Exhibit 10.26
[On HomeFed Corporation Letterhead]
----------------,-----
[Name and Address of Grantee]
Re: Award of Restricted Stock
-------------------------
Dear [Name of Grantee]:
On December 14, 1999, the stockholders of HomeFed
Corporation (the "Company") approved the Company's 1999 Stock Incentive Plan
(the "Plan"). The Plan provides the Company with a means of incentivizing its
directors and key officers and employees, and certain officers and key employees
of subsidiary corporations, parent corporations and affiliated corporations who
are responsible for the continued growth of the Company ("Eligible Persons") by
permitting Eligible Persons to acquire a proprietary interest in the Company. A
copy of the Plan is annexed to this Letter Agreement and is considered to be a
part of this Letter Agreement as if fully set forth in this Letter Agreement.
Unless the context otherwise requires, all terms defined in the Plan will have
the same meaning when used in this Letter Agreement.
Subject to the provisions of this Letter Agreement and the
provisions of the Plan, the Company hereby grants to you, as of ____, ____ (the
"Award Date"), ____ shares (the "Restricted Stock") of common stock, par value
$.01 per share ("Common Stock") of the Company. This Award is not in lieu of
salary or other compensation for your services.
The Restricted Stock shall vest immediately upon grant.
Notwithstanding the foregoing, if your service to the Company is terminated
during the Restricted Period (as defined in this Letter Agreement), for any
reason other than your death or permanent disability, shares of Restricted Stock
will be forfeited according to the following schedule, unless waived by the
Committee:
Termination Prior To % Forfeited
-------------------- -----------
First anniversary of Award Date 100%
Second anniversary of Award Date 50%
Third anniversary of Award Date 25%
Restricted Stock will not be forfeited as a result of your
death or termination of service to the Company resulting from permanent
disability, as determined by the Committee.
The period during which Restricted Stock is subject to
forfeiture is known as the "Restricted Period" with respect to such shares.
During the Restricted Period, you may not sell, transfer, pledge or assign the
Restricted Stock.
As soon as practicable after the Award Date, the Company
will issue to you one or more stock certificates for the Restricted Stock, which
will be registered in your name and held by the Company. The certificates will
bear the following legend:
"The transferability of this certificate and the shares of
stock represented hereby are subject to the terms and
conditions (including forfeiture) of the HomeFed
Corporation 1999 Stock Incentive Plan and a Restricted
Stock Letter Agreement. Copies of such Plan and Letter
Agreement are on file at the offices of HomeFed
Corporation."
Except as otherwise specifically provided in this Letter
Agreement, during the Restricted Period, you shall have all the rights of a
stockholder with respect to the Restricted Stock, including, without limitation,
the right to vote the Restricted Stock, and the right to receive dividends with
respect thereto (except that dividends paid in Common Stock shall be subject to
the same restrictions as those imposed upon the Restricted Stock).
In the event of an "Extraordinary Event" (as defined in the
Plan) with respect to the Company (including a change in control of the
Company), all shares of Restricted Stock still subject to forfeiture will become
free of such restrictions.
[If the grant of shares of Restricted Stock causes you (or
any person) to become a "5 percent stockholder" (as defined in the Plan), such
grant shall only be effective with respect to the number of shares of Restricted
Stock that you may acquire without causing you (or any person) to become a 5
percent stockholder, and any grant in excess of such amount shall be void.]
To protect the Company's significant tax loss
carryforwards, the Restricted Stock will be subject to certain transfer
restrictions contained in the Company's Restated Certificate of Incorporation
designed to regulate transfers to a person or group of persons who are or would
become as a result of such transfers a "5 percent stockholder." All Certificates
for the Company's Common Stock, including the Restricted Stock, bear a legend
with respect to such transfer restrictions.
No later than the date as of which an amount first becomes
includible in your gross income for federal income tax purposes with respect to
any Restricted Stock, you shall pay to the Company, or make arrangements
satisfactory to the Company regarding the payment of, all federal, state, local
and foreign taxes that are required by applicable laws and regulations to be
withheld by the Company with respect to such amount. The obligations of the
2
Company under this Agreement shall be conditioned on compliance by you with this
paragraph, and the Company shall, to the extent permitted by law, have the right
to deduct any such taxes for any payment otherwise due you, including from the
delivery of the Restricted Stock that gives rise to the withholding requirement.
