CUMBERLAND MOUNTAIN BANCSHARES, INC.
1998 STOCK OPTION AND INCENTIVE PLAN
____________________________________
Agreement for
Incentive Stock Options
____________________________________
STOCK OPTION (the "Option") for a total of ___________
shares of Common Stock, par value $.01 per share, of Cumberland
Mountain Bancshares, Inc. (the "Company"), which Option is
intended to qualify as an incentive stock option under Section
422 of the Internal Revenue Code of 1986, as amended (the
"Code"), is hereby granted to _______________ (the "Optionee")
at the price set forth herein, and in all respects subject to
the terms, definitions and provisions of the 1998 Stock Option
and Incentive Plan (the "Plan") which was adopted by the Company
and which is incorporated by reference herein, receipt of which
is hereby acknowledged.
1. Exercise Price. The exercise price per share is
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$______, which equals 100% */ of the fair market value, as
determined by the Committee, of the Common Stock on the date
of grant of this Option.
2. Exercise of Option. This Option shall be
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exercisable in accordance with the Plan and the following
provisions:
(i) Schedule of rights to exercise.
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Percentage of Total Shares
Years of Continuous Employment Subject to Option Which May
After Date of Grant of Option Be Exercised
- ------------------------------- ---------------------------
Upon Grant 0%
1 year but less than 2 years 33 1/3%
2 years but less than 3 years 33 1/3%
3 years or more 33 1/3%
__________
*/ 110% in the case of an Optionee who owns shares representing
more than 10% of the outstanding common stock of the Company
on the date of grant of this Option.
ISO Agreement
Page 2
(ii) Method of Exercise. This Option shall be exercisable
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by a written notice by the Optionee which shall:
(a) state the election to exercise the Option, the
number of shares with respect to 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, his address and Social Security Number (or if
more than one, the names, addresses and Social Security
Numbers of such persons);
(b) contain such representations and agreements as to
the holder's investment intent with respect to such shares
of Common Stock as may be satisfactory to the Company's
counsel;
(c) be signed by the person or persons entitled to
exercise the Option 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
(d) be in writing and delivered in person or by
certified mail to the Treasurer of the Company.
Payment of the purchase price of any shares with respect
to which the Option is being exercised shall be by cash, Common
Stock, or such combination of cash and Common Stock as the
Optionee elects. In addition, the Optionee may elect to pay for
all or part of the exercise price of the shares by having the
Company withhold a number of shares having a fair market value
equal to the exercise price. The certificate or certificates for
shares of Common Stock as to which the Option shall be exercised
shall be registered in the name of the person or persons
exercising the Option.
(iii) Restrictions on exercise. This Option may not be
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exercised if the issuance of the shares upon such exercise would
constitute a violation of any applicable federal or state
securities or other law or valid regulation. As a condition to
the Optionee's exercise of this Option, the Company may require
the person exercising this Option to make any representation and
warranty to the Company as may be required by any applicable law
or regulation.
3. Withholding. The Optionee hereby agrees that the
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exercise of the Option or any installment thereof will not be
effective, and no shares will become transferable to the
Optionee, until the Optionee makes appropriate arrangements with
the Company for such tax withholding as may be required of the
Company under federal, state, or local law on account of such
exercise.
4. Non-transferability of Option. This Option may not
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be transferred in any manner otherwise than by will or the laws
of descent or distribution. The terms of this Option shall be
binding upon the executors, administrators, heirs, successors
and assigns of the Optionee.
ISO Agreement
Page 3
5. Term of Option. This Option may not be exercisable
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for more than ten **/ years from the date of grant of this
Option, as stated below, and may be exercised during such term
only in accordance with the Plan and the terms of this Option.
_______________________
Date of Grant CUMBERLAND MOUNTAIN BANCSHARES, INC.
1998 STOCK OPTION AND INCENTIVE PLAN
COMMITTEE
By: __________________________________
Authorized Member of the Committee
Witness: _________________________
___________
**/ Five years in the case of an Optionee who owns shares
representing more than 10% of the outstanding common
stock of the Company on the date of grant of this
Option.
CUMBERLAND MOUNTAIN BANCSHARES, INC.
1998 STOCK OPTION AND INCENTIVE PLAN
____________________________
Form for Exercise of
Incentive Stock Options
____________________________
Treasurer
Cumberland Mountain Bancshares, Inc.
1431 Cumberland Avenue
Middlesboro, Kentucky 40965
Re: 1998 Stock Option and Incentive Plan
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Dear Sir:
The undersigned elects to exercise the Incentive Stock
Option to purchase ________ shares, par value $.01, of Common
Stock of Cumberland Mountain Bancshares, Inc. under and
pursuant to a Stock Option Agreement dated ____________, 199_.
Delivered herewith is a certified or bank cashier's or
teller's check and/or shares of Common Stock, valued at the fair
market value of the stock on the date of exercise, as set forth
below.
$______ of cash or check
$______ in the form of _______ shares of Common
Stock, valued at $____ per share
$______ in the form of the Company's withholding
of _______ shares of Common Stock,
valued at $ ____ per share, that are
subject to this Option
$ TOTAL
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The name or names to be on the stock certificate or
certificates and the address and Social Security Number of such
person(s) is as follows:
Name ________________________________________________________
Address _____________________________________________________
Social Security Number ______________________________________
_____________________
Date
Very truly yours,
__________________________