Exhibit 10.1
Kentucky Bancshares, Inc.
Notice of Nonqualified Stock Option Award
Name of Optionee: _______________________________
No. of Shares Covered: _______________________________
Grant Date: _______________________________
Exercise Price Per Share: _______________________________
Expiration Date: _______________________________
Restriction Period. The Shares shall vest as set forth below:
[can be modified at Committee's discretion]
Aggregate Percentage of the
Shares Vested as of Such
Date Date
The Grant Date 100%
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This is a Notice of Incentive Stock Option Award (the "Notice") from
Kentucky Bancshares, Inc., a Kentucky corporation (the "Company"), to the
optionee identified above (the "Optionee") effective as of the Grant Date
specified above.
Background
A. The Company maintains the Kentucky Bancshares, Inc. 2009 Stock
Award Plan (the "Plan").
B. Under the Plan, the Board of Directors of the Company or the
Compensation Committee of the Board (collectively, the "Plan Administrator")
administers the Plan and has the authority to determine the awards to be
granted under the Plan.
C. The Plan Administrator has determined that the Optionee is
eligible to receive an award under the Plan in the form of a nonqualified
stock option.
D. The Company hereby grants such an option to the Optionee under
the terms and conditions that follow.
Terms and Conditions
1. Grant of Option. The Company hereby grants to the Optionee the option
to purchase the number of shares of Common Stock of the Company specified in
the table at the beginning of this Notice on the terms and conditions set
forth in this Notice and as otherwise provided in the Plan (the "Option").
The shares of Common Stock purchasable upon exercise of the Option are
sometimes referred to as the "Option Stock." The Options granted hereunder
are intended to constitute nonqualified stock options and are not intended to
constitute incentive stock options within the meaning of Section 422 of the
Code.
2. Exercise Price. During the term of this Option, the purchase price for
each share of Option Stock granted herein will be the Exercise Price
specified in the table at the beginning of this Notice.
3. Exercise Schedule. The Option will vest and become exercisable as to
the number of shares of Option Stock on the dates specified in the table at
the beginning of this Notice. The Exercise Schedule is cumulative, meaning
that to the extent the Option has not already been exercised and has not
expired, terminated or been cancelled, the Optionee (or the person entitled
to exercise the Option as provided herein) may at any time, and from time to
time, purchase all or any portion of the shares of Option Stock then
purchasable under the Exercise Schedule. The Option may also be exercised in
full (notwithstanding the Exercise Schedule) under the circumstances
described in Section 8 of this Notice if the Option has not expired prior
thereto.
4. Expiration. The Option will expire at 5:00 p.m. Eastern Standard
Time/Eastern Daylight Savings Time on the earliest of:
(a) The Expiration Date specified in the table at the beginning of
this Notice;
(b) The expiration of the period after the cessation of the Optionee
as an Eligible Individual within which the Option can be exercised (as
specified in Section 7 of this Notice);
(c) The date (if any) the Option is cancelled pursuant to Paragraph
8(a) of this Notice.
No one may exercise the Option, in whole or in part, after it has expired,
notwithstanding any other provision of this Agreement.
5. Personal Exercise by Optionee. This Option shall, during the lifetime
of the Optionee, be exercisable only by said Optionee (or his or her personal
representative), and shall not be transferable by the Optionee, in whole or
in part, other than by will or by the laws of descent and distribution or
pursuant to a domestic relations order, as defined in the Code.
6. Manner of Exercise of Option.
(a) The Option may be exercised, in whole or in part, by delivering
written notice to the Company, in a form prescribed by the Plan
Administrator, to the Company's Secretary at the principal executive office
of the Company, or to the Company's designated agent for receipt of such
notice. The notice shall state the number of shares of Option Stock to be
purchased, and shall be signed by the person exercising the Option. If the
person exercising the Option is not the Optionee, he/she also must submit
appropriate proof of his/her right to exercise the Option.
(b) Tender of Payment. Upon giving notice of any exercise hereunder,
the Optionee shall provide for payment of the purchase price of the shares of
Option Stock being purchased through one or a combination of the following
methods:
(i) Cash or cash equivalent (including check, bank draft or
money order);
(ii) By delivery to the Company of unencumbered Common Stock
having an aggregate fair market value (valued in accordance with procedures
established by the Plan Administrator) on the date of the exercise equal to
the purchase price of the shares of Option Stock and which have been held by
the Optionee for at least six (6) months;
(iii) By authorizing the Company to retain, from the total number
of shares of Option Stock as to which the Option is exercised, that number of
shares having a fair market value (valued in accordance with procedures
established by the Plan Administrator) on the date of exercise equal to the
purchase price for the total number of shares of Option Stock as to which the
Option is exercised; or
(iv) A combination of the above.
