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                    EXHIBIT 10.3   AMERICAN BANK OF CONNECTICUT
                        1998 INCENTIVE STOCK OPTION PLAN
  (AS ASSUMED BY AMERICAN FINANCIAL HOLDINGS, INC., EFFECTIVE JANUARY 18, 2002)





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                          AMERICAN BANK OF CONNECTICUT
                        1998 INCENTIVE STOCK OPTION PLAN
  (AS ASSUMED BY AMERICAN FINANCIAL HOLDINGS, INC., EFFECTIVE JANUARY 18, 2002)

1.    PURPOSE OF THE PLAN.  The Plan  shall be  known  as the  American  Bank of
Connecticut  1998 Incentive Stock Option Plan ("Plan").  The purpose of the Plan
is to  attract  and  retain  the  best  available  personnel  for  positions  of
substantial  responsibility and to provide additional  incentive to employees of
the American Bank of Connecticut  ("Bank") or any future parent or subsidiary of
the Bank.  It is  intended  that  options  issued  pursuant  to this Plan  shall
constitute  incentive  stock  options  within the  meaning of Section 422 of the
Internal Revenue Code of 1986, as amended.

2.    DEFINITIONS.  As used herein, the following definitions shall apply.

      (A)   "BANK" shall mean American Bank of Connecticut.

      (B)   "BOARD" shall mean the Board of Directors of the Bank.

      (C)   "CHANGE  OF  CONTROL"  shall mean the  acquisition  as a result of a
            tender offer,  merger or consolidation of fifty-one percent (51%) or
            more of the issued and outstanding  capital stock of the Bank by any
            person,  firm or corporation,  the adoption of a plan of liquidation
            of the Bank or changes  in the makeup of a majority  of the Board of
            Directors if such changes result from a tender or exchange  offer, a
            merger or similar transaction, or a contested election.

      (D)   "COMMON STOCK" shall mean common stock, par value One Dollar ($1.00)
            per share, of the Bank.

      (E)   "CODE" shall mean the Internal Revenue Code of 1986, as amended.

      (F)   "COMMITTEE"  shall mean the Stock Option Committee  appointed by the
            Board in accordance with paragraph 4(a) of the Plan.

      (G)   "EFFECTIVE DATE" of this Plan is January 1, 1998.

      (H)   "EMPLOYEE"  shall mean any person employed by the Bank or any future
            Parent or Subsidiary of the Bank.

      (I)   "OPTION" shall mean a stock option granted pursuant to this Plan.

      (J)  "OPTIONED  STOCK" shall mean the stock  subject to an Option  granted
           pursuant to this Plan.

      (K)   "OPTIONEE" shall mean an Employee who receives an option.

      (L)   "PARENT" shall mean any future  corporation which would be a "parent
            corporation" as defined in Subsections 424(e) and (g) of the Code.

      (M)   "PLAN" shall mean the American Bank of Connecticut 1998 Incentive
            Stock Option Plan.


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      (N)   "SUBSIDIARY"  shall mean any  future  corporation  which  would be a
            "subsidiary corporation" as defined in Subsections 424(f) and (g) of
            the Code.

      (O)   "TEN  PERCENT  EMPLOYEE"  shall mean an  Employee  who,  immediately
            before an Option is granted to him,  owns  stock  representing  more
            than ten percent  (10%) of the voting  power or value of all classes
            of stock of the Bank.

3. SHARES SUBJECT TO THE PLAN. Except as otherwise required by the provisions of
paragraph 10 hereof,  the aggregate number of shares of Common Stock deliverable
upon the  exercise of Options  pursuant to the Plan shall not exceed Two Hundred
Forty Thousand  (240,000).  Such shares may either be authorized but unissued or
treasury shares.

      If the Option should expire or become unexercisable for any reason without
having been exercised in full, the unpurchased shares which were subject thereto
shall, unless the Plan shall have been terminated, be available for the grant of
other Options under the Plan.

4.    ADMINISTRATION OF THE PLAN.

      (A) COMPOSITION OF OPTION  COMMITTEE.  The Plan shall be administered by a
Stock Option Committee ("Committee") consisting of not less than three directors
of the  Bank  appointed  by the  Board.  Employees  who  are  designated  by the
Committee shall be eligible to receive an Option under the Plan, and all persons
designated as members of the Committee shall be  "disinterested  persons" within
the meaning of Rule 16b-3 of the Securities Exchange Act of 1934.

      (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
Options 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.

      The  President  of the Bank is hereby  authorized  to execute  instruments
evidencing  Options on behalf of the Bank and to cause them to be  delivered  to
the Optionees.

      (C) EFFECT OF  COMMITTEE'S  DECISION.  All decisions,  determinations  and
interpretations  of the Committee  shall be final and  conclusive on all persons
affected thereby.

5.    ELIGIBILITY.  Options may be granted only to Employees of the Bank so long
as the Option is a consequence of the employment  relationship.  An Employee who
has been granted an Option may, if otherwise eligible,  be granted an additional
Option or Options.

