PERFORMANCE-BASED STOCK OPTION AWARD AGREEMENT UNDER THE M/I HOMES, INC.
Exhibit
10.3
UNDER
THE
M/I
HOMES, INC.
1993
STOCK INCENTIVE PLAN
AS
AMENDED
This
Performance-Based Stock Option Award Agreement (this “Agreement”) is made as of
_______________, 2007, by and between M/I Homes, Inc., an Ohio corporation
(the
“Company”), and ____________________ (the “Employee”).
WHEREAS,
on November 17, 1998, the Board of Directors of the Company adopted, and on
April 22, 1999, the shareholders approved, the M/I Homes, Inc. 1993 Stock
Incentive Plan as Amended (the “Plan”), pursuant to which awards of restricted
stock, options and stock appreciation rights may be granted to the Company’s
employees, officers, directors, consultants and advisors; and
WHEREAS,
in recognition of the valuable services provided by and to be provided by the
Employee, the Company has determined that its interests will be advanced by
providing an incentive to the Employee to acquire a proprietary interest in
the
Company and, as a shareholder, to share in its success and thereby have added
incentive to work effectively for and in the interests of the Company and its
affiliates; and
WHEREAS,
the Employee has acquired and/or shall acquire during his/her employment a
considerable amount of confidential and proprietary information with respect
to
the business of the Company and its affiliates, which confidential and
proprietary information is very valuable to the Company and would be extremely
detrimental to the Company if disclosed or used by the Employee, other than
in
the performance of his/her duties as an employee of the Company and/or its
affiliates; and
WHEREAS,
the Employee desires to participate in the Plan.
NOW,
THEREFORE, in consideration of the mutual promises and of the covenants and
agreements hereinafter set forth and for other good and valuable consideration,
the parties hereby agree as follows:
Section
1. Award
The
Company hereby grants to the Employee, and the Employee hereby accepts from
the
Company, the right, privilege and option (the “Option”) to purchase
_______________ shares of the Company’s common stock, $.01 par value (“Shares”),
subject to the terms and conditions set forth in the Plan and this
Agreement.
Section
2. Status
of Option
(a) Subject
to Plan.
The
Option and the manner of and the conditions placed upon its exercise shall
be
subject to all of the terms and conditions of this Agreement and of the Plan,
as
interpreted and administered by the Committee. In the event of a conflict
between the terms of this Agreement and the terms of the Plan, the terms of
the
Plan shall govern. All capitalized terms that are used in this Agreement but
are
not defined in this Agreement shall have the meanings ascribed to such terms
in
the Plan.
(b) Intended
Tax Status.
It is
the intention of the Company that the Option shall not be treated as an
“incentive stock option” in accordance with Section 422 of the Internal Revenue
Code of 1986, as amended.
Section
3. Exercise
Price of Shares
The
purchase price of the Shares subject to the Option shall be $_______ per Share
(the “Exercise Price”).
Section
4. Time
of Exercise of Option
(a) Subject
to the provisions of Sections 6 and 7, the Option shall vest and become
exercisable in accordance with the following provisions:
(i) As
soon
as reasonably practical after the conclusion of the fiscal year of the Company
ending on December 31, 2007, the Committee shall determine the extent to which
the performance measures described in Exhibit A attached hereto and made a
part
of this Agreement (the “Performance Measures”) are satisfied. Based upon this
determination, a percentage (between 0% and 100% as set forth in Exhibit A)
of
the Shares subject to the Option shall remain eligible to vest and be purchased
through the exercise of the Option pursuant to the provisions of Section
4(a)(ii) below (the “Available Option Shares”). The portion of the Option
attributable to Shares, if any, that do not become Available Option Shares
pursuant to the preceding provisions of this Section 4(a)(i) shall be deemed
to
have lapsed and to have been forfeited as of December 31, 2007.
(ii) The
Available Option Shares (as determined pursuant to the provisions of Section
4(a)(i) above and the provisions of Exhibit A), if any, shall vest and become
available for purchase through the exercise of the Option in accordance with
the
following schedule:
|
Percentage
of Available Option
Shares
that Vest and Become Available for Purchase
Upon
Exercise of Option
|
Vesting
Date
|
|
20%
of the Available Option Shares
|
12/31/2007
|
|
An
additional 20% of the Available Option Shares
|
12/31/2008
|
|
An
additional 20% of the Available Option Shares
|
12/31/2009
|
|
An
additional 20% of the Available Option Shares
|
12/31/2010
|
|
An
additional 20% of the Available Option Shares
|
12/31/2011
|
provided,
however,
that
the Employee must remain continuously employed by the Company or any of its
affiliates from the date of this Agreement until the applicable Vesting Date
in
order for the Available Option Shares scheduled to vest and become available
for
purchase on that Vesting Date to actually vest and become available for
purchase.
