exv10w3






Exhibit 10.3




NONQUALIFIED STOCK OPTION AGREEMENT




PURSUANT TO




K-V PHARMACEUTICAL COMPANY




2001 INCENTIVE STOCK OPTION PLAN

* * *




     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”).



W I T N E S S E T H:




     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:




	1.	 	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.
	 
	2.	 	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.
	 
	3.	 	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.
	 
	4.	 	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,




 









 






	 	 	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.
	 
	5.	 	Termination of Option.






	 	(a)	 	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.
	 
	 	(b)	 	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.
	 
	 	(c)	 	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.
	 
	 	(d)	 	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.






	6.	 	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.	 	Method of Exercising Option.






	 	(a)	 	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 Common Stock in
respect of which it is being exercised. It shall be signed by the person or persons so
exercising the Option and shall be accompanied by payment in full of the Option Price
for such shares of Common Stock in cash, by certified check or in shares of Common
Stock (including shares issuable on exercise of the Option).
	 
	 	(b)	 	If shares of Common Stock are tendered as payment of the Option Price (or are
withheld from the shares issuable on exercise of the Option), the value of such shares
shall be their Fair Market Value Per Share as of the date of exercise. If such tender
would result in the issuance of fractional shares of Common Stock, the Company shall
instead return the balance in cash or by check to the Optionee. The Company shall
issue, in the name of the person or persons exercising the Option, and deliver a
certificate or certificates representing such shares as soon as practicable after
notice and payment shall be received.
	 
	 	(c)	 	In the event the Option shall be exercised by any person or persons other than
the Optionee, pursuant to Paragraph 5, such notice shall be accompanied by appropriate
proof of the right of such person or persons to exercise the Option.
	 
	 	(d)	 	The Optionee shall have no rights of a stockholder with respect to shares of
Common Stock to be acquired by the exercise of the Option until a certificate or
certificates representing such shares are issued to the Optionee. All shares of Common
Stock purchased upon the exercise of the Option as provided herein shall be fully paid
and non-assessable.






	8.	 	General. The Company shall at all times during the term of the Option reserve and
keep available such number of shares of Common Stock as will be sufficient to satisfy the
requirements of this Agreement, shall pay all original issue taxes, if any, with respect to
the issuance of shares of Common Stock pursuant hereto and all other fees and expenses
necessarily incurred by the Company in connection therewith, and shall, from time to time, use
its best efforts to comply with all laws and regulations which, in the opinion of counsel for
the Company, shall be applicable thereto.
	 
	9.	 	Notices. Each notice relating to this Agreement shall be in writing and delivered in
person or by first class mail, postage prepaid, to the address as hereinafter provided. Each
notice shall be deemed to have been given on the date it is received. Each notice to the
Company shall be addressed to it at its offices at One Corporate Woods Drive, Bridgeton,
Missouri 63044 (Attention: VP, Human Resources). Each notice to the Optionee or other person
or persons then entitled to exercise the Option shall be addressed to the Optionee or such
other person or persons at the Optionee’s last known address.
	 
	10.	 	Reimbursement of Expenses. If the Optionee is not a citizen or resident of the
United States, the Optionee, as a condition hereof, agrees to reimburse the Company at its
request for any foreign exchange premiums or license, transfer taxes or similar sums of money
payable outside the United States by the Company in connection with the exercise of the Option
under this Agreement.





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	11.	 	Incorporation of Plan. A copy of the Plan has been delivered to the Optionee and is
hereby incorporated by reference.
	 
	12.	 	Interpretation. The interpretation and construction of any terms or conditions of
the Plan, or of this Agreement or other matters related to the Plan by the Compensation
Committee shall be final and conclusive.
	 
	13.	 	Enforceability. This Agreement shall be binding upon the Optionee, the Optionee’s
estate, the Optionee’s personal representatives and beneficiaries.




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     IN WITNESS WHEREOF, the Company has caused this Agreement to be duly exercised by its officer
thereunto duly authorized, and the Optionee has hereunto set his or her hand all as of the day and
year first above written.



