Contract
EXHIBIT
10.5
2003
NON-EMPLOYEE DIRECTORS EQUITY PLAN
THIS NONSTATUTORY STOCK OPTION
AGREEMENT (the “Option Agreement”) is made and entered into as of
_________ by and between KAYDON
CORPORATION, a Delaware corporation (the “Company”), and (the
“Optionee”). The Company has granted to the Optionee an option to
purchase certain shares of Stock, upon the terms and conditions set forth in
this Option Agreement (the “Option”).
1. Definitions and
Construction. Capitalized terms not defined herein shall have
the meaning given to them in the Director Plan. Whenever used herein,
the following terms shall have their respective meanings set forth
below:
(a) “Annual
Grant Date” means ________, 20__.
(b) “Director
Plan” means the Kaydon Corporation 2003 Non-Employee Directors Equity Plan, as
approved by stockholders of the Company on May 9, 2003.
(c) “Number
of Option Shares”
means ___________________ ( )
shares of Stock, as adjusted from time to time pursuant to Section
14.
(d)
“Exercise Price” means $ _____________ per share of Stock, as
adjusted from time to time pursuant to Section 14.
(e) “Option
Expiration Date” means the tenth, (10th) anniversary after the Annual Grant
Date.
(f)
“Securities Act” means the Securities Act of 1933, as amended.
(g) “Service”
means the Optionee’s service as a director.
2. Tax Status of the
Option. This Option is intended to be a nonstatutory stock
option and shall not be treated as an incentive stock option within the meaning
of Section 422(b) of the Code.
3. Administration. All
questions of interpretation concerning this Option Agreement shall be determined
by the Committee of the Board. All determinations by the Board shall
be final and binding upon all persons having an interest in the
Option.
4. Exercise of the
Option.
(a) Except
as otherwise provided herein, the Option shall become fully vested
and exercisable on and after the first anniversary of the Annual
Grant Date and prior to the termination of the Option (as provided in Section
11) in an amount not to exceed the Number of Option Shares less the number of
shares previously acquired upon exercise of the Option. In no event
shall the Option be exercisable for more shares than the Number of Option
Shares. Notwithstanding the foregoing, in the event that the adoption
of the Plan or any amendment of the Plan is subject to the approval of the
Company’s stockholders in order for the Plan or the grant of the Option to
comply with the requirements of Rule 16b-3, the Option shall not be exercisable
prior to such stockholder approval.
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(b) Exercise
of the Option shall be by written notice to the Company which must state the
election to exercise the Option, the number of whole shares of Stock for which
the Option is being exercised and such other representations and agreements as
to the Optionee’s investment intent with respect to such shares as may be
required pursuant to the provisions of this Option Agreement. The
written notice must be signed by the Optionee and must be delivered in person,
by certified or registered mail, return receipt requested, by confirmed
facsimile transmission, or by such other means as the Company may permit, to the
Vice President-Administration of the Company, or other authorized representative
of the Company, prior to the termination of the Option as set forth in Section
11, accompanied by full payment of the aggregate Exercise Price for the number
of shares of Stock being purchased. The Option shall be deemed to be
exercised upon receipt by the Company of such written notice and the aggregate
Exercise Price.
5. Payment of
Consideration. Except as otherwise provided below, payment of
the aggregate Exercise Price for the number of shares of Stock for which the
Option is being exercised shall be made (i) in cash, by check, or cash
equivalent or, (ii) by tender to the Company of whole shares of Stock owned by
the Optionee having a Fair Market Value not less than the aggregate Exercise
Price, or (iii) by any combination of the foregoing. Notwithstanding
the foregoing, the Option may not be exercised by tender to the Company of
shares of Stock to the extent such tender of Stock would constitute a violation
of the provisions of any law, regulation or agreement restricting the redemption
of the Company’s stock. The Option may not be exercised by tender to the Company
of shares of Stock unless such shares either have been owned by the Optionee for
more than six (6) months or were not acquired, directly or indirectly, from the
Company.
6. Tax
Withholding. The Company shall have the right, but not the
obligation, to deduct from the shares of Stock issuable upon the exercise of an
Option, or to accept from the Optionee the tender of, a number of whole shares
of Stock having a Fair Market Value equal to all or any part of the federal,
state, local and foreign taxes, if any, required by law to be withheld by the
Company with respect to such Option or the shares acquired upon exercise
thereof. Alternatively or in addition, in its sole discretion, the
Company shall have the right to require the Optionee to make adequate provision
for any such tax withholding obligations of the Company arising in connection
with the Option or the shares acquired upon exercise thereof. The
Company shall have no obligation to deliver shares of Stock until the Company’s
tax withholding obligations have been satisfied.
