<PAGE> 1
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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(MARK ONE)
/X/ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1995
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM ___________ TO __________ .
COMMISSION FILE NUMBER 1-5899
U.S. HOME CORPORATION
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C>
DELAWARE 21-0718930
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
</TABLE>
1800 WEST LOOP SOUTH, HOUSTON, TEXAS 77027
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (713) 877-2311
Securities Registered Pursuant to Section 12(b) of the Act:
<TABLE>
<CAPTION>
NAME OF EACH
TITLE OF EACH CLASS EXCHANGE ON WHICH REGISTERED
------------------------------------------------------- ----------------------------
<S> <C>
Common Stock, $.01 par value per share New York Stock Exchange
Convertible Redeemable Preferred Stock, New York Stock Exchange
$.10 par value per share
Class B Warrants to acquire Common Stock New York Stock Exchange
</TABLE>
Securities Registered Pursuant to Section 12(g) of the Act:
NONE
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. YES /X/ NO / /
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. / /
Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Section 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court. YES /X/ NO / /
As of January 31, 1996, the number of shares outstanding of Registrant's
voting stock was 11,562,402 and the aggregate market value of the Registrant's
voting stock held by non-affiliates was $317,235,081.
DOCUMENTS INCORPORATED BY REFERENCE
<TABLE>
<CAPTION>
PART OF 10-K
WHERE INCORPORATED
------------------
<S> <C>
Proxy Statement dated March 20, 1996 for the Annual Meeting of III
Stockholders to be held on April 24, 1996.
</TABLE>
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<PAGE> 2
PART I
ITEM 1. BUSINESS
GENERAL
U.S. Home Corporation ("U.S. Home" or the "Company"), organized in 1954 and
incorporated in the State of Delaware in 1959, is one of the largest
single-family home builders in the United States based on homes delivered. The
Company currently builds and sells homes in more than 200 new home communities
in 32 market areas in 12 states. Since its formation, the Company has delivered
more than 259,000 homes. In 1994, the Company was the fifth largest
single-family on-site home builder in the United States based on homes completed
and delivered and has been among the ten largest single-family on-site home
builders in the United States for more than 20 years. The Company conducts
substantially all of its home building business through U.S. Home, the parent
company.
The Company offers a wide variety of moderately-priced homes that are
designed to appeal to the affordable, move-up and retirement and
active-adult/second home buyers. In each of its markets, the Company's primary
strategy is to build quality homes, utilizing its Zero Defect Program, which the
Company believes offers prospective home buyers a high level of new home value.
The Company believes that many home purchasers compare homes on the basis of
location, perceived quality and dollars of purchase price per square foot of
living area. As a result, the Company attempts to purchase land and lots in
popular growth corridors, maintain high quality standards and design homes to
maximize living space.
In addition to building and selling single-family homes, the Company
provides mortgage banking services to its customers. The Company originates,
processes and sells mortgages to third-party investors. The Company does not
retain or service the mortgages that it originates but, rather, sells the
mortgages and related servicing rights to investors.
OPERATIONS
The Company is engaged in two related industry segments: home building and
financial services. The revenues, operating profits or losses and identifiable
assets attributable to the Company's industry segments are separately disclosed
in the Consolidated Financial Statements.
HOME BUILDING OPERATIONS
The Company's primary industry segment is the on-site development of
single-family residential communities. During 1995, the Company's product mix
consisted of deliveries of approximately 28% affordable homes, 50% move-up homes
and 22% retirement and active-adult/second homes. The Company has set a goal to
increase its retirement and active-adult/second home deliveries to approximately
30% of the Company's volume. However, there can be no assurance such efforts
will be successful. The Company presently has 14 retirement and
active-adult/second home communities in Florida, Maryland, Nevada, New Jersey
and Texas. The Company expects to begin taking new orders in three new
retirement communities in Tucson, Arizona, Palm Springs, California and Naples,
Florida in the second quarter of 1996.
2
<PAGE> 3
MARKETS
U.S. Home's building operations are currently conducted in the following
market areas:
<TABLE>
<CAPTION>
STATES MARKET AREAS
- ---------------------------------------- -------------------------------------------
<S> <C>
Arizona................................. Phoenix and Tucson
California.............................. Bakersfield, Palmdale/Lancaster, Palm
Springs and Sacramento
Colorado................................ Colorado Springs, Denver and Fort
Collins/Greeley/ Loveland
Florida................................. Bonita Springs, Clearwater/Palm
Harbor/Tarpon Springs, Fort Myers, Key
Largo, Naples, Orlando, Sarasota/Bradenton,
Spring Hill/New Port Richey and Tampa
Indiana/Ohio............................ Indianapolis, Cleveland and Columbus
Maryland/Virginia....................... Annapolis/Baltimore and Washington, D.C.
area
Minnesota............................... Minneapolis/St. Paul
Nevada.................................. Las Vegas
New Jersey.............................. Dover/Jackson/Monroe/Princeton and
Washington/Lumberton
Texas................................... Austin, Dallas/Fort Worth, Houston,
McAllen/Harlingen/Brownsville and San
Antonio
</TABLE>
The Company seeks to maintain geographic diversity and thus reduce the
potential risk of economic volatility in any given market.
The Company's home building and marketing activities are conducted under
the name of U.S. Home in each of its markets except in Minneapolis/St. Paul
where the Company markets its homes under the name of Orrin Thompson Homes and
in Florida where homes are marketed under the name of Rutenberg Homes as well as
U.S. Home.
Set forth below are revenues for the Company from the sale of single-family
homes by state for each of the last three fiscal years:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-----------------------------------
STATES 1995 1994 1993
------------------------------------------------ --------- -------- --------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
Arizona......................................... $ 125,103 $128,343 $ 85,784
California...................................... 89,662 107,625 104,416
Colorado........................................ 171,733 138,409 103,769
Florida......................................... 349,526 293,278 243,130
Indiana/Ohio.................................... 13,923 -- --
Maryland/Virginia............................... 69,944 67,689 49,913
Minnesota....................................... 55,746 67,496 64,645
Nevada.......................................... 48,030 43,540 28,946
New Jersey...................................... 63,160 39,198 31,810
Texas........................................... 88,379 79,173 77,061
---------- -------- --------
$1,075,206 $964,751 $789,474
========== ======== ========
</TABLE>
3
<PAGE> 4
Set forth below are tables providing information (expressed in number of
housing units) with respect to new orders taken, deliveries to purchasers and
backlog of single-family homes by state for each of the last three fiscal years:
NEW ORDERS TAKEN
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-------------------------
STATES 1995 1994 1993
---------------------------------------------------------- ----- ----- -----
<S> <C> <C> <C>
Arizona................................................... 1,015 845 931
California................................................ 533 592 722
Colorado.................................................. 1,172 812 841
Florida................................................... 2,081 2,127 1,979
Indiana/Ohio.............................................. 118 10 --
Maryland/Virginia......................................... 400 333 334
Minnesota................................................. 322 339 493
Nevada.................................................... 335 308 249
New Jersey................................................ 321 283 210
Texas..................................................... 662 585 659
----- ----- -----
6,959 6,234 6,418
===== ===== =====
</TABLE>
DELIVERIES
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-------------------------
STATES 1995 1994 1993
------------------------------------------------------------ ----- ----- -----
<S> <C> <C> <C>
Arizona..................................................... 893 970 729
California.................................................. 508 643 692
Colorado.................................................... 1,100 898 674
Florida..................................................... 2,241 1,948 1,705
Indiana/Ohio................................................ 66 -- --
Maryland/Virginia........................................... 369 382 301
Minnesota................................................... 290 396 457
Nevada...................................................... 306 299 206
New Jersey.................................................. 307 203 175
Texas....................................................... 699 648 647
----- ----- -----
6,779 6,387 5,586
===== ===== =====
</TABLE>
BACKLOG(1)
<TABLE>
<CAPTION>
AS OF DECEMBER 31,
-------------------------
STATES 1995 1994 1993
------------------------------------------------------------ ----- ----- -----
<S> <C> <C> <C>
Arizona..................................................... 385 263 388
California.................................................. 111 86 137
Colorado.................................................... 462 390 476
Florida..................................................... 986 1,146 967
Indiana/Ohio................................................ 62 10 --
Maryland/Virginia........................................... 113 82 131
Minnesota................................................... 119 87 144
Nevada...................................................... 119 90 81
New Jersey.................................................. 183 169 89
Texas....................................................... 191 228 291
----- ----- -----
2,731 2,551 2,704
===== ===== =====
</TABLE>
- ---------------
(1) Homes under contract for sale but not delivered at end of year.
4
<PAGE> 5
The Company anticipates that substantially all of its backlog units, net of
cancellations, as of December 31, 1995 will be completed and delivered during
1996. While operations in certain market areas are affected by seasonal factors
which limit on-site building and sales activities, the Company's ability to
build and deliver its backlog is not considered to be seriously affected by such
factors.
