Exhibit 10.1
D.R. Horton
Deferred Compensation Plan
Amended and Restated Effective January 1, 2005
TABLE OF CONTENTS
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ARTICLE 1
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ESTABLISHMENT AND PURPOSE
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1
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ARTICLE 2
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DEFINITIONS
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2
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ARTICLE 3
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ADMINISTRATION
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ARTICLE 4
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ELIGIBILITY AND PARTICIPATION
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ARTICLE 5
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CONTRIBUTIONS TO DEFERRAL ACCOUNTS
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ARTICLE 6
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DISTRIBUTIONS
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ARTICLE 7
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DEFERRED COMPENSATION ACCOUNTS
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ARTICLE 8
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TRUST
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ARTICLE 9
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CHANGE IN CONTROL
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ARTICLE 10
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RIGHTS OF PARTICIPANTS
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ARTICLE 11
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WITHHOLDING OF TAXES
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ARTICLE 12
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AMENDMENT AND TERMINATION
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ARTICLE 13
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MISCELLANEOUS
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ARTICLE 14
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ADMINISTRATIVE INFORMATION
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ARTICLE 15
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ERISA RIGHTS
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i
D.R. Horton
Deferred Compensation Plan
ARTICLE 1
ESTABLISHMENT AND PURPOSE
1.1
Establishment
. D.R. Horton, Inc., a Delaware corporation (the Company),
established the D.R. Horton, Inc. Supplemental Executive Retirement Plan No. 1 (the Supplemental
Plan), an unfunded deferred compensation plan for a select group of management or highly
compensated employees, effective as of November 15, 1993. Effective as of July 1, 2000, Schuler
Homes, Inc. established the Schuler Homes, Inc. Deferred Compensation Plan for Directors and Key
Employees (the Schuler Plan), which also is an unfunded deferred compensation plan maintained
primarily for the purpose of providing deferred compensation to members of the Board of Directors
and a select group of management or highly compensated employees.
Effective February 21, 2002, Schuler Homes, Inc. merged with and into the Company, and the
Company became the sponsor of the Schuler Plan. For sake of efficiency, the Company wishes to
consolidate and restate the Schuler Plan and the Supplemental Plan into one uniform plan of
benefits for the participants of such plans and to provide a select group of management or highly
compensated employees and nonemployee directors who are selected to participate the opportunity to
defer compensation on a pre-tax basis.
The Company established this deferred compensation plan, known as the D.R. Horton Deferred
Compensation Plan (the Plan), effective June 15, 2002, for a select group of employees and
directors, which is the successor to and supersedes the Supplemental Plan and the Schuler Plan. In
particular, the Schuler Plan was merged with and into the Supplemental Plan, with the Supplemental
Plan being the Surviving Plan, which changed its name to the Plan, all effective as of June 15,
2002. Except as expressly provided herein, all amounts deferred under the Supplemental Plan or the
Schuler Plan shall be payable under the terms of the Plan as of the effective date.
The Plan hereby is amended and restated, effective January 1, 2005, and is intended as good
faith compliance with the American Jobs Creation Act of 2004 with respect to amounts earned or that
become vested on and after January 1, 2005.
The Plan is intended to be an unfunded plan maintained primarily to provide deferred
compensation benefits for a select group of management or highly compensated employees within the
meaning of sections 201, 301, and 401 of ERISA, and therefore exempt from the provisions of Parts
2, 3, and 4 of Title I of ERISA. The Plan is intended to constitute a nonqualified deferred
compensation plan for purposes of Code section 3121(v)(2) as well as 4 U.S.C. section 114.
1.2
Purpose
. The primary purpose of the Plan is to provide a select group of
management and members of the Board of Directors with a capital accumulation opportunity by
deferring compensation on a pre-tax basis. The Plan also provides the Company with a method
of rewarding and retaining its highly compensated executives and directors.
1
ARTICLE 2
DEFINITIONS
Whenever used herein, the following terms shall have the meanings set forth below, and, when
the defined meaning is intended, the term is capitalized:
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(a)
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Affiliate means any business entity 80% or more owned or controlled by the
Company.
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(b)
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Board or Board of Directors means the Board of Directors of the Company.
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(c)
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Change in Control means the occurrence of any of the following events:
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(i)
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A merger, consolidation or reorganization of the Company
into or with another corporation or other legal person if the
stockholders of the Company, immediately before such merger,
consolidation or reorganization, do not, immediately following such
merger, consolidation or reorganization, then own directly or
indirectly, more than 50% of the combined voting power of the
then-outstanding voting securities of the corporation or other legal
person resulting from such merger, consolidation or reorganization in
substantially the same proportion as their ownership of Voting
Securities (as hereinafter defined) immediately prior to such merger,
consolidation or reorganization;
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(ii)
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The Company sells all or substantially all of its assets
to another corporation or other legal person, or there is a complete
liquidation or dissolution of the Company;
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(iii)
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There is a report filed on Schedule 13D or Schedule
14D-1 (or any successor schedule, form or report), each as promulgated
pursuant to the Securities Exchange Act of 1934, as amended (the
Exchange Act), disclosing that any person (as the term person is
used in Section 13(d)(3) or Section 14(d)(2) of the Exchange Act) has
become the beneficial owner (as the term beneficial owner is defined
under Rule 13d-3 or any successor rule or regulation promulgated under
the Exchange Act) of securities representing 20% or more of the combined
voting power of the then-outstanding voting securities of the Company
(Voting Securities) (computed in accordance with the standards for the
computation of total percentage ownership for the purposes of Schedule
13D or Schedule 14D-1 (or any successor schedule, form or report)); or
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(iv)
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The Company files a report or proxy statement with the
Securities and Exchange Commission pursuant to the Exchange Act
disclosing
in response to Form 8-K or Schedule 14A (or any successor schedule,
form or report or item therein) that a change in control of the
Company has occurred or will occur in the future pursuant to any
then-existing contract or transaction.
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Notwithstanding the provisions set forth in (iii) or (iv) above, a Change in
Control shall not be deemed to have occurred for purposes of this Plan solely
because (i) the Company, (ii) any Affiliate, or (iii) any employee stock ownership
plan or any other employee benefit plan of the Company or any Affiliate either files
or becomes obligated to file a report or a proxy statement under or in response to
Schedule 13D, Schedule 14D-1, Form 8-K or Schedule 14A (or any successor schedule,
form or report or item therein) under the Exchange Act disclosing beneficial
ownership by it of Voting Securities, whether in excess of 20% or otherwise, or
because the Company reports that a change in control of the Company has occurred or
will occur in the future by reason of such beneficial ownership. For purposes of
calculating beneficial ownership pursuant to this subsection, any Voting Securities
held by Donald R. Horton as of the date hereof or received by Donald R. Horton in
connection with any merger involving the Company and any affiliate of the Company
shall not be included in the calculation of beneficial ownership.
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(d)
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Code means the Internal Revenue Code of 1986, as amended from time to time.
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(e)
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Committee means a committee of three (3) or more persons appointed by the
Board to administer the Plan pursuant to Article 3.
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(f)
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Company means D.R. Horton, Inc., a Delaware corporation.
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(g)
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Compensation means an Employees Salary, Incentive Compensation, Directors
Compensation, and other compensation paid by the Employer for the Plan Year.
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(h)
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Deferral Account means the accounting entry made with respect to each
Participant for the purpose of maintaining a record of each Participants benefit under
the Plan.
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(i)
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Directors Compensation means such amounts payable to an Employee for the
Plan Year for the Employees service on the Board for the Plan Year including, without
limitation, annual retainer and meeting fees.
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(j)
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Disability means, with respect to amounts that were both earned and vested as
of December 31, 2004, and any earnings attributable thereto, a condition which meets
the definition of a disability as contained in the Companys long-term disability plan
(as determined by the Committee in its sole discretion). Disability means, with
respect to amounts that are earned and/or become vested on or after January 1, 2005,
and any earnings attributable thereto, a condition under which a Participant either
(i) is unable to engage in any substantial gainful activity by reason of any medically
determinable physical or mental impairment
that can be expected to result in death or can be expected to last for a continuous
period of not less than 12 months, or (ii) is, by reason of any medically
determinable physical or mental impairment that can be expected to result in death
or can be expected to last for a continuous period of not less than 12 months,
receiving income replacement benefits for a period of not less than three (3) months
under an accident and health plan covering employees of the Employer.
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3
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(k)
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Eligible Employee means an Employee who is eligible to participate in the
Plan pursuant to Section 4.1.
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(l)
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Employee means any person either (i) employed by the Employer whose wages are
subject to withholding for purposes of the Federal Insurance Contribution Act, or
(ii) serving as a member of the Board of Directors.
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(m)
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Employee Contributions means those contributions credited to a Participants
Deferral Account in accordance with the Participants deferral election pursuant to
Section 5.1.
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(n)
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Employer means the Company and each Affiliate of the Company.
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(o)
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ERISA means the Employee Retirement Income Security Act of 1974, as amended
from time to time.
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(p)
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Incentive Compensation means such bonuses and other non periodic amounts (not
including equity compensation) payable to an Employee in addition to his Salary and/or
Directors Compensation for services rendered during the Plan Year, which may be paid
to the Employee in the following Plan Year as determined by the Employer in accordance
with its general policies and procedures and its sole discretion. Whether a payment
qualifies as Incentive Compensation shall be determined by the Company in its sole
discretion.
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(q)
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Installment Eligibility Age means the attainment of age 50 and 10 years of
service with the Employer (including service with any predecessor employers designated
by the Company as such). This age and service requirement is applicable only to
eligibility to receive installment payments or delay distributions until age 62
hereunder and shall not apply to, or affect or be considered in interpreting, any other
compensation, benefit, or plan of the Company.
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(r)
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Participant means an Eligible Employee who is participating in the Plan
pursuant to Section 4.2 or an Employee who participated in the Supplemental Plan or the
Schuler Plan whose compensation deferrals under those plans have been credited to a
Deferral Account under the Plan.
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(s)
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Plan means the D.R. Horton Deferred Compensation Plan, as set forth herein,
and as it may be amended from time to time.
