Document:

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EXHIBIT 10.1   FORM OF FIRST CAPITAL, INC. STOCK OPTION ASSUMPTION AGREEMENT FOR
               THE 1998 OFFICERS' AND KEY EMPLOYEES' STOCK OPTION PLAN FOR HCB
               BANCORP

<PAGE> 2

                               FIRST CAPITAL, INC.
                        STOCK OPTION ASSUMPTION AGREEMENT

OPTIONEE:  [Name]

      STOCK  OPTION  ASSUMPTION  AGREEMENT  issued as of the ___ day of January,
2000, by First Capital, Inc., an Indiana corporation ("First Capital").

      WHEREAS,  the  undersigned  individual  ("Optionee")  holds  one  or  more
outstanding  options to purchase  shares of the common stock of HCB Bancorp,  an
Indiana  corporation  ("HCB"),  which were  granted to  Optionee  under the 1998
Officers' and Key  Employees'  Stock Option Plan of HCB Bancorp (the "HCB Plan")
and are evidenced by one or more Award Agreements or similar  documentation (the
"Award  Agreement(s)")  between  HCB and  Optionee,  which are  incorporated  by
reference herein.

      WHEREAS,  effective as of January __,  2000,  HCB has merged with and into
First Capital (the  "Merger")  pursuant to the Agreement and Plan of Merger (the
"Merger Agreement"),  dated as of July 19, 1999 by and between First Capital and
HCB;

      WHEREAS,   the  Merger  Agreement  provides  for  the  conversion  of  all
outstanding  stock  options  under the HCB Plan into  options to purchase  First
Capital common stock ("First Capital Stock"), and to issue to the holder of each
outstanding option an agreement evidencing the conversion and assumption of such
option;

      WHEREAS,  pursuant to the provisions of the Merger Agreement, the exchange
ratio (the  "Exchange  Ratio") in effect for the Merger is 15.5  shares of First
Capital Stock for each outstanding share of HCB common stock ("HCB Stock");

      WHEREAS,  this Stock Option  Assumption  Agreement is to become  effective
immediately in order to reflect  certain  adjustments to Optionee's  outstanding
options  under  the HCB  Plan,  which  have  become  necessary  by reason of the
assumption of those options by First Capital in connection with the Merger.

      NOW, THEREFORE, it is hereby agreed as follows:

      1. The  number of  shares  of First  Capital  Stock  subject  to the stock
options held by Optionee under the HCB Plan  immediately  prior to the Effective
Time (as defined in the Merger  Agreement) of the Merger (the "HCB Options") and
the exercise  price  payable per share are set forth in Exhibit A hereto.  First
Capital hereby assumes, as of the Effective Time, all the duties and obligations
of HCB  under  each of the HCB  Options  as set  forth  in the HCB  Plan and the
Optionee's Award Agreement(s). In connection with such assumption, the number of
shares of First Capital Stock  purchasable  under each HCB Option hereby assumed
and the exercise  price  payable  thereunder  have been  adjusted to reflect the
Exchange Ratio in a manner  consistent with the Merger

<PAGE> 3

Agreement.  Accordingly,  the number of shares of First Capital Stock subject to
each HCB Option hereby assumed shall be as specified for that option in attached
Exhibit A, and the adjusted  exercise  price  payable per share of First Capital
Stock  under the  assumed HCB Option  shall be as  indicated  for that option in
attached Exhibit A.

      2. The following provisions shall govern each HCB Option hereby assumed by
First Capital:

            (a) Unless the context  otherwise  requires,  all references in each
      Award  Agreement  and in the HCB Plan (as  incorporated  into such  Option
      Agreement) (i) to the Company"  shall mean First Capital,  and (ii) to the
      "Committee"  shall mean the Benefits  Committee of the First Capital Board
      of Directors.

            (b) The  grant  date and the  expiration  date of each  assumed  HCB
      Option and all other provisions which govern either the  exercisability or
      the  termination  of the assumed HCB Option  shall  remain the same as set
      forth in the Award Agreement  applicable to that option and the provisions
      of the HCB Plan,  and shall  accordingly  govern  and  control  Optionee's
      rights under this Stock  Option  Assumption  Agreement  to purchase  First
      Capital Stock.

