<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement / / Confidential, For Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
U.S. HOME CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1) or 14a-6(i)(2).
/ / $500 per each party to the controversy pursuant to Exchange Act
Rule 14a-6(i)(3).
/ / Fee computed on table below per Exchange Act
Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- -------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
(5) Total fee paid:
- --------------------------------------------------------------------------------
/ / Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
- --------------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
- --------------------------------------------------------------------------------
(3) Filing Party:
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(4) Date Filed:
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<PAGE> 2
U.S. HOME CORPORATION
1800 WEST LOOP SOUTH
P. O. BOX 2863
HOUSTON, TEXAS 77252-2863
[U.S. HOME LOGO]
NOTICE OF 1996 ANNUAL MEETING OF STOCKHOLDERS
AND PROXY STATEMENT
March 20, 1996
Dear Stockholders:
On behalf of the officers and directors of the Company, you are cordially
invited to attend the U.S. Home Corporation Annual Meeting of Stockholders to be
held at 10:00 a.m., local time, on Wednesday, April 24, 1996, at the Omni Hotel,
Four Riverway, Houston, Texas.
At the meeting, Stockholders will be asked to consider and act upon the
election of directors and ratification of auditors. Stockholders are also being
requested to consider and approve the Company's 1996 Employees' Stock Option
Plan. These matters are described in the formal Notice of Meeting and in the
accompanying Proxy Statement.
The Board of Directors of the Company unanimously recommends that all
Stockholders vote in favor of each proposal. Your vote is important regardless
of the number of shares you own. We strongly encourage all Stockholders to
participate by voting their shares by proxy whether or not they plan to attend
the meeting. Please sign, date and mail the enclosed proxy as soon as possible.
If you do attend the meeting, you may still vote in person.
Sincerely,
/s/ ROBERT J. STRUDLER
--------------------------
Robert J. Strudler
Chairman and Co-Chief
Executive Officer
<PAGE> 3
[U.S. HOME LOGO]
------------------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
APRIL 24, 1996
------------------------------------
The Annual Meeting of the Stockholders of U.S. Home Corporation (the
"Company") will be held on Wednesday, April 24, 1996, at 10:00 a.m., local time,
at the Omni Hotel, Four Riverway, Houston, Texas for the purpose of considering
and acting upon the following proposals as set forth in the accompanying Proxy
Statement:
1. Election of directors.
2. Approval of the Company's 1996 Employees' Stock Option Plan.
3. Ratification of the appointment of Arthur Andersen LLP as auditors of
the Company for the fiscal year ending December 31, 1996.
4. Transaction of such other business as may properly come before the
meeting or any adjournment thereof.
Only Stockholders of record at the close of business on March 1, 1996 are
entitled to notice of, and to vote at, the meeting or any adjournment thereof.
By Order of the Board of Directors
RICHARD G. SLAUGHTER
Secretary
March 20, 1996
<PAGE> 4
U.S. HOME CORPORATION
1800 WEST LOOP SOUTH
P. O. BOX 2863
HOUSTON, TEXAS 77252-2863
------------------------------------
PROXY STATEMENT
------------------------------------
Accompanying this Proxy Statement is a Notice of Annual Meeting of
Stockholders of U.S. Home Corporation (the "Company") and a form of Proxy (the
"Proxy") for such meeting solicited by the Board of Directors of the Company
(the "Board"). The Board has fixed the close of business on March 1, 1996 as the
record date (the "Record Date") for the determination of stockholders of the
Company ("Stockholders") who are entitled to notice of, and to vote at, the
meeting or any adjournment(s) thereof (the "Meeting"). The holders of a majority
of the aggregate outstanding shares of (i) common stock, $.01 par value per
share, of the Company (the "Common Stock") and (ii) convertible redeemable
preferred stock, $.10 par value per share, of the Company (the "Convertible
Preferred Stock") (hereinafter, the Common Stock and the Convertible Preferred
Stock shall be referred to collectively as the "Stock") present in person or
represented by Proxy and entitled to vote shall constitute a quorum at the
Meeting.
As of the Record Date, there were outstanding 11,247,318 shares of Common
Stock and 317,808 shares of Convertible Preferred Stock, or an aggregate of
11,565,126 shares of Stock, the holders of which are entitled to one vote per
share. On all proposals to be submitted to the Stockholders at the Meeting, the
holders of the Common Stock and Convertible Preferred Stock will vote together
as a single class.
A Proxy that is properly submitted to the Company may be revoked at any
time before it is exercised by written notice to the Secretary of the Company.
Any Stockholder attending the Meeting may vote in person and by doing so revokes
any Proxy previously submitted by him or her. With respect to Proposal 1, unless
authority to vote for all nominees for director or any individual nominee is
withheld, all the shares of Stock represented by the Proxy will be voted for the
election as director of the nominees set forth in this Proxy Statement. Where a
Stockholder has specified a choice on his or her Proxy with respect to other
proposals or matters, that direction will be followed. If no direction is given,
all of the shares of Stock represented by the Proxy will be voted in favor of
such proposal or matter. However, shares of Stock represented by Proxies marked
as abstentions on any matter will not be voted on that matter, although they
will be counted for quorum purposes; shares held by brokers in "street name" and
not voted by them will not be counted in tabulating votes.
The cost of soliciting Proxies will be paid by the Company, which will
reimburse brokerage firms, custodians, nominees and fiduciaries for their
expenses in forwarding proxy materials to the beneficial owners of Stock.
Officers and regular employees of the Company may solicit Proxies personally and
by telephone. In addition, the Company has retained D.F. King & Co., Inc., to
aid in the solicitation of Proxies from brokers, bank nominees and institutional
holders for a fee of $6,500, plus out-of-pocket expenses.
The Annual Report of the Company for the year ended December 31, 1995,
containing audited financial statements for such year, is enclosed with this
Proxy Statement.
This Proxy Statement and the enclosed Proxy are being sent to Stockholders
on or about March 20, 1996.
IN ORDER THAT YOUR SHARES OF STOCK MAY BE REPRESENTED AT THIS MEETING, YOU
ARE REQUESTED TO:
PLEASE SIGN, DATE AND MAIL THE PROXY PROMPTLY.
<PAGE> 5
ELECTION OF DIRECTORS
(PROPOSAL 1)
The Company's Restated Certificate of Incorporation, as amended (the
"Certificate of Incorporation"), provides that, effective with the annual
meeting of Stockholders to be held in 1996, the terms of all directors will
expire, prior classification of directors will terminate and, commencing with
such meeting, all directors thereafter will serve for one-year terms, and
nominations for election of all directors will be made by the affirmative vote
of a majority of the entire Board. The Certificate of Incorporation also
provides that, commencing with the annual meeting to be held in 1996, the number
of directors constituting the entire Board will be determined by a resolution
adopted by a majority of the entire Board, but such number will not be less than
7 or more than 15. On February 14, 1996, the Board adopted a resolution setting
the number of directors at 11.
The Nominating Committee of the Board will consider candidates for director
recommended by Stockholders, if such recommendations are submitted in writing to
the Secretary of the Company giving the background and qualifications of the
candidates.
The following persons comprising all of the current directors ("Directors")
have been nominated for reelection at the Meeting to serve until the annual
meeting of Stockholders in 1997, and until their successors are elected and
qualified:
Glen Adams
Steven L. Gerard
Kenneth J. Hanau, Jr.
Isaac Heimbinder
Malcolm T. Hopkins
Jack L. McDonald
Charles A. McKee
George A. Poole, Jr.
Herve Ripault
James W. Sight
Robert J. Strudler
Unless authority to vote for the election of all nominees for Director or
any individual nominee is specifically withheld by appropriate designation on
the Proxy, it is the intention of the persons named in the accompanying Proxy to
vote such Proxy for the election as Directors of the persons named above.
All nominees have consented to serve, if so elected. The Company does not
anticipate that any of the nominees for Director will be unable to serve, but if
such a situation should arise, it is the intention of the persons named in the
accompanying Proxy to vote for the election of such other person or persons as
the remaining Directors may nominate.
THE BOARD RECOMMENDS THAT STOCKHOLDERS VOTE FOR THE DIRECTOR NOMINEES NAMED
HEREIN, AND IT IS INTENDED THAT PROXIES NOT MARKED TO THE CONTRARY WILL BE SO
VOTED.
The election of directors requires the affirmative vote of the holders of a
plurality of the shares of Stock voting at the Meeting.
2
<PAGE> 6
NOMINEES FOR DIRECTOR
<TABLE>
<CAPTION>
SERVED AS BOARD
NAME, AGE, PRINCIPAL OCCUPATION, DIRECTOR COMMITTEE
OTHER DIRECTORSHIPS(1) SINCE MEMBERSHIP
- -------------------------------------------------------------- --------- -----------------------
<S> <C> <C>
Glen Adams (57 yrs.) Chairman, President and Chief Executive
Officer of Southmark Corporation(2)......................... 1993 Conflict of Interest;
Nominating
Steven L. Gerard (50 yrs.) Chairman and Chief Executive
Officer of Triangle Wire & Cable Inc. since September
1992(3)..................................................... 1993 Compensation and Stock
Option; Finance
Kenneth J. Hanau, Jr. (69 yrs.) Chairman of K&H Corrugated
Case Corporation(4)......................................... 1976 Audit; Compensation and
Stock Option; Executive
Isaac Heimbinder (52 yrs.) President, Co-Chief Executive
Officer and Chief Operating Officer of the Company(5)....... 1984 Conflict of Interest;
Executive; Finance
Malcolm T. Hopkins (68 yrs.) Private investor and a director
of several companies(6)..................................... 1993 Audit; Executive
Jack L. McDonald (62 yrs.) Private investor, consultant and a
director of several companies(7)............................ 1993 Conflict of Interest;
Finance
Charles A. McKee (77 yrs.) Former Chairman and Chief Executive
Officer of Electrolux Corporation(8)........................ 1978 Audit; Compensation and
Stock Option
George A. Poole, Jr. (64 yrs.) Private investor and a director
of several companies(9)..................................... 1993 Audit; Nominating
Herve Ripault (55 yrs.) Associate of Optigestiom S.A., a
French fund management company since November 1991(10)...... 1982 Finance; Nominating
James W. Sight (40 yrs.) Private investor and a director of
several companies(11)....................................... 1993 Compensation and Stock
Option; Conflict of
Interest; Nominating
Robert J. Strudler (53 yrs.) Chairman and Co-Chief Executive
Officer of the Company(12).................................. 1984 Executive
</TABLE>
- ---------------
(1) Unless otherwise indicated, directors have held the position with the
Company or have been engaged in the principal occupation indicated for at
least five years.
(2) Mr. Adams has been Chairman, President and Chief Executive Officer of
Southmark Corporation since August 1990. Southmark, a real estate and
financial services company, is engaged in the liquidation of its assets
pursuant to a Chapter 11 plan of reorganization which became effective in
August 1990. Prior to joining Southmark, Mr. Adams served as Chairman,
President and Chief Executive Officer of The Great Western Sugar Company, a
sugar manufacturer, from 1986 to 1989 during its bankruptcy case. He
previously served from 1983 to 1986 as Vice President and General Counsel
of Hunt International Resources Corp., a holding company for Great Western
and other entities. Mr. Adams serves as a director of Southmark San Juan,
Inc. and Zale Corporation.
(3) Mr. Gerard has been Chairman and Chief Executive Officer of Triangle Wire &
Cable Inc., a manufacturer of insulated wire and cable, since September
1992. Mr. Gerard was previously Chief Executive Officer and Director of
Mountleigh Group, PLC, a London-based company engaged in property
management and retailing, from April 1992 to July 1992. Mr. Gerard was
hired in connection with the restructuring of Mountleigh. In connection
with the restructuring, Mountleigh was placed in U.K. receivership on May
23, 1992. From July 1990 until April 1992, Mr. Gerard was a Senior
3
<PAGE> 7
Managing Director of Citibank, N.A. responsible for credit, portfolio and
risk management for Citibank's corporate and investment banking activities
in the United States, Japan, Europe and Australia; from August 1987 to July
1990, he was Division Executive for the National Corporate Finance Division
of Citibank and prior thereto, he was the Senior Corporate Workout Officer
of the Institutional Recovery Management Division of Citibank. Mr. Gerard
is also a director of Banner Aerospace, Inc. and DeepTech Industries, Inc.
(4) Mr. Hanau is Chairman of K&H Corrugated Case Corporation, a manufacturer of
corrugated packaging materials, located in Walden, New York, and has been
associated with that company for more than five years. Mr. Hanau is also a
director of Cosco Industries and Tinque, Brown, Inc.
(5) Mr. Heimbinder has served as President, Co-Chief Executive Officer and
Chief Operating Officer of the Company since April 26, 1995; prior thereto
he had been President and Chief Operating Officer of the Company since May
12, 1986; Senior Vice President and Chief Financial Officer of the Company
since December 14, 1979 and Secretary from August 23, 1984 until June 26,
1986, and from October 13, 1976 until January 26, 1984.
(6) Mr. Hopkins has been a private investor and a director of several companies
for more than the past five years. He served as Vice Chairman and Chief
Financial Officer of the former St. Regis Corporation, a paper and forest
products company with interests in oil and gas and insurance, from 1980 to
1984. Mr. Hopkins is a director of The Columbia Gas System, Inc., MAPCO,
Inc., KinderCare Learning Centers, Inc., The Metropolitan Series Fund,
Inc., State Street Research Portfolios, Inc., Phar-Mor, Inc. and EMCOR
Group, Inc.
(7) Mr. McDonald has been a private investor and consultant for more than the
past five years. He served as President and Chief Operating Officer of
Centex Corporation, a homebuilding, general construction and cement-making
company, from 1978 to 1984, and as a director of that company from 1974
until 1985. He is also a director of Amre, Inc., Bally's Grand Inc.,
Triangle Pacific, Inc. and American Homestar Corp.
(8) Mr. McKee retired as Chairman and Chief Executive Officer of Electrolux
Corporation, a manufacturer of vacuum cleaners and floor care products,
located in Stamford, Connecticut on June 30, 1983 and as Executive Vice
President and Director of Sara Lee Corporation (formerly Consolidated Foods
Corporation) on October 31, 1983 after having served in such capacities for
more than five years. Mr. McKee is a director of MAC Corp.
(9) Mr. Poole has been a private investor for more than the past five years.
Mr. Poole serves as a director of Spreckels Industries, Inc., Bucyrus-Erie
Company, Rock Island Foods, Inc. and FCC Receivables Corporation, a
wholly-owned subsidiary of Franklin Resources, Inc.
(10) Mr. Ripault has been an Associate of Optigestiom S.A., a French fund
management company since November 1991. Mr. Ripault retired in October 1991
as Chairman of the Board of Delahaye -- Ripault, S.A., Agent de Change, a
member of the Paris Stock Exchange, Paris, France. Mr. Ripault had been
associated with such firm from June 1985 until his retirement. Mr. Ripault
was associated with Societe des Maisons Phenix, a homebuilding company in
France, from 1979 to 1985, during which time he was Executive Vice
President -- Finance.
(11) Mr. Sight has been a private investor for more than the past five years. He
has also served as Vice President and director of Sight Leasing Co. Inc., a
car leasing company, from 1978 until its dissolution in December 1992. Mr.
Sight served as Co-Chairman and a director of Metro Airlines, Inc., a
former regional feeder airline from December 1992 until its liquidation in
1995. Mr. Sight is also a director of United Recycling Industries and
Westmoreland Coal.
(12) Mr. Strudler has served as Chairman and Co-Chief Executive Officer of the
Company since April 26, 1995; prior thereto he had been Chairman and Chief
Executive Officer of the Company since May 12, 1986; President and Chief
Operating Officer of the Company since August 23, 1984, Senior Vice
President, Asset Management, and Secretary of the Company from January 26,
1984 to August 23, 1984 and Senior Vice President of the Company since
December 15, 1978. Mr. Strudler also served as a director of the Company
from January 27, 1983 until March 22, 1984.
4
<PAGE> 8
COMMITTEES OF THE BOARD OF DIRECTORS
The committees of the Board include the following:
The Audit Committee reviews and approves the scope of the annual audit
undertaken by the Company's independent public accountants and meets with them
on a regular basis to review the progress and results of their work as well as
any recommendations they may make. The Audit Committee also reviews the fees of
the independent public accountants, and reviews and approves the annual
financial statements of the Company prior to issuance of such statements. In
addition, the Audit Committee reviews and approves any significant non-audit
services undertaken by the Company's independent public accountants. In
connection with the internal accounting controls of the Company, the Audit
Committee reviews internal audit procedures and reporting systems, as well as
reports of the Audit Department of the Company and the management action taken
in response to such reports.
The Compensation and Stock Option Committee (the "Compensation Committee")
reviews the salaries and all compensation plans for corporate officers,
presidents of operations and division chairmen and presidents, and makes
specific recommendations to the Board for such salaries and plans. The
Compensation Committee also has the authority to administer the Company's 1993
Employees' Stock Option Plan, including the grant of options and approval of
loans to finance the purchase of shares, the Employee Stock Payment Plan,
including the determination of the amount, allocation and vesting of shares, the
Corporate Officers and Presidents of Operations Restricted Stock Plan and, if
approved by the Stockholders at the Meeting, the 1996 Employees' Stock Option
Plan (See Proposal 2).
The Conflict of Interest Committee makes determinations concerning
potential conflicts of interest involving the Company and its subsidiaries and
any directors, corporate officers, beneficial owners of more than 10% of the
Company's outstanding shares of Stock, presidents of operations, division
chairmen and presidents and members of conflict of interest committees reporting
to presidents of operations.
The Executive Committee is empowered to exercise all powers of the full
Board in the management of the business and affairs of the Company during the
intervals between regular and special meetings of the Board to the extent
permitted by, and subject to the limitations imposed by, the Delaware General
Corporation Law, the Certificate of Incorporation and the By-Laws.
The Finance Committee reviews and approves capital funding (debt or equity)
plans for the Company and major land policies in coordination with established
corporate strategic objectives, and reviews and recommends corporate strategic
objectives for the Company.
The Nominating Committee advises on compensation of directors and makes
recommendations to the Board for the election of directors, the succession in
the office of chief executive officer and the election of corporate officers.
The Nominating Committee also administers the Non-Employee Directors' Stock
Option Plan and the Retirement Plan for Non-Employee Directors. See "Director
Compensation." The Nominating Committee will consider candidates for director
recommended by Stockholders, if such recommendations are submitted in writing to
the Secretary of the Company giving the background and qualifications of the
candidates.
Members of the committees of the Board are as follows: Audit
Committee -- Messrs. Hanau, Hopkins (Chair), McKee and Poole; Compensation and
Stock Option Committee -- Messrs. Gerard, Hanau, McKee (Chair) and Sight;
Conflict of Interest Committee -- Messrs. Adams, Heimbinder, McDonald (Chair)
and Sight; Executive Committee -- Messrs. Hanau (Chair), Heimbinder, Hopkins and
Strudler; Finance Committee -- Messrs. Gerard (Chair), Heimbinder, McDonald and
Ripault; Nominating Committee -- Messrs. Adams (Chair), Poole, Ripault and
Sight.
During 1995, there were a total of 6 meetings of the Board, 2 meetings of
the Audit Committee, 3 meetings of the Compensation Committee, 3 meetings of the
Finance Committee and 2 meetings of the Nominating Committee. No meetings of the
Executive Committee or the Conflict of Interest Committee were held during 1995.
The Company's normal practice is that committee meetings are held the day
preceding
5
<PAGE> 9
the regular meetings of the Board. All of the directors attended at least 75
percent of the Board meetings and meetings of committees of which they were
members that were held during 1995.
EXECUTIVE COMPENSATION
The following table sets forth a summary of annual and long-term
compensation (for 1995, 1994 and 1993) awarded to, earned by, or paid to the
Chairman and Co-Chief Executive Officer of the Company and each of the four most
highly compensated executive officers of the Company (other than the Chairman
and Co-Chief Executive Officer) whose total annual salary and bonus for the year
ended December 31, 1995, was in excess of $100,000:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM COMPENSATION
-------------------------------------
ANNUAL COMPENSATION AWARDS PAYOUTS
----------------------------------- -------------------------- --------
(a) (b) (c) (d) (e) (f) (g) (h) (i)
RESTRICTED SECURITIES
OTHER ANNUAL STOCK UNDERLYING LTIP ALL OTHER
NAME AND SALARY BONUS COMPENSATION AWARDS OPTIONS/SARS PAYOUTS COMPENSATION
PRINCIPAL POSITION YEAR ($)(1) ($)(2) ($) ($)(3)(4)(5) (#)(6) ($) ($)(7)(8)(9)
- ----------------------- ---- -------- -------- ------------- ------------ ------------ ------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Robert J. Strudler; 1995 $425,000 $526,223 -$- $200,000 50,000 $-- $ 5,010
Chairman and Co-Chief 1994 400,000 440,000 -- -- 20,000 -- 5,010
Executive Officer 1993 368,225 568,225 -- -- 45,000 -- 845,048
Isaac Heimbinder; 1995 $415,000 $526,223 -- $200,000 50,000 $-- $ 5,010
President, Co-Chief 1994 390,000 430,000 -- -- 20,000 -- 5,010
Executive Officer and 1993 360,000 560,000 -- -- 45,000 -- 845,048
Chief Operating
Officer
Craig M. Johnson; 1995 $161,500 $106,750 -$- $215,250 2,000 $-- $ 4,525
Senior Vice 1994 145,000 91,875 -- 13,125 5,000 -- 4,417
President -- 1993 135,000 75,000 -- -- 10,000 -- 318,545
Community Development
Chester P. Sadowski; 1995 $159,000 $101,500 -$- $214,500 2,000 $-- $ 4,728
Vice President -- 1994 152,000 91,875 -- 13,125 5,000 -- 4,728
Controller and Chief 1993 145,000 75,000 -- -- 10,000 -- 213,900
Accounting Officer
Richard G. Slaughter; 1995 $159,000 $101,500 -$- $214,500 2,000 $-- $ 4,856
Vice President -- 1994 152,000 91,875 -- 13,125 5,000 -- 4,856
Planning and 1993 145,000 75,000 -- -- 10,000 -- 214,028
Secretary..........
</TABLE>
- ---------------
(1) Amounts shown include the dollar value of base salary (cash and non-cash)
earned by the executive officers named above.
(2) Amounts shown include the dollar value of bonuses (cash and non-cash) earned
by the executive officers named above but excludes the dollar value of
unvested stock awarded as described below. Pursuant to the 1995 Corporate
Officers' Incentive Compensation Program (the "1995 Program") and the 1994
Corporate Officers' Incentive Compensation Program (the "1994 Program," and
together with the 1995 Program, the "Incentive Programs"), the Board, on the
recommendation of the Compensation Committee, approved payment of incentive
compensation to Messrs. Johnson, Sadowski and Slaughter for services
rendered in 1995 and 1994. Pursuant to the Incentive Programs and the
Company's Employee Stock Payment Plan (the "Employee Stock Plan") (see
footnote (4) to the table for a description), 25% of such incentive
compensation is payable in Common Stock, one-half of which vests immediately
and
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<PAGE> 10
the remainder (reflected in column (f) above) of which vests two years after
the end of the incentive compensation year. The payments under the Incentive
Programs consisted of the following:
<TABLE>
<CAPTION>
VALUE
OF VALUE OF # OF SHARES AVERAGE
CASH VESTED UNVESTED OF UNVESTED CLOSING PRICE OF
YEAR OFFICER BONUS STOCK STOCK STOCK STOCK
----- -------------------------------------- ------- ------- -------- ----------- ----------------
<S> <C> <C> <C> <C> <C> <C>
1995 Mr. Johnson $91,500 $15,250 $15,250 546 $ 27.925
Messrs. Sadowski and Slaughter $87,000 $14,500 $14,500 519 $ 27.925
1994 Messrs. Johnson, Sadowski and
Slaughter $78,750 $13,125 $13,125 729 $ 17.988
</TABLE>
Pursuant to the Employee Stock Plan, the number of shares of Common Stock
issued to each of the executives listed in the table was calculated by
dividing (x) the portion of their incentive compensation payable in Common
Stock by (y) the average of the closing prices of the Common Stock on the
New York Stock Exchange ("NYSE") for the 10 trading days immediately
following release by the Company of its financial results for the
applicable fiscal year. Payment of contractual incentive compensation to
Messrs. Strudler and Heimbinder was made pursuant to the terms and
conditions of their respective Employment and Consulting Agreements
(described below). For the year ended December 31, 1994, Messrs. Strudler
and Heimbinder elected to receive 25% of such incentive compensation in
shares of Common Stock under the Employee Stock Plan, all of which vested
immediately. In addition, the Board, on the recommendation of the
Compensation Committee, approved on December 8, 1994, payment of
supplemental incentive compensation of $40,000 to each of Messrs. Strudler
and Heimbinder for their contribution to the Company's results during 1994
in several significant areas. See "Report of Compensation and Stock Option
Committee on Executive Compensation." The amounts of such contractual and
supplemental incentive bonuses, including the dollar value of the Common
Stock, are included in column (d) above. See "Employment Contracts and
Termination of Employment and Change-in-Control Arrangements."
(3) Amount shown for 1995 includes the dollar value of Common Stock issued to
the executive officers named above on April 27, 1995 pursuant to the
Corporate Officers and Presidents of Operations Restricted Stock Plan (the
"Restricted Stock Plan"), which was adopted by the Board on October 13,
1994 and approved by the Stockholders at the 1995 Annual Meeting of
Stockholders. Subject to forfeiture provisions and accelerated vesting
provisions, 20% of the shares of Common Stock awarded to each employee will
vest with each employee each year commencing in 2000. The 11,119 shares of
Common Stock awarded to each participant was determined by dividing
$200,000 by $17.988, the average of the closing prices of the Common Stock
on the NYSE for the 10 trading days immediately following release by the
Company on February 8, 1995 of its financial results for the fiscal year
ended December 31, 1994. With respect to shares of Common Stock issued but
unvested, the participants shall have the right to vote such shares and to
receive any cash dividends. The amount shown for 1995 for Messrs. Johnson,
Sadowski and Slaughter also includes the dollar value of Common Stock not
yet vested under the 1995 Program described in footnote (2) above.
(4) Amount shown for 1994 for Messrs. Johnson, Sadowski and Slaughter includes
the dollar value of Common Stock not yet vested under the 1994 Program and
the Employee Stock Plan. Pursuant to the Employee Stock Plan, which was
adopted by the Board on December 10, 1993 and by the Stockholders at the
1994 Annual Meeting of Stockholders, up to 25% of the annual incentive
compensation payable to each employee of the Company pursuant to the
Company's incentive compensation programs may be payable in Common Stock,
up to 50% of which may vest not later than two years from the end of the
applicable incentive compensation year. No dividends on the shares of
Common Stock subject to vesting will be paid prior to vesting. The number
of shares of Common Stock to be issued was determined pursuant to the
calculations described in footnote (2) to the table.
(5) The number and value of the aggregate restricted stock holdings at the end
of the last completed fiscal year for the executive officers named above
are: each of Messrs. Strudler and Heimbinder -- 11,119 shares with a value
of $323,841; Mr. Johnson -- 12,394 shares with a value of $360,975; and
each of Messrs. Sadowski and Slaughter -- 12,367 shares with a value of
$360,189.
