Document:

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                                  EXHIBIT 10.2

                    AMENDED AND RESTATED ROSLYN BANCORP, INC.
                         1997 STOCK-BASED INCENTIVE PLAN

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                              AMENDED AND RESTATED
                              ROSLYN BANCORP, INC.
                         1997 STOCK-BASED INCENTIVE PLAN

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

         (a)      "Affiliate" means any "subsidiary  corporation" of the Holding
Company,  as such term is defined in Section 424(f)of the Code.

         (b) "Award" means, individually or collectively, a grant under the Plan
of  Non-statutory  Stock Options,  Incentive Stock Options,  Stock  Appreciation
Rights, Limited Rights, and Stock Awards.

         (c) "Award  Notice" means a document  evidencing  and setting forth the
terms of an Award granted  under the Plan,  in such form as the  Committee  may,
from time to time, approve.

         (d) "Bank" means The Roslyn Savings Bank, Roslyn, New York.

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

         (f)  "Change  in  Control"  means a change  in  control  of the Bank or
Holding  Company  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 Holding Company representing 20%
or more of the Bank's or the Holding Company's outstanding securities except for
any securities of the Bank  purchased by the Holding  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  Holding  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 Holding Company or similar transaction occurs in which
the Bank or Holding Company is not the resulting  entity;  or (D) a solicitation
of  shareholders  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 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 Holding  Company;  or (E) a tender  offer is made for 20% or more of
the voting securities of the Bank or the Holding Company.

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

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

         (l)  "Effective Date" means March 22, 1999.

         (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 share of Common Stock
may be purchased by a Participant pursuant to an Option.

         (p)  "Extraordinary  Dividend"  means a distribution to stockholders by
the Holding Company of earnings or  stockholders'  equity which: (i) exceeds net
earnings  for the  period  for  which  the  distribution  is  paid or (ii)  such
distribution  or any  portion  thereof  will  be  treated  by  the  stockholders
receiving  such  distribution  as a return of  capital  for  federal  income tax
purposes.

         (q) "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 last  transaction
                           price  quoted  for  such  date  by The  Nasdaq  Stock
                           Market;

                  (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. Such
                                                   -----------------------
determination shall be conclusive and binding on all persons.

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         (r) "Holding Company" means Roslyn Bancorp, Inc.

         (s)  "Incentive  Stock Option" means an 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.

         (t)  "Limited Right"  means  an Award granted to a Participant pursuant
to Section 8 of the Plan.

         (u)  "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.

         (v) "Option"  means an Incentive  Stock Option or  Non-statutory  Stock
Option.

         (w) "Outside  Director" means a member of the Board of Directors of the
Holding  Company or an  Affiliate,  who is not also an  Employee  of the Holding
Company or an Affiliate.

         (x)  "Participant"  means any  person  who holds an  outstanding  Award
pursuant to the Plan.

         (y)  "Performance  Award"  means  an  Award  granted  to  a Participant
pursuant to Section 11 of the Plan.

         (z)  "Performance  Goal" means an objective for the Holding  Company or
any Affiliate or any unit thereof or any  individual  that may be established by
the Committee for a Performance  Award to become vested,  earned or exercisable.
Performance  Goals  applicable to Performance  Awards are intended to constitute
"performance-based"  compensation  within the  meaning of Section  162(m) of the
Code and shall be based on one or more of the following criteria:

                  (i)      net income, as adjusted for non-recurring items
                  (ii)     cash earnings
                  (iii)    earnings per share
                  (iv)     cash earnings per share
                  (v)      return on equity
                  (vi)     return on assets
                  (vii)    assets
                  (viii)   stock price
                  (ix)     total shareholder return
                  (x)      capital
                  (xi)     net interest income
                  (xii)    market share
                  (xiii)   cost control or efficiency ratio
                  (xiv)    asset growth

         (aa) "Plan" means the Amended and Restated  Roslyn  Bancorp,  Inc. 1997
Stock-Based Incentive Plan.

         (bb)  "Retirement"  means a  termination  of  employment  (i)  from the
Holding Company or an Affiliate at an age and with employment service that would
entitle the  individual  to a pension  under The  Retirement  Plan of The Roslyn
Savings Bank in RSI Retirement Trust if the individual were a participant

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in such Pension Plan or (ii) under  circumstances  designated as a Retirement by
the  Committee.  "Retirement"  with  respect  to an Outside  Director  means the
termination  of service from the Board of  Directors of the Holding  Company and
any Affiliate following written notice to the Board of Directors of such Outside
Director's intention to retire.

         (cc)  "Stock   Appreciation   Right"  means  an  Award   granted  to  a
Participant,  alone or in connection with a related Option,  pursuant to Section
10 of the Plan.

         (dd)  "Stock Award" means an Award granted to a Participant pursuant to
Section 9 of the Plan.

         (ee)  "Termination  for Cause"  shall  mean,  in the case of an Outside
Director,  removal from the Board of  Directors  or, in the case of an Employee,
termination of employment,  because of a material loss to the Holding Company or
one of its Affiliates caused by the Participant's intentional failure to perform
stated  duties,  personal  dishonesty,  willful  violation  of  any  law,  rule,
regulation  (other than traffic  violations or similar  offenses) or final cease
and desist order, as determined by the Board of Directors. No act, or failure to
act, on a  Participant's  part shall be "willful"  unless done, or omitted to be
done,  not in good  faith  and  without  reasonable  belief  that the  action or
omission was in the best interest of the Holding Company or an Affiliate.

         (ff)  "Trust"  means a trust  established  by the Board of Directors in
connection with this Plan to hold Plan assets for the purposes set forth herein.

         (gg)  "Trustee"  means any  person or entity  approved  by the Board of
Directors  to hold legal title to any of the Trust  assets for the  purposes set
forth under the Plan.

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

         (a) The Plan shall be  administered  by the  Committee.  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  and who 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.

         (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 (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 approved by the Committee. Each
Award Notice shall  constitute a binding contract between the Holding Company or
an Affiliate and the Participant, and every Participant,  upon

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acceptance of the Award Notice,  shall be bound by the terms and restrictions of
the Plan and the  Award  Notice.  The  terms of each  Award  Notice  shall be in
accordance  with the Plan,  but each Award  Notice may include  such  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, the Committee shall set forth in each
Award Notice (i) the type of Award granted, (ii) the Exercise Price of an Option
or Stock  Appreciation  Right,  (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  are hereby
authorized to execute Award Notices on behalf of the Company or an Affiliate and
to cause them to be delivered to the recipients of Awards.

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
         (c)      Limited Rights
         (d)      Stock Awards
         (e)      Stock Appreciation Rights

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

        Subject to  adjustment  as  provided  in Section 17 hereof,  the maximum
number of shares  reserved  for Awards under the Plan is  6,109,994.  Subject to
adjustment  as  provided  in  Section 17 hereof,  the  maximum  number of shares
reserved   hereby  for  purchase   pursuant  to  the  exercise  of  Options  and
Option-related Awards granted under the Plan is 4,364,246. Subject to adjustment
as provided in Section 17 hereof the maximum number of shares reserved for Stock
Awards is  1,745,698.  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 Trust or the Holding Company, respectively. To the
extent that  Options and Stock  Awards 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 Stock Awards or Options
terminate,  expire, or are forfeited without having been vested or exercised (in
the case of Limited  Rights,  exercised  for cash),  new Awards may be made with
respect to these shares.

