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EXHIBIT 10.3      AMENDED AND RESTATED
                  BAYONNE BANCSHARES, INC. 1995 STOCK OPTION PLAN
                  (AS ASSUMED BY RICHMOND COUNTY FINANCIAL CORP.)

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                  AMENDED AND RESTATED BAYONNE BANCSHARES, INC.
                             1995 STOCK OPTION PLAN
                (AS ASSUMED BY RICHMOND COUNTY FINANCIAL CORP.)

1.    PURPOSE

      The purpose of the Amended and  Restated  Bayonne  Bancshares,  Inc.  1995
Stock  Option  Plan  (the  "Plan")  is  to  advance  the  interests  of  Bayonne
Bancshares, Inc. (the "Company") and its shareholders by providing Employees and
Outside  Directors of the Company and its  Affiliates,  including  First Savings
Bank of New Jersey,  S.L.A.  (the "Bank"),  upon whose judgment,  initiative and
efforts the successful conduct of the business of the Company and its Affiliates
largely depends, with an additional incentive to perform in a superior manner as
well as to attract people of experience and ability.

2.    DEFINITIONS

      "AFFILIATE" "parent  corporation" or "subsidiary  corporation" of the Bank
or  the  Company,  as  such  terms  are  defined  in  Section  424(e)  and  (f),
respectively, of the Code.

      "AWARD" means an Award of  Non-statutory  Stock Options,  Incentive  Stock
Options, and/or Limited Rights granted under the provisions of the Plan.

      "BENEFICIARY"  means the person or persons  designated  by a Recipient  to
receive any  benefits  payable  under the Plan in the event of such  Recipient's
death.  Such person or persons shall be designated in writing on forms  provided
for this  purpose  of 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 Recipient's surviving spouse, if any,
or if none, his estate.

      "BOARD OF  DIRECTORS"  means the  Board of  Directors  of the Bank and the
Company, as applicable.

      "CHANGE IN  CONTROL"  means a change in control of the Company or the Bank
of a nature  that (i) would be  required to be reported in response to Item 1 of
the  current  report on Form 8-K, as in effect on the date  hereof,  pursuant to
Sections 13 or 15(d) of the Exchange  Act; (ii) results in a "change of control"
or "acquisition of control" within the meaning of the regulations promulgated by
the Office of Thrift Supervision ("OTS") (or its predecessor agency) found at 12
C.F.R.  Part 574, as in effect on the date hereof;  PROVIDED,  HOWEVER,  that in
applying the definition of change in control as set forth under such regulations
the Board of  Directors  shall  substitute  its judgment for that of the OTS; or
(iii) without  limitation  Change in Control shall be deemed to have occurred at
such time as (A) any "person"  (as the term is used in Sections  13(d) and 14(d)
of the Exchange  Act) is or becomes the  "beneficial  owner" (as defined in Rule
13d-3 under the Exchange Act), directly or indirectly, of securities of the Bank
or  the  Company  representing  20%  or  more  of the  Bank's  or the  Company's
outstanding  securities  except for any  securities of the Bank purchased by the
Company and any securities purchased by any tax-qualified  employee benefit plan
of the Bank; or (B)  individuals  who  constitute  the Board of Directors on the
date hereof (the "Incumbent  Board") cease for any reason to constitute at least
a majority thereof,  provided that any person becoming a director  subsequent to
the date hereof whose election was approved by a vote of at least three-quarters
of the  directors  comprising  the  Incumbent  Board,  or whose  nomination  for
election by the Company's  stockholders  was approved by a nominating  committee
serving  under the Incumbent  Board,  shall be, for purposes of this clause (B),
considered as though he were a member of the Incumbent  Board;  or (C) a plan of
reorganization,  merger,  consolidation,  sale of all or  substantially  all the
assets of the Bank or the  Company  or similar  transaction  occurs in which the
Bank  or  Company  is  not  the  resulting  entity;  or  (D) a  solicitation  of
shareholders of the Company, by someone other than the current management of the
Company,  seeking  stockholder  approval of a plan of reorganization,  merger or
consolidation  of the  Company or Bank or similar  transaction  with one or more
corporations,  as a result  of which  the  outstanding  shares  of the  class of
securities  then subject to the plan are exchanged for or converted into cash or
property or  securities  not issued by the Bank or the Company;  or (E) a tender
offer  is  made  for 20% or more of the  voting  securities  of the  Bank or the
Company.

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      "CODE" means the Internal Revenue Code of 1986, as amended.

      "COMMITTEE"  means the  Committee  designated  by the Board of  Directors,
pursuant to Section 3 herein, to administer the Plan.

      "COMMON STOCK" means the common stock of the Company , par value $0.10 per
share.

      "COMPANY" means Bayonne Bancshares, Inc.

      "DATE OF GRANT"  means the actual date on which an Award is granted by the
Committee.

      "DIRECTOR" means a member of the Boards of Directors of the Company or its
Affiliates.

      "DIRECTOR   EMERITUS"  means  a  former  Director  of  the  Bank,  who  in
recognition of his past contributions to the Bank, has been titled as a director
emeritus of the Bank.

      "DISABILITY"  means the permanent and total  inability by reason of mental
or physical  infirmity,  or both, of an employee to perform the work customarily
assigned  to him.  Additionally,  a medical  doctor  selected or approved by the
Board of Directors  must advise the Committee  that it is either not possible to
determine when such Disability  will terminate or that it appears  probable that
such  Disability  will be  permanent  during the  remainder  of such  employee's
lifetime.

      "EMPLOYEE"  means any person who is currently  employed by the Bank or the
Company or an Affiliate, including officers.

      "FAIR MARKET VALUE" means,  when used in connection  with the Common Stock
on a certain date, the reported closing price of the Common Stock as reported by
the National  Association of Securities Dealers Automated  Quotation  ("Nasdaq")
National Market (as published by THE WALL STREET  JOURNAL,  if published) on the
date prior to such date,  or if the Common Stock was not traded on such date, on
the next preceding day on which the Common Stock was traded  thereon;  PROVIDED,
HOWEVER, that if the Common Stock is not reported on the Nasdaq National Market,
Fair  Market  Value  shall mean the  average  sale price of all shares of Common
Stock sold during the 30-day period immediately preceding the date on which such
stock option was  granted,  and if no shares of stock have been sold within such
30-day  period,  the average  sale price of the last three sales of Common Stock
sold during the 90-day period immediately preceding the date on which such stock
option was granted.  In the event Fair Market Value cannot be  determined in the
manner  described  above,  then Fair  Market  Value shall be  determined  by the
Committee.  The Committee shall be authorized to obtain an independent appraisal
to determine the Fair Market Value of the Common Stock.

      "INCENTIVE  STOCK OPTION"  means an Option  granted by the Committee to an
Employee  Participant,  which Option is designated as an Incentive  Stock Option
pursuant to Section 8.

      "LIMITED  RIGHT"  means the right to  receive an amount of cash based upon
the terms set forth in Section 9.

      "NON-STATUTORY  STOCK OPTION" means an Option  granted by the Committee to
(i) an Outside  Director  or (ii) to any other  Participant  and such  option is
either (A) not designated by the Committee as an Incentive Stock Option,  or (B)
fails to satisfy the  requirements  of an Incentive Stock Option as set forth in
Section 422 of the Code and the regulations thereunder.

      "NORMAL  RETIREMENT"  means, for an Employee,  retirement at the normal or
early  retirement date as set forth in the Bank's Employee Stock Ownership Plan,
or any  successor  plan.  For  an  Outside  Director,  Normal  Retirement  means
retirement  from  service  on the  Boards  of  Directors  of the  Company  or an
Affiliate.

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      "OPTION" means Award granted under Section 7 or Section 8.

      "OUTSIDE DIRECTOR" means a Director who is not also an Employee.

      "PARTICIPANT"  means an Outside Director or an Employee of the Bank or the
Company or an Affiliate chosen by the Committee to participate in the Plan.

      "TERMINATION FOR CAUSE" means the termination of employment  caused by the
individual's personal dishonesty,  willful misconduct, any breach of a fiduciary
duty involving personal profit or intentional  failure to perform stated duties,
or  willful  violation  of any  law,  rule or  regulation  (other  than  traffic
violations or similar  offenses) or final  cease-and-desist  order, any of which
results in material loss to the Bank, the Company, or an Affiliates.