SALES AND MARKETING
The Company employs sales consultants for the sale of single-family homes,
although sales by independent real estate brokers are also encouraged. Specific
sales training programs are provided which inform sales consultants about sales
techniques and methods as well as information about their local market, realtors
and products. The sales programs focus on the Company's Zero Defect Program as a
marketing tool because the sales force is the first contact with the customer.
The Zero Defect Program is a quality assurance program with major emphasis on
construction (see Construction below).
The Company advertises primarily in magazines and local newspapers.
Additionally, homes are marketed by means of model homes, pictorial brochures
and on-site displays. The Company's general marketing strategy seeks to generate
one-third of housing sales through advertisements, one-third through customer
referrals and one-third through realtor contacts.
The Company markets homes in "model home parks" featuring one or more model
homes, attractively furnished and decorated and staffed by the Company's sales
consultants who provide information regarding floor plans, the various
elevations available, decorating options, as well as assisting with mortgage
financing information. The model may include a variety of options and upgrades
which the customer may request at an additional cost. Such upgrades may include
items such as pools, fireplaces and decks. The Company constantly studies both
aesthetic design and architectural trends, as well as quality construction and
engineering trends, in order to provide customers with high quality, design and
value. The Company has received numerous awards in various markets for
outstanding housing design.
Selling prices are set in each area based on local market conditions and
competitive factors. The Company's gross margins vary from area to area based on
competitive factors in each market.
The Company's product lines include both single-family detached and
attached homes. During 1995, 1994 and 1993, approximately 85% of the homes
delivered were single-family detached. The number of units and average sales
prices of single-family homes delivered in 1995, 1994 and 1993 were as follows:
<TABLE>
<CAPTION>
SINGLE-FAMILY SINGLE-FAMILY
DETACHED ATTACHED
----------------------- -----------------------
NUMBER AVERAGE NUMBER AVERAGE
OF UNITS SALES PRICE OF UNITS SALES PRICE
-------- ----------- -------- -----------
<S> <C> <C> <C> <C>
1995................................. 5,708 $ 162,800 1,071 $ 136,400
1994................................. 5,411 155,200 976 127,900
1993................................. 4,773 145,000 813 119,500
</TABLE>
The increases in the average sales prices of single-family detached and attached
homes in 1995 and 1994 were primarily due to price increases.
In 1995, the national average sales prices of new single-family homes (both
detached and attached) as reported on a preliminary basis by the U.S. Census
Bureau was $156,500 compared with an average sales price of $158,600 for the
Company.
5
<PAGE> 6
Variations in the general product and customer mix may exist from year to
year based on shifts in local market demand or product availability. The table
below sets forth the mix of the Company's deliveries for the affordable, move-up
and retirement and active-adult/second home products during the last three
years:
<TABLE>
<CAPTION>
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Affordable..................................................... 28% 34% 31%
Move-up........................................................ 50% 47% 54%
Retirement and active-adult/second home........................ 22% 19% 15%
</TABLE>
Many purchasers finance a large portion of the purchase price of a home
through conventional or government insured/guaranteed mortgages from lending
institutions. The Company generally assists purchasers in obtaining mortgages.
Approximately 82% of the homes delivered in 1995, and 85% delivered in 1994 and
86% delivered in 1993, were purchased using mortgage financing.
The Company takes steps to qualify certain of its homes under Veterans
Administration ("VA") and Federal Housing Administration ("FHA") mortgage
financing programs, which provide mortgage financing sources. During 1995, 1994
and 1993, approximately 17%, 19% and 25% of the Company's homes delivered were
financed under VA and FHA mortgage programs.
CONSTRUCTION
The Company's investment in direct employee labor costs, equipment and
facilities is kept to a minimum because all construction of single-family homes
is performed by independent subcontractors. At all stages of construction,
however, on-site Company managers supervise and coordinate the activities of
these subcontractors and subject their work to quality and cost control
standards. The Company's Director of National Purchasing and Quality Control
provides centralized management of quality standards, both with respect to the
construction of homes and the purchase of certain major components used in the
construction of homes. Company employees are rated and compensation incentives
are affected by a measure of quality standards. The Company's commitment to
quality and its use in the Company's sales efforts are best illustrated by its
Zero Defect Program. Under the Zero Defect Program, the home buyer meets with
the construction supervisor prior to the commencement of, and during,
construction in order to ensure that the home buyer (i) is aware of all quality
features of the house, including those which are not readily apparent in the
finished house, (ii) agrees that the design features, including appliances,
match those ordered and (iii) is satisfied with the finished product. The
Company considers a completed house to have "zero defects" if, upon final
inspection by the home buyer, only a few minor cosmetic items remain to be
corrected.
Construction subcontractors are selected on the basis of competitive bids
and written agreements govern their relationship with the Company. All bids are
based on detailed specifications and complete blueprints to ensure commitment to
the Company's expectation for high quality workmanship.
The Company purchases the majority of its construction material on a
decentralized basis with a "just in time" delivery schedule to each individual
job site. Materials are regularly purchased on a competitive bid basis to ensure
both competitive pricing and high quality. In addition to local purchasing, the
Company has entered into a number of national purchasing agreements in order to
maximize purchasing power. Agreements with each vendor are negotiated on an
annual basis by the Company's Director of National Purchasing and Quality
Control.
In order to minimize the risk associated with completed but unsold
inventory, the Company generally does not commence construction of a
single-family detached home prior to receipt of an executed purchase contract, a
deposit from the customer and preliminary mortgage approval based on the
purchaser's mortgage application. For single-family attached homes, construction
does not generally commence until 50% of the units in a building have been sold.
6
<PAGE> 7
REGULATION
The Company and its subcontractors must comply with various federal, state
and local zoning, building, pollution, environmental, health, advertising and
consumer credit statutes, ordinances, rules and regulations, as well as other
activities, including regulations relating to specific building materials to be
used, building design and minimum elevations of properties. All of these
regulations have increased the time and cost required to market the Company's
products by extending the time between the initial acquisition of land and the
commencement of construction. The Company's operations, like those of other home
builders, have been periodically subject to moratoriums on development
activities caused by insufficient water, sewage and energy-related facilities.
Moratoriums in local areas have not had a material adverse effect on the
Company's overall activities because of the geographic diversification of the
Company's operations.
COMPETITION
The single-family residential housing industry is highly competitive. U.S.
Home competes in each of its markets, with respect to the location, design and
price of its products, with numerous firms engaged in the on-site development of
single-family residential housing, ranging from regional and national firms to
small local companies. The Company is one of the largest on-site builders of
single-family homes in the United States, ranking among the ten largest
single-family on-site home builders in the United States for more than 20 years.
However, because there are so many firms engaged in the single-family home
building industry, the Company accounts for less than 1% of all new on-site
single-family housing sales in the United States.
RAW MATERIALS AND SUBCONTRACTORS
The Company uses numerous suppliers of raw materials and services in its
business and such materials and services have been and continue to be available.
Where appropriate, the Company has adopted national programs for products to
maximize price discounts through volume purchases. The Company also utilizes
numerous independent subcontractors representing all building trades in
connection with the construction of its homes.
COMMUNITY DEVELOPMENT
A significant portion of the Company's finished lot needs are currently
satisfied through rolling lot options, which enable the Company to initially pay
a small fraction of total lot cost and then purchase the lots on a scheduled
basis. For example, during 1995, 56% of the Company's unit deliveries were from
lots owned by the Company and 44% were from lots acquired by the exercise of
rolling lot options.
The Company's policy is that land cannot be purchased or sold without prior
approval of the Company's Asset Management Committee. Asset Management Committee
approval requires submission of data relating to sales forecasts, a timing
schedule (e.g., estimated dates for the commencement of land development,
housing construction, model opening and sales) and a projection of income and
internal rate of return. All development expenditures are reviewed by the
respective President of Operations prior to the commencement of development. In
addition, the Company's by-laws require approval by the Company's Board of
Directors of any acquisition of unimproved real property or acreage by the
Company which is material to the Company in any single transaction involving an
expenditure in excess of $5 million and any other material capital expenditures,
borrowings (subject to certain exceptions) and other commitments by the Company
in excess of $5 million per transaction (excluding transactions involving
housing inventory).
The Presidents of Operations and the Division Presidents are responsible
for maintaining continuity of housing sales through awareness of trends in
housing demand in each market area. Feasibility studies and market research
studies are generally required before approval of the purchase of land. These
studies examine the demographics of an area, including population trends, income
trends, employment trends, housing stock and housing demand. Products are
matched to customer profile, determined in part by the market studies and the
experience of the local manager in each market.
7
<PAGE> 8
Housing communities are generally built in or near major metropolitan areas
and are normally located in growing markets for such areas. At December 31,
1995, the Company's land and finished lot inventories totaled $330.1 million,
excluding option deposits. See Note 1 of Notes to Consolidated Financial
Statements. Substantially all housing communities are zoned for their intended
use and serviced by utilities. As of December 31, 1995, the Company had deposits
totaling $63.4 million for options to purchase undeveloped land and finished
lots for home building operations for a total purchase price on exercise of
approximately $296.2 million.
