NON-QUALIFIED PERFORMANCE STOCK OPTION AGREEMENT
XXXXXXX PURINA COMPANY (the "Company"), effective September 26, 1996,
grants this Non-Qualified Performance Stock Option to
("Optionee") to purchase a total of shares of Common Stock of the
Company ("Stock") at a price of $67.25 per share pursuant to its 1996 Incentive
Stock Plan (the "Plan"). Subject to the provisions of the Plan and the
following terms, Optionee may exercise this Option from time to time by
tendering to the Company written notice of exercise together with the purchase
price in cash, or in shares of Stock which have been held by Optionee at least
six months, at their Fair Market Value as determined by the Human Resources
Committee, or both. In the event of any conflict between the terms of the Plan
and the following terms, the terms of this Option Agreement shall prevail.
1. Normal Exercise. This Option becomes exercisable at the rate of 33-1/3% of
the total shares on September 26 in each of the years 1998, 2001 and 2004,
provided that the Performance Price Target applicable to each such date is
met on such date with respect to that portion of the shares for which the
Vesting Requirement has been satisfied. The shares with respect to which
the Performance Price Target has not been met, but for which the Vesting
Requirement has been met, remain unexercisable until the earliest date
thereafter on which a Performance Price Target associated with such
subsequent date as set forth in the Stock Performance Table in paragraph 7
of this Agreement is met. If the New York Stock Exchange is closed on any
of such dates, then the applicable Performance Price Target must be met on
the next trading day thereafter. Subject to the forfeiture provisions of
paragraph 4 below, all Vesting Requirements and all Performance Price
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Targets are waived on September 26, 2005, and all unexercised options are
exercisable on or after that date. Once both the Vesting Requirement and
Performance Price Target are met or waived with respect to shares under the
Option, such shares remain exercisable through September 25, 2006, subject
only to the provisions of paragraphs 3(b) and (c) and paragraph 4 below.
2. Acceleration. Notwithstanding the above, prior to September 26, 2005, the
Vesting Requirement is waived before the normal exercise dates set forth in
paragraph 1 hereof upon the occurrence of any of the following events:
a. Death of Optionee;
b. Declaration of Optionee's total and permanent disability;
c. Retirement from the Board of Directors of the Company; or
d. Split-up of the Company as defined by the Human Resources Committee of
the Board.
The Performance Price Target for shares for which the Vesting Requirement
is waived upon the occurrence of the events set forth in paragraphs 2a, 2b,
2c or 2d, and for shares for which the Vesting Requirement but not the
Price Performance Target previously had been met before the occurrence of
one of such events, shall be the Performance Price Target associated with
the date set forth in the Stock Performance Table immediately preceding the
date of such event. Options for such shares shall be exercisable if the
Performance Price Target is met on one day during the applicable exercise
period set forth in paragraph 3.
Notwithstanding the foregoing, all Vesting Requirements and Performance
Price Targets which have not been met as of a Change in Control of the
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Company are waived, and all Options which have not been forfeited or
exercised prior to a Change of Control are exercisable after such Change of
Control.
3. Exercise After Certain Events. Upon the occurrence of any of the events
described below, any Options exercisable on the date of such event shall
remain exercisable during the period stated below, but, in any event, not
later than September 25, 2006:
a. Upon Optionee's retirement from the Board of Directors, declaration of
total and permanent disability or death, such Options shall remain
exercisable for the balance of the option term remaining after such
event;
b. When, prior to a Change of Control, there has been a declaration of
forfeiture pursuant to Section IV of the Plan because Optionee's
employment is Terminated for Cause, Optionee engages in competition
with the Company or an Affiliate, or Optionee engages in any activity
or conduct contrary to the best interests of the Company or any
Affiliate, such Options shall remain exercisable for seven days
thereafter; or
c. With respect to Options that are exercisable after a Change of
Control, such shares shall remain exercisable for seven days if
Optionee's employment is Terminated for Cause, Optionee engages in
competition with the Company or an Affiliate, or Optionee engages in
any activity or conduct contrary to the best interests of the Company
or any Affiliate.
The restrictions on exercise set forth in Sections II.C.1, 2 and 3(ii) of
the Plan are not applicable to the terms of this Option.
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4. Forfeiture. Prior to a Change of Control, this Option is subject to
forfeiture for the reasons set forth in Section IV.A.1, 3 or 4 of the Plan.
If there is an event of forfeiture, only those shares that are exercisable
at that time may be exercised as set forth in paragraph 3 hereof.
5. Adjustments. Upon any stock split-up, stock dividend, issuance of any
targeted stock, combination or reclassification with respect to any
outstanding class or series of Stock, or consolidation, merger or sale of
all or substantially all of the assets of the Company, the Committee shall
cause adjustments as it deems equitable or appropriate to be made to the
terms of this Option.
7. Definitions. Unless otherwise defined in this Option Agreement, defined
terms used herein shall have the same meaning as set forth in the Plan.
"Change of Control" shall occur when (i) a person, as defined
under the securities laws of the United States, acquires beneficial
ownership of more than 50% of the outstanding voting securities of the
Company; or (ii) the directors of the Company immediately before a
business combination between the Company and another entity, or a
proxy contest for the election of directors, shall, as a result
thereof, cease to constitute a majority of the Board of Directors of
the Company or any successor to the Company.
"Date of Grant" means September 26, 1996.
"Performance Price Target" shall mean the closing price for a
share of Stock as quoted in the New York Stock Exchange Composite
Transactions, as set forth in the Stock Performance Table below with
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respect to each anniversary of the Date of Grant of this Option and
the last day of each quarter between such anniversary dates:
Stock Performance Table
Anniversary of Date Performance Price
of Grant Target
September 26, 1996 $67.25
December 31, 1996 $68.08
March 31, 1997 $68.91
June 30, 1997 $69.76
September 26, 1997 $70.61
December 31, 1997 $71.48
March 31, 1998 $72.36
June 30, 1998 $73.24
September 26, 1998 $74.14
December 31, 1998 $75.05
March 31, 1999 $75.97
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June 30, 1999 $76.91
September 26, 1999 $77.85
December 31, 1999 $78.81
March 31, 2000 $79.77
June 30, 2000 $80.75
September 26, 2000 $81.74
December 31, 2000 $82.75
March 31, 2001 $83.76
June 30, 2001 $84.79
September 26, 2001 $85.83
December 31, 2001 $86.88
March 31, 2002 $87.95
June 30, 2002 $89.03
September 26, 2002 $90.12
December 31, 2002 $91.23
March 31, 2003 $92.35
June 30, 2003 $93.48
September 26, 2003 $94.63
December 31, 2003 $95.79
March 31, 2004 $96.96
June 30, 2004 $98.15
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September 26, 2004 $99.36
December 31, 2004 $100.58
March 31, 2005 $101.81
June 30, 2005 $103.06
"Termination for Cause" shall mean Optionee's termination of
employment with the Company because of the willful engaging by
Optionee in gross misconduct; provided, however, that a Termination
for Cause shall not include termination attributable to (i) poor work
performance, bad judgment or negligence on the part of Optionee, (ii)
an act or omission believed by Optionee in good faith to have been in
or not opposed to the best interests of the Company and reasonably
believed by Optionee to be lawful, or (iii) the good faith conduct of
Optionee in connection with a Change of Control (including opposition
to or support of such Change of Control).
"Vesting Requirement" shall mean the provision, set forth in
paragraph 1, regarding exercise of the Option at the rate of 33-1/3%
of the total shares on September 26 of the years 1998, 2001 and 2004.
8. Severability. The invalidity or unenforceability of any provision hereof
in any jurisdiction shall not affect the validity or enforceability of the
remainder hereof in that jurisdiction, or the validity or enforceability of
this Option, including that provision, in any other jurisdiction. To the
extent permitted by applicable law, the Company and Optionee each waive any
provision of law that renders any provision hereof invalid, prohibited or
unenforceable in any respect. If any provision of this Option is held to
be unenforceable for any reason, it shall be adjusted rather than voided,
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if possible, in order to achieve the intent of the parties to the extent
possible.
9. Choice of Law. The validity, construction, interpretation and effect of
this Option Agreement shall be determined solely in accordance with the
laws, but not the laws pertaining to choice of laws, of the State of
Missouri.
ACKNOWLEDGED AND ACCEPTED: XXXXXXX PURINA COMPANY
By: By:
X. X. Xxxxxxx X. X. Xxxxxx
Vice President, Administration
Date Date
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