FOREST CITY ENTERPRISES,
INC.
Nonqualified Stock Option
Agreement
WHEREAS ,
[GRANTEE NAME] (the “ Grantee ”) is a
nonemployee director of Forest City Enterprises, Inc. (the “
Company ”);
WHEREAS ,
a grant of Option Rights to the Grantee was authorized by a
resolution of the Compensation Committee (the “
Committee ”) of the Board of Directors (the
“ Board ”) of the Company that was duly
adopted on
(the “ Date of Grant ”), and the
execution of a Nonqualified Stock Option Agreement in the form
hereof (this “ Agreement ”) to evidence
such grant was authorized by a resolution of the Committee that was
duly adopted on
; and
WHEREAS ,
the grant of Option Rights was made pursuant to and in compliance
with the Amended Board of Directors Compensation Policy approved by
the Board with effect from February 1, 2008.
NOW,
THEREFORE , pursuant to the Company’s 1994 Stock Plan (As
Amended and Restated as of June 19, 2008) (the “
Plan ”), and subject to the terms and
conditions thereof and the terms and conditions hereinafter set
forth, the Company hereby confirms to Grantee, effective as of the
Date of Grant, the grant of Option Rights to purchase
Shares.
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1.
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DEFINITIONS . All capitalized terms have the
meanings set forth in the Plan unless otherwise specifically
provided. As used in this Agreement, the following term has the
following meaning:
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“ Disability
” means disability as defined in the Company’s Long
Term Disability Plan, as amended from time to time.
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2.
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OPTION PRICE . The Option Price with respect to
the Shares covered by the Option Rights shall be $
per Share, the Market Value per Share as of the close of business
on the Date of Grant.
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3.
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OPTION PERIOD; VESTING AND TIME OF
EXERCISE OF OPTION RIGHT . (a) The Option Rights shall
continue in effect for a period of 10 years from the Date of
Grant, except as such option period may be reduced as hereinafter
provided in Section 6 of this Agreement as a result of certain
terminations of the Grantee’s service as a director of the
Company.
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(b)
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The
Option Rights shall be exercisable cumulatively over the option
period only in accordance with the following terms, conditions and
provisions:
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(i)
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Except as otherwise provided in the
Plan or this Agreement, the Option Rights shall not be exercisable
prior to the first anniversary of the Date of Grant, and upon such
day the Option Rights shall automatically become vested and
exercisable with respect to 33 1/3% of the Option Rights.
Thereafter, upon the second anniversary of the Date of Grant, the
Grantee may exercise an additional 33 1/3% up to 66 2/3% of the
Option Rights. Upon the third anniversary and thereafter until the
end of the option period, the Grantee may exercise an additional 33
1/3% up to 100% of the Option Rights. To the extent exercisable,
Option Rights may be exercised from time to time.
Schedule I, attached hereto, lists the number of Shares the
Grantee may exercise the Option Rights for upon the first, second
and third through tenth anniversaries of the ten-year option
period .
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(ii)
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Except as hereinafter provided in
Section 6 of this Agreement, no part of the Option Rights may
be exercised unless the Grantee is, at the date of such exercise, a
director of the Company and shall have continuously served as a
director since the Date of Grant.
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4.
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METHOD OF EXERCISE
. Shares may be
purchased pursuant to this Agreement only upon receipt by the
Secretary of the Company of notice in writing from Grantee of his
or her intention to purchase, specifying the number of Shares as to
which the Grantee desires to exercise the Option Rights, and said
notice shall be accompanied by the full amount of the Option Price
in the form of: cash, a certified or official bank check, a money
order, a cashier’s check, or in Shares that have been owned
by the Grantee for at least six months prior to the date of
exercise and having a market value at the time of exercise equal to
the total Option Price of the Shares subject to such exercise. Such
form of written notice is attached hereto.
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In
no event shall the Option Rights be exercisable as to less than 25
Shares at any one time or all of the remaining Shares then subject
to the Option Rights, if less than 25.
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5.
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OPTION RIGHTS CONFER NO RIGHTS AS
COMMON SHAREHOLDER . The Grantee shall not be entitled
to any privileges of ownership with respect to Shares subject to
the Option Rights, unless and until purchased and delivered upon
the exercise of the Option Rights, in whole or in part, and the
Grantee becomes a shareholder of record with respect to such
delivered Shares. The Grantee shall not be considered a shareholder
of the Company with respect to any such Shares not so purchased and
delivered.
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6.
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TERMINATION OF OPTION
RIGHT .
(a) In the event the Grantee terminates service as a director
of the Company under any circumstance other than those specified in
Section 6(b), (c) or (d) below, all rights to purchase
Shares pursuant to the Option Rights (including rights to purchase
Shares thereunder which have accrued but which then remain
unexercised) shall forthwith cease and terminate.
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(b)
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If
the Grantee terminates service as a director of the Company due to
the Grantee’s Disability, the Option Rights may be exercised
by the Grantee, to the extent the Grantee was entitled to do so on
the date of termination, but not later than ten years from the Date
of Grant.
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(c)
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If
the Grantee terminates service as a director of the Company at or
after age 65 with five or more years of service as a director of
the Company, the Option Rights shall become immediately exercisable
by the Grantee on the date of termination and shall remain
exercisable until ten years from the Date of Grant.
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(d)
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If
the Grantee shall die while serving as a director of the Company or
during a period of Disability, the Option Rights shall become
immediately exercisable if Grantee was age 65 or older and had
served as
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