3.    ADMINISTRATION

      The Plan shall be  administered  by the  Committee.  The  Committee  shall
consist of two or more  disinterested  directors  of the  Company,  who shall be
appointed by the Board of  Directors  of the  Company.  A member of the Board of
Directors  shall be  deemed  to be  "disinterested"  only if he  satisfies  such
requirements  as the  Securities  and  Exchange  Commission  may  establish  for
non-employee  directors  administering  plans  intended to qualify for exemption
under Rule 16b-3 (or its  successor)  under the Exchange  Act. The  Committee is
authorized,  subject to the  provisions of the Plan, to establish such rules and
regulations as it deems necessary for the proper  administration of the Plan and
to make whatever  determinations and interpretations in connection with the Plan
it deems necessary or advisable.  All determinations and interpretations made by
the Committee  shall be binding and conclusive on all  Participants  in the Plan
and on their legal representatives and beneficiaries.

4.    TYPES OF AWARDS

      Awards  under the Plan may be granted in any one or a  combination  of (a)
Incentive Stock Options as defined in Section 7; (b) Non-statutory Stock Options
as defined in Section 8; and (c) Limited Rights as defined herein in Section 9.

5.    STOCK SUBJECT TO THE PLAN

      There shall be 398,307  shares  available  for Awards under this Plan.  Of
those shares no more than 270, 851 shares shall be available in connection  with
the grant of Incentive Stock Options.  The shares of Common Stock represented by
Options  granted  pursuant to this Plan may be either  authorized  but  unissued
shares or shares previously issued and reacquired by the Company.  To the extent
that Options  together with any related rights granted under the Plan terminate,
expire or are cancelled without having been exercised or, in the case of Limited
Rights  exercised for cash, new Awards may be made with respect to these shares.
Option Awards granted to Employees and Outside Directors shall be subject to the
individual and aggregate limitations imposed by the Office of Thrift Supervision
regulations, as applicable.

6.    ELIGIBILITY

      Officers and other  Employees of the Company and its  Affiliates  shall be
eligible to receive Incentive Stock Options,  Non-statutory Stock Options and/or
Limited  Rights  under the Plan.  Outside  Directors  shall not be  eligible  to
receive  Incentive  Stock Options  under the Plan.  Outside  Directors  shall be
eligible to receive only Non-statutory Stock Options.

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7.    NON-STATUTORY STOCK OPTIONS

      7.1   GRANT OF NON-STATUTORY STOCK OPTIONS

      (a) Grants. The  Committee  may, from  time to time,  grant  Non-statutory
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Stock Options to eligible  Employees and Outside  Directors  upon such terms and
conditions as the Committee may determine.  Non-statutory  Stock Options granted
under  this  Plan are  subject  to the terms  and  conditions  set forth in this
Section 7.

      (b) Option  Agreement.  Each Option shall be evidenced by a written option
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agreement  between the Company and the Award recipient  specifying the number of
shares of Common Stock that may be acquired  through its exercise and containing
such other terms and conditions that are not inconsistent with the terms of this
grant.  The maximum number of shares subject to a Non-statutory  Option that may
be awarded under the Plan to any Employee shall be 117,320.

      (c) Price.  The purchase price per share of Common Stock  deliverable upon
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the exercise of each Non-  statutory  Stock Option  shall be  determined  by the
Committee  on the date the Option is  granted.  Except as provided  below,  such
purchase  price  shall  not be less than  100% of the Fair  Market  Value of the
Company's Common Stock on the date the Option is granted. The purchase price per
share of Common Stock deliverable upon the exercise of each Non-statutory  Stock
Option granted in exchange for and upon  surrender of previously  granted awards
shall be not less than 100% of the Fair  Market  Value of the  Company's  Common
Stock on the date the Option is granted,  but in no event may the purchase price
of any  Non-statutory  Stock  Option be less  than the par  value of the  Common
Stock.  Shares may be purchased  only upon full  payment of the purchase  price.
Payment of the  purchase  price may be made,  in whole or in part,  through  the
surrender  of shares of the Common Stock of the Company at the Fair Market Value
of such shares determined in the manner described in Section 2.

      (d) Manner of  Exercise.  Unless  otherwise  specified  by the  Committee,
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Non-statutory  Stock Options granted under the Stock Option Plan shall vest in a
Participant  at the rate of twenty  percent (20%) per year  commencing  from the
Date of Grant. The vested Option may be exercised from time to time, in whole or
in part,  by  delivering a written  notice of exercise to the President or Chief
Executive  Officer  of the  Company  . Such  notice is  irrevocable  and must be
accompanied  by  full  payment  of the  purchase  price  in cash  or  shares  of
previously acquired Common Stock of the Company at the Fair Market Value of such
shares  determined  on the  exercise  date by the manner  described in Section 2
hereof.

      (e) Terms of  Options.  The term  during  which each  Non-statutory  Stock
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Option may be exercised  shall be determined by the  Committee,  but in no event
shall a Non-statutory  Stock Option be exercisable in whole or in part more than
10 years and one day from the Date of Grant. The  Non-statutory  Options awarded
to  Employees  shall  be  exercisable  in  installments,  as  determined  by the
Committee.  The Committee  shall  determine  the date on which each  installment
shall  become  exercisable.  The  shares  comprising  each  installment  may  be
purchased  in  whole  or in part at any  time  after  such  installment  becomes
exercisable.  The Committee, in its sole discretion,  may accelerate the time at
which any Non-statutory  Stock Option awarded to Employees and Outside Directors
may be exercised in whole or in part. Notwithstanding the above, in the event of
a Change in Control of the Bank or the Company,  all Non-statutory Stock Options
shall become immediately exercisable.

      (f)  Termination  of Employment  or Service.  Upon the  termination  of an
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Employee's  employment or upon termination of an Outside  Director's service for
any reason other than Disability,  death,  Normal  Retirement or Termination for
Cause, the Employee's or Outside Director's Non-statutory Stock Options shall be
exercisable  only as to those shares that were  immediately  purchasable  by the
Employee or Outside  Directors at the date of termination  and only for a period
of one (1) year following  termination.  For purposes of determining the date of
termination of an Outside Director's service,  service as a Director Emeritus of
the Bank  following  termination  from the Board of  Directors  will not cause a
Participant to incur a termination of service and such Participant will continue
to vest in his Award until termination of service as a Director Emeritus. In the
event of Termination for Cause, all rights under his Non-statutory

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Stock  Options  shall  expire  upon  termination.  In the  event of the death or
Disability of any Employee or Outside Director,  all Non-statutory Stock Options
held by such Employee or Outside  Director,  whether or not  exercisable at such
time,  shall be  exercisable  by such  person  or his legal  representatives  or
beneficiaries  for one (1) year  following the date of his death or cessation of
employment or service, as applicable, PROVIDED that in no event shall the period
extend  beyond the  expiration  of the  Non-statutory  Stock Option term. In the
event of Normal Retirement, all Non-statutory Stock Options held by an Employee,
whether or not  exercisable at such time,  shall be exercisable for one (1) year
following the date of the Participant's retirement,  provided,  however, that in
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the event the  Employee  continues in service as a director of the Company or an
Affiliate,  following  his  Normal  Retirement,  the  Participant's  Award  will
continue  to vest  during  his  tenure as a Director  pursuant  to his  original
vesting schedule.  Notwithstanding the above, all Non- statutory Options held by
a Participant  whose employment as an Employee or service as an Outside Director
terminates  following  a Change in Control of the Bank or the  Company  shall be
deemed earned as of the last day of employment or service with the Company or an
Affiliate and shall be exercisable  for one (1) year following such  termination
of employment or service.

8.    INCENTIVE STOCK OPTIONS

      8.1   GRANT OF INCENTIVE STOCK OPTIONS

      The  Committee,  from time to time, may grant  Incentive  Stock Options to
eligible  Employees.  Incentive Stock Options granted pursuant to the Plan shall
be subject to the following terms and conditions:

      (a) Option  Agreement.  Each Option shall be evidenced by a written option
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agreement  between the Bank and the Employee  specifying the number of shares of
Common Stock that may be acquired through its exercise and containing such other
terms and conditions that are not inconsistent with the terms of this grant.

