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EXHIBIT 10.1
SUIZA FOODS CORPORATION
AMENDED AND RESTATED
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.
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"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
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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 5,500,000 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
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approved by the Board or the Committee and executed on behalf of the Corporation
by an appropriate officer. The aggregate number of shares of Common Stock with
respect to which Options may be granted to any single Participant during a
calendar year shall not exceed the number of shares subject to the Plan referred
to in Section 4. Any Options that are granted and subsequently lapse or are
cancelled or forfeited will nonetheless count against this limit. For this
purpose, repricing of an Option shall be considered as the cancellation of the
Option and the grant of a new Option.
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
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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 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
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purchase of shares of Common Stock pursuant to such Option on such terms as the
Board or the Committee may specify.
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 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; provided, however, that the
Committee may (but need not) permit transfer without consideration by such
Participant to (i) the spouse, children or grandchildren of the Participant
("Immediate Family Members"), (ii) a trust or trusts, or to a guardian under the
Uniform Gift to Minors Act, for the exclusive benefit of such Immediate Family
Members, or (iii) a partnership or other entity in which such Immediate Family
Members are the only partners, provided that subsequent transfers of transferred
Options shall be prohibited except by will or the laws of descent and
distribution. Following transfer, any such Options shall continue to be subject
to the same terms and conditions as were applicable
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immediately prior to transfer, provided that, for purposes of each Option
agreement and Section 11 hereof, the term "Participant" shall be deemed to refer
to the transferee (however, the events of termination of employment, if any, set
forth in the agreement and the obligation to pay withholding taxes shall
continue to apply to the transferor). Incentive Stock Options shall be
nontransferable except by will or the laws of descent and distribution, and may
only be exercisable during the Participant's lifetime, by the Participant.
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.
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 (a) impair any Option without the consent of the holder of the Option, or
(b) decrease the exercise price of any Option without the consent of the
stockholders of the Corporation. Notwithstanding the foregoing, in the event of
a modification, 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
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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.
(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, and subject to the stockholder approval requirements of sections 422
and 162(m)(4)(C) of the Code, 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.
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EXHIBIT 10.2
CONSENT AND WAIVER
[Southern California Dairy Venture]
CONSENT AND WAIVER (this "Consent and Waiver"), dated as of July 23,
1999, relating to the Amended and Restated Credit Agreement, dated as of May 22,
1998 (as amended, supplemented or otherwise modified and in effect on the date
hereof, the "Credit Agreement"), between Suiza Foods Corporation, a Delaware
corporation (the "Company"), the lenders party thereto (the "Lenders") and First
Union National Bank, as administrative agent for the Lenders (in such capacity,
the "Agent").
WHEREAS, Swiss Dairy Corporation, a Delaware corporation (hereinafter
referred to as "Swiss Dairy"), is a Wholly Owned Subsidiary of the Company and
party to the Subsidiary Guarantee and Security Agreement (as defined in the
Credit Agreement);
WHEREAS, Adohr Farms, LLC, a limited liability company (hereinafter
referred to as "Adohr") is owned directly or indirectly by Dairy Farmers of
America, Inc., a Kansas cooperative marketing association ("DFA"), Mid-Am
Capital, LLC ("Mid-Am"), Louis J. Stremick ("Stremick") and Michael W. Malone
("Malone");
WHEREAS, the Company, DFA, Mid-Am, Stremick and Malone desire to enter
into a series of transactions pursuant to which: (i) Adohr will transfer certain
of its assets (subject to certain debt owing to Mid-Am) relating to its "fluid
dairy" business to Suiza SoCal, LLC, a Delaware limited liability company (the
"California Venture"), in exchange for equity interests in the California
Venture which will be transferred by Adohr to DFA, Stremick and Malone, and
Adohr will retain its assets relating to its "non-fluid dairy" business; (ii)
the California Venture will purchase the inventory of the "fluid dairy" business
from Adohr; (iii) Mid-Am will contribute certain debt owing to it to the
California Venture in exchange for preferred equity interests in the California
Venture; (iv) Suiza SoCal Holdings, Inc., a Delaware corporation and
Wholly-Owned Subsidiary of the Company ("Suiza Sub"), will contribute Swiss
Dairy to, or Swiss Dairy will transfer all its assets to, or be merged with and
into, the California Venture, such that the California Venture will survive as a
Subsidiary of Suiza Sub and as a result of which Suiza Sub will receive
preferred and common equity interests in the California Venture; and (v) Suiza
Sub and DFA shall purchase from Stremick and Malone all of their equity
interests in the California Venture (collectively, the "Transaction");
WHEREAS, upon consummation of the Transaction: (i) seventy percent
(70%) or more of each of the common and preferred ownership interests of the
California Venture will be owned and controlled by Suiza Sub; and (ii) the
remaining common and preferred ownership interests of the California Venture
will be owned and controlled by DFA and Mid-Am;
WHEREAS, pursuant to the Transaction, the existing fluid dairy and
bottled water operations of the Company and DFA located in Southern California
will be operated by the California Venture; and
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WHEREAS, certain aspects of the Transaction require the consent of the
Majority Lenders or the waiver by the Majority Lenders of certain provisions of
the Credit Agreement and the Security Documents, in each case in accordance with
the terms thereof.
NOW, THEREFORE, the Majority Lenders hereby agree as follows:
1. Defined Terms. Except as otherwise defined in this Consent and
Waiver, terms defined in the Credit Agreement are used herein as defined
therein.
2. Consent and Waiver of Credit Agreement Provisions. Subject to the
conditions set forth in Section 6 hereto and compliance with the covenants set
forth in Section 7 hereto, notwithstanding Sections 7.15, 8.03, 8.05 and 8.17 of
the Credit Agreement and the other terms and provisions of the Credit Agreement:
(a) the Majority Lenders hereby consent to the consummation of
the Transaction on substantially the terms set forth in the recitals to
this Consent and Waiver;
(b) the Majority Lenders hereby waive the provisions of
Sections 8.03 and 8.05 of the Credit Agreement to the extent
application of such provisions would prohibit the merger of Swiss Dairy
or Adohr with and into the California Venture, the contribution of
ownership interests in, or the transfer of assets of, Swiss Dairy or
Adohr to the California Venture or the issuance of ownership interests
in the California Venture to the Company or Suiza Sub, DFA, Mid-Am,
Stremick, Malone or other Persons;
(c) the Majority Lenders hereby waive the provisions of
Section 7.15 of the Credit Agreement to the extent they restrict or
prevent the California Venture from issuing or having outstanding
Equity Rights;
(d) the Majority Lenders hereby waive the provisions of
Sections 8.17(a), (b) and (c) of the Credit Agreement to the extent
such provisions:
(i) would require that the California Venture or any
now-owned or hereafter acquired or formed Subsidiary of the
California Venture be a Wholly Owned Subsidiary;
(ii) would require that the California Venture or any
now-owned or hereafter acquired or formed Subsidiary of the
California Venture become a party, by Joinder Agreement or
otherwise, to the Subsidiary Guarantee and Security Agreement
or any similar agreement; or
(iii) would prohibit or prevent the constituent
documents of the California Venture, or of any now-owned or
hereafter acquired or formed Subsidiary thereof, or any
indenture, agreement, instrument or other arrangement to which
the California Venture or such Subsidiary may be a party, from
prohibiting or restraining or having the effect of prohibiting
or restraining or imposing materially adverse conditions upon
the ability of the California Venture,
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or any such Subsidiary thereof, to incur Indebtedness, grant
Liens, make loans, advances or Investments or sell, assign,
transfer or otherwise dispose of Property;
provided, that the California Venture shall not incur
Indebtedness or grant Liens other than Indebtedness or Liens
in favor of the Company or its Wholly-Owned Subsidiaries or
Indebtedness or Liens of Adohr or Persons or Property acquired
by, or merged into, the California Venture, which Indebtedness
and Liens (x) otherwise satisfy the requirements of Sections
8.06 and 8.07 of the Credit Agreement, as applicable, (y)
existed before such acquisition or merger and were not created
in anticipation thereof and (z) in the case of Liens, were
created solely for the purpose of securing Indebtedness
representing, or incurred to finance, refinance or refund, the
cost of the Property subject thereto (provided that (A) no
such Lien shall extend to or cover any Property of the Company
or any Subsidiary other than the Property so acquired, and (B)
the principal amount of Indebtedness secured by any such Lien
shall at no time exceed the fair market value (as determined
in good faith by a Responsible Financial Officer of the
Company) of such Property at the time it was acquired);
provided, further, that the California Venture shall not make
loans, advances or Investments or sell, assign, transfer or
otherwise dispose of Property except in accordance with
Sections 8.08 or 8.05(c) of the Credit Agreement, as
applicable; and
provided, further, that such constituent documents,
indentures, agreements or other arrangements shall impose no
restrictions on the ability of the California Venture to pay
dividends or make other distributions, other than to give
priority to the payment of any dividends or distributions to
any preferred capital stock or other preferred ownership
interests in the California Venture;
(e) the Majority Lenders hereby acknowledge and agree that the
California Venture and each of its Subsidiaries shall be a Subsidiary
of the Company, but shall not be an Affiliate of the Company, for all
purposes of the Credit Agreement; and
(f) subject to compliance with the other terms of the Credit
Agreement, the Majority Lenders hereby consent to the Company's future
acquisition of all or any portion of the remaining ownership interests
in the California Venture; provided, however, upon the acquisition by
the Company or its Subsidiaries of all the outstanding capital stock,
Equity Rights and other ownership interests of the California Venture,
the California Venture shall execute a Joinder Agreement and thereby
become a party to the Subsidiary Guarantee and Security Agreement.
3. Waiver of Security Agreement Provisions. Notwithstanding Sections 2
and 5.04 of the Security Agreement, the Majority Lenders hereby waive any
violation of the Security Agreement that would occur as a result of: (a) the
Company's or Suiza Sub's ownership of less than all the ownership interests of
the California Venture; or (b) any restrictions on the transfer or encumbrance
of the Company's or Suiza Sub's interest in the California Venture.
3
12
4. Release of Capital Stock of Swiss Dairy. The Agent is hereby
authorized and directed to deliver all stock certificates and related stock
powers with respect to Swiss Dairy to the Company to facilitate the consummation
of the Transaction. Effective upon the merger of Swiss Dairy into the California
Venture or the transfer of substantially all the assets of, or ownership
interests in, Swiss Dairy to the California Venture, (i) the Subsidiary
Guarantee and Security Agreement is hereby terminated as to Swiss Dairy and
Swiss Dairy is hereby released from all obligations thereunder, (ii) the capital
stock of Swiss Dairy is hereby released from the Lien of the Security Agreement
or the Subsidiary Guarantee and Security Agreement, as the case may be, and
(iii) all references to Swiss Dairy in the Credit Agreement and the Security
Documents are hereby deleted.
5. Representations and Warranties of the Company. The Company
represents and warrants to the Agent and the Lenders that (with respect to
matters pertaining to itself and each of its Subsidiaries) as of the date hereof
and as of the date of the consummation of the Transaction:
(a) no Default has occurred and is otherwise continuing under
the Credit Agreement;
(b) except as permitted by this Consent and Waiver, the
representations and warranties made by the Company in Section 7 of the
Credit Agreement, and by each Obligor in each of the other Loan
Documents to which it is a party, are true and complete on and as of
the date of this Consent and Waiver, and the date of the consummation
of the Transaction, with the same force and effect as if made on and as
of each such date (or, if any such representation or warranty is
expressly stated to have been made as of a specific date, as of such
specific date);
(c) on a pro forma basis after giving effect to the
Transaction, the Company shall remain in compliance with Sections 8.10,
8.11 and 8.13 of the Credit Agreement; and
(d) the businesses being conducted by Adohr to be transferred
to the California Venture are in the same line or lines of business
currently engaged in by certain Subsidiaries of the Company, or as
permitted by Section 8.14 of the Credit Agreement.
6. Conditions Precedent. The effectiveness of this Consent and Waiver
is subject to the receipt by the Agent of the following documents, each of which
shall be satisfactory to the Agent in form and substance:
(a) certified copies of the Amended and Restated Operating
Agreement and Certificate of Formation of Limited Liability Company (or
equivalent documents) of the California Venture;
4
13
(b) Uniform Commercial Code searches for Adohr for each
jurisdiction in which Adohr conducts its business or in which any of
its Properties are located (or otherwise as the Agent may reasonably
request);
(c) appropriately completed and duly executed copies of
Uniform Commercial Code Financing Statements, sufficient to perfect in
the Agent a security interest in the ownership interests of the
California Venture owned by the Company or Suiza Sub, in accordance
with the Security Agreement or the Subsidiary Guarantee and Security
Agreement;
(d) an opinion, appropriately dated, of counsel to the
California Venture covering such matters as the Agent may reasonably
request;
(e) if requested by the Agent, environmental surveys and
assessments prepared by one or more firms of licensed engineers
(familiar with the identification of toxic and hazardous substances) in
form and substance satisfactory to the Agent, such environmental survey
and assessment to be based upon physical on-site inspections by such
firm of each of the existing sites and facilities owned, operated or
leased by Adohr and to continue to be owned, operated or leased by the
California Venture as well as an historical review of the uses of such
sites and facilities and of the business and operations of Adohr;
(f) an amendment to the Security Agreement pursuant to which
the Company shall pledge all of its right, title and interest in or to
Suiza Sub to the Agent for the benefit of the Lenders, and
(g) a Joinder Agreement from Suiza Sub, whereby Suiza Sub
shall become a party to the Subsidiary Guarantee and Security
Agreement.