Notwithstanding the foregoing, the Optionee shall not be permitted to pay any
portion of the purchase price with shares of Common Stock, or by authorizing
the Company to retain shares of Option Stock upon exercise of the Option, if
the Plan Administrator, in its sole discretion, determines that payment in
such manner is undesirable.
7. Cessation as Eligible Individual.
(a) Except as set forth in this Section 7, the Option provided for in
this Notice shall immediately terminate on the date that the Optionee ceases
for any reason to be an Eligible Individual. In the event of a sale by the
Company of its equity interest in a Subsidiary, following which such entity
is no longer a Subsidiary of the Company, persons who continue to be employed
by such entity following such sale shall cease to be Eligible Individuals for
purposes of the Plan and this Notice.
(b) If the Optionee ceases to be an Eligible Individual for any
reason other than death, Disability (as defined in Paragraph 9(c)),
Retirement (as defined in Paragraph 9(e)), or termination for Cause (as
defined in Paragraph 9(a)), any Option granted hereunder that is then
exercisable shall remain exercisable in accordance with the terms of this
Notice within three (3) months after the date of such cessation, but in no
event shall any such Option be exercisable after the Expiration Date.
(c) If the Optionee ceases to be an Eligible Individual by reason of
Optionee's Disability or Retirement, any Option granted hereunder that is
exercisable on the date of such cessation, as well as any Option granted
hereunder that would have become exercisable within one (1) year after the
date of such cessation had the Optionee continued to be an Eligible
Individual, shall remain exercisable in accordance with the terms of this
Notice within three (3) years after the date of such cessation, but in no
even shall any such Option be exercisable after the Expiration Date.
(d) (i) If the Optionee ceases to be an Eligible Individual as a
result of the Optionee's death, any Option granted hereunder that is
exercisable on the date of such death, as well as any Option granted
hereunder that would have become exercisable within one (1) year after the
date of such death had the Optionee continued to be an Eligible Individual,
shall remain exercisable by the Optionee's designated beneficiary in
accordance with the terms of this Notice until the third (3rd) anniversary of
the date of such death, but in no event shall any such Option be exercisable
after the Expiration Date.
(ii) If the Optionee dies after having ceased to be an Eligible
Individual and any Option granted hereunder is then exercisable in accordance
with the provisions of this Section 5, such Option will remain exercisable by
the Optionee's designated beneficiary in accordance with the terms of this
Notice until the third (3rd) anniversary of the date the Optionee ceased to be
an Eligible Individual, but in no event shall any such Option be exercisable
after the Expiration Date.
8. Change in Control. If a Change in Control (as defined in Paragraph
9(b)) occurs while this Option remains outstanding, then one of the following
shall occur:
(a) If, pending the Change in Control, the Plan Administrator
determines that this Option will not continue following the Change in Control
or that the successor entity (or its parent) will not assume or replace this
Option with a comparable equity-based award covering shares of the successor
entity (or its parent) that would equitably preserve the compensation element
of the Award at the time of the Change in Control, then one of the following
shall occur:
(i) The Plan Administrator may elect, in its sole discretion,
to cancel this Option and to pay the Optionee an amount in cash equal to the
difference between the fair market value (valued in accordance with
procedures established by the Plan Administrator) immediately prior to the
Change in Control of the shares of Option Stock still subject to the Option,
and the aggregate exercise price of those shares; or
(ii) If the Plan Administrator does not make the election
described above, the Option shall become fully exercisable ten (10) days
prior to the scheduled occurrence of the Change in Control and shall remain
exercisable for a period of ten (10) days. Any exercise of this Option
during such ten (10) day period shall be conditioned upon the occurrence of
the Change in Control and shall be effective immediately prior to the Change
in Control. Upon the occurrence of the Change in Control, this Option shall
expire. The Plan Administrator shall provide advance notice of this
temporary period of exercisability to the Optionee. If the Change in Control
does not occur, the Option shall continue according to its original terms.
