HOMEBASE, INC. REPLACEMENT EQUITY UNIT AGREEMENT
This Replacement Equity Unit Agreement ("Agreement") is made and
entered into as of December 9, 1999, by and between HomeBase, Inc., a Delaware
corporation (the "Company"), and Xxxx X. Xxxxx ("Employee").
WHEREAS, the Executive Compensation Committee of the Board of Directors
of the Company ("ECC") has approved, and Employee has hereby agreed to, the
cancellation of options to purchase shares of the Company's Common Stock, $.01
par value per share (the "Common Stock"), granted to Employee by the Company and
listed on Schedule I attached hereto and incorporated herein ("Old Options");
and
WHEREAS, furthermore, the ECC has approved the replacement of the Old
Options by granting to Employee the number of Replacement Units ("Units")
indicated below, on the terms and conditions set forth herein;
NOW, THEREFORE, in consideration of the foregoing recitals and the
covenants set forth herein, the parties hereto agree as follows:
1. Cancellation and Replacement of Old Options. The Company and
Employee hereby acknowledge and agree that (i) concurrently herewith the Old
Options are hereby cancelled and are no longer of any force and effect, and (ii)
the Units hereby granted to Employee are in replacement of and not in addition
to the Old Options.
2. Grant of Units: Certain Terms and Conditions. The Company hereby
grants to Employee, and Employee hereby accepts, 20,000 Units, subject to the
vesting schedule indicated below and all of the terms and conditions set forth
in this Agreement.
Number of Units Vesting Date
4,000 April 1, 2001
6,000 April 1, 2002
10,000 April 1, 2003
Notwithstanding any other provision hereof, if a Change of Control
Event (as defined in Annex A hereto) occurs, all of the Units granted hereby
shall become fully vested and non-forfeitable.
3. Payment of Vested Units. A cash payment in respect of vested Units
shall be made to Employee not later than the 15th of April following the date
such Unit vests and shall equal the applicable number of vested Units multiplied
by the lesser of (a) $8.00 or (b) the greater of (i) $5.00 or (ii) the average
closing price of the Common Stock (as reported in the Wall Street Journal) for
the first five trading days immediately following the Company's annual earnings
release in respect of the Company's fiscal years ending in January 2001, 2002,
or 2003, as the case may be. Notwithstanding the foregoing, if Units vest by
reason of a Change of Control Event, a cash payment in respect of such Units
shall be made to Employee as soon as practicable after the Change of Control
Event and shall equal the applicable number of Units multiplied by the lesser of
(x) $8.00, or (y) the greater of (i) $5.00 or (ii) the tender offer price per
share of Common Stock in the case of a cash transaction or the average closing
price for the Common Stock (as reported in the Wall Street Journal) for the five
trading days immediately preceding the Change of Control Event date in the case
of a noncash transaction.
4. Forfeitures. If Employee's employment with the Company terminates
for any reason, any Units remaining unvested as of the date of employment
termination shall be forfeited.
5. Adjustment to Common Stock. In the event of any stock split, stock
dividend, recapitalization, reorganization, merger, consolidation, combination,
exchange of shares, liquidation, spin-off or other similar change in
capitalization or event, or any distribution to holders of Common Stock other
than a normal cash dividend, the number of Units and/or the cash payment for
Units described in Section 3 hereof shall be appropriately adjusted by the
Company (or substituted awards may be made, if applicable) to the extent the
Board of Directors shall determine, in good faith, that such an adjustment (or
substitution) is necessary and appropriate.
6. Transferability of Units. Neither the Units nor any interest therein
may be sold, assigned, conveyed, gifted, pledged, hypothecated or otherwise
transferred in any manner.
7. Payment of Withholding Tax. If the Company is obligated to withhold
an amount on account of any federal, state or local tax imposed as a result of
the redemption of the Units, including, without limitation, any federal, state
or other income tax, or any F.I.C.A., state disability insurance tax or other
employment tax, then the Company shall deduct such amount from the amount
otherwise payable to Employee upon payment in respect of the Units.
8. Employment Rights. No provision of this Agreement or of the Units
granted hereunder shall (a) confer upon Employee the right to continue in the
employ of the Company, (b) affect the right of the Company to terminate the
employment of Employee, with or without cause, or (c) confer upon Employee any
right to participate in any employee welfare or benefit plan or other program of
the Company. Employee hereby acknowledges and agrees that the Company may
terminate the employment of Employee at any time and for any reason, or for no
reason, unless Employee and the Company are parties to a written employment
agreement that expressly provides otherwise.
9. Governing Law. This Agreement shall be governed by and construed and
enforced in accordance with the laws of the State of Delaware.
IN WITNESS WHEREOF, the Company and Employee have duly executed this
Agreement as of the date just noted above.
HomeBase, Inc.
By: /s/Xxxxx X. Xxxxxxx
---------------------------
Xxxxx X. Xxxxxxx
Chief Executive Officer
and President
/s/Xxxx X.Xxxxx
Xxxx X. Xxxxx
Vice President, General
Counsel and Secretary
DEFINITION OF CHANGE OF CONTROL EVENT
For the purpose of the Plan, a "Change of Control Event" shall mean:
(a) The acquisition by an individual, entity or group (within the
meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934,
as amended (the "Exchange Act") (a "Person") of beneficial ownership (within the
meaning of Rule 13d-3 promulgated under the Exchange Act) of 20% or more of
either (i) the then-outstanding shares of Common Stock (the "Outstanding Company
Common Stock") or (ii) the combined voting power of the then-outstanding voting
securities of the Company entitled to vote generally in the election of
directors (the "Outstanding Company Voting Securities"); provided, however, that
for purposes of this subsection (a), the following acquisitions shall not
constitute a Change of Control Event: (i) any acquisition directly from the
Company, (ii) any acquisition by the Company, (iii) any acquisition by any
employee benefit plan (or related trust) sponsored or maintained by the Company
or any corporation controlled by the Company, or (iv) any acquisition by any
corporation pursuant to a transaction which satisfies the criteria set forth in
clauses (i), (ii) and (iii) of subsection (c) of this definition; or
(b) Individuals who, as of the date hereof, constitute the Board of
Directors (the "Incumbent Board") cease for any reason to constitute at least a
majority of the board; provided, however, that any individual becoming a
director subsequently to the date hereof whose election, or nomination for
election by the Company's stockholders, was approved by a vote of at least a
majority of the directors when comprising the Incumbent Board shall be
considered as though such individual were a member of the Incumbent Board
(except that this proviso shall not apply to any individual whose initial
assumption of office as a director occurs as a result of an, actual or
threatened election contest with respect to the election or removal of directors
or other actual or threatened solicitation of proxies or consents by or on
behalf of a Person other than the Board); or
(c) Consummation of a reorganization, merger or consolidation involving
the Company or a sale or other disposition of all or substantially all of the
assets of the Company (a "Business Combination"), in each case, unless,
immediately following such Business Combination, (i) all or substantially all of
the individuals and entities who were the beneficial owners, respectively, of
the Outstanding Company Common Stock and Outstanding Company Voting Securities
immediately prior to such Business Combination beneficially own, directly or
indirectly, more than 60% of, respectively, the then-outstanding shares of
common stock and the combined voting power of the then-outstanding voting
securities entitled to vote generally in the election of directors, of the
corporation resulting from such Business Combination (which as used in section
(c) of this definition shall include, without limitation, a corporation which as
a result of such transaction owns the Company or all or substantially all of the
Company's assets either directly or through one or more subsidiaries) in
substantially the same proportions as their ownership, immediately prior to such
Business Combination, of the Outstanding Company Common Stock and Outstanding
Company Voting Securities, as the case may be, (ii) no Person (excluding any
corporation resulting from such Business Combination or any employee benefit
plan (or related trust) of the Company or such corporation resulting from such
Business Combination) beneficially owns, directly or indirectly, 20% or more of,
respectively, the then-outstanding shares of common stock of the corporation
resulting from such Business Combination, or the combined voting power of the
then-outstanding voting securities of such corporation and (iii) at least half
of the members of the board of directors of the corporation resulting from such
Business Combination were members of the Incumbent Board at the time of the
execution of the initial agreement, or of the action of the Board, providing for
such Business Combination; or
(d) Approval by the stockholders of the Company of a complete
liquidation or dissolution of the Company.
