# TIERONE CORPORATION 
INCENTIVE STOCK OPTION AGREEMENT
2003 STOCK OPTION PLAN

AN
INCENTIVE 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 employment with the Corporation or a Subsidiary Company
(as defined in Section 3.25 of the Plan) because of his or her death, 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.

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

| | (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 for the Option in this manner will result in the
loss of the                     tax-advantaged nature of the Option).
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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 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 (or one year in the
case of previously exercised Incentive Stock Options).

(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.

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3.       
          Non-transferability of Option. This Option may not be transferred or
          assigned in any manner otherwise than by will or the laws of descent or
          distribution and may be exercised during the lifetime of the Optionee only by
          him or her. The terms of this Option shall be binding upon the executors,
          administrators, heirs, successors and assigns of the Optionee.

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 be employed by the
          Corporation and all Subsidiary Companies, 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 employment 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 employ of the Corporation or a
          Subsidiary Company or terminates employment 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 employment 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. Exercise of
          the Option more than three (3) months (or one (1) year in certain cases) after
          termination will result in the loss of the tax-advantaged nature of the Option.

5.       
          Tax Status. To the extent that the aggregate Fair Market Value of the
          stock with respect to which incentive stock options are exercisable by the
          Optionee for the first time during any calendar year (under all stock option
          plans of the Corporation and its Subsidiary Companies) exceeds $100,000, such
          Options are not incentive stock options. For the purposes of this Section 5, the
          Fair Market Value of stock shall be determined as of the time the option with
          respect to such stock is granted. This Section 5 shall be applied by taking
          options into account in the order in which they were granted. To the extent that
          this Option is to become exercisable for the first time during any calendar year
          with respect to a number of shares that exceeds the foregoing limitation, this
          Option shall be considered to consist of (i) an incentive stock option to
          acquire the maximum number of shares permitted under this Section 5 and (ii) a
          compensatory stock option to acquire the excess shares on the same terms
          described in this Agreement.

6.       
          Notice of Disposition; Withholding; Escrow. Optionee shall immediately
          notify the Corporation in writing of any sale, transfer, assignment or other
          disposition (or action constituting a disqualifying disposition within the
          meaning of Section 421 of the Internal Revenue Code of 1986, as amended) of any
          shares of Common Stock acquired through exercise of this Option, within two (2)
          years after the date of the grant of the Option or within one (1) year after the
          acquisition of such shares, setting forth the date and manner of disposition,
          the number of shares disposed of and the price at which such shares were
          disposed of. 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. The Committee or the Board may, in their
          discretion, require shares of Common Stock acquired by an Optionee upon exercise
          of this Option to be held in an escrow arrangement for the purpose of enabling
          compliance with the provisions of Section 8.09(c) of the Plan.

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7.       
          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.

8.       
          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.

9.       
          Not an Employment Contract. The Option will not confer on the Optionee
          any right with respect to continuance of employment or other 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 employment or other service at anytime.

10.       
          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 fax 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.

11.       
          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.

12.       
          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).

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|                               |                                          
|------------------------------ | -----------------------------------------
|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)                           

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TIERONE CORPORATIONINCENTIVE STOCK OPTION
EXERCISE FORM

___________________________
Date

|      |                               
|----- | ------------------------------
|Attn: | Eugene B. Witkowicz, Secretary
|      | TierOne Corporation           
|      | 1235 N Street                 
|      | Lincoln, Nebraska 68508       

Dear Mr. Witkowicz:

The
undersigned elects to exercise his/her Incentive Stock Option to purchase _____ shares,
par value $.01 per share, of Common Stock of TierOne Corporation (the Option
Shares).

Delivered
herewith in satisfaction of the required purchase price is (select applicable choice(s):

|____ | (a)
 cash or a check payable to TierOne Corporation or in the amount of $_____ ;
|---- | --------------------------------------------------------------------------------

|____ | (b)
 Certificate(s) for ___ shares of Common Stock having a value of $___ as of the date of
this notice;
|---- | --------------------------------------------------------------------------------------------------------

|____ | (c)
irrevocable instructions to a broker to sell ___ Option Shares and then to properly
deliver to the Corporation the amount of sale proceeds to pay the exercise price and any
applicable tax withholding (which manner of payment I acknowledge will result in a
disqualifying disposition of my Option and the loss of the tax-advantaged nature of the
Option to the extent exercised).
|---- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

If
Common Stock is enclosed or being used in full or partial consideration of the purchase
price pursuant to items (b) and/or (c) above, I am also attaching a written notification
from the Committee advising: (i) that such means of payment has been authorized to be used
by me with respect to the Option Shares and (ii) as to the fair market value of the shares
proposed to be tendered by me as required by the provisions of the Plan.

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The
name or names to be on the stock certificates and the address and Social Security number
or addresses and Social Security numbers of such person or persons is as follows:

Name:
_________________________________________________________________

Address:

______________________________________________________________________

______________________________________________________________________
       City
                 
                 
                 
                 State
                 
                 Zip Code

Social Security Number:
 __________________________________________________

| |                                    
| | -----------------------------------
| | Very truly yours,                  
| | ___________________________________
| | (Signature of Person or Persons    
| | exercising the Option)             
| | ___________________________________
| | (Print Name and Address)           
| | ___________________________________

Date received by the
Corporation:   __________________________________

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