (iv) the acquisition,  directly
or indirectly,  of the beneficial  ownership (within the meaning of that term as
it is used in Section 13(d) of the Securities Exchange Act of 1934 and the rules
and regulations  promulgated thereunder) of twenty-five percent (25%) or more of
the outstanding  voting securities of the Bank by any person,  trust,  entity or
group other than by Skibo Bancshares,  M.H.C., the mutual holding company of the
Bank. This limitation  shall not apply to the purchase of shares by underwriters
in connection with a public offering of Bank stock, or the purchase of shares of
up to 25% of any class of  securities  of the Bank by a  tax-qualified  employee
stock  benefit  plan which is exempt from the approval  requirements,  set forth
under 12  C.F.R.  ss.574.3(c)(1)(vi)  as now in effect  or as may  hereafter  be
amended.   The  term  "person"   refers  to  an  individual  or  a  corporation,
partnership,   trust,   association,   joint  venture,  pool,  syndicate,   sole
proprietorship,  unincorporated  organization  or any other  form of entity  not
specifically listed herein. The decision of the Committee as to whether a Change
in Control has occurred  shall be  conclusive  and binding.  A Change in Control
shall not include a  transaction  whereby a Parent is formed  which shall be the
owner of 100% of the stock of the Bank.

                  (d) "Code"  shall mean the Internal  Revenue Code of 1986,  as
amended, and regulations promulgated thereunder.

                                       1

<PAGE>




                  (e)  "Committee"  shall  mean the  Board or the  Stock  Option
Committee appointed by the Board in accordance with Section 5(a) of the Plan.

                  (f) "Common Stock" shall mean the common stock of the Bank, or
any successor or parent corporation thereto.

                  (g) "Bank" shall mean the First  Carnegie  Deposit,  Carnegie,
Pennsylvania, or any successor or Parent thereof.

                  (h)  "Continuous  Employment"  or  "Continuous  Status  as  an
Employee"  shall  mean  the  absence  of  any  interruption  or  termination  of
employment  with the Bank or any present or future  Parent or  Subsidiary of the
Bank. Employment shall not be considered  interrupted in the case of sick leave,
military leave or any other leave of absence approved by the Bank or in the case
of transfers  between  payroll  locations,  of the Bank or between the Bank, its
Subsidiaries or a successor.

                  (i)  "Director"  shall mean a member of the Board of the Bank,
or any successor or parent corporation thereto.

                  (j)  "Director  Emeritus"  shall  mean a person  serving  as a
director emeritus,  advisory  director,  consulting  director,  or other similar
position as may be  appointed by the Board of Directors of the Bank from time to
time.

                  (k)  "Disability"  means (a) with respect to  Incentive  Stock
Options,  the "permanent  and total  disability" of the Employee as such term is
defined at Section  22(e)(3) of the Code; and (b) with respect to  Non-Incentive
Stock Options,  any physical or mental  impairment which renders the Participant
incapable of  continuing  in the  employment  or service of the Bank in his then
current capacity as determined by the Committee.

                  (l) "Effective  Date" shall mean the date specified in Section
15 hereof.

                  (m) "Employee"  shall mean any person  employed by the Bank or
any present or future Parent or Subsidiary of the Bank.

                  (n) "Fair Market Value" shall mean: (i) if the Common Stock is
traded otherwise than on a national  securities  exchange,  then the Fair Market
Value per Share shall be equal to the mean between the last bid and ask price of
such  Common  Stock on such  date or,  if there is no bid and ask  price on said
date,  then on the  immediately  prior business day on which there was a bid and
ask price. If no such bid and ask price is available, then the Fair Market Value
shall be determined by the Committee in good faith;  or (ii) if the Common Stock
is listed on a national  securities  exchange,  then the Fair  Market  Value per
Share shall be not less than the average of the highest and lowest selling price
of such Common Stock on such exchange on such date, or if there were no sales on
said date,  then the Fair Market  Value shall be not less than the mean  between
the last bid and ask price on such date.

                  (o) "Incentive  Stock Option" or "ISO" shall mean an option to
purchase  Shares granted by the Committee  pursuant to Section 8 hereof which is
subject to the limitations and  restrictions of Section 8 hereof and is intended
to qualify as an incentive stock option under Section 422 of the Code.