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(t)
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Plan Year means January 1 to December 31 of each calendar year. The first
Plan Year was a short plan year that began on June 15, 2002, and ended on December 31,
2002.
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(u)
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Salary means the base annual compensation payable to an Employee by the
Employer for services rendered during a Plan Year, before reduction for amounts
deferred pursuant to the Plan or to the D.R. Horton, Inc. Profit Sharing Plus Plan, or
any other deferred compensation, 401(k), or cafeteria plan, which is payable in cash to
the Employee for services to be rendered during the Plan Year; provided that Salary
shall exclude (i) Incentive Compensation, and (ii) Directors Compensation that may be
paid by the Employer to an Employee with respect to the Plan Year.
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(v)
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Schuler Plan means the Schuler Homes, Inc. Deferred Compensation Plan for
Directors and Key Employees.
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(w)
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Supplemental Plan means the D.R. Horton, Inc. Supplemental Executive
Retirement Plan No. 1.
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ARTICLE 3
ADMINISTRATION
3.1
Authority of the Committee
. The Board shall appoint a Committee of three (3) or
more persons to administer the Plan. The members of the Committee shall be appointed by and shall
serve at the discretion of the Board.
Subject to the provisions herein, the Committee shall have full power and discretion to select
Employees for participation in the Plan; to determine the terms and conditions of each Employees
participation in the Plan; to construe and interpret the Plan and any agreement or instrument
entered into under the Plan; to establish, amend, or waive rules and regulations for the Plans
administration; to amend (subject to the provisions of Articles 9 and 12 herein) the terms and
conditions of the Plan and any agreement entered into under the Plan; and to make other
determinations which may be necessary or advisable for the administration of the Plan.
3.2
Decisions Binding
. Subject to Section 3.4(b), all determinations and decisions of
the Committee as to any disputed question arising under the Plan, including questions of
construction and interpretation, shall be final, conclusive, and binding on all parties and shall
be given the maximum possible deference allowed by law.
3.3
Claim Procedures
. If a request for Plan benefits is denied in whole or in part,
the Participant or his beneficiary (claimant) will be notified in writing within 90 days after
receipt of the claim. In some instances, the Committee may require an additional 90 days to
consider the claim. When additional time is needed, the claimant will be notified of the special
circumstances requiring the extension. The extension may not exceed a total of 180 days from the
date the claim was originally filed.
If additional information is necessary to process the claim, the claimant will be notified of
the items needed in order to consider the claim.
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If a claimants initial request for benefits is denied, the notice of the denial will include
the specific reasons for denial and references to the relevant Plan provisions on which the denial
was based, a description of any additional material or information necessary to perfect the claim
and an explanation of why such information is necessary, if applicable, and a description of the
Plans review procedures and the time limits applicable thereto, including a statement of the
claimants rights under Section 502(a) of ERISA.
Within 60 days after receiving a denial, the claimant or his authorized representative may
appeal the decision by requesting a review by writing the Committee. On appeal, the claimant may
submit in writing any comments or issues with respect to the claim and/or any additional documents
or information not considered during the initial review and, upon request, the claimant may review
all documents pertinent to the claim.
A decision on appeal will normally be given within 60 days of the receipt of the appeals
request. If special circumstances warrant an extension, then the decision will be made no later
than 120 days after receipt of the appeal. Subject to Section 3.4, the Committees decision on
appeal shall be final and binding on all parties.
If a claimants appeal is denied in whole or in part, the notice of the decision on appeal
shall include the specific reasons for the denial and reference to the relevant Plan provisions on
which the denial was based, a statement that, upon request and free of charge, the claimant may
review and copy all documents relevant to the claim for benefits, a statement describing the Plans
binding arbitration procedures (or, on or after a Change in Control, other contest procedures) and
the claimants rights under Section 502(a) of ERISA.
3.4
Arbitration
. (a)
Pre Change in Control
. The following provisions shall
apply before a Change in Control. Any individual making a claim for benefits under this Plan may
contest the Committees decision to deny such claim or appeal therefrom only by submitting the
matter to binding arbitration before a single arbitrator. Any arbitration shall be held in Fort
Worth, Texas, unless otherwise agreed to by the Committee. The arbitration shall be conducted
pursuant to the Commercial Arbitration Rules of the American Arbitration Association.
The arbitrators authority shall be limited to the affirmation or reversal of the Committees
denial of the claim or appeal, based solely on whether or not the Committees decision was
arbitrary or capricious, and the arbitrator shall have no power to alter, add to, or subtract from
any provision of this Plan. Except as otherwise required by ERISA, the arbitrators decision shall
be final and binding on all parties, if warranted on the record and reasonably based on applicable
law and the provisions of this Plan. The arbitrator shall have no power to award any punitive,
exemplary, consequential or special damages, and under no circumstances shall an award contain any
amount that in any way reflects any of such types of damages. Each party shall bear its own
attorneys fees and costs of arbitration. Judgment on the award rendered by the arbitrator may be
entered in any court having jurisdiction thereof.
(b)
Post Change in Control
. On and after a Change in Control, the Committees
decisions shall be given no special deference, but rather shall be reviewed de novo, and a claimant
may contest any Committee decision through arbitration or litigation, at the forum and
the venue of his or her choice. The Company shall be liable for all Court or arbitration
costs and legal fees if the claimant is the prevailing party.
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3.5
Indemnification
. Each person who is or shall have been a member of the Committee,
or of the Board, shall be indemnified and held harmless by the Employer against and from any loss,
cost, liability, or expense that may be imposed upon or reasonably incurred by him in connection
with or resulting from any claim, action, suit, or proceeding to which he or she may be a party, or
in which he or she may be involved by reason of any action taken or failure to act under the Plan,
and against and from any and all amounts paid by him in settlement thereof, with the Employers
approval, or paid by him in satisfaction of any judgment in any such action, suit or proceeding
against him, provided he or she shall give the Employer an opportunity, at its own expense, to
handle and defend the same before he or she undertakes to handle and defend it on his own behalf.
The foregoing right of indemnification shall not be exclusive of any other rights of
indemnification to which such persons may be entitled under the Employers Certificate of
Incorporation or Bylaws, as a matter of law, or otherwise, or any power that the Employer may have
to indemnify them or hold them harmless.
ARTICLE 4
ELIGIBILITY AND PARTICIPATION
4.1
Eligibility
. The Committee shall determine, in its sole and absolute discretion,
which such Employees shall be eligible to participate from time to time, and may modify such
determinations at any time, provided that at all times the Plan shall continue to qualify as an
unfunded plan maintained primarily to provide deferred compensation benefits to a select group of
management or highly compensated employees, within the meaning of sections 201, 301, and 401 of
ERISA. To be eligible for selection by the Committee, an Employee must either (i) be a Director
serving on the Board, or (ii) have total Compensation for the Plan Year scheduled to be at least
$100,000 (or, if greater, the highly compensated employee threshold under Code section 414(q)). In
addition, to be eligible to participate herein, a former Schuler Plan participant must consent to
the transfer of assets held in the Trust informally funding the Schuler Plan (with First Hawaiian
Bank as Trustee) being transferred to the Grantor Trust informally funding this Plan, and must
consent to the distribution rules provided for herein with respect to amounts formerly credited to
the Schuler Plan.
4.2
Participation
. Each Eligible Employee shall become a Participant in the Plan upon
his deferral of Compensation hereunder, pursuant to Article 5.
In the event a Participant ceases to be eligible to participate in the Plan, such Participant
shall become an inactive Participant, retaining all the rights described under the Plan, except the
right to make any further deferrals, until such time that the Participant again becomes an active
Participant.
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4.3
Partial Year Eligibility
. Eligibility only begins on the first day of the first
Plan Year subsequent to meeting the eligibility requirements to participate in the Plan. No
partial year
participation is permitted for an Employee that first becomes eligible to participate in the
Plan after the beginning of the Plan Year.
4.4
Notice
. The Company shall notify an Employee within a reasonable time of such
Employees gaining or losing eligibility for active participation in the Plan.
ARTICLE 5
CONTRIBUTIONS TO DEFERRAL ACCOUNTS
5.1
Compensation Deferrals
. Subject to Sections 5.2 and 5.3, an Eligible Employee may
elect to defer and have credited to his Deferral Account for any Plan Year (i) up to one hundred
percent (100%) of his Incentive Compensation and/or Directors Compensation, and (ii) up to ninety
percent (90%) of his Salary; provided, however, that the amount of deferrals selected by the
Participant shall not reduce his non-deferred Compensation below the amount that is required to
withhold for any state or federal payroll taxes (including FICA/Medicare tax on deferred amounts),
income tax, payments to be withheld pursuant to the D.R. Horton Profit Sharing Plus Plan or any
other benefit plan of the Employer (other than this Plan), and any other required or elected
withholding. The minimum amount of Compensation that may be deferred in any Plan Year is five
thousand dollars ($5,000) (or two thousand five hundred dollars ($2,500) in the case of the first
(short) Plan Year).
5.2
Deferral Election
. Eligible Employees and Participants shall make their elections
to defer all or a portion of their Compensation for a Plan Year no later than December 31 prior to
the beginning of the Plan Year in which the Salary, Incentive Compensation, and/or Directors
Compensation is to be earned, or not later than thirty (30) calendar days following notification of
eligibility to participate for a partial Plan Year (with respect to Compensation not yet earned),
such periods being referred to as enrollment periods. Notwithstanding the foregoing, any
deferral election a Participant made under the Supplemental Plan or the Schuler Plan shall be null
and void effective as of June 15, 2002.
This Section 5.2 shall apply equally to Incentive Compensation and to other types of
Compensation, notwithstanding that Incentive Compensation is earned based on the Companys fiscal
year (October 1 to September 30) and paid quarterly. For example, an election made during the
enrollment period for the 2005 Plan Year (
i.e.
, prior to December 31, 2004) shall serve to
defer Incentive Compensation earned in the final three quarters of FY05 (
i.e.
, January 1
through September 30, 2005) and the first quarter of FY06 (
i.e.
, October 1 through December
31, 2005), these four quarters together corresponding to the 2005 calendar year Plan Year.
