Exhibit 10(gg)
STOCK OPTION AGREEMENT
(Non-Assignable)
Date: Option Number: 91-1457
October 13, 1999 Number of Shares Purchasable
16,390
To Purchase Shares of
Class A Common Stock
-of-
K-V PHARMACEUTICAL COMPANY
Issued Pursuant to the
1991 Incentive Stock Option Plan (the "Plan")
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THIS CERTIFIES THAT Alan G. Johnson is hereby granted the option to
purchase, at the option price of $15.250 per share, all or any part of that
number of fully paid and non-assessable shares of the Class A Common Stock,
par value $0.01 per share ("Class A 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 or in accordance with
the Company's 1991 Incentive Stock Option Plan (the "Plan") shall be null
and void and without effect.
As of October 13, 1999, 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 October 13,
1999 and ending October 12, 2000, 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.
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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 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
A 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 Committee, as defined
in the Plan, by delivering at fair market value, as determined by the
Committee (as provided under the Plan), Company Common Stock already owned
by the Participant, 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 Committee.
Except as hereinafter provided, no Option may be exercised at any
time unless the holder hereof is an employee of the Company or any of its
subsidiaries.
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.
Initially, all Class A Common Stock purchased pursuant to the
exercise of this Option shall be held by the Company for a period of two
years from the date of exercise (the "Holding Period"). If the holder leaves
the employ of the Company during the Holding Period for any reason, except
retirement (under normal Company policies), 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 A
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 A Common Stock, determined as of the date
of such purchase, less any amount which would have been forfeited pursuant
to the Plan relative to Stock used to purchase the forfeited stock if such
Stock has not been so used and the
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Holding Period relative to such stock had not expired; or (iii) the fair
market value per share, as determined on the date of termination of the
holder's employment with the Company in accordance with the provisions of
the Plan, 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 A Common
Stock and an executed stock power with respect to such Stock. In order to
facilitate the repurchase of Class A Common Stock by the Company in
accordance with the terms of this Paragraph, each holder who exercises any
Option or portion thereof shall, at the time of payment for such Class A
Common Stock, as provided hereinabove, deliver to the Company a form of
stock power and assignment signed by such holder in form and substance
satisfactory to the Company, rendering the certificate representing the
shares purchased negotiable to the Company. Notwithstanding the foregoing,
if any holder who exercises an Option demonstrates to the Committee of the
Company a need to obtain financing for the purchase of Class A Common Stock
and indicates his good faith intention to remain in the employ of the
Company during the Holding Period, the Committee, in its sole discretion,
may permit delivery of any Class A Common Stock purchased hereunder to a
financial institution for use as collateral security for the purchase of the
Class A 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 A Common Stock so held
in payment of the Option Price for additional Class A Common Stock, as
provided for herein.
If the holder remains in the employ of the Company throughout the
Holding Period or is terminated by reason of death, disability or retirement
(under normal Company policies), the Company shall deliver to the holder or
the holder's personal representative, as soon as practicable thereafter,
certificates representing the Class A 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.
Notwithstanding the provisions of the two preceding paragraphs, if
the holder's employment by the Company is terminated after three (3) years
following the holder's date of commencement of employment ("Start Date"),
all exercised portions of this Option may be retained by the holder up to
sixty percent (60%) of the total number of shares covered by this Option, if
the holder's employment by the Company is terminated after four (4) years
from Start Date, all exercised portions of this Option may be retained up to
eighty percent (80%) of the total number of shares covered by this Option,
and if the holder's employment by the Company is terminated after five (5)
years from Start Date, all exercised portions of this Option may be retained
up to one hundred percent (100%) of the total number of shares covered by
this Option.
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This Option shall not confer upon the holder any right to remain in
the employ of the Company or any subsidiary thereof and 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.
Except as provided in this paragraph, upon termination of the
holder's employment with the Company or any of its subsidiaries for any
reason, this Option shall terminate. If the employment of the Participant is
terminated by reason of retirement (under normal Company policies), any
outstanding Option or unexercised portion thereof granted to him may be
fully exercised by the Participant, his personal representative, executor,
administrator, heirs or devisees, as applicable, at any time, within three
months from the date of termination by reason of retirement. If the
employment of a Participant 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 year from the date of termination by reason of death or
disability, provided that the Participant has completed three (3) full years
of employment with the Company from the date the Option was granted. If the
Participant has not completed three (3) full years of employment 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 employment.
Notwithstanding any of the foregoing, the transfer of employment from the
Company to any Parent or Subsidiary thereof, or vice versa, shall not be
deemed a termination of employment.
In the event that the outstanding shares of Class A 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 A
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 Committee shall be conclusive.
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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, the Plan shall terminate, and any outstanding Options granted
under the Plan shall terminate on the day before the consummation of the
transaction; provided that the Board of Directors 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 termination of such
Options shall not occur if the Board of Directors takes certain actions as
provided in the Plan. In addition, the Board of Directors has the authority
to amend the Plan to require that a successor corporation assume any
outstanding Options.
The Company 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 Securities 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.
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WITNESS the seal of the Company and the signatures of its duly
authorized officers or agents.
Dated: October 13, 1999
K-V PHARMACEUTICAL COMPANY
By /s/ Richard H. Chibnall
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Vice President, Finance
ACCEPTED:
/s/ Alan G. Johnson
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Alan G. Johnson
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