      (b) Price.  The purchase price per share of Common Stock  deliverable upon
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the exercise of each  Incentive  Stock Option shall be not less than 100% of the
Fair Market Value of the Company's  Common Stock on the date the Incentive Stock
Option is granted.  However,  if an Employee owns stock possessing more than 10%
of the total combined voting power of all classes of Common Stock of the Company
(or under Section 424(d) of the Code, is deemed to own stock  representing  more
than 10% of the  total  combined  voting  power of all  classes  of stock of the
Company or its  Affiliates  by reason of the ownership of such classes of common
stock directly or indirectly, by or for any brother, sister, spouse, ancestor or
lineal  descendant of such Employee or by or for any  corporation,  partnership,
estate  or  trust  or  which  such  employee  is  a   shareholder,   partner  or
beneficiary),  the purchase price per share of Common Stock deliverable upon the
exercise of each Incentive  Stock Option shall not be less than 110% of the Fair
Market  Value of the  Company's  Common  Stock on the date the  Incentive  Stock
Option  is  granted.  Shares  may be  purchased  only upon  payment  of the full
purchase price.  Payment of the purchase price may be made, in whole or in part,
through  the  surrender  of  shares  of the  Common  Stock  of the  Company.  If
previously  acquired  shares of Common  Stock are  tendered in payment of all or
part of the exercise  price,  the value of such shares shall be determined as of
the date of exercise of the Incentive Stock Option.

      (c) Manner of Exercise.  Unless  otherwise  determined  by the  Committee,
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Incentive  Stock  Options  granted  under the Stock  Option Plan shall vest in a
Participant  at the rate of twenty  percent (20%) per year  commencing  from the
date of grant. The vested Option may be exercised from time to time, in whole or
in part,  by  delivering a written  notice of exercise to the President or Chief
Executive Officer of the Company , PROVIDED,  HOWEVER,  that no Options shall be
exercisable  prior to  approval  of the Plan by  stockholders.  Such  notice  is
irrevocable  and must be  accompanied  by full payment of the purchase  price in
cash or  shares  of  previously  acquired  Common  Stock  of the  Company.  . If
previously  acquired  shares of Common  Stock are  tendered in payment of all or
part of the  exercise  price,  the Fair  Market  Value of such  shares  shall be
determined as of the date of such exercise of the Incentive Stock Option.

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      (d)  Amount of  Options.  Incentive  Stock  Options  may be granted to any
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eligible Employee in such amounts as determined by the Committee;  PROVIDED that
the amount  granted is consistent  with the terms of Section 422 of the Internal
Revenue Code of 1986, as amended (the "Code").  Notwithstanding  the above,  the
maximum  number of shares  that may be  subject  to an  Incentive  Stock  Option
awarded under the Plan to any Employee shall be 117,320.  In granting  Incentive
Stock Options, the Committee shall consider the position and responsibilities of
the eligible Employee,  the length and value of his or her service to the or the
Company, the compensation paid to the Employee and the Committee's evaluation of
the performance of the or the Company  according to  measurements  that include,
among others, key financial ratios, levels of classified assets, and independent
audit  findings.  In the case of an option  intended to qualify as an  Incentive
Stock Option,  the aggregate  Fair Market Value  (determined  as of the time the
option is granted) of the Common  Stock with  respect to which  Incentive  Stock
Options granted are exercisable for the first time by the Participant during any
calendar year (under all plans of the Participant's employer corporation and its
parent and subsidiary corporations) shall not exceed $100,000. The provisions of
this Section  8.1(d) shall be construed and applied in  accordance  with Section
422(d) of the Code and the regulations, if any, promulgated thereunder.

      (e) Term of Options. The term during which each Incentive Stock Option may
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be exercised  shall be  determined  by the  Committee,  but in no event shall an
Incentive  Stock  option be  exercisable  in whole or in part more than 10 years
from the Date of Grant.  If any Employee,  at the time an Incentive Stock Option
is granted to him,  owns Common  Stock  representing  more than 10% of the total
combined voting power of the Company or its Affiliates (or, under Section 424(d)
of the Code,  is deemed to own Common  Stock  representing  more than 10% of the
total  combined  voting power of all such classes of Common Stock,  by reason of
the ownership of such classes of Common Stock, directly or indirectly, by or for
any brother,  sister, spouse, ancestor or lineal descendent of such Employee, or
by or for any corporation,  partnership,  estate or trust of which such Employee
is a shareholder, partner or beneficiary), the Incentive Stock Option granted to
him or her shall not be exercisable  after the expiration of five years from the
Date of Grant. No Incentive Stock Option granted under this Plan is transferable
except by will or the laws of descent and distribution and is exercisable during
his lifetime only by the Employee to which it is granted.

      The  Committee  shall  determine  the date on which each  Incentive  Stock
Option shall become  exercisable  and may provide that an Incentive Stock Option
shall become exercisable in installments. The shares comprising each installment
may be purchased in whole or in part at any time after such installment  becomes
purchasable, provided that the amount able to be first exercised in a given year
is consistent  with the terms of Section 422 of the Code. To the extent required
by Section 422 of the Code, the aggregate  fair market value  (determined at the
time the  Option is  granted)  of the  Common  Stock for which  Incentive  Stock
Options are exercisable for the first time by a Participant  during any calendar
year (under all plans of the Bank and its Affiliates) shall not exceed $100,000.
The  Committee,  in its sole  discretion,  may  accelerate the time at which any
Incentive Stock Option may be exercised in whole or in part; PROVIDED that it is
consistent with the terms of Section 422 of the Code. Notwithstanding the above,
in the event of a Change in Control of the Bank or Company,  all Incentive Stock
Options shall become immediately exercisable unless the fair market value of the
amount  exercisable  as a result of a Change in Control  shall  exceed  $100,000
(determined  as of the date of grant).  In such  event,  the first  $100,000  of
Incentive  Stock  Options  (determined  as  of  the  date  of  grant)  shall  be
exercisable  as Incentive  Stock Options and any excess shall be  exercisable as
Non-statutory Stock Options.

      (f)  Termination  of  Employment.  Upon the  termination  of an Employee's
           ---------------------------
employment for any reason other than Normal  Retirement,  Disability,  Change in
Control,  death or  Termination  for Cause,  his or her Incentive  Stock Options
shall be exercisable only as to those shares which were immediately  purchasable
by him at the date of  termination  and only for a period  of three  (3)  months
following  termination.  In the event of Termination  for Cause all rights under
his or her Incentive Stock Options shall expire upon termination.

      In the event of death, Disability, termination in the event of a Change in
Control or Normal  Retirement,  all Incentive Stock Options held by an Employee,
whether or not  exercisable at such time,  shall be exercisable by such Employee
or his legal  representatives  or  beneficiaries  for one (1) year following the
date of his or her death or cessation of employment; PROVIDED, HOWEVER, that, in
the case of  Normal  Retirement  or  termination  in the  event  of a Change  in
Control,  such Options  shall not be eligible for  treatment as Incentive  Stock
Options in the event such Options are

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exercised  more than three (3) months  following the date of the  termination in
the event of a Change in Control; PROVIDED,  FURTHER, that, upon a Participant's
Normal  Retirement,  any such Options  which are not  eligible for  treatment as
Incentive  Stock  Options by  operation  of  Section  422(d) of the Code (or any
successor  provision)  shall be treated as  Non-statutory  Stock Options.  In no
event shall the exercise  period extend  beyond the  expiration of the Incentive
Stock Option term.

      (g) Compliance  with Code. The Options granted under this Section 8 of the
          ---------------------
Plan are intended to qualify as Incentive  Stock  Options  within the meaning of
Section  422  of  the  Code,  but  the  Company  makes  no  warranty  as to  the
qualification  of any Option as an incentive  stock option within the meaning of
Section  422 of the Code.  If an Option  granted  hereunder  fails for  whatever
reason to comply with the provisions of Section 422 of the Code and such failure
is not or cannot be cured, such Option shall be a Non-statutory Stock Option.

9.    LIMITED RIGHTS

      9.1   GRANT OF LIMITED RIGHTS

      The Committee may grant a Limited Right  simultaneously  with the grant of
any Option to any Employee of the Company or an  Affiliate,  with respect to all
or some of the shares covered by such Option.  Limited Rights granted under this
Plan are subject to the following terms and conditions:

      (a) Terms of Rights.  In no event shall a Limited Right be  exercisable in
          ---------------
whole or in part before the  expiration of six (6) months from the date of grant
of the Limited  Right.  A Limited Right may be exercised  only in the event of a
Change in Control of the Bank.

      The Limited  Right may be  exercised  only when the  underlying  Option is
eligible to be exercised,  provided that the Fair Market Value of the underlying
shares on the day of exercise is greater than the exercise  price of the related
Option.

