Form of non-employee Director Stock Option Grant Agreement (Used for 2010 and 2020 Stock Option and Incentive Plan Awards)
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EX-10.3 2 exhibit103formofnon-employ.htm EX-10.3 Document
EXHIBIT 10.3
HILLS BANCORPORATION
2020 STOCK OPTION AND INCENTIVE PLAN
GRANT OF STOCK OPTION
[Nonemployee Director Option Award]
Date of Grant: _________, 20__
THIS GRANT, dated as of the date of grant first stated above (the “Date of Grant”), is delivered by Hills Bancorporation, an Iowa corporation (“Hills”) to _______________ (the “Grantee”), who is a non-employee director of Hills or one of its subsidiaries.
WHEREAS, on______________, 20__, the stockholders of Hills approved the Hills Bancorporation 2020 Stock Option and Incentive Plan (the “Plan”), as previously adopted by the Board of Directors of Hills (the “Board”);
WHEREAS, the Plan provides for the granting of incentive stock options and non-incentive stock options by a committee to be appointed by the Board (the “Committee”) to directors, officers and employees of Hills or any subsidiary of Hills to purchase shares of the common stock of Hills (the “Stock”), in accordance with the terms and provisions thereof; and
WHEREAS, the Committee considers the Grantee to be a person who is eligible for a grant of non-incentive stock options under the Plan, and has determined that it would be in the best interest of Hills to grant the options documented herein.
NOW, THEREFORE, the parties hereto, intending to be legally bound hereby, agree as follows (capitalized terms, unless otherwise defined, have the meaning set forth in the Plan):
1.Grant of Option.
Subject to the terms and conditions hereinafter set forth, Hills, with the approval and at the direction of the Committee, hereby grants to the Grantee, as of the Date of Grant, an option to purchase up to _________shares of Stock at a price of $____per share. The fair market value of each share of Stock on the Date of Grant is $____per share. Such option is hereinafter referred to as the “Option” and the shares of Stock purchasable upon exercise of the Option are hereinafter sometimes referred to as the “Option Shares.” The Option is not intended by the parties hereto to be an incentive stock option (as such term is defined under section 422 of the Internal Revenue Code of 1986).
1.Vesting; Right to Exercise Option.
The Option shall become exercisable in full on____________, 20___, the fifth anniversary of the Date of Grant, the Grantee having the right hereunder to purchase from Hills the Option Shares upon exercise of the Option.
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1.Exercise of Options.
(a)The Grantee may exercise the Option with respect to all or any part of the number of Option Shares then exercisable hereunder by giving the Treasurer of Hills written notice of intent to exercise. The notice of exercise shall specify the number of Option Shares as to which the Option is to be exercised and the date of exercise thereof, which date shall be at least five days after the giving of such notice unless an earlier time shall have been mutually agreed upon. The Option expires at the end of business on_______, _____.
a.Full payment by the Grantee of the option price for the Option Shares purchased shall be made on or before the exercise date specified in the notice of exercise in cash, or, with the prior written consent of the Committee, in whole or in part through the surrender of previously acquired shares of Stock at their fair market value on the exercise date.
On the exercise date specified in the Grantee’s notice or as soon thereafter as is practicable, Hills shall cause the Option Shares to be issued in book entry form and registered in the name of the Grantee promptly (out of theretofore unissued Stock or reacquired Stock, as Hills may elect) upon full payment for such Option Shares. The obligation of Hills to deliver Stock shall, however, be subject to the condition that if at any time the Committee shall determine in its discretion that the listing, registration or qualification of the Option or the Option Shares upon any securities exchange or under any state or federal law, or the consent or approval of any governmental regulatory body, is necessary or desirable as a condition of, or in connection with, the Option or the issuance or purchase of Stock there under, the Option may not be exercised in whole or in part unless such listing, registration, qualification, consent or approval shall have been effected or obtained free of any conditions not acceptable to the Committee.
a.If the Grantee fails to pay for any of the Option Shares specified in such notice or fails to accept delivery thereof, the Grantee’s right to purchase such Option Shares may be terminated by Hills. The date specified in the Grantee’s notice as the date of exercise shall be deemed the date of exercise of the Option, provided that payment in full for the Option Shares to be purchased upon such exercise shall have been received by such date.