                                       2

<PAGE>



                  (p)  "Non-Incentive  Stock Option" or "Non-ISO"  shall mean an
option to purchase Shares granted pursuant to Section 9 hereof,  which option is
not intended to qualify under Section 422 of the Code.

                  (q)  "Option"   shall  mean  an  Incentive   Stock  Option  or
Non-Incentive Stock Option granted pursuant to this Plan providing the holder of
such Option with the right to purchase Common Stock.

                  (r)     "Optioned Stock" shall mean stock subject to an Option
granted pursuant to the Plan.

                  (s) "Optionee" shall mean any person who receives an Option or
Award pursuant to the Plan.

                  (t)   "Parent"   shall  mean  any  present  or  future   stock
corporation which would be a "parent  corporation" as defined in Sections 424(e)
and (g) of the Code.

                  (u) "Participant" means any director,  officer or key employee
of the  Bank  or any  Parent  or  Subsidiary  of the  Bank or any  other  person
providing a service to the Bank who is selected by the  Committee  to receive an
Award, or who by the express terms of the Plan is granted an Award.

                  (v)      "Plan" shall mean the  First  Carnegie  Deposit  1998
Stock Option Plan.

                  (w) "Share" shall mean one share of the Common Stock.

                  (x) "Subsidiary"  shall mean any present or future corporation
which  constitutes a "subsidiary  corporation" as defined in Sections 424(f) and
(g) of the Code.

          3. Shares  Subject to the Plan.  Except as  otherwise  required by the
provisions of Section 13 hereof,  the aggregate number of Shares with respect to
which Awards may be made pursuant to the Plan shall not exceed *103,500  Shares.
Such  Shares  may  either  be from  authorized  but  unissued  shares  or shares
purchased  in the market for Plan  purposes.  If an Award shall  expire,  become
unexercisable,  or be forfeited for any reason prior to its exercise, new Awards
may be granted  under the Plan with  respect to the number of Shares as to which
such expiration has occurred.

         4.       Six Month Holding Period.

                  Subject to vesting requirements,  if applicable, except in the
event of death or  disability  of the  Optionee,  a minimum of six  months  must
elapse  between  the date of the grant of an Option  and the date of the sale of
the Common Stock received through the exercise of such Option.

          5.      Administration of the Plan.

                  (a)   Composition  of  the   Committee.   The  Plan  shall  be
administered  by the Board of Directors  of the Bank or a Committee  which shall
consist of not less than two Directors of the Bank


-------------------
* 10% of shares outstanding as of date of Board adoption.

                                       3

<PAGE>



appointed  by the Board and serving at the  pleasure  of the Board.  All persons
designated  as  members  of the  Committee  shall  meet  the  requirements  of a
"Non-Employee  Director"  within the meaning of Rule 16b-3 under the  Securities
Exchange Act of 1934, as amended, as found at 17 CFR ss.240.16b-3.

                  (b) Powers of the Committee.  The Committee is authorized (but
only to the extent not  contrary  to the  express  provisions  of the Plan or to
resolutions adopted by the Board) to interpret the Plan, to prescribe, amend and
rescind  rules and  regulations  relating to the Plan, to determine the form and
content of Awards to be issued  under the Plan and to make other  determinations
necessary or advisable for the  administration  of the Plan,  and shall have and
may  exercise  such other power and  authority  as may be delegated to it by the
Board from time to time. A majority of the entire  Committee shall  constitute a
quorum and the action of a majority  of the  members  present at any  meeting at
which a quorum is present  shall be deemed the  action of the  Committee.  In no
event may the Committee  revoke  outstanding  Awards  without the consent of the
Participant.

                  The President of the Bank and such other  officers as shall be
designated by the Committee are hereby authorized to execute written  agreements
evidencing Awards on behalf of the Bank and to cause them to be delivered to the
Participants.  Such agreements  shall set forth the Option  exercise price,  the
number of shares of Common Stock subject to such Option,  the expiration date of
such Options, and such other terms and restrictions  applicable to such Award as
are determined in accordance with the Plan or the actions of the Committee.

