Exhibit 10.2


 


INCENTIVE STOCK OPTION AGREEMENT


 


UNDER THE ALBANY MOLECULAR RESEARCH, INC.


1998 STOCK OPTION AND INCENTIVE PLAN


 


	
  Name of
  Optionee:

  	
  Mark T. Frost

  
	
  Number of Option
  Shares:

  	
  120,000

  
	
  Option Exercise
  Price per Share:

  	
  $11.11

  
	
  [FMV
  (Average of high and low sale prices on Grant Date) or 110% of FMV if a 10%
  Owner]

  
	
  Grant Date:

  	
  December 3,
  2004

  
	
  Expiration Date:

  	
  December 3,
  2014

  



 


Pursuant
to the Albany Molecular Research, Inc. 1998 Stock Option and Incentive Plan, as
amended through the date hereof (the “Plan”), Albany Molecular Research, Inc.
(the “Company”) hereby grants to the Optionee named above an option (the “Stock
Option”) to purchase on or prior to the Expiration Date specified above all or
any part of the number of shares of Common Stock, par value $.01 per share (the
“Stock”), of the Company specified above at the Option Exercise Price per Share
specified above subject to the terms and conditions set forth herein and in the
Plan.


 


1.                                       Vesting
Schedule.  No portion of this Stock
Option may be exercised until such portion shall have vested.  Except as set forth below, and subject to the
discretion of the Administrator (as defined in Section 2 of the Plan) to
accelerate the vesting schedule hereunder and the acceleration of vesting
in accordance with Sections 3(c) and 17 of the Plan, (a) twenty-five
percent (25%) of this Stock Option shall be fully vested and exercisable on the
first anniversary of the Grant Date, (b) an additional six and one-quarter
percent (6.25%) of this Stock Option shall be fully vested and exercisable on
the fifteen (15) month anniversary of the Grant Date, and quarterly thereafter,
and (c) one hundred percent (100%) of this Stock Option shall be fully vested
and exercisable on the fourth anniversary of the Grant Date.(1)  Once vested, this Stock Option shall continue
to be exercisable at any time or times prior to the close of business on the
Expiration Date, subject to the provisions hereof and of the Plan.


 










(1) Max. of $100,000 per
yr.


 





















 


2.                                       Manner
of Exercise.


 


(a)                                  The
Optionee may exercise this Stock Option only in the following manner:  from time to time on or prior to the
Expiration Date of this Stock Option, the Optionee may give written notice to
the Company of his or her election to purchase some or all of the vested Option
Shares purchasable at the time of such notice. 
This notice shall specify the number of Option Shares to be purchased.


 


Payment of the purchase
price for the Option Shares may be made by one or more of the following
methods:  (i) in cash, by certified
or bank check or other instrument acceptable to the Administrator;
(ii) through the delivery (or attestation to the ownership) of shares of
Stock, valued at Fair Market Value on the exercise date, that have been
purchased by the Optionee on the open market or that have been beneficially
owned by the Optionee for at least six months, and are not then subject to
restrictions under any Company plan, if permitted by the Administrator in its
discretion; (iii) by the Optionee delivering to the Company a properly
executed exercise notice together with irrevocable instructions to a broker to
promptly deliver to the Company cash or a check payable and acceptable to the
Company to pay the purchase price, provided that in the event the
Optionee chooses to pay the purchase price as so provided, the Optionee and the
broker shall comply with such procedures and enter into such agreements of
indemnity and other agreements as the Administrator shall prescribe as a
condition of such payment procedure; (iv) by the Optionee delivering to the
Company a promissory note if the Board of Directors has expressly authorized
the loan of funds to the Optionee for the purpose of enabling or assisting the
Optionee to effect the exercise of his or her Stock Option, provided
that at least so much of the exercise price as represents the par value of the
Stock shall be paid other than with a promissory note; or (v) with the consent
of the Administrator, a combination of (i), (ii), (iii) and (iv) above.  Payment instruments will be received subject
to collection.