7. Covenants. In addition to any covenants set forth in the Credit
Agreement, the Company covenants and agrees with the Lenders and the Agent that:
(a) the Company, together with its Subsidiaries (other than
the California Venture), shall at all times collectively retain voting
control of at least 51% of each class of capital stock or other
ownership interests of the California Venture; and
(b) notwithstanding anything to the contrary in the
definitions of "EBITDA", the Company shall include within EBITDA for
any period no more than the pro rata share (equal to the aggregate
shares of capital stock or other ownership interests in the California
Venture then held by the Company and its Subsidiaries (other than the
California Venture) divided by the total shares of outstanding capital
stock or other ownership interests in the California Venture) of the
California Venture's operating income, depreciation and amortization,
and other income for such period.
8. Miscellaneous. Except as expressly provided herein, the Credit
Agreement and the Security Documents shall remain unmodified and in full force
and effect. This Consent and Waiver may be executed in any number of
counterparts, all of which taken together shall
5
14
constitute one and the same instrument and any of the parties hereto may execute
this Consent and Waiver by signing any such counterpart. This Consent and Waiver
shall be governed by, and construed in accordance with, the law of the State of
New York.
6
15
IN WITNESS WHEREOF, the parties hereto have caused this Consent and
Waiver to be duly executed and delivered as of the day and year first above
written.
COMPANY:
SUIZA FOODS CORPORATION
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
AGREED AND ACCEPTED:
FIRST UNION NATIONAL BANK,
as Administrative Agent
By: /s/ Jorge A. Gonzalez
-------------------------------
Name: Jorge A. Gonzalez
Title: Senior Vice President
LENDERS:
FIRST UNION NATIONAL BANK
By: /s/ Jorge A. Gonzalez
-----------------------------------
Name: Jorge A. Gonzalez
Title: Senior Vice President
THE FIRST NATIONAL BANK
OF CHICAGO
By: /s/ Kathy Turner
-----------------------------------
Name: Kathy Turner
Title: Authorized Officer
7
16
BANK ONE, TEXAS, N.A.
By: /s/ Kathy Turner
-----------------------------------
Name: Kathy Turner
Title: Vice President
BANK OF AMERICA NT&SA
By: /s/ Tom F. Scharfenberg
-----------------------------------
Name: Tom F. Scharfenberg
Title: Managing Director
BANK OF AMERICA, N.A.
By: /s/ Tom F. Scharfenberg
-----------------------------------
Name: Tom F. Scharfenberg
Title: Managing Director
BANCO POPULAR DE PUERTO RICO
By: /s/ John Incandela
-----------------------------------
Name: John Incandela
Title: Senior Vice President
By:
-------------------------------------
Name:
Title:
THE BANK OF NOVA SCOTIA
By: /s/ M.D. Smith
-----------------------------------
Name: M.D. Smith
Title: Agent Operations
8
17
THE BANK OF TOKYO - MITSUBISHI,
LTD., DALLAS OFFICE
By: /s/ D. Barnell
-----------------------------------
Name: D. Barnell
Title: Vice President
CREDIT AGRICOLE INDOSUEZ
By: /s/ Katherine L. Abbott
-----------------------------------
Name: Katherine L. Abbott
Title: First Vice President
Managing Director
By: /s/ Bradley C. Peterson
-----------------------------------
Name: Bradley C. Peterson
Title: Vice President, Manager
CREDIT LYONNAIS NEW YORK BRANCH
By: /s/ Robert Ivosevich
-----------------------------------
Name: Robert Ivosevich
Title: Senior Vice President
FLEET NATIONAL BANK
By: /s/ Steve Kalin
-----------------------------------
Name: Steve Kalin
Title: Vice President
WELLS FARGO BANK (TEXAS) N.A.
By: /s/ Austin D. Nettle
-----------------------------------
Name: Austin D. Nettle
Title: Banking Officer
9
18
CIBC INC.
By: /s/ Katherine Bass
-----------------------------------
Name: Katherine Bass
Title: Executive Director
CIBC World Markets Corp.,
As Agent
HARRIS TRUST AND SAVINGS BANK
By: /s/ Dianna D. Carr
-----------------------------------
Name: Dianna D. Carr
Title: Vice President
COBANK ACB
By: /s/ Brian J. Klatt
-----------------------------------
Name: Brian J. Klatt
Title: Vice President
AMSOUTH BANK
By: /s/ Brock E. Fredette
-----------------------------------
Name: Brock E. Fredette
Title: Vice President
BANKBOSTON N.A.
By: /s/ Esteban Arrondo
-----------------------------------
Name: Esteban Arrondo
Title: Vice President
10
19
BANQUE NATIONALE DE PARIS
HOUSTON AGENCY
By: /s/ Warren Parham
-----------------------------------
Name: Warren Parham
Title: Vice President
BHF (USA) CAPITAL CORPORATION
By:
-------------------------------------
Name:
Title:
By:
-------------------------------------
Name:
Title:
THE INDUSTRIAL BANK OF JAPAN,
LIMITED
By: /s/ Walter R. Wolff
-----------------------------------
Name: Walter R. Wolff
Title: Joint General Manager
By:
-------------------------------------
Name:
Title:
THE LONG-TERM CREDIT BANK OF
JAPAN, LIMITED
By:
-------------------------------------
Name:
Title:
11
20
MELLON BANK, N.A.
By: /s/ Louis E. Flori
-----------------------------------
Name: Louis E. Flori
Title: Vice President
THE MITSUBISHI TRUST AND
BANKING CORPORATION
By: /s/ Nobuo Tominaga
-----------------------------------
Name: Nobuo Tominaga
Title: Chief Manager
NATEXIS BANQUE BFCE
By:
-------------------------------------
Name:
Title:
By:
-------------------------------------
Name:
Title:
NATIONAL CITY BANK OF
KENTUCKY
By: /s/ Tom Gurbach
-----------------------------------
Name: Tom Gurbach
Title: Vice President
THE ROYAL BANK OF SCOTLAND PLC
By:
-------------------------------------
Name:
Title:
12
21
THE SANWA BANK, LIMITED,
NEW YORK BRANCH
By:
-------------------------------------
Name:
Title:
STB DELAWARE FUNDING TRUST I
By: /s/ Donald C. Hargadon
-----------------------------------
Name: Donald C. Hargadon
Title: Assistant Vice President
SUNTRUST BANK, ATLANTA
By: /s/ F. Steven Parrish
-----------------------------------
Name: F. Steven Parrish
Title: Vice President
By: /s/ Patrick M. Kotors
-----------------------------------
Name: Patrick M. Kotors
Title: Banking Officer
THE TOKAI BANK, NEW YORK BRANCH
By:
-------------------------------------
Name:
Title:
UNION BANK OF CALIFORNIA, N.A.
