EXHIBIT 10.3

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                             Amsterdam Federal Bank
                              Restricted Stock Plan
                               and Trust Agreement

                                    Article I
                                    ---------

                       ESTABLISHMENT OF THE PLAN AND TRUST

         1.01 Amsterdam  Federal Bank ("Savings  Bank") hereby  establishes  the
Restricted  Stock Plan (the "Plan") and Trust (the  "Trust")  upon the terms and
conditions  hereinafter stated in this Restricted Stock Plan and Trust Agreement
(the "Agreement").

         1.02 The Trustee hereby accepts this Trust and agrees to hold the Trust
assets  existing on the date of this  Agreement and all additions and accretions
thereto upon the terms and conditions hereinafter stated.

                                   Article II
                                   ----------

                               PURPOSE OF THE PLAN

         2.01 The  purpose of the Plan is to reward and to retain  personnel  of
experience and ability in key positions of responsibility  with the Savings Bank
and its  subsidiaries,  by providing  such personnel of the Savings Bank and its
subsidiaries  with an equity  interest in the parent  corporation of the Savings
Bank,  AFSALA  Bancorp  Inc.  ("Parent"),  as  compensation  for their prior and
anticipated  future  professional  contributions and service to the Savings Bank
and its subsidiaries.

                                   Article III
                                   -----------

                                   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.

         3.01  "Beneficiary"  means the  person  or  persons  designated  by the
Participant to receive any benefits  payable under the Plan in the event of such
Participant's  death.  Such person or persons  shall be designated in writing on
forms provided for this purpose by the Committee and may be changed from time to
time by similar  written  notice to the  Committee.  In the absence of a written
designation,  the Beneficiary  shall be the  Participant's  surviving spouse, if
any, or if none, the Participant's estate.

         3.02 "Board"  means the Board of Directors of the Savings  Bank, or any
successor corporation thereto.

         3.03  "Cause"  means the  personal  dishonesty,  incompetence,  willful
misconduct,  breach of fiduciary duty involving  personal  profits,  intentional
failure to perform stated duties,  willful violation of a material  provision of
any law, rule or regulation (other than traffic violations and similar offense),
or a material  violation of a final  cease-and-desist  order or any other action
which results in a substantial financial loss to the Parent, Savings Bank or its
Subsidiaries.

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         3.04 "Change in Control" shall mean: (i) the sale of all, or a material
portion,  of the  assets  of the  Parent or  Savings  Bank;  (ii) the  merger or
recapitalization of the Parent or the Savings Bank whereby the Parent or Savings
Bank is not the  surviving  entity;  (iii) a change in  control of the Parent or
Savings  Bank,  as  otherwise  defined  or  determined  by the  Office of Thrift
Supervision  ("OTS") 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  1934  Act  and  the  rules  and
regulations  promulgated thereunder) of twenty-five percent (25%) or more of the
outstanding  voting  securities  of the  Parent or Savings  Bank by any  person,
trust,  entity or group.  This  limitation  shall not apply to the  purchase  of
shares of up to 25% of any class of  securities of the Parent or Savings 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.

         3.05  "Committee"  means the Board of  Directors  of the  Parent or the
Restricted  Stock Plan  Committee  appointed  by the Board of  Directors  of the
Parent pursuant to Article IV hereof.

         3.06 "Common  Stock" means shares of the common  stock,  $.10 par value
per share, of the Savings Bank or any successor corporation or Parent thereto.

         3.07 "Conversion"  means the effective date of the stock charter of the
Savings Bank and simultaneous acquisition of all of the outstanding stock of the
Savings Bank by the Parent.

         3.08     "Director" means a member of the Board of the Savings Bank.

         3.09 "Director Emeritus" means 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 Savings Bank or the Parent from time
to time.

         3.10 "Disability" means any physical or mental impairment which renders
the  Participant  incapable of  continuing  in the  employment or service of the
Savings  Bank  or the  Parent  in his  current  capacity  as  determined  by the
Committee.

         3.11 "Employee" means any person who is employed by the Savings Bank or
a Subsidiary.

         3.12  "Effective  Date" shall mean the date of stockholder  approval of
the Plan by the Parent's stockholders.

         3.13 "Parent" shall mean AFSALA Bancorp Inc., the parent corporation of
the Savings Bank.

