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 __________________,
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 or is a party to a merger, consolidation,
recapitalization, reorganization, tender offer 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 or equity interests 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. 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 that a stock split, stock dividend or
"spin-off" of stock in a subsidiary of the Corporation shall have occurred, 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 or other
securities as is equitably required in the event of a stock split, stock
dividend or "spin-off," together with an appropriate adjustment of the Exercise
Price.
8. TRANSFER OF OPTION. Without the prior written consent of the
Corporation, 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 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 without
the prior written consent of the Corporation 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.
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:
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Address:
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Fax:
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