You may also make withholding tax payments by tendering shares of Common Stock,
valued as of the date tendered.
The Company agrees to pay any and all original issue taxes
and stock transfer taxes that may be imposed on the issuance of shares received
by you in connection with the Restricted Stock, together with any and all other
fees and expenses necessarily incurred by the Company in connection therewith.
You hereby covenant and agree with the Company that if, at
the time you wish to sell the Restricted Stock (which shall not be during the
Restricted Period for such Restricted Stock), there does not exist a
Registration Statement on an appropriate form under the Securities Act of 1933,
as amended (the "Act"), which Registration Statement shall have become effective
and shall include a prospectus which is current with respect to the Restricted
Stock (i) that you are acquiring the Restricted Stock for your own account and
not with a view to the resale or distribution thereof and (ii) unless waived by
the Board of Directors of the Company, that any subsequent offer for sale or
sale of any such shares shall be made either pursuant to (x) a Registration
Statement on an appropriate form under the Act, which Registration Statement
shall have become effective and shall be current with respect to the shares
being offered and sold, or (y) a specific exemption from the registration
requirements of the Act, but in claiming such exemption, you shall, prior to any
offer for sale or sale of such shares, obtain a favorable written opinion from
counsel for or approved by the Company as to the applicability of such
exemption.
Restricted Stock shall become free of all restrictions upon
the expiration of the Restricted Period and, at such point, the Company will
deliver to you a new certificate evidencing such stock with the Restricted Stock
legend deleted.
In the event of any conflict between this Letter Agreement
and the Plan, the Plan shall control. In the event of any ambiguity in this
Letter Agreement, or any matters as to which this Letter Agreement is silent,
the Plan shall govern including, without limitation, the provisions thereof
pursuant to which the Committee has the power, among others, to (i) interpret
the Plan, (ii) prescribe, amend and rescind rules and regulations relating to
the Plan, and (iii) make all other determinations deemed necessary or advisable
for the administration of the Plan.
3
Please indicate your acceptance of all the terms and
conditions of this Award and the Plan by signing and returning a copy of this
Letter Agreement.
Very truly yours,
HomeFed Corporation
By:
-------------------------
Accepted:
--------------------------------
Signature of Grantee
--------------------------------
Name of Grantee - Please Print
Date:
--------------------------
4
[On HomeFed Corporation Letterhead]
----------, ----
[Name and Addresss of Grantee]
Re: Grant of Incentive Stock Option
-------------------------------
Dear {Name]:
On December 14, 1999, the stockholders of HomeFed
Corporation (the "Company") approved the 1999 Stock Option Plan (the "Plan").
The Plan provides the Company with a means of incentivizing its salaried key
employees and certain salaried key employees of subsidiary corporations or
parent corporations ("Eligible Persons") by permitting Eligible Persons to
acquire a proprietary interest in the Company. A copy of the Plan is annexed to
this Letter Agreement and is considered to be a part of this Letter Agreement as
if fully set forth herein. Unless the context otherwise requires, all terms
defined in the Plan will have the same meaning when used in this Letter
Agreement.
Subject to the provisions of this Letter Agreement and the
provisions of the Plan, the Company hereby grants to you, as a matter of
separate inducement and not in lieu of any salary or other compensation for your
services, the right and option (the "Option") to purchase, an aggregate of _____
shares of common stock, par value $.01 per share (the "Common Stock"), of the
Company, at a price of $_____ per share, such option price being, in the
judgment of the Committee, not less than one hundred percent (100%) of the fair
market value of shares of Common Stock at the date hereof. The option is
intended to qualify as an "incentive stock option" within the meaning of Section
422 of the Internal Revenue Code of 1986, as amended (the "Code"), but it is
specifically understood that no warranty is made to you as to such
qualification.
Subject to the provisions and limitations of Articles
VI,VIII and XVIII of the Plan, this Option may be exercised by you, on a
cumulative basis, during a period of five (5) years commencing one (1) year from
the date hereof and terminating at the close of business on ____________ as
follows:
(a) this Option may not be exercised by you during the
first year following the date hereof;
(b) up to twenty percent (20%) of the total number of
shares subject to this Option may be purchased by you during the second year
following the date hereof;
5
(c) up to an additional twenty percent (20%) of the total
number of shares subject to this Option may be purchased by you during the third
year following the date hereof;
(d) up to an additional twenty percent (20% of the total
number of shares subject to this Option may be purchased by you during the
fourth year following the date hereof;
(e) up to an additional twenty percent (20%) of the total
number of shares subject to this Option may be purchased by you during the fifth
year following the date hereof; and
(f) the balance of the total number of shares subject to
this Option may be purchased by you during the sixth year following the date
hereof.