7
<PAGE> 11
(6) Pursuant to the Company's 1993 Employees' Stock Option Plan, options were
granted to acquire shares of Common Stock to certain officers and other
employees of the Company. See "Executive Compensation -- Stock Options."
(7) On June 21, 1993, in accordance with the Company's Chapter 11 plan of
reorganization and pursuant to the Company's Amortizing Incentive Plan, the
Company issued 140,000 shares of Common Stock to certain corporate officers
and other employees, including 40,000 shares to Mr. Strudler; 40,000 shares
to Mr. Heimbinder; 15,000 shares to Mr. Johnson; 10,000 shares to Mr.
Sadowski; and 10,000 shares to Mr. Slaughter. The market value of the
Common Stock at the time of issuance was $21.00 per share.
(8) The Company has a qualified profit sharing plan for the benefit of its
employees. The amounts shown above for 1993 include the contributions made
by the Company for the year ended December 31, 1993, as well as the market
value of the Common Stock issued pursuant to the Company's Amortizing
Incentive Plan and the premium for a universal life insurance policy with a
cash surrender value. The amounts shown for 1994 are comprised of the
following: (i) contributions to the Company's profit sharing plan; (ii)
401(k) contributions by the Company and (iii) premium for universal life
insurance policy with a cash surrender value. The amounts shown for 1995
are comprised of the following:
<TABLE>
<CAPTION>
OFFICER PROFIT SHARING 401(K) LIFE INSURANCE PREMIUM
---------------------------------------------- -------------- ------ ----------------------
<S> <C> <C> <C>
Robert J. Strudler............................ $3,000 $500 $1,510
Isaac Heimbinder.............................. $3,000 $500 $1,510
Craig M. Johnson.............................. $3,000 $500 $1,025
Chester P. Sadowski........................... $3,000 $500 $1,228
Richard G. Slaughter.......................... $3,000 $500 $1,356
</TABLE>
(9) Mr. Strudler and Mr. Heimbinder are also entitled to retirement benefits
under their respective Employment and Consulting Agreements on the terms
and conditions specified therein. See "Employment Contracts and Termination
of Employment and Change-in-Control Arrangements."
8
<PAGE> 12
STOCK OPTIONS
The following table contains information concerning grants of options to
acquire shares of Common Stock made during the year ended December 31, 1995 to
the Chairman and Co-Chief Executive Officer of the Company and each of the four
most highly compensated executive officers of the Company (other than the
Chairman and Co-Chief Executive Officer) whose total annual salary and bonus for
the year ended December 31, 1995, was in excess of $100,000:
OPTIONS/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT ASSUMED ANNUAL
RATES OF STOCK PRICE
APPRECIATION
INDIVIDUAL GRANTS FOR OPTION TERM
---------------------------------------------------- ------------------------
(a) (b) (c) (d) (e) (f) (g)
--- ---------- ----------- --------- ---------- --------- ----------
% OF TOTAL
NUMBER OF OPTIONS/
SECURITIES SARS
UNDERLYING GRANTED TO EXERCISE
OPTIONS/ EMPLOYEES OR BASE
SARS GRANTED IN FISCAL PRICE EXPIRATION
NAME (# SH) (1) YEAR ($/SH) DATE 5% ($) 10% ($)
- --------------------------- ------------ ---------- -------- ---------- -------- ----------
<S> <C> <C> <C> <C> <C> <C>
Robert J. Strudler......... 50,000(2) 41.0% $25.25 10/17/05 $793,979 $2,012,099
Isaac Heimbinder........... 50,000(2) 41.0% $25.25 10/17/05 $793,979 $2,012,099
Craig M. Johnson........... 2,000(3) 1.6% $27.75 12/07/05 $ 34,903 $ 88,452
Chester P. Sadowski........ 2,000(3) 1.6% $27.75 12/07/05 $ 34,903 $ 88,452
Richard G. Slaughter....... 2,000(3) 1.6% $27.75 12/07/05 $ 34,903 $ 88,452
</TABLE>
- ---------------
(1) The Board and Stockholders adopted the Company's 1993 Employees' Stock
Option Plan, which became effective on June 21, 1993, in connection with
the Company's Chapter 11 plan of reorganization. The purpose of the
Company's 1993 Employees' Stock Option Plan is to provide an incentive to
key employees, including officers and managerial or supervisory employees
who are salaried employees of the Company, to remain in the employ of the
Company and to have a proprietary interest in the Company. 500,000 shares
of Common Stock have been reserved for issuance in accordance with the
provisions of the Company's 1993 Employees' Stock Option Plan.
Options granted under the Company's 1993 Employees' Stock Option Plan are
intended to be designated as (i) "Incentive Stock Options" as defined in
Section 422(b) of the Internal Revenue Code of 1986, as amended (the "Tax
Code"), (ii) nonqualified stock options or (iii) any combination of
Incentive Stock Options and nonqualified stock options. In the event that a
portion of an option cannot be exercised as an Incentive Stock Option by
reason of the limitations contained in Section 422 of the Tax Code, such
portion will be treated as a nonqualified stock option.
Pursuant to the Company's 1993 Employees' Stock Option Plan, the exercise
price for any Incentive Stock Option and/or a nonqualified stock option
granted after August 20, 1993 will be the closing price of the Common Stock
on the NYSE on the date that such option is granted. No option granted
under the Company's 1993 Employees' Stock Option Plan may be exercised more
than 10 years from the date such option is granted.
(2) In connection with the amendment and restatement of their respective
Employment and Consulting Agreements on October 17, 1995, which extended
their employment terms, Messrs. Strudler and Heimbinder were granted
options that were exercisable upon grant. See "Employment Contracts and
Termination of Employment and Change-in-Control Arrangements."
(3) As of December 7, 1995, pursuant to the Company's 1993 Employees' Stock
Option Plan, options to acquire an aggregate of 22,000 shares of Common
Stock were granted to certain employees of the Company, including Messrs.
Johnson, Sadowski and Slaughter and other officers. The options granted to
Messrs. Johnson, Sadowski and Slaughter become exercisable for one-third of
the shares purchasable
9
<PAGE> 13
thereunder on December 7, 1996, two-thirds of the shares purchasable
thereunder on December 7, 1997 and all of the shares purchasable thereunder
on December 7, 1998.
The following table contains information concerning the exercise of stock
options during the fiscal year ended December 31, 1995, and the fiscal year-end
value of unexercised options by the Chairman and Co-Chief Executive Officer of
the Company and each of the four most highly compensated executive officers of
the Company (other than the Chairman and Co-Chief Executive Officer) whose total
annual salary and bonus for the year ended December 31, 1995, was in excess of
$100,000:
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR,
AND FISCAL YEAR-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
(a) (b) (c) (d) (e)
--- ------------ -------- ------------------------- -------------------------
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY
SHARES VALUE OPTIONS/SARS OPTIONS/SARS
ACQUIRED ON REALIZED AT FY-END (#) AT FY-END ($)
NAME EXERCISE (#) ($) EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
- --------------------------------- ------------ -------- ------------------------- -------------------------
<S> <C> <C> <C> <C>
Robert J. Strudler............... -- -- 86,668/28,332 $440,743/$263,482
Isaac Heimbinder................. -- -- 86,668/28,332 $440,743/$263,482
Craig M. Johnson................. -- -- 8,335/ 8,665 $ 57,964/$ 66,716
Chester P. Sadowski.............. -- -- 8,335/ 8,665 $ 57,964/$ 66,716
Richard G. Slaughter............. -- -- 8,335/ 8,665 $ 57,964/$ 66,716
</TABLE>
EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT AND
CHANGE-IN-CONTROL ARRANGEMENTS
Mr. Strudler entered into an Employment and Consulting Agreement with the
Company on May 12, 1986 which was amended and restated on October 17, 1995, and
Mr. Heimbinder entered into a similar Employment and Consulting Agreement with
the Company on May 12, 1986 which was amended and restated on October 17, 1995
(as amended and restated, collectively, the "Employment Agreements"). The
Employment Agreements provide for their continued employment with the Company as
Chairman and Co-Chief Executive Officer and President, Co-Chief Executive
Officer and Chief Operating Officer, respectively, until the later of (i) June
20, 1999 or (ii) such date when the Employment Agreements are not renewed for
successive one-year terms (the "Employment Term"). Under the Employment
Agreements, during 1995, Messrs. Strudler and Heimbinder were paid annual base
salaries of $425,000 and $415,000, respectively, and will be paid salaries,
commencing in 1996, which are subject to minimum increases equal to any increase
in the cost of living and which are subject to annual review by the Board.
Messrs. Strudler and Heimbinder are also to be paid incentive compensation for
each fiscal year that the Company is profitable based upon a formula set forth
in the Employment Agreements which, commencing in 1995, do not provide for any
limit on the maximum bonus payable. Pursuant to the Employment Agreements,
Messrs. Strudler and Heimbinder are entitled to receive incentive compensation
equal to the sum of the following: (i) one-half ( 1/2) of one percent (1%) of
the first $10,000,000 of the Company's pre-tax income for such year, plus (ii)
three-fourths ( 3/4) of one percent (1%) of the next $10,000,000 of the
Company's pre-tax income for such year, plus (iii) one percent (1%) of the
Company's pre-tax income for such year in excess of $20,000,000. Pursuant to the
Employment Agreements, a portion of any compensation otherwise payable may be
deferred in certain circumstances if it would otherwise not be deductible by the
Company because of the limitations set forth in Section 162(m) of the Tax Code.
See "Report of Compensation and Stock Option Committee on Executive
Compensation -- Chairman and President Compensation." In addition, Messrs.
Strudler and Heimbinder agreed to serve as consultants to the Company for a
period of five years after the Employment Term ceases, with consulting fees
payable at 1995 rates of $139,854 and $134,260 per year, respectively, subject
to cost of living adjustments, and, in the case of Mr. Strudler, will receive
reimbursement of expenses for maintenance of an office and secretarial
assistance up to an amount not to exceed $50,000 per year. They will also be
entitled to retirement benefits upon the later of attainment of age 58 or the
end of the Employment Term equal to 50 percent of their highest monthly base
salaries during the Employment Term. The Company's
10
<PAGE> 14
obligation to pay these retirement benefits has been substantially provided for
by annuities owned by a trust established by the Company for that purpose.
Messrs. Strudler and Heimbinder may be terminated for cause, as defined in
the Employment Agreements. If either Mr. Strudler or Mr. Heimbinder is
terminated without cause during the Employment Term, he will be entitled to
receive (i) the balance of the base salary which would have been paid during the
remainder of the Employment Term (but not less than three years), (ii) an amount
equal to bonuses paid in respect of the most recently completed three calendar
years, (iii) the actuarial present value of retirement benefits payable under
the Employment Agreement and (iv) an amount equal to any consulting fee payable
under the Employment Agreements.
If a "Control Change" (as defined below) is followed within two years by a
"Material Change" (as defined below), each of Mr. Strudler and Mr. Heimbinder
may terminate his employment and receive the payments referred to in clauses
(i), (ii) and (iv) of the preceding paragraph. A "Material Change" occurs if (x)
Mr. Strudler's or Mr. Heimbinder's employment is terminated without cause, (y)
Mr. Strudler's or Mr. Heimbinder's functions, duties, responsibilities or base
salaries are adversely changed or (z) Mr. Strudler or Mr. Heimbinder is assigned
to a place of employment which is more than 10 miles from his present place of
employment and which is not the corporate headquarters of the Company. In
addition, if a Control Change occurs, each of Mr. Strudler and Mr. Heimbinder
may terminate his employment even if a Material Change has not occurred, but
will not be entitled to receive the payments referred to in clause (i), (ii),
(iii) or (iv) of the preceding paragraph. However, in such event, each will
serve as a consultant to the Company and be compensated at the 1995 rate of
$139,854 (for Mr. Strudler) or $134,260 (for Mr. Heimbinder) per annum (subject
to cost of living increases) for five years thereafter and will be entitled to
have the payment of the full retirement benefits due under the Employment
Agreements commence upon attainment of age 58, or, at their respective elections
if they have not attained age 58, in a reduced amount, on or after the first day
of any month after such termination of employment.
A Control Change occurs under the following circumstances: (i) a report on
Schedule 13D is filed pursuant to the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), indicating that any person has become a beneficial
owner of 15% or more of the combined voting power of the outstanding securities
of the Company, (ii) the purchase by any person of securities pursuant to a
tender offer or exchange offer to acquire any Common Stock (or securities
convertible into such Common Stock), if after the consummation of the offer the
person would be the beneficial owner of 15% or more of the combined voting power
of the then outstanding securities of the Company, (iii) a consolidation or
merger of the Company in which the Company is not the surviving corporation, or
pursuant to which shares of Common Stock would be converted into cash,
securities or other property (other than a merger of the Company in which
holders of Common Stock prior to the merger have the same proportionate
ownership of Common Stock of the surviving corporation immediately after the
merger as immediately before), (iv) any sale, lease, exchange or other transfer
of all or substantially all of the assets of the Company, or (v) a change of a
majority of the members of the Board within a 12-month period, unless the
election or nomination for election by the Stockholders of each new director
during such 12-month period was approved by a vote of two-thirds of the
directors then still in office who were on the Board at the beginning of such
12-month period.
DIRECTOR COMPENSATION
Directors, other than those who are officers of the Company, receive the
following compensation: membership on the Board -- $24,000 per annum; each
committee membership -- $1,600 per annum; each committee chairmanship -- $1,600
per annum; attendance at each Board and committee meeting -- a per diem fee of
$1,000. Directors who are officers of the Company receive no compensation for
their services as directors.