(b)(i) In
the
event that, prior to January 1, 2008, a Change of Control occurs or the Employee
dies or suffers a disability (as defined in the Plan), the Option shall vest
and
become immediately exercisable with respect to all Shares described in Section
1.
(ii) In
the
event that, on or after January 1, 2008, a “Change of Control” occurs or the
Employee dies or suffers a disability, the Option shall vest and become
immediately exercisable with respect to all Available Option Shares, if any,
which have not previously been purchased by the Employee.
(iii) Subject
to Section 4(b)(i), the Employee hereby acknowledges that he/she (or, in the
case of the Employee’s death, his/her beneficiary) may not exercise the Option
prior to the Committee’s determination of the extent to which the Performance
Measures have been satisfied and the number of the Available Option Shares
in
accordance with Section 4(a)(i) and Exhibit A.
(c) The
Option shall lapse and be forfeited to the extent not exercised on or before
its
termination in accordance with Section 7.
Section
5. Method
of Exercise of Option
(a) Subject
to the relevant provisions of the Plan, the Employee shall exercise the Option
with respect to all or any number of full Available Option Shares then subject
to exercise by written notice to the Committee in the form attached hereto.
Such
notice shall either be accompanied by (i) a certified check, bank draft, postal
or express money order, personal check (if approved by the Committee), or Shares
previously acquired by the Employee in full payment of the Exercise Price of
the
Available Option Shares to be purchased; or (ii) a statement, in substantially
the form attached hereto directing that (A) the certificates for the Available
Option Shares for which the Option is exercised be delivered to a licensed
broker acceptable to the Company as the agent for the individual exercising
the
Option and (B) at the time such certificate or certificates are delivered,
the
broker shall tender to the Company cash (or cash equivalents acceptable to
the
Company) equal to the Exercise Price for the Available Option Shares purchased
pursuant to the exercise of the Option plus the amount (if any) of federal
and/or other taxes which the Company may in its judgment, be required to
withhold with respect to the exercise of the Option.
(b) If
the
Option is being exercised by the Employee’s Beneficiary, the Beneficiary’s
notice of exercise to the Committee shall be accompanied by proof satisfactory
to the Committee of the right of such Beneficiary to exercise the Option under
this Agreement, the Plan and all applicable laws and regulations.
Section
6. Conditions
on Exercise
Notwithstanding
any provision to the contrary in this Agreement:
(a) The
exercise of any portion of the Option or the Company’s obligation to deliver
Shares upon the exercise of the Option is subject to the satisfaction, in the
Committee’s sole and absolute discretion, of the following
conditions:
(i) any
withholding liabilities;
(ii) any
restrictions imposed by any securities exchange or under federal or state law
with respect to the listing, registration or qualification of any Shares to
be
delivered; and
(iii) any
consent or approval of any regulatory body, the Board of Directors of the
Company or the Company’s shareholders.
(b) The
Company’s obligation to deliver Shares upon the exercise of any portion of the
Option is further subject to the conditions that:
(i) the
Employee is not, at the time of exercise, in material breach of any of his
or
her obligations under this Agreement, or under any other agreement with the
Company;
(ii) no
preliminary or permanent injunction or other order against the delivery of
the
Shares issued by any federal or state court of competent jurisdiction in the
United States shall be in effect;
(iii) there
shall not be in effect any federal or state law, rule or regulation which
prevents or delays delivery of the Shares or payment, as appropriate;
and
(iv) the
Employee or Beneficiary exercising the Option shall confirm any factual matters
reasonably requested by the Committee, the Company or counsel for the
Company.
Section
7. Termination
of Option
The
Option granted hereunder, to the extent not theretofore exercised, shall
terminate upon the first to occur of the following dates:
(a) December
31, 2007, with respect to Shares that do not become Available Option Shares
pursuant to the provisions of Section 4(a)(i) and Exhibit A;
(b) the
expiration of thirty (30) days after the date on which the Employee’s employment
by the Company or any of its affiliates terminates for any reason other than
the
retirement (as defined in the Plan), death or disability of the
Employee;
(c) the
expiration of one (1) year after the date of the Employee’s retirement, death or
disability;
(d) the
expiration of fifteen (15) days after the occurrence of a Change of Control;
or
(e) the
tenth
anniversary of the date of this Agreement.
Section
8. Rights
of Shareholder
Neither
the Employee nor his or her Beneficiary, executor, administrator, heirs or
legatees shall have any rights of a shareholder in the Company with respect
to
the Shares covered by the Option unless and until a certificate representing
such Shares has been duly issued and delivered to him or her pursuant to this
Agreement. Nothing in this Agreement shall be deemed to confer on the Employee
any right to continue in the employ of the Company or any of its affiliates
or
to interfere in any way with the right of the Company or, if applicable, its
affiliates to terminate his or her employment at any time.
Section
9. Option
Nontransferable
The
Option shall not be assignable or transferable, or subject to any disposition,
including hypothecation, by the Employee otherwise than by will and the laws
of
descent and distribution. Any such transfer, disposition, pledge or
hypothecation shall be null and void. The Option shall not be subject to
execution, attachment or similar process except with the express consent of
the
Company. During the lifetime of the Employee, the Option shall be exercisable
only by him or her.
Section
10. Employee
Covenants
In
consideration for the granting of the Option, the Employee hereby covenants
and
agrees as follows:
(a) The
Employee shall not at any time, directly or indirectly, disclose to any other
person, corporation, partnership, proprietorship or other business enterprise,
or otherwise use any “Data of a Confidential Nature” except in the performance
of his/her duties as an employee of the Company and/or an affiliate with respect
to the business of the Company and its affiliates. Employee agrees that all
Company materials evidencing, reflecting or containing “Data of a Confidential
Nature” are and shall remain the sole and exclusive property of the Company and
that upon termination of the Employee’s employment with the Company and its
affiliates, all such materials, including but not limited to, records, drawings,
blueprints, manuals, brochures, pamphlets and all other materials will be
returned to the Company. As used herein “Data of a Confidential Nature”
includes, but is not limited to cost, price and customer data, any information
on land acquisition programs, information on the Company’s (or any affiliate’s)
plans to acquire new properties or business, information on the Company’s (or
any affiliate’s) compensation programs, information regarding relocations of
existing facilities, new properties or business, major changes in organization,
competitive bid information, prices paid or received for goods or services,
processes, plans, methods of doing business, special needs of customers, or
any
other information or data which if published, released, or otherwise
disseminated might be used to the detriment of the Company, its affiliates
or
their management or affect their ability to transact business.
(b) The
Employee shall not, at any time, directly or indirectly, or in concert with
any
other person, corporation, partnership, proprietorship or other business
enterprise:
(i) induce
or
attempt to induce any employee or agent of the Company or any of its affiliates
to leave the employ of the Company or any of its affiliates; or
(ii) employ
(or engage to act, directly or indirectly, as an independent contractor or
agent) any employee or agent of the Company or any of its affiliates within
six
(6) months following termination of such employee’s employment or of such
agent’s agency with the Company or any of its affiliates.
(c) In
the
event that any covenant set forth in subparagraph (b) shall be determined by
a
court of competent jurisdiction to be unenforceable because it extends over
too
great a period of time, or for any other reason, such covenant shall be
interpreted to extend only over the maximum time period or to the maximum extent
to which they may be enforceable.
(d) The
covenants set forth in subparagraphs (a) and (b) shall remain in effect
regardless of whether the Employee exercises the Option in whole or in
part.
The
Employee acknowledges that a breach of the covenants set forth in this Section
10 may cause irreparable damage to the Company and its affiliates, the extent
of
which may be difficult to ascertain, and that the award of damages may not
be
adequate relief. The Employee agrees that, in the event of a breach or
threatened breach of the covenants contained in this Section 10, the Company
may
institute an action to compel the specific performance of such covenants, and
that such remedy shall be cumulative, not exclusive, and shall be in addition
to
any other available remedies.
The
Employee recognizes and understands that the Employee has acquired and/or shall
acquire during his or her employment with the Company and/or its affiliates
a
considerable amount of confidential and proprietary information with respect
to
the business of the Company and its affiliates, which confidential and
proprietary information is very valuable to the Company and would be extremely
detrimental to the Company if disclosed or used by the Employee other than
in
the performance of his or her duties as an employee of the Company and/or its
affiliates. The Employee further acknowledges that the employees of the Company
and its affiliates are an integral part of the Company’s business and, thus, it
is important for the Company and its affiliates to use their maximum efforts
to
prevent the loss of such employees.
Section
11. Miscellaneous
(a) No
provision of this Agreement may be modified, waived or discharged unless such
modification, waiver or discharge is agreed to in a writing signed by the
parties to this Agreement.
(b) No
fractional Shares or other securities shall be issued or delivered pursuant
to
this Agreement, and the Committee in its sole discretion shall determine (except
as otherwise provided in the Plan) whether cash, other securities, or other
property shall be paid or transferred in lieu of any fractional Shares or other
securities, or whether such fractional Shares or other securities or any rights
thereto shall be canceled, terminated, or otherwise eliminated.
(c) No
agreement or representations, express or implied, with respect to the subject
matter hereof have been made by either party which are not set forth expressly
in this Agreement or the Plan.
(d) This
Agreement shall be construed and enforced in accordance with and governed by
the
laws of the State of Ohio. Any action brought relating to this Agreement must
be
forumed and venued in a court of appropriate jurisdiction located within
Franklin County, Ohio. The Employee hereby consents to the jurisdiction of
the
courts of Franklin County, Ohio with respect to any action brought against
the
Employee by the Company under this Agreement.
(e) To
the
extent that the exercise of the Option results in income to the Employee for
any
federal or state income tax purposes, no later than the date as of which such
tax withholding is first required, the Employee shall pay to the Company, or
make arrangements satisfactory to the Company regarding the payment of, any
federal or state income tax required to be withheld with respect to such amount.
If the Employee fails to do so, then the Company is authorized to withhold
from
any cash remuneration then or thereafter payable to the Employee any tax
required to be withheld by reason of such resulting compensation income.
IN
WITNESS WHEREOF, the parties have caused this Agreement to be executed and
made
effective the day and year first above written.
EMPLOYEE: COMPANY:
M/I
Homes, Inc.
|
By:
|
||||
|
Date:
|
Title:
|
EXHIBIT
A
TO
UNDER
THE
M/I
HOMES, INC.
1993
STOCK INCENTIVE PLAN
AS
AMENDED
The
Performance Measures to be satisfied as of December 31, 2007 for purposes of
Section 4(a) of the Agreement will be based (1) 60% on the Company’s actual net
income in 2007, (2) 20% on homebuyer satisfaction ratings in 2007 and (3) 20%
on
the Company’s return on beginning equity (“XXX”) in 2007 as
follows:
1. Actual
Net Income
|
%
of 2007 Budgeted Net Income
|
%
of Shares
Becoming
Available Option Shares
|
|
Less
than 40%
|
0%
|
|
40%
|
3%
|
|
100%
|
22%
|
|
150%
|
31%
|
|
200%
|
44%
|
|
900%
|
60%
|
The
percentage of Shares becoming Available Option Shares will increase
proportionately between the percentage levels of 2007 Budgeted Net
Income.
2. Homebuyer
Satisfaction Rating
|
%
of Positive Ratings in 2007
|
%
of Shares
Becoming
Available Option Shares
|
|
Less
than 79%
|
0%
|
|
79%
|
2%
|
|
88%
|
20%
|
The
percentage of Shares becoming Available Option Shares will increase
proportionately between the percentage levels of Positive Ratings in 2007;
provided,
however, that, if the Company’s actual net income in 2007 is less than the
Company’s 2007 budgeted net income, the percentage of Shares becoming Available
Option Shares (as determined by the above table) will be reduced, on a pro-rata
basis, based on the percentage of the 2007 budgeted net income achieved by
the
Company. For purposes of this Section 2, “% of Positive Ratings in 2007” means
the percentage of the respondents to the Company’s homeowner survey who
responded “yes” to the question “Would you recommend M/I homes to a friend or
relative?”
3. XXX
|
XXX
%
|
%
of Shares
Becoming
Available Option Shares
|
|
Less
than 10%
|
0%
|
|
10%
|
10%
|
|
20%
|
20%
|
The
percentage of Shares becoming Available Option Shares will increase
proportionately between the percentage levels of XXX in
2007.