By:
-------------------------------------
Name:
Title:
13
22
COMPAGNIE FINANCIERE DE CIC ET
DE L'UNION EUROPEENNE
By: /s/ Brian O'Leary
-----------------------------------
Name: Brian O'Leary
Title: Vice President
By: /s/ Marcus Edward
-----------------------------------
Name: Marcus Edward
Title: Vice President
ERSTE BANK
By: /s/ Arcinee Hovanessian
-----------------------------------
Name: Arcinee Hovanessian
Title: Vice President, Erste Bank
New York Branch
By: /s/ John S. Runnion
-----------------------------------
Name: John S. Runnion
Title: First Vice President
GENERAL ELECTRIC CAPITAL
CORPORATION
By:
-------------------------------------
Name:
Title:
MICHIGAN NATIONAL BANK
By: /s/ Eric Harge
-----------------------------------
Name: Eric Harge
Title: Commercial Relationship Manager
14
23
COOPERATIEVE CENTRALE RAIFFEISEN-
BOERENLEENBANK B.A., "RABOBANK
NEDERLAND", NEW YORK BRANCH
By: /s/ Pieter Kodde
-----------------------------------
Name: David L. Streeter
Title: Senior Vice President
By: /s/ David L. Streeter
-----------------------------------
Name: David L. Streeter
Title: Vice President
15
24
EXHIBIT 10.3
SUIZA FOODS CORPORATION
EXECUTIVE DEFERRED COMPENSATION PLAN
Table of Contents
Page
----
ARTICLE I DEFINITIONS................................................................................1
ARTICLE II ELIGIBILITY................................................................................2
ARTICLE III CREDITS TO ACCOUNT.........................................................................3
ARTICLE IV BENEFITS...................................................................................4
ARTICLE V PAYMENT OF BENEFITS AT TERMINATION.........................................................5
ARTICLE VI IN-SERVICE WITHDRAWALS.....................................................................6
ARTICLE VII ADMINISTRATION OF THE PLAN.................................................................7
ARTICLE VIII CLAIMS REVIEW PROCEDURE....................................................................8
ARTICLE IX LIMITATION OF RIGHTS.......................................................................9
ARTICLE X LIMITATION OF ASSIGNMENT AND PAYMENTS TO
LEGALLY INCOMPETENT DISTRIBUTEE...........................................................10
ARTICLE XI AMENDMENT TO OR TERMINATION OF THE PLAN...................................................10
ARTICLE XII GENERAL AND MISCELLANEOUS.................................................................10
25
SUIZA FOODS CORPORATION
EXECUTIVE DEFERRED COMPENSATION PLAN
PREAMBLE
WHEREAS, Suiza Foods Corporation (the "Company"), a corporation formed
under the laws of the State of Delaware, desires to establish a deferred
compensation plan for the exclusive benefit of a select group of management and
highly compensated employees of the Company and its Affiliates to provide an
additional means by which such employees may defer funds for their retirement;
NOW, THEREFORE, the Company hereby establishes the Suiza Foods
Corporation Executive Deferred Compensation Plan (the "Plan"), effective July 1,
1999.
ARTICLE I
DEFINITIONS
1.1 "Account" shall mean the individual bookkeeping record established
by the Committee showing the monetary value of the interest in the Plan of each
Participant or Beneficiary.
1.2 "Affiliate" shall mean a member of a controlled group of
corporations (as defined in Section 414(b) of the Code), a group of trades or
businesses (whether or not incorporated) which are under common control (as
defined in Section 414(c) of the Code), or an affiliated service group (as
defined in Section 414(m) of the Code) of which the Company is a member; and any
entity otherwise required to be aggregated with the Company pursuant to Section
414(o) of the Code or the regulations issued thereunder.
1.3 "Annual Compensation" shall mean the total amounts paid or accrued
by the Company or an Affiliate to an employee as remuneration for personal
services rendered during each Plan Year, including bonuses and commissions, as
reported on the employee's federal income tax withholding statement or
statements (IRS Form W-2 or its subsequent equivalent), together with any
amounts not includable in such employee's gross income pursuant to Sections 125
or 402(g) of the Code, and any amounts deferred by such employee pursuant to
Section 3.1 hereof.
1.4 "Beneficiary" shall mean the Beneficiary designated by each
Participant under the 401(k) Plan; provided, however, that a Participant may
designate a different Beneficiary hereunder by delivering to the Committee a
written beneficiary designation, in the form provided by the Committee, and
executed specifically with respect to this Plan.
1.5 "Board" shall mean the Board of Directors of the Company.
1.6 "Code" shall mean the Internal Revenue Code of 1986, as it may be
amended from time to time, and the rules and regulations promulgated thereunder.
26
1.7 "Committee" shall mean the Compensation Committee of the Board.
1.8 "Company" shall mean Suiza Foods Corporation or its successor or
successors.
1.9 "Disability" shall mean a physical or mental condition which, in
the opinion of the Committee, prevents a Participant from being able to perform
the substantial duties of his employment with the Company and is expected to be
of long duration or to result in death.
1.10 "Effective Date" shall mean July 1, 1999.
1.11 "401(k) Plan" shall mean the Suiza Foods Corporation 401(k) Plan.
1.12 "Participant" shall mean an individual who has been designated by
the Committee as being eligible to participate in the Plan.
1.13 "Plan" shall mean the Suiza Foods Corporation Executive Deferred
Compensation Plan set forth in this document, as it may be amended from time to
time.
1.14 "Plan Year" shall mean the twelve month period beginning each
January 1 and ending each December 31, except that the first Plan Year shall
commence July 1, 1999 and end December 31, 1999.
1.15 "Profit Sharing Credit" shall mean the amount contributed to the
Participant's Account as a profit sharing credit pursuant to Section 3.3 hereof.
1.16 "Trust" shall mean the Suiza Foods Corporation Executive Deferred
Compensation Plan Trust.
1.17 "Valuation Date" shall mean each business day on which the
financial markets are open for trading activity or such other dates as may be
established by the Committee.
