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EXHIBIT 10.3
THE HOME DEPOT, INC.
DEFERRED STOCK UNITS
PLAN AND AGREEMENT
THIS DEFERRED STOCK UNITS PLAN AND AGREEMENT evidences that, subject
to the following terms and conditions, on April 2, 2001 (the "Grant Date"), The
Home Depot, Inc., a Delaware Corporation, (the "Company") granted to Xxxxx X.
Xxxxxxxxx (the "Executive") an award of deferred stock units corresponding to
fifty thousand (50,000) shares of Common Stock, $.05 par value ("Common
Stock"), of the Company (each a "Deferred Stock Unit"):
1. DEFINITIONS. As used herein, the following terms shall be
defined as set forth below:
(A) "CAUSE" shall mean that Executive (1) has been convicted of a
felony involving theft or moral turpitude, (2) has engaged in conduct that
constitutes willful gross neglect or willful gross misconduct with respect to
Executive's employment duties which results in material economic harm to the
Company, or (3) has engaged in willful conduct that constitutes a material
violation of any of the Company's (A) mutual attraction policy, (B) substance
abuse policy, or (C) compliance policies (each as shall be in place from time
to time); provided, however, that for purposes of determining whether conduct
constitutes willful gross misconduct or willful conduct or whether neglect
constitutes willful gross neglect, no act or omission on Executive's part shall
be considered "willful" unless it is done by Executive in bad faith and without
reasonable belief that his action or inaction was in the best interests of the
Company. Notwithstanding the foregoing, the Company may not terminate
Executive's employment for Cause unless (i) a determination that Cause exists
is made and approved by a majority of the Company's Board of Directors (the
"Board"), (ii) Executive is given at least thirty (30) days' written notice of
the Board meeting called to make such determination, and (iii) Executive and
his legal counsel are given the opportunity to address such meeting.
(b) A "CHANGE IN CONTROL" shall be deemed to have occurred if:
(1) Any "person" (as defined in Section 13(d) and 14(d)
of the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), excluding for this purpose,
(A) the Company or any subsidiary of the Company, or
(B) any employee benefit plan of the Company or any
subsidiary of the Company, or any person or entity
organized, appointed or established by the Company
for or pursuant to the terms of any such plan which
acquires beneficial ownership of voting securities
of the Company, is or becomes the "beneficial owner"
(as defined in Rule 13d-3 under the Exchange Act),
directly or indirectly, of securities of the Company
representing more than twenty percent (20%) of the
combined voting power of the Company's then
outstanding securities; provided, however, that no
Change in Control will be deemed to have occurred as
a result of a change in ownership percentage
resulting solely from an acquisition of securities
by the Company; or
(2) During any two (2) consecutive years (not including
any period beginning prior to April 2, 2001),
individuals who at the beginning of such two (2)
year period constitute the Board and any new
director (except for a director designated by a
person who has entered into an agreement with the
Company
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to effect a transaction described elsewhere in this
definition of Change in Control) whose election by
the Board or nomination for election by the
Company's stockholders was approved by a vote of at
least two-thirds of the directors then still in
office who either were directors at the beginning of
the period or whose election or nomination for
election was previously so approved cease for any
reason to constitute at least a majority of the
Board; or
(3) Consummation of a reorganization, merger or
consolidation or sale of the Company or other
disposition of all or substantially all of the
assets of the Company (a "Business Combination"), in
each case, unless, following such Business
Combination, all or substantially all of the
individuals and entities who were the beneficial
owners of outstanding voting securities of the
Company immediately prior to such Business
Combination beneficially own, directly or
indirectly, more than fifty percent (50%) of 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
company resulting from such Business Combination
(including, without limitation, a company which 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 voting securities of
the Company; or
(4) Approval by the stockholders of the Company of a
complete liquidation or dissolution of the Company.
(C) "COMMITTEE" means the Compensation Committee of the Board.
(D) "DISABILITY" means Executive's inability to substantially
perform his duties under that certain employment agreement entered into between
the Company and Executive effective as of April 2, 2001 (the "Employment
Agreement"), with reasonable accommodation, as evidenced by a certificate
signed either by a physician mutually acceptable to the Company and Executive
or, if the Company and Executive cannot agree upon a physician, by a physician
selected by agreement of a physician designated by the Company and a physician
designated by Executive; provided, however, that if such physicians cannot
agree upon a third physician within thirty (30) days, such third physician
shall be designated by the American Arbitration Association.