7. Certificate
Registration. The certificate for the shares as to which the
Option is exercised shall be registered in the name of the Optionee, or, if
applicable, the heirs of the Optionee. The Company may at any time
place legends referencing any applicable federal, state or foreign securities
law restrictions on all certificates representing shares of Stock subject to the
provisions of this Option Agreement. The Optionee shall, at the
request of the Company, promptly present to the Company any and all certificates
representing shares acquired pursuant to the Option in the possession of the
Optionee in order to carry out the provisions of this Section.
8. Restrictions on Grant of the Option
and Issuance of Shares. The grant of the Option and the
issuance of shares of Stock upon exercise of the Option shall be subject to
compliance with all applicable requirements of federal, state or foreign law
with respect to such securities. The Option may not be exercised if
the issuance of shares of Stock upon exercise would constitute a violation of
any applicable federal, state or foreign securities laws or other law or
regulations or the requirements of any stock exchange or market system upon
which the Stock may then be listed. In addition, the Option may not
be exercised unless (i) a registration statement under the Securities Act shall
at the time of exercise of the Option be in effect with respect to the shares
issuable upon exercise of the Option or (ii) in the opinion of legal counsel to
the Company, the shares issuable upon exercise of the Option may be issued in
accordance with the terms of an applicable exemption from the registration
requirements of the Securities Act. THE OPTIONEE IS CAUTIONED THAT
THE
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OPTION
MAY NOT BE EXERCISED UNLESS THE FOREGOING CONDITIONS ARE SATISFIED. ACCORDINGLY,
THE OPTIONEE MAY NOT BE ABLE TO EXERCISE THE OPTION WHEN DESIRED EVEN THOUGH THE
OPTION IS VESTED. The inability of the Company to obtain from any
regulatory body having jurisdiction the authority, if any, deemed by the
Company’s legal counsel to be necessary to the lawful issuance and sale of any
shares subject to the Option shall relieve the Company of any liability in
respect of the failure to issue or sell such shares as to which such requisite
authority shall not have been obtained. As a condition to the
exercise of the Option, the Company may require the Optionee to satisfy any
qualifications that may be necessary or appropriate, to evidence compliance with
any applicable law or regulation and to make any representation or warranty with
respect thereto as may be requested by the Company.
9. Fractional
Shares. The Company shall not be required to issue fractional
shares upon the exercise of the Option.
10. Nontransferability of the
Option. The Option may be exercised during the lifetime of the
Optionee only by the Optionee or the Optionee’s guardian or legal representative
and may not be assigned or transferred in any manner except by will or by the
laws of descent and distribution. Following the death of the
Optionee, the Option, to the extent provided in Section 6 of the Director Plan,
may be exercised by the Optionee’s legal representative or by any person
empowered to do so under the deceased Optionee’s will or under the then
applicable laws of descent and distribution.
11. Expiration of the
Option. The Option shall terminate and cease to be exercisable
on the first to occur of the following events:
(a) the
date which is the tenth (10th)
anniversary of the Annual Grant Date unless earlier terminated pursuant to
clause (iii) below;
(b) the
expiration of one (1) month from the date of a person’s Termination of Service
for any reason other than death, Disability or Retirement; or
(c) the
expiration of five (5) years from the date of a person’s death, whether before
or after a Termination of Service.
12. Option
Exercisability. Notwithstanding the foregoing, if the Optionee
incurs a Termination of Service other than due to death, Disability or
Retirement, any portion of the Option that is not exercisable at the date of
such Termination of Service shall never become exercisable and shall be
immediately forfeited. If a Director incurs a Termination of Service
due to Disability or Retirement, the Option shall continue to become exercisable
in accordance with the Vested Percentage schedule, but the exercise thereof
shall be subject to the provisions of Section 6, and, in addition, the Option
shall be cancelled and forfeited if the Committee at any time thereafter
determines that the former Director has engaged in any activity detrimental to
the interests of the Company. Notwithstanding the foregoing, if the
exercise of the Option within the applicable time periods set forth in Section 6
is prevented by the provisions of Section 8, the Option shall remain exercisable
until three (3) months after the date the Optionee is notified by the Company
that the Option is exercisable, but in any event no later than the option
expiration date set forth in Section 6.
