Exhibit 10.8

STOCK OPTION

 

 

THIS STOCK OPTION is dated as of the day of ______ , 20__ (the “Effective Date”)
by United Fire & Casualty Company, Inc. (the “Company”) to
___________________________ (the “Optionee”).

 

 

1.

Grant of Option.

 

Subject to the terms and conditions set forth herein, the Company hereby
irrevocably grants to the Optionee the option to purchase from the Company, at a
price of $_____ per share (the "Exercise Price"), _____ shares of the Company's
common stock (“Stock”), such number being subject to adjustment as provided
herein.

 

 

2.

Vesting.

 

a.         The Option may be exercised only to the extent it is vested. This
Option shall vest twenty percent (20%) on the first anniversary date of the
Effective Date and twenty percent (20%) on each subsequent anniversary date of
the Effective Date, until fully vested.

 

b.         The Board of Directors may, on such terms and conditions as it may
determine to be appropriate, accelerate the vesting of the Option. Also, the
vesting of this Option may accelerate as provided herein.

c.         All or any part of the vested portion of the Option may be exercised
at any time in accordance with and as limited by this Option. A vested portion
of the Option is considered to be outstanding until such portion of the Option
is exercised in full or expires as provided herein.

 

 

3.

Method of Exercising Option.

 

a.         Notice. To exercise the Option, the Optionee shall deliver to the
Company a written notice (the "Notice") signed by the Optionee that states the
Optionee's election to exercise the Option, the number of shares being purchased
and the date, not less than ten (10) nor more than thirty (30) days after the
date of such notice, on which the shares will be purchased.

 

b.         Certificate for Shares. Delivery to the Optionee of a certificate
representing the shares purchased shall be made as soon as practicable, provided
payment has been made therefor at the principal office of the Company. If any
law or regulation requires the Corporation to take any action with respect to
the shares specified in the Notice, then the date for the delivery of such
shares against payment therefor shall be extended for the period necessary to
take such action.

 

c.         Failure to Pay. Upon the failure to take up and pay for the number of
shares specified in the Notice on the date set forth therein, the Option shall
expire with respect to such number of shares, but shall continue with respect to
the remaining shares covered by the Option and not yet acquired pursuant
thereto.

 

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d.         Other Policies. The Option shall be exercised only in accordance with
the Company's Statement Regarding Insider Trading Restrictions under Sec Rule
10b-5, as the Statement may, from time to time, be amended.

 

4.

Payment of Purchase Price.

 

a.         The Optionee shall pay the purchase price for shares being purchased
by one of the following methods:

 

i.         Cash Payment. The purchase price for the shares shall be paid in
cash, certified check or bank draft, or such other method acceptable to the
Company, to the order of the Company for an amount in United States Dollars
equal to the Exercise Price for the number of shares specified in the Notice.

 

ii.        Transfer of Shares. As an alternative to 4(a)(i), if the Board of
Directors of the Company, in its discretion, permits it, the Optionee may pay
the purchase price of shares purchased pursuant to the Option by transferring to
the Corporation previously acquired shares of Stock of the Corporation. The
value of the shares previously acquired shall be the Fair Market Value on the
date set forth in the Notice, as determined pursuant to Section 8.

 

iii.       Cashless Exercise. As an alternative to 4(a)(i), the Optionee may pay
the purchase price through a cancellation of all or a portion of this Option in
satisfaction of the purchase price (a “Cashless Exercise”). To effect a Cashless
Exercise, the Optionee shall tender to the Corporation the Notice referred to in
Section 3(a), together with a Notice of Cashless Exercise that specifies the
number of shares (the "Exercise Shares") that the Optionee wishes to be utilized
to effect to the Cashless Exercise. All Exercise Shares must be vested. The
Corporation shall issue to the Optionee, without any further payment by the
Optionee, the number of shares of Stock equal to (i) the number of Exercise
Shares less (ii) the number of Exercise Shares multiplied by a fraction, the
numerator of which is the Exercise Price and the denominator of which is the
Fair Market Value (determined as of the date specified in the Notice). The
Option shall terminate and be cancelled with respect to the number of shares
equal to the Exercise Shares.

 

b.         If the number of Exercise Shares is less than the total number of
shares subject to this Option, the Option shall remain in effect with respect to
the remaining shares until terminated as provided herein.

 

 

5.

Termination of Options.

 

The Options granted hereby shall terminate and be of no force or effect upon the
expiration of ten (10) years from the Effective Date (the "Option Expiration
Date").

 

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6.

Recapitalization; Merger and Consolidation.