            (c) The adjusted  exercise price payable for the First Capital Stock
      subject to each  assumed  HCB Option  shall be payable in any of the forms
      authorized  under the HCB Plan and the Award Agreement  applicable to that
      option.

            (d) In order to exercise  each  assumed HCB  Option,  Optionee  must
      deliver to First Capital a written  notice of exercise in which the number
      of  shares  of First  Capital  Stock to be  purchased  thereunder  must be
      indicated.  The  exercise  notice  must be  accompanied  by payment of the
      adjusted  exercise price payable for the purchased shares of First Capital
      Stock and should be delivered to First Capital at the following address:

                  First Capital, Inc.
                  William W. Harrod
                  220 Federal Drive, N.W.
                  Corydon, Indiana 47112

      3.  Except  to the  extent  specifically  modified  by this  Stock  Option
Assumption Agreement, all of the terms and conditions of each Award Agreement as
in effect  immediately  prior to the  Merger  shall  continue  in full force and
effect and shall not in any way be  amended,  revised or  otherwise  affected by
this Stock Option Assumption Agreement.

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      IN WITNESS WHEREOF,  First Capital has caused this Stock Option Assumption
Agreement to be executed on its behalf by its duly authorized  officer as of the
___ day of January, 2000.

                                     FIRST CAPITAL, INC.

                                       By:
                                           -------------------------------------

                                       Title:
                                              ----------------------------------

                                 ACKNOWLEDGMENT

      The  undersigned  acknowledges  receipt  of this  foregoing  Stock  Option
Assumption  Agreement  and  understands  and  acknowledges  that all  rights and
liabilities  with  respect to each of his or her HCB Options  hereby  assumed by
First  Capital  are as set forth only in the Award  Agreement,  the HCB Plan and
this Stock Option  Assumption  Agreement and that no other agreements exist with
respect to his HCB Options.  The undersigned also  acknowledges  that, except to
the extent specifically modified by this Stock Option Assumption Agreement,  all
of the terms and  conditions  of the Award  Agreement  as in effect  immediately
prior to the  effective  time shall  continue in full force and effect and shall
not in any way be amended,  revised or  otherwise  affected by this Stock Option
Assumption  Agreement.  The undersigned further acknowledges that the HCB Option
or Options  described in Exhibit A hereto constitute all of the options or other
rights to  purchase  HCB Stock  that he or she  owned  immediately  prior to the
effective time of the Merger.

                              [Name], Optionee

DATED: __________________ , 2000

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                                    EXHIBIT A

                Optionee's Outstanding Options to Purchase Shares
                        of HCB Bancorp, Inc. Common Stock
                                  (Pre-Merger)

DATE OF OPTION GRANT       NUMBER OF OUTSTANDING OPTIONS        EXERCISE PRICE
--------------------       -----------------------------        --------------

                Optionee's Outstanding Options to Purchase Shares
                       of First Capital, Inc. Common Stock
                                  (Post-Merger)

<TABLE>
<CAPTION>

<S>                     <C>                                       <C>
DATE OF OPTION GRANT    ADJUSTED NUMBER OF OUTSTANDING OPTIONS    ADJUSTED EXERCISE PRICE
--------------------    --------------------------------------    -----------------------

</TABLE><PAGE> 1

EXHIBIT 10.2    FIRST CAPITAL, INC. 1999 STOCK-BASED INCENTIVE PLAN

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                               FIRST CAPITAL, INC.
                         1999 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) "Award" means, individually or collectively, a grant under the Plan of
Non-Statutory Stock Options, Incentive Stock Options and Stock Awards.

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

      (d) "Bank" means First Federal Bank, A Federal Savings Bank.