-2-
27
ARTICLE II
ELIGIBILITY
Participation in the Plan shall be made available to a select group of
individuals, as determined by the Committee, who are providing services to the
Company or an Affiliate in key positions of management and responsibility. Such
individuals may elect to participate hereunder by executing a participation
agreement in such form and at such time as the Committee shall require, provided
that each participation agreement shall be executed no later than the day
immediately preceding the Plan Year for which an individual elects to make
contributions to the Plan in accordance with the provisions of Section 3.1
hereof. Notwithstanding the foregoing, in the first year in which an individual
becomes eligible to participate in the Plan, he may elect to participate in the
Plan by executing a participation agreement, in such form as the Committee shall
require, within thirty (30) days of the date on which he is notified by the
Committee of his eligibility to participate in the Plan. In such event, his
election to participate in the Plan shall become effective as of the first full
payroll period beginning on or after the Committee's receipt of his
participation agreement. The determination as to the eligibility of any
individual to participate in the Plan shall be in the sole and absolute
discretion of the Committee, whose decision in that regard shall be conclusive
and binding for all purposes hereunder.
ARTICLE III
CREDITS TO ACCOUNT
3.1 For any Plan Year, a Participant who elects to contribute to the
401(k) Plan the lesser of: (i) the maximum elective deferral permitted under
Section 402(g)(1) of the Code with respect to the taxable year in which such
Plan Year begins, or (ii) the maximum elective contributions permitted under the
terms of the 401(k) Plan with respect to such Plan Year, may, in the manner
prescribed by the Committee, irrevocably elect to defer a whole percentage of
the Annual Compensation otherwise payable to such Participant with respect to
such Plan Year, not to exceed the maximum amount established by the Committee.
Any amounts deferred, pursuant to this Article III, from the Annual Compensation
otherwise payable to a Participant shall be transferred to the Trust and
credited to the Account of such Participant as soon as practicable after the
date on which such amounts would otherwise have been paid to the Participant.
3.2 The Committee shall credit a matching contribution to the Account
of each Participant who has deferred amounts under the Plan during any Plan Year
under Section 3.1 above. The matching contribution, if any, shall be computed as
follows: (i) The Committee shall first compute a maximum matching contribution
for each Participant, taking into account salary deferrals made by the
Participant under both the Plan and the 401(k) Plan, using the formula applied
by the 401(k) Plan with respect to percentage of salary deferrals matched and
the maximum percentage of compensation which is subject to the match, but using
the Participant's Annual Compensation (not exceeding the maximum compensation
that may be considered on behalf of a participant in the 401(k) Plan unless
otherwise approved by the Board of Directors of the Company); (ii) the Committee
shall then determine the amount of matching contributions
-3-
28
made for the Participant under the 401(k) Plan; and (iii) the difference between
(i) and (ii) is the matching contribution to be credited to the Participant's
Account under the Plan. The Committee shall credit matching contribution, if
any, to the Account of each Participant entitled thereto as soon as
administratively practicable following the payroll period during which the
Participant's deferral under Section 3.1 to which the matching contribution
relates is withheld from his Annual Compensation and the Company shall transfer
a similar amount to the Trust on or as soon as administratively practicable
following such date.
3.3 For each Plan Year, the Committee shall credit each Participant's
Account with an amount that represents a Profit Sharing Credit. The Profit
Sharing Credits shall be equal in amount to the additional contribution, if any,
which would have been allocated as a non-matching contribution to the
Participant's account in the 401(k) Plan if the Participant had not elected to
defer, pursuant to this Plan, Annual Compensation that otherwise would have been
paid for the 401(k) Plan plan year coinciding with or ending in the Plan Year.
The Committee shall credit the Profit Sharing Credits to the Account of each
Participant entitled thereto as soon as administratively practicable following
the date that the Company makes a profit sharing contribution to the 401(k) Plan
and the Company shall transfer an equivalent amount to the Trust on or as soon
as administratively practicable following such date.
3.4 At the time of making the deferrals elections described in Section
3.1 and at such other times as is allowed by the Committee, the Participant
shall designate, on a form provided by the Committee, the types of investments,
including life insurance policies, in which the Participant's Account will be
deemed to be invested for purposes of determining the amount of earnings to be
credited to that Account. On a quarterly or other basis selected by the
Committee, the Committee shall credit to each Participant's Account an amount
equal to the interest, earnings or losses that would have resulted to the
Account if the amounts credited to the Account were invested as elected by the
Participant. If the Participant designates a deemed investment in a life
insurance policy, the rate of earnings to be credited to such Participant's
Account shall be as set forth in a split-dollar life insurance agreement or
other agreement concerning such a policy.
ARTICLE IV
BENEFITS
4.1 After the death of a Participant, the Beneficiary of such
Participant shall be entitled to the entire value of all amounts credited to
such Participant's Account, determined as of the Valuation Date coincident with
or preceding the date of distribution, including any additional amount credited
to such Participant's Account as a result of life insurance proceeds payable on
the Participant's death.
-4-
29
4.2 After the Disability of a Participant, such Participant shall be
entitled to the entire value of all amounts credited to such Participant's
Account, determined as of the Valuation Date coincident with or preceding the
date of Disability. Such amount shall be payable to the Participant at the time
and in the manner determined by the Committee.
4.3 After a Participant's termination of employment for any reason
other than death or Disability, such Participant shall be entitled to the entire
value of all amounts credited to the Account of such Participant, determined as
of the Valuation Date coincident with or preceding the date of distribution.
ARTICLE V
PAYMENT OF BENEFITS AT TERMINATION
5.1 In the case of a Participant who terminates employment with the
Company, the amount credited to the Participant's Account (provided it is more
than $25,000) shall be paid in cash to the Participant, at the time the
distribution of the Account is to commence, from among the following optional
forms of benefit as elected by the Participant on the form provided by Company
upon his or her initial participation in the Plan.
(1) a lump sum distribution;
(2) substantially equal annual installments over five (5) years;
(3) substantially equal annual installments over ten (10) years; or
(4) substantially equal annual installments over fifteen (15) years.
However, if the amount credited to a Participant's account is $25,000 or less at
the time distribution of the Account is to commence, payment will be made in a
lump sum. Furthermore, notwithstanding the commencement of installment payments
under this Section 5.1, all remaining amounts credited to a Participant's
Account shall be distributed in a lump sum, at such time as the value of such
remaining amounts is $25,000 or less.
Payment shall commence as soon as practicable following the
Participant's termination of employment with the Company, or, if so elected by
the Participant in the Participant's deferral election form provided by the
Committee, as soon as practicable during the calendar year following the year in
which such event occurs. If installment payments are made, the unpaid balance of
the Participant's Account shall continue to share in the income and losses
attributable thereto, in accordance with the provisions of the Trust, during the
period for which installment payments are made. A Participant may modify the
optional form of benefit that he or she has previously elected, as long as he or
she provides the Committee with written notice at least one (1) year in advance
of the effective date of the change.