         3.14 "Participant" means an Employee, Director or Director Emeritus who
receives a Plan Share Award under the Plan.

         3.15 "Plan Shares" means shares of Common Stock held in the Trust which
are awarded or issuable to a Participant pursuant to the Plan.


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         3.16  "Plan  Share  Award"  or  "Award"  means  a  right  granted  to a
Participant under this Plan to earn or to receive Plan Shares.

         3.17 "Plan Share  Reserve" means the shares of Common Stock held by the
Trust pursuant to Sections 5.03 and 5.04.

         3.18 "Savings  Bank" means  Amsterdam  Federal Bank,  and any successor
corporation thereto.

         3.19 "Subsidiary"  means those  subsidiaries of the Savings Bank which,
with the consent of the Board, agree to participate in this Plan.

         3.20  "Trustee" or "Trustee  Committee"  means that person(s) or entity
nominated by the Committee  and approved by the Board  pursuant to Sections 4.01
and 4.02 to hold  legal  title to the Plan  assets  for the  purposes  set forth
herein.

                                   Article IV
                                   ----------

                           ADMINISTRATION OF THE PLAN

         4.01  Role  of the  Committee.  The  Plan  shall  be  administered  and
interpreted by the Board of Directors of the Parent or a Committee  appointed by
said Board, which shall consist of not less than two non-employee members of the
Board,  which  shall  have all of the powers  allocated  to it in this and other
sections of the Plan. All persons  designated as members of the Committee  shall
be  "Non-Employee  Directors"  within  the  meaning  of  Rule  16b-3  under  the
Securities Exchange Act of 1934, as amended ("1934 Act"). The interpretation and
construction by the Committee of any provisions of the Plan or of any Plan Share
Award granted  hereunder shall be final and binding.  The Committee shall act by
vote or written  consent of a majority  of its  members.  Subject to the express
provisions  and  limitations  of the Plan,  the  Committee may adopt such rules,
regulations  and  procedures  as it deems  appropriate  for the  conduct  of its
affairs.  The Committee  shall report its actions and decisions  with respect to
the Plan to the Board at appropriate  times,  but in no event less than one time
per  calendar  year.  The  Committee  shall  recommend  to the Board one or more
persons or entity to act as Trustee in  accordance  with the  provision  of this
Plan and Trust and the terms of Article VIII hereof.

         4.02 Role of the Board.  The members of the  Committee  and the Trustee
shall be  appointed or approved by, and will serve at the pleasure of the Board.
The Board may in its  discretion  from time to time remove  members from, or add
members to, the Committee,  and may remove,  replace or add Trustees.  The Board
shall have all of the powers  allocated to it in this and other  sections of the
Plan,  may take any action under or with respect to the Plan which the Committee
is authorized to take,  and may reverse or override any action taken or decision
made by the Committee under or with respect to the Plan, provided, however, that
the Board may not revoke any Plan Share Award already made except as provided in
Section 7.01(b) herein.

         4.03 Limitation on Liability.  No member of the Board, the Committee or
the  Trustee  shall be liable  for any  determination  made in good  faith  with
respect to the Plan or any Plan Share Awards granted.  If a member of the Board,
Committee or any Trustee is a party or is  threatened  to be made a party to any
threatened,  pending or completed  action,  suit or  proceeding,  whether civil,
criminal, administrative or investigative, by any reason of anything done or not
done by him in such capacity  under or with respect to the Plan,  the Parent and
the Savings Bank shall indemnify such member against

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expenses  (including  attorney's  fees),  judgments,  fines and amounts  paid in
settlement  actually and  reasonably  incurred by him or her in connection  with
such action, suit or proceeding if he or she acted in good faith and in a manner
he or she  reasonably  believed to be in the best  interests of the Parent,  the
Savings Bank and its  Subsidiaries  and, with respect to any criminal  action or
proceeding,  had no  reasonable  cause to  believe  his  conduct  was  unlawful.
Notwithstanding  anything herein to the contrary,  in no event shall the Savings
Bank  take  any  actions  with  respect  to this  Section  4.03  which is not in
compliance with the limitations or requirements set forth at 12 CFR 545.121,  as
may be amended from time to time.