NON-EMPLOYEE DIRECTORS' STOCK OPTION PLAN
At the 1994 Annual Meeting, the Stockholders approved the Non-Employee
Directors' Stock Option Plan ("Directors' Plan") for the purpose of attracting
and retaining qualified persons for service as members
11
<PAGE> 15
of the Board. There were 100,000 shares of Common Stock reserved for issuance in
accordance with the provisions of the Directors' Plan. The Directors' Plan is
administered by the Nominating Committee.
Under the Directors' Plan, options are granted only to non-employee members
of the Board. No individual who is, at the time of grant, an employee of the
Company will be eligible to receive options. Options granted under the
Directors' Plan are nonqualified stock options and are not entitled to special
income tax treatment under the Tax Code.
No option may be exercised more than 10 years after the date such option is
granted. Furthermore, in the event of the resignation or removal of an optionee
as a director of the Company, the optionee shall have the right, not later than
the earlier of (i) three months after such resignation or removal or (ii) the
termination date of the option, to exercise the option. If an optionee shall
retire because of age, die or become disabled while a director of the Company,
the personal representative of the optionee or the person to whom such options
have been transferred by will or by laws of descent and distribution, or the
retiree or disabled optionee, shall have the right, not later than the earlier
of (i) three years after such optionee's retirement, death or disability, or the
number of months such director has served as a non-employee director, whichever
is less, or (ii) the termination date of the option, to exercise such option.
The grant of options to non-employee directors is nondiscretionary under
the Directors' Plan. Each non-employee director of the Company at the time of
adoption of the Directors' Plan was granted options to acquire 5,000 shares of
Common Stock at $23.29 per share (an "Initial Stock Option Grant"). Each person
who becomes a non-employee director of the Company after the adoption of the
Directors' Plan shall be granted options to acquire 5,000 shares of Common Stock
at the time such person first becomes a non-employee director of the Company (a
"New Director Stock Option Grant"). On the date of each annual meeting or
special meeting in lieu of annual meeting of the Stockholders, each person who
continues to serve as a non-employee director of the Company immediately after
such meeting shall be granted options to acquire 1,000 shares of Common Stock
(an "Annual Stock Option Grant"); provided, that he or she has served as a
non-employee director for at least six months prior to such meeting.
In addition to the Initial Stock Option Grant, each person who (i) was a
non-employee director of the Company at the time of adoption of the Directors'
Plan and (ii) served as a non-employee director of the Company prior to June 21,
1993 was granted options to acquire 2,500 shares of Common Stock at $23.29 per
share. The aggregate of such grant and the grant of options to acquire 5,000
shares of Common Stock shall be deemed an Initial Stock Option Grant for such
director.
The exercise price of any New Director Stock Option Grant and the Annual
Stock Option Grant shall be the average closing price of the Common Stock on the
NYSE for the 10 consecutive trading days immediately prior to the date of any
such stock option grant. Notwithstanding the foregoing, the exercise price of
any such option will in no event be less than 95% of the average closing price
of the Common Stock on the NYSE for the 20 consecutive trading days immediately
prior to the date of any such stock option grant.
Under the Directors' Plan, Messrs. Hanau, McKee and Ripault were each
granted options to acquire 7,500 shares of Common Stock, at $23.29 per share,
and Messrs. Adams, Gerard, Hopkins, McDonald, Poole and Sight were each granted
options to acquire 5,000 shares of Common Stock at $23.29 per share.
Additionally, each of such individuals was granted an Annual Stock Option Grant
immediately following the 1994 and 1995 Annual Meetings of Stockholders at an
exercise price of $22.71 and $16.815 per share, respectively.
RETIREMENT PLAN FOR NON-EMPLOYEE DIRECTORS
On October 13, 1994, the Board adopted the Retirement Plan for Non-Employee
Directors (the "Directors' Retirement Plan") for the purpose of attracting and
retaining qualified persons for service as members of the Board. The Directors'
Retirement Plan is administered by the Nominating Committee.
12
<PAGE> 16
To be eligible for participation in the Directors' Retirement Plan, a
director must have served as a non-employee director of the Company for five
full calendar years (which need not be consecutive) since January 1, 1985
whether or not such director is a director upon retirement.
An eligible director's annual "Normal Retirement Benefit" under the
Directors' Retirement Plan equals 100% of such eligible director's "Base
Retainer" (defined as regular annual active service retainer for service as a
member of the Board in effect on the date of retirement, exclusive of any other
fees for serving on committees of the Board, attending meetings of the Board or
committees thereof or otherwise paid for services rendered to the Company)
payable in equal monthly installments and continuing for the number of full
months of service as a non-employee director from January 1, 1985 to the month
prior to retirement (whether or not after age 65), less a certain number of
months in the case of directors who received accrued retirement benefits in a
lump sum payment upon termination as of December 31, 1988 of the Non-Employee
Directors' Retirement Plan in effect as of January 1, 1985.
An eligible director who elects to retire from the Board prior to age 65
may elect to receive an early retirement benefit commencing at age 55 in an
amount equal to his Normal Retirement Benefit minus 5% for each year prior to
age 65 that the director elects early retirement, but not more than a 50%
reduction in Normal Retirement Benefits.
An eligible director may elect to receive a lump sum payment, in lieu of
his Normal Retirement Benefit or early retirement benefits, payable at the time
when his benefit payments would otherwise commence, in an amount equal to the
present value of the benefit payments to be received.
Upon commencement of periodic benefit payments, such payments will be
adjusted on January 1 of each year for increases in the cost of living in the
preceding year, as measured by the Consumer Price Index -- U.S. City Average, as
published by the Bureau of Labor Statistics of the United States Department of
Labor.
Normal Retirement Benefit payments commence in the month following the
eligible director's retirement or 65th birthday, whichever is later. Early
retirement benefit payments commence in the month following the eligible
director's early retirement or 55th birthday, whichever is later.
13
<PAGE> 17
REPORT OF COMPENSATION AND STOCK OPTION COMMITTEE
ON EXECUTIVE COMPENSATION
The Compensation Committee administers the Company's executive compensation
program and makes specific recommendations to the Board for salaries, incentive
bonuses and stock option plans. The Compensation Committee is composed of four
independent, non-employee directors. See "Committees of the Board of Directors."
The Company's executive compensation program (which excludes the Chairman
and President of the Company, whose respective Employment Agreements provide for
the terms of their base and incentive compensation) is intended to attract,
retain and motivate highly qualified executives for the Company and to create an
incentive to increase Stockholder value. This policy is implemented through
payment of salaries and bonuses, the granting of stock options and the payment
of universal life insurance premiums, as well as medical benefits, 401(k)
contributions and profit sharing plan contributions which are available to
employees of the Company.
Salaries. The Compensation Committee is responsible for recommending for
each fiscal year the base salary levels for the executive officers of the
Company. In developing salary recommendations for the year ended December 31,
1995, the Compensation Committee reviewed the salaries for similar positions in
similarly-sized companies which engage in the Company's business. The
Compensation Committee confirmed that the base salaries for the executive
officers were consistent with its objective of setting base salaries within
reasonable ranges for similar positions in comparatively-sized companies by
reviewing a composite compensation survey for residential builders, as well as
public filings of various residential builders. Such survey and filings included
various companies which were in the Company's peer group. See "Stock Performance
Graph." In recommending base salary levels, the Compensation Committee also
considers each executive officer's experience level and potential for
significant contributions to the Company's profitability and the Company's goal
of retaining and motivating highly qualified executive officers in a highly
competitive and mobile industry.
Bonuses. An annual incentive bonus plan for the executive officers (other
than Messrs. Strudler and Heimbinder) has been structured to provide financial
incentives which are related to the Company's profitability and are utilized to
recognize the executive's individual contributions to the Company. The annual
bonus plan is also intended to reward executive officers for exceptional
performance. Under the 1995 Program, an incentive compensation pool in an amount
equal to the lesser of $700,000 or 2% of the Company's pre-tax income for the
fiscal year ended December 31, 1995 has been established to be distributed to
the executive officers based upon evaluation of the following factors:
1) A review of the profit and loss of the Company as compared to the
projected profit and loss for the fiscal year as set forth in the Company's
business plan.
2) A review of the cash flow of the Company as compared to the
projected cash flow for the fiscal year as set forth in the Company's
business plan.
3) The overall performance of the Company in comparison to competitive
industry performance, taking into consideration an analysis of rates of
growth, return on equity and return on sales.
4) The incentive bonus payments by competitors in relation to the
proposed bonus payments to the Company's executive officers.
5) All other actions and activities by the executive officers in the
fulfillment of their tasks as an officer to maximize Stockholder value.
The amount of the payments allocated to each executive officer from the
incentive pool is determined by the Board (upon the recommendation of the
Compensation Committee) in its sole discretion; provided that the maximum
incentive compensation payable to any officer for fiscal year 1995 will not
exceed 75% of the base salary of such officer. An executive officer will only be
entitled to receive incentive compensation from the incentive pool if the
officer is employed by the Company during the entire fiscal year.
Stock Options. Long-term incentives to remain in the employ of the Company
are provided through grants of stock options to key employees, including
officers and managerial or supervisory employees who are
14
<PAGE> 18
salaried employees of the Company. The amount of the awards reflect the
officer's position and ability to influence the Company's overall performance.
Options are intended to provide officers with an increased incentive to make
contributions to the long-term performance and growth of the Company, to join
the interests of officers with the interests of Stockholders and to attract and
retain qualified employees.
Restricted Stock Plan. In 1995, long-term incentives through grants of
restricted stock were provided to key employees, including officers and
presidents of operations. These restricted stock grants vest over time,
including on an accelerated schedule if the Company's financial performance
achieves certain specified targets.
Compliance with Internal Revenue Code Section 162(m). With respect to
Section 162(m) of the Tax Code, the Compensation Committee does not expect
"applicable employee remuneration" for any "covered employee" (as such terms are
defined in the Tax Code) of the Company to exceed $1,000,000 for the year ended
December 31, 1995. It is the policy of the Compensation Committee to structure
compensation to minimize the amount that could be subject to the $1,000,000
limitation on corporate tax deductions under Section 162(m) of the Tax Code,
while maintaining flexibility to take actions which it deems to be in the best
interest of the Company and its Stockholders but which may result in the payment
of certain amounts that are not deductible. Pursuant to the Employment
Agreements, a portion of any compensation otherwise payable may be deferred in
certain circumstances if it would otherwise not be deductible by the Company
because of the limitations set forth in Section 162(m) of the Tax Code.
Chairman and President Compensation. The compensation for Mr. Strudler, the
Chairman and Co-Chief Executive Officer of the Company, and Mr. Heimbinder, the
President, Co-Chief Executive Officer and Chief Operating Officer of the
Company, is based on their respective Employment Agreements, which were amended
and restated as of October 17, 1995 upon approval by the Board (based on a
recommendation of the Compensation Committee), and have been in effect since
1986, as amended from time to time. See "Employment Contracts and Termination of
Employment and Change-in-Control Arrangements." Mr. Strudler's base salary for
1995 was $425,000 and Mr. Heimbinder's base salary for 1995 was $415,000. Such
base salaries were determined by the Board (based on a recommendation of the
Compensation Committee), after reviewing the base salary increases for Messrs.
Strudler and Heimbinder over the past several years, the comparable salaries of
chief executive officers and chief operating officers of other homebuilding
companies as set forth in the composite compensation survey for residential
builders employed by the Compensation Committee in determining the other
executive officer compensation and public filings of various residential
builders (some of which were included in the Company's peer group (See "Stock
Performance Graph"), and the Company's performance during 1994. In 1995, the
incentive bonus paid to Mr. Strudler was $526,223, and the incentive bonus paid
to Mr. Heimbinder was $526,223, based upon a formula set forth in the Employment
Agreements. The compensation framework of the Employment Agreements is
consistent with the Compensation Committee's policy to provide incentives to
executive officers with rewards related to the Company's profitability and to
recognize executive officer's individual contributions to the Company.
Compensation and Stock Option Committee
Charles A. McKee, Chairman
Steven L. Gerard
Kenneth J. Hanau, Jr.
James W. Sight
15
<PAGE> 19
STOCK PERFORMANCE GRAPH
The following graph compares on a cumulative basis the yearly percentage
change during the five years ended December 31, 1995 in (i) the total
Stockholder return on the Common Stock with (ii) the total return on the
Standard & Poor's 500 Stock Index and (iii) the total stockholder return on the
common stock of a peer group consisting of 10 companies engaged in homebuilding
activities. Such yearly percentage change has been measured by dividing (i) the
sum of (a) the amount of dividends for the measurement periods, assuming
dividend reinvestment, and (b) the price per share at the end of the measurement
period less the price per share at the beginning of the measurement period, by
(ii) the price per share at the beginning of the measurement period. The price
of each unit has been set at $100 on December 31, 1990 and June 22, 1993 for
preparation of the graph.
[PERFORMANCE GRAPH]
<TABLE>
<CAPTION>
Measurement Period U.S. Home
(Fiscal Year Covered) Corporation S&P 500 Peer Group
<S> <C> <C> <C>
1990 100 100 100
1991 76.89 130.48 200.85
1992 184.66 140.46 238.39
6/21/93 461.65 147.30 245.86
6/22/93 100 100 100
12/31/93 126.79 104.97 123.21
1994 76.79 106.35 76.47
1995 138.69 146.32 106.57
</TABLE>
The first period shown on the graph (left of the double vertical bar) is
from December 31, 1990 to June 21, 1993 and includes the Company's shares of
common stock, $0.10 par value per share, that were outstanding and traded prior
to the effective date of the Company's Chapter 11 plan of reorganization.
Pursuant to the provisions of the Company's Chapter 11 plan of reorganization,
all shares of such common stock were cancelled on June 21, 1993 and .077480
shares of Common Stock and Class B Warrants to purchase .042036 shares of Common
Stock were issued for each old share of common stock.