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

      (f) "Change in Control" of the Holding  Company or the Bank means:  (i) an
event of a nature that would be required to be reported in response to Item 1(a)
of the current report on Form 8-K, as in effect on the date hereof,  pursuant to
Section 13 or 15(d) of the  Exchange  Act;  or (ii) an event  that  results in a
change in control of the Bank or the Holding  Company  within the meaning of the
Home Owners' Loan Act of 1933, as amended,  the Federal  Deposit  Insurance Act,
and the rules and  regulations  promulgated by the Office of Thrift  Supervision
(or its predecessor agency), as in effect on the date hereof (provided,  that in
applying  the  definition  of change in control as set forth under the rules and
regulations of the OTS, the Board of Directors shall substitute its judgment for
that of the OTS); or (iii) without  limitation such a Change in Control shall be
deemed to have occurred at such time as (A) any "person" (as the term is used in
Sections  13(d) and 14(d) of the  Exchange  Act) is or becomes  the  "beneficial
owner"  (as  defined  in  Rule  13d-3  under  the  Exchange  Act),  directly  or
indirectly, of voting securities of the Bank or the Holding Company representing
20% or more of the Bank's or the Holding Company's outstanding voting securities
or the right to acquire such securities  except for any voting securities of the
Bank purchased by the Holding Company and any voting securities purchased by any
employee  benefit  plan  of the  Holding  Company  or its  Subsidiaries,  or (B)
individuals  who  constitute  the Board 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 solely
composed of members which are Incumbent Board members, 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 or is effectuated in which the Bank or Holding Company is not
the resulting entity; provided, however, that such an event listed above will be
deemed to have  occurred  or to have been  effectuated  upon the  receipt of all
required federal  regulatory  approvals not including the lapse of any statutory
waiting  periods,  or (D) a proxy  statement  has  been  distributed  soliciting
proxies from  stockholders  of the Holding  Company,  by someone  other than the
current  management of the Holding Company,  seeking  stockholder  approval of a
plan of  reorganization,  merger or consolidation of the Holding Company or Bank
with one or more corporations as a result of which the outstanding shares of the
class of securities  then subject to such plan or transaction  are exchanged for
or

<PAGE> 3

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 Holding  Company then  outstanding  by a person other
than the Bank or Holding Company.

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

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

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

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

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

      (l)  "Effective  Date" means  January 1, 2000,  but only if, prior to such
date, the Plan is approved by the Holding Company's shareholders.  The Plan will
be so approved if at an annual or special meeting of shareholders  held prior to
such date a quorum is present and the majority of the votes cast at such meeting
by the holders of the Common Stock shall be cast in favor of its approval.

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

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

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

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

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

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

<PAGE> 4

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

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

      (q) "Holding Company" means First Capital, Inc.

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

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

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

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

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

      (w) "Plan" means this First Capital, Inc. 1999 Stock-Based Incentive Plan.

      (x) "Retirement" means retirement from employment with the Holding Company
or an Affiliate in accordance with the then current  retirement  policies of the
Holding  Company or Affiliate,  as applicable.  "Retirement"  with respect to an
Outside Director means the termination of service from the board(s) of directors
of the  Holding  Company  and any  Affiliate  following  written  notice to such
board(s) of directors of the Outside Director's intention to retire.

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

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

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

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

<PAGE> 5

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

      (a) The Committee  shall  administer the Plan. The Committee shall consist
of two or more  disinterested  directors  of the Holding  Company,  who shall be
appointed by the Board of Directors. A member of the Board of Directors shall be
deemed to be  "disinterested"  only if he or she satisfies such  requirements as
the Securities and Exchange Commission may establish for non-employee  directors
administering  plans intended to qualify for exemption  under Rule 16b-3 (or its
successor) under the Exchange Act.

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

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

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

3.    TYPES OF AWARDS.
      ---------------

      The following Awards may be granted under the Plan:

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

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

      Subject to adjustment as provided in Section 13 of the Plan, the number of
shares  reserved for Awards under the Plan is 107,626.  Subject to adjustment as
provided  in Section 13 of the Plan,  the number

<PAGE> 6

of shares  reserved  hereby for  purchase  pursuant  to the  exercise of Options
granted  under the Plan is 76,876.  The number of the shares  reserved for Stock
Awards is 30,750. The shares of Common Stock issued under the Plan may be either
authorized  but  unissued  shares or  authorized  shares  previously  issued and
acquired or reacquired by the Trustee or the Holding Company,  respectively.  To
the extent that Options 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 vested or without having been
exercised, 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 an
Affiliate, as it sees fit.

