EXHIBIT 10.3(d)

 

1998 STOCK INCENTIVE PLAN

 

NONSTATUTORY STOCK OPTION AGREEMENT

 

BETWEEN

 

SMITHFIELD FOODS, INC.

 

AND

--------------------------------------------------------------------------------

SMITHFIELD FOODS, INC.

 

1998 STOCK INCENTIVE PLAN

 

Nonstatutory Stock Option Agreement

 

Number of Shares Subject to Option: 10,000

 

THIS AGREEMENT, dated as of                     , 20    , between SMITHFIELD
FOODS, INC., a Virginia corporation (the “Company”), and                     
(“Participant”), is made pursuant and subject to the provisions of the Company’s
1998 Stock Incentive Plan (as amended from time to time, the “Plan”), and all
terms used herein that are defined in the Plan shall have the same meaning given
them in the Plan:

 

W I T N E S S E T H:

 

1. Grant of Option. Pursuant to the provisions of the Plan, the Company has
granted to Participant as of                     , 20     (the “Date of Grant”),
subject to the terms and conditions of the Plan and subject further to the terms
and conditions herein set forth, the right and option to purchase from the
Company (the “Option”) all or any part of an aggregate of              shares of
Company Common Stock at the purchase price of $             per share (the
“Option Price”), being not less than 100% of the Fair Market Value per share of
the Common Stock on the date of grant, such Option to be exercisable as
hereinafter provided. The Option evidenced hereby is intended to be a
nonstatutory stock option that does not receive special tax treatment under
Section 422 of the Internal Revenue Code.

 

2

--------------------------------------------------------------------------------

2. Terms and Conditions. The Option evidenced hereby is subject to the following
terms and conditions.

 

(a) Expiration Date. This Option shall expire 10 years from the Date of Grant.

 

(b) Nontransferability. This Option shall be nontransferable except by will or
by the laws of descent and distribution and, during the lifetime of the
Participant, may be exercised only by the Participant, except as provided in
Section 3 below.

 

(c) Exercise of Option. Subject to the provisions of Section 3 below, this
Option shall become exercisable as follows. On and after the earlier to occur of
(i) the fifth anniversary of the Date of Grant, or (ii) Participant’s
sixty-fifth birthday, this Option may be exercised for up to 100% of the number
of shares hereby granted. This Option shall be fully exercisable until the tenth
anniversary of the Date of Grant when the Option will terminate by its terms.
Notwithstanding the foregoing, this option shall become fully exercisable in the
event of and upon a Change of Control (as such term is defined in the Plan).

 

(d) Method of Exercising and Payment for Shares. This Option may only be
exercised by written notice delivered to the Secretary at the Company’s
principal office. The exercise date will be (i) in the case of notice by mail,
the date of postmark or (ii) if delivered in person, the date of delivery. Such
notice shall be accompanied by payment of the Option Price in full by cash
(which shall include payment by check, bank draft or money order payable to the
order of the Company). Instead of paying cash, a Participant may exercise by
means of a so-

 

3

--------------------------------------------------------------------------------

called “cashless exercise” pursuant to which Common Stock may be issued directly
to the Participant’s designated broker/dealer upon receipt by the Company of the
Option Price in cash from such broker/dealer.

 

3. Termination of Option Upon Termination of Employment. The right of
Participant and his successors in interest to exercise this Option shall
terminate immediately when his employment with the Company or any Subsidiary is
terminated for any reason except as provided in subsections 3(a), 3(b) and 3(c)
below.

 

(a) Exercise Following Death. In the event Participant dies while he is employed
by the Company or any Subsidiary, before the exercise in full or expiration of
this Option, Participant’s estate, or the person or persons to whom the rights
under this Option shall have passed by will or the laws of descent and
distribution, may exercise this Option at any time within one year next
following Participant’s death (but in any event before the Expiration Date of
the Option) for the number of shares exercisable on the date of the
Participant’s death. For purposes of the preceding sentence, notwithstanding any
vesting schedule set by subsection 2(c) above, if Participant has been employed
by the Company and/or a Subsidiary for at least five years, then this Option
(and all of the shares covered hereby) shall become fully exercisable on the
date of Participant’s death.