The second period shown on the graph (right of the double vertical bar) is
from June 22, 1993 to December 31, 1995 and includes the Company's current
shares of Common Stock. The graph does not include the value of the Class B
Warrants.
The peer group index is composed of the following homebuilding companies:
Centex Corporation, Continental Homes Holding Corp., Del Webb Corp., Hovnanian
Enterprises, Inc., Kaufman & Broad Home Corporation, Lennar Corporation, MDC
Holdings, Inc., Pulte Corporation, The Ryland Group, Inc. and Standard Pacific
Corp.
16
<PAGE> 20
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The members of the Compensation Committee during the year ended December
31, 1995 were Messrs. Gerard, Hanau, McKee and Sight. No such person was an
officer or employee of the Company during the year ended December 31, 1995 or
was formerly an officer of the Company.
SECURITY OWNERSHIP OF MANAGEMENT AND CERTAIN BENEFICIAL OWNERS
The following table sets forth certain information regarding the Company's
outstanding shares of Common Stock and Convertible Preferred Stock beneficially
owned as of March 1, 1996, by (i) each director of the Company, (ii) the
Chairman and Co-Chief Executive Officer and each of the four most highly
compensated executive officers of the Company (other than the Chairman and
Co-Chief Executive Officer), (iii) all directors and executive officers of the
Company as a group and (iv) each person who owns more than five percent of the
Common Stock or the Convertible Preferred Stock. All information with respect to
beneficial ownership has been furnished to the Company by the parties below.
<TABLE>
<CAPTION>
CONVERTIBLE PREFERRED
COMMON STOCK STOCK
------------------------------- --------------------------
NUMBER OF SHARES PERCENT NUMBER OF PERCENT
BENEFICIAL OWNERS (1)(2)(3)(4)(5) OF CLASS SHARES OF CLASS
- ---------------------------------------- ---------------- -------- --------- --------
<S> <C> <C> <C> <C>
Glen Adams.............................. 7,000 * -- --
Steven L. Gerard........................ 7,000 * -- --
Kenneth J. Hanau, Jr.................... 9,790 * -- --
Isaac Heimbinder........................ 152,441(6)(7) 1.36% -- --
Malcolm T. Hopkins...................... 9,000 * -- --
Jack L. McDonald........................ 7,000 * -- --
Charles A. McKee........................ 11,535(8) * -- --
George A. Poole, Jr..................... 9,000 * -- --
Herve Ripault........................... 10,365 * -- --
James W. Sight.......................... 7,000 * -- --
Robert J. Strudler...................... 150,544(6) 1.34% -- --
Craig M. Johnson........................ 30,830 * -- --
Chester P. Sadowski..................... 27,269 * -- --
Richard G. Slaughter.................... 26,703(6) * -- --
All directors and executive officers of
the Company as a group................ 535,985 4.77% 261 *
FMR Corp.
82 Devonshire Street
Boston, MA 02109(9)................... 1,551,845 13.80% 45,000 14.16%
Loomis, Sayles & Company, L.P
One Financial Center, 34th Floor
Boston, MA 02111(10).................. 1,715,432 15.25% -- --
</TABLE>
- ---------------
* Less than 1%.
(1) Includes options which are fully exercisable pursuant to the Company's 1993
Employees' Stock Option Plan for the following number of shares of Common
Stock: Mr. Heimbinder -- 86,668; Mr. Strudler -- 86,668; Mr.
Johnson -- 8,335; Mr. Sadowski -- 8,335; Mr. Slaughter -- 8,335; and all
executive officers of the Company as a group -- 219,344.
(2) Includes shares of Common Stock issued in connection with the Employee
Stock Plan. See "Executive Compensation -- Summary Compensation Table." The
number of shares of Common Stock issued pursuant to the Employee Stock Plan
for 1994 incentive compensation are as follows: Mr. Heimbinder -- 5,420;
Mr. Strudler -- 5,559; Mr. Johnson -- 730; Mr. Sadowski -- 730; Mr.
Slaughter -- 730; and all executive officers of the Company as a
group -- 14,803.
17
<PAGE> 21
Messrs. Heimbinder and Strudler elected to be included in the Plan for
purposes of their 1994 incentive compensation. The number of shares of
Common Stock issued pursuant to the Employee Stock Plan for 1995 incentive
compensation are as follows: Mr. Johnson -- 546; Mr. Sadowski -- 519; Mr.
Slaughter -- 519; and all executive officers of the Company as a
group -- 2,889. The table does not include an approximately equal number of
shares of Common Stock credited to Messrs. Johnson, Sadowski and Slaughter
that have not yet vested under the Employee Stock Plan.
(3) Includes shares of Common Stock issued in connection with the Restricted
Stock Plan. See "Executive Compensation -- Summary Compensation Table." The
number of shares of Common Stock issued pursuant to the Restricted Stock
Plan are as follows: Messrs. Heimbinder, Strudler, Sadowski, Slaughter and
Johnson each received 11,119 shares; and all executive officers of the
Company as a group -- 88,952.
(4) Includes fully exercisable options granted pursuant to the Directors' Plan
to acquire the following number of shares of Common Stock: Mr.
Adams -- 7,000; Mr. Gerard -- 7,000; Mr. Hanau -- 9,500; Mr.
Hopkins -- 7,000; Mr. McDonald -- 7,000; Mr. McKee -- 9,500; Mr.
Poole -- 7,000; Mr. Ripault -- 9,500 and Mr. Sight -- 7,000.
(5) Includes Class B Warrants, exercisable at $20 per share, to acquire the
following number of shares of Common Stock: Mr. Hanau -- 102; Mr.
McKee -- 710; Mr. Ripault -- 21; Mr. Strudler -- 1,893; Mr. Sadowski -- 23;
and all directors and executive officers of the Company as a
group -- 4,102.
(6) Excludes 55,000 shares of Common Stock held in the Company's Profit Sharing
Plan, of which Messrs. Strudler, Heimbinder and Slaughter are each a
trustee and in which each may be deemed to have an unallocated pecuniary
interest to the extent of 195 shares; each of Messrs. Strudler, Heimbinder
and Slaughter disclaim beneficial ownership of all such shares held by the
Plan except those in which each has a pecuniary interest. Each of Messrs.
Strudler, Heimbinder and Slaughter has shared voting and dispositive power
over the 55,000 shares of Common Stock. Because of the delay in determining
the nature and amount of the executive's pecuniary interest, the Form 4's
reporting the pecuniary interests were not filed until April 18, 1995 by
Mr. Heimbinder and April 19, 1995 by Messrs. Strudler and Slaughter rather
than by March 10, 1995.
(7) Excludes 12,196 shares of Common Stock and Class B Warrants, exercisable at
$20 per share, to purchase 6,116 shares of Common Stock held in trust for
Mr. Heimbinder's children. Mr. Heimbinder disclaims beneficial ownership of
such shares and Warrants.
(8) Excludes 775 shares of Common Stock and Class B Warrants, exercisable at
$20 per share, to purchase 420 shares of Common Stock owned by Mr. McKee's
wife. Mr. McKee disclaims beneficial ownership of such shares.
(9) FMR Corp. beneficially owns, through its wholly-owned subsidiary, Fidelity
Management & Research Company ("Fidelity"), as an investment advisor to
certain funds ("Fidelity Funds"), 1,292,945 shares of Common Stock, which
amount includes 45,000 shares of Convertible Preferred Stock convertible
into 45,000 shares of Common Stock, and through its wholly-owned subsidiary
Fidelity Management Trust Company ("FMTC"), as trustee or managing agent to
certain accounts ("Accounts"), 258,900 shares of Common Stock. Of the
amounts held by FMR Corp., 555,645 shares of Common Stock (4.94% of the
total outstanding amount of the Common Stock) and 45,000 shares of
Convertible Preferred Stock (14.16% of the total outstanding amount of the
Convertible Preferred Stock) are also beneficially owned by Fidelity Low
Priced Stock Fund, a fund for which Fidelity serves as investment advisor.
Each of FMR Corp., through its control of Fidelity, and the Fidelity Funds
has sole dispositive power over 1,292,945 shares of Common Stock. Neither
FMR Corp. nor Edward C. Johnson 3d, as chairman and holder of 12.0% of
voting common stock of FMR Corp., has the sole power to vote or direct the
voting of such shares, which power rests with the boards of trustees of the
Fidelity Funds. Each of FMR Corp., through its control of FMTC, and the
Accounts has sole dispositive power over 258,900 shares of Common Stock and
power to vote or to direct the voting of such shares.
(10) Loomis, Sayles and Company, L.P. may be deemed to be the beneficial owner
of such shares held by third party accounts under reporting requirements of
the Exchange Act; however, Loomis, Sayles and Company, L.P. expressly
disclaims beneficial ownership of such shares. Loomis, Sayles and Company,
L.P. has or shares voting power and dispositive power over such shares.
18
<PAGE> 22
1996 EMPLOYEES' STOCK OPTION PLAN
(PROPOSAL 2)
On December 7, 1995, the Board adopted the Company's 1996 Employees' Stock
Option Plan (the "1996 Stock Option Plan") for the purpose of providing an
incentive to key employees, including officers and managerial or supervisory
employees who are salaried employees of the Company, to remain in the employ of
the Company and to have a proprietary interest in the Company. There are 500,000
shares of Common Stock reserved for issuance under the 1996 Stock Option Plan.
The full text of the 1996 Stock Option Plan is set forth as Exhibit A to
this Proxy Statement. The principal features of the 1996 Stock Option Plan are
summarized below.
All officers and managerial or supervisory employees who are salaried
employees of the Company, approximately 580 employees, including, but not
limited to, corporate officers, presidents of operations and division
presidents, are eligible to receive options under the 1996 Stock Option Plan.
Options to be granted under the 1996 Stock Option Plan are intended to be
designated as (i) "Incentive Stock Options" as defined in Section 422(b) of the
Tax Code, (ii) nonqualified stock options or (iii) any combination of Incentive
Stock Options and nonqualified stock options. In the event that a portion of an
option cannot be treated as an Incentive Stock Option by reason of the
limitations contained in Section 422 of the Tax Code, such portion will be
treated as a nonqualified stock option.
The grant of options under the 1996 Stock Option Plan is discretionary with
the Board who shall also specify the terms under which the options become
exercisable. The exercise price of any Incentive Stock Option and/or a
nonqualified stock option granted under the 1996 Stock Option Plan shall be the
closing price of the Common Stock on the NYSE on the day that such option is
granted. Notwithstanding the foregoing, the exercise price of such option will
in no event be less than 95% of the average of the daily last sale price of the
Common Stock on the NYSE for the 20 consecutive trading days immediately prior
to the date such option is granted, unless otherwise determined by the Board or
the Committee (as defined below), as applicable. The 1996 Stock Option Plan
became effective upon the date of adoption by the Board and options may be
granted on or subsequent to such date, but no option may be exercised under the
1996 Stock Option Plan unless and until the 1996 Stock Option Plan shall have
been approved by the Stockholders within 12 months after its adoption by the
Board.
No option may be exercised more than 10 years after the date such option is
granted. Furthermore, in the event the optionee's employment with the Company is
terminated for any reason other than for Cause (as defined in the applicable
Option Agreement) or death or disability, the optionee retires or such
optionee's employment with the Company is Constructively Terminated (as defined
in the applicable Option Agreement), the optionee shall have the right, not
later than the earlier of (i) three months after such termination or retirement
or (ii) the termination date of the option, to exercise the option. If an
optionee shall die or become disabled while an employee of the Company, the
personal representative of the optionee or the person to whom such options have
been transferred by will or by laws of descent and distribution, or the disabled
optionee, shall have the right, not later than the earlier of (i) one year after
such optionee's death or disability, or (ii) the termination date of the option,
to exercise such option.
The Common Stock issuable under the 1996 Stock Option Plan will be
registered pursuant to a Registration Statement on Form S-8 under the Securities
Act of 1933, as amended. The 1996 Stock Option Plan will be administered by the
Board who may from time to time appoint a committee (the "Committee") and may
delegate to the Committee full power and authority to take any action required
or permitted to be taken by the Board under the 1996 Stock Option Plan. The
Committee will be comprised of at least three members of the Board, all of whom
are to be "disinterested persons" for purposes of Rule 16b-3 of the Exchange Act
and "outside directors" for the purposes of Section 162(m) of the Tax Code. The
Board has authorized the Compensation Committee to administer the Plan.
The Board may at any time terminate, amend or modify the 1996 Stock Option
Plan in any respect it deems suitable; provided, however, no such action of the
Board, without the approval of the Stockholders, may (i) materially increase the
benefits accruing to employees eligible to receive options under the 1996 Stock
Option Plan, (ii) materially increase the total amount of Common Stock for which
options may be awarded
19
<PAGE> 23
under the 1996 Stock Option Plan or (iii) materially modify the requirements for
participation in the 1996 Stock Option Plan; provided, further, that no
amendment, modification or termination of the 1996 Stock Option Plan may (A) in
any manner affect any option theretofore granted under the 1996 Stock Option
Plan without the consent of the holder or (B) modify the allocation of options
to the persons designated by the Board or the Committee, as applicable.
Tax Considerations
A recipient who receives an option grant under the 1996 Stock Option Plan
will not have to recognize any income at the time the option is granted. The
recipient of a Incentive Stock Option will generally recognize income at the
time the shares received on exercise are disposed of in an amount equal to the
difference between the amount realized and the option price. The Company will
not receive a Federal income tax deduction in connection with either the grant
or exercise of the Incentive Stock Option. The recipient of a nonqualified stock
option will recognize income at the time the option is exercised in an amount
equal to the excess of the fair market value of the shares on the date of
exercise over the exercise price. The Company will be entitled to a deduction at
the time and in the same amount as the recipient of a nonqualified stock option
recognizes income upon exercise. Special rules regarding the timing of income
will apply to a recipient who is subject to the insider trading rules of Section
16(b) of the Exchange Act. Income attributable to options granted under the 1996
Stock Option Plan should not be subject to the limitations on deductibility
contained in Section 162(m) of the Tax Code.