 


The delivery of
certificates representing the Option Shares will be contingent upon the Company’s
receipt from the Optionee of full payment for the Option Shares, as set forth
above and any agreement, statement or other evidence that the Company may
require to satisfy itself that the issuance of Stock to be purchased pursuant
to the exercise of this Stock Option under the Plan and any subsequent resale
of the shares of Stock will be in compliance with applicable laws and regulations.  In the event an Optionee chooses to pay the
purchase price by previously-owned shares of Stock through the attestation
method described in clause (ii) of the preceding paragraph, the number of
shares of Stock transferred to the Optionee upon exercise of this Stock Option
shall be net of the number of shares attested to.


 


(b)                                 Certificates
for the shares of Stock purchased upon exercise of this Stock Option shall be
issued and delivered to the Optionee upon compliance to the satisfaction of the
Administrator with all requirements under applicable laws or regulations in
connection with such issuance and with the requirements hereof and of the
Plan.  The determination of the
Administrator as to such compliance shall be final and binding on the
Optionee.  The Optionee shall not be
deemed to be the holder of, or to have any of the rights of a holder with
respect to,


 





















 


any shares of Stock
subject to this Stock Option unless and until this Stock Option shall have been
exercised pursuant to the terms hereof, the Company shall have issued and
delivered the shares to the Optionee, and the Optionee’s name shall have been
entered as the stockholder of record on the books of the Company.  Thereupon, the Optionee shall have full
voting, dividend and other ownership rights with respect to such shares of
Stock.


 


(c)                                  The
minimum number of shares with respect to which this Stock Option may be
exercised at any one time shall be 100 shares, unless the number of shares with
respect to which this Stock Option is being exercised is the total number of
shares subject to exercise under this Stock Option at the time.


 


(d)                                 Notwithstanding
any other provision hereof or of the Plan, no portion of this Stock Option
shall be exercisable after the Expiration Date hereof.


 


3.                                       Termination
of Employment.  If the Optionee’s
employment by the Company or a Subsidiary (as defined in the Plan) is
terminated, the period within which to exercise the Stock Option may be subject
to earlier termination as set forth below.


 


(a)                                  Termination
Due to Death.  If the Optionee’s
employment terminates by reason of death, any Option held by the Optionee shall
become fully exercisable and may thereafter be exercised by the Optionee’s
legal representative or legatee for a period of twelve (12) months from the date
of death or until the Expiration Date, if earlier.


 


(b)                                 Termination
Due to Disability.  If the Optionee’s
employment terminates as a result of the inability of the Optionee, by reason
of injury, illness or other similar cause, to perform a major part of his or
her duties and responsibilities in connection with the conduct of the business
and affairs of the Company, any Option held by the Optionee shall become fully
exercisable and may thereafter be exercised by the Optionee for a period of
twelve (12) months from the date of termination or until the Expiration Date,
if earlier.  The death of the Optionee
during the 12-month period provided in this Section 3(b) shall extend such
period for another twelve (12)
months from the date of death or until the Expiration Date, if earlier.


 


(c)                                  Termination
for Cause.  If the Optionee’s
employment terminates for Cause (as defined below), any Option held by the
Optionee shall terminate immediately and be of no further force and effect.


 


For purposes of this
Agreement, “Cause” shall have the meaning set forth in any Employment Agreement
by and between the Company and the Optionee, or if there is no such Employment
Agreement, termination of the Optionee’s employment for any of the following
reasons shall constitute termination for “Cause” for purposes hereof:


 


(i)                                     dishonest
statements or acts of the Optionee with respect to the Company, any Subsidiary
or any affiliate of the Company;


 





















 


(ii)                                  commission
by or indictment of the Optionee for (A) a felony or (B) any misdemeanor
involving moral turpitude, deceit, dishonesty or fraud (“indictment,” for these
purposes, meaning an indictment, probable cause hearing or any other procedure
pursuant to which an initial determination of probable or reasonable cause with
respect to such offense is made);


 


(iii)                               commission,
in the reasonable judgment of the Administrator, of any act involving a
violation of any procedure or policy of the Company;