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

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

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

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

      (c)  Non-Transferability.  Unless otherwise determined by the Committee in
           -------------------
accordance  with this Section  6(c), a  Participant  may not  transfer,  assign,
hypothecate,  or  dispose  of in any  manner,  other than by will or the laws of
intestate succession,  a Non-Statutory Stock Option. The Committee may, however,
in its sole discretion,  permit transferability or assignment of a Non-Statutory
Stock Option if such transfer or assignment is, in its sole  determination,  for
valid estate  planning  purposes and such  transfer or  assignment  is permitted
under the Code and Rule 16b-3  under the  Exchange  Act.  For  purposes  of this
Section 6(c), a transfer for valid estate planning purposes includes, but is not
limited  to:  (a) a transfer  to a  revocable  intervivos  trust as to which the
Participant  is  both  the  settlor  and  trustee,  or  (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. For

<PAGE> 7

purposes  of  this  Section  6(c),  "Immediate  Family"  includes,  but  is  not
necessarily limited to, a Participant's parents, grandparents, spouse, children,
grandchildren,  siblings  (including half bothers and sisters),  and individuals
who are family members by adoption. Nothing contained in this Section 6(c) shall
be  construed  to require the  Committee to give its approval to any transfer or
assignment of any Non-Statutory Stock Option or portion thereof, and approval to
transfer or assign any  Non-Statutory  Stock Option or portion  thereof does not
mean that such  approval  will be given with respect to any other  Non-Statutory
Stock Option or portion thereof. The transferee or assignee of any Non-Statutory
Stock Option shall be subject to all of the terms and  conditions  applicable to
such Non-Statutory  Stock Option immediately prior to the transfer or assignment
and shall be subject to any other  conditions  proscribed by the Committee  with
respect to such Non-Statutory Stock Option.

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

      (e) Termination of Employment or Service  (Retirement).  Unless  otherwise
          --------------------------------------------------
determined by the Committee,  in the event of a  Participant's  Retirement,  the
Participant  may  exercise  only those Non-  Statutory  Stock  Options that were
immediately  exercisable  by the  Participant at the date of Retirement and only
for a period of one (1) year from the date of  Retirement  or, if sooner,  until
the expiration of the term of the Option.

      (f)  Termination of Employment or Service  (Disability  or Death).  Unless
           ------------------------------------------------------------
otherwise  determined by the  Committee,  in the event of the  termination  of a
Participant's  employment  or other  service  due to  Disability  or death,  all
Non-Statutory  Stock Options held by such Participant shall  immediately  become
exercisable and remain  exercisable for a period one (1) year following the date
of such  termination,  or, if sooner,  until the  expiration  of the term of the
Option.

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

      (h)  Acceleration  Upon a Change in  Control.  In the event of a Change in
           ---------------------------------------
Control all Non- Statutory Stock Options held by a Participant as of the date of
the Change in Control  shall  immediately  become  exercisable  and shall remain
exercisable until the expiration of the term of the Non-Statutory Stock Options.

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

<PAGE> 8

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

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

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

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

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

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

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

<PAGE> 9

      (f) Termination of Employment (Retirement). Unless otherwise determined by
          --------------------------------------
the Committee, in the event of a Participant's  Retirement,  the Participant may
exercise only those Incentive Stock Options that were immediately exercisable by
the  Participant at the date of Retirement and only for a period of one (1) year
from the date of Retirement,  or, if sooner, until the expiration of the term of
the Option. Any Option originally  designated as an Incentive Stock Option shall
be treated as a  Non-Statutory  Stock  Option to the extent the Option  does not
otherwise  qualify as an Incentive  Stock Option  pursuant to Section 422 of the
Code.

      (g)  Termination  of Employment  (Disability or Death).  Unless  otherwise
           -------------------------------------------------
determined by the Committee,  in the event of the termination of a Participant's
employment  or other service due to  Disability  or death,  all Incentive  Stock
Options held by such Participant shall immediately become exercisable and remain
exercisable  for a period one (1) year  following the date of such  termination,
or, if sooner, until the expiration of the term of the Option.