1. No Rights of Stockholders.
Neither the Grantee nor any personal representative shall be, or shall have any of the rights and privileges of, a stockholder of Hills with respect to any shares of Stock purchasable or issuable upon the exercise of the Option, in whole or in part, prior to the date of exercise of the Option.
1.Non-Transferability of Option.
During the Grantee’s lifetime, the Option hereunder shall be exercisable only by the Grantee or any guardian or legal representative of the Grantee, and the Option shall not be transferable except, in case of the death of the Grantee, by will or the laws of descent and distribution, nor shall the Option be subject to attachment, execution or other similar process. In the event of: (a) any attempt by the Grantee to alienate, assign, pledge, hypothecate or otherwise dispose of the Option, except as provided for herein, or (b) the levy of any attachment, execution
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or similar process upon the rights or interest hereby conferred, Hills may terminate the Option by notice to the Grantee and it shall thereupon become null and void.
1.Restrictions Upon Sale of Shares.
6.1 - Offer for Sale to Corporation. If Grantee desires to sell or otherwise transfer any or all of his or her Option Shares, Grantee shall first offer the same for sale to Hills by giving to Hills written notice, delivered to the President or Secretary of Hills, designating the number of shares of Option Shares desired to be sold or otherwise transferred, the number of the certificate or certificates therefore, the name and residence address of any other intended transferee or transferees, if any, and the price at which the stock is proposed to be sold to such transferee or transferees.
6.2 - Acceptance of Offer by Corporation. The Board of Directors of Hills shall within thirty (30) days after receipt of said offer of sale and determination of fair market value as provided in Section 6.7 below notify the offeror in writing whether it desires to purchase the Option Shares so offered for sale at the purchase price as hereinafter defined. In the event that the Board of Directors notifies the offeror of its acceptance of the offer for sale, said notification shall specify a date not less than five (5) nor more than fifteen (15) days after the date of such notice as the date on which the stock will be taken up and payment made therefore at the office of Hills. Upon the consummation of the purchase and payment of the price therefore and delivery of the cash payment hereinafter provided for, the stock purchased shall thereafter be held as treasury stock or shall be retired, as the Board of Directors shall direct. If Hills shall not purchase and pay for all of the Option Shares so offered for sale, it shall be deemed to have rejected said offer, as to any Options Shares not so purchased and paid for.
6.3 - Offer to Corporation in Case of Bankruptcy. In the event of bankruptcy or insolvency of the Grantee or in the event of any levy or attachment of the Option Shares of Grantee in Hills or the interest represented thereby or any right or interests therein or there under, Grantee shall be deemed to have offered his or her stock for sale to Hills as of the date Hills receives notice of such bankruptcy, insolvency, levy or attachment, whereupon Hills shall have the first option to purchase said shares of stock in the manner and during the time as provided in the foregoing Sections 6.1 and 6.2.
6.4 - Purchase by Corporation upon Death of Grantee. Upon the death of a Grantee, Hills, during the period commencing two (2) months after the date of the appointment of an administrator or executor of his or her estate (hereinafter called "personal representative") and ending twelve (12) months after the date of such appointment, shall purchase and the estate or other successors of Grantee shall sell all of the stock of Grantee for the purchase price as hereinafter defined, unless, in the opinion of counsel for the estate, such purchase would not qualify as a redemption under Section 302 of the Internal Revenue Code of 1986 or similar provisions of subsequent enactments.
