KAYDON CORPORATION 1999 LONG TERM STOCK INCENTIVE PLAN NON-QUALIFIED STOCK OPTION AGREEMENT
Exhibit 10.11
NON-QUALIFIED STOCK OPTION AGREEMENT, dated as of
_____, 200_____; between KAYDON
CORPORATION, a Delaware corporation (the “Corporation”), and
_____
(“Optionee”).
The Kaydon Corporation 1999 Long Term Stock Incentive Plan Committee (the Committee), pursuant
to the Corporation’s 1999 Long Term Stock Incentive Plan (the Plan), has granted to the Optionee,
on the date of this Agreement, an option under the Plan to purchase an aggregate of
_____
shares of Common Stock of the Corporation par value $0.10 per share (“Common Stock”). To evidence
the option and to set forth its terms and conditions as provided in the Plan, the Corporation and
the Optionee agree as follows.
1. Confirmation of Grant and Price. The Corporation, by this Agreement, evidences and
confirms its grant to the Optionee on the date of this Agreement of an option (the Option) to
purchase
_____
shares of Common Stock, at an option price of $ per share. The Option
is subject to all of the provisions of the Plan, whether or not explicitly stated in this
Agreement, except that the ability of the Board of Directors or the Committee to amend this
Agreement without the consent of Optionee is limited as provided in this Agreement.
2. Term for Exercise. The Option becomes available for exercise, subject to the provisions of
this Agreement, as to the percentage of the aggregate number of shares of Common Stock subject to
the Option and on the dates set forth below:
(a) Percentage and Date Schedule
| Percentage of Number | Date First Available | |
| of Shares | for Exercise | |
| 20% | One year after the date of grant |
|
| 20% | Two years after the date of grant |
|
| 20% | Three years after the date of grant |
|
| 20% | Four years after the date of grant |
|
| 20% | Five years after the date of grant |
(b) Later Exercise. The right to purchase is cumulative. If the full number of shares
exercisable in any period is not exercised, the balance may be exercised at any time or from
time to time after that date, as long as the exercise occurs prior to the expiration or
termination of the Option.
(c) Expiration. The Option expires , 200 .
3. Non-Qualified Stock Option. The Option evidenced by this Agreement is not intended to be
an incentive stock option as that term is defined in Section 422 of the Internal Revenue Code of
1986, as amended (the Code).
4. Who May Exercise. During the lifetime of the Optionee, the Option may be exercised only by
the Optionee. If the Optionee dies, the Option may be exercised, to the extent provided in Section
5 hereof, by the Optionee’s estate or a person who acquires the right to exercise the Option by
bequest or inheritance or by reason of the death of the Optionee.
5. Exercise After Termination of Employment. Except as explicitly provided below, no part of
an Option may be exercised by an Optionee unless the Optionee is then in the employ of the
Corporation or any parent or subsidiary and was continuously so employed since the date of the
grant. It is not a termination of employment for purposes of this section if the Optionee
transfers employment from the Corporation to any subsidiary or vice versa, or from one subsidiary
to another, without an intervening period, if the Optionee is absent on sick leave or is granted a
leave of absence (not to exceed one year), or if the Optionee changes status to become a consultant
to the Corporation or a subsidiary. Termination will include termination by reason of the fact that
an entity employing Optionee is no longer a subsidiary of the Company.
(a) General Rules. Unless governed by a special rule, below, the Option terminates on
the earlier of the expiration date specified in Section 2 and the date which is 10 days
after the date of termination of employment. Unless acceleration of or continued vesting is
specifically provided for in this Section 5 or in an Employment Agreement between Optionee
and the Corporation which specifically addresses vesting of stock based awards upon
termination, vesting of awards shall cease and no further installments of the Option will
become exercisable following termination of employment by the Corporation or any parent or
subsidiary and the Option shall be exercisable pursuant to the rules set forth in this
Section 5 only with respect to the number of shares of Common Stock as to which the Optionee
could have exercised the Option at the date of termination. The Board of Directors or the
Committee may, in its discretion, amend this Agreement to accelerate the exercisability of
any installments of the Option which were not exercisable at the time of the Optionee’s
death.
(b) Exceptions for Involuntary Termination and Disability. In the case of involuntary
termination of employment or a Disability within the meaning of the Plan or as defined in
any employment agreement between Optionee and the Corporation, the Option terminates on the
earlier of the expiration date specified in Section 2 and the date which is three months
after the date of termination of employment.
(c) Exception for Death. In the case of death, the Option terminates on the earlier of
the expiration date specified in Section 2 and the date which is one year from the date of
death.
(d) Exception for Retirement. In the case of termination of employment by reason of
retirement at or after age 65, the Option will continue to vest in accordance with the
Option vesting schedule in effect on the date of retirement and will continue to be
exercisable in accordance with its terms as though the Optionee had continued in employment
unless otherwise provided in an Employment Agreement between Optionee and the Company.
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(e) Termination following Change in Control. If the Optionee is a party to a Change in
Control Compensation Agreement or an Employment Agreement which explicitly provides for
acceleration of vesting and exercisability of options upon events of termination following a
“Change in Control,” the vesting and exercisability of the Option for terminations following
a Change in Control (as defined in such other agreement) will be governed by the terms of
such Change in Control Compensation Agreement or Employment Agreement to the extent such
provisions are different than or conflict with the provisions of this Agreement. Such
acceleration is not subject to cancellation under the Plan and is also irrevocable as long
as the Optionee is a party to such a Change in Control Compensation Agreement or Employment
Agreement.
Notwithstanding the foregoing, if at any time upon or following termination of employment the
Committee determines that reason to terminate the Optionee for cause, as defined in the Plan,
exists at the time of termination or existed at such time, the Committee may terminate the
unexercised portion of the Option concurrently with or at any time following the termination of
employment. Further, nothing in the Plan or in this Agreement confers upon the Optionee any right
to continue in the employ of the Corporation or any of its affiliates, or interferes in any way
with the right of the Corporation or any of its affiliates to terminate the Optionee’s employment
at any time during the Option period or otherwise.
6. Restrictions on Exercise. The Option may be exercised only with respect to full shares.
No fractional shares of Common Stock will be issued.
(a) General Limitation. The Option may not be exercised in whole or in part, and no
payment by the Corporation shall be made nor shall any certificates representing shares of
Common Stock subject to the Option be delivered, if:
i. Governmental Approval. At any time any requisite approval or consent of any
governmental authority of any kind having jurisdiction over the exercise of options
has not been effectively secured;
ii. Registration. The shares are not effectively registered under the
Securities Act of 1933, as amended, and the Securities Exchange Act of 1934, as
amended; or
iii. Withholding. Applicable federal, state and local tax withholding
requirements are not satisfied (including, any taxes arising under Sections 409A or
4999 of the Code).
(b) Representation. The Corporation may require as a condition to the exercise of the
Option in whole or in part at any time that the Optionee or any person exercising the Option
after the Optionee’s death in accordance with the provisions of Section 4 (the Holder)
represent to the Corporation in writing that the shares are being acquired for the
Optionee’s or Holder’s own account for investment only and not with a view to distribution
or with any present intention of reselling any.
(c) Hardship. The Option is not exercisable for the period of at least twelve (12)
months to the extent provided under the hardship distribution provisions of the
Kaydon Corporation Employee Stock Ownership and Thrift Plan or other Corporation or
affiliate plan to the extent the Optionee receives a hardship distribution from that plan.
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7. Manner of Exercise. To the extent the Option has become and remains exercisable as
provided in this Agreement, and subject to any additional administrative regulations the Committee
may from time to time adopt, the Option may be exercised from time to time, in whole or in part, by
a signed written notice to the Secretary of the Corporation on a form supplied by the Corporation.
The notice must specify the number of shares of Common Stock with respect to which the Option is
being exercised and be accompanied by full payment of the option price for the shares.
(a) Payment. Payment must be made in:
i. Cash or Shares. Cash; provided, however, that with the consent of the
Committee, payment may be made in whole or in part with (A) shares of Common Stock,
represented by certificates duly endorsed to the Corporation or its nominees, valued
at fair market value, (B) shares of Common Stock otherwise issuable upon exercise of
such Option, valued at fair market value, or other awards or property having a fair
market value on the exercise date equal to the exercise price;
ii. Instructions. With the consent of the Committee, by delivering with a
properly executed exercise notice irrevocable instructions to a third party to
promptly deliver to the Corporation the amount of sale or loan proceeds to pay the
exercise price;
iii. Combination. With the consent of the Committee, a combination of the
above; or
iv. Other. With the consent of the Committee, other consideration.
(b) Prior Holdings Limitation. The option price may not be paid in shares of Common
Stock that have been held by the Optionee for less than six months.
(c) Tax Withholding. Prior to the issuance of shares upon exercise of the Option,
Optionee must pay or provide for any applicable federal or state withholding obligations of
the Corporation (including any taxes arising under Sections 409A or 4999 of the Code). If
the Committee allows, Optionee may provide for payment of withholding taxes upon exercise of
the Option by (i) requesting that the Corporation retain shares with a fair market value
equal to the minimum amount of taxes required to be withheld or (ii) delivering to the
Corporation other shares of Common Stock owned by Optionee for a period of at least six
months having a fair market value equal to the minimum amount of taxes required to be
withheld. In the case of clause (i) above, the Corporation shall issue the net number of
shares to the Optionee by deducting the shares retained from the shares issuable upon
exercise. Unless otherwise expressly set forth in a written agreement between the Company
and the Optionee, neither the Company nor any of its employees, officers, directors, or
service providers shall have any obligation whatsoever to pay such taxes, to prevent the
Optionee from incurring them, or to mitigate or protect the
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Optionee from any such tax liabilities. Nevertheless, if the Company
reasonably determines that the Optionee’s receipt of payments or benefits pursuant to
Section 6 of the Plan as a result of the Optionee’s cessation of employment with the Company
constitutes “nonqualified deferred compensation” within the meaning of Section 409A, payment
of such amounts shall not commence until the Optionee incur a “separation from service”
within the meaning of Treasury Regulation § 1.409A-1(h) (“Separation from Service”). If, at
the time of the Optionee’s Separation from Service, the Optionee is a “specified employee”
(under Internal Revenue Code Section 409A), any amount that constitutes “nonqualified
deferred compensation” within the meaning of Code Section 409A that becomes payable to the
Optionee on account of the Optionee’s Separation from Service (including any amounts payable
pursuant to the preceding sentence) will not be paid until after the end of the sixth
calendar month beginning after the Optionee’s Separation from Service (the “409A Suspension
Period”). Within 14 calendar days after the end of the 409A Suspension Period, the Optionee
shall be paid a lump sum payment in cash equal to any payments delayed because of the
preceding sentence, without interest. Thereafter, the Optionee shall receive any remaining
benefits as if there had not been an earlier delay.
(d) Right to Exercise. In the event that the Option is exercised by a person other
than the Optionee in accordance with Section 4, the person must furnish to the Corporation
evidence satisfactory to it of the person’s right to exercise the Option.
(e) Other Documents. The Corporation may require the Optionee or any other person
exercising the Option to furnish or execute any documents the Corporation deems necessary to
evidence the exercise or to comply with any requirements of this Agreement, the Plan, or any
law.
8. Non-Assignability. The Option may not be assigned, transferred or hypothecated by the
Optionee or other Holder except as provided below:
(a) Acceptable Assignments. Subject to subsection b., the Option may be assigned by
the Optionee:
i. Death. By will or by the laws of descent and distribution to the extent
provided in Section 4;
ii. Grantor Trust. To a revocable grantor trust established by the Optionee
for the Optionee’s sole benefit during the Optionee’s life, subject to the terms of
the Plan; or
iii. Other. To a beneficiary designated by the Optionee in writing on a form
approved by the Committee.
(b) Limitation. Notwithstanding those general rules, the Option may not be assigned by
Optionee if Optionee is a director or officer of the Corporation or an affiliate for
purposes of the securities laws, except as permitted under Rule 16b-3 of those laws.
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9. Rights as Shareholders. The Optionee and any other Holder have no rights as a shareholder
with respect to any shares covered by the Option until the issuance of a certificate or
certificates to the Optionee or other Holder for the shares upon due exercise of the Option. No
adjustment will be made for dividends or other rights for which the record date is prior to the
issuance of the certificate or certificates.
10. Capital and Other Adjustments. In the event of any change in the number of outstanding
shares of Common Stock by reason of any stock dividend, stock split, combination or exchange of
shares, recapitalization, reclassification, merger, consolidation, reorganization, or other similar
transaction, the Committee may adjust the number, type and option price of shares of Common Stock
covered by the Option, by means of a grant of a substitute option or an additional option or
otherwise, as it in its discretion deems appropriate. In addition, in the event of any unusual or
nonrecurring event (including, but not limited to, the events described in the preceding sentence)
affecting the Corporation, any subsidiary, or the financial statements of the Corporation or any
subsidiary, or of changes in applicable laws, regulations, or accounting principles, the Committee
may adjust the terms and conditions of, and the criteria included in this Agreement if the
Committee determines that such adjustments are appropriate to prevent dilution or enlargement of
the benefits or potential benefits of the Option.
11. Change in Control. In the event of a Change in Control (as defined in the Plan), the
Option shall vest, shall become exercisable in full and shall no longer be subject to any
restrictions which would prevent immediate exercise. In addition, in that circumstance, the
Committee as constituted before the Change in Control may, in its sole discretion:
(a) Purchase. Provide for the purchase of the Option for an amount of cash equal to
the amount that could have been attained upon exercise had the Option been exercisable at
that time;
(b) Adjust. Adjust the Option as the Committee deems appropriate to reflect the Change
in Control; and
(c) Cause Assumption. Cause the Option to be assumed, or replaced with a new option,
by the acquiring or surviving corporation after the Change in Control.
12. Legality. The issuance or delivery of any shares of Common Stock pursuant to an Option
may be postponed by the Corporation for any period required to comply with any applicable
requirements under the Federal securities laws, any applicable listing requirements of any national
securities exchange or any requirements under any other applicable law or regulation. The
Corporation is not obligated to issue or deliver any shares if the issuance or delivery
constitutes, or in the opinion of counsel to the Corporation may constitute, a violation of any
provision of any law or of any regulation of any governmental authority or any national securities
exchange.
13. Notice. Notice to the Secretary of the Corporation shall be deemed given if in writing
and delivered to the Secretary of the Corporation at the then principal office of the Corporation
in accordance with the Xxxxxxxx-Xxxxx Accounting/Corporate Responsibility Act of 2002 (such Notice must be delivered in a timely manner in order for the Corporation to meet
its reporting requirements).
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14. Amendment. The Board of Directors or the Committee may amend the terms and conditions of
this Agreement as provided in the Plan, except that, without the consent of the Optionee, no
amendment may impair the rights of the Optionee or Holder relating to the Option or amend Sections
5(e), or 11, or this Section 14 of this Agreement. Notwithstanding that, the Option provided in
this Agreement may be canceled in the Committee’s sole discretion, as long as the Optionee is not a
party to an effective Change in Control Compensation Agreement or Employment Agreement, as
described in Section 5 above, upon payment of the value of the Option to the Optionee or Holder in
cash or in another Option, and such value may be determined by the Committee in its sole
discretion.
15. Governing Law. The words “exercise”, “subsidiary”, “outstanding” and any other words or
terms used in this Agreement which are defined or used in Section 421, 422 or 425 of the Code have
the meanings assigned to them in those Sections, unless the context clearly requires otherwise. In
all other respects this Agreement shall be construed and enforced in accordance with, and governed
by, the laws of the State of Delaware.
Executed
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day of , effective as of the date first set forth above.
| KAYDON CORPORATION | OPTIONEE | |||||||||
By |
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| Name: | ||||||||||
| Its: | ||||||||||
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