      The aggregate fair market value of stock with respect to which Options are
exercisable  for the first time by any Optionee  during any calendar year (under
all plans of Bank) is limited to One Hundred Thousand  Dollars  ($100,000) (fair
market value determined as of the date the Option is granted.)


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6.    TERM OF THE PLAN - TERM OF OPTIONS.

      (A) The Plan  shall  continue  in effect for a term of ten (10) years from
its Effective Date, unless sooner terminated pursuant to paragraph 14.

      (B) The term of each Option granted under the Plan shall be established by
the Committee,  but shall not exceed ten (10) years,  provided however,  that in
the case of a Ten Percent Employee the term of such option shall not exceed five
(5) years.

7. OPTION  PRICE.  The price per share at which each Option is grated  under the
Plan may be exercised shall not, as to any particular  Option,  be less than the
fair market  value of the stock at the time such Option is granted.  In the case
of a Ten Percent  Employee,  the Option price shall not be less than one hundred
ten percent  (110%) of the fair market value of the stock at the time the Option
is granted.

8.    EXERCISE OF OPTION.

      (A)  PROCEDURE  FOR  EXERCISE.  Any  Option  granted  hereunder  shall  be
exercisable  at such times and under  such  conditions  as shall be  permissible
under the  terms of the Plan and of the  Options  granted  to the  Optionee.  An
Option may not be exercised for a fractional share.

      An  Option  granted  pursuant  to the Plan may be  exercised,  subject  to
provisions  relative to its termination  and  limitations on its exercise,  from
time to time only by (a) written  notice of intent to  exercise  the option with
respect  to  a  specified  number  of  shares,  and  (b)  payment  to  the  Bank
(contemporaneously  with delivery of each such notice),  in cash or by certified
bank  cashier's  or  teller's  check,  of the amount of the Option  price of the
number of shares with respect to which the Option is then being exercised.  Each
such notice and payment shall be delivered,  or mailed by prepaid  registered or
certified mail,  addressed to the Secretary of the Bank at the Bank's  executive
offices.

      (B) Unless otherwise  provided in the terms of an Option, an Option may be
exercised  by an Optionee  only while he is an Employee and has  maintained  his
status as an Employee since the date of the grant of the Option,  except: (1) if
the  Optionee's  employment is  terminated  by reason of disability  (within the
meaning of Section  22(e)(3) of the Code),  then the  Optionee  may exercise his
Option within one year from the date of  termination of his  employment;  (2) if
the Optionee's  employment is terminated by reason of death,  the Option of such
deceased  Optionee may be exercised within three months of the date of the death
of Optionee by the person or persons  (including  his estate) to whom his rights
under  such  Option  shall  have  passed  by  will  or by  law  of  descent  and
distribution;  (3) if the  Optionee's  employment is  terminated  for any reason
other than for cause, within sixty (60) days after a Change in Control, then all
outstanding Options of such Optionee may be exercised  immediately and fully for
a period of ninety (90) days following said Change of Control.

      The Committee's  determination as to whether as Optionee's  employment has
ceased,  and the  effective  date thereof  shall be final and  conclusive on all
persons affected hereby.

9.  NON-TRANSFERABILITY  OF OPTIONS.  Options  granted under the Plan may not be
sold, pledged, assigned, hypothecated,  transferred or disposed of in any manner
other than by will or by the laws of descent and distribution.


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10.   ADJUSTMENTS.  In  the  event  of  any  change in the outstanding shares of
Common  Stock by  reason  of any  stock  dividend  or  split,  recapitalization,
reclassification,  merger, consolidation,  combination or exchange of shares, or
other  similar  corporate  change,  whether  or not the  Bank  is the  surviving
corporation, then if the Committee shall determine, in its sole discretion, that
such change  necessarily  or equitabliy  requires an adjustment in the number of
shares  subject  to each  outstanding  Option  and the  Option  prices or in the
maximum number of shares subject to this Plan, such adjustments shall be made by
the Committee and shall be conclusive and binding for all purposes of this Plan.
No adjustments  shall be made in connection  with the issuance by the Company of
any warrants,  rights or options to acquire additional shares of Common Stock or
of securities convertible into Common Stock.

11.  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  determination  shall be
given to each Employee to whom an Option is so granted within a reasonable  time
after the date of such grant.

12.   APPROVAL BY SHAREHOLDERS.  The Plan shall be ratified by  the stockholders
of the Bank on or before April 15, 1998.

13.   MODIFICATION OF OPTIONS.  At any time and from time to time the  Committee
may modify any outstanding Options provided no rights of the Optionee under said
Options are impaired without his consent.

14.   TERMINATION OF PLAN.   The  Board  may  terminate  this Plan provided such
termination  does not  impair any rights of any  Optionee  under an  outstanding
Option.

15. CONDITIONS UPON ISSUANCE OF SHARES.  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 Federal and State law and
the rules and regulations  issued  thereunder and the  requirements of any stock
exchange upon which the shares may be then listed.

16.   RESERVATION OF SHARES.   The  Bank  during  the term of  this  Plan,  will
reserve  and keep  available  a number  of  shares  sufficient  to  satisfy  the
requirements of the Plan.


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