                  (c)   Effect   of   Committee's   Decision.   All   decisions,
determinations  and   interpretations  of  the  Committee  shall  be  final  and
conclusive on all persons affected thereby.

          6.      Eligibility for Awards and Limitations.

                  (a)  The Committee shall  from  time  to  time  determine  the
officers, Directors, key employees and other persons who shall be granted Awards
under the Plan,  the number of Awards to be granted  to each such  persons,  and
whether  Awards  granted  to each  such  Participant  under  the  Plan  shall be
Incentive and/or  Non-Incentive Stock Options. In selecting  Participants and in
determining  the  number of Shares of Common  Stock to be  granted  to each such
Participant,  the Committee may consider the nature of the prior and anticipated
future  services  rendered  by each such  Participant,  each such  Participant's
current and  potential  contribution  to the Bank and such other  factors as the
Committee may, in its sole discretion, deem relevant. Participants who have been
granted an Award may, if otherwise eligible, be granted additional Awards.

                   (b) The aggregate Fair Market  Value (determined  as  of  the
date the Option is granted) of the Shares with respect to which  Incentive Stock
Options are  exercisable for the first time by each Employee during any calendar
year (under all Incentive  Stock Option plans,  as defined in Section 422 of the
Code,  of the Bank or any present or future  Parent or  Subsidiary  of the Bank)
shall not exceed $100,000.  Notwithstanding the prior provisions of this Section
6, the  Committee  may grant  Options  in excess of the  foregoing  limitations,
provided said Options shall be clearly and specifically  designated as not being
Incentive Stock Options.

                   (c) In no  event  shall  Shares  subject  to  Options granted
to non-employee  Directors in the aggregate under this Plan exceed more than 28%
of the total number of Shares  authorized  for delivery under this Plan pursuant
to Section 3 herein or more than 7% to any individual non-employee

                                       4

<PAGE>



Director.  In no event shall Shares  subject to Options  granted to any Employee
exceed more than 25% of the total number of Shares authorized for delivery under
the Plan.

          7. Term of the Plan.  The Plan shall  continue in effect for a term of
ten (10) years from the Effective  Date,  unless sooner  terminated  pursuant to
Section 18  hereof.  No Option  shall be  granted  under the Plan after ten (10)
years from the Effective Date.

          8. Terms and Conditions of Incentive  Stock Options.  Incentive  Stock
Options may be granted only to  Participants  who are Employees.  Each Incentive
Stock Option granted pursuant to the Plan shall be evidenced by an instrument in
such form as the Committee shall from time to time approve. Each Incentive Stock
Option  granted  pursuant to the Plan shall comply with,  and be subject to, the
following terms and conditions:

                  (a)      Option Price.

                            (i)     The price per Share at which each  Incentive
Stock Option granted by the Committee under the Plan may be exercised shall not,
as to any particular  Incentive Stock Option, be less than the Fair Market Value
of the Common Stock on the date that such Incentive Stock Option is granted.

                           (ii)     In the case of an Employee who  owns  Common
Stock  representing more than ten percent (10%) of the outstanding  Common Stock
at the time the Incentive  Stock Option is granted,  the Incentive  Stock Option
exercise  price shall not be less than one hundred and ten percent (110%) of the
Fair  Market  Value of the  Common  Stock on the date that the  Incentive  Stock
Option is granted.

                  (b)  Payment.  Full  payment  for each  Share of Common  Stock
purchased upon the exercise of any Incentive Stock Option granted under the Plan
shall be made at the time of exercise of each such  Incentive  Stock  Option and
shall be paid in cash (in United States Dollars),  Common Stock or a combination
of cash and Common Stock.  Common Stock  utilized in full or partial  payment of
the  exercise  price  shall be  valued at the Fair  Market  Value at the date of
exercise.  The Bank shall accept full or partial payment in Common Stock only to
the extent  permitted  by  applicable  law.  No Shares of Common  Stock shall be
issued until full payment has been received by the Bank,  and no Optionee  shall
have any of the rights of a stockholder of the Bank until Shares of Common Stock
are issued to the Optionee.

