NON-QUALIFIED STOCK OPTION AGREEMENT
THIS NON-QUALIFIED STOCK OPTION AGREEMENT (the "Option Agreement"),
made as of this 18th day of December, 2001, by and between J. R. CAMPBELL
(hereinafter referred to as the "Executive"), and FLEMING COMPANIES, INC.
(hereinafter referred to as the "Company"):
WITNESSETH:
WHEREAS, the Company has offered the Executive employment as Executive
Vice President, Merchandising and Supply, and the Executive has accepted such
employment; and
WHEREAS, it is important to the Company that the Executive be
encouraged to remain in the employ of the Company and given an incentive to
perform while in the employ of the Company; and
WHEREAS, in recognition of such facts and as a material inducement for
Executive to accept and continue his employment with the Company, the
Compensation and Organization Committee of the Board of Directors of the Company
(the "Committee") has awarded the Executive nonqualified stock options to
purchase 200,000 shares of common stock subject to the terms and conditions of
this Option Agreement; and
WHEREAS, as an ancillary part of this Option Agreement, it is also
important to the Company to protect its legitimate business interests if the
Executive leaves the employ of the Company.
NOW, THEREFORE, in consideration of the premises and the mutual
promises and covenants herein contained, the Executive and the Company agree as
follows:
1. OPERATION OF THE OPTION AGREEMENT AND RELATIONSHIP TO THE PLAN. The
Company has previously adopted the Fleming Companies, Inc. 2000 Stock Incentive
Plan (the "Plan"), a copy of which is attached hereto as Exhibit A. It is the
intent of the parties that, except as provided herein, capitalized terms used in
this Option Agreement shall have the same meanings as defined in the Plan.
2. GRANT OF STOCK OPTION. The Company hereby grants to the Executive
Nonqualified Stock Options (the "Stock Options") to purchase all or any part of
an aggregate of 200,000 shares of Common Stock under and subject to the terms
and conditions of this Option Agreement. The purchase price per share for each
share of Common Stock to be purchased hereunder shall be $20.1550 (the "Option
Price").
3. TIMES OF EXERCISE OF STOCK OPTION. After, and only after, the
conditions of Section 9 hereof have been satisfied, the Executive shall be
eligible to exercise that portion of his Stock Options pursuant to the schedule
set forth hereinafter. If the Executive's employment with the Company (or of any
one or more of the Subsidiaries of the Company) remains full-time and continuous
at all times prior to any of the "Exercise Dates" set forth in this Section 3,
then the Executive shall be entitled, subject to this Option Agreement having
been satisfied, to
exercise on or after the applicable Exercise Date, on a cumulative basis, the
number of shares of Stock determined by multiplying the aggregate number of
shares set forth in Section 2 of this Option Agreement by the designated
percentage set forth below.
Percent of Stock
Exercise Dates Option Exercisable
- --------------------------------------------------------------------------------
On or After December 18, 2002 50%
On or After December 18, 2003 100%
4. TERM OF STOCK OPTION. Except as provided for in Section 5 of this
Option Agreement, none of the Stock Options shall be exercisable more than ten
years from the Date of Grant (the "Option Period").
5. SPECIAL RULES WITH RESPECT TO STOCK OPTIONS. With respect to the
Stock Options, the following special rules shall apply:
(a) Exercise of Exercisable Stock Options on Termination of
Employment. Except as provided to the contrary in this Option
Agreement, if the Executive's employment with the Company, a Subsidiary
or an Affiliated Entity is terminated during the Option Period for any
reason other than death, he may exercise all or any portion of the
Stock Options which are otherwise exercisable on the date of such
termination at any time within three months from the date of
termination; provided, however, that if the Executive should die during
such three month period, the rights of his personal representative
shall be as set forth in Section 5(b) of this Option Agreement.
(b) Exercise of Exercisable Stock Options on Termination of
Employment Due to Death. If the Executive's employment with the
Company, a Subsidiary or an Affiliated Entity is terminated during the
Option Period due to his death, the personal representative of the
deceased Executive may exercise all or any portion of the Stock Options
which are otherwise exercisable on the date of death within 12 months
from the date of death.