THE BOARD RECOMMENDS THAT STOCKHOLDERS VOTE FOR APPROVAL OF THE 1996 STOCK
OPTION PLAN, AND IT IS INTENDED THAT PROXIES NOT MARKED TO THE CONTRARY WILL BE
SO VOTED.
The affirmative vote of the holders of a majority of the shares of Stock
present in person or represented by Proxy and entitled to vote at the Meeting is
required for approval of Proposal 2.
RATIFICATION OF THE APPOINTMENT OF
ARTHUR ANDERSEN LLP AS AUDITORS
(PROPOSAL 3)
The Board, upon recommendation of the Audit Committee, has appointed,
subject to ratification by Stockholders, the firm of Arthur Andersen LLP,
independent public accountants, to examine the financial statements of the
Company for 1996. Arthur Andersen LLP has been employed by the Company as its
independent auditors for more than 25 years. Stockholders are asked to ratify
the action of the Board in making such appointment.
Representatives of Arthur Andersen LLP will attend the Meeting and may make
a statement if they so desire. They also will be available to respond to
appropriate questions.
THE BOARD RECOMMENDS THAT STOCKHOLDERS VOTE FOR RATIFICATION, AND IT IS
INTENDED THAT PROXIES NOT MARKED TO THE CONTRARY WILL BE SO VOTED.
The affirmative vote of the holders of a majority of the shares of Stock
cast thereon is required for the ratification of the appointment of auditors.
OTHER BUSINESS
Management of the Company knows of no business to be brought before the
Meeting other than the election of Directors, the adoption of the 1996 Stock
Option Plan and ratification of the appointment of auditors as set forth in the
Notice of Annual Meeting. If any other proposals come before the Meeting, it is
intended that the shares of Stock represented by Proxies shall be voted in
accordance with the judgment of the person or persons exercising the authority
conferred by the Proxies.
20
<PAGE> 24
STOCKHOLDER PROPOSALS
Proposals by Stockholders intended to be presented at the 1997 Annual
Meeting of Stockholders must be received by the Company on or before November
20, 1996 in order to be included in the Proxy Statement and Proxy for that
meeting. The mailing address of the Company for submission of any such proposal
is given on the first page of this Proxy Statement.
IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY. THEREFORE, STOCKHOLDERS
ARE REQUESTED TO SIGN, DATE AND RETURN THE PROXY CARD AS SOON AS POSSIBLE,
WHETHER OR NOT THEY EXPECT TO ATTEND THE MEETING IN PERSON.
On Behalf of the Board of Directors
RICHARD G. SLAUGHTER
Secretary
Houston, Texas
March 20, 1996
21
<PAGE> 25
EXHIBIT A
U.S. HOME CORPORATION
1996 EMPLOYEES' STOCK OPTION PLAN
1. PURPOSES.
The 1996 Employees' Stock Option Plan (the "Stock Option Plan") is intended
to provide an incentive for key employees of U.S. Home Corporation (the
"Company") and its subsidiaries and divisions in order to encourage them to
remain in the employ of the Company and contribute to the Company's success by
granting them stock options.
2. ADMINISTRATION.
(a) The Board of Directors of the Company (the "Board") will (i) administer
the Stock Option Plan, (ii) establish, subject to the provisions of the Stock
Option Plan, such rules and regulations as it may deem appropriate for the
proper administration of the Stock Option Plan and (iii) make such
determinations under, and such interpretations of, and take such steps in
connection with, the Stock Option Plan or the options issued thereunder as it
may deem necessary or advisable.
(b) The Board may from time to time appoint a Committee (the "Committee")
which will be comprised of at least three members of the Board, all of whom are
to be disinterested persons (as defined herein) and outside directors (as
defined herein), and may delegate to the Committee full power and authority to
take any and all action required or permitted to be taken by the Board under the
Stock Option Plan, whether or not the power and the authority of the Committee
is hereinafter fully set forth. The members of the Committee may be appointed
from time to time by the Board and serve at the pleasure of the Board. The
Board, if each member is a disinterested director and outside director, or the
Committee, as applicable, will hereinafter be referred to as the
"Administrator."
(c) For the purposes hereof, (i) a "disinterested person" is a person who,
on a given date, is disinterested within the meaning of Rule 16b-3 promulgated
under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and
(ii) an "outside director" is a director who, on a given date, is an outside
director within the meaning of Section 162(m) of the Internal Revenue Code of
1986, as amended (the "IRC").
3. STOCK.
The stock (the "Stock") to be made the subject of an option under the Stock
Option Plan will be the shares of common stock, $.01 par value per share, of the
Company, whether authorized and unissued or treasury stock. The total amount of
Stock for which options may be granted under the Stock Option Plan will not
exceed, in the aggregate, 500,000 shares, subject to adjustment in accordance
with the provisions of Section 11 hereof. Any shares of Stock which were the
subject of unexercised portions of any terminated or expired options may again
be subject to the grant of options under the Stock Option Plan.
4. AWARD OF OPTIONS.
(a) The Administrator may award options to those Officers (as defined
herein) selected by the Administrator in the amounts determined by the
Administrator, provided that the maximum number of shares of Stock which may be
the subject of options granted to any individual in any calendar year is
250,000. Such options will be exercisable in accordance with the terms hereof.
(b) The Administrator may, at any time prior to the expiration of 10 years
from the date on which the Stock Option Plan is adopted, authorize the granting
of options to such members of that class of the Company's key employees
consisting of the officers and managerial or supervisory personnel, who are
salaried employees of the Company (the "Officers"), as it may select, and in
such amounts and in such installments as it will designate, subject to the
provisions of this Section. The Administrator, in its sole discretion, will
designate such options as (i) "Incentive Stock Options" within the meaning of
Section 422 of the IRC,
A-1
<PAGE> 26
(ii) other stock options subject to the terms and conditions set forth herein
("Nonqualified Stock Options") or (iii) any combination of Incentive Stock
Options and Nonqualified Stock Options. In the event that any portion of an
option cannot be exercised as an Incentive Stock Option by reason of the
limitation contained in Section 422(d) of the IRC, such portion will be treated
as a Nonqualified Stock Option.
(c) No person will be eligible to receive or hold an Incentive Stock Option
under the Stock Option Plan if, immediately after such option is granted, such
person owns (within the meaning of Section 422 of the IRC) stock possessing more
than 10 percent of the total combined voting power or value of all classes of
capital stock of the Company.
(d) All Incentive Stock Options will be evidenced by a written agreement in
substantially the form of Exhibit A annexed hereto, and all Nonqualified Stock
Options will be evidenced by a written agreement in substantially the form of
Exhibit B annexed hereto (each an "Option Agreement").
5. PRICE.
(a) The exercise price of an option will be the closing price of the Stock
on the New York Stock Exchange ("NYSE") on the day that such option is granted
if a sale is executed on such Exchange on that day, and if there was no such
sale, the price will be the closing price of the Stock on the last preceding day
on which a sale was executed. Notwithstanding the foregoing, the exercise price
of such option will in no event be less than 95% of the average of the daily
last sale prices of the Stock on the NYSE (or if no sale takes place on any such
day on the NYSE, the average of the last reported closing bid and asked prices
on such day as officially quoted on the NYSE) for the 20 consecutive trading
days immediately prior to the date such option is granted, unless otherwise
determined by the Administrator.
(b) The closing price of the Stock, as of any particular day, will be as
reported in The Wall Street Journal; provided, however, that if the Stock is not
listed on the NYSE on the date the particular option is granted, the exercise
price will be not less than the fair market value of the shares of Stock covered
by the option at the time that the option is granted, as determined by the
Administrator based on such empirical evidence as it deems to be necessary under
the circumstances.
6. TERM.
Subject to Sections 8 and 9 hereof, an option may be exercised by the
holder thereof (a "Holder") at such times and in such installments, if any, as
may be specified in such Holder's Option Agreement, which will provide that no
option will be exercised in any amount later than 10 years from the date such
option was granted.
7. TRANSFERABILITY.
No option will be transferable by a Holder other than by will or the laws
of descent and distribution or pursuant to a qualified domestic relations order
as defined by the IRC or Title I of the Employee Retirement Income Security Act
of 1974, as amended("ERISA"). During the lifetime of a Holder, the option will
be exercisable only by such Holder. An Officer who acquires Stock hereunder will
only transfer such Stock in compliance with applicable federal and state
securities laws.
8. TERMINATION OF EMPLOYMENT.
Except to the extent otherwise specified by the Administrator, if, on or
after the date an option is granted under the Stock Option Plan, (i) (A) a
Holder's employment with the Company is terminated by the Company for any reason
other than (x) for Cause (as defined in the applicable Option Agreement), or (y)
death or disability (within the meaning of Section 22(e)(3) of the IRC), (B) the
Holder retires in accordance with the Company's normal retirement policy or with
the consent of the Board, or (C) such Holder's employment with the Company is
Constructively Terminated (as defined in the applicable Option Agreement), the
Holder will have the right, not later than the earlier of (a) three months after
such termination or retirement or (b) the termination date of the option, to
exercise the option, to the extent the
A-2
<PAGE> 27
right to exercise such option will have accrued at the date of such termination
of employment or retirement, except to the extent that such option theretofore
will have been exercised, or (ii) a Holder's employment with the Company is
terminated (A) by the Company for Cause, or (B) by the Holder for any reason
other than due to (x) such Holder being Constructively Terminated, (y) such
Holder's retirement in accordance with the Company's normal retirement policy or
with the consent of the Board or (z) such Holder's death or disability, the
right to exercise the option will thereupon terminate.
9. DEATH OR DISABILITY.
(a) Except to the extent otherwise specified by the Administrator and as
provided in paragraph (b) of this Section 9, if a Holder's employment with the
Company is terminated because of disability (within the meaning of Section
22(e)(3) of the IRC), the disabled Holder will have the right, not later than
the earlier of (i) one year after such termination or (ii) the termination date
of the option, to exercise the option, to the extent the right to exercise such
option will have accrued at the date of such termination of employment, except
to the extent that such option theretofore has been exercised.
(b) Except to the extent otherwise specified by the Administrator, if a
Holder dies while in the employ of the Company or within three months after
termination of employment with the Company because of disability, such Holder's
personal representative or the person or persons to whom the option will have
been transferred by will or by the laws of descent and distribution will have
the right, not later than the earlier of (i) one year after the date of such
Holder's death or (ii) the termination date of the option, to exercise such
option, to the extent the right to exercise such option shall have accrued at
the date of death or disability, except to the extent such option theretofore
will have been exercised.
10. PAYMENT FOR STOCK.
(a) The purchase price of Stock issued upon exercise of options granted
hereunder will be paid in full on the date of purchase. Payment will be made
either in cash or such other consideration as the Administrator deems
appropriate, including, without limitation, Stock already owned by the Holder or
Stock to be acquired by the Holder upon exercise of the option having a total
fair market value, as determined by the Administrator, equal to the purchase
price, or a combination of cash and Stock having a total fair market value, as
so determined, equal to the purchase price.
(b) The Company may make loans to such Holders as the Administrator, in its
discretion, may determine in connection with the exercise of options granted
under the Stock Option Plan; provided, however, that the Administrator will have
no discretion to authorize the making of any loan where the possession of such
discretion or the making of such loan would result in a "modification" (as
defined in Section 424(h) of the IRC) of any Incentive Stock Option. Such loans
will be subject to the following terms and conditions and such other terms and
conditions as the Administrator will determine not inconsistent with the Stock
Option Plan. Such loans will bear interest at such rates as the Administrator
will determine from time to time, which rates may be below then current market
rates (except in the case of Incentive Stock Options). In no event may any such
loan exceed the fair market value, at the date of exercise, of the shares
covered by the option, or portion thereof, exercised by the Holder. No loan will
have an initial term exceeding five years, but any such loan may be renewable at
the discretion of the Administrator. When a loan is made, the Holder will pledge
to the Company shares of Stock having a fair market value at least equal to the
principal amount of the loan. Every loan will comply with all applicable laws,
regulations and rules of the Federal Reserve Board and any other governmental
agency having jurisdiction over the Company.
(c) Stock will not be issued upon the exercise of options unless and until
the aggregate amount of federal, state or local taxes of any kind required by
law to be withheld with respect to the exercise of such options have been paid
or satisfied or provision for their payment and satisfaction has been made upon
such terms as the Administrator may prescribe, including, without limitation,
payment of any such taxes by exchanging shares of Stock previously owned by the
Holder or acquired upon the exercise of an option.
A-3
<PAGE> 28
11. STOCK ADJUSTMENTS.
(a) The total amount of Stock for which options may be granted under the
Stock Option Plan and option terms (both as to the number of shares of Stock and
the price of the option) will be appropriately adjusted for any increase or
decrease in the number of outstanding shares of Stock resulting from payment of
a stock dividend on the Stock, a subdivision or combination of the Stock, or a
reclassification of the Stock, and (in accordance with the provisions contained
in the following paragraph) in the event of a consolidation or a merger in which
the Company will be the surviving corporation.
(b) After any merger of one or more corporations into the Company in which
the Company will be the surviving corporation, or after any consolidation of the
Company and one or more other corporations, each Holder will, at no additional
cost, be entitled, upon any exercise of his option, to receive, in lieu of the
number of shares of Stock as to which such option will then be so exercised, the
number and class of shares of stock, other securities or other consideration to
which such Holder would have been entitled pursuant to the terms of the
applicable agreement of merger or consolidation if at the time of such merger or
consolidation such Holder had been a Holder of record of a number of shares of
Stock equal to the number of shares for which such option may then be so
exercised. Comparable rights will accrue to each Holder in the event of
successive mergers or consolidations of the character described above.