                  (c) Term of Incentive Stock Option. The term of exercisability
of each Incentive  Stock Option  granted  pursuant to the Plan shall be not more
than ten (10) years from the date each such  Incentive  Stock Option is granted,
provided that in the case of an Employee who owns stock  representing  more than
ten percent  (10%) of the Common  Stock  outstanding  at the time the  Incentive
Stock  Option is granted,  the term of  exercisability  of the  Incentive  Stock
Option shall not exceed five (5) years.

                  (d)  Exercise  Generally.  Except  as  otherwise  provided  in
Section  10 hereof,  no  Incentive  Stock  Option  may be  exercised  unless the
Optionee  shall  have been in the  employ of the Bank at all  times  during  the
period  beginning with the date of grant of any such Incentive  Stock Option and
ending on the date three (3) months  prior to the date of  exercise  of any such
Incentive Stock Option. The Committee may impose additional  conditions upon the
right of an Optionee to exercise any Incentive  Stock Option  granted  hereunder
which are not  inconsistent  with the terms of the Plan or the  requirements for
qualification as an Incentive Stock Option.  Except as otherwise provided by the
terms of the Plan

                                       5

<PAGE>



or by  action of the  Committee  at the time of the  grant of the  Options,  the
Options  will be first  exercisable  at the rate of 50% on the date of grant and
50% one year thereafter during such periods of service as an Employee,  Director
or Director Emeritus.

                  (e) Cashless  Exercise.  Subject to vesting  requirements,  if
applicable,  an Optionee who has held an Incentive Stock Option for at least six
months may engage in the  "cashless  exercise"  of the  Option.  Upon a cashless
exercise,  an Optionee shall give the Bank written notice of the exercise of the
Option together with an order to a registered  broker-dealer or equivalent third
party,  to sell part or all of the Optioned  Stock and to deliver  enough of the
proceeds  to the  Bank to pay  the  Option  exercise  price  and any  applicable
withholding  taxes.  If the Optionee does not sell the Optioned  Stock through a
registered  broker-dealer  or equivalent  third party, the Optionee can give the
Bank written notice of the exercise of the Option and the third party  purchaser
of the Optioned  Stock shall pay the Option  exercise  price plus any applicable
withholding taxes to the Bank.

                  (f)   Transferability.   An  Incentive  Stock  Option  granted
pursuant to the Plan shall be exercised  during an  Optionee's  lifetime only by
the Optionee to whom it was granted and shall not be assignable or  transferable
otherwise than by will or by the laws of descent and distribution.

          9.  Terms  and  Conditions  of  Non-Incentive   Stock  Options.   Each
Non-Incentive Stock Option granted pursuant to the Plan shall be evidenced by an
instrument in such form as the Committee  shall from time to time approve.  Each
Non-Incentive Stock Option granted pursuant to the Plan shall comply with and be
subject to the following terms and conditions.

                  (a) Options  Granted to Directors.  Subject to the limitations
of Section 6(c), Non- Incentive Stock Options to purchase 7,245 shares of Common
Stock  will  be  granted  to  each  Director  who is not an  Employee  as of the
Effective  Date,  at an exercise  price  equal to the Fair  Market  Value of the
Common Stock on such date of grant. The Options will be first exercisable at the
rate of 50% on the  Effective  Date  and 50% one  year  thereafter  during  such
periods  of  service  as a  Director  or  Director  Emeritus.  Upon the death or
Disability  of the  Director or Director  Emeritus,  such Option shall be deemed
immediately 100% exercisable.  Such Options shall continue to be exercisable for
a  period  of ten  years  following  the  date of grant  without  regard  to the
continued services of such Director as a Director or Director  Emeritus.  In the
event of the  Optionee's  death,  such  Options may be exercised by the personal
representative  of his estate or person or persons to whom his rights under such
Option  shall have  passed by will or by the laws of descent  and  distribution.
Options  may be granted to newly  appointed  or elected  non-employee  Directors
within the sole  discretion of the  Committee.  The exercise  price per Share of
such Options granted shall be equal to the Fair Market Value of the Common Stock
at the time such  Options are  granted.  All  outstanding  Awards  shall  become
immediately  exercisable in the event of a Change in Control of the Bank. Unless
otherwise  inapplicable,  or inconsistent with the provisions of this paragraph,
the Options to be granted to Directors  hereunder  shall be subject to all other
provisions of this Plan.