 

a.         After the granting of this Option, if the number of shares of Stock
issued and outstanding as a whole is increased, decreased, or changed into or
exchanged for a different number or kind of shares or securities of the Company,
whether through merger, consolidation, reorganization, recapitalization,
reclassification, stock dividend, stock split, combination of shares, exchange
of shares, change in corporate structure, or the like, an appropriate and
proportionate adjustment shall be made with respect to the unexercised portion
of this Option in the number, kinds and per-share exercise price of shares of
Stock subject to this Option. Any such adjustment in this Option, however, shall
be made without a change in the total price applicable to the unexercised
portion of the Option, but with a corresponding adjustment in the price for each
share of Stock covered by the Option.

 

b.          If the Company or the Stockholders of the Company enter into an
agreement to dispose of all or substantially all of the assets or capital stock
of the Company by means of a sale, merger, consolidation, reorganization,
liquidation, or otherwise, then subject to the other provisions of this Section
6, this Option shall immediately be fully vested, and shall thereafter terminate
and become unexerciseable unless exercised before the earlier of the Option
Expiration Date or the date on which the Company consummates the disposition of
assets or capital stock contemplated by the agreement.

 

c.         Notwithstanding the foregoing provisions of this Section, if any
agreement referred to in Section 6(b) shall be terminated without consummation:

 

i.          any unexercised non-vested portion of this Option that had become
vested and exercisable solely by reason of the provisions of Section 6(b) shall
again become non-vested and unexerciseable as of said termination of such
agreement, and

 

ii.         the exercise of any portion of the Option that had become vested and
exercisable solely by reason of Section 6(b) shall be deemed ineffective, and
such portion shall again become non-vested and unexerciseable as of the
termination of such agreement without consummation.

 

d.         Notwithstanding the foregoing provisions of this Section, if the
number of shares of Stock issued and outstanding as a whole is increased,
decreased, or changed into or exchanged for a different number or kind of shares
or securities of the Company, whether through merger, consolidation,
reorganization, recapitalization, reclassification, stock dividend, stock split,
combination of shares, exchange of shares, change in corporate structure, or the
like, the Board of Directors may, at its election, arrange for the Optionee to
receive upon surrender of Optionee’s Option and upon consummation of the
Transaction, a new option covering shares of the surviving corporation in the
same proportion, at an equivalent exercise price and subject to the same terms
and conditions as this Option, in which case Section 6(a), (b) and (c) shall be
ineffective. For purposes of the preceding sentence, the excess of the Fair
Market Value of the shares subject to such new option immediately after
consummation of such disposition of Stock or assets over the Exercise Price of
such shares of the surviving corporation shall not be more than the excess of
the Fair Market Value of the shares subject to this Option immediately before
consummation of such disposition of Stock and assets over the Exercise Price of
such shares of the Company. The new option shall not give the Optionee
additional benefits which the Optionee does not have under this Option or
deprive the Optionee of benefits which the Optionee has under this Option. If
such substitution of options is effectuated, the Optionee's shall have the
rights set forth in the new option, and the Optionee’s rights under this Option
shall thereupon terminate.

 

 

7.

Optionee.

 

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Whenever the word "Optionee" is used in any provision of this Option under
circumstances where the provision should logically be construed to apply to the
estate, personal representative, or beneficiary to whom this Option may be
transferred by will or by the laws of descent and distribution, the word
Optionee shall be deemed to include such person.

 

 

8.

Fair Market Value.

 

The Fair Market Value per share of Stock on any relevant date shall be
determined in accordance with the following provisions:

 

a.         If the Stock is at the time traded on the NASDAQ National Market,
then the Fair Market Value shall be the closing selling price per share of Stock
on the date in question, as such price is reported on the NASDAQ National Market
or any successor system. If there is no closing selling price for the Stock on
the date in question, then the Fair Market Value shall be the closing selling
price on the last preceding date for which such quotation exists.

 

b.         If the Stock is at the time listed on any Stock Exchange, then the
Fair Market Value shall be the closing selling price per share of Common Stock
on the date in question on the Stock Exchange determined by the Board of
Directors to be the primary market for the Stock, as such price is officially
quoted in the composite tape of transactions on such exchange. If there is no
closing selling price for the Stock on the date in question, then the Fair
Market Value shall be the closing selling price on the last preceding date for
which such quotation exists.

 

c.         If neither (a) nor (b) above applies, the Fair Market Value shall be
determined by the Board of Directors, after taking into account such factors as
it deems appropriate.

 

 

9.

Assignability.

 

Except as otherwise provided herein, this Option is not transferable by the
Optionee otherwise than by will or the laws of descent and distribution and is
exercisable during the Optionee's lifetime only by the Optionee. No assignment
or transfer of this Option, or of the rights represented thereby, whether
voluntary or involuntary, by operation of law or otherwise, except by will or
the laws of descent and distribution, shall vest in the assignee or transferee
any interest or right herein whatsoever, but immediately upon any attempt to
assign or transfer this Option the same shall terminate and be of no force or
effect.

 

 

10.

