Exhibit 10.3
FORM OF
CITIZENS NATIONAL BANK OF TEXAS
INCENTIVE STOCK OPTION AGREEMENT
This Incentive Stock Option Agreement ("Option Agreement") is between
Citizens National Bank of Texas, a national banking association (the "Bank"),
and ______________ (the "Optionee").
WITNESSETH:
WHEREAS, the Bank has heretofore adopted the Citizens National Bank of
Texas 199__ Stock Option Plan (the "Plan") for the purpose of providing
employees of the Bank with additional incentive to promote the success of the
business, to increase their proprietary interest in the success of the Bank, and
to encourage them to remain in its employ; and
WHEREAS, the Bank, acting through the Compensation Committee of its Board
of Directors (the "Committee"), has determined that its interests will be
advanced by the issuance to Optionee of an incentive stock option under the
Plan;
NOW THEREFORE, for and in consideration of these premises it is agreed as
follows:
1. Option. Subject to the terms and conditions contained herein, the
Bank hereby irrevocably grants to Optionee the right and option ("Option") to
purchase from the Bank five thousand shares of the Bank's common stock, $___ par
value ("Common Stock"), at a price of $__.00 per share, which is deemed to be
not less that the fair market value of the Common Stock at the date of grant of
this Option.
2. Option Period. The option herein granted may be exercised by Optionee
in whole or in part at any time during a ten year period, which period shall in
no event exceed a ten (10) year period beginning on the date of this Option
Agreement (the "Option Period"), subject to the limitation that said Option
shall not be exercisable for more that a percentage of the aggregate number of
shares offered by this Option determined by the number of full years of
employment with the Bank or a subsidiary from the effective date of the
Optionee's grant, to the date of such exercise, in accordance with the following
schedule:
After three years can exercise twenty percent, if still employed by
Citizens National Bank of Texas.
After four years can exercise twenty percent more, if still employed by
Citizens National Bank of Texas.
After five years can exercise twenty percent more if still employed by
Citizens National Bank of Texas.
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After six years can exercise all, if still employed by Citizens National
Bank of Texas.
Notwithstanding anything in this Option Agreement to the contrary, the
Committee, in its sole discretion may waive the foregoing schedule of vesting
and upon written notice to the Optionee, accelerate the earliest date or dates
on which any of the Options granted hereunder are exercisable.
3. Procedure for Exercise. The Option herein granted may be exercised by
written notice by Optionee to the Secretary of the Bank setting forth the number
of shares of Common Stock with respect to which the Option is to be exercised
accompanied by payment for the shares to be purchased, and specifying the
address to which the certificate for such shares is to be mailed. Payment shall
be by means of cash, or cashier's check, bank draft, postal or express money
order payable to the order of the Bank, or at the option of the Optionee, in
Common Stock theretofore owned by such Optionee (or a combination of cash and
Common Stock). As promptly as practicable after receipt of such written
notification and payment, the Bank shall deliver to Optionee certificates for
the number of shares of Common Stock with respect to which such Option has been
so exercised.
4. Termination of Employment. If Optionee's employment with the Bank is
terminated during the Option Period for any reason other than death or
disability, options granted to him which are not exercisable on such date
thereupon terminate. Any options which are exercisable on the date of his
termination of employment may be exercised by Optionee during a three month
period beginning on such date; provided however, if an Optionee's employment is
terminated because of the Optionee's theft or embezzlement from the Bank,
disclosure of trade secrets of the Bank or the commission of a willful,
felonious act while in the employment of the Bank, then any option or
unexercised portion thereof granted to said Optionee shall expire upon such
termination of employment.