The following table sets forth as of December 31, 1995, by state, the cost
of certain of the Company's land inventories and the estimated number of lots
controlled through direct ownership and under option which are being used or
that are anticipated to be used in the Company's home building operations
(dollars in thousands):
<TABLE>
<CAPTION>
ESTIMATED NUMBER OF
HOUSING UNITS THAT COULD
BE CONSTRUCTED ON LAND
CONTROLLED AS OF DECEMBER
BOOK 31, 1995(1)
COST OF --------------------------
LAND UNDER
STATES OWNED OWNED OPTION TOTAL
------------------------------------------------- -------- ------ ------ ------
<S> <C> <C> <C> <C>
Arizona.......................................... $ 13,217 661 2,573 3,234
California....................................... 23,922 795 1,937 2,732
Colorado......................................... 66,937 5,372 3,083 8,455
Florida.......................................... 84,814 6,947 5,579 12,526
Indiana/Ohio..................................... 4,799 113 1,010 1,123
Maryland/Virginia................................ 21,105 572 1,214 1,786
Minnesota........................................ 15,082 816 634 1,450
Nevada........................................... 19,053 446 608 1,054
New Jersey....................................... 27,540 1,450 368 1,818
Texas............................................ 25,957 2,174 568 2,742
-------- ------ ------ ------
$302,426 19,346 17,574 36,920
======== ====== ====== ======
</TABLE>
- ---------------
(1) The estimates set forth above have been prepared based on numerous
assumptions made at the date hereof, many of which are beyond the control of
the Company. Many of these assumptions, and hence the estimates, are subject
to change. This table does not include commercial property and other
properties which the Company has no current plans to use, with an aggregate
cost of $27.7 million (including $9.7 million relating to land under
contract for sale). In view of the various stages of development of the land
owned by the Company as of December 31, 1995 (i.e., finished, under
development and development not started), any per lot cost derived by
dividing the book cost by the estimated number of units would not be
meaningful.
Inventory risk is substantial for all home building companies. The market
value of housing inventories, finished lots and raw land can change
significantly over the life of a community, reflecting dynamic market
conditions. In addition, inventory carrying costs are significant which can
result in losses when trying to exit a poorly performing community or market.
The Company seeks to reduce its risks associated with housing inventories,
finished lots and raw land through (i) maintaining its geographic diversity and
(ii) acquiring lots and land under option where possible, thereby enabling the
Company to control land and lots with a smaller capital investment.
In 1995, the Company's revenues from the sale of developed and undeveloped
land amounted to $16.1 million, as compared to revenues of $16.2 million in 1994
and $8.5 million in 1993.
REORGANIZATION
The Company and certain of its affiliates commenced proceedings (the
"Cases") under Chapter 11 of Title 11 of the United States Code on April 15,
1991, in order to restructure their indebtedness and other liabilities. The
Company's plan of reorganization (the "Plan") was confirmed in May 1993 by the
United States Bankruptcy Court for the Southern District of New York and became
effective in June 1993 (the
8
<PAGE> 9
"Effective Date"). On the Effective Date, the Company also completed a public
offering of $200 million principal amount of 9.75% senior notes due 2003, the
net proceeds from which were utilized to pay a portion of the claims of certain
unsecured creditors of the Company under the Plan and to repay outstanding
amounts under the Company's debtor-in-possession financing facility.
The Plan effected a recapitalization of the Company and did not result in a
reduction in the scope or other major restructuring of the Company's operations.
During the pendency of the Cases, the Company continued its home building
operations in the ordinary course in its housing markets and improved its market
share in a majority of such markets. The Company was able to retain its senior
management and believes that it maintained customer, subcontractor and supplier
goodwill and the confidence of its employees.
For additional information, see Notes 4 and 8 of Notes to Consolidated
Financial Statements.
FINANCIAL SERVICES OPERATIONS
The Company's second industry segment consists primarily of its mortgage
banking activities. U.S. Home Mortgage Corporation ("Mortgage"), a wholly-owned
subsidiary of the Company, commenced operations in 1971 and serves an important
role in the Company's sale of its homes by arranging financing for customers.
Mortgage is a Federal National Mortgage Association/Government National
Mortgage Association/Federal Home Loan Mortgage Corporation approved
seller-servicer, headquartered in Clearwater, Florida with branch offices in the
metropolitan areas of Phoenix and Tucson, Arizona; Sacramento, California;
Denver, Colorado; metropolitan Washington, D.C.; Clearwater, Fort Myers and
Orlando, Florida; Minneapolis, Minnesota; Las Vegas, Nevada; and Dallas,
Texas. The Company offers a wide variety of conventional, FHA and VA financing
programs through Mortgage, thereby providing prospective buyers the benefits
of both conventional and government-assisted loan programs. As a mortgage
banker, Mortgage originates and funds mortgage loans and sells the loans and
the related servicing rights directly to investors. Loans and servicing rights
are generally sold by Mortgage and funded by the investors within 30 days
after home delivery. To limit its risk of interest rate fluctuations, Mortgage
regularly enters into fixed price mandatory forward delivery contracts to sell
mortgage-backed securities to securities dealers or fixed price forward
delivery commitments to sell specific whole loans to investors on a mandatory
or best efforts basis. Mortgage has a secured revolving line of credit to fund
the mortgage loans on an interim basis until purchased by investors. See
Note 2 of Notes to Consolidated Financial Statements.
The following table summarizes certain mortgage banking operating
information (dollars in thousands):
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
--------------------------------
1995 1994 1993
-------- -------- --------
<S> <C> <C> <C>
Residential mortgage loans
Number of loans originated......................... 3,367 2,987 3,050
Average amount of loan originated.................. $ 128 $ 122 $ 114
Total amount of loans originated:
Funded by Mortgage.............................. $376,000 $308,000 $317,000
Brokered by Mortgage............................ 57,000 58,000 30,000
-------- -------- --------
Total...................................... $433,000 $366,000 $347,000
======== ======== ========
Company's homes delivered financed by Mortgage as a
percentage of Company's homes delivered which were
financed........................................... 57% 50% 51%
Company's homes delivered financed by Mortgage as a
percentage of Mortgage's total originations........ 95% 92% 83%
</TABLE>
While the Company continues to focus its attention primarily upon the
expansion of Mortgage's operations within the Company's own customer base,
Mortgage also offers its services to realtors, unaffiliated builders and
refinance customers.
9
<PAGE> 10
Among the factors affecting Mortgage's operations are general economic
conditions, federal, state and local regulatory constraints, consumer confidence
and interest rate volatility. These factors, together with the number of homes
delivered by the Company, affect the volume of loan originations which in turn
impact the resulting volume of mortgage loans and mortgage servicing rights
available for sale.
ADDITIONAL INFORMATION
EMPLOYEES
At December 31, 1995, the Company had 1,379 employees, of whom 1,236 were
employed in home building operations and 143 were employed in financial services
operations. None of the Company's employees are represented by a union. The
Company considers its relations with its employees to be good. The Company's
single-family housing and community development operations are conducted
primarily through independent subcontractors, thereby limiting the number of
direct employees required.
ITEM 2. PROPERTIES
The Company leases its executive offices, located at 1800 West Loop South,
Houston, Texas 77027, pursuant to a lease scheduled to expire on February 28,
1999. The Company does not believe that its executive offices or its other
facilities, consisting of sales and administrative offices located in or near
each of the Company's areas of operations and generally held under leases with
terms not exceeding five years, are material to its operations.
ITEM 3. LEGAL PROCEEDINGS
The Company is involved from time to time in litigation arising from the
normal course of business, none of which, in the opinion of the Company, is
expected to have a material adverse effect on the financial position or results
of operations of the Company.
ITEM 4. SUBMISSION OF MATTERS TO VOTE OF SECURITY HOLDERS
None.
EXECUTIVE OFFICERS OF THE COMPANY
The Company's executive officers during 1995 and their respective ages and
positions are set forth below:
<TABLE>
<CAPTION>
NAME AGE POSITION AND OFFICE
- --------------------------------- --- ---------------------------------------------
<S> <C> <C>
Robert J. Strudler............... 53 Chairman and Co-Chief Executive Officer
Isaac Heimbinder................. 52 President, Co-Chief Executive Officer and
Chief Operating Officer
Craig M. Johnson................. 42 Senior Vice President -- Community
Development
Gary L. Frueh.................... 55 Vice President -- Tax and Audit
Thomas A. Napoli................. 54 Vice President -- Finance and Chief Financial
Officer
Chester P. Sadowski.............. 49 Vice President -- Controller and Chief
Accounting Officer
Richard G. Slaughter............. 51 Vice President -- Planning and Secretary
Kelly F. Somoza.................. 42 Vice President
</TABLE>
No family relationship exists among any of the executive officers of the
Company.
Each of the foregoing officers has been elected to serve in the office
indicated until the first meeting of the Board of Directors following the next
annual meeting of stockholders of U.S. Home and until his or her successor is
elected and qualified.
10
<PAGE> 11
Mr. Strudler has served as Chairman and Co-Chief Executive Officer since
April 26, 1995; prior thereto, he had been Chairman and Chief Executive Officer
of the Company since May 12, 1986.