6.5 - Sale to Corporation to Pay Debts and Expenses. Notwithstanding the provisions of Section 6.4 hereof, the personal representative of Grantee may, within two (2) months following his appointment, offer such part or all of the stock of decedent for
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sale to Hills as does not exceed in value the sum of (1) the estate, inheritance, legacy and succession taxes (including any interest collected as a part of such taxes) imposed because of the decedent's death and (2) the amount of funeral and administration expenses allowable as deductions to the estate under Section 2053 of the Internal Revenue Code of 1986 or subsequent similar enactments. Such offer shall be made only if the value (for Federal Estate Tax purposes) of all the stock of such Corporation, or of such Corporation and of other companies, equals or exceeds the amounts prescribed by Section 303(b) (2) of the Internal Revenue Code of 1986 or subsequent similar enactments, and all other requirements for treatment of the payment therefore as a distribution in full payment in exchange for such stock, are met. The Corporation, unless by law prohibited, shall accept such offer and shall pay the purchase price as hereinafter provided in cash.
6.6 - Purchase Price. The term "purchase price" as used in this Agreement shall mean the "fair market value" of the share or shares of stock offered for sale as of the date such offer of sale is received by Hills or by Grantee, as the case may be.
6.7 - Fair Market Value. Whenever in this Agreement the term "fair market value" is used, the fair market value of a share of stock shall be determined by the reference to the most recent stock valuation reporting the value of the Company’s common stock prepared by an independent appraiser, as required in connection with Hills Bank and Trust Employee Stock Ownership Plan.
6.8 – Payment of Purchase Price. The purchase price to be paid by the Corporation or by any stockholder when purchasing stock pursuant to the provisions of this Agreement, shall be payable in cash and in full on the date of settlement for and delivery of the stock.
6.9 – Failure of Corporation and Stockholders to Purchase. Upon receipt of written notice of the Corporation’s refusal to purchase the share or shares offered to them for sale, or if the Corporation shall not purchase and pay for such share or shares of stock at the determined purchase price and upon the terms and conditions and within in the time limitations hereinbefore prescribed, then the Grantee may sell or otherwise transfer the same to, and only to, the proposed transferee, if any, at the proposed price, but if said sale or transfer be not then made, the provisions of this Agreement shall again apply.
1.Employment Not Affected.
The granting of neither the Option nor its exercise shall not be construed as granting to the Grantee any right to continue the Grantee’s service on the Board of the Company or any of its subsidiaries. Except as may otherwise be limited by a written agreement between Hills and the Grantee, the right of Hills to terminate at will the Grantee’s service on the Board or other relationship with Hills at any time (whether by dismissal, discharge, retirement or otherwise) is specifically reserved by Hills, and acknowledged by the Grantee.
1.Amendment of Option.
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The Option may be amended by the Board or the Committee at any time (i) if the Board or the Committee determines, in its sole discretion, that amendment is necessary or advisable in the light of any addition to or change in the Internal Revenue Code of 1986 or in the regulations issued there under, or any federal or state securities law or other law or regulation, which change occurs after the Date of Grant and by its terms applies to the Option; or (ii) other than in the circumstances described in clause (i), with the consent of the Grantee.
1.Notice.
Any notice to Hills provided for in this instrument shall be addressed to it in care of its President at its executive offices at Hills, Iowa, and any notice to the Grantee shall be addressed to the Grantee at the current address shown on the payroll records of the Employer. Any notice shall be deemed to be duly given if and when properly addressed and posted by registered or certified mail, postage prepaid.
1.Incorporation of Plan by Reference.
The Option is granted pursuant to the terms of the Plan, the terms of which are incorporated herein by reference, and the Option shall in all respects be interpreted in accordance with the Plan. The Committee shall interpret and construe the Plan and this instrument, and its interpretations and determinations shall be conclusive and binding on the parties hereto and any other person claiming an interest hereunder, with respect to any issue arising hereunder or there under.
1.Governing Law.
The validity, construction, interpretation and effect of this instrument shall exclusively be governed by and determined in accordance with the law of the State of Iowa, except to the extent preempted by federal law, which shall to the extent govern.
IN WITNESS WHEREOF, Hills has caused its duly authorized officer to execute and attest this grant of the Option, and to apply the corporate seal hereto, and the Grantee has placed his or her signature hereon, effective as of the Date of Grant.
HILLS BANCORPORATION
By: ______________________________________
ACCEPTED AND AGREED TO:
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By: ______________________________________
Grantee
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