NONQUALIFIED
STOCK OPTION AGREEMENT
K-V
PHARMACEUTICAL COMPANY
2001
INCENTIVE STOCK OPTION PLAN
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NONQUALIFIED STOCK OPTION AGREEMENT (the
“Agreement”) made as of the ___ day of
, 20___, (the “Grant Date”) between K-V
PHARMACEUTICAL COMPANY , a Delaware corporation (the
“Company”), and
, a member of the Company’s Board of Directors (the
“Optionee”).
WHEREAS , the Company desires, by affording the Optionee an
opportunity to purchase shares of its Class A Common Stock,
$.01 par value per share (the “Common Stock”), as
hereinafter provided, to carry out the purpose of the
Company’s 2001 Incentive Stock Option Plan (the
“Plan”):
NOW THEREFORE , in consideration of the premises and of the
mutual covenants and agreements hereinafter contained, the parties
hereto mutually covenant and agree as follows:
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1.
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Grant of Option
. The Company hereby
grants to the Optionee a nonqualified stock option (the
“Option”) to purchase all or any part of an aggregate
of
shares of Common Stock (such number being subject to adjustment as
provided in Paragraph 6) on the terms and conditions
hereinafter set forth.
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2.
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Purchase Price
. The purchase price of
the shares of Common Stock issuable upon exercise of the Option
(the “Option Price”) shall be $___ per share,
which is not less than one hundred percent (100%) of the Fair
Market Value Per Share of Common Stock on the Grant Date. Payment
shall be made in cash, by certified check or in shares of Common
Stock in the manner prescribed in Paragraph 7
hereof.
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3.
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Term of Option
. The term of the Option
shall be for a period of ten (10) years from the Grant Date,
subject to earlier termination as provided in Paragraph 5. The
Option is exercisable during its term only in accordance with the
provisions of Exhibit A attached hereto. Except as
provided in Paragraph 5, the Option may not be exercised
unless, at the time the Option is exercised and at all times from
the Grant Date, the Optionee shall then be and shall have been, a
Director of the Company.
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4.
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Nontransferability
. The Option shall not
be transferable otherwise than by will or the laws of descent and
distribution to the extent provided in Paragraph 5, and the
Option may be exercised, during the lifetime of the Optionee, only
by the Optionee. More particularly (but without limiting the
generality of the foregoing), the Option may not be assigned,
transferred (except as provided above), pledged or hypothecated in
any way, shall not be assignable by operation of law, and shall not
be subject to execution, attachment or similar process. Any
attempted assignment, transfer, pledge, hypothecation or other
disposition of the Option contrary to the provisions hereof and of
the Plan, and the levy of any execution, attachment,
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or similar
process upon the Option, shall be null and void and without effect;
provided, however, that if the Optionee shall die while a Director
of the Company, the Optionee’s estate, personal
representative, or beneficiary shall have the right to exercise the
Option to the extent provided in Paragraph 5.
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5.
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Termination of Option
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(a)
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If
the Optionee shall cease to be a Director of the Company, then the
Option, to the extent that it is exercisable by the Optionee at the
time the Optionee ceases to be a Director of the Company, and only
to the extent that the Option is exercisable as of such time, may
be exercised by the Optionee within three (3) years after such
time, but in no event beyond ten (10) years after the Grant
Date.
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(b)
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If
the Optionee shall cease to be a Director of the Company as the
result of the Optionee’s disability, as such term is defined
in the Plan, then the Option, to the extent that it is exercisable
by the Optionee at the time the Optionee ceases to be a Director of
the Company, and only to the extent that the Option is exercisable
as of such time, may be exercised by the Optionee within three
(3) years after such time, but in no event beyond ten
(10) years after the Grant Date.
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(c)
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If
the Optionee shall die while a Director of the Company, the
Optionee’s estate, personal representative, or beneficiary
shall have the right, subject to the provisions of
Paragraph 3, to exercise the Option (to the extent that the
Optionee would have been entitled to do so at the time of the
Optionee’s death) at any time within three (3) years
from the date of the Optionee’s death, but in no event beyond
ten (10) years after the Grant Date.
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(d)
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Notwithstanding anything in this
Section 5 to the contrary, if, in the 12-month period
following a Change of Control, Optionee shall cease to be a
Director of the Company, the Option shall become immediately
exercisable in full, whether or not the dates set forth in
Exhibit A have passed, and may be exercised by the
Optionee within three (3) years after such termination of
service, but in no event beyond ten (10) years after the Grant
Date. For the avoidance of doubt, if following a Change of Control,
Optionee’s service shall terminate as a result of the
Optionee’s death or disability, the provisions of
(b) and (c) above shall apply, respectively. For purposes
of this Agreement, “Change of Control” will have the
meaning set forth on Exhibit B.
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6.
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Changes in Capital Stock
. Upon any readjustment
or recapitalization of the Company’s capital stock whereby
the character of the Common Stock shall be changed, appropriate
adjustments shall be made so that the capital stock issuable upon
exercise of the Option after such readjustment or recapitalization
shall be the substantial equivalent of the Common Stock issuable
upon exercise of the Option. In the case of a merger, sale of
assets or similar transaction which results in a replacement of the
Common Stock with stock of another corporation, the Company will
make a reasonable effort, but shall not be required, to replace any
outstanding Options granted under the Plan with comparable options
to purchase the stock of such other corporation, or will provide
for immediate maturity of all outstanding Options, with all Options
not being exercised within the time period specified by the
Company’s Board of Directors being terminated; provided,
however, that in the event Optionee shall cease to be a Director as
described in Section 5(d), the terms set forth in Section 5(d)
shall control.
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7.
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Method of Exercising
Option .
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(a)
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Subject to the terms and conditions
of this Agreement, the Option may be exercised by written notice to
the Company at its offices at One Corporate Woods Drive, Bridgeton,
Missouri 63044 (Attention: VP, Human Resources). Such notice shall
state that the Option is being exercised thereby and the number of
shares of C
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