KENTUCKY INVESTORS, INC.
1999 STOCK OPTION AND STOCK APPRECIATION RIGHTS PLAN
STOCK OPTION AGREEMENT
This Stock Option Agreement (the "Option Agreement") is made
and effective as of September 24, 1999 by and between Kentucky
Investors, Inc., a Kentucky corporation (the "Company"), and
Howard L. Graham (the "Optionee").
- A G R E E M E N T -
1. Grant of Option. In exchange for good and valuable
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consideration, the Company hereby grants to the Optionee a
nonqualified stock option (the "Option") to purchase from the
Company 8,100 shares of its common stock, par value $1.00 per
share (the "Stock"), at an exercise price equal to $23.00 per
share (the "Exercise Price"). This Option is granted as of
September 24, 1999 (the "Option Grant Date").
2. Governing Plan. This Option is granted pursuant to the
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Kentucky Investors, Inc. 1999 Stock Option and Stock Appreciation
Rights Plan (the "Plan") which was adopted by the Company's Board
of Directors on September 24, 1999, and is subject to all the
terms and conditions set forth in the Plan and this Option
Agreement. All capitalized terms not otherwise defined herein
shall have the same meaning as defined in the Plan. The terms
and conditions of the Plan, a copy of which is attached hereto,
are incorporated in this Option Agreement by reference. In the
event of a conflict between the terms and conditions of the Plan
and the terms and conditions of this Option Agreement, the terms
and conditions of the Plan shall prevail.
3. Right to Exercise. This Option shall first become
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exercisable on September 24, 2001 (the "Vesting Date"), and
thereafter shall remain vested and exercisable, subject to the
terms and conditions of the Plan and this Option Agreement. This
Option may be exercised, in whole or in part, at any time or from
time to time on and after the Vesting Date until the expiration
date set forth in Section 4 below, at which time the entire
unexercised portion of this Option shall expire. In the event of
termination of the Optionee's status as an employee or director
of the Company, or its subsidiaries, this Option shall be
exercisable in accordance with the applicable provisions of the
Plan and this Option Agreement. This Option shall become fully
vested and immediately exercisable upon a Change in Control.
4. Expiration of Option.
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(a) This Option shall expire when exercised in full.
This Option (to the extent not previously exercised in full) also
shall expire immediately and automatically on the earlier of:
(i) the date the Optionee's status as an employee
or director of the Company terminates for any reason whatsoever
other than death, retirement, disability or dismissal by the
Company other than for cause; or
(ii) the date which is the tenth anniversary of
the Option Grant Date.
(b) In the event the Optionee's status as an employee
or director of the Company terminates as a result of his or her
retirement, disability, death or dismissal by the Company other
than for cause, this Option shall remain exercisable during its
term by the Optionee or his or her legal representatives, heirs,
executor or administrator, subject to and in accordance with the
Plan and this Option Agreement.
5. Method of Exercise.
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(a) The Optionee may (subject to Sections 3 and 4 of
this Option Agreement) exercise this Option in whole or in part
(before the date this Option expires) on any normal business day
of the Company by (a) delivering written notice (in the form of
Exhibit A attached hereto) of the exercise of such Option
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("Notice to Exercise"), specifying the number of shares of Stock
to be purchased (in not less than 500 share denominations) and
signed by the Optionee, to the principal executive office of the
Company and (b) simultaneously paying to the Company the Exercise
Price. The payment of such Exercise Price shall be made either
in cash or by check acceptable to the Committee, or in any
combination of cash and check which results in payment in full of
the Exercise Price. This Option shall be deemed to be exercised
upon receipt by the Company of the written notice of exercise
accompanied by payment of the Exercise Price. If the Notice to
Exercise is less than the total number of shares subject to the
Option, and the time for exercise has not expired, the Company
will provide Optionee with a revised Option Agreement for the
balance of the Shares then remaining unexercised, upon the same
terms and conditions as stated herein.
(b) In order to be considered timely exercised, the
written notice of exercise must be actually received in the
office of the Secretary of the Company before the end of normal
working hours on the last day of the period during which this
Option may be exercised. However, if the last day of the period
during which this Option would be exercisable falls on a
Saturday, Sunday or holiday, the Notice to Exercise must be
actually received in the office of the Secretary of the Company
by the end of normal working hours on the last business day on
which the Company's offices are open for normal business which
immediately precedes the last date on which this Option may be
exercised.
6. Adjustment; Effect of Certain Transactions.
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(a) The number of shares of Stock underlying this
Option shall be proportionately adjusted in the event of any
change in the outstanding shares of the Company through a merger,
consolidation, reorganization, recapitalization, stock dividend,
stock split, spin-off, combination or exchange of shares, or
other like change in the capital structure of the Company.
(b) In the event of a Change in Control (as defined in
the Plan), this Option shall terminate within 10 days after
notice to the Optionee and the Optionee shall receive, with
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respect to each share of Stock underlying this Option, an amount
of cash equal to the excess of the fair market value of such
share of Stock immediately prior to the occurrence of the Change
in Control transaction over the Exercise Price.
7. Nontransferable. No rights granted under this Option
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shall be transferable by the Optionee and such rights shall be
exercisable during the Optionee's lifetime only by the Optionee.
To the extent this Option Agreement provides for the exercise of
this Option after the death of the Optionee, the personal
representative of the Optionee's estate thereafter shall be
treated as the Optionee under this Option Agreement.