 

(b) Exercise Following Disability. In the event of termination of Participant’s
employment by the Company or any Subsidiary by reason of disability under the
Company’s Retirement Plan, Participant may exercise this Option at any time
within one year following such termination of employment (but in any event
before the Expiration date of the Option) for the number of shares exercisable
on the date of the Participant’s termination of employment.

 

4

--------------------------------------------------------------------------------

(c) Exercise Following Termination of Employment Other Than Death or Disability.
In the event Participant’s termination of employment with the Company or any
Subsidiary (including due to retirement) occurs for reasons other than death, or
disability and before the exercise in full or expiration of this Option,
Participant may exercise this Option at any time within three months next
following such termination of employment (but in any event before the Expiration
Date of the Option) for the number of shares exercisable on the date of the
Participant’s termination of employment.

 

For the purposes of this Section 3, it shall not be considered a termination of
employment if Participant is placed by the Company or any Subsidiary on military
or sick leave or such other type of leave of absence that the Committee
considers as continuing the employment relationship intact. At the time of any
exercise of any Option exercised pursuant to this Section 3, the Option Price
shall be paid in full as provided in Section 2.

 

Notwithstanding subsections 3(a), 3(b) and 3(c) above, in no event may this
Option be exercised after the Expiration Date.

 

4. Governing Law. This Agreement shall be governed by the laws of the
Commonwealth of Virginia.

 

5. Conflicts. In the event of any conflict between the provisions of the Plan as
in effect on the date of grant and the provisions of this Agreement, the
provisions of the Plan shall govern. All references herein to the Plan shall
mean the Plan as in effect on the date hereof. Terms defined in the Plan are
used herein as so defined.

 

6. Participants Bound by Plan. In consideration of the grant of this Option,
Participant agrees he will comply with such conditions as the Board of Directors
and the

 

5

--------------------------------------------------------------------------------

Committee may impose on the exercise of the Option, and Participant will perform
such duties as may be assigned from time to time by the Board of Directors or by
the executive officers of the Company or its subsidiaries operating under the
authority of the Board; provided, however, that the provisions of this sentence
shall not be interpreted as affecting the right of the Company or its
subsidiaries to terminate Participant’s employment at such time.

 

7. Binding Effect. Subject to the limitations stated above and in the Plan, this
Agreement shall be binding upon and inure to the benefit of the legatees,
distributees and personal representatives of Participant and the successors of
the Company.

 

8. Change in Capital Structure. In the event of changes in the capital structure
of the Company, appropriate adjustments in the number of shares for which the
Option shall be exercisable or the exercise price, or both, shall be made, as
provided in Section 11 of the Plan.

 

9. Tax Obligations Upon Exercise. The difference between the “Fair Market Value”
of Company Stock purchased when Participant exercises the option and the Option
Price is compensation taxable to Participant as ordinary income and subject to
applicable federal and state taxes, which the Company is obligated to withhold.
Participant is required to make arrangements suitable to the Company for the
payment of all applicable withholding taxes.

 

10. Notice Provisions. Any notice or election required or permitted under this
Option shall be delivered in writing to the Secretary at the Company’s principal
offices in Smithfield, Virginia.

 

6

--------------------------------------------------------------------------------

With this Option, Participant will receive and acknowledge receipt of a copy of
the Company’s last annual report, an explanatory memorandum, a prospectus and a
copy of the Plan.

 

IN WITNESS WHEREOF, the Company has caused this Agreement to be signed by its
duly authorized officer and Participant has affixed his signature hereto.

 

SMITHFIELD FOODS, INC. By:  

 

--------------------------------------------------------------------------------

Title:  

 

--------------------------------------------------------------------------------

 

--------------------------------------------------------------------------------

Name of Participant

 

7