The unexercised portion of the Option granted herein will
automatically and without notice terminate and become null and void upon the
expiration of six (6) years from the date of the grant of this Option. If,
however, prior to the expiration of six (6) years from the date hereof, your
employment with the Company and any parent or subsidiary corporation terminates,
unless otherwise provided by the Committee, this Option will terminate on the
applicable date as described below; provided, however, that none of the events
described below shall extend the period of exercisability of this Option beyond
six (6) years from the date hereof:
(a) the date of termination, if your employment is
terminated other than by reason of death, disability or retirement or if you are
discharged for cause (as defined by the Plan);
(b) the expiration of one (1) year after your death if your
death occurs either during your employment or within the three-month or one-year
period after the termination of your employment specified in clauses (c) and (d)
below, except that your Option will be exercisable during such one-year period
only to the extent that it would have been exercisable on the date of your
death;
(c) the expiration of three (3) months from the date of
termination of your employment by reasons of your retirement or dismissal other
than for cause (as defined in the Plan), except that your option will be
exercisable during such three-month period only to the extent that it would have
been exercisable immediately prior to the termination of your employment;
(d) the expiration of one (1) year after the termination of
your employment by reason of your disability (as defined by the Plan), except
that your Option will be exercisable during such one-year period only to the
extent that it would have been exercisable immediately prior to the termination
of your employment.
Except to the extent otherwise provided under the Code, to
the extent that the aggregate fair market value of Options (under all stock
options plans of the Company and of any parent corporation or subsidiary
corporation of the Company) exercisable for the first time by an employee during
6
any calendar year exceeds one hundred thousand dollars ($100,000), such Options
shall be treated as Non-Qualified Options.
In no event may you exercise this Option for a fraction of
a share.
In the event of an "Extraordinary Event" (as defined in the
Plan) with respect to the Company (including a change in control of the
Company), all then outstanding Options that have not vested or become
exercisable at the time of the Extraordinary Event will immediately become
exercisable. The Committee may, in its discretion determine that upon the
occurrence of an Extraordinary Event each outstanding Option shall terminate
within a specified number of days after notice to the holder. In such event,
your rights will be as specified in Article XVIII of the Plan.
If the grant or exercise of an Option causes you (or any
person) to become a "5 percent stockholder" (as defined in the Plan), such grant
or exercise shall only be effective with respect to the number of shares of
Common Stock that you may acquire without causing you (or any person) to become
a 5 percent stockholder, and any grant in excess of such amount shall be void.
To protect the Company's significant tax loss carryforwards,
the shares issuable upon exercise of an Option will be subject to certain
transfer restrictions contained in the Company's Restated Certificate of
Incorporation designed to regulate transfers to a person or group of persons who
are or would become as a result of such transfers a "5 percent stockholder"..
All Certificates for the Company's Common Stock, including shares issuable
pursuant to this Option, bear a legend with respect to such transfer
restrictions.
In the event of any change in corporate capitalization
(including, but not limited to, a change in the number of shares of Common Stock
outstanding), such as a stock split or a corporate transaction such as a merger,
consolidation, reorganization, spin-off (or other distribution of stock or
property of the Company), the number and kind of shares subject to the Option
and/or the exercise price per share shall be equitably adjusted by the Committee
as it may deem appropriate in its sole discretion. The determination of the
Committee regarding any adjustment will be final and conclusive.
The Option shall be subject to the requirement that, if at
any time the Committee shall determine that (i) the listing, registration or
qualification of the shares of Common Stock subject or related thereto upon any
securities exchange or under any state or federal law, or (ii) the consent or
approval of any government regulatory body, or (iii) an agreement by you with
respect to the disposition of shares of Common Stock is necessary or desirable
as a condition of, or in connection with, the sale or purchase of shares
pursuant thereto, then in any such event, the issuance or delivery of shares
issuable pursuant to Option shall be delayed until such listing, registration,
qualification, consent, approval or agreement shall have been effected or
obtained free of any conditions not acceptable to the Committee.
7
This Option is not transferable by you otherwise than by
will or the laws of descent and distribution, and is exercisable, during your
lifetime, only by you. This Option may not be assigned, transferred (except by
will or the laws of descent and distribution), pledged or hypothecated in any
way (whether by operation of the law or otherwise) and shall not be subject to
execution, attachment or similar proceeding. Any attempted assignment, transfer,
pledge, hypothecation or other disposition of this Option contrary to the
provisions hereof, and the levy of any attachment or similar proceeding upon the
Option, shall be null and void and without effect.
Any exercise of this Option shall be in writing addressed
to the Corporate Secretary of the Company at the principal place of business of
the Company and shall be accompanied by a certified or bank cashier's check to
the order of the Company in the full amount of the purchase price of the shares
so purchased; provided, however, that in lieu of cash you may, to the extent
permitted by applicable law, exercise this Option in whole or in part, by
delivering to the Company shares of the Company (in proper form for transfer and
accompanied by all requisite stock transfer tax stamps or cash in lieu thereof)
owned by you having a fair market value equal to the cash exercise price
applicable to that portion of the Option being exercised by the delivery of such
shares.
If the Company, in its sole discretion, shall determine
that it is necessary, to comply with applicable securities laws, the certificate
or certificates representing the shares purchased pursuant to the exercise of
this Option shall bear an appropriate legend in form and substance, as
determined by the Company, giving notice of applicable restrictions on transfer
under or in respect of such laws.
You hereby covenant and agree with the Company that if, at
the time of exercise of this Option, there does not exist a Registration
Statement on an appropriate form under the Securities Act of 1933, as amended
(the "Act"), which Registration statement shall have become effective and shall
include a prospectus which is current with respect to the shares subject to this
Option (i) that you are purchasing shares for your own account and not with a
view to the resale or distribution thereof or (ii) that any subsequent offer for
sale or sale of any such shares shall be made either pursuant to (x) a
Registration Statement on an appropriate form under the Act, which Registration
Statement shall have become effective and shall be current with respect to the
shares being offered and sold, or (y) a specific exemption from the registration
requirements of the Act, but in claiming such exemption, you shall, prior to any
offer for sale or sale of such shares, obtain a favorable written opinion from
counsel for or approved by the Company as to the applicability of such
exemption.
You hereby acknowledge that the Company may endorse a
legend upon the certificate evidencing the Common Shares as the Company, in its
sole discretion, determines to be necessary and appropriate to implement the
terms of the Plan.
The Company agrees to pay any and all original issue taxes
and stock transfer taxes that may be imposed on the issuance of shares acquired
pursuant to exercise of the Option, together with any and all fees and expenses
necessarily incurred by the Company in connection therewith.
8
In the event of any conflict between this Letter Agreement
and the Plan, the Plan shall control. In the event of any ambiguity in this
Letter Agreement, or any matters as to which this Letter Agreement is silent,
the Plan shall govern including, without limitation, the provisions thereof
pursuant to which the Committee has the power, among others, to (i) interpret
the Plan, (ii) prescribe, amend and rescind rules and regulations relating to
the Plan, and (iii) make all other determinations deemed necessary or advisable
for the administration of the Plan.
[Remainder of page intentionally left blank.]
9
Please indicate your acceptance of all the terms and
conditions of this Option and the Plan by signing and returning a copy of this
letter.
Very truly yours,
HOMEFED CORPORATION
By:
-------------------------
Accepted:
--------------------------------
Signature of Grantee
--------------------------------
Name of Grantee - Please Print
Date:
--------------------------
10
[On HomeFed Corporation Letterhead]
----------, -----
[Name of Grantee]
Re: Grant of Non-Qualified Stock Option to
Affiliated Participants
--------------------------------------
Dear [Name of Grantee]:
On December 14, 1999, the stockholders of HomeFed
Corporation (the "Company") approved the 1999 Stock Option Plan (the "Plan").
The Plan provides the Company with a means of incentivizing its directors and
key officers and employees, and certain officers and key employees of subsidiary
corporations, parent corporations and affiliated corporations who are
responsible for the continued growth of the Company ("Eligible Persons") by
permitting Eligible Persons to acquire a proprietary interest in the Company. A
copy of the Plan is annexed to this Letter Agreement and is considered to be a
part of this Letter Agreement as if fully set forth herein. Unless the context
otherwise requires, all terms defined in the Plan will have the same meaning
when used in this Letter Agreement.
Subject to the provisions of this Letter Agreement and the
provisions of the Plan, the Company hereby grants to you, as a matter of
separate inducement and not in lieu of any compensation for your services, the
right and option (the "Option") to purchase, an aggregate of _____ shares of
common stock, par value $.01 per share (the "Common Stock"), of the Company, at
a price of $_____ per share. The Option shall be a Non-Qualified Stock Option.
Subject to the provisions and limitations of Articles VI,
VIII, XIV and XVIII of the Plan, this Option may be exercised by you, on a
cumulative basis, during a period of five (5) years commencing one (1) year from
the date hereof and terminating at the close of business on ____________ as
follows:
(a) this Option may not be exercised by you during the
first year following the date hereof;
(b) up to twenty percent (20%) of the total number of
shares subject to this Option may be purchased by you
during the second year following the date hereof;
11
(c) up to an additional twenty percent (20%) of the total
number of shares subject to this Option may be purchased by
you during the third year following the date hereof;
(d) up to an additional twenty percent (20% of the total
number of shares subject to this Option may be purchased by
you during the fourth year following the date hereof;
(e) up to an additional twenty percent (20%) of the total
number of shares subject to this Option may be purchased
by you during the fifth year following the date hereof;
and
(f) the balance of the total number of shares subject to
this Option may be purchased by you during the sixth year
following the date hereof.
The unexercised portion of the Option granted herein will
automatically and without notice terminate and become null and void upon the
expiration of six (6) years from the date of the grant of this Option. If,
however, prior to the expiration of six (6) years from the date hereof, your
service to the Company or any parent, subsidiary or affiliated corporation
terminates, unless otherwise provided by the Committee, this Option will
terminate on the applicable date as described in Article XII of the Plan;
provided, however, that none of the events described in Article XII of the Plan
shall extend the period of exercisability of this Option beyond six (6) years
from the date hereof.
In no event may you exercise this Option for a fraction of
a share.
In the event of an "Extraordinary Event" (as defined in the
Plan) with respect to the Company (including a change in control of the
Company), all then outstanding Options that have not vested or become
exercisable at the time of the Extraordinary Event will immediately become
exercisable. The Committee may, in its discretion determine that upon the
occurrence of an Extraordinary Event each outstanding Option shall terminate
within a specified number of days after notice to the holder. In such event,
rights will be as specified in Article XVIII of the Plan.
If the grant or exercise of an Option causes you (or any
person) to become a "5 percent stockholder" (as defined in the Plan), such grant
or exercise shall only be effective with respect to the number of shares of
Common Stock that you may acquire without causing you (or any person) to become
a 5 percent stockholder, and any grant in excess of such amount shall be void.
To protect the Company's significant tax loss carryforwards,
the shares issuable upon exercise of an Option will be subject to certain
transfer restrictions contained in the Company's Restated Certificate of
Incorporation designed to regulate transfers to a person or group of persons who
are or would become as a result of such transfers a "5 percent stockholder"..
All Certificates for the Company's Common Stock, including shares issuable
pursuant to this Option, bear a legend with respect to such transfer
restrictions.
12
In the event of any change in corporate capitalization
(including, but not limited to, a change in the number of shares of Common Stock
outstanding), such as a stock split or a corporate transaction such as a merger,
consolidation, reorganization, spin-off (or other distribution of stock or
property of the Company), the number and kind of shares subject to the Option
and/or the exercise price per share shall be equitably adjusted by the Committee
as it may deem appropriate in its sole discretion. The determination of the
Committee regarding any adjustment will be final and conclusive.
The Option shall be subject to the requirement that, if at
any time the Committee shall determine that (i) the listing, registration or
qualification of the shares of Common Stock subject or related thereto upon any
securities exchange or under any state or federal law, or (ii) the consent or
approval of any government regulatory body, or (iii) an agreement by you with
respect to the disposition of shares of Common Stock is necessary or desirable
as a condition of, or in connection with, the sale or purchase of shares
pursuant thereto, then in any such event, the issuance or delivery of shares
issuable pursuant to Option shall be delayed until such listing, registration,
qualification, consent, approval or agreement shall have been effected or
obtained free of any conditions not acceptable to the Committee.
This Option is not transferable by you otherwise than by
will or the laws of descent and distribution, and is exercisable, during your
lifetime, only by you. This Option may not be assigned, transferred (except by
will or the laws of descent and distribution), pledged or hypothecated in any
way (whether by operation of the law or otherwise) and shall not be subject to
execution, attachment or similar proceeding. Any attempted assignment, transfer,
pledge, hypothecation or other disposition of this Option contrary to the
provisions hereof, and the levy of any attachment or similar proceeding upon the
Option, shall be null and void and without effect.
Any exercise of this Option shall be in writing addressed
to the Corporate Secretary of the Company at the principal place of business of
the Company and shall be accompanied by a certified or bank cashier's check to
the order of the Company in the full amount of the purchase price of the shares
so purchased; provided, however, that in lieu of cash you may, to the extent
permitted by applicable law, exercise this Option in whole or in part, by
delivering to the Company shares of the Company (in proper form for transfer and
accompanied by all requisite stock transfer tax stamps or cash in lieu thereof)
owned by you having a fair market value equal to the cash exercise price
applicable to that portion of the Option being exercised by the delivery of such
shares.
If the Company, in its sole discretion, shall determine
that it is necessary, to comply with applicable securities laws, the certificate
or certificates representing the shares purchased pursuant to the exercise of
this Option shall bear an appropriate legend in form and substance, as
determined by the Company, giving notice of applicable restrictions on transfer
under or in respect of such laws.
You hereby covenant and agree with the Company that if, at
the time of exercise of this Option, there does not exist a Registration
Statement on an appropriate form under the Securities Act of 1933, as amended
(the "Act"), which Registration statement shall have become effective and shall
13
include a prospectus which is current with respect to the shares subject to this
Option (i) that you are purchasing shares for your own account and not with a
view to the resale or distribution thereof, (ii) that any subsequent offer for
sale or sale of any such shares shall be made either pursuant to (x) a
Registration Statement on an appropriate form under the Act, which Registration
Statement shall have become effective and shall be current with respect to the
shares being offered and sold, or (y) a specific exemption from the registration
requirements of the Act, but in claiming such exemption, you shall, prior to any
offer for sale or sale of such shares, obtain a favorable written opinion from
counsel for or approved by the Company as to the applicability of such
exemption.
You hereby acknowledge that the Company may endorse a
legend upon the certificate evidencing the Common Shares as the Company, in its
sole discretion, determines to be necessary and appropriate to implement the
terms of the Plan.
As provided in the Plan, the Company may withhold from the
sums due or to become due to you from the Company an amount necessary to satisfy
its obligation to withhold taxes imposed in connection with this Option,
including in connection with your exercise hereof, or may require you to
reimburse the Company in such amount. The Company may hold the stock certificate
to which you are entitled upon the exercise of this Option as security for the
payment of withholding tax liability, until cash sufficient to pay such
liability has been accumulated, collected or received by the Company. The
Committee may permit you to (i) direct the Company to satisfy the withholding
tax obligation through the withholding of shares of Common Stock that would
otherwise be issuable to you, or (ii) tender to the Company other shares of
Common Stock owned by you.
The Company agrees to pay any and all original issue taxes
and stock transfer taxes that may be imposed on the issuance of shares
acquired pursuant to exercise of the Option, together with any and all fees and
expenses necessarily incurred by the Company in connection therewith.
In the event of any conflict between this Letter Agreement
and the Plan, the Plan shall control. In the event of any ambiguity in this
Letter Agreement, or any matters as to which this Letter Agreement is silent,
the Plan shall govern including, without limitation, the provisions thereof
pursuant to which the Committee has the power, among others, to (i) interpret
the Plan, (ii) prescribe, amend and rescind rules and regulations relating to
the Plan, and (iii) make all other determinations deemed necessary or advisable
for the administration of the Plan.
14
Please indicate your acceptance of all the terms and
conditions of this Option and the Plan by signing and returning a copy of this
letter.
Very truly yours,
HOMEFED CORPORATION
By:
-------------------------
Accepted:
--------------------------------
Signature of Grantee
--------------------------------
Name of Grantee - Please Print
Date:
--------------------------
15
[On HomeFed Corporation Letterhead]
----------, ----
[Name of Grantee]
Re: Grant of Non-Qualified Stock Option
(Director Participant)
-----------------------------------
Dear [Name of Grantee]:
On December 14, 1999, the stockholders of HomeFed
Corporation (the "Company") approved the 1999 Stock Option Plan (the "Plan").