 


(iv)                              failure
to perform to the reasonable satisfaction of the Chief Executive Officer or the
President of the Company a substantial portion of the Optionee’s duties and
responsibilities as an employee of the Company, which failure continues, in the
reasonable judgment of the Chief Executive Officer or the President of the
Company, after written notice to the Optionee thereof and after a 30-day cure
period expires;


 


(v)                                 gross
negligence, willful misconduct or insubordination of the Optionee with respect
to the Company, any Subsidiary or any affiliate of the Company; or


 


(vi)                              material
breach by the Optionee of any of the Optionee’s obligations under any agreement
with the Company, including, without limitation, that certain Employee
Innovation, Proprietary Information and Post-Employment Activity Agreement by
and between the Company and the Optionee.


 


(d)                                 Other
Termination.  If the Optionee’s
employment terminates for any reason other than those set forth in
Sections 3(a), 3(b) or 3(c) of this Agreement, and unless otherwise
determined by the Committee, any Option held by the Optionee may be exercised,
to the extent exercisable on the date of termination, for a period of three (3)
months from the date of termination or until the Expiration Date, if
earlier.  Any Option that is not
exercisable at such time shall terminate immediately and be of no further force
or effect.


 


The Administrator’s determination of the reason for
termination of the Optionee’s employment shall be conclusive and binding on the
Optionee and his or her representatives or legatees.


 


4.                                       Incorporation
of Plan.  Notwithstanding anything
herein to the contrary, this Stock Option shall be subject to and governed by
all the terms and conditions of the Plan. 
In the event of any discrepancy or inconsistency between this Agreement
and the Plan, the terms and conditions of the Plan shall control.  Capitalized terms in this Agreement shall
have the meaning specified in the Plan, unless a different meaning is specified
herein.


 


5.                                       Transferability.  This Agreement is personal to the Optionee,
is non-assignable and is not transferable in any manner, by operation of law or
otherwise, other than by will or the laws of


 





















 


descent and
distribution.  This Stock Option is
exercisable, during the Optionee’s lifetime, only by the Optionee, or by the
Optionee’s legal representative or guardian in the event of the Optionee’s
incapacity.


 


6.                                       Status
of the Stock Option.  This Stock
Option is intended to qualify as an “incentive stock option” under Section 422
of the Internal Revenue Code of 1986, as amended (the “Code”), but the Company
does not represent or warrant that this Stock Option qualifies as such.  The Optionee should consult with his or her
own tax advisors regarding the tax effects of this Stock Option and the
requirements necessary to obtain favorable income tax treatment under Section 422
of the Code, including, but not limited to, holding period requirements.  If the Optionee intends to dispose or does
dispose (whether by sale, gift, transfer or otherwise) of any Option Shares
within the one-year period beginning on the date after the transfer of such
shares to him or her, or within the two-year period beginning on the day after
the grant of this Stock Option, he or she will notify the Company within 30
days after such disposition.


 


7.                                       Miscellaneous.


 


(a)                                  Notice
hereunder shall be given to the Company at its principal place of business, and
shall be given to the Optionee at the address set forth below, or in either
case at such other address as one party may subsequently furnish to the other
party in writing.


 


(b)                                 This
Stock Option does not confer upon the Optionee any rights with respect to
continuance of employment by the Company or any Subsidiary.


 


(c)                                  Pursuant
to Section 15 of the Plan, the Administrator may at any time amend or
cancel any outstanding portion of this Stock Option, but no such action may be
taken which adversely affects the Optionee’s rights under this Agreement
without the Optionee’s consent.


 


(d)                                 This
Agreement may be executed in one or more counterparts, each of which shall be
an original, but all of which shall together constitute one instrument.


 


 


	
  ALBANY MOLECULAR
  RESEARCH, INC.

  
	
   

  
	
  By: /s/ Thomas
  E. D’Ambra

  	
   

  
	
   

  
	
  Name:  Thomas E. D’Ambra

  	
   

  
	
   

  
	
  Title:  Chairman, CEO and President