Mr. Heimbinder has served as President, Co-Chief Executive Officer and
Chief Operating Officer since April 26, 1995; prior thereto, he had been
President and Chief Operating Officer of the Company since May 12, 1986.
Mr. Johnson has served as Senior Vice President -- Community Development
since April 26, 1995; prior thereto, he had been Vice President -- Community
Development since June 11, 1992, and Executive Vice President, Community
Development since October 14, 1988.
Mr. Frueh has served as Vice President -- Tax and Audit since February 5,
1992; prior thereto, he had been Vice President -- Tax since December 18, 1986.
Mr. Napoli has served as Vice President -- Finance and Chief Financial
Officer since April 21, 1989.
Mr. Sadowski has served as Vice President -- Controller and Chief
Accounting Officer since December 17, 1987.
Mr. Slaughter has served as Vice President -- Planning since December 18,
1986; prior thereto, he had been Secretary since June 26, 1986.
Ms. Somoza has served as Vice President since June 11, 1992; prior thereto,
she had been Director, Investor Relations since December 31, 1981. Ms. Somoza is
responsible for the Company's public and investor relations, and is the
administrator of the Company's profit sharing and employees' savings programs.
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS
As of February 2, 1996, there were 3,694 holders of record of the Company's
common stock, $.01 par value per share. The principal market on which the common
stock is traded is the New York Stock Exchange. Information concerning the high
and low sales prices for the Company's common stock for each calender quarter
during 1995 and 1994 is set forth below:
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
DECEMBER 31, 1995 DECEMBER 31, 1994
CALENDAR ----------------- -----------------
QUARTER HIGH LOW HIGH LOW
-------- ------ ------ ------ ------
<S> <C> <C> <C> <C>
First........................................... $18.25 $14.75 $29.38 $20.75
Second.......................................... 25.38 16.13 22.25 14.00
Third........................................... 25.88 20.25 18.50 14.63
Fourth.......................................... 29.25 23.25 16.38 14.38
</TABLE>
No dividends were paid by the Company during 1995 or 1994. The Company's
credit agreement (the most restrictive of the Company's borrowing agreements)
prohibits the Company from paying dividends on its capital stock, other than
stock dividends.
11
<PAGE> 12
ITEM 6. SELECTED FINANCIAL DATA
U.S. HOME CORPORATION AND SUBSIDIARIES
CONSOLIDATED SUMMARY OF SELECTED FINANCIAL DATA
FOR THE FIVE YEARS ENDED DECEMBER 31, 1995
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-------------------------------------------------------------
1995 1994 1993 1992 1991
---------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Operating Revenues......................... $1,107,945 $995,311 $812,077 $689,900 $495,117
Operating Income (Loss).................... 59,072 52,526 44,640 29,349 (4,832)
Reorganization Items....................... -- -- 6,915 50,703 3,978
Income Taxes............................... 22,152 19,697 (33,966) -- --
---------- -------- -------- -------- --------
Net Income (Loss)................... $ 36,920 $ 32,829 $ 71,691 $(21,354) $ (8,810)
========== ======== ======== ======== ========
Net Income (Loss) Per Common And Common
Equivalent Share(1):
Primary.................................. $ 3.14 $ 2.89 $ 6.16(2) $ (1.89) $ (.78)
Fully Diluted............................ $ 2.68 $ 2.50 $ 5.93(2) $ (1.89) $ (.78)
Dividends Per Common Share................. $ -- $ -- $ -- $ -- $ --
BALANCE SHEET DATA (at year end):
Total Assets............................... $ 842,084 $753,203 $682,637 $545,110 $612,859
========== ======== ======== ======== ========
Revolving Credit Facilities --
Housing(3)............................... $ 24,000 $ 7,553 $ -- $172,373 $183,271
Financial Services....................... 35,371 10,014 20,566 14,079 --
---------- -------- -------- -------- --------
$ 59,371 $ 17,567 $ 20,566 $186,452 $183,271
========== ======== ======== ======== ========
Senior And Convertible
Subordinated Debt And Notes Payable --
Housing(3)............................. $ 300,599 $304,327 $311,937 $161,736 $212,846
Financial Services..................... -- 1,034 1,102 1,797 9,934
---------- -------- -------- -------- --------
$ 300,599 $305,361 $313,039 $163,533 $222,780
========== ======== ======== ======== ========
</TABLE>
- ---------------
(1) Income (loss) per common and common equivalent share has been computed using
the weighted average number of common and common equivalent shares
outstanding, assuming the Company's current capital structure had been
effective as of the beginning of all periods presented. This differs from
historical primary and fully diluted income (loss) per common and common
equivalent share previously reported (based on the Company's former capital
structure) for the years ended December 31, 1992 and 1991, of $(.47) and
$(.20), respectively. The Company believes that earnings per common share
information for 1992 and 1991 is of limited use and relevance in view of the
significant changes in ownership of the Company's capital stock and the
Company's capital structure which occurred in 1993 under the Plan.
(2) Primary and fully diluted income per share in 1993 were $2.29 per share and
$2.21 per share, respectively, excluding $3.87 primary income per share and
$3.72 fully diluted income per share, respectively, due to the decrease in
the deferred tax asset valuation allowance. See Note 3 of Notes to
Consolidated Financial Statements.
(3) Includes unsecured debt of $266,635 at December 31, 1992 which was exchanged
for a combination of cash and equity securities, and secured debt of $5,213
at December 31, 1992 which was either reinstated or the property securing
the debt was deeded to the lenders in full satisfaction of the debt.
12
<PAGE> 13
ITEM 7.MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
RESULTS OF OPERATIONS
Housing
The following table sets forth certain financial information for the
Company's housing segment for the periods indicated (dollars in thousands,
except average sales price):
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
------------------------------------
1995 1994 1993
---------- -------- --------
<S> <C> <C> <C>
Revenues --
Single-family homes............................. $1,075,206 $964,751 $789,474
Land and other.................................. 17,077 17,627 9,476
---------- -------- --------
Total................................... $1,092,283 $982,378 $798,950
========== ======== ========
Single-family homes --
Gross margin amount............................. $ 173,558 $156,982 $127,901
Gross margin percentage......................... 16.1% 16.3% 16.2%
Units delivered................................. 6,779 6,387 5,586
Average sales price............................. $ 158,600 $151,000 $141,300
New orders taken................................ 6,959 6,234 6,418
Backlog at end of year.......................... 2,731 2,551 2,704
Selling, general and administrative expenses as a
percentage of housing revenues.................. 10.8% 11.0% 11.0%
Interest expense --
Paid or accrued................................. $ 31,995 $ 30,820 $ 22,105
Capitalized..................................... $ 31,995 $ 30,820 $ 21,920
Percentage capitalized.......................... 100.0% 100.0% 99.2%
Capitalized interest included in cost of sales.... $ 27,555 $ 28,871 $ 22,342
</TABLE>
Revenues and Gross Margin
Revenues from sales of single-family homes for 1995 increased 11% from
1994. The increase resulted from a 6% increase in the number of housing units
delivered and a 5% increase in the average sales price. Revenues from sales of
single-family homes for 1994 increased 22% from 1993, resulting primarily from a
14% increase in the number of housing units delivered and a 7% increase in the
average sales price.
The increases in the average sales prices in 1995 and 1994 were primarily
due to price increases.
The gross margin percentage was essentially unchanged over the three-year
period as increases in sales prices in the three year period were offset by cost
increases.
New orders taken in 1995 increased 12% from 1994. The increase in new
orders in 1995 reflects the demand for new single-family homes which the Company
believes was brought about by the decrease in mortgage interest rates starting
in the second quarter of 1995. New orders taken in 1994 decreased 3% from 1993.
The decline in new orders in 1994 occurred in the second half of the year which
the Company believes was attributable to the increases in mortgage interest
rates.
Selling, General and Administrative Expenses
As a percentage of housing revenues, selling, general and administrative
expenses declined in 1995 as compared to both 1994 and 1993. Actual selling,
general and administrative expense for 1995 increased $10.2 million compared to
1994. This increase was attributable to increases in volume-related expenses
($4.7 million) resulting from the increase in deliveries in 1995 when compared
to 1994 and increases in other selling, general and administrative expenses
resulting from increased activities and earnings. Similarly, selling, general
and administrative expenses increased by $19.5 million in 1994 compared to 1993,
due to increases in
13
<PAGE> 14
volume-related expenses ($6.5 million) resulting from increases in deliveries in
1994 when compared to 1993 and increases in other selling, general and
administrative expenses resulting from increased activities and earnings.
Interest Expense
Interest paid and accrued for 1995 increased approximately 4% compared to
1994 and increased approximately 39% in 1994 compared to 1993. The increase in
1994 over 1993 was primarily due to interest on a majority of the Company's debt
in the first six months of 1993 being stayed during the pendency of the Cases.
Reorganization Items, Net
Reorganization items in 1993 represent expenses (primarily professional and
other fees) incurred by the Company resulting from the Cases and are specific to
the reorganization process. Pursuant to the Plan, the Company issued 140,000
shares of common stock on June 21, 1993 to corporate officers and certain other
key employees for services rendered in connection with the reorganization of the
Company. The Company has reflected the issuance as an increase in stockholders'
equity and an offsetting charge to earnings of $2.9 million based upon the
market price of the common stock on June 21, 1993.
