EXHIBIT 10.2
SOLO CUP INVESTMENT CORPORATION
STOCK OPTION AWARD AGREEMENT
UNDER THE 2004 MANAGEMENT INVESTMENT AND INCENTIVE
COMPENSATION PLAN
THIS STOCK OPTION AWARD AGREEMENT (the "Award Agreement"), dated as of
March [ ], 2004, is made by and between Solo Cup Investment Corporation, a
Delaware corporation (the "Company"), and [Executive] (the "Optionee").
1. GRANT OF OPTION
The Company hereby grants to the Optionee an option (the "Option") to purchase
the number of Common Shares set forth below, at the exercise price per share set
forth below (the "Exercise Price"), subject to the terms and conditions of the
Solo Cup Investment Corporation 2004 Management Investment and Incentive
Compensation Plan (the "Plan"), which is incorporated herein by reference, and
this Award Agreement. The Option shall consist of a Time Option and a
Performance Option (each as defined below). Except as otherwise expressly set
forth herein, the Award Agreement shall be construed in accordance with the
provisions of the Plan and any capitalized terms not otherwise defined in this
Award Agreement shall have the definitions set forth in the Plan. The Committee
shall have final authority to interpret and construe the Plan and this Award
Agreement and to make any and all determinations under them, and its decisions
shall be binding and conclusive upon the Optionee and the Optionee's legal
representative in respect of any questions arising under the Plan or this Award
Agreement. In the event of a conflict between the terms and conditions of the
Plan and the terms and conditions of this Award Agreement, the terms and
conditions of the Plan shall prevail.
Date of Grant: March [ ], 2004
Exercise Price per Common Share: $47.32
Total Number of Common Shares [ ]
Subject to the Option:
Number of Common Shares [Insert number equal to 60% of
subject to the Time Option total options]
Number of Common Shares [Insert number equal to 40% of
subject to the Performance total options]
Option
Type of Option Nonqualified Stock Option
Term/Expiration Date: March [ ], 2014 (the "Expiration
Date") or an earlier date as
provided herein
2. VESTING
So long as the Optionee is employed by the Company or any subsidiary of the
Company on the applicable vesting dates set forth below, the Option shall,
unless it vests and becomes exercisable earlier as provided herein, become
vested and exercisable as follows:
A. TIME OPTION.
PERCENTAGE VESTING DATE
---------- ------------
25% First anniversary of date of grant
25% Second anniversary of date of grant
25% Third anniversary of date of grant
25% Fourth anniversary of date of grant
B. PERFORMANCE OPTION.
(i) (a) 20% of the shares subject to the Performance Option shall
be subject to the Series A vesting requirements set forth in Section
2(B)(ii)(a) below (the "Series A Options"), (b) an additional 20% shall be
subject to the Series B vesting requirements set forth in Section
2(B)(ii)(b) below (the "Series B Options"), (c) an additional 20% shall be
subject to the Series C vesting requirements set forth in Section
2(B)(ii)(c) below (the "Series C Options"), (d) an additional 20% shall be
subject to the Series D vesting requirements set forth in Section
2(B)(ii)(d) below (the "Series D Options") and (e) an additional 20% shall
be subject to the Series E vesting requirements set forth in 2(B)(ii)(e)
below (the "Series E Options," and together with the Series A Options, the
Series B Options, the Series C Options and the Series D Options, the
"Performance Options"). The vesting of all Performance Options shall be
subject to the achievement of their respective "Target Level" set forth in
Exhibit A hereto. The Target Level shall be expressed in terms of
cumulative EBITDA targets (the "Cumulative EBITDA Targets") and cumulative
debt paydown targets (the "Cumulative Debt Paydown Target"). All unvested
Performance Options shall expire on December 31, 2008. To the extent that
(A)(1) the Optionee has not had the opportunity to dispose of any shares
underlying the Performance Options, or (2) the Company has not exercised
its rights to effect an Optional Contingent Redemption (as defined in the
Certificate of Designations) of Convertible
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Preferred Participating Stock (an "OCR") and (b) Vestar ceases to be a
Stockholder (as defined in the Stockholders' Agreement), the Optionee shall
be entitled to receive from the Company, in the form of cash, notes or a
combination thereof (as determined by the Committee) an amount equal to the
aggregate Fair Market Value of the Common Shares subject to such
Performance Options as of December 31, 2008, less the aggregate exercise
price of such Performance Options.