                  (b) Option Price. The exercise price per Share of Common Stock
for each  Non-Incentive  Stock Option  granted  pursuant to the Plan shall be at
such price as the  Committee  may  determine in its sole  discretion,  but in no
event less than the Fair Market  Value of such Common Stock on the date of grant
as determined by the Committee in good faith.

                  (c)  Payment.  Full  payment  for each  Share of Common  Stock
purchased upon the exercise of any Non-Incentive  Stock Option granted under the
Plan shall be made at the time of exercise

                                       6

<PAGE>



of each such  Non-Incentive  Stock  Option  and shall be paid in cash (in United
States Dollars),  Common Stock or a combination of cash and Common Stock. Common
Stock utilized in full or partial  payment of the exercise price shall be valued
at its Fair Market Value at the date of exercise.  The Bank shall accept full or
partial payment in Common Stock only to the extent  permitted by applicable law.
No Shares of Common Stock shall be issued  until full payment has been  received
by the Bank and no Optionee shall have any of the rights of a stockholder of the
Bank until the Shares of Common Stock are issued to the Optionee.

                  (d) Term.  The term of  exercisability  of each  Non-Incentive
Stock Option granted  pursuant to the Plan shall be not more than ten (10) years
from the date each such Non-Incentive Stock Option is granted.

                  (e) Exercise  Generally.  The Committee may impose  additional
conditions upon the right of any Participant to exercise any Non-Incentive Stock
Option granted  hereunder which is not inconsistent  with the terms of the Plan.
Except  as  otherwise  provided  by the  terms of the Plan or by  action  of the
Committee  at the time of the grant of the  Options,  the Options  will be first
exercisable at the rate of 50% on the date of grant and 50% one year  thereafter
during such periods of service as an Employee, Director or Director Emeritus.

                  (f) Cashless  Exercise.  Subject to vesting  requirements,  if
applicable,  an Optionee who has held a Non-Incentive  Stock Option for at least
six months may engage in the "cashless  exercise" of the Option. Upon a cashless
exercise,  an Optionee shall give the Bank written notice of the exercise of the
Option together with an order to a registered  broker-dealer or equivalent third
party,  to sell part or all of the Optioned  Stock and to deliver  enough of the
proceeds  to the  Bank to pay  the  Option  exercise  price  and any  applicable
withholding  taxes.  If the Optionee does not sell the Optioned  Stock through a
registered  broker-dealer  or equivalent  third party, the Optionee can give the
Bank written notice of the exercise of the Option and the third party  purchaser
of the Optioned  Stock shall pay the Option  exercise  price plus any applicable
withholding taxes to the Bank.

                  (g)  Transferability.  Any Non-Incentive  Stock Option granted
pursuant to the Plan shall be exercised  during an  Optionee's  lifetime only by
the Optionee to whom it was granted and shall not be assignable or  transferable
otherwise than by will or by the laws of descent and distribution.

         10.  Effect  of  Termination  of  Employment,  Disability  or  Death on
Incentive Stock Options.

                  (a)   Termination  of  Employment.   In  the  event  that  any
Optionee's  employment with the Bank shall terminate for any reason,  other than
Disability or death, all of any such Optionee's Incentive Stock Options, and all
of any such  Optionee's  rights to  purchase or receive  Shares of Common  Stock
pursuant  thereto,  shall  automatically  terminate on (A) the earlier of (i) or
(ii): (i) the respective  expiration  dates of any such Incentive Stock Options,
or (ii) the  expiration of not more than three (3) months after the date of such
termination  of  employment;  or (B) at such later date as is  determined by the
Committee  at the time of the  grant of such  Award  based  upon the  Optionee's
continuing  status as a Director or Director  Emeritus of the Bank, but only if,
and to the extent that, the Optionee was entitled to exercise any such Incentive
Stock Options at the date of such  termination of  employment,  and further that
such Award shall thereafter be deemed a Non-Incentive Stock Option. In the event
that a Subsidiary  ceases to be a Subsidiary of the Bank,  the employment of all
of its employees who are not immediately

                                       7

<PAGE>



thereafter employees of the Bank shall be deemed to terminate upon the date such
Subsidiary so ceases to be a Subsidiary of the Bank.