-5-
30
5.2 Payment of a Participant's benefit on account of death shall be
made in a lump sum in cash. Payment of a Participant's death benefit shall be
made to the Beneficiary of such Participant as soon as practicable following the
Committee's receipt of proper notice of such Participant's death.
5.3 Notwithstanding the provisions of sections 5.1 or 5.2, the benefits
payable hereunder may be paid before they would otherwise be payable if, based
on a change in the federal or applicable state tax or revenue laws, a published
ruling or similar announcement issued by the Internal Revenue Service, a
regulation issued by the Secretary of the Treasury, a decision by a court of
competent jurisdiction involving a Participant or a Beneficiary, or a closing
agreement made under Section 7121 of the Code that is approved by the Internal
Revenue Service and involves a Participant, the Committee determines that a
Participant has or will recognize income for federal or state income tax
purposes with respect to amounts that are or will be payable under the Plan
before they otherwise would be paid. The amount of any payments pursuant to this
Section 5.3 shall not exceed the lesser of: (a) the amount in the Participant's
Account or (b) the amount of taxable income with respect to which the tax
liability is assessed or determined.
5.4 The payment of benefits under the Plan shall begin at the date
specified in accordance with the provisions of Sections 5.1 and 5.2 hereof;
provided that, in case of administrative necessity, the starting date of payment
of benefits may be delayed up to thirty (30) days as long as such delay does not
result in the Participant or Beneficiary receiving the distribution in a
different taxable year than if no such delay had occurred.
ARTICLE VI
IN-SERVICE WITHDRAWALS
6.1 (HARDSHIP WITHDRAWALS): In the event of an unforeseeable emergency,
a Participant may make a request to the Committee for a withdrawal from the
Account of such Participant. For purposes of this Section, the term
"unforeseeable emergency" shall mean a severe financial hardship to the
Participant resulting from a sudden and unexpected illness or accident of the
Participant or of a dependent (as defined in Section 152(a) of the Code) of the
Participant, loss of the Participant's property due to casualty, or other
similar extraordinary and unforeseeable circumstances arising as a result of
events beyond the control of the Participant. Any determination of the existence
of an unforeseeable emergency and the amount to be withdrawn on account thereof
shall be made by the Committee, in its sole and absolute discretion. However,
notwithstanding the foregoing, a withdrawal will not be permitted to the extent
that the financial hardship is or may be relieved: (i) through reimbursement or
compensation by insurance or otherwise; (ii) by liquidation of the Participant's
assets, to the extent that liquidation of such assets would not itself cause
severe financial hardship; or (iii) by
-6-
31
cessation of deferrals under this Plan. In no event shall the need to send a
Participant's child to college or the desire to purchase a home be deemed to
constitute an unforeseeable emergency. No member of the Committee shall vote or
decide upon any matter relating to the determination of the existence of such
member's own financial hardship or the amount to be withdrawn on account
thereof. A request for a hardship withdrawal must be made in the manner
prescribed by the Committee, and must be expressed as a specific dollar amount.
The amount of a hardship withdrawal may not exceed the amount required to meet
the severe financial hardship. All hardship withdrawals shall be paid in a lump
sum in cash.
6.2 (SCHEDULED IN-SERVICE WITHDRAWALS): On a form prescribed by the
Committee, a Participant, prior to the beginning of any Plan Year, can elect to
receive that Plan Year's deferrals made pursuant to Section 3.1, matching
contributions made pursuant to Section 3.2, any additional contributions made
that Plan Year pursuant to Section 3.3, and earnings thereon at a date specified
by the Participant. Such date shall be no earlier than five (5) years from the
last day of the Plan Year for which the deferrals and matching and other
contributions are made. A Participant may extend the scheduled in-service
withdrawal date for any Plan Year, as long as the Participant provides advance
written notice to the Committee at least one year before the scheduled payment
date, and such extension is for a period of not less than one year from the
previous, scheduled in-service withdrawal date. A Participant may not extend the
scheduled in-service withdrawal more than twice without the consent of the
Committee. Any withdrawal under this Section 6.2 shall be made in a single lump
sum, in cash.
6.3 (UNSCHEDULED IN-SERVICE WITHDRAWALS): Notwithstanding any other
provision herein to the contrary, prior to the end of any calendar month, a
Participant who is actively employed or has started receiving installment
payments, (as provided in Section 5.1 above) may elect to accelerate the date on
which payment of his benefit hereunder would otherwise be made, using a form
provided by and filed with the Committee. Upon such election, the amount to
which such Participant is entitled shall be any whole percentage, from ten
percent (10%) to ninety percent (90%) of the benefit otherwise payable
hereunder, which shall be distributed in one lump sum, in cash, as soon as
administratively practicable after the end of the calendar month in which the
early distribution election is made. Ten percent (10%) of any amounts withdrawn
from such Participant's Account shall be forfeited as of the date of such
distribution.
If, at the time of such election, the Participant is employed by the
Company or an Affiliate, such Participant shall be prohibited from participating
in the Plan for the balance of the Plan Year and for the following Plan Year,
and no amounts shall be credited to his or her Account pursuant to Section 3.1
hereunder during this period. The Participant may again elect to participate in
the Plan as of the first full payroll period after the last day of the period of
ineligibility by executing a new participation agreement within the time prior
to such date established by the Committee.
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6.4 Withdrawals shall be charged pro rata to the investment options in
which amounts credited to a Participant's Account are deemed to be invested
pursuant to Section 3.5 hereof.
ARTICLE VII
ADMINISTRATION OF THE PLAN
7.1 The Plan shall be administered by the Committee. The members of the
Committee shall not receive compensation with respect to their services for the
Committee. The members of the Committee shall serve without bond or security for
the performance of their duties hereunder unless applicable law makes the
furnishing of such bond or security mandatory or unless required by the Company.
Any member of the Committee may resign by delivering a written resignation to
the Company and to the other members of the Committee.
7.2 The Committee shall perform any act which the Plan authorizes
expressed by a vote at a meeting or in a writing signed by a majority of its
members without a meeting. The Committee may, by a writing signed by a majority
of its members, appoint any member of the Committee to act on behalf of the
Committee. Any person who is a member of the Committee shall not vote or decide
upon any matter relating solely to such member or vote in any case in which the
individual right or claim of such member to any benefit under the Plan is
particularly involved. If, in any matter or case in which a person is so
disqualified to act, the remaining persons constituting the Committee cannot
resolve such matter or case, the Board will appoint a temporary substitute to
exercise all the powers of the disqualified person concerning the matter or case
in which such person is disqualified.
