# TIERONE CORPORATION COMPENSATORY STOCK
OPTION AGREEMENT2003 STOCK OPTION PLAN

A
COMPENSATORY STOCK OPTION (Option) to purchase a total of
«number» shares of the common stock, par value $.01 per share
(Common Stock), of TierOne Corporation, Lincoln, Nebraska (the
Corporation) is hereby granted to «name» (the
Optionee) pursuant to the 2003 Stock Option Plan (Plan) of the
Corporation. The Option granted hereby is subject to all the terms and conditions of the
Plan and this Agreement. The Plan is incorporated by reference herein. Defined terms,
unless otherwise defined herein, shall have the same meaning as set forth in the Plan.

1.       
          Option Price. The option price shall be $17.83 for each share of Common
          Stock eligible to the exercised hereunder, which price is 100% of the Fair
          Market Value, as defined in Section 3.15 of the Plan, of the Common Stock on the
          date of grant of this Option.

2.       
          Exercise of Option. This Option shall be exercisable pursuant to the
          provisions of Article VIII, Section 8.03 of the Plan, as follows:

(a)       
          Schedule of Right of Exercise.

|Years of Continuous Employment
After Date of Grant of Option | Percentage of Total Shares of Common Stock
Subject to Option Which May be Exercised
|------------------------------------------------------------ | -----------------------------------------------------------------------------------
|after 1 year                                                 |                                                                                    
|after 2 years                                                |                                                                                    
|after 3 years                                                |                                                                                    
|after 4 years                                                |                                                                                    
|after 5 years                                                |                                                                                    

The
right to exercise the Option pursuant to the above schedule is cumulative.

Notwithstanding
the foregoing, the Option shall become immediately vested and exercisable in full on the
date the Optionee terminates his service as a Non-Employee Director (as defined in Section
3.17 of the Plan) with the Corporation or a Subsidiary Company (as defined in Section 3.25
of the Plan) because of his or her death, or Disability (as defined in Section 3.10 of the
Plan) or as of the effective date of a Change in Control of the Corporation (as defined in
Section 3.04 of the Plan).

(b)       Method
of Exercise. This Option shall be exercisable by written notice
                    to the Secretary of the Corporation on the Compensatory Stock Option
Exercise                     Form provided herewith which shall:

1

---

| | (i)
                                               state
the election to exercise the Option, the number of shares with respect to
                    which it is being exercised, the person in whose name the stock
certificate or                     certificates for such shares of Common Stock is to be
registered, his or her                     address and Social Security number (or if more
than one, the names, addresses                     and Social Security numbers of such
persons);
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (ii)
                                               be
signed by the person or persons entitled to exercise the Option and, if the
                    Option is being exercised by any person or person other than the
Optionee, be                     accompanied by proof, satisfactory to counsel for the
Corporation, of the right                     of such person or persons to exercise the
Option;
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (iii)
                                               be in
writing and delivered in person or by certified mail to the Secretary of
                    the Corporation at its executive office located at 1235 N Street,
Lincoln,                     Nebraska 68508, Attention: Eugene B. Witkowicz; and
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (iv)
                                               be
accompanied by payment for, or irrevocable instructions to a broker to sell,
                    the shares of Common Stock with respect to which the Option is being
exercised.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Payment
in full of the purchase price for shares of Common Stock purchased pursuant to the
exercise of the Option shall be made to the Corporation upon exercise of the Option.
Payment for shares may be made by the Optionee (i) in cash or by check, (ii) by delivery
of a properly executed exercise notice, together with irrevocable instructions to a broker
to sell the shares and then to properly deliver to the Corporation the amount of sale
proceeds to pay the exercise price, all in accordance with applicable laws and
regulations, plus any required amount to meet any tax withholding requirements of federal
and/or state law or (iii) at the sole discretion of the Board or the Committee by
delivering shares of Common Stock (including shares acquired pursuant to a previous
partial exercise of the Option or the exercise of another option) equal in Fair Market
Value to the purchase price of the shares to be acquired pursuant to the Option, by
withholding some of the shares of Common Stock which are being purchased upon exercise of
an Option, or any combination of the foregoing. With respect to subclause (iii) hereof,
the shares of Common Stock delivered to pay the purchase price must have either been (x)
purchased in open market transactions or (y) issued by the Corporation pursuant to a plan
thereof in each case more than six months prior to the exercise date of the Option.

(c)       
          Restrictions on Exercise. This Option may not be exercised if the
          issuance of the shares of Common Stock upon such exercise would constitute a
          violation of any applicable federal or state securities law or regulation or any
          other law or valid regulation. As a condition to the exercise of this Option,
          the Corporation may require the person exercising this Option to make any
          representation or warranty to the Corporation as may be required by any
          applicable law or regulation, and may require the Optionee to comply with the
          matters set forth in Sections 4.05 and 4.06 of the Plan.