                                    Article V
                                    ---------

                        CONTRIBUTIONS; PLAN SHARE RESERVE

         5.01 Amount and Timing of Contributions.  The Board of Directors of the
Savings  Bank  shall  determine  the  amounts  (or the method of  computing  the
amounts) to be  contributed by the Savings Bank to the Trust  established  under
this  Plan.  Such  amounts  shall  be  paid  to  the  Trustee  at  the  time  of
contribution.  No contributions to the Trust by Participants  shall be permitted
except with respect to amounts necessary to meet tax withholding obligations.

         5.02  Initial  Investment.  Any  funds  held  by  the  Trust  prior  to
investment  in the  Common  Stock  shall  be  invested  by the  Trustee  in such
interest-bearing  account or accounts at the Savings  Bank as the Trustee  shall
determine to be appropriate.

         5.03  Investment  of Trust  Assets.  Following  approval of the Plan by
stockholders  of the  Parent  and  receipt  of any  other  necessary  regulatory
approvals,  the Trust  shall  purchase  Common  Stock of the Parent in an amount
equal to up to 100% of the Trust's  assets,  after  providing  for any  required
withholding as needed for tax purposes,  provided, however, that the Trust shall
not purchase  more than 58,190 shares of Common  Stock,  representing  4% of the
aggregate  shares of Common  Stock issued by the Parent in the  Conversion.  The
Trustee  may  purchase  shares of  Common  Stock in the open  market  or, in the
alternative,  may purchase authorized but unissued shares of the Common Stock or
treasury shares from the Parent sufficient to fund the Plan Share Reserve.

         5.04 Effect of  Allocations,  Returns and  Forfeitures  Upon Plan Share
Reserves. Upon the allocation of Plan Share Awards under Sections 6.02 and 6.05,
or the decision of the  Committee to return Plan Shares to the Parent,  the Plan
Share Reserve shall be reduced by the number of Shares  subject to the Awards so
allocated  or  returned.  Any Shares  subject  to an Award  which are not earned
because of forfeiture by the Participant pursuant to Section 7.01 shall be added
to the Plan Share Reserve.

                                   Article VI
                                   ----------

                            ELIGIBILITY; ALLOCATIONS

         6.01  Eligibility.  Employees  and  Directors  Emeritus are eligible to
receive Plan Share Awards within the sole discretion of the Committee. Directors
who are not  otherwise  Employees  shall  receive Plan Share Awards  pursuant to
Section 6.05.

         6.02  Allocations.  The Committee will determine which of the Employees
will be  granted  Plan Share  Awards  and the  number of Shares  covered by each
Award, provided, however, that in no event

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shall any Awards be made which will violate the Charter or Bylaws of the Savings
Bank or its Parent or  Subsidiaries  or any  applicable  federal or state law or
regulation.  In the event  Shares are  forfeited  for any  reason or  additional
Shares are  purchased  by the Trustee,  the  Committee  may,  from time to time,
determine which of the Employees will be granted Plan Share Awards to be awarded
from forfeited  Shares.  In selecting those Employees and Directors  Emeritus to
whom Plan Share Awards will be granted and the number of shares  covered by such
Awards,  the Committee shall consider the prior and anticipated future position,
duties  and  responsibilities  of the  Employees,  the value of their  prior and
anticipated  future services to the Savings Bank and its  Subsidiaries,  and any
other  factors the  Committee  may deem  relevant.  All actions by the Committee
shall be deemed final, except to the extent that such actions are revoked by the
Board.  Notwithstanding  anything herein to the contrary,  in no event shall any
Participant  receive  Plan Share Awards in excess of 25% of the  aggregate  Plan
Shares authorized under the Plan.

         6.03  Form  of  Allocation.   As  promptly  as   practicable   after  a
determination is made pursuant to Section 6.02 or Section 6.05 that a Plan Share
Award is to be made,  the Committee  shall notify the  Participant in writing of
the grant of the Award,  the number of Plan Shares covered by the Award, and the
terms upon which the Plan Shares subject to the award may be earned. The date on
which the Committee makes its award  determination  or the date the Committee so
notifies the Participant shall be considered the date of grant of the Plan Share
Awards as determined by the Committee.  The Committee shall maintain  records as
to all grants of Plan Share Awards under the Plan.