Financial Services
Revenues
Revenues for the financial services segment for the periods indicated were
as follows (dollars in thousands):
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-----------------------------
1995 1994 1993
------- ------- -------
<S> <C> <C> <C>
U.S. Home Mortgage Corporation and Subsidiaries......... $12,477 $ 9,885 $10,303
Other financial services subsidiaries................... 3,185 3,048 2,824
------- ------- -------
$15,662 $12,933 $13,127
======= ======= =======
</TABLE>
Mortgage provides financing primarily to purchasers of homes sold by the
Company's housing operations through origination of residential mortgage loans
and engages in the sale of such mortgages and related servicing rights to
unaffiliated investors. Mortgage's operations are affected, among other things,
by general economic conditions, consumer confidence and interest rate
volatility. These factors, together with the number of homes delivered by the
Company, affect the volume of loan originations which in turn impact the
resulting volume of mortgages and servicing rights for sale.
The increase in Mortgage's revenues in 1995 from 1994 was primarily due to
an increase in mortgage loan originations and income from the sales of mortgage
loans and servicing rights while the decrease in its revenues for 1994 from 1993
was primarily due to decreased marketing income as a result of increased pricing
competition and volatility in the secondary mortgage markets.
FINANCIAL CONDITION AND LIQUIDITY
Housing
The Company's most significant needs for capital resources are land and
finished lot purchases, land development and housing construction. The Company's
ability to generate cash adequate to meet these needs is principally achieved
from the sale of homes and the margins thereon, the utilization of Company-owned
lots and borrowings under its financing facilities, including the Credit
Agreement (see below).
Access to quality land and lot locations is an integral part of the
Company's success. Typically, in order to secure the rights to quality locations
and provide sufficient lead time for development, the Company must acquire land
rights well in advance of when orders for housing units are expected to occur.
The Company
14
<PAGE> 15
attempts to minimize its exposure to the cyclical nature of the housing market
and its use of working capital by employing rolling lot options, which enable
the Company to initially pay a small portion of the total lot cost and then
purchase the lots on a scheduled basis. Over the last three years, approximately
44% of the units delivered have been on lots acquired under rolling lot option
agreements. The increase in land inventories in 1995 from 1994 and 1994 from
1993 was primarily the result of increased activities, including the increase in
the Company's retirement and active-adult/second home communities activities.
The Company has financed, and expects to continue to finance, its working
capital needs from operations and borrowings, including those made under the
Company's $130 million unsecured revolving credit agreement ("Credit Agreement")
entered into in September 1995 (which replaced the Company's secured working
capital facility). The Credit Agreement (and previous credit facilities) have
enabled the Company to meet peak operating needs and, more currently, to finance
the Company's recent increase in land inventories. See Note 2 of Notes to
Consolidated Financial Statements. Also, certain of the properties owned or
under option by the Company may be located within community development
districts ("Districts") formed by municipalities to construct and finance
certain infrastructure/improvements on property in the Districts' area. The
Districts utilize assessment revenue bonds to fund improvements and repay the
bonds by annual assessments on District property based on the property's
relative value to other District property. The Company provides no credit
support for and is not liable for the debt of the Districts, except to the
extent of actual assessments made by the Districts. The Company may utilize
Districts to a greater extent in the future.
On January 31, 1996, the Company filed a Registration Statement with the
Securities and Exchange Commission relating to the continuous offering pursuant
to Rule 415 under the Securities Act of 1933, as amended, of up to $100 million
principal amount of debt securities. The debt securities registered thereunder
may be sold in one or more series from time to time. The offering of the debt
securities will be made only by means of a prospectus.
The net cash provided or used by the operating, investing and financing
activities of the housing operations for the years ended December 31, 1995, 1994
and 1993 is summarized below (dollars in thousands):
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
--------------------------------
1995 1994 1993
-------- -------- --------
<S> <C> <C> <C>
Net cash provided (used by):
Operating activities............................... $(13,752) $(17,887) $(61,613)
Investing activities............................... (2,041) (1,676) 1,520
Financing activities............................... 5,216 (3,445) 70,262
-------- -------- --------
Net increase (decrease) in cash...................... $(10,577) $(23,008) $ 10,169
======== ======== ========
</TABLE>
Housing operations are, at any time, affected by a number of factors,
including the number of housing units under construction and housing units
delivered. Housing construction and land asset activities increased in 1995 over
1994 and in 1994 over 1993. However, housing operating activities for 1995 used
less cash than in 1994 primarily due to increased profitability and the timing
of payments related to these activities. Housing operating activities used less
cash in 1994 than in 1993 primarily due to an increase in the number of housing
units delivered offset in part by an increase in construction and land asset
activities.
Cash flow from housing financing activities increased in 1995 from 1994
primarily due to increased net borrowings under the Company's revolving credit
facilities to finance increases in housing and land assets necessary to meet
increased sales activities. Cash flow from housing financing activities for 1994
was used for the repayment of notes and mortgages payable, offset by net
borrowings under the Company's revolving credit facilities.
The Company believes that cash flow from operations and amounts available
under the Credit Agreement will be sufficient to meet its current working
capital obligations and other needs. However, should the Company require capital
in excess of that which is currently available, there can be no assurance that
it will be available.
15
<PAGE> 16
Financial Services
Mortgage's activities represent a substantial portion of the financial
services segment's activities. As loan originations by Mortgage are primarily
from homes sold by the Company's home building operations, Mortgage's financial
condition and liquidity are to a significant extent dependent upon the financial
condition of the Company.
Financial services operating activities are affected primarily by
Mortgage's loan originations which result in the sale of mortgage loans and
related servicing rights to third party investors. Cash flows from financial
services operating activities are also affected by the timing of the sale of
loans and servicing rights which generally are sold to investors within 30 days
after homes are delivered. In this regard, cash flows from financial services
operating activities for 1995 used more cash compared to 1994 primarily due to
an increase in residential mortgage loan receivables while financial services
operating activities in 1994 used less cash compared to 1993 primarily due to a
decrease in residential mortgage loan receivables.
The Company finances its financial services operations primarily from
internally generated funds, such as from the origination and sale of residential
mortgage loans and related servicing rights, and short-term debt. As more fully
discussed in Note 2 of Notes to Consolidated Financial Statements, the
short-term debt consists of a $45 million secured revolving line of credit (the
"Mortgage Credit Facility") which matures on August 31, 1996. While the Mortgage
Credit Facility contains numerous covenants, including a debt to tangible net
worth ratio and a minimum tangible net worth requirement, these covenants are
not anticipated to significantly limit Mortgage's operations.
The Company has no obligation to provide funding to its financial services
operations, nor does it guarantee any of its financial services subsidiaries'
debt. The Company believes that internally generated funds and the Mortgage
Credit Facility will be sufficient to provide for Mortgage's working capital
needs.
OTHER
Impact of Inflation
Inflation not only affects interest rates on funds borrowed by the Company,
but also affects the affordability of permanent mortgage financing available to
prospective customers. Increased construction costs associated with rising
interest rates, as well as increased material costs, compress gross margins in
the short-term, but may be recovered in the long-term through increases in sales
prices, although such increases may reduce sales volume. In recent years,
inflation has not had a significant adverse effect on the Company.
Future Accounting Requirement
In October 1995, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 123, Accounting for Stock-Based
Compensation ("SFAS No. 123"). For the Company, SFAS No. 123 will be effective
for the year beginning January 1, 1996. SFAS No. 123 recommends all stock-based
employee compensation plans, such as the Company's incentive stock option plans,
be accounted for using the fair value method but allows for the continued
application of the intrinsic value concept under existing accounting rules
prescribed by Accounting Principles Board Opinion No. 25 ("APB 25"). In general,
use of the fair value method would require the Company to estimate the fair
value of its stock options as of the grant date using an option-pricing model
(such as Black-Scholes) and charge this estimate to expense over the vesting
period. The accounting prescribed by APB 25 requires no expense recognition
because the options are granted at the prevailing market prices at dates of
grant. SFAS No. 123 requires proforma net income and earnings per share
disclosures for those companies which continue to follow APB 25 rather than
adopt the fair value method of accounting. The Company currently plans to
continue to value its stock options using the guidance of APB 25 and to
implement SFAS No. 123 by including the proforma disclosures in the notes to its
consolidated financial statements for the year ended December 31, 1996.
