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Exhibit
10.2
NONQUALIFIED STOCK OPTION
AGREEMENT
NON-QUALIFIED STOCK OPTION
AGREEMENT, dated as of the Grant Date set forth in the Notice of
Grant (as defined below), between Domtar Corporation, a Delaware
corporation (the “ Company ”), and the
Participant whose name appears in the Notice of Grant (the “
Participant ”), pursuant to the Domtar Corporation
2007 Omnibus Incentive Plan, as in effect and as amended from time
to time (the “ Plan ”). Capitalized terms that
are not defined herein shall have the meanings given to such terms
in the Plan.
1. Confirmation of Grant, Option
Price .
(a) Confirmation of
Grant . The Company hereby evidences and confirms the grant to
the Participant of options to purchase the number of shares of
Stock (the “ Options ”) set forth in the Domtar
Corporation 2007 Omnibus Incentive Plan Stock Option Grant Notice
delivered by the Company to the Participant (the “ Notice
of Grant ”). The Options are not intended to be incentive
stock options under the U.S. Internal Revenue Code of 1986, as
amended. This Agreement is entered into pursuant to, and the terms
of the Options are subject to, the terms and conditions of the
Plan, which is incorporated by reference herein. If there is any
inconsistency between this Agreement and the terms of the Plan, the
terms of the Plan shall govern. The Options shall be considered a
Service Award under the Plan.
(b) Exercise Price .
Each share of Stock covered by an Option shall have the Exercise
Price set forth in the Notice of Grant.
2. Vesting, Exercisability and
Exercise.
(a) Vesting . Except
as otherwise provided in Section 3, the Option shall become
vested in three equal annual installments on each of the first
through third anniversaries of the Grant Date[ or, for Options
granted in 2007, the vesting dates set forth in the Notice of
Grant], subject to the continuous employment of the Participant
with the Company until the applicable vesting date.
(b) Exercise; Condition to
Exercise . Once vested in accordance with the provisions of
this Agreement, the Options may be exercised at any time and from
time to time prior to the date such Options terminate pursuant to
Section 3. Notwithstanding anything to the contrary contained
herein, except as otherwise provided in Section 3(c), vested
Options may not be exercised unless, at any time after the Grant
Date, the average Fair Market Value of a share of Stock over a
period of at least 20 consecutive trading days is at least 120% of
the Exercise Price. Options may only be exercised with respect to
whole shares of Stock. The Participant may exercise the Option by
giving notice to the Company or a brokerage firm designated or
approved by the Company, in form and substance
satisfactory to the Company,
which will state the Participant’s election to exercise the
Option and the number of shares of Stock for which the Participant
is exercising the Option. The notice must be accompanied by full
payment of the exercise price for the number of shares of Stock the
Participant is purchasing. The Participant may make this payment in
any combination of the following: ( a ) by cash; (
b ) by check acceptable to the Company; ( c
) by tendering (either actually or by attestation) shares of
Common Stock the Participant has owned for at least six months (if
such holding period is necessary to avoid a charge to the
Company’s earnings); ( d ) to the extent
permitted by law, by instructing a broker to deliver to the Company
the total payment required in accordance with procedures
established by the Company; or ( e ) by any other
method permitted by the Committee.
(c) Cashless Exercise
. In lieu of tendering the exercise price to the Company in
accordance with Section 2(b), the Participant may elect to
perform a “Cashless Exercise” of the Option, in whole
or in part, by surrendering the Option to the Company, marked
“Cashless Exercise” and designating the number of
shares of Common Stock desired by the Participant out of the total
for which the Option is exercisable. The Participant shall
thereupon be entitled to receive the number of shares of Stock
having a Fair Market Value equal to the excess of ( i
) the then Fair Market Value per share of Stock multiplied by
the number of the shares of Stock into which the Option, or portion
thereof designated by the Participant, would have been exercisable
pursuant to Section 2(b) upon payment of the exercise price by
the Participant over (ii) the exercise price the Participant
would have been required to pay under Section 2(b) in respect
of such an exercise.
3. Termination of
Options
(a) Normal Expiration
Date . Unless earlier terminated pursuant to Section 3(b)
or Section 3(c), the Options shall terminate on the seventh
anniversary of the Grant Date (the “ Normal Expiration
Date ”), if not exercised prior to such date.
(b) Termination of
Employment .
(i) Death or
Disability . If the Participant’s employment with the
Company terminates due to death or Disability, all of the
Participant’s Options shall vest and shall remain outstanding
until the first anniversary of the date of termination or the
Normal Expiration Date, whichever is earlier, after which any
unexercised Options shall immediately terminate.
(ii) Retirement . If
the Participant’s employment with the Company terminates due
to Retirement[either with prior approval of the Board or
2
following the 2009 Annual
Meeting of Stockholders] 1 , the
Participant’s Options will vest to the extent of the number
of shares of Stock subject to the Option multiplied by a fraction,
the numerator of which is the number of days elapsed from the Grant
Date through the date of the Participant’s Retirement and the
denominator of which is the number of days from the Grant Date to
the date the Option would have vested had the Participant’s
employment continued through the original vesting date, and the
remainder of the Option shall be forfeited and canceled as of the
date of such Retirement. All vested Options shall remain
outstanding until the fifth anniversary of the date of termination
or the Normal Expiration Date, whichever is earlier, after which
any unexercised Options shall immediately terminate.
(iii) Termination for
Cause . If a Parti
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