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Exhibit 10.10
FOREST CITY ENTERPRISES, INC.
1994 STOCK OPTION PLAN
1. PURPOSE
The purpose of the 1994 Stock Option Plan (the "Plan") shall be to
enhance the retention and motivation of key employees including officers,
executives and other employees who are members of the Company's
management team and who, in the judgement of the Committee, can
contribute materially to the Company's success by awarding these key
employees the opportunity to receive stock options to purchase shares of
the Company's Class A common stock. The Plan is also intended to
foster within these key employees an identification with ownership and
shareholder interest.
2. DEFINITIONS
Unless the context of the applicable section clearly indicates otherwise,
the terms below, when used within the Plan, shall have the meaning set
forth in this Section 2.
A. BENEFICIARY means the person or persons designated in writing by the
Grantee or, in the absence of such a designation or if the
designated person or persons predecease the Grantee, the Grantee's
beneficiary shall be the person or persons who acquire the right
to exercise an option by bequest or inheritance.
B. BOARD OF DIRECTORS or BOARD means the Board of Directors of the
Company.
C. CODE means the Internal Revenue Code of 1986, as amended from time
to time.
D. COMPANY means Forest City Enterprises, Inc.
E. COMPENSATION COMMITTEE or COMMITTEE means the Compensation
Committee of the Board of Directors.
F. DISABILITY means a disability as defined in the Company's Long
Term Disability Plan, as amended from time to time.
G. GRANTEE means an executive or management team member to whom an
Option has been granted under the Plan.
H. INCENTIVE STOCK OPTIONS means options to purchase shares of stock
within the meaning of Section 422(b) of the Code.
I. NONQUALIFIED STOCK OPTIONS means options which do not qualify as
Incentive Stock Options within the meaning of Section 422(b) of the
Code.
J. OPTION means an option to purchase a share or shares of the
Company's par value common stock.
K. PLAN means the 1994 Stock Option Plan.
L. RETIREMENT means retirement pursuant to the Company's retirement
policies.
M. SHARES means shares of the Company's par Class A common stock.
N. TERM OF EXERCISE means the time period during which a particular
Option may be exercised in accordance with Section 6(G) of this Plan.
O. Wherever used herein, unless indicated otherwise, words in the
masculine form shall be deemed to refer to females as well as to males.
3. ADMINISTRATION
A. COMPENSATION COMMITTEE
The Plan shall be administered by the Compensation Committee of the
Board of Directors. No member of the Compensation Committee may
exercise discretion with respect to, or participate in, the
administration of the Plan if, at any time during the twelve month
period prior to such exercise or participation, he or she has been
granted or awarded stock, restricted stock, stock options, stock
appreciation rights, or any other derivative security of the
Company, except as permitted in Rule 16b-3 of the Securities and
Exchange Act of 1934, or any successor rule or regulation.
B. DETERMINATIONS
Within the limits of the provisions of the Plan, the Committee shall
have the plenary authority to determine (i) the key employees to whom
awards hereunder shall be granted, (ii) the number of shares subject
to each option; provided that, if the award is an incentive stock
option, the aggregate fair market value of the shares (as
determined at the time the option is granted) which become exercisable
in any calendar year for any employee shall not exceed $100,000,
(iii) the form (incentive stock options or nonqualified stock options)
and amount of each award granted, (iv) the provisions of each Option
Agreement, and (v) the limitations, restrictions and conditions
applicable to any such award. In making such awards the Committee
shall take into consideration the performance of each eligible
employee. The determinations of the Committee on all
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matters regarding the Plan shall be final and conclusive unless
otherwise determined by the Board of Directors.
C. INTERPRETATION
Subject to the provisions of the Plan, the Committee may interpret
the Plan, and prescribe, amend and rescind rules and regulations
relating to it. The interpretation of any provision of the Plan by
the Committee shall be final and conclusive unless otherwise
determined by the Board of Directors.
4. ELIGIBILITY
Stock options may be granted under the Plan to key employees of the
Company, as determined by the Committee, based upon the Committee's
evaluation of employees' duties and their overall performance
including current and potential contributions to the Company's
success. Generally, this group of eligible key employees includes
officers, senior executives, directors who are also employees, and any
other members of the Company's management team deemed appropriate by the
Committee. All determinations by the Committee as to the identity of
persons eligible to be granted awards hereunder shall be conclusive.