(ii) (a) all Series A Options shall (I) become 100% fully vested
and exercisable on the first anniversary of the date of grant if the
Company attains the Series A Target Level for fiscal year 2004, (II) become
50% vested and exercisable if the Company achieves either the Cumulative
EBITDA Target or satisfies the Cumulative Debt Paydown Target, in each case
in respect of the Series A Target Level for fiscal year 2004 or (III) not
become vested or exercisable if the Company does not attain either portion
of the Series A Target Level in respect of fiscal year 2004 of the Company.
Any Series A Options which do not become exercisable pursuant to this
paragraph shall be referred to as "Suspended Options."
(b) all Series B Options shall (I) become 100% fully vested and
exercisable on the second anniversary of the date of grant if the Company
attains the Series B Target Level for fiscal year 2005, (II) become 50%
vested and exercisable the Company achieves either the Cumulative EBITDA
Target or satisfies the Cumulative Debt Paydown Target, in each case in
respect of Series B Target Level for fiscal year 2005 or (III) not become
vested or exercisable if the Company does not attain either portion of the
Series B Target Level in respect of fiscal year 2005 of the Company. Any
Series B Options which do not become exercisable pursuant to this paragraph
shall be referred to as "Suspended Options."
(c) all Series C Options shall (I) become 100% fully vested and
exercisable on the third anniversary of the date of grant if the Company
attains the Series C Target Level for fiscal year 2006, (II) become 50%
vested and exercisable if the Company achieves either the Cumulative EBITDA
Target or satisfies the Cumulative Debt Paydown Target, in each case in
respect of Series C Target Level for fiscal year 2006 or (III) not become
vested or exercisable if the Company does not attain either portion of the
Series C Target Level in respect of fiscal year 2006 of the Company. Any
Series C Options which do not become exercisable pursuant to this paragraph
shall be referred to as "Suspended Options."
(d) all Series D Options shall (I) become 100% fully vested and
exercisable on the fourth anniversary of the date of grant if the Company
attains the Series D Target Level for fiscal year 2007, (II) become 50%
vested and exercisable if the Company achieves either the Cumulative EBITDA
Target or satisfies the Cumulative Debt Paydown Target, in each case in
respect of Series D Target Level for fiscal year 2007 or (III) not become
vested or exercisable if the Company does not attain either portion of
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the Series D Target Level in respect of fiscal year 2007 of the Company.
Any Series D Options which do not become exercisable pursuant to this
paragraph shall be referred to as "Suspended Options."
(e) all Series E Options shall (I) become 100% fully vested and
exercisable on the fifth anniversary of the date of grant if the Company
attains the Series E Target Level for fiscal year 2008, (II) become 50%
vested and exercisable if the Company achieves either the Cumulative EBITDA
Target or satisfies the Cumulative Debt Paydown Target, in each case in
respect of Series E Target Level for fiscal year 2008 or (III) not become
vested or exercisable if the Company does not attain either portion of the
Series E Target Level in respect of fiscal year 2008 of the Company. Any
Series E Options which do not become exercisable pursuant to this paragraph
shall be referred to as "Suspended Options."