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

        Subject to the terms of  the Plan,  all Employees and Outside  Directors
shall be eligible to receive  Awards under the Plan. In addition,  the Committee
may grant  eligibility to consultants and advisors of the Holding Company or any
Affiliate.

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 unawarded  under this Plan,
grant  Non-statutory  Stock  Options  upon such terms and  conditions  as it may
determine.  Non-statutory  Stock Options  granted under this Plan are subject to
the following terms and conditions:

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         (a) Exercise  Price.  The Exercise  Price of each  Non-statutory  Stock
             ---------------
Option shall be determined by the Committee on the Date of Grant.  Such Exercise
Price shall not be less than 100% of the Fair Market  Value of the Common  Stock
on the Date of Grant.  Shares of Common Stock  underlying a Non-statutory  Stock
Option may be purchased only upon full payment of the Exercise Price in a manner
provided for in Section 14 of the Plan.

         (b) Terms of  Non-statutory  Stock Options.  The term during which each
             --------------------------------------
Non-statutory  Stock  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 ten (10) years from the Date of Grant.  The Committee
shall determine the date on which each  Non-statutory  Stock Option shall become
exercisable  and any terms or conditions  which must be satisfied  prior to each
Non-statutory  Stock Option becoming  exercisable.  Any such terms or conditions
shall be  determined  by the  Committee  as of the Date of Grant.  The shares of
Common Stock  underlying  each  Non-statutory  Stock Option  installment  may be
purchased in whole or in part by the  Participant at any time during the term of
such Non-statutory Stock Option after such installment becomes exercisable.

         (c)  Non-Transferability.  Unless otherwise determined by the Committee
              -------------------
in accordance with this Section 6(c),  Non-statutory  Stock Options shall not be
transferred,  assigned,  hypothecated,  or  disposed  of  in  any  manner  by  a
Participant  other  than by  will  or the  laws  of  intestate  succession.  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) the  Roslyn  Savings  Foundation.  For
purposes  of  this  Section  6(c),  "Immediate  Family"  includes,  but  is  not
necessarily limited to, a Participant's parents, spouse, children, grandchildren
and  great-grandchildren.  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 conditions  proscribed by the Committee with respect
to such Non-statutory Stock Option.

         (d)  Termination of Employment or Service or Change in Control.  Unless
              ---------------------------------------------------------
otherwise  determined by the Committee,  upon the termination of a Participant's
employment or service for any reason other than Disability,  death,  Retirement,
Change in Control or  Termination  for Cause,  the  Participant's  Non-statutory
Stock Options shall be exercisable only as to those shares that were immediately
exercisable by the  Participant at the date of termination and only for a period
of three (3)  months  following  termination.  In the  event of a  Participant's
Retirement,  the Participant's  Non-statutory Stock Options shall be exercisable
only as to those shares that were immediately  exercisable by the Participant at
the date of Retirement and remain  exercisable  for a period of three (3) years;
provided however, that upon the Participant's Retirement,  the Committee, in its
discretion, may determine that (i) all unexercisable Non-statutory Stock Options
held by the Participant as of that date shall become immediately exercisable and
shall  remain  exercisable  for  a  period  of  three  (3)  years  or  (ii)  all

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unexercisable  Non-statutory  Stock Options shall continue to become exercisable
in accordance with the Award Notice if the Participant is immediately engaged by
the Holding  Company or an Affiliate as a consultant  or advisor or continues to
serve the Holding Company or an Affiliate as a director or advisory director. In
the  event of a  Change  in  Control  or,  unless  otherwise  determined  by the
Committee,  upon  termination  of a  Participant's  employment or 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 of
three (3) years. Unless otherwise  determined by the Committee in the event of a
Termination for Cause, all rights under the  Participant's  Non-statutory  Stock
Options shall expire immediately upon such Termination for Cause.

         (e) Maximum  Individual Award.  No individual Employee shall be granted
             -------------------------
an amount of  Non-statutory  Stock  Options  which  exceeds  25% of all  Options
eligible  to be  granted  under  the  Plan  within  any 60 month  period  and no
individual  Outside Director shall be granted an amount of  Non-statutory  Stock
Options  which  exceeds 5% of all Options  eligible to be granted under the Plan
within any 60 month period.

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.  Incentive Stock Options granted
pursuant to the Plan shall be subject to the following terms and conditions:

         (a) Exercise  Price.  The Exercise Price of each Incentive Stock Option
             ---------------
shall be not less than 100% of the Fair Market  Value of the Common Stock on the
Date of Grant. However, 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.  Shares
of Common Stock may be purchased only upon payment of the full Exercise Price in
a manner provided for in Section 14 of the Plan.

         (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 term  during  which  each
             -----------------------------------
Incentive  Stock Option may 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  ten (10)  years  from  the  Date of  Grant.  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
determine the date on which each Incentive Stock Option shall become exercisable
and any terms or conditions which must be satisfied prior to the Incentive Stock
Option becoming exercisable. Any such terms or conditions shall be determined by
the  Committee as of the Date of Grant.  The shares of Common  Stock  underlying
each Incentive Stock Option  installment may be purchased in whole or in part at
any time during the term of such Incentive  Stock Option after such  installment
becomes exercisable.

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         (d)  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 it is granted. The designation
of a beneficiary does not constitute a transfer.

         (e)  Termination of Employment or Change in Control.  Unless  otherwise
              ----------------------------------------------
determined by the Committee,  upon the  termination of an Employee's  employment
for any reason other than Disability,  death,  Retirement,  Change in Control or
Termination  for  Cause,  the  Employee's   Incentive  Stock  Options  shall  be
exercisable  only as to those  Incentive  Stock  Options  that were  immediately
exercisable by the Employee at the date of termination  and only for a period of
three (3)  months  following  such  termination.  In the event of an  Employee's
Retirement,  the Employee's Incentive Stock Options shall be exercisable only as
to those shares that were immediately exercisable by the Employee at the date of
Retirement  and remain  exercisable  for a period of three (3)  years;  provided
however, that upon the Employee's Retirement,  the Committee, in its discretion,
may determine  that (i) all  unexercisable  Incentive  Stock Options held by the
Employee as of that date shall become  immediately  exercisable and shall remain
exercisable for a period of three (3) years or (ii) all unexercisable  Incentive
Stock Options shall continue to become  exercisable in accordance with the Award
Notice if the  Employee  is  immediately  engaged by the  Holding  Company or an
Affiliate as a consultant  or advisor or continues to serve the Holding  Company
or an Affiliate as a director or advisory director.  In the event of a Change in
Control or, unless otherwise determined by the Committee, upon termination of an
Employee's  employment for  Disability or death,  all unvested  Incentive  Stock
Options held by such Employee shall  immediately  become  exercisable  and shall
remain exercisable for three (3) years after such termination.  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.  Any Option
which, by operation of this provision, does not meet the requirements of Section
422 of the Code, shall be considered a Non-statutory Stock Option.

         (f) Maximum  Individual Award. No individual  Employee shall be granted
             -------------------------
an amount of Incentive  Stock Options which exceeds 25% of all Options  eligible
to be granted under the Plan within any 60 month period.