         6.04 Allocations Not Required. Notwithstanding anything to the contrary
at Sections 6.01,  6.02 or 6.05, no Employee shall have any right or entitlement
to  receive  a Plan  Share  Award  hereunder,  such  Awards  being  at the  sole
discretion of the  Committee  and the Board,  nor shall the Employees as a group
have such a right.  The Committee may, with the approval of the Board (or, if so
directed by the Board)  return all Common Stock in the Plan Share Reserve to the
Savings Bank at any time, and cease issuing Plan Share Awards.

         6.05  Awards  to  Directors.  Notwithstanding  anything  herein  to the
contrary,  upon the Effective Date, a Plan Share Award  consisting of 2,909 Plan
Shares  shall be  awarded  to each  Director  of the  Savings  Bank  that is not
otherwise  an  Employee.  Such  Plan  Share  Award  shall  be  earned  and  non-
forfeitable  at the rate of  one-fifth  as of the  one-year  anniversary  of the
Effective  Date and an  additional  one-fifth  following  each of the next  four
successive  years  during  such  periods of service  as a Director  or  Director
Emeritus.  Further,  such Plan Share Award shall be immediately  100% earned and
non-  forfeitable  in the event of the death or  Disability  of such Director or
Director  Emeritus,  or upon a Change in Control of the Savings  Bank or Parent;
provided  that such  accelerated  vesting is not  inconsistent  with  applicable
regulations  of the Office of Thrift  Supervision  ("OTS")  or other  applicable
banking  regulatory agency at the time of such Change in Control.  Subsequent to
the  Effective  Date,  Plan Share  Awards  may be  awarded  to newly  elected or
appointed  Directors of the Savings Bank by the  Committee,  provided that total
Plan Share Awards  granted to  non-employee  Directors of the Savings Bank shall
not exceed 30% of the total Plan Share Reserve in the  aggregate  under the Plan
or 5% of the total Plan Share Reserve to any individual non-employee Director.


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                                   Article VII
                                   -----------

             EARNINGS AND DISTRIBUTION OF PLAN SHARES; VOTING RIGHTS

         7.01     Earnings Plan Shares; Forfeitures.

         (a) General Rules. Unless the Committee shall specifically state to the
contrary at the time a Plan Share Award is  granted,  Plan Shares  subject to an
Award  shall be  earned  and  non-forfeitable  by a  Participant  at the rate of
one-fifth of such Award following one year after the granting of such Award, and
an  additional  one-fifth  following  each of the next  four  successive  years;
provided  that such  Participant  remains an  Employee,  Director,  or  Director
Emeritus during such period. Notwithstanding anything herein to the contrary, in
no  event  shall a Plan  Share  Award  granted  hereunder  be  earned  and  non-
forfeitable by a Participant  more rapidly than at the rate of one-fifth of such
Award as of the one year  anniversary  of the  date of grant  and an  additional
one-fifth following each of the next four successive years.

         (b) Revocation for Misconduct.  Notwithstanding  anything herein to the
contrary,  the Board  shall,  by  resolution,  immediately  revoke,  rescind and
terminate any Plan Share Award,  or portion  thereof,  previously  awarded under
this Plan, to the extent Plan Shares have not been  delivered  thereunder to the
Participant,  whether or not yet  earned,  in the case of a  Participant  who is
discharged  from  the  employ  or  service  of the  Parent,  Savings  Bank  or a
Subsidiary for Cause,  or who is discovered  after  termination of employment or
service to have engaged in conduct  that would have  justified  termination  for
Cause.  A  determination  of Cause  shall be made by the Board  within  its sole
discretion.

         (c)   Exception   for   Terminations   Due  to  Death  or   Disability.
Notwithstanding  the general rule contained in Section  7.01(a) above,  all Plan
Shares subject to a Plan Share Award held by a Participant  whose  employment or
service with the Parent, Savings Bank or a Subsidiary terminates due to death or
Disability,  shall be deemed earned and  nonforfeitable  as of the Participant's
last date of employment  or service with the Parent,  Savings Bank or Subsidiary
and shall be distributed as soon as practicable thereafter.

         (d)   Exception   for   Termination   after  a   Change   in   Control.
Notwithstanding  the general  rule  contained  in Section  7.01 above,  all Plan
Shares subject to a Plan Share Award held by a Participant shall be deemed to be
immediately 100% earned and  non-forfeitable in the event of a Change in Control
of the Parent or Savings Bank and shall be  distributed  as soon as  practicable
thereafter;  provided that such  accelerated  vesting is not  inconsistent  with
applicable  regulations of the OTS or other applicable banking regulatory agency
at the time of such Change in Control.