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

      (i)  Acceleration  Upon a Change in  Control.  In the event of a Change in
           ---------------------------------------
Control all Incentive  Stock Options held by a Participant as of the date of the
Change  in  Control  shall  immediately  become  exercisable  and  shall  remain
exercisable until the expiration of the term of the Incentive Stock Options. Any
Option originally  designated as an Incentive Stock Option shall be treated as a
Non-Statutory  Stock Option to the extent the Option does not otherwise  qualify
as an Incentive Stock Option pursuant to Section 422 of the Code.

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

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

8.     STOCK AWARDS.
       ------------

      The Committee may make grants of Stock Awards,  which shall consist of the
grant of some number of shares of Common Stock, to a Participant 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 the Stock  Awards.  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 Stock Award or
portion  thereof.  Any such  terms or  conditions  shall  be  determined  by the
Committee as of the Date of Grant.

<PAGE> 10

      (c)  Termination  of Employment  or Service  (General).  Unless  otherwise
           -------------------------------------------------
determined by the Committee,  upon the termination of a Participant's employment
or service for any reason other than  Retirement,  Disability or death, a Change
in Control,  or Termination for Cause, any Stock Awards in which the Participant
has not become vested as of the date of such termination  shall be forfeited and
any rights the Participant had to such Stock Awards shall become null and void.

      (d) Termination of Employment or Service  (Retirement).  Unless  otherwise
          --------------------------------------------------
determined by the Committee,  in the event of a  Participant's  Retirement,  any
Stock Awards in which the  Participant  has not become  vested 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.

      (e)  Termination of Employment or Service  (Disability  or Death).  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 as of the date of such termination.

      (f) Termination of Employment or Service  (Termination for Cause).  Unless
          -------------------------------------------------------------
otherwise  determined  by the  Committee,  in  the  event  of the  Participant's
Termination for Cause,  all Stock Awards in which the Participant had not become
vested 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.

      (g)  Acceleration  Upon a Change in  Control.  In the event of a Change in
           ---------------------------------------
Control all unvested Stock Awards held by a Participant shall immediately vest.

      (h)  Issuance  of  Certificates.   Unless  otherwise  held  in  Trust  and
           --------------------------
registered  in the name of the Trustee,  reasonably  promptly  after the Date of
Grant with  respect to shares of Common  Stock  pursuant to a Stock  Award,  the
Holding Company shall cause to be issued a stock certificate,  registered in the
name of the  Participant to whom such Stock Award was granted,  evidencing  such
shares;  provided,  that  the  Holding  Company  shall  not  cause  such 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 First  Capital,  Inc.  1999  Stock-Based
            Incentive  Plan  and  Award  Agreement   entered  into  between  the
            registered  owner of such  shares  and First  Capital,  Inc.  or its
            Affiliates. A copy of the Plan and Award Agreement is on file in the
            office of the Corporate Secretary of First Capital,  Inc. located at
            220 Federal Drive, N.W., Corydon, Indiana 47112.

Such legend shall not be removed until the  Participant  becomes  vested in such
shares pursuant to the terms of the Plan and Award  Agreement.  Each certificate
issued pursuant to this Section 8(h), in connection with a Stock Award, shall be
held by the Holding Company or its Affiliates,  unless the Committee  determines
otherwise.

      (i)  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:

<PAGE> 11

            1.    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.

            2.    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 or her lifetime only by the  Participant to whom
                  it is granted. Upon the death of a Participant,  a Stock Award
                  is   transferable   by  will  or  the  laws  of  descent   and
                  distribution.  The  designation  of a  beneficiary  shall  not
                  constitute a transfer.

            3.    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 Agreement),  be sold or otherwise disposed of within six
                  (6) months following the date of grant of the Stock Award.

      (j) Accrual of Dividends. To the extent Stock Awards are held in Trust and
          --------------------
registered in the name of the Trustee,  unless otherwise  specified by the Trust
agreement,  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.