                  (b)  Disability.  In the event that any Optionee's  employment
with the Bank shall  terminate as the result of the Disability of such Optionee,
such Optionee may exercise any Incentive  Stock Options  granted to the Optionee
pursuant  to the Plan at any time  prior to the  earlier  of (i) the  respective
expiration  dates of any such Incentive  Stock Options or (ii) the date which is
one (1) year after the date of such termination of employment,  but only if, and
to the extent that,  the  Optionee  was entitled to exercise any such  Incentive
Stock Options at the date of such termination of employment.

                  (c)  Death.  In the  event of the  death of an  Optionee,  any
Incentive  Stock Options granted to such Optionee may be exercised by the person
or persons to whom the Optionee's  rights under any such Incentive Stock Options
pass  by  will  or by the  laws  of  descent  and  distribution  (including  the
Optionee's estate during the period of  administration) at any time prior to the
earlier  of (i) the  respective  expiration  dates of any such  Incentive  Stock
Options or (ii) the date which is two (2) years  after the date of death of such
Optionee  but only if, and to the extent  that,  the  Optionee  was  entitled to
exercise any such Incentive Stock Options at the date of death.  For purposes of
this Section  10(c),  any  Incentive  Stock Option held by an Optionee  shall be
considered  exercisable  at the  date  of his  death  if  the  only  unsatisfied
condition  precedent to the exercisability of such Incentive Stock Option at the
date of death is the passage of a specified period of time. At the discretion of
the Committee,  upon exercise of such Options the Optionee may receive Shares or
cash or a  combination  thereof.  If cash shall be paid in lieu of Shares,  such
cash shall be equal to the  difference  between  the Fair  Market  Value of such
Shares and the exercise price of such Options on the exercise date.

                  (d) Incentive Stock Options Deemed  Exercisable.  For purposes
of Sections 10(a), 10(b) and 10(c) above, any Incentive Stock Option held by any
Optionee  shall  be  considered  exercisable  at  the  date  of  termination  of
employment if any such  Incentive  Stock Option would have been  exercisable  at
such date of termination of employment without regard to the Disability or death
of the Participant.

                  (e) Termination of Incentive  Stock Options.  Except as may be
specified by the Committee at the time of grant of an Option, to the extent that
any  Incentive  Stock  Option  granted  under  the  Plan to any  Optionee  whose
employment  with the Bank  terminates  shall not have been exercised  within the
applicable period set forth in this Section 10, any such Incentive Stock Option,
and all rights to purchase or receive Shares of Common Stock  pursuant  thereto,
as the case may be, shall terminate on the last day of the applicable period.

         11.  Effect  of  Termination  of  Employment,  Disability  or  Death on
Non-Incentive  Stock Options.  The terms and conditions of  Non-Incentive  Stock
Options relating to the effect of the termination of an Optionee's employment or
service,  Disability  of an  Optionee  or his  death  shall  be such  terms  and
conditions as the Committee shall, in its sole discretion, determine at the time
of termination of service,  unless specifically provided for by the terms of the
Agreement at the time of grant of the Award.


         12. Recapitalization, Merger, Consolidation, and Other Transactions.

                  (a)      Adjustment.  Subject  to  any  required action by the
stockholders  of the Bank,  within the sole  discretion  of the  Committee,  the
aggregate number of Shares of Common Stock for which

                                       8

<PAGE>



Options may be granted  hereunder,  the number of Shares of Common Stock covered
by each outstanding  Option, and the exercise price per Share of Common Stock of
each such  Option,  shall all be  proportionately  adjusted  for any increase or
decrease  in the  number  of issued  and  outstanding  Shares  of  Common  Stock
resulting from a subdivision or  consolidation  of Shares  (whether by reason of
merger, consolidation, recapitalization, reclassification, split-up, combination
of shares,  or  otherwise)  or the payment of a stock  dividend (but only on the
Common Stock) or any other  increase or decrease in the number of such Shares of
Common Stock  effected  without the receipt or payment of  consideration  by the
Bank (other than Shares held by dissenting stockholders).

