Exhibit 10.1
CENTEX
CORPORATION
PLAN REGARDING SEVERANCE AFTER A CHANGE IN CONTROL
Introduction
The Board of Directors of Centex
Corporation (the “Company”) recognizes that the
possibility of a Change in Control of the Company, and the
uncertainty it creates, may result in the loss or distraction of
employees of the Company to the detriment of the Company and its
stockholders.
The Board considers the avoidance
of such loss and distraction to be essential to protecting and
enhancing the best interests of the Company and its stockholders.
The Board also believes that when a Change in Control is perceived
as imminent, or is occurring, the Board should be able to receive
and rely on disinterested service from employees regarding the best
interests of the Company and its stockholders without concern that
employees might be distracted or concerned by the personal
uncertainties and risks created by the perception of an imminent or
occurring Change in Control.
In addition, the Board believes
that it is consistent with the Company’s employment practices
and policies and in the best interests of the Company and its
stockholders to treat fairly its employees whose employment
terminates on or following a Change in Control.
Accordingly, the Board has
determined that appropriate steps should be taken to assure the
Company of the continued employment and attention and dedication to
duty of its employees and to seek to ensure the availability of
their continued service, notwithstanding the possibility or
occurrence of a Change in Control.
Therefore, in order to fulfill the
above purposes, the following plan has been developed and is hereby
adopted.
1.
Establishment of Plan . As of the Effective Date, the
Company hereby establishes the Centex Corporation Plan Regarding
Severance After a Change in Control as set forth in this document.
Upon a Change in Control, only with respect to each Executive, (a)
this Plan shall replace the Centex Corporation Executive Severance
Policy (the “ESP”) and (b) the ESP shall be terminated
pursuant to Section 14 thereof; provided, however , that,
except as otherwise provided herein, the obligations of the Company
to any individual whose employment by the Company is terminated
prior to a Change in Control shall be governed by the terms of the
ESP.
2.
Definitions . As used herein, the following words and
phrases shall have the following respective meanings:
(a)
Affiliated Company . Any company controlled by, controlling
or under common control with the Company.
(b) Base Salary . The annual
base rate of compensation payable to an Executive by the Company
(excluding bonuses and other benefits), before deductions or
voluntary deferrals authorized by the Executive or
required by law to be withheld from the Executive by the
Company.
(c)
Board . The Board of Directors of the Company.
(d)
Bonus Amount . The product of an Executive’s Required
Base Salary and the Executive’s target percentage under the
Company’s applicable bonus plan or any comparable percentage
under any predecessor or successor Company plan for the fiscal year
in which the Change in Control occurs (or, if such percentage has
not been established, the Executive’s target percentage under
the Company’s applicable bonus plan or any comparable
percentage under any predecessor or successor Company plan for the
fiscal year immediately prior to the year in which the Change in
Control occurs), as determined immediately prior to the Change in
Control.
(e)
Cause . “Cause” means: (i) the willful and
continued failure of the Executive to perform substantially the
Executive’s duties with the Company or any Affiliated Company
(other than any such failure resulting from incapacity due to
physical or mental illness or following the Executive’s
delivery of a Notice of Termination for Good Reason), after a
written demand for substantial performance is delivered to the
Executive that specifically identifies the manner in which the
Board or the Chief Executive Officer of the Company believes that
the Executive has not substantially performed the Executive’s
duties, (ii) the willful engaging by the Executive in illegal
conduct or gross misconduct that is materially and demonstrably
injurious to the Company or (iii) the willful performance by the
Executive, while employed by the Company, of services for a company
or person which competes with the Company, resulting in harm to the
Company.