5. SHARE AWARDS UNDER THE PLAN
A. FORM
Awards under the Plan shall be granted in the form of incentive
stock options or nonqualified stock options as herein defined in
Section 2.
B. SHARES SUBJECT TO THE PLAN
The aggregate number of shares that may be awarded as stock options
during the term of the plan may not exceed 250,000 authorized but
unissued shares or shares held by the Company in its Treasury, subject
to adjustments described in section 9-A. The aggregate number of
shares which may be awarded to an individual participant during the
term of the plan is 25,000 shares, subject to adjustments described
in section 9-A. If any stock option granted under the Plan shall
terminate, expire or, with the consent of the grantee, be canceled
as to any shares, such shares shall again be available for grant
under the Plan.
6. TERMS AND CONDITIONS OF AWARDS
Stock options granted under the Plan shall be in such form and
upon such terms and conditions as the Committee shall determine
from time to time, subject to the following:
A. STOCK OPTION AGREEMENT
Each stock option granted under the Plan shall be evidenced by an
agreement between the Company and the Grantee, in a form approved by
the Committee, which has been executed and delivered. Appropriate
officers of the Company are hereby authorized to execute and
deliver these agreements in the name of the Company as directed
from time to time by the Committee.
B. EXERCISE PRICE FOR STOCK OPTIONS
(1)With respect to any non-qualified stock options the exercise
price to be paid by the Grantee to the Company for each share
shall be at least equal to the fair market value of a share on
the date the option is granted.
(2)With respect to any incentive stock option awarded to a Grantee
who, on the date of the grant, owns ten percent or less of the total
combined voting power of all classes of stock of the Company, the
exercise price to be paid by the Grantee to the Company for each
share shall be at least equal to the fair market value of a share
on the date the option is granted.
(3)With respect to any incentive stock option awarded to a Grantee
who, on the date of the grant, owns more than ten percent of the total
combined voting power of all classes of stock of the Company, the
exercise price to be paid by the Grantee to the Company for each share
shall be not be less than 110% of the fair market value of a share on
the date the incentive stock option award is granted. At no time may
an option be granted under the plan if the option price per share is
less than the par value of the stock.
C. EXERCISE
Stock options shall be exercisable subject to provisions of this
Plan and any other conditions as determined by the Committee, and
shall be evidenced by a written Option Agreement between the key
employee and the Company as provided in Section 6(A) of this Plan.
D. PAYMENT
At the time that a stock option granted under the Plan, or any part
thereof, is exercised, payment for the stock issuable thereupon shall
be made in full in cash, money order, certified check, cashier's
check, or in shares of stock currently owned by the key employee
which have satisfied any required holding period and are valued at
the fair market value of the shares on the date of exercise. As
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soon as reasonably possible following such exercise of a stock
option, a certificate representing the shares of stock purchased,
registered in the name of the key employee (Grantee), shall be
delivered to same.
E. CASHLESS EXERCISE
Options may be exercised in whole or in part upon delivery to the
Secretary of the Company of an irrevocable written notice of exercise.
The date on which such notice is received by the Secretary shall be
the date of exercise of the option, provided that within five business
days of the delivery of such notice the funds to pay for exercise
of the option are delivered to the Company by a broker acting on
behalf of the optionee either in connection with the sale of the
shares underlying the option or in connection with the making of a
margin loan to the optionee to enable payment of the exercise
price of the option. In connection with the foregoing, the Company
will provide a copy of the notice of exercise of the option to the
aforesaid broker upon receipt by the Secretary of such notice and
will deliver to such broker, within five business days of the
delivery of such notice to the company, a certificate or certificates
(as requested by the broker) representing the number of shares
underlying the option that have been sold by such broker for
the optionee.
F. TERM OF EXERCISE
The term during which each stock option granted under the Plan may
be exercised shall be as provided within the fully executed and
delivered Option Agreement. In no event shall the term during which
an option may be exercised exceed ten years from the date upon which
such option was granted.
G. STOCK OPTION VESTING
No stock options awarded under the Plan may be exercised during
the first year following its grant.
H. FAIR MARKET VALUE
Fair Market Value shall be determined by the price per share at
the close of business on the date on which the stock option grant is
awarded or, if the grant date is not a regular business day, by the
price per share on the next regular business day following the date of
the grant.