(b) If, in connection with the Change in Control, Paragraph 8(a) is
not applicable and this Option is continued, assumed or replaced in the
manner described in Paragraph 8(a), and if within one (1) year after that
Change in Control the Optionee's employment with the Company and all of its
Subsidiaries (or with any successor entity) is terminated by the employer for
reasons other than Cause, or is terminated by the Optionee for Good Reason
(as defined in Paragraph 9(d), then this Option will immediately vest and
become exercisable in full and remain exercisable for one (1) year after such
termination of employment.
9. Definitions. The following terms used in this Notice will have the
meanings indicated:
(a) "Cause" means what the term is expressly defined to mean in a
then-effective employment agreement between the Optionee and the Company, or
in the absence of any such then-effective agreement or definition, means:
(i) Optionee's commission of any act constituting a felony or
Optionee's conviction or guilty or no contest plea to any criminal
misdemeanor involving fraud, misrepresentation or theft;
(ii) gross misconduct or any act of fraud, disloyalty or
dishonesty by Optionee related to or connected with Optionee's employment by
the Company or otherwise likely to cause material harm to the Company or its
reputation;
(iii) a material violation by Optionee of the Company's policies
or codes of conduct; or
(iv) the willful or material breach by Optionee of any agreement
between the Optionee and the Company.
(b) "Change in Control" means what the term (or a word of like
import) is expressly defined to mean in a then-effective employment agreement
between the Optionee and the Company, or in the absence of any such then-
effective agreement or definition, means a change in the ownership or control
of the Company effected through any of the following transactions:
(i) a merger, consolidation or reorganization approved by the
Company's shareholders, unless securities representing more than fifty
percent (50%) of the total combined voting power of the outstanding voting
securities of the successor corporation are immediately thereafter
beneficially owned, directly or indirectly and in substantially the same
proportion, by the persons who beneficially owned the Company's outstanding
voting securities immediately prior to such transaction;
(ii) any shareholder approved sale, transfer or other
disposition of all or substantially all of the Company's assets in complete
liquidation or dissolution of the Company;
(iii) any transaction or series of related transactions pursuant
to which any person or any group of persons comprising a "group" within the
meaning of Rule 13d-5(b)(1) under the Securities Exchange Act of 1934, as
amended (the "Exchange Act") (other than the Company or a person that, prior
to such transaction or series of related transactions, directly or indirectly
controls, is controlled by or is under common control with, the Company)
becomes directly or indirectly the beneficial owner (within the meaning of
Rule 13d-3 of the Exchange Act) of securities possessing (or convertible into
or exercisable for securities possessing) thirty percent (30%) or more of the
total combined voting power of the Company's securities (determined by the
power to vote with respect to the election of Board members) outstanding
immediately after the consummation of such transaction or series of related
transaction, whether such transaction involves a direct issuance from the
Company or the acquisition of outstanding securities held by one or more of
the Company's shareholders; or
(iv) a change in the composition of the Board over a period of
eighteen (18) consecutive months or less such that a majority of the Board
members ceases to be comprised of individuals who have been Board members
continuously since the beginning of such period.
(c) "Disability" shall mean long-term disability, as defined in the
Company's long-term disability plan, or in the absence of such long-term
disability plan, as defined by Section 22(e)(3) of the Code.
(d) "Good Reason" means what the term is expressly defined to mean in
a then-effective employment agreement between the Optionee and the Company,
or in the absence of any such then-effective agreement or definition, means
any of the following conditions arising without the consent of Optionee,
provided that the Optionee has first given written notice to the Company of
the existence of the condition within ninety (90) days of its first
occurrence, and the Company has failed to remedy the condition within thirty
(30) days thereafter:
(i) a material diminution in the Optionee's base salary;
(ii) a material diminution in the Optionee's authority, duties,
or responsibilities;
(iii) relocation of Optionee's principal office more than fifty
(50) miles from its current location; or
(iv) any other action or inaction that constitutes a material
breach by the Company of any terms or conditions of any agreement between the
Company and the Optionee, which breach has not been caused by Optionee.
(e) "Retirement" shall mean early, normal or deferred retirement of
the Optionee under a tax qualified retirement plan of the Company or any
other cessation of the provision of services to the Company or a Subsidiary
by the Optionee that is deemed by the Plan Administrator to constitute a
retirement.
KENTUCKY BANCSHARES, INC.
By: ________________________________
Its: ________________________________
Any capitalized term used in this Notice shall have the meaning set forth in
this Notice (including in the table at the beginning of this Notice) or, if
not defined in this Notice, the meaning set forth in the Plan as it currently
exists or as it is amended in the future.
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