8.       LIMITED RIGHTS.
         --------------

         Simultaneously  with the grant of any Option, the Committee may grant a
Limited  Right with respect to all or some of the shares of Common Stock 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.  The  Limited  Right  may be  exercised  only when the
underlying  Option is  eligible to be  exercised,  and only when the Fair Market
Value of the  underlying  shares  on the day of  exercise  is  greater  than the
Exercise Price of the underlying  Option.  Upon exercise of a Limited Right, the
underlying  Option shall cease to be exercisable  and shall be terminated.  Upon
exercise  or  termination  of  an  Option,  any  related  Limited  Rights  shall
terminate.  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  receive  from the Holding  Company or an  Affiliate  an amount of cash
equal to the difference  between the Exercise Price of the underlying Option and
the Fair Market Value of the Common Stock subject to such Option on the

<PAGE> 10

date the Limited  Right is  exercised,  multiplied  by the number of shares with
respect to which such Limited Right is being exercised.

9.       STOCK AWARDS.
         ------------

         The Committee may,  subject to the  limitations of the Plan, make Stock
Awards which shall consist of the grant of some number of shares of Common Stock
to a Participant.  Stock Awards shall be made subject to the following terms and
conditions:

         (a) Payment of the Stock Award.  Stock Awards may only be made in whole
             --------------------------
shares of Common  Stock.  Stock Awards may only be granted from shares  reserved
under the Plan and  available  for award at the time the Stock  Award is made to
the Participant.

         (b) Terms of the Stock Awards.  The Committee shall determine the dates
             -------------------------
on which  Stock  Awards  granted  to a  Participant  shall vest and any terms or
conditions  which must be satisfied  prior to the vesting of any  installment or
portion of the Stock Award. Any such terms, or conditions shall be determined by
the Committee as of the Date of Grant.

         (c)  Termination of Employment or Service or Change in Control.  Unless
              ---------------------------------------------------------
otherwise  determined by the Committee,  upon the termination of a Participant's
employment or service for any reason other than Disability,  death,  Retirement,
Change in Control or Termination  for Cause,  the  Participant's  unvested Stock
Awards as of the date of  termination  shall be  forfeited  and any  rights  the
Participant had to such unvested Stock Awards shall become null and void. In the
event of a Participant's Retirement,  the Participant's unvested Stock Awards as
of the date of Retirement  shall be forfeited and any rights the Participant had
to such unvested Stock Awards shall become null and void; provided however, that
upon  the  Participant's  Retirement,  the  Committee,  in its  discretion,  may
determine that (i) all unvested Stock Awards held by the  Participant as of that
date shall become  immediately  vested or (ii) all  unvested  Stock Awards shall
continue  to vest in  accordance  with the Award  Notice if the  Participant  is
immediately  engaged by the Holding  Company or an Affiliate as a consultant  or
advisor or continues to serve the Holding  Company or an Affiliate as a director
or advisory  director.  In the event of a Change in Control or, unless otherwise
determined by the Committee in the event of a termination  of the  Participant's
service due to  Disability  or death,  all  unvested  Stock  Awards held by such
Participant  shall   immediately  vest.  Unless  otherwise   determined  by  the
Committee,  or in the event of the  Participant's  Termination  for  Cause,  all
unvested Stock Awards held by such  Participant as of the effective date of such
Termination for Cause shall be forfeited and any rights such  Participant had to
such unvested Stock Awards shall become null and void.

         (d)  Non-Transferability.  Except to the extent  permitted by the Code,
              -------------------
the rules  promulgated  under Section 16(b) of the Exchange Act or any successor
statutes or rules:

                  (i)      The  recipient  of a  Stock  Award  shall  not  sell,
                           transfer,   assign,  pledge,  or  otherwise  encumber
                           shares  subject to the Stock Award until full vesting
                           of such  shares has  occurred.  For  purposes of this
                           section,  the separation of beneficial  ownership and
                           legal title through the use of any "swap" transaction
                           is deemed to be a prohibited encumbrance.

                  (ii)     Unless  determined  otherwise  by the  Committee  and
                           except  in the  event of the  Participant's  death or
                           pursuant to a domestic relations order, a Stock Award
                           is not transferable and may be earned in his lifetime
                           only by the  Participant to whom it is granted.  Upon
                           the  death  of  a  Participant,   a  Stock  Award  is
                           transferable  by will
<PAGE> 11

                        or the laws of descent and distribution. The designation
                        of a beneficiary shall not constitute a transfer.

             (iii)      If  a  recipient  of  a Stock  Award  is  subject to the
                        provisions of Section 16 of the Exchange Act,  shares of
                        Common  Stock  subject  to such  Stock  Award  may  not,
                        without  the  written  consent of the  Committee  (which
                        consent  may be given in the Award  Notice),  be sold or
                        otherwise  disposed  of within six (6) months  following
                        the date of grant of the Stock Award.

         (e) Accrual of Dividends.  Whenever shares of Common Stock underlying a
             --------------------
Stock Award are  distributed to a Participant  or beneficiary  thereof under the
Plan, such  Participant or beneficiary  shall also be entitled to receive,  with
respect to each such share  distributed,  a payment equal to any cash  dividends
and the number of shares of Common Stock equal to any stock dividends,  declared
and paid with  respect  to a share of the Common  Stock if the  record  date for
determining  shareholders  entitled to receive such dividends  falls between the
date the relevant  Stock Award was granted and the date the relevant Stock Award
or installment thereof is issued. There shall also be distributed an appropriate
amount of net earnings,  if any, of the Trust with respect to any dividends paid
out on the shares related to the Stock Award.

         (f) Voting of Stock  Awards.  After a Stock Award has been  granted but
             -----------------------
for which the  shares  covered by such  Stock  Award  have not yet been  vested,
earned and distributed to the Participant  pursuant to the Plan, the Participant
shall be entitled to vote or to direct the Trustee to vote,  as the case may be,
such shares of Common  Stock which the Stock Award  covers  subject to the rules
and  procedures  adopted  by the  Committee  for  this  purpose  and in a manner
consistent with the Trust agreement.

         (g) Maximum  Individual Award. No individual  Employee shall be granted
             -------------------------
an amount of Stock Awards which  exceeds 25% of all Stock Awards  eligible to be
granted  under the Plan  within any 60 month  period and no  individual  Outside
Director  shall be granted  an amount of Stock  Awards  which  exceeds 5% of all
Stock Awards eligible to be granted under the Plan within any 60 month period.

10.      STOCK APPRECIATION RIGHTS
         -------------------------

         The Committee may, subject to the limitation of the Plan, grant a Stock
Appreciation Right ("SAR") to any Participant.  A Stock Appreciation Right shall
entitle the Participant to the right to receive a payment, equal in value to the
excess of the Fair Market Value of a specified  number of shares of Common Stock
on the date the SAR is exercised  over the grant price of such SAR,  which shall
not be less than 100% of the Fair Market Value on the Date of Grant of such SAR,
as  determined  by the  Committee,  provided  that, in the case of a SAR granted
retroactively  in tandem with or as substitution for another award granted under
any plan of the Company or an Affiliate,  the grant price may be the same as the
exercise or designated price of such other award.

         (a)  Maximum  Individual  Award.  No  individual  Employee  or  Outside
              --------------------------
Director  shall be granted a number of Stock  Appreciation  Rights which exceeds
the maximum  number of Options such  individual  may be granted  under the Plan,
pursuant to Section 6(e) hereof, within any 60 month period.

11.      PERFORMANCE AWARDS
         ------------------

         (a) The  Committee  may  determine  to make any award  under the Plan a
Performance  Award by making such Award  contingent  upon the  achievement  of a
Performance Goal or any combination of Performance Goals. Each Performance Award
shall be evidenced in the Award  Notice,  which shall

<PAGE> 12

set forth the  Performance  Goals  applicable to the Award,  the maximum amounts
payable and such other terms and conditions as are applicable to the Performance
Award.  Each Performance  Award shall be granted and administered to comply with
the requirements of Section 162(m) of the Code.