16
<PAGE> 17
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
U.S. HOME CORPORATION AND SUBSIDIARIES
INDEX TO FINANCIAL STATEMENTS
Financial Statements:
Report of Independent Public Accountants
Consolidated Balance Sheets -- December 31, 1995 and 1994
Consolidated Statements of Operations -- For the Years Ended December 31,
1995, 1994 and 1993
Consolidated Statements of Cash Flows -- For the Years Ended December 31,
1995, 1994 and 1993
Consolidated Statements of Stockholders' Equity -- For the Years Ended
December 31, 1995, 1994 and 1993
Notes to Consolidated Financial Statements
17
<PAGE> 18
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To U.S. Home Corporation:
We have audited the accompanying consolidated balance sheets of U.S. Home
Corporation (a Delaware corporation) and subsidiaries as of December 31, 1995
and 1994, and the related consolidated statements of operations, stockholders'
equity and cash flows for each of the three years in the period ended December
31, 1995. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of U.S. Home
Corporation and subsidiaries as of December 31, 1995 and 1994, and the results
of their operations and cash flows for each of the three years in the period
ended December 31, 1995, in conformity with generally accepted accounting
principles.
ARTHUR ANDERSEN LLP
Houston, Texas
February 1, 1996
18
<PAGE> 19
U.S. HOME CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1995 AND 1994
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
ASSETS
<TABLE>
<CAPTION>
1995 1994
-------- --------
<S> <C> <C>
HOUSING:
Cash (including restricted funds of $334 and $614).................... $ 5,110 $ 1,148
Receivables, net...................................................... 33,454 27,471
Single-Family Housing Inventories..................................... 632,035 576,779
Option Deposits on Real Estate........................................ 63,375 53,621
Deferred Tax Asset.................................................... -- 13,727
Other Assets.......................................................... 43,437 41,869
-------- --------
777,411 714,615
-------- --------
FINANCIAL SERVICES:
Cash (including restricted funds of $4,004 and $4,051)................ 5,456 5,567
Residential Mortgage Loans............................................ 43,292 24,672
Other Assets.......................................................... 15,925 8,349
-------- --------
64,673 38,588
-------- --------
$842,084 $753,203
-------- --------
LIABILITIES AND STOCKHOLDERS' EQUITY
HOUSING:
Accounts Payable...................................................... $ 88,234 $ 85,581
Accrued Expenses and Other Current Liabilities........................ 46,070 40,497
Revolving Credit Facilities........................................... 24,000 7,553
Senior and Convertible Subordinated Debt and Notes Payable............ 300,599 304,327
-------- --------
458,903 437,958
-------- --------
FINANCIAL SERVICES:
Accrued Expenses and Other Current Liabilities........................ 18,818 12,733
Notes Payable......................................................... 35,371 11,048
-------- --------
54,189 23,781
-------- --------
Total Liabilities............................................. 513,092 461,739
-------- --------
STOCKHOLDERS' EQUITY:
Convertible Preferred Stock, $25 per share redemption value, 319,254
and 518,772 shares outstanding at December 31, 1995 and 1994....... 7,981 12,969
Common Stock, 11,243,147 and 10,909,860 shares outstanding at December
31, 1995 and 1994.................................................. 112 109
Capital in Excess of Par Value........................................ 348,577 340,673
Retained Earnings (Deficit)........................................... (25,367) (62,287)
Unearned Compensation on Restricted Stock............................. (2,311) --
-------- --------
Total Stockholders' Equity......................................... 328,992 291,464
-------- --------
$842,084 $753,203
======== ========
</TABLE>
The accompanying notes are an integral part of these balance sheets.
19
<PAGE> 20
U.S. HOME CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
1995 1994 1993
---------- -------- --------
<S> <C> <C> <C>
HOUSING:
Operating Revenues........................................ $1,092,283 $982,378 $798,950
---------- -------- --------
Operating Costs and Expenses --
Cost of products sold.................................. 918,648 823,597 668,706
Selling, general and administrative.................... 117,896 107,736 88,229
Interest, net.......................................... -- -- 185
---------- -------- --------
1,036,544 931,333 757,120
---------- -------- --------
Housing Operating Income.................................. 55,739 51,045 41,830
---------- -------- --------
FINANCIAL SERVICES:
Operating Revenues........................................ 15,662 12,933 13,127
---------- -------- --------
Operating Costs and Expenses --
General and administrative............................. 11,637 10,915 9,049
Interest............................................... 692 537 1,268
---------- -------- --------
12,329 11,452 10,317
---------- -------- --------
Financial Services Operating Income....................... 3,333 1,481 2,810
---------- -------- --------
INCOME BEFORE REORGANIZATION ITEMS AND INCOME TAXES......... 59,072 52,526 44,640
REORGANIZATION ITEMS........................................ -- -- 6,915
---------- -------- --------
INCOME BEFORE INCOME TAXES.................................. 59,072 52,526 37,725
---------- -------- --------
PROVISION FOR INCOME TAXES --
Federal and State Income Taxes............................ 22,152 19,697 11,034
Decrease in Deferred Tax Asset Valuation Allowance........ -- -- (45,000)
---------- -------- --------
22,152 19,697 (33,966)
---------- -------- --------
NET INCOME.................................................. $ 36,920 $ 32,829 $ 71,691
========= ======== ========
INCOME PER COMMON AND COMMON EQUIVALENT SHARE:
Primary................................................... $ 3.14 $ 2.89 $ 6.16
========= ======== ========
Fully Diluted............................................. $ 2.68 $ 2.50 $ 5.93
========= ======== ========
</TABLE>
The accompanying notes are an integral part of these statements.
20
<PAGE> 21
U.S. HOME CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
1995 1994 1993
-------- --------- ---------
<S> <C> <C> <C>
Cash Flows From Operating Activities:
Net income............................................... $ 36,920 $ 32,829 $ 71,691
Adjustments to reconcile net income to net cash provided
by operating activities --
Decrease in deferred tax asset........................ 13,727 22,125 9,148
Decrease in deferred tax asset valuation allowance.... -- -- (45,000)
Noncash reorganization items.......................... -- -- 2,940
Other, net (principally depreciation and
amortization)....................................... 4,579 4,578 9,060
Changes in assets and liabilities --
Increase in receivables, inventories and other
assets........................................... (94,337) (107,200) (98,926)
Increase (decrease) in accounts payable and accrued
liabilities...................................... 14,923 48,662 (20,456)
-------- --------- ---------
Net cash provided (used) by operating activities......... (24,188) 994 (71,543)
-------- --------- ---------
Cash Flows From Investing Activities:
Purchase of property, plant and equipment, net of
disposals............................................. (2,526) (2,034) (2,273)
Decrease in restricted cash.............................. 327 436 4,098
Proceeds from investments in mortgages................... 1,687 868 1,015
Other.................................................... (661) 22 (353)
-------- --------- ---------
Net cash provided (used) by investing activities......... (1,173) (708) 2,487
-------- --------- ---------
Cash Flows From Financing Activities:
Proceeds from short-term debt, net of repayments......... 41,058 (2,410) (12,095)
Net proceeds from sale of senior notes and convertible
subordinated debentures............................... -- -- 271,800
Long-term debt assumed................................... -- 1,037 --
Repayment of long-term debt.............................. (11,519) (12,692) (17,022)
Payment of liabilities subject to compromise............. -- -- (166,020)
-------- --------- ---------
Net cash provided (used) by financing activities......... 29,539 (14,065) 76,663
-------- --------- ---------
Net Increase (Decrease) In Cash............................ 4,178 (13,779) 7,607
Cash At Beginning Of Year.................................. 2,050 15,829 8,222
-------- --------- ---------
Cash At End Of Year........................................ $ 6,228 $ 2,050 $ 15,829
======== ========= =========
Supplemental Disclosure:
Interest paid, before amount capitalized --
Housing............................................... $ 31,761 $ 30,559 $ 30,384
Financial Services.................................... 645 572 1,302
-------- --------- ---------
$ 32,406 $ 31,131 $ 31,686
======== ========= =========
</TABLE>
The accompanying notes are an integral part of these statements.
21
<PAGE> 22
U.S. HOME CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
UNEARNED
COMMON STOCK CONVERTIBLE CAPITAL IN COMPENSATION RETAINED
-------------------- PREFERRED EXCESS OF ON RESTRICTED EARNINGS
$.10 PAR $.01 PAR STOCK PAR VALUE STOCK (DEFICIT)
-------- -------- ----------- ---------- ------------- ---------
<S> <C> <C> <C> <C> <C> <C>
BALANCE AT DECEMBER 31, 1992................... $ 4,531 $ -- $ -- $ 216,322 $ -- $(166,807)
Common and convertible redeemable preferred
stock issued in connection with the Plan
(8,524,468 shares and 2,816,762 shares,
respectively)............................. (4,531) 85 70,419 65,277 -- --
Conversion of convertible redeemable
preferred stock to common stock (862,032
shares)................................... -- 9 (21,551) 21,542 -- --
Other........................................ -- -- -- 52 --
Net income for the year...................... -- -- -- -- -- 71,691
-------- ------ --------- --------- ------- ---------
BALANCE AT DECEMBER 31, 1993................... -- 94 48,868 303,193 -- (95,116)
Conversion of convertible redeemable
preferred stock to common stock (1,435,835
shares)................................... -- 14 (35,896) 35,882 -- --
Issuance of common stock under incentive
bonus program (29,046 shares)............. -- -- -- 740 -- --
Contribution of common stock issued to profit
sharing plan (55,000 shares).............. -- 1 -- 847 -- --
Other........................................ -- -- (3) 11 -- --
Net income for the year...................... -- -- -- -- -- 32,829
-------- ------ --------- --------- ------- ---------
BALANCE AT DECEMBER 31, 1994................... -- 109 12,969 340,673 -- (62,287)
Conversion of convertible redeemable
preferred stock to common stock (198,536
shares)................................... -- 2 (4,963) 4,961 -- --
Issuance of common stock under stock payment
plan (21,731 shares)...................... -- -- -- 382 -- --
Issuance of common stock under restricted
stock plan (144,547 shares)............... -- 1 -- 2,599 (2,600) --
Other........................................ -- -- (25) (38) 289 --
Net income for the year...................... -- -- -- -- -- 36,920
-------- ------ --------- --------- ------- ---------
BALANCE AT DECEMBER 31, 1995................... $ - $ 112 $ 7,981 $ 348,577 $(2,311) $ (25,367)
======== ====== ========= ========= ======= =========
</TABLE>
The accompanying notes are an integral part of these statements.
