Exhibit 10(12)

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                    EMPLOYEE INCENTIVE STOCK OPTION AGREEMENT
                UNDER THE RIVER VALLEY BANCORP STOCK OPTION PLAN

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     You are hereby  granted the option to purchase a total of ___ shares of the
Common  Stock,  without par value  ("Common  Stock"),  of River  Valley  Bancorp
("RVB")  over the next ten  years  pursuant  to RVB's  Stock  Option  Plan  (the
"Plan"), on the following terms and conditions:

     1. The purchase  price of the shares of Common Stock subject to this option
is $___ per  share.  You must pay this  purchase  price in cash at the time this
option is exercised;  provided,  however that,  with the approval of RVB's Stock
Compensation  Committee  (the  "Committee"),  beginning on and after three years
following  the date  hereof,  you may  exercise  your option by tendering to RVB
whole  shares of RVB's Common  Stock owned by you, or any  combination  of whole
shares of RVB's Common  Stock owned by you and cash,  having a fair market value
equal to the cash exercise  price of the shares with respect to which the option
is exercised by you. For this purpose, any shares so tendered shall be deemed to
have a fair market value equal to the mean between the highest and lowest quoted
selling prices for the shares on the date of exercise of the option (or if there
were no sales on such date the weighted average of the means between the highest
and lowest quoted selling prices on the nearest date before and the nearest date
after the date of  exercise  of the  option),  as  reported  in The Wall  Street
Journal or a similar  publication  selected by the  Committee.  To exercise this
option, you must send written notice to the RVB's Secretary at the address noted
in Section 12 hereof. Such notice shall state the number of shares in respect of
which the option is being  exercised,  shall identify the option exercised as an
incentive  stock  option,  and  shall be  signed by the  person  or  persons  so
exercising  the option.  Such notice shall be accompanied by payment of the full
cash option price for such shares or, if the Committee has authorized the use of
the stock swap feature provided for above, such notice shall be followed as soon
as practicable by the delivery of the option price for such shares. Certificates
evidencing shares of Common Stock will not be delivered to you until payment has
been made. Under certain circumstances, the Plan permits you to deliver a notice
to your broker to deliver the cash to RVB upon the receipt of such cash from the
sale of RVB Common Stock.  Contact the Secretary of RVB for further  information
about this procedure if you are interested in it.

     2. The term of this option (the "Option Term") shall be for a period of ten
years from the date of this letter,  subject to earlier  termination as provided
in paragraphs 3 and 4 hereof.  Except as otherwise  provided  below,  the option
shall  become  exercisable  with respect to the first 20% of the total number of
shares covered hereby on the first  anniversary of the date of this letter,  and
the option shall become  exercisable with respect to the second,  third,  fourth
and  fifth  20%  of  such  shares  on  the  second,   third,  fourth  and  fifth
anniversaries, respectively, of the date of this letter. When the option becomes
exercisable  with  respect to any shares of Common

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Stock, those shares may be purchased at any time, or from time to time, in whole
or in part,  until the Option  Term  expires,  but in no case may fewer than 100
such shares be purchased at any one time,  except to purchase a residue of fewer
than 100 shares.  Notwithstanding  the foregoing or any other provision  herein,
the option may not be exercised during the first six months of the Option Term.

     3. If you cease to be an employee of RVB or any of its subsidiaries for any
reason other than retirement,  permanent and total  disability,  or death,  this
option  shall  forthwith  terminate.  If  your  employment  by RVB or any of its
subsidiaries is terminated by reason of retirement (which means such termination
of employment as shall entitle you to early or normal retirement  benefits under
any  then  existing  pension  plan of RVB or one of its  subsidiaries),  you may
exercise  this  option  to the  extent  it was  exercisable  at the date of your
retirement in whole or in part within three years after such retirement, but not
later than the date upon which this option  would  otherwise  expire;  provided,
however, that if you are a director or a director emeritus of RVB at the time of
your  retirement,  you may  exercise  this  option in whole or in part until the
later of (a) three years after your date of  retirement  or (b) six months after
you service as a director or director  emeritus  terminates,  but not later than
the date upon which this option would  otherwise  expire.  If you cease to be an
employee of RVB or any of its  subsidiaries  because of your permanent and total
disability,  you may exercise this option in whole or in part at any time within
one year after such termination of employment by reason of such disability,  but
not later than the date upon which this option would otherwise expire.

     4. If you die  while  employed  by RVB or any of its  subsidiaries,  within
three years after the termination of your employment  because of retirement (of,
if later,  six months  following  your  termination  of service as a director or
director  emeritus  of RVB),  or within one year after the  termination  of your
employment  because  of  permanent  and total  disability,  this  option  may be
exercised  in  whole  or in part  by your  executor,  administrator,  or  estate
beneficiaries  at any time  within one (1) year after the date of your death but
not later than the date upon which this option would otherwise expire.

     5. This option is  non-transferable  otherwise  than by will or the laws of
descent and distribution or pursuant to a qualified domestic relations order. It
may be exercised only by you or your  guardian,  if any, or, if you die, by your
executor,  administrator,  or  beneficiaries  of your estate who are entitled to
your option.

     6. All rights to exercise this option will expire,  in any event, ten years
from the date of this letter.

     7.  Certificates  evidencing shares issued upon exercise of this option may
bear a  legend  setting  forth  among  other  things  such  restrictions  on the
disposition  or  transfer of the shares of RVB as RVB may deem  consistent  with
applicable federal and state laws.

     8.  Nothing  in  this  option  shall  restrict  the  right  of  RVB  or its
subsidiaries to terminate your employment at any time with or without cause.
<PAGE>

     9. This option is subject to all the terms,  provisions  and  conditions of
the Plan, which is incorporated herein by reference,  and to such regulations as
may from time to time be adopted by the  Committee.  A copy of the Plan has been
furnished to you and an  additional  copy may be obtained from RVB. In the event
of any conflict  between the  provisions of the Plan and the  provisions of this
letter, the terms, conditions and provisions of the Plan shall control, and this
letter shall be deemed to be modified accordingly.

     10. This Stock Option  Agreement is intended to grant an option which meets
all of the requirements of incentive stock options as defined in Section 422A of
the  Internal  Revenue  Code.  Subject  to and upon the  terms,  conditions  and
provisions  of the Plan,  each and every  provision of this  Agreement  shall be
administered,  construed and interpreted so that the option granted herein shall
so qualify as an incentive  stock  option.  Each  provision of this Stock Option
Agreement  which would prevent this option from qualifying as an incentive stock
option, if any, shall be void.

     11. You agree to advise RVB  immediately  upon any sale or  transfer of any
shares of Common Stock  received upon exercise of this option to the extent such
sale or  transfer  takes place prior to the later of (a) two years from the date
of grant or (b) one year from the date of exercise of this option.

     12.  All  notices  by you to RVB and your  exercise  of the  option  herein
granted,  shall be addressed to River Valley Bancorp, 430 Clifty Drive, Madison,
Indiana 47250, Attention: Secretary, or such other address as RVB may, from time
to time, specify.

     13. This option may not be exercised  until RVB has been advised by counsel
that all other applicable legal requirements have been met.

                                     Very truly yours,

                                     RIVER VALLEY BANCORP


                                     By:
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                                        Matthew P. Forrester, President and
                                        Chief Executive Officer


Accepted on the date above written



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