         7.02 Accrual and Payment of Dividends.  A holder of a Plan Share Award,
whether or not earned,  shall also be entitled to receive an amount equal to any
cash  dividends  declared  and paid with  respect  to  shares  of  Common  Stock
represented  by such Plan Share Award  between the date the relevant  Plan Share
Award  was  granted  to such  Participant  and the  date  the  Plan  Shares  are
distributed. Such cash dividend amounts shall be held in arrears under the Trust
and  distributed  upon the  earning of the  applicable  Plan Share  Award.  Such
payment  shall also include an  appropriate  amount of earnings,  if any, of the
Trust assets with respect to any cash dividends so distributed.


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         7.03     Distribution of Plan Shares.

         (a)  Timing of  Distributions:  General  Rule.  Except as  provided  in
Subsections  (d)  and  (e)  below,  Plan  Shares  shall  be  distributed  to the
Participant or his Beneficiary, as the case may be, as soon as practicable after
they  have  been   earned.   No   fractional   shares   shall  be   distributed.
Notwithstanding  anything  herein  to the  contrary,  at the  discretion  of the
Committee,  Plan  Shares  may be  distributed  prior to such  Shares  being 100%
earned,  provided  that such Plan  Shares  shall  contain a  restrictive  legend
detailing the applicable limitations of such shares with respect to transfer and
forfeiture.

         (b) Form of  Distribution.  All Plan Shares,  together  with any shares
representing stock dividends,  shall be distributed in the form of Common Stock.
One share of Common  Stock shall be given for each Plan Share  earned.  Payments
representing  cash  dividends  (and  earnings  thereon)  shall  be made in cash.
Notwithstanding  anything  within  the Plan to the  contrary,  upon a Change  in
Control  whereby  substantially  all of the Common Stock of the Company shall be
acquired for cash, all Plan Shares  associated with Plan Share Awards,  together
with any shares representing stock dividends  associated with Plan Share Awards,
shall  be,  at the  sole  discretion  of the  Committee,  distributed  as of the
effective  date of  such  Change  in  Control,  or as  soon as  administratively
feasible thereafter,  in the form of cash equal to the consideration received in
exchange for such Common Stock represented by such Plan Shares.

         (c)  Withholding.   The  Trustee  may  withhold  from  any  payment  or
distribution made under this Plan sufficient amounts of cash or shares of Common
Stock necessary to cover any applicable withholding and employment taxes, and if
the amount of such payment or distribution  is not  sufficient,  the Trustee may
require the Participant or Beneficiary to pay to the Trustee the amount required
to be  withheld in taxes as a  condition  of  delivering  the Plan  Shares.  The
Trustee shall pay over to the Parent,  Savings Bank or Subsidiary  which employs
or  employed  such  Participant  any such  amount  withheld  from or paid by the
Participant or Beneficiary.

         (d) Timing: Exception for 10% Shareholders.  Notwithstanding Subsection
(a) above,  no Plan  Shares may be  distributed  prior to the date which is five
years from the effective date of the Conversion to the extent the Participant or
Beneficiary,  as the case may be,  would  after  receipt  of such  Shares own in
excess of ten percent (10%) of the issued and outstanding shares of Common Stock
held by parties other than Parent,  unless such action is approved in advance by
a majority vote of disinterested  directors of the Board of the Parent. Any Plan
Shares  remaining  undistributed  solely  by  reason  of the  operation  of this
Subsection (d) shall be distributed to the Participant or his Beneficiary on the
date which is five years from the effective date of the Conversion.

         (e)  Regulatory  Exceptions.  No  Plan  Shares  shall  be  distributed,
however,  unless and until all of the  requirements  of all  applicable  law and
regulation  shall  have been  fully  complied  with,  including  the  receipt of
approval of the Plan by the  stockholders of the Parent by such vote, if any, as
may be required by applicable law and regulations as determined by the Board.

         7.04 Voting of Plan Shares.  After a Plan Share Award has become earned
and non- forfeitable, the Participant shall be entitled to direct the Trustee as
to the voting of the Plan Shares which are associated  with the Plan Share Award
and which have not yet been  distributed  pursuant to Section  7.03,  subject to
rules and  procedures  adopted by the Committee for this purpose.  All shares of
Common  Stock held by the Trust as to which  Participants  are not  entitled  to
direct, or have not directed,  the voting of such Shares,  shall be voted by the
Trustee as directed by the Committee.