         (b) Any Performance  Award  shall be  made not later than 90 days after
the start of the period for which the  Performance  Award  relates  and shall be
made prior to the completion of 25% of such period. All determinations regarding
the  achievement of any  Performance  Goals will be made by the  Committee.  The
Committee may not increase during a year the amount of a Performance  Award that
would  otherwise be payable upon  achievement of the  Performance  Goals but may
reduce or eliminate the payments as provided for in the Award Notice.

         (c) Nothing contained in the Plan will be deemed in any way to limit or
restrict the Committee  from making any Award or payment to any person under any
other plan,  arrangement or understanding,  whether now existing or hereafter in
effect.

         (d) A Participant  who receives a  Performance  Award payable in Common
Stock shall have no rights as a  shareholder  until the Company  Stock is issued
pursuant  to the  terms of the  Award  Notice.  The  Common  Stock may be issued
without cash consideration.

         (e) A  Participant's  interest in a Performance  Award may not be sold,
assigned, transferred, pledged, hypothecated, or otherwise encumbered.

         (f) No Award or portion  thereof that is subject to the  attainment  or
satisfaction  of a  condition  or  Performance  Goal  shall  be  distributed  or
considered to be earned or vested until the Committee  certifies in writing that
the conditions or Performance Goal to which the distribution, earning or vesting
of such Award is subject has been achieved.

12.      DEFERRED PAYMENTS
         -----------------

         Notwithstanding  any other  provision of this Plan, any Participant may
elect,  with the  concurrence of the Committee and consistent with any rules and
regulations  established by the Committee, to defer the delivery of the proceeds
of the  exercise of any  Non-statutory  Stock Option not  transferred  under the
provisions of Section 6(c), Stock Appreciation Rights, and Stock Awards.

         (a) Election Timing. The election to defer the delivery of the proceeds
             ---------------
from any eligible Non-statutory Stock Option or Stock Appreciation Right must be
made at least six (6)  months  prior to the date such Award is  exercised  or at
such other time as the Committee may specify. The election to defer the delivery
of any Stock Award must be made no later than the last day of the calendar  year
preceding the calendar year in which the  Participant  would  otherwise  have an
unrestricted  right to receive such Award.  Deferrals  of eligible  Awards shall
only be allowed for  exercises  of Options and lapses of  restrictions  on Stock
Awards that occur while the  Participant  is in active  service with the Holding
Company or an  Affiliate.  Any election to defer the  proceeds  from an eligible
Award shall be irrevocable as long as the Participant  remains an Employee or an
Outside Director of the Holding Company or an Affiliate.

         (b)  Stock   Option   Deferral.   The   deferral  of  the  proceeds  of
              -------------------------
Non-statutory Stock Options may be elected by a Participant subject to the rules
and regulations established by the Committee. The proceeds from such an exercise
shall be  credited  to a  deferred  stock  option  account  established  for the
Participant. The proceeds shall be credited to the deferred stock option account
as a number of  deferred  shares  or share  units  equivalent  in value to those
proceeds.  Deferred  share units shall be valued at

<PAGE> 13

the Fair Market  Value on the date of  exercise.  Subsequent  to  exercise,  the
deferred  shares or share  units  shall be valued  at the Fair  Market  Value of
Common Stock;  provided,  however, that at the discretion of the Committee,  the
Participant  may elect to have the value of his deferred  stock  option  account
valued on some other basis of measurement approved by the Committee.  Unless the
Participant's  deferred  stock  option  account  is  valued  using  a  basis  of
measurement other than Common Stock, deferred share units shall accrue dividends
at the rate  paid  upon the  Common  Stock  credited  in the form of  additional
deferred  share units.  Deferred  shares or share units shall be  distributed in
shares of Common Stock or cash,  at the  discretion of the  Committee,  upon the
Participant's  termination  of service or at such other date, as may be approved
by the Committee, over a period of no more than ten (10) years.

         (c) Stock Appreciation Right Deferral.  The deferral of the proceeds of
             ---------------------------------
Stock Appreciation  Rights may be made by a Participant subject to the rules and
regulations  established  by the Committee.  Upon  exercise,  the Committee will
credit the Participant's deferred stock option account with a number of deferred
shares or share units  equivalent  in value to the  difference  between the Fair
Market Value of a share of Common  Stock on the  exercise  date and the Exercise
Price of the  Stock  Appreciation  Right  multiplied  by the  number  of  shares
exercised.  Deferred  shares or share  units  shall be valued at the Fair Market
Value on the date of exercise.  Subsequent to exercise,  the deferred  shares or
share units shall be valued at the Fair Market Value of Common Stock;  provided,
however,  that at the discretion of the Committee,  the Participant may elect to
have the value of his deferred  stock option  account valued on some other basis
of measurement  approved by the  Committee.  Unless the  Participant's  deferred
stock option  account is valued using a basis of  measurement  other than Common
Stock,  deferred  shares or share units shall accrue  dividends at the rate paid
upon the Common  Stock  credited in the form of  additional  deferred  shares or
share units.  Deferred  shares or share units shall be  distributed in shares of
Common Stock or cash, at the discretion of the Committee, upon the Participant's
termination  of  service  or at  such  other  date,  as may be  approved  by the
Committee, over a period of no more than ten (10) years.

         (d) Stock Award Deferrals.  The deferral of Stock Awards may be elected
             ---------------------
by a  Participant  subject  to the  rules  and  regulations  established  by the
Committee.  Upon the lapsing of  restrictions  on such an Award,  the  Committee
shall credit to a deferred stock award account established for the Participant a
number of deferred  shares or share units  equivalent  in value to the number of
deferred  Stock  Awards  multiplied  by the Fair Market  Value of Common  Stock.
Deferred  shares or share units shall be valued at the Fair Market  Value on the
date all  restriction on the Stock Award lapse or are waived.  Subsequent to the
lapsing of all restrictions,  the deferred shares or share units shall be valued
at the Fair  Market  Value  of  Common  Stock;  provided,  however,  that at the
discretion of the Committee,  the Participant may elect to have the value of his
deferred stock award account valued on some other basis of measurement  approved
by the  Committee.  Unless the  Participant's  deferred  stock award  account is
valued using a basis of measurement other than Common Stock,  deferred shares or
share  units  shall  accrue  dividends  at the rate paid upon the  Common  Stock
credited in the form of additional  deferred  share units.  Deferred share units
shall be distributed in shares of Common Stock or cash, at the discretion of the
Committee,  upon the Participant's termination of service or at such other date,
as may be  approved  by the  Committee,  over a period  of no more than ten (10)
years.

         (e)  Accelerated   Distributions.   The  Committee  may,  at  its  sole
              ---------------------------
discretion, allow for the early payment of a Participant's deferred stock option
account and/or  deferred  stock award account in the event of an  "unforeseeable
emergency"  or in the event of the death or Disability  of the  Participant.  An
"unforeseeable  emergency" means an  unanticipated  emergency caused by an event
beyond the  control of the  Participant  that would  result in severe  financial
hardship if the distribution  were not permitted.  Such  distributions  shall be
limited to the amount necessary to sufficiently  address the financial hardship.
Any  distributions  under this provision,  shall be consistent with the Code and
the regulations promulgated thereunder.  Additionally, the Committee may use its
discretion to cause stock option  deferral  accounts

<PAGE> 14

and/or  deferred  stock award  accounts to be  distributed  when  continuing the
program  is no  longer  in the  best  interest  of the  Holding  Company  or any
Affiliate.