      Upon  exercise of a Limited  Right,  the related  Option shall cease to be
exercisable.  Upon exercise or  termination  of an Option,  any related  Limited
Rights shall  terminate.  The Limited Rights may be for no more than 100% of the
difference  between the  exercise  price and the Fair Market Value of the Common
Stock subject to the underlying  Option.  The Limited Right is transferable only
when the underlying Option is transferable and under the same conditions.

      (b) Payment.  Upon exercise of a Limited Right,  the holder shall promptly
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receive from the Company an amount of cash equal to the  difference  between the
Fair Market Value on the Date of Grant of the related Option and the Fair Market
Value of the  underlying  shares  on the date the  Limited  Right is  exercised,
multiplied  by the number of shares with respect to which such Limited  Right is
being exercised. In the event of a Change in Control in which pooling accounting
treatment  is a  condition  to the  transaction,  the  Limited  Right  shall  be
exercisable  solely  for  shares of stock of the  Company,  or in the event of a
merger transaction,  for shares of the acquiring corporation,  or its parent, as
applicable.  The number of shares to be received on the exercise of such Limited
Right shall be  determined  by  dividing  the amount of cash that would have ben
available under the first sentence above by the Fair Market Value at the time of
exercise of the shares underlying the Option subject to the Limited Right.

10.   SURRENDER OF OPTION

      In the event of a  Participant's  termination of employment or termination
of service as a result of death or Disability,  the Participant (or his personal
representative(s),  heir(s),  or  devisee(s))  may, in a form  acceptable to the
Committee, make application to surrender all or part of the Options held by such
Participant  in exchange  for a cash payment from the Company of an amount equal
to the difference  between the Fair Market Value of the Common Stock on the date
of  termination  of employment and the exercise price per share of the Option on
the Date of Grant. Whether

                                        7

<page> 9

the Company accepts such application or determines to make payment,  in whole or
in part,  is  within  its  absolute  and  sole  discretion,  it being  expressly
understood that the Company is under no obligation to any Participant whatsoever
to make such payments.  In the event that the Company  accepts such  application
and determines to make payment, such payment shall be in lieu of the exercise of
the underlying Option and such Option shall cease to be exercisable.

11.   RIGHTS OF A SHAREHOLDER; NON-TRANSFERABILITY

      An  optionee  shall have no rights as a  shareholder  with  respect to any
shares covered by a Non-statutory  and/or  Incentive Stock Option until the date
of issuance of a stock  certificate for such shares.  Nothing in this Plan or in
any Award  granted  confers on any person any right to continue in the employ of
the Company or its Affiliates or to continue to perform services for the Company
or its  Affiliates or interferes in any way with the right of the Company or its
Affiliates to terminate  his or her services as an officer or other  employee at
any time.

      No Award under the Plan shall be  transferable  by the optionee other than
by will or the laws or descent and distribution and may only be exercised during
his or her lifetime by the optionee,  or by a guardian or legal  representative.
The designation of a beneficiary does not constitute a transfer of an Award.

12.   DESIGNATION OF BENEFICIARY

      A Participant,  with the consent of the Committee,  may designate a person
or persons to receive, in the event of death, any Option or Limited Rights Award
to which he or she would then be entitled.  Such  designation  will be made upon
forms supplied by and delivered to the Company and may be revoked in writing. If
a Participant fails effectively to designate a Beneficiary, then his estate will
be deemed to be the Beneficiary.

13.   DILUTION AND OTHER ADJUSTMENTS

      In the event of any change in the  outstanding  shares of Common  Stock of
the Company by reason of any stock dividend or split, recapitalization,  merger,
consolidation,  spin-off, reorganization,  combination or exchange of shares, or
other similar  corporate  change,  or other  increase or decrease in such shares
without receipt or payment of  consideration by the Company , the Committee will
make such  adjustments  to previously  granted  Awards,  to prevent  dilution or
enlargement  of the  rights  of  the  Participant,  including  any or all of the
following:

      (a) adjustments in the aggregate  number or kind of shares of Common Stock
      which may be awarded under the Plan;

      (b) adjustments in the aggregate  number or kind of shares of Common Stock
      covered by Awards already made under the Plan;

      (c)  subject to 422 of the Code ,  adjustments  in the  purchase  price of
      outstanding  Incentive and/or Non- statutory Stock Options, or any Limited
      Rights attached to such Options.

      No such adjustments,  however, may change materially the value of benefits
available to a Participant under a previously granted Award.

14.   WITHHOLDING

      There may be deducted from each  distribution  of cash and/or Common Stock
under the Plan the amount of tax  required by any  governmental  authority to be
withheld.

                                        8

<page> 10

15.   AMENDMENT OF THE PLAN

      The Board of Directors may at any time,  and from time to time,  modify or
amend the Plan and Award Agreements in any respect;  PROVIDED,  HOWEVER, that if
necessary  to  continue to qualify the Plan under the  Securities  and  Exchange
Commission Rule 16b-3,  the approval by a majority of the shares  represented in
person or by proxy at an annual  or  special  meeting  of the  Company  shall be
required for any such modification or amendment that:

      (a)  increases  the  maximum  number of shares  for which  options  may be
      granted under the Plan (SUBJECT,  HOWEVER, to the provisions of Section 13
      hereof);

      (b) reduces the exercise  price at which  Awards may be granted  (SUBJECT,
      HOWEVER, to the provisions of Sections 8.1(a) and 13 hereof);

      (c) extends the period  during  which  options may be granted or exercised
      beyond  the  times  originally   prescribed  (SUBJECT,   HOWEVER,  to  the
      provisions of Section 8.1(a) hereof); or

      (d)   changes the persons eligible to participate in the Plan.

      Failure to ratify or approve  amendments or  modifications  to subsections
(a) through (d) of this Section 15 by shareholders shall be effective only as to
the specific  amendment  or  modification  requiring  such  ratification.  Other
provisions, sections, and subsections of this Plan will remain in full force and
effect.

      No such termination,  modification or amendment may affect the rights of a
Participant under an outstanding Award.

16.   APPROVAL BY STOCKHOLDERS

      The Plan was approved by stockholders of the Bank. No Options were granted
pursuant to the Plan prior to such stockholder  approval.  Any amendments to the
Plan shall be subject to the provisions of Section 15 hereof.

17.   EFFECTIVE DATE OF PLAN

      The Plan  shall  become  effective  upon the date  adopted by the Board of
Directors, following the approval of stockholders (the "Effective Date").

18.   TERMINATION OF THE PLAN

      The right to grant Awards under the Plan will  terminate  upon the earlier
of ten (10) years after the  Effective  Date of the  issuance of Common Stock or
the date on which the exercise of Options or related rights equaling the maximum
number  of shares  reserved  under  the Plan  occurs  as set forth in  Section 5
hereof. The Board of Directors has the right to suspend or terminate the Plan at
any  time;  PROVIDED  that  no  such  action  will,  without  the  consent  of a
Participant, affect adversely his rights under a previously granted Award.

19.   APPLICABLE LAW

      The Plan will be  administered in accordance with the laws of the State of
New Jersey and federal law, to the extent applicable.

                                       9<page> 1

EXHIBIT 10.4      SOUTH JERSEY FINANCIAL CORPORATION, INC.
                  2000 STOCK OPTION PLAN
                  (AS ASSUMED BY RICHMOND COUNTY FINANCIAL CORP.)

<page> 2

                   SOUTH JERSEY FINANCIAL CORPORATION, INC.
                             2000 STOCK OPTION PLAN
                 (AS ASSUMED BY RICHMOND COUNTY FINANCIAL CORP.)

1.    DEFINITIONS.
      -----------

      (a) "Affiliate" means any "parent corporation" or "subsidiary corporation"
of the Holding Company,  as such terms are defined in Sections 424(e) and 424(f)
of the Code.

      (b)  "Association"  means  South  Jersey  Savings  and  Loan  Association,
Turnersville, New Jersey.

      (c) "Award" means, individually or collectively, a grant under the Plan of
Non-Statutory Stock Options and Incentive Stock Options.

      (d) "Award Agreement" means an agreement  evidencing and setting forth the
terms of an Award.

      (e)  "Board of  Directors"  means the board of  directors  of the  Holding
Company.