5. Disability or Death. If Optionee's employment with the bank is
terminated by his disability or death, all options hereunder exercisable at the
date of such disability or death shall be thereafter exercisable by Optionee,
his executor or administrator, or the person or persons to whom his rights under
this Option Agreement shall pass by will or by the laws of descent and
distribution, as the case may be, for a period of three months from the date of
Optionee's disability or death, unless this Option Agreement should earlier
terminate in accordance with its other terms. In no event may any option be
exercised after the end of the Option Period. Optionee shall be deemed to be
disabled if, in the opinion of a physician selected by the Committee, he is
incapable of performing services for the Bank by reason of any medically
determinable physical or mental impairment which can be expected to result in
death or to be of long, continued and indefinite duration.
6. Transferability. This option shall not be transferable by Optionee
otherwise than by Optionee's will or by the laws of descent and distribution.
During the lifetime of Optionee, the Option shall be exercisable only by him.
Any heir or legatee of Optionee shall
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take rights herein granted subject to the terms and conditions hereof. No such
transfer of this Option Agreement to heirs or legatees of Optionee shall be
effective to bind the Bank unless the Bank shall have been furnished
with'written notice thereof and a copy of such evidence as the Committee may
deem necessary to establish the validity of the transfer and the acceptance by
the transferee or transferees of the terms and conditions hereof.
7. No Rights as Stockholder. Optionee shall have no rights as a
stockholder with respect to any shares of Common Stock covered by this Option
Agreement until the date of issuance of a certificate for shares of Common Stock
purchased pursuant to this Option Agreement. Until such time, Optionee shall not
be entitled to dividends or to vote at meetings of the stockholders of the Bank.
Except as provided in paragraph 9 hereof, no adjustment shall be made for
dividend (ordinary or extraordinary, whether in cash or securities or other
property) paid or distributions or other rights granted in respect of any share
of Common Stock for which the record date for such payment, distribution or
grant is prior to the date upon which the Optionee shall have been issued share
certificates, as provided hereinabove.
8. Extraordinary Corporate Transactions. The existence of outstanding
Options shall not affect in any way the right or power of the Bank or its
shareholders to make or authorize any or all adjustments, recapitalizations,
reorganizations or other changes in the Bank's capital structure or its
business, or any merger or consolidation of the Bank, or any issuance of Common
Stock or subscription rights thereto, or any issuance of bonds, debentures,
preferred or prior preference stock ahead of or affecting the Common Stock or
the rights thereof, or the dissolution or liquidation of the Bank, or any sale
or transfer of all or any part of its assets or business, or any other corporate
act or proceedings, whether of a similar character or otherwise. If the Bank
recapitalizes or otherwise changes its capital structure, or merges,
consolidates, sells all of its assets or dissolves (each of the foregoing a
"Fundamental Change"), then thereafter upon any exercise of any option
theretofore granted the Optionee shall be entitled to purchase under such
option, in lieu of the number of shares of Common Stock as to which option shall
then be exercisable, the number and class of shares of stock and securities to
which the Optionee would have been entitled pursuant to the terms of the
Fundamental Change if, immediately prior to such Fundamental Change, the
Optionee had been the holder of record of the number of shares of Common Stock
as to which such option is then exercisable. If the Bank shall not be the
surviving entity upon the occurrence of a Fundamental Change, the Options
granted hereunder shall be governed by subparagraph 6(j) of the Plan.
9. Change in Capital Structure. If the outstanding shares of Common
Stock of the Bank shall at any time be changed or exchanged by declaration of
a stock dividend, stock split, combination of shares, or recapitalization, the
number and kind of shares subject to the Plan or subject to any options
theretofore granted, and the Option prices, shall be appropriately and equitable
adjusted so as to maintain the proportionate number of shares without changing
the aggregate Option price.
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10. Compliance with Securities Laws. Upon the acquisition of any shares
pursuant to the exercise of the Option herein granted, Optionee (or any person
acting under paragraph 6) will enter into such written representations,
warranties and agreements as the Bank may reasonably request in order to comply
with applicable securities laws or with this Option Agreement.
11. Compliance With Laws. Notwithstanding any of the other provisions
hereof, Optionee agrees that he will not exercise the Option(s) granted hereby,
and that the Bank will not be obligated to issue any shares pursuant to this
Option Agreement, if the exercise of the Option(s) or the issuance of such
shares of Common Stock would constitute a violation by the Optionee or by the
Bank of any provision of any law or regulation of any governmental authority.