         (f)  Assignability.  No rights to  deferred  stock  option  accounts or
              -------------
deferred  stock award  accounts  may be assigned or subject to any  encumbrance,
pledge or  charge of any  nature  except  that a  Participant  may  designate  a
beneficiary pursuant to any rules established by the Committee.

         (g)  Unfunded  Status.  No  Participant  or other person shall have any
              ----------------
interest  in any fund or in any  specific  asset of the  Holding  Company  or an
Affiliate  by reason of any  amount  credited  hereunder.  Any  amounts  payable
hereunder  shall be paid from the general  assets of the Holding  Company or its
Affiliates  and no  Participant  or other  person  shall have any rights to such
assets beyond the rights afforded  general  creditors of the Holding Company and
its  Affiliates.  However,  the Holding  Company or any Affiliate shall have the
right to establish a reserve,  trust or make any  investment  for the purpose of
satisfying the obligations created under this Section 12 of the Plan;  provided,
however,  that no  Participant  or other  person shall have any interest in such
reserve, trust or investment.

13.      PAYOUT ALTERNATIVES
         -------------------

         (a) Payments due to a Participant upon the exercise or redemption of an
Option or Stock  Award  shall be made in the form of  shares  of  Common  Stock.
Payments  due to a  Participant  upon  the  exercise  or  redemption  of a Stock
Appreciation Right or Limited Right shall be made in the form of cash.

         (b)  Any  shares  of  Common  Stock  tendered  in  satisfaction  of  an
obligation  arising  under this Plan shall be valued at the Fair Market Value of
the Common Stock on the day  preceding the date of the issuance of such stock to
the Participant.

14.      METHOD OF EXERCISE
         ------------------

         Subject to any applicable Award Notice,  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, including, without
limitation,  payment by delivery of cash,  Common  Stock or other  consideration
(including,  where  permitted by law and the  Committee,  Awards)  having a Fair
Market Value on 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 Notice.

15.      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  herein or in any
Award  Notice  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.

16.      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 Holding  Company and may be revoked in writing.

<PAGE> 15

If a  Participant  fails  effectively  to  designate  a  beneficiary,  then  the
Participant's estate will be deemed to be the beneficiary.

17.      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,  including an Extraordinary  Dividend,  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,  or any Limited  Rights
                  attached to such Options.

         Alternatively,  the Committee may provide the  Participant  with a cash
benefit for shares  underlying  vested,  but  unexercised  Options,  in order to
achieve the aforementioned effect.

         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.

18.      TAX WITHHOLDING.
         ---------------

         Notwithstanding any other provision of the Plan, Awards under this Plan
shall be subject to tax withholding to the extent  required by any  governmental
authority.  Any  withholding  shall  comply with Rule 16b-3 or any  amendment or
successive  rule.  Shares of Common  Stock  withheld to pay for tax  withholding
amounts  shall be valued  at their  Fair  Market  Value on the date the Award is
deemed taxable to the  Participant.  Participants  granted  Non-statutory  Stock
Options  shall be  responsible  for any required  withholding  applicable to any
Non-statutory  Stock Option which has been transferred  pursuant to Section 6(c)
hereof, unless otherwise inconsistent with current tax law.

19.      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,
unless   permitted  by  the  rules  and  regulations  or  staff   pronouncements
promulgated  under the Code shall be submitted for  shareholder  approval to the
extent required by such law, regulation or interpretation.

         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.

<PAGE> 16

         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  Notice,  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.

20.      EFFECTIVE DATE OF PLAN.
         ----------------------

         The Plan originally  became effective as of July 22, 1997. The Board of
Directors  adopted and approved the Plan, as amended and restated,  effective as
of March 22, 1999.  All  amendments  are effective upon approval by the Board of
Directors,  subject to shareholder ratification when specifically required under
the Plan or by applicable federal or state statutes,  rules or regulations.  The
failure to obtain shareholder ratification for such purposes will not affect the
validity of other provisions of the Plan and any Awards made under the Plan.

21.      TERMINATION OF THE PLAN.
         -----------------------

         The  right to grant  Awards  under  the Plan  will  terminate  upon the
earlier of: (i) ten (10) years after July 22,  1997;  or (ii) the  issuance of a
number of shares of Common  Stock  pursuant  to the  exercise  of Options or the
distribution  of Stock Awards which together with the exercise of Limited Rights
is equivalent  to the maximum  number of shares  reserved  under the Plan as set
forth in Section 4 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, adversely affect a Participant's vested rights under a
previously granted Award.

22.      APPLICABLE LAW.
         --------------

The Plan  will be  administered  in  accordance  with  the laws of the  state of
Delaware and applicable federal law.

23.      DELEGATION OF AUTHORITY
         -----------------------

         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 Notice.  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
attainment of Performance Goals. However, only the Committee or a portion of the
Committee may certify the attainment of a Performance Goal.<PAGE> 1

                                  EXHIBIT 10.3

                              ROSLYN BANCORP, INC.
                         2001 STOCK-BASED INCENTIVE PLAN

<PAGE> 2

                              ROSYLN BANCORP, INC.
                         2001 STOCK-BASED INCENTIVE PLAN

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)      "Bank" means Roslyn Savings Bank.

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

(d)      "Change in  Control"  means  a change in control of the Bank or Holding
         Company  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  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 securities of the Bank or the
         Holding Company  representing  20% or more of the Bank's or the Holding
         Company's outstanding  securities except for any securities of the Bank
         purchased by the Holding  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 Holding  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 or she 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 Holding Company or similar  transaction occurs in which the Bank
         or Holding Company is not the resulting  entity;  or (D) a solicitation
         of  shareholders  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 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 Holding  Company;
         or (E) a tender offer is made for 20% or more of the voting  securities
         of the Bank or the Holding Company.

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

(f)      "Committee" means  the  committee designated,  pursuant to Section 2 of
         the Plan, to administer the Plan.

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

<PAGE> 3

(h)      "Disability"  means any mental or physical  condition,  with respect to
         which  an  individual  qualifies  for  and  receives  benefits  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 individual from
         fulfilling his duties or  responsibilities to the Holding Company or an
         Affiliate.

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

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

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

(l)      "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  for 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.

(m)      "Holding Company" means Roslyn Bancorp, Inc.

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

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

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

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

(r)      "Plan" means this Roslyn Bancorp, Inc. 2001 Stock-Based Incentive Plan.

<PAGE> 4

(s)      "Restricted Stock Award" means  an award of restricted stock granted to
         an individual pursuant to Section 6 of the Plan.

(t)      "Retirement"  means a termination  of  employment  (i) from the Holding
         Company or an  Affiliate  at an age and with  employment  service  that
         would entitle the individual to a pension under The Retirement  Plan of
         The Roslyn Savings Bank in RSI Retirement  Trust if the individual were
         a  participant  in  such  pension  plan  or  (ii)  under  circumstances
         designated as a Retirement by the Committee.  "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 the  board(s) of directors of the Outside
         Director's intention to retire.

(u)      "Termination  for Cause" means  termination  because of an individual'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 affiliate of the Holding Company and any individual.

2.       PURPOSE.

This Plan is intended to provide the Holding Company and its Affiliates, a means
to continue using stock as a form of compensation.  Pursuant to the terms of the
Plan, the Committee may grant stock options and  restricted  stock to Employees,
Outside  Directors and  independent  contractors  or  Consultants of the Holding
Company and its affiliates.

