Exhibit 10(ii)
STOCK OPTION AGREEMENT
(Non-Assignable)
Date: Option Number: SP-18
April 9, 2001 Number of Shares Purchasable
7,500
To Purchase Shares of
Class B Common Stock
-of-
K-V PHARMACEUTICAL COMPANY
THIS CERTIFIES THAT Xxxxx X. Xxxxxx (the "Participant") is hereby granted the
option to purchase, at the option price of $16.250 per share (the "Option
Price"), all or any part of that number of fully paid and non-assessable shares
of the Class B Common Stock, par value $0.01 per share ("Class B Common
Stock"), of K-V Pharmaceutical Company, a Delaware corporation (hereinafter
called the "Company") above set forth, upon and subject to the following terms
and conditions:
This Option and all rights to purchase shares hereunder shall expire five
(5) years from the date hereof (hereinafter called the "expiration date").
This Option and all rights hereunder shall be non-assignable and
non-transferable, except to the extent that the holder's legatees, personal
representatives or distributees in the event of the holder's death may be
permitted to exercise this Option as hereinafter set forth.
Any attempted transfer, assignment, pledge, hypothecation or other
disposition of this Option except as provided herein shall be null and void and
without effect.
As of April 9, 2001, and prior to its expiration or earlier termination,
this Option shall be exercisable from time to time in cumulative installments
as to all or any of the shares then purchasable hereunder as follows: During
the twelve-month period commencing April 9, 2001 and ending April 8, 2002, it
may be exercised as to 20% of the shares originally subject hereto; and during
each additional consecutive twelve-month period, it may be exercised as to an
additional 20%; until the fifth twelve-month period, during which this Option
shall be exercisable as to all the shares subject hereto.
This Option may be exercised from time to time only by delivery to the
Company at its main office (attention of the Secretary) of a duly signed notice
in writing stating the number of shares with respect to which this Option is
being exercised and the time and date of delivery thereof, which time and date
of delivery
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shall be during the normal business hours of the Company on a regular business
day not less than fifteen (15) days after the giving of such notice unless an
earlier date has been mutually agreed upon; provided, however, that not less
than ten (10) shares may be purchased at any one time unless the number
purchased is the total number then purchasable hereunder; and provided further
that this Option may not be exercised at any time when this Option or the
granting or exercise hereof violates any law or governmental order or
regulation. At the time of delivery specified in such notice, the Company shall,
without transfer or issue tax to the holder (or other person entitled to
exercise this Option) transfer and set aside for the benefit of the holder (or
other person entitled to exercise this Option) a certificate or certificates out
of the Company's theretofore authorized but unissued or reacquired shares of
Class B Common Stock as the Company may elect (with appropriate legend thereon,
if deemed necessary by the Company, containing the representation by the person
exercising the Option that the shares purchased shall be for investment purposes
and not with a view to resale or distribution) against payment of the option
price in full for the number of shares purchased by either (i) cash (including a
certified or bank cashier's check or the equivalent thereof), or (ii) at the
discretion of the Board of Directors of the Company (with the Participant
abstaining from voting), by delivering at fair market value, as determined by
the Board of Directors of the Company (with the Participant abstaining from
voting), Company Common Stock already owned by the holder, or (iii) any
combination of cash and Company Common Stock, to be held by the Company and
subsequently delivered to the holder (or such other person) as hereinafter
provided. If the holder fails to pay for any part of the number of shares
specified in such notice as required, the right to purchase such shares may be
terminated by the Board of Directors of the Company (with the Participant
abstaining from voting).
Except as hereinafter provided, no Option may be exercised at any time
unless the holder hereof is a director of the Company.
To the extent that this Option has not been exercised in full prior to its
termination or Expiration date, whichever occurs sooner, it shall terminate and
become void and of no effect.
All Class B Common Stock purchased pursuant to the exercise of an Option
shall be held by the Company for a period of two years from the date of
exercise (the "Holding Period"). If the holder ceases to be a director of the
Company during the Holding Period for any reason, except death or disability,
the holder's purchase thereof shall be voidable at the Company's sole option
and discretion at any time within the Holding Period. If any purchase of Class
B Common Stock is so voided, the least of (i) the funds paid by the holder in
connection with the voided transaction; (ii) the value in cash of Common Stock
used to purchase such Class B Common Stock, determined as of the date of such
purchase, less any amount which would have been forfeited relative to Stock
used to purchase the forfeited stock if
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such Stock had not been so used and the Holding Period relative to such stock
had not expired; or (iii) the fair market value per shares, as determined on the
date of termination of the holder as director of the Company shall be returned
in full to the holder within thirty (30) days after such purchase is voided
provided, however, no payment shall be due prior to the time that the Company is
in possession of the Class B Common Stock and an executed stock power with
respect to such Stock. In order to facilitate the repurchase of Class B Common
Stock by the Company in accordance with the terms of this Paragraph, exercise of
any Option or portion thereof, the holder shall, at the time of payment for such
Class B Common Stock, as provided hereinabove, deliver to the Company a form of
stock power and assignment signed by the holder in form and substance
satisfactory to the Company, rendering the certificate representing the shares
purchased negotiable to the Company. Notwithstanding the foregoing, if the
holder demonstrates to the Company a need to obtain financing for the purchase
of Class B Common Stock, and indicates his good faith intention to remain a
director of the Company during the Holding Period, the Company, may permit
delivery of any Class B Common Stock purchased hereunder to a financial
institution for use as collateral security for the purchase of the Class B
Common Stock, subject to any necessary or appropriate restrictions with respect
thereto as may be required to comply with applicable federal and state
securities laws and/or the listing requirements of any national securities
exchange, and the holder may use any Class B Common Stock so held in payment of
the Option Price for additional Class B Common Stock as provided for herein.