7. DURATION
With respect to any stock option awarded to a Grantee, such award shall
be granted within a period of 10 years from the date on which the Plan
is adopted or the date on which the Plan is approved by shareholders,
whichever is earlier. The Plan shall remain in effect thereafter until
all stock options awarded under the Plan have been exercised, surrendered
or expired.
8. EXERCISE IN THE EVENT OF DEATH OR OTHER TERMINATION OF EMPLOYMENT
A. DEATH
If a Grantee shall die while an employee of the Company or during
a period of disability, the option can be exercised by his estate,
heir or legatee at any time during its original term.
B. DISABILITY
If a Grantee's employment by the Company shall terminate because
of disability, and Grantee has not died within the following twelve
months, he may exercise his options to the extent that he was entitled
to do so on the date of his termination of employment, at any time,
but not later than the expiration date specified in the Option
Agreement by which such award was granted.
C. RETIREMENT
If a Grantee's employment shall terminate (i) by reason of his
retirement in accordance with the Company's retirement plan or (ii)
with the consent of the Committee, his right to exercise shall
terminate and be forfeited on the expiration data specified in the
Option Agreement by which such award was granted, or three months
after termination of employment, whichever date is earlier.
D. OTHER
If a Grantee's employment shall terminate for any reason other than
death, disability or retirement as provided in Sections 8(A) through
8(C) of the Plan herein, all rights to exercise his option shall
terminate and be forfeited on the date of such termination of
employment.
9. MISCELLANEOUS
A. ADJUSTMENTS IN THE EVENT OF CHANGE IN COMMON STOCK
In the event of any change in the common stock of the Company by
reason of a stock dividend, recapitalization, reorganization,
merger, consolidation, combination, split-up, or exchange of shares,
or of any similar change affecting the common stock, the number and
kind of shares which thereafter may be awarded under the Plan and
the number and kind of shares subject to option in outstanding
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agreements, and the option purchase price per share thereof shall be
appropriately adjusted consistent with such change in such manner
as the Committee may deem equitable to prevent substantial
dilution or enlargement of the rights granted to, or available for,
eligible key employees.
B. NON-TRANSFERABILITY AND NON-ASSIGNABILITY
No stock options granted hereunder may be transferred, assigned,
pledged or hypothecated, except as provided by will or the applicable
laws of descent or distribution, and no awards granted hereunder
shall be subject to execution, attachment, or similar process. Each
option granted hereunder may be exercised only by the individual to
whom it is issued or the executor of the estate and is subject to
the terms, conditions and provisions herein.
C. INVESTMENT REPRESENTATION
Each stock option agreement may provide that, upon demand by the
Committee, the Grantee shall deliver to the Committee at the time of
exercise of an option or portion thereof, a written representation
that the shares to be acquired upon such exercise are to be acquired
for investment and not for resale or with a view to the distribution
thereof.
D. RIGHTS AS A SHAREHOLDER
Any eligible key employee who receives a stock option under the
Plan shall have no rights to the underlying shares until the date of
the issuance of a stock certificate to him, and only after such shares
are fully paid. No adjustment will be made for dividends or other
rights for which the record date is prior to the date such stock
certificate is issued.
E. NO OBLIGATION TO EXERCISE
The granting of a stock option under the Plan shall impose no
obligation upon an eligible key employee to exercise such option.
F. INCENTIVE STOCK OPTIONS
Each option agreement which provides for the grant of an incentive
stock option to an eligible key employee shall contain such terms and
provisions as the Committee may determine to be necessary or desirable
in order to qualify such option as an incentive stock option within
the meaning of Section 422(b) of the Internal Revenue Code of 1986,
as amended from time to time.
G. APPLICATION OF PROCEEDS
The proceeds received by the Company from the sale of common stock
under the Plan shall be used for general corporate purposes.
H. WITHHOLDING TAXES
Upon the issuance of any stock pursuant to the exercise of a stock
option, the Company shall have the right to require the Grantee to
remit to the Company an amount payable in cash, money order, certified
check or cashier's check that is sufficient to satisfy all federal,
state and local withholding tax requirements prior to the delivery of
any certificate(s) for shares of common stock. The Committee, in its
sole descretion, may permit the Grantee to pay such taxes through the
withholding of shares otherwise deliverable to such Grantee in
connection with such exercise or the delivery to the Company of shares
otherwise acquired by the Grantee.
I. RIGHT TO TERMINATE EMPLOYMENT
Nothing in the Plan or any agreement entered into pursuant to the
Plan shall confer upon any key employee the right to continue in
the employment of the Company or affect any right which the
Company has to terminate any key employee.