3.       
          Non-transferability of Option. This Option may not be transferred except
          as provided in Section 8.05 of the Plan. Pursuant to Section 8.05, the Optionee
          may transfer the Option in whole or in part to his immediate family or to a duly
          established trust for the benefit of one or more of these individuals. For
          purposes of the Plan, immediate family includes but is not
          necessarily limited to, the Optionees spouse, children (including
          stepchildren), parents, grandchildren and great grandchildren. Options so
          transferred may thereafter be transferred only to the Optionee or to an
          individual or trust to whom the Optionee could have initially transferred the
          Option pursuant to Section 8.05. Options which are transferred pursuant to
          Section 8.05 shall be exercisable by the transferee according to the same terms
          and conditions as applied to the Optionee. The terms of this Option shall be
          binding upon the executors, administrators, heirs, successors and assigns of the
          Optionee.

2

---

4.       
          Term of Option. This Option may not be exercised later than the earlier
          to occur of (i) ten years from the date of grant of this Option, or (ii) six (6)
          months after the date on which the Optionee ceases to serve as a Director,
          Advisory Director or Director Emeritus of the Corporation and all Company
          Subsidiaries, and may be exercised during such term only in accordance with the
          Plan and the terms of this Agreement. If the Optionee terminates his or her
          service as a Non-Employee Director with the Corporation or a Subsidiary Company
          as a result of Disability or Retirement without having fully exercised his or
          her Option, the Optionee shall have the right, during the three (3) year period
          following his or her termination due to Disability or Retirement, to exercise
          such Option to the extent such Option has vested in accordance with the terms
          hereof and the Plan at the time of termination for Disability or Retirement. If
          the Optionee dies while in the service of the Corporation or a Subsidiary
          Company or terminates service with the Corporation or a Subsidiary Company as a
          result of Disability or Retirement and dies without having fully exercised his
          or her vested Option, the executors, administrators, legatees or distributees of
          his or her estate shall have the right, during the one (1) year period following
          his or her death, to exercise such Option. If the Optionee terminates his or her
          service as a Non-Employee Director with the Corporation or a Subsidiary Company
          following a Change in Control of the Corporation without having fully exercised
          his or her Option, the Optionee shall have the right to exercise such Option to
          the extent vested at the time of such termination during the remainder of the
          original ten (10) year term of the Option from the date of grant.

5.       
          Withholding. The Corporation shall be entitled to withhold from any
          compensation or other payments then or thereafter due to the Optionee such
          amounts as may be necessary to satisfy any withholding requirements of federal
          or state law or regulation and, further, to collect from the Optionee any
          additional amounts which may be required for such purpose.

6.       
          Administration. The authority to manage and control the operation and
          administration of this Agreement shall be vested in the Committee, and the
          Committee shall have all powers with respect to this Agreement as it has with
          respect to the Plan. Any interpretation of the Agreement by the Committee and
          any decision made by it with respect to the Agreement is final and binding in
          the absence of action by the Board.

7.       
          Terms and Conditions. The terms and conditions included in the Plan are
          incorporated herein by reference, and to the extent that any conflict may exist
          between the terms and conditions included in the Plan and the terms of this
          Agreement the terms and conditions included in the Plan shall control.

3

---

8.       
          Not an Employment Contract. The Option will not confer on the Optionee
          any right with respect to continuance of service with the Corporation or any
          Subsidiary Company, nor will it interfere in any way with any right the Company
          or any Subsidiary Company would otherwise have to terminate or modify the terms
          of the Optionees service at anytime.

9.       
          Notices. Any written notices provided for in this Agreement or the Plan
          shall be in writing and shall be deemed sufficiently given if either hand
          delivered or if sent by facsimile or overnight courier, or by postage paid first
          class mail. Notices sent by mail shall be deemed received three business days
          after mailing but in no event later than the date of actual receipt. Notices
          shall be directed, if to the Optionee, at the Optionees address indicated
          by the Corporations records, or if to the Corporation, at the
          Corporations executive office.

10.       
          No Rights As Shareholder. The Optionee shall not have any rights of a
          shareholder with respect to the shares subject to the Option until a stock
          certificate has been duly issued following exercise of the Option as provided
          herein.

11.       
          Amendment. This Agreement may be amended by written agreement of the
          Optionee and the Corporation, without the consent of any other person;
          provided, however,in no event shall the Board or the Committee without
          shareholder approval amend the Option in any manner that effectively allows the
          repricing of the Option either through a reduction in the exercise price or
          through the cancellation and regrant of a new Option in exchange for the
          cancelled Option (except as permitted pursuant to Article IX of the Plan in
          connection with a change in the Corporations capitalization).

12.       
          Deferral. The Optionee may elect, with the concurrence of the Committee
          and in accordance with the provisions of Article XIII of the Plan and any rules
          and regulations established by the Committee pursuant thereto, to defer the
          delivery of the proceeds of the exercise of the Option (to the extent the Option
          has not been transferred as permitted by Section 8.05 of the Plan).

|                               |                                          
|------------------------------ | -----------------------------------------
|ATTEST:                        | TIERONE CORPORATION                      
|____________________________   | By: _____________________________________
|Eugene B. Witkowicz            | Gilbert G. Lundstrom                     
|Secretary                      | Chairman and Chief Executive Officer     
|(Seal)                         | OPTIONEE                                 
|                               | _____________________________________    
|                               | (Name)                                   
|Date of Grant: (date of grant) | (The Optionee)                           

4