5.3
Length of Deferral and Modification of Elections
. All deferral elections shall be
made in the form specified by the Committee, and shall be irrevocable for the Plan Year in which
they are in effect. Once made, a Participants deferral election shall remain in effect for all
subsequent Plan Years for which the Participant is an Eligible Employee unless and until the
Participant increases, decreases, or terminates such election with respect to a future Plan Year.
Deferral election changes must be submitted to the Employer no later than December 31 prior to the
beginning of the Plan Year for which the change is to be effective.
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During the enrollment period Participants shall elect (i) the percentage or flat dollar amount
of each eligible component of Compensation to be deferred; (ii) the deemed investment elections of
the amounts to be deferred, in accordance with Section 7.2; (iii) the Participants distribution
preference under either Section 6.2 (scheduled in-service distribution) or Section 6.3
(distribution following termination of employment or Board service); and (iv) a Beneficiary
designation. Each of the Participants elections or choices described above must be received by
(or must be on file with) the Company no later than December 31 prior to the beginning of the
applicable Plan Year.
5.4
Revocation of 2005 Deferral Elections
. Notwithstanding anything herein to the
contrary, with respect to deferral elections for the Plan Year ending on December 31, 2005 (the
2005 Deferral Election), Participants shall have the one-time opportunity to elect, prior to
December 31, 2005, to cancel their 2005 Deferral Election and receive a lump-sum payment of all
amounts that would have otherwise been deferred under the Plan pursuant to their 2005 Deferral
Election, increased or reduced by earnings or losses credited with respect thereto through the date
of distribution. Any distributions that result from the cancellation of a 2005 Deferral Election
shall be paid to the applicable Participant in a lump sum no later than December 31, 2005 or such
later date on which the Participant first obtains a legally binding right to receive such amounts.
Any amounts that become payable to a Participant pursuant to the cancellation of his or her 2005
Deferral Election shall be included in the taxable income of the Participant for the calendar year
ending December 31, 2005 or such later year when such amounts become earned and vested (within the
meaning of Section 409A of the Code).
ARTICLE 6
DISTRIBUTIONS
6.1
Distribution Elections
. In respect of amounts earned or vested on or after
January 1, 2005, each Participant shall make a distribution election (A) on or before December 31,
2008 (with respect to amounts earned prior to January 1, 2009); or (B) within the time period
specified in Sections 5.2 and 5.3 (with respect to amounts earned on or after January 1, 2009), in
each case choosing
either
(i) scheduled in-service distributions pursuant to Section 6.2,
or (ii) distributions after termination of employment or Board service pursuant to Section 6.3.
Participants also can elect, pursuant to Section 6.3(e), to delay distributions to the later of
termination of employment or Board service or age 62. Distribution elections shall be made in the
manner specified by the Committee. If no valid and timely distribution election is made to select
either scheduled in-service distributions or else distributions after termination of employment or
Board service (or age 62) in accordance with this Section 6.1, the Participants Deferral Account
will be distributed in the form of a lump sum payment following termination of employment or Board
Service, subject to the rules of Section 6.3(d).
In respect of any amount earned or vested on or after January 1, 2005, a Participant may, no
later than December 31, 2008, make a new distribution election if an election has not previously
been made, or amend a previous distribution election to change the time and/or form of payment;
provided however, that (i) no such election made in the calendar year 2006 may change payment
elections with respect to payments that would have otherwise been received in the calendar year
2006, or to accelerate payments into calendar year 2006 that would not have otherwise been made in
2006; (ii) no such election made in the calendar year 2007 may change
payment elections with respect to payments that would have otherwise been received in the
calendar year 2007, or to accelerate payments into calendar year 2007 that would not have otherwise
been made in 2007; and (iii) no such election made in the calendar year 2008 may change payment
elections with respect to payments that would have otherwise been received in the calendar year
2008, or to accelerate payments into calendar year 2008 that would not have otherwise been made in
2008.
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6.2
Scheduled In-Service Distributions
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(a)
Lump Sum or Installment Payments
. A Participant may elect, during the applicable
enrollment period and in a manner prescribed by the Committee, to receive all or a portion of the
vested portion of his Deferral Account while he is still employed by the Employer in (i) a single
lump sum payment, or (ii) annual installment payments over a period of two (2) to five (5) years;
provided, however, that a Participant may not elect to receive a scheduled in-service distribution
of any portion of his or her Deferral Account attributable to amounts deferred under the
Supplemental Plan. If a Participant elects installment payments pursuant to (ii) above, the vested
portion of such Participants Deferral Account must be at least $25,000 in the aggregate at the
time that installment payments would commence in order for such election to be honored; if the
vested portion of such Participants Deferral Account is less than $25,000, payment shall be made
in a lump sum. If no valid distribution election is made to select either a lump sum payment or
installments in accordance with this Section 6.2(a), the Participants Deferral Account will be
distributed in the form of a lump sum payment on the specific in-service date indicated.
The amount of each installment payment shall be equal to the balance remaining in the portion
of the Participants Deferral Account that is subject to such installment election (as determined
immediately prior to each such payment), multiplied by a fraction, the numerator of which is one
(1), and the denominator of which is the total number of remaining installment payments. The
installment amount shall be adjusted annually to reflect gains and losses, if any, allocated to
such Participants Deferral Account pursuant to Article 7.
(b)
Time of Distribution
. A Participants election under this Section 6.2 must
specify the future year in which the payment of the deferred amounts shall be made (in the case of
a lump sum) or commence (in the case of installments), provided that the year in which
distributions are to commence is at least two (2) years after the end of the Plan Year in which the
applicable compensation is deferred. Scheduled in-service distributions shall commence in January
of the year specified in the Participants election.
(c)
Separate Annual Elections
. Any scheduled in-service distribution must be elected
separately for each Plan Year for which compensation is deferred. Thus, to elect a scheduled
in-service distribution for a future Plan Years deferral, a new distribution election must be
submitted during the applicable enrollment period for such Plan Year. Once the applicable
enrollment period has passed, a scheduled in-service distribution cannot be elected for that Plan
Years deferral.
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(d)
Amendment of Election
. A Participant may amend his or her election as to the form
or timing of a scheduled in-service distribution provided that such amendment (i) must be
made in the manner specified by the Committee at least 12 months prior to the date the
distribution otherwise would be made (in the case of a lump sum payment) or commence (in the case
of installments); (ii) shall not take effect until 12 months after it is made; and (iii) must defer
the payment for a minimum of five (5) additional years. The limitation set forth in clauses (ii)
and (iii) of this Section 6.2(d) shall only apply to amounts that are earned and/or become vested
on or after January 1, 2005, and any earnings attributable thereto, and shall not apply to amounts
that were both earned and vested as of December 31, 2004, and any earnings attributable thereto.
For purposes of the limitation set forth in clause (iii) of this Section 6.2(d), distributions that
are to be paid in installments (as opposed to in a lump sum) shall be treated as a single payment
payable on the date the installments are due to commence. Any change in the form or timing of
payment may not accelerate distributions to the Participant, except to the extent permitted under
Section 409A of the Code without the imposition of the additional tax set forth in Section
409A(a)(1)(B) of the Code.
(e)
Termination of Employment or Board Service Prior to Completion of In-Service
Distribution
. If a Participants employment or Board service with the Employer terminates for
any reason (including Disability or death) prior to receiving full payment of a scheduled
in-service distribution, the balance of the vested portion of such Participants Deferral Account
shall be paid in the form of a lump sum: (i) with respect to amounts that were both earned and
vested as of December 31, 2004, and any earnings attributable thereto, as soon as administratively
practicable following the Participants termination of employment or Board service, and (ii) with
respect to amounts that are earned and/or become vested on or after January 1, 2005, and any
earnings attributable thereto, at the time provided for in Section 6.3(d).
Notwithstanding anything in this Section 6.2 to the contrary, if a Participant has elected or
is receiving an Interim Distribution (as such term is defined in the Schuler Plan) under the
Schuler Plan as of the original effective date of this Plan (
i.e.
, June 15, 2002), the
Participant shall receive or shall continue receiving such distribution in accordance with his
election under the Schuler Plan; provided, however, installment payments shall not be made for a
period longer than five (5) years from the first January 1 following the original effective date of
this Plan (
i.e.
, June 15, 2002); any undistributed portion of the Participants Deferral
Account at the end of such five (5) year period shall be distributed in the form of a lump sum at
such time.
6.3
Distributions Following Termination of Employment or Board Service
.
(a)
Lump Sum or Installment Payments for Amounts Earned and Vested as of December 31,
2004
. With respect to amounts that were both earned and vested as of December 31, 2004, and
any earnings attributable thereto, within ninety (90) days of a Participants termination of
employment after attaining Installment Eligibility Age, separation from Board service, or incurring
a Disability, the Participant may elect to receive the vested balance credited to that portion of
his or her Deferral Account (to the extent not subject to a in-service distribution election under
Section 6.2) in (i) a single lump sum payment or (ii) annual installment payments over a period of
two (2) to ten (10) years, subject to the payment timing rules set forth in Section 6.3(d). If a
Participant is Installment Eligibility Age, separates from Board service, or incurs a Disability
and he fails to make a distribution election pursuant to this Section 6.3(a) with respect to
amounts that were both earned and vested as of December 31, 2004, and any earnings attributable
thereto, within ninety (90) days following his termination of employment, or if the
vested balance credited to his Deferral Account is less than $50,000, payment of that portion
of the Participants Deferral Account shall be made in a single lump sum, subject to the rules set
forth in Section 6.3(d). Notwithstanding anything herein to the contrary, with respect to amounts
that were both earned and vested as of December 31, 2004, and any earnings attributable thereto, if
a Participants employment terminates for any reason prior to the date the Participant attains
Installment Eligibility Age or incurs a Disability, that portion of such Participants Deferral
Account shall be paid to the Participant or, in the event of his death, the Participants
designated beneficiary in a single lump sum payment as soon as administratively feasible following
the Participants termination of employment (and the timing rules of Section 6.3(d) shall not
apply).
