NON-QUALIFIED STOCK OPTION AGREEMENT
THIS NON-QUALIFIED STOCK OPTION AGREEMENT (the "Option Agreement"),
made as of this 30th day of December, 2001, at Lewisville, Texas by and between
TIMOTHY R. LABEAU (hereinafter referred to as the "Executive"), and FLEMING
COMPANIES, INC. (hereinafter referred to as the "Company"):
WITNESSETH:
WHEREAS, the Executive has become an associate of the Company in the
position of Senior Vice President, Operations, effective as of December 30,
2001, and it is important to the Company that the Executive be encouraged to
remain in the employ of the Company and given incentive to perform while in the
employ of the Company; 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; and
WHEREAS, in recognition of such facts and also as a material inducement
to his entering into an employment relationship with the Company, the Company
desires to provide to the Executive an opportunity to purchase shares of the
common stock of the Company.
NOW, THEREFORE, in consideration of the mutual covenants hereinafter
set forth and for good and valuable consideration, the Executive and the Company
hereby agree as follows:
1. ACKNOWLEDGEMENT OF AND RELATIONSHIP TO STOCK INCENTIVE PLAN.
(a) The parties to this Option Agreement acknowledge that the
Company has previously established the Fleming Companies, Inc. 2000
Stock Incentive Plan (the "Plan"). The award reflected in this Option
Agreement is not made, in whole or in part, from the shares of Common
Stock authorized to be awarded under the Plan. It is, however, the
intent of the parties that, except as otherwise provided in this Option
Agreement, terms used herein shall have the same meanings as defined in
the Plan. It is also the intent of the parties that, except as
otherwise provided herein, this Option Agreement shall be interpreted
and administered to provide the Executive and the Company the same
respective rights and obligations as if the Stock Options had been
awarded under the Plan.
(b) The Company may at any time unilaterally and in its sole
discretion rescind the award made under this Option Agreement, in whole
or in part, and whether or not presently exercisable or vested, and
substitute an award under the Plan or under any non-qualified stock
option or incentive plan or program that has previously been or may in
the future be established; PROVIDED, THAT SUCH RESCISSION AND
SUBSTITUTION SHALL NOT CAUSE OR RESULT IN ANY ECONOMIC LOSS OR OTHER
ADVERSE CONSEQUENCE TO THE EXECUTIVE ABSENT THE EXECUTIVE'S CONSENT.
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
100,000 shares of Common Stock under and subject to the terms and conditions of
this Option Agreement, to be administered by the Compensation and Organization
Committee of the Company's Board of Directors and/or the Regular Award Committee
(collectively, the "Committee"). The purchase price per share for each share of
Common Stock to be purchased hereunder shall be $19.10 (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 or Affiliated Entities 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 the
applicable provisions of 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.
<Table>
<Caption>
Percent of Stock
Exercise Dates Option Exercisable
- ---------------- ------------------
On or After December 30, 2002 25%
On or After December 30, 2003 50%
On or After December 30, 2004 75%
On or After December 30, 2005 100%
</Table>
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
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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 the 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," as defined in that certain
Change of Control Employment Agreement made as of December 30, 2001,
between the Company and the Executive (the "Change of Control
Agreement"), 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 date of retirement.
6. NON-TRANSFERABILITY OF STOCK OPTIONS. Except as provided in Section
9.3 of the Plan regarding certain limited transferability of Stock Options with
the Committee's approval, 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 Option.
7. EMPLOYMENT. So long as the Executive shall continue to be a
full-time and continuous associate of the Company or a Subsidiary or Affiliated
Entity, 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
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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. 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.
(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. The 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.
10. NOTICES. All notices or other communications relating to this
Option Agreement as it relates to the Executive 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 HIS 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
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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, 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
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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 HE 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.
(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
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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. COPY OF PLAN ATTACHED. A copy of the Plan is attached as Exhibit
"A," but is incorporated herein only to the extent provided in Section 1 above.
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/ TIMOTHY R. LABEAU
------------------------------------------------
Timothy R. LaBeau
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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