If the holder remains a director of the Company throughout the Holding
Period, or ceases to be a director by reason of death or disability, the Company
shall deliver to the holder or the holder's personal representative, as soon as
practicable thereafter, certificates representing the Class B Common Stock
purchased hereunder (the "Certificates"), free and clear of restrictions except
for the restrictions which are necessary to assure compliance by the Company and
the holder with applicable federal and state securities laws and/or the listing
requirements of any national securities exchange. If the Company fails or
declines to exercise its right to void any purchase pursuant to the terms of the
preceding paragraph hereof, the Company shall deliver the Certificates to the
holder as soon as practicable after the expiration of two years from the date of
exercise.
This Option shall not confer upon the holder any rights in the stock of the
Company prior to the issuance of a stock certificate pursuant to the exercise of
this Option. No adjustment shall be made for dividends or other rights for which
the record date is prior to the date such stock certificate is issued.
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Except as provided in this paragraph, upon the date the holder ceases to
be a director for any reason, this Option shall terminate. If the Participant's
directorship is terminated by reason of death or disability, any outstanding
Option or unexercised portion thereof which was granted to him may be fully
exercised by the Participant, his personal representative, executor,
administrator, heirs or devisees, as applicable, at any time within one (1)
year from the date of termination be reason of death or disability, provided
that the Participant has completed five (5) full years of service with the
Company from the date the Option was granted. If the Participant has not
completed five (5) full years of service with the Company from the date the
Option was granted, the Option may be exercised only to the extent exercisable
as of the date of termination of services.
In the event that the outstanding shares of Class B Common Stock of the
Company are hereafter increased or decreased or changed into or exchanged for a
different number or kind of shares or other securities of the Company or of
another corporation, or in the event that there is a "corporate transaction" as
that term is defined in the Regulations under Section 425 of the Internal
Revenue Code of 1986, by reason of reorganization, merger, consolidation,
recapitalization, reclassification, stock split-up, spin-off, combination of
shares or dividend payable in capital stock, this Option shall, to the extent
that it has not been exercised, entitle the holder upon the subsequent exercise
of this Option to such number and kind of securities or other property, subject
to the terms of the Option, to which the holder would be entitled had the
holder actually owned the shares subject to the unexercised portion of this
Option at the time of the occurrence of such event, and the aggregate purchase
price upon the subsequent exercise of this Option shall be the same as if the
Class B Common Stock of the Company originally optioned were being purchased as
provided herein; provided, however, that each such adjustment in the number and
kind of shares subject to this Option, including any adjustment in the Option
price, shall be made in such manner as not to constitute a "modification" as
defined in Section 425 of the Internal Revenue Code of 1986. Any such
adjustment made by the Company shall be conclusive.
Upon the occurrence of: (i) the dissolution or liquidation of the Company,
(ii) a reorganization, merger or consolidation of the Company with one or more
corporations in which the Company is not the surviving corporation, (iii) a
sale of substantially all of the assets of the Company or (iv) the transfer of
more than 80% of the then outstanding Stock of the Company to another entity or
person in a single transaction or series of transactions, this Agreement shall
terminate, and any outstanding Options shall terminate on the day before the
consummation of the transaction; provided that the Board of Directors of the
Company (with the Participant abstaining from voting) shall have the right, but
shall not be obligated, to accelerate the time in which any Options may be
exercised prior to such a termination. However, the Board of Directors of the
Company (with the Participant abstaining from voting) has the authority to
amend this Agreement to require that a successor corporation assume any
outstanding Options.
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The Board of Directors of the Company (with the Participant abstaining
from voting) may postpone the issuance and delivery of shares upon any exercise
of this Option, if necessary, until admission of such shares to listing on any
stock exchange and completion of registration and qualification of such shares
under any applicable state or federal law, rule or regulation.
The holder hereof shall make such representations and furnish such
information to the Company as may be appropriate to permit the Company to issue
such shares in compliance with the provisions of the Security Act of 1933, as
amended (the "Securities Act"), or any other applicable law, including state
securities laws. Without limiting the generality of the foregoing, if requested
by the Company, the holder will represent, in form acceptable to the Company,
that the holder is purchasing any shares issued pursuant hereto for investment
purposes and not with a view to resale or distribution. The holder, by
acceptance of this Option, hereby consents to the placing of restrictive legend
on any stock certificate for shares purchased hereunder, setting forth the
restrictions applicable to the further resale, transfer or other conveyance
thereof without registration under the Securities Act of other applicable law
or the availability of an exemption from registration thereunder and to the
placing of transfer restrictions on the records of the transfer agent for such
shares. In addition, the holder hereof will not thereafter resell, transfer or
otherwise convey any shares purchased hereunder without compliance with one of
the following three conditions: (1) an opinion of the holder's counsel is
received, in form and substance satisfactory to counsel for the Company, that
registration under the Security Act and applicable state securities laws is not
required; or (2) such shares have been registered for sale under the Securities
Act and any applicable state securities laws; or (3) a "no-action" letter is
received from the staff of the Securities and Exchange Commission and from
applicable state securities agencies, based on an opinion of the holder's
counsel in form and substance reasonably satisfactory to counsel for the
Company, advising that registration under the Securities Act is not required.
A determination by the Board of Directors of the Company (with the
Participant abstaining from voting) of any question which may arise with
respect to the interpretation and construction of the provisions of this Option
shall be final.
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WITNESS the seal of the Company and the signatures of its duly authorized
officers or agents.
Dated: Xxxxx 0, 0000 X-X PHARMACEUTICAL COMPANY
By /s/ Xxxxxx X. Xxxxxxxx
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VP, Treasurer and CFO
ACCEPTED:
/s/ Xxxxx X. Xxxxxx
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Xxxxx X. Xxxxxx