(E) "GOOD REASON" shall mean, without Executive's consent, (1)
the assignment to Executive of any duties inconsistent in any material respect
with Executive's position (including status, offices, titles and reporting
relationships), authority, duties or responsibilities as contemplated by
Section 3 of the Employment Agreement, or any other action by the Company which
results in a significant diminution in such position, authority, duties or
responsibilities, excluding any isolated and inadvertent action not taken in
bad faith and which is remedied by the Company within ten (10) days after
receipt of notice thereof given by Executive; (2) any failure by the Company to
comply with any of the provisions of Sections 4 or 5 of the Employment
Agreement other than an isolated and inadvertent failure not committed in bad
faith and which is remedied by the Company within ten (10) days after receipt
of notice thereof given by Executive; (3) Executive being required to relocate
to a principal place of employment more than twenty-five (25) miles from his
principal place of employment with the Company in Atlanta, Georgia, as of April
2, 2001; (4) delivery by the Company
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of a notice discontinuing the automatic extension provision of Section 2 of the
Employment Agreement; or (5) any purported termination by the Company of
Executive's employment otherwise than as expressly permitted by the Employment
Agreement.
2. DEFERRED STOCK UNITS.
(A) VESTING SCHEDULE; ISSUANCE OF SHARES. Twelve
thousand five hundred (12,500) Deferred Stock Units shall become vested on each
of the second, third, fourth, and fifth anniversaries of the Grant Date (the
"Vesting Dates"); provided that, except as provided in subparagraph (c) below,
Executive is employed by the Company on the applicable Vesting Date. The
Company shall issue one share of Common Stock to Executive for each vested
Deferred Stock Unit on April 1, 2007, unless (1) Executive has elected to defer
the issuance of such shares pursuant to subparagraph (b) below, or (2)
Executive's employment terminates prior to such date (in which case shares
shall be issued as provided under subparagraph (c) below). Each Deferred Stock
Unit shall be cancelled upon the issuance of a share of Common Stock with
respect thereto.
(B) DEFERRAL. Executive may elect in writing on or
before December 31, 2005 (the "Latest Deferral Date") to defer the issuance of
shares of Common Stock with respect to all or a part of the Deferred Stock
Units. Any such election shall specify the date of issuance for the deferred
shares and shall be irrevocable after the Latest Deferral Date.
(C) TERMINATION OF EMPLOYMENT; CHANGE IN CONTROL. If (1)
the Company terminates Executive's employment other than for Cause, (2)
Executive, upon fifteen (15) days' prior written notice, terminates his
employment for Good Reason, (3) Executive's employment terminates due to death
or Disability, or (4) a Change in Control occurs while Executive is employed by
the Company, any Deferred Stock Units that have not yet vested shall
immediately vest. Unless Executive has elected pursuant to subparagraph (b)
above to defer issuance to a later date, the Company shall issue to Executive,
within ten (10) days after the termination of Executive's employment for any
reason, one share of Common Stock for each outstanding vested Deferred Stock
Unit, and each outstanding Deferred Stock Unit shall be cancelled.
(D) LIMITATION OF RIGHTS; DIVIDEND EQUIVALENTS.
Executive shall not have any right to transfer any rights under the Deferred
Stock Units except as permitted by Paragraph 4 below, shall not have any rights
of ownership in the shares of Common Stock subject to the Deferred Stock Units
prior to the issuance of such shares, and shall not have any right to vote such
shares. Executive, however, shall receive a cash payment equal to the cash
dividends paid on shares underlying outstanding vested Deferred Stock Units
when cash dividends are paid to shareholders of the Company.
3. ADMINISTRATION. This Plan and Agreement shall be administered
by the Committee. The interpretation and construction by the Committee of any
provision herein and any determination by the Committee pursuant to any
provision of this Plan and Agreement shall be final and conclusive. No member
of the Committee shall be liable to any person for any such action taken or
determination made in good faith.
4. TRANSFERABILITY. Except as otherwise provided in this
Paragraph 4, the Deferred Stock Units granted pursuant to this Plan and
Agreement shall not be sold, pledged, assigned, hypothecated, transferred or
disposed of in any manner, whether by the operation of law or otherwise.
Additionally, Executive may transfer the Deferred Stock Units, in whole or in
part, to a
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spouse or lineal descendant (a "Family Member"), a trust for the exclusive
benefit of Executive and/or Family Members, a partnership or other entity in
which all the beneficial owners are Executive and/or Family Members, or any
other entity affiliated with Executive that may be approved by the Committee (a
"Permitted Transferee"). Subsequent transfers of the Deferred Stock Units shall
be prohibited except in accordance with this Paragraph 4. All terms and
conditions of the Deferred Stock Units, including provisions relating to the
termination of Executive's employment with the Company, shall continue to apply
following a transfer made in accordance with this Paragraph 4. Upon any attempt
of a transfer of the Deferred Stock Units prohibited by this Paragraph 4, the
Deferred Stock Units shall immediately become null and void.