	 	 	 	 	 	 	 	 	 	 	 
	K-V PHARMACEUTICAL COMPANY	 	 	 	OPTIONEE	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	By:

	 	 	 	 	 	By:
	 	 	 	 
	 

	 	 
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	Name:

	 	 	 	 	 	Printed Name:
	 	 	 	 
	 

	 	 
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	Title:

	 	 	 	 	 	Address:
	 	 	 	 
	 

	 	 
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 
	 

	 	 	 	 	 	 	 	 





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EXHIBIT A




TO




NONQUALIFIED STOCK OPTION AGREEMENT




The Option is exercisable during its term only in accordance with the following:



	 	 	 	 	 	 	 	 	 
	 	 	Percentage Exercisable
	Date	 	Per Time Period	 	Cumulative
	March 31, 20__
	 	25% = ____ shares	 	25% =     ____ shares
	 
	June 30, 20__
	 	25% = ____ shares	 	50% =     ____ shares
	 
	September 30, 20__
	 	25% = ____ shares	 	75% =   ____ shares
	 
	December 31, 20__
	 	25% = ____ shares	 	100% = ____ shares






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Exhibit B




          A “Change of Control” shall mean the occurrence of any of the following:




          (1) an acquisition by any individual, entity or group (within the meaning of Section 13d-3 or
14d-1 of the Securities Exchange Act of 1934, as amended (the “Act”)) (a “Person”)
of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Act) of more than
50% of the combined voting power of the then outstanding voting securities of the Company entitled
to vote generally in the election of directors to the Board (the “Outstanding Company Voting
Securities”); provided, however, that “Change of Control” shall not include (i) the acquisition
by any corporation pursuant to a reorganization, merger, consolidation or similar corporate
transaction (in each case, a “Corporate Transaction”) if, pursuant to such Corporate
Transaction, the conditions described in (A) and (B) of clause (3) below are satisfied, and (ii)
for the avoidance of doubt, any acquisition after the Grant Date by any Person who beneficially
owned 50% or more of the combined voting power of the Outstanding Company Voting Securities prior
to the Grant Date;




          (2) a change in the composition of the Board such that the individuals who, as of the Grant
Date, constitute the Board (the Board as of the Grant Date shall be hereinafter referred to as the
(“Incumbent Board”)) cease for any reason to constitute at least a majority of the Board;
provided that, for purposes of this clause (2), any individual who becomes a member of the Board
subsequent to the Grant Date and whose election, or nomination for election by the Company’s
stockholders, was approved by a majority of the members of the Board who also are members of the
Incumbent Board (or so deemed to be pursuant to this proviso) shall be deemed a member of the
Incumbent Board; but, provided further, that any such individual whose initial assumption of office
is in connection with a Change of Control described in clause (1), (3) or (4) or whose initial
assumption of office occurs as a result of either an actual or threatened election contest or other
actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the
Board shall not be so deemed a member of the Incumbent Board; or




          (3) the consummation of a Corporate Transaction; excluding, however, such a Corporate
Transaction pursuant to which (A) the beneficial owners of the outstanding shares of the Company’s
common stock, par value of $.01 per share (the “Shares”) and Outstanding Company Voting
Securities immediately prior to such Corporate Transaction will beneficially own, directly or
indirectly, more than fifty-one percent (51%) of, respectively, the outstanding shares of common
stock of the corporation resulting from such Corporate Transaction and the combined voting power of
the outstanding voting securities of such corporation entitled to vote generally in the election of
directors, in substantially the same proportions as their ownership, immediately prior to such
Corporate Transaction, of the outstanding Shares and Outstanding Company Voting Securities, as the
case may be, and (B) individuals who were members of the Incumbent Board will constitute at least a
majority of the members of the board of directors of the corporation resulting from such Corporate
Transaction; or




          (4) the approval of the stockholders of the Company of (A) a complete liquidation or
dissolution of the Company or (B) the sale or other disposition of all or
substantially all the assets of the Company; excluding, however, such a sale or other
disposition to a corporation with respect to which, following such sale or other disposition, (y)
more than fifty-one percent (51%) of the then outstanding shares of common stock of such
corporation and the combined voting power of the then outstanding voting securities of such
corporation entitled to vote generally in the election of directors will be then beneficially
owned, directly or indirectly,


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by the individuals and entities who were the beneficial owners,
respectively, of the outstanding Shares and Outstanding Company Voting Securities immediately prior
to such sale or other disposition in substantially the same proportion as their ownership,
immediately prior to such sale or other disposition, of the outstanding Shares and Outstanding
Company Voting Securities, as the case may be, and (z) individuals who were members of the
Incumbent Board will constitute at least a majority of the members of the board of directors of
such corporation.





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