                  (b)  Extraordinary   Corporate  Action.   Notwithstanding  any
provisions  of the Plan to the contrary,  subject to any required  action by the
stockholders   of  the   Bank,   in  the  event  of  any   Change  in   Control,
recapitalization,   merger,   consolidation,   exchange  of  Shares,   spin-off,
reorganization,   tender  offer,   partial  or  complete  liquidation  or  other
extraordinary  corporate action or event, the Committee, in its sole discretion,
shall have the power, prior or subsequent to such action or event to:

                            (i)     appropriately adjust the number of Shares of
Common Stock  subject to each  Option,  the Option  exercise  price per Share of
Common Stock, and the consideration to be given or received by the Bank upon the
exercise of any outstanding Option;

                           (ii)    cancel any or all previously granted Options,
provided that  appropriate  consideration  is paid to the Optionee in connection
therewith; and/or

                         (iii)    make such other adjustments in connection with
the Plan as the Committee, in its sole discretion,  deems necessary,  desirable,
appropriate or advisable;  provided,  however,  that no action shall be taken by
the Committee which would cause Incentive Stock Options granted  pursuant to the
Plan to fail to meet the  requirements  of Section  422 of the Code  without the
consent of the Optionee.

                  (c)  Acceleration.  The Committee  shall at all times have the
power to accelerate  the exercise date of Options  previously  granted under the
Plan.

                  (d) Non-recurring Dividends.  Upon the payment of a special or
non-recurring  cash  dividend  that has the effect of a return of capital to the
stockholders,   the  Option   exercise   price  per  share   shall  be  adjusted
proportionately.

         Except as expressly  provided in Sections  12(a) and 12(d)  hereof,  no
Optionee  shall have any rights by reason of the occurrence of any of the events
described in this Section 12.

         13. Time of Granting Options.  The date of grant of an Option under the
Plan  shall,  for all  purposes,  be the date on which the  Committee  makes the
determination of granting such Option. Notice of the grant of an Option shall be
given to each  individual  to whom an Option is so granted  within a  reasonable
time after the date of such grant in a form determined by the Committee.

         14.  Effective  Date. The Plan shall become  effective upon the date of
approval of the Plan by the  stockholders  of the Bank. The Committee may make a
determination  related to Awards prior to the Effective Date with such Awards to
be effective upon the date of stockholder approval of the Plan.


                                       9

<PAGE>



         15. Approval by Stockholders.  The Plan shall be approved by a majority
of the  stockholders  of the Bank within  twelve (12) months before or after the
date the Plan is approved by the Board.  Furthermore,  the Plan must be approved
by a majority  of the votes cast by  stockholders  other than Skibo  Bancshares,
M.H.C.

         16.  Modification  of Options.  At any time and from time to time,  the
Board may  authorize  the  Committee to direct the  execution  of an  instrument
providing  for the  modification  of any  outstanding  Option,  provided no such
modification, extension or renewal shall confer on the holder of said Option any
right or benefit  which could not be conferred on the Optionee by the grant of a
new  Option  at such  time,  or shall not  materially  decrease  the  Optionee's
benefits  under the Option  without  the  consent  of the holder of the  Option,
except as otherwise permitted under Section 18 hereof.

         17. Amendment and Termination of the Plan.

                  (a)  Action by the  Board.  The Board may  alter,  suspend  or
discontinue  the Plan,  except  that no action  of the  Board may  increase  the
maximum  number of Shares  permitted to be optioned  under the Plan,  materially
increase  the benefits  accruing to  Participants  under the Plan or  materially
modify the  requirements  for eligibility for  participation  in the Plan unless
such action of the Board shall be subject to  approval  or  ratification  by the
stockholders of the Bank.

                  (b)  Change  in  Applicable  Law.  Notwithstanding  any  other
provision  contained  in the Plan,  in the event of a change in any  federal  or
state law,  rule or  regulation  which would make the exercise of all or part of
any previously  granted Option unlawful or subject the Bank to any penalty,  the
Committee may restrict any such exercise  without the consent of the Optionee or
other holder thereof in order to comply with any such law, rule or regulation or
to avoid any such penalty.

