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8-K - FORM 8-K - HORTON D R INC /DE/ | d79260e8vk.htm |
D. R.
HORTON, INC.
2006
STOCK INCENTIVE PLAN
(As
Amended & Restated Effective as of December 6,
2010)
1. | Purpose |
The purpose of the D. R. Horton, Inc. 2006 Stock Incentive Plan
(As Amended and Restated Effective as of December 6, 2010)
(the Plan) is to advance the interests of D.
R. Horton, Inc. (the Company) by stimulating
the efforts of employees, officers and, to the extent provided
by Sections 5(e) and (f), non-employee directors and
certain other service providers, in each case who are selected
to be participants, by heightening the desire of such persons to
continue in working toward and contributing to the success and
progress of the Company. The Plan supersedes the Companys
1991 Stock Incentive Plan with respect to future awards, and
provides for the grant of Incentive and Nonqualified Stock
Options, Stock Appreciation Rights, Restricted Stock and
Restricted Stock Units, any of which may be performance-based,
and for Incentive Bonuses, which may be paid in cash or stock or
a combination thereof, as determined by the Administrator.
2. | Definitions |
As used in the Plan, the following terms shall have the meanings
set forth below:
(a) Administrator means the
Administrator of the Plan in accordance with Section 17.
(b) Award means an Incentive Stock
Option, Nonqualified Stock Option, Stock Appreciation Right,
Restricted Stock, Restricted Stock Unit or Incentive Bonus
granted to a Participant pursuant to the provisions of the Plan,
any of which the Administrator may structure to qualify in whole
or in part as a Performance Award.
(c) Award Agreement means a written
agreement or other instrument as may be approved from time to
time by the Administrator implementing the grant of each Award.
An Agreement may be in the form of an agreement to be executed
by both the Participant and the Company (or an authorized
representative of the Company) or certificates, notices or
similar instruments as approved by the Administrator.
(d) Board means the board of directors
of the Company.
(e) Code means the Internal Revenue Code
of 1986, as amended from time to time, and the rulings and
regulations issues thereunder.
(f) Company means D. R. Horton, Inc., a
Delaware corporation.
(g) Incentive Bonus means a bonus
opportunity awarded under Section 9 pursuant to which a
Participant may become entitled to receive an amount based on
satisfaction of such performance criteria as are specified in
the Award Agreement.
(h) Incentive Stock Option means a stock
option that is intended to qualify as an incentive stock
option within the meaning of Section 422 of the Code.
(i) Nonemployee Director means each
person who is, or is elected to be, a member of the Board and
who is not an employee of the Company or any Subsidiary.
(j) Nonqualified Stock Option means a
stock option that is not intended to qualify as an
incentive stock option within the meaning of
Section 422 of the Code.
(k) Option means an Incentive Stock
Option
and/or a
Nonqualified Stock Option granted pursuant to Section 6.
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(l) Participant means any individual
described in Section 3 to whom Awards have been granted
from time to time by the Administrator and any authorized
transferee of such individual.
(m) Performance Award means an Award,
the grant, issuance, retention, vesting or settlement of which
is subject to satisfaction of one or more Qualifying Performance
Criteria established pursuant to Section 13.
(n) Plan means D. R. Horton, Inc. 2006
Stock Incentive Plan (As Amended & Restated Effective
as of December 6, 2010), as set forth herein and as amended
from time to time.
(o) Prior Plan means D. R. Horton, Inc.
1991 Stock Incentive Plan, as amended and restated on
February 21, 2002.
(p) Qualifying Performance Criteria has
the meaning set forth in Section 13(b).
(q) Restricted Stock means Shares
granted pursuant to Section 8.
(r) Restricted Stock Unit means an Award
granted to a Participant pursuant to Section 8 pursuant to
which Shares or cash in lieu thereof may be issued in the future.
(s) Service Provider means a consultant
or advisor to the Company or any Subsidiary who (i) is a
natural person, (ii) provides bona fide services to the
Company or any Subsidiary, (iii) provides services other
than in connection with the offer or sale of securities in a
capital-raising transaction, and (iv) does not directly or
indirectly promote or maintain a market for the Companys
securities, in each case, within the meaning of the General
Instructions to
Form S-8
under the Securities Act of 1933, as amended.
(t) Share means a share of the
Companys common stock, par value $.01, subject to
adjustment as provided in Section 12.
(u) Stock Appreciation Right means a
right granted pursuant to Section 7 that entitles the
Participant to receive, in cash or Shares or a combination
thereof, as determined by the Administrator, value equal to or
otherwise based on the excess of (i) the market price of a
specified number of Shares at the time of exercise over
(ii) the exercise price of the right, as established by the
Administrator on the date of grant.
(v) Subsidiary means (i) any
corporation (other than the Company) in an unbroken chain of
corporations beginning with the Company where each of the
corporations in the unbroken chain other than the last
corporation owns stock possessing at least 50 percent or
more of the total combined voting power of all classes of stock
in one of the other corporations in the chain, (ii) other
than with respect to Incentive Stock Options, any limited
liability company, limited partnership, general partnership or
other entity, the majority of the equity or ownership interests
in which are owned, directly or indirectly, by the Company, and
(iii) if specifically determined by the Administrator in
the context other than with respect to Incentive Stock Options,
any entity in which the Company has a significant ownership
interest or that is directly or indirectly controlled by the
Company.
(w) Substitute Awards means Awards
granted or Shares issued by the Company in assumption of, or in
substitution or exchange for, awards previously granted, or the
right or obligation to make future awards, by a person or entity
acquired by the Company or any Subsidiary or with which the
Company or any Subsidiary merges or combines.
(x) Termination of Employment means
ceasing to serve as a full-time employee of the Company and its
Subsidiaries or, with respect to a Nonemployee Director or other
Service Provider, ceasing to serve as such for the Company,
except that with respect to all or any Awards held by a
Participant (i) the Administrator may determine, subject to
Section 6(d), that an approved leave of absence or approved
employment on a less than full-time basis is not considered a
Termination of Employment, (ii) the
Administrator may determine that a transition of employment to
service with a partnership, joint venture or corporation not
meeting the requirements of a Subsidiary in which the Company or
a Subsidiary is a party is not considered a Termination of
Employment, (iii) service as a member of the Board
shall constitute continued employment with respect to Awards
granted to a Participant while he or she served
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as an employee and (iv) service as an employee of the
Company or a Subsidiary shall constitute continued employment
with respect to Awards granted to a Participant while he or she
served as a member of the Board. The Administrator shall
determine whether any corporate transaction, such as a sale or
spin-off of a division or subsidiary that employs a Participant,
shall be deemed to result in a Termination of Employment with
the Company and its Subsidiaries for purposes of any affected
Participants Options, and the Administrators
decision shall be final and binding. Unless determined otherwise
by the Administrator, a Termination of Employment will be
interpreted consistent with the definition of a separation
from service under the Code Section 409A Regulations.
3. | Eligibility |
Any person who is a current or prospective officer or employee
(including, without limitation, any director who is also an
employee, in his or her capacity as such) of the Company or of
any Subsidiary shall be eligible for selection by the
Administrator for the grant of Awards hereunder. To the extent
provided by Section 5(e), any Nonemployee Director shall be
eligible for the grant of Awards hereunder as determined by the
Administrator. In addition, to the extent provided by
Section 5(f), any Service Provider shall be eligible for
selection by the Administrator for the grant of Awards
hereunder. Options intending to qualify as Incentive Stock
Options may only be granted to employees of the Company or any
Subsidiary within the meaning of Section 424(f) the Code,
as selected by the Administrator.
4. | Effective Date and Termination of Plan |
This Plan was originally adopted by the Board on
November 17, 2005, and became effective as of
January 26, 2006 (the Original Effective
Date) upon approval by the Companys
stockholders. The restated Plan was adopted by the Board and
became effective as of December 6, 2010, subject to the
approval by the Companys stockholders. The Plan shall
remain available for the grant of Awards until the tenth (10th)
anniversary of the Original Effective Date. Notwithstanding the
foregoing, the Plan may be terminated at such earlier time as
the Board may determine. Termination of the Plan will not affect
the rights and obligations of the Participants and the Company
arising under Awards theretofore granted and then in effect.
5. | Shares Subject to the Plan and to Awards |
(a) Aggregate Limits. The aggregate
number of Shares issuable pursuant to all Awards shall not
exceed 28,000,000, plus (i) any Shares that were authorized
for issuance under the Prior Plan that, as of January 26,
2006, remain available for issuance under the Prior Plan (not
including any Shares that are subject to, as of January 26,
2006, outstanding awards under the Prior Plan or any Shares that
prior to January 26, 2006 were issued pursuant to awards
granted under the Prior Plan) and (ii) any Shares subject
to outstanding awards under the Prior Plan as of
January 26, 2006 that on or after such date cease for any
reason to be subject to such awards (other than by reason of
exercise or settlement of the awards to the extent they are
exercised for or settled in vested and nonforfeitable shares);
provided that any Shares granted under Options or Stock
Appreciation Rights shall be counted against this limit on a
one-for-one
basis and any Shares granted as Awards other than Options or
Stock Appreciation Rights shall be counted against this limit as
1.75 Shares for every one Share subject to such Award. The
aggregate number of Shares available for grant under this Plan
and the number of Shares subject to outstanding Awards shall be
subject to adjustment as provided in Section 12. The Shares
issued pursuant to Awards granted under this Plan may be shares
that are authorized and unissued or shares that were reacquired
by the Company, including, without limitation, shares purchased
in the open market.
(b) Issuance of Shares. For purposes of
Section 5(a), the aggregate number of Shares issued under
this Plan at any time shall equal only the number of Shares
actually issued upon exercise or settlement of an Award.
Notwithstanding the foregoing, Shares subject to an Award under
the Plan may not again be made available for issuance under the
Plan if such Shares are: (i) Shares that were subject to a
stock-settled Stock Appreciation Right and were not issued upon
the net settlement or net exercise of such Stock Appreciation
Right, (ii) Shares used to pay the exercise price of a
Stock Option, (iii) Shares delivered to or withheld by the
Company to pay the withholding taxes related to a Stock Option
or a Stock Appreciation Right, or (iv) Shares
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repurchased on the open market with the proceeds of a Stock
Option exercise. Shares subject to Awards that have been
canceled, expired, forfeited or otherwise not issued under an
Award and Shares subject to Awards settled in cash shall not
count as Shares issued under this Plan; provided however, that
any Shares that again become available for grant pursuant to
this Section 5 shall be added back on a
one-for-one
basis if such Shares were subject to Awards of Options or Stock
Appreciation Rights or added back as one and three-quarters
(1.75) Shares for all Shares granted as Awards other than
Options or Stock Appreciation Rights.
(c) Substitute Awards. Substitute Awards
shall not reduce the Shares authorized for issuance under the
Plan or authorized for grant to a Participant in any calendar
year. In addition, in the event that a person or entity acquired
by the Company or any Subsidiary, or with which the Company or
any Subsidiary merges or combines, has shares available under a
pre-existing plan approved by its stockholders and not adopted
in contemplation of such acquisition, merger or combination, the
shares available for grant pursuant to the terms of such
pre-existing plan (as adjusted, to the extent appropriate, using
the exchange ratio or other adjustment or valuation ratio or
formula used in such acquisition, merger or combination to
determine the consideration payable to the holders of common
stock of the entities party to such transaction) may be used for
Awards under the Plan and, notwithstanding any other provision
hereof, shall not reduce the Shares authorized for issuance
under the Plan; provided that Awards using such available shares
shall not be made after the date awards or grants could have
been made under the terms of the pre-existing plan, absent the
acquisition, merger or combination, and shall only be made to
individuals who were employees, directors or Service Providers
of such acquired, merged or combined company before such
acquisition, merger or combination.
