NVR, INC.
2005 STOCK OPTION PLAN
NON-QUALIFIED STOCK OPTION AGREEMENT
THIS AGREEMENT is
entered into as of ___ , between NVR, INC., a Virginia
corporation (hereinafter “NVR”), and ___ an
employee of NVR and/or of an NVR subsidiary (the
“Optionee”).
WHEREAS, NVR has
adopted the NVR, INC. 2005 Stock Option Plan (the
“Plan”) providing for the grant under certain
circumstances of options (the “Options”) exercisable
for the purchase of shares of NVR Common Stock (the
“Shares”);
WHEREAS, NVR,
under the terms and conditions set forth below, has offered and
committed to grant an Option under the Plan to the Optionee in
connection with the employment of the Optionee in the capacity set
forth below; and
WHEREAS, in
consideration of the grant of the Option and other benefits, the
Optionee is willing to accept the Option provided for in this
Agreement and is willing to abide by the obligations imposed on him
or her under this Agreement and the other responsibilities of his
or her position
NOW, THEREFORE, in
consideration of the mutual benefits hereinafter provided, and each
intending to be legally bound, NVR and the Optionee hereby agree as
follows:
1.
Acknowledgments of Optionee.
The Option granted under this Agreement is intended to provide to
the Optionee an opportunity to purchase Shares. The Optionee is
employed by NVR in the position of ___ . The Optionee
acknowledges that such position, the Option granted under this
Agreement and the other benefits of his or her employment in that
capacity are being conferred upon the Optionee only because of and
on the condition of the willingness of the Optionee to commit his
or her best efforts and loyalty to NVR in the performance of the
duties of that position.
2.
Effect of the Plan. The
Option to be granted under this Agreement will be subject to all of
the terms and conditions of the Plan, which are incorporated by
reference and made part of this Agreement. The Optionee will abide
by, and the Option granted to the Optionee will be subject to, all
of the provisions of the Plan and of this Agreement, together with
all rules and determinations from time to time issued by the
Committee established to administer the Plan and by the Board of
Directors of NVR (hereinafter “Board”) pursuant to the
Plan.
3.
Grants. The Optionee is
hereby granted an option to purchase ___ Shares, with an
Option Price of $___ per Share.
4.
Exercise; Conditions to
Exercise.
(a)
Period of Exercise . Subject to Section 4(f) below, the
Option may be exercised in whole or in part with respect to vested
grants at any time after vesting. No Option may be exercised after
ten years from the date of grant. The Option may be exercised only
with respect to whole Shares.
(b)
Vesting of Option . If the EPS Target is met in accordance
with Section 4(f)(i) below, then on each of December 31,
2011, December 31, 2012, December 31, 2013 and
December 31, 2014, twenty-five percent (25%) of the Options
shall be exercisable in respect of the number of Shares initially
subject to the Option. Subject to Section 4(f), the foregoing
installments, to the extent not exercised, shall accumulate and be
exercisable, in whole or in part, at any time and from time to
time, after becoming exercisable and prior to the termination of
the Option. For the avoidance of doubt and by way of example, if
additional vesting occurs on December 31, 2010, the Options
additionally vested on that date could not be exercised until the
first business day of 2011, at which time the Optionee would not
necessarily have to be an employee of NVR or an NVR subsidiary to
exercise the Options, subject to the earlier termination of the
Option pursuant to Paragraphs 4(a) and 5 of this Agreement. In the
event of a termination of the Optionee’s employment resulting
from the Optionee’s involuntary termination without
“Cause” (as defined in Section 5), death,
disability or retirement at normal retirement age (age 65) after
the EPS Target is met, the Option shall become exercisable at the
date of termination for a pro rata portion (based on the number of
full months of the current year that has expired prior to the
termination, but no more than three months in the case of an
involuntary termination without “Cause” or retirement
at normal retirement age) of the previously nonexercisable portion
of the Option which would have been eligible to be exercised at the
end of the year in which such termination occurs.
(c)
Who May Exercise . During the Optionee’s lifetime, the
Option rights may be exercised only by him or her.
(d)
Manner of Exercise . Option rights may be exercised by the
delivery of written notice from the Optionee to the Committee or
the Committee’s designee specifying the number of Shares then
being exercised.
(e)
Payment of Exercise Price . To exercise the Option, the
Optionee must make full payment of the Option Price to NVR in any
one or more of the following ways:
(i) in immediately
available funds;
(ii) by the
assignment and delivery to NVR of Shares owned by the Optionee (or
his estate) provided however, that such Shares have not been
acquired pursuant to the exercise of an option within the last six
months (unless the options were exercised following the death of
the Optionee), are free and clear of all liens and encumbrances and
have a fair market value (as determined by the closing price on the
national securities exchange on which the Shares are listed on the
day preceding the day of exercise or by any other method acceptable
to the Committee in its absolute discretion) equal to the
applicable Option Price less than any portion thereof paid in cash;
or
(iii) by delivery
(on a form prescribed by NVR) of an irrevocable direction to a
licensed securities broker acceptable to NVR to sell Shares and to
deliver all or part of the sale proceeds to NVR in payment of the
aggregate Option Price (but only if the Optionee is not a member of
Senior Management).
The Optionee
also must reimburse NVR for the amount of all applicable
withholding taxes at the rate required to be paid by NVR in
immediately available funds at the time of exercise.
(f)
Restrictions on Exercise .
(i) Performance
Goal. Except as provided in Section 7 below, the Option
shall not become exercisable unless NVR meets the EPS Target. NVR
will be deemed to have met the EPS Target if NVR’s cumulative
earnings per share is at least $339.00 per share (as adjusted by
the Board in its reasonable discretion for reorganizations,
recapitalizations, splits, reverse splits, combinations of shares,
mergers, consolidations, sales of assets or other similar events
occurring after May 4, 2005) for the years 2005, 2006, 2007
and 2008. For the avoidance of doubt, cumulative earnings per share
means the sum of the earnings per share for each year (determined
in accordance with the generally accepted accounting principles for
U.S. companies as then in effect for each such year, with no
retroactive adjustments for rules becoming effective in future
years), and
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