3.       ADMINISTRATION.

(a)      The Committee  shall  administer  the Plan. The Committee shall consist
         of two (2) 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  "disinterested" only if he or she 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  individuals
         who are not  considered  officers or directors  of the Holding  Company
         under Section 16 of the Exchange Act.

(b)      The Committee shall:

          (i)     select  the individuals  who  are  to receive grants of awards
                  under the Plan;

         (ii)     determine the type,  number,  vesting  requirements  and other
                  features and conditions of such awards made under the Plan;

         (iii)    interpret the Plan and Award Notices (as defined below); and

         (iv)     make all other decisions related to the operation of the Plan.

<PAGE> 5

         The  Committee  shall  adopt  any  rules  or  guidelines  that it deems
         appropriate  to implement  and  administer  the Plan.  The  Committee's
         determinations  under  the  Plan  shall  be final  and  binding  on all
         persons.

(c)      Each  award  granted  under the Plan  shall be  evidenced  by a written
         notice ("Award  Notice").  Each Award Notice shall constitute a binding
         contract  between the  Holding  Company or an  Affiliate  and the award
         holder,  and every award  holder,  upon  acceptance of an Award Notice,
         shall be bound by the terms and  restrictions of the Plan and the Award
         Notice.  The terms of each Award Notice shall be set in accordance with
         the  Plan,  but each  Award  Notice  may also  include  any  additional
         provisions and restrictions determined by the Committee. In particular,
         and at a minimum, the Committee shall set forth in each Award Notice:

         (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 the award; and

         (vi)     the restrictions,  if any, placed on the award, or upon shares
                  which may be issued upon the exercise or vesting of the award.

         The Chairman of the Committee and such other  directors and officers as
         shall be designated  by the Committee are hereby  authorized to execute
         Award  Notices on behalf of the Holding  Company or an Affiliate and to
         cause them to be delivered to the  recipients  of awards  granted under
         the Plan.

(d)      The Committee may delegate all authority for the determination of forms
         of payment to be made or received by the Plan and for the  execution of
         any  Award  Notice.   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.

4.       STOCK SUBJECT TO THE PLAN.

Subject to  adjustment  as  provided  in  Section 11 of the Plan,  the number of
shares  reserved for awards under the Plan is 2,500,000,  including for purchase
pursuant to the exercise of Options  (Incentive Stock Options and  Non-Statutory
Stock  Options);  provided,  however,  that no more than 500,000 may be used for
grants of Restricted  Stock Awards.  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 Holding  Company.  Shares
underlying  outstanding  awards will be unavailable for any other use, including
future grants under the Plan,  except that, to the extent the awards  terminate,
expire or are forfeited without vesting or having been exercised, new awards may
be granted with respect to these shares subject to the  limitations set forth in
this Section 4.  Notwithstanding  these overall  limitations,  no individual may
receive grants of awards under the Plan that, in the aggregate,  cover more than
25% of the total shares reserved for awards under the Plan.

<PAGE> 6

5.       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 Options to eligible individuals, subject to terms and conditions as it may
determine,  to the extent that such terms and conditions are consistent with the
following provisions:

(a)      EXERCISE  PRICE.  The Exercise Price shall not be less than one hundred
         percent (100%) of the Fair Market Value of the Common Stock on the date
         of grant.

(b)      TERMS OF OPTIONS. In  no event may an individual exercise an Option, in
         whole or in part,  more than ten (10) years from the  date of grant.

(c)      NON-TRANSFERABILITY.  Unless  otherwise  determined by the Committee in
         accordance  with this Section  5(c),  an  individual  may not transfer,
         assign,  hypothecate, or dispose of an Option in any manner, other than
         by will  or the  laws  of  intestate  succession.  The  Committee  may,
         however,  in its sole  discretion,  permit  transfer or assignment of a
         Non-Statutory  Stock  Option,  if it  determines  that the  transfer or
         assignment is for valid estate planning purposes and is permitted under
         the Code and Rule  16b-3 of the  Exchange  Act.  For  purposes  of this
         Section 5(c), a transfer for valid estate planning  purposes  includes,
         but is not limited to, transfers:

         (i)       to a revocable inter  vivos  trust, as to which an individual
                   is both settlor and trustee;

         (ii)     for no  consideration  to: (1) any member of the  individual's
                  Immediate  Family;  (2) a  trust  solely  for the  benefit  of
                  members  of  the  individual's   Immediate  Family;   (3)  any
                  partnership   whose   only   partners   are   members  of  the
                  individual's  Immediate  Family;  or (4) any limited liability
                  corporation  or other  corporate  entity whose only members or
                  equity  owners  are  members  of  the  individual's  Immediate
                  Family; or

         (iii)    a transfer to the Roslyn Savings Foundation.

         For purposes of this Section 5(c), "Immediate Family" includes,  but is
         not  necessarily  limited to, an  individual's  parents,  grandparents,
         spouse, children, grandchildren,  siblings (including half brothers and
         sisters),  and individuals who are family members by adoption.  Nothing
         contained  in this  Section  5(c) shall be  construed  to  require  the
         Committee to approve the transfer or  assignment  of any  Non-Statutory
         Stock Option, in whole or in part. Receipt of the Committee's  approval
         to  transfer or assign a  Non-Statutory  Stock  Option,  in whole or in
         part,  does not mean that the  Committee  must  approve a  transfer  or
         assignment of any other Non-Statutory Stock Option, or portion thereof.
         The transferee or assignee of any  Non-Statutory  Stock Option shall be
         subject  to  all  terms  and   conditions   applicable  to  the  Option
         immediately  prior to transfer or assignment,  and shall remain subject
         to any other conditions proscribed by the Committee with respect to the
         Option.

(d)      SPECIAL RULES FOR INCENTIVE  STOCK OPTIONS.  Notwithstanding  foregoing
         provisions,  the following  rules apply to the grant of Incentive Stock
         Options:

         (i)      If an Employee  owns or is treated as owning,  for purposes of
                  Section 422 of the Code,  Common Stock  representing more than
                  ten percent (10%) of the total combined  voting  securities of
                  the  Holding  Company  at the time the  Committee  grants  the
                  Incentive  Stock

<PAGE> 7

                  Option (a "10% Owner"),  the Exercise  Price shall not be less
                  than one  hundred  and ten  percent  (110%) of the Fair Market
                  Value of the Common Stock on the date of grant.

         (ii)     An Incentive  Stock Option granted to a 10% Owner shall not be
                  exercisable  more than five (5) years from the date of grant.

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

         (iv)     Each Award Notice for an Incentive  Stock Option shall require
                  the individual to notify the Committee within ten (10) days of
                  any   disposition   of  shares  of  Common   Stock  under  the
                  circumstances   described  in  Section   421(b)  of  the  Code
                  (relating to certain disqualifying dispositions).

(e)      ACCELERATION  UPON A CHANGE IN CONTROL.  Upon a Change in Control,  all
         Options held by an  individual  as of the date of the Change in Control
         shall immediately become exercisable and shall remain exercisable until
         the expiration of the Option term.

(f)      TERMINATION  OF EMPLOYMENT OR SERVICE.  The following  rules apply upon
         the termination of an individual's employment or other service:

         (i)      IN GENERAL.  Unless the Committee determines  otherwise,  upon
                  termination of employment or service for any reason other than
                  Retirement, Disability or death, or Termination for Cause, the
                  individual may exercise only those Non-Statutory Stock Options
                  that were  immediately  exercisable  by the  individual at the
                  date of termination, and only for a period of three (3) months
                  from  the  date of  termination,  or,  if  sooner,  until  the
                  expiration of the Option term.

