Exhibit 10.3.1
BALCHEM CORPORATION
STOCK OPTION GRANT
This STOCK OPTION GRANT (the "Grant"), dated as of , is between
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BALCHEM CORPORATION, a Maryland corporation (the "Corporation") and
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(the "Optionee").
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W I T N E S S E T H:
1. Grant of Options. Pursuant to the provisions of the 1999 Stock Plan of
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the Corporation, as the same may be amended from time to time (the "Plan"), the
Corporation has on the date set forth on Exhibit A hereto 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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set forth in Exhibit A at the price per share set forth in Exhibit A, as (i)
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incentive stock options ("Incentive Options") under Section 422 of the Internal
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Revenue Code of 1986, as amended (the "Code"), and/or (ii) non-incentive stock
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options ("Non-Qualified Options"), as set forth in Exhibit A (the Incentive
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Options and Non-Qualified Options granted hereby being referred to together
herein as the "Option" or the "Options"). Notwithstanding anything to the
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contrary contained in this Grant, the aggregate fair market value of Stock
(determined as of the date of grant) with respect to which options intended as
Incentive Options, whether granted to Optionee hereby or heretofore granted to
Optionee by the Corporation, become exercisable for the first time in any
calendar year may not exceed $100,000. Accordingly, to the extent that the fair
market value of the Stock subject to such options intended as Incentive Options
exceeds that amount, the Options corresponding to such excess, whether or not
referred to as or originally intended to be Incentive Options, shall
nevertheless be for all purposes Non-Qualified Options. All determinations with
respect to the foregoing shall be made in the order that the particular stock
options in question were granted. This limitation is intended to acknowledge and
comply with the annual vesting limitation on incentive stock option treatment
contained in Section 422(d) of the Code and shall be interpreted consistently
therewith.
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 Grant, unless otherwise expressly provided in Exhibit
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A. Unless otherwise provided in Exhibit A as to Non-Qualified Options, the
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Option may not be exercised (a) as to fewer than 100 shares at any one time (or
for the remaining shares then purchasable under the Option, if fewer than 100
shares), and (b) until fulfillment of any conditions precedent set forth in
Paragraph 7 hereof. 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 of Employment. In the event that the employment (as defined
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in the Plan) of Optionee shall be terminated (otherwise than by reason of death,
or disability or for cause, as defined below), the Option shall be exercisable
(to the extent that Optionee shall have been entitled to do so at the
termination of his employment) at any time prior to the expiration of the period
of sixty (60) days after such termination, but in no event later than the
specified expiration date, except as may be expressly provided in Exhibit A with
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respect to Non-Qualified Options. Notwithstanding anything herein to the
contrary, in the event that the employment of Optionee shall be terminated for
cause, all vested and unvested portions of the Option shall be immediately
forfeited by Optionee without any consideration. For the purposes hereof,
"cause" shall be defined as: any illegal or disreputable conduct which impairs
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or is injurious to the reputation, goodwill or business of the Corporation or is
seriously injurious to its stockholders, or involves the misappropriation of
funds or property of the Corporation or any of its direct or indirect
subsidiaries or any of the customers or vendors thereof or others having
business relations with any of them. A termination for "cause" will include any
resignation in anticipation of discharge for "cause" or accepted by the
Corporation in lieu of a formal discharge for "cause."
This Grant does not constitute an employment contract. Nothing in the Plan
or in this Grant shall confer upon Optionee any right to be continued in the
employ of the Corporation or its subsidiaries for the length of any vesting
schedule or for any portion thereof or for any other period of time, or
interfere in any way with the right of the Corporation or any such subsidiary to
terminate or otherwise modify the terms of Optionee's employment; provided, that
a change in Optionee's duties or position shall not affect Optionee's Option so
long as Optionee is still an employee of the Corporation or any Related Company
(as defined in the Plan).
4. Death or Disability of Optionee.
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(a) Death. If Optionee ceases to be employed by the Corporation and all
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Related Companies 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), 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 180 days from the date of Optionee's death, except as may be
provided in Exhibit A with respect to Non-Qualified Options.
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(b) Disability. If Optionee ceases to be employed by the Corporation and
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all Related Companies 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 employment), 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 180 days from the date of the termination of Optionee's employment,
except as may be provided in Exhibit A with respect to Non-Qualified Options.
