D.R. HORTON, INC.
1991 STOCK INCENTIVE PLAN
(As Amended and Restated February 21, 2002)
1. Purpose. The purpose of this Plan is to attract and retain
directors, officers, key employees and other agents and consultants for D.R.
Horton, Inc. (the "Company") and its Subsidiaries and to provide to such
persons incentives and rewards for superior performance.
2. Definitions. As used in this Plan,
"Appreciation Right" means a right granted pursuant to
Paragraph 5 of this Plan.
"Award" means an Appreciation Right, an Option Right, an
award of Performance Shares, a Performance Unit or an award of
Restricted Stock.
"Board" means the Board of Directors of the Company.
"Code" means the Internal Revenue Code of 1986, as in effect
from time to time.
"Committee" means the committee to which the Board has
delegated its authority to administer this Plan pursuant to Paragraph
13 of this Plan.
"Common Stock" means the Common Stock, par value $.01 per
share, of the Company or any security into which such Common Stock
may be changed by reason of any transaction or event of the type
described in Paragraph 10 of this Plan.
"Company Security" means any security (as that term is
defined in Section 2(1) of the Securities Act of 1933) of the Company
other than Common Stock.
"Date of Grant" means the date specified by the Board on
which a grant of Option Rights, Appreciation Rights, Performance
Units or Performance Shares or a grant or sale of Restricted Stock
shall become effective (which date shall not be earlier than the date
on which the Board takes action with respect thereto).
"ERISA" means the Employee Retirement Income Security Act of
1974, as in effect from time to time.
"Fair Market Value" means the value of any Company Security
as determined by the Board in its sole discretion as of the date of
any such determination.
"Grant Price" means the price per share of Common Stock at
which an Appreciation Right not granted in tandem with an Option
Right is granted.
"Management Objectives" means the objectives, if any,
established by the Board that are to be achieved with respect to an
Award granted under this Plan, which may be described in terms of
Company-wide objectives, in terms of objectives that are related to
performance of the division, Subsidiary, department or function
within the Company or a Subsidiary in which the Participant receiving
the Award is employed or in other terms, and which shall relate to
the Performance Period determined by the Board. The Board may adjust
Management Objectives and any minimum acceptable level of achievement
with respect to any Management Objectives if, in the sole judgment of
the Board, events or transactions have occurred which are unrelated
to the performance of the Participant and result in a distortion of
the Management Objectives or such minimum acceptable level of
achievement.
"Market Value per Share" means, at any date, the average of
the inside bid and asked price of the Common Stock at the close of
trading on that date in the principal market in which the Common
Stock is traded, or, if no market for the Common Stock exists, the
price determined by the Board in its sole discretion at the time of
any such determination.
"Option Price" means the price per share payable on exercise
of an Option Right.
"Option Right" means the right to purchase a share of Common
Stock upon exercise of an option granted pursuant to Paragraph 4 of
this Plan.
"Participant" means a person who is selected by the Board to
receive benefits under this Plan and who is at the time a director,
officer, key employee, consultant or agent of the Company or any of
its Subsidiaries, or who has agreed to commence serving in any such
capacity within 90 days of the Date of Grant. Notwithstanding the
foregoing, no non-employee director of the Company shall be eligible
to receive any benefit under this Plan if he or she would thereby
cease to be a "non-employee director" as that term is defined in
Rule 16b-3.
"Performance Period" means, in respect of an Award, a period
of time established by the Board within which the Management
Objectives relating to such Award are to be achieved.
"Performance Shares" means shares of Common Stock granted
pursuant to Paragraph 8 of this Plan.
"Performance Unit" means a unit of specified dollar amount
established by the Board and awarded pursuant to Paragraph 7 of this
Plan.
"Restricted Stock" means shares of Common Stock granted or
sold pursuant to Paragraph 6 of this Plan as to which neither the
substantial risk of forfeiture nor the restrictions on transfer
referred to therein has expired.
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"Rule 16b-3" means Rule 16b-3 of the Securities and Exchange
Commission (or any successor rule to the same effect) as in effect
from time to time.
"Spread" means the excess of the Market Value per Share on
the date when an Appreciation Right is exercised over (a) the Option
Price provided for in the related Option Right or (b) if there is no
tandem Option Right, the Grant Price provided for in the Appreciation
Right, multiplied by the number of shares of Common Stock in respect
of which the Appreciation Right is exercised.
"Subsidiary" means any corporation, trust, joint venture,
partnership or other unincorporated entity in which, at the time, the
Company owns or controls, directly or indirectly, (i) in the case of
a corporation, not less than 50% of the total combined voting power
represented by all classes of stock issued by such corporation, or
(ii) in the case of a trust, joint venture, partnership or other
unincorporated entity, not less than 50% of the beneficial interest
of such entity.
3. Shares Available Under Plan. The shares of Common Stock and
any other Company Security which may be (a) sold upon the exercise of Option
Rights, (b) delivered upon the exercise of Appreciation Rights, (c) granted or
sold as Restricted Stock and released from substantial risks of forfeiture and
restrictions on transfer thereof or (d) delivered in payment of any
Performance Units or as Performance Shares (or in lieu thereof), shall not
exceed in the aggregate 9,640,373 shares, subject to adjustment as provided in
Paragraph 10 of this Plan. Such shares may be shares of original issuance or
treasury shares or a combination of the foregoing. Upon exercise of any
Appreciation Rights, there shall be deemed to have been delivered under this
Plan for purposes of this Paragraph 3 the number of shares of Common Stock
covered by the Appreciation Rights or the related Option Rights, regardless of
whether such Appreciation Rights were paid in cash, Company Securities or
shares of Common Stock. Subject to the provisions of the preceding sentence,
any shares of Common Stock which are subject to Option Rights or Appreciation
Rights or are awarded or sold as Restricted Stock that are terminated,
unexercised, forfeited or surrendered or which expire for any reason will
again be available for issuance under this Plan. Notwithstanding the
foregoing, the number of shares of Common Stock underlying Awards made to a
single Participant during a calendar year shall not exceed 300,000.
4. Option Rights. The Board may, from time to time and upon
such terms and conditions as it may determine, authorize the granting to
Participants of options to purchase shares of Common Stock. Each such grant
may utilize any or all of the authorizations, and shall be subject to all of
the limitations, contained in the following provisions:
(a) Each grant shall specify the number of shares of
Common Stock to which it pertains. Notwithstanding any other
provision of the Plan, the aggregate Fair Market Value (determined at
the time of grant of the Option Rights) of Common Stock with respect
to which a Participant may be granted Option Rights intended to
qualify for favorable tax treatment under Code Section 421(a) in any
calendar year shall not exceed $100,000.
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(b) Each grant shall specify the Option Price, which
shall not be less than 50% of the Market Value per Share on the Date
of Grant; provided, however, that the foregoing limitation shall not
apply with respect to Option Rights granted for the purpose of
issuing or assuming an Option Right, pursuant to a merger,
consolidation, acquisition of property or stock, other business
combination, separation, reorganization or liquidation, in the manner
described in Code Section 424(a).
(c) Each grant shall specify that the Option Price
shall be payable (i) in cash or by check acceptable to the Company,
(ii) by the transfer to the Company of shares of Common Stock having
an aggregate Market Value per Share at the time of exercise equal to
the aggregate Option Price or (iii) by a combination of such methods
of payment. Any grant may provide for deferred payment of the Option
Price from the proceeds of sale through a broker on the exercise date
of some or all of the shares to which such exercise relates.
(d) Successive grants may be made to the same
Participant whether or not any Option Rights previously granted to
such Participant remain unexercised.
(e) Each grant shall specify the required period or
periods of continuous service by the Participant with the Company or
any Subsidiary and/or the Management Objectives to be achieved before
the Option Rights or installments thereof will become exercisable.
(f) Each grant the exercise of which, or the timing of
the exercise of which, is dependent, in whole or in part, on the
achievement of Management Objectives may specify a minimum level of
achievement in respect of the specified Management Objectives below
which no Options Rights will be exercisable and may set forth a
formula or other method for determining the number of Option Rights
that will be exercisable if performance is at or above such minimum
but short of full achievement of the Management Objectives.
(g) Option Rights granted under this Plan may be
(i) options which are intended to qualify under particular provisions
of the Code, (ii) options which are not intended to so qualify or
(iii) combinations of the foregoing.
(h) No Option Right shall be exercisable more than ten
years from the Date of Grant.
(i) Each grant of Option Rights shall be evidenced by
an agreement executed on behalf of the Company by any officer and
delivered to the Participant and containing such terms and
provisions, consistent with this Plan, as the Board may approve.
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5. Appreciation Rights. The Board may also authorize the
granting to any Participant of Appreciation Rights. Appreciation Rights may
be granted in tandem with Option Rights or separate and apart from a grant of
Option Rights. An Appreciation Right shall be a right of the Participant who
has been granted such Award to receive from the Company upon exercise an
amount which shall be determined by the Board at the Date of Grant and shall
be expressed as a percentage of the Spread (not exceeding 100%) at the time of
exercise. An Appreciation Right granted in tandem with an Option Right may be
exercised only by surrender of the related Option Right. Each grant of an
Appreciation Right may utilize any or all of the authorizations, and shall be
subject to all of the limitations, contained in the following provisions:
(a) Each grant shall state whether it is made in tandem
with Option Rights and, if not made in tandem with any Option Rights,
shall specify the number of shares of Common Stock in respect of
which it is made.
(b) Each grant made in tandem with Option Rights shall
specify the Option Price and each grant not made in tandem with
Option Rights shall specify the Grant Price, which in either case
shall not be less than 50% of the Market Value per Share on the Date
of Grant; provided, however, that the foregoing limitation on the
Option Price and Grant Price shall not apply with respect to
Appreciation Rights granted for the purpose of issuing or assuming a
grant of Appreciation Rights, pursuant to a merger, consolidation,
acquisition of property or stock, other business combination,
separation, reorganization or liquidation, in the manner described in
Code Section 424(a).
(c) Any grant may specify that the amount payable on
exercise of an Appreciation Right may be paid by the Company in
(i) cash, (ii) shares of Common Stock having an aggregate Market Value
per Share equal to the Spread, (iii) Company Securities having an
aggregate Fair Market Value equal to the Spread or (iv) any
combination thereof, as determined by the Board in its sole
discretion at the time of payment.
(d) Any grant may specify that the amount payable on
exercise of an Appreciation Right (valuing shares of Common Stock for
this purpose at their Market Value per Share at the date of exercise
and valuing Company Securities for this purpose at their Fair Market
Value at the date of exercise) may not exceed a maximum specified by
the Board at the Date of Grant.
(e) Each grant shall specify the required period or
periods of continuous service by the Participant with the Company or
any Subsidiary and/or Management Objectives to be achieved before the
Appreciation Rights or installments thereof will become exercisable,
and shall provide that no Appreciation Right may be exercised except
at a time when the Spread is positive and, with respect to any grant
made in tandem with Option Rights, when the related Option Right is
also exercisable.
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(f) Each grant the exercise of which, or the timing of
the exercise of which, is dependent, in whole or in part, on the
achievement of Management Objectives may specify a minimum level of
achievement in respect of the specified Management Objectives below
which no Appreciation Rights will be exercisable and may set forth a
formula or other method for determining the number of Appreciation
Rights that will be exercisable if performance is at or above such
minimum but short of full achievement of the Management Objectives.
(g) Each grant of an Appreciation Right shall be
evidenced by a notification executed on behalf of the Company by any
officer and delivered to and accepted by the Participant receiving
the grant, which notification shall describe such Appreciation Right,
identify any Option Right granted in tandem with such Appreciation
Right, state that such Appreciation Right is subject to all the terms
and conditions of this Plan and contain such other terms and
provisions, consistent with this Plan, as the Board may approve.
6. Restricted Stock. The Board may also authorize the granting
or sale to Participants of Restricted Stock. Each such grant or sale may
utilize any or all of the authorizations, and shall be subject to all of the
limitations, contained in the following provisions:
(a) Each such grant or sale shall constitute an
immediate transfer of the ownership of shares of Common Stock to the
Participant in consideration of the performance of services,
entitling such Participant to voting, dividend and other ownership
rights, but subject to the substantial risk of forfeiture and
restrictions on transfer hereinafter referred to.
(b) Each such grant or sale may be made without
additional consideration or in consideration of a payment by such
Participant that is less than the Market Value per Share at the Date
of Grant.
(c) Each such grant or sale shall provide that the
shares of Restricted Stock covered by such grant or sale shall be
subject, for a period to be determined by the Board at the Date of
Grant, to a "substantial risk of forfeiture" within the meaning of
Section 83 of the Code and the regulations of the Internal Revenue
Service thereunder.
(d) Each such grant or sale shall provide that during
the period for which such substantial risk of forfeiture is to
continue, the transferability of the Restricted Stock shall be
prohibited or restricted in a manner and to the extent prescribed by
the Board at the Date of Grant (which restrictions may include,
without limiting the generality of the foregoing, rights of
repurchase or first refusal in the Company or provisions subjecting
the Restricted Stock to a continuing substantial risk of forfeiture
in the hands of any transferee).
(e) Each grant or sale of Restricted Stock shall be
evidenced by an agreement executed on behalf of the Company by any
officer and delivered to and accepted by the Participant and shall
contain such terms and provisions, consistent with this Plan, as the
Board may approve.
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7. Performance Units. The Board may also authorize the
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granting of Performance Units which will become payable to a Participant upon
achievement of specified Management Objectives. Each such grant may utilize
any or all of the authorizations, and shall be subject to all of the
limitations, contained in the following provisions:
(a) Each grant shall specify the number of Performance
Units to which it pertains.
(b) Each grant shall specify the Management Objectives
that are to be achieved by the Participant.
(c) Each grant shall specify a minimum acceptable level
of achievement in respect of the specified Management Objectives
below which no payment will be made and may set forth a formula or
other method for determining the amount of the payment to be made if
performance is at or above such minimum but short of full achievement
of the Management Objectives.
(d) Each grant shall specify the time and manner of
payment of Performance Units which have become payable, which payment
may be made in (i) cash, (ii) shares of Common Stock having an
aggregate Market Value per Share equal to the aggregate value of the
Performance Units which have become payable, (iii) Company Securities
having an aggregate Fair Market Value equal to the aggregate value of
the Performance Units which have become payable or (iv) any
combination thereof, as determined by the Board in its sole
discretion at the time of payment.
(e) Each grant of a Performance Unit shall be evidenced
by a notification executed on behalf of the Company by any officer
and delivered to and accepted by the Participant, which notification
shall describe the Performance Units, state that such Performance
Units are subject to all the terms and conditions of this Plan, and
contain such other terms and provisions, consistent with this Plan,
as the Board may approve.
8. Performance Shares. The Board may also authorize the
granting to Participants of Performance Shares. Each such grant may utilize
any or all of the authorizations, and shall be subject to all of the
limitations, contained in the following provisions:
(a) Each grant shall specify the number of Performance
Shares to which it pertains.
(b) Each grant shall specify the Management Objectives
that are to be achieved by the Participant.
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(c) Each grant shall specify a minimum acceptable level
of achievement in respect of the specified Management Objectives
below which no delivery of Performance Shares will occur and may set
forth a formula or other method for determining the number of
Performance Shares to be delivered if performance is at or above such
minimum but short of full achievement of the Management Objectives.
(d) Each grant shall specify the time and manner of
delivery of Performance Shares which have been earned, provided that
in lieu of the delivery of all or any Performance Shares, the
Participant may receive (i) cash in an amount equal to the aggregate
Market Value per Share of the Performance Shares, (ii) Company
Securities having an aggregate Fair Market Value equal to the
aggregate Market Value per Share of the Performance Shares or
(iii) any combination thereof, as determined by the Board in its sole
discretion at the time of payment.
(e) Each grant of Performance Shares shall be evidenced
by a notification executed on behalf of the Company by any officer
and delivered to and accepted by the Participant, which notification
shall state that such Performance Shares are subject to all the terms
and conditions of this Plan and contain such other terms and
provisions, consistent with this Plan, as the Board may approve.
9. Transferability. No Option Right, Appreciation Right,
Performance Unit that has not become payable or Performance Share that has not
been delivered shall be transferable by a Participant other than by will or
the laws of descent and distribution. Option Rights or Appreciation Rights
shall be exercisable during the Participant's lifetime only by the Participant
or by the Participant's guardian or legal representative.
10. Adjustments. The Board may make or provide for such
adjustments in the maximum number of shares specified in Paragraph 3 of this
Plan, in the numbers of shares of Common Stock covered by outstanding Option
Rights, Appreciation Rights, awards of Restricted Stock, awards of Performance
Units and awards of Performance Shares granted hereunder, and/or in the Option
Price or Grant Price applicable to such Option Rights and Appreciation Rights,
as the Board in its sole discretion, exercised in good faith, may determine is
equitably required to prevent dilution or enlargement of the rights of
Participants that otherwise would result from any stock dividend, stock split,
combination of shares, recapitalization or other change in the capital
structure of the Company, merger, consolidation, spin-off, reorganization,
partial or complete liquidation, issuance of rights or warrants to purchase
securities or any other corporate transaction or event having an effect
similar to any of the foregoing.
11. Fractional Shares. The Company shall not be required to
issue any fractional share of Common Stock or of any Company Security pursuant
to this Plan. The Board may provide for the elimination of fractions or for
the settlement of fractions in cash.
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12. Withholding Taxes. To the extent that the Company is
required to withhold federal, state, local or foreign taxes in connection with
any payment made or benefit realized by a Participant or other person under
this Plan, and the amounts available to the Company for such withholding are
insufficient, it shall be a condition to the receipt of such payment or the
realization of such benefit that the Participant or such other person make
arrangements satisfactory to the Company for payment of the balance of such
taxes required to be withheld, which arrangements in the discretion of the
Board may include relinquishment of a portion of such benefit.
13. Administration of the Plan. (a) This Plan shall be
administered by the Board, which may from time to time delegate all or any
part of its authority under this Plan to a committee of not less than two
non-employee directors appointed by the Board, each of whom shall be a
"non-employee director" within the meaning of Rule 16b-3 (the "Committee"). To
the extent of such delegation, references herein to the "Board" shall include
the Committee. A majority of the Committee shall constitute a quorum, and the
action of the members of the Committee present at any meeting at which a
quorum is present, or acts unanimously approved in writing, shall be the acts
of the Committee.
(b) The interpretation and construction by the Board
of any provision of this Plan or of any agreement, notification or document
evidencing the grant of an Award and any determination by the Board pursuant
to any provision of this Plan or of any such agreement, notification or
document shall be final and conclusive. No member of the Board or the
Committee shall be liable for any such action or determination made in good
faith.
(c) Notwithstanding any other provision of this Plan,
this Plan may be administered by the Chairman of the Board of the Company with
respect to matters relating solely to Participants who are not subject to the
reporting requirements of Section 16(a) of the Securities Exchange Act of
1934, as amended, and any references to the "Board" or the "Committee", as the
case may be, shall include the Chairman of the Board; provided, however, that
no such authority shall be deemed to have been granted hereunder to the extent
that any such grant shall cause the disqualification of this Plan from
reliance on the exemption provided by Rule 16b-3.
14. Amendments, Etc. (a) This Plan may be amended from time to
time by the Board but may not be amended by the Board without further approval
by the stockholders of the Company if such amendment would result in this Plan
no longer satisfying the requirements of Rule 16b-3.
(b) The Board may, with the concurrence of the affected
Participant, cancel any agreement evidencing any Award granted under this
Plan. In the event of such cancellation, the Board may authorize the granting
of new Awards (which may or may not cover the same number of shares or units
which had been the subject of the prior Award) in such manner, at such price
and subject to the same terms, conditions and discretions as would have been
applicable under this Plan had the canceled Awards not been granted.
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(c) In case of termination of employment by reason of
death, disability or retirement under a retirement plan of the Company or a
Subsidiary of an Optionee who holds an Option Right or Appreciation Right not
immediately exercisable in full, or any Restricted Stock as to which the
substantial risk of forfeiture or the prohibition or restriction on transfer
has not lapsed, or any Performance Units which have not become fully payable
or any Performance Shares that have not been delivered, the Board may, in its
sole discretion, accelerate the time at which such Option Right or
Appreciation Right may be exercised or the time at which such substantial risk
of forfeiture or prohibition or restriction on transfer will lapse or the time
at which such Performance Units will be deemed to have become fully payable or
Performance Shares will be delivered.
(d) This Plan shall not confer upon any Participant any
right with respect to continuance of employment or other service with the
Company or any Subsidiary, nor shall it interfere in any way with any right
the Company or any Subsidiary would otherwise have to terminate such
Participant's employment or other service at any time.
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