5. ADJUSTMENTS. The number of shares covered by the Deferred
Stock Units and, if applicable, the kind of shares covered by the Deferred
Stock Units shall be adjusted to reflect any stock dividend, stock split, or
combination of shares of the Company's Common Stock. In addition, the Committee
may make or provide for such adjustment in the number of shares covered by the
Deferred Stock Units, and the kind of shares covered the Deferred Stock Units,
as the Committee in its sole discretion may in good faith determine to be
equitably required in order to prevent dilution or enlargement of Executive's
rights that otherwise would result from (a) any exchange of shares of the
Company's Common Stock, recapitalization or other change in the capital
structure of the Company, (b) any merger, consolidation, spin-off, spin-out,
split-off, split-up, reorganization, partial or complete liquidation or other
distribution of assets (other than a normal cash dividend), issuance of rights
or warrants to purchase securities, or (c) any other corporate transaction or
event having an effect similar to any of the foregoing. Moreover, in the event
of any such transaction or event, the Committee may provide in substitution for
the Deferred Stock Units such alternative consideration as it may in good faith
determine to be equitable under the circumstances and may require in connection
therewith the surrender of the Deferred Stock Units so replaced.
6. FRACTIONAL SHARES. The Company shall not be required to issue
any fractional shares pursuant to this Plan and Agreement, and the Committee
may round fractions down.
7. TAXES. To the extent that the Company is required to withhold
federal, state, local or foreign taxes in connection with any benefit realized
by Executive or any other person under this Plan and Agreement, it shall be a
condition to the realization of such benefit that Executive or such other
person make arrangements satisfactory to the Company for payment of all such
taxes required to be withheld, which arrangements may include Executive's
delivery to the Company of a check equal to the amount of such taxes. Upon the
payment of any dividend equivalents payable pursuant to Paragraph 2(d) above,
Executive agrees that the Company shall deduct therefrom such amounts as are
necessary to satisfy applicable withholding requirements.
8. NO IMPACT ON OTHER BENEFITS AND EMPLOYMENT. This Plan and
Agreement shall not confer upon Executive any right with respect to continuance
of employment or other service with the Company and shall not interfere in any
way with any right that the Company would otherwise have to terminate
Executive's employment at any time, subject to the terms of the Employment
Agreement. Nothing herein contained shall affect Executive's right to
participate in and receive benefits under and in accordance with the then
current provisions of any pension, insurance or other employment plan or
program of the Company or any of its subsidiaries nor constitute an obligation
for continued employment.
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9. CANCELLATION. With Executive's concurrence, the Committee may
cancel this Plan and Agreement. In the event of such cancellation, the
Committee may authorize the granting of new deferred stock units, which may or
may not cover the same number of shares that had been the subject of the
Deferred Stock Units, in such manner and subject to such other terms and
conditions as then determined by the Committee.
10. GOVERNING LAW. The validity, construction and effect of this
Plan and Agreement will be determined in accordance with (a) the Delaware
General Corporation Law, and (b) to the extent applicable, other laws
(including those governing contracts) of the State of Georgia (without regard
to the choice of law provisions thereof).
11. MERGER CLAUSE. This Plan and Agreement supersedes any and all
understandings between the Company and Executive with respect to the Deferred
Stock Units and, except as otherwise provided herein, this Plan and Agreement
may be amended only in writing signed by the Company and Executive.
PLEASE INDICATE YOUR UNDERSTANDING AND ACCEPTANCE OF THE FOREGOING BY SIGNING
AND RETURNING A COPY OF THIS PLAN AND AGREEMENT.
THE HOME DEPOT, INC.
/s/ Xxxxxx X. Xxxxxxxx
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By: Xxxxxx X. Xxxxxxxx
Chairman of the Board
I hereby acknowledge receipt of the Deferred Stock Units granted on
April 2, 2001, which have been granted to me under the foregoing terms and
conditions. I further agree to conform to all of the terms and conditions of
such Deferred Stock Units.
EXECUTIVE
/s/ Xxxxx X. Xxxxxxxxx
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Xxxxx X. Xxxxxxxxx
Date: April 2, 2001
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