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For the purposes of the Plan, the term "disability" shall mean "permanent and
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total disability" as defined in Section 22(e)(3) of the Code or successor
statute.
5. Transferability of Option. Incentive Options shall not be transferable
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otherwise than by will or the law of descent and distribution and are
exercisable during the lifetime of Optionee only by Optionee. Non-Qualified
Options shall not be transferable, except as, and then only to the extent, if
any, provided in Exhibit A hereto.
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 Grant 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 Grant, 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 ▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇.▇. Box 600, New Hampton,
New York, 10958. 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 shares 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) by any combination of the above. 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 Grant 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. Early Disposition. Optionee agrees to notify the Corporation in writing
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immediately after Optionee makes a Disqualifying Disposition of the Stock
received pursuant to the exercise of any of the Incentive Options. A
"Disqualifying Disposition" is any disposition (including any sale) of such
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Stock before the later of (a) two years after the date Optionee was granted the
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Option or (b) one year after the date Optionee acquired Stock by exercising the
Option. If Optionee has died before such Stock is sold, these holding period
requirements do not apply and no Disqualifying Disposition can occur thereafter.
Optionee also agrees to provide the Corporation with any information which it
shall request concerning any such disposition. Optionee acknowledges that he or
she will forfeit the favorable income tax treatment otherwise available with
respect to the exercise of any of the Incentive Options, if he or she makes a
Disqualifying Disposition of the Stock received upon exercise of the Option.
12. Withholding Taxes. Upon the exercise of a Non-Qualified Option, the
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making of a Disqualifying Disposition, the exercise of an Option transferred by
the original Optionee in accordance with the terms of this Grant or the Plan, or
the vesting of restricted Stock acquired on the exercise of the Option under the
Plan, 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 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 such wages, or (with
respect to compensation income attributable to the exercise of the Option) in
kind from the Stock otherwise deliverable to Optionee on exercise of the Option.
Optionee further agrees that, if the Corporation does not withhold an amount
from Optionee's wages sufficient to satisfy the Corporation's withholding
obligation, Optionee will reimburse the Corporation on demand, in cash, for the
amount underwithheld.
13. 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 Compensation Committee thereof (the "Committee"), after taking
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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 Stock in question shall be determined as of the day on which
the event occurs.
14. 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 Grant 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
Grant; 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 Grant to be executed by
its duly authorized officer and Optionee has executed this Grant as of the date
first written above.
BALCHEM CORPORATION
By:
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AGREED AND ACCEPTED:
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OPTIONEE:
EXHIBIT A
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GRANT OF OPTIONS
(1) Name of Optionee: ____________________
(2) Date of Grant: ____________________
Incentive Option Non-Qualified Option
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(3) Number of shares of Stock:
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(4) Price per share:
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(5) Expiration date:
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(6)Earliest date on which Options
can be exercised for the number of
shares ofStock indicated: Date Number of Shares Date Number of Shares
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(7) Transferability (applicable to Non-Qualified Option only). [Select one
choice]:
|_| The Non-Qualified Option shall not be transferable otherwise than by will
or the law of descent and distribution and are exercisable during the
lifetime of Optionee only by Optionee.
|_| 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.
EXHIBIT B
BALCHEM CORPORATION
1999 STOCK PLAN
EXERCISE NOTICE [INCENTIVE/NON-QUALIFIED] STOCK OPTIONS
Balchem Corporation
▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇
P.O. Box 600 New Hampton, New York 10958 Attention: _________
1. Exercise of Option. Effective as of today, ________, ____, the
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undersigned ("Optionee") hereby elects to exercise Incentive Stock Options to
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purchase ______ shares and/or Non-Qualified Options to purchase __________
shares of the Common Stock (the "Shares") of Balchem Corporation (the
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"Corporation"), under and pursuant to Balchem Corporation 1999 Stock Plan, as
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the same may be amended from time to time (the "Plan"), and the Stock Option
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Grant between the Corporation and Optionee dated as of ______________________,
as the same may be amended from time to time (the "Option Grant").
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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 Grant.
3. Representation of Optionee. Optionee acknowledges that Optionee has
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received, read and understood the Plan and the Option ▇▇▇▇▇ 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 Grant). 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 Grant, 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
Grant 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 Grant 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: