The purpose of this Employee Stock Purchase Plan (the "Plan") is to allow all employees of Rose & Kiernan, Inc. (the "Company") to purchase shares of the Company's common stock, par value $2.50 per share ("Shares") for cash or through payroll deductions. The Board of Directors of the Company believes that increased employee participation in the ownership of the Company will be to the mutual benefit of both the employees and the Company.

On October 1 of any year, any employee can deliver a statement to the Company indicating how many Shares the employee wants to purchase over the next year. A form of the statement (the "Purchase Form") is attached to this document. Each employee can purchase no less then 10 shares over the year. An employee can decide at any point over the year to stop purchasing the Shares for any reason, but such employee must then wait until the next October 1 before signing up to participate again. If an employee participates in any year, the Shares purchased must be paid in full before the employee can participate again.

The price for Shares purchased from the Company will be the same price used for the purposes of the Rose & Kiernan, Inc. Employee Stock Ownership Plan ("ESOP") as determined by the ESOP's appraiser and announced by the Company. All transactions will be conducted at the current value. The Company will post the current price in a public area.

The purchase price for the Shares can be paid in one of two ways:

a. In cash, payable on October 1 of the year of purchase; or

b. Through payroll deductions. If this option is chosen on the Purchase Form, the Company will deduct the purchase price, in after tax money, from the employee's regular paycheck, spread over the year in equal installments. The employee will be credited with a proportionate amount of their Shares after each payroll. If the employee notifies the Company at any point over the year that the employee wishes to terminate the purchase, no more deductions will be taken, and no additional portion of the Shares will be credited.

The Company may not have enough Shares available in any one year to accommodate all purchase requests under the Plan. That is a decision to be made by the Company in its sole discretion. If there are not enough Shares available, the Company will pro-rate the requests based on the available Shares, and will promptly refund the appropriate portion of the purchase price to those employees who elected to pay cash for their Shares.

THE COMPANY RESERVES THE RIGHT TO ENLARGE, LIMIT OR STOP THIS PROGRAM AT ANY TIME FOR ANY REASON, AND TO REFUND ALL OR SOME OF THE MONIES PAID UNDER THIS PLAN, IN ITS SOLE DISCRETION.

If an employee ceases being employed by the Company while a payroll deduction election is in effect, the payroll deduction will stop on the employee's last paycheck and the employee will be credited with the number of Shares purchased to that point.

The Company will keep track of each employee's Shares under the Plan and will issue a quarterly statement showing the employee's holdings under the Plan. Each employee will have the right to vote the Shares held under the Plan; dividends on the Shares will be paid to the employee. The Company will not issue stock certificates unless and until the employee leaves the Company or sells their Shares, and any such sale is subject to the Company's right of first refusal as set forth herein. The Company reserves the right to pay an employee cash for any fractional Shares in lieu of issuing a stock certificate for fractional Shares.

Shares held by an employee under the Plan may not be pledged or encumbered in any way.

(a) The Company is granted the right of first refusal ("First Refusal Right"), exercisable in connection with any proposed sale or other transfer of the Shares. For purposes of this Section 8, the term "transfer" shall include any assignment, conveyance or other disposition for value of the Shares. In the event an employee desires to accept a bona fide third-party offer for any or all of the Shares, the employee must deliver to the Company written notice of the proposed sale. The Company will then have 60 days to match the offer. If the Company does not match within the 60 days, the employee is free to dispose of the Shares proposed to be sold.

(b) The Company is granted the right to purchase, at the Company's sole discretion (the "Call Right"), all or any part of the Shares purchased by any employee hereunder upon termination of such employee's employment for any reason. Such call right, if exercised by the Company, shall be at the then-prevailing price of the Shares as set forth in Section 3 of this Plan.

The stock certificates for the Shares shall be endorsed with legends reflecting the Company's First Refusal Right and Call Right.

In the event of reorganization, recapitalization, stock split, stock dividend, combination of shares, merger, consolidation, offerings of rights, or any other change in the structure of the Shares of the Company, the Board of Directors may make such adjustment, if any, as it may deem appropriate in the number, kind, and the price of Shares available for purchase under this Plan, and in the minimum and maximum number of Shares which an employee is entitled to purchase.

Any stock distributions or split Shares distributed by the Company on an employee's Shares will be credited to that employee.

In the event of any stock dividend, stock split, recapitalization or other transaction affecting the Company's outstanding Common Stock as a class is effected without receipt of consideration, then any new, substituted or additional securities or other property which is by reason of such transaction distributed with respect to the Shares shall be immediately subject to the Company's First Refusal Right and other terms of this Plan.

The Board of Directors of the Company shall designate a person or persons who will administer the Plan for the participants (the "Plan Administrator"). The Plan Administrator keeps the Plan's records, sends to participating employees a quarterly statement of account and any other information the Plan Administrator deems necessary. The initial Plan Administrator will be Mr. Joseph F. Vitale, Executive Vice President\CFO and Treasurer of the Company. Address any written correspondence to him at:

Rose & Kiernan, Inc.

Employee Stock Purchase Plan Administrator

P.O. Box 640

East Greenbush, New York 12061

You may contact the Plan Administrator by telephone at (518) 244-4252.