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                                  Article VIII
                                  ------------

                                      TRUST

         8.01 Trust.  The Trustee shall receive,  hold,  administer,  invest and
make  distributions  and  disbursements  from the Trust in  accordance  with the
provisions  of  the  Plan  and  Trust  and  the  applicable  directions,  rules,
regulations,  procedures and policies  established by the Committee  pursuant to
the Plan.


         8.02  Management  of Trust.  It is the intention of this Plan and Trust
that the Trustee shall have complete  authority and  discretion  with respect to
the management,  control and investment of the Trust, and that the Trustee shall
invest all assets of the Trust, except those attributable to cash dividends paid
with respect to Plan Shares not held in the Plan Share Reserve,  in Common Stock
to the  fullest  extent  practicable,  except  to the  extent  that the  Trustee
determines  that the holding of monies in cash or cash  equivalents is necessary
to meet the obligations of the Trust. In performing  their duties,  the Trustees
shall have the power to do all things and  execute  such  instruments  as may be
deemed necessary or proper, including the following powers:

         (a) To invest up to one hundred  percent  (100%) of all Trust assets in
         the Common  Stock  without  regard to any law now or hereafter in force
         limiting investments for Trustees or other fiduciaries.  The investment
         authorized  herein may constitute the only investment of the Trust, and
         in making such investment, the Trustee is authorized to purchase Common
         Stock from the Parent or from any other  source,  and such Common Stock
         so purchased may be outstanding, newly issued, or treasury shares.

         (b) To invest any Trust  assets not  otherwise  invested in  accordance
         with (a) above in such deposit  accounts,  and  certificates of deposit
         (including those issued by the Savings Bank), obligations of the United
         States government or its agencies or such other investments as shall be
         considered the equivalent of cash.

         (c) To sell,  exchange or otherwise dispose of any property at any time
         held or acquired by the Trust.

         (d) To cause stocks,  bonds or other securities to be registered in the
         name of a nominee,  without the addition of words  indicating that such
         security  is an asset  of the  Trust  (but  accurate  records  shall be
         maintained showing that such security is an asset of the Trust).

         (e) To hold cash  without  interest  in such  amounts  as may be in the
         opinion of the Trustee  reasonable for the proper operation of the Plan
         and Trust.

         (f) To employ brokers, agents, custodians, consultants and accountants.

         (g) To hire  counsel to render  advice  with  respect to their  rights,
         duties and  obligations  hereunder,  and such other  legal  services or
         representation as they may deem desirable.

         (h) To  hold  funds  and  securities  representing  the  amounts  to be
         distributed to a Participant  or his  Beneficiary as a consequence of a
         dispute as to the disposition thereof,  whether in a segregated account
         or held in common with other assets.

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         Notwithstanding  anything herein contained to the contrary, the Trustee
shall not be required to make any  inventory,  appraisal or settlement or report
to any court,  or to secure any order of a court for the  exercise  of any power
herein contained, or to maintain bond.

         8.03 Records and  Accounts.  The Trustee  shall  maintain  accurate and
detailed records and accounts of all  transactions of the Trust,  which shall be
available at all reasonable  times for inspection by any legally entitled person
or entity  to the  extent  required  by  applicable  law,  or any  other  person
determined by the Committee.

         8.04  Earnings.  All  earnings,  gains and losses with respect to Trust
assets shall be allocated in accordance with a reasonable  procedure  adopted by
the  Committee,  to  bookkeeping  accounts  for  Participants  or to the general
account of the Trust,  depending  on the  nature  and  allocation  of the assets
generating such earnings, gains and losses. In particular,  any earnings on cash
dividends  received with respect to shares of Common Stock shall be allocated to
accounts for  Participants,  except to the extent that such cash  dividends  are
distributed to Participants,  if such shares are the subject of outstanding Plan
Share Awards, or, otherwise to the Plan Share Reserve.

         8.05  Expenses.  All costs and expenses  incurred in the  operation and
administration of this Plan,  including those incurred by the Trustee,  shall be
paid by the Savings Bank.

         8.06  Indemnification.  Subject to the  requirements and limitations of
applicable  laws  and  regulations,  the  Parent  and  the  Savings  Bank  shall
indemnify, defend and hold the Trustee harmless against all claims, expenses and
liabilities  arising out of or related to the exercise of the  Trustee's  powers
and the  discharge  of their duties  hereunder,  unless the same shall be due to
their gross negligence or willful misconduct.

                                   Article IX
                                   ----------

                                  MISCELLANEOUS

         9.01  Adjustments  for Capital  Changes.  The aggregate  number of Plan
Shares  available for issuance  pursuant to the Plan Share Awards and the number
of  Shares  to which  any Plan  Share  Award  relates  shall be  proportionately
adjusted for any increase or decrease in the total number of outstanding  shares
of Common Stock issued  subsequent to the effective  date of the Plan  resulting
from any  split,  subdivision  or  consolidation  of the  Common  Stock or other
capital adjustment, change or exchange of the Common Stock, or other increase or
decrease in the number or kind of shares effected  without receipt or payment of
consideration by the Parent.

         9.02  Amendment  and  Termination  of  the  Plan.  The  Board  may,  by
resolution,  at any time,  amend or  terminate  the Plan.  The power to amend or
terminate  the Plan shall  include  the power to direct the Trustee to return to
the  Parent  all or any part of the  assets of the  Trust,  including  shares of
Common Stock held in the Plan Share  Reserve,  as well as shares of Common Stock
and other assets  subject to Plan Share Awards which have not yet been earned by
the Participants to whom they have been awarded. However, the termination of the
Trust shall not affect a  Participant's  right to earn Plan Share  Awards and to
the distribution of Common Stock relating thereto,  including  earnings thereon,
in accordance  with the terms of this Plan and the grant by the Committee or the
Board. Notwithstanding the foregoing, no action of the Board may increase (other
than as provided  in Section  9.01  hereof)  the  maximum  number of Plan Shares
permitted to be awarded under the Plan as specified at Section 5.03,  materially
increase

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<PAGE>



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 ratification by the stockholders of the Parent.


         9.03 Nontransferable. Plan Share Awards and rights to Plan Shares shall
not  be  transferable  by  a  Participant,   and  during  the  lifetime  of  the
Participant,  Plan Shares may only be earned by and paid to the  Participant who
was notified in writing of the Award by the Committee  pursuant to Section 6.03.
No Participant or Beneficiary  shall have any right in or claim to any assets of
the Plan or Trust,  nor shall the Parent,  Savings  Bank,  or any  Subsidiary be
subject to any claim for benefits hereunder.

         9.04 No  Employment  Rights.  Neither  the Plan nor any grant of a Plan
Share Award or Plan Shares  hereunder  nor any action taken by the Trustee,  the
Committee  or the Board in  connection  with the Plan  shall  create  any right,
either  express or implied,  on the part of any  Participant  to continue in the
employ or service of the Parent, Savings Bank, or a Subsidiary thereof.

         9.05 Voting and Dividend Rights.  No Participant  shall have any voting
or dividend rights of a stockholder with respect to any Plan Shares covered by a
Plan Share Award,  except as expressly provided in Sections 7.02 and 7.04 above,
prior to the time said Plan Shares are actually distributed to such Participant.

         9.06  Governing  Law.  The Plan and  Trust  shall  be  governed  by and
construed  under the laws of the State of New York,  except to the  extent  that
Federal Law shall be deemed applicable.

         9.07  Effective  Date.  The Plan shall be  effective  as of the date of
approval of the Plan by  stockholders  of the Parent,  subject to the receipt of
approval or non-objection by the OTS or other applicable banking  regulator,  if
applicable.

         9.08 Term of Plan.  This Plan shall  remain in effect until the earlier
of (i)  termination  by the Board,  (ii) the  distribution  of all assets of the
Trust, or (iii) 21 years from the Effective Date.  Termination of the Plan shall
not effect any Plan Share Awards previously granted,  and such Plan Share Awards
shall  remain  valid and in effect  until they have been earned and paid,  or by
their terms expire or are forfeited.

         9.09 Tax Status of Trust.  It is  intended  that the Trust  established
hereby  shall be  treated  as a  grantor  trust of the  Savings  Bank  under the
provisions  of Section  671 et seq. of the  Internal  Revenue  Code of 1986,  as
amended, as the same may be amended from time to time.







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