FORM OF STOCK OPTION AGREEMENT
The individuals listed below received options to purchase the indicated
number of shares of Common Stock pursuant to Stock Option Agreements dated as
of May 13, 1997, in the form attached, which were granted under the Company's
1997 Stock Option and Restricted Stock Plan.
NUMBER OF SHARES
PARTICIPANT SUBJECT TO OPTION
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Gregg L. Engles 300,000
William P. Brick 200,000
Hector M. Nevares 60,000
Tracy L. Noll 60,000
SUIZA FOODS CORPORATION
STOCK OPTION AGREEMENT
THIS AGREEMENT (this "Agreement"), effective as of May 13, 1997, is made
and entered into by and between Suiza Foods Corporation, a Delaware
corporation (the "Corporation"), and _______________________ (the
"Participant").
WITNESSETH:
WHEREAS, the Corporation has implemented the Suiza Foods Corporation 1997
Stock Option and Restricted Stock Plan (the "Plan"), which was adopted by the
Corporation's Board of Directors (the "Board") and approved by the
Corporation's stockholders, and which provides for the grant of stock options
and restricted stock to certain selected officers, directors and key
employees of the Corporation or its subsidiaries with respect to shares of
Common Stock, $.01 par value, of the Corporation (the "Common Stock");
WHEREAS, the stock options and restricted stock provided for under the
Plan are intended to comply with the requirements of Rule 16b-3 under the
Securities Exchange Act of 1934, as amended (the "Exchange Act").
WHEREAS, the committee appointed by the Board to administer the Plan (the
"Committee") has selected the Participant to participate in the Plan and has
awarded the non-qualified stock option described in this Agreement (the
"Option") to the Participant;
WHEREAS, the parties hereto desire to evidence in writing the terms and
conditions of the Option.
NOW, THEREFORE, in consideration of the foregoing and of the mutual
covenants and agreements herein contained, and as an inducement to the
Participant to continue as an employee of the Corporation or its subsidiaries
and to promote the success of the business of the Corporation and its
subsidiaries, the parties hereby agree as follows:
1. GRANT OF OPTION. The Corporation hereby grants to the Participant,
upon the terms and subject to the conditions, limitations and restrictions
set forth in the Plan and in this Agreement, the Option to acquire __________
shares of Common Stock (the "Option Shares"), at an exercise price per share
of $29.25, effective as of the date of this Agreement (the "Award Date").
The Participant hereby accepts the Option from the Corporation.
2. VESTING. The Option shall vest in full as to all of the Option
Shares on the seventh anniversary of the Award Date; provided that the Option
will vest automatically upon the death of the Participant and may vest
earlier in accordance with the following provisions:
(a) If, by the applicable "Target Date" set forth below, the
closing price of the Common Stock on the New York Stock Exchange (or the
principal exchange on which the
Common Stock is then traded) exceeds the applicable "Target Price" for 20
consecutive trading days, then, at the end of such 20 trading day period, the
Option will be considered vested as to the indicated percentage of the total
number of Option Shares:
CUMULATIVE PERCENTAGE
TARGET DATE TARGET PRICE OF TOTAL OPTION SHARES
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First anniversary of Award Date $33.64 20%
Second anniversary of Award Date $38.68 40%
Third anniversary of Award Date $44.49 60%
Fourth anniversary of Award Date $51.16 80%
Fifth anniversary of Award Date $58.83 100%
(b) The Option shall immediately vest in full as to all of the
Option Shares upon any "Sale of the Corporation". A "Sale of the
Corporation" shall occur if the Corporation engages in a merger,
consolidation, recapitalization, reorganization or sale, lease or transfer of
all or substantially all of the Corporation's assets or a tender offer is
completed with respect to the Common Stock and the Corporation or its
stockholders or affiliates immediately before such transaction beneficially
own, immediately after or as a result of such transaction, equity securities
of the surviving or acquiring corporation or such corporation's parent
corporation possessing less than fifty-one percent (51%) of the voting power
of the surviving or acquiring corporation or such corporation's parent
corporation; provided that a Sale of the Corporation shall not be deemed to
occur upon any public offering or series of such offerings of securities of
the Corporation or its affiliates that results in any such change in
beneficial ownership.
