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EXHIBIT 10.3: FORM OF INCENTIVE STOCK OPTION AWARD AGREEMENT
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FORM OF
INCENTIVE STOCK OPTION AWARD AGREEMENT
FOR THE KENTUCKY FIRST FEDERAL BANCORP 2005 EQUITY INCENTIVE PLAN
This Award Agreement is provided to ________________ (the "Participant") by
Kentucky First Federal Bancorp (the "Company") as of _________, the date the [
______ COMMITTEE] (the "Committee") granted the Participant the right and option
to purchase Shares pursuant to the Kentucky First Federal Bancorp 2005 Equity
Incentive Plan (the "2005 Plan"), subject to the terms and conditions of the
2005 Plan and this Award Agreement:
1. OPTION GRANT: You have been granted an INCENTIVE STOCK OPTION
(referred to in this Agreement as your "Option").
2. NUMBER OF SHARES
SUBJECT TO YOUR OPTION: ___________ shares of Common Stock ("Shares"),
subject to adjustment as may be necessary pursuant to
Article 11 of the 2005 Plan.
3. GRANT DATE: ___________
4. EXERCISE PRICE: You may purchase Shares covered by your Option at a
price of $_______ per share.
Unless sooner vested in accordance with Section 2 of the Terms and
Conditions (attached hereto) or otherwise in the discretion of the Committee,
the Options shall vest (become exercisable) in accordance with the following
schedule:
Continuous Status Percentage of
as a Participant Option Vested/ Number of Shares
after Grant Date Number of Shares Available for Exercise Vesting Date
---------------- ---------------- ---------------------- ------------
Less than 1 year _____ _____ ______
1 year _____ _____ ______
2 years _____ _____ ______
3 years _____ _____ ______
4 years _____ _____ ______
5 years _____ _____ ______
IN WITNESS WHEREOF, Kentucky First Federal Bancorp, acting by and
through the [ _____ COMMITTEE] of the Board of Directors of the Company, has
caused this Award Agreement to be executed as of the Grant Date, set forth
above.
KENTUCKY FIRST FEDERAL BANCORP
ACCEPTED BY PARTICIPANT: By:
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On behalf of the [ _____] Committee
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[Name]
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Date
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TERMS AND CONDITIONS
1. GRANT OF OPTION. The Grant Date, Exercise Price and number of Shares
subject to your Option are stated on page 1 of this Award Agreement.
Capitalized terms used herein and not otherwise defined shall have the
meanings assigned to such terms in the 2005 Plan. The Company intends
this grant to qualify as an Incentive Stock Option under Section 422 of
the Internal Revenue Code of 1986, as amended.
2. VESTING OF OPTIONS. The Option shall vest (become exercisable) in
accordance with the vesting schedule shown on page 1 of this Award
Agreement. Notwithstanding the vesting schedule on page 1, the Option
will also vest and become exercisable:
(a) Upon your death or Disability during your Continuous Status as a
Participant; or
(b) Upon a Change in Control.
3. TERM OF OPTIONS AND LIMITATIONS ON RIGHT TO EXERCISE. The term of the
Option will be for a period of ten (10) years, expiring at 5:00 p.m.,
Eastern Time, on the tenth anniversary of the Grant Date (the
"Expiration Date"). To the extent not previously exercised, the vested
portion of your Option will lapse prior to the Expiration Date upon the
earliest to occur of the following circumstances:
(a) Three (3) months after the termination of your Continuous
Status as a Participant for any reason other than by reason of
your death or Disability.
(b) Twelve (12) months after termination of your Continuous Status
as a Participant by reason of Disability.
(c) Twelve (12) months after the date of your death, if you die
while employed, or during the three-month period described in
subsection (a) above or during the twelve-month period
described in subsection (b) above and before the Option would
otherwise lapse. Upon your death, your beneficiary (designated
pursuant to the terms of the 2005 Plan) may exercise your
Option.
(d) At the end of the remaining original term of the Option, if
your employment is involuntarily or constructively terminated
within twelve (12) months of a Change in Control. Options
exercised after three (3) months from your termination date
will be treated as Non-Statutory Stock Options for tax
purposes.
The Committee may, prior to the lapse of your Option under the
circumstances described in paragraphs (a), (b), (c) or (d) above,
extend the time to exercise your Option as determined by the Committee
in writing and subject to federal regulations. If you return to
employment with the Company during the designated post-termination
exercise period, then you will be restored to the status as a
Participant that you held prior to termination, but no vesting credit
will be earned for any period you were not in Continuous Status as a
Participant. If you or your beneficiary exercises an Option after your
termination of
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service, the Option may be exercised only with respect to the Shares
that were otherwise vested on the date of your termination of service.