(d) Tax Code Limits. The aggregate number
of Shares subject to Awards, denominated in Shares, granted
under this Plan during any calendar year to any one Participant
shall not exceed 750,000, which number shall be calculated and
adjusted pursuant to Section 12 only to the extent that
such calculation or adjustment will not affect the status of any
Award intended to qualify as performance based
compensation under Section 162(m) of the Code but
which number shall not count any tandem SARs (as defined in
Section 7). The aggregate number of Shares that may be
issued pursuant to the exercise of Incentive Stock Options
granted under this Plan shall not exceed 28,000,000, which
number shall be calculated and adjusted pursuant to
Section 12 only to the extent that such calculation or
adjustment will not affect the status of any option intended to
qualify as an Incentive Stock Option under Section 422 of
the Code. The maximum amount payable pursuant to that portion of
an Incentive Bonus, denominated in dollars, granted with respect
any specified performance period to any Participant under this
Plan that is intended to satisfy the requirements for
performance based compensation under
Section 162(m) of the Code shall not exceed two percent
(2%) of the Companys consolidated pre-tax income for such
performance.
(e) Director Awards. The aggregate number
of Shares subject to Awards granted under this Plan during any
calendar year to any one Nonemployee Director shall not exceed
15,000, which limit shall not count any tandem SARs (as defined
in Section 7).
(f) Awards to Service Providers. The
aggregate number of Shares issued under this Plan pursuant to
all Awards granted to Service Providers shall not exceed 300,000.
(g) Effect on Prior Plan. From and after
the Original Effective Date, no further grants or awards shall
be made under the Prior Plan. Grants and awards made under the
Prior Plan before the Original Effective Date, however, shall
continue in effect in accordance with their terms.
6. | Options |
(a) Option Awards. Options may be granted
at any time and from time to time prior to the termination of
the Plan to Participants as determined by the Administrator. No
Participant shall have any rights as a stockholder with respect
to any Shares subject to Options hereunder until such Shares
have been issued. Each Option shall be evidenced by an Award
Agreement. Options granted pursuant to the Plan need not be
identical but each Option must contain and be subject to the
terms and conditions set forth below.
(b) Price. The Administrator will
establish the exercise price per Share under each Option, which,
in no event will be less than the fair market value of the
Shares on the date of grant; provided, however, that the
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exercise price per Share with respect to an Option that is
granted in connection with a merger or other acquisition as a
substitute or replacement award for options held by optionees of
the acquired entity may be less than 100% of the market price of
the Shares on the date such Option is granted if such exercise
price is based on a formula set forth in the terms of the
options held by such optionees or in the terms of the agreement
providing for such merger or other acquisition. The exercise
price of any Option may be paid in Shares, cash or a combination
thereof, as determined by the Administrator, including, without
limitation, an irrevocable commitment by a broker to pay over
such amount from a sale of the Shares issuable under an Option,
the delivery of previously owned Shares and withholding of
Shares deliverable upon exercise.
(c) No Repricing. Other than in
connection with a change in the Companys capitalization or
other event or transaction described in Section 12, the
terms of outstanding Awards may not be amended to
(a) reduce the exercise price of outstanding Options or
take any other action that is treated as a re-pricing under
generally accepted accounting principles (GAAP), or
(b) at any time when the exercise price of an Option is
above the market value of a Share, cancel, exchange, buyout or
surrender outstanding Options in exchange for cash, other awards
or Options or Stock Appreciation Rights with an exercise price
that is less than the exercise price of the original Options,
without stockholder approval.
(d) Provisions Applicable to Options. The
date on which Options become exercisable shall be determined at
the sole discretion of the Administrator and set forth in an
Award Agreement. Unless provided otherwise in the applicable
Award Agreement, to the extent that the Administrator determines
that an approved leave of absence or employment on a less than
full-time basis is not a Termination of Employment, the vesting
period
and/or
exercisability of an Option shall be adjusted by the
Administrator during or to reflect the effects of any period
during which the Participant is on an approved leave of absence
or is employed on a less than full-time basis.
(e) Term of Options and Termination of
Employment. The Administrator shall establish the
term of each Option, which in no case shall exceed a period of
ten (10) years from the date of grant. In addition, the
Award Agreement evidencing the grant of each Option shall set
forth the terms and conditions applicable to such Option upon a
Participants Termination of Employment.
(f) Incentive Stock
Options. Notwithstanding anything to the contrary
in this Section 6, in the case of the grant of an Option
intending to qualify as an Incentive Stock Option: (i) if
the Participant owns stock possessing more than 10 percent
of the combined voting power of all classes of stock of the
Company (a 10% Shareholder), the exercise price of
such Option must be at least 110 percent of the fair market
value of the Shares on the date of grant and the Option must
expire within a period of not more than five (5) years from
the date of grant, and (ii) Termination of Employment will
occur when the person to whom an Award was granted ceases to be
an employee (as determined in accordance with
Section 3401(c) of the Code and the regulations promulgated
thereunder) of the Company and its Subsidiaries. Notwithstanding
anything in this Section 6 to the contrary, options
designated as Incentive Stock Options shall not be eligible for
treatment under the Code as Incentive Stock Options (and will be
deemed to be Nonqualified Stock Options) to the extent that
either (a) the aggregate fair market value of Shares
(determined as of the time of grant) with respect to which such
Options are exercisable for the first time by the Participant
during any calendar year (under all plans of the Company and any
Subsidiary) exceeds $100,000, taking Options into account in the
order in which they were granted, or (b) such Options
otherwise remain exercisable but are not exercised within three
(3) months of Termination of Employment (or such other
period of time provided in Section 422 of the Code).
7. | Stock Appreciation Rights |
Stock Appreciation Rights may be granted to Participants from
time to time either in tandem with or as a component of other
Awards granted under the Plan (tandem SARs)
or not in conjunction with other Awards (freestanding
SARs) and may, but need not, relate to a specific
Option granted under Section 6. The provisions of Stock
Appreciation Rights need not be the same with respect to each
grant or each recipient. Any Stock Appreciation Right granted in
tandem with an Award may be granted at the same time such Award
is granted or at any time thereafter before exercise or
expiration of such Award. All freestanding SARs shall
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be granted subject to the same terms and conditions applicable
to Options as set forth in Section 6 (including, without
limitation, no repricing) and all tandem SARs shall have the
same exercise price, vesting, exercisability, forfeiture and
termination provisions as the Award to which they relate.
Subject to the provisions of Section 6 and the immediately
preceding sentence, the Administrator may impose such other
conditions or restrictions on any Stock Appreciation Right as it
shall deem appropriate. Stock Appreciation Rights may be settled
in Shares, cash or a combination thereof, as determined by the
Administrator and set forth in the applicable Award Agreement.
Other than in connection with a change in the Companys
capitalization or other event or transaction described in
Section 12, the terms of outstanding Awards may not be
amended to (a) reduce the exercise price of outstanding
Stock Appreciation Rights or take any other action that is
treated as a re-pricing under GAAP, or (b) at any time when
the exercise price of an SAR is above the market value of a
Share, cancel, exchange, buyout or surrender outstanding Stock
Appreciation Rights in exchange for cash, other awards or
Options or Stock Appreciation Rights with an exercise price that
is less than the exercise price of the original Stock
Appreciation Rights, without stockholder approval.
8. | Restricted Stock and Restricted Stock Units |
(a) Restricted Stock and Restricted Stock Unit
Awards. Restricted Stock and Restricted Stock
Units may be granted at any time and from time to time prior to
the termination of the Plan to Participants as determined by the
Administrator. Restricted Stock is an award or issuance of
Shares the grant, issuance, retention, vesting
and/or
transferability of which is subject during specified periods of
time to such conditions (including, without limitation,
continued employment or performance conditions) and terms as the
Administrator deems appropriate. Restricted Stock Units are
Awards denominated in units of Shares under which the issuance
of Shares is subject to such conditions (including, without
limitation, continued employment or performance conditions) and
terms as the Administrator deems appropriate. Each grant of
Restricted Stock and Restricted Stock Units shall be evidenced
by an Award Agreement. Unless determined otherwise by the
Administrator, each Restricted Stock Unit will be equal to one
Share and will entitle a Participant to either the issuance of
Shares or payment of an amount of cash determined with reference
to the value of Shares. To the extent determined by the
Administrator, Restricted Stock and Restricted Stock Units may
be satisfied or settled in Shares, cash or a combination
thereof. Restricted Stock and Restricted Stock Units granted
pursuant to the Plan need not be identical but each grant of
Restricted Stock and Restricted Stock Units must contain and be
subject to the terms and conditions set forth below.
(b) Contents of Agreement. Each Award
Agreement shall contain provisions regarding (i) the number
of Shares or Restricted Stock Units subject to such Award or a
formula for determining such number, (ii) the purchase
price of the Shares, if any, and the means of payment,
(iii) the performance criteria, if any, and level of
achievement versus these criteria that shall determine the
number of Shares or Restricted Stock Units granted, issued,
retainable
and/or
vested, (iv) such terms and conditions on the grant,
issuance, vesting
and/or
forfeiture of the Shares or Restricted Stock Units as may be
determined from time to time by the Administrator, (v) the
term of the performance period, if any, as to which performance
will be measured for determining the number of such Shares or
Restricted Stock Units, and (vi) restrictions on the
transferability of the Shares or Restricted Stock Units. Shares
issued under a Restricted Stock Award may be issued in the name
of the Participant and held by the Participant or held by the
Company, in each case as the Administrator may provide.
(c) Vesting and Performance Criteria. The
grant, issuance, retention, vesting and/or, subject to
Section 10, settlement of shares of Restricted Stock and
Restricted Stock Units will occur when and in such installments
as the Administrator determines or under criteria the
Administrator establishes, which may include Qualifying
Performance Criteria. The grant, issuance, retention, vesting
and/or
settlement of Shares under any such Award that is based on
performance criteria and level of achievement versus such
criteria will be subject to a performance period of not less
than one (1) year, and the grant, issuance, retention,
vesting
and/or
settlement of Shares under any Restricted Stock or Restricted
Stock Unit Award that is based solely upon continued employment
and/or the
passage of time may not vest or be settled in full over a period
of less than three (3) years but may be subject to pro-rata
vesting over such period, except that the Administrator may
provide for the satisfaction
and/or lapse
of all conditions under any such Award in the event of the
Participants death,
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disability, retirement or in connection with a change in control
of the Company, and the Administrator may provide that any such
restriction or limitation will not apply in the case of a
Restricted Stock or Restricted Stock Unit Award that is issued
in payment or settlement of compensation that has been earned by
the Participant or that qualifies as a Substitute Award.
Notwithstanding anything in this Plan to the contrary, the
performance criteria for any Restricted Stock or Restricted
Stock Unit that is intended to satisfy the requirements for
performance-based compensation under
Section 162(m) of the Code will be a measure based on one
or more Qualifying Performance Criteria selected by the
Administrator and specified when the Award is granted.
(d) Discretionary Adjustments and
Limits. Subject to the limits imposed under
Section 162(m) of the Code for Awards that are intended to
qualify as performance based compensation,
notwithstanding the satisfaction of any performance goals, the
number of Shares granted, issued, retainable
and/or
vested under an Award of Restricted Stock or Restricted Stock
Units on account of either financial performance or personal
performance evaluations may, to the extent specified in the
Award Agreement, be reduced, but not increased, by the
Administrator on the basis of such further considerations as the
Administrator shall determine.
(e) Voting Rights. Unless otherwise
determined by the Administrator, Participants holding shares of
Restricted Stock granted hereunder may exercise full voting
rights with respect to those shares during the period of
restriction. Participants shall have no voting rights with
respect to Shares underlying Restricted Stock Units unless and
until such Shares are reflected as issued and outstanding shares
on the Companys stock ledger.
(f) Dividends and
Distributions. Participants in whose name
Restricted Stock is granted shall be entitled to receive all
dividends and other distributions paid with respect to those
Shares, unless determined otherwise by the Administrator. The
Administrator will determine whether any such dividends or
distributions will be automatically reinvested in additional
shares of Restricted Stock and subject to the same restrictions
on transferability as the Restricted Stock with respect to which
they were distributed or whether such dividends or distributions
will be paid in cash. Shares underlying Restricted Stock Units
shall be entitled to dividends or dividend equivalents only to
the extent provided by the Administrator. Notwithstanding the
foregoing, any dividends or distributions on performance-based
Restricted Stock or Restricted Stock Units shall be subject to
the same performance-based vesting criteria and other
restrictions on transferability as the underlying Restricted
Stock (or Restricted Stock Units) with respect to which they
were paid or distributed.
(g) Termination of Employment. The Award
Agreement evidencing the grant of an Award of Restricted Stock
or Restricted Stock Units shall set forth the terms and
conditions applicable to such Award upon a Participants
Termination of Employment.
9. | Incentive Bonuses |
(a) General. Each Incentive Bonus Award
will confer upon the Participant the opportunity to earn a
future payment tied to the level of achievement with respect to
one or more performance criteria established for a performance
period of not less than one year (if payable in Shares), and not
less than one calendar quarter (if payable solely in cash).
(b) Incentive Bonus Document. The terms
of any Incentive Bonus will be set forth in an Award Agreement.
Each Award Agreement evidencing an Incentive Bonus shall contain
provisions regarding (i) the target and maximum amount
payable to the Participant as an Incentive Bonus, (ii) the
performance criteria and level of achievement versus these
criteria that shall determine the amount of such payment,
(iii) the term of the performance period as to which
performance shall be measured for determining the amount of any
payment, (iv) the timing of any payment earned by virtue of
performance, (v) restrictions on the alienation or transfer
of the Incentive Bonus prior to actual payment,
(vi) forfeiture provisions and (vii) such further
terms and conditions, in each case not inconsistent with this
Plan as may be determined from time to time by the Administrator.
(c) Performance Criteria. The
Administrator shall establish the performance criteria and level
of achievement versus these criteria that shall determine the
target and maximum amount payable under an Incentive Bonus,
which criteria may be based on financial performance
and/or
personal performance
7
evaluations. The Administrator may specify the percentage of the
target Incentive Bonus that is intended to satisfy the
requirements for performance-based compensation
under Section 162(m) of the Code. Notwithstanding anything
to the contrary herein, the performance criteria for any portion
of an Incentive Bonus that is intended by the Administrator to
satisfy the requirements for performance-based
compensation under Section 162(m) of the Code shall
be a measure based on one or more Qualifying Performance
Criteria (as defined in Section 13(b)) selected by the
Administrator and specified at the time the Incentive Bonus is
granted. The Administrator shall certify the extent to which any
Qualifying Performance Criteria has been satisfied, and the
amount payable as a result thereof, prior to payment of any
Incentive Bonus that is intended to satisfy the requirements for
performance-based compensation under
Section 162(m) of the Code.
(d) Timing and Form of Payment. The
Administrator shall determine the timing of payment of any
Incentive Bonus. Payment of the amount due under an Incentive
Bonus may be made in cash or in Shares, as determined by the
Administrator. Subject to Section 10, the Administrator may
provide for or, subject to such terms and conditions as the
Administrator may specify, may permit a Participant to elect for
the payment of any Incentive Bonus to be deferred to a specified
date or event.
(e) Discretionary
Adjustments. Notwithstanding satisfaction of any
performance goals, the amount paid under an Incentive Bonus on
account of either financial performance or personal performance
evaluations may, to the extent specified in the Award Agreement,
be reduced, but not increased, by the Administrator on the basis
of such further considerations as the Administrator shall
determine.
10. | Deferral of Gains |
The Administrator may, in an Award Agreement or otherwise,
provide for the deferred delivery of Shares or cash upon
settlement, vesting or other events with respect to Restricted
Stock or Restricted Stock Units, or in payment or satisfaction
of an Incentive Bonus. Notwithstanding anything herein to the
contrary, in no event will any deferral of the delivery of
Shares or any other payment with respect to any Award be allowed
if the Administrator determines that the deferral would result
in the imposition of the additional tax under
Section 409A(a)(1)(B) of the Code. No Award shall provide
for deferral of compensation that does not comply with
Section 409A of the Code, unless the Board, at the time of
grant, specifically provides that the Award is not intended to
comply with Section 409A of the Code. The Company shall
have no liability to a Participant, or any other party, if an
Award that is intended to be exempt from, or compliant with,
Section 409A of the Code is not so exempt or compliant or
for any action taken by the Board.
11. | Conditions and Restrictions Upon Securities Subject to Awards |
The Administrator may provide that the Shares issued upon
exercise of an Option or Stock Appreciation Right or otherwise
subject to or issued under an Award shall be subject to such
further agreements, restrictions, conditions or limitations as
the Administrator in its discretion may specify prior to the
exercise of such Option or Stock Appreciation Right or the
grant, vesting or settlement of such Award, including, without
limitation, conditions on vesting or transferability, forfeiture
or repurchase provisions and method of payment for the Shares
issued upon exercise, vesting or settlement of such Award
(including, without limitation, the actual or constructive
surrender of Shares already owned by the Participant) or payment
of taxes arising in connection with an Award. Without limiting
the foregoing, such restrictions may address the timing and
manner of any resales by the Participant or other subsequent
transfers by the Participant of any Shares issued under an
Award, including, without limitation (i) restrictions under
an insider trading policy or pursuant to applicable law,
(ii) restrictions designed to delay
and/or
coordinate the timing and manner of sales by Participant and
holders of other Company equity compensation arrangements,
(iii) restrictions as to the use of a specified brokerage
firm for such resales or other transfers and
(iv) provisions requiring Shares to be sold on the open
market or to the Company in order to satisfy tax withholding or
other obligations.
12. | Adjustment of and Changes in the Stock |
The number and kind of Shares available for issuance under this
Plan (including, without limitation, under any Awards then
outstanding), and the number and kind of Shares subject to the
individual limits set
8
forth in Section 5 of this Plan, shall be equitably
adjusted by the Administrator as it determines appropriate to
reflect any reorganization, reclassification, combination or
exchange of shares, repurchase of shares, stock split, reverse
stock split, spin-off, dividend or other distribution of
securities, property or cash (other than regular, quarterly cash
dividends), or any other event or transaction that affects the
number or kind of Shares of the Company outstanding. Such
adjustment may be designed to comply with Section 425 of
the Code or, except as otherwise expressly provided in
Section 5(d) of this Plan, may be designed to treat the
Shares available under the Plan and subject to Awards as if they
were all outstanding on the record date for such event or
transaction or to increase the number of such Shares to reflect
a deemed reinvestment in Shares of the amount distributed to the
Companys securityholders. The terms of any outstanding
Award shall also be equitably adjusted by the Administrator as
to price, number or kind of Shares subject to such Award,
vesting, and other terms to reflect the foregoing events, which
adjustments need not be uniform as between different Awards or
different types of Awards.
In the event there shall be any other change in the number or
kind of outstanding Shares, or any stock or other securities
into which such Shares shall have been changed, or for which it
shall have been exchanged, by reason of a change of control,
other merger, consolidation or otherwise, then the Administrator
shall, in its sole discretion, determine the appropriate and
equitable adjustment, if any, to be effected. Without limiting
the generality of the foregoing, in the event of any such change
described in this paragraph, the Administrator may, in its sole
discretion, (i) provide for the assumption or substitution
of, or adjustment to, each outstanding Award;
(ii) accelerate the vesting of and terminate any
restrictions on outstanding Awards; (iii) provide for
cancellation of accelerated Awards that are not exercised within
a time prescribed by the Administrator; or (iv) provide for
the cancellation of any outstanding Awards in exchange for a
cash payment to the holders thereof.
No right to purchase fractional shares shall result from any
adjustment in Awards pursuant to this Section 12. In case
of any such adjustment, the Shares subject to the Award shall be
rounded down to the nearest whole share. The Company shall
notify Participants holding Awards subject to any adjustments
pursuant to this Section 12 of such adjustment, but
(whether or not notice is given) such adjustment shall be
effective and binding for all purposes of the Plan.
13. | Qualifying Performance-Based Compensation |
(a) General. The Administrator may
establish performance criteria and level of achievement versus
such criteria that shall determine the number of Shares to be
granted, retained, vested, issued or issuable under or in
settlement of or the amount payable pursuant to an Award, which
criteria may be based on Qualifying Performance Criteria or
other standards of financial performance
and/or
personal performance evaluations. In addition, the Administrator
may specify that an Award or a portion of an Award is intended
to satisfy the requirements for performance-based
compensation under Section 162(m) of the Code,
provided that the performance criteria for such Award or portion
of an Award that is intended by the Administrator to satisfy the
requirements for performance-based compensation
under Section 162(m) of the Code shall be a measure based
on one or more Qualifying Performance Criteria selected by the
Administrator and specified at the time the Award is granted.
The Administrator shall certify the extent to which any
Qualifying Performance Criteria has been satisfied, and the
amount payable as a result thereof, prior to payment, settlement
or vesting of any Award that is intended to satisfy the
requirements for performance-based compensation
under Section 162(m) of the Code. Notwithstanding
satisfaction of any performance goals, the number of Shares
issued under or the amount paid under an award may, to the
extent specified in the Award Agreement, be reduced (but not
increased) by the Administrator on the basis of such further
considerations as the Administrator in its sole discretion shall
determine.
(b) Qualifying Performance Criteria. For
purposes of this Plan, the term Qualifying Performance
Criteria shall mean any one or more of the following
performance criteria, either individually, alternatively or in
any combination, applied to either the Company as a whole or to
a business unit or Subsidiary, either individually,
alternatively or in any combination, and measured either
quarterly, annually or cumulatively over a period of years, on
an absolute basis or relative to a pre-established target, to
previous years results or to a designated comparison
group, in each case as specified by the Administrator:
(i) cash flow (before or after
9
dividends), (ii) earnings per share (including, without
limitation, earnings before interest, taxes, depreciation and
amortization), (iii) stock price, (iv) return on
equity, (v) stockholder return or total stockholder return,
(vi) return on capital (including, without limitation,
return on total capital or return on invested capital),
(vii) return on investment, (viii) return on assets or
net assets, (ix) market capitalization, (x) economic value
added, (xi) debt leverage (debt to capital),
(xii) revenue, (xiii) sales or net sales,
(xiv) backlog, (xv) income, pre-tax income or net
income, (xvi) operating income or pre-tax profit,
(xvii) operating profit, net operating profit or economic
profit, (xviii) gross margin, operating margin or profit
margin, (xix) return on operating revenue or return on
operating assets, (xx) cash from operations,
(xxi) operating ratio, (xxii) operating revenue,
(xxiii) market share improvement, (xxiv) general and
administrative expenses, (xxv) gross profit or gross profit
percentage, (xxvi) income or pre-tax income percentage,
(xxvii) selling, general and administrative expense
improvement or containment, (xxiii) land, lot or inventory
improvement or (xxix) customer service. To the extent
consistent with Section 162(m) of the Code, the
Administrator may appropriately adjust any evaluation of
performance under a Qualifying Performance Criteria to exclude
any of the following events that occurs during a performance
period: (i) asset write-downs, (ii) litigation,
claims, judgments or settlements, (iii) the effect of
changes in tax law, accounting principles or other such laws or
provisions affecting reported results, (iv) accruals for
reorganization and restructuring programs and (v) any
extraordinary, unusual, non-recurring or non-comparable items
(A) as described in Accounting Principles Board Opinion
No. 30, (B) as described in managements
discussion and analysis of financial condition and results of
operations appearing in the Companys Annual Report to
stockholders for the applicable year, or (C) publicly
announced by the Company in a press release or conference call
relating to the Companys results of operations or
financial condition for a completed quarterly or annual fiscal
period.
14. | Transferability |
Unless the Administrator specifies otherwise and to the extent
permitted under the General Instructions to
Form S-8
under the Securities Act of 1933, as amended, an Award may not
be sold, transferred, pledged, assigned, or otherwise alienated
or hypothecated by a Participant other than by will or the laws
of descent and distribution, and each Option or Stock
Appreciation Right shall be exercisable only by the Participant
during his or her lifetime, and thereafter by the legal
representative of the Participants estate or the
individual to whom such Award was transferred by the
Participants will or the laws of descent and distribution.
15. | Compliance with Laws and Regulations |
This Plan, the grant, issuance, vesting, exercise and settlement
of Awards thereunder, and the obligation of the Company to sell,
issue or deliver Shares under such Awards, shall be subject to
all applicable foreign, federal, state and local laws, rules and
regulations, stock exchange rules and regulations, and to such
approvals by any governmental or regulatory agency as may be
required. The Company shall not be required to register in a
Participants name or deliver any Shares prior to the
completion of any registration or qualification of such shares
under any foreign, federal, state or local law or any ruling or
regulation of any government body which the Administrator shall
determine to be necessary or advisable. To the extent the
Company is unable to or the Administrator deems it infeasible to
obtain authority from any regulatory body having jurisdiction,
which authority is deemed by the Companys counsel to be
necessary to the lawful issuance and sale of any Shares
hereunder, the Company and its Subsidiaries shall be relieved of
any liability with respect to the failure to issue or sell such
Shares as to which such requisite authority shall not have been
obtained. No Option shall be exercisable and no Shares shall be
issued
and/or
transferable under any other Award unless a registration
statement with respect to the Shares underlying such Option is
effective and current or the Company has determined that such
registration is unnecessary.
In the event an Award is granted to or held by a Participant who
is employed or providing services outside the United States, the
Administrator may, in its sole discretion, modify the provisions
of the Plan or of such Award as they pertain to such individual
to comply with applicable foreign law or to recognize
differences in local law, currency or tax policy. The
Administrator may also impose conditions on the grant, issuance,
exercise, vesting, settlement or retention of Awards in order to
comply with such foreign law
and/or to
minimize the Companys obligations with respect to tax
equalization for Participants employed outside their home
country.
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16. | Withholding |
To the extent required by applicable federal, state, local or
foreign law, a Participant shall be required to satisfy, in a
manner satisfactory to the Company, any withholding tax
obligations that arise by reason of an Option exercise,
disposition of Shares issued under an Incentive Stock Option,
the vesting of or settlement of an Award, an election pursuant
to Section 83(b) of the Code or otherwise with respect to
an Award. To the extent a Participant makes an election under
Section 83(b) of the Code, within ten days of filing such
election with the Internal Revenue Service, the Participant must
notify the Company in writing of such election. The Company and
its Subsidiaries shall not be required to issue Shares, make any
payment or to recognize the transfer or disposition of Shares
until such obligations are satisfied. The Administrator may
provide for or permit these obligations to be satisfied through
the mandatory or elective sale of Shares
and/or by
having the Company withhold a portion of the Shares that
otherwise would be issued to him or her upon exercise of the
Option or the vesting or settlement of an Award, or by tendering
Shares previously acquired.
17. | Administration of the Plan |
(a) Administrator of the Plan. The Plan
shall be administered by the Administrator who shall be the
Compensation Committee of the Board or, in the absence of a
Compensation Committee, the Board itself; provided, however,
that with respect to Awards to Nonemployee Directors, the
Administrator shall be the full Board. Any power of the
Administrator may also be exercised by the Board, except to the
extent that the grant or exercise of such authority would cause
any Award or transaction to become subject to (or lose an
exemption under) the short-swing profit recovery provisions of
Section 16 of the Securities Exchange Act of 1934 or cause
an Award designated as a Performance Award not to qualify for
treatment as performance-based compensation under
Section 162(m) of the Code. To the extent that any
permitted action taken by the Board conflicts with action taken
by the Administrator, the Board action shall control. The
Administrator may by resolution authorize one or more officers
of the Company to perform any or all things that the
Administrator is authorized and empowered to do or perform under
the Plan, and for all purposes under this Plan, such officer or
officers shall be treated as the Administrator; provided,
however, that the resolution so authorizing such officer or
officers shall specify the total number of Awards (if any) such
officer or officers may award pursuant to such delegated
authority. No such officer shall designate himself or herself or
any executive officer or director of the Company as a recipient
of any Awards granted under authority delegated to such officer.
In addition, the Administrator may delegate any or all aspects
of the
day-to-day
administration of the Plan to one or more officers or employees
of the Company or any Subsidiary,
and/or to
one or more agents.
(b) Powers of Administrator. Subject to
the express provisions of this Plan, the Administrator shall be
authorized and empowered to do all things that it determines to
be necessary or appropriate in connection with the
administration of this Plan, including, without limitation:
(i) to prescribe, amend and rescind rules and regulations
relating to this Plan and to define terms not otherwise defined
herein; (ii) to determine which persons are Participants,
to which of such Participants, if any, Awards shall be granted
hereunder and the timing of any such Awards; (iii) to grant
Awards to Participants and determine the terms and conditions
thereof, including, without limitation, the number of Shares
subject to Awards and the exercise or purchase price of such
Shares and the circumstances under which Awards become
exercisable or vested or are forfeited or expire, which terms
may but need not be conditioned upon the passage of time,
continued employment, the satisfaction of performance criteria,
the occurrence of certain events (including, without limitation,
events which the Board or the Administrator determine constitute
a change of control), or other factors; (iv) to establish
and verify the extent of satisfaction of any performance goals
or other conditions applicable to the grant, issuance,
exercisability, vesting
and/or
ability to retain any Award; (v) to prescribe and amend the
terms of the agreements or other documents evidencing Awards
made under this Plan (which need not be identical) and the terms
of or form of any document or notice required to be delivered to
the Company by Participants under this Plan; (vi) to
determine whether, and the extent to which, adjustments are
required pursuant to Section 12; (vii) to interpret
and construe this Plan, any rules and regulations under this
Plan and the terms and conditions of any Award granted
hereunder, and to make exceptions to any such provisions if the
Administrator, in good faith, determines that it is necessary to
do so in light of the circumstances and for the benefit of the
Company; (viii) to approve corrections in the documentation
or administration of any Award; and (ix) to make all other
determinations
11
deemed necessary or advisable for the administration of this
Plan. The Administrator may, in its sole and absolute
discretion, without amendment to the Plan, waive or amend the
operation of Plan provisions respecting exercise after
Termination of Employment or service to the Company or an
affiliate and, except as otherwise provided herein, adjust any
of the terms of any Award. Notwithstanding anything in the Plan
to the contrary, other than in connection with a change in the
Companys capitalization or other event or transaction
described in Section 12, the terms of outstanding Awards
may not be amended to (a) reduce the exercise price of
outstanding Options or Stock Appreciation Rights or take any
other action that is treated as a re-pricing under GAAP, or
(b) at any time when the exercise price of an Option or SAR
is greater than the market value of a Share, cancel, exchange,
buyout or surrender outstanding Options or Stock Appreciation
Rights in exchange for cash, other awards or Options or Stock
Appreciation Rights with an exercise price that is less than the
exercise price of the original Options or Stock Appreciation
Rights, without stockholder approval.
(c) Determinations by the
Administrator. All decisions, determinations and
interpretations by the Administrator regarding the Plan, any
rules and regulations under the Plan and the terms and
conditions of or operation of any Award granted hereunder, shall
be final and binding on all Participants, beneficiaries, heirs,
assigns or other persons holding or claiming rights under the
Plan or any Award. The Administrator shall consider such factors
as it deems relevant, in its sole and absolute discretion, to
making such decisions, determinations and interpretations
including, without limitation, the recommendations or advice of
any officer or other employee of the Company and such attorneys,
consultants and accountants as it may select.
(d) Subsidiary Awards. In the case of a
grant of an Award to any Participant employed by a Subsidiary,
such grant may, if the Administrator so directs, be implemented
by the Company issuing any subject Shares to the Subsidiary, for
such lawful consideration as the Administrator may determine,
upon the condition or understanding that the Subsidiary will
transfer the Shares to the Participant in accordance with the
terms of the Award specified by the Administrator pursuant to
the provisions of the Plan. Notwithstanding any other provision
hereof, such Award may be issued by and in the name of the
Subsidiary and shall be deemed granted on such date as the
Administrator shall determine.
18. | Amendment of the Plan or Awards |
The Board or the Compensation Committee of the Board may amend,
alter or discontinue this Plan, and the Administrator may amend
or alter any agreement or other document evidencing an Award
made under this Plan but, except as provided pursuant to the
provisions of Section 12, no such amendment shall, without
the approval of the stockholders of the Company:
(a) increase the maximum number of Shares for which Awards
may be granted under this Plan;
(b) whether before or after the date of grant, reduce the
price at which Options or Stock Appreciation Rights may be
exercised below the price provided for in Section 6(b) or
Section 7;
(c) other than in connection with a change in the
Companys capitalization or other event or transaction
described in Section 12, amend the terms of outstanding
Awards to (a) reduce the exercise price of outstanding
Options or Stock Appreciation Rights or take any other action
that is treated as a re-pricing under GAAP, or (b) at any
time when the exercise price of an Option or SAR is greater than
the market value of a Share, cancel, exchange, buyout or
surrender outstanding Options or Stock Appreciation Rights in
exchange for cash, other awards or Options or Stock Appreciation
Rights with an exercise price that is less than the exercise
price of the original Options or Stock Appreciation Rights;
(d) extend the term of this Plan;
(e) change the class of persons eligible to be Participants;
(f) otherwise amend the Plan in any manner requiring
stockholder approval by law or under the New York Stock Exchange
listing requirements; or
(g) increase the individual maximum limits in
Sections 5(d) and (e).
12
No amendment or alteration to the Plan or an Award or Award
Agreement shall be made which would impair the rights of the
holder of an Award, without such holders consent, provided
that no such consent shall be required if (i) the
Administrator determines in its sole discretion and prior to the
date of any change of control (as defined in the applicable
Award Agreement) that such amendment or alteration either is
required or advisable in order for the Company, the Plan or the
Award to satisfy any law or regulation or stock exchange listing
requirement or to meet the requirements of or avoid adverse
financial accounting consequences under any accounting standard,
or (ii) the Administrator determines in its sole discretion
that such amendment or alteration is not reasonably likely to
significantly diminish the benefits provided under the Award, or
that any such diminution has been adequately compensated.
19. | No Liability of Company |
The Company and any Subsidiary or affiliate which is in
existence or hereafter comes into existence shall not be liable
to a Participant or any other person as to: (i) the
non-issuance or sale of Shares as to which the Company has been
unable to obtain from any regulatory body having jurisdiction
the authority deemed by the Companys counsel to be
necessary to the lawful issuance and sale of any Shares
hereunder; and (ii) any tax consequence expected, but not
realized, by any Participant or other person due to the receipt,
exercise or settlement of any Award granted hereunder.
20. | Non-Exclusivity of Plan |
Neither the adoption of this Plan by the Board nor the
submission of this Plan to the stockholders of the Company for
approval shall be construed as creating any limitations on the
power of the Board or the Administrator to adopt such other
incentive arrangements as either may deem desirable, including,
without limitation, the granting of restricted stock or stock
options otherwise than under this Plan or an arrangement that is
or is not intended to qualify under Code Section 162(m),
and such arrangements may be either generally applicable or
applicable only in specific cases.
21. | Governing Law |
This Plan and any agreements or other documents hereunder shall
be interpreted and construed in accordance with the laws of the
Delaware and applicable federal law. Any reference in this Plan
or in the agreement or other document evidencing any Awards to a
provision of law or to a rule or regulation shall be deemed to
include any successor law, rule or regulation of similar effect
or applicability.
22. | No Right to Employment, Reelection or Continued Service |
Nothing in this Plan or an Award Agreement shall interfere with
or limit in any way the right of the Company, its Subsidiaries
and/or its
affiliates to terminate any Participants employment,
service on the Board or service for the Company at any time or
for any reason not prohibited by law, nor shall this Plan or an
Award itself confer upon any Participant any right to continue
his or her employment or service for any specified period of
time. Neither an Award nor any benefits arising under this Plan
shall constitute an employment contract with the Company, any
Subsidiary
and/or its
affiliates. Subject to Sections 4 and 18, this Plan and the
benefits hereunder may be terminated at any time in the sole and
exclusive discretion of the Board without giving rise to any
liability on the part of the Company, its Subsidiaries
and/or its
affiliates.
23. | Unfunded Plan |
The Plan is intended to be an unfunded plan. Participants are
and shall at all times be general creditors of the Company with
respect to their Awards. If the Administrator or the Company
chooses to set aside funds in a trust or otherwise for the
payment of Awards under the Plan, such funds shall at all times
be subject to the claims of the creditors of the Company in the
event of its bankruptcy or insolvency.
13