7.3 The Committee may designate in writing other persons to carry out
its responsibilities under the Plan, and may remove any person designated to
carry out its responsibilities under the Plan by notice in writing to that
person. The Committee may employ persons to render advice with regard to any of
its responsibilities. All usual and reasonable expenses of the Committee shall
be paid by the Company. The Company shall indemnify and hold harmless each
member of the Committee from and against any and all claims and expenses
(including, without limitation, attorneys' fees and related costs), in
connection with the performance by such member of duties in that capacity, other
than any of the foregoing arising in connection with the willful neglect or
willful misconduct of the person so acting.
7.4 The Committee shall establish rules and procedures, not contrary to
the provisions of the Plan, for the administration of the Plan and the
transaction of its business. The Committee shall determine the eligibility of
any individual to participate in the Plan, shall interpret the Plan in its sole
and absolute discretion, and shall determine all questions arising in the
administration, interpretation and application of the Plan. All determinations
of the Committee shall be conclusive and binding on all employees, Participants
and Beneficiaries.
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33
7.5 Any action to be taken hereunder by the Company shall be taken by
resolution adopted by the Board or by a committee thereof; provided, however,
that by resolution, the Board or a committee thereof may delegate to any officer
of the Company the authority to take any such actions hereunder.
ARTICLE VIII
CLAIMS REVIEW PROCEDURE
8.1 In the event that a Participant or Beneficiary is denied a claim
for benefits under this Plan (the "Claimant"), the Committee shall provide to
the Claimant written notice of the denial which shall set forth:
(a) the specific reason or reasons for the denial;
(b) specific references to pertinent Plan provisions on which the
Committee based its denial;
(c) a description of any additional material or information needed
for the Claimant to perfect the claim and an explanation of
why the material or information is needed;
(d) a statement that the Claimant may:
(i) request a review upon written application to the Committee;
(ii) review pertinent Plan documents; and
(iii) submit issues and comments in writing; and
(e) that any appeal the Claimant wishes to make of the adverse
determination must be in writing and received by the Committee
within sixty (60) days after receipt of the Committee's notice
of denial of benefits. The Committee's notice must further
advise the Claimant that failure to appeal the action to the
Committee in writing within the sixty (60) day period will
render the Committee's determination final, binding, and
conclusive.
8.2 If the Claimant should appeal to the Committee, the Claimant, or
the duly authorized representative of such Claimant, may submit, in writing,
whatever issues and
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34
comments such Claimant, or the duly authorized representative of such Claimant,
feels are pertinent. The Committee shall re-examine all facts related to the
appeal and make a final determination as to whether the denial of benefits is
justified under the circumstances. The Committee shall advise the Claimant in
writing of its decision on the appeal, the specific reasons for the decision,
and the specific Plan provisions on which the decision is based. The notice of
the decision shall be given within sixty (60) days of the Claimant's written
request for review, unless special circumstances (such as a hearing) would make
the rendering of a decision within the sixty (60) day period infeasible, but in
no event shall the Committee render a decision regarding the denial of a claim
for benefits later than 120 days after its receipt of a request for review. If
an extension of time for review is required because of special circumstances,
written notice of the extension shall be furnished to the Claimant prior to the
date the extension period commences. The Committee's notice of denial of
benefits shall identify the address to which the Claimant may forward an appeal.
ARTICLE IX
LIMITATION OF RIGHTS
The establishment of this Plan shall not be construed as giving to any
Participant, employee of the Company or any person whomsoever, any legal,
equitable or other rights against the Company, or its officers, directors,
agents or shareholders, or as giving to any Participant or Beneficiary any
equity or other interest in the assets or business of the Company or shares of
Company stock or as giving any employee the right to be retained in the
employment of the Company. All employees of the Company and Participants shall
be subject to discharge to the same extent they would have been if this Plan had
never been adopted.
ARTICLE X
LIMITATION OF ASSIGNMENT AND PAYMENTS TO
LEGALLY INCOMPETENT DISTRIBUTEE
10.1 No benefits which shall be payable under the Plan to any person
shall be subject in any manner to anticipation, alienation, sale, transfer,
assignment, pledge, encumbrance or charge, and any attempt to anticipate,
alienate, sell, transfer, assign, pledge, encumber, charge or otherwise dispose
of the same shall be void. No benefit shall in any manner be subject to the
debts, contracts, liabilities, engagements or torts of any person, nor shall it
be subject to attachment or legal process for or against any person, except to
the extent required by law.
10.2 Whenever any benefit which shall be payable under the Plan is to
be paid to or for the benefit of any person who is then a minor or determined by
the Committee, on the basis of
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qualified medical advice, to be incompetent, the Committee need not require the
appointment of a guardian or custodian, but shall be authorized to cause the
same to be paid over to the person having custody of the minor or incompetent,
or to cause the same to be paid to the minor or incompetent without the
intervention of a guardian or custodian, or to cause the same to be paid to a
legal guardian or custodian of the minor or incompetent, if one has been
appointed, or to cause the same to be used for the benefit of the minor or
incompetent.
ARTICLE XI
AMENDMENT TO OR TERMINATION OF THE PLAN
The Committee reserves the right at any time to amend or terminate the
Plan in whole or in part. No amendment shall have the effect of retroactively
depriving Participants or Beneficiaries of rights already accrued under the
Plan. Upon termination of the Plan, the Committee may, in its sole and absolute
discretion, and notwithstanding any other provision hereunder to the contrary,
direct that all benefits hereunder will be paid as soon as administratively
practicable thereafter.
ARTICLE XII
GENERAL AND MISCELLANEOUS
12.1 Severability. In the event that any provision of this Plan shall
be declared illegal or invalid for any reason, said illegality or invalidity
shall not affect the remaining provisions of this Plan but shall be fully
severable and this Plan shall be construed and enforced as if said illegal or
invalid provision had never been inserted herein.
12.2 Construction. The Section headings and numbers are included only
for convenience of reference and are not to be taken as limiting or extending
the meaning of any of the terms and provisions of this Plan. Whenever
appropriate, words used in the singular shall include the plural or the plural
may be read as the singular.
12.3 Governing Law. The validity and effect of this Plan and the rights
and obligations of all persons affected hereby shall be construed and determined
in accordance with the laws of the State of Texas unless superseded by federal
law.
12.4 No Requirement to Fund. The Company is not required to set aside
any assets for payment of the benefits provided under this Plan. A Participant
shall have no security interest in any amounts credited hereunder on such
Participant's behalf. It is the Company's intention that this Plan be construed
as a plan which is unfunded and maintained primarily for the purpose of
providing deferred compensation for a select group of highly compensated
employees.
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12.5 Taxes. All amounts payable hereunder shall be reduced by any and
all federal, state and local taxes imposed upon the Participant or a Beneficiary
which are required to be paid or withheld by the Company.
IN WITNESS WHEREOF, Suiza Foods Corporation, the Company, has caused
its corporate seal to be affixed hereto and these presents to be duly executed
in its name and behalf by its proper officers thereunto duly authorized this
_____ day of June, 1999.
COMPANY:
SUIZA FOODS CORPORATION
By:
----------------------------------
37
EXHIBIT 11
STATEMENT RE COMPUTATION OF PER SHARE EARNINGS
SUIZA FOODS CORPORATION
(In thousands, except share and per-share amounts)
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
----------------------------- ----------------------------
1999 1998 1999 1998
------------ ------------ ------------ ------------
Basic EPS computation:
Numerator:
Income from continuing operations ...................... $ 32,147 $ 29,630 $ 53,020 $ 47,683
Less preferred stock dividends......................... (75) (162)
------------ ------------ ------------ ------------
Income applicable to common stock ...................... $ 32,147 $ 29,555 $ 53,020 $ 47,521
============ ============ ============ ============
Denominator:
Average common shares .................................. 33,730,348 32,516,846 33,686,492 31,645,463
============ ============ ============ ============
Basic EPS from continuing operations ....................... $ 0.95 $ 0.91 $ 1.57 $ 1.50
============ ============ ============ ============
Diluted EPS calculation:
Numerator:
Income from continuing operations ...................... $ 32,147 $ 29,630 $ 53,020 $ 47,683
Less preferred stock dividends ......................... (75) (162)
Net effect on earnings from conversion of mandatorily
redeemable convertible preferred securities ........ 5,981 5,981 11,962 6,755
------------ ------------ ------------ ------------
Income applicable to common stock ...................... $ 38,128 $ 35,536 $ 64,982 $ 54,276
============ ============ ============ ============
Denominator:
Average common shares - basic .......................... 33,730,348 32,516,846 33,686,492 31,645,463
Stock option conversion ................................ 979,300 1,969,220 1,062,954 2,165,329
Dilutive effect of conversion of manditorily
redeemable convertible preferred securities .......... 9,096,105 9,096,303 9,096,132 5,219,999
------------ ------------ ------------ ------------
Average common shares - diluted ........................ 43,805,753 43,582,369 43,845,578 39,030,791
============ ============ ============ ============
Diluted EPS from continuing operations ................... $ 0.87 $ 0.82 $ 1.48 $ 1.39
============ ============ ============ ============
38
EXHIBIT 21
LIST OF SUBSIDIARIES
Name of Subsidiary State of Incorporation
- ------------------ ----------------------
Neptune Delaware Corporation Delaware
Suiza Capital Trust Delaware
Suiza Capital Trust II Delaware
Suiza Management Corporation Delaware
Broughton Foods Company Ohio
LFD Holding Company Delaware
London Farms Dairy, Inc. Delaware
Country Delite Farms, Inc. Delaware
Country Fresh, Inc. Michigan
Burger Dairy Company Indiana
CFI-TMP, Inc. Michigan
Country Fresh Wesley, Inc. Michigan
Dairy Products of Michigan, Inc. Michigan
East Coast Ice Cream, L.L.C. Michigan
Frostbite Brands, Inc. Michigan
Northern Falls Water Company, Inc. Delaware
Southeastern Juice Packers, Inc. Michigan
Dairy Fresh, Inc. Delaware
Garrido y Compania, Inc. Puerto Rico
LOS Holdings, Inc. Delaware
Land-O-Sun Dairies, L.L.C. Delaware
Louis Trauth Dairy, Inc. Delaware
Model Dairy, Inc. Delaware
The Morningstar Group Inc. Delaware
Morningstar Foods Inc. Delaware
Ultra Products, L.L.C. Arizona
Oberlin Farms Dairy, Inc. Ohio
Suiza Dairy Corporation Delaware
Suiza Fruit Corporation Delaware
Suiza GTL Holdings, Inc. Delaware
Suiza GTL, LLC Delaware
Assumed Names for Suiza GTL, LLC:
Footman's, LLC Maine
Footman's Dairy, LLC Maine
Grant's Dairy - Maine, LLC Maine
Sunrise Farms, LLC Maine
West Lynn Creamery - Maine, LLC Maine
Garelick Farms - Massachusetts Massachusetts
Miscoe Springs - Massachusetts Massachusetts
Scangas Bros. Holdings - Massachusetts Massachusetts
West Lynn Creamery - Massachusetts Massachusetts
West Lynn Creamery Realty - Massachusetts Massachusetts
West Lynn Creamery - New Hampshire New Hampshire
Garelick Farms - New Jersey New Jersey
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39
Name of Subsidiary State of Incorporation
- ------------------ ----------------------
West Lynn Creamery - New Jersey New Jersey
Fairdale Farms - New York New York
Garelick Farms - New York New York
West Lynn Creamery - New York New York
Nature's Best Rhode Island
West Lynn Creamery - Vermont Vermont
New England Dairies, LLC Delaware
Tuscan/Lehigh Management, LLC Delaware
Tuscan/Lehigh Dairies, L.P. Delaware
Swiss Dairy Corporation Delaware
Thompson Beverage Acquisition Corporation Delaware
Velda Farms, Inc. Delaware
Continental Can Company, Inc. Delaware
Dixie Holding, Inc. New York
Dixie Union Geschaftsfuhrungs GmbH Germany
Dixie Union GmbH & Co. KG Germany
Ferembal S.A. France
Ferembal EST S.A., Ludres near Nancy - 99.99% France
Ferembal Developpement S.A., Ludres near Nancy - 99.99% France
Ferembal Sud Quest S.A., Villeneuve sur Lot (47) - 99.99% France
Ferembal Sud-Est S.A., Veauche near St-Etienne - 99.99% France
Ferembal Nord S.A., Roye (80) - 99.99% France
Ferembal Ouest S.A., Moelan (29) - 99.99% France
Ferembal Industries S.A., Roye (80) - 99.99% France
Ferembal Investissement S.A. (dormant company) - 99.99% France
Obalex A.S. (95%) Czech Republic
Amco S.A.-Buftea (51%) Romania
Franklin Plastics, Inc. Delaware
Consolidated Container Holdings LLC (49%) Delaware
Lockbart Realty Corp. [to be dissolved] New York
Viatech Espana SA Spain
Neva Plastics Manufacturing Corp. Delaware
Plastics Management Group, LLC Massachusetts
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