      (k) 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.

      (l) Payment.  Payment due to a Participant  upon the redemption of a Stock
          -------
Award shall be made in the form of shares of Common Stock.

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

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

<PAGE> 12

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

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

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

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

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

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

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

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

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

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

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

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

<PAGE> 13

of  the  Holding  Company.  Notwithstanding  the  above,  in  the  event  of  an
extraordinary capital  distribution,  any adjustment under this Section 13 shall
be subject to required approval by the Office of Thrift Supervision.

14.   TAXES.
      -----

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

      (b) If any  disqualifying  disposition  described  in Section 7(k) is made
with respect to shares of Common Stock acquired under an Incentive  Stock Option
granted  pursuant to this Plan,  or any  transfer  described  in Section 6(c) is
made,  or any election  described in Section 15 is made,  then the person making
such disqualifying disposition, transfer, or election shall remit to the Holding
Company or its  Affiliates an amount  sufficient to satisfy all federal,  state,
and local withholding  taxes thereby  incurred;  provided that, in lieu of or in
addition to the foregoing,  the Holding Company or its Affiliates shall have the
right to withhold such sums from compensation  otherwise due to the Participant,
or, except in the case of any transfer pursuant to Section 6(c), from any shares
of Common Stock due to the Participant under this Plan.

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

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

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

      (a) Except as provided in  paragraph  (c) of this Section 16, 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 such ratification or
approval. Other provisions of this Plan will remain in full force and effect. No
such termination, modification or amendment may adversely affect the rights of a
Participant  under an outstanding  Award without the written  permission of such
Participant.

<PAGE> 14

      (b) Except as provided in paragraph  (c) of this Section 16, the Committee
may  amend  any  Award  Agreement,  prospectively  or  retroactively;  PROVIDED,
HOWEVER,  that no such  amendment  shall  adversely  affect  the  rights  of any
Participant  under an  outstanding  Award  without the  written  consent of such
Participant.

      (c) In no event shall the Board of  Directors  amend the Plan or shall the
Committee amend an Award Agreement in any manner that has the effect of:

            (i)   Allowing any Option to be granted with an Exercise Price below
                  the  Fair  Market  Value  of the  Common  Stock on the Date of
                  Grant.

            (ii)  Allowing the Exercise Price of any Option  previously  granted
                  under the Plan to be reduced subsequent to the Date of Award.

      (d)   Notwithstanding  anything in this Plan or any Award Agreement 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,  at its  discretion,  may modify,  adjust,  eliminate  or
            terminate the Award or right so that pooling of interest  accounting
            is available.

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

      The Plan shall become  effective on January 1, 2000, but only if, prior to
such date, the Plan is approved by the Holding Company's shareholders.  The Plan
will be so  approved  if at an annual or special  meeting of  shareholders  held
prior to such date a quorum is  present  and the  majority  of the votes cast at
such  meeting by the  holders of the Common  Stock shall be cast in favor of its
approval.  If the Plan is not approved by  shareholders  in accordance  with the
regulations of the Internal Revenue Service, the Plan shall remain in full force
and effect,  and any  Incentive  Stock  Options  granted under the Plan shall be
deemed to be Non-Statutory Stock Options.

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

      The right to grant Awards under the Plan will  terminate  upon the earlier
of: (i) ten (10) years after the Effective  Date;  (ii) the issuance of a number
of  shares  of  Common  Stock  pursuant  to  the  exercise  of  Options  or  the
distribution  of Stock  Awards 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.

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

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

20.   TREATMENT  OF  UNVESTED,  UNEXERCISED,  OR  NON-EXERCISABLE  AWARDS UPON A
      --------------------------------------------------------------------------
      CHANGE IN CONTROL.
      ------------------

<PAGE> 15

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

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

      (b) Replace the Awards with comparable Awards, subject to the same or more
favorable  terms and  conditions as the Award granted to the  Participant  under
this Plan, whereby the Participant will be granted common stock or the option to
purchase common stock of the successor entity; or

      (c) Replace the Awards with an immediate cash payment of equivalent value.

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