3. EXERCISE. In order to exercise the Option with respect to
any vested portion of the Option Shares, the Participant shall provide
written notice to the Corporation at its principal executive office. At the
time of exercise, the Participant shall pay to the Corporation the exercise
price per share set forth in Section 1 times the number of vested Option
Shares as to which the Option is being exercised. The Participant shall make
such payment in cash, check or at the Corporation's option, by the delivery
of shares of Common Stock having a Fair Market Value (as defined in the Plan)
on the date immediately preceding the exercise date equal to the aggregate
exercise price. If the Option is exercised in full, the Participant shall
surrender this Agreement to the Corporation for cancellation. If the Option
is exercised in part, the Participant shall surrender this Agreement to the
Corporation so that the Corporation may make appropriate notation hereon or
cancel this Agreement and issue a new agreement representing the unexercised
portion of the Option.
If the shares to be purchased are covered by an effective registration
statement under the Securities Act of 1933, as amended (the "Act"), the
Option may be exercised by a broker-dealer acting on behalf of the
Participant if (a) the broker-dealer has received from the Participant or the
Corporation a fully-and duly-endorsed agreement evidencing such option,
together with instructions signed by the Participant requesting the
Corporation to deliver the shares of Common Stock subject to such option to
the broker-dealer on behalf of the Participant 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 Participant have otherwise
complied with Section 220.3(e)(4) of Regulation T, 12 CFR Part 220, or any
successor provision.
4. WHO MAY EXERCISE. The Option shall be exercisable during the
lifetime of the Participant only by the Participant. To the extent
exercisable after the Participant's death, the Option shall be exercised only
by the Participant's representatives, executors, successors or beneficiaries.
5. EXPIRATION OF OPTION. The Option shall expire, and shall not be
exercisable with respect to any vested Option Shares as to which the Option
has not been exercised, on the first to occur of: (a) the tenth anniversary
of the Award Date; or (b) 60 days after any termination of the Participant's
employment with the Corporation for any reason other than death (or 120 days
after any such death). The Option shall expire, and shall not be
exercisable, with respect to any unvested Option Shares immediately upon the
termination of the Participant's employment with the Corporation for any
reason, other than death.
6. TAX WITHHOLDING. Any provision of this Agreement to the contrary
notwithstanding, the Corporation may take such steps as it deems necessary or
desirable for the withholding of any taxes that it is required by law or
regulation of any governmental authority, federal, state or local, domestic
or foreign, to withhold in connection with any of the shares of Common Stock
subject hereto.
7. DILUTION. The number of Option Shares subject to the Option and the
exercise price therefor set forth in Section 1 shall be subject to adjustment
for any Dilutive Event. A "Dilutive Event" shall include any of the
following events that results in dilution to the shares of Common Stock
acquired or acquirable upon exercise of the Option: any increase or decrease
in the shares of Common Stock or any other capital stock of the Corporation
or any change or exchange of any such securities for a different number or
kind of securities, any of which results from one or more stock splits,
reverse stock splits, stock dividends, recapitalizations, reorganizations or
other corporate actions with a similar effect. A "Dilutive Event" shall not
include, however, among other things: (i) the issuance or exercise of
options granted pursuant to the Plan or pursuant to any other stock-based
compensation plan adopted by the Corporation's Board of Directors; or (ii)
any issuance of capital stock by the Corporation for Fair Market Value or any
issuance or grant to any person or entity of any right to subscribe for or to
purchase any capital stock or securities convertible into any capital stock
of the Corporation for Fair Market Value.