(c) Acceleration of Otherwise Unexercisable Stock Options on
Termination of Employment. The Committee, in its sole discretion, may
determine that upon termination of the employment of Executive any and
all Stock Options shall become automatically fully vested and
immediately exercisable by the Executive or his personal representative
as the case may be for whatever period following such termination as
the Committee shall so decide.
(d) Acceleration of Options Upon Change of Control. Upon the
occurrence of a Change of Control Event, any and all Stock Options will
become automatically fully vested and immediately exercisable with such
acceleration to occur without the requirement of any further act by
either the Company or the Executive.
(e) Exercise of Exercisable Stock Options on Termination of
Employment Due to Retirement. If the Executive's employment with the
Company, a Subsidiary or an Affiliated Entity is terminated due to
retirement in accordance with the Company's retirement policies, the
Executive shall have a period of three years following his date of
retirement to exercise the Stock Options which are otherwise
exercisable on his/her date of retirement.
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6. NON-TRANSFERABILITY OF STOCK OPTIONS. With the Committee's approval,
the Stock Options shall be transferable in the limited same manner and under the
same limited circumstances as described in Section 9.3 of the Plan regarding the
limited transferability of stock options awarded under the Plan. Otherwise, the
Stock Options shall be transferable only by will or the laws of descent and
distribution; however, no such transfer of the Stock Options by the Executive
shall be effective to bind the Company unless the Company shall have been
furnished with written notice of such transfer and an authenticated copy of the
will and/or such other evidence as the Committee may deem necessary to establish
the validity of the transfer and the acceptance by the transferee of the terms
and conditions of such Stock Option.
7. EMPLOYMENT. So long as the Executive shall continue to be a
full-time and continuous employee of the Company or a Subsidiary, the Stock
Options shall not be affected by any change of duties or position. Nothing in
this Option Agreement shall confer upon the Executive any right to continue in
the employ of the Company, any of the Subsidiaries, or any Affiliated Entities
or interfere in any way with the right of the Company, any of the Subsidiaries
or any Affiliated Entities to terminate the Executive's employment at any time.
8. METHOD OF EXERCISING STOCK OPTION.
(a) Procedures for Exercise. The manner of exercising the
Stock Options shall be by written notice to the Company at least two
days before the date the Stock Option, or part thereof, is to be
exercised, and in any event prior to the expiration of the Option
Period. Such notice shall state the election to exercise the Stock
Options and the number of shares of Common Stock with respect to that
portion of the Stock Options being exercised, and shall be signed by
the person or persons so exercising the Stock Options. The notice shall
be accompanied by payment of the full purchase price of such shares, in
which event the Company shall deliver a certificate or certificates
representing such shares to the person or persons entitled thereto as
soon as practicable after the notices shall be received.
(b) Form of Payment. Payment for shares of Common Stock
purchased under this Option Agreement shall be made in full by the
Executive in any manner specified in Section 6.2(b) of the Plan for
payment for shares of Common Stock pursuant to stock options awarded
under the Plan. No Common Stock shall be issued to the Executive until
the Company receives full payment for the Common Stock purchased under
the Stock Options which shall include any required state and federal
withholding taxes. Withholding taxes may be paid by the Executive in
any manner specified in Section 9.4 of the Plan for withholding taxes
to be paid in connection with shares of Common Stock purchased under
stock options awarded under the Plan.
(c) Further Information. In the event the Stock Options are
exercised, pursuant to the foregoing provisions of this Section 8, by
any person or persons other than the Executive in the event of the
death of the Executive, the notice of election to exercise shall also
be accompanied by appropriate proof of the right of such person or
persons to exercise the Stock Options.
9. SECURITIES LAW RESTRICTIONS. Stock Options shall be exercised and
Common Stock issued only upon compliance with the Securities Act of 1933, as
amended, and any other applicable securities law, or pursuant to an exemption
therefrom.
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10. NOTICES. All notices or other communications relating to this
Option Agreement or, in event of the death of the Executive, his personal
representative, shall be in writing and shall be mailed (U.S. Mail) by the
Company to the Executive or his personal representative, as the case may be, at
the then current address as maintained by the Company or such other address as
the Executive or his personal representative may advise the Company in writing.
All other notices shall be given by personal delivery to the Secretary of the
Company or by registered or certified mail at his principal office or at such
other address as the Company may hereafter advise the Executive or his personal
representative, and it shall be deemed to have been given when they are so
personally delivered or when they are deposited in the United States mail in an
envelope addressed to the Company, properly stamped for delivery as a registered
or certified letter.
11. PROTECTION OF COMPANY BUSINESS AS CONSIDERATION. AS SPECIFIC
CONSIDERATION TO THE COMPANY FOR THE STOCK OPTIONS, THE EXECUTIVE AGREES:
(a) LIMITATIONS ON COMPETITION. SUBJECT TO SUBSECTION (g), THE
EXECUTIVE WILL NOT, WITHOUT THE COMPANY'S WRITTEN CONSENT, DIRECTLY OR
INDIRECTLY, BE A SHAREHOLDER, PRINCIPAL, AGENT, PARTNER, OFFICER,
DIRECTOR, EMPLOYEE OR CONSULTANT OF SUPERVALU, INC., NASH FINCH COMPANY
OR ANY OTHER DIRECT COMPETITOR OF THE COMPANY, EXCLUDING NATIONAL
RETAIL CHAINS, OR ANY OF THEIR RESPECTIVE SUBSIDIARIES, AFFILIATES OR
SUCCESSORS (COLLECTIVELY, THE "COMPETITORS").
(b) CONFIDENTIAL INFORMATION; NO DISPARAGING STATEMENTS. THE
EXECUTIVE ACKNOWLEDGES THAT DURING THE COURSE OF THE EXECUTIVE'S
EMPLOYMENT WITH THE COMPANY, A SUBSIDIARY OR AFFILIATED ENTITY, HE WILL
HAVE ACCESS TO AND GAIN KNOWLEDGE OF HIGHLY CONFIDENTIAL AND
PROPRIETARY INFORMATION AND TRADE SECRETS. THE EXECUTIVE FURTHER
ACKNOWLEDGES THAT THE MISUSE, MISAPPROPRIATION OR DISCLOSURE OF THIS
INFORMATION COULD CAUSE IRREPARABLE HARM TO THE COMPANY, A SUBSIDIARY
AND/OR AFFILIATED ENTITY, BOTH DURING AND AFTER THE TERM OF THE
EXECUTIVE'S EMPLOYMENT. THEREFORE, THE EXECUTIVE AGREES, DURING HIS
EMPLOYMENT AND AT ALL TIMES THEREAFTER, HE WILL HOLD IN A FIDUCIARY
CAPACITY FOR THE BENEFIT OF THE COMPANY, A SUBSIDIARY AND/OR AFFILIATED
ENTITY AND WILL NOT DIVULGE OR DISCLOSE, DIRECTLY OR INDIRECTLY, TO ANY
OTHER PERSON, FIRM OR BUSINESS, ALL CONFIDENTIAL OR PROPRIETARY
INFORMATION, KNOWLEDGE AND DATA (INCLUDING, BUT NOT LIMITED TO,
PROCESSES, PROGRAMS, TRADE "KNOW HOW," IDEAS, DETAILS OF CONTRACTS,
MARKETING PLANS, STRATEGIES, BUSINESS DEVELOPMENT TECHNIQUES, BUSINESS
ACQUISITION PLANS, PERSONNEL PLANS, PRICING PRACTICES AND BUSINESS
METHODS AND PRACTICES) RELATING IN ANY WAY TO THE BUSINESS OF THE
COMPANY, A SUBSIDIARY OR AFFILIATED ENTITY, CUSTOMERS, SUPPLIERS, JOINT
VENTURES, LICENSORS, LICENSEES, DISTRIBUTORS AND OTHER PERSONS AND
ENTITIES WITH WHOM THE COMPANY, ITS SUBSIDIARIES OR AFFILIATED ENTITIES
DO BUSINESS ("CONFIDENTIAL DATA"), EXCEPT UPON THE COMPANY'S WRITTEN
CONSENT OR AS REQUIRED BY HIS DUTIES WITH THE COMPANY, ITS SUBSIDIARIES
OR AFFILIATED ENTITIES, FOR SO LONG AS SUCH CONFIDENTIAL DATA REMAINS
CONFIDENTIAL AND ALL SUCH CONFIDENTIAL DATA, TOGETHER WITH ALL COPIES
THEREOF AND NOTES AND OTHER REFERENCES THERETO, SHALL REMAIN THE SOLE
PROPERTY OF THE COMPANY, A SUBSIDIARY OR AN AFFILIATED ENTITY. THE
EXECUTIVE AGREES, DURING HIS EMPLOYMENT WITH THE COMPANY, ITS
SUBSIDIARIES OR AFFILIATED ENTITIES AND AT ALL TIMES THEREAFTER, NOT TO
MAKE DISPARAGING STATEMENTS ABOUT THE COMPANY, ITS SUBSIDIARIES OR
AFFILIATED ENTITIES OR THEIR OFFICERS, DIRECTORS, AGENTS,
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EMPLOYEES, PRODUCTS OR SERVICES WHICH HE KNOWS, OR HAS REASON TO KNOW,
ARE FALSE OR MISLEADING.
(c) NO SOLICITATION OF EMPLOYEES OR BUSINESS. THE EXECUTIVE
AGREES THAT HE WILL NOT, EITHER DIRECTLY OR IN CONCERT WITH OTHERS,
RECRUIT, SOLICIT OR INDUCE, OR ATTEMPT TO INDUCE, ANY EMPLOYEES OF THE
COMPANY, ITS SUBSIDIARIES OR AFFILIATED ENTITIES TO TERMINATE THEIR
EMPLOYMENT WITH THE COMPANY, ITS SUBSIDIARIES OR AFFILIATED ENTITIES
AND/OR BECOME ASSOCIATED WITH ANOTHER EMPLOYER. THE EXECUTIVE FURTHER
AGREES THAT HE WILL NOT, EITHER DIRECTLY OR IN CONCERT WITH OTHERS,
SOLICIT, DIVERT OR TAKE AWAY, OR ATTEMPT TO DIVERT OR TAKE AWAY, THE
BUSINESS OF ANY OF THE CUSTOMERS OR ACCOUNTS OF THE COMPANY, ITS
SUBSIDIARIES OR AFFILIATED ENTITIES WHICH THE COMPANY, A SUBSIDIARY OR
AFFILIATED ENTITY HAD OR WAS ACTIVELY SOLICITING BEFORE AND/OR ON HIS
DATE OF TERMINATION/SEPARATION.
(d) TERM OF THE EXECUTIVE'S PROMISES UNDER THIS SECTION. THE
EXECUTIVE AGREES THAT EXCEPT AS OTHERWISE PROVIDED IN SUBSECTION (b),
HIS PROMISES CONTAINED IN THIS SECTION 11 SHALL CONTINUE IN EFFECT
DURING HIS EMPLOYMENT WITH THE COMPANY, ITS SUBSIDIARIES OR AFFILIATED
ENTITIES AND UNTIL THE FIRST ANNIVERSARY OF HIS TERMINATION/SEPARATION.
(e) CONSEQUENCES OF BREACH OF LIMITATIONS ON COMPETITION
AND/OR OTHER COMPETING EMPLOYMENT. SUBJECT TO SUBSECTION (g), IF AT ANY
TIME WITHIN (i) THE TERM OF THIS OPTION AGREEMENT OR (ii) WITHIN ONE
(1) YEAR FOLLOWING THE EXECUTIVE'S DATE OF TERMINATION/SEPARATION, BUT
ONLY IF SUCH TERMINATION/SEPARATION OCCURS ON A DATE WHICH IS PRIOR TO
TEN (10) YEARS FROM THE DATE OF THIS OPTION AGREEMENT, OR (iii) WITHIN
ONE (1) YEAR AFTER HE EXERCISES ANY PORTION OF THE STOCK OPTIONS,
WHICHEVER IS LATEST, THE EXECUTIVE IS, WITHOUT THE COMPANY'S WRITTEN
CONSENT, DIRECTLY OR INDIRECTLY, A SHAREHOLDER, PRINCIPAL, AGENT,
PARTNER, OFFICER, DIRECTOR, EMPLOYEE OR CONSULTANT OF ANY OF THE
COMPETITORS, THEN (iv) THE STOCK OPTIONS SHALL TERMINATE EFFECTIVE THE
DATE THE EXECUTIVE ENTERS INTO SUCH ACTIVITY (UNLESS TERMINATED SOONER
BY OPERATION OF ANOTHER TERM OR CONDITION OF THIS OPTION AGREEMENT OR
THE PLAN), AND (v) ANY GAIN REPRESENTED BY THE FAIR MARKET VALUE (AS
DEFINED IN THE PLAN) ON THE DATE THE EXECUTIVE EXERCISED ANY OF THE
STOCK OPTIONS OVER THE OPTION PRICE, MULTIPLIED BY THE NUMBER OF SHARES
THE EXECUTIVE PURCHASED (THE "OPTION GAIN"), SHALL BE PAID BY THE
EXECUTIVE TO THE COMPANY WITHIN 30 DAYS OF WRITTEN NOTICE FROM THE
COMPANY TO THE EXECUTIVE THAT SUCH PAYMENT IS DUE. THE OPTION GAIN
SHALL BE CALCULATED WITHOUT REGARD TO ANY SUBSEQUENT MARKET PRICE
DECREASE OR INCREASE. THIS SHALL BE IN ADDITION TO ANY INJUNCTIVE OR
OTHER RELIEF TO WHICH THE COMPANY MAY BE ENTITLED UNDER SUBSECTION (f).
(f) CONSEQUENCES OF OTHER BREACHES OF THIS SECTION. THE
EXECUTIVE ACKNOWLEDGES THAT DAMAGES WHICH MAY ARISE FROM ANY BREACH OF
ANY OF HIS PROMISES CONTAINED IN THIS SECTION 11 MAY BE IMPOSSIBLE TO
ASCERTAIN OR PROVE WITH CERTAINTY. THE EXECUTIVE AGREES IF THE
EXECUTIVE BREACHES ANY OF HIS PROMISES CONTAINED IN THIS SECTION 11, IN
ADDITION TO THE REMEDIES PROVIDED UNDER SUBSECTION (e), IF APPLICABLE,
AND ANY OTHER LEGAL REMEDIES WHICH MAY BE AVAILABLE, THE COMPANY, ITS
SUBSIDIARIES OR AFFILIATED ENTITIES (AS APPLICABLE) SHALL BE ENTITLED
TO IMMEDIATE INJUNCTIVE RELIEF FROM A COURT OF COMPETENT JURISDICTION,
PENDING ARBITRATION UNDER SECTION 12 OR OTHERWISE, TO END SUCH BREACH,
WITHOUT FURTHER PROOF OF DAMAGE.
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(g) PERMITTED OWNERSHIP. NOTHING IN THIS SECTION 11 SHALL
PROHIBIT THE EXECUTIVE FROM OWNING LESS THAN ONE PERCENT (1%) OF ANY
COMPANY THAT IS PUBLICLY TRADED ON ANY NATIONAL SECURITIES EXCHANGE.
(h) SEVERABILITY AND REASONABLENESS. IF, AT ANY TIME, THE
PROVISIONS OF THIS SECTION 11 SHALL BE DETERMINED TO BE INVALID OR
UNENFORCEABLE, BY REASON OF BEING VAGUE OR UNREASONABLE AS TO
GEOGRAPHIC AREA, DURATION OR SCOPE OF ACTIVITY OR DUE TO ANY OTHER
RESTRICTION OR LIMITATION, THIS SECTION 11 SHALL BE CONSIDERED
DIVISIBLE AND SHALL BECOME AND BE IMMEDIATELY AMENDED TO ONLY SUCH
GEOGRAPHIC AREA, DURATION AND SCOPE OF ACTIVITY AND/OR RESTRICTIONS OR
LIMITATIONS AS SHALL BE DETERMINED TO BE REASONABLE AND ENFORCEABLE BY
AN ARBITRATOR OR A COURT HAVING JURISDICTION OVER THE MATTER; AND THE
EXECUTIVE AGREES THAT THIS SECTION 11 AS SO AMENDED SHALL BE VALID AND
BINDING AS THOUGH ANY INVALID OR UNENFORCEABLE PORTION HAD NOT BEEN
INCLUDED HEREIN. THE PARTIES AGREE THAT THE GEOGRAPHIC AREA, DURATION
AND SCOPE OF THE LIMITATIONS AND THE RESTRICTIONS DESCRIBED IN
SUBSECTIONS (a) THROUGH (e) ARE REASONABLE.
12. ARBITRATION OF DISPUTES. Any disputes, claims or controversies
between the Executive and the Company, its Subsidiaries or Affiliated Entities
which may arise out of or relate to this Option Agreement shall be settled by
arbitration. This agreement to arbitrate shall survive the termination of this
Option Agreement. Any arbitration shall be in accordance with the Rules of the
American Arbitration Association and shall be undertaken pursuant to the Federal
Arbitration Act. Arbitration will be held in Dallas, Texas unless the parties
mutually agree on another location. The decision of the arbitrator(s) will be
enforceable in any court of competent jurisdiction. The arbitrator(s) may, but
will not be required, to award such damages or other monetary relief as either
party might be entitled to receive from a court of competent jurisdiction.
Nothing in this agreement to arbitrate shall preclude the Company from obtaining
injunctive relief under Section 11(f) from a court of competent jurisdiction
prohibiting any on-going breaches of the Option Agreement by the Executive
pending arbitration. The arbitrator(s) may also award costs and attorneys' fees
in connection with the arbitration to the prevailing party; however, in the
arbitrator's(s') discretion, each party may be ordered to bear its/his own costs
and attorneys' fees.
13. CHOICE OF LAW. This Option Agreement shall be governed by and
construed in accordance with the laws of the State of Texas, excluding any
conflicts or choice of law rule or principle that might otherwise refer
construction or interpretation of the Option Agreement to the substantive law of
another jurisdiction, except as superseded by applicable federal law and/or as
provided in Section 12 hereof.
14. OPTION AGREEMENT REPLACES PLAN OPTION AGREEMENT. The parties agree
that this Option Agreement replaces and supersedes the Nonqualified Stock Option
Agreement Under the Fleming Companies, Inc. 2000 Stock Option Plan between them,
dated as of December 18, 2001 (the "Plan Option Agreement"). The parties
acknowledge that the Plan Option Agreement contains terms which are contrary to
the Plan and is therefore null and void and mutually wish to substitute this
Option Agreement for the Plan Option Agreement.
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IN WITNESS WHEREOF, the Company, through a duly authorized officer, and
the Executive have executed this Option Agreement as of the day and year first
above written.
COMPANY: FLEMING COMPANIES, INC., an Oklahoma corporation
By /s/ SCOTT M. NORTHCUTT
---------------------------------------------
Scott M. Northcutt
Executive Vice President - Human Resources
EXECUTIVE: /s/ J. R. CAMPBELL
---------------------------------------------
J. R. Campbell
I acknowledge that I received this Option Agreement on ___________________
[INSERT DATE OF RECEIPT] and executed it on ___________________ [INSERT DATE OF
EXECUTION].
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