EXHIBIT 10 (b) FORM OF STOCK OPTION AGREEMENT


 


 


FIRST FINANCIAL SERVICE CORPORATION


 


1998 STOCK OPTION AND INCENTIVE COMPENSATION PLAN


STOCK OPTION AGREEMENT


 


 


This is a STOCK OPTION
AGREEMENT (the “Agreement”) dated as of                                     ,
20    , by and between First Financial Service Corporation
(f/k/a First Federal Financial Corporation of Kentucky) (the “Company”) and                                                                     
(the “Optionee”).


    


Recitals


 


A.                                   The Board of
Directors of the Company (the “Board”) adopted the First Federal Financial
Corporation of Kentucky 1998 Stock Option and Incentive Compensation Plan (the “Plan”).


 


B.                                     The Board of
Directors (the “Board”) has determined that it is in the best interests of the
Company and appropriate to the stated purposes of the Plan that the Company
grant to the Optionee an option to purchase shares of the Company’s common
stock (“Shares”) pursuant and subject to the terms, definitions, and conditions
of the Plan.


 


C.                                     Any capitalized
terms used but not defined herein shall have the respective meanings given them
in the Plan, a copy of which is attached hereto and incorporated by reference
herein in its entirety.


 


Agreement


 


                NOW, THEREFORE, the Company and the Optionee do hereby agree
as follows:


 


SECTION
1 — GRANT OF OPTION


 


Subject to the terms and
conditions of this Agreement, the Company hereby grants to the Optionee an
option (the “Option”) to purchase all or any part from time to time of Shares
as set forth below:


 


	
  TYPE OF OPTION

  	
   

  	
  NUMBER OF SHARES

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Incentive Stock Options

  	
   

  	
  —

  	
   

  
	
  Nonqualified Stock Options

  	
   

  	
  —

  	
   

  



 


 


SECTION 2 —  OPTION PRICE


 


The option price hereunder is $              
per Share, which equals 100% of the fair market value of a Share as determined in
accordance with the Plan.


 


 


SECTION 3 — DURATION OF
OPTION


 


Subject to acceleration upon a Change in Control and subject to such
shorter period as might be provided in Section 8 of this Agreement (related to
Termination of Employment or Service), the Option shall be exercisable as
follows:


 





















 


	
  Dates Options are Eligible For Exercise

  	
   

  	
  Percentage of Total Share Subject to Option

  Which May Be Exercised

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  [Immediately]

  	
   

  	
  20

  	
  %

  
	
  [1st anniversary]

  	
   

  	
  20

  	
  %

  
	
  [2nd anniversary]

  	
   

  	
  20

  	
  %

  
	
  [3rd anniversary]

  	
   

  	
  20

  	
  %

  
	
  [4th anniversary]

  	
   

  	
  20

  	
  %

  



 


                The Optionee’s
unexercised right to purchase shares of Option Stock shall cumulate and
carry-over to subsequent twelve month periods.


 


SECTION 4 — EXERCISE OF
OPTION


 


During the Option Period,
the Optionee may exercise the Option upon compliance with the following
additional terms:


 


(a)           Method of Exercise. 
The Optionee shall exercise portions of the Option by written notice,
which shall:


 


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


 


(ii)           contain such representations and agreements, if any, as
the Board or the Committee may require concerning the holder’s investment
intent regarding such Shares;


 


(iii)          acknowledge and accept the restrictions on transfer of the
Option Stock as required by Section 9 of the Plan;


 


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


 


(v)           be in writing and delivered in person or by certified mail
to the Treasurer of the Company on behalf of the Committee.


 


(b)           Cashless Exercise.  By a written election, Optionee may have
Company retain that number of shares subject to the Option having an aggregate
fair market value equal to:


 


                ý            The aggregate exercise price of the
nonqualified options (mandatory);


 


                o            The aggregate exercise price of the
incentive stock options; or


 


                o            The total amount of tax required to
be withheld.


 


(c)           Payment Upon
Exercise of Option.  Payment of the
full Option Price for Shares upon which the Option is exercised shall be made
in one of the following manners: (1) in cash; (2) in shares owned by the
Participant for at least six months (or by deemed transfer at such shares),
with approval of the Committee; (3) in accordance with Section 4(b); or (4) in
any combination thereof, all in accordance with Section 6.8 of the Plan.  The Optionee shall make arrangements for
income and employment tax withholding (if applicable), which are consistent
with Section 4(b) and are satisfactory to the Company.  The Company shall cause to be issued and
delivered to the Optionee the certificate(s) representing such Shares as soon
as practicable following the receipt of notice and payment described above.


