Exhibit 10.3.2
BALCHEM CORPORATION
DIRECTOR STOCK OPTION AGREEMENT
This DIRECTOR STOCK OPTION AGREEMENT (the "Agreement"), dated as of
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_______________, is between BALCHEM CORPORATION, a Maryland corporation (the
"Corporation"), and ____________ ("Optionee").
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W I T N E S S E T H :
1. Grant of Options or Purchase Rights. Pursuant to the provisions of the
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1999 Stock Plan of the Corporation, as the same may be amended from time to time
(the "Plan"), the Corporation has, as of the date hereof, granted to Optionee,
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subject to the terms and conditions of the Plan and subject further to the terms
and conditions herein set forth, the right and option to purchase from the
Corporation the number of shares of Common Stock of the Corporation ("Stock")
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determined pursuant to Exhibit A at the price per share set forth in Exhibit A,
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as non-qualified options (such non-qualified options granted hereby being
referred to together herein as the "Option" or the "Options").
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2. Terms and Conditions. The term of the Option shall be for the period
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specified in Exhibit A. The Option shall be exercisable at any time in whole or
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in part and from time to time subject to earlier termination as provided in
Paragraphs 3 and 4 of this Agreement. The holder of any Option shall not have
any rights as a stockholder with respect to the stock issuable upon exercise of
an Option until certificates for such Stock shall have been issued and delivered
to him after the exercise of the Option.
3. Termination as a Director. In the event that Optionee shall cease to be
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a director, or, if Optionee is a director emeritus of the Corporation, Optionee
shall cease to be a director emeritus, of the Corporation (otherwise than by
reason of death or disability), the Option shall be exercisable (to the extent
that Optionee shall have been entitled to do so at the time of said cessation)
at any time prior to such cessation, but in no event later than the specified
expiration date of the Option.
Nothing in the Plan or in this Agreement shall confer upon Optionee any
right to be continued as a director or as a director emeritus of the Corporation
for the term of the Option or for any portion thereof or for any other period of
time, or interfere in any way with the right of the stockholders and/or the
directors of the Corporation to replace or remove Optionee as a director or a
director emeritus of the Corporation, with or without cause, in accordance with
the Corporation's By-laws and applicable law.
4. Death or Disability of Optionee.
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(a) Death. If Optionee ceases to be a director or director emeritus of the
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Corporation by reason of his death, any unexercised portion of the Option shall
be exercisable (to the extent that Optionee shall have been entitled to do so at
the time of his death), to the extent of the number of shares with respect to
which he could have exercised it on that date, by his estate, personal
representative or beneficiary who has acquired the Option by will or by the laws
of descent and distribution, at any time prior to the earlier of the specified
expiration date of the Option or 90 days from the date of Optionee's death.
(b) Disability. If Optionee resigns, or otherwise ceases to be a director
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or director emeritus by the Corporation by reason of his disability, any
unexercised portion of the Option shall be exercisable (to the extent that
Optionee shall have been entitled to do so at the date of termination of his
membership on the Board), to the extent of the number of shares with respect to
which he could have exercised it on that date, at any time prior to the earlier
of the specified expiration date of the Option or 90 days from the date of
resignation or cessation. For all purposes of this Agreement, the term
"disability" shall mean "permanent and total disability" as defined in Section
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22(e)(3) of the Internal Revenue Code (the "Code") or successor statute.
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5. Transferability of Option. The Option shall not be transferable, except
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as, and then only to the extent, provided in Exhibit A hereto.
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6. Adjustments Upon Changes in Capitalization. In the event of changes in
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the outstanding stock of the Corporation by reason of stock dividends, stock
splits, recapitalizations, mergers, consolidations, combinations or exchanges of
shares, separations, reorganizations or liquidations, the number and class of
shares subject to the Option shall be correspondingly adjusted as provided in
the Plan.
7. Conditions Precedent To Exercise of Option. In the event that the
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exercise of the Option or the issuance and delivery of the shares hereunder
shall be subject to, or shall require, any prior exchange listing, prior
approval of the stockholders of the Corporation, or other prior condition or
act, pursuant to the applicable laws, regulations or policies of any stock
exchange, federal or local government or its agencies or representatives, and/or
pursuant to the Plan, then the Option shall not be deemed to be exercisable
under this Agreement until such condition is satisfied. The Corporation shall
not be liable in any manner to Optionee or any other party for any failure or
delay by the Corporation on its part to fulfill any such condition.
8. Methods of Exercising Option. Subject to the terms and conditions of
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this Agreement, the Option may be exercised by delivering a signed, completed
exercise notice in the form of Exhibit B hereto, as the same may be modified
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from time to time by determination of the Corporation in its discretion, to the
Corporation, at its office at ▇.▇. ▇▇▇ ▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇▇▇. Such
notice shall (i) identify the Option to which it applies (i.e., Incentive Option
and/or Non-Qualified Option), (ii) state the election to exercise the Option,
(iii) designate the number of shares in respect of which the Option is being
exercised, and (iv) be signed by the person or persons so exercising the Option,
and shall otherwise be in such form and substance as the Corporation may
require. Such notice shall be accompanied by payment of the full purchase price
of such shares. The Corporation shall deliver to Optionee, at such address as is
provided in the notice, a certificate or certificates representing such Stock as
soon as practicable after the notice shall be received and all conditions to the
exercise of the Option are fulfilled and satisfied. Payment of such purchase
price shall be made (a) in United States dollars in cash or by check, or (b)
through delivery of shares of Stock theretofore owned by Optionee for at least
six months and having a fair market value equal as of the date of the exercise
to the cash exercise price of the Option, or (c), in the discretion of the
Compensation Committee of the Board of Directors (the "Committee") (that is,
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only in the event of the express prior approval thereof by the Committee), by
delivery (including by telecopier) to the Corporation or its designated agent of
an executed irrevocable exercise notice together with irrevocable instructions
to a broker-dealer to sell (or margin) a sufficient portion of the shares and
deliver the sale (or margin loan) proceeds directly to the Corporation to pay
for the exercise price, or (d) by any combination of the above if permitted
hereunder. Notwithstanding the foregoing, Optionee may not pay any part of the
exercise price hereof by transferring Stock to the Corporation if such Stock is
both subject to a substantial risk of forfeiture and not transferable within the
meaning of Section 83 of the Code. The certificate or certificates for the
shares as to which the Option shall have been so exercised shall be issued in
the name of the person or person so exercising the Option (or, if the Option
shall be exercised by Optionee and if Optionee shall so request in the notice
exercising the Option, the certificate shall be issued in the name of Optionee
and another person jointly, with right of survivorship) and shall be delivered
as provided above to or upon the written order of the person or persons
exercising the Option. In the event the Option shall be exercised, pursuant to
Paragraph 4 hereof, by any person or persons other than Optionee, such notice
shall be accompanied by appropriate proof of the right of such person or persons
to exercise the Option. At the election of the Corporation, such certificate may
bear such legends regarding the limited transferability of the shares under
applicable securities laws the Corporation may require. All shares that shall be
purchased upon the exercise of the Option as provided herein shall be fully paid
and non-assessable.
9. Certain Securities Law Matters. By acceptance of the Option, Optionee
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agrees that a purchase of shares under the Option will not be made with a view
to their distribution, as that term is used in the Securities Act of 1933, as
amended (the "Act"), unless in the opinion of the Corporation such distribution
is in compliance with or exempt from the registration and prospectus
requirements of the Act, and Optionee agrees to sign a certificate to such
effect at the time of exercising the Option (which certificate shall, if
required by the Corporation, be in such form and substance, and pertaining to
such securities law related matters, as the Corporation may require in its
discretion), and agrees that the certificate for the shares so purchased may, if
deemed appropriate by the Corporation, be inscribed with a legend to ensure
compliance with the Act. Optionee agrees that, in order to ensure compliance
with the restrictions referred to herein and the requirements of the Act, the
Corporation may issue appropriate "stop transfer" instructions to its transfer
agent. The Corporation shall not be required (i) to transfer on its books any
shares purchased upon the exercise of the Option that have been sold or
otherwise transferred in violation of any of the provisions of this Agreement
and/or the Plan, or (ii) to treat as owner of such shares or to accord the right
to vote or receive dividends to any purchaser or other transferee to whom such
shares shall have been so sold or transferred.
10. Capital Changes and Business Successions. The Plan contains provisions
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covering the treatment of the Option in a number of contingencies such as stock
splits and mergers. Provisions in the Plan for adjustment with respect to stock
subject to options and the related provisions with respect to successors to the
business of the Corporation are hereby made applicable hereunder and are
incorporated herein by reference. In general, Optionee should not assume that
the Option necessarily would survive the acquisition of the Corporation.