4. EXERCISE OF OPTION. You may exercise your Option by providing:
(a) a written notice of intent to exercise to [NAME] at the address
and in the form specified by the [ _______ COMMITTEE] of the
Board of Directors of the Company from time to time; and
(b) payment to the Company in full for the Shares subject to such
exercise (unless the exercise is a cash-less exercise. Payment
for such Shares can be made in cash, Company common stock
("stock swap"), a combination of cash and Company common stock
or a "cash-less exercise" (if permitted by the Committee).
5. BENEFICIARY DESIGNATION. You may, in the manner determined by
the Committee, designate a beneficiary to exercise your rights
hereunder and to receive any distribution with respect to this
Option upon your death. A beneficiary, legal guardian, legal
representative, or other person claiming any rights hereunder is
subject to all terms and conditions of this Award Agreement and
the 2005 Plan, and to any additional restrictions deemed
necessary or appropriate by the Committee. If you have not
designated a beneficiary or none survives you, the Option may be
exercised by the legal representative of your estate, and
payment will be made to your estate. Subject to the foregoing,
you may change or revoke a beneficiary designation at any time,
provided the change or revocation is filed with the Company.
6. WITHHOLDING.
(A) EXERCISE OF INCENTIVE
STOCK OPTION:
Under this Award Agreement, there
are no regular federal or state
income or employment tax liabilities
upon the exercise of an Incentive
Stock Option (SEE INCENTIVE STOCK
OPTION HOLDING PERIOD), although the
excess, if any, of the Fair Market
Value of the shares of Common Stock
on the date of exercise over the
Exercise Price will be treated as
income for alternative minimum tax
("AMT") purposes and may subject you
to AMT in the year of exercise.
Please check with your tax advisor.
(B) DISQUALIFYING DISPOSITION:
In the event of a disqualifying
disposition (described below), you
may be required to pay Kentucky
First Federal Bancorp or its
Affiliates (based on the federal and
state regulations in place at the
time of exercise) an amount
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sufficient to satisfy all federal,
state and local tax withholding.
(C) INCENTIVE STOCK OPTION
HOLDING PERIOD:
In order to receive Incentive Stock
Option tax treatment under Section
422 of the Code, you may not dispose
of Shares acquired under an
Incentive Stock Option Award (i) for
two (2) years from the Date of Grant
and (ii) for one (1) year after the
date you exercise your Incentive
Stock Option. YOU MUST NOTIFY THE
COMPANY WITHIN TEN (10) DAYS OF AN
EARLY DISPOSITION OF COMMON STOCK
(I.E., A "DISQUALIFYING
DISPOSITION").
7. LIMITATION OF RIGHTS. This Option does not confer on you or your
beneficiary designated pursuant to Paragraph 5 any rights of a
shareholder of the Company unless and until Shares are in fact issued
in connection with the exercise of the Option. Nothing in this Award
Agreement shall interfere with or limit in any way the right of the
Company or any Affiliate to terminate your service at any time, nor
confer upon you any right to continue in the service of the Company or
any Affiliate.
8. STOCK RESERVE. The Company shall, at all times during the term of this
Award Agreement, reserve and keep available a sufficient number of
Shares to satisfy the requirements of this Award Agreement.
9. RESTRICTIONS ON TRANSFER AND PLEDGE. You may not pledge, encumber, or
hypothecate your right or interest in this Option to or in favor of any
party other than the Company or an Affiliate, and the Option shall not
be subject to any lien, obligation, or liability of the Participant to
any other party other than the Company or an Affiliate. You may not
assign or transfer the Option other than by will or the laws of descent
and distribution or pursuant to a domestic relations order that would
satisfy Section 414(p)(1)(A) of the Code, if such Section applied to an
Option under the 2005 Plan; provided, however, that the Committee may
(but need not) permit other transfers. Only you or a permitted
transferee may exercise the Option during your lifetime.
10. PLAN CONTROLS. The terms contained in the 2005 Plan are incorporated
into and made a part of this Award Agreement and this Award Agreement
shall be governed by and construed in accordance with the 2005 Plan. In
the event of any actual or alleged conflict between the provisions of
the 2005 Plan and the provisions of this Award Agreement, the
provisions of the 2005 Plan shall be controlling and determinative.
11. SUCCESSORS. This Award Agreement shall be binding upon any successor of
the Company, in accordance with the terms of this Award Agreement and
the 2005 Plan.
12. SEVERABILITY. If any one or more of the provisions contained in this
Award Agreement is invalid, illegal or unenforceable, the other
provisions of this Award Agreement will be
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construed and enforced as if the invalid, illegal or unenforceable
provision had never been included.
13. NOTICE. Notices and communications under this Award Agreement must be
in writing and either personally delivered or sent by registered or
certified United States mail, return receipt requested, postage
prepaid. Notices to the Company must be addressed to:
Kentucky First Federal Bancorp
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Attn: [ ____ COMMITTEE]
or any other address designated by the Company in a written notice to
the Participant. Notices to you will be directed to your address, then
currently on file with the Company, or at any other address that you
provide in a written notice to the Company.