8. TRANSFER OF OPTION. The Participant shall not, directly or
indirectly, sell, transfer, pledge, encumber or hypothecate ("Transfer") any
unvested portion of the Option or the rights and privileges pertaining
thereto. In addition, the Participant shall not, directly or indirectly,
Transfer any vested portion of the Option or any shares of Common Stock
acquired upon exercise of the Option other than (i) with the prior written
consent of the Corporation, (ii) by will or the laws of descent and
distribution, (iii) with respect to shares of Common Stock acquired upon
exercise of the Option, pursuant to an effective registration statement filed
under the Act, or
(iv) with respect to shares of Common Stock acquired upon exercise of the
Option, pursuant to an exemption from the registration requirements of the
Act. Any permitted transferee to whom the Participant shall Transfer the
Option pursuant to (i) or (ii) above shall agree to be bound by this
Agreement. Neither the Option nor the underlying shares of Common Stock is
liable for or subject to, in whole or in part, the debts, contracts,
liabilities or torts of the Participant, nor shall they be subject to
garnishment, attachment, execution, levy or other legal or equitable process.
9. CERTAIN LEGAL RESTRICTIONS. The Corporation shall not be obligated
to sell or issue any shares of Common Stock upon the exercise of the Option
or otherwise unless the issuance and delivery of such shares shall comply
with all relevant provisions of law and other legal requirements including,
without limitation, any applicable federal or state securities laws and the
requirements of any stock exchange upon which shares of the Common Stock may
then be listed. As a condition to the exercise of the Option or the sale by
the Corporation of any additional shares of Common Stock to the Participant,
the Corporation may require the Participant to make such representations and
warranties as may be necessary to assure the availability of an exemption
from the registration requirements of applicable federal or state securities
laws. The Corporation shall not be liable for refusing to sell or issue any
shares if the Corporation cannot obtain authority from the appropriate
regulatory bodies deemed by the Corporation to be necessary to lawfully sell
or issue such shares. In addition, the Corporation shall have no obligation
to the Participant, express or implied, to list, register or otherwise
qualify any of the Participant's shares of Common Stock. The shares of
Common Stock issued upon the exercise of the Option may not be transferred
except in accordance with applicable federal or state securities laws. At
the Corporation's option, the certificate evidencing shares of Common Stock
issued to the Participant may be legended as follows:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR UNDER THE APPLICABLE
SECURITIES LAWS OF ANY STATE OR OTHER JURISDICTION AND MAY NOT BE SOLD,
ASSIGNED, TRANSFERRED OR PLEDGED EXCEPT IN COMPLIANCE WITH THE REQUIREMENTS
OF SUCH ACT AND THE APPLICABLE SECURITIES LAWS OF ANY STATE OR OTHER
JURISDICTION.
Any Common Stock issued pursuant to the exercise of Options granted
pursuant to this Agreement to a person who would be deemed an officer or
director of the Corporation under Rule 16b-3 shall not be transferred until
at least six months have elapsed from the date of grant of such Option to the
date of disposition of the Common Stock underlying such Option, unless, at
the time of transfer, the Participant is not subject to the provisions of
Section 16 of the Exchange Act.
10. PLAN INCORPORATED. The Participant accepts the Option subject to
all the provisions of the Plan, which are incorporated into this Agreement,
including the provisions that authorize the Committee to administer and
interpret the Plan and which provide that the Committee's decisions,
determinations and interpretations with respect to the Plan are final and
conclusive on all persons affected thereby. Except as otherwise set forth in
this Agreement, terms defined in the Plan have the same meanings herein.
11. MISCELLANEOUS.
(a) The Option is intended to be a non-qualified stock option under
applicable tax laws, and it is not to be characterized or treated as an
incentive stock option under such laws.
(b) The granting of the Option shall impose no obligation upon the
Participant to exercise the Option or any part thereof. Nothing contained in
this Agreement shall affect the right of the Corporation to terminate the
Participant at any time, with or without cause, or shall be deemed to create
any rights to employment on the part of the Participant.
(c) The rights and obligations arising under this Agreement are not
intended to and do not affect the employment relationship that otherwise
exists between the Corporation and the Participant, whether such employment
relationship is at will or defined by an employment contract. Moreover, this
Agreement is not intended to and does not amend any existing employment
contract between the Corporation and the Participant; to the extent there is
a conflict between this Agreement and such an employment contract, the
employment contract shall govern and take priority.