11. Withholding Taxes. Upon the exercise of a Non-Qualified Option, the
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exercise of an Option transferred by the original Optionee in accordance with
the terms of this Agreement or the Plan, or the vesting of restricted Common
Stock acquired on the exercise of the Option, the Corporation may require
Optionee or the purchaser or original Optionee to pay to the Corporation in cash
an amount equal to all applicable withholding taxes in respect of the amount
that is considered compensation includable in such person's gross income. The
Corporation in its discretion may condition (i) the exercise of the Option, (ii)
the vesting of restricted Common Stock acquired by exercising the Option, or
(iii) the exercise of a transferred Option, on Optionee's payment of such
amount. At the Corporation's discretion, the amount required to be withheld may
be withheld in cash from fees and/or other compensation payable to Optionee, or
(with respect to compensation income attributable to the exercise of the Option)
in kind from the Stock otherwise deliverable to Optionee upon exercise of the
Option. Optionee further agrees that, if the Corporation does not withhold an
amount from Optionee's fees or other compensation sufficient to satisfy the
Corporation's withholding obligation, Optionee will reimburse the Corporation on
demand, in cash, for the amount underwithheld.
12. Fair Market Value of Stock. If, at the time the Option is granted under
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the Plan, the Corporation's Stock is publicly traded, "fair market value" shall
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be determined as of the last business day for which the prices or quotes
discussed in this sentence are available prior to the date such Option is
granted and shall mean (i) the average (on that date) of the high and low prices
of the Stock on the principal national securities exchange on which the Stock is
traded, if the Stock is then traded on a national securities exchange; or (ii)
the last reported sale price (on that date) of the Stock on the NASDAQ National
Market List, if the Stock is not then traded on a national securities exchange
and is reported on the NASDAQ National Market List; or (iii) the average of the
closing bid and asked prices last quoted (on that date) by an established
quotation service for over-the-counter securities, if the Stock is not then
traded on a national securities exchange and is not then reported on the NASDAQ
National Market List. However, if the Stock is not publicly traded at the time
the Option is granted under the Plan, "fair market value" shall be deemed to be
the fair value of the Stock as determined by the Corporation's Board of
Directors or any Committee, after taking into consideration all factors which it
deems appropriate, including, without limitation, recent sale and offer prices
of the Stock in private transactions negotiated at arm's length, if any. The
determination by the Board of Directors or the Committee of fair market value
shall be conclusive and binding. The fair market value of the shares in question
shall be determined as of the day on which the event occurs.
13. Terms of Plan Control. The Option granted hereunder is granted pursuant
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to the provisions of the Plan, the receipt of a copy of which Optionee hereby
acknowledges. Nothing contained in this Agreement shall in any way be deemed to
alter or modify the provisions of the Plan and no act of the Corporation or its
directors, officers or employees shall be deemed to be a waiver or modification
of any provision of the Plan. The provisions of the Plan shall in all respects
govern the Option. The Committee shall have authority in its discretion, but
subject to the express provisions of the Plan, to interpret the Plan and this
Agreement; to prescribe, amend and rescind rules and regulations relating to the
Plan and the Option; and to make all other determinations deemed necessary or
advisable for the administration of the Plan or the Option. The Committee's
determination on the foregoing matters shall be conclusive.
IN WITNESS WHEREOF, the Corporation has caused this Agreement to be
executed by its duly authorized officer and Optionee has executed this Agreement
as of the date first written above.