(f)
Change in Control . A “Change in Control” means
the first to occur of any of the following:
(i) The
acquisition by any individual, entity or group (within the meaning
of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of
1934, as amended (the “Exchange Act”)) (a
“Person”) of beneficial ownership (within the meaning
of Rule 13d-3 promulgated under the Exchange Act) of 30% or more of
either (A) the then-outstanding shares of common stock of the
Company (the “Outstanding Company Common Stock”) or (B)
the combined voting power of the then-outstanding voting securities
of the Company entitled to vote generally in the election of
directors (the “Outstanding Company Voting
Securities”); provided , however , that, for
purposes of this Section 2(f), the following acquisitions shall not
constitute a Change in Control: (i) any acquisition of Outstanding
Company Common Stock or Outstanding Company Voting Securities
directly from the Company, (ii) any acquisition of Outstanding
Company Common Stock or Outstanding Company Voting Securities by
the Company, (iii) any acquisition of Outstanding Company Common
Stock or Outstanding Company Voting Securities by any employee
benefit plan (or related trust) sponsored or maintained by the
Company or any Affiliated Company or (iv) any acquisition of
Outstanding Company Common Stock or Outstanding Company Voting
Securities by any corporation pursuant to a transaction that
complies with Sections 2(f)(iii)(A), 2(f)(iii)(B) and
2(f)(iii)(C);
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(ii) Individuals who, as of the
date hereof, constitute the Board (the “Incumbent
Board”) cease for any reason to constitute at least a
majority of the Board; provided , however , that any
individual becoming a director subsequent to the date hereof whose
election, or nomination for election by the Company’s
shareholders, was approved by a vote of at least a majority of the
directors then comprising the Incumbent Board shall be considered
as though such individual were a member of the Incumbent Board, but
excluding, for this purpose, any such individual whose initial
assumption of office occurs as a result of an actual or threatened
election contest with respect to the election or removal of
directors or other actual or threatened solicitation of proxies or
consents by or on behalf of a Person other than the Board;
(iii) Consummation of a
reorganization, merger, statutory share exchange or consolidation
or similar corporate transaction involving the Company or any of
its subsidiaries, a sale or other disposition of all or
substantially all of the assets of the Company, or the acquisition
of assets or stock of another entity by the Company or any of its
subsidiaries (each, a “Business Combination”), in each
case unless, following such Business Combination, (A) all or
substantially all of the individuals and entities that were the
beneficial owners of the Outstanding Company Common Stock and the
Outstanding Company Voting Securities (the “Existing
Shareholders”) immediately prior to such Business Combination
beneficially own, directly or indirectly, more than 60% of the
then-outstanding shares of common stock and the combined voting
power of the then-outstanding voting securities entitled to vote
generally in the election of directors, as the case may be, of the
corporation resulting from such Business Combination (including,
without limitation, a corporation that, as a result of such
transaction, owns the Company or all or substantially all of the
Company’s assets either directly or through one or more
subsidiaries) in substantially the same proportions as their
ownership immediately prior to such Business Combination of the
Outstanding Company Common Stock and the Outstanding Company Voting
Securities, as the case may be, (B) no Person (excluding any
corporation resulting from such Business Combination or any
employee benefit plan (or related trust) of the Company or such
corporation resulting from such Business Combination) beneficially
owns, directly or indirectly, 30% or more of, respectively, the
then-outstanding shares of common stock of the corporation
resulting from such Business Combination or the combined voting
power of the then-outstanding voting securities of such
corporation, except to the extent that such ownership existed prior
to the Business Combination, and (C) at least a majority of the
members of the board of directors of the corporation resulting from
such Business Combination were members of the Incumbent Board at
the time of the execution of the initial agreement or of the action
of the Board providing for such Business Combination (
provided,
that any Business Combination that constitutes a Change in Control
solely by reason of subsection (iii)(A) of this Section 2(f)
following which the Existing Shareholders beneficially own greater
than 50% (but less than 60%) of the then-outstanding shares of
common stock and the combined voting power of the then-outstanding
voting securities entitled to vote generally in the election of
directors of the corporation resulting from such Business
Combination shall be referred to hereinafter as a “Merger of
Equals Transaction”); or
(iv) Approval by the
shareholders of the Company of a complete liquidation or
dissolution of the Company.
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(g)
Code . The Internal Revenue Code of 1986, as amended from
time to time.
(h)
Committee . Subject to Section 13, the Compensation and
Management Development Committee of the Board, or its duly
authorized designee.
(i)
Company . Centex Corporation, and any successor thereto or,
if applicable, the ultimate parent of any such successor.