(c) In the event of any sale of all or substantially all of the assets of
the Company, or any merger of the Company into another corporation, or any
dissolution or liquidation of the Company or, in the discretion of the Board,
any consolidation or other reorganization in which it is impossible or
impracticable to continue in effect any options, all options granted under the
Stock Option Plan and not previously exercised will become exercisable by
Holders who are at such time in the employ of the Company or any of its
subsidiaries or divisions, commencing 10 days before the scheduled closing of
such event, and will terminate unless exercised at least one business day before
the scheduled closing of such event; provided, that any such exercise will be
conditioned on the closing of such transaction; and provided further, that the
Administrator may, in its discretion, require instead that all options granted
under the Stock Option Plan and not previously exercised will be assumed by such
other corporation on the basis provided in the preceding paragraph.
(d) The adjustments described in this Section 11 and the manner of
application of the foregoing provisions will be determined by the Administrator
in its sole discretion. Any such adjustment may provide for the elimination of
any fractional share which might otherwise become subject to an option.
12. RIGHTS AS A STOCKHOLDER.
A Holder or a transferee of an option will have no rights as a stockholder
with respect to any share of Stock covered by such Holder's option until such
Holder has become the Holder of record of such share of Stock, and, except for
stock dividends as provided in Section 11 hereof, no adjustment will be made for
dividends (ordinary or extraordinary, whether in cash, securities or other
property) or distributions or other rights in respect of such share for which
the record date is prior to the date on which he will become the holder of
record thereof.
13. AMENDMENT AND TERMINATION.
The Board may at any time terminate, amend or modify the Stock Option Plan
in any respect it deems suitable; provided, however, that no such action of the
Board, without the approval of the stockholders of the Company, may (i)
materially increase the benefits accruing to employees eligible to receive
options under the Stock Option Plan, (ii) materially increase the total amount
of Stock for which options may be granted under the Stock Option Plan or (iii)
materially modify the requirements for participation in the Stock Option Plan;
provided, further, that no amendment, modification or termination of the Stock
Option Plan may (A) in any manner affect any option theretofore granted under
the Stock Option Plan without the consent of the then Holder or (B) modify the
allocation of options to the persons designated by the Administrator.
A-4
<PAGE> 29
14. INVESTMENT PURPOSE.
At the time of exercise of any option, the Company may, if it will deem it
necessary or desirable for any reason, require the Holder to (i) represent in
writing to the Company that it is such Holder's then intention to acquire the
Stock for investment and not with a view to the distribution thereof or (ii)
postpone the date of exercise until such time as the Company has available for
delivery to the Holder a prospectus meeting the requirements of all applicable
securities laws.
15. RIGHT TO TERMINATE EMPLOYMENT.
Nothing contained herein or in any Option Agreement will restrict the right
of the Company to terminate the employment of any Holder at any time, with or
without Cause.
16. FINALITY OF DETERMINATIONS.
Each determination, interpretation, or other action made or taken pursuant
to the provisions of the Stock Option Plan by the Administrator will be final
and be binding and conclusive for all purposes.
17. INDEMNIFICATION OF DIRECTORS.
Each director of the Company will be indemnified by the Company against all
costs and expenses reasonably incurred by such director in connection with any
action, suit or proceeding to which he or she or any of the other directors may
be a party by reason of any action taken or failure to act under or in
connection with the Stock Option Plan, or any option granted thereunder, and
against all amounts paid by the other directors in settlement thereof (provided
such settlement will be approved by independent legal counsel) or paid by the
other directors in satisfaction of a judgment in any such action, suit or
proceeding, except a judgment based upon a finding of bad faith. Upon the
institution of any such action, suit or proceeding, a director of the Company
will notify the Company in writing, giving the Company an opportunity, at its
own expense, to handle and defend the same before such director undertakes to
handle it on his or her own behalf.
18. SUBSIDIARY AND PARENT CORPORATIONS.
Unless the context requires otherwise, references under the Stock Option
Plan to the Company will be deemed to include any divisions of the Company and
any subsidiary corporations and parent corporations of the Company, as those
terms are defined in Section 424 of the IRC.
19. GOVERNING LAW.
The Stock Option Plan will be governed by the laws of the State of
Delaware.
20. EFFECTIVE DATE.
The Stock Option Plan will become effective upon the date of its adoption
by the Board and options may be granted on or subsequent to such date but no
option may be exercised under the Stock Option Plan unless and until the Stock
Option Plan shall have been approved by the stockholders of the Company within
12 months after its adoption by the Board. If the Stock Option Plan is not so
approved by the stockholders, all options granted hereunder shall be null and
void.
21. OVERRIDE.
With respect to persons subject to Section 16 of the Exchange Act,
transactions under the Stock Option Plan are intended to comply with all
applicable conditions of Rule 16b-3 or any successor provision under the
Exchange Act. To the extent any provision of the Stock Option Plan or action by
the Administrator fails to so comply, it shall be deemed null and void, to the
extent permitted by law and deemed advisable by the Administrator.
A-5
<PAGE> 30
EXHIBIT A
(TO 1996 STOCK OPTION PLAN)
U.S. HOME CORPORATION
1996 EMPLOYEES' STOCK OPTION PLAN
INCENTIVE STOCK OPTION AGREEMENT
OPTION AGREEMENT, dated as of , between U.S. HOME
CORPORATION, a Delaware corporation (the "Company"), and (the
"Holder").
1. PURPOSE.
The purpose of this Incentive Option Agreement (this "Agreement") is to set
forth the terms and conditions of the incentive stock option granted to the
Holder under the U.S. Home Corporation 1996 Employees' Stock Option Plan (the
"Stock Option Plan"). The terms and conditions (including defined terms) of the
Stock Option Plan are expressly incorporated herein and made a part hereof with
the same force and effect as if fully set forth herein. The acceptance by the
Holder of the Option (as hereinafter defined) granted hereby will constitute
acceptance of and agreement with all of the terms and conditions contained in
this Agreement and the Stock Option Plan.
2. GRANT OF OPTION.
The Company hereby grants to the Holder an option (the "Option") to
purchase all or any part of an aggregate of shares of the Company's
common stock, $.01 par value per share (the "Stock"), at a price of $ * per
share (the "Exercise Price"), subject to adjustment as herein provided. Such
Option is intended to qualify as an "Incentive Stock Option" within the meaning
of Section 422 of the Internal Revenue Code of 1986, as amended (the "IRC");
provided, however, that to the extent that any portion of this Option cannot be
exercised as an Incentive Stock Option by reason of the $100,000 limitation
contained in Section 422(d) of the IRC, such portion will be treated as a
Nonqualified Stock Option.
3. TERM OF OPTION.
(a) Subject to Sections 4 and 5 hereof, the Option shall be exercisable as
follows:
(b) The Option will expire on the date 10 years from the date hereof. Any
exercise will be accompanied by a written notice to the Company in substantially
the form attached hereto as Schedule 1.
4. TERMINATION OF EMPLOYMENT.
(a) Except to the extent otherwise specified by the Administrator, if, on
or after the date an Option is granted under the Stock Option Plan, (i)(A) the
Holder's employment with the Company is terminated by the Company for any reason
other than (x) for Cause (as herein defined), or (y) death or disability (within
the meaning of Section 22(e)(3) of the IRC), (B) the Holder retires in
accordance with the Company's normal retirement policy or with the consent of
the board of directors of the Company (the "Board"), or (C) the Holder's
employment with the Company is Constructively Terminated (as defined herein),
the Holder will have the right, not later than the earlier of (a) three months
after such termination or retirement or (b) the termination date of the Option
to exercise the Option, to the extent the right to exercise such Option will
have accrued at the date of such termination of employment or retirement, except
to the extent
- ---------------
* To be determined pursuant to Section 5 of the Stock Option Plan.
A-6
<PAGE> 31
that such Option theretofore will have been exercised, or (ii) the Holder's
employment with the Company is terminated (A) by the Company for Cause or (B) by
the Holder for any reason other than due to (x) the Holder being Constructively
Terminated, (y) the Holder's retirement in accordance with the Company's normal
retirement policy or with the consent of the Board, or (z) the Holder's death or
disability, the right to exercise the Option will thereupon terminate.
(b) For purposes of this Agreement, the term "Cause" means (i) the Holder's
continuing willful failure to perform his or her duties with respect to the
Company (other than as a result of total or partial incapacity due to physical
or mental illness), (ii) gross negligence or malfeasance by the Holder in the
performance of his duties with respect to the Company, (iii) an act or acts on
the Holder's part constituting a felony under the laws of the United States or
any state thereof which results or was intended to result directly or indirectly
in gain or personal enrichment by the Holder at the expense of the Company or
(iv) any other circumstances set forth in an employment agreement between the
Company and the Holder which would constitute grounds for the Company to
terminate the employment of the Holder for Cause.
(c) For purposes of this Agreement, the term "Constructively Terminated"
means (i) a reduction in an amount equal to or greater than 15 percent of the
Holder's base salary, (ii) a material reduction in the Holder's job function,
duties or responsibilities or (iii) a required relocation of the Holder of more
than 50 miles from the Holder's current job location; provided, however, that
the employment with the Company will not be deemed to be Constructively
Terminated in the event he or she is required to be a Division Chairman or
Division President with the Company and has job functions, duties or
responsibilities of a Division Chairman or Division President and/or is required
to relocate in connection with such change in position; provided, further, that
the employment with the Company will not be deemed to be Constructively
Terminated in the event he or she is required to be a Division Chairman or
Division President of a division other than the division he or she is currently
employed by and has job functions, duties or responsibilities of a Division
Chairman or Division President and/or is required to relocate in connection with
such change in position; provided, further, that the employment of any person
will not be deemed Constructively Terminated unless the Holder actually
terminates his or her employment with the Company within 60 days after the
occurrence of an event specified in clauses (i), (ii) or (iii) above.
5. DEATH OR DISABILITY.
(a) Except to the extent otherwise specified by the Administrator and as
provided in paragraph (b) of this Section 5, if the Holder's employment with the
Company is terminated because of his or her disability (within the meaning of
Section 22(e)(3) of the IRC), the disabled Holder will have the right, not later
than the earlier of (i) one year after such termination or (ii) the date 10
years from the date hereof, to exercise the Option, to the extent the right to
exercise the Option will have accrued hereunder at the date of such termination
of employment, except to the extent the Option theretofore will have been
exercised.
(b) Except to the extent otherwise specified by the Administrator, if the
Holder dies while in the employ of the Company or within three months after
termination of his or her employment with the Company or any Subsidiary or
division thereof because of his or her disability, his personal representative
or the person or persons to whom the Option will have been transferred by will
or by the laws of descent and distribution will have the right, not later than
the earlier of (i) one year after the date of the Holder's death or (ii) the
date 10 years from the date hereof, to exercise the Option, to the extent the
right to exercise the Option will have accrued at the date of death or
disability, except to the extent the Option theretofore will have been
exercised.
6. TRANSFERABILITY.
The Option will not be transferable by the Holder other than by will or the
laws of descent and distribution or pursuant to a qualified domestic relations
order as defined by the IRC or Title I of the Employee Retirement Income
Security Act of 1974, as amended. During the lifetime of the Holder, the Option
will be exercisable only by such Holder. If the Holder acquires Stock hereunder,
he or she will only transfer such Stock in compliance with applicable federal
and state securities laws.
A-7
<PAGE> 32
7. PAYMENT OF EXERCISE PRICE.
Payment for shares of Stock issued upon exercise of the Option will be paid
in full on the date of purchase. Payment will be made either in cash or in such
other consideration as the Administrator (as defined in the Stock Option Plan)
deems appropriate. Notwithstanding the foregoing, shares of Stock will not be
issued upon exercise of the Option unless and until the aggregate amount of
federal, state and local taxes of any kind required to be withheld with respect
to such exercise have been paid or satisfied or provision for their payment and
satisfaction has been made upon such terms as the Administrator may prescribe.
8. ADJUSTMENT TO OPTION.
The number of shares of Stock subject to the Option and the Exercise Price
will be adjusted, as necessary, in accordance with the provisions of Section 11
of the Stock Option Plan.
9. NO RIGHTS AS STOCKHOLDER.
The Holder will have no rights as a stockholder with respect to any Stock
covered by the Option until he or she has become the holder of record of such
Stock, and, except for stock dividends as provided in Section 11 of the Stock
Option Plan, no adjustment will be made for dividends (ordinary or
extra-ordinary, whether in cash, securities or other property) or distributions
or other rights in respect of such Stock for which the record date is prior to
the date on which he or she will become the holder of record thereof.
10. NO RIGHT TO CONTINUED EMPLOYMENT.
Nothing contained herein will restrict any right of the Company to
terminate the employment of the Holder at any time, with or without Cause.
11. REPRESENTATIONS.
At the time of any exercise of the Option, the Company may, if it will deem
it necessary or desirable for any reason, require the Holder (i) to represent in
writing to the Company that it is his then intention to acquire the Stock for
investment and not with a view to the distribution thereof or (ii) to postpone
the date of exercise until such time as the Company has available for delivery
to the Holder a prospectus meeting the requirements of all applicable federal or
state securities laws.
A-8
<PAGE> 33
12. GOVERNING LAW.
This Agreement will be governed by the laws of the State of Delaware.
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as
of the date first above written.