      (f) "Change in Control" of the Holding  Company or the  Association  shall
mean an event of a nature  that (i) would be required to be reported in response
to Item 1(a) of the current report on Form 8-K, as in effect on the date hereof,
pursuant  to Section  13 or 15(d) of the  Securities  Exchange  Act of 1934 (the
"Exchange  Act");  or (ii) results in a Change in Control of the  Association or
the Holding  Company within the meaning of the Home Owners' Loan Act of 1933, as
amended,  the  Federal  Deposit  Insurance  Act,  and the Rules and  Regulations
promulgated by the Office of Thrift Supervision (or its predecessor  agency), as
in effect on the date hereof  (provided,  that in  applying  the  definition  of
change in control as set forth under the rules and  regulations  of the OTS, the
Board shall  substitute  its  judgment  for that of the OTS);  or (iii)  without
limitation  such a Change in Control  shall be deemed to have  occurred  at such
time as (A) any "person" (as the term is used in Sections 13(d) and 14(d) of the
Exchange  Act) is or becomes  the  "beneficial  owner" (as defined in Rule 13d-3
under the Exchange  Act),  directly or indirectly,  of voting  securities of the
Association or the Holding Company representing 20% or more of the Association's
or the Holding Company's  outstanding voting securities or right to acquire such
securities except for any voting securities of the Association  purchased by the
Holding Company and any voting securities purchased by any employee benefit plan
of the Holding  Company or its  Subsidiaries,  or (B) individuals who constitute
the Board on the date hereof  (the  "Incumbent  Board")  cease for any reason to
constitute  at least a majority  thereof,  provided  that any person  becoming a
director  subsequent to the date hereof whose election was approved by a vote of
at least  three-quarters  of the directors  comprising the Incumbent  Board,  or
whose  nomination for election by the Company's  stockholders  was approved by a
Nominating  Committee  solely  composed  of members  which are  Incumbent  Board
members, shall be, for purposes of this clause (B), considered as though he were
a  member  of the  Incumbent  Board,  or (C) a plan of  reorganization,  merger,
consolidation, sale of all or substantially all the assets of the Association or
the Holding Company or similar transaction occurs or is effectuated in which the
Association or Holding Company is not the resulting entity;  provided,  however,
that such an event listed above will be deemed to have  occurred or to have been
effectuated  upon the receipt of all required federal  regulatory  approvals not
including the lapse of any statutory  waiting periods,  or (D) a proxy statement
has  been  distributed  soliciting  proxies  from  stockholders  of the  Holding
Company,  by someone other than the current  management of the Holding  Company,
seeking   stockholder   approval  of  a  plan  of   reorganization,   merger  or
consolidation   of  the  Holding  Company  or  Association   with  one  or  more
corporations  as a result  of  which  the  outstanding  shares  of the  class of
securities  then  subject  to such  plan or  transaction  are  exchanged  for or
converted into cash or property or securities  not issued by the  Association or
the Holding Company shall be distributed,  or (E) a tender offer is made for 20%
or more of the voting  securities  of the  Institution  or Holding  Company then
outstanding.

      (g)   "Code" means the Internal Revenue Code of 1986, as amended.

<page> 3

      (h) "Committee" means the committee  designated by the Board of Directors,
pursuant to Section 2 of the Plan, to administer the Plan.

      (i) "Common  Stock"  means the Common  Stock of the Holding  Company,  par
value, $.01 per share.

      (j)   "Date of Grant" means the effective date of an Award.

      (k)  "Disability"  means any mental or physical  condition with respect to
which the Participant  qualifies for and receives benefits for under a long-term
disability  plan of the Holding  Company or an  Affiliate,  or in the absence of
such a long-term  disability  plan or coverage  under such a plan,  "Disability"
shall mean a physical or mental  condition  which, in the sole discretion of the
Committee,   is  reasonably  expected  to  be  of  indefinite  duration  and  to
substantially   prevent  the   Participant   from   fulfilling   his  duties  or
responsibilities to the Holding Company or an Affiliate.

      (l) "Effective  Date" means the date the Plan is approved by  shareholders
of the Holding Company.

      (m)  "Employee"  means any person  employed by the  Holding  Company or an
Affiliate.  Directors  who are  employed by the Holding  Company or an Affiliate
shall be considered Employees under the Plan.

      (n) "Exchange Act" means the Securities Exchange Act of 1934, as amended.

      (o) "Exercise Price" means the price at which a Participant may purchase a
share of Common Stock pursuant to an Option.

      (p) "Fair Market Value" means the market price of Common Stock, determined
by the Committee as follows:

            (i)   If the Common  Stock was traded on the date in question on The
                  Nasdaq  Stock Market then the Fair Market Value shall be equal
                  to the closing price reported for such date;

            (ii)  If the Common Stock was traded on a stock exchange on the date
                  in question,  then the Fair Market Value shall be equal to the
                  closing   price   reported   by   the   applicable   composite
                  transactions report for such date; and

            (iii) If neither of the foregoing provisions is applicable, then the
                  Fair Market Value shall be determined by the Committee in good
                  faith on such basis as it deems appropriate.

      Whenever possible, the determination of Fair Market Value by the Committee
shall  be  based  on  the  prices  reported  in The  Wall  Street  Journal.  The
Committee's  determination  of Fair Market Value shall be conclusive and binding
on all persons.

      (q)   "Holding Company" means South Jersey Financial Corporation, Inc.

      (r)   "Incentive   Stock  Option"  means  a  stock  option  granted  to  a
Participant,  pursuant  to Section 7 of the Plan,  that is  intended to meet the
requirements of Section 422 of the Code.

      (s)  "Non-Statutory  Stock  Option"  means a  stock  option  granted  to a
Participant  pursuant  to the terms of the Plan but which is not  intended to be
and is not  identified  as an Incentive  Stock Option or a stock option  granted
under the Plan which is intended to be and is identified  as an Incentive  Stock
Option but which does not meet the requirements of Section 422 of the Code.

      (t)  "Option"  means an  Incentive  Stock  Option or  Non-Statutory  Stock
Option.

                                        2

<page> 4

      (u) "Outside  Director" means a member of the board(s) of directors of the
Holding  Company or an  Affiliate  who is not also an  Employee  of the  Holding
Company or an Affiliate.

      (v) "Participant" means any person who holds an outstanding Award.

      (w) "Performance  Award" means an Award granted to a Participant  pursuant
to Section 8 of the Plan.

      (x) "Plan"  means this  South  Jersey  Financial  Corporation,  Inc.  2000
Stock-Option Plan.

      (y) "Retirement" means retirement from employment with the Holding Company
or an Affiliate in accordance with the then current  retirement  policies of the
Holding  Company or  Affiliate,  as  applicable.  Notwithstanding  the foregoing
"Retirement" shall include termination of employment (other than Termination for
Cause) under which the Participant  would qualify for normal or early retirement
under the money purchase pension plan sponsored by the Association, as in effect
on the Effective Date.  "Retirement"  with respect to an Outside  Director means
the termination of service from the board(s) of directors of the Holding Company
and any Affiliate  following written notice to such board(s) of directors of the
Outside Director's intention to retire.

      (z)  "Termination   for  Cause"  shall  mean  termination   because  of  a
Participant's personal dishonesty,  incompetence,  willful misconduct, breach of
fiduciary duty involving personal profit,  intentional failure to perform stated
duties,  willful  violation of any law, rule or  regulation  (other than traffic
violations  or similar  offenses)  or material  breach of any  provision  of any
employment  agreement  between the Holding  Company and/or any subsidiary of the
Holding Company and a Participant.

      (aa)  "Trust"  means a trust  established  by the  Board of  Directors  in
connection  with  this  Plan to hold  Common  Stock  or other  property  for the
purposes set forth in the Plan.

      (bb)  "Trustee"  means  any  person  or  entity  approved  by the Board of
Directors or its designee(s) to hold any of the Trust assets.

2.    ADMINISTRATION.
      --------------

      (a) The Committee  shall  administer the Plan. The Committee shall consist
of two or more  disinterested  directors  of the Holding  Company,  who shall be
appointed by the Board of Directors. A member of the Board of Directors shall be
deemed to be  "disinterested"  only if he satisfies (i) such requirements as the
Securities  and Exchange  Commission  may establish for  non-employee  directors
administering  plans intended to qualify for exemption  under Rule 16b-3 (or its
successor)  under the  Exchange Act and (ii) such  requirements  as the Internal
Revenue Service may establish for outside  directors acting under plans intended
to qualify for exemption  under Section  162(m)(4)(C)  of the Code. The Board of
Directors  may also  appoint  one or more  separate  committees  of the Board of
Directors,  each composed of one or more directors of the Holding  Company or an
Affiliate who need not be  disinterested,  that may grant Awards and  administer
the Plan with respect to Employees and Outside  Directors who are not considered
officers or directors of the Holding  Company  under  Section 16 of the Exchange
Act or for whom Awards are not  intended to satisfy  the  provisions  of Section
162(m) of the Code.

      (b) The Committee shall (i) select the Employees and Outside Directors who
are to receive Awards under the Plan, (ii) determine the type,  number,  vesting
requirements  and other features and conditions of such Awards,  (iii) interpret
the Plan and Award  Agreements in all respects and (iv) make all other decisions
relating to the  operation of the Plan.  The  Committee  may adopt such rules or
guidelines  as it deems  appropriate  to  implement  the Plan.  The  Committee's
determinations under the Plan shall be final and binding on all persons.

      (c)  Each  Award  shall  be  evidenced  by  a  written  agreement  ("Award
Agreement")  containing  such  provisions  as may be  required  by the  Plan and
otherwise approved by the Committee. Each Award Agreement shall

                                        3

<page> 5

constitute a binding  contract  between the Holding  Company or an Affiliate and
the Participant,  and every Participant,  upon acceptance of an Award Agreement,
shall  be  bound  by the  terms  and  restrictions  of the  Plan  and the  Award
Agreement.  The terms of each Award  Agreement  shall be in accordance  with the
Plan,  but each Award  Agreement  may  include  any  additional  provisions  and
restrictions determined by the Committee, in its discretion,  provided that such
additional  provisions and restrictions  are not inconsistent  with the terms of
the Plan. In particular and at a minimum,  the Committee shall set forth in each
Award Agreement:  (i) the type of Award granted;  (ii) the Exercise Price of any
Option;  (iii) the number of shares  subject to the Award;  (iv) the  expiration
date of the Award;  (v) the manner,  time, and rate (cumulative or otherwise) of
exercise or vesting of such Award;  and (vi) the  restrictions,  if any,  placed
upon such Award, or upon shares which may be issued upon exercise of such Award.
The Chairman of the Committee and such other  directors and officers as shall be
designated by the Committee is hereby  authorized to execute Award Agreements on
behalf of the Company or an  Affiliate  and to cause them to be delivered to the
recipients of Awards.

      (d) The Committee may delegate all authority for: (i) the determination of
forms of payment to be made by or received by the Plan and (ii) the execution of
any   Award   Agreement.   The   Committee   may   rely  on  the   descriptions,
representations,  reports and estimates  provided to it by the management of the
Holding  Company or an Affiliate for  determinations  to be made pursuant to the
Plan,  including the  satisfaction  of any  conditions  of a Performance  Award.
However,  only the  Committee  or a portion of the  Committee  may  certify  the
attainment  of any  conditions of a  Performance  Award  intended to satisfy the
requirements of Section 162(m) of the Code.

3.    TYPES OF AWARDS AND RELATED RIGHTS.
      ----------------------------------

      The following Awards may be granted under the Plan:

      (a)   Non-Statutory Stock Options.
      (b)   Incentive Stock Options.

4.    STOCK SUBJECT TO THE PLAN.
      -------------------------

      Subject to adjustment as provided in Section 13 of the Plan, the number of
shares  reserved  for Options  under the Plan is  379,343.  The shares of Common
Stock issued  under the Plan may be either  authorized  but  unissued  shares or
authorized shares previously issued and acquired or reacquired by the Trustee or
the Holding Company,  respectively. To the extent that Options are granted under
the Plan, the shares  underlying  such Awards will be unavailable  for any other
use  including  future  grants  under the Plan except  that,  to the extent that
Options  terminate,  expire or are  forfeited  without  having vested or without
having been exercised,  new Awards may be made with respect to these shares.  No
Employee may be granted an Option  under this Plan to purchase  more than 25% of
all shares of Common Stock available under this Plan. No outside Director may be
granted  an Option  under  this Plan to  purchase  more than 5% of all shares of
Common Stock available under this Plan.

5.    ELIGIBILITY.
      -----------

      Subject to the terms of the Plan,  all  Employees  and  Outside  Directors
shall be eligible to receive Awards under the Plan.

6.    NON-STATUTORY STOCK OPTIONS.
      ---------------------------

      The  Committee  may,  subject  to the  limitations  of this  Plan  and the
availability of shares of Common Stock reserved but not previously awarded under
the Plan, grant  Non-Statutory  Stock Options to eligible  individuals upon such
terms and conditions as it may determine to the extent such terms and conditions
are consistent with the following provisions:

                                        4

<page> 6

      (a) Exercise  Price.  The Committee  shall determine the Exercise Price of
          ---------------
each Non-Statutory Stock Option.  However,  the Exercise Price shall not be less
than 100% of the Fair Market Value of the Common Stock on the Date of Grant.

      (b) Terms of  Non-statutory  Stock Options.  The Committee shall determine
          --------------------------------------
the term during which a Participant may exercise a  Non-Statutory  Stock Option,
but in no event may a Participant  exercise a  Non-Statutory  Stock  Option,  in
whole or in part, more than ten (10) years from the Date of Grant. The Committee
shall also determine the date on which each  Non-Statutory  Stock Option, or any
part  thereof,   first  becomes  exercisable  and  any  terms  or  conditions  a
Participant must satisfy in order to exercise each  Non-Statutory  Stock Option.
The shares of Common Stock  underlying  each  Non-Statutory  Stock Option may be
purchased in whole or in part by the  Participant at any time during the term of
such Non-Statutory Stock Option, or any portion thereof,  once the Non-Statutory
Stock Option becomes exercisable.

      (c)  Non-Transferability.  Unless otherwise determined by the Committee in
           -------------------
accordance  with this Section  6(c), a  Participant  may not  transfer,  assign,
hypothecate,  or  dispose  of in any  manner,  other than by will or the laws of
intestate succession,  a Non-Statutory Stock Option. The Committee may, however,
in its sole discretion,  permit transferability or assignment of a Non-Statutory
Stock Option if such transfer or assignment is, in its sole  determination,  for
valid estate  planning  purposes and such  transfer or  assignment  is permitted
under the Code and Rule 16b-3  under the  Exchange  Act.  For  purposes  of this
Section 6(c), a transfer for valid estate planning purposes includes, but is not
limited  to:  (a) a transfer  to a  revocable  intervivos  trust as to which the
Participant is both the settlor and trustee, (b) a transfer for no consideration
to: (i) any member of the Participant's  Immediate Family, (ii) any trust solely
for the  benefit of members of the  Participant's  Immediate  Family,  (iii) any
partnership  whose only  partners  are  members of the  Participant's  Immediate
Family,  and (iv) any limited  liability  corporation or corporate  entity whose
only members or equity owners are members of the Participant's Immediate Family,
or (c) a  transfer  to the  South  Jersey  Savings  Charitable  Foundation.  For
purposes  of  this  Section  6(c),  "Immediate  Family"  includes,  but  is  not
necessarily limited to, a Participant's parents, grandparents, spouse, children,
grandchildren,  siblings  (including half bothers and sisters),  and individuals
who are family members by adoption. Nothing contained in this Section 6(c) shall
be  construed  to require the  Committee to give its approval to any transfer or
assignment of any Non-Statutory Stock Option or portion thereof, and approval to
transfer or assign any  Non-Statutory  Stock Option or portion  thereof does not
mean that such  approval  will be given with respect to any other  Non-Statutory
Stock Option or portion thereof. The transferee or assignee of any Non-Statutory
Stock Option shall be subject to all of the terms and  conditions  applicable to
such Non- Statutory Stock Option immediately prior to the transfer or assignment
and shall be subject to any other  conditions  proscribed by the Committee  with
respect to such Non-Statutory Stock Option.

      (d)  Termination  of Employment  or Service  (General).  Unless  otherwise
           -------------------------------------------------
determined by the Committee,  upon the termination of a Participant's employment
or other service for any reason other than Retirement,  Disability, death, or as
a result of a Termination  for Cause,  the  Participant  may exercise only those
Non-Statutory Stock Options that were immediately exercisable by the Participant
at the  date of such  termination  and only for a  period  of three  (3)  months
following the date of such termination.

      (e) Termination of Employment or Service  (Retirement).  In the event of a
          --------------------------------------------------
Participant's   Retirement,   all  Non-Statutory   Stock  Options  held  by  the
Participant at the date of Retirement shall immediately  become  exercisable and
remain  exercisable  for a  period  of five  (5)  years  following  the  date of
Retirement.

      (f)  Termination of Employment or Service  (Disability  or death).  In the
           ------------------------------------------------------------
event of the termination of a  Participant's  employment or other service due to
Disability or death,  all  Non-Statutory  Stock Options held by such Participant
shall immediately become exercisable and remain exercisable for a period one (1)
year following the date of such termination.

                                        5

<page> 7

      (g) Termination of Employment or Service  (Termination for Cause).  Unless
          -------------------------------------------------------------
otherwise  determined  by  the  Committee,  in  the  event  of  a  Participant's
Termination  for  Cause,  all rights  with  respect  to the  Participant's  Non-
Statutory Stock Options shall expire immediately upon the effective date of such
Termination for Cause.

      (h) Termination of Employment or Service (Change in Control). In the event
          --------------------------------------------------------
of a Change in Control, all Non-Statutory Stock Options held by a Participant as
of the date of the Change in Control shall  immediately  become  exercisable and
shall remain  exercisable  until the expiration of the term of the Non-Statutory
Stock  Option,  regardless  of  whether  or when the  Option  holder  terminates
employment or service.

      (i)  Payment.  Payment  due  to  a  Participant  upon  the  exercise  of a
           -------
Non-Statutory Stock Option shall be made in the form of shares of Common Stock.

7.    INCENTIVE STOCK OPTIONS.
      -----------------------

      The  Committee  may,  subject  to the  limitations  of the  Plan  and  the
availability  of shares of Common Stock reserved but unawarded  under this Plan,
grant  Incentive  Stock Options to an Employee upon such terms and conditions as
it may determine to the extent such terms and conditions are consistent with the
following provisions:

      (a) Exercise  Price.  The Committee  shall determine the Exercise Price of
          ---------------
each Incentive Stock Option.  However, the Exercise Price shall not be less than
100% of the  Fair  Market  Value  of the  Common  Stock  on the  Date of  Grant;
PROVIDED, HOWEVER, that if at the time an Incentive Stock Option is granted, the
Employee owns or is treated as owning,  for purposes of Section 422 of the Code,
Common Stock  representing more than 10% of the total combined voting securities
of the Holding Company ("10% Owner"),  the Exercise Price shall not be less than
110% of the Fair Market Value of the Common Stock on the Date of Grant.

      (b) Amounts of Incentive  Stock Options.  To the extent the aggregate Fair
          -----------------------------------
Market  Value of shares of Common Stock with  respect to which  Incentive  Stock
Options  that are  exercisable  for the first  time by an  Employee  during  any
calendar  year under the Plan and any other  stock  option  plan of the  Holding
Company  or an  Affiliate  exceeds  $100,000,  or such  higher  value  as may be
permitted  under  Section 422 of the Code,  such Options in excess of such limit
shall be treated as  Non-Statutory  Stock  Options.  Fair Market  Value shall be
determined  as of the Date of Grant with  respect to each such  Incentive  Stock
Option.

      (c) Terms of Incentive  Stock Options.  The Committee  shall determine the
          ---------------------------------
term during which a Participant may exercise an Incentive  Stock Option,  but in
no event may a Participant  exercise an Incentive  Stock Option,  in whole or in
part, more than ten (10) years from the Date of Grant;  PROVIDED,  HOWEVER, that
if at the time an Incentive  Stock Option is granted to an Employee who is a 10%
Owner,  the  Incentive  Stock  Option  granted  to such  Employee  shall  not be
exercisable  after the expiration of five (5) years from the Date of Grant.  The
Committee shall also determine the date on which each Incentive Stock Option, or
any part  thereof,  first  becomes  exercisable  and any terms or  conditions  a
Participant  must satisfy in order to exercise each Incentive Stock Option.  The
shares of Common Stock  underlying  each Incentive Stock Option may be purchased
in whole or in part at any time during the term of such  Incentive  Stock Option
after such Option becomes exercisable.

      (d)  Non-Transferability.  No Incentive Stock Option shall be transferable
           -------------------
except  by will or the laws of  descent  and  distribution  and is  exercisable,
during his  lifetime,  only by the  Employee  to whom the  Committee  grants the
Incentive Stock Option.  The designation of a beneficiary  does not constitute a
transfer of an Incentive Stock Option.

      (e) Termination of Employment  (General).  Unless otherwise  determined by
          ------------------------------------
the  Committee,  upon the  termination  of a  Participant's  employment or other
service for any reason other than Retirement,  Disability, death, or as a result
of a Termination  for Cause,  the  Participant may exercise only those Incentive
Stock Options that were  immediately  exercisable by the Participant at the date
of such termination and only for a period of three (3) months following the date
of such termination.

                                        6

<page> 8

      (f)   Termination   of  Employment   (Retirement).   In  the  event  of  a
            -------------------------------------------
Participant's Retirement, all Incentive Stock Options held by the Participant at
the date of Retirement  shall  immediately  become  exercisable and shall remain
exercisable for a period of five (5) years following the date of Retirement. Any
Option originally  designated as an Incentive Stock Option shall be treated as a
Non-Statutory  Stock Option to the extent the Participant  exercises such Option
more than three (3) months following the Date of the Participant's Retirement.

      (g) Termination of Employment  (Disability or Death).  In the event of the
          ------------------------------------------------
termination of a Participant's  employment or other service due to Disability or
death,  all Incentive Stock Options held by such Participant  shall  immediately
become  exercisable  and remain  exercisable for a period one (1) year following
the date of such termination.

      (h) Termination of Employment  (Termination  for Cause).  Unless otherwise
          ---------------------------------------------------
determined  by the  Committee,  in the event of an  Employee's  Termination  for
Cause,  all rights under such  Employee's  Incentive  Stock Options shall expire
immediately upon the effective date of such Termination for Cause.

      (i) Change in Control.  In the event of a Change in Control, all Incentive
          -----------------
Stock  Options  held by a  Participant  as of the date of the  Change in Control
shall  immediately  become  exercisable and shall remain  exercisable  until the
expiration of the term of the Incentive  Stock Option,  regardless of whether or
when the Option holder terminates  employment or service.  Any Option originally
designated  as an Incentive  Stock  Option  shall be treated as a  Non-Statutory
Stock  Options to the extent the  Participant  exercises  such  Option more than
three (3) months following the Date of the Participant's Retirement.

      (j)  Payment.  Payment  due  to a  Participant  upon  the  exercise  of an
           -------
Incentive Stock Option shall be made in the form of shares of Common Stock.

      (k)  Disqualifying  Dispositions.  Each Award Agreement with respect to an
           ---------------------------
Incentive  Stock Option shall require the Participant to notify the Committee of
any  disposition  of shares of Common Stock  issued  pursuant to the exercise of
such Option  under the  circumstances  described  in Section  421(b) of the Code
(relating  to  certain  disqualifying  dispositions),  within  10  days  of such
disposition.

8.    PERFORMANCE AWARDS.
      ------------------

      The Committee  may  determine to make any Award under the Plan  contingent
upon the  satisfaction  of any  conditions  related  to the  performance  of the
Holding Company,  an Affiliate or the Participant.  Each Performance Award shall
be  evidenced  in the Award  Agreement,  which  shall  set forth the  applicable
conditions,  the maximum  amounts payable and such other terms and conditions as
are applicable to the Performance Award.

9.    DEFERRED PAYMENTS.
      -----------------

      The  Committee,  in its  discretion,  may permit a Participant to elect to
defer receipt of all or any part of any cash or stock payment under the Plan, or
the Committee may determine to defer receipt by some or all Participants, of all
or part of any such  payment.  The  Committee  shall  determine  the  terms  and
conditions of any such deferral, including the period of deferral, the manner of
deferral,  and the method for measuring  appreciation on deferred  amounts until
their payout.

10.    METHOD OF EXERCISE OF OPTIONS.
       -----------------------------

      Subject to any applicable Award Agreement,  any Option may be exercised by
the  Participant in whole or in part at such time or times,  and the Participant
may make  payment of the Exercise  Price in such form or forms  permitted by the
Committee,  including,  without limitation,  payment by delivery of cash, Common
Stock or other consideration

                                        7

<page> 9

(including,  where  permitted by law and the  Committee,  Awards)  having a Fair
Market Value on the day  immediately  preceding  the exercise  date equal to the
total Exercise Price, or by any combination of cash,  shares of Common Stock and
other  consideration,  including  exercise  by  means  of  a  cashless  exercise
arrangement with a qualifying broker-dealer, as the Committee may specify in the
applicable Award Agreement.