11
The amount of each installment payment under (ii) above shall be equal to the balance
remaining in the portion of the Participants Deferral Account that is subject to such installment
election (as determined immediately prior to each such payment), multiplied by a fraction, the
numerator of which is one (1), and the denominator of which is the total number of remaining
installment payments. The installment amount shall be adjusted annually to reflect gains and
losses, if any, allocated to such Participants Deferral Account pursuant to Article 7.
(b)
Lump Sum or Installment Payments for Amounts Earned and/or Vested on or after January
1, 2005
. As an alternative to electing a scheduled in-service distribution under Section 6.2,
with respect to amounts that are earned and/or become vested on or after January 1, 2005, and any
earnings attributable thereto, a Participant may elect, during the applicable enrollment period
specified in Section 6.1, to receive the vested balance credited to that portion of his or her
Deferral Account (to the extent not subject to a in-service distribution election under Section
6.2) following termination of employment or Board service (for any reason, including Disability) in
(i) a single lump sum payment or, (ii) annual installment payments over a period of two (2) to ten
(10) years, subject to the rules of Section 6.3(d). If a Participant elects installment payments
pursuant to (ii) above, the vested portion of such Participants Deferral Account must be at least
$50,000 in the aggregate at the time that installment payments would commence in order for such
election to be honored; if the vested portion of such Participants Deferral Account is less than
$50,000, payment shall be made in a lump sum. If no valid distribution election is made with
respect to amounts that are earned and/or become vested on or after January 1, 2005, and any
earnings attributable thereto, to select either a lump sum payment or installments in accordance
with this Section 6.3(b), that portion of the Participants Deferral Account will be distributed in
the form of a lump sum payment, subject to the rules of Section 6.3(d).
Notwithstanding anything herein to the contrary, with respect to amounts that are earned
and/or became vested on or after January 1, 2005, and any earnings attributable thereto, if a
Participants employment terminates for any reason prior to the date the Participant attains
Installment Eligibility Age or incurs a Disability, then that portion of such Participants
Deferral Account shall be paid to the Participant or, in the event of the Participants death, the
Participants designated beneficiary in a single lump sum at the time provided for in Section
6.3(d).
The amount of each installment payment under (ii) above shall be equal to the balance
remaining in the portion of the Participants Deferral Account that is subject to such installment
election (as determined immediately prior to each such payment), multiplied by a fraction, the
numerator of which is one (1), and the denominator of which is the total number of remaining
installment payments. The installment amount shall be adjusted annually to reflect gains and
losses, if any, allocated to such Participants Deferral Account pursuant to Article 7.
12
Any prior elections with respect to retirement or termination of employment made under the
Supplemental Plan or Schuler Plan shall be null and void.
(c)
Installment Eligibility Age
. If a Participant who is an employee elects
installment payments pursuant to Section 6.3(a) or (b), such Participant must have reached
Installment Eligibility Age in order for such election to be honored, unless such Participant
terminates employment on account of Disability. Otherwise, the Participants Deferral Account will
be paid in the form of a lump sum following termination of employment, subject to the rules of
Section 6.3(d). Participants who are members of the Board or Participants who are employees
terminating employment on account of Disability may receive installment payments regardless of
whether they have reached Installment Eligibility Age. A Participant, who is an employee, must
reach Installment Eligible Age to delay distributions until age 62 pursuant to Plan Section 6.3(e),
otherwise, the Participants Deferral Account will be paid in the form of a lump sum following his
or her termination of employment, subject to the rules of Section 6.3(d). Participant who are
members of the Board may elect to delay distributions until age 62, regardless of whether they have
reached Installment Eligibility Age.
(d)
Time of Distribution
. Notwithstanding anything herein to the contrary,
distribution of such Participants Deferral Account shall be made in accordance with the following
schedule:
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(i)
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Except as set forth in Sections 6.2(e) or 6.3(a), with respect
to Compensation both earned and vested up to and including December 31, 2004
(and any earnings attributable thereto), if the termination of employment or
service occurs after January 1 of any calendar year, but before June 30 of such
year, distributions shall commence on July 1 of the calendar year following the
year of termination (for example if termination of employment occurs on
February 1, 2006, distributions commence on July 1, 2007).
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(ii)
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Except as set forth in Sections 6.2(e) or 6.3(a), with respect
to Compensation both earned and vested up to and including December 31, 2004
(and any earnings attributable thereto), if the termination of employment or
service occurs after July 1 of any calendar year, but before December 31 of
such year, distributions shall commence on January 1 of the second calendar
year following the year of termination (for example if termination of
employment occurs on August 1, 2006, distributions commence on January 1,
2008).
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(iii)
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With respect to Compensation earned or vested on or after
January 1, 2005 (and any earnings attributable thereto), if the termination of
employment or service occurs after January 1 of any calendar year, but before
June 30 of such year, distributions shall commence on January 1 of the calendar
year following the year of termination (for example if termination of
employment occurs on February 1, 2006, distributions commence on January 1,
2007).
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13
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(iv)
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With respect to Compensation earned or vested on or after
January 1, 2005 (and any earnings attributable thereto), if the termination of
employment or service occurs after July 1 of any calendar year, but before
December 31 of such year, distributions shall commence on July 1 of the
calendar year following the year of termination (for example if termination of
employment occurs on August 1, 2006, distributions commence on July 1, 2007).
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(e)
Delay of Distributions Until Age 62
. A Participant can elect or amend his or her
election to delay the payment (in the case of a lump sum) or the commencement of payment (in the
case of installments) of his or her Deferral Account after termination of employment or Board
service to a date no later than the January of the year immediately following his or her attainment
of age 62, provided that such election satisfies the rules of Section 6.1, or such amended election
meets the requirements for amended elections described in Section 6.2(d) or 6.3(g). An amended
election may not accelerate distributions to the Participant, except to the extent permitted under
Section 409A of the Code without the imposition of the additional tax set forth in Section
409A(a)(1)(B) of the Code.
(f)
Death of Participant
. Notwithstanding anything herein to the contrary, if a
Participant dies prior to receiving full payment of his or her Deferral Account as elected under
this Section 6.3, the balance of the vested portion of such Participants Deferral Account shall be
paid to the Participants beneficiary or other person determined pursuant to Section 7.3 in the
form of a lump sum as soon as administratively practicable following the Participants death.
(g)
Amendment of Election
. A Participant may amend his or her election as to the form
or timing of a distribution under this Section 6.3, provided that such amendment (i) must be made
in the manner specified by the Committee at least 12 months prior to the date the distribution
otherwise would be made (in the case of a lump sum payment) or commence (in the case of
installments); (ii) shall not take effect until 12 months after it is made; and (iii) must defer
the payment for a minimum of five (5) additional years. The limitation set forth in clauses (ii)
and (iii) of this Section 6.3(g) shall only apply to amounts that are earned and/or become vested
on or after January 1, 2005, and any earnings attributable thereto, and shall not apply to amounts
that were both earned and vested as of December 31, 2004, and any earnings attributable thereto.
For purposes of the limitation set forth in clause (iii) of this Section 6.3(g), distributions that
are to be paid in installments (as opposed to in a lump sum) shall be treated as a single payment
payable on the date the installments are due to commence. Any change in the form or timing of
payment may not accelerate distributions to the Participant, except to the extent permitted under
Section 409A of the Code without the imposition of the additional tax set forth in Section
409A(a)(1)(B) of the Code.
14
6.4
Nonscheduled In-Service Withdrawals
. Notwithstanding any provision of this Plan
to the contrary, a Participant may at any time request a lump sum distribution of all or a portion
of that portion of his Deferral Account that was both earned and vested as of December
31, 2004, and any earnings attributable thereto. In the event a Participant requests a
distribution under this Section 6.4, (i) such Participant will receive a portion of his Deferral
Account equal to 90% of the requested distribution, and the remaining 10% of the requested
distribution will be forfeited, and (ii) such Participant will be ineligible to participate in the
Plan for the remainder of the Plan Year in which the distribution is received and for the
immediately following Plan Year. This Section 6.4 shall not apply to amounts that are earned
and/or become vested on or after January 1, 2005, and any earnings attributable thereto and
Nonscheduled In-Service Withdrawals of such amounts are not permitted.
6.5
Unforeseeable Emergency
. The Committee shall have the authority to alter the
timing or manner of payment of deferred amounts in the event that the Participant establishes, to
the satisfaction of the Committee, that he or she has experienced an unforeseeable emergency. In
such event, the Committee may, in its sole discretion, distribute all or a portion of such
Participants Deferral Account to the Participant without penalty.
For purposes of this Section 6.5, unforeseeable emergency shall mean a severe financial
hardship to the Participant resulting from an illness or accident of the Participant, the
Participants spouse, or a dependent of the Participant, loss of the Participants property due to
casualty, or other similar extraordinary and unforeseeable circumstances arising as a result of
events beyond the control of the Participant. Payment under this Section 6.5 may not be made to
the extent such emergency is or may be relieved: (i) through reimbursement or compensation by
insurance or otherwise; (ii) by liquidation of the Participants assets, to the extent the
liquidation of such assets itself would not cause severe financial hardship; and (iii) by cessation
of deferrals under the Plan. Distributions of amounts because of an unforeseeable emergency only
may be permitted to the extent reasonably necessary to satisfy the hardship and to pay taxes on the
distribution. Examples of what are not considered to be unforeseeable emergencies include the need
to send a Participants child to college or the desire to purchase a home. The Participants
Deferral Account will be credited with earnings in accordance with the Plan up to the date of
distribution.
The Committee shall judge the existence of the unforeseeable emergency. The Committees
decision in this regard and the manner in which, if at all, the Participants future deferral
opportunities shall be suspended, and/or the manner in which, if at all, the payment of deferred
amounts to the Participant shall be altered or modified, shall be final, conclusive, and not
subject to appeal. In the event a Participant receives a distribution under this Section 6.5, then
such Participant will be ineligible to participate in the Plan for the remainder of the Plan Year
in which the distribution was received.
6.6
Incompetence of Distributee
. In the event that it shall be found that a person
entitled to receive payment under the Plan (including a designated beneficiary) is a minor or is
physically or mentally incapable of personally receiving and giving a valid receipt for any payment
due (unless prior claim therefor shall have been made by a duly qualified committee or other legal
representative), such payment may be made to any person whom the Committee in its sole discretion
determines is entitled to receive it, and any such payment shall fully discharge the Employer, the
Company, the Committee and the Plan from any further liability to the person otherwise entitled to
payment hereunder, to the extent of such payment.
15
ARTICLE 7
DEFERRED COMPENSATION ACCOUNTS
7.1
Participants Accounts
. The Company shall establish and maintain an individual
bookkeeping Deferral Account for Employee Contributions. Each Deferral Account shall be credited
with Employee Contributions generally within five (5) business days of the applicable payroll
deduction, and as provided in Section 7.2. The Employee Contributions held in each Participants
Deferral Account shall be one hundred percent (100%) vested at all times.
A Participants Deferral Account also shall be credited with (i) compensation deferrals, if
any, made under the Supplemental Plan or the Schuler Plan, (ii) Matching Contributions and
Discretionary Contributions (as those terms are defined in the Schuler Plan) made on the
Participants behalf under the Schuler Plan, if any, and (iii) deemed earnings credit to such
amounts prior to the effective date of this Plan. (These credits are in lieu of the amounts
formerly credited under the Supplemental Plan and Schuler Plan, which are being merged into this
Plan.) Participants shall be one hundred percent (100%) vested at all times in the compensation
deferrals made under the Supplemental Plan or the Schuler Plan credited to their Deferral Accounts.
If a Participants Deferral Account is credited with Matching Contributions and/or Discretionary
Contributions made under the Schuler Plan, the Participants vested interest in such contributions
shall be determined in accordance with the terms of the Schuler Plan.
7.2
Earnings on Deferred Amounts
. A Participants Deferral Account shall be credited
with earnings (or losses) based on a deemed investment of the Participants Deferral Account, as
directed by each Participant, which deemed investment shall be in one or more funds among the
investment options selected by the Committee from time to time. Deemed earnings (and losses) on a
Participants Deferral Account shall be based upon the daily unit valuation of the funds selected
by such Participant, and shall be credited to a Participants Deferral Account on a monthly basis.
Deemed earnings (or losses) shall be paid out to a Participant in accordance with the applicable
Deferral Election Form. Any portion of a Participants Deferral Account which is subject to
distribution in installments shall continue to be credited with deemed earnings (or losses) until
fully paid out to the Participant.
The Committee reserves the right to change the options available for deemed investments under
the Plan from time to time, or to eliminate any such option at any time. A Participant may specify
a separate investment allocation with respect to each Deferral Election Form or amended Deferral
Election Form. Participants may modify their deemed investment instructions each business day with
respect to any portion (whole percentages only) of their Deferral Account; provided they notify the
Committee or its designee within the time and in the manner specified by the Committee. Elections
and amendments thereto pursuant to this Section 7.2 shall be made in the manner prescribed by the
Committee. The Committee reserve the right to credit earnings (or losses) on a basis different
from that elected by the Participants.
7.3
Designation of Beneficiary
. Each Participant may designate a beneficiary or
beneficiaries who, upon the Participants death will receive the amounts that otherwise would have
been paid to the Participant under the Plan. All designations shall be signed by the Participant,
and shall be in such form as prescribed by the Committee. Each designation shall be effective as
of the date delivered to the Committee or its designee by the Participant.
16
Participants may change their beneficiary designations on such form as prescribed by the
Committee. The payment of amounts deferred under the Plan shall be in accordance with the last
unrevoked written beneficiary designation that has been signed by the Participant and delivered to
the Committee or its designee prior to the Participants death. Notwithstanding the foregoing, a
Participant who is married may not designate a beneficiary other than the Participants spouse,
unless the spouse consents in writing to such alternate beneficiary designation.
In the event that all the beneficiaries named by a Participant pursuant to this Section 7.3
predecease the Participant, the deferred amounts that would have been paid to the Participant or
the Participants beneficiaries shall be paid to the Participants estate.
In the event a Participant does not designate a beneficiary, or for any reason such
designation is ineffective, in whole or in part, the amounts that otherwise would have been paid to
the Participant or the Participants beneficiaries under the Plan shall be paid to the
Participants estate.
ARTICLE 8
TRUST
Nothing contained in this Plan shall create a trust of any kind or a fiduciary relationship
between the Employer and any Participant. Nevertheless, the Employer may establish one or more
trusts, with such trustee(s) as the Committee may approve, for the purpose of providing for the
payment of deferred amounts and earnings thereon. Such trust or trusts may be irrevocable, but the
assets thereof shall be subject to the claims of the Employers general creditors upon the
bankruptcy or insolvency of the Employer.
ARTICLE 9
CHANGE IN CONTROL
9.1
Trust and Trustees
. Upon the occurrence of a Change in Control, the trust or
trusts that may be established by the Employer pursuant to Article 8 shall become irrevocable and
the Employer shall not thereafter be permitted to remove, terminate, or change the trustee(s)
without the prior written consent of the majority of the Participants, with weighted voting as
measured by their account balances.
9.2
Advanced Funding
. No later than 30 days after a Change in Control occurs, the
Employer shall make a contribution to the trust or trust(s) established pursuant to Article 8 to
the extent required to fully fund all benefits that are or may become payable under the Plan,
assuming for purposes of this calculation that all Participants retire with 100% vesting, and to
fund in advance all administrative, legal, and other costs of maintaining the Plan, in an amount no
less than $125,000. No later than December 31 of each Plan Year thereafter, the Employer shall
make such additional contributions to the trust or trusts to fully fund the additional benefits
that may become payable to Participants or beneficiaries under the Plan and the additional
administrative, legal, and other Plan expenses.
9.3
Amendment and Termination
. After the occurrence of a Change in Control, the
Employer may not amend the Plan without the prior approval of a majority of the Participants.
After a Change in Control, the Employer may not terminate the Plan until either (i) all
benefits have been paid in full, or (ii) the majority of the Participants approve the same. For
purposes hereof, Participants votes shall be weighted based on their relative Plan account
balances.
17
ARTICLE 10
RIGHTS OF PARTICIPANTS
10.1
Contractual Obligation
. The Plan shall create an unfunded, unsecured contractual
obligation on the part of the Employer to make payments from the Participants Deferral Accounts
when due. Payment of Deferral Account balances shall be made out of the general assets of the
Employer or from the trust or trusts referred to in Article 8 above.
10.2
Unsecured Interest
. No Participant or party claiming an interest in deferred
amounts of a Participant shall have any interest whatsoever in any specific asset of the Employer.
To the extent that any party acquires a right to receive payments under the Plan, such right shall
be equivalent to that of an unsecured general creditor of the Employer. Each Participant, by
participating hereunder, agrees to waive any priority creditor status for wage payments with
respect to any amounts due hereunder. The Employer shall have no duty to set aside or invest any
amounts credited to Participants Deferral Accounts under this Plan. Accounts established
hereunder are solely for bookkeeping purposes and the Employer shall not be required to segregate
any funds based on such Accounts.
10.3
Employment
. Nothing in the Plan shall interfere with or limit in any way the
right of the Employer to terminate a Participants employment at any time, or confer upon any
Participant any right to continue in the employ of the Employer.
ARTICLE 11
WITHHOLDING OF TAXES
The Employer shall have the right to require Participants to remit to the Employer an amount
sufficient to satisfy federal, state, and local withholding tax requirements, or to deduct from all
payments made pursuant to the Plan (or from a Participants other Compensation) amounts sufficient
to satisfy withholding tax requirements. Employment taxes with respect to amounts deferred
hereunder shall be payable in accordance with Code section 3121(v)(2) and may be withheld from a
Participants Compensation even if due prior to the time of a distribution hereunder. The Employer
makes no representations, warranties, or assurances and assumes no responsibility as to the tax
consequences of this Plan or participation herein.
ARTICLE 12
AMENDMENT AND TERMINATION
Subject to Article 9, the Employer reserves the right to amend or modify the Plan (in whole or
in part) at any time by action of the Board or the Committee, with or without prior notice. To the
extent permitted under Code Section 409A without imposition of the additional tax set forth in
Section 409A(a)(1)(B), and subject to Article 9, the Board or Committee may terminate the Plan (in
whole or in part) at any time, with or without prior notice. Except as
described below in this Article 12, no such amendment or termination shall in any material
manner adversely affect any Participants rights to any amounts already deferred or credited
hereunder or deemed earnings thereon, up to the point of amendment or termination, without the
consent of the Participant.
18
To the extent permitted under Section 409A of the Code without imposition of the additional
tax set forth in Section 409A(a)(1)(B) of the Code, the Board may terminate the Plan and commence
termination payout for all or certain Participants, or remove certain Employees as Participants, if
it is determined by the United States Department of Labor or a court of competent jurisdiction that
the Plan constitutes an employee pension benefit plan within the meaning of section 3(2) of ERISA
that is not exempt from the provisions of Parts 2, 3, and 4 of Title I of ERISA, or if the IRS
otherwise taxes amounts deferred prior to their scheduled payment date. If payout is commenced
pursuant to the operation of this Article 12, the payment of deferred amounts and earnings thereon
shall be made in the manner selected by each Participant under Section 6.2 herein (other than the
commencement date), as if the Participant had attained Installment Eligibility Age.
ARTICLE 13
MISCELLANEOUS
13.1
Notice
. Any notice or filing required or permitted to be given to the Employer
under the Plan shall be sufficient if in writing and hand delivered, or sent by registered or
certified mail to the D.R. Horton Deferred Compensation Plan Committee, and if mailed, shall be
addressed to the principal executive offices of the Employer. Notice mailed to a Participant shall
be at such address as is given in the records of the Employer. Notices to the Employer shall be
deemed given as of the date of delivery. Notice to a Participant or beneficiary shall be deemed
given as of the date of hand delivery, or if delivery is made by mail, three (3) days following the
postmark date.
13.2
Nontransferability
. Except as provided in Section 7.3 and this Section 13.2,
Participants rights to deferred amounts and earnings credited thereon under the Plan may not be
sold, transferred, assigned, or otherwise alienated or hypothecated, other than by will or by the
laws of descent and distribution, or pursuant to a domestic relations order, nor shall the Employer
make any payment under the Plan to any assignee or creditor of a Participant.
13.3
Severability
. In the event any provision of the Plan shall be held illegal or
invalid for any reason, the illegality or invalidity shall not affect the remaining parts of the
Plan, and the Plan shall be construed and enforced as if the illegal or invalid provision had not
been included.
13.4
Gender and Number
. Except where otherwise indicated by the context, any
masculine term used herein also shall include the feminine; the plural shall include the singular,
and the singular shall include the plural.
13.5
Costs of the Plan
. All costs of implementing and administering the Plan shall be
borne by the Employer.
13.6
Successors
. All obligations of the Employer under the Plan shall be binding on
any successor to the Employer, whether the existence of such successor is the result of a direct or
indirect purchase, merger, consolidation, or otherwise, of all or substantially all of the
business and/or assets of the Employer.
13.7
Applicable Law
. Except to the extent preempted by applicable federal law, the
Plan shall be governed by and construed in accordance with the laws of the state of Texas.
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ARTICLE 14
ADMINISTRATIVE INFORMATION
14.1
Plan Sponsor and Administrator
. The Plan described herein is sponsored by:
D.R. Horton, Inc.
301 Commerce Street
Suite 500
Fort Worth, Texas 76102
The Company is the plan administrator and named fiduciary. Prior to a Change in Control, the
Company has been granted complete fiduciary discretion and authority to administer, operate, and
interpret the Plan and make final decisions on such issues as eligibility, payment of benefits,
claims, and claims appeals, unless such decisions have been delegated to another party. However,
many day-to-day questions can be answered by the Benefits Department.
The agent for the service of legal process for the Plan is the Company.
14.2
Plan Type and Plan Year
. Documents and reports for the Plan are filed with the
United States Internal Revenue Service and the Department of Labor under Employer Identification
Number: 75-2386963.
The official Plan name is the D.R. Horton Deferred Compensation Plan, which, for government
purposes, is intended to be an unfunded pension plan maintained by an employer for a select group
of management or highly compensated employees. Plan records are maintained on an annual basis and
December 31 is the end of the plan year.
14.3
Plan Funding
. The Plan is unfunded and unsecured and benefits are paid solely
from the Employers general assets.
ARTICLE 15
ERISA RIGHTS
Certain rights and protections are provided to Plan participants under the Employee Retirement
Income Security Act of 1974 (ERISA). These ERISA rights include the following:
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(a)
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Any Plan participant may contact the Benefits Department to examine all Plan
documents without charge. These may include the Plan descriptions and all other
documents filed with the United States Department of Labor.
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(b)
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Copies of Plan documents and other information may be obtained by writing to
the Committee. A reasonable charge may be assessed for these copies.
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20
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(c)
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Each Plan participant has the right to receive a written summary of the Plans
annual financial reports, if any. However, this type of plan is not required to have
either an annual financial report or a summary annual report.
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(d)
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An employee may not be discharged or discriminated against to prevent his
obtaining a benefit or exercising his ERISA rights.
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(e)
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If a claim for a benefit is denied, in whole or in part, a written explanation
from the Committee or a delegated representative will be provided. Each participant
has the right to have the plan administrator review and reconsider any denied claim.
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The named fiduciary for this Plan is the Company.
Under certain circumstances, outside assistance may be necessary to resolve disputes between a
Participant and Plan officials. For example:
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(a)
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If a claim for benefits is denied or ignored, in whole or in part, after a
final review, the claim may be submitted to binding arbitration (or, after a Change in
Control, to either arbitration or a court, at the Participants election).
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(b)
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If a participant is discriminated against for pursuing a benefit or exercising
his ERISA rights, the participant may seek help from the United States Department of
Labor or file an arbitration claim (or, after a Change in Control, either an
arbitration claim or a lawsuit, at the Participants election).
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For further information about this statement or about ERISA rights, contact the Benefits
Department. Or, you may contact the nearest area office of the Employee Benefits Security
Administration, United States Department of Labor, listed in your telephone directory or the
Division of Technical Assistance and Inquiries, Employee Benefits Security Administration, U.S.
Department of Labor, 200 Constitution Avenue N.W., Washington D.C. 20210. You may also obtain
certain publications about your rights and responsibilities under ERISA by calling the publications
hotline of the Employee Benefits Security Administration.
21
IN WITNESS WHEREOF,
D.R. Horton, Inc. has caused this document to be executed by its duly
authorized officer on this 10th day of December, 2008, effective as of the date set forth
above.
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D.R. HORTON, INC.
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By:
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/s/ Donald J. Tomnitz
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Its: Vice Chairman, President and
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Chief Executive Officer
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22
Exhibit 10.2
D.R. HORTON, INC.
AMENDED AND RESTATED
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN NO. 2
D.R. Horton, Inc.
established, on January 1, 1994, the D.R. Horton, Inc. Supplemental Executive
Retirement Plan No. 2 (the Plan), a supplemental retirement plan for certain of its key
management or highly compensated employees pursuant to which it makes Employer allocations of
benefits for retirement.
The Plan hereby is amended and restated, effective January 1, 2005, and is intended as good faith
compliance with the American Jobs Creation Act of 2004 with respect to amounts earned or that
become vested on or after January 1, 2005.
ARTICLE I
GENERAL
Section 1.1
Effective Date
. This Plan was originally effective as of
January 1, 1994. This amendment and restatement of the Plan
shall be effective as of January 1, 2005.
Section 1.2
Purpose
. The purpose of the Plan is to protect Participants
against contingencies that interrupt or impair their earning
power and to assure that funds will be available for such
Participants upon retirement, death or disability.
ARTICLE II
DEFINITIONS AND USAGE
Section 2.1
Definitions
. Wherever used in the Plan, the following words and phrases shall
have the meaning set forth unless the context plainly requires a different meaning:
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(a)
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Account
means the account established on behalf of
the Participant as described in Section 4.2
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(b)
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Administrative Committee
means the committee
appointed by the Board to administer the Plan.
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(c)
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Affiliate
means any business entity 80% or more owned
or controlled by the Company.
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(d)
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Agreement
means an agreement for Supplemental
Retirement Benefits between the Employer and a Participant in accordance with
Section 3.3.
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(e)
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Board
means the Board of Directors of the Company.
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(f)
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Cause
means any matter that constitutes a violation
of the standard of employee conduct set forth in the Companys Employee Manual
as in effect on the date of such termination.
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(g)
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Change in Control
means:
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(i)
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With respect to amounts that were both earned
and vested as of December 31, 2004, and any earnings attributable
thereto, the occurrence of any of the following events:
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(1)
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A merger, consolidation or
reorganization of the Company into or with another corporation
or other legal person if the stockholders of the Company,
immediately before such merger, consolidation or reorganization,
do not, immediately following such merger, consolidation or
reorganization, then own directly or indirectly, more than 50%
of the combined voting power of the then-outstanding voting
securities of the corporation or other legal person resulting
from such merger, consolidation or reorganization in
substantially the same proportion as their ownership of Voting
Securities (as hereinafter defined) immediately prior to such
merger, consolidation or reorganization;
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(2)
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The Company sells all or
substantially all of its assets to another corporation or other
legal person, or there is a complete liquidation or dissolution
of the Company;
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(3)
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There is a report filed on
Schedule 13D or Schedule 14D-1 (or any successor schedule, form
or report), each as promulgated pursuant to the Securities
Exchange Act of 1934, as amended (the
Exchange Act
),
disclosing that any person (as the term
person
is used
in Section 13(d)(3) or Section 14(d)(2) of the Exchange Act) has
become the beneficial owner (as the term
beneficial
owner
is defined under Rule 13d-3 or any successor rule or
regulation promulgated under the Exchange Act) of securities
representing 20% or more of the combined voting power of the
then-outstanding voting securities of the Company (
Voting
Securities
) (computed in accordance with the standards for
the computation of total percentage ownership for the purposes
of Schedule 13D or Schedule 14D-1 (or any successor schedule,
form or report)); or
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(4)
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The Company files a report or
proxy statement with the Securities and Exchange Commission
pursuant to the Exchange Act disclosing in response to Form 8-K
or Schedule 14A (or any successor schedule, form or report or
item therein) that a change in control of the Company has
occurred or will occur in the future pursuant to any
then-existing contract or transaction.
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2
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(ii)
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With respect to amounts that are earned and/or
become vested on or after January 1, 2005, and any earnings
attributable thereto, the occurrence of any of the following events:
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(1)
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A merger, consolidation or
reorganization of the Company into or with another corporation
or other legal person if the stockholders of the Company,
immediately before such merger, consolidation or reorganization,
do not, immediately following such merger, consolidation or
reorganization, then own directly or indirectly, at least 50% of
the combined voting power of the then-outstanding voting
securities of the corporation or other legal person resulting
from such merger, consolidation or reorganization in
substantially the same proportion as their ownership of Voting
Securities (as defined above) immediately prior to such merger,
consolidation or reorganization;
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(2)
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The Company sells all or
substantially all of its assets to another corporation or other
legal person, or there is a complete liquidation or dissolution
of the Company, in each case, subject to the requirements of
Section 409A of the Code and any regulations or other guidance
issued thereunder;
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(3)
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There is a report filed on
Schedule 13D or Schedule 14D-1 (or any successor schedule, form
or report), each as promulgated pursuant to the Exchange Act of
1934 disclosing that any person or group has acquired, either in
one transaction or in a series of transactions over a 12-month
period ending on the date of the most recent acquisition, the
beneficial ownership of securities representing more than 35% of
the combined voting power of the then-outstanding Voting
Securities (computed in accordance with the standards for the
computation of total percentage ownership for the purposes of
Schedule 13D or Schedule 14D-1 (or any successor schedule, form
or report));
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3
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(4)
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There is a report filed on
Schedule 13D or Schedule 14D-1 (or any successor schedule, form
or report), each as promulgated pursuant to the Exchange Act of
1934 disclosing that any person or group has become the
beneficial owner of securities representing 50% or more of the
combined voting power of the then-outstanding Voting Securities
(computed in accordance with the standards for the computation
of total percentage ownership for the
purposes of Schedule 13D or Schedule 14D-1 (or any successor
schedule, form or report));.
Notwithstanding the provisions set forth above, a Change in Control shall
not be deemed to have occurred for purposes of this Plan solely because
(i) the Company, (ii) any Affiliate, or (iii) any employee stock ownership
plan or any other employee benefit plan of the Company or any Affiliate
either files or becomes obligated to file a report or a proxy statement
under or in response to Schedule 13D, Schedule 14D-1, Form 8-K or
Schedule 14A (or any successor schedule, form or report or item therein)
under the Exchange Act disclosing beneficial ownership by it of Voting
Securities, whether in excess of 20% or otherwise, or because the Company
reports that a change in control of the Company has occurred or will occur
in the future by reason of such beneficial ownership. For purposes of
calculating beneficial ownership pursuant to this subsection, any Voting
Securities held by Donald R. Horton as of the date hereof or received by
Donald R. Horton in connection with any merger involving the Company and any
affiliate of the Company shall not be included in the calculation of
beneficial ownership.
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(h)
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Code
means the Internal Revenue Code of 1986, as
amended.
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(i)
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Company
means D.R. Horton, Inc., a Delaware
corporation, and any successor thereto.
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(j)
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Compensation
means an employees Salary, Incentive
Compensation, and other compensation paid by the Employer for the Plan Year.
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(k)
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Disabled
means that a Participant either (i) is
unable to engage in any substantial gainful activity by reason of any medically
determinable physical or mental impairment that can be expected to result in
death or can be expected to last for a continuous period of not less than 12
months, or (ii) is, by reason of any medically determinable physical or mental
impairment that can be expected to result in death or can be expected to last
for a continuous period of not less than 12 months, receiving income
replacement benefits for a period of not less than three (3) months under an
accident and health plan covering employees of the Employer.
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(l)
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Eligible Employee
has the meaning set forth in
Section 3.1.
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(m)
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Employer
means the Company and each Affiliate of the
Company.
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(n)
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Incentive Compensation
means such bonuses and other
non periodic amounts (not including equity compensation) payable to an employee
in addition to his Salary for services rendered during the Plan Year, which may
be paid to the employee in the following Plan Year as determined by the
Employer in accordance with its general policies and procedures and its sole
discretion. Whether a payment qualifies as Incentive
Compensation shall be determined by the Administrative Committee in its
sole discretion.
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4
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(o)
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Participant
means an Eligible Employee of the
Employer who is participating in the Plan in accordance with Section 3.2.
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(p)
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Plan
means the D.R. Horton, Inc. Amended and Restated
Supplemental Executive Retirement Plan No. 2, as set forth herein, and as it
may be amended from time to time.
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(q)
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Plan Year
means October 1st through September 30th.
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(r)
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Salary
means the base annual compensation payable to
an employee by the Employer for services rendered during a Plan Year, before
reduction for amounts deferred pursuant to the D.R. Horton, Inc. Deferred
Compensation Plan or to the D.R. Horton, Inc. Profit Sharing Plus Plan, or any
other deferred compensation, 401(k), or cafeteria plan, which is payable in
cash to the employee for services to be rendered during the Plan Year; provided
that Salary shall exclude Incentive Compensation that may be paid by the
Employer to an employee with respect to the Plan Year.
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(s)
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Supplemental Retirement Benefit
means the deferred
compensation benefit of a Participant as determined under Article IV.
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Section 2.2
Usage
. Except where otherwise indicated by the context, any masculine
terminology used herein shall also include the feminine and vice versa, and the definition of
any term herein in the singular shall also include the plural and vice versa.
ARTICLE III
ELIGIBILITY AND PARTICIPATION
Section 3.1
Eligibility
. An
Eligible Employee
is an employee of the
Employer who has been chosen by the Administrative Committee,
in the exercise of its sole discretion, to be permitted to
participate in the Plan; provided that at all times the Plan
shall continue to qualify as an unfunded plan maintained
primarily to provide deferred compensation benefits to a
select group of management or highly compensated employees,
within the meaning of sections 201, 301, and 401 of the
Employee Retirement Income Security Act of 1974, as amended
from time to time. Eligibility begins on the first day of the
first Plan Year subsequent to being chosen by the
Administrative Committee to participate in the Plan.
Section 3.2
Participation
. Each Eligible Employee of the Employer shall
become a Participant by having Supplemental Retirement
Benefits allocated to his Account. A Participant shall
continue as such until his or her entire Supplemental
Retirement Benefit has been paid.
5
Section 3.3
Agreement Procedure
. The Employer and each Eligible Employee
may execute an Agreement that provides for the amount to be
allocated by the Employer to a Participants Account in
accordance with Section 4.3 below.
ARTICLE IV
SUPPLEMENTAL RETIREMENT BENEFIT
Section 4.1
Supplemental Retirement Benefit
. A Participants Supplemental
Retirement Benefit shall be equal to the total amount
allocated to the Participants Account.
Section 4.2
Accounts
. The Company shall establish and maintain, pursuant
to the terms of the Plan, an Account for each Participant
consisting of amounts allocated pursuant to Sections 4.3, 4.4
and 4.5 below. All amounts which are allocated to the Account
shall be allocated solely for purposes of accounting and
computation.
Section 4.3
Allocations
. The Company shall allocate such amount under the
Plan as determined under any Agreement that is in effect for
each Plan Year. In the event that the Employer and the
Eligible Employee have not executed an Agreement, the Company
may allocate such amount under the Plan as the Administrative
Committee determines in its sole discretion.
Section 4.4
Earnings
. A Participants Account shall be credited (or
debited) quarterly with earnings (or losses) at a rate
determined by the Company, in accordance with the procedures
established by the Administrative Committee.
Section 4.5
Valuation of Accounts
. The value of a Participants Account
shall be determined from time to time by the Administrative
Committee in the following manner:
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(a)
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First, a Participants Account shall be allocated with earnings
as specified above;
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(b)
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Next, a Participants Account shall be allocated with all
Company allocations as specified above.
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Each Participants Account shall be valued as of the last day of each Plan Year (or
more frequently as agreed upon by the Administrative Committee), and shall be valued
as of the date that a Participant receives a payment under the Plan, in accordance
with the procedures established by the Administrative Committee. All allocations to
a Participants Account shall be deemed to have been made on the applicable
valuation date in the order of priority set forth in this Section 4.5.
6
ARTICLE V
PAYMENT OF BENEFITS
Section 5.1
Commencement of Supplemental Retirement Benefit Payments
. Except as otherwise
provided in this Article V, the payment of a Participants Supplemental Retirement Benefit
shall be made (in the case of a lump sum) or shall commence
(in the case of installment payments) within 60 days after the date on which the
earliest of the following events occurs:
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(a)
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the Participant terminates service with the Employer for any
reason;
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(b)
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the Participants service with the Employer is terminated by
the Employer for any reason;
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(c)
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the Participant becomes Disabled;
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(d)
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the Participant dies; or
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(e)
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there is a Change in Control of the Company.
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If a Participant dies before receiving the Supplemental Retirement Benefit, then
such Supplemental Retirement Benefit shall be paid in the form of a lump sum payment
to the person or persons designated under Section 5.3. Notwithstanding any other
provision of this Plan to the contrary, a Participants right to receive any
Supplemental Retirement Benefit shall terminate and be forfeited immediately upon
termination of the Participants service with the Employer for Cause.
7
Section 5.2
Specified Employees
. Notwithstanding any other provision of
this Plan to the contrary, with respect to any Participant who
is a specified employee (as such term is defined under
Section 409A of the Code), no distribution under paragraphs
(a) or (b) of Section 5.1 of this Plan may be made of the
Supplemental Retirement Benefit, earlier than six (6) months
following the date of such Participants termination of
service with the Employer; provided, however, that in the case
of distributions that are to be paid in quarterly installments
(as opposed to in a lump sum), any installments that would
otherwise have been payable during the six-month period
immediately following a Participants termination of service
with the Employer shall be payable in lump sum on the first
day of the seventh month following such termination.
Section 5.3
Designation of Beneficiary
. A Participant may, by written
instrument delivered to the Administrative Committee during
the Participants lifetime, designate one or more primary and
contingent beneficiaries to receive the Supplemental
Retirement Benefit which may be payable hereunder following
the Participants death, and may designate the proportions in
which such beneficiaries are to receive such payments. A
Participant may change such designations from time to time,
and the last written designation filed with the Administrative
Committee prior to the Participants death shall control.
Notwithstanding the foregoing, a Participant who is married
may not designate a beneficiary other than the Participants
spouse, unless the spouse consents in writing to such
alternate beneficiary designation. In the event a Participant
does not designate a beneficiary, or for any reason such
designation is ineffective, in whole or in part, or if no
designated beneficiary survives the Participant, payment shall
be made by the Administrator in the following order of
priority:
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(a)
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to the Participants surviving spouse; or if none;
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(b)
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to the Participants children, per stripes; or if none;
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(c)
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the amounts that otherwise would have been paid to the
Participant or the Participants beneficiaries under the Plan shall be paid to
the Participants estate.
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Section 5.4
Form of Supplemental Retirement Benefit Payments
.
|
(a)
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Subject to Section 5.2, each Participant shall make a
distribution election to select distribution of his or her Supplemental
Retirement Benefit either (i) in a lump sum or (ii) in quarterly installments
over a period not to exceed five (5) years, provided that any such distribution
election, to the extent not already made, must be made no later than December
31, 2008; provided, however, that (i) no such election made in the calendar
year 2006 may change payment elections with respect to payments that would have
otherwise been received in the calendar year 2006, or to accelerate payments
into calendar year 2006 that would not have otherwise been made in 2006,
(ii) no such election made in the
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8
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calendar year 2007 may change payment elections with respect to payments that would have otherwise
been received in the calendar year 2007, or to accelerate payments into
calendar year 2007 that would not have otherwise been made in 2007; and
(iii) no such election made in the calendar year 2008 may change payment
elections with respect to payments that would have otherwise been received
in the calendar year 2008, or to accelerate payments into calendar year 2008
that would not have otherwise been made in 2008. New Plan participants
shall make their election pursuant to this Section 5.4(a) within 30 days of
becoming eligible to participate in the Plan. Notwithstanding anything
herein to the contrary, if a distribution election under this Section 5.4(a)
is not received prior to the deadlines set forth in this Section 5.4(a),
distribution of such Supplemental Retirement Benefit shall be made pursuant
to Section 5.4(c) as if the Participant had not made any election under this
Section 5.4(a).