13. Change in
Control. In the event of a Change in Control, any
unexercisable portion of the Option shall become immediately exercisable and
vested in full as of the date thirty (30) days prior to the date of the Change
in Control. The exercise or vesting of any Option that results solely
by reason of this Section 13, shall be conditioned upon the consummation of the
Change in Control. In addition, the surviving, continuing, successor,
or purchasing corporation or parent corporation thereof, as the case may be (the
“Acquiring Corporation”), may either assume the Company’s rights and obligations
under outstanding Options or substitute
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for
outstanding Options substantially equivalent options for the Acquiring
Corporation’s stock. Any Options which are neither assumed or
substituted for by the Acquiring Corporation in connection with the Change in
Control nor exercised as of the date of the Change in Control shall terminate
and cease to be outstanding effective as of the date of the Change in
Control.
14. Adjustments for Changes in Capital
Structure. In the event of any stock dividend, stock split,
reverse stock split, recapitalization, combination, reclassification, or similar
change in the capital structure of the Company, appropriate adjustments shall be
made in the number, Exercise Price and class of shares of stock subject to the
Option. If a majority of the shares which are of the same class as the shares
that are subject to the Option are exchanged for, converted into, or otherwise
become (whether or not pursuant to a Change in Control) shares of another
corporation (the “New Shares”), the Board may unilaterally amend the Option to
provide that the Option is exercisable for New Shares. In the event of any such
amendment, the Number of Option Shares and the Exercise Price shall be adjusted
in a fair and equitable manner, as determined by the Board, in its sole
discretion. Notwithstanding the foregoing, any fractional share resulting from
an adjustment pursuant to this Section 14 shall be rounded down to the nearest
whole number, and in no event may the Exercise Price be decreased to an amount
less than the par value, if any, of the stock subject to the
Option.
15. Rights as a
Stockholder. The Optionee shall have no rights as a
stockholder with respect to any shares covered by the Option until the date of
the issuance of a certificate for the shares for which the Option has been
exercised (as evidenced by the appropriate entry on the books of the Company or
of a duly authorized transfer agent of the Company). No adjustment shall be made
for dividends, distributions or other rights for which the record date is prior
to the date such certificate is issued, except as provided in Section
14.
16. Construction. Captions
and titles contained herein are for convenience only and shall not affect the
meaning or interpretation of any provision of this Option Agreement. Except when
otherwise indicated by the context, the singular shall include the plural, the
plural shall include the singular, and use of the term “or” shall not be
exclusive.
17. Binding
Effect. Subject to the restrictions on transfer set forth
herein, this Option Agreement shall inure to the benefit of and be binding upon
the parties hereto and their respective heirs, executors, administrators,
successors and assigns.
18. Termination or
Amendment. The Board may terminate or amend the Plan or the
Option at any time; provided, however, that no such termination or amendment may
adversely affect the Option or any unexercised portion hereof without the
consent of the Optionee unless such termination or amendment is necessary to
comply with any applicable law or government regulation. No amendment or
addition to this Option Agreement shall be effective unless in
writing.
19. Integrated
Agreement. This Option Agreement constitutes the entire
understanding and agreement of the Optionee and the Company with respect to the
subject matter contained herein, and there are no agreements, understandings,
restrictions, representations, or warranties among the Optionee and the Company
with respect to such subject matter other than those as set forth or provided
for herein. To the extent contemplated herein, the provisions of this Option
Agreement shall survive any exercise of the Option and shall remain in full
force and effect.
20. Applicable
Law. This Option Agreement shall be governed by the laws of
the State of Delaware as such laws are applied to agreements between Delaware
residents entered into and to be performed entirely within the State of
Delaware.
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| KAYDON CORPORATION | |||
| By: | |||
| Its: | |||
The
Optionee represents that the Optionee is familiar with the terms and provisions
of this Option Agreement and hereby accepts the Option subject to all of the
terms and provisions thereof. The Optionee hereby agrees to accept as
binding, conclusive and final all decisions or interpretations of the Board upon
any questions arising under this Option Agreement.
|
OPTIONEE
|
||||||
| Dated: | ||||||
| Print Name: | ||||||
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