(d) Neither the Participant nor any person claiming under or
through the Participant shall be or shall have any of the rights or
privileges of a stockholder of the Corporation in respect of any of the
shares issuable upon the exercise of the Option herein unless and until
certificates representing such shares shall have been issued and delivered to
the Participant or such Participant's agent.
(e) Any notice to be given to the Corporation under the terms of
this Agreement or any delivery of the Option to the Corporation shall be
addressed to the Corporation at its principal executive offices, and any
notice to be given to the Participant shall be addressed to the Participant
at the address set forth beneath his or her signature hereto, or at such
other address for a party as such party may hereafter designate in writing to
the other. Any such notice shall be deemed to have been duly given if
mailed, postage prepaid, addressed as aforesaid.
(f) Subject to the limitations in this Agreement on the
transferability by the Participant of the Option and any shares of Common
Stock, this Agreement shall be binding upon and inure to the benefit of the
representatives, executors, successors or beneficiaries of the parties hereto.
(g) THE INTERPRETATION, PERFORMANCE AND ENFORCEMENT OF THIS
AGREEMENT SHALL BE GOVERNED BY THE LAWS OF THE STATE OF DELAWARE AND THE
UNITED STATES, AS APPLICABLE, WITHOUT REFERENCE TO THE CONFLICT OF LAWS
PROVISIONS THEREOF.
(h) If any provision of this Agreement is declared or found to be
illegal, unenforceable or void, in whole or in part, then the parties shall
be relieved of all obligations arising under such provision, but only to the
extent that it is illegal, unenforceable or void, it being the intent and
agreement of the parties that this Agreement shall be deemed amended by
modifying such provision to the extent necessary to make it legal and
enforceable while preserving its intent or, if that is not possible, by
substituting therefor another provision that is legal and enforceable and
achieves the same objectives.
(i) All section titles and captions in this Agreement are for
convenience only, shall not be deemed part of this Agreement, and in no way
shall define, limit, extend or describe the scope or intent of any provisions
of this Agreement.
(j) The parties shall execute all documents, provide all
information, and take or refrain from taking all actions as may be necessary
or appropriate to achieve the purposes of this Agreement.
(k) This Agreement constitutes the entire agreement among the
parties hereto pertaining to the subject matter hereof and supersedes all
prior agreements and understandings pertaining thereto.
(l) No failure by any party to insist upon the strict performance
of any covenant, duty, agreement or condition of this Agreement or to
exercise any right or remedy consequent upon a breach thereof shall
constitute waiver of any such breach or any other covenant, duty, agreement
or condition.
(m) This Agreement may be executed in counterparts, all of which
together shall constitute one agreement binding on all the parties hereto,
notwithstanding that all such parties are not signatories to the original or
the same counterpart.
(n) At any time and from time to time 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 (i) impair the Option in any respect without the consent of the holder
of the Option or (ii) conflict with the provisions of Rule 16b-3. Except as
provided in the preceding sentence, no supplement, modification or amendment
of this Agreement or waiver of any provision of this Agreement shall be
binding unless executed in writing by all parties to this Agreement. No
waiver of any of the provisions of this Agreement shall be deemed or shall
constitute a waiver of any other provision of this Agreement (regardless of
whether similar), nor shall any such waiver constitute a continuing waiver
unless otherwise expressly provided.
(o) In addition to all other rights or remedies available at law or
in equity, the Corporation shall be entitled to injunctive and other
equitable relief to prevent or enjoin any violation of the provisions of this
Agreement.
(p) The Participant's spouse joins this Agreement for the purpose
of agreeing to and accepting the terms of this Agreement and to bind any
community property interest he or she has or may have in the Option, any
vested portion or any unvested portion of the Option, any shares of Common
Stock acquired upon exercise of the Option and any other shares of Common
Stock held by the Participant.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
SUIZA FOODS CORPORATION
By:
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Gregg L. Engles
Chairman of the Board
PARTICIPANT:
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Name:
Address:
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Fax:
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PARTICIPANT'S SPOUSE:
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Name:
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