J. GOVERNING LAW
The Plan shall be construed and its provisions enforced and
administered in accordance with the laws of Ohio, except to the
extent that such laws may be superseded by any federal laws.
K. AWARDS NOT TREATED AS COMPENSATION UNDER BENEFIT PLANS
No awards under the Plan shall be considered as compensation under
any employee benefit plan of the Company, except as specifically
provided in any such plan or as otherwise determined by the Board
of Directors.
L. EFFECT OF MERGER OR OTHER REORGANIZATION
In the event any merger, consolidation or other reorganization in
which the Corporation is not the surviving or continuing
corporation, all options that were granted hereunder and that are
outstanding on the date of such event shall be assumed by the
surviving or continuing corporation.
M. ELIMINATION OF FRACTIONAL SHARES
If, under any provision of the Plan or formula used to calculate
award levels of stock options, the number so computed is not a
whole number, such number of shares shall be rounded down to the
next whole number.
10. EFFECTIVE DATE/APPROVAL BY SHAREHOLDERS
The effective date of the Plan shall be the date on which it is adopted
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by the Board, subject to approval of the Plan by the holders of a
majority of the shares of common stock of the Company within a period
beginning 12 months prior to and ending 12 months following approval of
the Plan by the Board. The Plan and any grants made as a part of the
Plan shall be null and void and of no effect if such condition is not
fulfilled.
11. AMENDMENT AND TERMINATION OF THE PLAN
The Board may, without further action by the shareholders, from time
to time, amend, alter, suspend or terminate the Plan, except as
otherwise required by applicable federal securities laws.
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A G R E E M E N T
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THIS AGREEMENT, made this day of , 1996, by and between
FOREST CITY ENTERPRISES, INC., an Ohio corporation of Cleveland, Ohio,
hereinafter referred to as "Company," and , hereinafter referred to
as "Employee."
WITNESSETH:
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WHEREAS, the Board of Directors of the Company is of the opinion that
the interests of the Company and its shareholders will be advanced by affording
present and future executives and key employees an opportunity to secure stock
ownership in the Company,
NOW THEREFORE, in consideration of the premises and the mutual
covenants, agreements and promises set forth herein, the parties hereto agree as
follows:
1. GRANT OF OPTION. The Company granted to the Employee as of September
9, 1996 (the "Option Date") an option to purchase under the 1994 Stock Option
Plan (the "Plan"), an aggregate of ______ shares of the presently authorized
$0.33 1/3 par value Class A Common Stock of the Company (the "Option"), which
Option, subject to all the terms and conditions hereinafter set forth, shall be
exercisable by the Employee over the option period as hereinafter described.
2. OPTION PRICE. The option price with respect to the shares of stock
covered by this Agreement (the "Option Shares") shall be $43.125 per share, the
price as of the close of business on September 9, 1996.
3. VESTING AND TIME OF EXERCISE OF OPTION. The Option granted
hereunder shall continue in effect for a period of ten (10) years from the date
of the granting of the same, except as
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such period may be reduced as hereinafter provided with respect to termination
of employment, retirement or death of the Employee.
The Option shall be exercisable cumulatively over the option period
only in accordance with the following terms, conditions and provisions:
(a) Except as otherwise provided in the Plan or this
Agreement, this Option shall not be exercisable prior
to the first business day after the second
anniversary of the Option Date, and upon such day the
Option shall automatically become vested and
exercisable with respect to 25 percent (25%) of the
total Option Shares. Thereafter, upon the third
anniversary of the Option Date, Employee may exercise
up to 50 percent (50%) of the total Option Shares.
Upon the fourth anniversary and thereafter until the
tenth anniversary of the Option Date, the Employee
may exercise up to 100 percent (100%) of the total
Option Shares.
(b) Except as hereinafter provided, no Option may be
exercised unless the Employee is, at the date of such
exercise, in the employ of the Company or a
subsidiary of the Company, and shall have been
continuously so employed since the date his Option
was granted. Absence or leave from the Company, or a
subsidiary of the Company, shall not be considered an
interruption of employment for the purposes of this
Agreement.
4. METHOD OF EXERCISE. Option Shares may be purchased pursuant to this
Agreement only upon receipt by the Secretary of the Company of notice in writing
from Employee of his intention to purchase, specifying the number of shares as
to which he desires to exercise his Option, and said notice shall be accompanied
by the full amount of the purchase price in the form of: full cash, a certified
or official bank check, a money order, a cashier's check, or in shares of stock
currently owned by the Employee and valued at the fair market value of the
shares on the date of exercise. In no event shall an Option be exercisable as to
less than twenty-five (25) shares at any one time (or all of the
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remaining shares then subject to the Option, if less than twenty-five (25)).
5. OPTION CONFERS NO RIGHTS AS COMMON STOCK HOLDER. The Employee shall
not be entitled to any privileges of ownership with respect to shares of Class A
Common Stock subject to this Option, unless and until purchased and delivered
upon the exercise of this Option, in whole or in part, and the Employee becomes
a stockholder of record with respect to such delivered shares. The Employee
shall not be considered a stockholder of the Company with respect to any such
shares not so purchased and delivered.
6. TERMINATION OF OPTION. In the event the employment of the Employee
with the Company, or its subsidiary, shall terminate and prevent him from
performing his regular duties for any reason other than disability, death, or
retirement with the consent of the Company, all rights to purchase shares
pursuant to his Option (including rights to purchase shares thereunder which
have accrued but which then remain unexercised) shall forthwith cease and
terminate.
In the event of the termination of his employment because of
disability, with the consent of the Company, the Option may be exercised by him
at any time prior to the expiration date of the Option, or prior to the
expiration of one (1) year after the date of such termination, whichever is the
shorter period, but only if, and to the extent, that he was entitled to exercise
the Option at the date of such termination.
In the event of the termination of his employment because of
retirement, in accordance with the Company's retirement plan or with the consent
of the Compensation Committee, the Option may be exercised by him at any time
prior to the expiration date of the Option, or prior to the expiration of three
(3) months after the date of such termination, whichever is the shorter period,
but only if, and to the extent that he was entitled to exercise the Option at
the date of such termination.
In the event of the death of the Employee, his Option shall be
exercisable any time prior to the expiration date of the Option, or prior to the
expiration of one (1) year after the date of death, whichever is the shorter
period, but only by the person
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or persons to whom such Employee's Will or by the laws of descent and
distribution of the State of his domicile at the time of his death, and then
only if, and to the extent that such Employee was entitled to exercise the
Option at the date of his death.
To the extent that the Option of the Employee shall not have been
exercised within the limited period above provided due to his death, retirement
or termination because of disability, all further rights to purchase shares
pursuant to such Option shall cease and terminate at the expiration of such
period.
7. NON-TRANSFERABILITY OF OPTION. This Option may not be transferred by
the Employee other than by Will or the laws of descent and distribution. During
the Employee's lifetime, this Option is exercisable only by the Employee or his
guardian or legal representative, PROVIDED that if so determined by the Board of
Directors, the Employee may, in a manner designated by the Board of Directors,
designate a beneficiary to exercise the rights of the Employee under this Option
upon the death of the Employee. Absent such a designation, in a case of death,
such Option shall be exercisable by the executor, administrator or legal
representative of the deceased Employee.
Except as permitted by the above, this Option may not be sold,
transferred, assigned, pledged, hypothecated or otherwise disposed of (whether
by operation of law or otherwise) or by subject to execution, attachment or
similar process. Any attempted sale, transfer, assignment, pledge, hypothecation
or encumbrance, or other disposition of this Option shall be null and void.
8. CHANGE IN STOCK CAPITALIZATION. If after the effective date of the
Stock Option there is any change in the Common Stock of the Company through the
declaration of stock dividends or reclassification, reorganization,
redesignation or recapitalization resulting in stock split-ups or combinations
or exchanges of shares, or through merger, consolidation, liquidation, or other
similar event, the number of shares available for option and the shares subject
to any option, and the price per share, shall be appropriately adjusted as
determined by the Compensation Committee of the Board of Directors to prevent
dilution or enlargement of option rights.
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9. EMPLOYMENT RIGHTS. Nothing contained in the Plan, however, or in any
Option granted pursuant to the Plan, shall confer upon any Employee any right to
be continued in the employment of the Company or any subsidiary of the Company,
or interfere in any way with the right of the Company, or such subsidiary, to
terminate his employment at any time.
10. RIGHTS OF AMENDMENTS TO OPTION PLAN. The Board of Directors shall
have the right to amend, suspend or terminate the Plan at any time, provided,
however, that no such action shall affect or in any way impair the rights of
Employee under the Option heretofore granted under the Plan, and provided
further that unless first duly approved by the shareholders of the Company
entitled to vote thereon at a meeting (which may be the annual meeting) no
amendment or change shall be made in the Plan (a) increasing the total number of
shares which may be purchased under the Plan; (b) changing the minimum purchase
price hereinbefore specified for the optioned shares; (c) changing the option
period, the time limitation on the exercise of options under the Plan
hereinbefore specified or the rate at which shares may be purchased pursuant to
options; or (d) changing the designation of the persons eligible or ineligible
for the granting of options under the Plan.
The Plan shall be administered by the Board of Directors of the Company
whose interpretation of the terms and provisions thereof shall be final and
conclusive.
11. DELIVERING OF SHARES. The Employee shall give notice of his intent
to exercise an Option, and shares shall be delivered by the Company against full
payment of the Option Price in respect of the shares delivered, subject to the
conditions of Item 4 hereof.
12. CANCELLATION OF OPTION RIGHTS. The Board of Directors may cancel
all unexercised options hereunder if the Employee, after retirement and while
having rights to purchase hereunder, engages in employment or activities which
in any way directly or indirectly, divert or attempt to divert from the Company
any business whatsoever, and which in the opinion of the Board of Directors are
contrary to the best interests of the Company.
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13. NOTICES. Any notice to be given hereunder by the Employee shall be
sent by certified or registered mail addressed to the Company for the attention
of the Chairman of the Board, or the President, at its principle office, 10800
Brookpark Road, Cleveland, Ohio 44130, and any notice by the Company to the
Employee shall be sent by certified or registered mail addressed to the Employee
at______________________________________________ . Either party may, by notice
given to the other in accordance with the provisions of this Section, change the
address to which subsequent notices shall be sent.
14. EXERCISE OF EARLIER OPTIONS. It is understood that this Option by
its terms may not be exercisable if the Employee has an earlier qualified Option
granted to him at a higher price which is still outstanding and has not been
fully exercised.
15. AGREEMENT SUBJECT TO THE PLAN. This Agreement is subject to the
provisions of the Plan and shall be interpreted in accordance therewith. The
Employee hereby acknowledges receipt of a copy of the Plan.
16. GOVERNING LAWS. It is intended that (a) this Agreement shall come
within the provisions of the Plan and shall qualify as an Incentive Stock Option
within the meaning of Section 422(b) of the Internal Revenue Code of 1986, as
amended, and shall be construed accordingly, and (b) the Company will treat any
deduction under the Internal Revenue Code of 1986, as amended, in respect of
shares acquired by the Employee pursuant hereto in such manner as to accord to
the Employee the full benefit of Section 422(b) of the 1986 Internal Revenue
Code, as amended. This Agreement shall be governed by the laws of the State of
Ohio.
Further, this Agreement may not be modified orally. It is understood
that wherever the masculine pronouns are used in this Agreement, it is intended
to include the feminine pronouns as well as the masculine.
IN WITNESS WHEREOF, we have hereunto set out hands this__________
day of___________________ , 1996.
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FOREST CITY ENTERPRISES, INC.
-------------------------------
-------------------------------
, Employee
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A G R E E M E N T
-----------------
THIS AGREEMENT, made this day of , 1996, by and between
FOREST CITY ENTERPRISES, INC., an Ohio corporation of Cleveland, Ohio,
hereinafter referred to as "Company," and , hereinafter referred to
as "Employee."
WITNESSETH:
-----------
WHEREAS, the Board of Directors of the Company is of the opinion that
the interests of the Company and its shareholders will be advanced by affording
present and future executives and key employees an opportunity to secure stock
ownership in the Company,
NOW THEREFORE, in consideration of the premises and the mutual
covenants, agreements and promises set forth herein, the parties hereto agree as
follows:
1. GRANT OF OPTION. The Company granted to the Employee as of September
9, 1996 (the "Option Date") a nonqualified stock option to purchase under the
1994 Stock Option Plan (the "Plan"), an aggregate of ______ shares of the
presently authorized $0.33 1/3 par value Class A Common Stock of the Company
(the "Option"), which Option, subject to all the terms and conditions
hereinafter set forth, shall be exercisable by the Employee over the option
period as hereinafter described.
2. OPTION PRICE. The option price with respect to the shares of stock
covered by this Agreement (the "Option Shares") shall be $43.125 per share, the
price as of the close of business on September 9, 1996.
3. VESTING AND TIME OF EXERCISE OF OPTION. The Option granted
hereunder shall continue in effect for a period of ten (10) years from the date
of the granting of the same, except as
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such period may be reduced as hereinafter provided with respect to termination
of employment, retirement or death of the Employee.
The Option shall be exercisable cumulatively over the option period
only in accordance with the following terms, conditions and provisions:
(a) Except as otherwise provided in the Plan or this
Agreement, this Option shall not be exercisable prior
to the first business day after the second
anniversary of the Option Date, and upon such day the
Option shall automatically become vested and
exercisable with respect to 25 percent (25%) of the
total Option Shares. Thereafter, upon the third
anniversary of the Option Date, Employee may exercise
up to 50 percent (50%) of the total Option Shares.
Upon the fourth anniversary and thereafter until the
tenth anniversary of the Option Date, the Employee
may exercise up to 100 percent (100%) of the total
Option Shares.
(b) Except as hereinafter provided, no Option may be
exercised unless the Employee is, at the date of such
exercise, in the employ of the Company or a
subsidiary of the Company, and shall have been
continuously so employed since the date his Option
was granted. Absence or leave from the Company, or a
subsidiary of the Company, shall not be considered an
interruption of employment for the purposes of this
Agreement.
4. METHOD OF EXERCISE. Option Shares may be purchased pursuant to this
Agreement only upon receipt by the Secretary of the Company of notice in writing
from Employee of his intention to purchase, specifying the number of shares as
to which he desires to exercise his Option, and said notice shall be accompanied
by the full amount of the purchase price in the form of: full cash, a certified
or official bank check, a money order, a cashier's check, or in shares of stock
currently owned by the Employee and valued at the fair market value of the
shares on the date of exercise. In no event shall an Option be exercisable as to
less than twenty-five (25) shares at any one time (or all of the
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remaining shares then subject to the Option, if less than twenty-five (25)).
5. OPTION CONFERS NO RIGHTS AS COMMON STOCK HOLDER. The Employee shall
not be entitled to any privileges of ownership with respect to shares of Class A
Common Stock subject to this Option, unless and until purchased and delivered
upon the exercise of this Option, in whole or in part, and the Employee becomes
a stockholder of record with respect to such delivered shares. The Employee
shall not be considered a stockholder of the Company with respect to any such
shares not so purchased and delivered.
6. TERMINATION OF OPTION. In the event the employment of the Employee
with the Company, or its subsidiary, shall terminate and prevent him from
performing his regular duties for any reason other than disability, death, or
retirement with the consent of the Company, all rights to purchase shares
pursuant to his Option (including rights to purchase shares thereunder which
have accrued but which then remain unexercised) shall forthwith cease and
terminate.
In the event of the termination of his employment because of
disability, with the consent of the Company, the Option may be exercised by him
at any time prior to the expiration date of the Option, or prior to the
expiration of one (1) year after the date of such termination, whichever is the
shorter period, but only if, and to the extent, that he was entitled to exercise
the Option at the date of such termination.
In the event of the termination of his employment because of
retirement, in accordance with the Company's retirement plan or with the consent
of the Compensation Committee, the Option may be exercised by him at any time
prior to the expiration date of the Option, or prior to the expiration of three
(3) months after the date of such termination, whichever is the shorter period,
but only if, and to the extent that he was entitled to exercise the Option at
the date of such termination.
In the event of the death of the Employee, his Option shall be
exercisable any time prior to the expiration date of the Option, or prior to the
expiration of one (1) year after the date of death, whichever is the shorter
period, but only by the person
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or persons to whom such Employee's Will or by the laws of descent and
distribution of the State of his domicile at the time of his death, and then
only if, and to the extent that such Employee was entitled to exercise the
Option at the date of his death.
To the extent that the Option of the Employee shall not have been
exercised within the limited period above provided due to his death, retirement
or termination because of disability, all further rights to purchase shares
pursuant to such Option shall cease and terminate at the expiration of such
period.
7. NON-TRANSFERABILITY OF OPTION. This Option may not be transferred by
the Employee other than by Will or the laws of descent and distribution. During
the Employee's lifetime, this Option is exercisable only by the Employee or his
guardian or legal representative, PROVIDED that if so determined by the Board of
Directors, the Employee may, in a manner designated by the Board of Directors,
designate a beneficiary to exercise the rights of the Employee under this Option
upon the death of the Employee. Absent such a designation, in a case of death,
such Option shall be exercisable by the executor, administrator or legal
representative of the deceased Employee.
Except as permitted by the above, this Option may not be sold,
transferred, assigned, pledged, hypothecated or otherwise disposed of (whether
by operation of law or otherwise) or by subject to execution, attachment or
similar process. Any attempted sale, transfer, assignment, pledge, hypothecation
or encumbrance, or other disposition of this Option shall be null and void.
8. CHANGE IN STOCK CAPITALIZATION. If after the effective date of the
Stock Option there is any change in the Common Stock of the Company through the
declaration of stock dividends or reclassification, reorganization,
redesignation or recapitalization resulting in stock split-ups or combinations
or exchanges of shares, or through merger, consolidation, liquidation, or other
similar event, the number of shares available for option and the shares subject
to any option, and the price per share, shall be appropriately adjusted as
determined by the Compensation Committee of the Board of Directors to prevent
dilution or enlargement of option rights.
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9. EMPLOYMENT RIGHTS. Nothing contained in the Plan, however, or in any
Option granted pursuant to the Plan, shall confer upon any Employee any right to
be continued in the employment of the Company or any subsidiary of the Company,
or interfere in any way with the right of the Company, or such subsidiary, to
terminate his employment at any time.
10. RIGHTS OF AMENDMENTS TO OPTION PLAN. The Board of Directors shall
have the right to amend, suspend or terminate the Plan at any time, provided,
however, that no such action shall affect or in any way impair the rights of
Employee under the Option heretofore granted under the Plan, and provided
further that unless first duly approved by the shareholders of the Company
entitled to vote thereon at a meeting (which may be the annual meeting) no
amendment or change shall be made in the Plan (a) increasing the total number of
shares which may be purchased under the Plan; (b) changing the minimum purchase
price hereinbefore specified for the optioned shares; (c) changing the option
period, the time limitation on the exercise of options under the Plan
hereinbefore specified or the rate at which shares may be purchased pursuant to
options; or (d) changing the designation of the persons eligible or ineligible
for the granting of options under the Plan.
The Plan shall be administered by the Board of Directors of the Company
whose interpretation of the terms and provisions thereof shall be final and
conclusive.
11. DELIVERING OF SHARES. The Employee shall give notice of his intent
to exercise an Option, and shares shall be delivered by the Company against full
payment of the Option Price in respect of the shares delivered, subject to the
conditions of Item 4 hereof.
12. CANCELLATION OF OPTION RIGHTS. The Board of Directors may cancel
all unexercised options hereunder if the Employee, after retirement and while
having rights to purchase hereunder, engages in employment or activities which
in any way directly or indirectly, divert or attempt to divert from the Company
any business whatsoever, and which in the opinion of the Board of Directors are
contrary to the best interests of the Company.
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13. NOTICES. Any notice to be given hereunder by the Employee shall be
sent by certified or registered mail addressed to the Company for the attention
of the Chairman of the Board, or the President, at its principle office, 10800
Brookpark Road, Cleveland, Ohio 44130, and any notice by the Company to the
Employee shall be sent by certified or registered mail addressed to the Employee
at______________________________________________ . Either party may, by notice
given to the other in accordance with the provisions of this Section, change the
address to which subsequent notices shall be sent.
14. EXERCISE OF EARLIER OPTIONS. It is understood that this Option by
its terms may not be exercisable if the Employee has an earlier qualified Option
granted to him at a higher price which is still outstanding and has not been
fully exercised.
15. AGREEMENT SUBJECT TO THE PLAN. This Agreement is subject to the
provisions of the Plan and shall be interpreted in accordance therewith. The
Employee hereby acknowledges receipt of a copy of the Plan.
16. GOVERNING LAWS. This Option is hereby designated as not
constituting an "incentive stock option" within the meaning of section 422 of
the Internal Revenue Code of 1986, as amended; this Agreement shall be
interpreted and treated consistently with such designation. This Agreement
shall be governed by the laws of the State of Ohio.
Further, this Agreement may not be modified orally. It is understood
that wherever the masculine pronouns are used in this Agreement, it is intended
to include the feminine pronouns as well as the masculine.
IN WITNESS WHEREOF, we have hereunto set out hands this__________
day of___________________ , 1996.
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FOREST CITY ENTERPRISES, INC.
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, Employee