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(b)
|
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If a Participant elects to receive his or her distributions in
the form of quarterly installments, the amount of each installment payment
shall be equal to the balance remaining in the Participants Account multiplied
by a fraction, the numerator of which is one (1), and the denominator of which
is the total number of remaining installment payments. The installment amount
shall be adjusted annually to reflect investment gains and losses allocated to
the Participants Account.
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(c)
|
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If no valid distribution election is made in accordance with
this Section 5.4 by the deadlines specified in Section 5.4(a), the
Participants Account will be distributed in the form of a lump sum payment
upon termination of employment subject to Section 5.2.
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(d)
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Each Participants distribution election shall be made in
writing, signed by the Participant on a Distribution Election Form provided by
the Company.
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(e)
|
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Notwithstanding any distribution election made by the
Participant pursuant to this Section 5.4 to receive installment payments, if
the Participant dies before such installment payments commence, or while such
installment payments are being made, the balance of the Participants
Supplemental Retirement Benefit shall be paid in the form of a lump sum to the
person or persons designated under Section 5.3.
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ARTICLE VI
ADMINISTRATION
Section 6.1
General
. Except as otherwise specifically provided in the
Plan, the Administrative Committee shall be responsible for
administration of the Plan.
Section 6.2
Administrative Rules
. The Administrative Committee may adopt
such rules of procedure as it deems desirable for the conduct
of its affairs except to the extent that such rules conflict
with the provisions of the Plan.
9
Section 6.3
Duties
. The Administrative Committee shall have the following
rights, power, duties, and discretionary authority:
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(a)
|
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The decision of the Administrative Committee in matters within
its jurisdiction shall be final, binding and conclusive upon any person
affected by such decision, subject to the claims procedure hereinafter set
forth.
|
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(b)
|
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The Administrative Committee shall have the complete
discretionary duty and authority to interpret and construe the provisions of
the Plan, to decide any question which may arise regarding the rights of
employees, Participants, and beneficiaries, and the amounts of their respective
interests, to adopt, amend or waive such rules and to exercise such powers as
the Administrative Committee may deem necessary for the administration of the
Plan, and to exercise any other rights, powers or privileges granted to the
Administrative Committee by the terms of the Plan.
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(c)
|
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The Administrative Committee shall maintain full and complete
records of its decisions. Its records shall contain all relevant data
pertaining to the Participant and his rights and duties under the Plan. The
Administrative Committee shall have the duty to maintain Account records of all
Participants.
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(d)
|
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The Administrative Committee shall cause the .principal
provisions of the Plan to be communicated to the Participants, and a copy of
the Plan and other documents shall be available at the principal office of the
Company for inspection by the Participants at reasonable times determined by
the Administrative Committee.
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Section 6.4
Fees
. No fee or compensation shall be paid to any person for services as the
Administrative Committee.
ARTICLE VII
CLAIMS PROCEDURE
Section 7.1
General
. Any claim for Supplemental Retirement Benefits under
the Plan shall be filed by the Participant or beneficiary
(claimant) on the form prescribed for such purpose with the
Administrative Committee.
Section 7.2
Denials
. If a claim for Supplemental Retirement Benefits
under the Plan is wholly or partially denied, notice of the
decision shall be furnished to the claimant by the
Administrative Committee within 90 days after receipt of the
claim by the Administrative Committee. If special
circumstances require an extension, an additional 90 day
period may apply, provided that the claimant is notified of
the extension before the expiration of the first 90 days.
10
Section 7.3
Notice
. Any claimant who is denied a claim for Supplemental
Retirement Benefits shall be furnished written notice setting
forth:
|
(a)
|
|
the specific reason or reasons for the denial;
|
|
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(b)
|
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specific reference to the pertinent provision of the Plan upon
which the denial is based;
|
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(c)
|
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a description of any additional material or information
necessary for the claimant to perfect the claim;
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(d)
|
|
an explanation of the claim review procedure under the Plan;
and
|
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(e)
|
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a statement of the claimants rights to bring a civil action
under ERISA Section 502(a).
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Section 7.4
Appeals Procedure
. So a claimant may appeal a denial of a claim, the claimant
or the claimants duly authorized representative may:
|
|
(a)
|
|
request a review by written application to the Administrative
Committee, or its designate, no later than 60 days after receipt by the
claimant of written notification of denial of a claim;
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(b)
|
|
review, free of charge, pertinent documents; and
|
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(c)
|
|
submit issues and comments in writing, whether or not such
information was considered in connection with the initial benefits
determination.
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Section 7.5
Review
. A decision on review of a denied claim shall be made not later than 60
days after receipt of a request for review, unless special circumstances require an extension
of time for processing, in which case a decision shall be rendered within a reasonable period
of time, but not later than 120 days after receipt of a request for review. The decision on
review shall be in writing and shall include the specific reason(s) for the decision and the
specific reference(s) to the pertinent provisions of the Plan on which the decision is based.
Deference will not be afforded any prior benefits determination.
If the claimants appeal is denied in whole or in part, he will be notified in
writing of the specific reasons for the decision. The denial notice will also
include the following information: (i) references to the specific Plan provision(s)
upon which the decision was based; (ii) a statement that, upon written request and
free of charge, the claimant will be provided reasonable access to and copies of all
documents, records and other information relevant to this claim for benefits; and
(iii) a statement of the claimants right to bring a civil action under ERISA
Section 502(a).
The Plan Administrative Committee is granted complete discretion and authority to
decide all claims (including any underlying factual determinations), and its
decision on review will be final and binding on all parties unless overturned by a
court.
11
ARTICLE VIII
MISCELLANEOUS PROVISIONS
Section 8.1
Contractual Obligation
. The Plan shall create an unfunded,
unsecured contractual obligation on the part of the Employer
to make payments from the Participants Accounts when due.
Payment of Account balances shall be made out of the general
assets of the Employer unless otherwise provided for by the
Employer.
Section 8.2
Unsecured Interest
. No Participant or party claiming an
interest in a Participants Account shall have any interest
whatsoever in any specific asset of the Employer. To the
extent that any party acquires a right to receive payments
under the Plan, such right shall be equivalent to that of an
unsecured general creditor of the Employer. Each Participant,
by participating hereunder, agrees to waive any priority
creditor status for wage payments with respect to any amounts
due hereunder. The Employer shall have no duty to set aside
or invest any amounts credited to Participants Accounts under
this Plan. Accounts established hereunder are solely for
bookkeeping purposes and the Employer shall not be required to
segregate any funds based on such Accounts.
Section 8.3
Withholding of Taxes
. The Employer shall have the right to
require Participants to remit to the Employer an amount
sufficient to satisfy federal, state, and local withholding
tax requirements, or to deduct from all payments made pursuant
to the Plan (or from a Participants other Compensation)
amounts sufficient to satisfy such withholding tax
requirements. The Employer makes no representations,
warranties, or assurances and assumes no responsibility as to
the tax consequences of this Plan or participation herein.
Section 8.4
Amendment
. The Company reserves the right to amend the Plan,
from time to time, in any manner that it deems advisable, by a
resolution of the Board or Administrative Committee. No
amendment shall, without the Participants consent, affect the
amount of the Participants Supplemental Retirement Benefit at
the time the amendment becomes effective or the rights of the
Participant to receive a Supplemental Retirement Benefit.
Section 8.5
Termination
. The Company reserves the right to terminate the
Plan or suspend contributions for any period of time and from
time to time. No termination shall, without the Participants
consent, affect the amount of the Participants Supplemental
Retirement Benefit prior to the termination or the right of
the Participant to receive a Supplemental Retirement Benefit.
In addition, termination of the Plan shall not be a permitted
distribution event, except to the extent permitted under
Section 409A of the Code without imposition of the additional
tax set forth in Section 409A(a)(1)(B) of the Code.
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Section 8.6
No Assignment
. The Participant shall not have the power to
pledge, transfer, assign, anticipate, mortgage or otherwise
encumber or dispose of in advance, any
interest in amounts payable hereunder or any of the payments provided for
herein, nor shall any interest in amounts payable hereunder or in any payments
be subject to seizure for payments of any debts, judgments, alimony or separate
maintenance, or be reached or transferred by operation of law in the event of
bankruptcy, insolvency or otherwise.
Section 8.7
Successors and Assigns
. The provisions of the Plan
are binding upon and inure to the benefit of the
Employer, its successors and assigns, and the
Participant, his beneficiaries, heirs, legal
representatives and assigns.
Section 8.8
Governing Law
. Except to the extent preempted by
applicable federal law, the Plan shall be subject to
and construed in accordance with the laws of the
State of Texas.
Section 8.9
No Guarantee of Employment
. Nothing contained in the
Plan shall be construed as a contract of employment
or deemed to give any Participant the right to be
retained in the employ of the Employer or any equity
or other interest in the assets, business or affairs
of the Employer. No Participant hereunder shall have
a security interest in any assets of the Employer to
secure the Employers obligations to pay any
Supplemental Retirement Benefits.
Section 8.10
Severability
. If any provision of the Plan shall be
held illegal or invalid for any reason, such
illegality or invalidity shall not affect the
remaining provisions of the Plan, but the Plan shall
be construed and enforced as if such illegal or
invalid provision had never been included herein.
Section 8.11
Notification of Addresses
. Each Participant and each
beneficiary shall file with the Administrative
Committee, from time to time, in writing, the post
office address of the Participant, the post office
address of each beneficiary, and each change of post
office address. Any communication, statement or
notice addressed to the last post office address
filed with the Administrative Committee (or if no
such address was filed with the Administrative
Committee, then to the last post office address of
the Participant or beneficiary as shown on the
Companys records) shall be binding on the
participant and each beneficiary for all purposes of
the Plan and neither the Administrative Committee nor
the Company shall be obliged to search for or
ascertain the whereabouts of any Participant or
beneficiary.
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