The Plan provides the Company with a means of incentivizing its directors and
key officers and employees, and certain officers and key employees of subsidiary
corporations, parent corporations and affiliated corporations who are
responsible for the continued growth of the Company ("Eligible Persons") by
permitting Eligible Persons to acquire a proprietary interest in the Company. A
copy of the Plan is annexed to this Letter Agreement and is considered to be a
part of this Letter Agreement as if fully set forth herein. Unless the context
otherwise requires, all terms defined in the Plan will have the same meaning
when used in this Letter Agreement.
Subject to the provisions of this Letter Agreement and the
provisions of the Plan, the Company hereby grants to you, as a matter of
separate inducement and not in lieu of any salary or other compensation for your
services, the right and option (the "Option") to purchase, an aggregate of 1,000
shares of common stock, par value $.01 per share (the "Common Stock"), of the
Company, at a price of $_____ per share. The Option shall be a Non-Qualified
Stock Option.
Subject to the provisions and limitations of Articles VI,
XII and XVIII of the Plan, this Option may be exercised by you, on a cumulative
basis, during a period of five (5) years commencing one (1) year from the date
hereof and terminating at the close of business on ____________ as follows:
(a) this Option may not be exercised by you during the
first year following the date hereof;
16
(b) up to twenty-five percent (25%) of the total number of
shares subject to this Option may be purchased by you
during the second year following the date hereof;
(c) up to an additional twenty-five percent (25%) of the
total number of shares subject to this Option may be
purchased by you during the third year following the date
hereof;
(d) up to an additional twenty-five percent (25% of the
total number of shares subject to this Option may be
purchased by you during the fourth year following the date
hereof;
(e) the balance of the total number of shares subject to
this Option may be purchased by you during the fifth year
following the date hereof.
The unexercised portion of the Option granted herein will
automatically and without notice terminate and become null and void upon the
expiration of five (5) years from the date of the grant of this Option. If,
however, prior to the expiration of five (5) years from the date hereof, your
service to the Company as a Director terminates, unless otherwise provided by
the Committee, this Option will terminate on the applicable date as described in
Article XIV of the Plan; provided, however, that none of the events described in
Article XIV of the Plan shall extend the period of exercisability of this Option
beyond five (5) years from the date hereof.
In no event may you exercise this Option for a fraction of
a share.
In the event of an "Extraordinary Event" (as defined in the
Plan) with respect to the Company (including a change in control of the
Company), all then outstanding Options that have not vested or become
exercisable at the time of the Extraordinary Event will immediately become
exercisable. The Committee may, in its discretion determine that upon the
occurrence of an Extraordinary Event each outstanding Option shall terminate
within a specified number of days after notice to the holder. In such event,
your rights will be as specified in Article XVIII of the Plan.
[If the grant or exercise of this Option causes you (or any
person) to become a "5 percent stockholder" (as defined in the Plan), such grant
or exercise shall only be effective with respect to the number of shares of
Common Stock that you may acquire without causing you (or any person) to become
a 5 percent stockholder, and any grant in excess of such amount shall be void. ]
To protect the Company's significant tax loss
carryforwards, the shares issuable upon exercise of an Option will be subject to
certain transfer restrictions contained in the Company's Restated Certificate of
Incorporation designed to regulate transfers to a person or group of persons who
are or would become as a result of such transfers a "5 percent stockholder". All
Certificates for the Company's Common Stock, including shares issuable pursuant
to this Option, bear a legend with respect to such transfer restrictions.
17
In the event of any change in corporate capitalization
(including, but not limited to, a change in the number of shares of Common Stock
outstanding), such as a stock split or a corporate transaction such as a merger,
consolidation, reorganization, spin-off (or other distribution of stock or
property of the Company), the number and kind of shares subject to the Option
and/or the exercise price per share shall be equitably adjusted by the Committee
as it may deem appropriate in its sole discretion. The determination of the
Committee regarding any adjustment will be final and conclusive.
The Option shall be subject to the requirement that, if at
any time the Committee shall determine that (i) the listing, registration or
qualification of the shares of Common Stock subject or related thereto upon any
securities exchange or under any state or federal law, or (ii) the consent or
approval of any government regulatory body, or (iii) an agreement by you with
respect to the disposition of shares of Common Stock is necessary or desirable
as a condition of, or in connection with, the sale or purchase of shares
pursuant thereto, then in any such event, the issuance or delivery of shares
issuable pursuant to Option shall be delayed until such listing, registration,
qualification, consent, approval or agreement shall have been effected or
obtained free of any conditions not acceptable to the Committee.
This Option is not transferable by you otherwise than by
will or the laws of descent and distribution, and is exercisable, during your
lifetime, only by you. This Option may not be assigned, transferred (except by
will or the laws of descent and distribution), pledged or hypothecated in any
way (whether by operation of the law or otherwise) and shall not be subject to
execution, attachment or similar proceeding. Any attempted assignment, transfer,
pledge, hypothecation or other disposition of this Option contrary to the
provisions hereof, and the levy of any attachment or similar proceeding upon the
Option, shall be null and void and without effect.
Any exercise of this Option shall be in writing addressed
to the Corporate Secretary of the Company at the principal place of business of
the Company and shall be accompanied by a certified or bank cashier's check to
the order of the Company in the full amount of the purchase price of the shares
so purchased; provided, however, that in lieu of cash you may, to the extent
permitted by applicable law, exercise this Option in whole or in part, by
delivering to the Company shares of the Company (in proper form for transfer and
accompanied by all requisite stock transfer tax stamps or cash in lieu thereof)
owned by you having a fair market value equal to the cash exercise price
applicable to that portion of the Option being exercised by the delivery of such
shares.
If the Company, in its sole discretion, shall determine
that it is necessary, to comply with applicable securities laws, the certificate
or certificates representing the shares purchased pursuant to the exercise of
this Option shall bear an appropriate legend in form and substance, as
determined by the Company, giving notice of applicable restrictions on transfer
under or in respect of such laws.
You hereby covenant and agree with the Company that if, at
the time of exercise of this Option, there does not exist a Registration
Statement on an appropriate form under the Securities Act of 1933, as amended
(the "Act"), which Registration statement shall have become effective and shall
18
include a prospectus which is current with respect to the shares subject to this
Option (i) that you are purchasing shares for your own account and not with a
view to the resale or distribution thereof or (ii) that any subsequent offer for
sale or sale of any such shares shall be made either pursuant to (x) a
Registration Statement on an appropriate form under the Act, which Registration
Statement shall have become effective and shall be current with respect to the
shares being offered and sold, or (y) a specific exemption from the registration
requirements of the Act, but in claiming such exemption, you shall, prior to any
offer for sale or sale of such shares, obtain a favorable written opinion from
counsel for or approved by the Company as to the applicability of such
exemption.
You hereby acknowledge that the Company may endorse a
legend upon the certificate evidencing the Common Shares as the Company, in its
sole discretion, determines to be necessary and appropriate to implement the
terms of the Plan.
As provided in the Plan, the Company may withhold from the
sums due or to become due to you from the Company an amount necessary to satisfy
its obligation to withhold taxes imposed in connection with this Option,
including in connection with your exercise hereof, or may require you to
reimburse the Company in such amount. The Company may hold the stock certificate
to which you are entitled upon the exercise of this Option as security for the
payment of withholding tax liability, until cash sufficient to pay such
liability has been accumulated, collected or received by the Company. The
Committee may permit you to (i) direct the Company to satisfy the withholding
tax obligation through the withholding of shares of Common Stock that would
otherwise be issuable to you, or (ii) tender to the Company other shares of
Common Stock owned by you.
The Company agrees to pay any and all original issue taxes
and stock transfer taxes that may be imposed on the issuance of shares acquired
pursuant to exercise of the Option, together with any and all fees and expenses
necessarily incurred by the Company in connection therewith.
In the event of any conflict between this Letter Agreement
and the Plan, the Plan shall control. In the event of any ambiguity in this
Letter Agreement, or any matters as to which this Letter Agreement is silent,
the Plan shall govern including, without limitation, the provisions thereof
pursuant to which the Committee has the power, among others, to (i) interpret
the Plan, (ii) prescribe, amend and rescind rules and regulations relating to
the Plan, and (iii) make all other determinations deemed necessary or advisable
for the administration of the Plan.
19
Please indicate your acceptance of all the terms and
conditions of this Option and the Plan by signing and returning a copy of this
letter.
Very truly yours,
HOMEFED CORPORATION
By:
-------------------------
Accepted:
--------------------------------
Signature of Grantee
--------------------------------
Name of Grantee - Please Print
Date:
--------------------------
20