The Company and the Plan Administrator, in administering the Plan, are not liable for any acts done in good faith or for any good faith omission to act. NEITHER THE COMPANY NOR THE PLAN ADMINISTRATOR CAN ASSURE PROFITS OR PROTECT EMPLOYEE AGAINST A LOSS ON SHARES PURCHASED UNDER THE PLAN.

The Company reserves the right to suspend, modify or terminate the Plan at any time without the consent of beneficial or record owners of Shares. All participants will receive written notification of any such changes.

All questions of interpretation with respect to the construction and application of the Plan and the other agreements entered into pursuant to it and the administration of the Plan shall be settled by the determination of the Board of Directors of the Company or of one or more other persons designated by it, which determinations shall be final, binding, and conclusive on the Company and all employees and other persons.

If a participant in the Plan has failed to supply and certify his or her correct taxpayer identification number to the Company, or if the Internal Revenue Service notifies the Company that the participant has furnished an incorrect taxpayer identification number or is otherwise subject to backup withholding, the Company will be required to deduct and withhold from any distributions payable to that participant a tax of twenty percent (20%). If the backup withholding requirements apply to an employee participating in the Plan, the Plan Administrator will invest an amount equal to the distribution payable to that participant, after the deduction of the backup withholding tax.

None of the rights of an employee under this Plan or any Subscription Agreement entered into pursuant hereto shall be transferable by such employee otherwise than by will or the laws of descent and distribution and during the lifetime of an employee such rights shall be exercisable only by them. References to employees shall be deemed to include the personal representative of a deceased employee.

Any election or other notice required to be given by a subscribing employee under this Plan shall be in writing and shall be delivered personally or by mail, postage prepaid, addressed to the Plan Administrator at the address in Section 10. If an election is made which requires the payment of a sum of money, such sum shall accompany the written election.

The Plan has been adopted by the Board of Directors of the Company on August 27, 1996, and is subject to the approval of the shareholders of the Company at their next annual meeting. If the Plan is not approved by the shareholders, this Plan shall terminate and all monies paid will be promptly refunded., all subscriptions hereunder shall be cancelled and be of no further force and effect, and all persons who shall have subscribed for Shares pursuant to the Plan shall be entitled to a prompt refund in cash, without interest, of all sums withheld from or paid by them pursuant to the Plan.

(a) If the amount of any person's ownership of Shares or rights to purchase Shares would violate any law, regulation, or provision, or, in the opinion of the Company, could subject the Company or the employee to negative tax, securities or legal consequences, the Company may limit or terminate that person from participating in this Plan.

(b) In the event that the aggregate number of Shares offered and subscribed for pursuant to the Plan the amount of securities that may be offered or sold under Rule 701 adopted by the United States Securities and Exchange Commission or such other amount that will result in the loss of exemption from the registration requirements under the Securities Act of 1933, as amended, then all subscriptions under the Plan in excess of that amount shall be reduced proportionately, but disregarding fractions of shares, to the extent necessary so that the aggregate number of Shares covered by the Plan will not exceed that number.

(c) These securities have not been approved or disapproved by the Securities and Exchange Commission or any state securities commission nor has the Securities and Exchange Commission or any state securities commission passed upon the accuracy or adequacy of this plan. Any representation to the contrary is a criminal offense.

(d) The Shares have not been registered under the Securities Act of 1933 (the "Securities Act"), and are being issued to eligible employees in reliance upon the exemption from such registration provided by Rule 701 of the Securities and Exchange Commission for stock issuances under compensatory benefit arrangements such as this Plan. The Shares are restricted securities under the Securities Act and may not be resold or transferred unless the Shares are first registered under the federal securities laws or unless an exemption from such registration is available. Accordingly, eligible employees purchasing Shares under the Plan must be prepared to hold the Shares purchased hereunder for an indefinite period.

(e) The Company makes no representations regarding the tax effect of any purchase or reinvestment hereunder on the employee. Each employee is advised to contact his or her personal tax advisor regarding such tax consequences.

(f) The stock certificates for the Shares may be endorsed with restrictive legends reflecting the above restrictions on the disposition of the Shares purchased under the Plan.

RK.ESPP

The undersigned Employee (the "Employee") of Rose & Kiernan, Inc. (the "Company"), hereby elects, as follows, to purchase certain shares of Company common stock, $2.50 par value per share, pursuant to the Company's Stock Purchase Plan dated August 27, 1996 (the "Plan"):

1.     The number of shares to be purchased (the "Shares") is :_______(must be no less then 10).

2.     The purchase price is currently $________, but that may change, as set forth in the Plan.

3.     The payment method is (pick one):

           a  ______Full payment attached.

           b______Payroll deductions. The Employee hereby authorizes and directs the Company to deduct the purchase price, in after tax money, from the Employee's regular paycheck, spread over the year in equal installments. The Employee will be credited with a proportionate amount of Shares after each payroll.

4.     The Employee understands that he or she can decide at any point over the year to stop purchasing the Shares for any reason, but then must then wait until the next October 1 before signing up to participate again, and understands that the Company may not have enough Shares available in any one year to accommodate all purchase requests under the Plan. The Company may eliminate or limit the amount of Shares the Employee may purchase.

5.      The Employee represents that he or she has received a copy of the Plan, has read and understands it, acknowledges all of the statements and representations made in the Plan as though they are fully reproduced herein, and will abide by the terms of the Plan.

_________________

Employee

_______________

Dated:

Received by the Company on__________ (date):

___________________________

Joseph F. Vitale, Plan Administrator