 





















 


SECTION 5 — NONTRANSFERABILITY OF OPTION


 


Except for certain transfers to Immediate Family Members and certain
entities for their benefit pursuant to Section 6.5 of the Plan, the Option
shall not be transferable or assignable by the Optionee.  The Option shall be exercisable, during the
Optionee’s lifetime, only by him.  The
Option shall not be pledged or hypothecated in any way, and shall not be
subject to execution, attachment or similar process.  Any attempted transfer, assignment, pledge,
hypothecation or other disposition of the Option contrary to the provisions
hereof, and the levy of any process upon the Option, shall be null, void and
without effect.


 


SECTION 6 — EFFECT OF AMENDMENT, SUSPENSION


OR TERMINATION OF EXISTING OPTIONS


 


No amendment, suspension or termination of the Plan shall, without the
Optionee’s written consent, alter or impair the Option granted under the terms
of this Agreement.


 


SECTION 7 — RESTRICTIONS ON ISSUING SHARES


 


Shares shall not be issued pursuant to the exercise of the Option,
unless the issuance and transferability of the Shares shall comply with all
relevant provisions of law, including, but not limited to, the (i) limitations,
if any, imposed by applicable state law; and (ii) restrictions, if any, imposed
by the Securities Act of 1933, as amended, the Securities Exchange Act of 1934,
as amended, and the rules and regulations promulgated thereunder by the United
States Securities and Exchange Commission. 
The Committee may, in its discretion, determine if such restrictions or
such issuance of shares so complies with all relevant provisions of law.


 


SECTION 8 — EXERCISE AFTER TERMINATION OF EMPLOYMENT


 


After an Employee’s Termination of Employment other than by the Company
for Cause (as defined in the Plan), an Option may be exercised with respect to
the number of Shares which the Employee could have acquired by an exercise of
the Option immediately before the Termination of Employment but in no event
after the expiration date of the Option as specified in Section 3.  The right to exercise will expire at the
earlier of the expiration of the Option Period or one year after the Employee’s
death, or Disability.  Any Option
exercised under this Section may be exercised by the legal representative of
the estate of the Employee or by the person or persons who acquire the right to
exercise such Option by bequest or inheritance.


 


Absent death, Disability, or a finding of Cause, the Option shall
remain exercisable for the shorter of the Option Period or three months
following Termination of Employment, provided that if the Optionee terminates
employment voluntarily on account of Retirement on or after age 60, the option
will remain exercisable for the shorter of the Option Period or one year
following termination, but any Incentive Stock Option will be treated as a
Nonqualified Stock Option if not exercised within three months.


 


SECTION 9 — ACKNOWLEDGEMENTS


 


The Optionee acknowledges receipt contemporaneously herewith of a copy
of the Plan, and the Optionee represents that he is familiar with the terms and
provisions thereof and hereby accepts the Option subject to all the terms and
provisions thereof.  Any capitalized term
used herein and not otherwise defined shall have the meaning given in the
Plan.  The Optionee acknowledges that
nothing contained in the Plan or this Agreement shall (a) confer upon the
Optionee any additional rights to continued employment by the Company or any
corporation related to the Company; or (b) interfere in any way with the right
of the Company to terminate the Optionee’s employment or change the Optionee’s
compensation at any time.


 





















 


SECTION
10 — TERM OF AGREEMENT


 


This Agreement shall terminate upon the earlier of (i) complete
exercise or termination of the Option; (ii) mutual agreement of the parties; or
(iii) expiration of the Option Period.


 


                IN WITNESS WHEREOF, the parties have executed and delivered
this Agreement as of the date set forth in the preamble hereto, but actually on
the dates set forth below.


 


 


	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
  Optionee

  	
   

  	
   

  	
   

  	
  Chairman, Stock Option and

  
	
   

  	
   

  	
   

  	
   

  	
  Incentive Plan Committee

  
	
   

  	
   

  	
   

  	
   

  
	
  Date:

  	
   

  	
   

  	
  Date: