SUIZA FOODS CORPORATION
1997 STOCK OPTION AND RESTRICTED STOCK PLAN
1. PURPOSE OF THE PLAN. This Plan shall be known as the
Suiza Foods Corporation 1997 Stock Option and Restricted Stock Plan. The
purpose of the Plan is to attract and retain the best available personnel for
positions of substantial responsibility and to provide incentives to such
personnel to promote the success of the business of Suiza Foods Corporation
and its subsidiaries.
Certain options granted under this Plan are intended to
qualify as "incentive stock options" pursuant to Section 422 of the Internal
Revenue Code of 1986, as amended from time to time, while certain other
options granted under the Plan will constitute nonqualified options.
2. DEFINITIONS. As used herein, the following definitions
shall apply:
"Board" means the Board of Directors of the Corporation.
"Common Stock" means the Common Stock, $.01 par value per
share, of the Corporation. Except as otherwise provided herein, all Common
Stock issued pursuant to the Plan shall have the same rights as all other
issued and outstanding shares of Common Stock, including but not limited to
voting rights, the right to dividends, if declared and paid, and the right to
pro rata distributions of the Corporation's assets in the event of
liquidation.
"Code" means the Internal Revenue Code of 1986, as
amended from time to time.
"Committee" means the committee described in Section 19
that administers the Plan or, if no such committee has been appointed, the
full Board.
"Consultant" means any consultant or advisor who renders
bona fide services to the Corporation or one of its Subsidiaries, which
services are not in connection with the offer or sale of securities in a
capital-raising transaction.
"Corporation" means Suiza Foods Corporation, a Delaware
corporation.
"Date of Grant" means the date on which an Option is
granted or Restricted Stock is awarded pursuant to this Plan or, if the Board
or the Committee so determines, the date specified by the Board or the
Committee as the date the award is to be effective.
"Employee" means any officer or other key employee of the
Corporation or one of its Subsidiaries (including any director who is also an
officer or key employee of the Corporation or one of its Subsidiaries).
"Exchange Act" means the Securities Exchange Act of 1934,
as amended.
1
"Fair Market Value" means the closing sale price (or
average of the quoted closing bid and asked prices if there is no closing
sale price reported) of the Common Stock on the trading day immediately prior
to the date specified as reported by the principal national exchange or
trading system on which the Common Stock is then listed or traded. If there
is no reported price information for the Common Stock, the Fair Market Value
will be determined by the Board or the Committee, in its sole discretion. In
making such determination, the Board or the Committee may, but shall not be
obligated to, commission and rely upon an independent appraisal of the Common
Stock.
"Non-Employee Director" means an individual who is a
"non-employee director" as defined in Rule 16b-3 under the Exchange Act and
also an "outside director" within the meaning of Treasury Regulation Section
1.162-27(e)(3).
"Nonqualified Option" means any Option that is not a
Qualified Option.
"Option" means a stock option granted pursuant to Section
6 of this Plan.
"Optionee" means any Employee, Consultant or director who
receives an Option.
"Participant" means any Employee, Consultant or director
who receives an Option or Restricted Stock pursuant to this Plan.
"Plan" means this Suiza Foods Corporation 1997 Stock
Option and Restricted Stock Plan, as amended from time to time.
"Qualified Option" means any Option that is intended to
qualify as an "incentive stock option" within the meaning of Section 422 of
the Code.
"Restricted Stock" means Common Stock awarded to an
Employee, Consultant or director pursuant to Section 7 of this Plan.
"Rule 16b-3" means Rule 16b-3 of the rules and
regulations under the Exchange Act, as Rule 16b-3 may be amended from time to
time, and any successor provisions to Rule 16b-3 under the Exchange Act.
"Subsidiary" means any now existing or hereinafter
organized or acquired company of which more than fifty percent (50%) of the
issued and outstanding voting stock is owned or controlled directly or
indirectly by the Corporation or through one or more Subsidiaries of the
Corporation.
3. TERM OF PLAN. The Plan has been adopted by the Board
effective as of February 24, 1997. To permit the granting of Qualified
Options under the Code, and to qualify awards of Options or Restricted Stock
hereunder as "performance based" under Section 162(m) of the Code, the Plan
will be submitted for approval by the stockholders of the Corporation by the
affirmative votes of the holders of a majority of the shares of Common Stock
then issued and
2
outstanding, for approval no later than the next annual meeting of
stockholders. If the Plan is not so approved by the stockholders of the
Corporation, then any Options previously granted under the Plan will be
Nonqualified Options, regardless of whether the option agreements relating
thereto purport to grant Qualified Options. The Plan shall continue in
effect until terminated pursuant to Section 19(a).
4. SHARES SUBJECT TO THE PLAN. Except as otherwise provided
in Section 18 hereof, the aggregate number of shares of Common Stock issuable
upon the exercise of Options or upon the grant of Restricted Stock pursuant
to this Plan shall be 1,150,000 shares. Such shares may either be authorized
but unissued shares or treasury shares. The Corporation shall, during the
term of this Plan, reserve and keep available a number of shares of Common
Stock sufficient to satisfy the requirements of the Plan. If an Option
should expire or become unexercisable for any reason without having been
exercised in full, or Restricted Stock should fail to vest and be forfeited
in whole or in part for any reason, then the shares that were subject thereto
shall, unless the Plan has terminated, be available for the grant of
additional Options or Restricted Stock under this Plan, subject to the
limitations set forth above.
5. ELIGIBILITY. Qualified Options may be granted under
Section 6 of the Plan to such Employees of the Corporation or its
Subsidiaries as may be determined by the Board or the Committee.
Nonqualified Options may be granted under Section 6 of the Plan to such
Employees, Consultants and directors of the Corporation or its Subsidiaries
as may be determined by the Board or the Committee. Restricted Stock may be
granted under Section 7 of the Plan to such Employees, Consultants and
directors of the Corporation or its Subsidiaries as may be determined by the
Board or the Committee. Subject to the limitations and qualifications set
forth in this Plan, the Board or the Committee shall also determine the
number of Options or shares of Restricted Stock to be granted, the number of
shares subject to each Option or Restricted Stock grant, the exercise price
or prices of each Option, the vesting and exercise period of each Option and
the vesting and/or forfeiture provisions relating to Restricted Stock,
whether an Option may be exercised as to less than all of the Common Stock
subject thereto, and such other terms and conditions of each Option or grant
of Restricted Stock, if any, as are consistent with the provisions of this
Plan. In connection with the granting of Qualified Options, the aggregate
Fair Market Value (determined at the Date of Grant of a Qualified Option) of
the shares with respect to which Qualified Options are exercisable for the
first time by an Optionee during any calendar year (under all such plans of
the Optionee's employer corporation and its parent and subsidiary
corporations as defined in Section 424(e) and (f) of the Code, or a
corporation or a parent or subsidiary corporation of such corporation issuing
or assuming an Option in a transaction to which Section 424(a) of the Code
applies (collectively, such corporations described in this sentence are
hereinafter referred to as "Related Corporations")) shall not exceed $100,000
or such other amount as from time to time provided in Section 422(d) of the
Code or any successor provision.
6. GRANT OF OPTIONS. Except as provided in Section 19(b),
the Board or the Committee shall determine the number of shares of Common
Stock to be offered from time to time pursuant to Options granted hereunder
and shall grant Options under the Plan. The grant of Options shall be
evidenced by Option agreements containing such terms and provisions as are
3
approved by the Board or the Committee and executed on behalf of the
Corporation by an appropriate officer. In connection with the granting of any
Options under the Plan, the aggregate number of shares of Common Stock
issuable to any single Participant shall not exceed the number of shares
subject to the Plan referred to in Section 4.
Unless the Board or the Committee determines otherwise
with respect to a particular year, each Non-Employee Director will
automatically be granted a Nonqualified Option to purchase 7,500 shares of
Common Stock (subject to adjustment pursuant to Section 18 hereof), at an
exercise price equal to the Fair Market Value of the Common Stock on the Date
of Grant, on June 30 of each year; provided that such number of shares will
be reduced to the extent (if any) that such director receives options on such
date under an automatic grant pursuant to the Corporation's 1995 Stock Option
and Restricted Stock Plan.
7. RESTRICTED STOCK. The Board or the Committee shall
determine the number of shares of Common Stock to be granted as Restricted
Stock from time to time under the Plan. The grant of Restricted Stock shall
be evidenced by Restricted Stock agreements containing such terms and
provisions as are approved by the Board or the Committee and executed on
behalf of the Corporation by an appropriate officer.
8. TIME OF GRANT OF OPTIONS. The date of grant of an Option
or Restricted Stock under the Plan shall be the date on which the Board or
the Committee awards the Option or Restricted Stock or, if the Board or the
Committee so determines, the date specified by the Board or the Committee as
the date the award is to be effective. Notice of the grant shall be given to
each Participant to whom an Option or Restricted Stock is granted promptly
after the date of such grant.
9. PRICE. The exercise price for each share of Common Stock
subject to an Option (the "Exercise Price") granted pursuant to Section 6 of
the Plan shall be determined by the Board or the Committee at the Date of
Grant; provided, however, that (a) the Exercise Price for any Option shall
not be less than 100% of the Fair Market Value of the Common Stock at the
Date of Grant, and (b) if the Optionee owns on the Date of Grant more than 10
percent of the total combined voting power of all classes of stock of the
Corporation or its parent or any of its subsidiaries, as more fully described
in Section 422(b)(6) of the Code or any successor provision (such stockholder
is referred to herein as a "10-Percent Stockholder"), the Exercise Price for
any Qualified Option granted to such Optionee shall not be less than 110% of
the Fair Market Value of the Common Stock at the Date of Grant. The Board or
the Committee in its discretion may award shares of Restricted Stock under
Section 7 of the Plan to Participants without requiring the payment of cash
consideration for such shares.
10. VESTING. Subject to Section 12 of this Plan, each Option
and Restricted Stock award under the Plan shall vest or be subject to
forfeiture in accordance with the provisions set forth in the applicable
Option agreement or Restricted Stock agreement. The Board or the Committee
may, but shall not be required to, permit acceleration of vesting or
termination of forfeiture provisions upon any sale of the Corporation or
similar transaction. A Participant's
4
Option or Restricted Stock agreement may contain such additional provisions
with respect to vesting as the Board or the Committee may specify.
11. EXERCISE. A Participant may pay the Exercise Price of
the shares of Common Stock as to which an Option is being exercised by the
delivery of cash, check or, at the Corporation's option, by the delivery of
shares of Common Stock having a Fair Market Value on the date immediately
preceding the exercise date equal to the Exercise Price.
If the shares to be purchased are covered by an effective
registration statement under the Securities Act of 1933, as amended, any
Option granted under the Plan may be exercised by a broker-dealer acting on
behalf of an Optionee if (a) the broker-dealer has received from the Optionee
or the Corporation a fully- and duly-endorsed agreement evidencing such
Option, together with instructions signed by the Optionee requesting the
Corporation to deliver the shares of Common Stock subject to such Option to
the broker-dealer on behalf of the Optionee and specifying the account into
which such shares should be deposited, (b) adequate provision has been made
with respect to the payment of any withholding taxes due upon such exercise,
and (c) the broker-dealer and the Optionee have otherwise complied with
Section 220.3(e)(4) of Regulation T, 12 CFR Part 220, or any successor
provision.
12. WHEN QUALIFIED OPTIONS MAY BE EXERCISED. No Qualified
Option shall be exercisable at any time after the expiration of ten (10)
years from the Date of Grant; PROVIDED, HOWEVER, that if the Optionee with
respect to a Qualified Option is a 10-Percent Stockholder on the Date of
Grant of such Qualified Option, then such Option shall not be exercisable
after the expiration of five (5) years from its Date of Grant. In addition,
if an Optionee of a Qualified Option ceases to be an employee of the
Corporation or any Related Corporation for any reason, such Optionee's vested
Qualified Options shall not be exercisable after (a) 90 days following the
date such Optionee ceases to be an employee of the Corporation or any Related
Corporation, if such cessation of service is not due to the death or
permanent and total disability (within the meaning of Section 22(e)(3) of the
Code) of the Optionee, or (b) twelve months following the date such Optionee
ceases to be an employee of the Corporation or any Related Corporation, if
such cessation of service is due to the death or permanent and total
disability (as defined above) of the Optionee. Upon the death of an
Optionee, any vested Qualified Option exercisable on the date of death may be
exercised by the Optionee's estate or by a person who acquires the right to
exercise such Qualified Option by bequest or inheritance or by reason of the
death of the Optionee, provided that such exercise occurs within both the
remaining option term of the Qualified Option and twelve months after the
date of the Optionee's death. This Section 12 only provides the outer limits
of allowable exercise dates with respect to Qualified Options; the Board or
the Committee may determine that the exercise period for a Qualified Option
shall have a shorter duration than as specified above.
13. OPTION FINANCING. Upon the exercise of any Option
granted under the Plan, the Corporation may, but shall not be required to,
make financing available to the Participant for the purchase of shares of
Common Stock pursuant to such Option on such terms as the Board or the
Committee may specify.
5
14. WITHHOLDING OF TAXES. The Board or the Committee shall
make such provisions and take such steps as it may deem necessary or
appropriate for the withholding of any taxes that the Corporation is required
by any law or regulation of any governmental authority to withhold in
connection with any Option or Restricted Stock including, but not limited to,
withholding the issuance of all or any portion of the shares of Common Stock
subject to such Option or Restricted Stock until the Participant reimburses
the Corporation for the amount it is required to withhold with respect to
such taxes, canceling any portion of such issuance in an amount sufficient to
reimburse the Corporation for the amount it is required to withhold or taking
any other action reasonably required to satisfy the Corporation's withholding
obligation.
15. CONDITIONS UPON ISSUANCE OF SHARES. The Corporation
shall not be obligated to sell or issue any shares upon the exercise of any
Option granted under the Plan or to deliver Restricted Stock unless the
issuance and delivery of shares complies with all provisions of applicable
federal and state securities laws and the requirements of any national
exchange or trading system on which the Common Stock is then listed or traded.
As a condition to the exercise of an Option or the grant
of Restricted Stock, the Corporation may require the person exercising the
Option or receiving the grant of Restricted Stock to make such
representations and warranties as may be necessary to assure the availability
of an exemption from the registration requirements of applicable federal and
state securities laws.
The Corporation shall not be liable for refusing to sell
or issue any shares covered by any Option or for refusing to issue Restricted
Stock if the Corporation cannot obtain authority from the appropriate
regulatory bodies deemed by the Corporation to be necessary to sell or issue
such shares in compliance with all applicable federal and state securities
laws and the requirements of any national exchange or trading system on which
the Common Stock is then listed or traded. In addition, the Corporation
shall have no obligation to any Participant, express or implied, to list,
register or otherwise qualify the shares of Common Stock covered by any
Option or Restricted Stock.
No Participant will be, or will be deemed to be, a holder
of any Common Stock subject to an Option unless and until such Participant
has exercised his or her Option and paid the purchase price for the subject
shares of Common Stock. Each Qualified Option under this Plan shall be
transferable only by will or the laws of descent and distribution and shall
be exercisable during the Participant's lifetime only by such Participant.
Each nonqualified Option under this Plan shall be transferable only by will,
the laws of descent and distribution, pursuant to a domestic relations order
issued by a court of competent jurisdiction, or to a trust established by the
Participant for estate planning purposes.
16. RESTRICTIONS ON SHARES. Shares of Common Stock issued
pursuant to the Plan may be subject to restrictions on transfer under
applicable federal and state securities laws. The Board may impose such
additional restrictions on the ownership and transfer of shares of Common
Stock issued pursuant to the Plan as it deems desirable; any such
restrictions shall be set forth in any Option agreement entered into
hereunder.
6
17. MODIFICATION OF OPTIONS. Except as provided in Section
19(b) of this Plan, at any time and from time to time, the Board or the
Committee may execute an instrument providing for modification, extension or
renewal of any outstanding Option, provided that no such modification,
extension or renewal shall impair the Option without the consent of the
holder of the Option. Notwithstanding the foregoing, in the event of such a
modification, substitution, extension or renewal of a Qualified Option, the
Board or the Committee may increase the exercise price of such Option if
necessary to retain the qualified status of such Option.
18. EFFECT OF CHANGE IN STOCK SUBJECT TO THE PLAN. In the
event that each of the outstanding shares of Common Stock (other than shares
held by dissenting stockholders) shall be changed into or exchanged for a
different number or kind of shares of stock of the Corporation or of another
corporation (whether by reason of merger, consolidation, recapitalization,
reclassification, split-up, combination of shares or otherwise), or in the
event a stock split or stock dividend occurs, then there shall be substituted
for each share of Common Stock then subject to Options or Restricted Stock
awards or available for Options or Restricted Stock awards the number and
kind of shares of stock into which each outstanding share of Common Stock
(other than shares held by dissenting stockholders) shall be so changed or
exchanged, or the number of shares of Common Stock as is equitably required
in the event of a stock split or stock dividend, together with an appropriate
adjustment of the Exercise Price. The Board may, but shall not be required
to, provide additional anti-dilution protection to a Participant under the
terms of the Participant's Option or Restricted Stock agreement.
19. ADMINISTRATION.
(a) The Plan shall be administered by the Board or by a
committee of the Board comprised solely of two or more Non-Employee Directors
appointed by the Board (the "Committee"). Options and Restricted Stock may be
granted under Sections 6 and 7, respectively, only (i) by the Board as a
whole, or (ii) by majority agreement of the members of the Committee. Option
agreements and Restricted Stock agreements, in the forms as approved by the
Board or the Committee, and containing such terms and conditions consistent
with the provisions of this Plan as are determined by the Board or the
Committee, may be executed on behalf of the Corporation by the Chairman of
the Board, the President or any Vice President of the Corporation. The Board
or the Committee shall have complete authority to construe, interpret and
administer the provisions of this Plan and the provisions of the Option
agreements and Restricted Stock agreements granted hereunder; to prescribe,
amend and rescind rules and regulations pertaining to this Plan; to suspend
or discontinue this Plan; and to make all other determinations necessary or
deemed advisable in the administration of the Plan. The determinations,
interpretations and constructions made by the Board or the Committee shall be
final and conclusive. No member of the Board or the Committee shall be liable
for any action taken, or failed to be taken, made in good faith relating to
the Plan or any award thereunder, and the members of the Board or the
Committee shall be entitled to indemnification and reimbursement by the
Corporation in respect of any claim, loss, damage or expense (including
attorneys' fees) arising therefrom to the fullest extent permitted by law.
7
(b) Although the Board or the Committee may suspend or
discontinue the Plan at any time, all Qualified Options must be granted
within ten (10) years from the effective date of the Plan or the date the
Plan is approved by the stockholders of the Corporation, whichever is earlier.
(c) Subject to any applicable requirements of Rule 16b-3
or of any national exchange or trading system on which the Common Stock is
then listed or traded, the Board may amend any provision of this Plan in any
respect in its discretion.
20. CONTINUED EMPLOYMENT NOT PRESUMED. Nothing in this Plan
or any document describing it nor the grant of any Option or Restricted Stock
shall give any Participant the right to continue in the employment of the
Corporation or affect the right of the Corporation to terminate the
employment of any such person with or without cause.
21. LIABILITY OF THE CORPORATION. Neither the Corporation,
its directors, officers or employees or the Committee, nor any Subsidiary
which is in existence or hereafter comes into existence, shall be liable to
any Participant or other person if it is determined for any reason by the
Internal Revenue Service or any court having jurisdiction that any Qualified
Option granted hereunder does not qualify for tax treatment as an incentive
stock option under Section 422 of the Code.
22. GOVERNING LAW. THE PLAN SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF STATE OF TEXAS AND THE UNITED
STATES, AS APPLICABLE, WITHOUT REFERENCE TO THE CONFLICT OF LAWS PROVISIONS
THEREOF.
23. SEVERABILITY OF PROVISIONS. If any provision of this
Plan is determined to be invalid, illegal or unenforceable, such invalidity,
illegality or unenforceability shall not affect the remaining provisions of
the Plan, but such invalid, illegal or unenforceable provision shall be fully
severable, and the Plan shall be construed and enforced as if such provision
had never been inserted herein.
8