BALCHEM CORPORATION
By:_________________________________
AGREED AND ACCEPTED:
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OPTIONEE:
EXHIBIT A
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GRANT OF NON-QUALIFIED OPTION
Name of Optionee: __________________
Date of Grant: ____________________
No. of Shares covered by
Non-Qualified Options: _________________
Expiration Date: ______________
Price per share for all Shares: $ ___
Exercisability: Earliest date on
which Non-Qualified
Option can be exercised
for the number of
Shares indicated Number of Shares
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Date of Grant All Shares covered
by the Option
Transferability: Except as expressly provided below, the Non-Qualified Option
shall not be transferable other than by will or the law of
descent and distribution and is exercisable during the
lifetime of Optionee only by Optionee. The Non-Qualified
Option shall be transferable by Optionee, under the limited
circumstances and conditions set forth below, to Family
Members of Optionee, provided that (i) such transfer is not
a transfer for value, (ii) the specific transfer has been
approved by the Committee, and (iii) subsequent transfers of
said Option shall be prohibited (except for a transfer to a
Family Member of Optionee from another Family Member of
Optionee which otherwise complies with the foregoing
requirements). For purposes hereof, a "Family Member" of
Optionee includes any child, stepchild, grandchild, parent,
stepparent, grandparent, spouse, former spouse, sibling,
niece, nephew, mother-in-law, father-in-law, son-in-law,
daughter-in-law, brother-in-law, or sister-in-law, of
Optionee, including adoptive relationships, any person
sharing Optionee's household (other than a tenant or
employee of Optionee), a trust in which such above-described
Family Members have more than fifty percent of the
beneficial interest, a foundation in which such
above-described Family Members (or Optionee) control the
management of assets, and any other entity in which such
above-described Family Members (or Optionee) own more than
fifty percent of the voting interests. The following
transactions shall not be deemed transfers for value: (A) a
transfer under a domestic relations order in settlement of
marital property rights; and (B) a transfer to an entity in
which more than fifty percent of the voting interests are
owned by Family Members (or Optionee) in exchange for an
interest in that entity. Notwithstanding any such transfer
by Optionee, the transferee, and any subsequent transferees,
shall be subject to the Agreement, including the provisions
as to and limitations on the exerciseability of the Option
in the event the original Optionee ceases to be a director
of the Corporation as provided under Sections 3 and 4 of the
Agreement, it being understood that, such provisions shall
apply in the event the original Optionee ceases to be a
director even if the Option has been transferred as
permitted hereby.
EXHIBIT B
BALCHEM CORPORATION
1999 STOCK PLAN
EXERCISE NOTICE NON-QUALIFIED STOCK OPTION
Balchem Corporation
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▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ___________
1. Exercise of Option. Effective as of today, , the undersigned
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("Optionee") hereby elects to exercise Non-Qualified Stock Options to purchase
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______ shares of the Common Stock (the "Shares") of Balchem Corporation (the
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"Corporation"), under and pursuant to the Balchem Corporation 1999 Stock Plan,
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as the same may be amended from time to time (the "Plan"), and the Stock Option
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Agreement between the Corporation and Optionee dated as of _____________,
_____________, as the same may be amended from time to time (the "Option
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Agreement").
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2. Delivery of Payment. Optionee herewith delivers to the Corporation the
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full purchase price of the Shares, as set forth in the Option Agreement.
3. Representation of Optionee. Optionee acknowledges that Optionee has
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received, read and understood the Plan and the Option Agreement and agrees to
abide by and be bound by their terms and conditions.
4. Rights as Stockholder. Until the stock certificate evidencing the Shares
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is issued (as evidenced by the appropriate entry on the books of the Corporation
or of a duly authorized transfer agent of the Corporation), no right to vote or
receive dividends or any other rights as a stockholder shall exist with respect
to the Shares, notwithstanding the exercise of the Option (as defined in the
Option Agreement). No adjustment will be made for any dividend or other right
for which the record date is prior to the date the stock certificate for the
Shares is issued.
5. Tax Consultation. Optionee understands that Optionee may suffer adverse
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tax consequences as a result of Optionee's purchase or disposition of the
Shares. Optionee represents that Optionee has consulted with any tax consultants
Optionee deems advisable in connection with the purchase or disposition of the
Shares and that Optionee is not relying on the Corporation for any tax advice.
6. Certain Securities Law Matters. Without limiting the provisions of the
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Plan and/or the Option Agreement, Optionee understands and agrees that the
Corporation shall be entitled to cause appropriate legends to be placed upon any
certificate(s) evidencing ownership of the Shares that may be required by the
Corporation in connection with state or federal securities laws, the Option
Agreement and/or the Plan.
7. Successors and Assigns. The Corporation may assign any of its rights
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under this Exercise Notice to single or multiple assignees, and this Exercise
Notice shall inure to the benefit of the successors and the assigns of the
Corporation. Subject to any restrictions on transfer set forth or referred to in
the Option Agreement and/or the Plan, this Exercise Notice shall be binding upon
Optionee and his or her heirs, executors, administrators, successors and
assigns.
8. Interpretation. Any dispute regarding the interpretation of this
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Exercise Notice shall be determined by the Corporation's Board of Directors or
the Committee (as defined in the Plan), whose determination shall be final and
binding on the Corporation and on Optionee.
Submitted by: OPTIONEE:
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Name:
Address: