-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, LTvkS0yWL2+MYLK+BRS6j20YPVW857bEOHydV0kCgsFJfEYb/Pt0ZftTwCTTmTTY vQThhstNwHBljOggI+Uuyg== 0000909334-00-000067.txt : 20000526 0000909334-00-000067.hdr.sgml : 20000526 ACCESSION NUMBER: 0000909334-00-000067 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 16 CONFORMED PERIOD OF REPORT: 20000415 FILED AS OF DATE: 20000525 FILER: COMPANY DATA: COMPANY CONFORMED NAME: FLEMING COMPANIES INC /OK/ CENTRAL INDEX KEY: 0000352949 STANDARD INDUSTRIAL CLASSIFICATION: WHOLESALE-GROCERIES & GENERAL LINE [5141] IRS NUMBER: 480222760 STATE OF INCORPORATION: OK FISCAL YEAR END: 0131 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-08140 FILM NUMBER: 643799 BUSINESS ADDRESS: STREET 1: 6301 WATERFORD BLVD STREET 2: P O BOX 26647 CITY: OKLAHOMA CITY STATE: OK ZIP: 73126 BUSINESS PHONE: 4058407200 MAIL ADDRESS: STREET 1: P O BOX 26647 CITY: OKLAHOMA CITY STATE: OK ZIP: 73216-0647 10-Q 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q (Mark One) X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended April 15, 2000 OR TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number 1-8140 FLEMING COMPANIES, INC. (Exact name of registrant as specified in its charter) OKLAHOMA 48-0222760 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 6301 Waterford Boulevard, Box 26647 Oklahoma City, Oklahoma 73126 (Address of principal executive offices) (Zip Code) (405) 840-7200 (Registrant's telephone number, including area code) (Former name, former address and former fiscal year, if changed since last report.) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No The number of shares outstanding of each of the issuer's classes of common stock, as of May 12, 2000 is as follows: Class Shares Outstanding Common stock, $2.50 par value 39,255,000 INDEX Part I. FINANCIAL INFORMATION: Item 1. Financial Statements Consolidated Condensed Statements of Operations - 16 Weeks Ended April 15, 2000, and April 17, 1999 Consolidated Condensed Balance Sheets - April 15, 2000, and December 25, 1999 Consolidated Condensed Statements of Cash Flows - 16 Weeks Ended April 15, 2000, and April 17, 1999 Notes to Consolidated Condensed Financial Statements Independent Accountants' Review Report Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Item 3. Quantitative and Qualitative Disclosures about Market Risk Part II. OTHER INFORMATION: Item 1. Legal Proceedings Item 4. Results of Votes of Security Holders Item 6. Exhibits and Reports on Form 8-K Signatures PART I. FINANCIAL INFORMATION Item 1. Financial Statements Consolidated Condensed Statements of Operations For the 16 weeks ended April 15, 2000, and April 17, 1999 (In thousands, except per share amounts)
============================================================================== 2000 1999 - ------------------------------------------------------------------------------ Net sales $4,444,804 $4,465,246 Costs and expenses: Cost of sales 4,028,130 4,036,868 Selling and administrative 372,307 376,995 Interest expense 53,101 51,606 Interest income (9,505) (9,350) Equity investment results 1,891 3,556 Impairment/restructuring charge 42,145 37,036 - ------------------------------------------------------------------------------ Total costs and expenses 4,488,069 4,496,711 - ------------------------------------------------------------------------------ Loss before taxes (43,265) (31,465) Taxes on loss (17,392) (7,224) - ------------------------------------------------------------------------------ Net loss $ (25,873) $ (24,241) ============================================================================== Basic and diluted net loss per share $(.67) $(.64) Dividends paid per share $.02 $.02 Weighted average shares outstanding: Basic 38,515 38,143 Diluted 38,515 38,143 ==============================================================================
Fleming Companies, Inc. See notes to consolidated condensed financial statements and independent accountants' review report. Consolidated Condensed Balance Sheets (In thousands)
============================================================================== April 15, December 25, Assets 2000 1999 - ------------------------------------------------------------------------------ Current assets: Cash and cash equivalents $ 20,719 $ 6,683 Receivables 442,452 496,159 Inventories 860,926 997,805 Other current assets 199,431 228,103 - ------------------------------------------------------------------------------ Total current assets 1,523,528 1,728,750 Investments and notes receivable 97,817 108,895 Investment in direct financing leases 119,492 126,309 Property and equipment 1,507,958 1,539,465 Less accumulated depreciation and amortization (700,413) (701,289) - ------------------------------------------------------------------------------ Net property and equipment 807,545 838,176 Deferred income taxes 49,047 54,754 Other assets 155,818 150,214 Goodwill 559,819 566,120 - ------------------------------------------------------------------------------ Total assets $3,313,066 $3,573,218 ============================================================================== Liabilities and Shareholders' Equity - ------------------------------------------------------------------------------ Current liabilities: Accounts payable $ 788,913 $ 981,219 Current maturities of long-term debt 67,905 70,905 Current obligations under capital leases 21,096 21,375 Other current liabilities 212,316 210,220 - ------------------------------------------------------------------------------ Total current liabilities 1,090,230 1,283,719 Long-term debt 1,189,934 1,234,185 Long-term obligations under capital leases 368,124 367,960 Other liabilities 129,738 126,652 Commitments and contingencies Shareholders' equity: Common stock, $2.50 par value per share 98,113 97,141 Capital in excess of par value 510,686 511,447 Accumulated deficit (48,199) (22,326) Accumulated other comprehensive income: Additional minimum pension liability (25,560) (25,560) - ------------------------------------------------------------------------------ Accumulated other comprehensive income (25,560) (25,560) - ------------------------------------------------------------------------------ Total shareholders' equity 535,040 560,702 - ------------------------------------------------------------------------------ Total liabilities and shareholders' equity $3,313,066 $3,573,218 ==============================================================================
Fleming Companies, Inc. See notes to consolidated condensed financial statements and independent accountants' review report. Consolidated Condensed Statements of Cash Flows For the 16 weeks ended April 15, 2000, and April 17, 1999 (In thousands)
============================================================================== 2000 1999 - ------------------------------------------------------------------------------ Cash flows from operating activities: Net loss $(25,873) $(24,241) Adjustments to reconcile net loss to net cash provided by operating activities: Depreciation and amortization 55,245 46,317 Credit losses 7,698 7,942 Deferred income taxes 8,208 (12,641) Equity investment results 1,891 3,556 Impairment/restructuring and related charges (not in other lines) 59,322 45,123 Cash payments on impairment/restructuring and related charges (41,081) (16,474) Change in assets and liabilities, excluding effect of acquisitions: Receivables 47,639 49,145 Inventories 129,927 111,128 Accounts payable (192,306) (141,788) Other assets and liabilities 3,592 (36,911) Other adjustments, net 384 428 - ------------------------------------------------------------------------------ Net cash provided by operating activities 54,646 31,584 - ------------------------------------------------------------------------------ Cash flows from investing activities: Collections on notes receivable 9,021 8,031 Notes receivable funded (5,710) (4,541) Purchase of property and equipment (38,498) (50,041) Proceeds from sale of property and equipment 7,627 3,465 Investments in customers (1,514) (1,935) Proceeds from sale of investment 2,616 2,084 Businesses acquired - (10,704) Proceeds from sale of businesses 36,952 - Other investing activities 3,753 (51) - ------------------------------------------------------------------------------ Net cash provided by (used in) investing activities 14,247 (53,692) - ------------------------------------------------------------------------------ Cash flows from financing activities: Proceeds from long-term borrowings 60,000 101,000 Principal payments on long-term debt (107,251) (38,593) Principal payments on capital lease obligations (6,982) (3,614) Sale of common stock under incentive stock and stock ownership plans 151 178 Dividends paid (775) (787) Other financing activities - (31) - ------------------------------------------------------------------------------ Net cash provided by (used in) financing activities (54,857) 58,153 - ------------------------------------------------------------------------------ Net increase in cash and cash equivalents 14,036 36,045 Cash and cash equivalents, beginning of period 6,683 5,967 - ------------------------------------------------------------------------------ Cash and cash equivalents, end of period $ 20,719 $ 42,012 ============================================================================== Supplemental information: Cash paid for interest $41,333 $41,070 Cash paid (refunded) for taxes $(50,491) $11,301 ==============================================================================
Fleming Companies, Inc. See notes to consolidated condensed financial statements and independent accountants' review report. Notes to Consolidated Condensed Financial Statements (See independent accountants' review report) 1. The consolidated condensed balance sheet as of April 15, 2000, and the consolidated condensed statements of operations and cash flows for the 16 weeks ended April 15, 2000 and April 17, 1999, have been prepared by the company, without audit. In the opinion of management, all adjustments necessary to present fairly the company's financial position at April 15, 2000, and the results of operations and cash flows for the periods presented have been made. All such adjustments are of a normal, recurring nature except as disclosed. Both basic and diluted loss per share are computed based on net loss divided by weighted average shares as appropriate for each calculation. The preparation of the consolidated condensed financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Certain reclassifications have been made to prior year amounts to conform to current year classifications. 2. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted. These consolidated condensed financial statements should be read in conjunction with the consolidated financial statements and related notes included in the company's 1999 annual report on Form 10-K. 3. The LIFO method of inventory valuation is used for determining the cost of most grocery and certain perishable inventories. The excess of current cost of LIFO inventories over their stated value was $58 million at April 15, 2000 ($5 million of which is recorded in assets held for sale in other current assets) and $54 million at December 25, 1999 ($4 million of which is recorded in assets held for sale in other current assets). 4. Sales and operating earnings for the company's distribution and retail segments are presented below.
============================================================================== For the 16 weeks ended April 15, April 17, ($ in millions) 2000 1999 - ------------------------------------------------------------------------------ Sales: Distribution $3,966 $4,002 Intersegment elimination (582) (675) - ------------------------------------------------------------------------------ Net distribution 3,384 3,327 Retail 1,061 1,138 - ------------------------------------------------------------------------------ Total sales $4,445 $4,465 ============================================================================== Operating earnings: Distribution $ 83 $ 83 Retail 12 13 Support services (51) (45) - ------------------------------------------------------------------------------ Total operating earnings 44 51 Interest expense (53) (51) Interest income 10 9 Equity investment results (2) (3) Impairment/restructuring charge (42) (37) - ------------------------------------------------------------------------------ Loss before taxes $(43) $(31) ==============================================================================
General support services expenses are not allocated to distribution and retail segments. The transfer pricing between segments is at cost. 5. The company's comprehensive loss totaled $25.9 million for the 16 weeks ended April 15, 2000 and $24.2 million for the 16 weeks ended April 17, 1999. The comprehensive loss in both years was comprised only of the reported net loss. 6. In accordance with applicable accounting standards, the company records a charge reflecting contingent liabilities (including those associated with litigation matters) when management determines that a material loss is "probable" and either "quantifiable" or "reasonably estimable." Additionally, the company discloses material loss contingencies when the likelihood of a material loss is deemed to be greater than "remote" but less than "probable." Set forth below is information regarding certain material loss contingencies: Class Action Suits. In 1996, the company and certain of its present and former officers and directors were named as defendants in nine purported class action suits filed by certain stockholders and one purported class action suit filed by a noteholder. In 1997, the court consolidated the stockholder cases (the noteholder case was also consolidated, but only for pre-trial purposes). During 1998 the noteholder case was dismissed and during 1999 the consolidated case was also dismissed, each without prejudice. The court gave the plaintiffs the opportunity to restate their claims in each case. The complaint filed in the consolidated cases asserted liability for the company's alleged failure to properly account for and disclose the contingent liability created by the David's litigation and by the company's alleged "deceptive business practices." The plaintiffs claim that these alleged practices led to the David's litigation and to other material contingent liabilities, caused the company to change its manner of doing business at great cost and loss of profit, and materially inflated the trading price of the company's common stock. The company denied each of these allegations. On February 4, 2000 the stockholder case was dismissed with prejudice by the district court. The plaintiffs filed an appeal on March 3, 2000. The motion to dismiss in the noteholder case has not yet been decided. The plaintiffs seek undetermined but significant damages. However, if the district court ruling described below is upheld, Fleming believes the litigation will not have a material adverse effect on the company. In 1997, the company won a declaratory judgment against certain of its insurance carriers regarding policies issued to Fleming for the benefit of its officers and directors ("D&O policies"). On motion for summary judgment, the court ruled that the company's exposure, if any, under the class action suits is covered by D&O policies written by the insurance carriers (aggregating $60 million in coverage) and that the "larger settlement rule" will be applicable to the case. According to the trial court, under the larger settlement rule a D&O insurer is liable for the entire amount of coverage available under a policy even if there is some overlap in the liability created by the insured individuals and the uninsured corporation. If a corporation's liability is increased by uninsured parties beyond that of the insured individuals, then that portion of the liability is the sole obligation of the corporation. The court also held that allocation is not available to the insurance carriers as an affirmative defense. The insurance carriers appealed. In 1999, the appellate court affirmed the decision that the class actions were covered by D&O policies aggregating $60 million in coverage but reversed the trial court's decision as to allocation as being premature. Tru Discount Foods. Fleming brought suit in 1994 on a note and an open account against its former customer, Tru Discount Foods. The case was initially referred to arbitration but later restored to the trial court; Fleming appealed. In 1997, the defendant amended its counter claim against the company alleging fraud, overcharges for products and violations of the Oklahoma Deceptive Trade Practices Act. In 1998, the appellate court reversed the trial court and directed that the matter be sent again to arbitration. On September 28, 1999, the arbitration panel entered its award in favor of Fleming against Tru Discount Foods and its principals in the net amount of $579,443 plus interest at the rate of six percent per annum from October 29, 1999, and fees and expenses. On December 27, 1999, Tru Discount Foods and its principals filed a motion in the trial court to vacate the arbitration award, on the grounds, among others, that the arbitration panel prevented them from asserting a RICO counterclaim for treble damages, and refused to admit alleged new evidence relating thereto. The company objected to the motion and moved to confirm the arbitration award. On February 28, 2000, the trial court confirmed the award and entered judgment against the defendants. The time for appeal by the defendants has expired. Don's United Super (and related cases). The company and two retired executives have been named in a suit filed in 1998 in the United States District Court for the Western District of Missouri by several current and former customers of the company (Don's United Super, et al. v. Fleming, et al.). The eighteen plaintiffs operate retail grocery stores in the St. Joseph and Kansas City metropolitan areas. The plaintiffs in this suit allege product overcharges, breach of contract, breach of fiduciary duty, misrepresentation, fraud, and RICO violations, and they are seeking actual, punitive and treble damages, as well as a declaration that certain contracts are voidable at the option of the plaintiffs. During the fourth quarter of 1999, plaintiffs produced reports of their expert witnesses calculating alleged actual damages of approximately $112 million. During the first quarter of 2000, plaintiffs revised a portion of these damage calculations, and although plaintiffs have not finalized these calculations, it appears that their revised damage calculations will result in a claim of approximately $120 million, exclusive of any punitive or treble damages. On May 2, 2000, the court granted partial summary judgment to the defendants, holding that plaintiffs' breach of contract claims that relate to events that occurred more than four (4) years before the filing of the litigation are barred by limitations, and that plaintiffs' fraud claims based upon fraudulent inducement that occurred more than fifteen (15) years before the filing of the lawsuit likewise are barred by limitations. The company is in the process of evaluating what impact, if any, these rulings are likely to have on the damage calculations of the plaintiffs' expert witnesses. In October 1998, the company and the same two retired executives were named in a suit filed by another group of retailers in the same court as the Don's suit. (Coddington Enterprises, Inc., et al. v. Fleming, et al.). Currently, sixteen plaintiffs are asserting claims in the Coddington suit. All of the plaintiffs except for one have arbitration agreements with Fleming. The plaintiffs assert claims virtually identical to those set forth in the Don's suit, and although plaintiffs have not yet quantified the damages in their pleadings, it is anticipated that they will claim actual damages approximating the damages claimed in the Don's suit. In July 1999, the court ordered two of the plaintiffs in the Coddington case to arbitration, and otherwise denied arbitration as to the remaining plaintiffs. The company has appealed the district court's denial of arbitration to the Eighth Circuit Court of Appeals. The two plaintiffs that were ordered to arbitration have filed motions asking the district court to reconsider the arbitration ruling. Two other cases had been filed before the Don's case in the same district court (R&D Foods, Inc., et al. v. Fleming, et al.; and Robandee United Super, Inc., et al. v. Fleming, et al.) by ten customers, some of whom are also plaintiffs in the Don's case. The earlier two cases, which principally seek an accounting of the company's expenditure of certain joint advertising funds, have been consolidated. All proceedings in these cases have been stayed pending the arbitration of the claims of those plaintiffs who have arbitration agreements with the company. The company intends to vigorously defend against the claims in these related cases but is currently unable to predict the outcome of the cases. An unfavorable outcome could have a material adverse effect on the financial condition and prospects of the company. Storehouse Markets. In 1998, the company and one of its division officers were named in a suit filed in the United States District Court for the District of Utah by several current and former customers of the company (Storehouse Markets, Inc., et al. v. Fleming Companies, Inc., et al.). The plaintiffs have alleged product overcharges, fraudulent misrepresentation, fraudulent nondisclosure and concealment, breach of contract, breach of duty of good faith and fair dealing, and RICO violations, and they are seeking actual, punitive and treble damages. The plaintiffs have made these claims on behalf of a class that would purportedly include current and former customers of Fleming's Salt Lake City division covering a four state region. On March 7, 2000 the court stated that this case would be certified as a class action, although no formal order had been entered as of the date of this report. The company is considering an appeal of this ruling once the court enters its order. Damages have not been quantified by the plaintiffs; however, the company anticipates that substantial damages will be claimed. The company intends to vigorously defend against these claims but is currently unable to predict the outcome of the case. An unfavorable outcome could have a material adverse effect on the financial condition and prospects of the company. Allen's IGA. In March 2000, the company and two of its former executives were named in a suit filed in the United States District Court for the Eastern District of Oklahoma by several former customers in Oklahoma (Allen's IGA, Inc., et al. v. Fleming Companies, Inc., et al.). The plaintiffs have alleged product overcharges, fraud, breach of contract, negligence, RICO violations, and they seek actual, punitive and treble damages, an accounting, and other equitable relief. Damages have not been quantified by the plaintiffs; however, the company anticipates that substantial damages will be claimed. The court has entered a scheduling order setting November 6, 2000 as the date on which the trial of this case will commence. The company intends to vigorously defend against the claims in this case but is currently unable to predict the outcome. An unfavorable outcome could have a material adverse effect on the financial condition and prospects of the company. Other. The company's facilities and operations are subject to various laws, regulations and judicial and administrative orders concerning protection of the environment and human health, including provisions regarding the transportation, storage, distribution, disposal or discharge of certain materials. In conformity with these provisions, the company has a comprehensive program for testing, removal, replacement or repair of its underground fuel storage tanks and for site remediation where necessary. The company has established reserves that it believes will be sufficient to satisfy the anticipated costs of all known remediation requirements. The company and others have been designated by the U.S. Environmental Protection Agency ("EPA") and by similar state agencies as potentially responsible parties under the Comprehensive Environmental Response, Compensation and Liability Act ("CERCLA") or similar state laws, as applicable, with respect to EPA-designated Superfund sites. While liability under CERCLA for remediation at such sites is generally joint and several with other responsible parties, the company believes that, to the extent it is ultimately determined to be liable for the expense of remediation at any site, such liability will not result in a material adverse effect on its consolidated financial position or results of operations. The company is committed to maintaining the environment and protecting natural resources and human health and to achieving full compliance with all applicable laws, regulations and orders. The company is a party to various other litigation and contingent loss situations arising in the ordinary course of its business including: disputes with customers and former customers; disputes with owners and former owners of financially troubled or failed customers; disputes with employees and former employees regarding labor conditions, wages, workers' compensation matters and alleged discriminatory practices; disputes with insurance carriers; tax assessments and other matters, some of which are for substantial amounts. However, the company does not believe any such action will result in a material adverse effect on the company. 7. Certain indebtedness is guaranteed by all direct and indirect subsidiaries of the company (except for certain inconsequential subsidiaries), all of which are wholly owned. The guarantees are joint and several, full, complete and unconditional. There are no restrictions on the ability of the subsidiary guarantors to transfer funds to the company in the form of cash dividends, loans or advances. Full financial statements for the subsidiary guarantors are not presented herein because management does not believe such information would be material. The following summarized financial information, which includes allocations of material corporate-related expenses, for the combined subsidiary guarantors may not necessarily be indicative of the results of operations or financial position had the subsidiary guarantors been operated as independent entities.
April 15, April 17, (In millions) 2000 1999 ------------------------------------------------- Current assets $378 $28 Noncurrent assets $493 $51 Current liabilities $164 $15 Noncurrent liabilities $147 $7
16 weeks ended --------------------------- April 15, April 17, (In millions) 2000 1999 ------------------------------------------------ Net sales $1,163 $104 Costs and expenses $1,169 $106 Net loss $(3) $(1)
8. The accompanying operating statements include the following:
16 weeks ended --------------------------- April 15, April 17, (In thousands) 2000 1999 --------------------------------------------------------- Depreciation and amortization (includes amounts below) $55,245 $46,317 Amortized costs in interest expense $1,496 $1,498 Excess depreciation and amortization due to the strategic plan $4,395 $-
9. In December 1998, the company announced the implementation of a strategic plan designed to improve the competitiveness of the retailers the company serves and improve the company's performance by building stronger operations that can better support long-term growth. The four major initiatives of the strategic plan are to consolidate wholesale operations, grow wholesale sales, improve retail performance, and reduce overhead and operating expenses. On April 25, 2000, the company announced the exploration of strategic alternatives for the remaining conventional retail chains, including the potential sale of these operations. The total pre-tax charge of the strategic plan is presently estimated at $949 million ($229 million cash and $720 million non- cash). The plan originally announced in December 1998 had an estimated pre-tax charge totaling $782 million. The increase is due primarily to closing the Peoria, York and Philadelphia divisions ($73 million), updating impairment amounts on the five retail chains in the original plan ($11 million), the divestiture or closing of the two chains not in the original plan ($36 million), decreasing costs related to a scheduled closing no longer planned ($18 million), and other costs including those related to the company's low cost pursuit program and centralization of administrative functions ($65 million). Updating the impairment amounts was necessary as decisions to close additional operating units were made. Additionally, sales negotiations provided more current information regarding the fair value on certain chains. There were changes in the list of operating units to be divested or closed since they no longer fit into the current business strategy. Also, the cost of severance, relocation and other periodic expenses related to the company's low cost pursuit program and centralization of administrative functions has been accrued as incurred. The pre-tax charge recorded to-date is $869 million ($64 million in 2000, $137 million in 1999, and $668 million recorded in 1998). After tax, the expense for the first quarter of 2000 was $38 million or $.99 per share. The $80 million of costs relating to the strategic plan not yet charged against income will primarily be recorded throughout 2000 at the time such costs are accruable. The $64 million charge in the first quarter of 2000 was included on several lines of the Consolidated Statements of Operations as follows: $13 million was included in cost of sales and was primarily related to inventory valuation adjustments and additional depreciation and amortization on assets to be disposed of but not yet held for sale; $8 million was included in selling and administrative expense and equity investment results as disposition related costs recognized on a periodic basis; and the remaining $43 million was included in the impairment/restructuring charge line. The first quarter charge consisted of the following components: o Impairment of assets of $2 million. The impairment related to other long-lived assets. o Restructuring charges of $41 million. The restructuring charges consisted primarily of severance related expenses and pension withdrawal liabilities for the divested or closed operating units announced during the first quarter of 2000. The restructuring charges also consisted of operating lease liabilities and professional fees incurred related to the restructuring process. o Other disposition and related costs of $21 million. These costs consisted primarily of inventory valuation adjustments, additional depreciation and amortization on assets to be disposed of but not yet held for sale, disposition related costs recognized on a periodic basis and other costs. The first quarter of 2000 charge relates to the company's segments as follows: $37 million relates to the distribution segment and $17 million relates to the retail segment with the balance relating to support services expenses. The charges related to workforce reductions are as follows:
($'s in thousands) Amount Headcount ------ --------- 1998 Activity: Charge $25,441 1,430 Terminations (3,458) (170) ------- ------- Ending Liability 21,983 1,260 1999 Activity: Charge 12,029 1,350 Terminations (24,410) (1,950) ------- ------- Ending Liability 9,602 660 2000 Quarter 1 Activity: Charge 25,509 1,020 Terminations (4,250) (560) ------- ------- Ending Liability $30,861 1,120 ======= =======
The breakdown of the 1,020 headcount reduction recorded during 2000 is: 910 from the distribution segment; 100 from the retail segment; and 10 from support services. Additionally, the strategic plan includes charges related to lease obligations which will be utilized as operating units or retail stores close, but ultimately reduced over remaining lease terms ranging from 1 to 20 years. The charges and utilization have been recorded to-date as follows:
($'s in thousands) Amount ------ 1998 Activity: Charge $28,101 Utilized (385) ------- Ending Liability 27,716 1999 Activity: Charge 15,074 Utilized (10,281) ------- Ending Liability 32,509 2000 Quarter 1 Activity: Charge 9,062 Utilized (9,957) ------- Ending Liability $31,614 =======
Assets held for sale included in other current assets at the end of the first quarter of 2000 were approximately $69 million, consisting of $27 million of distribution operating units and $42 million of retail stores. The pre-tax charge of the strategic plan in the first quarter of 1999 totaled $46 million. After tax, the expense for the first quarter of 1999 was $32 million or $.84 per share. The $46 million charge was included on several lines of the Consolidated Condensed Statements of Operations for the first quarter of 1999 as follows: $6 million was included in cost of sales and was primarily related to inventory valuation adjustments; $3 million was included in selling and administrative expense as disposition related costs recognized on a periodic basis; and the remaining $37 million was included in the impairment/restructuring charge line. The $46 million charge consisted of the following components: o Impairment of assets of $24 million. The impairment components were $22 million for goodwill and $2 million for other long-lived assets. All of the goodwill charge of $22 million was related to the 1994 "Scrivner" acquisition. o Restructuring charges of $13 million. The restructuring charges consisted of severance related expenses and pension withdrawal liabilities for the Peoria distribution operating unit and Consumers retail chain. The restructuring charges also consisted of operating lease liabilities for the Peoria distribution operating unit. o Other disposition and related costs of $9 million. These costs consist primarily of inventory valuation adjustments, disposition related costs recognized on a periodic basis and other costs. The $46 million charge relates to the company's segments as follows: $32 million relates to the distribution segment and $8 million relates to the retail segment with the balance relating to corporate overhead expenses. Asset impairments were recognized in accordance with SFAS No. 121 - - Accounting for the Impairment of Long-Lived Assets and for Long- Lived Assets to be Disposed Of, and such assets were written down to their estimated fair values based on estimated proceeds of operating units to be sold or discounted cash flow projections. The operating costs of operating units to be sold or closed are treated as normal operations during the period they remain in use. Salaries, wages and benefits of employees at these operating units are charged to operations during the time such employees are actively employed. Depreciation expense is continued for assets that the company is unable to remove from operations. Independent Accountants' Review Report TO THE BOARD OF DIRECTORS AND SHAREHOLDERS FLEMING COMPANIES, INC. We have reviewed the accompanying condensed consolidated balance sheet of Fleming Companies, Inc. and subsidiaries as of April 15, 2000, and the related condensed consolidated statements of operations and of cash flows for the sixteen weeks ended April 15, 2000 and April 17, 1999. These financial statements are the responsibility of the company's management. We conducted our reviews in accordance with standards established by the American Institute of Certified Public Accountants. A review of interim financial information consists principally of applying analytical procedures to financial data and of making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with auditing standards generally accepted in the United States of America, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion. Based on our reviews, we are not aware of any material modifications that should be made to such condensed consolidated financial statements for them to be in conformity with accounting principles generally accepted in the United States of America. We have previously audited, in accordance with auditing standards generally accepted in the United States of America, the consolidated balance sheet of Fleming Companies Inc. and subsidiaries as of December 25, 1999, and the related consolidated statements of operations, shareholders' equity, and cash flows for the year then ended (not presented herein); and in our report dated February 18, 2000, we expressed an unqualified opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying condensed consolidated balance sheet as of December 25, 1999 is fairly stated, in all material respects, in relation to the consolidated balance sheet from which it has been derived. DELOITTE & TOUCHE LLP Oklahoma City, Oklahoma May 3, 2000 Item 2. Management's Discussion and Analysis of Financial Condition And Results of Operations General In early 1998, the Board of Directors and senior management began an extensive strategic planning process that evaluated all aspects of Fleming's business. With the help of a consulting firm, the evaluation and planning process was completed late in 1998. In December 1998, the strategic plan was approved and implementation efforts began. The strategic plan consists of the following four major initiatives: o Consolidate distribution operations. The strategic plan initially included closing eleven operating units (El Paso, TX; Portland, OR; Houston, TX; Huntingdon, PA; Laurens, IA; Johnson City, TN; Sikeston, MO; San Antonio, TX; Buffalo, NY; an unannounced operating unit still to be closed; and an unannounced operating unit scheduled for 1999 closure, but due to increased cash flows from new business it will not be closed). Of the nine closings announced, all have been completed. Three additional closings were announced which were not originally part of the strategic plan bringing the total operating units to be closed to thirteen. The closing of Peoria was added to the plan in the first quarter of 1999 when costs associated with continuing to service customers during a strike coupled with costs of reopening the operating unit made closing the operating unit an economically sound decision. During the first quarter of 2000, the closings of York and Philadelphia were announced as part of an effort to grow in the northeast by consolidating distribution operations and expanding the Maryland facility. The York and Philadelphia closings are expected to be complete by the end of the second quarter of 2000. The last full year of operations for the 13 operating units closed or to be closed was in 1998 with sales totaling approximately $3.1 billion. Most of these sales have been or are expected to be retained by transferring customer business to the company's higher volume, better utilized facilities. The company believes that this consolidation process benefits customers with better product variety and improved buying opportunities. The company has also benefited with better coverage of fixed expenses. The closings result in savings due to reduced depreciation, payroll, lease and other operating costs, and the company begins recognizing these savings immediately upon closure. The capital returned from the divestitures and closings has been and will continue to be reinvested in the business. o Grow distribution sales. Higher volume, better-utilized distribution operations and the dynamics of the market place represent an opportunity for sales growth. The improved efficiency and effectiveness of the remaining distribution operations enhances their competitiveness, and the company intends to capitalize on these improvements. o Improve retail performance. This not only requires divestiture or closing of under-performing company-owned retail chains, but also requires increased investments in the retail concepts on which the company is focused. As of year-end 2000, the strategic plan included the divestiture or closing of seven retail chains (Hyde Park, Consumers, Boogaarts, New York Retail, Pennsylvania Retail, Baker's Oklahoma, and Thompson Food Basket). The sale of Baker's Oklahoma as well as the divestiture or closing of Thompson Food Basket were not in the original strategic plan, but no longer fit into the current business strategy. The last full year of operations for these seven divested or closed (or to be divested or closed) chains was in 1998 with sales totaling approximately $844 million. The sale or closing of these chains is expected to be substantially completed by the end of the second quarter of 2000. On April 25, 2000, the company announced the exploration of strategic alternatives for the remaining conventional retail chains (Rainbow Foods, Baker's Nebraska, Sentry Foods, and ABCO Foods), including the potential sale of these operations. o Reduce overhead and operating expenses. Overhead has been and will continue to be reduced through the company's low cost pursuit program which includes organization and process changes, such as a reduction in workforce through productivity improvements and elimination of work, centralization of administrative and procurement functions, and reduction in the number of management layers. The low cost pursuit program also includes other initiatives to reduce complexity in business systems and remove non-value-added costs from operations, such as reducing the number of SKU's, creating a single point of contact with customers, reducing the number of decision points within the company, and centralizing vendor negotiations. These initiatives are well underway and have reflected reduced costs for the company which ultimately reflect improved profitability and competitiveness. Implementation of the strategic plan is expected to continue through 2000. This time frame accommodates the company's limited resources and customers' seasonal marketing requirements. Additional expenses will continue for some time beyond 2000 because certain disposition related costs can only be expensed when incurred. The total pre-tax charge of the strategic plan is presently estimated at $949 million ($229 million cash and $720 million non- cash). The plan originally announced in December 1998 had an estimated pre-tax charge totaling $782 million. The increase is due primarily to closing the Peoria, York and Philadelphia divisions ($73 million), updating impairment amounts on the five retail chains in the original plan ($11 million), the divestiture or closing of the two chains not in the original plan ($36 million), decreasing costs related to a scheduled closing no longer planned ($18 million), and other costs including those related to the company's low cost pursuit program and centralization of administrative functions ($65 million). Updating the impairment amounts was necessary as decisions to close additional operating units were made. Additionally, sales negotiations provided more current information regarding the fair value on certain chains. There were changes in the list of operating units to be divested or closed since they no longer fit into the current business strategy as described above. Also, the cost of severance, relocation and other periodic expenses related to the company's low cost pursuit program and centralization of administrative functions has been accrued as incurred. No additional charge has been or is expected to be added related to the strategic alternatives being explored for the remaining conventional retail chains. The pre-tax charge recorded to-date is $869 million ($64 million in 2000, $137 million in 1999, and $668 million recorded in 1998). After tax, the expense for the first quarter of 2000 was $38 million or $.99 per share. Of the $64 million charge in the first quarter of 2000, $19 million is expected to require cash expenditures. The remaining $45 million charge consisted of noncash items. The $64 million charge consisted of the following components: o Impairment of assets of $2 million. The impairment related to other long-lived assets. o Restructuring charges of $41 million. The restructuring charges consisted primarily of severance related expenses and pension withdrawal liabilities for the divested or closed operating units announced during the first quarter of 2000. The restructuring charges also consisted of operating lease liabilities and professional fees incurred related to the restructuring process. o Other disposition and related costs of $21 million. These costs consisted primarily of inventory valuation adjustments, additional depreciation and amortization on assets to be disposed of but not yet held for sale, disposition related costs recognized on a periodic basis and other costs. The company recorded a net loss of $26 million or $.67 per share for the first quarter of 2000. The after-tax effect of the strategic plan charge on the company's first quarter of 2000 was $38 million or $.98 per share. Excluding the strategic plan charge, the company would have recorded net income of $12 million or $.30 per share. Adjusted EBITDA for the first quarter of 2000 was $128 million. "Adjusted EBITDA" is earnings before extraordinary items, interest expense, income taxes, depreciation and amortization, equity investment results, LIFO provision and one-time adjustments (e.g., strategic plan charges and specific litigation charges). Adjusted EBITDA should not be considered as an alternative measure of the company's net income, operating performance, cash flow or liquidity. It is provided as additional information related to the company's ability to service debt; however, conditions may require conservation of funds for other uses. Although the company believes adjusted EBITDA enhances a reader's understanding of the company's financial condition, this measure, when viewed individually, is not necessarily a better indicator of any trend as compared to conventionally computed measures (e.g., net sales, net earnings, net cash flows, etc.). Finally, amounts presented may not be comparable to similar measures disclosed by other companies. The following table sets forth the calculation of adjusted EBITDA for the first quarter of 2000 (in millions): Net loss $(26) Add back: Taxes on loss (17) Depreciation/amortization 54 Interest expense 53 Equity investment results 2 LIFO provision 3 ---- EBITDA 69 Add back noncash strategic plan charges * 40 ---- EBITDA excluding noncash strategic plan charges 109 Add back strategic plan charges requiring cash 19 ---- Adjusted EBITDA $128 ==== * Excludes amounts for depreciation/amortization and equity investment results already added back. The adjusted EBITDA amount represents cash flow from operations excluding unusual or infrequent items. In the company's opinion, adjusted EBITDA is the best starting point when evaluating the company's ability to service debt. In addition, the company believes it is important to identify the cash flows relating to unusual or infrequent charges and strategic plan charges, which should also be considered in evaluating the company's ability to service debt. Additional pre-tax expense relating to the strategic plan of approximately $80 million is expected throughout the rest of 2000 as implementation of the strategic plan continues. Approximately $78 million of these future expenses are expected to require cash expenditures. The remaining $2 million of the future expense relates to noncash items. These future expenses will consist primarily of severance, relocation, real estate-related expenses and other costs expensed when incurred. The company does not expect any charge related to the strategic alternatives being explored for the remaining conventional retail chains. The pre-tax charges relating to the strategic plan for 1999 and 1998 totaled $137 million and $668 million, respectively, and are described in the Form 10-K and Form 10-K/A for 1998 and the Form 10-K for 1999. The expected benefit of the plan is improved earnings. Net earnings for 1999 after excluding strategic plan charges and one- time items ("adjusted earnings") was $43 million or $1.12 per share. Adjusted earnings for the first quarter of 2000 was $12 million or $.30 per share with earnings per share of $1.50 expected for 2000. The company continues to expect annual earnings per share to exceed $3.00 by the year 2003. Sales in the distribution segment are also expected to increase, but the growth will not be evident in 2000 because of the previously announced loss of two significant customers. Sales in the retail segment may decrease dramatically depending on the outcome of the strategic alternatives being explored for the remaining conventional retail chains. The company has assessed the strategic significance of all operating units. Under the plan, certain divestitures have been announced and are planned as described above. The company anticipates the improved performance of several strategic operating units. However, in the event that performance is not improved, the strategic plan will be revised and additional operating units could be sold or closed. Results of Operations Set forth in the following table is information regarding the company's net sales and certain components of earnings expressed as a percent of sales which are referred to in the accompanying discussion:
============================================================================== April 15, April 17, For the 16-weeks ended 2000 1999 - ------------------------------------------------------------------------------ Net sales 100.00 % 100.00 % Gross margin 9.38 9.60 Less: Selling and administrative 8.38 8.44 Interest expense 1.19 1.16 Interest income (.21) (.21) Equity investment results .04 .08 Impairment/restructuring charge .95 .83 - ------------------------------------------------------------------------------ Total expenses 10.35 10.30 - ------------------------------------------------------------------------------ Loss before taxes (.97) (.70) Taxes on loss (.39) (.16) - ------------------------------------------------------------------------------ Net loss (.58)% (.54)% ==============================================================================
Net sales. Sales for the first quarter (16 weeks) of 2000 decreased by $20 million, or less than 1%, to $4.4 billion from the same period in 1999. Net sales for the distribution segment were $3.4 billion in 2000 compared to $3.3 billion in 1999. The 2% increase in sales was due to new business added from independent retailers, convenience stores, e-tailers, and supercenter customers. This increase was partially offset by a loss of sales previously announced from Randall's (in 1999). The increase in the distribution segment sales is the largest in five years. Sales have also been impacted by the planned closing and consolidation of certain distribution operating units. Future sales comparisons in 2000 will be affected by the previously announced prospective loss of sales to United. In 1999, sales to Randall's and United accounted for less than 4% of the company's sales. Retail segment sales decreased $77 million, or 7%, in 2000 to $1.1 billion from the same period in 1999. The decrease in sales was due to the divestiture of underperforming and non-strategic stores as well as a decrease of 5.1% in same-store sales for the first quarter of 2000 compared to the same period in 1999. The decrease was offset partially by sales of new stores opened since the first quarter of 1999. Depending on the outcome of the strategic alternatives being explored for the conventional chains, sales may dramatically decrease in the retail segment. Fleming measures inflation using data derived from the average cost of a ton of product sold by the company. Food price inflation for the first quarter of 2000 was down at 1.3% compared to 2.3% for the same period in 1999. Gross margin. Gross margin for the first quarter of 2000 decreased by $12 million, or 3%, to $417 million from $428 million for the same period in 1999, and also decreased as a percentage of net sales to 9.38% from 9.60% for the same period in 1999. After excluding the strategic plan charges, gross margin for the first quarter of 2000 decreased by $4 million, or less than 1%, compared to the same period in 1999, and decreased as a percentage of net sales to 9.68% from 9.72% for the same period in 1999. The decrease in dollars was due primarily to the overall sales decrease, but was partly offset by positive results from leveraging the company's buying power and cutting costs. The decrease in percentage to net sales was due to a change in mix. The sales of the distribution segment represent a larger portion of total company sales than the retail segment and the distribution segment has lower margins as a percentage of sales versus the retail segment. For the distribution segment, gross margin as a percentage of net sales improved slightly in the first quarter of 2000 compared to the same period in 1999 reflecting the benefits of asset rationalization and the centralization of procurement. This was partially offset by competitive pricing actions. For the retail segment, gross margin as a percentage of net sales improved significantly in the first quarter of 2000 compared to the same period in 1999 due to the divesting or closing of underperforming stores and the centralization of procurement. The strategic plan charges were higher in the first quarter of 2000 compared to the same period in 1999 and were primarily related to inventory valuation adjustments and additional depreciation and amortization on assets to be disposed of but not yet held for sale. Selling and administrative expenses. Selling and administrative expenses for the first quarter of 2000 decreased by $5 million, or 1%, to $372 million from $377 million for the same period in 1999 and decreased as a percentage of net sales to 8.38% for 2000 from 8.44% in 1999. After excluding the strategic plan charges, selling and administrative expenses for the first quarter of 2000 decreased by $10 million, or 3%, compared to the same period in 1999, and decreased as a percentage of net sales to 8.20% from 8.38% for the same period in 1999. The decreases were due to asset rationalization and centralizing administrative functions, but also due to reducing the significance of retail. The sales of the distribution segment represent a larger portion of total company sales than the retail segment and the distribution segment has lower operating expenses as a percentage of sales versus the retail segment. For the distribution segment, selling and administrative expenses as a percentage of net sales improved in the first quarter of 2000 compared to the same period in 1999 due to asset rationalization and the centralization of administrative functions. For the retail segment, selling and administrative expenses as a percentage of net sales decreased in the first quarter of 2000 compared to the same period in 1999 due to the costs of closing certain retail stores in continuing retail chains. The was partially offset by the divestiture or closing of underperforming stores and the centralization of administrative functions. The strategic plan charges were higher in the first quarter of 2000 compared to the same period in 1999 due primarily to moving and training costs associated with the consolidation of the accounting and human resource functions. The company has a significant amount of credit extended to its customers through various methods. These methods include customary and extended credit terms for inventory purchases and equity investments in, and secured and unsecured loans to, certain customers. Secured loans generally have terms up to ten years. Credit loss expense is included in selling and administrative expenses and was $8 million for the first quarter of both 2000 and 1999. Operating earnings. Operating earnings for the distribution segment remained unchanged for the first quarter of 2000 from the same period of 1999 at $83 million. After excluding the strategic plan charges, operating earnings increased by $6 million, or 7%, to $94 million from $88 million for the same period of 1999. Operating earnings improved primarily due to the benefits of the consolidation of distribution operating units, reduction of costs and centralizing of certain procurement and administrative functions in support services. The improvements were offset by higher strategic plan charges in 2000 relating primarily to additional depreciation and amortization on assets to be disposed of but not yet held for sale. Operating earnings for the retail segment decreased by less than $1 million to $12 million for the first quarter of 2000 from $13 million for the same period of 1999. After excluding the strategic plan charges, operating earnings increased by $2 million to $18 million in the first quarter of 2000 from $16 million for the same period of 1999. Operating earnings were improved primarily by divesting or closing underperforming chains and increased benefits received from the distribution segment. Operating earnings also improved due to centralizing certain administrative functions in support services. The improvements were partially offset by higher strategic plan charges in 2000 relating to inventory valuation adjustments. Support services expenses increased in the first quarter of 2000 compared to the same period of 1999 by approximately $6 million to $51 million from $45 million. After excluding the strategic plan charges, support services expenses increased by $1 million to $46 million in the first quarter of 2000 from $45 million for the same period of 1999. The increase in expense was primarily due to centralizing certain procurement and administrative functions from the distribution and retail segments. The increase was also due to lease termination and real estate disposition expenses that were higher in the first quarter of 2000 than similar costs for the same period in 1999. Strategic plan charges were higher in 2000 due to moving and training expenses associated with the centralization of the procurement and administrative functions. Interest expense. Interest expense for the first quarter of 2000 of $53 million was $1 million higher than the same period in 1999 due primarily to higher average debt balances. The company's derivative agreements consist of simple "floating- to-fixed rate" interest rate swaps. For the first quarter of 2000, interest rate hedged agreements contributed $0.5 million of net interest expense compared to the $1.7 million contribution made in 1999. The amount contributed for hedges was lower in 2000 due to lower applicable notional principal balances and a higher interest income component. For a description of these derivatives, see Item 7A. Quantitative and Qualitative Disclosures about Market Risk in the company's Annual Report on Form 10-K for the fiscal year ended December 25, 1999. Interest income. Interest income of $10 million for the first quarter of 2000 was slightly higher than the same period of 1999 primarily due to higher average interest rates offset in part by lower average balances for direct financing leases. Equity investment results. The company's portion of operating losses from equity investments improved to $2 million for the first quarter of 2000 from $4 million for the same period of 1999. Impairment/restructuring charge. The pre-tax charge recorded in the Consolidated Condensed Statements of Operations (associated with the implementation of the company's strategic plan announced in 1998) was $64 million for the first quarter of 2000 compared to $46 million for the same period of 1999. The $64 million charge in 2000 was recorded with $42 million reflected in the Impairment/restructuring charge line and the balance reflected in other financial statement lines. The $46 million charge in 1999 was recorded with $37 million reflected in the Impairment/restructuring charge line and the balance reflected in other financial statement lines. See "General" above and Note 9 in the notes to the consolidated condensed financial statements for further discussion regarding the strategic plan. Taxes on income. The effective tax rate used for the first quarters of 2000 and 1999 were 40.2% and 23.0%, respectively. These were both blended rates taking into account operations activity, strategic plan activity, write-offs of non-deductible goodwill and the timing of these items during the year. Other. Several factors negatively affecting earnings in the first 16- weeks of 2000 are likely to continue for the near term. The company believes that these factors include costs relating to the strategic plan, negative same-store sales and operating losses in certain company-owned retail stores. Additionally, although the company cannot predict the outcome of the strategic alternatives being explored for the remaining conventional retail chains, an adverse affect on earnings is not expected. Liquidity and Capital Resources In the first quarter ended April 15, 2000, the company's principal sources of liquidity were cash flows from operating activities, borrowings under its credit facility, and the sale of certain assets and liabilities. The company's principal sources of capital, excluding shareholders' equity, during this period were banks and lessors. Net cash provided by operating activities. Operating activities generated $55 million of net cash flows for the first quarter ended April 15, 2000 compared to $32 million for the same period in 1999. In the first quarter of 2000, $65 million provided by net cash earnings and a $5 million net decrease in other assets and other liabilities was offset by a $15 million increase in net working capital items. Cash requirements related to the implementation and completion of the strategic plan (on a pre-tax basis) are expected to be $112 million for the full year 2000. The company believes working capital reductions, proceeds from asset sales, and increased earnings related to the successful implementation of the strategic plan are expected to provide adequate cash flows to cover all of these costs. The company cannot predict the outcome of the strategic alternatives being explored for the remaining conventional retail chains, and no amount is included in the cash requirements described above. The company does not anticipate any alternative having a negative effect on cash requirements. Net cash provided by investing activities. Total investment-related activity resulted in $14 million of positive net cash flow for the first quarter ended April 15, 2000 compared to a $54 million use of funds in the same period of 1999. Cash provided by asset sales, collections on notes receivable and other investing-related activities was only partially offset by capital expenditures. Net cash used in financing activities. Net cash expended by financing activities was $55 million for the first quarter ended April 15, 2000 compared to a $58 million source of cash flows for the same period last year. Total debt decreased by $45 million in the first quarter of 2000 and this included $7 million in principal payments for capital leases. At the end of the first quarter of 2000, outstanding loans and letters of credit under the credit facility totaled $180 million in term loans, $230 million in revolver loans, and $39 million in letters of credit. Based on actual borrowings and letters of credit issued, the company could have borrowed an additional $331 million under the revolver. On April 25, 2000, the company announced it was exploring strategic alternatives with respect to its conventional retail chains, including their potential sale. Any such sale could provide substantial net cash flows which could potentially be used to prepay debt, repurchase common stock or help to finance business investment. For the foreseeable future, the company's principal sources of liquidity and capital are expected to be cash flows from operating activities, the company's ability to borrow under its credit facility, and asset sale proceeds. In addition, lease financing may be employed for new retail stores and certain equipment. Management believes these sources will be adequate to meet working capital needs, capital expenditures, expenditures for acquisitions (if any), strategic plan implementation costs and other capital needs for the next 12 months. Contingencies From time to time the company faces litigation or other contingent loss situations resulting from owning and operating its assets, conducting its business or complying (or allegedly failing to comply) with federal, state and local laws, rules and regulations which may subject the company to material contingent liabilities. In accordance with applicable accounting standards, the company records as a liability amounts reflecting such exposure when a material loss is deemed by management to be both "probable" and "quantifiable" or "reasonably estimable." Furthermore, the company discloses material loss contingencies in the notes to its financial statements when the likelihood of a material loss has been determined to be greater than "remote" but less than "probable." Such contingent matters are discussed in Note 6 in the notes to the consolidated condensed financial statements. An adverse outcome experienced in one or more of such matters, or an increase in the likelihood of such an outcome, could have a material adverse effect on the company. Also see Legal Proceedings. Forward-Looking Information This report includes statements that (a) predict or forecast future events or results, (b) depend on future events for their accuracy, or (c) embody projections and assumptions which may prove to have been inaccurate, including expectations for years 2000 and beyond, the company's ability to successfully achieve the goals of its strategic plan and reverse sales declines, cut costs and improve earnings; the company's assessment of the probability and materiality of losses associated with litigation and other contingent liabilities; the company's ability to expand portions of its business or enter new facets of its business; and the company's expectations regarding the adequacy of capital and liquidity. The management of the company has prepared the financial projections included in this document on a reasonable basis, and such projections reflect the best currently available estimates and judgments and present, to the best of management's knowledge and belief, the expected course of action and the expected future financial performance of the company. However, this information is not fact and should not be relied upon as necessarily indicative of future results, and readers of this document are cautioned not to place undue reliance on the projected financial information. The projections were not prepared with a view to compliance with the guidelines established by the American Institute of Certified Public Accountants regarding projections. These projections, forward- looking statements and the company's business and prospects are subject to a number of factors which could cause actual results to differ materially including the risks associated with the successful execution of the company's strategic business plan; adverse effects of labor disruptions; adverse effects of the changing industry environment and increased competition; sales declines and loss of customers; disruption caused by exploration of strategic alternatives regarding conventional retail; exposure to litigation and other contingent losses; failure of the company to achieve necessary cost savings; and the negative effects of the company's substantial indebtedness and the limitations imposed by restrictive covenants contained in the company's debt instruments. These and other factors are described in the company's Annual Report on Form 10-K for the fiscal year ended December 25, 1999 and in other periodic reports available from the Securities and Exchange Commission. Item 3. Quantitative and Qualitative Disclosures about Market Risk No material change has occurred since year-end 1999. See Item 7A. Quantitative and Qualitative Disclosures about Market Risk in the company's Annual Report on Form 10-K for the fiscal year ended December 25, 1999. PART II. OTHER INFORMATION Item 1. Legal Proceedings Set forth below and in Note 6 in the notes to the consolidated condensed financial statements, which information is incorporated herein by reference, is information regarding litigation which became reportable or as to which a material development has occurred since the date of the company's Annual Report on Form 10- K for the fiscal year ended December 25, 1999: (1) Tobacco Cases. During the first quarter of 2000, the dismissal and tolling agreement expired which had prevented the running of the statute of limitations and assertion of other defenses against 30 claimants who had filed or registered claims related to tobacco use in the Court of Common Pleas, Philadelphia County, Pennsylvania and the Court of Common Pleas, Dauphin County, Pennsylvania. None of these claimants has filed a complaint since the expiration of the dismissal and tolling agreement. During the second quarter of 2000, two cases which were scheduled for trial in the Court of Common Pleas, Philadelphia County, Pennsylvania in October, 2000 and January, 2001 were dismissed by the plaintiffs. The only pending tobacco case is a case formerly pending in Cameron Parish, Louisiana. This case was removed to the federal district court. The district court's decision to deny a motion to remand the case to the state court has been appealed to the United States Court of Appeals for the Fifth Circuit, where no decision has been rendered. The Company is being defended and indemnified by a substantial co-defendant. (2) Other Customer Cases. In March 2000, the company and one former executive were named in a suit filed in the United States District Court for the Eastern District of Missouri by current and former customers that operated five retail grocery stores in and around Kansas City, Missouri, and four retail grocery stores in and around Phoenix, Arizona (J&A Foods, Inc., et al. v. Dean Werries and Fleming Companies, Inc.). The plaintiffs have alleged product overcharges, fraudulent misrepresentation, fraudulent nondisclosure and concealment, breach of contract, breach of duty of good faith and fair dealing, and RICO violations, and they are seeking actual, punitive and treble damages, as well as other relief. The damages have not been quantified by the plaintiffs; however, the company anticipates that substantial damages will be claimed. In April 2000, the operators of two grocery stores in Van Horn and Marfa, Texas filed an amended complaint in the United States District Court for the Western District of Texas, Pecos Division (Welsh v. Fleming Foods of Texas, L.P.). The amended complaint alleges product overcharges, breach of contract, fraud, conversion, breach of fiduciary duty, negligent misrepresentation, and breach of the Texas Deceptive Trade Practices Act. The amended complaint seeks unspecified actual damages, punitive damages, attorneys' fees and prejudgment and postjudgment interest. The court has entered a scheduling order setting August 1, 2000 as the date on which the trial of this case will commence. From time to time, the company is a party to litigation in which claims against the company are made by present and former customers, sometimes in situations involving financially troubled or failed customers. Except as noted in this report, the company does not believe that any such claim will result in a material adverse effect on the company. Item 4. Results of Votes of Security Holders The company held its annual meeting on May 10, 2000. Matters voted on were as follows: Election of directors - Carol B. Hallett, Guy A. Osborn, and David A. Rismiller were each elected members of the Board of Directors for terms expiring in 2001. Directors whose terms of office continued are Herbert M. Baum, Archie R. Dykes, Edward C. Joullian III, Alice M. Peterson and Mark S. Hansen. Jack W. Baker, whose term expires in 2002, retired from the Board of Directors effective May 10, 2000. 2000 stock incentive plan - Shareholders approved the proposal authorizing the grant of stock options and award of restricted stock pursuant to the terms of the plan. Ratification of independent auditors - Shareholders ratified the appointment of Deloitte & Touche LLP as independent auditors for 2000. The number of votes cast is as follows (votes in thousands):
For Withheld --- -------- Election of directors Carol B. Hallett 33,319 2,391 Guy A. Osborn 33,320 2,390 David A. Rismiller 33,320 2,391
For Against Abstain --- ------- ------- 2000 stock incentive plan 27,535 8,039 137 Ratification of independent auditors 33,735 1,938 38
No other business came before the meeting. Item 6. Exhibits and Reports on Form 8-K (a) Exhibits: Exhibit Number -------------- 4.9 Second Amendment dated as of December 21, 1999 to Credit Agreement dated July 25, 1997 10.61* Employment Agreement for Lenore T. Graham dated as of January 18, 2000 10.62* Employment Agreement for Neal J. Rider dated as of January 18, 2000 10.63* Restricted Stock Award Agreement for Lenore T. Graham dated as of January 18, 2000 10.64* Restricted Stock Award Agreement for Neal J. Rider dated as of January 18, 2000 10.65* Restricted Stock Award Agreement for Mark S. Hansen dated as of February 29, 2000 10.66* Restricted Stock Award Agreement for David R. Almond dated as of February 29, 2000 10.67* Amendment to the Amended and Restated Restricted Award Agreement for David R. Almond dated as of February 29, 2000 10.68* Amendment to Nonqualified Stock Option Agreement for David R. Almond dated as of February 29, 2000 10.69* Amendment to Restricted Stock Award Agreement for E. Stephen Davis dated as of February 29, 2000 10.70* 2000 Stock Incentive Plan for Fleming Companies, Inc. is incorporated herein by reference to Exhibit A to the company's Proxy Statement dated March 27, 2000. 10.71* Form of Nonqualified Stock Option Agreement between eMAR.net, Inc. and each director of the registrant (4,000 shares each) except for Mark S. Hansen dated as of January 18, 2000 10.72* Form of Stock Option Agreement between eMAR.net, Inc. and Mark S. Hansen (150,000 shares), William H. Marquard (100,000 shares), John M. Thompson (75,000 shares) and the other executive officers of the registrant (25,000 shares each) dated as of January 18, 2000 12 Computation of Ratio of Earnings to Fixed Charges 15 Letter from Independent Accountants as to Unaudited Interim Financial Information 27 Financial Data Schedule - ----------------- * Management contract, compensatory plan or arrangement. (b) Reports on Form 8-K: On February 10, 2000, pursuant to Item 5, the company filed a descriptive narrative of a presentation to the Donaldson, Lufkin & Jenrette Retail Equity Conference scheduled that day. On April 25, 2000, pursuant to Item 5, the company announced that it was exploring strategic alternatives concerning its five conventional supermarket chains, including the potential sale of these operations. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. FLEMING COMPANIES, INC. (Registrant) Date: May 25, 2000 KEVIN TWOMEY Kevin Twomey Senior Vice President-Finance and Controller (Principal Accounting Officer) EXHIBIT INDEX
Exhibit No. Description Method of Filing - ------- ----------- ---------------- 4.9 Second Amendment dated as of December Filed herewith electronically 21, 1999 to Credit Agreement dated July 25, 1997 10.61 Employment Agreement for Lenore T. Filed herewith electronically Graham dated as of January 18, 2000 10.62 Employment Agreement for Neal J. Rider Filed herewith electronically dated as of January 18, 2000 10.63 Restricted Stock Award Agreement for Filed herewith electronically Lenore T. Graham dated as of January 18, 2000 10.64 Restricted Stock Award Agreement for Filed herewith electronically Neal J. Rider dated as of January 18, 2000 10.65 Restricted Stock Award Agreement for Filed herewith electronically Mark S. Hansen dated as of February 29, 2000 10.66 Restricted Stock Award Agreement for Filed herewith electronically David R. Almond dated as of February 29, 2000 10.67 Amendment to the Amended and Restated Filed herewith electronically Restricted Award Agreement for David R. Almond dated as of February 29, 2000 10.68 Amendment to Nonqualified Stock Option Filed herewith electronically Agreement for David R. Almond dated as of February 29, 2000 10.69 Amendment to Restricted Stock Award Filed herewith electronically Agreement for E. Stephen Davis dated as of February 29, 2000 10.70 2000 Stock Incentive Plan for Fleming Incorporated herein by Companies, Inc. reference 10.71 Form of Nonqualified Stock Option Filed herewith electronically Agreement between eMAR.net, Inc. and each director of the registrant (4,000 shares each) except for Mark S. Hansen dated as of January 18, 2000 10.72 Form of Stock Option Agreement Filed herewith electronically between eMAR.net, Inc. and Mark S. Hansen (150,000 shares), William H. Marquard (100,000 shares), John M. Thompson (75,000 shares) and the other executive officers of the registrant (25,000 shares each) dated as of January 18, 2000 12 Computation of Ratio of Earnings Filed herewith electronically to Fixed Charges 15 Letter from Independent Accountants Filed herewith electronically as to Unaudited Interim Financial Information 27 Financial Data Schedule Filed herewith electronically
EX-4 2 Exhibit 4.9 SECOND AMENDMENT dated as of December 21, 1999 (this "Amendment"), to the Credit Agreement, dated as of July 25, 1997, as amended by the First Amendment dated as of October 5, 1998 (as so amended and as the same may be further amended, restated, modified or supplemented from time to time, the "Credit Agreement"), among FLEMING COMPANIES, INC. (the "Borrower"), the LENDERS from time to time party thereto (the "Lenders"), BANCAMERICA SECURITIES, INC., as Syndication Agent (the "Syndication Agent"), SOCIETE GENERALE, as Documentation Agent (the "Documentation Agent") and THE CHASE MANHATTAN BANK, as Administrative Agent for the Lenders (the "Administrative Agent"). WHEREAS, the Borrower, the Lenders, the Syndication Agent, the Documentation Agent and the Administrative Agent are parties to the Credit Agreement; WHEREAS, the Borrower has requested that certain provisions of the Credit Agreement be modified in the manner provided for in this Amendment, and the undersigned Lenders are willing to agree to such modifications. NOW THEREFORE, for and in consideration of the premises and the mutual covenants herein set forth and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the undersigned parties hereby agree as follows: Section 1. Definitions. All capitalized terms which are defined in the Credit Agreement and not otherwise defined herein or in the recitals hereof shall have the same meanings herein as in the Credit Agreement. Section 2. Amendment of Credit Agreement. The Credit Agreement is hereby amended by: (a) Inserting the following sentence at the end of the definition of "Affiliate": At all times when the Borrower owns an equity interest in Netco, Netco and each of its subsidiaries will be deemed to be Affiliates of the Borrower. (b) Amending clause (a) of the definition of "Asset Disposition" to read as follows: (a) any sale, transfer or other disposition of any capital stock of any Subsidiary or of Netco to any Person other than the Borrower or any Wholly Owned Subsidiary (including, without limitation, through the merger of any Subsidiary or Netco with or into any Person other than the Borrower or any Wholly Owned Subsidiary), (c) Amending the definition of "Collateral Requirement" to read as follows: "Collateral Requirement" means at any date that (a) the Pledge Agreement creates in favor of the Collateral Agent, for the benefit of the Lenders, first priority perfected pledges of and security interests in all capital stock or other equity interests owned by the Borrower or any Subsidiary (other than Netco) in any Subsidiary or in Netco, and (b) the Security Agreement creates in favor of the Collateral Agent, for the benefit of the Lenders, first priority perfected security interests in Inventory and Accounts Receivable representing at least 95% of the consolidated Inventory and Accounts Receivable of the Borrower and the Subsidiaries; provided, that (i) the Borrower and the Subsidiaries will in no event be required, in order to satisfy the Collateral Requirement, to subject to the Lien of the Security Agreement Inventory or Accounts Receivable of Joint Ventures or of Netco and (ii) the Borrower will not be required to cause Richmar Foods, Inc. to pledge the capital stock of Netco Foods, Inc. unless and until Richmar Foods, Inc. becomes a Wholly Owned Subsidiary. (d) Amending the definition of "Designated Subsidiary" to read as follows: "Designated Subsidiary" means a Subsidiary that is neither an Equity Store nor a Business Development Venture; provided that for purposes of Article VI, neither Netco nor any subsidiary of Netco shall be considered a Designated Subsidiary. (e) Amending the first sentence of the definition of "Guarantee Requirement" to read as follows: "Guarantee Requirement" means at any date that (a) all Wholly Owned Subsidiaries (other than Netco or any subsidiary of Netco) are Guarantors and (b) the assets of the Guarantors, together with the assets of the Borrower, constituted as at the last day of the most recently ended fiscal quarter of the Borrower at least 95% of the consolidated total assets of the Borrower and its Subsidiaries (other than Netco or any subsidiary of Netco); provided, however, that the Guarantee Requirement shall in no event be met unless each Subsidiary that guarantees the Subordinated Notes or any other subordinated Indebtedness of the Borrower shall be a Guarantor. (f) Amending the definition of "Subsidiary" to read as follows: "Subsidiary" means any subsidiary of the Borrower; provided that for purposes of Article V (other than Sections 5.01) and Sections 6.03(b), 6.03(c), 6.05 and 6.06(b), neither Netco nor any subsidiary of Netco shall be considered a Subsidiary of the Borrower. (g) Inserting in its proper alphabetical order the following new definitions: "Netco" means a subsidiary formed or to be formed by the Borrower to which the Visionet Business will be transferred. "Visionet Business" means the ownership and operation of an interactive internet medium facilitating open communication among food manufacturers, food wholesalers and retail grocery businesses which as of the date of this Amendment is operated as a division of the Borrower. (h) Inserting the words "or any Subsidiary" immediately after the word "Borrower" in Section 5.01(j). (i) Inserting "(a)" immediately after the heading of Section 6.06 and inserting the following new paragraph at the end of such Section: (b) Neither the Borrower nor any Subsidiary shall make any Investment in or to Netco other than (i) the contribution to Netco of assets associated with the Visionet Business, which assets will at the time of such contribution have a book value of approximately $3,000,000, and (ii) other Investments the amount or book value, as applicable, of which does not exceed $10,000,000 in the aggregate for all such Investments. Investments in Netco that are permitted by this paragraph will not be prohibited by any other covenant contained in Section 6.05 or elsewhere in this Agreement. (j) Inserting the following new sentence at the end of Article VI: For purposes of computing the ratios referred to in Sections 6.08 and 6.09, (a) the net income of Netco shall be included in Consolidated Net Income to the extent (and only to the extent) that it is dividended to and received by the Borrower or a Designated Subsidiary in cash and (b) except as provided in the preceding clause (a), the assets, liabilities, cash flows and results of operations of Netco shall be excluded. Section 3. Representations and Warranties. The Borrower represents and warrants to the Administrative Agent on behalf of the Lenders as of the date hereof as follows: (a) Before and after giving effect to this Amendment, the representations and warranties set forth in the Credit Agreement are true and correct as of the date hereof. (b) Immediately before and after giving effect to this Amendment, no Event of Default or Default has occurred and is continuing. (c) The execution, delivery and performance by the Borrower of this Amendment have been duly authorized by all necessary corporate and other action and do not and will not require any registration with, consent or approval of, notice to or action by, any person (including any governmental agency) in order to be effective and enforceable. The Credit Agreement as amended by this Amendment constitutes the legal, valid and binding obligation of the Borrower, enforceable against it in accordance with its terms, subject only to the operation of the bankruptcy code and other similar statutes for the benefit of debtors generally and to the application of general equitable principles. Section 4. Conditions to Effectiveness. This Amendment shall become effective when the Administrative Agent shall have received counterparts hereof signed by each of the parties hereto (or, in the case of any party as to which an executed counterpart shall not have been received, telegraphic, telex or other written confirmation from such party of the execution of a counterpart hereof by such party). Section 5. Credit Agreement. Except as specifically stated herein, the Credit Agreement shall continue in full force and effect in accordance with the provisions thereof. As used therein, the terms "Agreement", "herein", "hereunder", "hereto", "hereof" and words of similar import shall, unless the context otherwise requires, refer to the Credit Agreement as modified hereby. Section 6. Counterparts. This Amendment may be executed in any number of counterparts and by different parties hereto on separate counterparts, each of which when so executed and delivered shall be deemed an original, but all such counterparts together shall constitute but one and the same instrument. Delivery of an executed counterpart of a signature page of this Amendment by facsimile transmission shall be as effective as delivery of a manually executed counterpart hereof. Section 7. Applicable Law. THIS AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK. IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed by their duly authorized officers, all as of the date and year first above written. FLEMING COMPANIES, INC. KEVIN TWOMEY Name: Kevin Twomey Title: Vice President & Treasurer THE CHASE MANHATTAN BANK, individually and as Administrative Agent, BARRY K. BERGMAN Name: Barry K. Bergman Title: Vice President BANK OF AMERICA, N.A., LYNN DURNING Name: Lynn Durning Title: Principal BANK OF HAWAII, DANIEL J. FALSTAD Name: Daniel J. Falstad Title: Vice President BANK OF MONTREAL, RJ MCCLOVEY Name: RJ McClovey Title: Director BANK OF SCOTLAND, ANNIE GLYNN Name: Annie Glynn Title: Senior Vice President BEAR STEARNS INVESTMENT PRODUCTS INC., GREGORY HANLEY Name: Gregory Hanley Title: Vice President COMERICA BANK, MARK B. GROVER Name: Mark B. Grover Title: Vice President CREDIT LYONNAIS NEW YORK BRANCH, ROBERT IVOSEVICH Name: Robert Ivosevich Title: Senior Vice President THE DAI-ICHI KANGYO BANK, LTD., PARESH R. SHAH Name: Paresh R. Shah Title: Assistant Vice President FIRST HAWAIIAN BANK, Name: Title: THE FUJI BANK, LIMITED, TEIJI TERAMOTO Name: Teiji Teramoto Title: Vice President & Manager IBJ WHITEHALL BANK & TRUST COMPANY, CHARLES B. FEARS Name: Charles B. Fears Title: Director BANK ONE, OKLAHOMA, NA, MARK C. DEMOS Name: Mark C. Demos Title: Senior Vice President MANUFACTURERS AND TRADERS TRUST COMPANY, CHRISTOPHER KANIA Name: Christopher Kania Title: Vice President THE MITSUBISHI TRUST AND BANKING CORPORATION, NOBUO TOMINAGA Name: Nobuo Tominaga Title: Chief Manager NATEXIS BANQUE-BFCE, MARK A. HARRINGTON Name: Mark A. Harrington Title: Senior Vice President and Regional Manager PAUL H. DIOURI Name: Paul H. Diouri Title: Assistant Treasurer NATIONAL BANK OF CANADA, RANDALL K. WILHOT Name: Randall K. Wilhot Title: Vice President BILL HANDLEY Name: Bill Handley Title: Vice President NATIONAL CITY BANK, KENTUCKY, TODD ETHINGTON Name: Todd Ethington Title: Vice President PARIBAS, LARRY ROBINSON Name: Larry Robinson Title: Vice President THE SANWA BANK LIMITED, Name: Title: SENIOR DEBT PORTFOLIO, Name: Title: SOCIETE GENERALE, J. BLAINE SHAUM Name: J. Blaine Shaum Title: Managing Director Director THE SUMITOMO BANK, LIMITED, SURESH S. TATA Name: Suresh S. Tata Title: Senior Vice President SUMMIT BANK, CATHERINE E. GARRITY Name: Catherine E. Garrity Title: Vice President TRANSAMERICA BUSINESS CREDIT CORPORATION, PERRY VAVOULES Name: Perry Vavoules Title: Senior Vice President VAN KAMPEN CLO I LIMITED, by Van Kampen American Capital Management, Inc. As Collateral Manager DARVIN D. PIERCE Name: Darvin D. Pierce Title: Vice President GE CAPITAL CORPORATION, W. JEROME MCDERMOTT Name: W. Jerome McDermott Title: Vice President MEESPIERSON CAPITAL CORP., Name: Title: PAM CAPITAL FUNDING, L.P., Name: Title: CALIFORNIA BANK & TRUST, Name: Title: EX-10 3 Exhibit 10.61 EMPLOYMENT AGREEMENT AGREEMENT, dated as of January 18, 2000, by and between FLEMING COMPANIES, INC., an Oklahoma corporation (the "Company") and LENORE T. GRAHAM ("Executive"). IN CONSIDERATION of the premises and the mutual covenants set forth below, the parties hereby agree as follows: 1. Employment. The Company hereby agrees to employ Executive as Senior Vice President, General Counsel and Corporate Secretary of the Company, and Executive hereby accepts such employ- ment, on the terms and conditions hereinafter set forth. 2. Term. The period of employment of Executive by the Company hereunder (the "Employment Period") shall commence on January 18, 2000 (the "Commencement Date") and shall continue through January 17, 2005. The Employment Period may be sooner terminated in accordance with Section 6 of this Agreement. 3. Position and Duties. During the Employment Period, Executive shall report directly to the Chairman and Chief Executive Officer of the Company. Executive shall have those powers and duties normally associated with the position of Senior Vice President, General Counsel and Corporate Secretary. Executive shall devote substantially all of her working time, attention and energies (other than absences due to illness or vacation) to the performance of her duties for the Company. Notwithstanding the above, Executive shall be permitted, to the extent such activities do not interfere with the performance by Executive of her duties and responsibilities hereunder or violate Sections 10(a), (b) or (c) of this Agreement, to (i) manage Executive's personal, financial and legal affairs, (ii) serve on civic or charitable boards or committees and (iii) subject to the approval of the board of directors of the Company (the "Board") (which approval shall not be unreasonably withheld), serve on the board of directors or other similar governing body of any other corporation or other business entity or trade organization. 4. Place of Performance. The principal place of employment of Executive shall be at the Company's principal executive offices. 5. Compensation and Related Matters. (a) Base Salary. During the Employment Period the Company shall pay Executive a base salary at the rate of not less than $250,000 per year ("Base Salary"). Executive's Base Salary shall be paid in approximately equal installments in accordance with the Company's customary payroll practices. Executive's Base Salary shall be subject to increase, but not decrease, pursuant to annual review by the Compensation and Organization Committee of the Board (the "Compensation Committee"). Such increased Base Salary shall then constitute the Base Salary for all purposes of this Agreement. (b) Company Stock Option. The Company has granted to Executive, on the Commencement Date, (i) a stock option to purchase 55,800 shares of the common stock of the Company, par value $2.50 per share (the "Company Stock"), at an exercise price of $8.9688 per share, pursuant to the Company's 1990 Stock Option Plan and (ii) a stock option to purchase 44,200 shares of Company Stock at an exercise price of $8.9375 per share, pursuant to the Company's 1996 Stock Incentive Plan (collectively, the "Company Options"). Each of the Company Options has a scheduled 10-year term and, subject to the terms of the applicable stock option agreements between the Company and Executive, shall vest and become exercisable (i) with respect to 25% of the shares of Company Stock subject to such Company Options on each of the first four anniversaries of the Commencement Date and (ii) upon the occurrence of a Change of Control (as such term is defined in that certain Change of Control Employment Agreement, dated as of the date of this Agreement, between the Company and Executive) with respect to 100% of the Company Stock subject to Company Options. (c) Annual Bonus. Executive shall have a target annual bonus of 55% of Base Salary and a maximum annual bonus of 110% of Base Salary, based upon meeting performance goals established by the Compensation Committee. The performance goals and corresponding bonus amounts during the Employment Period shall be established by the Compensation Committee. (d) Expenses. The Company shall promptly reimburse Executive for all reasonable business expenses upon the presentation of reasonably itemized statements of such expenses in accordance with the Company's policies and procedures now in force or as such policies and procedures may be modified with respect to all senior executive officers of the Company. (e) Vacation. Executive shall be entitled to the number of weeks of vacation per year provided to the Company's senior executive officers. (f) Restricted Stock Grant. The Company has granted to Executive, on the Commencement Date, ten thousand (10,000) shares of restricted Company Stock (the "Restricted Stock") pursuant to the Company's 1996 Stock Incentive Plan. In connection with the grant of the Restricted Stock, Executive shall make an election prior to February 17, 2000 to include in gross income the value of the Restricted Stock on the date of grant pursuant to Section 83(b) of the Internal Revenue Code of 1986, as amended (the "Code"). Upon notification from Executive that she has made such election, the Company shall pay to Executive an additional payment in an amount necessary to cause the net amount of such payment that is retained by Executive after the calculation and deduction of any and all federal, state and local income taxes and employment taxes on such payment to be equal to Executive's income taxes attributable to the Restricted Stock and Executive's election under Section 83(b) of the Code in connection with the Restricted Stock. (g) Welfare, Pension and Incentive Benefit Plans. During the Employment Period, Executive (and her spouse and dependents to the extent provided therein) shall be entitled to participate in and be covered under all the welfare benefit plans or programs maintained by the Company from time to time for the benefit of its senior executives including, without limitation, all medical, life, hospitalization, dental, disability, accidental death and dismemberment and travel accident insurance plans and programs. In addition, during the Employment Period, Executive shall be eligible to participate in all pension, retirement, savings and other employee benefit plans and programs maintained from time to time by the Company for the benefit of its senior executives or any annual incentive or long-term performance plans. (h) Offices. Executive shall serve, without additional compensation, as a director or trustee of the Company's wholly- owned subsidiaries, (and as a member of any committees of the board of directors of any such entities), and in one or more executive positions of any of such subsidiaries, provided that Executive is indemnified for serving in any and all such capacities on a basis no less favorable than is then provided to any other director of such entity. (i) Relocation. The Executive shall be provided with the Company's standard relocation program for transferred senior executive officers in order to relocate to the Company's principal executive offices in Lewisville, Texas, including travel costs, temporary housing, moving costs of household belongings, storage costs for up to one year, and any other expenses necessary to efficiently effect Executive's relocation (collectively, the "Relocation Payment"). Also, at the Executive's option, at any time during up to the first two (2) years of the employment period, the Company shall purchase the Executive's residence in Oklahoma City at a purchase price equal to the greater of the appraised value (as set by an appraiser designated by the Company) or the Executive's invested cost in the residence (the "Residence Payment"). In addition to these payments, the Company shall pay the Executive an additional payment in an amount (the "Tax Gross-Up Amount") necessary to cause the net amount of such payment that is retained by the Executive after the calculation and deduction of all federal, state and local income taxes and employment taxes on such payments to be equal to the Executive's income tax attributable to such payments for the Relocation Payment and the Residence Payment. In the event the Executive voluntarily leaves her employment with the Company, other than for "good reason" (as such term is hereafter defined), prior to January 18, 2002, the Executive shall repay the Company an amount equal to the Relocation Payment, plus the Tax Gross-Up Amount attributable to the Relocation Payment within thirty (30) days after her termination of employment; provided, however, that this repayment obligation shall be waived in equal increments each of one eighth (1/8th) of the total amount, for each three consecutive months during which the Executive is employed following January 18, 2000. (j) Indemnification and Insurance. Executive shall be indemnified and held harmless by the Company during the term of this Agreement and following any termination of this Agreement for any reason whatsoever in the same manner as would any other key management associate of the Company with respect to acts or omissions occurring prior to the termination of employment of the Executive under this Agreement. In addition, during the Employment Period and for a period of five years following the termination of employment of the Executive under this Agreement for any reason whatsoever, the Executive shall be covered by a Company-held directors and officers liability insurance policy covering acts or omissions occurring prior to the termination of employment of the Executive under this Agreement. 6. Termination. Executive's employment hereunder may be terminated during the Employment Period under the following circumstances: (a) Death. Executive's employment hereunder shall terminate upon her death. (b) Disability. If, as a result of Executive's incapacity due to physical or mental illness, Executive shall have been substantially unable to perform her duties hereunder for an entire period of six (6) consecutive months, and within thirty (30) days after written Notice of Termination is given after such six (6) month period, Executive shall not have returned to the substantial performance of her duties on a full-time basis, the Company shall have the right to terminate Executive's employment hereunder for "Disability", and such termination in and of itself shall not be, nor shall it be deemed to be, a breach of this Agreement. (c) Cause. The Company shall have the right to terminate Executive's employment for Cause, and such termination shall not be, nor shall it be deemed to be, a breach of this Agreement. For purposes of this Agreement, the Company shall have "Cause" to terminate Executive's employment upon: (i) Executive's conviction of a felony by a federal or state court of competent jurisdiction; or (ii) an act or acts of dishonesty taken by Executive and intended to result in substantial personal enrichment of Executive at the expense of the Company; or (iii) Executive's "willful" failure to follow a direct, reasonable and lawful order from the Board and/or the Chairman and Chief Executive Officer, within the reasonable scope of Executive's duties, which failure is not cured within thirty (30) days. For purposes of this Section 6(c), no act, or failure to act, by Executive shall be considered "willful" unless done, or omitted to be done, by Executive not in good faith and without a reasonable belief that the act or omission was in the best interests of the Company. Cause shall not exist under paragraphs (i), (ii) or (iii) above unless and until the Company has delivered to Executive a copy of a resolution duly adopted by not less than three-fourths (3/4ths) of the Board (excluding Executive) at a meeting of the Board called and held for such purpose (after reasonable notice to Executive and an opportunity for Executive, together with her counsel, to be heard before the Board), finding that in the good faith opinion of the Board, Executive was guilty of the conduct set forth in paragraphs (i),(ii) or (iii) and specifying the particulars thereof in detail. (d) Good Reason. Executive may terminate her employment for "Good Reason" by providing Notice of Termination (as defined in Section 7(a)) to the Company within one hundred and twenty (120) days after Executive has actual knowledge of the occurrence, without the written consent of Executive, of one of the events set forth below. Executive's Date of Termination for Good Reason shall be fifteen (15) days after Notice of Termination, unless the basis for Good Reason has been cured by the Company prior to such date: (i) the assignment to Executive of duties materially and adversely inconsistent with Executive's status as Executive Vice President and Chief Financial Officer of the Company or a material and adverse alteration in the nature of Executive's duties and/or responsibilities, reporting obligations, titles or authority; (ii) a reduction by the Company in Executive's Base Salary; (iii) the relocation of (a) the Company's principal executive offices or Executive's own office location to a location more than twenty five (25) miles from Oklahoma City except with respect to one relocation during the term of this Agreement, provided such relocation is pursuant to recommenda- tion of the Chairman and Chief Executive Officer or an action by the Board concurred in by the Chairman and Chief Executive Officer, as evidenced by her vote, or (b) Executive's office location to a place other than the Company's principal executive offices; (iv) the Company's failure to provide any material employee benefits due to be provided to Executive (other than any such failure which affects all senior executive officers); or (v) the failure of any successor to the Company to assume this Agreement pursuant to Section 12(a). Executive's right to terminate her employment hereunder for Good Reason shall not be affected by her incapacity due to physical or mental illness. Executive's continued employment during the one hundred and twenty (120) day period referred to above in this paragraph (d) shall not constitute consent to, or a waiver of rights with respect to, any act or failure to act constituting Good Reason hereunder. (e) Without Cause. The Company shall have the right to terminate Executive's employment hereunder without Cause by providing Executive with a Notice of Termination, and such termination shall not in and of itself be, nor shall it be deemed to be, a breach of this Agreement. 7. Termination Procedure. (a) Notice of Termination. Any termination of Execu- tive's employment by the Company or by Executive during the Employment Period (other than termination pursuant to Section 6(a)) shall be communicated by written Notice of Termination to the other party hereto in accordance with Section 13. For purposes of this Agreement, a "Notice of Termination" shall mean a written notice which shall indicate the specific termination provision in this Agreement relied upon and shall set forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of Executive's employment under the provision so indicated. (b) Date of Termination. "Date of Termination" shall mean (i) if Executive's employment is terminated by her death, the date of her death, (ii) if Executive's employment is terminated pursuant to Section 6(b), thirty (30) days after Notice of Termination (provided that Executive shall not have returned to the substantial performance of her duties on a full-time basis during such thirty (30) day period), (iii) if Executive's employment is terminated pursuant to Section 6(d), the date provided in such Section, and (iv) if Executive's employment is terminated for any other reason, the date on which a Notice of Termination is given or any later date (within thirty (30) days after the giving of such notice) set forth in such Notice of Termination. 8. Compensation Upon Termination or During Disability. In the event Executive is disabled or her employment terminates during the Employment Period, the Company shall provide Executive with the payments and benefits set forth below. Executive acknowledges and agrees that the payments set forth in this Section 8, and the other agreements and plans referenced in this Agreement, constitute the sole and liquidated damages for termination of her employment during the Employment Period. The Executive also agrees that the Company shall have the right to deduct any amounts owed by the Executive to the Company for any reason, including, without limi- tation, due to the Executive's misappropriation of Company funds, from the payments set forth in this Section 8. (a) Termination By Company without Cause or By Executive for Good Reason. If Executive's employment is terminated by the Company without Cause or by Executive for Good Reason: (i) the Company shall pay to Executive (A) her Base Salary and accrued vacation pay through the Date of Termination, as soon as practicable following the Date of Termination, and (B) continued Base Salary (as provided for in Section 5(a)) for a period of twenty-four (24) months following the Date of Termination; (ii) the Company shall maintain in full force and effect, for the continued benefit of Executive, her spouse and her dependents for a period of twenty-four (24) months following the Date of Termination the medical, hospitalization, dental, and life insurance programs in which Executive, her spouse and her dependents were participating immediately prior to the Date of Termination at the level in effect and upon substantially the same terms and conditions (including without limitation contributions required by Executive for such benefits) as existed immediately prior to the Date of Termination; provided, that if Executive, her spouse or her dependents cannot continue to participate in the Company programs providing such benefits, the Company shall arrange to provide Executive, her spouse and her dependents with the economic equivalent of such benefits which they otherwise would have been entitled to receive under such plans and programs ("Continued Benefits"); provided, that if Executive becomes reemployed with another employer and is eligible to receive medical or other welfare benefits under another employer-provided plan, the medical and other welfare benefits described herein shall be secondary to those provided under such other plan during such applicable period; (iii) the Company shall reimburse Executive pursuant to Section 5(d) for reasonable expenses incurred, but not paid, prior to such termination of employment; and (iv) Executive shall be entitled to any other rights, compensation and/or benefits as may be due to Executive following such termination to which she is otherwise entitled in accordance with the terms and provisions of any agreements, plans or programs of the Company. (b) Cause or By Executive Without Good Reason. If Executive's employment is terminated by the Company for Cause or by Executive (other than for Good Reason): (i) the Company shall pay Executive her Base Salary and her accrued vacation pay (to the extent required by law or the Company's vacation policy) through the Date of Termination, as soon as practicable following the Date of Termination; (ii) the Company shall reimburse Executive pursuant to Section 5(d) for reasonable expenses incurred, but not paid, prior to such termination of employment, unless such termi- nation resulted from a misappropriation of Company funds; and (iii) Executive shall be entitled to any other rights, compensation and/or benefits as may be due to Executive following such termination to which she is otherwise entitled in accordance with the terms and provisions of any agreements, plans or programs of the Company. (c) Disability. During any period that Executive fails to perform her duties hereunder as a result of incapacity due to physical or mental illness ("Disability Period"), Executive shall continue to receive her full Base Salary set forth in Section 5(a) until her employment is terminated pursuant to Section 6(b). In the event Executive's employment is terminated for Disability pursuant to Section 6(b): (i) the Company shall pay to Executive (A) her Base Salary and accrued vacation pay through the Date of Termination, as soon as practicable following the Date of Termination, and (B) provide Executive with disability benefits pursuant to the terms of the Company's disability programs; (ii) the Company shall reimburse Executive pursuant to Section 5(d) for reasonable expenses incurred, but not paid, prior to such termination of employment; and (iii) Executive shall be entitled to any other rights, compensation and/or benefits as may be due to Executive following such termination to which she is otherwise entitled in accordance with the terms and provisions of any agreements, plans or programs of the Company. (d) Death. If Executive's employment is terminated by her death: (i) the Company shall pay in a lump sum to Executive's beneficiary, legal representatives or estate, as the case may be, Executive's Base Salary through the Date of Termination; (ii) the Company shall reimburse Executive's beneficiary, legal representatives, or estate, as the case may be, pursuant to Section 5(d) for reasonable expenses incurred, but not paid, prior to such termination of employment; and (iii) Executive's beneficiary, legal representatives or estate, as the case may be, shall be entitled to any other rights, compensation and benefits as may be due to any such persons or estate following such termination to which such persons or estate is otherwise entitled in accordance with the terms and provisions of any agreements, plans or programs of the Company. 9. Mitigation. Executive shall not be required to mitigate amounts payable under this Agreement by seeking other employment or otherwise, and, not withstanding Section 8 hereof, there shall be no offset against amounts due Executive under this Agreement on account of subsequent employment except as specifically provided herein. 10. Confidential Information, Ownership of Documents; Non- Competition. (a) Confidential Information. Executive shall hold in a fiduciary capacity for the benefit of the Company all trade secrets and confidential information, knowledge or data relating to the Company and its businesses and investments and its Affiliates, which shall have been obtained by Executive during Executive's employment by the Company and which is not generally available public knowledge (other than by acts by Executive in violation of this Agreement). Except as may be required or appropriate in connection with her carrying out her duties under this Agreement, Executive shall not, without the prior written consent of the Company or as may otherwise be required by law or any legal process, or as is necessary in connection with any adversarial proceeding against the Company (in which case Executive shall use her reasonable best efforts in cooperating with the Company in obtaining a protective order against disclosure by a court of competent jurisdiction), communicate or divulge any such trade secrets, information, knowledge or data to anyone other than the Company and those designated by the Company or on behalf of the Company in the furtherance of its business or to perform duties hereunder. (b) Removal of Documents; Rights to Products; Other Property. All records, files, drawings, documents, models, equipment, and the like relating to the Company's business and its Affiliates, which Executive has control over shall not be removed from the Company's premises without its written consent, unless such removal is in the furtherance of the Company's business or is in connection with Executive's carrying out her duties under this Agreement and, if so removed, shall be returned to the Company promptly after termination of Executive's employment hereunder, or otherwise promptly after removal if such removal occurs following termination of employment. Executive shall assign to the Company all rights to trade secrets and other products relating to the Company's business developed by her alone or in conjunction with others at any time while employed by the Company. Executive shall also return to the Company all Company- provided vehicles in her possession or control. (c) Protection of Business. During the Employment Period and until the second anniversary of Executive's Date of Termina- tion (other than if such termination is by the Company without Cause or by Executive for Good Reason), the Executive will not in the capacity of a businessperson, directly or indirectly, be a shareholder, principal, agent, partner, officer, director, employee or consultant of SUPERVALU, Inc., Nash Finch Company, Richfood Holdings, Inc. or any other direct competitor of the Company, excluding, national retail chains, or any subsidiary, affiliate or successor of any direct competitor of the Company (collectively, the "Competitors"); provided, however, that nothing in this Section 10(c) is intended to preclude the Executive from being employed or otherwise acting in the capacity of a lawyer on behalf of any of the Competitors unless such employment or activity would result in a breach of her conflict of interest and/or confidentiality obligations as an attorney or former attorney for and an officer or former officer of the Company or based on the confidentiality requirements contained in Section 10(a). Notwithstanding the preceding sentence, the Executive shall not be prohibited from owning less than one percent (1%) of any publicly traded corporation (or from owning any greater percentage if such ownership is through a mutual fund or other diversified investment vehicle in which she has a passive and minority interest), whether or not such corporation is a Competitor. If, at any time, the provisions of this Section 10(c) shall be determined to be invalid or unenforceable, by reason of being vague or unreasonable as to area, duration or scope of activity, this Section 10(c) shall be considered divisible and shall become and be immediately amended to only such area, duration and scope of activity as shall be determined to be reasonable and enforceable by the court or other body having jurisdiction over the matter; and Executive agrees that this Section 10(c) as so amended shall be valid and binding as though any invalid or unenforceable provision had not been included herein. The parties agree that the duration and geographic area for which the covenant not to compete set forth in this Section 10(c) is to be effective are reasonable. (d) Injunctive Relief. In the event of a breach or threatened breach of this Section 10, Executive agrees that the Company shall be entitled to injunctive relief in a court of appropriate jurisdiction to remedy any such breach or threatened breach, Executive acknowledging that damages would be inadequate and insufficient. (e) Continuing Operation. Except as specifically provided in this Section 10, the termination of Executive's employment or of this Agreement shall have no effect on the continuing operation of this Section 10. 11. Arbitration; Legal Fees and Expenses. The parties agree that Executive's employment and this Agreement relate to interstate commerce, and that any disputes, claims or controversies between Executive and the Company which may arise out of or relate to the Executive's employment relationship or this Agreement shall be settled by arbitration. This agreement to arbitrate shall survive the termination of this 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 parties agree that punitive, liquidated or indirect damages shall not be awarded by the arbitrator(s). Nothing in this agreement to arbitrate, however, shall preclude the Company from obtaining injunctive relief from a court of competent jurisdiction prohibiting any on- going breaches by Executive of this Agreement including, without limitation, violations of Section 10. If any contest or dispute shall arise between the Company and Executive regarding any provision of this Agreement, the Company shall reimburse Executive for all legal fees and expenses reasonably incurred by Executive in connection with such contest or dispute, but only if Executive is successful in respect of one or more of Executive's material claims or defenses brought, raised or pursued in connection with such contest or dispute. Such reimbursement shall be made as soon as practicable following the resolution of such contest or dispute to the extent the Company receives reasonable written evidence of such fees and expenses. 12. Successors Binding Agreement. (a) Company's Successors. No rights or obligations of the Company under this Agreement may be assigned or transferred except that the Company will require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of the Company to expressly assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform it if no such succession had taken place. As used in this Agreement, "Company" shall mean the Company as hereinbefore defined and any successor to its business and/or assets (by merger, purchase or otherwise) which executes and delivers the agreement provided for in this Section 12 or which otherwise becomes bound by all the terms and provisions of this Agreement by operation of law. (b) Executive's Successors. No rights or obligations of Executive under this Agreement may be assigned or transferred by Executive other than her rights to payments or benefits hereunder, which may be transferred only by will or the laws of descent and distribution. Upon Executive's death, this Agreement and all rights of Executive hereunder shall inure to the benefit of and be enforceable by Executive's beneficiary or beneficiaries, personal or legal representatives, or estate, to the extent any such person succeeds to Executive's interests under this Agreement. Executive shall be entitled to select and change a beneficiary or beneficiaries to receive any benefit or compensation payable hereunder following Executive's death by giving the Company written notice thereof. In the event of Executive's death or a judicial determination of her incompetence, reference in this Agreement to Executive shall be deemed, where appropriate, to refer to her beneficiary(ies), estate or other legal representative(s). If Executive should die following her Date of Termination while any amounts would still be payable to her hereunder if she had continued to live, all such amounts unless otherwise provided herein shall be paid in accordance with the terms of this Agreement to such person or persons so appointed in writing by Executive, or otherwise to her legal representatives or estate. 13. Notice. For the purposes of this Agreement, notices, demands and all other communications provided for in this Agreement shall be in writing and shall be deemed to have been duly given when delivered either personally or by United States certified or registered mail, return receipt requested, postage prepaid, addressed as follows: If to Executive: At her last known address evidenced on the Company's payroll records. If to the Company: Fleming Companies, Inc. 6301 Waterford Boulevard Oklahoma City, Oklahoma 73126-0647 Attention: Senior Vice President - Human Resources or to such other address as any party may have furnished to the others in writing in accordance herewith, except that notices of change of address shall be effective only upon receipt. 14. Miscellaneous. No provisions of this Agreement may be amended, modified, or waived unless such amendment or modification is agreed to in writing signed by Executive and by a duly authorized officer of the Company, and such waiver is set forth in writing and signed by the party to be charged. No waiver by either party hereto at any time of any breach by the other party hereto of any condition or provision of this Agreement to be performed by such other party shall be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time. The respective rights and obligations of the parties hereunder shall survive Executive's termination of employment and the termination of this Agreement to the extent necessary for the intended preservation of such rights and obligations. The validity, interpretation, construction and performance of this Agreement shall be governed by the laws of the State of Texas without regard to its conflicts of law principles. 15. Validity. The invalidity or unenforceability of any provision or provisions of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement, which shall remain in full force and effect. 16. Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original but all of which together will constitute one and the same instrument. 17. Entire Agreement. This Agreement sets forth the entire agreement of the parties hereto in respect of the subject matter contained herein and supersedes all prior agreements, promises, covenants, arrangements, communications, representations or warranties, whether oral or written, by any officer, employee or representative of any party hereto in respect of such subject matter. Any prior agreement of the parties hereto in respect of the subject matter contained herein is hereby terminated and cancelled. 18. Withholding. All payments hereunder shall be subject to any required withholding of Federal, state and local taxes pursuant to any applicable law or regulation. 19. Section Headings. The section headings in this Agree- ment are for convenience of reference only, and they form no part of this Agreement and shall not affect its interpretation. IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the date first above written. FLEMING COMPANIES, INC. By SCOTT M. NORTHCUTT Scott M. Northcutt, Senior Vice President- Human Resources LENORE T. GRAHAM Lenore T. Graham EX-10 4 Exhibit 10.62 EMPLOYMENT AGREEMENT AGREEMENT, dated as of January 18, 2000, by and between FLEMING COMPANIES, INC., an Oklahoma corporation (the "Company") and NEAL RIDER ("Executive"). IN CONSIDERATION of the premises and the mutual covenants set forth below, the parties hereby agree as follows: 1. Employment. The Company hereby agrees to employ Executive as Executive Vice President and Chief Financial Officer of the Company, and Executive hereby accepts such employment, on the terms and conditions hereinafter set forth. 2. Term. The period of employment of Executive by the Company hereunder (the "Employment Period") shall commence on January 18, 2000 (the "Commencement Date") and shall continue through January 17, 2005. The Employment Period may be sooner terminated in accordance with Section 6 of this Agreement. 3. Position and Duties. During the Employment Period, Executive shall report directly to the Chairman and Chief Executive Officer of the Company. Executive shall have those powers and duties normally associated with the position of Executive Vice President and Chief Financial Officer. Executive shall devote substantially all of his working time, attention and energies (other than absences due to illness or vacation) to the performance of his duties for the Company. Notwithstanding the above, Executive shall be permitted, to the extent such activities do not interfere with the performance by Executive of his duties and responsibilities hereunder or violate Sections 10(a), (b) or (c) of this Agreement, to (i) manage Executive's personal, financial and legal affairs, (ii) serve on civic or charitable boards or committees and (iii) subject to the approval of the board of directors of the Company (the "Board") (which approval shall not be unreasonably withheld), serve on the board of directors or other similar governing body of any other corporation or other business entity or trade organization. 4. Place of Performance. The principal place of employment of Executive shall be at the Company's principal executive offices. 5. Compensation and Related Matters. (a) Base Salary. During the Employment Period the Company shall pay Executive a base salary at the rate of not less than $450,000 per year ("Base Salary"). Executive's Base Salary shall be paid in approximately equal installments in accordance with the Company's customary payroll practices. Executive's Base Salary shall be subject to increase, but not decrease, pursuant to annual review by the Compensation and Organization Committee of the Board (the "Compensation Committee"). Such increased Base Salary shall then constitute the Base Salary for all purposes of this Agreement. (b) Company Stock Option. The Company has granted to Executive, on the Commencement Date, (i) a stock option to purchase 250,000 shares of the common stock of the Company, par value $2.50 per share (the "Company Stock"), at an exercise price of $8.9688 per share, pursuant to the Company's 1990 Stock Option Plan and (ii) a stock option to purchase 100,000 shares of Company Stock at an exercise price of $8.9375 per share, pursuant to the Company's 1996 Stock Incentive Plan (collectively, the "Company Options"). Each of the Company Options has a scheduled 10-year term and, subject to the terms of the applicable stock option agreements between the Company and Executive, shall vest and become exercisable (i) with respect to 25% of the shares of Company Stock subject to such Company Options on each of the first four anniversaries of the Commencement Date and (ii) upon the occurrence of a Change of Control (as such term is defined in that certain Change of Control Employment Agreement, dated as of the date of this Agreement, between the Company and Executive) with respect to 100% of the Company Stock subject to Company Options. (c) Annual Bonus. Executive shall have a target annual bonus of 65% of Base Salary and a maximum annual bonus of 130% of Base Salary, based upon meeting performance goals established by the Compensation Committee. The performance goals and corresponding bonus amounts during the Employment Period shall be established by the Compensation Committee. (d) Expenses. The Company shall promptly reimburse Executive for all reasonable business expenses upon the presentation of reasonably itemized statements of such expenses in accordance with the Company's policies and procedures now in force or as such policies and procedures may be modified with respect to all senior executive officers of the Company. (e) Vacation. Executive shall be entitled to the number of weeks of vacation per year provided to the Company's senior executive officers. (f) Restricted Stock Grant. The Company has granted to Executive, on the Commencement Date, twenty-five thousand (25,000) shares of restricted Company Stock (the "Restricted Stock") pursuant to the Company's 1996 Stock Incentive Plan. In connection with the grant of the Restricted Stock, Executive shall make an election prior to February 17, 2000 to include in gross income the value of the Restricted Stock on the date of grant pursuant to Section 83(b) of the Internal Revenue Code of 1986, as amended (the "Code"). Upon notification from Executive that he has made such election, the Company shall pay to Executive an additional payment in an amount necessary to cause the net amount of such payment that is retained by Executive after the calculation and deduction of any and all federal, state and local income taxes and employment taxes on such payment to be equal to Executive's income taxes attributable to the Restricted Stock and Executive's election under Section 83(b) of the Code in connection with the Restricted Stock. (g) Welfare, Pension and Incentive Benefit Plans. During the Employment Period, Executive (and his spouse and dependents to the extent provided therein) shall be entitled to participate in and be covered under all the welfare benefit plans or programs maintained by the Company from time to time for the benefit of its senior executives including, without limitation, all medical, life, hospitalization, dental, disability, accidental death and dismemberment and travel accident insurance plans and programs. In addition, during the Employment Period, Executive shall be eligible to participate in all pension, retirement, savings and other employee benefit plans and programs maintained from time to time by the Company for the benefit of its senior executives or any annual incentive or long-term performance plans. (h) Offices. Executive shall serve, without additional compensation, as a director or trustee of the Company's wholly-owned subsidiaries, (and as a member of any committees of the board of directors of any such entities), and in one or more executive positions of any of such subsidiaries, provided that Executive is indemnified for serving in any and all such capacities on a basis no less favorable than is then provided to any other director of such entity. (i) Relocation. The Executive shall be provided with the Company's standard relocation program for transferred senior executive officers in order to relocate to the Company's principal executive offices in Lewisville, Texas, including travel costs, temporary housing, moving costs of household belongings, storage costs for up to one year, and any other expenses necessary to efficiently effect Executive's relocation (collectively, the "Relocation Payment"). Also, at the Executive's option, at any time during up to the first two (2) years of the employment period, the Company shall purchase the Executive's residence and the residence of the Executive's father- in-law, both of which are located in Knoxville, Tennessee, at a purchase price equal to the greater of their respective appraised values (as set by an appraiser designated by the Company) or the Executive's and his father-in-law's respective documented invested costs in the residences (collectively, the "Residence Payment"). In addition to these payments, the Company shall pay the Executive an additional payment in an amount (the "Tax Gross- Up Amount") necessary to cause the net amount of such payment that is retained by the Executive after the calculation and deduction of all federal, state and local income taxes and employment taxes on such payments to be equal to the Executive's income tax attributable to such payments for the Relocation Payment and the Residence Payment. In the event the Executive voluntarily leaves his employment with the Company, other than for "Good Reason" (as such term is hereafter defined), prior to January 18, 2002, the Executive shall repay the Company an amount equal to the Relocation Payment, plus the Tax Gross-Up Amount attributable to the Relocation Payment within thirty (30) days after his termination of employment; provided, however, that this repayment obligation shall be waived in equal increments each of one eighth (1/8th) of the total amount, for each three consecutive months during which the Executive is employed following January 18, 2000. (j) Indemnification and Insurance. Executive shall be indemnified and held harmless by the Company during the term of this Agreement and following any termination of this Agreement for any reason whatsoever in the same manner as would any other key management associate of the Company with respect to acts or omissions occurring prior to the termination of employment of the Executive under this Agreement. In addition, during the Employment Period and for a period of five years following the termination of employment of the Executive under this Agreement for any reason whatsoever, the Executive shall be covered by a Company-held directors and officers liability insurance policy covering acts or omissions occurring prior to the termination of employment of the Executive under this Agreement. (k) Signing Bonus. Within thirty days after the Commencement Date, the Executive will receive a cash bonus from the Company ("Signing Bonus") in the gross amount necessary to cause the net amount of the Signing Bonus, after the calculation and deduction of any and all federal, state and local income taxes and employment taxes on the Signing Bonus payment to be equal to $50,000. 6. Termination. Executive's employment hereunder may be terminated during the Employment Period under the following circumstances: (a) Death. Executive's employment hereunder shall terminate upon his death. (b) Disability. If, as a result of Executive's incapacity due to physical or mental illness, Executive shall have been substantially unable to perform his duties hereunder for an entire period of six (6) consecutive months, and within thirty (30) days after written Notice of Termination is given after such six (6) month period, Executive shall not have returned to the substantial performance of his duties on a full- time basis, the Company shall have the right to terminate Executive's employment hereunder for "Disability", and such termination in and of itself shall not be, nor shall it be deemed to be, a breach of this Agreement. (c) Cause. The Company shall have the right to terminate Executive's employment for Cause, and such termination shall not be, nor shall it be deemed to be, a breach of this Agreement. For purposes of this Agreement, the Company shall have "Cause" to terminate Executive's employment upon: (i) Executive's conviction of a felony by a federal or state court of competent jurisdiction; or (ii) an act or acts of dishonesty taken by Executive and intended to result in substantial personal enrichment of Executive at the expense of the Company; or (iii) Executive's "willful" failure to follow a direct, reasonable and lawful order from the Board and/or the Chairman and Chief Executive Officer, within the reasonable scope of Executive's duties, which failure is not cured within thirty (30) days. For purposes of this Section 6(c), no act, or failure to act, by Executive shall be considered "willful" unless done, or omitted to be done, by Executive not in good faith and without a reasonable belief that the act or omission was in the best interests of the Company. Cause shall not exist under paragraphs (i), (ii) or (iii) above unless and until the Company has delivered to Executive a copy of a resolution duly adopted by not less than three-fourths (3/4ths) of the Board (excluding Executive) at a meeting of the Board called and held for such purpose (after reasonable notice to Executive and an opportunity for Executive, together with his counsel, to be heard before the Board), finding that in the good faith opinion of the Board, Executive was guilty of the conduct set forth in paragraphs (i),(ii) or (iii) and specifying the particulars thereof in detail. (d) Good Reason. Executive may terminate his employment for "Good Reason" by providing Notice of Termination (as defined in Section 7(a)) to the Company within one hundred and twenty (120) days after Executive has actual knowledge of the occurrence, without the written consent of Executive, of one of the events set forth below. Executive's Date of Termination for Good Reason shall be fifteen (15) days after Notice of Termination, unless the basis for Good Reason has been cured by the Company prior to such date: (i) the assignment to Executive of duties materially and adversely inconsistent with Executive's status as Executive Vice President and Chief Financial Officer of the Company or a material and adverse alteration in the nature of Executive's duties and/or responsibilities, reporting obligations, titles or authority; (ii) a reduction by the Company in Executive's Base Salary; (iii) the relocation of (a) the Company's principal executive offices or Executive's own office location to a location more than twenty five (25) miles from Oklahoma City except with respect to one relocation during the term of this Agreement, provided such relocation is pursuant to recommendation of the Chairman and Chief Executive Officer or an action by the Board concurred in by the Chairman and Chief Executive Officer, as evidenced by his vote, or (b) Executive's office location to a place other than the Company's principal executive offices; (iv) the Company's failure to provide any material employee benefits due to be provided to Executive (other than any such failure which affects all senior executive officers); or (v) the failure of any successor to the Company to assume this Agreement pursuant to Section 12(a). Executive's right to terminate his employment hereunder for Good Reason shall not be affected by his incapacity due to physical or mental illness. Executive's continued employment during the one hundred and twenty (120) day period referred to above in this paragraph (d) shall not constitute consent to, or a waiver of rights with respect to, any act or failure to act constituting Good Reason hereunder. (e) Without Cause. The Company shall have the right to terminate Executive's employment hereunder without Cause by providing Executive with a Notice of Termination, and such termination shall not in and of itself be, nor shall it be deemed to be, a breach of this Agreement. 7. Termination Procedure. (a) Notice of Termination. Any termination of Executive's employment by the Company or by Executive during the Employment Period (other than termination pursuant to Section 6(a)) shall be communicated by written Notice of Termination to the other party hereto in accordance with Section 13. For purposes of this Agreement, a "Notice of Termination" shall mean a written notice which shall indicate the specific termination provision in this Agreement relied upon and shall set forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of Executive's employment under the provision so indicated. (b) Date of Termination. "Date of Termination" shall mean (i) if Executive's employment is terminated by his death, the date of his death, (ii) if Executive's employment is terminated pursuant to Section 6(b), thirty (30) days after Notice of Termination (provided that Executive shall not have returned to the substantial performance of his duties on a full- time basis during such thirty (30) day period), (iii) if Executive's employment is terminated pursuant to Section 6(d), the date provided in such Section, and (iv) if Executive's employment is terminated for any other reason, the date on which a Notice of Termination is given or any later date (within thirty (30) days after the giving of such notice) set forth in such Notice of Termination. 8. Compensation Upon Termination or During Disability. In the event Executive is disabled or his employment terminates during the Employment Period, the Company shall provide Executive with the payments and benefits set forth below. Executive acknowledges and agrees that the payments set forth in this Section 8, and the other agreements and plans referenced in this Agreement, constitute the sole and liquidated damages for termination of his employment during the Employment Period. The Executive also agrees that the Company shall have the right to deduct any amounts owed by the Executive to the Company for any reason, including, without limitation, due to the Executive's misappropriation of Company funds, from the payments set forth in this Section 8. (a) Termination By Company without Cause or By Executive for Good Reason. If Executive's employment is terminated by the Company without Cause or by Executive for Good Reason: (i) the Company shall pay to Executive (A) his Base Salary and accrued vacation pay through the Date of Termination, as soon as practicable following the Date of Termination, and (B) continued Base Salary (as provided for in Section 5(a)) for a period of twenty-four (24) months following the Date of Termination; (ii) the Company shall maintain in full force and effect, for the continued benefit of Executive, his spouse and his dependents for a period of twenty-four (24) months following the Date of Termination the medical, hospitalization, dental, and life insurance programs in which Executive, his spouse and his dependents were participating immediately prior to the Date of Termination at the level in effect and upon substantially the same terms and conditions (including without limitation contributions required by Executive for such benefits) as existed immediately prior to the Date of Termination; provided, that if Executive, his spouse or his dependents cannot continue to participate in the Company programs providing such benefits, the Company shall arrange to provide Executive, his spouse and his dependents with the economic equivalent of such benefits which they otherwise would have been entitled to receive under such plans and programs ("Continued Benefits"); provided, that if Executive becomes reemployed with another employer and is eligible to receive medical or other welfare benefits under another employer-provided plan, the medical and other welfare benefits described herein shall be secondary to those provided under such other plan during such applicable period; (iii) the Company shall reimburse Executive pursuant to Section 5(d) for reasonable expenses incurred, but not paid, prior to such termination of employment; and (iv) Executive shall be entitled to any other rights, compensation and/or benefits as may be due to Executive following such termination to which he is otherwise entitled in accordance with the terms and provisions of any agreements, plans or programs of the Company. (b) Cause or By Executive Without Good Reason. If Executive's employment is terminated by the Company for Cause or by Executive (other than for Good Reason): (i) the Company shall pay Executive his Base Salary and his accrued vacation pay (to the extent required by law or the Company's vacation policy) through the Date of Termination, as soon as practicable following the Date of Termination; (ii) the Company shall reimburse Executive pursuant to Section 5(d) for reasonable expenses incurred, but not paid, prior to such termination of employment, unless such termination resulted from a misappropriation of Company funds; and (iii) Executive shall be entitled to any other rights, compensation and/or benefits as may be due to Executive following such termination to which he is otherwise entitled in accordance with the terms and provisions of any agreements, plans or programs of the Company. (c) Disability. During any period that Executive fails to perform his duties hereunder as a result of incapacity due to physical or mental illness ("Disability Period"), Executive shall continue to receive his full Base Salary set forth in Section 5(a) until his employment is terminated pursuant to Section 6(b). In the event Executive's employment is terminated for Disability pursuant to Section 6(b): (i) the Company shall pay to Executive (A) his Base Salary and accrued vacation pay through the Date of Termination, as soon as practicable following the Date of Termination, and (B) provide Executive with disability benefits pursuant to the terms of the Company's disability programs; (ii) the Company shall reimburse Executive pursuant to Section 5(d) for reasonable expenses incurred, but not paid, prior to such termination of employment; and (iii) Executive shall be entitled to any other rights, compensation and/or benefits as may be due to Executive following such termination to which he is otherwise entitled in accordance with the terms and provisions of any agreements, plans or programs of the Company. (d) Death. If Executive's employment is terminated by his death: (i) the Company shall pay in a lump sum to Executive's beneficiary, legal representatives or estate, as the case may be, Executive's Base Salary through the Date of Termination; (ii) the Company shall reimburse Executive's beneficiary, legal representatives, or estate, as the case may be, pursuant to Section 5(d) for reasonable expenses incurred, but not paid, prior to such termination of employment; and (iii) Executive's beneficiary, legal representatives or estate, as the case may be, shall be entitled to any other rights, compensation and benefits as may be due to any such persons or estate following such termination to which such persons or estate is otherwise entitled in accordance with the terms and provisions of any agreements, plans or programs of the Company. 9. Mitigation. Executive shall not be required to mitigate amounts payable under this Agreement by seeking other employment or otherwise, and, notwithstanding Section 8 hereof, there shall be no offset against amounts due Executive under this Agreement on account of subsequent employment except as specifically provided herein. 10. Confidential Information, Ownership of Documents; Non-Competition. (a) Confidential Information. Executive shall hold in a fiduciary capacity for the benefit of the Company all trade secrets and confidential information, knowledge or data relating to the Company and its businesses and investments and its Affiliates, which shall have been obtained by Executive during Executive's employment by the Company and which is not generally available public knowledge (other than by acts by Executive in violation of this Agreement). Except as may be required or appropriate in connection with his carrying out his duties under this Agreement, Executive shall not, without the prior written consent of the Company or as may otherwise be required by law or any legal process, or as is necessary in connection with any adversarial proceeding against the Company (in which case Executive shall use his reasonable best efforts in cooperating with the Company in obtaining a protective order against disclosure by a court of competent jurisdiction), communicate or divulge any such trade secrets, information, knowledge or data to anyone other than the Company and those designated by the Company or on behalf of the Company in the furtherance of its business or to perform duties hereunder. (b) Removal of Documents; Rights to Products; Other Property. All records, files, drawings, documents, models, equipment, and the like relating to the Company's business and its Affiliates, which Executive has control over shall not be removed from the Company's premises without its written consent, unless such removal is in the furtherance of the Company's business or is in connection with Executive's carrying out his duties under this Agreement and, if so removed, shall be returned to the Company promptly after termination of Executive's employment hereunder, or otherwise promptly after removal if such removal occurs following termination of employment. Executive shall assign to the Company all rights to trade secrets and other products relating to the Company's business developed by him alone or in conjunction with others at any time while employed by the Company. Executive shall also return to the Company all Company-provided vehicles in his possession or control. (c) Protection of Business. During the Employment Period and until the second anniversary of Executive's Date of Termination (other than if such termination is by the Company without Cause or by Executive for Good Reason), the Executive will not directly or indirectly, be a shareholder, principal, agent, partner, officer, director, employee or consultant of SUPERVALU, Inc., Nash Finch Company, Richfood Holdings, Inc. or any other direct competitor of the Company, excluding, national retail chains, or any subsidiary, affiliate or successor of any direct competitor of the Company (collectively, the "Competitors"). Notwithstanding the preceding sentence, the Executive shall not be prohibited from owning less than one percent (1%) of any publicly traded corporation (or from owning any greater percentage if such ownership is through a mutual fund or other diversified investment vehicle in which he has a passive and minority interest), whether or not such corporation is a Competitor. If, at any time, the provisions of this Section 10(c) shall be determined to be invalid or unenforceable, by reason of being vague or unreasonable as to area, duration or scope of activity, this Section 10(c) shall be considered divisible and shall become and be immediately amended to only such area, duration and scope of activity as shall be determined to be reasonable and enforceable by the court or other body having jurisdiction over the matter; and Executive agrees that this Section 10(c) as so amended shall be valid and binding as though any invalid or unenforceable provision had not been included herein. The parties agree that the duration and geographic area for which the covenant not to compete set forth in this Section 10(c) is to be effective are reasonable. (d) Injunctive Relief. In the event of a breach or threatened breach of this Section 10, Executive agrees that the Company shall be entitled to injunctive relief in a court of appropriate jurisdiction to remedy any such breach or threatened breach, Executive acknowledging that damages would be inadequate and insufficient. (e) Continuing Operation. Except as specifically provided in this Section 10, the termination of Executive's employment or of this Agreement shall have no effect on the continuing operation of this Section 10. 11. Arbitration; Legal Fees and Expenses. The parties agree that Executive's employment and this Agreement relate to interstate commerce, and that any disputes, claims or controversies between Executive and the Company which may arise out of or relate to the Executive's employment relationship or this Agreement shall be settled by arbitration. This agreement to arbitrate shall survive the termination of this 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 parties agree that punitive, liquidated or indirect damages shall not be awarded by the arbitrator(s). Nothing in this agreement to arbitrate, however, shall preclude the Company from obtaining injunctive relief from a court of competent jurisdiction prohibiting any on- going breaches by Executive of this Agreement including, without limitation, violations of Section 10. If any contest or dispute shall arise between the Company and Executive regarding any provision of this Agreement, the Company shall reimburse Executive for all legal fees and expenses reasonably incurred by Executive in connection with such contest or dispute, but only if Executive is successful in respect of one or more of Executive's material claims or defenses brought, raised or pursued in connection with such contest or dispute. Such reimbursement shall be made as soon as practicable following the resolution of such contest or dispute to the extent the Company receives reasonable written evidence of such fees and expenses. 12. Successors Binding Agreement. (a) Company's Successors. No rights or obligations of the Company under this Agreement may be assigned or transferred except that the Company will require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of the Company to expressly assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform it if no such succession had taken place. As used in this Agreement, "Company" shall mean the Company as hereinbefore defined and any successor to its business and/or assets (by merger, purchase or otherwise) which executes and delivers the agreement provided for in this Section 12 or which otherwise becomes bound by all the terms and provisions of this Agreement by operation of law. (b) Executive's Successors. No rights or obligations of Executive under this Agreement may be assigned or transferred by Executive other than his rights to payments or benefits hereunder, which may be transferred only by will or the laws of descent and distribution. Upon Executive's death, this Agreement and all rights of Executive hereunder shall inure to the benefit of and be enforceable by Executive's beneficiary or beneficiaries, personal or legal representatives, or estate, to the extent any such person succeeds to Executive's interests under this Agreement. Executive shall be entitled to select and change a beneficiary or beneficiaries to receive any benefit or compensation payable hereunder following Executive's death by giving the Company written notice thereof. In the event of Executive's death or a judicial determination of his incompetence, reference in this Agreement to Executive shall be deemed, where appropriate, to refer to his beneficiary(ies), estate or other legal representative(s). If Executive should die following his Date of Termination while any amounts would still be payable to him hereunder if he had continued to live, all such amounts unless otherwise provided herein shall be paid in accordance with the terms of this Agreement to such person or persons so appointed in writing by Executive, or otherwise to his legal representatives or estate. 13. Notice. For the purposes of this Agreement, notices, demands and all other communications provided for in this Agreement shall be in writing and shall be deemed to have been duly given when delivered either personally or by United States certified or registered mail, return receipt requested, postage prepaid, addressed as follows: If to Executive: At his last known address evidenced on the Company's payroll records. If to the Company: Fleming Companies, Inc. 6301 Waterford Boulevard Oklahoma City, Oklahoma 73126-0647 Attention: General Counsel or to such other address as any party may have furnished to the others in writing in accordance herewith, except that notices of change of address shall be effective only upon receipt. 14. Miscellaneous. No provisions of this Agreement may be amended, modified, or waived unless such amendment or modification is agreed to in writing signed by Executive and by a duly authorized officer of the Company, and such waiver is set forth in writing and signed by the party to be charged. No waiver by either party hereto at any time of any breach by the other party hereto of any condition or provision of this Agreement to be performed by such other party shall be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time. The respective rights and obligations of the parties hereunder shall survive Executive's termination of employment and the termination of this Agreement to the extent necessary for the intended preservation of such rights and obligations. The validity, interpretation, construction and performance of this Agreement shall be governed by the laws of the State of Texas without regard to its conflicts of law principles. 15. Validity. The invalidity or unenforceability of any provision or provisions of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement, which shall remain in full force and effect. 16. Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original but all of which together will constitute one and the same instrument. 17. Entire Agreement. This Agreement sets forth the entire agreement of the parties hereto in respect of the subject matter contained herein and supersedes all prior agreements, promises, covenants, arrangements, communications, representations or warranties, whether oral or written, by any officer, employee or representative of any party hereto in respect of such subject matter. Any prior agreement of the parties hereto in respect of the subject matter contained herein is hereby terminated and cancelled. 18. Withholding. All payments hereunder shall be subject to any required withholding of Federal, state and local taxes pursuant to any applicable law or regulation. 19. Section Headings. The section headings in this Agreement are for convenience of reference only, and they form no part of this Agreement and shall not affect its interpretation. IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the date first above written. FLEMING COMPANIES, INC. By SCOTT M. NORTHCUTT Scott M. Northcutt, Senior Vice President- Human Resources NEAL RIDER Neal Rider EX-10 5 Exhibit 10.63 RESTRICTED STOCK AWARD AGREEMENT FOR THE FLEMING COMPANIES, INC. 1996 STOCK INCENTIVE PLAN THIS RESTRICTED STOCK AWARD AGREEMENT (the "Agreement") entered into as of the 18th day of January, 2000, by and between Fleming Companies, Inc., an Oklahoma corporation (the "Company"), and Lenore T. Graham (herein referred to as the "Participant"); W I T N E S S E T H: WHEREAS, the Company has previously adopted the Fleming Companies, Inc. 1996 Stock Incentive Plan and certain amendments thereto (the "Plan"); WHEREAS, in connection with her employment with the Company, the Company has awarded the Participant 10,000 shares of common stock under the Plan subject to the terms and conditions of this Agreement; and WHEREAS, the Participant has previously entered into an Employment Agreement with the Company dated as of January 18, 2000 (the "Employment Agreement"). NOW, THEREFORE, in consideration of the premises and the mutual promises and covenants herein contained, the Participant and the Company agree as follows (all capitalized terms used herein, unless otherwise defined, have the meaning ascribed to such terms as set forth in the Plan): 1. The Plan. The Plan, a copy of which is attached hereto as Exhibit A, is hereby incorporated by reference herein and made a part hereof for all purposes, and when taken with this Agreement shall govern the rights of the Participant and the Company with respect to the Award (as defined below). 2. Grant of Award. The Company hereby grants to the Participant an award (the "Award") of 10,000 shares of Company common stock, par value $2.50 per share (the "Stock"), on the terms and conditions set forth herein and in the Plan. 3. Terms of Award. (a) Escrow of Shares. A certificate representing the shares of Stock subject to the Award (the "Restricted Stock") shall be issued in the name of the Participant and shall be escrowed with the Secretary of the Company (the "Escrow Agent") subject to removal of the restrictions placed thereon or forfeiture pursuant to the terms of this Agreement. (b) Vesting. One-half of the shares of Restricted Stock will vest based on the Participant's continuous employment with the Company or a Subsidiary through January 18, 2001 and the remaining one-half of the shares of Restricted Stock will vest based on the Participant's continuous employment with the Company or a Subsidiary through January 18, 2002. In the event the Participant's employment with the Company or a Subsidiary is terminated by reason of (i) death, (ii) disability, (iii) without "Cause" (as such term is defined in the Employment Agreement), or (iv) by the Participant for "Good Reason" (as such term is defined in the Employment Agreement), then all remaining shares of Restricted Stock (including any "Accrued Dividends," as such term is hereafter defined) which have not yet been vested shall immediately vest. Once vested pursuant to the terms of this Agreement, the Restricted Stock shall be deemed "Vested Stock." (c) Voting Rights and Dividends. The Participant shall not have the voting rights attributable to the shares of Restricted Stock issued to her. Any dividends declared and paid by the Company with respect to shares of Restricted Stock ("Accrued Dividends") shall not be paid to the Participant until such Restricted Stock becomes Vested Stock. Such Accrued Dividends shall be held by the Company as a general obligation and paid to the Participant at the time the underlying Restricted Stock becomes Vested Stock. (d) Vested Stock - Removal of Restrictions. Upon Restricted Stock becoming Vested Stock, all restrictions shall be removed from the certificates representing such Stock and the Secretary of the Company shall deliver to the Participant certificates representing such Vested Stock free and clear of all restrictions, except for any applicable securities laws restrictions, together with a check in the amount of all Accrued Dividends attributed to such Vested Stock without interest thereon. (e) Forfeiture. Restricted Stock that does not become Vested Stock pursuant to the terms of this Agreement shall be absolutely forfeited and the Participant shall have no future interest therein of any kind whatsoever. In the event the Participant's employment with the Company or a Subsidiary is terminated prior to all shares of Restricted Stock becoming Vested Stock for any reason other than (i) death, (ii) disability, (iii) without Cause, or (iv) by the Participant for Good Reason, then all remaining shares of Restricted Stock which have not yet been vested (including any Accrued Dividends) shall be absolutely forfeited and the Participant shall have no further interest therein of any kind whatsoever. 4. Change of Control. Upon the occurrence of a Change of Control Event on or prior to January 18, 2002, all Restricted Stock shall become Vested Stock and the Company shall deliver to the Participant certificates representing the Vested Stock free and clear of all restrictions, except for any applicable securities law restrictions, together with any Accrued Dividends attributable to such Vested Stock without interest thereon. 5. Legends. The shares of Stock which are the subject of the Award shall be subject to the following legend: "THE SHARES OF STOCK EVIDENCED BY THIS CERTIFICATE ARE SUBJECT TO AND ARE TRANSFERABLE ONLY IN ACCORDANCE WITH THAT CERTAIN RESTRICTED STOCK AWARD AGREEMENT FOR THE FLEMING COMPANIES, INC. 1996 STOCK INCENTIVE PLAN DATED THE 18th DAY OF JANUARY, 2000. ANY ATTEMPTED TRANSFER OF THE SHARES OF STOCK EVIDENCED BY THIS CERTIFICATE IN VIOLATION OF SUCH AGREEMENT SHALL BE NULL AND VOID AND WITHOUT EFFECT. A COPY OF THE AGREEMENT MAY BE OBTAINED FROM THE SECRETARY OF FLEMING COMPANIES, INC." 6. Stock Power. The Participant hereby agrees to execute and deliver to the Secretary of the Company a stock power (endorsed in blank) in the form of Exhibit B hereto covering her Award and authorizes the Secretary to deliver to the Company any and all shares of Restricted Stock that are forfeited under the provisions of this Agreement. The Participant further authorizes the Company to hold as a general obligation of the Company any Accrued Dividends and to pay such dividends to the Participant at the time the underlying Restricted Stock becomes Vested Stock. 7. Nontransferability of Award. The Participant shall not have the right to sell, assign, transfer, convey, dispose, pledge, hypothecate, burden, encumber or charge any shares of Restricted Stock or any interest therein in any manner whatsoever. 8. Notices. All notices or other communications relating to the Plan and this Agreement as it relates to the Participant shall be in writing, shall be deemed to have been made if personally delivered in return for a receipt, or if mailed, by regular U.S. mail, postage prepaid, by the Company to the Participant at her last known address evidenced on the payroll records of the Company. 9. Binding Effect and Governing Law. This Agreement shall be (i) binding upon and inure to the benefit of the parties hereto and their respective heirs, successors and assigns except as may be limited by the Plan and (ii) governed and construed under the laws of the State of Texas. 10. Withholding. The Company and the Participant shall comply with all federal and state laws and regulations with respect to the withholding, deposit and payment of any income, employment or other taxes relating to the Award (including Accrued Dividends). 11. Award Subject to Claims or Creditors. The Participant shall not have any interest in any particular assets of the Company, its parent, if applicable, or any Subsidiary by reason of the right to earn an Award (including Accrued Dividends) under the Plan and this Agreement; and the Participant or any other person shall have only the rights of a general unsecured creditor of the Company, its parent, if applicable, or a Subsidiary with respect to any rights under the Plan or this Agreement. 12. Captions. The captions of specific provisions of this Agreement are for convenience and reference only, and in no way define, describe, extend or limit the scope of this Agreement or the intent of any provision hereof. 13. Counterparts. This Agreement may be executed in any number of identical counterparts, each of which shall be deemed an original for all purposes, but all of which taken together shall form but one agreement. 14. Protection of Company's Business as Consideration. As specific consideration to the Company for this Award, the Participant agrees: (a) Limitations on Competition. Subject to subsection (g), the Participant will not, without the Company's written consent, as a businessperson, directly or indirectly, be a shareholder, principal, agent, partner, officer, director, employee or consultant of SUPERVALU, Inc., Nash Finch Company, Richfood Holdings, Inc. or any other direct competitor of the Company, excluding national retail chains, or of any subsidiary, affiliate or successor of any direct competitor of the Company (collectively, the "Competitors"); provided, however, that nothing in this subsection (a) is intended to preclude the Participant from being employed or otherwise acting in the capacity of a lawyer on behalf of any of the Competitors unless such employment or activity would result in a breach of her conflict of interest and/or confidentiality obligations as an attorney or former attorney and an officer or former officer of the Company or any of its Subsidiaries or based on the confidentiality requirements contained in subsection (b). (b) Confidential Information; No Disparaging State- ments. The Participant acknowledges that during the course of the Participant's employment with the Company or any Subsidiary, she will have access to and gain knowledge of highly confidential and proprietary information and trade secrets. The Participant further acknowledges that the misuse, misappropriation or disclosure of this information could cause irreparable harm to the Company and/or a Subsidiary, both during and after the term of the Participant's employment. Therefore, the Participant agrees, during her employment and at all times thereafter, she will hold in a fiduciary capacity for the benefit of the Company and/or a Subsidiary 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 or any Subsidiary, customers, suppliers, joint ventures, licensors, licensees, distributors and other persons and entities with whom the Company or any of its Subsidiaries do business ("Confidential Data"), except upon the Company's written consent or as required by her duties with the Company or any of its Subsidiaries, 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 or a Subsidiary. The Participant agrees, during her employment with the Company or any of its Subsidiaries and at all times thereafter, not to make disparaging statements about the Company or any of its Subsidiaries or their officers, directors, agents, employees, products or services which she knows, or has reason to know, are false or misleading. (c) No Solicitation of Employees or Business. The Participant agrees that she will not, either directly or in concert with others, recruit, solicit or induce, or attempt to induce, any employees of the Company or any of its Subsidiaries to terminate their employment with the Company or any of its Subsidiaries and/or become associated with another employer. The Participant further agrees that she 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 or any its Subsidiaries which the Company or a Subsidiary had or was actively soliciting before and/or on her date of termination/separation. (d) Term of the Participant's Promises Under This Section. The Participant agrees that except as otherwise provided in subsection (b), her promises contained in this Section 14 shall continue in effect during her employment with the Company or any of its Subsidiaries and until the first anniversary of her termination/separation. (e) Consequences of Breach of Limitations on Competi- tion and/or Other Competing Employment. Subject to subsection (g), if at any time within (i) the term of this Agreement or (ii) within one (1) year following the Participant's date of termination/separation, but only if such termination/separation occurs on a date which is prior to January 18, 2002, or (iii) within one (1) year after vesting of any portion of the Restricted Stock, whichever is latest, the Participant, without the Company's written consent, as a businessperson, directly or indirectly, is a shareholder, principal, agent, partner, officer, director, employee or consultant of any of the Competitors, then (x) with respect to any shares of Restricted Stock, effective the date the Participant enters into such activity, all such Restricted Stock (including any Accrued Dividends) shall be absolutely forfeited and the Participant shall have no further interest therein of any kind whatsoever (unless forfeited sooner by operation of another term or condition of this Agreement or the Plan), and (y) with respect to any shares of Vested Stock, the Participant shall be required to return to the Company all of the actual shares of Vested Stock, or other equivalent shares of Company common stock, within thirty (30) days after the date of written notice from the Company that pursuant to the provisions of this subsection delivery of such shares is due and the Participant shall forfeit all rights to such shares of Vested Stock. This shall be in addition to any injunctive or other relief to which the Company may be entitle under subsection (f). This subsection (e) shall not apply however, if the Participant's employment by or other activity in connection with the applicable Competitor is in the capacity of a lawyer unless such employment or activity would result in a breach of the Participant's conflict of interest and/or confidentiality obligations as an attorney or former attorney for and an officer or former officer of the Company or any of its Subsidiaries or a breach of the confidentiality requirements contained in subsection (b). (f) Consequences of Other Breaches of this Section. The Participant acknowledges that damages which may arise from any breach of any of her promises contained in this Section 14 may be impossible to ascertain or prove with certainty. The Participant agrees if the Participant breaches any of her promises contained in this Section 14, in addition to the remedies provided under subsection (e), if applicable, and any other legal remedies which may be available, the Company shall be entitled to immediate injunctive relief from a court of competent jurisdiction, pending arbitration under Section 15 or otherwise, to end such breach, without further proof of damage. (g) Permitted Ownership. Nothing in this Section 14 shall prohibit the Participant 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 14 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 14 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 Participant agrees that this Section 14 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. 15. Arbitration of Disputes. Any disputes, claims or controversies between the Participant and the Company which may arise out of or relate to this Agreement shall be settled by arbitration. This agreement to arbitrate shall survive the termination of this 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 from a court of competent jurisdiction prohibiting any on-going breaches of the Agreement by the Participant 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/her own costs and attorneys' fees. IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the day and year first above written. "COMPANY" FLEMING COMPANIES, INC., an Oklahoma corporation By SCOTT M. NORTHCUTT Scott M. Northcutt, Senior Vice President - Human Resources "PARTICIPANT" LENORE T. GRAHAM Lenore T. Graham Exhibit A [Copy of 1996 Stock Incentive Plan] Exhibit B ASSIGNMENT SEPARATE FROM CERTIFICATE FOR VALUE RECEIVED, __________________, an individual, hereby irrevocably assigns and conveys to ________________________, ______________ AND NO/100 (_____) shares of the Common Capital Stock of Fleming Companies, Inc., an Oklahoma corporation, $2.50 par value. DATED: EX-10 6 Exhibit 10.64 RESTRICTED STOCK AWARD AGREEMENT FOR THE FLEMING COMPANIES, INC. 1996 STOCK INCENTIVE PLAN THIS RESTRICTED STOCK AWARD AGREEMENT (the "Agreement") entered into as of the 18th day of January, 2000, by and between Fleming Companies, Inc., an Oklahoma corporation (the "Company"), and Neal Rider (herein referred to as the "Participant"); W I T N E S S E T H: WHEREAS, the Company has previously adopted the Fleming Companies, Inc. 1996 Stock Incentive Plan and certain amendments thereto (the "Plan"); WHEREAS, in connection with his employment with the Company, the Company has awarded the Participant 25,000 shares of common stock under the Plan subject to the terms and conditions of this Agreement; and WHEREAS, the Participant has previously entered into an Employment Agreement with the Company dated as of January 18, 2000 (the "Employment Agreement"). NOW, THEREFORE, in consideration of the premises and the mutual promises and covenants herein contained, the Participant and the Company agree as follows (all capitalized terms used herein, unless otherwise defined, have the meaning ascribed to such terms as set forth in the Plan): 1. The Plan. The Plan, a copy of which is attached hereto as Exhibit A, is hereby incorporated by reference herein and made a part hereof for all purposes, and when taken with this Agreement shall govern the rights of the Participant and the Company with respect to the Award (as defined below). 2. Grant of Award. The Company hereby grants to the Participant an award (the "Award") of 25,000 shares of Company common stock, par value $2.50 per share (the "Stock"), on the terms and conditions set forth herein and in the Plan. 3. Terms of Award. (a) Escrow of Shares. A certificate representing the shares of Stock subject to the Award (the "Restricted Stock") shall be issued in the name of the Participant and shall be escrowed with the Secretary of the Company (the "Escrow Agent") subject to removal of the restrictions placed thereon or forfeiture pursuant to the terms of this Agreement. (b) Vesting. One-half of the shares of Restricted Stock will vest based on the Participant's continuous employment with the Company or a Subsidiary through January 18, 2001 and the remaining one-half of the shares of Restricted Stock will vest based on the Participant's continuous employment with the Company or a Subsidiary through January 18, 2002. In the event the Participant's employment with the Company or a Subsidiary is terminated by reason of (i) death, (ii) disability, (iii) without "Cause" (as such term is defined in the Employment Agreement), or (iv) by the Participant for "Good Reason" (as such term is defined in the Employment Agreement), then all remaining shares of Restricted Stock (including any "Accrued Dividends," as such term is hereafter defined) which have not yet been vested shall immediately vest. Once vested pursuant to the terms of this Agreement, the Restricted Stock shall be deemed "Vested Stock." (c) Voting Rights and Dividends. The Participant shall not have the voting rights attributable to the shares of Restricted Stock issued to him. Any dividends declared and paid by the Company with respect to shares of Restricted Stock ("Accrued Dividends") shall not be paid to the Participant until such Restricted Stock becomes Vested Stock. Such Accrued Dividends shall be held by the Company as a general obligation and paid to the Participant at the time the underlying Restricted Stock becomes Vested Stock. (d) Vested Stock - Removal of Restrictions. Upon Restricted Stock becoming Vested Stock, all restrictions shall be removed from the certificates representing such Stock and the Secretary of the Company shall deliver to the Participant certificates representing such Vested Stock free and clear of all restrictions, except for any applicable securities laws restrictions, together with a check in the amount of all Accrued Dividends attributed to such Vested Stock without interest thereon. (e) Forfeiture. Restricted Stock that does not become Vested Stock pursuant to the terms of this Agreement shall be absolutely forfeited and the Participant shall have no future interest therein of any kind whatsoever. In the event the Participant's employment with the Company or a Subsidiary is terminated prior to all shares of Restricted Stock becoming Vested Stock for any reason other than (i) death, (ii) disability, (iii) without Cause, or (iv) by the Participant for Good Reason, then all remaining shares of Restricted Stock which have not yet been vested (including any Accrued Dividends) shall be absolutely forfeited and the Participant shall have no further interest therein of any kind whatsoever. 4. Change of Control. Upon the occurrence of a Change of Control Event on or prior to January 18, 2002, all Restricted Stock shall become Vested Stock and the Company shall deliver to the Participant certificates representing the Vested Stock free and clear of all restrictions, except for any applicable securities law restrictions, together with any Accrued Dividends attributable to such Vested Stock without interest thereon. 5. Legends. The shares of Stock which are the subject of the Award shall be subject to the following legend: "THE SHARES OF STOCK EVIDENCED BY THIS CERTIFICATE ARE SUBJECT TO AND ARE TRANSFERABLE ONLY IN ACCORDANCE WITH THAT CERTAIN RESTRICTED STOCK AWARD AGREEMENT FOR THE FLEMING COMPANIES, INC. 1996 STOCK INCENTIVE PLAN DATED THE 18th DAY OF JANUARY, 2000. ANY ATTEMPTED TRANSFER OF THE SHARES OF STOCK EVIDENCED BY THIS CERTIFICATE IN VIOLATION OF SUCH AGREEMENT SHALL BE NULL AND VOID AND WITHOUT EFFECT. A COPY OF THE AGREEMENT MAY BE OBTAINED FROM THE SECRETARY OF FLEMING COMPANIES, INC." 6. Stock Power. The Participant hereby agrees to execute and deliver to the Secretary of the Company a stock power (endorsed in blank) in the form of Exhibit B hereto covering his Award and authorizes the Secretary to deliver to the Company any and all shares of Restricted Stock that are forfeited under the provisions of this Agreement. The Participant further authorizes the Company to hold as a general obligation of the Company any Accrued Dividends and to pay such dividends to the Participant at the time the underlying Restricted Stock becomes Vested Stock. 7. Nontransferability of Award. The Participant shall not have the right to sell, assign, transfer, convey, dispose, pledge, hypothecate, burden, encumber or charge any shares of Restricted Stock or any interest therein in any manner whatsoever. 8. Notices. All notices or other communications relating to the Plan and this Agreement as it relates to the Participant shall be in writing, shall be deemed to have been made if personally delivered in return for a receipt, or if mailed, by regular U.S. mail, postage prepaid, by the Company to the Participant at his last known address evidenced on the payroll records of the Company. 9. Binding Effect and Governing Law. This Agreement shall be (i) binding upon and inure to the benefit of the parties hereto and their respective heirs, successors and assigns except as may be limited by the Plan and (ii) governed and construed under the laws of the State of Texas. 10. Withholding. The Company and the Participant shall comply with all federal and state laws and regulations with respect to the withholding, deposit and payment of any income, employment or other taxes relating to the Award (including Accrued Dividends). 11. Award Subject to Claims or Creditors. The Participant shall not have any interest in any particular assets of the Company, its parent, if applicable, or any Subsidiary by reason of the right to earn an Award (including Accrued Dividends) under the Plan and this Agreement; and the Participant or any other person shall have only the rights of a general unsecured creditor of the Company, its parent, if applicable, or a Subsidiary with respect to any rights under the Plan or this Agreement. 12. Captions. The captions of specific provisions of this Agreement are for convenience and reference only, and in no way define, describe, extend or limit the scope of this Agreement or the intent of any provision hereof. 13. Counterparts. This Agreement may be executed in any number of identical counterparts, each of which shall be deemed an original for all purposes, but all of which taken together shall form but one agreement. 14. Protection of Company's Business as Consideration. As specific consideration to the Company for this Award, the Participant agrees: (a) Limitations on Competition. Subject to subsection (g), the Participant 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, Richfood Holdings, Inc. 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 Participant acknowledges that during the course of Participant's employment with the Company or any Subsidiary, he will have access to and gain knowledge of highly confidential and proprietary information and trade secrets. The Participant further acknowledges that the misuse, misappropriation or disclosure of this information could cause irreparable harm to the Company and/or a Subsidiary, both during and after the term of the Participant's employment. Therefore, the Participant agrees that during his employment and at all times thereafter he will hold in a fiduciary capacity for the benefit of the Company and/or a Subsidiary 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 or any of its Subsidiaries, customers, suppliers, joint ventures, licensors, licensees, distributors and other persons and entities with whom the Company or any of its Subsidiaries do business ("Confidential Data"), except upon the Company's written consent or as required by his duties with the Company or any of its Subsidiaries, 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 or a Subsidiary. The Participant agrees, during his employment with the Company or any of its Subsidiaries and at all times thereafter, not to make disparaging statements about the Company or any of its Subsidiaries or their respective 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 Participant agrees that he will not, either directly or in concert with others, recruit, solicit or induce, or attempt to induce, any employee of the Company or any of its Subsidiaries to terminate employment with the Company or any of its Subsidiaries and/or become associated with another employer. The Participant 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 or any its Subsidiaries which the Company or a Subsidiary had or was actively soliciting before and/or on his date of termination/separation. (d) Term of the Participant's Promises Under This Section. The Participant agrees that except as otherwise provided in subsection (b), his promises contained in this Section 14 shall continue in effect during his employment with the Company or any of its Subsidiaries and until the first anniversary of his termination/separation. (e) Consequences of Breach of Limitations. Subject to subsection (g), if at any time within (i) the term of this Agreement or (ii) within one (1) year following the Participant's date of termination/separation, but only if such termination/separation occurs on a date prior to January 18, 2002, or (iii) within one (1) year after vesting any portion of the Restricted Stock, whichever is latest, the Participant, without the Company's written consent, directly or indirectly, is a shareholder, principal, agent, partner, officer, director, employee or consultant of any of the Competitors, then (x) with respect to any shares of Restricted Stock, effective the date the Participant enters into such activity, all such Restricted Stock (including any Accrued Dividends) shall be absolutely forfeited and the Participant shall have no further interest therein of any kind whatsoever (unless forfeited sooner by operation of another term or condition of this Agreement or the Plan), and (y) with respect to any shares of Vested Stock, the Participant shall be required to return to the Company all of the actual shares of Vested Stock, or other equivalent shares of Company common stock, within thirty (30) days after the date of written notice from the Company that pursuant to the provisions of this subsection delivery of such shares is due and the Participant shall forfeit all rights to such shares of Vested Stock. This shall be in addition to any injunctive or other relief to which the Company may be entitle under subsection (f). (f) Consequences of Other Breaches of this Section. The Participant acknowledges that damages which may arise from any breach of any of his promises contained in this Section 14 may be impossible to ascertain or prove with certainty. The Participant agrees if Participant breaches any of his promises contained in this Section 14, in addition to the remedies provided under subsection (e), if applicable, and any other legal remedies which may be available, the Company shall be entitled to immediate injunctive relief from a court of competent jurisdiction, pending arbitration under Section 15 or otherwise, to end such breach, without further proof of damage. (g) Permitted Ownership. Nothing in this Section 14 shall prohibit the Participant 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 14 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 14 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 Participant agrees that this Section 14 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. 15. Arbitration of Disputes. Any disputes, claims or controversies between the Participant and the Company which may arise out of or relate to this Agreement shall be settled by arbitration. This agreement to arbitrate shall survive the termination of this 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 from a court of competent jurisdiction prohibiting any on-going breaches of the Agreement by the Participant 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. IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the day and year first above written. "COMPANY" FLEMING COMPANIES, INC., an Oklahoma corporation By SCOTT M. NORTHCUTT Scott M. Northcutt Senior Vice President - Human Resources "PARTICIPANT" NEAL RIDER Neal Rider Exhibit A [Copy of 1996 Stock Incentive Plan] Exhibit B ASSIGNMENT SEPARATE FROM CERTIFICATE FOR VALUE RECEIVED, __________________, an individual, hereby irrevocably assigns and conveys to ________________________, ______________ AND NO/100 (_____) shares of the Common Capital Stock of Fleming Companies, Inc., an Oklahoma corporation, $2.50 par value. DATED: EX-10 7 Exhibit 10.65 RESTRICTED STOCK AWARD AGREEMENT FOR THE FLEMING COMPANIES, INC. 1999 STOCK INCENTIVE PLAN THIS RESTRICTED STOCK AWARD AGREEMENT (the "Agreement") entered into as of the 29th day of February, 2000, by and between Fleming Companies, Inc., an Oklahoma corporation (the "Company"), and Mark S. Hansen (herein referred to as the "Participant"); W I T N E S S E T H: WHEREAS, the Company has previously adopted the Fleming Companies, Inc. 1999 Stock Incentive Plan (the "Plan"); WHEREAS, in connection with his employment with the Company, the Company has awarded the Participant 300,000 shares of common stock under the Plan subject to the terms and conditions of this Agreement; and WHEREAS, the Participant has previously entered into an Employment Agreement with the Company dated as of November 30, 1998 (the "Employment Agreement"). NOW, THEREFORE, in consideration of the premises and the mutual promises and covenants herein contained, the Participant and the Company agree as follows (all capitalized terms used herein, unless otherwise defined, have the meaning ascribed to such terms as set forth in the Plan): 1. The Plan. The Plan, a copy of which is attached hereto as Exhibit A, is hereby incorporated by reference herein and made a part hereof for all purposes, and when taken with this Agreement shall govern the rights of the Participant and the Company with respect to the Award (as defined below). 2. Grant of Award. The Company hereby grants to the Participant an award (the "Award") of 300,000 shares of Company common stock, par value $2.50 per share (the "Stock"), on the terms and conditions set forth herein and in the Plan. 3. Terms of Award. (a) Escrow of Shares. A certificate representing the shares of Stock subject to the Award (the "Restricted Stock") shall be issued in the name of the Participant and shall be escrowed with the Secretary of the Company (the "Escrow Agent") subject to removal of the restrictions placed thereon or forfeiture pursuant to the terms of this Agreement. (b) Vesting. The shares of Restricted Stock will vest based on the Participant's continuous employment with the Company or a Subsidiary through February 28, 2002. In the event the Participant's employment with the Company or a Subsidiary is terminated by reason of (i) death, (ii) disability, (iii) without "Cause" (as such term is defined in the Employment Agreement), or (iv) by the Participant for "Good Reason" (as such term is defined in the Employment Agreement), then all remaining shares of Restricted Stock (including any "Accrued Dividends," as such term is hereafter defined) which have not yet been vested shall immediately vest. Once vested pursuant to the terms of this Agreement, the Restricted Stock shall be deemed "Vested Stock." (c) Voting Rights and Dividends. The Participant shall not have the voting rights attributable to the shares of Restricted Stock issued to him. Any dividends declared and paid by the Company with respect to shares of Restricted Stock ("Accrued Dividends") shall not be paid to the Participant until such Restricted Stock becomes Vested Stock. Such Accrued Dividends shall be held by the Company as a general obligation and paid to the Participant at the time the underlying Restricted Stock becomes Vested Stock. (d) Vested Stock - Removal of Restrictions. Upon Restricted Stock becoming Vested Stock, all restrictions shall be removed from the certificates representing such Stock and the Secretary of the Company shall deliver to the Participant certificates representing such Vested Stock free and clear of all restrictions, except for any applicable securities laws restrictions, together with a check in the amount of all Accrued Dividends attributed to such Vested Stock without interest thereon. (e) Forfeiture. Restricted Stock that does not become Vested Stock pursuant to the terms of this Agreement shall be absolutely forfeited and the Participant shall have no future interest therein of any kind whatsoever. In the event the Participant's employment with the Company or a Subsidiary terminates prior to all shares of Restricted Stock becoming Vested Stock for any reason other than (i) death, (ii) disability, (iii) without Cause, or (iv) by the Participant for Good Reason, then all remaining shares of Restricted Stock which have not yet been vested (including any Accrued Dividends) shall be absolutely forfeited and the Participant shall have no further interest therein of any kind whatsoever. 4. Change of Control. Upon the occurrence of a Change of Control Event on or prior to February 28, 2002, all Restricted Stock shall become Vested Stock and the Company shall deliver to the Participant certificates representing the Vested Stock free and clear of all restrictions, except for any applicable securities law restrictions, together with any Accrued Dividends attributable to such Vested Stock without interest thereon. 5. Legends. The shares of Stock which are the subject of the Award shall be subject to the following legend: "THE SHARES OF STOCK EVIDENCED BY THIS CERTIFICATE ARE SUBJECT TO AND ARE TRANSFERABLE ONLY IN ACCORDANCE WITH THAT CERTAIN RESTRICTED STOCK AWARD AGREEMENT FOR THE FLEMING COMPANIES, INC. 1999 STOCK INCENTIVE PLAN DATED THE 29th DAY OF FEBRUARY, 2000. ANY ATTEMPTED TRANSFER OF THE SHARES OF STOCK EVIDENCED BY THIS CERTIFICATE IN VIOLATION OF SUCH AGREEMENT SHALL BE NULL AND VOID AND WITHOUT EFFECT. A COPY OF THE AGREEMENT MAY BE OBTAINED FROM THE SECRETARY OF FLEMING COMPANIES, INC." 6. Stock Power. The Participant hereby agrees to execute and deliver to the Secretary of the Company a stock power (endorsed in blank) in the form of Exhibit B hereto covering his Award and authorizes the Secretary to deliver to the Company any and all shares of Restricted Stock that are forfeited under the provisions of this Agreement. The Participant further authorizes the Company to hold as a general obligation of the Company any Accrued Dividends and to pay such dividends to the Participant at the time the under- lying Restricted Stock becomes Vested Stock. 7. Nontransferability of Award. The Participant shall not have the right to sell, assign, transfer, convey, dispose, pledge, hypothecate, burden, encumber or charge any shares of Restricted Stock or any interest therein in any manner whatsoever. 8. Notices. All notices or other communications relating to the Plan and this Agreement as it relates to the Participant shall be in writing, shall be deemed to have been made if personally delivered in return for a receipt, or if mailed, by regular U.S. mail, postage prepaid, by the Company to the Participant at his last known address evidenced on the payroll records of the Company. 9. Binding Effect and Governing Law. This Agreement shall be (i) binding upon and inure to the benefit of the parties hereto and their respective heirs, successors and assigns except as may be limited by the Plan and (ii) governed and construed under the laws of the State of Texas. 10. Withholding. The Company and the Participant shall comply with all federal and state laws and regulations with respect to the withholding, deposit and payment of any income, employment or other taxes relating to the Award (including Accrued Dividends). 11. Award Subject to Claims or Creditors. The Participant shall not have any interest in any particular assets of the Company, its parent, if applicable, or any Subsidiary by reason of the right to earn an Award (including Accrued Dividends) under the Plan and this Agreement; and the Participant or any other person shall have only the rights of a general unsecured creditor of the Company, its parent, if applicable, or a Subsidiary with respect to any rights under the Plan or this Agreement. 12. Captions. The captions of specific provisions of this Agreement are for convenience and reference only, and in no way define, describe, extend or limit the scope of this Agreement or the intent of any provision hereof. 13. Counterparts. This Agreement may be executed in any number of identical counterparts, each of which shall be deemed an original for all purposes, but all of which taken together shall form but one agreement. 14. Protection of Company's Business as Consideration. As specific consideration to the Company for this Award, the Participant agrees: (a) Limitations on Competition. Subject to sub- section (g), the Participant 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, Richfood Holdings, Inc. 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 Participant acknowledges that during the course of Participant's employment with the Company or any Subsidiary, he will have access to and gain knowledge of highly confidential and proprietary information and trade secrets. The Participant further acknowledges that the mis- use, misappropriation or disclosure of this information could cause irreparable harm to the Company and/or a Subsidiary, both during and after the term of the Participant's employment. Therefore, the Par- ticipant agrees that during his employment and at all times thereafter he will hold in a fiduciary capacity for the benefit of the Company and/or a Subsidiary 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 or any of its Subsidiaries, customers, suppliers, joint ventures, licensors, licensees, distributors and other persons and entities with whom the Company or any of its Subsidiaries do business ("Confidential Data"), except upon the Company's written consent or as required by his duties with the Company or any of its Sub- sidiaries, 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 or a Subsidiary. The Participant agrees, during his employment with the Company or any of its Subsidiaries and at all times thereafter, not to make disparaging statements about the Company or any of its Subsidiaries or their respective 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 Participant agrees that he will not, either directly or in concert with others, recruit, solicit or induce, or attempt to induce, any employee of the Company or any of its Subsidiaries to terminate employment with the Company or any of its Subsidiaries and/or become associated with another employer. The Participant 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 or any its Subsidiaries which the Company or a Subsidiary had or was actively soliciting before and/or on his date of termination/separation. (d) Term of the Participant's Promises Under This Section. The Participant agrees that except as otherwise provided in subsection (b), his promises contained in this Section 14 shall continue in effect during his employment with the Company or any of its Subsidiaries and until the first anniversary of his termination/separation. (e) Consequences of Breach of Limitations. Subject to subsection (g), if at any time within (i) the term of this Agreement or (ii) within one (1) year following the Participant's date of termination/separation, but only if such termination/ separation occurs on a date prior to February 28, 2002, or (iii) within one (1) year after vesting any portion of the Restricted Stock, whichever is latest, the Participant, without the Company's written consent, directly or indirectly, is a shareholder, principal, agent, partner, officer, director, employee or consultant of any of the Competitors, then (x) with respect to any shares of Restricted Stock, effective the date the Participant enters into such activity, all such Restricted Stock (including any Accrued Dividends) shall be absolutely forfeited and the Participant shall have no further interest therein of any kind whatsoever (unless forfeited sooner by operation of another term or condition of this Agreement or the Plan), and (y) with respect to any shares of Vested Stock, the Participant shall be required to return to the Company all of the actual shares of Vested Stock, or other equivalent shares of Company common stock, within thirty (30) days after the date of written notice from the Company that pursuant to the provisions of this subsection delivery of such shares is due and the Participant shall forfeit all rights to such shares of Vested Stock. This shall be in addition to any injunctive or other relief to which the Company may be entitle under subsection (f). (f) Consequences of Other Breaches of this Section. The Participant acknowledges that damages which may arise from any breach of any of his promises contained in this Section 14 may be impossible to ascertain or prove with certainty. The Participant agrees if Participant breaches any of his promises contained in this Section 14, in addition to the remedies provided under subsection (e), if applicable, and any other legal remedies which may be available, the Company shall be entitled to immediate injunctive relief from a court of competent jurisdiction, pending arbitration under Section 15 or otherwise, to end such breach, without further proof of damage. (g) Permitted Ownership. Nothing in this Section 14 shall prohibit the Participant 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 14 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 14 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 enforce- able by an arbitrator or a court having jurisdiction over the matter; and the Participant agrees that this Section 14 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. 15. Arbitration of Disputes. Any disputes, claims or controversies between the Participant and the Company which may arise out of or relate to this Agreement shall be settled by arbitration. This agreement to arbitrate shall survive the termination of this 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 from a court of competent jurisdiction prohibiting any on-going breaches of the Agreement by the Participant 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. IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the day and year first above written. "COMPANY" FLEMING COMPANIES, INC., an Oklahoma corporation SCOTT M. NORTHCUTT Scott M. Northcutt Senior Vice President - Human Resources "PARTICIPANT" MARK S. HANSEN Mark S. Hansen Exhibit A [Copy of 1999 Stock Incentive Plan] Exhibit B ASSIGNMENT SEPARATE FROM CERTIFICATE FOR VALUE RECEIVED, Mark S. Hansen, an individual, hereby irrevocably assigns and conveys to ________________________, THREE HUNDRED THOUSAND AND NO/100 (300,000) shares of the Common Capital Stock of Fleming Companies, Inc., an Oklahoma corporation, $2.50 par value. DATED: Mark S. Hansen EX-10 8 EXHIBIT 10.66 RESTRICTED STOCK AWARD AGREEMENT FOR THE FLEMING COMPANIES, INC. 1996 STOCK INCENTIVE PLAN THIS RESTRICTED STOCK AWARD AGREEMENT (the "Agreement") entered into as of the 29th day of February, 2000, by and between Fleming Companies, Inc., an Oklahoma corporation (the "Company"), and David R. Almond (herein referred to as the "Participant"); W I T N E S S E T H: WHEREAS, the Company has previously adopted the Fleming Companies, Inc. 1996 Stock Incentive Plan and certain amendments thereto (the "Plan"); WHEREAS, in connection with his employment with the Company, the Company has awarded the Participant 13,334 shares of common stock under the Plan subject to the terms and conditions of this Agreement; and WHEREAS, the Participant has previously entered into an Employment Agreement with the Company dated as of March 2, 1995, as amended dated May 1, 1997, August 18, 1998 and March 2, 1999 (the "Employment Agreement"). NOW, THEREFORE, in consideration of the premises and the mutual promises and covenants herein contained, the Participant and the Company agree as follows (all capitalized terms used herein, unless otherwise defined, have the meaning ascribed to such terms as set forth in the Plan): 1. The Plan. The Plan, a copy of which is attached hereto as Exhibit A, is hereby incorporated by reference herein and made a part hereof for all purposes, and when taken with this Agreement shall govern the rights of the Participant and the Company with respect to the Award (as defined below). 2. Grant of Award. The Company hereby grants to the Participant an award (the "Award") of 13,334 shares of Company common stock, par value $2.50 per share (the "Stock"), on the terms and conditions set forth herein and in the Plan. 3. Terms of Award. (a) Escrow of Shares. A certificate representing the shares of Stock subject to the Award (the "Restricted Stock") shall be issued in the name of the Participant and shall be escrowed with the Secretary of the Company (the "Escrow Agent") subject to removal of the restrictions placed thereon or forfeiture pursuant to the terms of this Agreement. (b) Vesting. The shares of Restricted Stock will vest based on the Participant's continuous employment with the Company or a Subsidiary through March 2, 2001. In the event the Participant's employment with the Company or a Subsidiary is terminated by reason of (i) death, (ii) disability, (iii) without "Cause" (as such term is defined in the Employment Agreement), or (iv) by the Participant for "Good Reason" (as such term is defined in the Employment Agreement), then all remaining shares of Restricted Stock (including any "Accrued Dividends," as such term is hereafter defined) which have not yet been vested shall immediately vest. Once vested pursuant to the terms of this Agreement, the Restricted Stock shall be deemed "Vested Stock." (c) Voting Rights and Dividends. The Participant shall not have the voting rights attributable to the shares of Restricted Stock issued to him. Any dividends declared and paid by the Company with respect to shares of Restricted Stock ("Accrued Dividends") shall not be paid to the Participant until such Restricted Stock becomes Vested Stock. Such Accrued Dividends shall be held by the Company as a general obligation and paid to the Participant at the time the underlying Restricted Stock becomes Vested Stock. (d) Vested Stock - Removal of Restrictions. Upon Re- stricted Stock becoming Vested Stock, all restrictions shall be removed from the certificates representing such Stock and the Secretary of the Company shall deliver to the Participant certificates representing such Vested Stock free and clear of all restrictions, except for any applicable securities laws restrictions, together with a check in the amount of all Accrued Dividends attributed to such Vested Stock without interest thereon. (e) Forfeiture. Restricted Stock that does not become Vested Stock pursuant to the terms of this Agreement shall be absolutely forfeited and the Participant shall have no future interest therein of any kind whatsoever. In the event the Participant's employment with the Company or a Subsidiary is terminated prior to all shares of Restricted Stock becoming Vested Stock for any reason other than (i) death, (ii) disability, (iii) without Cause, or (iv) by the Participant for Good Reason, then all remaining shares of Restricted Stock which have not yet been vested (including any Accrued Dividends) shall be absolutely forfeited and the Participant shall have no further interest therein of any kind whatsoever. 4. Change of Control. Upon the occurrence of a Change of Control Event on or prior to March 2, 2001, all Restricted Stock shall become Vested Stock and the Company shall deliver to the Participant certificates representing the Vested Stock free and clear of all restrictions, except for any applicable securities law restrictions, together with any Accrued Dividends attributable to such Vested Stock without interest thereon. For purposes of this Agreement, the words "Change of Control Event" shall not have the meaning set forth in Section 2.4 of the Plan, but shall instead be defined as: (i) the acquisition by any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended (the "Exchange Act")) (a "Person") of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 20% or more (the "Triggering Percentage") of either (i) the then outstanding shares of common stock of the Company (the "Outstanding Company Common Stock") or (ii) the combined voting power of the then outstanding voting securities of the Company entitled to vote generally in the election of directors (the "Outstanding Company Voting Securities"); provided, however, in the event the "Incumbent Board" (as such term is hereinafter defined) pursuant to authority granted in any rights agreement to which the Company is a party (the "Rights Agreement") lowers the acquisition threshold percentages set forth in such Rights Agreement, the Triggering Percentage shall be automatically reduced to equal the threshold percentages set pursuant to authority granted to the board in the Rights Agreement; and provided, further, however, that the following acquisitions shall not constitute a Change of Control: (i) any acquisition directly from the Company, (ii) any acquisition by the Company, (iii) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any corporation controlled by the Company, or (iv) any acquisition by any corporation pursuant to a transaction which complies with clauses (x), (y), and (z) of subsection (iii) of this Section 4(b); or (ii) Individuals who, as of the date hereof, constitute the Board (the "Incumbent Board") cease for any reason to constitute at least a majority of the Board; provided, however, that any individual becoming a director subsequent to the date hereof whose election, appointment or nomination for election by the Company's shareholders, was approved by a vote of at least a majority of the directors then comprising the Incumbent Board shall be considered as though such individual were a member of the Incumbent Board, but excluding, for purposes of this definition, any such individual whose initial assumption of office occurs as a result of an actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board; or (iii) Approval by the shareholders of the Company of a reorganization, share exchange, merger or consolidation or acquisition of assets of another corporation (a "Business Combination"), in each case, unless, following such Business Combination, (x) all or substantially all of the individuals and entities who were the beneficial owners, respectively, of the Outstanding Company Common Stock and Outstanding Company Voting Securities immediately prior to such Business Combination will beneficially own, directly or indirectly, more than 50% of, respectively, the then outstanding shares of common stock and the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors, as the case may be, of the corporation resulting from such Business Combination (including, without limitation, a corporation which as a result of such transaction will own the Company through one or more subsidiaries) in substantially the same proportions as their ownership, immediately prior to such Business Combination of the Outstanding Company Common Stock and Outstanding Company Voting Securities, as the case may be, (y) no Person (excluding any employee benefit plan (or related trust) of the Company or such corporation resulting from such Business Combination) will beneficially own, directly or indirectly, 20% or more of, respectively, the then outstanding shares of common stock of the corporation resulting from such Business Combination or the combined voting power of the then outstanding voting securities of such corporation except to the extent that such ownership existed prior to the Business Combination, and (z) at least a majority of the members of the board of directors of the corporation resulting from such Business Combination will have been members of the Incumbent Board at the time of the execution of the initial agreement, or of the action of the Board, providing for such Business Combination; or (iv) Approval by the shareholders of the Company of (x) a complete liquidation or dissolution of the Company or, (y) the sale or other disposition of all or substantially all of the assets of the Company, other than to a corporation, with respect to which following such sale or other disposition, (A) more than 50% of, respectively, the then outstanding shares of common stock of such corporation and the combined voting power of the then outstanding voting securities of such corporation entitled to vote generally in the election of directors will be beneficially owned, directly or indirectly, by all or substantially all of the individuals and entities who were the beneficial owners, respectively, of the Outstanding Company Common Stock and Outstanding Company Voting Securities immediately prior to such sale or other disposition in substantially the same proportion as their ownership, immediately prior to such sale or other disposition, of the Outstanding Company Common Stock and Outstanding Company Voting Securities, as the case may be, (B) less than 20% of, respectively, the then outstanding shares of common stock of such corporation and the combined voting power of the then outstanding voting securities of such corporation entitled to vote generally in the election of directors will be beneficially owned, directly or indirectly, by any Person (excluding any employee benefit plan (or related trust) of the Company or such corporation), except to the extent that such Person owned 20% or more of the Outstanding Company Common Stock or Outstanding Company Voting Securities prior to the sale or disposition, and (C) at least a majority of the members of the board of directors of such corporation will have been members of the Incumbent Board at the time of the execution of the initial agreement, or of the action of the Board, providing for such sale or other disposition of assets of the Company. 5. Legends. The shares of Stock which are the subject of the Award shall be subject to the following legend: "THE SHARES OF STOCK EVIDENCED BY THIS CERTIFICATE ARE SUBJECT TO AND ARE TRANSFERABLE ONLY IN ACCORDANCE WITH THAT CERTAIN RESTRICTED STOCK AWARD AGREEMENT FOR THE FLEMING COMPANIES, INC. 1996 STOCK INCENTIVE PLAN DATED THE 29th DAY OF FEBRUARY, 2000. ANY ATTEMPTED TRANSFER OF THE SHARES OF STOCK EVIDENCED BY THIS CERTIFICATE IN VIOLATION OF SUCH AGREEMENT SHALL BE NULL AND VOID AND WITHOUT EFFECT. A COPY OF THE AGREEMENT MAY BE OBTAINED FROM THE SECRETARY OF FLEMING COMPANIES, INC." 6. Stock Power. The Participant hereby agrees to execute and deliver to the Secretary of the Company a stock power (endorsed in blank) in the form of Exhibit B hereto covering his Award and authorizes the Secretary to deliver to the Company any and all shares of Restricted Stock that are forfeited under the provisions of this Agreement. The Participant further authorizes the Company to hold as a general obligation of the Company any Accrued Dividends and to pay such dividends to the Participant at the time the underlying Restricted Stock becomes Vested Stock. 7. Nontransferability of Award. The Participant shall not have the right to sell, assign, transfer, convey, dispose, pledge, hypothecate, burden, encumber or charge any shares of Restricted Stock or any interest therein in any manner whatsoever. 8. Notices. All notices or other communications relating to the Plan and this Agreement as it relates to the Participant shall be in writing, shall be deemed to have been made if personally delivered in return for a receipt, or if mailed, by regular U.S. mail, postage prepaid, by the Company to the Participant at his last known address evidenced on the payroll records of the Company. 9. Binding Effect and Governing Law. This Agreement shall be (i) binding upon and inure to the benefit of the parties hereto and their respective heirs, successors and assigns except as may be limited by the Plan and (ii) governed and construed under the laws of the State of Texas. 10. Withholding. The Company and the Participant shall comply with all federal and state laws and regulations with respect to the withholding, deposit and payment of any income, employment or other taxes relating to the Award (including Accrued Dividends). 11. Award Subject to Claims or Creditors. The Participant shall not have any interest in any particular assets of the Company, its parent, if applicable, or any Subsidiary by reason of the right to earn an Award (including Accrued Dividends) under the Plan and this Agreement; and the Participant or any other person shall have only the rights of a general unsecured creditor of the Company, its parent, if applicable, or a Subsidiary with respect to any rights under the Plan or this Agreement. 12. Captions. The captions of specific provisions of this Agreement are for convenience and reference only, and in no way define, describe, extend or limit the scope of this Agreement or the intent of any provision hereof. 13. Counterparts. This Agreement may be executed in any number of identical counterparts, each of which shall be deemed an original for all purposes, but all of which taken together shall form but one agreement. 14. Protection of Company's Business as Consideration. As specific consideration to the Company for this Award, the Participant agrees: (a) Limitations on Competition. Subject to sub- section (g), the Participant will not, without the Company's written consent, as a businessperson, directly or indirectly, be a share- holder, principal, agent, partner, officer, director, employee or consultant of SUPERVALU, Inc., Nash Finch Company, Richfood Holdings, Inc. or any other direct competitor of the Company, excluding national retail chains, or of any subsidiary, affiliate or successor of any direct competitor of the Company (collectively, the "Competitors"); provided, however, that nothing in this subsection (a) is intended to preclude the Participant from being employed or otherwise acting in the capacity of a lawyer on behalf of any of the Competitors unless such employment or activity would result in a breach of his conflict of interest and/or confidentiality obligations as an attorney or former attorney and an officer or former officer of the Company or any of its Subsidiaries or based on the confidentiality requirements contained in subsection (b). (b) Confidential Information; No Disparaging State- ments. The Participant acknowledges that during the course of the Participant's employment with the Company or any Subsidiary, he will have access to and gain knowledge of highly confidential and proprietary information and trade secrets. The Participant further acknowledges that the misuse, misappropriation or disclosure of this information could cause irreparable harm to the Company and/or a Subsidiary, both during and after the term of the Participant's employment. Therefore, the Participant agrees, during his employment and at all times thereafter, he will hold in a fiduciary capacity for the benefit of the Company and/or a Subsidiary 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 or any Subsidiary, customers, suppliers, joint ventures, licensors, licensees, distributors and other persons and entities with whom the Company or any of its Subsidiaries do business ("Confidential Data"), except upon the Company's written consent or as required by his duties with the Company or any of its Subsidiaries, 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 or a Subsidiary. The Participant agrees, during his employment with the Company or any of its Subsidiaries and at all times thereafter, not to make disparaging statements about the Company or any of its Subsidiaries 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 Par- ticipant 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 or any of its Subsidiaries to terminate their employment with the Company or any of its Subsidiaries and/or become associated with another employer. The Participant 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 or any its Subsidiaries which the Company or a Subsidiary had or was actively soliciting before and/or on his date of termination/separation. (d) Term of the Participant's Promises Under This Section. The Participant agrees that except as otherwise provided in subsection (b), his promises contained in this Section 14 shall continue in effect during his employment with the Company or any of its Subsidiaries 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 Agreement or (ii) within one (1) year following the Participant's date of termination/separation, but only if such termination/separation occurs on a date which is prior to March 2, 2001, or (iii) within one (1) year after vesting of any portion of the Restricted Stock, whichever is latest, the Participant, without the Company's written consent, as a businessperson, directly or indirectly, is a shareholder, principal, agent, partner, officer, director, employee or consultant of any of the Competitors, then (x) with respect to any shares of Restricted Stock, effective the date the Participant enters into such activity, all such Restricted Stock (including any Accrued Dividends) shall be absolutely forfeited and the Participant shall have no further interest therein of any kind whatsoever (unless forfeited sooner by operation of another term or condition of this Agreement or the Plan), and (y) with respect to any shares of Vested Stock, the Participant shall be required to return to the Company all of the actual shares of Vested Stock, or other equivalent shares of Company common stock, within thirty (30) days after the date of written notice from the Company that pursuant to the provisions of this subsection delivery of such shares is due and the Participant shall forfeit all rights to such shares of Vested Stock. This shall be in addition to any injunctive or other relief to which the Company may be entitle under subsection (f). This subsection (e) shall not apply however, if the Participant's employment by or other activity in connection with the applicable Competitor is in the capacity of a lawyer unless such employment or activity would result in a breach of the Participant's conflict of interest and/or confidentiality obligations as an attorney or former attorney for and an officer or former officer of the Company or any of its Subsidiaries or a breach of the confidentiality requirements contained in subsection (b). (f) Consequences of Other Breaches of this Section. The Participant acknowledges that damages which may arise from any breach of any of his promises contained in this Section 14 may be impossible to ascertain or prove with certainty. The Participant agrees if the Participant breaches any of his promises contained in this Section 14, in addition to the remedies provided under subsection (e), if applicable, and any other legal remedies which may be available, the Company shall be entitled to immediate injunctive relief from a court of competent jurisdiction, pending arbitration under Section 15 or otherwise, to end such breach, without further proof of damage. (g) Permitted Ownership. Nothing in this Section 14 shall prohibit the Participant 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 14 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 14 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 Participant agrees that this Section 14 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. 15. Arbitration of Disputes. Any disputes, claims or controversies between the Participant and the Company which may arise out of or relate to this Agreement shall be settled by arbitration. This agreement to arbitrate shall survive the termination of this 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 from a court of competent jurisdiction prohibiting any on-going breaches of the Agreement by the Participant 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/her own costs and attorneys' fees. 16. Reimbursement of Taxes. In the event that the Partici- pant makes a timely election to include in gross income the value of the Restricted Stock on the date of grant pursuant to Section 83(b) of the Internal Revenue Code of 1986, as amended (the "Code"), and gives notice of such election to the Company, the Company shall pay to the Participant an amount necessary to cause the net amount of such payment that is retained by the Participant after the calculation and deduction of any and all federal, state and local income taxes and employment taxes on such payment to be equal to the Participant's income taxes attributable to the Restricted Stock and the Participant's election under Section 83(b) of the Code in connection with the Restricted Stock. IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the day and year first above written. "COMPANY" FLEMING COMPANIES, INC., an Oklahoma corporation SCOTT M. NORTHCUTT Scott M. Northcutt Senior Vice President - Human Resources "PARTICIPANT" DAVID R. ALMOND David R. Almond Exhibit A (Fleming Companies, Inc. 1996 Stock Incentive Plan) Exhibit B ASSIGNMENT SEPARATE FROM CERTIFICATE FOR VALUE RECEIVED, David R. Almond, an individual, hereby irrevocably assigns and conveys to ________________________, THIRTEEN THOUSAND, THREE HUNDRED THIRTY-FOUR AND NO/100 (13,334) shares of the Common Capital Stock of Fleming Companies, Inc., an Oklahoma corporation, $2.50 par value. DATED: David R. Almond EX-10 9 EXHIBIT 10.67 AMENDMENT TO THE AMENDED AND RESTATED RESTRICTED STOCK AWARD AGREEMENT FOR THE FLEMING COMPANIES, INC. 1996 STOCK INCENTIVE PLAN THIS AMENDMENT TO THE AMENDED AND RESTATED RESTRICTED STOCK AWARD AGREEMENT FOR THE FLEMING COMPANIES, INC. 1996 STOCK INCENTIVE PLAN ("Amendment") is entered into as of the 29th day of February, 2000 by and between Fleming Companies, Inc., an Oklahoma corporation (the "Company"), and David R. Almond (the "Participant"). WITNESSETH: WHEREAS, the Company and the Participant have previously entered into that certain Amended and Restated Restricted Stock Award Agreement for the Fleming Companies, Inc. 1996 Stock Incentive Plan dated August 18, 1998 (the "Agreement"), which provided that the Company would grant to the Participant an award of 20,000 shares of voting common stock of the Company in exchange for the Participant's performing future services for the Company pursuant to the terms of the Agreement; and WHEREAS, as of the date hereof, the Participant has already become 100% vested in 10,000 shares of Stock (as defined in the Agreement) pursuant to Section A of Exhibit "B" of the Agreement, and 3,334 shares of Stock pursuant to Section B of Exhibit "B" of the Agreement; and WHEREAS, the parties hereto wish to amend the Exhibit "B" of the Agreement to provide that the remaining 6,666 unvested shares of Stock that were subject to performance vesting under Section B shall instead be subject to vesting after a required period of continuous employment with the Company and/or any of its subsidiaries; and WHEREAS, the parties hereto also wish to amend the Agreement to provide that the Participant will be reimbursed by the Company for income taxes attributable to the vesting of the remaining 6,666 unvested shares of Stock in accordance with the Agreement; and WHEREAS, this Amendment is not intended and shall not be construed as increasing the aggregate number of shares of Stock subject to the Agreement. NOW, THEREFORE, for good and valuable consideration, the receipt of which is hereby acknowledged, the parties hereto agree as follows: 1. The Agreement is hereby amended to add the following new Section: "14. Reimbursement of Taxes. The Company shall pay to the Participant an amount necessary to cause the net amount of such payment that is retained by the Participant after the calculation and deduction of any and all federal, state and local income taxes and employment taxes on such payment to be equal to the Participant's income taxes attributable to the vesting of 6,666 shares of Stock within the Award on March 2, 2001 in accordance with the terms of Section A of Exhibit "B" of this Agreement." 2. Exhibit "B" of the Agreement shall be amended to read as follows: "EXHIBIT 'B' VESTING OF RESTRICTED STOCK Restricted Stock shall vest in accordance with the following terms during the 'Award Period' which shall commence November 1, 1997 and shall terminate March 2, 2001 if not sooner vested. Shares not fully vested during the Award Period shall be forfeited by the Participant at the end of the Award Period. A. Sixteen thousand, six hundred sixty-six (16,666) shares of Stock in the Award will be subject to vesting based upon the Participant's continuous employment with the Company and/or any of its Subsidiaries through the vesting dates set forth on the following table: Vesting Date Number of Shares Vested ------------ ----------------------- January 1, 1998 3,334 January 1, 1999 3,333 January 1, 2000 3,333 March 2, 2001 6,666 B. Three thousand, three hundred thirty-four (3,334) shares of Stock in the Award will be subject to vesting based upon the Stock of the Company achieving and maintaining for 20 consecutive trading days from and after October 31, 1997, the following Current Market Values: Current Market Value Number of Shares Vested -------------------- ----------------------- $18.25 3,334 For purposes of this Agreement, 'Current Market Value' shall mean the closing price for shares of Stock as reported on the New York Stock Exchange as reflected in the Wall Street Journal Southwest Edition. These shares of Stock have vested." The Agreement is not amended in any respect except as herein provided. IN WITNESS WHEREOF, the parties have executed this Amendment as of the day and year first above written. "Company" FLEMING COMPANIES, INC., an Oklahoma corporation SCOTT M. NORTHCUTT Scott M. Northcutt, Senior Vice President - Human Resources "Participant" DAVID R. ALMOND David R. Almond EX-10 10 EXHIBIT 10.68 AMENDMENT TO NON-QUALIFIED STOCK OPTION AGREEMENT FOR THE FLEMING COMPANIES, INC. 1999 STOCK INCENTIVE PLAN THIS AMENDMENT TO NON-QUALIFIED STOCK OPTION AGREEMENT FOR THE FLEMING COMPANIES, INC. 1999 STOCK INCENTIVE PLAN ("Amendment") is entered into as of the 29th day of February, 2000 by and between Fleming Companies, Inc., an Oklahoma corporation (the "Company"), and David R. Almond (the "Participant"). WITNESSETH: WHEREAS, the Company and the Participant have previously entered into that certain Non-Qualified Stock Option Agreement under the Fleming Companies, Inc. 1999 Stock Incentive Plan dated March 2, 1999 (the "Agreement"), which granted to the Participant options to purchase 100,000 shares of voting common stock of the Company in exchange for the Participant's performing future services for the Company pursuant to the terms of the Agreement; and WHEREAS, all capitalized terms used in this Amendment shall have the same meaning ascribed to them in the Agreement unless specifically denoted otherwise; and WHEREAS, effective as of March 2, 2000, the Participant will become 100% vested in Stock Options to purchase 25,000 shares of Common Stock pursuant to Section 2 of the Agreement; and WHEREAS, the parties hereto wish to amend the Agreement to provide that the 25,000 Stock Options subject to the March 2, 2003 Exercise Date shall instead be subject to the March 2, 2001 Exercise Date; and WHEREAS, this Amendment is not intended and shall not be construed as increasing the aggregate number of shares of Common Stock subject to the Stock Options under the Agreement. NOW, THEREFORE, for good and valuable consideration, the receipt of which is hereby acknowledged, the parties hereto agree that Section 2 of the Agreement is hereby amended to read as follows: "2. TIMES OF EXERCISE OF STOCK OPTION. After, and only after, the conditions of Section 8 hereof have been satisfied, the Participant shall be eligible to exercise that portion of his Stock Options pursuant to the schedule set forth hereinafter. If the Participant'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 2, then the Participant shall be entitled, subject to the applicable provisions of the Plan and 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 1 of this Option Agreement by the designated percentage set forth below. Percent of Stock Exercise Dates Option Exercisable -------------- ------------------ On or After March 2, 2000 25% On or After March 2, 2001 75% On or After March 2, 2002 100%" The Agreement is not amended in any respect except as herein provided. IN WITNESS WHEREOF, the parties have executed this Amendment as of the day and year first above written. "Company" FLEMING COMPANIES, INC., an Oklahoma corporation SCOTT M. NORTHCUTT Scott M. Northcutt, Senior Vice President - Human Resources "Participant" DAVID R. ALMOND David R. Almond EX-10 11 EXHIBIT 10.69 AMENDMENT TO RESTRICTED STOCK AWARD AGREEMENT FOR THE FLEMING COMPANIES, INC. 1990 STOCK INCENTIVE PLAN THIS AMENDMENT TO RESTRICTED STOCK AWARD AGREEMENT FOR THE FLEMING COMPANIES, INC. 1990 STOCK INCENTIVE PLAN ("Amendment") is entered into as of the 29th day of February, 2000 by and between Fleming Companies, Inc., an Oklahoma corporation (the "Company"), and E. Stephen Davis (the "Participant"). WITNESSETH: WHEREAS, the Company and the Participant have previously entered into that certain Restricted Stock Award Agreement for the Fleming Companies, Inc. 1990 Stock Incentive Plan dated November 1, 1997 (the "Agreement"), which provided that the Company would grant to the Participant an award of 100,000 shares of voting common stock of the Company in exchange for the Participant's performing future services for the Company pursuant to the terms of the Agreement; and WHEREAS, as of the date hereof, the Participant has already become 100% vested in 33,334 shares of Stock (as defined in the Agreement) pursuant to Section A of Exhibit "B" of the Agreement, and 16,667 shares of Stock pursuant to Section B of Exhibit "B" of the Agreement; and WHEREAS, the parties hereto wish to amend Exhibit "B" of the Agreement to provide that the remaining 33,333 unvested shares of Stock that were subject to performance vesting under Section "B" shall instead become vested upon achievement by the Company of other performance standards and requirements as set forth in a new Section C of Exhibit "B"; and WHEREAS, this Amendment is not intended and shall not be construed as increasing the aggregate number of shares of Stock subject to the Agreement. NOW, THEREFORE, for good and valuable consideration, the receipt of which is hereby acknowledged, the parties hereto agree that Exhibit "B" of the Agreement shall be amended to read as follows: "EXHIBIT 'B' VESTING OF RESTRICTED STOCK Restricted Stock shall vest in accordance with the following terms during the 'Award Period' which shall commence November 1, 1997 and shall terminate July 20, 2001, if not sooner vested. Shares not fully vested during the Award Period shall be forfeited by the Participant at the end of the Award Period. A. Fifty thousand (50,000) shares of Stock in the Award will be subject to vesting based upon the Participant's continuous employment with the Company and/or any of its Subsidiaries through the vesting dates set forth on the following table: Vesting Date Number of Shares Vested ------------ ----------------------- January 1, 1998 16,667 January 1, 1999 16,667 January 1, 2000 16,666 B. Sixteen thousand, six hundred sixty-seven (16,667) shares of Stock in the Award will be subject to vesting based upon the Stock of the Company achieving and maintaining for 20 consecutive trading days from and after October 31, 1997, the following Current Market Values: Current Market Value Number of Shares Vested -------------------- ----------------------- $18.25 16,667 For purposes of this Agreement, 'Current Market Value' shall mean the closing price for shares of Stock as reported on the New York Stock Exchange as reflected in the Wall Street Journal Southwest Edition. These shares of Stock are vested. C. Thirty-three thousand, three hundred thirty-three (33,333) shares of Stock in the Award will be subject to vesting based upon the fulfillment of all of the following conditions: (i) The Participant shall have completed continuous employment with the Company through July 20, 2001; (ii) The Company shall have achieved the 'Target' as such term is defined in that certain Letter Agreement effective as of June 1, 1999, between the Company and Ernst & Young LLP covering Phase II of the Low Cost Pursuit Program (the 'Performance Vesting Objective'); and (iii) The Participant shall have taken all necessary steps to identify and propose to the Company a suitable candidate to succeed the Participant as Executive Vice President-Wholesale, of the Company upon the Participant's retirement or termination of employment from the Company. Such steps will include, but not be limited to, preparing a job description, conducting a search for candidates, interviewing candidates, and conducting negotiations with the prospective candidates. Any question regarding satisfaction of conditions in clauses (ii) and (iii) above shall be resolved by the Chairman and Chief Executive Officer of the Company in his sole and absolute discretion." The Agreement is not amended in any respect except as herein provided. IN WITNESS WHEREOF, the parties have executed this Amendment as of the day and year first above written. "Company" FLEMING COMPANIES, INC., an Oklahoma corporation SCOTT M. NORTHCUTT Scott M. Northcutt, Senior Vice President - Human Resources "Participant" E. STEPHEN DAVIS E. Stephen Davis EX-10 12 Exhibit 10.71 FLEMING BOARD MEMBER EMAR.NET, INC. NOTICE OF GRANT OF STOCK OPTION Notice is hereby given of the following option grant (the "Option") to purchase shares of the Common Stock of eMAR.net, Inc. (the "Corporation"): Optionee: Grant Date: January 18, 2000 Vesting Commencement Date: January 18, 2000 Exercise Price: $0.20 per share Number of Option Shares: 4,000 shares of Common Stock Expiration Date: January 17, 2010 Type of Incentive Stock Option Option: X Non-Statutory Stock Option Date Exercisable: Immediately Exercisable Vesting Schedule: The Option Shares shall initially be unvested and subject to repurchase by the Corporation at the Exercise Price paid per share. Optionee shall acquire a vested interest in, and the Corporation's repurchase right shall accordingly lapse with respect to, (i) twenty-five percent (25%) of the Option Shares upon Optionee's completion of one (1) year of Service measured from the Vesting Commencement Date and (ii) the balance of the Option Shares in a series of thirty-six (36) successive equal monthly installments upon Optionee's completion of each additional month of Service over the thirty-six (36)-month period measured from the first anniversary of the Vesting Commencement Date. In no event shall any additional Option Shares vest after Optionee's cessation of Service. Optionee understands and agrees that the Option is granted subject to and in accordance with the terms of the eMAR.net, Inc. 2000 Stock Option/Stock Issuance Plan (the "Plan"). Optionee further agrees to be bound by the terms of the Plan and the terms of the Option as set forth in the Stock Option Agreement attached hereto as Exhibit A. Optionee understands that any Option Shares purchased under the Option will be subject to the terms set forth in the Stock Purchase Agreement attached hereto as Exhibit B. Optionee hereby acknowledges receipt of a copy of the Plan in the form attached hereto as Exhibit C. REPURCHASE RIGHTS. OPTIONEE HEREBY AGREES THAT ALL OPTION SHARES ACQUIRED UPON THE EXERCISE OF THE OPTION SHALL BE SUBJECT TO CERTAIN REPURCHASE RIGHTS AND RIGHTS OF FIRST REFUSAL EXERCISABLE BY THE CORPORATION AND ITS ASSIGNS. THE TERMS OF SUCH RIGHTS ARE SPECIFIED IN THE ATTACHED STOCK PURCHASE AGREEMENT. At Will Employment. Nothing in this Notice or in the attached Stock Option Agreement or Plan shall confer upon Optionee any right to continue in Service for any period of specific duration or interfere with or otherwise restrict in any way the rights of the Corporation (or any Parent or Subsidiary employing or retaining Optionee) or of Optionee, which rights are hereby expressly reserved by each, to terminate Optionee's Service at any time for any reason, with or without cause. No Impairment of Rights. Nothing in this Notice or the attached Stock Option Agreement or Plan shall interfere with or otherwise impair the rights of Fleming and the Fleming stockholders to terminate Optionee's service as a Fleming Board Member at any time in accordance with the provisions of applicable law. Definitions. All capitalized terms in this Notice shall have the meaning assigned to them in this Notice or in the attached Stock Option Agreement. DATED: JANUARY 18, 2000 EMAR.NET, INC. By: John M. Thompson Title: Vice President - Chief Financial Officer and Treasurer OPTIONEE Address: Attachments: Exhibit A - Stock Option Agreement Exhibit B - Stock Purchase Agreement Exhibit C - 2000 Stock Option/Stock Issuance Plan EXHIBIT A FLEMING NON-EMPLOYEE BOARD MEMBER EMAR.NET, INC. STOCK OPTION AGREEMENT RECITALS A. The Board has adopted the Plan for the purpose of retaining the services of selected Employees, non-employee members of the Board or the board of directors of any Parent or Subsidiary and consultants and other independent advisors in the service of the Corporation (or any Parent or Subsidiary). B. Optionee is to render valuable services to the Corporation (or a Parent or Subsidiary), and this Agreement is executed pursuant to, and is intended to carry out the purposes of, the Plan in connection with the Corporation's grant of an option to Optionee. C. All capitalized terms in this Agreement shall have the meaning assigned to them in the attached Appendix. NOW, THEREFORE, it is hereby agreed as follows: 1. Grant of Option. The Corporation hereby grants to Optionee, as of the Grant Date, an option to purchase up to the number of Option Shares specified in the Grant Notice. The Option Shares shall be purchasable from time to time during the option term specified in Paragraph 2 at the Exercise Price. 2. Option Term. This option shall have a term of ten (10) years measured from the Grant Date and shall accordingly expire at the close of business on the Expiration Date, unless sooner terminated in accordance with Paragraph 5 or 6. 3. Limited Transferability. (a) Except as otherwise provided in Paragraph 3(b), this option shall be neither transferable nor assignable by Optionee other than by will or the laws of inheritance following Optionee's death and may be exercised, during Optionee's lifetime, only by Optionee. However, Optionee may designate one or more persons as the beneficiary or beneficiaries of this option, and this option shall, in accordance with such designation, automatically be transferred to such beneficiary or beneficiaries upon the Optionee's death while holding this option. Such beneficiary or beneficiaries shall take the transferred option subject to all the terms and conditions of this Agreement, including (without limitation) the limited time period during which this option may, pursuant to Paragraph 5, be exercised following Optionee's death. (b) This option may be assigned in whole or in part during Optionee's lifetime to one or more members of Optionee's family or to a trust established for the exclusive benefit of one or more such family members or to Optionee's former spouse, to the extent such assignment is in connection with the Optionee's estate plan or pursuant to a domestic relations order. The assigned portion shall be exercisable only by the person or persons who acquire a proprietary interest in the option pursuant to such assignment. The terms applicable to the assigned portion shall be the same as those in effect for this option immediately prior to such assignment. 4. Dates of Exercise. This option shall become exercisable for the Option Shares in one or more installments as specified in the Grant Notice. As the option becomes exercisable for such installments, those installments shall accumulate, and the option shall remain exercisable for the accumulated installments until the Expiration Date or sooner termination of the option term under Paragraph 5 or 6. 5. Cessation of Service. The option term specified in Paragraph 2 shall terminate (and this option shall cease to be outstanding) prior to the Expiration Date should any of the following provisions become applicable: (a) Should Optionee cease to remain in Service for any reason (other than death, Disability or Misconduct) while holding this option, then Optionee shall have a period of three (3) months (commencing with the date of such cessation of Service) during which to exercise this option, but in no event shall this option be exercisable at any time after the Expiration Date. (b) Should Optionee die while holding this option, then the personal representative of Optionee's estate or the person or persons to whom the option is transferred pursuant to Optionee's will or the laws of inheritance shall have the right to exercise this option. However, if Optionee has designated one or more beneficiaries of this option, then those persons shall have the exclusive right to exercise this option following Optionee's death. Any such right to exercise this option shall lapse, and this option shall cease to be outstanding, upon the earlier of (i) the expiration of the twelve (12)-month period measured from the date of Optionee's death or (ii) the Expiration Date. (c) Should Optionee cease Service by reason of Disability while holding this option, then Optionee shall have a period of twelve (12) months (commencing with the date of such cessation of Service) during which to exercise this option. In no event shall this option be exercisable at any time after the Expiration Date. (d) During the limited period of post-Service exercis- ability, this option may not be exercised in the aggregate for more than the number of Option Shares in which Optionee is, at the time of Optionee's cessation of Service, vested pursuant to the Vesting Schedule specified in the Grant Notice or the special vesting acceleration provisions of Paragraph 6. Upon the expiration of such limited exercise period or (if earlier) upon the Expiration Date, this option shall terminate and cease to be outstanding for any vested Option Shares for which the option has not been exercised. To the extent Optionee is not vested in one or more Option Shares at the time of Optionee's cessation of Service, this option shall immediately terminate and cease to be outstanding with respect to those shares. (e) Should Optionee's Service be terminated for Miscon- duct or should Optionee otherwise engage in Misconduct while this option is outstanding, then this option shall terminate immediately and cease to remain outstanding. 6. Parent Level Change in Control. Should a Parent-Level Change in Control occur at a time when the Optionee is a Fleming Board Member, then the Option Shares at the time subject to this option shall automatically vest in full so that this option shall, immediately prior to the effective date of such Parent- Level Change in Control, become exercisable for all of the Option Shares as fully-vested shares and may be exercised for any or all of those Option Shares as vested shares. The option shall remain so exercisable until the expiration or sooner termination of the option term pursuant to the provisions of this Agreement. 7. Corporate Level Change in Control. (a) Should a Corporate-Level Change in Control occur at a time when the Optionee is a Fleming Board Member, then the Option Shares at the time subject to this option but not otherwise vested shall automatically vest in full so that this option shall, immediately prior to the effective date of such Corporate- Level Change in Control, become exercisable for all of the Option Shares as fully-vested shares and may be exercised for any or all of those Option Shares as vested shares. (b) Immediately following the consummation of the Corpo- rate-Level Change in Control, this option shall terminate and cease to be outstanding, except to the extent assumed by the successor corporation (or parent thereof) or otherwise continued in full force and effect pursuant to the express terms of the Corporate- Level Change in Control transaction. 8. Additional Change in Control Provisions. (a) If this option is assumed in connection with a Corpo- rate-Level Change in Control, then this option shall be appropriately adjusted, immediately after such transaction, to apply to the number and class of securities which would have been issuable to Optionee in consummation of such Corporate-Level Change in Control, had the option been exercised immediately prior to such transaction. Appropriate adjustments shall also be made to the exercise price provided the aggregate exercise price shall remain the same. To the extent the actual holders of the Corporation's outstanding Common Stock receive cash consideration for their Common Stock in consummation of the Corporate-Level Change in Control, the successor corporation may, in connection with the assumption of this option, substitute one or more shares of its own common stock with a fair market value equivalent to the cash consideration paid per share of Common Stock in such Corporate- Level Change in Control. (b) This Agreement shall not in any way affect the right of the Corporation or Fleming as the Corporation's Parent to adjust, reclassify, reorganize or otherwise change its capital or business structure or to merge, consolidate, dissolve, liquidate or sell or transfer all or any part of its business or assets. 9. Parent-Level Reduction in Ownership. Should a Parent- Level Reduction in Ownership occur at a time when the Optionee is a Fleming Board Member, then the Option Shares at the time subject to this option but not otherwise vested shall automatically vest in full so that this option shall, immediately prior to the effective date of such Parent-Level Reduction in Ownership, become exercisable for all of the Option Shares as fully-vested shares and may be exercised for any or all of those Option Shares as vested shares. The option shall remain so exercisable until the expiration or sooner termination of the option term pursuant to the provisions of this Agreement. 10. Approved Termination Event. Should the Optionee's Service as a Fleming Board Member cease by reason of an Approved Termination Event, then fifty percent (50%) of any Option Shares which are not otherwise at that time vested in accordance with the provisions of this Agreement shall vest so that this option shall immediately become exercisable for that percentage portion of the Option Shares as fully-vested shares and may be exercised for any or all of those vested Option Shares, together with any other Option Shares which may have vested in accordance with the provisions of this Agreement. The option shall remain so exercisable until the expiration or sooner termination of the option term pursuant to the provisions of this Agreement. 11. Adjustment in Option Shares. Should any change be made to the Common Stock by reason of any stock split, stock dividend, recapitalization, combination of shares, exchange of shares or other change affecting the outstanding Common Stock as a class without the Corporation's receipt of consideration, appropriate adjustments shall be made to (i) the total number and/or class of securities subject to this option and (ii) the Exercise Price in order to reflect such change and thereby preclude a dilution or enlargement of benefits hereunder. 12. Stockholder Rights. The holder of this option shall not have any stockholder rights with respect to the Option Shares until such person shall have exercised the option, paid the Exercise Price and become the record holder of the purchased shares. 13. Manner of Exercising Option. (a) In order to exercise this option with respect to all or any part of the Option Shares for which this option is at the time exercisable, Optionee (or any other person or persons exercising the option) must take the following actions: (i) Execute and deliver to the Corporation a Pur- chase Agreement for the Option Shares for which the option is exercised. (ii) Pay the aggregate Exercise Price for the pur- chased shares in cash or check made payable to the Corporation. Should the Common Stock be registered under Section 12 of the 1934 Act at the time the option is exercised, then the Exercise Price may also be paid as follows: (A) in shares of Common Stock held by Optionee (or any other person or persons exercising the option) for the requisite period necessary to avoid a charge to the Corporation's earnings for financial reporting purposes and valued at Fair Market Value on the Exercise Date; or (B) to the extent the option is exercised for vested Option Shares, through a special sale and remittance procedure pursuant to which Optionee (or any other person or persons exercising the option) shall concurrently provide irrevocable instructions (a) to a Corporation-designated brokerage firm to effect the immediate sale of the purchased shares and remit to the Corporation, out of the sale proceeds available on the settlement date, sufficient funds to cover the aggregate Exercise Price payable for the purchased shares plus all applicable Federal, state and local income and employment taxes required to be withheld by the Corporation by reason of such exercise and (b) to the Corporation to deliver the certificates for the purchased shares directly to such brokerage firm in order to complete the sale. Except to the extent the sale and remittance procedure is utilized in connection with the option exercise, payment of the Exercise Price must accompany the Purchase Agreement delivered to the Corporation in connection with the option exercise. (iii) Furnish to the Corporation appropriate docu- mentation that the person or persons exercising the option (if other than Optionee) have the right to exercise this option. (iv) Execute and deliver to the Corporation such written representations as may be requested by the Corporation in order for it to comply with the applicable requirements of Federal and state securities laws. (v) Make appropriate arrangements with the Corpora- tion (or Parent or Subsidiary employing or retaining Optionee) for the satisfaction of all Federal, state and local income and employment tax withholding requirements applicable to the option exercise. (b) As soon as practical after the Exercise Date, the Corporation shall issue to or on behalf of Optionee (or any other person or persons exercising this option) a certificate for the purchased Option Shares, with the appropriate legends affixed thereto. (c) In no event may this option be exercised for any fractional shares. 14. REPURCHASE RIGHTS. ALL OPTION SHARES ACQUIRED UPON THE EXERCISE OF THIS OPTION SHALL BE SUBJECT TO CERTAIN RIGHTS OF THE CORPORATION AND FLEMING AND ITS ASSIGNS TO REPURCHASE THOSE SHARES IN ACCORDANCE WITH THE TERMS SPECIFIED IN THE PURCHASE AGREEMENT. 15. Compliance with Laws and Regulations. (a) The exercise of this option and the issuance of the Option Shares upon such exercise shall be subject to compliance by the Corporation and Optionee with all applicable requirements of law relating thereto and with all applicable regulations of any stock exchange (or the Nasdaq National Market, if applicable) on which the Common Stock may be listed for trading at the time of such exercise and issuance. (b) The inability of the Corporation to obtain approval from any regulatory body having authority deemed by the Corporation to be necessary to the lawful issuance and sale of any Common Stock pursuant to this option shall relieve the Corporation of any liability with respect to the non-issuance or sale of the Common Stock as to which such approval shall not have been obtained. The Corporation, however, shall use its best efforts to obtain all such approvals. 16. Successors and Assigns. Except to the extent otherwise provided in Paragraphs 3 and 6, the provisions of this Agreement shall inure to the benefit of, and be binding upon, the Corporation and its successors and assigns and Optionee, Optionee's assigns and the legal representatives, heirs and legatees of Optionee's estate. 17. Notices. Any notice required to be given or delivered to the Corporation under the terms of this Agreement shall be in writing and addressed to the Corporation at its principal corporate offices. Any notice required to be given or delivered to Optionee shall be in writing and addressed to Optionee at the address indicated below Optionee's signature line on the Grant Notice. All notices shall be deemed effective upon personal delivery or upon deposit in the U.S. mail, postage prepaid and properly addressed to the party to be notified. 18. Construction. This Agreement and the option evidenced hereby are made and granted pursuant to the Plan and are in all respects limited by and subject to the terms of the Plan. All decisions of the Plan Administrator with respect to any question or issue arising under the Plan or this Agreement shall be conclusive and binding on all persons having an interest in this option. 19. Governing Law. The interpretation, performance and enforcement of this Agreement shall be governed by the laws of the State of Texas without resort to that State's conflict-of- laws rules. 20. Stockholder Approval. If the Option Shares covered by this Agreement exceed, as of the Grant Date, the number of shares of Common Stock which may be issued under the Plan as last approved by the stockholders, then this option shall be void with respect to such excess shares, unless stockholder approval of an amendment sufficiently increasing the number of shares of Common Stock issuable under the Plan is obtained in accordance with the provisions of the Plan. APPENDIX The following definitions shall be in effect under the Agreement: A. Agreement shall mean this Stock Option Agreement. B. Approved Termination Event shall mean the Optionee's voluntary resignation from the Fleming Board of Directors (i) on or after his or her attainment of age sixty-five (65) or (ii) in accordance with the governance policy in effect at the time for members of the Fleming Board of Directors. C. Board shall mean the Corporation's Board of Directors. D. Code shall mean the Internal Revenue Code of 1986, as amended. E. Common Stock shall mean the Corporation's common stock. F. Corporate-Level Change in Control shall mean any of the following transactions involving a change in control or ownership of the Corporation: (i) a stockholder-approved merger or consolidation in which securities possessing more than fifty percent (50%) of the total combined voting power of the Corporation's outstanding securities are transferred to a person or persons different from the persons holding those securities immediately prior to such transaction, or (ii) a stockholder-approved sale, transfer or other dis- position of all or substantially all of the Corporation's assets in complete liquidation or dissolution of the Corporation, or (iii) the acquisition, directly or indirectly, by any person or related group of persons (other than the Corporation or a person that directly or indirectly controls, is controlled by, or is under common control with, the Corporation) of beneficial ownership (within the meaning of Rule 13d-3 of the Securities Exchange Act of 1934, as amended) of securities possessing more than fifty percent (50%) of the total combined voting power of the Corporation's outstanding securities pursuant to a tender or exchange offer made directly to the Corporation's stockholders. G. Corporation shall mean eMAR.net, Inc., a Delaware corporation, and any successor corporation to all or substantially all of the assets or voting stock of eMAR.net, Inc. which shall be appropriate action assume this option. H. Disability shall mean the inability of Optionee to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment and shall be determined by the Plan Administrator on the basis of such medical evidence as the Plan Administrator deems warranted under the circumstances. I. Employee shall mean an individual who is in the employ of the Corporation (or any Parent or Subsidiary), subject to the control and direction of the employer entity as to both the work to be performed and the manner and method of performance. J. Exercise Date shall mean the date on which the option shall have been exercised in accordance with Paragraph 9 of the Agreement. K. Exercise Price shall mean the exercise price payable per Option Share as specified in the Grant Notice. L. Expiration Date shall mean the date on which the option expires as specified in the Grant Notice. M. Fair Market Value per share of Common Stock on any relevant date shall be determined in accordance with the following provisions: (i) If the Common Stock is at the time traded on the Nasdaq National Market, then the Fair Market Value shall be the closing selling price per share of Common Stock on the date in question, as the price is reported by the National Association of Securities Dealers on the Nasdaq National Market and published in The Wall Street Journal. If there is no closing selling price for the Common Stock on the date in question, then the Fair Market Value shall be the closing selling price on the last preceding date for which such quotation exists. (ii) If the Common Stock is at the time listed on any Stock Exchange, then the Fair Market Value shall be the closing selling price per share of Common Stock on the date in question on the Stock Exchange determined by the Plan Administrator to be the primary market for the Common Stock, as such price is officially quoted in the composite tape of transactions on such exchange and published in The Wall Street Journal. If there is no closing selling price for the Common Stock on the date in question, then the Fair Market Value shall be the closing selling price on the last preceding date for which such quotation exists. (iii) If the Common Stock is at the time neither listed on any Stock Exchange nor traded on the Nasdaq National Market, then the Fair Market Value shall be determined by the Plan Administrator after taking into account such factors as the Plan Administrator shall deem appropriate. N. Fleming shall mean Fleming Companies, Inc., an Oklahoma corporation, which is currently the Parent of the Corporation. O. Fleming Board Member shall mean any individual who is at the time of determination serving as a member of the Fleming Board of Directors. P. Grant Date shall mean the date of grant of the option as specified in the Grant Notice. Q. Grant Notice shall mean the Notice of Grant of Stock Option accompanying the Agreement, pursuant to which Optionee has been informed of the basic terms of the option evidenced hereby. R. Misconduct shall mean the commission of any act of fraud, embezzlement or dishonesty by Optionee, any unauthorized use or disclosure by Optionee of confidential information or trade secrets of the Corporation (or any Parent or Subsidiary), or any other intentional misconduct by Optionee adversely affecting the business or affairs of the Corporation (or any Parent or Subsidiary) in a material manner. The foregoing definition shall not be deemed to be inclusive of all the acts or omissions which the Corporation (or any Parent or Subsidiary) may consider as grounds for the dismissal or discharge of Optionee or any other individual in the Service of the Corporation (or any Parent or Subsidiary). S. 1934 Act shall mean the Securities Exchange Act of 1934, as amended. T. Non-Statutory Option shall mean an option not intended to satisfy the requirements of Code Section 422. U. Option Shares shall mean the number of shares of Common Stock subject to the option. V. Optionee shall mean the person to whom the option is granted as specified in the Grant Notice. W. Parent shall mean any corporation (other than the Corporation) in an unbroken chain of corporations ending with the Corporation, provided each corporation in the unbroken chain (other than the Corporation) owns, at the time of the determination, stock possessing fifty percent (50%) or more of the total combined voting power of all classes of stock in one of the other corporations in such chain. X. Parent-Level Change in Control shall mean any of the following transactions involving a change in control or ownership of the Fleming which is effected while, and only while, Fleming is the Parent of the Corporation: (i) the acquisition by any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the 1934 Act (a "Person") of beneficial ownership (within the meaning of Rule 13d- 3 promulgated under the 1933 Act) of 20% or more (the "Triggering Percentage") of either (i) the then outstanding shares of Fleming common stock (the "Outstanding Company Common Stock") or (ii) the combined voting power of the then outstanding Fleming voting securities entitled to vote generally in the election of directors (the "Outstanding Company Voting Securities"); provided, however, in the event the "Incumbent Board" (as such term is hereinafter defined) pursuant to authority granted in any rights agreement to which Fleming is a party (the "Rights Agreement") lowers the acquisition threshold percentages set forth in such Rights Agreement, the Triggering Percentage shall be automatically reduced to equal the threshold percentages set pursuant to authority granted to the board in the Rights Agreement; and provided, further, however, that the following acquisitions shall not constitute a Parent-Level Change in Control: (i) any acquisition directly from Fleming, (ii) any acquisition by Fleming, (iii) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by Fleming or any corporation controlled by Fleming, or (iv) any acquisition by any corporation pursuant to a transaction which complies with clauses (x), (y), and (z) of subsection (iii) of this definition; or (ii) a change in the composition of the Fleming Board of Directors such that the individuals who, as of the date of this Agreement, constitute the Fleming Board of Directors (the "Incumbent Board") cease for any reason to comprise at least a majority of the Fleming Board of Directors; provided, however, that any individual who becomes a member of the Fleming Board of Directors subsequent to the date of this Agreement and whose election, appointment or nomination for election by Fleming's shareholders, was approved by a vote of at least a majority of the directors then comprising the Incumbent Board shall be considered as though such individual were a member of the Incumbent Board, but excluding for purposes of this definition, any such individual whose initial assumption of office occurs as a result of an actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Fleming Board of Directors; or (iii) the approval by the Fleming shareholders of a reorganization, share exchange, merger or consolidation or acquisition of assets of another corporation (a "Business Combination"), in each case, unless, following such Business Combination, (x) all or substantially all of the individuals and entities who were the beneficial owners, respectively, of the Outstanding Company Common Stock and Outstanding Company Voting Securities immediately prior to such Business Combination will beneficially own, directly or indirectly, more than 50% of, respectively, the then outstanding shares of common stock and the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors, as the case may be, of the corporation resulting from such Business Combination (including, without limitation, a corporation which as a result of such transaction will own Fleming through one or more subsidiaries) in substantially the same proportions as their ownership, immediately prior to such Business Combination of the Outstanding Company Common Stock and Outstanding Company Voting Securities, as the case may be, (y) no Person (excluding any employee benefit plan (or related trust) of Fleming or such corporation resulting from such Business Combination) will beneficially own, directly or indirectly, 20% or more of, respectively, the then outstanding shares of common stock of the corporation resulting from such Business Combination or the combined voting power of the then outstanding voting securities of such corporation except to the extent that such ownership existed prior to the Business Combination, and (z) at least a majority of the members of the board of directors of the corporation resulting from such Business Combination will have been members of the Incumbent Board at the time of the execution of the initial agreement, or of the action of the Incumbent Board, providing for such Business Combination; or (iv) the approval by the shareholders of Fleming of (x) a complete liquidation or dissolution of Fleming or, (y) the sale or other disposition of all or substantially all of the assets of Fleming, other than to a corporation, with respect to which following such sale or other disposition, (A) more than 50% of, respectively, the then outstanding shares of common stock of such corporation and the combined voting power of the then outstanding voting securities of such corporation entitled to vote generally in the election of directors will be beneficially owned, directly or indirectly, by all or substantially all of the individuals and entities who were the beneficial owners, respectively, of the Outstanding Company Common Stock and Outstanding Company Voting Securities immediately prior to such sale or other disposition in substantially the same proportion as their ownership, immediately prior to such sale or other disposition, of the Outstanding Company Common Stock and Outstanding Company Voting Securities, as the case may be, (B) less than 20% of, respectively, the then outstanding shares of common stock of such corporation and the combined voting power of the then outstanding voting securities of such corporation entitled to vote generally in the election of directors will be beneficially owned, directly or indirectly, by any Person (excluding any employee benefit plan (or related trust) of Fleming or such corporation), except to the extent that such Person owned 20% or more of the Outstanding Company Common Stock or Outstanding Company Voting Securities prior to the sale or disposition, and (C) at least a majority of the members of the board of directors of such corporation will have been members of the Incumbent Board at the time of the execution of the initial agreement, or of the action of the Board, providing for such sale or other disposition of assets of Fleming. Y. Parent-Level Reduction in Ownership shall mean any transaction, including (without limitation) any sale or other disposition by Fleming of its ownership interest in any outstanding voting securities of the Corporation or any direct issuance of voting securities by the Corporation, which effects a reduction to Fleming's combined direct and indirect (through one or more majority-owned subsidiaries) ownership of the Corporation's voting securities to an amount which represents less than fifty percent (50%) of the total combined voting power of all outstanding classes of stock of the Corporation. Z. Plan shall mean the Corporation's 2000 Stock Option/Stock Issuance Plan. AA. Plan Administrator shall mean either the Board or a committee of the Board acting in its capacity as administrator of the Plan. BB. Purchase Agreement shall mean the stock purchase agreement in substantially the form of Exhibit B to the Grant Notice. CC. Service shall mean the Optionee's performance of services for the Corporation (or any Parent or Subsidiary) in the capacity of an Employee, a non-employee member of the board of directors or an independent consultant. Service shall in all events include the Optionee's service as a Fleming Board Member. DD. Stock Exchange shall mean the American Stock Exchange or the New York Stock Exchange. EE. Subsidiary shall mean any corporation (other than the Corporation) in an unbroken chain of corporations beginning with the Corporation, provided each corporation (other than the last corporation) in the unbroken chain owns, at the time of the determination, stock possessing fifty percent (50%) or more of the total combined voting power of all classes of stock in one of the other corporations in such chain. FF. Vesting Schedule shall mean the vesting schedule specified in the Grant Notice pursuant to which the Optionee is to vest in the Option Shares in a series of installments over his or her period of Service. EXHIBIT B EMAR.NET, INC. STOCK PURCHASE AGREEMENT AGREEMENT made as of this ____ day of February, 2000 by and between eMAR.net, Inc., a Delaware corporation, and ________________________________, a Participant in the Corporation's 2000 Stock Option/Stock Issuance Plan. All capitalized terms in this Agreement shall have the meaning assigned to them in this Agreement or in the attached Appendix. A. PURCHASE OF SHARES 1. Purchase. Participant hereby purchases Four Thousand (4,000) shares of Common Stock (the "Purchased Shares") pursuant to that certain option granted Participant on January 18, 2000 to purchase up to Four Thousand (4,000) shares of Common Stock under the Plan at the purchase price of $0.20 per share (the "Purchase Price"). 2. Payment. Concurrently with the delivery of this Agreement to the Corporation, Participant shall pay the Purchase Price for the Purchased Shares in cash or cash equivalent and shall deliver a duly-executed blank Assignment Separate from Certificate (in the form attached hereto as Exhibit I) with respect to the Purchased Shares. 3. Stockholder Rights. Until such time as the Corporation exercises the Repurchase Right or the First Refusal Right, Participant (or any successor in interest) shall have all stockholder rights (including voting, dividend and liquidation rights) with respect to the Purchased Shares, subject, however, to the transfer restrictions of Articles B and C. B. SECURITIES LAW COMPLIANCE 1. Restricted Securities. The Purchased Shares have not been registered under the 1933 Act and are being issued to Participant in reliance upon one of the following exemptions from such registration requirements: (i) SEC Rule 701 for stock issuances under compensatory benefit plans such as the Plan, (ii) SEC Rule 504 for limited offering of One Million Dollars ($1,000,000) or less or (iii) the private placement exemption provided under Section 4(2) of the 1933 Act. Participant hereby confirms that Participant has been informed that the Purchased Shares are restricted securities under the 1933 Act and may not be resold or transferred unless the Purchased Shares are first registered under the Federal securities laws or unless an exemption from such registration is available. Accordingly, Participant hereby acknowledges that Participant is prepared to hold the Purchased Shares for an indefinite period and that Participant is aware that SEC Rule 144 issued under the 1933 Act which exempts certain resales of unrestricted securities is not presently available to exempt the resale of the Purchased Shares from the registration requirements of the 1933 Act. 2. Disposition of Purchased Shares. Participant shall make no disposition of the Purchased Shares (other than a Permitted Transfer) unless and until there is compliance with all of the following requirements: (i) Participant shall have provided the Corporation with a written summary of the terms and conditions of the proposed disposition. (ii) Participant shall have complied with all requirements of this Agreement applicable to the disposition of the Purchased Shares. (iii) Participant shall have provided the Corporation with written assurances, in form and substance satisfactory to the Corporation, that (a) the proposed disposition does not require registration of the Purchased Shares under the 1933 Act or (b) all appropriate action necessary for compliance with the registration requirements of the 1933 Act or any exemption from registration available under the 1933 Act (including Rule 144) has been taken. The Corporation shall not be required (i) to transfer on its books any Purchased Shares which have been sold or transferred in violation of the provisions of this Agreement or (ii) to treat as the owner of the Purchased Shares, or otherwise to accord voting, dividend or liquidation rights to, any transferee to whom the Purchased Shares have been transferred in contravention of this Agreement. 3. Restrictive Legends. The stock certificates for the Purchased Shares shall be endorsed with one or more of the following restrictive legends: "The shares represented by this certificate have not been registered under the Securities Act of 1933. The shares may not be sold or offered for sale in the absence of (a) an effective registration statement for the shares under such Act, (b) a "no action" letter of the Securities and Exchange Commission with respect to such sale or offer or (c) satisfactory assurances to the Corporation that registration under such Act is not required with respect to such sale or offer." "The shares represented by this certificate are subject to certain repurchase rights and rights of first refusal granted to the Corporation and accordingly may not be sold, assigned, transferred, encumbered, or in any manner disposed of except in conformity with the terms of a written agreement dated February ____, 2000 between the Corporation and the registered holder of the shares (or the predecessor in interest to the shares). A copy of such agreement is maintained at the Corporation's principal corporate offices." C. TRANSFER RESTRICTIONS 1. Restriction on Transfer. Except for any Permitted Transfer, Participant shall not transfer, assign, encumber or otherwise dispose of any of the Purchased Shares which are subject to the Repurchase Right. In addition, Purchased Shares which are released from the Repurchase Right shall not be transferred, assigned, encumbered or otherwise disposed of in contravention of the First Refusal Right or the Market Stand-Off. 2. Transferee Obligations. Each person (other than the Corporation) to whom the Purchased Shares are transferred by means of a Permitted Transfer must, as a condition precedent to the validity of such transfer, acknowledge in writing to the Corporation that such person is bound by the provisions of this Agreement and that the transferred shares are subject to (i) the Repurchase Right, (ii) the First Refusal Right and (iii) the Market Stand-Off, to the same extent such shares would be so subject if retained by Participant. 3. Market Stand-Off. (a) In connection with any underwritten public offering by the Corporation of its equity securities pursuant to an effective registration statement filed under the 1933 Act, including the Corporation's initial public offering, Owner shall not sell, make any short sale of, loan, hypothecate, pledge, grant any option for the purchase of, or otherwise dispose or transfer for value or otherwise agree to engage in any of the foregoing transactions with respect to, any Purchased Shares without the prior written consent of the Corporation or its underwriters. Such restriction (the "Market Stand-Off") shall be in effect for such period of time from and after the effective date of the final prospectus for the offering as may be requested by the Corporation or such underwriters. In no event, however, shall such period exceed one hundred eighty (180) days, and the Market Stand-Off shall in no event be applicable to any underwritten public offering effected more than two (2) years after the effective date of the Corporation's initial public offering. (b) Owner shall be subject to the Market Stand- Off provided and only if the officers and directors of the Corporation are also subject to similar restrictions. (c) Any new, substituted or additional securities which are by reason of any Recapitalization or Reorganization distributed with respect to the Purchased Shares shall be immediately subject to the Market Stand-Off, to the same extent the Purchased Shares are at such time covered by such provisions. (d) In order to enforce the Market Stand-Off, the Corporation may impose stop-transfer instructions with respect to the Purchased Shares until the end of the applicable stand-off period. D. REPURCHASE RIGHT 1. Grant. The Corporation is hereby granted the right (the "Repurchase Right"), exercisable at any time during the sixty (60)-day period following the date Participant ceases for any reason to remain in Service, to repurchase at the Purchase Price any or all of the Purchased Shares in which Participant is not, at the time of his or her cessation of Service, vested in accordance with the provisions of the Vesting Schedule set forth in Paragraph D.3 or the special vesting acceleration provisions of Paragraphs D.5 through D.8 (such shares to be hereinafter referred to as the "Unvested Shares"). 2. Exercise of the Repurchase Right. The Repurchase Right shall be exercisable by written notice delivered to each Owner of the Unvested Shares prior to the expiration of the sixty (60)-day exercise period. The notice shall indicate the number of Unvested Shares to be repurchased and the date on which the repurchase is to be effected, such date to be not more than thirty (30) days after the date of such notice. The certificates representing the Unvested Shares to be repurchased shall be delivered to the Corporation on the closing date specified for the repurchase. Concurrently with the receipt of such stock certificates, the Corporation shall pay to Owner, in cash or cash equivalents (including the cancellation of any purchase-money indebtedness), an amount equal to the Purchase Price previously paid for the Unvested Shares which are to be repurchased from Owner. 3. Termination of the Repurchase Right. The Repurchase Right shall terminate with respect to any Unvested Shares for which it is not timely exercised under Paragraph D.2. In addition, the Repurchase Right shall terminate and cease to be exercisable with respect to any and all Purchased Shares in which Participant vests in accordance with the following Vesting Schedule: (i) Participant shall vest in twenty-five percent (25%) of the Purchased Shares, and the Repurchase Right shall concurrently lapse with respect to those Purchased Shares, upon Participant's completion of one (1) year of Service measured from January 18, 2000. (ii) Participant shall vest in the remaining seventy-five percent (75%) of the Purchased Shares, and the Repurchase Right shall concurrently lapse with respect to those Purchased Shares, in a series of thirty-six (36) successive equal monthly installments upon Participant's completion of each additional month of Service over the thirty-six (36)-month period measured from the date on which the first twenty-five percent (25%) of the Purchased Shares vests hereunder. All Purchased Shares as to which the Repurchase Right lapses shall, however, remain subject to (i) the First Refusal Right and (ii) the Market Stand-Off. 4. Recapitalization. Any new, substituted or additional securities or other property (including cash paid other than as a regular cash dividend) which is by reason of any Recapitalization distributed with respect to the Purchased Shares shall be immediately subject to the Repurchase Right and any escrow requirements hereunder, but only to the extent the Purchased Shares are at the time covered by such right or escrow requirements. Appropriate adjustments to reflect such distribution shall be made to the number and/or class of Purchased Shares subject to this Agreement and to the price per share to be paid upon the exercise of the Repurchase Right in order to reflect the effect of any such Recapitalization upon the Corporation's capital structure; provided, however, that the aggregate purchase price shall remain the same. 5. Corporate-Level Change in Control. Should a Corporate-Level Change in Control occur at a time when the Participant is a Fleming Board Member, then the Repurchase Right shall automatically terminate in its entirety, and all the Purchased Shares shall vest in full, immediately prior to the consummation of that Corporate-Level Change in Control. 6. Parent-Level Change in Control. Should a Parent-Level Change in Control occur at a time when the Participant is a Fleming Board Member, then the Repurchase Right shall automatically terminate in its entirety, and all the Purchased Shares shall vest in full, immediately prior to the consummation of that Parent-Level Change in Control. 7. Parent-Level Reduction in Ownership. Should a Parent-Level Reduction in Ownership occur at a time when the Participant is a Fleming Board Member, then the Repurchase Right shall automatically terminate in its entirety, and all the Purchased Shares shall vest in full, immediately prior to the consummation of the transaction resulting in such Parent-Level Reduction in Ownership. 8. Approved Termination Event. Should the Participant's Service as a Fleming Board Member cease by reason of an Approved Termination Event, then the Repurchase Right shall immediately terminate with respect to fifty percent (50%) of any Purchased Shares which are not otherwise at that time vested in accordance with the provisions of this Agreement, and that portion of the Purchased Shares shall accordingly vest at such time. E. RIGHT OF FIRST REFUSAL 1. Grant. The Corporation is hereby granted the right of first refusal (the "First Refusal Right"), exercisable in connection with any proposed transfer of the Purchased Shares in which Participant has vested in accordance with the provisions of Article D. For purposes of this Article E, the term "transfer" shall include any sale, assignment, pledge, encumbrance or other disposition of the Purchased Shares intended to be made by Owner, but shall not include any Permitted Transfer. 2. Notice of Intended Disposition. In the event any Owner of Purchased Shares in which Participant has vested desires to accept a bona fide third-party offer for the transfer of any or all of such shares (the Purchased Shares subject to such offer to be hereinafter referred to as the "Target Shares"), Owner shall promptly (i) deliver to the Corporation written notice (the "Disposition Notice") of the terms of the offer, including the purchase price and the identity of the third-party offeror, and (ii) provide satisfactory proof that the disposition of the Target Shares to such third-party offeror would not be in contravention of the provisions set forth in Articles B and C. 3. Exercise of the First Refusal Right. The Corporation shall, for a period of twenty-five (25) days following receipt of the Disposition Notice, have the right to repurchase any or all of the Target Shares subject to the Disposition Notice upon the same terms as those specified therein or upon such other terms (not materially different from those specified in the Disposition Notice) to which Owner consents. Such right shall be exercisable by delivery of written notice (the "Exercise Notice") to Owner prior to the expiration of the twenty-five (25)-day exercise period. If such right is exercised with respect to all the Target Shares, then the Corporation shall effect the repurchase of such shares, including payment of the purchase price, not more than five (5) business days after delivery of the Exercise Notice; and at such time the certificates representing the Target Shares shall be delivered to the Corporation. Should the purchase price specified in the Disposition Notice be payable in property other than cash or evidences of indebtedness, the Corporation shall have the right to pay the purchase price in the form of cash equal in amount to the value of such property. If Owner and the Corporation cannot agree on such cash value within ten (10) days after the Corporation's receipt of the Disposition Notice, the valuation shall be made by an appraiser of recognized standing selected by Owner and the Corporation or, if they cannot agree on an appraiser within twenty (20) days after the Corporation's receipt of the Disposition Notice, each shall select an appraiser of recognized standing and the two (2) appraisers shall designate a third appraiser of recognized standing, whose appraisal shall be determinative of such value. The cost of such appraisal shall be shared equally by Owner and the Corporation. The closing shall then be held on the later of (i) the fifth (5th) business day following delivery of the Exercise Notice or (ii) the fifth (5th) business day after such valuation shall have been made. 4. Non-Exercise of the First Refusal Right. In the event the Exercise Notice is not given to Owner prior to the expiration of the twenty-five (25)-day exercise period, Owner shall have a period of thirty (30) days thereafter in which to sell or otherwise dispose of the Target Shares to the third-party offeror identified in the Disposition Notice upon terms (including the purchase price) no more favorable to such third-party offeror than those specified in the Disposition Notice; provided, however, that any such sale or disposition must not be effected in contravention of the provisions of Articles B and C. The third-party offeror shall acquire the Target Shares subject to the First Refusal Right and the provisions and restrictions of Article B and Paragraph C.3, and any subsequent disposition of the acquired shares must be effected in compliance with the terms and conditions of such First Refusal Right and the provisions and restrictions of Article B and Paragraph C.3. In the event Owner does not effect such sale or disposition of the Target Shares within the specified thirty (30)-day period, the First Refusal Right shall continue to be applicable to any subsequent disposition of the Target Shares by Owner until such right lapses. 5. Partial Exercise of the First Refusal Right. In the event the Corporation makes a timely exercise of the First Refusal Right with respect to a portion, but not all, of the Target Shares specified in the Disposition Notice, Owner shall have the option, exercisable by written notice to the Corporation delivered within five (5) business days after Owner's receipt of the Exercise Notice, to effect the sale of the Target Shares pursuant to either of the following alternatives: (i) sale or other disposition of all the Target Shares to the third-party offeror identified in the Disposition Notice, but in full compliance with the requirements of Paragraph E.4, as if the Corporation did not exercise the First Refusal Right; or (ii) sale to the Corporation of the portion of the Target Shares which the Corporation has elected to purchase, such sale to be effected in substantial conformity with the provisions of Paragraph E.3. The First Refusal Right shall continue to be applicable to any subsequent disposition of the remaining Target Shares until such right lapses. Owner's failure to deliver timely notification to the Corporation shall be deemed to be an election by Owner to sell the Target Shares pursuant to alternative (i) above. 6. Recapitalization/Reorganization. (a) Any new, substituted or additional securities or other property which is by reason of any Recapitalization distributed with respect to the Purchased Shares shall be immediately subject to the First Refusal Right, but only to the extent the Purchased Shares are at the time covered by such right. (b) In the event of a Reorganization, the First Refusal Right shall remain in full force and effect and shall apply to the new capital stock or other property received in exchange for the Purchased Shares in consummation of the Reorganization, but only to the extent the Purchased Shares are at the time covered by such right. 7. Lapse. The First Refusal Right shall lapse upon the earliest to occur of (i) the first date on which shares of the Common Stock are held of record by more than five hundred (500) persons, (ii) a determination made by the Board that a public market exists for the outstanding shares of Common Stock or (iii) a firm commitment underwritten public offering, pursuant to an effective registration statement under the 1933 Act, covering the offer and sale of the Common Stock in the aggregate amount of at least twenty million dollars ($20,000,000). However, the Market Stand-Off shall continue to remain in full force and effect following the lapse of the First Refusal Right. F. SPECIAL TAX ELECTION 1. Section 83(b) Election. Under Code Section 83, the excess of the Fair Market Value of the Purchased Shares on the date any forfeiture restrictions applicable to such shares lapse over the Purchase Price paid for those shares will be reportable as ordinary income on the lapse date. For this purpose, the term "forfeiture restrictions" includes the right of the Corporation to repurchase the Purchased Shares pursuant to the Repurchase Right. Participant may elect under Code Section 83(b) to be taxed at the time the Purchased Shares are acquired, rather than when and as such Purchased Shares cease to be subject to such forfeiture restrictions. Such election must be filed with the Internal Revenue Service within thirty (30) days after the date of this Agreement. Even if the Fair Market Value of the Purchased Shares on the date of this Agreement equals the Purchase Price paid (and thus no tax is payable), the election must be made to avoid adverse tax consequences in the future. THE FORM FOR MAKING THIS ELECTION IS ATTACHED AS EXHIBIT II HERETO. PARTICIPANT UNDERSTANDS THAT FAILURE TO MAKE THIS FILING WITHIN THE APPLICABLE THIRTY (30)-DAY PERIOD WILL RESULT IN THE RECOGNITION OF ORDINARY INCOME AS THE FORFEITURE RESTRICTIONS LAPSE. 2. FILING RESPONSIBILITY. PARTICIPANT ACKNOWLEDGES THAT IT IS PARTICIPANT'S SOLE RESPONSIBILITY, AND NOT THE CORPORATION'S, TO FILE A TIMELY ELECTION UNDER CODE SECTION 83(b), EVEN IF PARTICIPANT REQUESTS THE CORPORATION OR ITS REPRESENTATIVES TO MAKE THIS FILING ON HIS OR HER BEHALF. G. GENERAL PROVISIONS 1. Assignment. The Corporation may assign the Repurchase Right and/or the First Refusal Right to any person or entity selected by the Board, including (without limitation) Fleming while the Parent of the Corporation. 2. At Will Employment/No Impairment of Rights. (a) Nothing in this Agreement or in the Plan shall confer upon Participant any right to continue in Service for any period of specific duration or interfere with or otherwise restrict in any way the rights of the Corporation (or any Parent or Subsidiary employing or retaining Participant) or of Participant, which rights are hereby expressly reserved by each, to terminate Participant's Service at any time for any reason, with or without cause. (b) Nothing in this Agreement or in the Plan shall interfere with or otherwise impair the rights of Fleming and the Fleming stockholders to terminate Participant's service as a Fleming Board Member at any time in accordance with the provisions of applicable law. 3. Notices. Any notice required to be given under this Agreement shall be in writing and shall be deemed effective upon personal delivery or upon deposit in the U.S. mail, registered or certified, postage prepaid and properly addressed to the party entitled to such notice at the address indicated below such party's signature line on this Agreement or at such other address as such party may designate by ten (10) days advance written notice under this paragraph to all other parties to this Agreement. 4. No Waiver. The failure of the Corporation or Fleming in any instance to exercise the Repurchase Right or the First Refusal Right shall not constitute a waiver of any other repurchase rights and/or rights of first refusal that may subsequently arise under the provisions of this Agreement or any other agreement between the Corporation and Participant. No waiver of any breach or condition of this Agreement shall be deemed to be a waiver of any other or subsequent breach or condition, whether of like or different nature. 5. Cancellation of Shares. If the Corporation or Fleming (as assignee) shall make available, at the time and place and in the amount and form provided in this Agreement, the consideration for the Purchased Shares to be repurchased in accordance with the provisions of this Agreement, then from and after such time, the person from whom such shares are to be repurchased shall no longer have any rights as a holder of such shares (other than the right to receive payment of such consideration in accordance with this Agreement). Such shares shall be deemed purchased in accordance with the applicable provisions hereof, and the Corporation or Fleming (as assignee) shall be deemed the owner and holder of such shares, whether or not the certificates therefor have been delivered as required by this Agreement. H. MISCELLANEOUS PROVISIONS 1. Governing Law. This Agreement shall be governed by, and construed in accordance with, the laws of the State of Texas without resort to that State's conflict-of-laws rules. 2. Participant Undertaking. Participant hereby agrees to take whatever additional action and execute whatever additional documents the Corporation may deem necessary or advisable in order to carry out or effect one or more of the obligations or restrictions imposed on either Participant or the Purchased Shares pursuant to the provisions of this Agreement. 3. Agreement is Entire Contract. This Agreement constitutes the entire contract between the parties hereto with regard to the subject matter hereof. This Agreement is made pursuant to the provisions of the Plan and shall in all respects be construed in conformity with the terms of the Plan. 4. Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed to be an original, but all of which together shall constitute one and the same instrument. 5. Successors and Assigns. The provisions of this Agree- ment shall inure to the benefit of, and be binding upon, the Corporation and its successors and assigns and upon Participant, Participant's assigns and the legal representatives, heirs and legatees of Participant's estate, whether or not any such person shall have become a party to this Agreement and have agreed in writing to join herein and be bound by the terms hereof. IN WITNESS WHEREOF, the parties have executed this Agreement on the day and year first indicated above. EMAR.NET, INC. By: John M. Thompson Title: Vice President - Chief Financial Officer and Treasurer Address: P.O. Box 79910 Dallas, Texas 75379 PARTICIPANT By: Address: EXHIBIT I ASSIGNMENT SEPARATE FROM CERTIFICATE FOR VALUE RECEIVED ____________ hereby sell(s), assign(s) and transfer(s) unto eMAR.net, Inc. (the "Corporation"), ______________ (_____) shares of the Common Stock of the Corporation standing in his or her name on the books of the Corporation represented by Certificate No. _______________ herewith and do(es) hereby irrevocably constitute and appoint _________________ Attorney to transfer the said stock on the books of the Corporation with full power of substitution in the premises. Dated: ___________ Signature Instruction: Please do not fill in any blanks other than the signature line. Please sign exactly as you would like your name to appear on the issued stock certificate. The purpose of this assignment is to enable the Corporation to exercise the Repurchase Right without requiring additional signatures on the part of Participant. EXHIBIT II SECTION 83(b) TAX ELECTION This statement is being made under Section 83(b) of the Internal Revenue Code, pursuant to Treas. Reg. Section 1.83-2. (1) The taxpayer who performed the services is: Name: Address: Taxpayer Ident. No.: (2) The property with respect to which the election is being made is 4,000 shares of the common stock of eMAR.net, Inc. (3) The property was issued on February ______, 2000. (4) The taxable year in which the election is being made is the calendar year 2000. (5) The property is subject to a repurchase right pursuant to which the issuer has the right to acquire the property at the original purchase price if for any reason taxpayer's service with the issuer terminates. The issuer's repurchase right will lapse in a series of annual and monthly installments over a four (4)- year period ending on January 17, 2004. (6) The fair market value at the time of transfer (determined without regard to any restriction other than a restriction which by its terms will never lapse) is $0.20 per share. (7) The amount paid for such property is $ 0.20 per share. (8) A copy of this statement was furnished to eMAR.net, Inc. for whom taxpayer rendered the services underlying the transfer of property. (9) This statement is executed on _______________, 2000. Spouse (if any) Taxpayer This election must be filed with the Internal Revenue Service Center with which taxpayer files his or her Federal income tax returns and must be made within thirty (30) days after the execution date of the Stock Issuance Agreement. This filing should be made by registered or certified mail, return receipt requested. Participant must retain two (2) copies of the completed form for filing with his or her Federal and state tax returns for the current tax year and an additional copy for his or her records. EXHIBIT III 2000 STOCK OPTION/STOCK ISSUANCE PLAN APPENDIX The following definitions shall be in effect under the Agreement: A. Agreement shall mean this Stock Purchase Agreement. B. Approved Termination Event shall mean the Participant's voluntary resignation from the Fleming Board of Directors (i) on or after his or her attainment of age sixty-five (65) or (ii) in accordance with the governance policy in effect at the time for members of the Fleming Board of Directors. C. Board shall mean the Corporation's Board of Directors. D. Code shall mean the Internal Revenue Code of 1986, as amended. E. Common Stock shall mean the Corporation's common stock. F. Corporate-Level Change in Control shall mean any of the following transactions involving a change in control or ownership of the Corporation: (i) a stockholder-approved merger or consolidation in which securities possessing more than fifty percent (50%) of the total combined voting power of the Corporation's outstanding securities are transferred to a person or persons different from the persons holding those securities immediately prior to such transaction, or (ii) a stockholder-approved sale, transfer or other disposition of all or substantially all of the Corporation's assets in complete liquidation or dissolution of the Corporation, or (iii) the acquisition, directly or indirectly, by any person or related group of persons (other than the Corporation or a person that directly or indirectly controls, is controlled by, or is under common control with, the Corporation) of beneficial ownership (within the meaning of Rule 13d-3 of the 1934 Act) of securities possessing more than fifty percent (50%) of the total combined voting power of the Corporation's outstanding securities pursuant to a tender or exchange offer made directly to the Corporation's stockholders. G. Corporation shall mean eMAR.net, Inc., a Delaware corporation, and any successor corporation to all or substantially all of the assets or voting stock of eMAR.net, Inc. which shall by appropriate action adopt the Plan. H. Disposition Notice shall have the meaning assigned to such term in Paragraph E.2. I. Exercise Notice shall have the meaning assigned to such term in Paragraph E.3. J. Fair Market Value of a share of Common Stock on any relevant date, prior to the initial public offering of the Common Stock, shall be determined by the Plan Administrator after taking into account such factors as it shall deem appropriate. K. First Refusal Right shall have the meaning assigned to such term in Article E. L. Fleming shall mean Fleming Companies, Inc., an Oklahoma corporation, which is currently the Parent of the Corporation. M. Fleming Board Member shall mean any individual who is at the time of determination serving as a member of the Fleming Board of Directors. N. Market Stand-Off shall mean the market stand-off restriction specified in Paragraph C.4. O. 1933 Act shall mean the Securities Act of 1933, as amended. P. 1934 Act shall mean the Securities Exchange Act of 1934, as amended. Q. Owner shall mean Participant and all subsequent holders of the Purchased Shares who derive their chain of ownership through a Permitted Transfer from Participant. R. Parent shall mean any corporation (other than the Corporation) in an unbroken chain of corporations ending with the Corporation, provided each corporation in the unbroken chain (other than the Corporation) owns, at the time of the determination, stock possessing fifty percent (50%) or more of the total combined voting power of all classes of stock in one of the other corporations in such chain. S. Parent-Level Change in Control shall mean any of the following transactions involving a change in control or ownership of the Fleming which is effected while, and only while, Fleming is the Parent of the Corporation: (i) the acquisition by any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the 1934 Act (a "Person") of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the 1933 Act) of 20% or more (the "Triggering Percentage") of either (i) the then outstanding shares of Fleming common stock (the "Outstanding Company Common Stock") or (ii) the combined voting power of the then outstanding Fleming voting securities entitled to vote generally in the election of directors (the "Outstanding Company Voting Securities"); provided, however, in the event the "Incumbent Board" (as such term is hereinafter defined) pursuant to authority granted in any rights agreement to which Fleming is a party (the "Rights Agreement") lowers the acquisition threshold percentages set forth in such Rights Agreement, the Triggering Percentage shall be automatically reduced to equal the threshold percentages set pursuant to authority granted to the board in the Rights Agreement; and provided, further, however, that the following acquisitions shall not constitute a Parent-Level Change in Control: (i) any acquisition directly from Fleming, (ii) any acquisition by Fleming, (iii) any acquisition by any employee benefit plan (or related trust) sponsored or main- tained by Fleming or any corporation controlled by Fleming, or (iv) any acquisition by any corporation pursuant to a transaction which complies with clauses (x), (y), and (z) of subsection (iii) of this definition; or (ii) a change in the composition of the Fleming Board of Directors such that the individuals who, as of the date of this Agreement, constitute the Fleming Board of Directors (the "Incumbent Board") cease for any reason to comprise at least a majority of the Fleming Board of Directors; provided, however, that any individual who becomes a member of the Fleming Board of Directors subsequent to the date of this Agreement and whose election, appointment or nomination for election by Fleming's shareholders, was approved by a vote of at least a majority of the directors then comprising the Incumbent Board shall be considered as though such individual were a member of the Incumbent Board, but excluding for purposes of this definition, any such individual whose initial assumption of office occurs as a result of an actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Fleming Board of Directors; or (iii) the approval by the Fleming shareholders of a reorganization, share exchange, merger or consolidation or acquisition of assets of another corporation (a "Business Combination"), in each case, unless, following such Business Combination, (x) all or substantially all of the individuals and entities who were the beneficial owners, respectively, of the Outstanding Company Common Stock and Outstanding Company Voting Securities immediately prior to such Business Combination will beneficially own, directly or indirectly, more than 50% of, respectively, the then outstanding shares of common stock and the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors, as the case may be, of the corporation resulting from such Business Combination (including, without limitation, a corporation which as a result of such transaction will own Fleming through one or more subsidiaries) in substantially the same proportions as their ownership, immediately prior to such Business Combination of the Outstanding Company Common Stock and Outstanding Company Voting Securities, as the case may be, (y) no Person (excluding any employee benefit plan (or related trust) of Fleming or such corporation resulting from such Business Combination) will beneficially own, directly or indirectly, 20% or more of, respectively, the then outstanding shares of common stock of the corporation resulting from such Business Combination or the combined voting power of the then outstanding voting securities of such corporation except to the extent that such ownership existed prior to the Business Combination, and (z) at least a majority of the members of the board of directors of the corporation resulting from such Business Combination will have been members of the Incumbent Board at the time of the execution of the initial agreement, or of the action of the Incumbent Board, providing for such Business Combination; or (iv) the approval by the shareholders of Fleming of (x) a complete liquidation or dissolution of Fleming or, (y) the sale or other disposition of all or substantially all of the assets of Fleming, other than to a corporation, with respect to which following such sale or other disposition, (A) more than 50% of, respectively, the then outstanding shares of common stock of such corporation and the combined voting power of the then outstanding voting securities of such corporation entitled to vote generally in the election of directors will be beneficially owned, directly or indirectly, by all or substantially all of the individuals and entities who were the beneficial owners, respectively, of the Outstanding Company Common Stock and Outstanding Company Voting Securities immediately prior to such sale or other disposition in substantially the same proportion as their ownership, immediately prior to such sale or other disposition, of the Outstanding Company Common Stock and Outstanding Company Voting Securities, as the case may be, (B) less than 20% of, respectively, the then outstanding shares of common stock of such corporation and the combined voting power of the then outstanding voting securities of such corporation entitled to vote generally in the election of directors will be beneficially owned, directly or indirectly, by any Person (excluding any employee benefit plan (or related trust) of Fleming or such corporation), except to the extent that such Person owned 20% or more of the Outstanding Company Common Stock or Outstanding Company Voting Securities prior to the sale or disposition, and (C) at least a majority of the members of the board of directors of such corporation will have been members of the Incumbent Board at the time of the execution of the initial agreement, or of the action of the Board, providing for such sale or other disposition of assets of Fleming. T. Parent-Level Reduction in Ownership shall mean any transaction, including (without limitation) any sale or other disposition by Fleming of its ownership interest in any outstanding voting securities of the Corporation or any direct issuance of voting securities by the Corporation, which effects a reduction to Fleming's combined direct and indirect (through one or more majority-owned subsidiaries) ownership of the Corporation's voting securities to an amount which represents less than fifty percent (50%) of the total combined voting power of all outstanding classes of stock of the Corporation. U. Participant shall mean the person to whom shares are issued under the Plan. V. Permitted Transfer shall mean (i) a gratuitous transfer of the Purchased Shares, provided and only if Participant obtains the Corporation's prior written consent to such transfer, (ii) a transfer of title to the Purchased Shares effected pursuant to Participant's will or the laws of inheritance following Participant's death or (iii) a transfer to the Corporation in pledge as security for any purchase-money indebtedness incurred by Participant in connection with the acquisition of the Purchased Shares. W. Plan shall mean the Corporation's 2000 Stock Option/Stock Issuance Plan attached hereto as Exhibit III. X. Plan Administrator shall mean either the Board or a committee of the Board acting in its capacity as administrator of the Plan. Y. Purchase Price shall have the meaning assigned to such term in Paragraph A.1. Z. Purchased Shares shall have the meaning assigned to such term in Paragraph A.1. AA. Recapitalization shall mean any stock split, stock dividend, recapitalization, combination of shares, exchange of shares or other change affecting the Corporation's outstanding Common Stock as a class without the Corporation's receipt of consideration. BB. Reorganization shall mean any of the following transactions: (i) a merger or consolidation in which the Corporation is not the surviving entity, (ii) a sale, transfer or other disposition of all or substantially all of the Corporation's assets, (iii) a reverse merger in which the Corporation is the surviving entity but in which the Corporation's outstanding voting securities are transferred in whole or in part to a person or persons different from the persons holding those securities immediately prior to the merger, or (iv) any transaction effected primarily to change the state in which the Corporation is incorporated or to create a holding company structure. CC. Repurchase Right shall mean the right granted to the Corporation in accordance with Article D. DD. SEC shall mean the Securities and Exchange Commission. EE. Service shall mean the Participant's performance of services for the Corporation (or any Parent or Subsidiary) in the capacity of an employee, subject to the control and direction of the employer entity as to both the work to be performed and the manner and method of performance, a non-employee member of the board of directors or an independent consultant. Service shall in all events include the Participant's service as a Fleming Board Member. FF. Subsidiary shall mean any corporation (other than the Corporation) in an unbroken chain of corporations beginning with the Corporation, provided each corporation (other than the last corporation) in the unbroken chain owns, at the time of the determination, stock possessing fifty percent (50%) or more of the total combined voting power of all classes of stock in one of the other corporations in such chain. GG. Target Shares shall have the meaning assigned to such term in Paragraph E.2. HH. Vesting Schedule shall mean the vesting schedule specified in Paragraph D.3 pursuant to which Participant is to vest in the Purchased Shares in a series of installments over the Participant's period of Service. II. Unvested Shares shall have the meaning assigned to such term in Paragraph D.1. EXHIBIT C EMAR.NET, INC. 2000 STOCK OPTION/STOCK ISSUANCE PLAN ARTICLE ONE GENERAL PROVISIONS I. PURPOSE OF THE PLAN This 2000 Stock Option/Stock Issuance Plan is intended to promote the interests of eMAR.net, Inc., a Delaware corporation, by providing eligible persons in the Corporation's employ or service with the opportunity to acquire a proprietary interest, or otherwise increase their proprietary interest, in the Corporation as an incentive for them to continue in such employ or service. Capitalized terms herein shall have the meanings assigned to such terms in the attached Appendix. II. STRUCTURE OF THE PLAN A. The Plan shall be divided into two (2) separate equity programs: (i) the Option Grant Program under which eligible persons may, at the discretion of the Plan Administrator, be granted options to purchase shares of Common Stock, and (ii) the Stock Issuance Program under which eligible persons may, at the discretion of the Plan Administrator, be issued shares of Common Stock directly, either through the immediate purchase of such shares or as a bonus for services rendered the Corporation (or any Parent or Subsidiary). B. The provisions of Articles One and Four shall apply to both equity programs under the Plan and shall accordingly govern the interests of all persons under the Plan. III. ADMINISTRATION OF THE PLAN A. The Plan shall be administered by the Board. However, any or all administrative functions otherwise exercisable by the Board may be delegated to the Committee. Members of the Committee shall serve for such period of time as the Board may determine and shall be subject to removal by the Board at any time. The Board may also at any time terminate the functions of the Committee and reassume all powers and authority previously delegated to the Committee. B. The Plan Administrator shall have full power and authority (subject to the provisions of the Plan) to establish such rules and regulations as it may deem appropriate for proper administration of the Plan and to make such determinations under, and issue such interpretations of, the Plan and any outstanding options or stock issuances thereunder as it may deem necessary or advisable. Decisions of the Plan Administrator shall be final and binding on all parties who have an interest in the Plan or any option grant or stock issuance thereunder. IV. ELIGIBILITY A. The persons eligible to participate in the Plan are as follows: (i) Employees, (ii) Other Fleming Service Providers, (iii) non-employee members of the Board or the non-employee members of the board of directors of any Parent or Subsidiary, and (iv) consultants and other independent advisors who provide services to the Corporation (or any Parent or Subsidiary). B. The Plan Administrator shall have full authority to determine, (i) with respect to the grants made under the Option Grant Program, which eligible persons are to receive such grants, the time or times when those grants are to be made, the number of shares to be covered by each such grant, the status of the granted option as either an Incentive Option or a Non- Statutory Option, the time or times when each option is to become exercisable, the vesting schedule (if any) applicable to the option shares and the maximum term for which the option is to remain outstanding, and (ii) with respect to stock issuances made under the Stock Issuance Program, which eligible persons are to receive such issuances, the time or times when those issuances are to be made, the number of shares to be issued to each Participant, the vesting schedule (if any) applicable to the issued shares and the consideration to be paid by the Participant for such shares. C. The Plan Administrator shall have the absolute dis- cretion either to grant options in accordance with the Option Grant Program or to effect stock issuances in accordance with the Stock Issuance Program. V. STOCK SUBJECT TO THE PLAN A. The stock issuable under the Plan shall be shares of authorized but unissued or reacquired Common Stock. The maximum number of shares of Common Stock which may be issued over the term of the Plan shall not exceed 2,724,000 shares. However, not more than 724,000 shares may be issued to Fleming Service Providers. B. Shares of Common Stock subject to outstanding options shall be available for subsequent issuance under the Plan to the extent (i) the options expire or terminate for any reason prior to exercise in full or (ii) the options are cancelled in accordance with the cancellation-regrant provisions of Article Two. Unvested shares issued under the Plan and subsequently repurchased by the Corporation, at the option exercise or direct issue price paid per share, pursuant to the Corporation's repurchase rights under the Plan shall be added back to the number of shares of Common Stock reserved for issuance under the Plan and shall accordingly be available for reissuance through one or more subsequent option grants or direct stock issuances under the Plan. Any unvested shares issued under the Plan and repurchased by Fleming pursuant to repurchase rights assigned to it by the Corporation will not be available for reissuance. C. Should any change be made to the Common Stock by reason of any stock split, stock dividend, recapitalization, combi- nation of shares, exchange of shares or other change affecting the outstanding Common Stock as a class without the Corporation's receipt of consideration, appropriate adjustments shall be made to (i) the maximum number and/or class of securities issuable under the Plan, (ii) the maximum number and/or class of securities issuable to Fleming Service Providers and (iii) the number and/or class of securities and the exercise price per share in effect under each outstanding option in order to prevent the dilution or enlargement of benefits thereunder. The adjustments determined by the Plan Administrator shall be final, binding and conclusive. In no event shall any such adjustments be made in connection with the conversion of one or more outstanding shares of the Corporation's preferred stock into shares of Common Stock. ARTICLE TWO OPTION GRANT PROGRAM I. OPTION TERMS Each option shall be evidenced by one or more documents in the form approved by the Plan Administrator; provided, however, that each such document shall comply with the terms specified below. Each document evidencing an Incentive Option shall, in addition, be subject to the provisions of the Plan applicable to such options. A. Exercise Price. 1. The exercise price per share shall be fixed by the Plan Administrator in accordance with the following provisions: (i) The exercise price per share shall not be less than eighty-five percent (85%) of the Fair Market Value per share of Common Stock on the option grant date. (ii) If the person to whom the option is granted is a 10% Stockholder, then the exercise price per share shall not be less than one hundred ten percent (110%) of the Fair Market Value per share of Common Stock on the option grant date. 2. The exercise price shall become immediately due upon exercise of the option and shall, subject to the provisions of Section I of Article Four and the documents evidencing the option, be payable in cash or check made payable to the Corporation. Should the Common Stock be registered under Section 12 of the 1934 Act at the time the option is exercised, then the exercise price may also be paid as follows: (i) in shares of Common Stock held for the requisite period necessary to avoid a charge to the Corporation's earnings for financial reporting purposes and valued at Fair Market Value on the Exercise Date, or (ii) to the extent the option is exercised for vested shares, through a special sale and remittance procedure pursuant to which the Optionee shall concurrently provide irrevocable instructions (A) to a Corporation-designated brokerage firm to effect the immediate sale of the purchased shares and remit to the Corporation, out of the sale proceeds available on the settlement date, sufficient funds to cover the aggregate exercise price payable for the purchased shares plus all applicable Federal, state and local income and employment taxes required to be withheld by the Corporation by reason of such exercise and (B) to the Corporation to deliver the certificates for the purchased shares directly to such brokerage firm in order to complete the sale. Except to the extent such sale and remittance procedure is utilized, payment of the exercise price for the purchased shares must be made on the Exercise Date. B. Exercise and Term of Options. Each option shall be exercisable at such time or times, during such period and for such number of shares as shall be determined by the Plan Administrator and set forth in the documents evidencing the option grant. However, no option shall have a term in excess of ten (10) years measured from the option grant date. C. Effect of Termination of Service. 1. The following provisions shall govern the exercise of any options held by the Optionee at the time of cessation of Service or death: (i) Should the Optionee cease to remain in Service for any reason other than death, Disability or Misconduct, then the Optionee shall have a period of three (3) months following the date of such cessation of Service during which to exercise each outstanding option held by such Optionee. (ii) Should Optionee's Service terminate by reason of Disability, then the Optionee shall have a period of twelve (12) months following the date of such cessation of Service during which to exercise each outstanding option held by such Optionee. (iii) If the Optionee dies while holding an outstanding option, then the personal representative of his or her estate or the person or persons to whom the option is transferred pursuant to the Optionee's will or the laws of inheritance or the Optionee's designated beneficiary or beneficiaries of that option shall have a twelve (12)-month period following the date of the Optionee's death to exercise such option. (iv) Under no circumstances, however, shall any such option be exercisable after the specified expiration of the option term. (v) During the applicable post-Service exercise period, the option may not be exercised in the aggregate for more than the number of vested shares for which the option is exercisable on the date of the Optionee's cessation of Service. Upon the expiration of the applicable exercise period or (if earlier) upon the expiration of the option term, the option shall terminate and cease to be outstanding for any vested shares for which the option has not been exercised. However, the option shall, immediately upon the Optionee's cessation of Service, terminate and cease to be outstanding with respect to any and all option shares for which the option is not otherwise at the time exercisable or in which the Optionee is not otherwise at that time vested. (vi) Should Optionee's Service be terminated for Misconduct or should Optionee otherwise engage in Misconduct while holding one or more outstanding options under the Plan, then all those options shall terminate immediately and cease to remain outstanding. 2. The Plan Administrator shall have the discretion, exercisable either at the time an option is granted or at any time while the option remains outstanding, to: (i) extend the period of time for which the option is to remain exercisable following Optionee's cessation of Service or death from the limited period otherwise in effect for that option to such greater period of time as the Plan Administrator shall deem appropriate, but in no event beyond the expiration of the option term, and/or (ii) permit the option to be exercised, during the applicable post-Service exercise period, not only with respect to the number of vested shares of Common Stock for which such option is exercisable at the time of the Optionee's cessation of Service but also with respect to one or more additional installments in which the Optionee would have vested under the option had the Optionee continued in Service. D. Stockholder Rights. The holder of an option shall have no stockholder rights with respect to the shares subject to the option until such person shall have exercised the option, paid the exercise price and become the recordholder of the purchased shares. E. Unvested Shares. The Plan Administrator shall have the discretion to grant options which are exercisable for unvested shares of Common Stock. Should the Optionee cease Service while holding such unvested shares, the Corporation shall have the right to repurchase, at the exercise price paid per share, any or all of those unvested shares. The terms upon which such repurchase right shall be exercisable (including the period and procedure for exercise and the appropriate vesting schedule for the purchased shares) shall be established by the Plan Administrator and set forth in the document evidencing such repurchase right. Any such repurchase rights which pertain to unvested shares held by a Fleming Service Provider shall be assignable to Fleming. The Plan Administrator may not impose a vesting schedule upon any option grant or the shares of Common Stock subject to that option which is more restrictive than twenty percent (20%) per year vesting, with the initial vesting to occur not later than one (1) year after the option grant date. However, such limitation shall not be applicable to any option grants made to individuals who are officers of the Corporation, non-employee Board members or independent consultants. F. First Refusal Rights. Until such time as the Common Stock is first registered under Section 12 of the 1934 Act, the Corporation shall have the right of first refusal with respect to any proposed disposition by the Optionee (or any successor in interest) of any shares of Common Stock issued under the Plan. Such right of first refusal shall be exercisable in accordance with the terms established by the Plan Administrator and set forth in the document evidencing such right. Any such first refusal rights which pertain to shares held by a Fleming Service Provider shall be assignable to Fleming. G. Limited Transferability of Options. An Incentive Stock Option shall be exercisable only by the Optionee during his or her lifetime and shall not be assignable or transferable other than by will or by the laws of inheritance following the Optionee's death. A Non-Statutory Option may be assigned in whole or in part during the Optionee's lifetime to one or more members of the Optionee's family or to a trust established exclusively for one or more such family members or to Optionee's former spouse, to the extent such assignment is in connection with the Optionee's estate plan or pursuant to a domestic relations order. The assigned portion may only be exercised by the person or persons who acquire a proprietary interest in the Non-Statutory Option pursuant to the assignment. The terms applicable to the assigned portion shall be the same as those in effect for the option immediately prior to such assignment and shall be set forth in such documents issued to the assignee as the Plan Administrator may deem appropriate. Notwithstanding the foregoing, the Optionee may also designate one or more persons as the beneficiary or beneficiaries of his or her outstanding options under the Plan, and those options shall, in accordance with such designation, automatically be transferred to such beneficiary or beneficiaries upon the Optionee's death while holding those options. Such beneficiary or beneficiaries shall take the transferred options subject to all the terms and conditions of the applicable agreement evidencing each such transferred option, including (without limitation) the limited time period during which the option may be exercised following the Optionee's death. II. INCENTIVE OPTIONS The terms specified below shall be applicable to all Incentive Options. Except as modified by the provisions of this Section II, all the provisions of Articles One, Two and Four shall be applicable to Incentive Options. Options which are specifically designated as Non-Statutory Options shall not be subject to the terms of this Section II. A. Eligibility. Incentive Options may only be granted to Employees. B. Exercise Price. The exercise price per share shall not be less than one hundred percent (100%) of the Fair Market Value per share of Common Stock on the option grant date. C. Dollar Limitation. The aggregate Fair Market Value of the shares of Common Stock (determined as of the respective date or dates of grant) for which one or more options granted to any Employee under the Plan (or any other option plan of the Corporation or any Parent or Subsidiary) may for the first time become exercisable as Incentive Options during any one (1) calendar year shall not exceed the sum of One Hundred Thousand Dollars ($100,000). To the extent the Employee holds two (2) or more such options which become exercisable for the first time in the same calendar year, the foregoing limitation on the exercisability of such options as Incentive Options shall be applied on the basis of the order in which such options are granted. D. 10% Stockholder. If any Employee to whom an Incentive Option is granted is a 10% Stockholder, then the option term shall not exceed five (5) years measured from the option grant date. III. PARENT-LEVEL CHANGE IN CONTROL A. The Plan Administrator shall have the discretion, exercisable either at the time the option is granted or at any time while the option remains outstanding, to incorporate the following special vesting acceleration provision into one or more options under the Plan: To the extent such option is (i) outstanding at the time of a Parent-Level Change in Control and (ii) held at that time by a Fleming Service Provider, the shares of Common Stock at the time subject to such option but not otherwise vested shall automatically vest in full so that such option shall, immediately prior to the effective date of such Parent-Level Change in Control, become exercisable for all of the shares of Common Stock at the time subject to that option and may be exercised for any or all of those shares as fully- vested shares of Common Stock. B. The Plan Administrator shall have the discretion to structure one or more of the Corporation's outstanding repurchase rights under the Plan so that those repurchase rights shall terminate automatically, and the shares of Common Stock subject to those terminated rights shall immediately vest in full, to the extent those shares are unvested at the time of a Parent-Level Change in Control and are held at that time by a Fleming Service Provider. IV. PARENT-LEVEL REDUCTION IN OWNERSHIP A. The Plan Administrator shall have the discretion, exercisable either at the time the option is granted or at any time while the option remains outstanding, to incorporate the following special vesting acceleration provision into one or more options under the Plan: To the extent such option is (i) outstanding at the time of a Parent-Level Reduction in Ownership and (ii) held at that time by a Fleming Service Provider, the shares of Common Stock at the time subject to such option but not otherwise vested shall automatically vest in full so that such option shall, immediately prior to the effective date of such Parent- Level Reduction in Ownership, become exercisable for all of the shares of Common Stock at the time subject to that option and may be exercised for any or all of those shares as fully-vested shares of Common Stock. B. The Plan Administrator shall have the discretion to structure one or more of the Corporation's outstanding repurchase rights under the Plan so that those repurchase rights shall terminate automatically, and the shares of Common Stock subject to those terminated rights shall immediately vest in full, to the extent those shares are unvested at the time of a Parent-Level Reduction in Ownership and are held at that time by a Fleming Service Provider. V. CORPORATE-LEVEL CHANGE IN CONTROL A. The shares subject to each option outstanding under the Plan at the time of a Corporate-Level Change in Control shall automatically vest in full so that each such option shall, immediately prior to the effective date of such Corporate-Level Change in Control, become exercisable for all of the shares of Common Stock at the time subject to that option and may be exercised for any or all of those shares as fully-vested shares of Common Stock. However, the shares subject to an outstanding option under the Plan shall not vest on such an accelerated basis if and to the extent: (i) such option is assumed by the successor corporation (or parent thereof) in the Corporate-Level Change in Control or otherwise continued in full force and effect and any repurchase rights of the Corporation with respect to the unvested option shares are concurrently assigned to such successor corporation (or parent thereof) or otherwise continued in full force and effect or (ii) such option is to be replaced with a cash incentive program which preserves the spread existing on the unvested option shares at the time of the Corporate-Level Change in Control and provides for subsequent payout in accordance with the same vesting schedule applicable to those unvested option shares. B. All outstanding repurchase rights shall also terminate automatically, and the shares of Common Stock subject to those terminated rights shall immediately vest in full, in the event of any Corporate-Level Change in Control, except to the extent those repurchase rights are assigned to any successor corporation (or parent thereof) in connection with such Corporate- Level Change in Control or are otherwise continued in full and effect. C. Immediately following the consummation of the Corporate- Level Change in Control, all outstanding options shall terminate and cease to be outstanding, except to the extent assumed by the successor corporation (or parent thereof) or otherwise continued in full force and effect pursuant to the express terms of the Corporate-Level Change in Control transaction. D. The Plan Administrator shall have the discretion, exercisable either at the time the option is granted or at any time while the option remains outstanding, to structure one or more options under the Plan so that those options shall automatically accelerate and vest in full (and any repurchase rights of the Corporation with respect to the unvested shares subject to those options shall immediately terminate) upon the occurrence of a Corporate-Level Change in Control, whether or not those options are to be assumed in such transaction or otherwise continued in full force and effect. E. The Plan Administrator shall also have full power and authority, exercisable either at the time the option is granted or at any time while the option remains outstanding, to structure such option so that the shares subject to that option shall automatically vest on an accelerated basis should the Optionee's Service terminate by reason of an Involuntary Termination within a designated period (not to exceed eighteen (18) months) following the effective date of any Corporate-Level Change in Control in which the option is assumed or continued in effect and the repurchase rights applicable to those shares do not otherwise terminate. Any option so accelerated shall remain exercisable for the fully-vested option shares until the expiration or sooner termination of the option term. In addition, the Plan Administrator may structure or more of the Corporation's repurchase rights so that those rights shall immediately terminate on an accelerated basis with respect to the unvested shares held by the Optionee at the time of such an Involuntary Termination, and the shares subject to those terminated rights shall accordingly vest at that time. VI. ADDITIONAL CHANGE IN CONTROL PROVISIONS A. Each option which is assumed in connection with a Corporate- Level Change in Control or otherwise continued in full force and effect shall be appropriately adjusted, immediately after such transaction, to apply to the number and class of securities which would have been issuable to the Optionee in consummation of such Corporate-Level Change in Control, had the option been exercised immediately prior to such transaction. Appropriate adjustments shall also be made to (i) the number and class of securities available for issuance under the Plan following the consummation of such Corporate-Level Change in Control and (ii) the exercise price payable per share under each outstanding option, provided the aggregate exercise price payable for such securities shall remain the same. To the extent the actual holders of the Corporation's outstanding Common Stock receive cash consideration for their Common Stock in consummation of the Corporate-Level Change in Control, the successor corporation may, in connection with the assumption of the outstanding options under this Plan, substitute one or more shares of its own common stock with a fair market value equivalent to the cash consideration paid per share of Common Stock in such Corporate-Level Change in Control. B. The portion of any Incentive Option accelerated in connection with a Parent-Level or Corporate-Level Change in Control shall remain exercisable as an Incentive Option only to the extent the applicable One Hundred Thousand Dollar limitation is not exceeded. To the extent such dollar limitation is exceeded, the accelerated portion of such option shall be exercisable as a Non-Statutory Option under the Federal tax laws. C. The grant of options under the Plan shall in no way affect the right of the Corporation or Fleming to adjust, reclassify, reorganize or otherwise change its capital or business structure or to merge, consolidate, dissolve, liquidate or sell or transfer all or any part of its business or assets. VII. CANCELLATION AND REGRANT OF OPTIONS The Plan Administrator shall have the authority to effect, at any time and from time to time, with the consent of the affected option holders, the cancellation of any or all outstanding options under the Plan and to grant in substitution therefor new options covering the same or different number of shares of Common Stock but with an exercise price per share based on the Fair Market Value per share of Common Stock on the new option grant date. ARTICLE THREE STOCK ISSUANCE PROGRAM I. STOCK ISSUANCE TERMS Shares of Common Stock may be issued under the Stock Issuance Program through direct and immediate issuances without any intervening option grants. Each such stock issuance shall be evidenced by a Stock Issuance Agreement which complies with the terms specified below. A. Purchase Price. 1. The purchase price per share shall be fixed by the Plan Administrator but shall not be less than eighty-five percent (85%) of the Fair Market Value per share of Common Stock on the issue date. However, the purchase price per share of Common Stock issued to a 10% Stockholder shall not be less than one hundred and ten percent (110%) of such Fair Market Value. 2. Subject to the provisions of Section I of Article Four, shares of Common Stock may be issued under the Stock Issuance Program for any of the following items of consideration which the Plan Administrator may deem appropriate in each individual instance: (i) cash or check made payable to the Corporation, or (ii) past services rendered to the Corporation (or any Parent or Subsidiary). B. Vesting Provisions. 1. Shares of Common Stock issued under the Stock Issuance Program may, in the discretion of the Plan Administrator, be fully and immediately vested upon issuance or may vest in one or more installments over the Participant's period of Service or upon attainment of specified performance objectives. However, the Plan Administrator may not impose a vesting schedule upon any stock issuance effected under the Stock Issuance Program which is more restrictive than twenty percent (20%) per year vesting, with initial vesting to occur not later than one (1) year after the issuance date. Such limitation shall not apply to any Common Stock issuances made to the officers of the Corporation, non- employee Board members or independent consultants. 2. Any new, substituted or additional securities or other property (including money paid other than as a regular cash dividend) which the Participant may have the right to receive with respect to the Participant's unvested shares of Common Stock by reason of any stock dividend, stock split, recapitalization, combination of shares, exchange of shares or other change affecting the outstanding Common Stock as a class without the Corporation's receipt of consideration shall be issued subject to (i) the same vesting requirements applicable to the Participant's unvested shares of Common Stock and (ii) such escrow arrangements as the Plan Administrator shall deem appropriate. 3. The Participant shall have full stockholder rights with respect to any shares of Common Stock issued to the Participant under the Stock Issuance Program, whether or not the Participant's interest in those shares is vested. Accordingly, the Participant shall have the right to vote such shares and to receive any regular cash dividends paid on such shares. 4. Should the Participant cease to remain in Service while holding one or more unvested shares of Common Stock issued under the Stock Issuance Program or should the performance objectives not be attained with respect to one or more such unvested shares of Common Stock, then those shares shall be immediately surrendered to the Corporation for cancellation, and the Participant shall have no further stockholder rights with respect to those shares. To the extent the surrendered shares were previously issued to the Participant for consideration paid in cash or cash equivalent (including the Participant's purchase- money indebtedness), the Corporation shall repay to the Participant the cash consideration paid for the surrendered shares and shall cancel the unpaid principal balance of any outstanding purchase-money note of the Participant attributable to such surrendered shares. 5. The Plan Administrator may in its discretion waive the surrender and cancellation of one or more unvested shares of Common Stock (or other assets attributable thereto) which would otherwise occur upon the non-completion of the vesting schedule applicable to those shares. Such waiver shall result in the immediate vesting of the Participant's interest in the shares of Common Stock as to which the waiver applies. Such waiver may be effected at any time, whether before or after the Participant's cessation of Service or the attainment or non-attainment of the applicable performance objectives. C. First Refusal Rights. Until such time as the Common Stock is first registered under Section 12 of the 1934 Act, the Corporation shall have the right of first refusal with respect to any proposed disposition by the Participant (or any successor in interest) of any shares of Common Stock issued under the Stock Issuance Program. Such right of first refusal shall be exercisable in accordance with the terms established by the Plan Administrator and set forth in the document evidencing such right. Any such first refusal rights which pertain to shares held by a Fleming Service Provider shall be assignable to Fleming. II. PARENT-LEVEL CHANGE IN CONTROL The Plan Administrator shall have the discretion to structure one or more of the Corporation's outstanding repurchase rights under the Stock Issuance Program so that those repurchase rights shall terminate automatically, and the shares of Common Stock subject to those terminated rights shall immediately vest in full, to the extent those shares are unvested at the time of a Parent- Level Change in Control and are held at that time by a Fleming Service Provider. III. PARENT-LEVEL REDUCTION IN OWNERSHIP The Plan Administrator shall have the discretion to structure one or more of the Corporation's outstanding repurchase rights under the Stock Issuance Program so that those repurchase rights shall terminate automatically, and the shares of Common Stock subject to those terminated rights shall immediately vest in full, to the extent those shares are unvested at the time of a Parent-Level Reduction in Ownership and are held at that time by a Fleming Service Provider. IV. CORPORATE-LEVEL CHANGE IN CONTROL A. Upon the occurrence of a Corporate-Level Change in Control, all outstanding repurchase rights under the Stock Issuance Program shall terminate automatically, and the shares of Common Stock subject to those terminated rights shall immediately vest in full, except to the extent those repurchase rights are assigned to the successor corporation (or parent thereof) in connection with such Corporate-Level Change in Control or otherwise continued in full force and effect. B. The Plan Administrator shall have the discretionary authority, exercisable either at the time the unvested shares are issued or any time while the Corporation's repurchase rights with respect to those shares remain outstanding, to provide that those rights shall automatically terminate on an accelerated basis, and the shares of Common Stock subject to those terminated rights shall immediately vest, in the event the Participant's Service should subsequently terminate by reason of an Involuntary Termination within a designated period (not to exceed eighteen (18) months) following the effective date of any Corporate-Level Change in Control in which those repurchase rights are assigned to the successor corporation (or parent thereof) or are otherwise continued in full force and effect. C. The Plan Administrator shall have the discretion to structure one or more of the Corporation's outstanding repurchase rights under the Stock Issuance Program so that those repurchase rights shall terminate automatically, and the shares of Common Stock subject to those terminated rights shall immediately vest in full, upon the occurrence of a Corporate-Level Change in Control. V. SHARE ESCROW/LEGENDS Unvested shares may, in the Plan Administrator's discretion, be held in escrow by the Corporation until the Participant's interest in such shares vests or may be issued directly to the Participant with restrictive legends on the certificates evidencing those unvested shares. ARTICLE FOUR MISCELLANEOUS I. FINANCING The Plan Administrator may permit any Optionee or Participant to pay the option exercise price under the Option Grant Program or the purchase price for shares issued under the Stock Issuance Program by delivering a full-recourse, interest bearing promissory note payable in one or more installments and secured by the purchased shares. In no event, however, may the maximum credit available to the Optionee or Participant exceed the sum of (i) the aggregate option exercise price or purchase price payable for the purchased shares (less the par value of those shares) plus (ii) any Federal, state and local income and employment tax liability incurred by the Optionee or the Participant in connection with the option exercise or share purchase. II. EFFECTIVE DATE AND TERM OF PLAN A. The Plan shall become effective when adopted by the Board, but no option granted under the Plan may be exercised, and no shares shall be issued under the Plan, until the Plan is approved by the Corporation's stockholders. If such stockholder approval is not obtained within twelve (12) months after the date of the Board's adoption of the Plan, then all options previously granted under the Plan shall terminate and cease to be outstanding, and no further options shall be granted and no shares shall be issued under the Plan. Subject to such limitation, the Plan Administrator may grant options and issue shares under the Plan at any time after the effective date of the Plan and before the date fixed herein for termination of the Plan. B. The Plan shall terminate upon the earliest of (i) the expiration of the ten (10)-year period measured from the date the Plan is adopted by the Board, (ii) the date on which all shares available for issuance under the Plan shall have been issued as vested shares or (iii) the termination of all outstanding options in connection with a Corporate Transaction. All options and unvested stock issuances outstanding at the time of a clause (i) termination event shall continue to have full force and effect in accordance with the provisions of the documents evidencing those options or issuances. III. AMENDMENT OF THE PLAN A. The Board shall have complete and exclusive power and authority to amend or modify the Plan in any or all respects. However, no such amendment or modification shall adversely affect the rights and obligations with respect to options or unvested stock issuances at the time outstanding under the Plan unless the Optionee or the Participant consents to such amendment or modification. In addition, certain amendments may require stockholder approval pursuant to applicable laws and regulations. B. Options may be granted under the Option Grant Program and shares may be issued under the Stock Issuance Program which are in each instance in excess of the number of shares of Common Stock then available for issuance under the Plan, provided any excess shares actually issued under those programs shall be held in escrow until there is obtained stockholder approval of an amendment sufficiently increasing the number of shares of Common Stock available for issuance under the Plan. If such stockholder approval is not obtained within twelve (12) months after the date the first such excess grants or issuances are made, then (i) any unexercised options granted on the basis of such excess shares shall terminate and cease to be outstanding and (ii) the Corporation shall promptly refund to the Optionees and the Participants the exercise or purchase price paid for any excess shares issued under the Plan and held in escrow, together with interest (at the applicable Short Term Federal Rate) for the period the shares were held in escrow, and such shares shall thereupon be automatically cancelled and cease to be outstanding. IV. USE OF PROCEEDS Any cash proceeds received by the Corporation from the sale of shares of Common Stock under the Plan shall be used for general corporate purposes. V. WITHHOLDING The Corporation's obligation to deliver shares of Common Stock upon the exercise of any options granted under the Plan or upon the issuance or vesting of any shares issued under the Plan shall be subject to the satisfaction of all applicable Federal, state and local income and employment tax withholding requirements. VI. REGULATORY APPROVALS The implementation of the Plan, the granting of any options under the Plan and the issuance of any shares of Common Stock (i) upon the exercise of any option or (ii) under the Stock Issuance Program shall be subject to the Corporation's procurement of all approvals and permits required by regulatory authorities having jurisdiction over the Plan, the options granted under it and the shares of Common Stock issued pursuant to it. VII. NO EMPLOYMENT OR SERVICE RIGHTS Nothing in the Plan shall confer upon the Optionee or the Participant any right to continue in Service for any period of specific duration or interfere with or otherwise restrict in any way the rights of the Corporation (or any Parent or Subsidiary employing or retaining such person) or of the Optionee or the Participant, which rights are hereby expressly reserved by each, to terminate such person's Service at any time for any reason, with or without cause. VIII. FINANCIAL REPORTS The Corporation shall deliver a balance sheet and an income statement at least annually to each individual holding an outstanding option under the Plan, unless such individual is a key Employee whose duties in connection with the Corporation (or any Parent or Subsidiary) assure such individual access to equivalent information. APPENDIX The following definitions shall be in effect under the Plan: A. Board shall mean the Corporation's Board of Directors. B. Code shall mean the Internal Revenue Code of 1986, as amended. C. Committee shall mean a committee of one (1) or more Board members appointed by the Board to exercise one or more administrative functions under the Plan. D. Common Stock shall mean the Corporation's common stock. E. Corporate-Level Change in Control shall mean any of the following transactions involving a change in control or ownership of the Corporation: (i) a stockholder-approved merger or consolidation in which securities possessing more than fifty percent (50%) of the total combined voting power of the Corporation's outstanding securities are transferred to a person or persons different from the persons holding those securities immediately prior to such transaction, or (ii) a stockholder-approved sale, transfer or other disposition of all or substantially all of the Corporation's assets in complete liquidation or dissolution of the Corporation, or (iii) the acquisition, directly or indirectly, by any person or related group of persons (other than the Corporation or a person that directly or indirectly controls, is controlled by, or is under common control with, the Corporation) of beneficial ownership (within the meaning of Rule 13d-3 of the Securities Exchange Act of 1934, as amended) of securities possessing more than fifty percent (50%) of the total combined voting power of the Corporation's outstanding securities pursuant to a tender or exchange offer made directly to the Corporation's stockholders. F. Corporation shall mean eMAR.net, Inc., a Delaware corporation, and any successor corporation to all or substantially all of the assets or voting stock of eMAR.net, Inc. which shall by appropriate action adopt the Plan. G. Disability shall mean the inability of the Optionee or the Participant to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment and shall be determined by the Plan Administrator on the basis of such medical evidence as the Plan Administrator deems warranted under the circumstances. H. Employee shall mean an individual who is in the employ of the Corporation (or any Parent or Subsidiary of the Corporation), subject to the control and direction of the employer entity as to both the work to be performed and the manner and method of performance. I. Exercise Date shall mean the date on which the Corporation shall have received written notice of the option exercise. J. Fair Market Value per share of Common Stock on any relevant date shall be determined in accordance with the following provisions: (i) If the Common Stock is at the time traded on the Nasdaq National Market, then the Fair Market Value shall be the closing selling price per share of Common Stock on the date in question, as such price is reported by the National Association of Securities Dealers on the Nasdaq National Market and published in The Wall Street Journal. If there is no closing selling price for the Common Stock on the date in question, then the Fair Market Value shall be the closing selling price on the last preceding date for which such quotation exists. (ii) If the Common Stock is at the time listed on any Stock Exchange, then the Fair Market Value shall be the closing selling price per share of Common Stock on the date in question on the Stock Exchange determined by the Plan Administrator to be the primary market for the Common Stock, as such price is officially quoted in the composite tape of transactions on such exchange and published in The Wall Street Journal. If there is no closing selling price for the Common Stock on the date in question, then the Fair Market Value shall be the closing selling price on the last preceding date for which such quotation exists. (iii) If the Common Stock is at the time neither listed on any Stock Exchange nor traded on the Nasdaq National Market, then the Fair Market Value shall be determined by the Plan Administrator after taking into account such factors as the Plan Administrator shall deem appropriate. K. Fleming shall mean Fleming Companies, Inc., an Oklahoma corporation, which is currently the Parent of the Corporation. L. Fleming Service Provider shall mean any individual who is in a direct service relationship with Fleming or any Fleming Subsidiary (and not with the Corporation or any other Parent or Subsidiary of the Corporation), whether as an employee, associate, board member or independent contractor, at a time when Fleming is the Parent of the Corporation. M. Fleming Subsidiary shall mean any corporation (other than Fleming) in an unbroken chain of corporations beginning with Fleming, provided each corporation (other than the last corporation) in the unbroken chain owns, at the time of the determination, stock possessing fifty percent (50%) or more of the total combined voting power of all classes of stock in one of the other corporations in such chain. In no event, however, shall a Fleming Subsidiary include the Corporation or any Parent or Subsidiary of the Corporation. N. Incentive Option shall mean an option which satisfies the requirements of Code Section 422. O. Involuntary Termination shall mean the termination of the Service of any individual which occurs by reason of: (i) such individual's involuntary dismissal or discharge by the Corporation for reasons other than Misconduct, or (ii) such individual's voluntary resignation following (A) a change in his or her position with the Corporation which materially reduces his or her duties and responsibilities or the level of management to which he or she reports, (B) a reduction in his or her level of compensation (including base salary, fringe benefits and target bonus under any corporate-performance based bonus or incentive programs) by more than fifteen percent (15%) or (C) a relocation of such individual's place of employment by more than fifty (50) miles, provided and only if such change, reduction or relocation is effected without the individual's consent. P. Misconduct shall mean the commission of any act of fraud, embezzlement or dishonesty by the Optionee or Participant, any unauthorized use or disclosure by such person of confidential information or trade secrets of the Corporation (or any Parent or Subsidiary), or any other intentional misconduct by such person adversely affecting the business or affairs of the Corporation (or any Parent or Subsidiary) in a material manner. The foregoing definition shall not be deemed to be inclusive of all the acts or omissions which the Corporation (or any Parent or Subsidiary) may consider as grounds for the dismissal or discharge of any Optionee, Participant or other person in the Service of the Corporation (or any Parent or Subsidiary). Q. 1934 Act shall mean the Securities Exchange Act of 1934, as amended. R. Non-Statutory Option shall mean an option not intended to satisfy the requirements of Code Section 422. S. Option Grant Program shall mean the option grant program in effect under the Plan. T. Optionee shall mean any person to whom an option is granted under the Plan. U. Parent shall mean any corporation (other than the Corporation) in an unbroken chain of corporations ending with the Corporation, provided each corporation in the unbroken chain (other than the Corporation) owns, at the time of the determination, stock possessing fifty percent (50%) or more of the total combined voting power of all classes of stock in one of the other corporations in such chain. V. Parent-Level Change in Control shall mean any of the following transactions involving a change in control or ownership of Fleming which is effected while, and only while, Fleming is the Parent of the Corporation: (i) the acquisition by any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the 1934 Act (a "Person") of beneficial ownership (within the meaning of Rule 13d- 3 promulgated under the 1933 Act) of 20% or more (the "Triggering Percentage") of either (i) the then outstanding shares of Fleming common stock (the "Outstanding Company Common Stock") or (ii) the combined voting power of the then outstanding Fleming voting securities entitled to vote generally in the election of directors (the "Outstanding Company Voting Securities"); provided, however, in the event the "Incumbent Board" (as such term is hereinafter defined) pursuant to authority granted in any rights agreement to which Fleming is a party (the "Rights Agreement") lowers the acquisition threshold percentages set forth in such Rights Agreement, the Triggering Percentage shall be automatically reduced to equal the threshold percentages set pursuant to authority granted to the board in the Rights Agreement; and provided, further, however, that the following acquisitions shall not constitute a Parent-Level Change in Control: (i) any acquisition directly from Fleming, (ii) any acquisition by Fleming, (iii) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by Fleming or any corporation controlled by Fleming, or (iv) any acquisition by any corporation pursuant to a transaction which complies with clauses (x), (y), and (z) of subsection (iii) of this definition; or (ii) a change in the composition of the Fleming Board of Directors such that the individuals who, as of the effective date of the Plan, constitute the Fleming Board of Directors (the "Incumbent Board") cease for any reason to comprise at least a majority of the Fleming Board of Directors; provided, however, that any individual who becomes a member of the Fleming Board of Directors subsequent to the effective date of the Plan and whose election, appointment or nomination for election by Fleming's shareholders, was approved by a vote of at least a majority of the directors then comprising the Incumbent Board shall be considered as though such individual were a member of the Incumbent Board, but excluding for purposes of this definition, any such individual whose initial assumption of office occurs as a result of an actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Fleming Board of Directors; or (iii) the approval by the Fleming shareholders of a reorganization, share exchange, merger or consolidation or acquisition of assets of another corporation (a "Business Combination"), in each case, unless, following such Business Combination, (x) all or substantially all of the individuals and entities who were the beneficial owners, respectively, of the Outstanding Company Common Stock and Outstanding Company Voting Securities immediately prior to such Business Combination will beneficially own, directly or indirectly, more than 50% of, respectively, the then outstanding shares of common stock and the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors, as the case may be, of the corporation resulting from such Business Combination (including, without limitation, a corporation which as a result of such transaction will own Fleming through one or more subsidiaries) in substantially the same proportions as their ownership, immediately prior to such Business Combination of the Outstanding Company Common Stock and Outstanding Company Voting Securities, as the case may be, (y) no Person (excluding any employee benefit plan (or related trust) of Fleming or such corporation resulting from such Business Combination) will beneficially own, directly or indirectly, 20% or more of, respectively, the then outstanding shares of common stock of the corporation resulting from such Business Combination or the combined voting power of the then outstanding voting securities of such corporation except to the extent that such ownership existed prior to the Business Combination, and (z) at least a majority of the members of the board of directors of the corporation resulting from such Business Combination will have been members of the Incumbent Board at the time of the execution of the initial agreement, or of the action of the Incumbent Board, providing for such Business Combination; or (iv) the approval by the shareholders of Fleming of (x) a complete liquidation or dissolution of Fleming or, (y) the sale or other disposition of all or substantially all of the assets of Fleming, other than to a corporation, with respect to which following such sale or other disposition, (A) more than 50% of, respectively, the then outstanding shares of common stock of such corporation and the combined voting power of the then outstanding voting securities of such corporation entitled to vote generally in the election of directors will be beneficially owned, directly or indirectly, by all or substantially all of the individuals and entities who were the beneficial owners, respectively, of the Outstanding Company Common Stock and Outstanding Company Voting Securities immediately prior to such sale or other disposition in substantially the same proportion as their ownership, immediately prior to such sale or other disposition, of the Outstanding Company Common Stock and Outstanding Company Voting Securities, as the case may be, (B) less than 20% of, respectively, the then outstanding shares of common stock of such corporation and the combined voting power of the then outstanding voting securities of such corporation entitled to vote generally in the election of directors will be beneficially owned, directly or indirectly, by any Person (excluding any employee benefit plan (or related trust) of Fleming or such corporation), except to the extent that such Person owned 20% or more of the Outstanding Company Common Stock or Outstanding Company Voting Securities prior to the sale or disposition, and (C) at least a majority of the members of the board of directors of such corporation will have been members of the Incumbent Board at the time of the execution of the initial agreement, or of the action of the Board, providing for such sale or other disposition of assets of Fleming. W. Parent-Level Reduction in Ownership shall mean any transaction, including (without limitation) any sale or other disposition by Fleming of its ownership interest in any outstanding voting securities of the Corporation or any direct issuance of voting securities by the Corporation, which effects a reduction to Fleming's combined direct and indirect (through one or more majority-owned subsidiaries) ownership of the Corporation's voting securities to an amount which represents less than fifty percent (50%) of the total combined voting power of all outstanding classes of stock of the Corporation. X. Participant shall mean any person who is issued shares of Common Stock under the Stock Issuance Program. Y. Plan shall mean the Corporation's 2000 Stock Option/Stock Issuance Plan, as set forth in this document. Z. Plan Administrator shall mean either the Board or the Committee acting in its capacity as administrator of the Plan. AA. Service shall mean (i) the provision of services to the Corporation (or any Parent or Subsidiary of the Corporation) in the capacity of an Employee, a non-employee member of the board of directors or a consultant or independent advisor, except to the extent otherwise specifically provided in the documents evidencing the option grant, or (ii) the provision of services to Fleming or any Fleming Subsidiary in the capacity of an employee or associate of that entity, a non-employee member of the board of directors or a consultant or independent advisor, but only to the extent such clause (ii) services are performed while Fleming remains the Parent of the Corporation. BB. Stock Exchange shall mean either the American Stock Exchange or the New York Stock Exchange. CC. Stock Issuance Agreement shall mean the agreement entered into by the Corporation and the Participant at the time of issuance of shares of Common Stock under the Stock Issuance Program. DD. Stock Issuance Program shall mean the stock issuance program in effect under the Plan. EE. Subsidiary shall mean any corporation (other than the Corporation) in an unbroken chain of corporations beginning with the Corporation, provided each corporation (other than the last corporation) in the unbroken chain owns, at the time of the determination, stock possessing fifty percent (50%) or more of the total combined voting power of all classes of stock in one of the other corporations in such chain. FF. 10% Stockholder shall mean the owner of stock (as determined under Code Section 424(d)) possessing more than ten percent (10%) of the total combined voting power of all classes of stock of the Corporation (or any Parent or Subsidiary). EX-10 13 Exhibit 10.72 EMAR.NET, INC. NOTICE OF GRANT OF STOCK OPTION Notice is hereby given of the following option grant (the "Option") to purchase shares of the Common Stock of eMAR.net, Inc. (the "Corporation"): Optionee: Grant Date: January 18, 2000 Vesting Commencement Date: January 18, 2000 Exercise Price: $0.20 per share Number of Option Shares: _________ shares of Common Stock Expiration Date: January 17, 2010 Type of Incentive Stock Option Option: X Non-Statutory Stock Option Date Exercisable: Immediately Exercisable Vesting Schedule: The Option Shares shall initially be unvested and subject to repurchase by the Corporation at the Exercise Price paid per share. Optionee shall acquire a vested interest in, and the Corporation's repurchase right shall accordingly lapse with respect to, (i) twenty-five percent (25%) of the Option Shares upon Optionee's completion of one (1) year of Service measured from the Vesting Commencement Date and (ii) the balance of the Option Shares in a series of thirty-six (36) successive equal monthly installments upon Optionee's completion of each additional month of Service over the thirty-six (36)-month period measured from the first anniversary of the Vesting Commencement Date. In no event shall any additional Option Shares vest after Optionee's cessation of Service. Optionee understands and agrees that the Option is granted subject to and in accordance with the terms of the eMAR.net, Inc. 2000 Stock Option/Stock Issuance Plan (the "Plan"). Optionee further agrees to be bound by the terms of the Plan and the terms of the Option as set forth in the Stock Option Agreement attached hereto as Exhibit A. Optionee understands that any Option Shares purchased under the Option will be subject to the terms set forth in the Stock Purchase Agreement attached hereto as Exhibit B. Optionee hereby acknowledges receipt of a copy of the Plan in the form attached hereto as Exhibit C. REPURCHASE RIGHTS. OPTIONEE HEREBY AGREES THAT ALL OPTION SHARES ACQUIRED UPON THE EXERCISE OF THE OPTION SHALL BE SUBJECT TO CERTAIN REPURCHASE RIGHTS AND RIGHTS OF FIRST REFUSAL EXERCISABLE BY THE CORPORATION AND ITS ASSIGNS. THE TERMS OF SUCH RIGHTS ARE SPECIFIED IN THE ATTACHED STOCK PURCHASE AGREEMENT. At Will Employment. Nothing in this Notice or in the attached Stock Option Agreement or Plan shall confer upon Optionee any right to continue in Service for any period of specific duration or interfere with or otherwise restrict in any way the rights of the Corporation (or any Parent or Subsidiary employing or retaining Optionee) or of Optionee, which rights are hereby expressly reserved by each, to terminate Optionee's Service at any time for any reason, with or without cause. No Impairment of Rights. Nothing in this Notice or the attached Stock Option Agreement or Plan shall interfere with or otherwise impair the rights of Fleming and the Fleming stockholders to terminate Optionee's service as a Fleming Board Member at any time in accordance with the provisions of applicable law. Definitions. All capitalized terms in this Notice shall have the meaning assigned to them in this Notice or in the attached Stock Option Agreement. DATED: JANUARY 18, 2000 EMAR.NET, INC. By: John M. Thompson Title: Vice President - Chief Financial Officer and Treasurer OPTIONEE Address: Attachments: Exhibit A - Stock Option Agreement Exhibit B - Stock Purchase Agreement Exhibit C - 2000 Stock Option/Stock Issuance Plan EXHIBIT A STOCK OPTION AGREEMENT EXHIBIT B STOCK PURCHASE AGREEMENT EXHIBIT C 2000 STOCK OPTION/STOCK ISSUANCE PLAN EXHIBIT A EMAR.NET, INC. STOCK OPTION AGREEMENT RECITALS A. The Board has adopted the Plan for the purpose of retaining the services of selected Employees, non-employee members of the Board or the board of directors of any Parent or Subsidiary and consultants and other independent advisors in the service of the Corporation (or any Parent or Subsidiary). B. Optionee is to render valuable services to the Corporation (or a Parent or Subsidiary), and this Agreement is executed pursuant to, and is intended to carry out the purposes of, the Plan in connection with the Corporation's grant of an option to Optionee. C. All capitalized terms in this Agreement shall have the meaning assigned to them in the attached Appendix. NOW, THEREFORE, it is hereby agreed as follows: 1. Grant of Option. The Corporation hereby grants to Optionee, as of the Grant Date, an option to purchase up to the number of Option Shares specified in the Grant Notice. The Option Shares shall be purchasable from time to time during the option term specified in Paragraph 2 at the Exercise Price. 2. Option Term. This option shall have a term of ten (10) years measured from the Grant Date and shall accordingly expire at the close of business on the Expiration Date, unless sooner terminated in accordance with Paragraph 5 or 6. 3. Limited Transferability. (a) This option shall be neither transferable nor as- signable by Optionee other than by will or the laws of inheritance fol- lowing Optionee's death and may be exercised, during Optionee's lifetime, only by Optionee. However, Optionee may designate one or more persons as the beneficiary or beneficiaries of this option, and this option shall, in accordance with such designa- tion, automatically be transferred to such beneficiary or beneficiaries upon the Optionee's death while holding this option. Such beneficiary or beneficiaries shall take the transferred option subject to all the terms and conditions of this Agreement, including (without limitation) the limited time period during which this option may, pursuant to Paragraph 5, be exercised following Optionee's death. (b) If this option is designated a Non-Statutory Option in the Grant Notice, then this option may be assigned in whole or in part during Optionee's lifetime to one or more members of Optionee's family or to a trust established for the exclusive benefit of one or more such family members or to Optionee's former spouse, to the extent such assignment is in connection with the Optionee's estate plan or pursuant to a domestic relations order. The assigned portion shall be exercisable only by the person or persons who acquire a proprietary interest in the option pursuant to such assignment. The terms applicable to the assigned portion shall be the same as those in effect for this option immediately prior to such assignment. 4. Dates of Exercise. This option shall become exercisable for the Option Shares in one or more installments as specified in the Grant Notice. As the option becomes exercisable for such installments, those installments shall accumulate, and the option shall remain exercisable for the accumulated installments until the Expiration Date or sooner termination of the option term under Paragraph 5 or 7. 5. Cessation of Service. The option term specified in Paragraph 2 shall terminate (and this option shall cease to be outstanding) prior to the Expiration Date should any of the following provisions become applicable: (a) Should Optionee cease to remain in Service for any reason (other than death, Disability or Misconduct) while holding this option, then Optionee shall have a period of three (3) months (commencing with the date of such cessation of Service) during which to exercise this option, but in no event shall this option be exercisable at any time after the Expiration Date. (b) Should Optionee die while holding this option, then the personal representative of Optionee's estate or the person or persons to whom the option is transferred pursuant to Optionee's will or the laws of inheritance shall have the right to exercise this option. However, if Optionee has designated one or more beneficiaries of this option, then those persons shall have the exclusive right to exercise this option following Optionee's death. Any such right to exercise this option shall lapse, and this option shall cease to be outstanding, upon the earlier of (i) the expiration of the twelve (12)-month period measured from the date of Optionee's death or (ii) the Expiration Date. (c) Should Optionee cease Service by reason of Dis- ability while holding this option, then Optionee shall have a period of twelve (12) months (commencing with the date of such cessation of Service) during which to exercise this option. In no event shall this option be exercisable at any time after the Expiration Date. Note: Exercise of this option on a date later than three (3) months following cessation of Service due to Disability will result in loss of favorable Incentive Option treatment, unless such Disability constitutes Permanent Disability. In the event that Incentive Option treatment is not available, this option will be taxed as a Non-Statutory Option upon exercise. (d) During the limited period of post-Service exercis- ability, this option may not be exercised in the aggregate for more than the number of Option Shares in which Optionee is, at the time of Optionee's cessation of Service, vested pursuant to the Vesting Schedule specified in the Grant Notice or the special vesting acceleration provisions of Paragraph 6. Upon the expiration of such limited exercise period or (if earlier) upon the Expiration Date, this option shall terminate and cease to be outstanding for any vested Option Shares for which the option has not been exercised. To the extent Optionee is not vested in one or more Option Shares at the time of Optionee's cessation of Service, this option shall immediately terminate and cease to be outstanding with respect to those shares. (e) Should Optionee's Service be terminated for Mis- conduct or should Optionee otherwise engage in Misconduct while this option is outstanding, then this option shall terminate immediately and cease to remain outstanding. 6. Parent Level Change in Control. Should a Parent-Level Change in Control occur at a time when the Optionee is a Fleming Service Provider, then the Option Shares at the time subject to this option shall automatically vest in full so that this option shall, immediately prior to the effective date of such Parent- Level Change in Control, become exercisable for all of the Option Shares as fully-vested shares and may be exercised for any or all of those Option Shares as vested shares. The option shall remain so exercisable until the expiration or sooner termination of the option term pursuant to the provisions of this Agreement. 7. Corporate Level Change in Control (a) Should a Corporate-Level Change in Control occur at a time when the Optionee is a Fleming Service Provider, then the Option Shares at the time subject to this option but not otherwise vested shall automatically vest in full so that this option shall, immediately prior to the effective date of such Corporate-Level Change in Control, become exercisable for all of the Option Shares as fully-vested shares and may be exercised for any or all of those Option Shares as vested shares. If the Optionee is not a Fleming Service Provider at the time of the Corporate-Level Change in Control but is still in a Service relationship at that time, then the Option Shares shall vest on an accelerated basis at the time of such Corporate-Level Change in Control only if and to the extent: (i) this option is not to be assumed by the successor corporation (or parent thereof) in the Corporate-Level Change in Control or otherwise continued in full force and effect and any repurchase rights of the Corporation with respect to the unvested Option Shares are assigned to any such successor corporation (or parent thereof) or otherwise continued in full force and effect or (ii) this option is not to be replaced with a cash incentive program which preserves the spread existing on the unvested Option Shares at the time of the Corporate-Level Change in Control (the excess of the Fair Market Value of those Option Shares over the Exercise Price payable for such shares) and provides for subsequent payout in accordance with the same Vesting Schedule applicable to those unvested Option Shares as set forth in the Grant Notice. (b) Immediately following the consummation of the Corpo- rate-Level Change in Control, this option shall terminate and cease to be outstanding, except to the extent assumed by the successor corporation (or parent thereof) or otherwise continued in full force and effect pursuant to the express terms of the Corporate- Level Change in Control transaction. 8. Additional Change in Control Provisions (a) If this option is assumed in connection with a Corporate-Level Change in Control, then this option shall be appropriately adjusted, immediately after such transaction, to apply to the number and class of securities which would have been issuable to Optionee in consummation of such Corporate-Level Change in Control, had the option been exercised immediately prior to such transaction. Appropriate adjustments shall also be made to the exercise price provided the aggregate exercise price shall remain the same. To the extent the actual holders of the Corporation's outstanding Common Stock receive cash consideration for their Common Stock in consummation of the Corporate-Level Change in Control, the successor corporation may, in connection with the assumption of this option, substitute one or more shares of its own common stock with a fair market value equivalent to the cash consideration paid per share of Common Stock in such Corporate-Level Change in Control. (b) This Agreement shall not in any way affect the right of the Corporation or Fleming as the Corporation's Parent to adjust, reclassify, reorganize or otherwise change its capital or business structure or to merge, consolidate, dissolve, liquidate or sell or transfer all or any part of its business or assets. 9. Parent-Level Reduction in Ownership. Should a Parent- Level Reduction in Ownership occur at a time when the Optionee is a Fleming Service Provider, then the Option Shares at the time subject to this option shall automatically vest in full so that this option shall, immediately prior to the effective date of such Parent-Level Reduction in Ownership, become exercisable for all of the Option Shares as fully-vested shares and may be exercised for any or all of those Option Shares as vested shares. The option shall remain so exercisable until the expiration or sooner termination of the option term pursuant to the provisions of this Agreement. 10. Adjustment in Option Shares. Should any change be made to the Common Stock by reason of any stock split, stock dividend, recapitalization, combination of shares, exchange of shares or other change affecting the outstanding Common Stock as a class without the Corporation's receipt of consideration, appropriate adjustments shall be made to (i) the total number and/or class of securities subject to this option and (ii) the Exercise Price in order to reflect such change and thereby preclude a dilution or enlargement of benefits hereunder. 11. Stockholder Rights. The holder of this option shall not have any stockholder rights with respect to the Option Shares until such person shall have exercised the option, paid the Exercise Price and become the record holder of the purchased shares. 12. Manner of Exercising Option. (a) In order to exercise this option with respect to all or any part of the Option Shares for which this option is at the time exercisable, Optionee (or any other person or persons exercising the option) must take the following actions: (i) Execute and deliver to the Corporation a Pur- chase Agreement for the Option Shares for which the option is exercised. (ii) Pay the aggregate Exercise Price for the pur- chased shares in one or more of the following forms: (A) cash or check made payable to the Corpo- ration; or (B) a promissory note payable to the Corpo- ration, but only to the extent authorized by the Plan Administrator in accordance with Paragraph 17. Should the Common Stock be registered under Section 12 of the 1934 Act at the time the option is exercised, then the Exercise Price may also be paid as follows: (C) in shares of Common Stock held by Optionee (or any other person or persons exercising the option) for the requisite period necessary to avoid a charge to the Corpora- tion's earnings for financial reporting purposes and valued at Fair Market Value on the Exercise Date; or (D) to the extent the option is exercised for vested Option Shares, through a special sale and remittance procedure pursuant to which Optionee (or any other person or persons exercising the option) shall concurrently provide irrevocable instructions (a) to a Corporation-designated brokerage firm to effect the immediate sale of the purchased shares and remit to the Corporation, out of the sale proceeds available on the settlement date, sufficient funds to cover the aggregate Exercise Price payable for the purchased shares plus all applicable Federal, state and local income and employment taxes required to be withheld by the Corporation by reason of such exercise and (b) to the Corporation to deliver the certificates for the purchased shares directly to such brokerage firm in order to complete the sale. Except to the extent the sale and remittance procedure is utilized in connection with the option exercise, payment of the Exercise Price must accompany the Purchase Agreement delivered to the Corporation in connection with the option exercise. (iii) Furnish to the Corporation appropriate docu- mentation that the person or persons exercising the option (if other than Optionee) have the right to exercise this option. (iv) Execute and deliver to the Corporation such written representations as may be requested by the Corporation in order for it to comply with the applicable requirements of Federal and state securities laws. (v) Make appropriate arrangements with the Corporation (or Parent or Subsidiary employing or retaining Optionee) for the satisfaction of all Federal, state and local income and employment tax withholding requirements applicable to the option exercise. (b) As soon as practical after the Exercise Date, the Corporation shall issue to or on behalf of Optionee (or any other person or persons exercising this option) a certificate for the purchased Option Shares, with the appropriate legends affixed thereto. (c) In no event may this option be exercised for any fractional shares. 13. REPURCHASE RIGHTS. ALL OPTION SHARES ACQUIRED UPON THE EXERCISE OF THIS OPTION SHALL BE SUBJECT TO CERTAIN RIGHTS OF THE CORPORATION AND FLEMING AND ITS ASSIGNS TO REPURCHASE THOSE SHARES IN ACCORDANCE WITH THE TERMS SPECIFIED IN THE PURCHASE AGREEMENT. 14. Compliance with Laws and Regulations. (a) The exercise of this option and the issuance of the Option Shares upon such exercise shall be subject to compliance by the Corporation and Optionee with all applicable requirements of law relating thereto and with all applicable regulations of any stock exchange (or the Nasdaq National Market, if applicable) on which the Common Stock may be listed for trading at the time of such exercise and issuance. (b) The inability of the Corporation to obtain approval from any regulatory body having authority deemed by the Corporation to be necessary to the lawful issuance and sale of any Common Stock pursuant to this option shall relieve the Corporation of any liability with respect to the non-issuance or sale of the Common Stock as to which such approval shall not have been obtained. The Corporation, however, shall use its best efforts to obtain all such approvals. 15. Successors and Assigns. Except to the extent otherwise provided in Paragraphs 3 and 7, the provisions of this Agreement shall inure to the benefit of, and be binding upon, the Corporation and its successors and assigns and Optionee, Optionee's assigns and the legal representatives, heirs and legatees of Optionee's estate. 16. Notices. Any notice required to be given or delivered to the Corporation under the terms of this Agreement shall be in writing and addressed to the Corporation at its principal corporate offices. Any notice required to be given or delivered to Optionee shall be in writing and addressed to Optionee at the last known payroll address for Optionee evidenced on the payroll records of the Corporation or its Parent or Subsidiary. All notices shall be deemed effective upon personal delivery or upon deposit in the U.S. mail, postage prepaid and properly addressed to the party to be notified. 17. Financing. The Plan Administrator may, in its absolute discretion and without any obligation to do so, permit Optionee to pay the Exercise Price for the purchased Option Shares (to the extent such Exercise Price is in excess of the par valued of those shares) by delivering a full-recourse, interest-bearing promissory note secured by those Option Shares. The payment schedule in effect for any such promissory note shall be established by the Plan Administrator in its sole discretion. 18. Construction. This Agreement and the option evidenced hereby are made and granted pursuant to the Plan and are in all respects limited by and subject to the terms of the Plan. All decisions of the Plan Administrator with respect to any question or issue arising under the Plan or this Agreement shall be conclusive and binding on all persons having an interest in this option. 19. Governing Law. The interpretation, performance and enforcement of this Agreement shall be governed by the laws of the State of Texas without resort to that State's conflict-of- laws rules. 20. Stockholder Approval. If the Option Shares covered by this Agreement exceed, as of the Grant Date, the number of shares of Common Stock which may be issued under the Plan as last approved by the stockholders, then this option shall be void with respect to such excess shares, unless stockholder approval of an amendment sufficiently increasing the number of shares of Common Stock issuable under the Plan is obtained in accordance with the provisions of the Plan. 21. Additional Terms Applicable to an Incentive Option. In the event this option is designated an Incentive Option in the Grant Notice, the following terms and conditions shall also apply to the grant: (a) This option shall cease to qualify for favorable tax treatment as an Incentive Option if (and to the extent) this option is exercised for one or more Option Shares: (i) more than three (3) months after the date Optionee ceases to be an Employee for any reason other than death or Permanent Disability or (ii) more than twelve (12) months after the date Optionee ceases to be an Employee by reason of Permanent Disability. (b) This option shall not become exercisable in the calendar year in which granted if (and to the extent) the aggregate Fair Market Value (determined at the Grant Date) of the Common Stock for which this option would otherwise first become exercisable in such calendar year would, when added to the aggregate value (determined as of the respective date or dates of grant) of the Common Stock and any other securities for which one or more other Incentive Options granted to Optionee prior to the Grant Date (whether under the Plan or any other option plan of the Corpora- tion or any Parent or Subsidiary) first become exercisable during the same calendar year, exceed One Hundred Thousand Dollars ($100,000) in the aggregate. To the extent the exercisability of this option is deferred by reason of the foregoing limitation, the deferred portion shall become exercisable in the first calendar year or years thereafter in which the One Hundred Thousand Dollar ($100,000) limi- tation of this Paragraph 21(b) would not be contravened, but such deferral shall in all events end immediately prior to the effective date of (i) a Parent-Level Change in Control at a time when Optionee is a Fleming Service Provider or (ii) a Corporate-Level Change in Control in which this option is not to be assumed, whereupon the option shall become immediately exercisable as a Non-Statutory Option for the deferred portion of the Option Shares. (c) Should Optionee hold, in addition to this option, one or more other options to purchase Common Stock which become exercisable for the first time in the same calendar year as this option, then the foregoing limitations on the exercisability of such options as Incentive Options shall be applied on the basis of the order in which such options are granted. APPENDIX The following definitions shall be in effect under the Agreement: A. Agreement shall mean this Stock Option Agreement. B. Board shall mean the Corporation's Board of Directors. C. Code shall mean the Internal Revenue Code of 1986, as amended. D. Common Stock shall mean the Corporation's common stock. E. Corporate-Level Change in Control shall mean any of the following transactions involving a change in control or ownership of the Corporation: (i) a stockholder-approved merger or consolidation in which securities possessing more than fifty percent (50%) of the total combined voting power of the Corporation's outstanding securities are transferred to a person or persons different from the persons holding those securities immediately prior to such transaction, or (ii) a stockholder-approved sale, transfer or other disposition of all or substantially all of the Corporation's assets in complete liquidation or dissolution of the Corporation, or (iii) the acquisition, directly or indirectly, by any person or related group of persons (other than the Corporation or a person that directly or indirectly controls, is controlled by, or is under common control with, the Corporation) of beneficial ownership (within the meaning of Rule 13d-3 of the Securities Exchange Act of 1934, as amended) of securities possessing more than fifty percent (50%) of the total combined voting power of the Corporation's outstanding securities pursuant to a tender or exchange offer made directly to the Corporation's stockholders. F. Corporation shall mean eMAR.net, Inc., a Delaware corporation, and any successor corporation to all or substantially all of the assets or voting stock of eMAR.net, Inc. which shall be appropriate action assume this option. G. Disability shall mean the inability of Optionee to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment and shall be determined by the Plan Administrator on the basis of such medical evidence as the Plan Administrator deems warranted under the circumstances. Disability shall be deemed to constitute Permanent Disability in the event that such Disability is expected to result in death or has lasted or can be expected to last for a continuous period of twelve (12) months or more. H. Employee shall mean an individual who is in the employ of the Corporation (or any Parent or Subsidiary), subject to the control and direction of the employer entity as to both the work to be performed and the manner and method of performance. I. Exercise Date shall mean the date on which the option shall have been exercised in accordance with Paragraph 9 of the Agreement. J. Exercise Price shall mean the exercise price payable per Option Share as specified in the Grant Notice. K. Expiration Date shall mean the date on which the option expires as specified in the Grant Notice. L. Fair Market Value per share of Common Stock on any relevant date shall be determined in accordance with the following provisions: (i) If the Common Stock is at the time traded on the Nasdaq National Market, then the Fair Market Value shall be the closing selling price per share of Common Stock on the date in question, as the price is reported by the National Association of Securities Dealers on the Nasdaq National Market and published in The Wall Street Journal. If there is no closing selling price for the Common Stock on the date in question, then the Fair Market Value shall be the closing selling price on the last preceding date for which such quotation exists. (ii) If the Common Stock is at the time listed on any Stock Exchange, then the Fair Market Value shall be the closing selling price per share of Common Stock on the date in question on the Stock Exchange determined by the Plan Administrator to be the primary market for the Common Stock, as such price is officially quoted in the composite tape of transactions on such exchange and published in The Wall Street Journal. If there is no closing selling price for the Common Stock on the date in question, then the Fair Market Value shall be the closing selling price on the last preceding date for which such quotation exists. (iii) If the Common Stock is at the time neither listed on any Stock Exchange nor traded on the Nasdaq National Market, then the Fair Market Value shall be determined by the Plan Administrator after taking into account such factors as the Plan Administrator shall deem appropriate. M. Fleming shall mean Fleming Companies, Inc., an Oklahoma corporation, which is currently the Parent of the Corporation. N. Fleming Service Provider shall mean any individual who is in a direct service relationship with Fleming or any Fleming Subsidiary (and not with the Corporation or any other Parent or Subsidiary of the Corporation), whether as an employee, associate, board member or independent contractor, at a time when Fleming is the Parent of the Corporation. O. Fleming Subsidiary shall mean any corporation (other than Fleming) in an unbroken chain of corporations beginning with Fleming, provided each corporation (other than the last corporation) in the unbroken chain owns, at the time of the determination, stock possessing fifty percent (50%) or more of the total combined voting power of all classes of stock in one of the other corporations in such chain. In no event, however, shall a Fleming Subsidiary include the Corporation or any Parent or Subsidiary of the Corporation. P. Grant Date shall mean the date of grant of the option as specified in the Grant Notice. Q. Grant Notice shall mean the Notice of Grant of Stock Option accompanying the Agreement, pursuant to which Optionee has been informed of the basic terms of the option evidenced hereby. R. Incentive Option shall mean an option which satisfies the requirements of Code Section 422. S. Misconduct shall mean the commission of any act of fraud, embezzlement or dishonesty by Optionee, any unauthorized use or disclosure by Optionee of confidential information or trade secrets of the Corporation (or any Parent or Subsidiary), or any other intentional misconduct by Optionee adversely affecting the business or affairs of the Corporation (or any Parent or Subsidiary) in a material manner. The foregoing definition shall not be deemed to be inclusive of all the acts or omissions which the Corporation (or any Parent or Subsidiary) may consider as grounds for the dismissal or discharge of Optionee or any other individual in the Service of the Corporation (or any Parent or Subsidiary). T. 1933 Act shall mean the Securities Act of 1933, as amended. U. 1934 Act shall mean the Securities Exchange Act of 1934, as amended. V. Non-Statutory Option shall mean an option not intended to satisfy the requirements of Code Section 422. W. Option Shares shall mean the number of shares of Common Stock subject to the option. X. Optionee shall mean the person to whom the option is granted as specified in the Grant Notice. Y. Parent shall mean any corporation (other than the Corporation) in an unbroken chain of corporations ending with the Corporation, provided each corporation in the unbroken chain (other than the Corporation) owns, at the time of the determination, stock possessing fifty percent (50%) or more of the total combined voting power of all classes of stock in one of the other corporations in such chain. Z. Parent-Level Change in Control shall mean any of the following transactions involving a change in control or ownership of the Fleming which is effected while, and only while, Fleming is the Parent of the Corporation: (i) the acquisition by any individual, entity or group (with- in the meaning of Section 13(d)(3) or 14(d)(2) of the 1934 Act (a "Person") of beneficial ownership (within the meaning of Rule 13d- 3 promulgated under the 1933 Act) of 20% or more (the "Triggering Percentage") of either (i) the then outstanding shares of Fleming common stock (the "Outstanding Company Common Stock") or (ii) the combined voting power of the then outstanding Fleming voting securities entitled to vote generally in the election of directors (the "Outstanding Company Voting Securities"); provided, however, in the event the "Incumbent Board" (as such term is hereinafter defined) pursuant to authority granted in any rights agreement to which Fleming is a party (the "Rights Agreement") lowers the acquisition threshold percentages set forth in such Rights Agreement, the Triggering Percentage shall be automatically reduced to equal the threshold percentages set pursuant to authority granted to the board in the Rights Agreement; and provided, further, however, that the following acquisitions shall not constitute a Parent-Level Change in Control: (i) any acquisition directly from Fleming, (ii) any acquisition by Fleming, (iii) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by Fleming or any corporation controlled by Fleming, or (iv) any acquisition by any corporation pursuant to a transaction which complies with clauses (x), (y), and (z) of subsection (iii) of this definition; or (ii) a change in the composition of the Fleming Board of Directors such that the individuals who, as of the effective date of the Plan, constitute the Fleming Board of Directors (the "Incumbent Board") cease for any reason to comprise at least a majority of the Fleming Board of Directors; provided, however, that any individual who becomes a member of the Fleming Board of Directors subsequent to the effective date of the Plan and whose election, appointment or nomination for election by Fleming's shareholders, was approved by a vote of at least a majority of the directors then comprising the Incumbent Board shall be considered as though such individual were a member of the Incumbent Board, but excluding for purposes of this definition, any such individual whose initial assumption of office occurs as a result of an actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Fleming Board of Directors; or (iii) the approval by the Fleming shareholders of a reorganization, share exchange, merger or consolidation or acquisition of assets of another corporation (a "Business Combination"), in each case, unless, following such Business Combination, (x) all or substantially all of the individuals and entities who were the beneficial owners, respectively, of the Outstanding Company Common Stock and Outstanding Company Voting Securities immediately prior to such Business Combination will beneficially own, directly or indirectly, more than 50% of, respectively, the then outstanding shares of common stock and the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors, as the case may be, of the corporation resulting from such Business Combination (including, without limitation, a corporation which as a result of such transaction will own Fleming through one or more subsidiaries) in substantially the same proportions as their ownership, immediately prior to such Business Combination of the Outstanding Company Common Stock and Outstanding Company Voting Securities, as the case may be, (y) no Person (excluding any employee benefit plan (or related trust) of Fleming or such corporation resulting from such Business Combination) will beneficially own, directly or indirectly, 20% or more of, respectively, the then outstanding shares of common stock of the corporation resulting from such Business Combination or the combined voting power of the then outstanding voting securities of such corporation except to the extent that such ownership existed prior to the Business Combination, and (z) at least a majority of the members of the board of directors of the corporation resulting from such Business Combination will have been members of the Incumbent Board at the time of the execution of the initial agreement, or of the action of the Incumbent Board, providing for such Business Combination; or (iv) the approval by the shareholders of Fleming of (x) a complete liquidation or dissolution of Fleming or, (y) the sale or other disposition of all or substantially all of the assets of Fleming, other than to a corporation, with respect to which following such sale or other disposition, (A) more than 50% of, respectively, the then outstanding shares of common stock of such corporation and the combined voting power of the then outstanding voting securities of such corporation entitled to vote generally in the election of directors will be beneficially owned, directly or indirectly, by all or substantially all of the individuals and entities who were the beneficial owners, respectively, of the Outstanding Company Common Stock and Outstanding Company Voting Securities immediately prior to such sale or other disposition in substantially the same proportion as their ownership, immediately prior to such sale or other disposition, of the Outstanding Company Common Stock and Outstanding Company Voting Securities, as the case may be, (B) less than 20% of, respectively, the then outstanding shares of common stock of such corporation and the combined voting power of the then outstanding voting securities of such corporation entitled to vote generally in the election of directors will be beneficially owned, directly or indirectly, by any Person (excluding any employee benefit plan (or related trust) of Fleming or such corporation), except to the extent that such Person owned 20% or more of the Outstanding Company Common Stock or Outstanding Company Voting Securities prior to the sale or disposition, and (C) at least a majority of the members of the board of directors of such corporation will have been members of the Incumbent Board at the time of the execution of the initial agreement, or of the action of the Board, providing for such sale or other disposition of assets of Fleming. AA. Parent-Level Reduction in Ownership shall mean any transaction, including (without limitation) any sale or other disposition by Fleming of its ownership interest in any outstanding voting securities of the Corporation or any direct issuance of voting securities by the Corporation, which effects a reduction to Fleming's combined direct and indirect (through one or more majority-owned subsidiaries) ownership of the Corporation's voting securities to an amount which represents less than fifty percent (50%) of the total combined voting power of all outstanding classes of stock of the Corporation. BB. Plan shall mean the Corporation's 2000 Stock Option/Stock Issuance Plan. CC. Plan Administrator shall mean either the Board or a committee of the Board acting in its capacity as administrator of the Plan. DD. Purchase Agreement shall mean the stock purchase agreement in substantially the form of Exhibit B to the Grant Notice. EE. Service shall mean (i) the Optionee's performance of services for the Corporation (or any Parent or Subsidiary) in the capacity of an Employee, a non-employee member of the board of directors or an independent consultant or (ii) the Optionee's performance of services for Fleming or any Fleming Subsidiary in the capacity of an employee or associate of that entity, a non- employee member of the board of directors or an independent consultant, but only to the extent such clause (ii) services are performed while Fleming remains the Parent of the Corporation. FF. Stock Exchange shall mean the American Stock Exchange or the New York Stock Exchange. GG. Subsidiary shall mean any corporation (other than the Corporation) in an unbroken chain of corporations beginning with the Corporation, provided each corporation (other than the last corporation) in the unbroken chain owns, at the time of the determination, stock possessing fifty percent (50%) or more of the total combined voting power of all classes of stock in one of the other corporations in such chain. HH. Vesting Schedule shall mean the vesting schedule specified in the Grant Notice pursuant to which the Optionee is to vest in the Option Shares in a series of installments over his or her period of Service. EXHIBIT B EMAR.NET, INC. STOCK PURCHASE AGREEMENT AGREEMENT made this _____ day of ___________________, _____ by and between eMAR.net, Inc., a Delaware corporation, and _____________________, Optionee under the Corporation's 2000 Stock Option/Stock Issuance Plan. All capitalized terms in this Agreement shall have the meaning assigned to them in this Agreement or in the attached Appendix. A. EXERCISE OF OPTION 1. Exercise. Optionee hereby purchases _______ shares of Common Stock (the "Purchased Shares") pursuant to that certain option (the "Option") granted Optionee on ____________________, _______ (the "Grant Date") to purchase up to _______________ shares of Common Stock (the "Option Shares") under the Plan at the exercise price of $___________ per share (the "Exercise Price"). 2. Payment. Concurrently with the delivery of this Agreement to the Corporation, Optionee shall pay the Exercise Price for the Purchased Shares in accordance with the provisions of the Option Agreement and shall deliver whatever additional documents may be required by the Option Agreement as a condition for exercise, together with a duly-executed blank Assignment Separate from Certificate (in the form attached hereto as Exhibit I) with respect to the Purchased Shares. 3. Stockholder Rights. Until such time as the Corporation exercises the Repurchase Right or the First Refusal Right, Optionee (or any successor in interest) shall have all the rights of a stockholder (including voting, dividend and liquidation rights) with respect to the Purchased Shares, subject, however, to the transfer restrictions of Articles B and C. B. SECURITIES LAW COMPLIANCE 1. Restricted Securities. The Purchased Shares have not been registered under the 1933 Act and are being issued to Optionee in reliance upon the exemption from such registration provided by SEC Rule 701 for stock issuances under compensatory benefit plans such as the Plan. Optionee hereby confirms that Optionee has been informed that the Purchased Shares are restricted securities under the 1933 Act and may not be resold or transferred unless the Purchased Shares are first registered under the Federal securities laws or unless an exemption from such registration is available. Accordingly, Optionee hereby acknowledges that Optionee is prepared to hold the Purchased Shares for an indefinite period and that Optionee is aware that SEC Rule 144 issued under the 1933 Act which exempts certain resales of unrestricted securities is not presently available to exempt the resale of the Purchased Shares from the registration requirements of the 1933 Act. 2. Restrictions on Disposition of Purchased Shares. Optionee shall make no disposition of the Purchased Shares (other than a Permitted Transfer) unless and until there is compliance with all of the following requirements: (i) Optionee shall have provided the Corporation with a written summary of the terms and conditions of the proposed disposition. (ii) Optionee shall have complied with all requirements of this Agreement applicable to the disposition of the Purchased Shares. (iii) Optionee shall have provided the Corporation with written assurances, in form and substance satisfactory to the Corporation, that (a) the proposed disposition does not require registration of the Purchased Shares under the 1933 Act or (b) all appropriate action necessary for compliance with the registration requirements of the 1933 Act or any exemption from registration available under the 1933 Act (including Rule 144) has been taken. The Corporation shall not be required (i) to transfer on its books any Purchased Shares which have been sold or transferred in violation of the provisions of this Agreement or (ii) to treat as the owner of the Purchased Shares, or otherwise to accord voting, dividend or liquidation rights to, any transferee to whom the Purchased Shares have been transferred in contravention of this Agreement. 3. Restrictive Legends. The stock certificates for the Purchased Shares shall be endorsed with one or more of the following restrictive legends: "The shares represented by this certificate have not been registered under the Securities Act of 1933. The shares may not be sold or offered for sale in the absence of (a) an effective registration statement for the shares under such Act, (b) a "no action" letter of the Securities and Exchange Commission with respect to such sale or offer or (c) satisfactory assurances to the Corporation that registration under such Act is not required with respect to such sale or offer." "The shares represented by this certificate are subject to certain repurchase rights and rights of first refusal granted to the Corporation and accordingly may not be sold, assigned, transferred, encumbered, or in any manner disposed of except in conformity with the terms of a written agreement dated ____________, ______ between the Corporation and the registered holder of the shares (or the predecessor in interest to the shares). A copy of such agreement is maintained at the Corporation's principal corporate offices." C. TRANSFER RESTRICTIONS 1. Restriction on Transfer. Except for any Permitted Transfer, Optionee shall not transfer, assign, encumber or otherwise dispose of any of the Purchased Shares which are subject to the Repurchase Right. In addition, Purchased Shares which are released from the Repurchase Right shall not be transferred, assigned, encumbered or otherwise disposed of in contravention of the First Refusal Right or the Market Stand-Off. 2. Transferee Obligations. Each person (other than the Corporation) to whom the Purchased Shares are transferred by means of a Permitted Transfer must, as a condition precedent to the validity of such transfer, acknowledge in writing to the Corporation that such person is bound by the provisions of this Agreement and that the transferred shares are subject to (i) the Repurchase Right, (ii) the First Refusal Right and (iii) the Market Stand-Off, to the same extent such shares would be so subject if retained by Optionee. 3. Market Stand-Off. (a) In connection with any underwritten public offering by the Corporation of its equity securities pursuant to an effective registration statement filed under the 1933 Act, including the Corporation's initial public offering, Owner shall not sell, make any short sale of, loan, hypothecate, pledge, grant any option for the purchase of, or otherwise dispose or transfer for value or otherwise agree to engage in any of the foregoing transactions with respect to, any Purchased Shares without the prior written consent of the Corporation or its underwriters. Such restriction (the "Market Stand-Off") shall be in effect for such period of time from and after the effective date of the final prospectus for the offering as may be requested by the Corporation or such underwriters. In no event, however, shall such period exceed one hundred eighty (180) days, and the Market Stand-Off shall in no event be applicable to any underwritten public offering effected more than two (2) years after the effective date of the Corporation's initial public offering. (b) Owner shall be subject to the Market Stand-Off provided and only if the officers and directors of the Corporation are also subject to similar restrictions. (c) Any new, substituted or additional securities which are by reason of any Recapitalization or Reorganization distributed with respect to the Purchased Shares shall be immediately subject to the Market Stand-Off, to the same extent the Purchased Shares are at such time covered by such provisions. (d) In order to enforce the Market Stand-Off, the Corporation may impose stop-transfer instructions with respect to the Purchased Shares until the end of the applicable stand-off period. D. REPURCHASE RIGHT 1. Grant. The Corporation is hereby granted the right (the "Repurchase Right"), exercisable at any time during the sixty (60)-day period following the date Optionee ceases for any reason to remain in Service or (if later) during the sixty (60)-day period following the execution date of this Agreement, to repurchase at the Exercise Price any or all of the Purchased Shares in which Optionee is not, at the time of his or her cessation of Service, vested in accordance with the Vesting Schedule applicable to those shares or the special vesting acceleration provisions of Paragraphs D.6 through D.8 of this Agreement (such shares to be hereinafter referred to as the "Unvested Shares"). 2. Exercise of the Repurchase Right. The Repurchase Right shall be exercisable by written notice delivered to each Owner of the Unvested Shares prior to the expiration of the sixty (60)-day exercise period. The notice shall indicate the number of Unvested Shares to be repurchased and the date on which the repurchase is to be effected, such date to be not more than thirty (30) days after the date of such notice. The certificates representing the Unvested Shares to be repurchased shall be delivered to the Corporation on the closing date specified for the repurchase. Concurrently with the receipt of such stock certificates, the Corporation shall pay to Owner, in cash or cash equivalents (including the cancellation of any purchase-money indebtedness), an amount equal to the Exercise Price previously paid for the Unvested Shares which are to be repurchased from Owner. 3. Termination of the Repurchase Right. The Repurchase Right shall terminate with respect to any Unvested Shares for which it is not timely exercised under Paragraph D.2. In addition, the Repurchase Right shall terminate and cease to be exercisable with respect to any and all Purchased Shares in which Optionee vests in accordance with the Vesting Schedule. All Purchased Shares as to which the Repurchase Right lapses shall, however, remain subject to (i) the First Refusal Right and (ii) the Market Stand- Off. 4. Aggregate Vesting Limitation. If the Option is exercised in more than one increment so that Optionee is a party to one or more other Stock Purchase Agreements (the "Prior Purchase Agreements") which are executed prior to the date of this Agreement, then the total number of Purchased Shares as to which Optionee shall be deemed to have a fully-vested interest under this Agreement and all Prior Purchase Agreements shall not exceed in the aggregate the number of Purchased Shares in which Optionee would otherwise at the time be vested, in accordance with the Vesting Schedule, had all the Purchased Shares (including those acquired under the Prior Purchase Agreements) been acquired exclusively under this Agreement. 5. Recapitalization. Any new, substituted or additional securities or other property (including cash paid other than as a regular cash dividend) which is by reason of any Recapitalization distributed with respect to the Purchased Shares shall be immediately subject to the Repurchase Right and any escrow requirements hereunder, but only to the extent the Purchased Shares are at the time covered by such right or escrow requirements. Appropriate adjustments to reflect such distribution shall be made to the number and/or class of Purchased Shares subject to this Agreement and to the price per share to be paid upon the exercise of the Repurchase Right in order to reflect the effect of any such Recapitalization upon the Corporation's capital structure; provided, however, that the aggregate purchase price shall remain the same. 6. Corporate-Level Change in Control (a) Should a Corporate-Level Change in Control occur at a time when the Optionee is a Fleming Service Provider, then the Repurchase Right shall automatically terminate in its entirety, and all the Purchased Shares shall vest in full, immediately prior to the consummation of that Corporate-Level Change in Control. However, if the Optionee is not a Fleming Service Provider at the time of the Corporate-Level Change in Control but is still in a Service relationship, then the Repurchase Right shall terminate on such an accelerated basis only to the extent (if any) such Repurchase Right is not to be assigned to the successor entity in the Corporate-Level Change in Control or otherwise continued in full force and effect pursuant to the express terms of the Corporate-Level Change in Control transaction, and the Purchased Shares subject to any such assigned or continuing Repurchase Right shall not vest at the time of the Corporate-Level Change in Control. (b) To the extent the Repurchase Right is assigned to the successor entity or otherwise remains in effect following a Corporate-Level Change in Control, such right shall apply to any new securities or other property (including any cash payments) received in exchange for the Purchased Shares in consummation of the Corporate-Level Change in Control, but only to the extent the Purchased Shares are at the time covered by such right. Appropriate adjustments shall be made to the price per share payable upon exercise of the Repurchase Right to reflect the effect (if any) of the Corporate-Level Change in Control upon the Corporation's capital structure; provided, however, that the aggregate purchase price shall remain the same. The new securities or other property (including any cash payments) issued or distributed with respect to the Purchased Shares in consummation of the Corporate-Level Change in Control shall be immediately deposited in escrow with the Corporation (or the successor entity) and shall not be released from escrow until Optionee vests in such securities or other property in accordance with the same Vesting Schedule in effect for the Purchased Shares. 7. Parent-Level Change in Control. Should a Parent-Level Change in Control occur at a time when the Optionee is a Fleming Service Provider, then the Repurchase Right shall automatically terminate in its entirety, and all the Purchased Shares shall vest in full, immediately prior to the consummation of that Parent-Level Change in Control. 8. Parent-Level Reduction in Ownership. Should a Parent- Level Reduction in Ownership occur at a time when the Optionee is a Fleming Service Provider, then the Repurchase Right shall automatically terminate in its entirety, and all the Purchased Shares shall vest in full, immediately prior to the consummation of the transaction resulting in that Parent-Level Reduction in Ownership. E. RIGHT OF FIRST REFUSAL 1. Grant. The Corporation is hereby granted the right of first refusal (the "First Refusal Right"), exercisable in connection with any proposed transfer of the Purchased Shares in which Optionee has vested in accordance with the provisions of Article D. For purposes of this Article E, the term "transfer" shall include any sale, assignment, pledge, encumbrance or other disposition of the Purchased Shares intended to be made by Owner, but shall not include any Permitted Transfer. 2. Notice of Intended Disposition. In the event any Owner of Purchased Shares in which Optionee has vested desires to accept a bona fide third-party offer for the transfer of any or all of such shares (the Purchased Shares subject to such offer to be hereinafter referred to as the "Target Shares"), Owner shall promptly (i) deliver to the Corporation written notice (the "Disposition Notice") of the terms of the offer, including the purchase price and the identity of the third-party offeror, and (ii) provide satisfactory proof that the disposition of the Target Shares to such third-party offeror would not be in contravention of the provisions set forth in Articles B and C. 3. Exercise of the First Refusal Right. The Corporation shall, for a period of twenty-five (25) days following receipt of the Disposition Notice, have the right to repurchase any or all of the Target Shares subject to the Disposition Notice upon the same terms as those specified therein or upon such other terms (not materially different from those specified in the Disposition Notice) to which Owner consents. Such right shall be exercisable by delivery of written notice (the "Exercise Notice") to Owner prior to the expiration of the twenty-five (25)-day exercise period. If such right is exercised with respect to all the Target Shares, then the Corporation shall effect the repurchase of such shares, including payment of the purchase price, not more than five (5) business days after delivery of the Exercise Notice; and at such time the certificates representing the Target Shares shall be delivered to the Corporation. Should the purchase price specified in the Disposition Notice be payable in property other than cash or evidences of indebtedness, the Corporation shall have the right to pay the purchase price in the form of cash equal in amount to the value of such property. If Owner and the Corporation cannot agree on such cash value within ten (10) days after the Corporation's receipt of the Disposition Notice, the valuation shall be made by an appraiser of recognized standing selected by Owner and the Corporation or, if they cannot agree on an appraiser within twenty (20) days after the Corporation's receipt of the Disposition Notice, each shall select an appraiser of recognized standing and the two (2) appraisers shall designate a third appraiser of recognized standing, whose appraisal shall be determinative of such value. The cost of such appraisal shall be shared equally by Owner and the Corporation. The closing shall then be held on the later of (i) the fifth (5th) business day following delivery of the Exercise Notice or (ii) the fifth (5th) business day after such valuation shall have been made. 4. Non-Exercise of the First Refusal Right. In the event the Exercise Notice is not given to Owner prior to the expiration of the twenty-five (25)-day exercise period, Owner shall have a period of thirty (30) days thereafter in which to sell or otherwise dispose of the Target Shares to the third-party offeror identified in the Disposition Notice upon terms (including the purchase price) no more favorable to such third-party offeror than those specified in the Disposition Notice; provided, however, that any such sale or disposition must not be effected in contravention of the provisions of Articles B and C. The third-party offeror shall acquire the Target Shares subject to the First Refusal Right and the provisions and restrictions of Article B and Paragraph C.3, and any subsequent disposition of the acquired shares must be effected in compliance with the terms and conditions of such First Refusal Right and the provisions and restrictions of Article B and Paragraph C.3. In the event Owner does not effect such sale or disposition of the Target Shares within the specified thirty (30)-day period, the First Refusal Right shall continue to be applicable to any subsequent disposition of the Target Shares by Owner until such right lapses. 5. Partial Exercise of the First Refusal Right. In the event the Corporation makes a timely exercise of the First Refusal Right with respect to a portion, but not all, of the Target Shares specified in the Disposition Notice, Owner shall have the option, exercisable by written notice to the Corporation delivered within five (5) business days after Owner's receipt of the Exercise Notice, to effect the sale of the Target Shares pursuant to either of the following alternatives: (i) sale or other disposition of all the Target Shares to the third-party offeror identified in the Disposition Notice, but in full compliance with the requirements of Paragraph E.4, as if Fleming did not exercise the First Refusal Right; or (ii) sale to the Corporation of the portion of the Target Shares which the Corporation has elected to purchase, such sale to be effected in substantial conformity with the provisions of Paragraph E.3. The First Refusal Right shall continue to be applicable to any subsequent disposition of the remaining Target Shares until such right lapses. Owner's failure to deliver timely notification to the Corporation shall be deemed to be an election by Owner to sell the Target Shares pursuant to alternative (i) above. 6. Recapitalization/Reorganization. (a) Any new, substituted or additional securities or other property which is by reason of any Recapitalization distributed with respect to the Purchased Shares shall be immediately subject to the First Refusal Right, but only to the extent the Purchased Shares are at the time covered by such right. (b) In the event of a Reorganization, the First Refusal Right shall remain in full force and effect and shall apply to the new capital stock or other property received in exchange for the Purchased Shares in consummation of the Reorganization, but only to the extent the Purchased Shares are at the time covered by such right. 7. Lapse. The First Refusal Right shall lapse upon the earliest to occur of (i) the first date on which shares of the Common Stock are held of record by more than five hundred (500) persons, (ii) a determination made by the Board that a public market exists for the outstanding shares of Common Stock or (iii) a firm commitment underwritten public offering, pursuant to an effective registration statement under the 1933 Act, covering the offer and sale of the Common Stock in the aggregate amount of at least twenty million dollars ($20,000,000). However, the Market Stand-Off shall continue to remain in full force and effect following the lapse of the First Refusal Right. F. SPECIAL TAX ELECTION The acquisition of the Purchased Shares may result in adverse tax consequences which may be avoided or mitigated by filing an election under Code Section 83(b). Such election must be filed within thirty (30) days after the date of this Agreement. A description of the tax consequences applicable to the acquisition of the Purchased Shares and the form for making the Code Section 83(b) election are set forth in Exhibit II. OPTIONEE SHOULD CONSULT WITH HIS OR HER TAX ADVISOR TO DETERMINE THE TAX CONSEQUENCES OF ACQUIRING THE PURCHASED SHARES AND THE ADVANTAGES AND DISADVANTAGES OF FILING THE CODE SECTION 83(b) ELECTION. OPTIONEE ACKNOWLEDGES THAT IT IS OPTIONEE'S SOLE RESPONSIBILITY, AND NOT THE CORPORATION'S, TO FILE A TIMELY ELECTION UNDER CODE SECTION 83(b), EVEN IF OPTIONEE REQUESTS THE CORPORATION OR ITS REPRESENTATIVES TO MAKE THIS FILING ON HIS OR HER BEHALF. G. GENERAL PROVISIONS 1. Assignment. The Corporation may assign the Repurchase Right and/or the First Refusal Right to any person or entity selected by the Board, including (without limitation) Fleming while the Parent of the Corporation. 2. At Will Employment. Nothing in this Agreement or in the Plan shall confer upon Optionee any right to continue in Service for any period of specific duration or interfere with or otherwise restrict in any way the rights of the Corporation (or any Parent or Subsidiary employing or retaining Optionee) or of Optionee, which rights are hereby expressly reserved by each, to terminate Optionee's Service at any time for any reason, with or without cause. 3. Notices. Any notice required to be given under this Agreement shall be in writing and shall be deemed effective upon personal delivery or upon deposit in the U.S. mail, registered or certified, postage prepaid and properly addressed to the party entitled to such notice at the address indicated below such party's signature line on this Agreement or at such other address as such party may designate by ten (10) days advance written notice under this paragraph to all other parties to this Agreement. 4. No Waiver. The failure of the Corporation or Fleming in any instance to exercise the Repurchase Right or the First Refusal Right shall not constitute a waiver of any other repurchase rights and/or rights of first refusal that may subsequently arise under the provisions of this Agreement or any other agreement between the Corporation and Optionee. No waiver of any breach or condition of this Agreement shall be deemed to be a waiver of any other or subsequent breach or condition, whether of like or different nature. 5. Cancellation of Shares. If the Corporation or Fleming (as assignee) shall make available, at the time and place and in the amount and form provided in this Agreement, the consideration for the Purchased Shares to be repurchased in accordance with the provisions of this Agreement, then from and after such time, the person from whom such shares are to be repurchased shall no longer have any rights as a holder of such shares (other than the right to receive payment of such consideration in accordance with this Agreement). Such shares shall be deemed purchased in accordance with the applicable provisions hereof, and the Corporation or Fleming (as assignee) shall be deemed the owner and holder of such shares, whether or not the certificates therefor have been delivered as required by this Agreement. H. MISCELLANEOUS PROVISIONS 1. Optionee Undertaking. Optionee hereby agrees to take whatever additional action and execute whatever additional documents the Corporation may deem necessary or advisable in order to carry out or effect one or more of the obligations or restrictions imposed on either Optionee or the Purchased Shares pursuant to the provisions of this Agreement. 2. Agreement is Entire Contract. This Agreement constitutes the entire contract between the parties hereto with regard to the subject matter hereof. This Agreement is made pursuant to the provisions of the Plan and shall in all respects be construed in conformity with the terms of the Plan. 3. Governing Law. This Agreement shall be governed by, and construed in accordance with, the laws of the State of Texas without resort to that State's conflict-of-laws rules. 4. Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed to be an original, but all of which together shall constitute one and the same instrument. 5. Successors and Assigns. The provisions of this Agree- ment shall inure to the benefit of, and be binding upon, the Corporation and its successors and assigns and upon Optionee, Optionee's permitted assigns and the legal representatives, heirs and legatees of Optionee's estate, whether or not any such person shall have become a party to this Agreement and have agreed in writing to join herein and be bound by the terms hereof. IN WITNESS WHEREOF, the parties have executed this Agreement on the day and year first indicated above. EMAR.NET, INC. By: Title: Address: OPTIONEE Address: SPOUSAL ACKNOWLEDGMENT The undersigned spouse of Optionee has read and hereby approves the foregoing Stock Purchase Agreement. In consideration of the Corporation's granting Optionee the right to acquire the Purchased Shares in accordance with the terms of such Agreement, the undersigned hereby agrees to be irrevocably bound by all the terms of such Agreement, including (without limitation) the right of the Corporation (or its assigns) to purchase any Purchased Shares in which Optionee is not vested at time of his or her cessation of Service. OPTIONEE'S SPOUSE Address: EXHIBIT I ASSIGNMENT SEPARATE FROM CERTIFICATE FOR VALUE RECEIVED ____________ hereby sell(s), assign(s) and transfer(s) unto eMAR.net, Inc. (the "Corporation"), _______________ (_________) shares of the Common Stock of the Corporation standing in his or her name on the books of the Corporation represented by Certificate No. ________________ herewith and do(es) hereby irrevocably constitute and appoint _____________________ Attorney to transfer the said stock on the books of the Corporation with full power of substitution in the premises. Dated: ____________________ Signature Instruction: Please do not fill in any blanks other than the signature line. Please sign exactly as you would like your name to appear on the issued stock certificate. The purpose of this assignment is to enable the Corporation to exercise the Repurchase Right without requiring additional signatures on the part of Optionee. EXHIBIT II FEDERAL INCOME TAX CONSEQUENCES AND SECTION 83(b) TAX ELECTION I. Federal Income Tax Consequences and Section 83(b) Election For Exercise of Non-Statutory Option. If the Purchased Shares are acquired pursuant to the exercise of a Non-Statutory Option, as specified in the Grant Notice, then under Code Section 83, the excess of the Fair Market Value of the Purchased Shares on the date any forfeiture restrictions applicable to such shares lapse over the Exercise Price paid for those shares will be reportable as ordinary income on the lapse date. For this purpose, the term "forfeiture restrictions" includes the right of the Corporation to repurchase the Purchased Shares pursuant to the Repurchase Right. However, Optionee may elect under Code Section 83(b) to be taxed at the time the Purchased Shares are acquired, rather than when and as such Purchased Shares cease to be subject to such forfeiture restrictions. Such election must be filed with the Internal Revenue Service within thirty (30) days after the date of the Agreement. Even if the Fair Market Value of the Purchased Shares on the date of the Agreement equals the Exercise Price paid (and thus no tax is payable), the election must be made to avoid adverse tax consequences in the future. The form for making this election is attached as part of this exhibit. FAILURE TO MAKE THIS FILING WITHIN THE APPLICABLE THIRTY (30)-DAY PERIOD WILL RESULT IN THE RECOGNITION OF ORDINARY INCOME BY OPTIONEE AS THE FORFEITURE RESTRICTIONS LAPSE. II. Federal Income Tax Consequences and Conditional Section 83(b) Election For Exercise of Incentive Option. If the Purchased Shares are acquired pursuant to the exercise of an Incentive Option, as specified in the Grant Notice, then the following tax principles shall be applicable to the Purchased Shares: (i) For regular tax purposes, no taxable income will be recognized at the time the Option is exercised. (ii) The excess of (a) the Fair Market Value of the Purchased Shares on the date the Option is exercised or (if later) on the date any forfeiture restrictions applicable to the Purchased Shares lapse over (b) the Exercise Price paid for the Purchased Shares will be includible in Optionee's taxable income for alternative minimum tax purposes. (iii) If Optionee makes a disqualifying disposition of the Purchased Shares, then Optionee will recognize ordinary income in the year of such disposition equal in amount to the excess of (a) the Fair Market Value of the Purchased Shares on the date the Option is exercised or (if later) on the date any forfeiture restrictions applicable to the Purchased Shares lapse over (b) the Exercise Price paid for the Purchased Shares. Any additional gain recognized upon the disqualifying disposition will be either short-term or long-term capital gain depending upon the period for which the Purchased Shares are held prior to the disposition. (iv) For purposes of the foregoing, the term "forfeiture restrictions" will include the right of the Corporation to repurchase the Purchased Shares pursuant to the Repurchase Right. The term "disqualifying disposition" means any sale or other disposition(1) of the Purchased Shares within two (2) years after the Grant Date or within one (1) year after the exercise date of the Option. (v) In the absence of final Treasury Regulations relating to Incentive Options, it is not certain whether Optionee may, in connection with the exercise of the Option for any Purchased Shares at the time subject to forfeiture restrictions, file a protective election under Code Section 83(b) which would limit Optionee's ordinary income upon a disqualifying disposition to the excess of the Fair Market Value of the Purchased Shares on the date the Option is exercised over the Exercise Price paid for the Purchased Shares. Accordingly, such election if properly filed will only be allowed to the extent the final Treasury Regulations permit such a protective election. (vi) The Code Section 83(b) election will be effective in limiting the Optionee's alternative minimum taxable income to the excess of the Fair Market Value of the Purchased Shares at the time the Option is exercised over the Exercise Price paid for those shares. Page 2 of the attached form for making the election should be filed with any election made in connection with the exercise of an Incentive Option. ___________________ (1) Generally, a disposition of shares purchased under an Incentive Option includes any transfer of legal title, including a transfer by sale, exchange or gift, but does not include a transfer to the Optionee's spouse, a transfer into joint ownership with right of survivorship if Optionee remains one of the joint owners, a pledge, a transfer by bequest or inheritance or certain tax free exchanges permitted under the Code. SECTION 83(b) ELECTION This statement is being made under Section 83(b) of the Internal Revenue Code, pursuant to Treas. Reg. Section 1.83-2. (1) The taxpayer who performed the services is: Name: Address: Taxpayer Ident. No.: (2) The property with respect to which the election is being made is _____________ shares of the common stock of eMAR.net, Inc. (3) The property was issued on ______________, _____. (4) The taxable year in which the election is being made is the calendar year _____. (5) The property is subject to a repurchase right pursuant to which the issuer has the right to acquire the property at the original purchase price if for any reason taxpayer's service with the issuer terminates. The issuer's repurchase right will lapse in a series of annual and monthly installments over a four (4)- year period ending on ___________, 200__. (6) The fair market value at the time of transfer (determined without regard to any restriction other than a restriction which by its terms will never lapse) is $__________per share. (7) The amount paid for such property is $___________ per share. (8) A copy of this statement was furnished to eMAR.net, Inc. for whom taxpayer rendered the services underlying the transfer of property. (9) This statement is executed on _________________, ______. Spouse (if any) Taxpayer This election must be filed with the Internal Revenue Service Center with which taxpayer files his or her Federal income tax returns and must be made within thirty (30) days after the execution date of the Stock Purchase Agreement. This filing should be made by registered or certified mail, return receipt requested. Optionee must retain two (2) copies of the completed form for filing with his or her Federal and state tax returns for the current tax year and an additional copy for his or her records. The property described in the above Section 83(b) election is comprised of shares of common stock acquired pursuant to the exercise of an incentive stock option under Section 422 of the Internal Revenue Code (the "Code"). Accordingly, it is the intent of the Taxpayer to utilize this election to achieve the following tax results: 1. One purpose of this election is to have the alternative minimum taxable income attributable to the purchased shares measured by the amount by which the fair market value of such shares at the time of their transfer to the Taxpayer exceeds the purchase price paid for the shares. In the absence of this election, such alternative minimum taxable income would be measured by the spread between the fair market value of the purchased shares and the purchase price which exists on the various lapse dates in effect for the forfeiture restrictions applicable to such shares. 2. Section 421(a)(1) of the Code expressly excludes from income any excess of the fair market value of the purchased shares over the amount paid for such shares. Accordingly, this election is also intended to be effective in the event there is a "disqualifying disposition" of the shares, within the meaning of Section 421(b) of the Code, which would otherwise render the provisions of Section 83(a) of the Code applicable at that time. Consequently, the Taxpayer hereby elects to have the amount of disqualifying disposition income measured by the excess of the fair market value of the purchased shares on the date of transfer to the Taxpayer over the amount paid for such shares. Since Section 421(a) presently applies to the shares which are the subject of this Section 83(b) election, no taxable income is actually recognized for regular tax purposes at this time, and no income taxes are payable, by the Taxpayer as a result of this election. The foregoing election is to be effective to the full extent permitted under the Code. THIS PAGE 2 IS TO BE ATTACHED TO ANY SECTION 83(b) ELECTION FILED IN CONNECTION WITH THE EXERCISE OF AN INCENTIVE STOCK OPTION UNDER THE FEDERAL TAX LAWS. APPENDIX The following definitions shall be in effect under the Agreement: A. Agreement shall mean this Stock Purchase Agreement. B. Board shall mean the Corporation's Board of Directors. C. Code shall mean the Internal Revenue Code of 1986, as amended. D. Common Stock shall mean the Corporation's common stock. E. Corporate-Level Change in Control shall mean any of the following transactions involving a change in control or ownership of the Corporation: (i) a stockholder-approved merger or consolidation in which securities possessing more than fifty percent (50%) of the total combined voting power of the Corporation's outstanding securities are transferred to a person or persons different from the persons holding those securities immediately prior to such transaction, or (ii) a stockholder-approved sale, transfer or other disposition of all or substantially all of the Corporation's assets in complete liquidation or dissolution of the Corporation, or (iii) the acquisition, directly or indirectly, by any person or related group of persons (other than the Corporation or a person that directly or indirectly controls, is controlled by, or is under common control with, the Corporation) of beneficial ownership (within the meaning of Rule 13d-3 of the Securities Exchange Act of 1934, as amended) of securities possessing more than fifty percent (50%) of the total combined voting power of the Corporation's outstanding securities pursuant to a tender or exchange offer made directly to the Corporation's stockholders. F. Corporation shall mean eMAR.net, Inc., a Delaware corporation, and any successor corporation to all or substantially all of the assets or voting stock of eMAR.net, Inc. which shall by appropriate action adopt the Plan. G. Disposition Notice shall have the meaning assigned to such term in Paragraph E.2. H. Exercise Price shall have the meaning assigned to such term in Paragraph A.1. I. Fair Market Value of a share of Common Stock on any relevant date, prior to the initial public offering of the Common Stock, shall be determined by the Plan Administrator after taking into account such factors as it shall deem appropriate. J. First Refusal Right shall mean the right granted to the Corporation and its assigns in accordance with Article E. K. Fleming shall mean Fleming Companies, Inc., an Oklahoma corporation, which is currently the Parent of the Corporation. L. Fleming Service Provider shall mean any individual who is in a direct service relationship with Fleming or any Fleming Subsidiary (and not with the Corporation or any other Parent or Subsidiary of the Corporation), whether as an employee, associate, board member or independent contractor, at a time when Fleming is the Parent of the Corporation. M. Fleming Subsidiary shall mean any corporation (other than Fleming) in an unbroken chain of corporations beginning with Fleming, provided each corporation (other than the last corporation) in the unbroken chain owns, at the time of the determination, stock possessing fifty percent (50%) or more of the total combined voting power of all classes of stock in one of the other corporations in such chain. In no event, however, shall a Fleming Subsidiary include the Corporation or any Parent or Subsidiary of the Corporation. N. Grant Date shall have the meaning assigned to such term in Paragraph A.1. O. Grant Notice shall mean the Notice of Grant of Stock Option pursuant to which Optionee has been informed of the basic terms of the Option. P. Incentive Option shall mean an option which satisfies the requirements of Code Section 422. Q. Market Stand-Off shall mean the market stand-off restriction specified in Paragraph C.3. R. 1933 Act shall mean the Securities Act of 1933, as amended. S. 1934 Act shall mean the Securities Exchange Act of 1934, as amended. T. Non-Statutory Option shall mean an option not intended to satisfy the requirements of Code Section 422. U. Option shall have the meaning assigned to such term in Paragraph A.1. V. Option Agreement shall mean all agreements and other documents evidencing the Option. W. Optionee shall mean the person to whom the Option is granted under the Plan. X. Owner shall mean Optionee and all subsequent holders of the Purchased Shares who derive their chain of ownership through a Permitted Transfer from Optionee. Y. Parent shall mean any corporation (other than the Corporation) in an unbroken chain of corporations ending with the Corporation, provided each corporation in the unbroken chain (other than the Corporation) owns, at the time of the determination, stock possessing fifty percent (50%) or more of the total combined voting power of all classes of stock in one of the other corporations in such chain. Z. Parent-Level Change in Control shall mean any of the following transactions involving a change in control or ownership of the Fleming which is effected while, and only while, Fleming is the Parent of the Corporation: (i) the acquisition by any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the 1934 Act (a "Person") of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the 1933 Act) of 20% or more (the "Triggering Percentage") of either (i) the then outstanding shares of Fleming common stock (the "Outstanding Company Common Stock") or (ii) the combined voting power of the then outstanding Fleming voting securities entitled to vote generally in the election of directors (the "Outstanding Company Voting Securities"); provided, however, in the event the "Incumbent Board" (as such term is hereinafter defined) pursuant to authority granted in any rights agreement to which Fleming is a party (the "Rights Agreement") lowers the acquisition threshold percentages set forth in such Rights Agreement, the Triggering Percentage shall be automatically reduced to equal the threshold percentages set pursuant to authority granted to the board in the Rights Agreement; and provided, further, however, that the following acquisitions shall not constitute a Parent-Level Change in Control: (i) any acquisition directly from Fleming, (ii) any acquisition by Fleming, (iii) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by Fleming or any corporation controlled by Fleming, or (iv) any acquisition by any corporation pursuant to a transaction which complies with clauses (x), (y), and (z) of subsection (iii) of this definition; or (ii) a change in the composition of the Fleming Board of Directors such that the individuals who, as of the effective date of the Plan, constitute the Fleming Board of Directors (the "Incumbent Board") cease for any reason to comprise at least a majority of the Fleming Board of Directors; provided, however, that any individual who becomes a member of the Fleming Board of Directors subsequent to the effective date of the Plan and whose election, appointment or nomination for election by Fleming's shareholders, was approved by a vote of at least a majority of the directors then comprising the Incumbent Board shall be considered as though such individual were a member of the Incumbent Board, but excluding for purposes of this definition, any such individual whose initial assumption of office occurs as a result of an actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Fleming Board of Directors; or (iii) the approval by the Fleming shareholders of a reorganization, share exchange, merger or consolidation or acquisition of assets of another corporation (a "Business Combination"), in each case, unless, following such Business Combination, (x) all or substantially all of the individuals and entities who were the beneficial owners, respectively, of the Outstanding Company Common Stock and Outstanding Company Voting Securities immediately prior to such Business Combination will beneficially own, directly or indirectly, more than 50% of, respectively, the then outstanding shares of common stock and the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors, as the case may be, of the corporation resulting from such Business Combination (including, without limitation, a corporation which as a result of such transaction will own Fleming through one or more subsidiaries) in substantially the same proportions as their ownership, immediately prior to such Business Combination of the Outstanding Company Common Stock and Outstanding Company Voting Securities, as the case may be, (y) no Person (excluding any employee benefit plan (or related trust) of Fleming or such corporation resulting from such Business Combination) will beneficially own, directly or indirectly, 20% or more of, respectively, the then outstanding shares of common stock of the corporation resulting from such Business Combination or the combined voting power of the then outstanding voting securities of such corporation except to the extent that such ownership existed prior to the Business Combination, and (z) at least a majority of the members of the board of directors of the corporation resulting from such Business Combination will have been members of the Incumbent Board at the time of the execution of the initial agreement, or of the action of the Incumbent Board, providing for such Business Combination; or (iv) the approval by the shareholders of Fleming of (x) a complete liquidation or dissolution of Fleming or, (y) the sale or other disposition of all or substantially all of the assets of Fleming, other than to a corporation, with respect to which following such sale or other disposition, (A) more than 50% of, respectively, the then outstanding shares of common stock of such corporation and the combined voting power of the then outstanding voting securities of such corporation entitled to vote generally in the election of directors will be beneficially owned, directly or indirectly, by all or substantially all of the individuals and entities who were the beneficial owners, respectively, of the Outstanding Company Common Stock and Outstanding Company Voting Securities immediately prior to such sale or other disposition in substantially the same proportion as their ownership, immediately prior to such sale or other disposition, of the Outstanding Company Common Stock and Outstanding Company Voting Securities, as the case may be, (B) less than 20% of, respectively, the then outstanding shares of common stock of such corporation and the combined voting power of the then outstanding voting securities of such corporation entitled to vote generally in the election of directors will be beneficially owned, directly or indirectly, by any Person (excluding any employee benefit plan (or related trust) of Fleming or such corporation), except to the extent that such Person owned 20% or more of the Outstanding Company Common Stock or Outstanding Company Voting Securities prior to the sale or disposition, and (C) at least a majority of the members of the board of directors of such corporation will have been members of the Incumbent Board at the time of the execution of the initial agreement, or of the action of the Board, providing for such sale or other disposition of assets of Fleming. AA. Parent-Level Reduction in Ownership shall mean any transaction, including (without limitation) any sale or other disposition by Fleming of its ownership interest in any outstanding voting securities of the Corporation or any direct issuance of voting securities by the Corporation, which effects a reduction to Fleming's combined direct and indirect (through one or more majority-owned subsidiaries) ownership of the Corporation's voting securities to an amount which represents less than fifty percent (50%) of the total combined voting power of all outstanding classes of stock of the Corporation. BB. Permitted Transfer shall mean (i) a gratuitous transfer of the Purchased Shares, provided and only if Optionee obtains the Corporation's prior written consent to such transfer, (ii) a transfer of title to the Purchased Shares effected pursuant to Optionee's will or the laws of inheritance following Optionee's death or (iii) a transfer to the Corporation in pledge as security for any purchase-money indebtedness incurred by Optionee in connection with the acquisition of the Purchased Shares. CC. Plan shall mean the Corporation's 2000 Stock Option/Stock Issuance Plan. DD. Plan Administrator shall mean either the Board or a committee of the Board acting in its capacity as administrator of the Plan. EE. Prior Purchase Agreement shall have the meaning assigned to such term in Paragraph D.4. FF. Purchased Shares shall have the meaning assigned to such term in Paragraph A.1. GG. Recapitalization shall mean any stock split, stock dividend, recapitalization, combination of shares, exchange of shares or other change affecting the Corporation's outstanding Common Stock as a class without the Corporation's receipt of consideration. HH. Reorganization shall mean any of the following transactions: (i) a merger or consolidation in which the Corporation is not the surviving entity, (ii) a sale, transfer or other disposition of all or substantially all of the Corporation's assets, (iii) a reverse merger in which the Corporation is the surviving entity but in which the Corporation's outstanding voting securities are transferred in whole or in part to a person or persons different from the persons holding those securities immediately prior to the merger, or (iv) any transaction effected primarily to change the state in which the Corporation is incorporated or to create a holding company structure. II. Repurchase Right shall mean the right granted to Fleming in accordance with Article D. JJ. SEC shall mean the Securities and Exchange Commission. KK. Service shall mean (i) the Optionee's performance of services for the Corporation (or any Parent or Subsidiary) in the capacity of an employee, subject to the control and direction of the employer entity as to both the work to be performed and the manner and method of performance, a non-employee member of the board of directors or an independent consultant, or (ii) the Optionee's performance of services for Fleming or any Fleming Subsidiary in the capacity of an employee or associate of that entity, a non-employee member of the board of directors or an independent consultant, but only to the extent such clause (ii) services are performed while Fleming remains the Parent of the Corporation. LL. Subsidiary shall mean any corporation (other than the Corporation) in an unbroken chain of corporations beginning with the Corporation, provided each corporation (other than the last corporation) in the unbroken chain owns, at the time of the determination, stock possessing fifty percent (50%) or more of the total combined voting power of all classes of stock in one of the other corporations in such chain. MM. Target Shares shall have the meaning assigned to such term in Paragraph E.2. NN. Vesting Schedule shall mean the vesting schedule specified in the Grant Notice pursuant to which the Optionee is to vest in the Option Shares in a series of installments over his or her period of Service. OO. Unvested Shares shall have the meaning assigned to such term in Paragraph D.1. EXHIBIT C EMAR.NET, INC. 2000 STOCK OPTION/STOCK ISSUANCE PLAN ARTICLE ONE GENERAL PROVISIONS I. PURPOSE OF THE PLAN This 2000 Stock Option/Stock Issuance Plan is intended to promote the interests of eMAR.net, Inc., a Delaware corporation, by providing eligible persons in the Corporation's employ or service with the opportunity to acquire a proprietary interest, or otherwise increase their proprietary interest, in the Corporation as an incentive for them to continue in such employ or service. Capitalized terms herein shall have the meanings assigned to such terms in the attached Appendix. II. STRUCTURE OF THE PLAN A. The Plan shall be divided into two (2) separate equity programs: (i) the Option Grant Program under which eligible persons may, at the discretion of the Plan Administrator, be granted options to purchase shares of Common Stock, and (ii) the Stock Issuance Program under which eligible persons may, at the discretion of the Plan Administrator, be issued shares of Common Stock directly, either through the immediate purchase of such shares or as a bonus for services rendered the Corporation (or any Parent or Subsidiary). B. The provisions of Articles One and Four shall apply to both equity programs under the Plan and shall accordingly govern the interests of all persons under the Plan. III. ADMINISTRATION OF THE PLAN A. The Plan shall be administered by the Board. However, any or all administrative functions otherwise exercisable by the Board may be delegated to the Committee. Members of the Committee shall serve for such period of time as the Board may determine and shall be subject to removal by the Board at any time. The Board may also at any time terminate the functions of the Committee and reassume all powers and authority previously delegated to the Committee. B. The Plan Administrator shall have full power and authority (subject to the provisions of the Plan) to establish such rules and regulations as it may deem appropriate for proper administration of the Plan and to make such determinations under, and issue such interpretations of, the Plan and any outstanding options or stock issuances thereunder as it may deem necessary or advisable. Decisions of the Plan Administrator shall be final and binding on all parties who have an interest in the Plan or any option grant or stock issuance thereunder. IV. ELIGIBILITY A. The persons eligible to participate in the Plan are as follows: (i) Employees, (ii) Other Fleming Service Providers, (iii) non-employee members of the Board or the non-employee members of the board of directors of any Parent or Subsidiary, and (iv) consultants and other independent advisors who provide services to the Corporation (or any Parent or Subsidiary). B. The Plan Administrator shall have full authority to determine, (i) with respect to the grants made under the Option Grant Program, which eligible persons are to receive such grants, the time or times when those grants are to be made, the number of shares to be covered by each such grant, the status of the granted option as either an Incentive Option or a Non- Statutory Option, the time or times when each option is to become exercisable, the vesting schedule (if any) applicable to the option shares and the maximum term for which the option is to remain outstanding, and (ii) with respect to stock issuances made under the Stock Issuance Program, which eligible persons are to receive such issuances, the time or times when those issuances are to be made, the number of shares to be issued to each Participant, the vesting schedule (if any) applicable to the issued shares and the consideration to be paid by the Participant for such shares. C. The Plan Administrator shall have the absolute dis- cretion either to grant options in accordance with the Option Grant Program or to effect stock issuances in accordance with the Stock Issuance Program. V. STOCK SUBJECT TO THE PLAN A. The stock issuable under the Plan shall be shares of authorized but unissued or reacquired Common Stock. The maximum number of shares of Common Stock which may be issued over the term of the Plan shall not exceed 2,724,000 shares. However, not more than 724,000 shares may be issued to Fleming Service Providers. B. Shares of Common Stock subject to outstanding options shall be available for subsequent issuance under the Plan to the extent (i) the options expire or terminate for any reason prior to exercise in full or (ii) the options are cancelled in accordance with the cancellation-regrant provisions of Article Two. Unvested shares issued under the Plan and subsequently repurchased by the Corporation, at the option exercise or direct issue price paid per share, pursuant to the Corporation's repurchase rights under the Plan shall be added back to the number of shares of Common Stock reserved for issuance under the Plan and shall accordingly be available for reissuance through one or more subsequent option grants or direct stock issuances under the Plan. Any unvested shares issued under the Plan and repurchased by Fleming pursuant to repurchase rights assigned to it by the Corporation will not be available for reissuance. C. Should any change be made to the Common Stock by reason of any stock split, stock dividend, recapitalization, combi- nation of shares, exchange of shares or other change affecting the outstanding Common Stock as a class without the Corporation's receipt of consideration, appropriate adjustments shall be made to (i) the maximum number and/or class of securities issuable under the Plan, (ii) the maximum number and/or class of securities issuable to Fleming Service Providers and (iii) the number and/or class of securities and the exercise price per share in effect under each outstanding option in order to prevent the dilution or enlargement of benefits thereunder. The adjustments determined by the Plan Administrator shall be final, binding and conclusive. In no event shall any such adjustments be made in connection with the conversion of one or more outstanding shares of the Corporation's preferred stock into shares of Common Stock. ARTICLE TWO OPTION GRANT PROGRAM I. OPTION TERMS Each option shall be evidenced by one or more documents in the form approved by the Plan Administrator; provided, however, that each such document shall comply with the terms specified below. Each document evidencing an Incentive Option shall, in addition, be subject to the provisions of the Plan applicable to such options. A. Exercise Price. 1. The exercise price per share shall be fixed by the Plan Administrator in accordance with the following provisions: (i) The exercise price per share shall not be less than eighty-five percent (85%) of the Fair Market Value per share of Common Stock on the option grant date. (ii) If the person to whom the option is granted is a 10% Stockholder, then the exercise price per share shall not be less than one hundred ten percent (110%) of the Fair Market Value per share of Common Stock on the option grant date. 2. The exercise price shall become immediately due upon exercise of the option and shall, subject to the provisions of Section I of Article Four and the documents evidencing the option, be payable in cash or check made payable to the Corporation. Should the Common Stock be registered under Section 12 of the 1934 Act at the time the option is exercised, then the exercise price may also be paid as follows: (i) in shares of Common Stock held for the requisite period necessary to avoid a charge to the Corporation's earnings for financial reporting purposes and valued at Fair Market Value on the Exercise Date, or (ii) to the extent the option is exercised for vested shares, through a special sale and remittance procedure pursuant to which the Optionee shall concurrently provide irrevocable instructions (A) to a Corporation-designated brokerage firm to effect the immediate sale of the purchased shares and remit to the Corporation, out of the sale proceeds available on the settlement date, sufficient funds to cover the aggregate exercise price payable for the purchased shares plus all applicable Federal, state and local income and employment taxes required to be withheld by the Corporation by reason of such exercise and (B) to the Corporation to deliver the certificates for the purchased shares directly to such brokerage firm in order to complete the sale. Except to the extent such sale and remittance procedure is utilized, payment of the exercise price for the purchased shares must be made on the Exercise Date. B. Exercise and Term of Options. Each option shall be exercisable at such time or times, during such period and for such number of shares as shall be determined by the Plan Administrator and set forth in the documents evidencing the option grant. However, no option shall have a term in excess of ten (10) years measured from the option grant date. C. Effect of Termination of Service. 1. The following provisions shall govern the exercise of any options held by the Optionee at the time of cessation of Service or death: (i) Should the Optionee cease to remain in Service for any reason other than death, Disability or Misconduct, then the Optionee shall have a period of three (3) months following the date of such cessation of Service during which to exercise each outstanding option held by such Optionee. (ii) Should Optionee's Service terminate by reason of Disability, then the Optionee shall have a period of twelve (12) months following the date of such cessation of Service during which to exercise each outstanding option held by such Optionee. (iii) If the Optionee dies while holding an outstanding option, then the personal representative of his or her estate or the person or persons to whom the option is transferred pursuant to the Optionee's will or the laws of inheritance or the Optionee's designated beneficiary or beneficiaries of that option shall have a twelve (12)-month period following the date of the Optionee's death to exercise such option. (iv) Under no circumstances, however, shall any such option be exercisable after the specified expiration of the option term. (v) During the applicable post-Service exercise period, the option may not be exercised in the aggregate for more than the number of vested shares for which the option is exercisable on the date of the Optionee's cessation of Service. Upon the expiration of the applicable exercise period or (if earlier) upon the expiration of the option term, the option shall terminate and cease to be outstanding for any vested shares for which the option has not been exercised. However, the option shall, immediately upon the Optionee's cessation of Service, terminate and cease to be outstanding with respect to any and all option shares for which the option is not otherwise at the time exercisable or in which the Optionee is not otherwise at that time vested. (vi) Should Optionee's Service be terminated for Misconduct or should Optionee otherwise engage in Misconduct while holding one or more outstanding options under the Plan, then all those options shall terminate immediately and cease to remain outstanding. 2. The Plan Administrator shall have the discretion, exercisable either at the time an option is granted or at any time while the option remains outstanding, to: (i) extend the period of time for which the option is to remain exercisable following Optionee's cessation of Service or death from the limited period otherwise in effect for that option to such greater period of time as the Plan Administrator shall deem appropriate, but in no event beyond the expiration of the option term, and/or (ii) permit the option to be exercised, during the applicable post-Service exercise period, not only with respect to the number of vested shares of Common Stock for which such option is exercisable at the time of the Optionee's cessation of Service but also with respect to one or more additional installments in which the Optionee would have vested under the option had the Optionee continued in Service. D. Stockholder Rights. The holder of an option shall have no stockholder rights with respect to the shares subject to the option until such person shall have exercised the option, paid the exercise price and become the recordholder of the purchased shares. E. Unvested Shares. The Plan Administrator shall have the discretion to grant options which are exercisable for unvested shares of Common Stock. Should the Optionee cease Service while holding such unvested shares, the Corporation shall have the right to repurchase, at the exercise price paid per share, any or all of those unvested shares. The terms upon which such repurchase right shall be exercisable (including the period and procedure for exercise and the appropriate vesting schedule for the purchased shares) shall be established by the Plan Administrator and set forth in the document evidencing such repurchase right. Any such repurchase rights which pertain to unvested shares held by a Fleming Service Provider shall be assignable to Fleming. The Plan Administrator may not impose a vesting schedule upon any option grant or the shares of Common Stock subject to that option which is more restrictive than twenty percent (20%) per year vesting, with the initial vesting to occur not later than one (1) year after the option grant date. However, such limitation shall not be applicable to any option grants made to individuals who are officers of the Corporation, non-employee Board members or independent consultants. F. First Refusal Rights. Until such time as the Common Stock is first registered under Section 12 of the 1934 Act, the Corporation shall have the right of first refusal with respect to any proposed disposition by the Optionee (or any successor in interest) of any shares of Common Stock issued under the Plan. Such right of first refusal shall be exercisable in accordance with the terms established by the Plan Administrator and set forth in the document evidencing such right. Any such first refusal rights which pertain to shares held by a Fleming Service Provider shall be assignable to Fleming. G. Limited Transferability of Options. An Incentive Stock Option shall be exercisable only by the Optionee during his or her lifetime and shall not be assignable or transferable other than by will or by the laws of inheritance following the Optionee's death. A Non-Statutory Option may be assigned in whole or in part during the Optionee's lifetime to one or more members of the Optionee's family or to a trust established exclusively for one or more such family members or to Optionee's former spouse, to the extent such assignment is in connection with the Optionee's estate plan or pursuant to a domestic relations order. The assigned portion may only be exercised by the person or persons who acquire a proprietary interest in the Non-Statutory Option pursuant to the assignment. The terms applicable to the assigned portion shall be the same as those in effect for the option immediately prior to such assignment and shall be set forth in such documents issued to the assignee as the Plan Administrator may deem appropriate. Notwithstanding the foregoing, the Optionee may also designate one or more persons as the beneficiary or beneficiaries of his or her outstanding options under the Plan, and those options shall, in accordance with such designation, automatically be transferred to such beneficiary or beneficiaries upon the Optionee's death while holding those options. Such beneficiary or beneficiaries shall take the transferred options subject to all the terms and conditions of the applicable agreement evidencing each such transferred option, including (without limitation) the limited time period during which the option may be exercised following the Optionee's death. II. INCENTIVE OPTIONS The terms specified below shall be applicable to all Incentive Options. Except as modified by the provisions of this Section II, all the provisions of Articles One, Two and Four shall be applicable to Incentive Options. Options which are specifically designated as Non-Statutory Options shall not be subject to the terms of this Section II. A. Eligibility. Incentive Options may only be granted to Employees. B. Exercise Price. The exercise price per share shall not be less than one hundred percent (100%) of the Fair Market Value per share of Common Stock on the option grant date. C. Dollar Limitation. The aggregate Fair Market Value of the shares of Common Stock (determined as of the respective date or dates of grant) for which one or more options granted to any Employee under the Plan (or any other option plan of the Corporation or any Parent or Subsidiary) may for the first time become exercisable as Incentive Options during any one (1) calendar year shall not exceed the sum of One Hundred Thousand Dollars ($100,000). To the extent the Employee holds two (2) or more such options which become exercisable for the first time in the same calendar year, the foregoing limitation on the exercisability of such options as Incentive Options shall be applied on the basis of the order in which such options are granted. D. 10% Stockholder. If any Employee to whom an Incentive Option is granted is a 10% Stockholder, then the option term shall not exceed five (5) years measured from the option grant date. III. PARENT-LEVEL CHANGE IN CONTROL A. The Plan Administrator shall have the discretion, exercisable either at the time the option is granted or at any time while the option remains outstanding, to incorporate the following special vesting acceleration provision into one or more options under the Plan: To the extent such option is (i) outstanding at the time of a Parent-Level Change in Control and (ii) held at that time by a Fleming Service Provider, the shares of Common Stock at the time subject to such option but not otherwise vested shall automatically vest in full so that such option shall, immediately prior to the effective date of such Parent-Level Change in Control, become exercisable for all of the shares of Common Stock at the time subject to that option and may be exercised for any or all of those shares as fully- vested shares of Common Stock. B. The Plan Administrator shall have the discretion to structure one or more of the Corporation's outstanding repurchase rights under the Plan so that those repurchase rights shall terminate automatically, and the shares of Common Stock subject to those terminated rights shall immediately vest in full, to the extent those shares are unvested at the time of a Parent-Level Change in Control and are held at that time by a Fleming Service Provider. IV. PARENT-LEVEL REDUCTION IN OWNERSHIP A. The Plan Administrator shall have the discretion, exercisable either at the time the option is granted or at any time while the option remains outstanding, to incorporate the following special vesting acceleration provision into one or more options under the Plan: To the extent such option is (i) outstanding at the time of a Parent-Level Reduction in Ownership and (ii) held at that time by a Fleming Service Provider, the shares of Common Stock at the time subject to such option but not otherwise vested shall automatically vest in full so that such option shall, immediately prior to the effective date of such Parent- Level Reduction in Ownership, become exercisable for all of the shares of Common Stock at the time subject to that option and may be exercised for any or all of those shares as fully-vested shares of Common Stock. B. The Plan Administrator shall have the discretion to structure one or more of the Corporation's outstanding repurchase rights under the Plan so that those repurchase rights shall terminate automatically, and the shares of Common Stock subject to those terminated rights shall immediately vest in full, to the extent those shares are unvested at the time of a Parent-Level Reduction in Ownership and are held at that time by a Fleming Service Provider. V. CORPORATE-LEVEL CHANGE IN CONTROL A. The shares subject to each option outstanding under the Plan at the time of a Corporate-Level Change in Control shall automatically vest in full so that each such option shall, immediately prior to the effective date of such Corporate-Level Change in Control, become exercisable for all of the shares of Common Stock at the time subject to that option and may be exercised for any or all of those shares as fully-vested shares of Common Stock. However, the shares subject to an outstanding option under the Plan shall not vest on such an accelerated basis if and to the extent: (i) such option is assumed by the successor corporation (or parent thereof) in the Corporate-Level Change in Control or otherwise continued in full force and effect and any repurchase rights of the Corporation with respect to the unvested option shares are concurrently assigned to such successor corporation (or parent thereof) or otherwise continued in full force and effect or (ii) such option is to be replaced with a cash incentive program which preserves the spread existing on the unvested option shares at the time of the Corporate-Level Change in Control and provides for subsequent payout in accordance with the same vesting schedule applicable to those unvested option shares. B. All outstanding repurchase rights shall also terminate automatically, and the shares of Common Stock subject to those terminated rights shall immediately vest in full, in the event of any Corporate-Level Change in Control, except to the extent those repurchase rights are assigned to any successor corporation (or parent thereof) in connection with such Corporate- Level Change in Control or are otherwise continued in full and effect. C. Immediately following the consummation of the Corporate- Level Change in Control, all outstanding options shall terminate and cease to be outstanding, except to the extent assumed by the successor corporation (or parent thereof) or otherwise continued in full force and effect pursuant to the express terms of the Corporate-Level Change in Control transaction. D. The Plan Administrator shall have the discretion, exercisable either at the time the option is granted or at any time while the option remains outstanding, to structure one or more options under the Plan so that those options shall automatically accelerate and vest in full (and any repurchase rights of the Corporation with respect to the unvested shares subject to those options shall immediately terminate) upon the occurrence of a Corporate-Level Change in Control, whether or not those options are to be assumed in such transaction or otherwise continued in full force and effect. E. The Plan Administrator shall also have full power and authority, exercisable either at the time the option is granted or at any time while the option remains outstanding, to structure such option so that the shares subject to that option shall automatically vest on an accelerated basis should the Optionee's Service terminate by reason of an Involuntary Termination within a designated period (not to exceed eighteen (18) months) following the effective date of any Corporate-Level Change in Control in which the option is assumed or continued in effect and the repurchase rights applicable to those shares do not otherwise terminate. Any option so accelerated shall remain exercisable for the fully-vested option shares until the expiration or sooner termination of the option term. In addition, the Plan Administrator may structure or more of the Corporation's repurchase rights so that those rights shall immediately terminate on an accelerated basis with respect to the unvested shares held by the Optionee at the time of such an Involuntary Termination, and the shares subject to those terminated rights shall accordingly vest at that time. VI. ADDITIONAL CHANGE IN CONTROL PROVISIONS A. Each option which is assumed in connection with a Corporate- Level Change in Control or otherwise continued in full force and effect shall be appropriately adjusted, immediately after such transaction, to apply to the number and class of securities which would have been issuable to the Optionee in consummation of such Corporate-Level Change in Control, had the option been exercised immediately prior to such transaction. Appropriate adjustments shall also be made to (i) the number and class of securities available for issuance under the Plan following the consummation of such Corporate-Level Change in Control and (ii) the exercise price payable per share under each outstanding option, provided the aggregate exercise price payable for such securities shall remain the same. To the extent the actual holders of the Corporation's outstanding Common Stock receive cash consideration for their Common Stock in consummation of the Corporate-Level Change in Control, the successor corporation may, in connection with the assumption of the outstanding options under this Plan, substitute one or more shares of its own common stock with a fair market value equivalent to the cash consideration paid per share of Common Stock in such Corporate-Level Change in Control. B. The portion of any Incentive Option accelerated in connection with a Parent-Level or Corporate-Level Change in Control shall remain exercisable as an Incentive Option only to the extent the applicable One Hundred Thousand Dollar limitation is not exceeded. To the extent such dollar limitation is exceeded, the accelerated portion of such option shall be exercisable as a Non-Statutory Option under the Federal tax laws. C. The grant of options under the Plan shall in no way affect the right of the Corporation or Fleming to adjust, reclassify, reorganize or otherwise change its capital or business structure or to merge, consolidate, dissolve, liquidate or sell or transfer all or any part of its business or assets. VII. CANCELLATION AND REGRANT OF OPTIONS The Plan Administrator shall have the authority to effect, at any time and from time to time, with the consent of the affected option holders, the cancellation of any or all outstanding options under the Plan and to grant in substitution therefor new options covering the same or different number of shares of Common Stock but with an exercise price per share based on the Fair Market Value per share of Common Stock on the new option grant date. ARTICLE THREE STOCK ISSUANCE PROGRAM I. STOCK ISSUANCE TERMS Shares of Common Stock may be issued under the Stock Issuance Program through direct and immediate issuances without any intervening option grants. Each such stock issuance shall be evidenced by a Stock Issuance Agreement which complies with the terms specified below. A. Purchase Price. 1. The purchase price per share shall be fixed by the Plan Administrator but shall not be less than eighty-five percent (85%) of the Fair Market Value per share of Common Stock on the issue date. However, the purchase price per share of Common Stock issued to a 10% Stockholder shall not be less than one hundred and ten percent (110%) of such Fair Market Value. 2. Subject to the provisions of Section I of Article Four, shares of Common Stock may be issued under the Stock Issuance Program for any of the following items of consideration which the Plan Administrator may deem appropriate in each individual instance: (i) cash or check made payable to the Corporation, or (ii) past services rendered to the Corporation (or any Parent or Subsidiary). B. Vesting Provisions. 1. Shares of Common Stock issued under the Stock Issuance Program may, in the discretion of the Plan Administrator, be fully and immediately vested upon issuance or may vest in one or more installments over the Participant's period of Service or upon attainment of specified performance objectives. However, the Plan Administrator may not impose a vesting schedule upon any stock issuance effected under the Stock Issuance Program which is more restrictive than twenty percent (20%) per year vesting, with initial vesting to occur not later than one (1) year after the issuance date. Such limitation shall not apply to any Common Stock issuances made to the officers of the Corporation, non- employee Board members or independent consultants. 2. Any new, substituted or additional securities or other property (including money paid other than as a regular cash dividend) which the Participant may have the right to receive with respect to the Participant's unvested shares of Common Stock by reason of any stock dividend, stock split, recapitalization, combination of shares, exchange of shares or other change affecting the outstanding Common Stock as a class without the Corporation's receipt of consideration shall be issued subject to (i) the same vesting requirements applicable to the Participant's unvested shares of Common Stock and (ii) such escrow arrangements as the Plan Administrator shall deem appropriate. 3. The Participant shall have full stockholder rights with respect to any shares of Common Stock issued to the Participant under the Stock Issuance Program, whether or not the Participant's interest in those shares is vested. Accordingly, the Participant shall have the right to vote such shares and to receive any regular cash dividends paid on such shares. 4. Should the Participant cease to remain in Service while holding one or more unvested shares of Common Stock issued under the Stock Issuance Program or should the performance objectives not be attained with respect to one or more such unvested shares of Common Stock, then those shares shall be immediately surrendered to the Corporation for cancellation, and the Participant shall have no further stockholder rights with respect to those shares. To the extent the surrendered shares were previously issued to the Participant for consideration paid in cash or cash equivalent (including the Participant's purchase- money indebtedness), the Corporation shall repay to the Participant the cash consideration paid for the surrendered shares and shall cancel the unpaid principal balance of any outstanding purchase-money note of the Participant attributable to such surrendered shares. 5. The Plan Administrator may in its discretion waive the surrender and cancellation of one or more unvested shares of Common Stock (or other assets attributable thereto) which would otherwise occur upon the non-completion of the vesting schedule applicable to those shares. Such waiver shall result in the immediate vesting of the Participant's interest in the shares of Common Stock as to which the waiver applies. Such waiver may be effected at any time, whether before or after the Participant's cessation of Service or the attainment or non-attainment of the applicable performance objectives. C. First Refusal Rights. Until such time as the Common Stock is first registered under Section 12 of the 1934 Act, the Corporation shall have the right of first refusal with respect to any proposed disposition by the Participant (or any successor in interest) of any shares of Common Stock issued under the Stock Issuance Program. Such right of first refusal shall be exercisable in accordance with the terms established by the Plan Administrator and set forth in the document evidencing such right. Any such first refusal rights which pertain to shares held by a Fleming Service Provider shall be assignable to Fleming. II. PARENT-LEVEL CHANGE IN CONTROL The Plan Administrator shall have the discretion to structure one or more of the Corporation's outstanding repurchase rights under the Stock Issuance Program so that those repurchase rights shall terminate automatically, and the shares of Common Stock subject to those terminated rights shall immediately vest in full, to the extent those shares are unvested at the time of a Parent- Level Change in Control and are held at that time by a Fleming Service Provider. III. PARENT-LEVEL REDUCTION IN OWNERSHIP The Plan Administrator shall have the discretion to structure one or more of the Corporation's outstanding repurchase rights under the Stock Issuance Program so that those repurchase rights shall terminate automatically, and the shares of Common Stock subject to those terminated rights shall immediately vest in full, to the extent those shares are unvested at the time of a Parent-Level Reduction in Ownership and are held at that time by a Fleming Service Provider. IV. CORPORATE-LEVEL CHANGE IN CONTROL A. Upon the occurrence of a Corporate-Level Change in Control, all outstanding repurchase rights under the Stock Issuance Program shall terminate automatically, and the shares of Common Stock subject to those terminated rights shall immediately vest in full, except to the extent those repurchase rights are assigned to the successor corporation (or parent thereof) in connection with such Corporate-Level Change in Control or otherwise continued in full force and effect. B. The Plan Administrator shall have the discretionary authority, exercisable either at the time the unvested shares are issued or any time while the Corporation's repurchase rights with respect to those shares remain outstanding, to provide that those rights shall automatically terminate on an accelerated basis, and the shares of Common Stock subject to those terminated rights shall immediately vest, in the event the Participant's Service should subsequently terminate by reason of an Involuntary Termination within a designated period (not to exceed eighteen (18) months) following the effective date of any Corporate-Level Change in Control in which those repurchase rights are assigned to the successor corporation (or parent thereof) or are otherwise continued in full force and effect. C. The Plan Administrator shall have the discretion to structure one or more of the Corporation's outstanding repurchase rights under the Stock Issuance Program so that those repurchase rights shall terminate automatically, and the shares of Common Stock subject to those terminated rights shall immediately vest in full, upon the occurrence of a Corporate-Level Change in Control. V. SHARE ESCROW/LEGENDS Unvested shares may, in the Plan Administrator's discretion, be held in escrow by the Corporation until the Participant's interest in such shares vests or may be issued directly to the Participant with restrictive legends on the certificates evidencing those unvested shares. ARTICLE FOUR MISCELLANEOUS I. FINANCING The Plan Administrator may permit any Optionee or Participant to pay the option exercise price under the Option Grant Program or the purchase price for shares issued under the Stock Issuance Program by delivering a full-recourse, interest bearing promissory note payable in one or more installments and secured by the purchased shares. In no event, however, may the maximum credit available to the Optionee or Participant exceed the sum of (i) the aggregate option exercise price or purchase price payable for the purchased shares (less the par value of those shares) plus (ii) any Federal, state and local income and employment tax liability incurred by the Optionee or the Participant in connection with the option exercise or share purchase. II. EFFECTIVE DATE AND TERM OF PLAN A. The Plan shall become effective when adopted by the Board, but no option granted under the Plan may be exercised, and no shares shall be issued under the Plan, until the Plan is approved by the Corporation's stockholders. If such stockholder approval is not obtained within twelve (12) months after the date of the Board's adoption of the Plan, then all options previously granted under the Plan shall terminate and cease to be outstanding, and no further options shall be granted and no shares shall be issued under the Plan. Subject to such limitation, the Plan Administrator may grant options and issue shares under the Plan at any time after the effective date of the Plan and before the date fixed herein for termination of the Plan. B. The Plan shall terminate upon the earliest of (i) the expiration of the ten (10)-year period measured from the date the Plan is adopted by the Board, (ii) the date on which all shares available for issuance under the Plan shall have been issued as vested shares or (iii) the termination of all outstanding options in connection with a Corporate Transaction. All options and unvested stock issuances outstanding at the time of a clause (i) termination event shall continue to have full force and effect in accordance with the provisions of the documents evidencing those options or issuances. III. AMENDMENT OF THE PLAN A. The Board shall have complete and exclusive power and authority to amend or modify the Plan in any or all respects. However, no such amendment or modification shall adversely affect the rights and obligations with respect to options or unvested stock issuances at the time outstanding under the Plan unless the Optionee or the Participant consents to such amendment or modification. In addition, certain amendments may require stockholder approval pursuant to applicable laws and regulations. B. Options may be granted under the Option Grant Program and shares may be issued under the Stock Issuance Program which are in each instance in excess of the number of shares of Common Stock then available for issuance under the Plan, provided any excess shares actually issued under those programs shall be held in escrow until there is obtained stockholder approval of an amendment sufficiently increasing the number of shares of Common Stock available for issuance under the Plan. If such stockholder approval is not obtained within twelve (12) months after the date the first such excess grants or issuances are made, then (i) any unexercised options granted on the basis of such excess shares shall terminate and cease to be outstanding and (ii) the Corporation shall promptly refund to the Optionees and the Participants the exercise or purchase price paid for any excess shares issued under the Plan and held in escrow, together with interest (at the applicable Short Term Federal Rate) for the period the shares were held in escrow, and such shares shall thereupon be automatically cancelled and cease to be outstanding. IV. USE OF PROCEEDS Any cash proceeds received by the Corporation from the sale of shares of Common Stock under the Plan shall be used for general corporate purposes. V. WITHHOLDING The Corporation's obligation to deliver shares of Common Stock upon the exercise of any options granted under the Plan or upon the issuance or vesting of any shares issued under the Plan shall be subject to the satisfaction of all applicable Federal, state and local income and employment tax withholding requirements. VI. REGULATORY APPROVALS The implementation of the Plan, the granting of any options under the Plan and the issuance of any shares of Common Stock (i) upon the exercise of any option or (ii) under the Stock Issuance Program shall be subject to the Corporation's procurement of all approvals and permits required by regulatory authorities having jurisdiction over the Plan, the options granted under it and the shares of Common Stock issued pursuant to it. VII. NO EMPLOYMENT OR SERVICE RIGHTS Nothing in the Plan shall confer upon the Optionee or the Participant any right to continue in Service for any period of specific duration or interfere with or otherwise restrict in any way the rights of the Corporation (or any Parent or Subsidiary employing or retaining such person) or of the Optionee or the Participant, which rights are hereby expressly reserved by each, to terminate such person's Service at any time for any reason, with or without cause. VIII. FINANCIAL REPORTS The Corporation shall deliver a balance sheet and an income statement at least annually to each individual holding an outstanding option under the Plan, unless such individual is a key Employee whose duties in connection with the Corporation (or any Parent or Subsidiary) assure such individual access to equivalent information. APPENDIX The following definitions shall be in effect under the Plan: A. Board shall mean the Corporation's Board of Directors. B. Code shall mean the Internal Revenue Code of 1986, as amended. C. Committee shall mean a committee of one (1) or more Board members appointed by the Board to exercise one or more administrative functions under the Plan. D. Common Stock shall mean the Corporation's common stock. E. Corporate-Level Change in Control shall mean any of the following transactions involving a change in control or ownership of the Corporation: (i) a stockholder-approved merger or consolidation in which securities possessing more than fifty percent (50%) of the total combined voting power of the Corporation's outstanding securities are transferred to a person or persons different from the persons holding those securities immediately prior to such transaction, or (ii) a stockholder-approved sale, transfer or other disposition of all or substantially all of the Corporation's assets in complete liquidation or dissolution of the Corporation, or (iii) the acquisition, directly or indirectly, by any person or related group of persons (other than the Corporation or a person that directly or indirectly controls, is controlled by, or is under common control with, the Corporation) of beneficial ownership (within the meaning of Rule 13d-3 of the Securities Exchange Act of 1934, as amended) of securities possessing more than fifty percent (50%) of the total combined voting power of the Corporation's outstanding securities pursuant to a tender or exchange offer made directly to the Corporation's stockholders. F. Corporation shall mean eMAR.net, Inc., a Delaware corporation, and any successor corporation to all or substantially all of the assets or voting stock of eMAR.net, Inc. which shall by appropriate action adopt the Plan. G. Disability shall mean the inability of the Optionee or the Participant to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment and shall be determined by the Plan Administrator on the basis of such medical evidence as the Plan Administrator deems warranted under the circumstances. H. Employee shall mean an individual who is in the employ of the Corporation (or any Parent or Subsidiary of the Corporation), subject to the control and direction of the employer entity as to both the work to be performed and the manner and method of performance. I. Exercise Date shall mean the date on which the Corporation shall have received written notice of the option exercise. J. Fair Market Value per share of Common Stock on any relevant date shall be determined in accordance with the following provisions: (i) If the Common Stock is at the time traded on the Nasdaq National Market, then the Fair Market Value shall be the closing selling price per share of Common Stock on the date in question, as such price is reported by the National Association of Securities Dealers on the Nasdaq National Market and published in The Wall Street Journal. If there is no closing selling price for the Common Stock on the date in question, then the Fair Market Value shall be the closing selling price on the last preceding date for which such quotation exists. (ii) If the Common Stock is at the time listed on any Stock Exchange, then the Fair Market Value shall be the closing selling price per share of Common Stock on the date in question on the Stock Exchange determined by the Plan Administrator to be the primary market for the Common Stock, as such price is officially quoted in the composite tape of transactions on such exchange and published in The Wall Street Journal. If there is no closing selling price for the Common Stock on the date in question, then the Fair Market Value shall be the closing selling price on the last preceding date for which such quotation exists. (iii) If the Common Stock is at the time neither listed on any Stock Exchange nor traded on the Nasdaq National Market, then the Fair Market Value shall be determined by the Plan Administrator after taking into account such factors as the Plan Administrator shall deem appropriate. K. Fleming shall mean Fleming Companies, Inc., an Oklahoma corporation, which is currently the Parent of the Corporation. L. Fleming Service Provider shall mean any individual who is in a direct service relationship with Fleming or any Fleming Subsidiary (and not with the Corporation or any other Parent or Subsidiary of the Corporation), whether as an employee, associate, board member or independent contractor, at a time when Fleming is the Parent of the Corporation. M. Fleming Subsidiary shall mean any corporation (other than Fleming) in an unbroken chain of corporations beginning with Fleming, provided each corporation (other than the last corporation) in the unbroken chain owns, at the time of the determination, stock possessing fifty percent (50%) or more of the total combined voting power of all classes of stock in one of the other corporations in such chain. In no event, however, shall a Fleming Subsidiary include the Corporation or any Parent or Subsidiary of the Corporation. N. Incentive Option shall mean an option which satisfies the requirements of Code Section 422. O. Involuntary Termination shall mean the termination of the Service of any individual which occurs by reason of: (i) such individual's involuntary dismissal or discharge by the Corporation for reasons other than Misconduct, or (ii) such individual's voluntary resignation following (A) a change in his or her position with the Corporation which materially reduces his or her duties and responsibilities or the level of management to which he or she reports, (B) a reduction in his or her level of compensation (including base salary, fringe benefits and target bonus under any corporate-performance based bonus or incentive programs) by more than fifteen percent (15%) or (C) a relocation of such individual's place of employment by more than fifty (50) miles, provided and only if such change, reduction or relocation is effected without the individual's consent. P. Misconduct shall mean the commission of any act of fraud, embezzlement or dishonesty by the Optionee or Participant, any unauthorized use or disclosure by such person of confidential information or trade secrets of the Corporation (or any Parent or Subsidiary), or any other intentional misconduct by such person adversely affecting the business or affairs of the Corporation (or any Parent or Subsidiary) in a material manner. The foregoing definition shall not be deemed to be inclusive of all the acts or omissions which the Corporation (or any Parent or Subsidiary) may consider as grounds for the dismissal or discharge of any Optionee, Participant or other person in the Service of the Corporation (or any Parent or Subsidiary). Q. 1934 Act shall mean the Securities Exchange Act of 1934, as amended. R. Non-Statutory Option shall mean an option not intended to satisfy the requirements of Code Section 422. S. Option Grant Program shall mean the option grant program in effect under the Plan. T. Optionee shall mean any person to whom an option is granted under the Plan. U. Parent shall mean any corporation (other than the Corporation) in an unbroken chain of corporations ending with the Corporation, provided each corporation in the unbroken chain (other than the Corporation) owns, at the time of the determination, stock possessing fifty percent (50%) or more of the total combined voting power of all classes of stock in one of the other corporations in such chain. V. Parent-Level Change in Control shall mean any of the following transactions involving a change in control or ownership of Fleming which is effected while, and only while, Fleming is the Parent of the Corporation: (i) the acquisition by any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the 1934 Act (a "Person") of beneficial ownership (within the meaning of Rule 13d- 3 promulgated under the 1933 Act) of 20% or more (the "Triggering Percentage") of either (i) the then outstanding shares of Fleming common stock (the "Outstanding Company Common Stock") or (ii) the combined voting power of the then outstanding Fleming voting securities entitled to vote generally in the election of directors (the "Outstanding Company Voting Securities"); provided, however, in the event the "Incumbent Board" (as such term is hereinafter defined) pursuant to authority granted in any rights agreement to which Fleming is a party (the "Rights Agreement") lowers the acquisition threshold percentages set forth in such Rights Agreement, the Triggering Percentage shall be automatically reduced to equal the threshold percentages set pursuant to authority granted to the board in the Rights Agreement; and provided, further, however, that the following acquisitions shall not constitute a Parent-Level Change in Control: (i) any acquisition directly from Fleming, (ii) any acquisition by Fleming, (iii) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by Fleming or any corporation controlled by Fleming, or (iv) any acquisition by any corporation pursuant to a transaction which complies with clauses (x), (y), and (z) of subsection (iii) of this definition; or (ii) a change in the composition of the Fleming Board of Directors such that the individuals who, as of the effective date of the Plan, constitute the Fleming Board of Directors (the "Incumbent Board") cease for any reason to comprise at least a majority of the Fleming Board of Directors; provided, however, that any individual who becomes a member of the Fleming Board of Directors subsequent to the effective date of the Plan and whose election, appointment or nomination for election by Fleming's shareholders, was approved by a vote of at least a majority of the directors then comprising the Incumbent Board shall be considered as though such individual were a member of the Incumbent Board, but excluding for purposes of this definition, any such individual whose initial assumption of office occurs as a result of an actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Fleming Board of Directors; or (iii) the approval by the Fleming shareholders of a reorganization, share exchange, merger or consolidation or acquisition of assets of another corporation (a "Business Combination"), in each case, unless, following such Business Combination, (x) all or substantially all of the individuals and entities who were the beneficial owners, respectively, of the Outstanding Company Common Stock and Outstanding Company Voting Securities immediately prior to such Business Combination will beneficially own, directly or indirectly, more than 50% of, respectively, the then outstanding shares of common stock and the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors, as the case may be, of the corporation resulting from such Business Combination (including, without limitation, a corporation which as a result of such transaction will own Fleming through one or more subsidiaries) in substantially the same proportions as their ownership, immediately prior to such Business Combination of the Outstanding Company Common Stock and Outstanding Company Voting Securities, as the case may be, (y) no Person (excluding any employee benefit plan (or related trust) of Fleming or such corporation resulting from such Business Combination) will beneficially own, directly or indirectly, 20% or more of, respectively, the then outstanding shares of common stock of the corporation resulting from such Business Combination or the combined voting power of the then outstanding voting securities of such corporation except to the extent that such ownership existed prior to the Business Combination, and (z) at least a majority of the members of the board of directors of the corporation resulting from such Business Combination will have been members of the Incumbent Board at the time of the execution of the initial agreement, or of the action of the Incumbent Board, providing for such Business Combination; or (iv) the approval by the shareholders of Fleming of (x) a complete liquidation or dissolution of Fleming or, (y) the sale or other disposition of all or substantially all of the assets of Fleming, other than to a corporation, with respect to which following such sale or other disposition, (A) more than 50% of, respectively, the then outstanding shares of common stock of such corporation and the combined voting power of the then outstanding voting securities of such corporation entitled to vote generally in the election of directors will be beneficially owned, directly or indirectly, by all or substantially all of the individuals and entities who were the beneficial owners, respectively, of the Outstanding Company Common Stock and Outstanding Company Voting Securities immediately prior to such sale or other disposition in substantially the same proportion as their ownership, immediately prior to such sale or other disposition, of the Outstanding Company Common Stock and Outstanding Company Voting Securities, as the case may be, (B) less than 20% of, respectively, the then outstanding shares of common stock of such corporation and the combined voting power of the then outstanding voting securities of such corporation entitled to vote generally in the election of directors will be beneficially owned, directly or indirectly, by any Person (excluding any employee benefit plan (or related trust ) of Fleming or such corporation), except to the extent that such Person owned 20% or more of the Outstanding Company Common Stock or Outstanding Company Voting Securities prior to the sale or disposition, and (C) at least a majority of the members of the board of directors of such corporation will have been members of the Incumbent Board at the time of the execution of the initial agreement, or of the action of the Board, providing for such sale or other disposition of assets of Fleming. W. Parent-Level Reduction in Ownership shall mean any transaction, including (without limitation) any sale or other disposition by Fleming of its ownership interest in any outstanding voting securities of the Corporation or any direct issuance of voting securities by the Corporation, which effects a reduction to Fleming's combined direct and indirect (through one or more majority-owned subsidiaries) ownership of the Corporation's voting securities to an amount which represents less than fifty percent (50%) of the total combined voting power of all outstanding classes of stock of the Corporation. X. Participant shall mean any person who is issued shares of Common Stock under the Stock Issuance Program. Y. Plan shall mean the Corporation's 2000 Stock Option/Stock Issuance Plan, as set forth in this document. Z. Plan Administrator shall mean either the Board or the Committee acting in its capacity as administrator of the Plan. AA. Service shall mean (i) the provision of services to the Corporation (or any Parent or Subsidiary of the Corporation) in the capacity of an Employee, a non-employee member of the board of directors or a consultant or independent advisor, except to the extent otherwise specifically provided in the documents evidencing the option grant, or (ii) the provision of services to Fleming or any Fleming Subsidiary in the capacity of an employee or associate of that entity, a non-employee member of the board of directors or a consultant or independent advisor, but only to the extent such clause (ii) services are performed while Fleming remains the Parent of the Corporation. BB. Stock Exchange shall mean either the American Stock Exchange or the New York Stock Exchange. CC. Stock Issuance Agreement shall mean the agreement entered into by the Corporation and the Participant at the time of issuance of shares of Common Stock under the Stock Issuance Program. DD. Stock Issuance Program shall mean the stock issuance program in effect under the Plan. EE. Subsidiary shall mean any corporation (other than the Corporation) in an unbroken chain of corporations beginning with the Corporation, provided each corporation (other than the last corporation) in the unbroken chain owns, at the time of the determination, stock possessing fifty percent (50%) or more of the total combined voting power of all classes of stock in one of the other corporations in such chain. FF. 10% Stockholder shall mean the owner of stock (as determined under Code Section 424(d)) possessing more than ten percent (10%) of the total combined voting power of all classes of stock of the Corporation (or any Parent or Subsidiary). EX-12 14 Exhibit 12 Fleming Companies, Inc. Computation of Ratio of Earnings to Fixed Charges
16 Weeks Ended -------------------- April 15, April 17, (In thousands of dollars) 2000 1999 - ------------------------------------------------------------------------------ Earnings: Pretax loss $(43,265) $(31,465) Fixed charges, net 61,135 60,246 Total earnings $ 17,870 $ 28,781 Fixed charges: Interest expense $ 53,101 $ 51,606 Portion of rental charges deemed to be interest 7,876 8,500 Capitalized interest 185 - Total fixed charges $ 61,162 $ 60,106 Deficiency $ 43,292 $ 31,325 Ratio of earnings to fixed charges .29 .48
"Earnings" consists of income before income taxes and fixed charges excluding capitalized interest. Capitalized interest amortized during the respective periods is added back to earnings. "Fixed charges, net" consists of interest expense, an estimated amount of rental expense which is deemed to be representative of the interest factor and amortization of capitalized interest. The pro forma ratio of earnings to fixed charges is omitted as it is not applicable. Under the company's long-term debt agreements, "earnings" and "fixed charges" are defined differently and amounts and ratios differ accordingly. EX-15 15 Exhibit 15 Fleming Companies, Inc. 6301 Waterford Boulevard, Box 26647 Oklahoma City, OK 73126 We have made a review, in accordance with standards established by the American Institute of Certified Public Accountants, of the unaudited interim financial information of Fleming Companies, Inc. and subsidiaries for the 16 weeks ended April 15, 2000 and April 17, 1999, as indicated in our report dated May 3, 2000; because we did not perform an audit, we expressed no opinion on that information. We are aware that our report referred to above, which is included in your Quarterly Report on Form 10-Q for the 16 weeks ended April 15, 2000, is incorporated by reference in the following: (i) Registration Statement No. 2-98602 (1985 Stock Option Plan) on Form S-8; (ii) Registration Statement No. 33-36586 (1990 Fleming Stock Option Plan) on Form S-8; (iii) Registration Statement No. 33-56241 (Dividend Reinvestment and Stock Purchase Plan) on Form S-3; (iv) Registration Statement No. 333-11317 (1996 Stock Incentive Plan) on Form S-8; (v) Registration Statement No. 333-35703 (Senior Subordinated Notes) on Form S-4; (vi) Registration Statement No. 333-28219 (Associate Stock Purchase Plan) on Form S-8; (vii) Registration Statement No. 333-80445 (1999 Stock Incentive Plan) on Form S-8; and (viii) Registration Statement No. 333-89375 (Consolidated Savings Plus and Stock Ownership Plan) on Form S-8. We also are aware that the aforementioned report, pursuant to Rule 436(c) under the Securities Act of 1933, is not considered a part of a registration statement prepared or certified by an accountant or a report prepared or certified by an accountant within the meaning of Sections 7 and 11 of that Act. DELOITTE & TOUCHE LLP Oklahoma City, Oklahoma May 25, 2000 EX-27 16
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FORM 10-Q FOR THE FISCAL QUARTER ENDED APRIL 15, 2000 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 3-MOS DEC-30-2000 DEC-25-1999 APR-15-2000 20,719 0 478,409 35,957 860,926 1,523,528 1,507,958 700,413 3,313,066 1,090,230 1,189,934 0 0 98,113 436,927 3,313,066 4,444,804 4,444,804 4,028,130 4,427,270 0 7,698 53,101 (43,265) (17,392) (25,873) 0 0 0 (25,873) (.67) (.67)
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