22
<PAGE> 23
U.S. HOME CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
(1) SIGNIFICANT ACCOUNTING POLICIES
General
Nature of Operations
The Company is one of the largest single-family home builders in the United
States based on homes delivered. The Company currently builds and sells homes in
more than 200 new home communities in 32 market areas in 12 states. The Company
offers a wide variety of moderately-priced homes that are designed to appeal to
the affordable, move-up and retirement and active-adult/second home buyers. In
addition to building and selling single-family homes, the Company provides
mortgage banking services to its customers. The Company originates, processes
and sells mortgages to third-party investors. The Company does not retain or
service the mortgages that it originates but, rather, sells the mortgages and
related servicing rights to investors.
Principles of Consolidation and Basis of Presentation
The accompanying consolidated financial statements include the accounts of
the Company and all wholly-owned subsidiaries after elimination of all
significant intercompany balances and transactions.
The preparation of consolidated financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of any contingent assets and liabilities at the date of the
consolidated financial statements and revenues and expenses during the reporting
period. Management's estimates and assumptions are reflective of, among other
things, prevailing market conditions, expected market conditions based on
published economic forecasts, current operating strategies and the availability
of capital which are all subject to change. Changes to the aforementioned or
other conditions could in turn cause changes to such estimates and assumptions
and, as a result, actual results could differ from the original estimates.
The Company is engaged in two related industry segments, the on-site
development of single-family residential communities and financial services.
Identifiable assets and the results of operations of the Company's segments are
reported in the consolidated balance sheets and consolidated statements of
operations. Capital expenditures, depreciation and amortization expense for the
years ended December 31, 1995, 1994 and 1993 were insignificant.
Accounting Change
The Financial Accounting Standards Board issued Statement of Financial
Accounting Standards No. 121, Accounting for Impairment of Long-Lived Assets and
for Long-Lived Assets to be Disposed Of ("SFAS No. 121"), in March 1995, with an
effective date for fiscal years beginning after December 15, 1995, to provide
additional guidance on when long-lived assets should be reviewed for possible
impairment, how impairment losses should be measured and when such losses should
be recognized. In addition to long-lived assets, SFAS No. 121 amended the
accounting standards for valuing real estate assets to the lower of cost or fair
value less cost to sell (for certain assets the lower of cost or fair value)
from the lower of cost or net realizable value.
Under SFAS No. 121, real estate assets are to be reviewed for possible
impairment whenever events or circumstances indicate the carrying amount of an
asset may not be recoverable such as a significant decrease in market value, a
significant adverse change in legal factors or business climate, a significant
change in intended use, an accumulation of costs significantly in excess of the
amount originally expected, or current period losses combined with a history of
losses or a forecast of continuing losses. If indications are that the carrying
amount of an asset may not be recoverable, SFAS No. 121 requires an estimate of
the future undiscounted cash flows expected to result from the use of the asset
and its eventual disposition. If these cash
23
<PAGE> 24
U.S. HOME CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
flows are less than the carrying amount of the asset, an impairment loss must be
recognized to write down the asset to its estimated fair value less cost to
sell. While the determination of whether a property is impaired under the new
accounting standard is similar to previous accounting standards, the amount of a
write-down under SFAS No. 121 could be greater than under the previous
standards. Fair value differs from net realizable value in that, among other
things, fair value assumes a cash sale under current market conditions,
considers a potential purchaser's requirement for future profit and discounts
the timing of estimated future cash receipts, whereas net realizable value is
the price obtainable in the future based on the current intended use of the
land, net of disposal and holding costs, without provision for future profits or
discounting future cash flow to present value.
During the fourth quarter of 1995, the Company elected to early adopt SFAS
No. 121 retroactive to January 1, 1995. The adoption of SFAS No. 121 did not
impact the Company's results of operations or financial position and did not
result in a restatement of any of the financial results for the prior three
quarters of 1995. The Company believes the adoption of SFAS No. 121 would not
have had a material effect in 1994 or 1993 had SFAS No. 121 been applied to
those years.
Income Per Share
The following weighted average number of common and common equivalent
shares were used to compute income per share:
<TABLE>
<CAPTION>
1995 1994 1993
---------- ---------- ----------
<S> <C> <C> <C>
Primary.................................. 11,773,099 11,366,810 11,631,071
Fully diluted............................ 14,525,989 13,620,331 12,110,237
</TABLE>
The weighted average number of common and common equivalent shares
outstanding for primary income per share include the dilutive effect of the
convertible redeemable preferred stock and Class B warrants and the assumed
exercise of stock options for periods subsequent to June 21, 1993 (based on the
average stock price for the periods). No effect was given to the shares that
would be issuable on exercise of the warrants and stock options in 1994, since
they would be antidilutive or immaterial. Fully diluted income per share
includes the assumed conversion of the convertible subordinated debentures and
the dilutive effect of the Class B warrants and stock options (based on the
higher year-end stock price) in 1995 and 1993.
Cash Equivalents
The Company considers all short-term investments with an initial maturity
of less than 90 days to be cash equivalents.
Financial Instruments
The Company believes that fair value approximates recorded values for such
financial instruments as cash and cash equivalents, trade receivables and
payables, short-term debt and option deposits because of the typically liquid,
short-term nature, market rate terms and lack of specific concentration of these
instruments.
The fair value of the senior notes and convertible subordinated debentures
can not be determined as neither of these instruments are actively traded on the
open market. The Company has been informed that the senior notes are currently
trading at a nominal premium and the convertible subordinated debentures are
currently trading at a discount under ten percent; however, the actual amount of
the premium or discount can not be determined because of the limited activity.
The Company does not presently intend to repurchase any of these instruments
prior to maturity. In addition, the Credit Agreement (see Note 2) prohibits the
Company from repurchasing the convertible subordinated debentures.
24
<PAGE> 25
U.S. HOME CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The fair value of the Company's residential mortgage loans approximate
their carrying value as such loans are packaged and sold to investors generally
within 30 days after home delivery. Additionally, a significant portion of the
Company's interest rate risk associated with and generated by these loans is
mitigated by the use of forward delivery contracts and commitments. See Hedging
Contracts below.
Housing
Sales and Profit Recognition
Profit is recognized from the sale of real estate at time of closing, i.e.,
when sufficient down payment has been made; any financing has been arranged;
title, possession and other attributes of ownership have been transferred to the
buyer; and the Company is not obligated to perform additional significant
activities after the sale.
Inventories and Valuation
The components of single-family housing inventories are as follows:
<TABLE>
<CAPTION>
1995 1994
-------- --------
<S> <C> <C>
Housing completed and under construction....................... $238,508 $224,870
Models......................................................... 63,475 47,914
Finished lots.................................................. 129,260 118,508
Land under development......................................... 50,714 60,809
Land held for development or sale.............................. 150,078 124,678
-------- --------
$632,035 $576,779
======== ========
</TABLE>
The cost of acquiring and developing land and constructing certain
amenities are allocated to the related parcels. Housing inventories are recorded
using the specific identification method. As discussed in Accounting Change
above, the Company adopted SFAS No. 121 during 1995. Thus, the Company records
land under development and to be developed at the lower of cost or fair value
and records land substantially completed and ready for its intended use, land
held for sale and housing inventories at the lower of cost or fair value less
cost to sell. Fair value is the amount at which a property could be bought or
sold in a current transaction between willing parties. Prior to 1995, the
Company recorded its inventories at the lower of cost or net realizable value.
Provisions to reduce land and housing inventories to the lower of cost or fair
value in 1995 and the lower of cost or net realizable value in 1994 and 1993
were not significant. Total land and housing reserves were $36,370, $35,417 and
$48,362 at December 31, 1995, 1994, and 1993, respectively.
During 1995 and 1993, the Company acquired land assets in several
transactions with third parties totaling approximately $14,832 and $5,697,
respectively, in which the Company received land suitable for single-family
detached homes, and these acquisitions were treated as non-cash transactions for
purposes of the consolidated statements of cash flows.