(j)
Date of Termination . The date of receipt of a Notice of
Termination from the Company or the Executive, as applicable, or
any later date specified in the Notice of Termination, which date
shall not be more than 30 days after the giving of such notice. The
Company and the Executive shall take all steps necessary (including
with regard to any post-termination services by the Executive) to
ensure that any termination under this Plan constitutes a
“separation from service” within the meaning of Section
409A of the Code, and notwithstanding anything contained herein to
the contrary, the date on which such separation from service takes
place shall be the “Date of Termination.” For purposes
of the Plan, an Executive shall experience a “separation from
service” on the date on which the facts and circumstances
indicate that the Executive and the Company reasonably anticipate
that the level of bona fide services the Executive will perform for
the Company after such date (whether as an employee or as an
independent contractor) will permanently decrease to no more than
33 1/3 percent of the average level of bona fide services performed
by the Executive (whether as an employee or an independent
contractor) over the immediately preceding 12-month period.
(k)
Disability . A termination for “Disability”
shall have occurred if the Company determines in good faith that
the Executive has been absent from his or her duties with the
Company on a full-time basis for 180 consecutive business days as a
result of incapacity due to mental or physical illness that is
determined to be total and permanent by a physician selected by the
Company or its insurers.
(l) Effective Date .
April 7, 2009.
(m)
Employee . Any regular, full-time employee or part-time
employee (who is regularly scheduled to work at least twenty (20)
hours per week) of the Company or any Affiliated Company. Part-time
employees who are regularly scheduled to work less than twenty (20)
hours per week and individuals who are classified by the Company as
independent contractors shall not be Employees.
(n)
Executive . An Employee who is selected, in the sole
discretion of the Committee or its duly authorized designee
(including without limitation, but only with respect to Employees
who are not Section 16 Employees and who participate in the ESP as
of the Effective Date, the Chief Executive Officer and the Senior
Vice President of Human Resources of the Company), to participate
in this Plan and who is listed on Exhibit A as amended from
time to time.
(o)
Good Reason . With respect to any Executive, the occurrence
of any of the following events after a Change in Control, without
the Executive’s prior
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written
consent: (i) a material diminution in the Executive’s
position (including status, offices, titles and reporting
requirements), authority, duties or responsibilities from the level
in effect immediately prior to a Change in Control; (ii) a material
diminution, following a Change in Control, in the authorities,
duties or responsibilities of the position to which the Executive
is required to report; (iii) a reduction of 10 percent or more in
the Executive’s annual base salary or target bonus or
aggregate other incentive compensation opportunities that are
awarded on an annual basis (including, without limitation, equity
or other long-term incentive opportunities, but excluding special
retention awards) (“Other Incentive Compensation
Opportunities”) or aggregate employee benefits, all as in
effect immediately prior to a Change in Control (provided that with
respect to each of Other Incentive Compensation Opportunities and
aggregate employee benefits, no reduction shall be deemed to have
occurred if the Executive receives aggregate Other Incentive
Compensation Opportunities or aggregate employee benefits, as
applicable, substantially similar to those provided to similarly
situated employees of the Company and its post-Change in Control
Affiliated Companies, unless, in the case of Other Incentive
Compensation Opportunities only, there is a reduction of 25 percent
or more in the Executive’s Other Incentive Compensation
Opportunities as in effect immediately prior to a Change in
Control); (iv) the Company’s requiring the Executive to be
based at any office not within 50 miles of the office at which the
Executive was based immediately prior to a Change in Control, or
the Company’s requiring the Executive to be based at a
location other than the principal executive offices of the Company,
if the Executive was employed at such location immediately prior to
a Change in Control; (v) any action or inaction that constitutes a
material breach by the Company of the terms of this Plan; or (vi)
failure of the Company to require any successor to the Company to
comply with the Plan. Notwithstanding the foregoing, in order to
invoke a termination for Good Reason, an Executive must provide
written notice to the Senior Vice President of Human Resources of
the Company of the existence of one or more of the conditions
described in clauses (i), (ii), (iii), (iv), (v) or (vi) within 90
days after having knowledge of such condition or conditions, and
the Company shall have 30 days following receipt of such written
notice (the “Cure Period”) during which it may remedy
the condition. In the event that the Company fails to remedy any
condition constituting Good Reason during the Cure Period, the
Executive must terminate employment, if at all, within 90 days
following the Cure Period in order to terminate employment for Good
Reason.
(p)
Nonsolicitation Period . The period beginning on the date of
the Executive’s Qualified Termination and ending on, as
applicable: (i) for an Executive in Level A of Exhibit A
attached hereto, the date that is two years following the date of
such Qualified Termination; (ii) for an Executive in Level B of
Exhibit A attached hereto, the date that is eighteen months
following the date of such Qualified Termination; and (iii) for an
Executive in Level C of Exhibit A attached hereto, the date
that is one year following the date of such Qualified
Termination.
(q)
Notice of Termination . A written notice that (i) indicates
the specific termination provision in this Plan relied upon, (ii)
to the extent applicable, sets forth in reasonable detail the facts
and circumstances claimed to provide a basis for termination of the
Executive’s employment under the provision so indicated and
(iii) if the Date of Termination (as defined herein) is other than
the date of receipt of such notice,
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specifies the
Date of Termination (which Date of Termination shall be not more
than 30 days after the giving of such notice). The failure by the
Executive or the Company to set forth in the Notice of Termination
any fact or circumstance that contributes to a showing of Good
Reason or Cause shall not waive any right of the Executive or the
Company, respectively, hereunder or preclude the Executive or the
Company, respectively, from asserting such fact or circumstance in
enforcing the Executive’s or the Company’s respective
rights hereunder.
(r)
Plan . This Centex Corporation Plan Regarding Severance
After a Change in Control.
(s)
Qualified Termination . Any termination of an
Executive’s employment, during the two-year period beginning
on the date of a Change in Control (or, if such Change in Control
is a Merger of Equals Transaction, only during the one-year period
beginning on the date of such Change in Control), by the Company
other than for Cause, or by the Executive for Good Reason. For the
avoidance of doubt, the termination of an Executive’s
employment on account of the Executive’s death or Disability
shall not constitute a Qualified Termination.
(t)
Required Base Salary . With respect to any Executive, the
higher of (i) the Executive’s Base Salary as in effect
immediately prior to a Change in Control and (ii) the
Executive’s highest Base Salary in effect at any time
thereafter.
(u)
Section 16 Employee . Any employee who is subject to Section
16 of the Securities Exchange Act of 1934, as amended.
(v)
Separation Agreement . An agreement between the Company and
an Executive in substantially the form appended hereto as
Appendix B .
3.
Eligibility . An Employee is eligible for selection by the
Committee to be an Executive for purposes of the Plan if the
Employee (a) is not, at the effective time of the Change in
Control, on a leave of absence as to which reemployment rights are
not guaranteed by applicable law and (b) has been an Employee for
at least one month prior to the Employee’s Date of
Termination.
4.
Benefits Payable Upon a Qualified Termination .
(a)
Severance Pay . In the event that an Executive suffers a
Qualified Termination, the Company shall pay such Executive an
amount (“Severance Pay”) equal to the applicable amount
set forth below:
(i) For
an Executive in Level A of Exhibit A attached hereto, an
amount equal to 2.0 times the sum of (A) the Executive’s
Required Base Salary and (B) the Executive’s Bonus
Amount;
(ii)
For an Executive in Level B of Exhibit A attached hereto, an
amount equal to 1.5 times the sum of (A) the Executive’s
Required Base Salary and (B) the Executive’s Bonus Amount;
and
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(iii)
For an Executive in Level C of Exhibit A attached hereto, an
amount equal to 1.0 times the sum of (A) the Executive’s
Required Base Salary and (B) the Executive’s Bonus
Amount.
(b) Certain Reductions in
Severance Pay .
(i) In
the event that an Executive suffers a Qualified Termination in a
fiscal year in respect of which an annual bonus is paid to the
Executive pursuant to Section 8 of the Centex Corporation 2003
Annual Incentive Compensation Plan or any successor thereto (the
“Bonus Payment”), such Executive’s Severance Pay
shall be reduced by an amount equal to the product of (A) the Bonus
Payment and (B) a fraction, the numerator of which equals the
number of days between the date on which such Qualified Termination
occurs and the end of the fiscal year in respect of which such
Qualified Termination occurs and the denominator of which equals
365.
(ii) In
no event shall an Executive’s Severance Pay exceed 2.99 times
the sum of (A) the Executive’s base salary received
(including for this purpose any amounts earned but d