11.   RIGHTS OF PARTICIPANTS.
      ----------------------

      No Participant  shall have any rights as a shareholder with respect to any
shares of Common  Stock  covered by an Option  until the date of  issuance  of a
stock  certificate for such Common Stock.  Nothing  contained in this Plan or in
any Award Agreement confers on any person any right to continue in the employ or
service of the Holding Company or an Affiliate or interferes in any way with the
right of the  Holding  Company or an  Affiliate  to  terminate  a  Participant's
services.

12.   DESIGNATION OF BENEFICIARY.
      --------------------------

      A Participant  may, with the consent of the Committee,  designate a person
or persons to receive, in the event of death, any Award to which the Participant
would then be entitled. Such designation will be made upon forms supplied by and
delivered to the Committee and may be revoked in writing. If a Participant fails
effectively to designate a beneficiary,  then the  Participant's  estate will be
deemed to be the beneficiary.

13.   DILUTION AND OTHER ADJUSTMENTS.
      ------------------------------

      In the event of any change in the  outstanding  shares of Common  Stock by
reason of any stock dividend or split, recapitalization,  merger, consolidation,
spin-off,  reorganization,  combination or exchange of shares,  or other similar
corporate  change,  or other increase or decrease in such shares without receipt
or  payment  of  consideration  by  the  Holding  Company,  or in the  event  an
extraordinary  capital  distribution  is  made,  the  Committee  may  make  such
adjustments to previously  granted Awards, to prevent dilution,  diminution,  or
enlargement  of the  rights  of  the  Participant,  including  any or all of the
following:

      (a)   adjustments  in the  aggregate  number  or kind of  shares of Common
            Stock or other  securities that may underlie future Awards under the
            Plan;

      (b)   adjustments  in the  aggregate  number  or kind of  shares of Common
            Stock or other securities  underlying  Awards already made under the
            Plan;

      (c)   adjustments in the  Exercise Price of outstanding  Incentive  and/or
            Non-Statutory Stock Options.

      No such adjustments may, however,  materially change the value of benefits
available to a Participant  under a previously  granted Award.  All Awards under
this Plan  shall be  binding  upon any  successors  or  assigns  of the  Holding
Company.

14.   TAXES.
      -----

      (a)  Whenever  under this Plan,  cash or shares of Common  Stock are to be
delivered  upon  exercise or payment of an Award or any other event with respect
to rights and benefits hereunder,  the Committee shall be entitled to require as
a condition of delivery (i) that the Participant  remit an amount  sufficient to
satisfy all  federal,  state,  and local tax  withholding  requirements  related
thereto, (ii) that the withholding of such sums come from compensation otherwise
due to the Participant or from any shares of Common Stock due to the Participant
under this Plan or (iii) any  combination  of the foregoing  PROVIDED,  HOWEVER,
that no amount shall be withheld from any cash payment or shares of Common Stock
relating to an Award which was transferred by the Participant in accordance with
this Plan.

                                      8

<page> 10

Furthermore,  Participants  may direct the  Committee to instruct the Trustee to
sell  shares of Common  Stock to be  delivered  upon the  payment of an Award to
satisfy tax obligations.

      (b) If any  disqualifying  disposition  described  in Section 7(l) is made
with respect to shares of Common Stock acquired under an Incentive  Stock Option
granted  pursuant to this Plan,  or any  transfer  described  in Section 6(c) is
made,  or any election  described in Section 16 is made,  then the person making
such disqualifying disposition, transfer, or election shall remit to the Holding
Company or its  Affiliates an amount  sufficient to satisfy all federal,  state,
and local withholding  taxes thereby  incurred;  provided that, in lieu of or in
addition to the foregoing,  the Holding Company or its Affiliates shall have the
right to withhold such sums from compensation  otherwise due to the Participant,
or, except in the case of any transfer pursuant to Section 6(c), from any shares
of Common Stock due to the Participant under this Plan.

15.   NOTIFICATION UNDER SECTION 83(b).
      --------------------------------

      The  Committee  may,  on the Date of Grant or any later  date,  prohibit a
Participant  from making the election  described below. If the Committee has not
prohibited  such  Participant  from making such  election,  and the  Participant
shall, in connection with the exercise of any Option,  or the grant of any Stock
Award,  make the  election  permitted  under  Section  83(b) of the  Code,  such
Participant shall notify the Committee of such election within 10 days of filing
notice of the election  with the Internal  Revenue  Service,  in addition to any
filing and  notification  required  pursuant  to  regulations  issued  under the
authority of Section 83(b) of the Code.

16.   AMENDMENT OF THE PLAN AND AWARDS.
      --------------------------------

      (a) The Board of Directors may at any time, and from time to time,  modify
or amend  the Plan in any  respect,  prospectively  or  retroactively;  provided
however,  that provisions  governing  grants of Incentive Stock Options shall be
submitted  for  shareholder  approval  to  the  extent  required  by  such  law,
regulation   or   otherwise.   Failure  to  ratify  or  approve   amendments  or
modifications  by  shareholders  shall  be  effective  only  as to the  specific
amendment or modification requiring such ratification.  Other provisions of this
Plan will remain in full force and effect. No such termination,  modification or
amendment may adversely affect the rights of a Participant  under an outstanding
Award without the written permission of such Participant.

      (b)  The  Committee  may  amend  any  Award  Agreement,  prospectively  or
retroactively;  PROVIDED, HOWEVER, that no such amendment shall adversely affect
the rights of any  Participant  under an  outstanding  Award without the written
consent of such Participant.

17.   EFFECTIVE DATE OF PLAN.
      ----------------------

      The Plan shall become  effective  upon  approval by the Holding  Company's
shareholders.  The failure to obtain  shareholder  approval  will not effect the
validity of the Plan and any Awards made under the Plan; PROVIDED, HOWEVER, that
if the Plan is not approved by stockholders in accordance with IRS  regulations,
the Plan shall remain in full force and effect,  and any Incentive Stock Options
granted under the Plan shall be deemed to be Non-Statutory Stock Options and any
Award  intended to comply with Section  162(m) of the Code shall not comply with
Section 162(m) of the Code.

18.   TERMINATION OF THE PLAN.
      -----------------------

      The right to grant Awards under the Plan will  terminate  upon the earlier
of: (i) ten (10) years after the Effective  Date;  (ii) the issuance of a number
of shares of Common Stock  pursuant to the exercise of Options is  equivalent to
the maximum  number of shares  reserved under the Plan as set forth in Section 4
of the Plan.  The Board of Directors  has the right to suspend or terminate  the
Plan at any time,  provided  that no such action will,  without the consent of a
Participant  or except as provided for in Section  16(c) of the Plan,  adversely
affect a Participant's vested rights under a previously granted Award.

                                       9

<page> 11

19.   APPLICABLE LAW.
      --------------

      The Plan will be  administered in accordance with the laws of the state of
Delaware to the extent not pre-empted by applicable federal law.

20.   TREATMENT OF  AWARDS UPON A CHANGE IN CONTROL.
      ---------------------------------------------

      In the  event of a Change in  Control  where the  Holding  Company  or the
Association is not the surviving  entity,  the Board of Directors of the Holding
Company and/or the Association, as applicable,  shall require that the successor
entity  take one of the  following  actions  with  respect to all Awards held by
Participants at the date of the Change in Control:

            (i) Assume the Awards with the same terms and  conditions as granted
            to the Participant under this Plan; or

            (ii) Replace the Awards with comparable Awards,  subject to the same
            or more  favorable  terms and conditions as the Award granted to the
            Participant under this Plan, whereby the Participant will be granted
            common stock or the option to purchase common stock of the successor
            entity;  or, only if the  Committee  determines  that neither of the
            alternatives set forth in clauses (i) or (ii) are legally available;
            or

            (iii)  Replace the Awards  with a cash  payment  under an  incentive
            plan,  program,  or other  arrangement of the successor  entity that
            preserves  the economic  value of the Awards and makes any such cash
            payment  subject  to the same  vesting  or  exercisability  schedule
            applicable to such Awards.

      (b) The  determination  of  comparability of Awards offered by a successor
entity under clause (ii) of paragraph (a) above shall be made by the  Committee,
and the Committee's determination shall be conclusive and binding.

                                       10

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