         (ii)     RETIREMENT. Unless the Committee determines otherwise, upon an
                  individual's  Retirement,  the  individual  may exercise  only
                  those  Options  that  were  immediately   exercisable  by  the
                  individual at the date of Retirement, and only for a period of
                  three (3) years  from the date of  Retirement,  or, if sooner,
                  until the expiration of the Option term.

         (iii)    DISABILITY   OR  DEATH.   Unless  the   Committee   determines
                  otherwise,  upon termination of an individual's  employment or
                  service due to Disability or death,  all  Non-Statutory  Stock
                  Options shall become immediately  exercisable and shall remain
                  exercisable  for a period of three (3) years  from the date of
                  termination, or, if sooner, until the expiration of the Option
                  term.

         (iv)     TERMINATION  FOR  CAUSE.   Unless  the  Committee   determines
                  otherwise,  upon  Termination  for  Cause,  all  rights  of an
                  individual  to  Options  shall  expire  immediately  upon  the
                  effective date of Termination for Cause.

<PAGE> 8

6.       RESTRICTED STOCK AWARDS.

The Committee may make grants of Restricted Stock Awards, which shall consist of
the grant of some number of shares of Common  Stock to an  individual  upon such
terms and conditions as it may determine to the extent such terms and conditions
are consistent with the following provisions:

(a)      GRANTS OF STOCK.  Restricted  Stock Awards may only be granted in whole
         shares of Common Stock.

(b)      NON-TRANSFERABILITY.  Except to  the extent  permitted by the Code, the
         rules   promulgated  under Section  16(b) of  the  Exchange  Act or any
         successor statutes or rules:

         (i)      The  recipient  of a  Restricted  Stock  Award grant shall not
                  sell, transfer,  assign,  pledge, or otherwise encumber shares
                  subject  to the grant  until full  vesting of such  shares has
                  occurred.  For purposes of this  section,  the  separation  of
                  beneficial  ownership  and legal title  through the use of any
                  "swap" transaction is deemed to be a prohibited encumbrance.

         (ii)     Unless determined otherwise by the Committee and except in the
                  event of the  Participant's  death or  pursuant  to a domestic
                  relations  order,  a  Restricted  Stock  Award  grant  is  not
                  transferable  and may be earned in his or her lifetime only by
                  the  individual  to whom it is  granted.  Upon the death of an
                  individual,  a Restricted Stock Award grant is transferable by
                  will or the laws of descent and distribution.  The designation
                  of a beneficiary shall not constitute a transfer.

         (iii)    If the recipient of a Restricted Stock Award is subject to the
                  provisions of Section 16 of the Exchange Act, shares of Common
                  Stock  subject  to the  grant  may not,  without  the  written
                  consent of the  Committee  (which  consent may be given in the
                  Award Notice), be sold or otherwise disposed of within six (6)
                  months following the date of grant.

(c)      ACCELERATION  OF  VESTING  UPON A CHANGE IN  CONTROL.  Upon a Change in
         Control,  all  Restricted  Stock Awards held by an individual as of the
         date of the Change in Control shall  immediately  become vested and any
         further restrictions shall lapse.

(d)      TERMINATION OF EMPLOYMENT OR SERVICE.  The following  rules will govern
         the treatment of a Restricted  Stock Award upon the  termination  of an
         individual's termination of employment or other service:

         (i)      IN GENERAL.  Unless the Committee determines  otherwise,  upon
                  the termination of an  individual's  employment or service for
                  any reason  other than  Retirement,  Disability  or death,  or
                  Termination for Cause, any Restricted Stock Award in which the
                  individual  has  not  become  vested  as of the  date  of such
                  termination  shall be forfeited and any rights the  individual
                  had to such Restricted Stock Award shall become null and void.

         (ii)     RETIREMENT. Unless the Committee determines otherwise, upon an
                  individual's  Retirement,  any Restricted Stock Award in which
                  the  Participant  has  not  become  vested  as of the  date of
                  Retirement  shall be forfeited  and any rights the  individual
                  had to such unvested Restricted Stock Awards shall become null
                  and void.

<PAGE> 9

         (iii)    DISABILITY  OR  DEATH.  Unless  otherwise  determined  by  the
                  Committee,  in the event of a termination of the  individual's
                  service due to  Disability  or death all  unvested  Restricted
                  Stock Awards held by such Participant  shall  immediately vest
                  as of the date of such termination.

         (iv)     TERMINATION  FOR CAUSE.  Unless  otherwise  determined  by the
                  Committee,  in the event of the  individual's  Termination for
                  Cause, all Restricted Stock Awards in which the individual had
                  not become vested as of the effective date of such termination
                  shall be forfeited and any rights such  individual had to such
                  unvested Restricted Stock Awards shall become null and void.

(e)      ISSUANCE OF CERTIFICATES. Unless otherwise held in trust and registered
         in the name of the trustee of the trust,  reasonably promptly after the
         date of grant with  respect  to shares of Common  Stock  pursuant  to a
         Restricted  Stock Award, the Holding Company shall cause to be issued a
         stock certificate, registered in the name of the individual to whom the
         Restricted Stock Award was granted,  evidencing such shares;  PROVIDED,
         HOWEVER,  that the Holding Company shall not cause a stock  certificate
         to be issued  unless it has  received a stock  power duly  endorsed  in
         blank with respect to such shares.  Each such stock  certificate  shall
         bear the following legend:

                  "The  transferability  of this  certificate  and the shares of
                  stock  represented  hereby are  subject  to the  restrictions,
                  terms and  conditions  (including  forfeiture  provisions  and
                  restrictions   against  transfer)   contained  in  the  Roslyn
                  Bancorp, Inc. 2001 Stock-Based Incentive Plan and Award Notice
                  entered into between the  registered  owner of such shares and
                  Roslyn Bancorp, Inc. or its Affiliates. A copy of the Plan and
                  Award  Notice  is on  file  in the  office  of  the  Corporate
                  Secretary of Roslyn  Bancorp,  Inc.,  One Jericho  Plaza,  New
                  York, New York 11753-8905."

         This legend shall not be removed until the individual becomes vested in
         such shares  pursuant to the terms of the Plan and Award  Notice.  Each
         certificate  issued  pursuant to this Section 6(e) shall be held by the
         Holding  Company or its  Affiliates,  unless the  Committee  determines
         otherwise.

(f)      TREATMENT  OF  DIVIDENDS. Whenever  shares of Common  Stock  underlying
         a  Restricted   Stock  Award  are   distributed  to  an  individual  or
         beneficiary  thereof  under  the  Plan  (or at such  other  time as the
         Committee may determine with respect to an  individual),  the recipient
         or beneficiary shall also be entitled to receive,  with respect to each
         such share distributed,  a payment equal to any cash dividends or other
         distributions  and the  number of shares of Common  Stock  equal to any
         stock  dividends,  declared  and paid  with  respect  to a share of the
         Common Stock if the record date for determining  shareholders  entitled
         to receive such dividends or other distributions falls between the date
         the  relevant  Restricted  Stock  Award  was  granted  and the date the
         relevant Restricted Stock Award or installment thereof is issued. There
         shall also be  distributed an  appropriate  amount of net earnings,  if
         any, of the trust with respect to any dividends  paid out on the shares
         related to the Restricted Stock Award.