Rights as a Stockholder.

 

The Optionee shall not be deemed for any purpose to be a stockholder of the
Company with respect to the shares represented by this Option except with
respect to shares as to which this Option has been exercised, payment and issue
has been made as herein provided, and the Optionee's name has been entered as a
stockholder of record on the books of the Company.

 

 

11.

The Company's Rights.

 

The existence of this Option shall not affect in any way the right or power of
the Company or its stockholders to make or authorize any or all adjustments,
recapitalizations, reorganizations, or other changes in the Company's capital
structure or its business, or any merger or consolidation of the Company,

 

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or any issue of bonds, debentures, preferred or other stocks with preference
ahead of or convertible into, or otherwise affecting the common stock of the
Company or the rights thereof, or the dissolution or liquidation of the Company,
or any sale or transfer of all or any part of the Company's assets or business,
or any other corporate act or proceeding, whether of a similar character or
otherwise.

 

 

12.

Preemption by Applicable Laws or Regulations.

 

Anything in this Option to the contrary notwithstanding, if, at any time
specified herein for the issuance of shares to the Optionee, any law,
regulation, or requirements of any governmental authority having appropriate
jurisdiction shall require either the Company or the Optionee to take any action
prior to or in connection with the shares of Stock then to be issued, sold, or
repurchased, the issue, sale, or repurchase of such shares of Stock shall be
deferred until such action shall have been taken.

 

 

13.

Resolution of Disputes.

 

Any dispute or disagreement that shall arise under, or as a result of, or
pursuant to, this Option shall be determined by the Board in its absolute and
uncontrolled discretion, and any such determination or any other determination
by the Board under or pursuant to this Option and any interpretation by the
Board of the terms of this Option shall be final, binding, and conclusive on all
persons affected thereby.

 

 

14.

Notice.

 

a.         All notices, consents, waivers and other communications must be in
writing and will be deemed to have been given (a) when delivered by hand (with
written confirmation of receipt), (b) when sent by telecopier (with written
confirmation of receipt) provided that a copy is also mailed by registered mail,
return receipt requested, (c) three business days following mailing of such
notice, consent, waiver or other communication by registered mail, return
receipt requested, or (d) when received by the addressee, if sent by a
nationally recognized overnight delivery service (receipt requested). For this
purpose, the Company's address is United Fire & Casualty Company, Inc. 118
Second Avenue S.E. Cedar Rapids, IA 52401 or at such other address as the
Company, by notice to the Optionee, may designate in writing from time to time.
Notices to the Company shall be addressed to the attention of the Secretary or,
if the Optionee is serving as Secretary, to the Chief Financial Officer.

 

b.         The address of the Optionee shall be the address shown on the records
of the Company, or at such other address as the Optionee, by notice to the
Secretary of the Company, may designate in writing from time to time.

 

 

15.

Tax Withholding.

 

The Company shall have the right to deduct from any payment hereunder any
federal, state, local, or employment taxes that it deems are required by law to
be withheld. At the request of the Optionee, or as required by law, such sums as
may be required for the payment of any estimated or accrued income tax liability
may be withheld and paid over to the governmental entity entitled to receive the
same.

 

 

16.

Fractional Shares.

 

Any fractional shares concerning this Option shall be eliminated at the time of
exercise by rounding down for fractions of less than one half (½) and rounding
up for fractions of equal to or more

 

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than one half (½). No cash settlements shall be made with respect to fractional
shares eliminated by rounding.

 

 

17.

Governing Law.

 

All matters relating to this Option shall be governed by the laws of the State
of Iowa, without regard to the principles of the conflict of laws, except to the
extent preempted by the laws of the United States.

 

 

18.

General.

 

The Company shall at all times during the term of the Option reserve and keep
available such number of shares of Stock as will be sufficient to satisfy the
requirements herein, shall pay all original issue and transfer taxes with
respect to the issue and transfer of shares pursuant hereto and all other fees
and expenses necessarily incurred by the Company in connection herewith, and
will from time to time use its best efforts to comply with all laws and
regulations that, in the opinion of counsel for the Company, shall be applicable
thereto. This Option shall not be deemed to limit or restrict the right of the
Company to terminate the Optionee's employment relationship at any time, for any
reason, for or without cause.

 

 

19.

Regulatory Compliance.

 

No Stock shall be issued hereunder until the Company has received all necessary
regulatory approvals and has taken all necessary steps to assure compliance with
federal and state securities laws or has determined to its satisfaction and the
satisfaction of its counsel that an exemption from the requirements of the
federal and applicable state securities laws are available.

 

IN WITNESS WHEREOF, the Company has caused this Option to be executed by its
duly authorized officer as of the date first above written.

 

 

UNITED FIRE & CASUALTY COMPANY, INC.

 

 

By:

______  

 

 

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