U.S. HOME CORPORATION
By:
--------------------------------
Name:
Title:
HOLDER
-----------------------------------
Signature
Name:
-------------------------------
Address:
----------------------------
----------------------------
A-9
<PAGE> 34
SCHEDULE 1
U.S. Home Corporation
1800 West Loop South
Houston, Texas 77252
Attention: Secretary
Re: Notice of Exercise of Incentive Stock Option
Dear Sir:
I am the holder of the below-described incentive stock option granted under
the U.S. Home Corporation (the "Company") 1996 Employees' Stock Option Plan:
<TABLE>
<CAPTION>
NUMBER OF SHARES
SUBJECT TO EXERCISE PRICE
DATE OF OPTION OPTION PER SHARE
- ----------------- ---------------- --------------
<S> <C> <C>
</TABLE>
I hereby exercise my option to purchase shares of the common
stock, $.01 par value per share, of the Company, reserving my right to purchase
any remaining shares subject to the option in accordance with its terms.
In making this purchase, I hereby represent to you as follows:
1. I am purchasing these shares for my own account for investment and
without any present intention of disposing of the shares by public offering
or otherwise.
2. I will not dispose of the shares unless a registration statement
under the Securities Act of 1933, as amended, and applicable state
securities and "blue sky" laws covering the shares is in effect or, in the
opinion of counsel to the Company, an exemption from such registration is
available.
Dated: ,
Very truly yours,
---------------------------------
Signature
Name:
----------------------------
Address:
-------------------------
-------------------------
A-10
<PAGE> 35
EXHIBIT B
(TO 1996 STOCK OPTION PLAN)
U.S. HOME CORPORATION
1996 EMPLOYEES' STOCK OPTION PLAN
NONQUALIFIED STOCK OPTION AGREEMENT
OPTION AGREEMENT, dated as of , between U.S. HOME
CORPORATION, a Delaware corporation (the "Company"), and
(the "Holder").
1. PURPOSE.
The purpose of this Nonqualified Stock Option Agreement (this "Agreement")
is to set forth the terms and conditions of the stock option granted to the
Holder under the 1996 Employees' Stock Option Plan (the "Stock Option Plan").
The terms and conditions (including defined terms) of the Stock Option Plan are
expressly incorporated herein and made a part of hereof with the same force and
effect as if fully set forth herein. The acceptance by the Holder of the Option
(as hereinafter defined) granted hereby will constitute acceptance of and
agreement with all of the terms and conditions contained in this Agreement and
the Stock Option Plan.
2. GRANT OF OPTION.
The Company hereby grants to the Holder an option (the "Option") to
purchase all or any part of an aggregate of shares of the Company's
common stock, $.01 par value per share (the "Stock"), at a price of $ *
per share (the "Exercise Price"), subject to adjustment as herein provided. Such
Option is not intended to qualify as an "incentive stock option" within the
meaning of Section 422 of the Internal Revenue Code of 1986, as amended (the
"IRC").
3. TERM OF OPTION.
(a) Subject to Sections 4 and 5 hereof, the Option shall be exercisable as
follows:
(b) The Option will expire on the date 10 years from the date hereof. Any
exercise will be accompanied by a written notice to the Company in substantially
the form attached hereto as Schedule 1.
4. TERMINATION OF EMPLOYMENT.
(a) Except to the extent otherwise specified by the Administrator, if, on
or after the date an Option is granted under the Stock Option Plan, (i) (A) the
Holder's employment with the Company is terminated by the Company for any reason
other than (x) for Cause (as herein defined), or (y) death or disability (within
the meaning of Section 22(e)(3) of the IRC), (B) the Holder retires in
accordance with the Company's normal retirement policy or with the consent of
the board of directors of the Company (the "Board"), or (C) the Holder's
employment with the Company is Constructively Terminated (as defined herein),
the Holder will have the right, not later than the earlier of (a) three months
after such termination or retirement or (b) the termination date of the Option,
to exercise the Option, to the extent the right to exercise the Option will have
accrued hereunder at the date of such termination of employment or retirement,
except to the extent
- ---------------
* To be determined pursuant to Section 5 of the Stock Option Plan.
A-11
<PAGE> 36
that the Option theretofore will have been exercised or (ii) the Holder's
employment with the Company is terminated (A) by the Company for Cause or (B) by
the Holder for any reason other than due to (x) the Holder being Constructively
Terminated, (y) the Holder's retirement in accordance with the Company's normal
retirement policy or with the consent of the Board, or (z) the Holder's death or
disability, the right to exercise the Option will thereupon terminate.
(b) For purposes of this Agreement, the term "Cause" will mean (i) the
Holder's continuing willful failure to perform his duties with respect to the
Company (other than as a result of total or partial incapacity due to physical
or mental illness), (ii) gross negligence or malfeasance by the Holder in the
performance of his or her duties with respect to the Company, (iii) an act or
acts on the Holder's part constituting a felony under the laws of the United
States or any state thereof which results or was intended to result directly or
indirectly in gain or personal enrichment by the Holder at the expense of the
Company or (iv) any other circumstances set forth in an employment agreement
between the Company and the Holder which would constitute grounds for the
Company to terminate the employment of the Holder for Cause.
(c) For purposes of this Agreement, the term "Constructively Terminated"
means (i) a reduction in an amount equal to or greater than 15 percent of the
Holder's base salary, (ii) a material reduction in the Holder's job function,
duties or responsibilities or (iii) a required relocation of the Holder of more
than 50 miles from such Holder's current job location; provided, however, that
the employment with the Company will not be deemed to be Constructively
Terminated in the event he or she is required to be a Division Chairman or
Division President with the Company and has job functions, duties or
responsibilities of a Division Chairman or Division President and/or is required
to relocate in connection with such change in position; provided, further, that
the employment with the Company will not be deemed to be Constructively
Terminated in the event he or she is required to be a Division Chairman or
Division President of a division other than the division he or she is currently
employed by and has job functions, duties or responsibilities of a Division
Chairman or Division President and/or is required to relocate in connection with
such change in position; provided, further, that the employment of any person
will not be deemed Constructively Terminated unless the Holder actually
terminates his or her employment with the Company within 60 days after the
occurrence of an event specified in clauses (i), (ii) or (iii) above.
5. DEATH OR DISABILITY.
(a) Except to the extent otherwise specified by the Administrator and as
provided in paragraph (b) of this Section 5, if the Holder's employment with the
Company is terminated because of his or her disability (within the meaning of
Section 22(e)(3) of the IRC), the disabled Holder will have the right, not later
than the earlier of (i) one year after such termination or (ii) the date 10
years from the date hereof, to exercise the Option, to the extent the right to
exercise the Option will have accrued hereunder at the date of such termination
of employment, except to the extent the Option theretofore will have been
exercised.
(b) Except to the extent otherwise specified by the Administrator, if the
Holder dies while in the employ of the Company or any subsidiary or division
thereof or within three months after termination of his or her employment with
the Company because of his or her disability, his or her personal representative
or the person or persons to whom the Option will have been transferred by will
or by the laws of descent and distribution will have the right, not later than
the earlier of (i) one year after the date of the Holder's death or (ii) the
date 10 years from the date hereof, to exercise the Option, to the extent the
right to exercise the Option will have accrued at the date of death or
disability, except to the extent the Option theretofore will have been
exercised.
6. TRANSFERABILITY.
The Option will not be transferable by the Holder other than by will or the
laws of descent and distribution or pursuant to a qualified domestic relations
order as defined by the IRC or Title I of the Employee Retirement Income
Security Act of 1974, as amended. During the lifetime of the Holder, the Option
will be exercisable only by such Holder. If the Holder acquires Stock hereunder,
he or she will only transfer such Stock in compliance with applicable federal
and state securities laws.
A-12
<PAGE> 37
7. PAYMENT OF EXERCISE PRICE.
Payment for shares of Stock issued upon exercise of the Option will be paid
in full on the date of purchase. Payment will be made either in cash or in such
other consideration as the Administrator (as defined in the Stock Option Plan)
deems appropriate. Notwithstanding the foregoing, shares of Stock will not be
issued upon exercise of the Option unless and until the aggregate amount of
federal, state and local taxes of any kind required to be withheld with respect
to such exercise have been paid or satisfied or provision for their payment and
satisfaction has been made upon such terms as the Administrator may prescribe.
8. ADJUSTMENT TO OPTION.
The number of shares of Stock subject to the Option and the Exercise Price
will be adjusted, as necessary, in accordance with the provisions of Section 11
of the Stock Option Plan.
9. NO RIGHTS AS STOCKHOLDER.
The Holder will have no rights as a stockholder with respect to any Stock
covered by the Option until such person has become the holder of record of such
Stock, and, except for stock dividends as provided in Section 11 of the Stock
Option Plan, no adjustment will be made for dividends (ordinary or
extra-ordinary, whether in cash, securities or other property) or distributions
or other rights in respect of such Stock for which the record date is prior to
the date on which he or she will become the holder of record thereof.
10. NO RIGHT TO CONTINUED EMPLOYMENT.
Nothing contained herein will restrict any right of the Company to
terminate the employment of the Holder at any time, with or without Cause.
11. REPRESENTATIONS.
At the time of any exercise of the Option, the Company may, if it will deem
it necessary or desirable for any reason, require the Holder (i) to represent in
writing to the Company that it is his then intention to acquire the Stock for
investment and not with a view to the distribution thereof or (ii) to postpone
the date of exercise until such time as the Company has available for delivery
to the Holder a prospectus meeting the requirements of all applicable federal or
state securities laws.
A-13
<PAGE> 38
12. GOVERNING LAW.
This Agreement will be governed by the laws of the State of Delaware.
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as
of the date first above written.
U.S. HOME CORPORATION
By:
-------------------------------
Name:
Title:
HOLDER
-----------------------------------
Signature
Name:
------------------------------
Address:
---------------------------
---------------------------
A-14
<PAGE> 39
SCHEDULE 1
U.S. Home Corporation
1800 West Loop South
Houston, Texas 77252
Attention: Secretary
Re: Notice of Exercise of Nonqualified Stock Option
Dear Sir:
I am the holder of the below-described nonqualified stock option granted
under the U.S. Home Corporation (the "Company") 1996 Employees' Stock Option
Plan:
<TABLE>
<CAPTION>
NUMBER OF SHARES
SUBJECT TO EXERCISE PRICE
DATE OF OPTION OPTION PER SHARE
- ----------------- ---------------- --------------
<S> <C> <C>
</TABLE>
I hereby exercise my option to purchase shares of the common
stock, $.01 par value per share, of the Company, reserving my right to purchase
any remaining shares subject to the option in accordance with its terms.
In making this purchase, I hereby represent to you as follows:
1. I am purchasing these shares for my own account for investment and
without any present intention of disposing of the shares by public offering
or otherwise.
2. I will not dispose of the shares unless a registration statement
under the Securities Act of 1933, as amended, and applicable state
securities and "blue sky" laws covering the shares is in effect or, in the
opinion of counsel to the Company, an exemption from such registration is
available.
Dated: ,
Very truly yours,
-------------------------------
Signature
Name:
--------------------------
Address:
-----------------------
-----------------------
A-15
<PAGE> 40
U.S. HOME CORPORATION
ANNUAL MEETING OF STOCKHOLDERS
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
P The undersigned hereby appoints ROBERT J. STRUDLER and ISAAC HELMBINDER,
and each of them, with full power of substitution, as proxies of the
R undersigned to vote all of the shares of capital stock of U.S. Home
Corporation the undersigned is entitled to vote, with all powers the
O undersigned would possess if personally present, at the Annual Meeting of
Stockholders of U.S. Home Corporation, a Delaware corporation, to be held
X at the Omni Hotel, Four Riverway, Houston, Texas, at 10:00 a.m., local time,
on Wednesday, April 24, 1996, and at any adjournment thereof, on the matters
Y described on the reverse hereof and, in their discretion, on such other
matters as may properly come before the meeting.
UNLESS AUTHORITY TO DO SO IS WITHHELD BY APPROPRIATE DESIGNATION, THIS
PROXY SHALL BE DEEMED TO HAVE GRANTED AUTHORITY TO VOTE FOR THE ELECTION OF
ALL DIRECTORS AS SET FORTH IN THE PROXY STATEMENT, AND WILL BE SO VOTED. IF
NO DIRECTORS ARE GIVEN, THIS PROXY WILL BE VOTED FOR PROPOSALS 2 AND 3.
Please sign, date and return this Proxy promptly. No postage is
required if returned in the enclosed envelope and mailed in the United
States.
******************
* *
CONTINUED AND TO BE SIGNED ON REVERSE SIDE * SEE REVERSE *
* SIDE *
* *
******************
- -------------------------------------------------------------------------------
PLEASE MARK
/X/ VOTES AS IN
THIS EXAMPLE
1. ELECTION OF DIRECTORS
Nominees: Glen Adams; Steven L. Gerard; Kenneth J. Hanau, Jr.; Isaac
Helmbinder; Malcolm T. Hopkins; Jack L. McDonald; Charles A. McKee;
George A. Poole, Jr.; Herve Ripault; James W. Sight;
Robert J. Strudler
FOR WITHHELD
/ / / /
For, except vote withheld from the following nominee(s):
- --------------------------------------------------------
2. Approval of the 1996 Employees' Stock Option Plan. FOR AGAINST ABSTAIN
/ / / / / /
3. Ratification of Arthur Andersen LLP as auditors. FOR AGAINST ABSTAIN
/ / / / / /
MARK HERE FOR
ADDRESS CHANGE
AND NOTE BELOW / /
Please sign exactly as name appears on this Proxy. If shares are registered
in more than one name, all such persons should sign this Proxy. A corporation
should sign in its full corporate name by a duly authorized officer, stating
his title. Trustees, guardians, executors and administrators should sign in
their official capacity giving their full title as such. If a partnership,
please sign in partnership name by authorized person.
Signature: ________________________________ Date ___________________________
Signature: ________________________________ Date ___________________________