(g)      VOTING OF RESTRICTED  STOCK AWARDS.  After a Restricted Stock Award has
         been granted but for which the shares covered by such Restricted  Stock
         Award  have  not  yet  been  vested,  earned  and  distributed  to  the
         individual  pursuant to the Plan, the  individual  shall be entitled to
         vote or to direct the trustee to vote,  as the case may be, such shares
         of Common Stock which the Restricted  Stock Award covers subject to the
         rules and procedures adopted by the Committee for this purpose and in a
         manner consistent with the trust agreement.

<PAGE> 10

7.       DEFERRED PAYMENTS.

The Committee, in its discretion, may permit an individual to elect to defer the
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 individuals, of all or a
portion of any payment.  The Committee  shall determine the terms and conditions
of any  permitted  deferral,  including  the period of  deferral,  the manner of
deferral and the method used to measure  appreciation on deferred  amounts until
paid.

8.       METHOD OF EXERCISING OPTIONS.

Subject to any applicable  Award Notice,  an individual may exercise any Option,
in whole or in part,  at such time or times as the  Committee  specifies  in the
Award Notice. The individual may make payment of the Exercise Price in such form
or forms as the  Committee  specifies in the Award  Notice,  including,  without
limitation,  payment by delivery of cash,  Common  Stock or other  consideration
(including,  where  permitted by law and the Committee,  Options)  having a Fair
Market Value equal to the total Exercise Price on the day immediately  preceding
the exercise  date.  The Committee may also allow payment by any  combination of
cash,  shares of Common  Stock and other  consideration,  including  exercise by
means of a cashless exercise arrangement with a qualified broker-dealer.

9.       RIGHTS OF INDIVIDUALS.

No individual  shall have any rights as a shareholder with respect to any shares
of Common Stock covered by a grant under this Plan until the date of issuance of
a stock certificate for such Common Stock.  Nothing contained in this Plan or in
any Award  Notice  confers on any person the 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  an  individual's
services.

10.      DESIGNATION OF BENEFICIARY.

With the Committee's consent, an individual may designate a person or persons to
receive,  upon the  individual's  death, any award to which the individual would
then be  entitled.  This  designation  shall be made upon forms  supplied by and
delivered  to the  Holding  Company  and it may be  revoked  in  writing.  If an
individual fails to effectively designate a beneficiary, the individual's estate
shall be deemed to be the beneficiary for purposes of the Plan.

11.      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 any 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 adjustments
to previously granted awards, to prevent dilution, diminution, or enlargement of
the rights of individuals, 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  that underlie awards already made under the Plan;
         and

<PAGE> 11

(c)      adjustments in the Exercise Price of outstanding Options.

The Committee,  however,  shall not make adjustments that materially  change the
value of benefits  available to an individual under a previously  granted award.
All awards  under this Plan shall be binding upon any  successors  or assigns of
the Holding Company.

12.      TAXES.

(a)      Under  this  Plan,  whenever  cash or shares of Common  Stock are to be
         delivered,  the  Committee  is entitled  to require as a  condition  of
         delivery that:

         (i)      the  individual  remit an amount  sufficient  to  satisfy  all
                  related   federal,    state,   and   local   withholding   tax
                  requirements;

         (ii)     the  withholding  of such  sums  may  come  from  compensation
                  otherwise due to the individual or from shares of Common Stock
                  due to the individual under this Plan; or

         (iii)    any  combination of (i) and (ii),  above;  PROVIDED,  HOWEVER,
                  that no amount  shall be  withheld  from any cash  payment  or
                  shares of Common Stock related to an Option transferred by the
                  individual in accordance with this Plan.

(b)      If any disqualifying disposition,  as described in Section 5(d)(iv), is
         made with respect to shares of Common Stock acquired under an Incentive
         Stock  Option  granted in  accordance  with this Plan,  or any transfer
         described in Section 5(c) is made, or any election described in Section
         13 is made, the person making such disqualifying disposition, transfer,
         or election  shall remit to the Holding  Company or its  Affiliates  an
         amount  sufficient  to  satisfy  any  federal,  state,  and  local  tax
         withholding  requirements.  In lieu of or in addition to the foregoing,
         however,  the Holding Company or its Affiliates shall have the right to
         withhold such sums from  compensation  otherwise due to the individual,
         or, except in the case of any transfer  pursuant to Section 5(c),  from
         any shares of Common Stock due to the individual under this Plan.

13.      NOTIFICATION UNDER SECTION 83(B).

The  Committee  may,  on the  date of  grant  or at a later  date,  prohibit  an
individual  from making the election  described  below. If the Committee has not
prohibited an individual from making this election, and the individual shall, in
connection  with the exercise of any award,  make the election  permitted  under
Section  83(b) of the Code,  the  individual  shall notify the  Committee of the
election within ten (10) days of filing notice of the election with the Internal
Revenue Service.  This requirement is in addition to any filing and notification
required  under the  regulations  issued under the authority of Section 83(b) of
the Code.

14.      AMENDMENT OF THE PLAN AND AWARD GRANTS.

(a)      Except as provided  in  paragraph  (c) of this  Section 14 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 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 shareholder  ratification
         or approval.  Other  provisions of this Plan shall remain in full force
         and effect. No termination, modification,

<PAGE> 12

         or  amendment  of this  Plan may  adversely  affect  the  rights  of an
         individual under an outstanding award without the written permission of
         the affected individual.

(b)      Except as provided in paragraph  (c) of this  Section 14 the  Committee
         may amend any Award Notice,  prospectively or retroactively;  PROVIDED,
         HOWEVER,  that no  amendment  shall  adversely  affect the rights of an
         individual  under an  outstanding  Award  Notice  without  the  written
         consent of the affected individual.

(c)      In no event shall the Board of Directors without  shareholder  approval
         amend  the Plan or shall  the  Committee  amend an Award  Notice in any
         manner that effectively:

         (i)      Allows any Option to be granted  with an Exercise  Price below
                  the  Fair  Market  Value  of the  Common  Stock on the date of
                  grant; or

         (ii)     Allows the  repricing of any Option  previously  granted under
                  the Plan either  through a reduction in the Exercise  Price or
                  through  the  cancellation  and  regrant  of a new  Option  in
                  exchange for the cancelled Option.

(d)      Notwithstanding  anything  in this  Plan  or any  Award  Notice  to the
         contrary,  if any award or right under this Plan would,  in the opinion
         of  the  Holding  Company's  accountants,  cause  a  transaction  to be
         ineligible for pooling of interest  accounting that would, but for such
         award  or  right,  be  eligible  for  such  accounting  treatment,  the
         Committee  may,  in  its  discretion,   modify,  adjust,  eliminate  or
         terminate the award or right,  to preserve the  availability of pooling
         of interest accounting.

15.      EFFECTIVE DATE AND TERMINATION OF THE PLAN.

The  Plan  shall  become  effective  upon  approval  by  the  Holding  Company's
shareholders.  The right to grant awards under the Plan will  terminate upon the
earlier of: (i) ten (10) years after the effective date; or (ii) the issuance of
a number of shares of Common  Stock  pursuant  to the  exercise  of Options  and
vesting  of  Restricted  Stock  Awards  equal to the  maximum  number  of shares
reserved  under the Plan,  as set forth in Section 4. The Board of Directors may
suspend  or  terminate  the Plan at any time;  PROVIDED,  HOWEVER,  that no such
action will adversely  affect an  individual's  vested rights under a previously
granted award, without the consent of the affected individual.

16.      APPLICABLE LAW.

The Plan  will be  administered  in  accordance  with  the laws of the  state of
Delaware, except to the extent that Federal law is deemed to apply.

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