C. RECAPTURE OF SUSPENDED OPTIONS.
Notwithstanding any provision contained in Sections 2(B)(ii)(a), (b),
(c), (d), or (e) above to the contrary, (i) if the Company achieves the
Cumulative EBITDA Target and satisfies the Cumulative Debt Paydown Target
with respect to any fiscal year prior to fiscal year-end 2008, all
Suspended Options in respect of all prior years shall become fully vested
as of the end of the fiscal year in which the Company achieves such
Cumulative EBITDA Target and satisfies such Cumulative Debt Paydown Target
or (ii) if the Company only achieves either the Cumulative EBITDA Target or
satisfies only the Cumulative Debt Paydown Target with respect to any
fiscal year, one-half of all Suspended Options in respect of all prior
years shall become fully vested as of the end of the fiscal year in which
the Company achieves such target.
D. LIQUIDITY EVENT; OPTIONAL CONTINGENT REDEMPTION; ETC.
(i) TIME OPTION. In the event of an occurrence of a Liquidity Event
or OCR, all unvested portions of the Time Option shall become fully vested
and exercisable.
(ii) PERFORMANCE OPTIONS. In the event of an occurrence of a
Liquidity Event or an OCR, all unvested Performance Options shall become
vested and exercisable in full if the Company has achieved the Target Level
(with respect to both the Cumulative EBITDA Target and Cumulative Debt
Paydown Target) in respect of the fiscal year ending immediately prior to
the year in which an OCR occurs.
(iii) LIMITATIONS ON CHANGE OF CONTROL PAYMENTS. Notwithstanding
anything in this Agreement to the contrary, accelerated vesting under
Sections 2D(i) and 2D(ii) of this Agreement, with respect to the occurrence
of a Change of Control, will not occur unless such accelerated vesting has
been approved by the Company's stockholders in accordance with the
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shareholder approval requirements of section 280G(b)(5)(B) of the Code and
the regulations promulgated thereunder; provided, however, this Section
2D(iii) will not apply if the Company is not eligible for the shareholder
exemption under section 280G(b)(5)(A) of the Code and the regulations
promulgated thereunder at the time of the Change of Control.
(iv) TAG-ALONG RIGHTS FOR OPTIONS UPON AN OCR. If the Company
exercises its right to redeem a percentage of Convertible Participating
Preferred Shares pursuant to an OCR (its "OCR Right"), the Optionee may
elect to have the Company (A) redeem the same percentage of the Optionee's
Option and Option Stock (as defined in the Stockholders' Agreement) (on a
fully diluted basis), but, in the case of the Option only to the extent the
Option is then vested, or, if lesser, (B) redeem the number of shares of
Option Stock plus the number of Common Shares underlying the Optionee's
Option that is vested (the "Tag-Along Right"); provided, however, that if
the Company exercises its OCR Right, and the Optionee elects not to
exercise his Tag-Along Right, the Optionee may not exercise his Tag-Along
Right in any subsequent OCR. Pursuant to the Tag-Along Right, the Company
will provide the Optionee with notice that it intends to exercise its OCR
Right at the same time that it provides notice of the same to Vestar. The
Optionee will have five (5) business days from receiving such notice to
notify the Company that he intends to exercise his Tag-Along Right. An
Optionee who exercises the Tag-Along Right shall receive an amount equal to
the aggregate Fair Market Value of the Common Shares subject to such Option
as of the date of the OCR, less the aggregate exercise price of such
Option. Notwithstanding anything to the contrary contained herein or in the
Stockholders' Agreement, the Tag-Along Right shall not be available on or
after the 6th anniversary of the Original Issuance Date through the last
day pursuant to Section 6(c) of the Certificate of Designations that
Redemption Securities (as defined in the Certificate of Designations) can
be redeemed after the 7th anniversary of the Original Issuance Date (as
defined in the Stockholders' Agreement).
E. TREATMENT OF OPTIONS FOLLOWING A LIQUIDITY EVENT OR OCR. In connection
with the occurrence of a Liquidity Event or an OCR, the Committee may take
such actions as it deems appropriate which may include, but without
limitation, any one or more of the following: (i) acceleration or change of
the exercise and/or expiration dates of the Option to require that exercise
be made, if at all, prior to the Liquidity Event or OCR; (ii) cancellation
of the Option upon payment to the Optionee in cash of the Fair Market Value
of the Common Share subject to such Option as of the date of the Liquidity
Event or an OCR, less the aggregate exercise price of the Option; and (iii)
in any case where equity securities of another entity are proposed to be
delivered in exchange for or with respect to Common Shares or shares of
Convertible Preferred Stock, as the case may be, equitable adjustments
including substitute options with respect to such other securities,
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with appropriate adjustments in the number of shares subject to, and the
exercise prices under, the award.
3. TERMS OF OPTION
A. METHOD OF EXERCISE. Any vested portion of this Option shall be
exercised by the Optionee by giving written notice to the Company in the
form attached as EXHIBIT B. Such exercise shall be effective upon receipt
of such notice by the Company at its principal office, specifying the
number of Common Shares with respect to which the Option is being exercised
and accompanied by (i) the executed Stockholders' Agreement and
Registration Rights Agreement; (ii) the payment of the exercise price
thereof in cash or such other method approved by the Committee; and, (iii)
the payment of any tax amount the Company is required to withhold at source
as a result of such exercise by Optionee to the extent the Company does not
withhold pursuant to Section 10 a portion of the Common Shares otherwise to
be issued.
B. OPTION CALL. Notwithstanding anything herein to the contrary, all
vested portions of the Option (and Option Stock) shall be subject to
Sections 3.9(a), 3.9(b) and 3.9(c) of the Stockholders' Agreement.
Following the Call Date (as defined below) the Company shall have the right
(the "Call Right") to purchase from the Optionee or any Permitted
Transferee (as defined in the Stockholders' Agreement) of any Option Stock
(i) the Option (whether or not any portion thereof is vested) held by such
Optionee and any Option Stock held by such Optionee or Permitted Transferee
at an aggregate purchase price equal to the (A) the Fair Market Value of
the Option Stock issuable upon exercise of such Option on the date the
right to call such Option hereunder is exercised (provided, that for
purposes of this provision, the Option shall be deemed vested) minus (B)
the exercise price of such Option (the "Option Call Price") and (ii) all
Option Stock then held by such Optionee or his Permitted Transferees at an
aggregate purchase price equal to the Fair Market Value of such shares of
Option Stock on the date the right to call hereunder is exercised;
provided, however, that such Call Right may be exercised only after Vestar
no longer owns any Redemption Securities or, if in connection with the
exercise of the Call Right, Vestar will cease to own any Redemption
Securities. For the purposes hereof the "Call Date" shall mean the 6th
anniversary of the Original Issuance Date. The Company shall have a period
from the Call Date until the first to occur of (i) the Expiration Date and
(ii) the date upon which such Option ceases to be exercisable in accordance
with Section 3D hereof in which to give notice in writing to the Optionee
or such Permitted Transferee of its election to exercise the rights
pursuant to this Section 3B (the "Call Notice"). The completion of the
purchases pursuant to the foregoing shall take place at the principal
office of the Company within the later of (A) the tenth business day after
the giving of the Call Notice or (B) ten (10) business days after the
receipt of all necessary regulatory approvals (including but not limited to
the expiration or termination of the waiting periods under the
Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of
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1976, as amended, if applicable). The price payable as described herein
shall be paid by delivery to the Optionee or his Permitted Transferees
against delivery of certificates or other instruments representing the
Option or the Option Stock so purchased, appropriately endorsed or executed
by the Optionee or the applicable Permitted Transferee. The purchase price
may be paid in cash, or if (A) the Company is prohibited from paying cash
under any financing arrangement or applicable law or (B) the Board makes a
good faith determination that the payment of cash would create a material
adverse effect on the financial condition of the Company, then such
purchase price may be paid (i) by note payable in installments of no longer
than five (5) years, bearing interest at the Company's prime lending rate
in effect as of the date of purchase or (ii) by delaying the exercise of
any call right until the financing or legal restrictions lapse; provided,
however, that to the extent possible, the Company shall pay the Optionee an
amount in cash sufficient to cover any income tax liability imposed on the
Optionee resulting from the exercise of any such call right, at such times
as are necessary for the Optionee to make required tax payments in a timely
fashion. The Company may choose to have a designee purchase any securities
elected to be sold to it hereunder so long as the Company shall bear any
reasonable costs and expenses of the Optionee and his Permitted Transferees
in connection with the sale to such designee that would not have otherwise
been incurred by him in connection with a sale to the Company. All
references to the Company in this Section 3B shall refer to such designee
as the context requires.
C. PUT RIGHT. Following the Put Date (as defined below) the Optionee
shall have the right (the "Put Right") to require the Company to purchase
from the Optionee or any Permitted Transferee (as defined pursuant to the
Stockholders' Agreement) of any Option Stock (i) the Option (whether or not
any portion thereof is vested) and any Option Stock held by such Optionee
or Permitted Transferee at an aggregate purchase price equal to the Option
Call Price and (ii) all Option Stock then held by such Optionee or his
Permitted Transferees at an aggregate purchase price equal to the Fair
Market Value of such shares of Option Stock on the date the Put Right
hereunder is exercised. For the purposes hereof the "Put Date" shall mean
the first to occur of (i) the one year anniversary of the last day that
Redemption Securities can be redeemed pursuant to Section 6(c) of the
Certificate of Designations and (ii) the date upon which both (A) no shares
of Convertible Participating Preferred Stock remain outstanding and Vestar
ceases to own any Redemption Securities of the Company and (B) either (I)
the Optionee's employment is terminated (other than by the Company for
Cause or by the Optionee for Good Reason) or (II) the sixtieth day prior to
the Expiration Date. The Optionee shall have a period from the Put Date
until the first to occur of (i) the Expiration Date and (ii) the date upon
which such Option ceases to be exercisable in accordance with Section 3D
hereof in which to give notice in writing to the Company of his election to
exercise the rights pursuant to this Section 3C (the "Put Notice");
provided, however, that in no event shall the Optionee be permitted to
exercise the Put Right granted hereby at any time
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during the period beginning on or after the 6th anniversary of the Original
Issuance Date and ending on the 90th day following the 7th anniversary of
the Original Issuance Date. The completion of the purchases pursuant to the
foregoing shall take place at the principal office of the Company within
the later of (A) the tenth business day after the giving of the Put Notice
or (B) ten (10) business days after the receipt of all necessary regulatory
approvals (including but not limited to the expiration or termination of
the waiting periods under the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act
of 1976, as amended, if applicable). The price payable as described herein
shall be paid by delivery to the Optionee or his Permitted Transferees
against delivery of certificates or other instruments representing this
Option or the Option Stock so purchased, appropriately endorsed or executed
by the Optionee or the applicable Permitted Transferee. The price payable
as described herein shall be paid by delivery to the Optionee or his
Permitted Transferees against delivery of certificates or other instruments
representing the Option or the Option Stock so purchased, appropriately
endorsed or executed by the Optionee or the applicable Permitted
Transferee. The purchase price may be paid in cash, or if (A) the Company
is prohibited from paying cash under any financing arrangement or
applicable law or (B) the Board makes a good faith determination that the
payment of cash would create a material adverse effect on the financial
condition of the Company, then such purchase price may be paid (i) by note
payable in installments of no longer than five (5) years, bearing interest
at the Company's prime lending rate in effect as of the date of purchase or
(ii) by delaying the exercise of the Put Right until the financing or legal
restrictions lapse; provided, however, that to the extent possible, the
Company shall pay the Optionee an amount in cash sufficient to cover any
income tax liability imposed on the Optionee resulting from the exercise of
such Put Right, at such times as are necessary for the Optionee to make
required tax payments in a timely fashion. The Company may choose to have a
designee purchase any securities elected to be sold to it hereunder so long
as the Company shall bear any reasonable costs and expenses of the Optionee
and his Permitted Transferees in connection with the sale to such designee
that would not have otherwise been incurred by him in connection with a
sale to the Company. All references to the Company in this Section 3C shall
refer to such designee as the context requires.
D. POST-TERMINATION EXERCISE. In the event that the Optionee ceases to be
employed by the Company, the Option (to the extent then outstanding) shall
terminate as follows:
(i) TERMINATION FOR CAUSE. If Optionee's employment is terminated
by the Company for Cause, all vested and unvested portions of the
Option shall immediately expire and terminate on termination of
employment.
(ii) TERMINATION BY THE COMPANY OTHER THAN FOR CAUSE, DEATH OR
DISABILITY OR BY THE OPTIONEE FOR GOOD REASON. If (a) Optionee's
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employment is terminated by the Company other than for Cause, death or
Disability, or by the Optionee for Good Reason, or (b) the Company
fails to renew the term of the employment agreement between the
Optionee and the Company (the "Employment Agreement"), then (a) all
vested portions of the Option shall remain exercisable for one (1)
year following termination of employment but in no event after the
Expiration Date and (b) any unvested portion of the Option shall
expire on termination of employment.
(iii) TERMINATION BY OPTIONEE OTHER THAN FOR GOOD REASON. If the
Optionee's employment is terminated by the Optionee other than for
Good Reason, then (a) any outstanding vested portion of the Option
shall remain exercisable for thirty (30) days following termination of
employment (but in no event past the Expiration Date); and (b) any
unvested portion of the Option shall expire on termination of
employment.
(iv) TERMINATION BECAUSE OF DEATH OR DISABILITY. If Optionee's
employment is terminated by reason of Optionee's death or Disability,
then (a) any outstanding vested portion of the Option shall remain
exercisable until the Expiration Date; and (b) any unvested portion of
the Option shall expire on termination of employment.
4. RIGHTS AS STOCKHOLDER.
Optionee shall not have voting rights as a shareholder (in any and all
matters whatsoever) until the date as of which the holder is registered as the
owner of the Common Shares, in the Company's register and solely to the extent
provided by the Stockholders' Agreement.
Each Optionee agrees to vote all of his Option Stock in favor of any
proposal submitted to the Company's stockholders for approval for the purpose of
exempting certain Change in Control payments from the definition of "parachute
payments" under Section 280G of the Code, in accordance with the shareholder
approval requirements of section 280G(b)(5)(B) of the Code and the regulations
promulgated thereunder.
5. ADJUSTMENTS.
In the event of a reorganization, recapitalization, stock dividend or stock
split, or combination or other change in the Common Shares, the Board shall, in
order to prevent the dilution or enlargement of rights under the Option, make
such equitable adjustments in the Fair Market Value of the Option and in the
number of Common Shares or other securities subject to the Option and the Option
Exercise Price as the Board in its sole discretion may determine.
6. NON-TRANSFERABILITY OF OPTION.
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The Option may not be transferred other than by will or the laws of descent
and distribution, and during the Optionee's lifetime shall be exercisable only
by that Optionee, except as follows. The Optionee may transfer the Option to any
Family Member (as defined in the Stockholders' Agreement) (to the extent that
such Family Member is a trust, in all events only where such transferee trust or
other entity is established and maintained for estate planning purposes and
conducts no business other than holding passive investments), and any such
transferee shall be bound by all of the terms and conditions applicable to the
Optionee.
7. ENTIRE AGREEMENT; GOVERNING LAW.
The Plan is incorporated herein by reference. The Plan and this Award
Agreement constitute the entire agreement of the parties with respect to the
subject matter hereof and supersede in their entirety all prior undertakings and
agreements of the Company and the Optionee with respect to the subject matter
hereof, and may not be modified adversely to the Optionee's interest except by
means of a writing signed by the Company and the Optionee. This Award Agreement
is governed exclusively in accordance with the laws of the State of
Delaware,
without regard to its conflict of laws rules and principles.
8. NO GUARANTEE OF CONTINUED EMPLOYMENT.
Nothing in the Plan or in this Award Agreement hereunder shall confer any
right on the Optionee to continue in the employ of the Company or shall
interfere in any way with the right of the Company to terminate the Optionee at
any time.
By the Optionee's signature and the signature of the Company's
representative below, the Optionee and the Company agree that this Option is
granted under and governed by the terms and conditions of the Plan and this
Award Agreement. The Optionee has reviewed the Plan and this Award Agreement in
their entirety, has had an opportunity to obtain the advice of counsel prior to
executing this Award Agreement and fully understands all provisions of the Plan
and Award Agreement. The Optionee further agrees to notify the Company upon any
change in the residence address indicated below.
9. SECURITIES LAWS REQUIREMENTS; LEGEND ON CERTIFICATES; STOCKHOLDERS'
AGREEMENT.
The certificates representing the Option Stock shall be subject to such
stop transfer orders and other restrictions as the Committee may deem reasonably
advisable under the Plan or the rules, regulations, and other requirements of
the Securities and Exchange Commission, any stock exchange upon which such
Option Stock may be or are listed, any applicable federal or state laws and the
Company's Articles of Incorporation and Bylaws, and the Committee may cause a
legend or
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legends to be put on any such certificates to make appropriate
reference to such restrictions. Upon the acquisition of any Option Stock, the
Optionee will make or enter into such written representations, warranties and
agreements as the Committee may reasonably request in order to comply with
applicable securities laws or with this Award Agreement.
By entering into this Award Agreement, the Optionee agrees and acknowledges
that the Optionee has received and read a copy of the Plan and the Stockholders'
Agreement. The Option and the Option Stock received upon exercise of the Options
are subject to the Plan and the Stockholders' Agreement. The terms and
provisions of the Plan and the Stockholders' Agreement as it may be amended from
time to time are hereby incorporated by reference.
10. WITHHOLDING OF TAXES.
The Company may require the Optionee to tender the amount of any such taxes
to the Company prior to the issuance of Option Stock to the Participant upon
exercise or payment of other amounts due under this Award Agreement. In the
alternative the Company may, but shall not be required to withhold a portion of
the Common Shares otherwise to be issued upon the exercise or other settlement
of the Option equal in value to the minimum amount required to be withheld under
applicable law in respect of any income, employment or other taxes required to
be paid by virtue of the Optionee receiving an Option under this Award
Agreement. In no event shall the Company be liable for any of a Optionee's
income tax obligations.
11. COUNTERPARTS.
This Award Agreement may be executed in any number of counterparts, each of
which when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement. Any counterpart or other
signature hereupon delivered by facsimile shall be deemed for all purposes as
constituting good and valid execution and delivery of this Award Agreement by
such party.
12. CERTAIN DEFINITIONS.
For purposes of this Award Agreement following definitions shall apply:
(i) "Cause" shall have the meaning assigned to such term in the
Optionee's Employment Agreement, or, if not defined therein or if there is no
such agreement, "Cause" means (a) Optionee's willful failure to perform
Optionee's duties (other than as a result of total or partial incapacity due to
physical or mental illness) which is not cured following written notice, (b)
Optionee's conviction of, or plea of NOLO CONTENDERE to, a crime constituting
(I) a felony under the laws of the United States or any state thereof or (II) a
misdemeanor involving moral turpitude, (c) Optionee's willful malfeasance or
willful misconduct in connection with
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Optionee's duties which is materially injurious to the financial condition or
business reputation of the Company or any of its affiliates, (d) Optionee's
breach of any non-competition, non-solicitation or confidentiality provisions to
which the Optionee is subject (other than disclosure of confidential information
made by the Optionee in the ordinary course of business so long as the Optionee
reasonably believes that such disclosure is in furtherance of the Company's
business), or (e) any material breach by the Optionee of the Employment
Agreement; PROVIDED that the Company provides written notice to the Optionee
within 60 days of its knowledge that such a breach has occurred; and PROVIDED
FURTHER that the Optionee shall have 10 business days following actual receipt
of such notice to cure such breach.
(ii) "Good Reason" shall have the meaning assigned to such term in the
Employment Agreement, or, if not defined therein or if there is no such
agreement, "Good Reason" shall mean (a) a substantial diminution in Optionee's
position or duties or assignment of duties materially inconsistent with the
Optionee's position, (b) any reduction in Optionee's base salary, except if such
reduction is part of an across-the-board reduction similarly affecting other
executives, or (c) any material breach by the Company of the Employment
Agreement; provided that the Company shall have 30 business days following
receipt of written notice of the existence of Good Reason to cure such breach;
provided, further, that in each case, "Good Reason" will cease to exist for an
event on the 60th day following the later of its occurrence or the Optionee's
knowledge thereof, unless the Optionee has given the Company written notice
thereof prior to such date.
(iii) "Registration Rights Agreement" shall mean the Registration Rights
Agreement, dated as of February 27, 2004, among the Company and each of the
stockholders of the Company whose name appears on the signature pages thereof
(as the same may amended from time to time).
13. GENDER
All pronouns and references to gender contained in this Award Agreement shall be
deemed to refer to the masculine, feminine or neuter, as the context may
require.
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IN WITNESS WHEREOF, Optionee and the Company have executed this
Agreement as of the date first above written
SOLO CUP INVESTMENT CORPORATION
By:
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Title:
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The undersigned hereby acknowledges having read this
Stock Option Award
Agreement and the Plan and hereby agrees to be bound by all provisions set forth
herein and in the Plan.
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[EXECUTIVE]
EXHIBIT A
PERFORMANCE OPTIONS VESTING CRITERIA
Performance Cumulative EBITDA(1) Cumulative Debt
Period Target Level Paydown
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Series A 2004 fiscal year. . . . . $ 205.5 million $ 63.0 million
Series B 2005 fiscal year. . . . . $ 442.3 million $ 145.5 million
Series C 2006 fiscal year. . . . . $ 706.7 million $ 250.8 million
Series D 2007 fiscal year. . . . . $ 984.0 million $ 367.5 million
Series E 2008 fiscal year. . . . . $ 1,274.3 million $ 495.5 million
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(1) EBITDA shall have the meaning set forth in the "Consolidated
EBITDA" definition set forth in the Company's revolving credit agreement.
Note also that all EBITDA target numbers shall be calculated after payment
of bonuses.
EXHIBIT B
SOLO CUP COMPANY
2004 MANAGEMENT INVESTMENT
AND INCENTIVE COMPENSATION PLAN
EXERCISE NOTICE
[Insert Address]
Attention [ ]:
I hereby elect to exercise the Option granted to me on March [ ], 2004,
under the Solo Cup Investment Corporation 2004 Management Investment and
Incentive Compensation Plan, with respect to _____ Common Shares at the exercise
price of $47.32 per share for a total purchase price of $___________.
I wish to make payment of the exercise price as indicated below (check one
or more boxes):
______ cash;
______ certified check; or
______ other (subject to approval by the Company), please specify:
_____ ___________ ________ __________ _________ _________.
I understand that I may suffer adverse tax consequences as a result of my
purchase of the Common Shares. I have consulted with any tax consultants I deem
advisable in connection with my purchase of the Common Shares and I am not
relying on Solo Cup Investment Corporation for any tax advice. I authorize the
Company to deduct all amount necessary to satisfies any withholding obligations
the Company may incur in connection with this exercise. If requested by the
Company, I agree to tender the amount of any required withholdings to the
Company prior to the payment of any amounts due under this Award Agreement.
Signature:
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Printed Name:
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Address:
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Dated:
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