         19. Conditions Upon Issuance of Shares; Limitations on Option Exercise;
Cancellation of Option Rights.

         (a) Shares shall not be issued with respect to any Option granted under
the Plan unless the  issuance  and delivery of such Shares shall comply with all
relevant  provisions of  applicable  law,  including,  without  limitation,  the
Securities  Act of 1933,  as  amended,  the  rules and  regulations  promulgated
thereunder,  any applicable  state  securities laws and the  requirements of any
stock exchange upon which the Shares may then be listed.

         (b) The inability of the Bank to obtain any  necessary  authorizations,
approvals  or letters of  non-objection  from any  regulatory  body or authority
deemed by the Bank's counsel to be necessary to the lawful  issuance and sale of
any Shares  issuable  hereunder  shall  relieve the Bank of any  liability  with
respect to the non-issuance or sale of such Shares.

         (c) As a condition to the  exercise of an Option,  the Bank may require
the person exercising the Option to make such  representations and warranties as
may  be  necessary  to  assure  the   availability  of  an  exemption  from  the
registration requirements of federal or state securities law.

         (d)  Notwithstanding   anything  herein  to  the  contrary,   upon  the
termination  of  employment  or  service  of an  Optionee  by  the  Bank  or its
Subsidiaries  for "cause" as defined at 12 C.F.R.  563.39(b)(1) as determined by
the Board of Directors,  all Options held by such Participant  shall cease to be
exercisable as of the date of such termination of employment or service.

                                      10

<PAGE>



         (e) Upon the  exercise of an Option by an Optionee  (or the  Optionee's
personal  representative),  the Committee,  in its sole and absolute discretion,
may make a cash  payment to the  Optionee,  in whole or in part,  in lieu of the
delivery  of shares of Common  Stock.  Such cash  payment  to be paid in lieu of
delivery  of Common  Stock  shall be equal to the  difference  between  the Fair
Market  Value of the  Common  Stock on the date of the Option  exercise  and the
exercise  price per share of the Option.  Such cash payment shall be in exchange
for the cancellation of such Option.  Such cash payment shall not be made in the
event that such  transaction  would  result in  liability to the Optionee or the
Bank under Section 16(b) of the Securities Exchange Act of 1934, as amended, and
regulations promulgated thereunder.

         20.  Reservation of Shares.  During the term of the Plan, the Bank will
reserve  and keep  available  a number  of  Shares  sufficient  to  satisfy  the
requirements of the Plan.

         21. Unsecured Obligation.  No Participant under the Plan shall have any
interest  in any fund or special  asset of the Bank by reason of the Plan or the
grant of any Option under the Plan. No trust fund shall be created in connection
with the  Plan or any  grant  of any  Option  hereunder  and  there  shall be no
required funding of amounts which may become payable to any Participant.

         22.  Withholding  Tax. The Bank shall have the right to deduct from all
amounts paid in cash with respect to the cashless  exercise of Options under the
Plan  any  taxes  required  by law to be  withheld  with  respect  to such  cash
payments.  Where a  Participant  or other  person is entitled to receive  Shares
pursuant to the exercise of an Option,  the Bank shall have the right to require
the  Participant  or such  other  person to pay the Bank the amount of any taxes
which the Bank is required to withhold with respect to such Shares,  or, in lieu
thereof,  to  retain,  or to sell  without  notice,  a  number  of  such  Shares
sufficient to cover the amount required to be withheld.

         23. No Employment  Rights. No Director,  Employee or other person shall
have a right to be selected as a  Participant  under the Plan.  Neither the Plan
nor any action  taken by the  Committee in  administration  of the Plan shall be
construed  as giving  any person any rights of  employment  or  retention  as an
Employee, Director or in any other capacity with the Bank or any Subsidiary.

         24.  Governing  Law.  The Plan shall be  governed by and  construed  in
accordance  with the laws of the  Commonwealth  of  Pennsylvania,  except to the
extent that federal law shall be deemed to apply.





                                      11