12. Resolution of Disputes. As a condition of the granting of the Option
hereby, the Optionee and his heirs and successors agree that any dispute or
disagreement which may arise hereunder shall be determined by the Committee in
its sole discretion and judgment, and that any such determination and any
interpretation by the Committee of the terms of this Option Agreement shall be
final and shall be binding and conclusive, for all purposes, upon the Bank,
Optionee, his heirs and personal representatives.
13. Stockholder Agreement. Optionee, or the Optionee's representative
upon the Optionee's death, prior to the exercise of an option granted hereunder,
agrees to enter into the Bank's Stockholders Agreement.
14. Legends on Certificate. The certificate representing the shares of
Common Stock purchased by exercise of any Option will be stamped or otherwise
imprinted with legends in such form as the Bank or its counsel may require with
respect to any applicable restrictions on sale or transfer and the stock
transfer records of the Bank will reflect stop-transfer instructions with
respect to such shares.
15. Notices. Every notice hereunder shall be in writing and shall be
given by registered or certified mail. All notices of the exercise of any Option
hereunder shall be directed to Citizens National Bank of Texas, P. O. Xxx 00,
Xxxxxxxx, Xxxxx 00000, Attention: Secretary. Any notice given by the Bank to
Optionee directed to him at his address on file with the Bank shall be effective
to bind him and any other person who shall acquire rights hereunder. The Bank
shall be under no obligation whatsoever to advise Optionee of the existence,
maturity or termination' of any of Optionee's rights hereunder and Optionee
shall be deemed to have familiarized himself with all matters contained herein
and in the Plan which may affect any of Optionee's rights or privileges
hereunder.
16. Construction and Interpretation. Whenever the term "Optionee" is used
herein under circumstances applicable to any other person or persons to whom
this award, in accordance with the provisions of paragraph 6 hereof, may be
transferred, the word
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"Optionee" shall be deemed to include such person or persons. References to the
masculine gender herein also include the feminine gender for all purposes.
17. Notice of Disposition. If Optionee disposes of any shares of Common
Stock acquired pursuant to the exercise of an Option granted hereunder prior to
the earlier of (i) two years from the date of this Option Agreement of (ii) one
year from the date the shares of Common Stock were acquired, Optionee shall
notify the Bank of such disposition within ten days of its occurrence and
deliver to the Bank any amount of federal or state income tax withholdings
required by law. Payment of the withholding shall be made in accordance with
Section 11 of the Plan. If the Optionee fails to pay the withholding tax, the
Bank is authorized to withhold from any cash remuneration then or thereafter
payable to the Optionee any tax required to be withheld by reason of any
disposition named herein.
18. Agreement Subject to Plan. This Option Agreement is subject to the
Plan. The terms and provisions of the Plan (including any subsequent amendments
thereto) are hereby incorporated herein by reference thereto. In the event of a
conflict between any term or provision contained herein and a term or provision
of the Plan, the applicable terms and provisions of the Plan will govern and
prevail. All definitions of words and terms contained in the Plan shall be
applicable to this Option Agreement.
19. Employment Relationship. Employees shall be considered to be in the
employment of the Bank as long as they remain employees of the Bank or a parent
or subsidiary corporation (as defined in Section 425 of the Internal Revenue
Code of 1986, as amended). Any questions as to whether and when there has been a
termination of such employment and the cause of such termination, shall be
determined by the Committee, and its determination shall be final.
20. Binding Effect. This Option Agreement shall be binding upon and inure
to the benefit of any successors to the Bank and all persons lawfully claiming
under Optionee.
IN WITNESS WHEREOF, this Option Agreement has been executed as of the
_________ day of ___________, 199__.
CITIZENS NATIONAL BANK OF TEXAS
By:_________________________________
ATTEST:
Secretary
OPTIONEE:
_____________________________
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