8. Employment and Termination. Neither the Plan, this
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Option Agreement nor any transaction contemplated hereunder shall
give the Optionee the right to continue in employment by the
Company or shall adversely affect the right of the Company to
terminate the Optionee's employment with or without cause at any
time.
9. Stockholder Status. The Optionee shall have no rights
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as a stockholder with respect to any shares of Stock under this
Option Agreement until certificates for such shares have been
duly issued and delivered to the Optionee. Except as otherwise
provided in Sections 10 or 11 hereof, the Company shall issue and
deliver such certificate(s) promptly following the exercise of
this Option as described in Section 5 hereof.
10. Other Laws. The Company shall have the right to refuse
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to issue or transfer any Stock under this Option Agreement if the
Company acting in its absolute discretion determines that the
issuance or transfer of such Stock might violate any applicable
law or regulation, and any payment tendered in such event to
exercise this Option shall be promptly refunded to the Optionee.
11. Securities Registration. In the event the shares of
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Stock issuable upon exercise of this Option have not been
registered under the Securities Act of 1933, as amended, at the
time this Option is exercised, the Optionee shall, if so
requested by the Company, concurrently with the exercise of this
Option (either in whole or in part) and as a condition to the
Company's obligation to issue and deliver a stock certificate for
such shares, deliver to the Company a written statement to the
effect that the Optionee is acquiring the Stock for his or her
own account for investment purposes only and not with a view to
resale or distribution thereof.
12. Tax Withholding. The Optionee shall have the right to
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satisfy any income tax or other applicable withholding
requirements arising out of the exercise of this Option by
electing to have the Company withhold Stock that otherwise would
be transferred to the Optionee as a result of the exercise of
this Option. To the extent the Optionee does not satisfy such
income tax or other applicable withholding requirements by
withholding Stock, the Company shall have the right upon the
exercise of this Option to take such action as the Company deems
necessary or appropriate to satisfy any income tax or other
applicable withholding requirements.
13. Entire Agreement; Governing Law. The Plan and this
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Option Agreement constitute the entire agreement of the parties
with respect to the subject matter hereof and supersede in their
entirety all prior undertakings and agreements of the Company and
the
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Optionee with respect to the subject matter hereof. The Plan and
this Option Agreement shall be governed by the laws of the
Commonwealth of Kentucky.
14. Modification or Amendment. This Option Agreement may
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not be modified or amended adversely to the Optionee's interest
except by means of a writing signed by the Optionee and the
Company.
15. Binding Effect. This Option Agreement shall be binding
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upon the Company and the Optionee and their respective heirs,
executors, administrators and successors.
Attest KENTUCKY INVESTORS, INC.
(the "Company")
By: /s/ Wilma Yeary By: /s/ Harry Lee Waterfield II
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Harry Lee Waterfield II,
President
The Optionee acknowledges receipt of a copy of the Plan and
represents that he or she is familiar with the terms and
provisions thereof, and hereby accepts this Option subject to all
of the terms and provisions thereof. The Optionee hereby agrees
to accept as binding, conclusive and final all decisions or
interpretations of the Committee upon any questions arising under
the Plan or this Option Agreement.
Dated: September 24, 1999 /s/ Howard L. Graham
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Howard L. Graham ("Optionee")
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SCHEDULE I TO OPTION AGREEMENT
NOTICE OF ELECTION TO EXERCISE
TO: Kentucky Investors, Inc.
200 Capital Avenue
Frankfort, Kentucky 40601
The undersigned Purchaser hereby elects to purchase
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shares (the "Shares") of the common stock ($1.00 par value) of
Kentucky Investors, Inc. (the "Corporation") pursuant to the
terms of the Stock Option Agreement (the "Options"), dated as of
, , by and between the undersigned and the
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Corporation, (which Options must be surrendered with this Notice
of Election To Exercise).
Payment in full (U.S. Funds) is hereby tendered in the aggregate
sum of $ , which sum represents shares times the per
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share purchase price of $ by:
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( ) Check to the Corporation's depository bank in accordance
with your prior written instructions.
( ) By Delivery of Cash to the Corporation's address listed
above.
You are hereby requested to issue a certificate representing the
shares in the name(s), and to the address(es) as specified below:
Name:
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Street: Number of Shares:
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City: State: Zip:
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Social Security or Tax I.D. Number:
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Purchaser acknowledges that no formal memorandum, prospectus or
offering document of any kind has been delivered by the
Corporation with specific regard to the exercise of these
Options. However, by virtue of the Purchaser's employment
relationship with, and activities on behalf of the Corporation,
sufficient business and other information has been made available
by the Corporation to enable Purchaser to fully evaluate the
investment potential of the Shares being acquired. The
Corporation's representatives have provided information and
answered all material questions.
Date:
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(Signature)
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(Printed or Typed Name)
If no registration statement as to the Options and the Shares is
effective as of the date of exercise, include the following
paragraph:
The purchaser represents and warrants that it is purchasing
the Shares for investment and not with a view to distribution
thereof and understands and acknowledges that the Stock
Certificate(s) representing the Shares shall bear the following
legend:
The shares represented by this
certificate have not been registered or
qualified for sale under the Securities Act
of 1933, as amended (the "Act"), or any state
securities or blue sky laws, and may not be
sold, transferred or otherwise disposed of
except pursuant to an exemption from
registration or qualification thereunder.
The Corporation may require, as a condition
to transfer of this certificate, an opinion
of counsel satisfactory to the Corporation to
the effect that such transfer will not be in
violation of the Act or any such laws.