25
<PAGE> 26
U.S. HOME CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Capitalization Period
Interest is capitalized on land, finished building lots and single-family
residential housing construction costs during the development and construction
period. Interest is capitalized to eligible assets using an allocation method
based on the Company's actual interest costs. A summary of interest for 1995,
1994 and 1993 follows:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
---------------------------------
1995 1994 1993
------- -------- --------
<S> <C> <C> <C>
Capitalized at beginning of year --
U.S. Home......................................... $56,082 $ 55,580 $ 57,474
Joint ventures consolidated....................... -- -- 1,234
-------- -------- --------
56,082 55,580 58,708
-------- -------- --------
Paid and accrued.................................... 31,995 30,820 22,105
Expensed............................................ -- -- (185)
-------- -------- --------
Capitalized......................................... 31,995 30,820 21,920
Included in cost of sales........................... (27,555) (28,871) (22,342)
Included in reorganization items, asset write-downs
and other......................................... (624) (1,447) (2,706)
-------- -------- --------
Capitalized at end of year.......................... $59,898 $ 56,082 $ 55,580
======== ======== ========
</TABLE>
Under Chapter 11 ("Chapter 11") of Title 11 of the United States Code,
interest on the Company's unsecured debt was stayed, while the Company was in
reorganization (April 1991 to June 1993). Had the accrual of interest not been
stayed, paid and accrued interest for 1993 would have been increased by
approximately $12,000, and interest expense for 1993 would have been increased
by approximately $1,300.
Financial Services
Revenue Recognition
The sale of loans and loan servicing rights is recognized when the closed
loans are sold and delivered to an investor. During the years ended December 31,
1995, 1994 and 1993, revenues included net losses from the sale of loans of
$512, $831 and $262, respectively, and net gains from the sale of servicing of
$5,467, $4,212, and $3,829, respectively.
Residential Mortgage Loans
Residential mortgage loans held for sale ($34,297 at December 31, 1995) are
included in the accompanying consolidated balance sheets at the lower of cost or
market on an aggregate basis. The Company estimates the fair value of
residential mortgage loans held at December 31, 1995 approximated recorded value
based on quoted market prices (at December 31, 1995) for similar loans sold
either on a whole loan basis or pooled and sold as collateral for
mortgage-backed securities.
Hedging Contracts
The Company manages its interest rate market risk on the inventory loans
held for sale and its estimated future commitments to originate and close
mortgage loans at fixed prices ("Loan Quotes") through hedging techniques by
regularly entering into either fixed price mandatory forward delivery contracts
("Forward Contracts") to sell mortgage-backed securities to security dealers or
fixed price forward delivery commitments ("Forward Commitments") to sell
specific whole loans to investors on a mandatory or best efforts basis ("Forward
Contracts" and "Forward Commitments" collectively "Hedging Contracts"). The
Company
26
<PAGE> 27
U.S. HOME CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
records the inventory of residential mortgage loans at the lower of cost or
market on an aggregate basis after considering any market value changes in the
inventory loans, Loan Quotes and Hedging Contracts. See Note 7.
(2) REVOLVING CREDIT FACILITIES, SENIOR AND CONVERTIBLE SUBORDINATED DEBT AND
NOTES PAYABLE
Housing
Revolving credit facilities, senior and convertible subordinated debt and
notes payable consist of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
---------------------
1995 1994
-------- --------
<S> <C> <C>
Revolving credit facilities --
Credit agreement............................................. $ 24,000 $ --
Working capital facility..................................... -- 7,553
-------- --------
24,000 7,553
-------- --------
9.75% Senior notes due 2003.................................... 200,000 200,000
4.875% Convertible subordinated debentures..................... 80,000 80,000
Notes and mortgage notes payable............................... 20,599 24,327
-------- --------
300,599 304,327
-------- --------
$324,599 $311,880
======== ========
</TABLE>
On September 29, 1995, the Company entered into a three-year unsecured
revolving credit agreement (the "Credit Agreement") with a group of banks, which
on October 5, 1995, replaced the Company's secured revolving working capital
facility when all amounts outstanding under that facility were repaid. The
Credit Agreement enables the Company to borrow up to a maximum of $130,000, of
which up to $20,000 may be used for letter of credit obligations, subject to a
borrowing base limitation. At December 31, 1995, $89,690 of the Credit Agreement
commitment was available for borrowing. Borrowings under the Credit Agreement
bear interest at a premium over the Eurodollar rate or the base rate announced
by the agent bank. The Credit Agreement expires on September 29, 1998, but may
be extended annually for successive one-year periods with the consent of the
banks and contains numerous real estate and financial covenants, including
restrictions on incurring additional debt, creation of liens and the levels of
land and housing inventories maintained by the Company and a prohibition on the
payment of dividends, other than stock dividends.
The revolving working capital facility, which was replaced in October 1995
by the Credit Agreement, consisted of a $95,000 secured financing agreement of
which $25,000 could be used for letter of credit obligations. The facility bore
interest at a premium over a composite commercial paper rate. The facility
contained real estate and financial covenants which were no more restrictive
than the covenants of the Credit Agreement.
The 9.75% senior notes are due June 15, 2003. Interest is payable
semi-annually. On or after June 15, 1998, the senior notes may be redeemed at
the option of the Company, in whole or in part, at prices ranging from 103.656%
(during the 12-month period ending June 14, 1999) to 100% (on and after June 15,
2001) of the principal amount thereof, together with accrued and unpaid
interest. The indenture relating to the senior notes contains numerous
covenants, including a limitation on the incurrence of additional debt and
making of certain restricted payments.
The 4.875% convertible subordinated debentures are due November 1, 2005.
Interest is payable semi-annually. The debentures are convertible at any time at
the option of the holder into common stock at a conversion price of $35.50 per
share, subject to adjustment under certain conditions. On or after November 1,
27
<PAGE> 28
U.S. HOME CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
1996, the debentures may be redeemed at the option of the Company, in whole or
in part, at prices ranging from 103.25% (during the 12 month period ending
October 31, 1997) to 100% (on or after November 1, 2004) of the principal amount
thereof, together with accrued and unpaid interest.
Housing notes and mortgage notes payable are primarily for the acquisition
and development of land, with interest rates ranging from 6.0% to 10.0%. Assets
pledged as collateral under these agreements totaled approximately $59,647 at
December 31, 1995.
Upon a change of control of the Company, holders of the senior notes and
the debentures will have the right to require the Company to redeem the senior
notes and debentures at a price of 101% of the principal amount of the senior
notes and 100% of the principal amount of the debentures, together with accrued
and unpaid interest. There can be no assurance that sufficient funds will be
available to make the required repurchases if a change of control occurs. In
addition, the Credit Agreement prohibits the Company from repurchasing the
debentures prior to the termination of the Credit Agreement. Moreover, the
occurrence of a change of control will trigger an event of default under the
Credit Agreement.
On January 31, 1996, the Company filed a Registration Statement with the
Securities and Exchange Commission relating to the continuous offering pursuant
to Rule 415 under the Securities Act of 1933, as amended, of up to $100,000
principal amount of debt securities. The debt securities registered thereunder
may be sold in one or more series from time to time. The offering of the debt
securities will be made only by means of a prospectus.
The maximum amounts of borrowings from banks and other financial
institutions (excluding debt subject to compromise in 1993) outstanding at any
time during 1995, 1994 and 1993 were $67,000, $34,600 and $60,900, respectively.
The average amounts of debt outstanding from banks and other financial
institutions (excluding debt subject to compromise in 1993) during 1995, 1994
and 1993 were $42,400, $10,700 and $34,900, respectively, and the weighted
average interest rates, without giving effect to commitment fees, were 9.7%,
9.2% and 8.3%, respectively. Computations of the weighted average interest rates
were based upon the weighted average of outstanding loan balances during the
respective years.
At December 31, 1995, housing notes and mortgages payable, senior debt and
convertible subordinated debt mature as follows: $13,621 in 1996, $4,584 in
1997, $2,071 in 1998, $143 in 1999, $180 in 2000, $200,000 in 2003 and $80,000
in 2005.
Financial Services
Financial Services' notes payable consist of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
-------------------
1995 1994
------- -------
<S> <C> <C>
Revolving line of credit....................................... $35,371 $10,014
Other.......................................................... -- 1,034
------- -------
$35,371 $11,048
======= =======
</TABLE>
Financial Services revolving line of credit consists of an agreement with a
financial institution whereby the Company's mortgage banking subsidiary, U.S.
Home Mortgage Corporation ("Mortgage"), may borrow up to $45,000 under a
revolving line of credit (the "Mortgage Credit Facility") secured by residential
mortgage loans and mortgage notes receivables. The Mortgage Credit Facility is
not guaranteed by the Company, was amended and renewed on August 31, 1995 under
substantially the same terms and conditions as the previous agreement, matures
on August 31, 1996 and bears interest at a premium over the London Interbank
Offered Rate.
28
<PAGE> 29
U.S. HOME CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The maximum amounts of financial services borrowings from banks and other
financial institutions outstanding at any time during 1995, 1994 and 1993 were
$35,400, $21,600, and $32,600, respectively. The average amounts of short-term
debt outstanding from banks and other financial institutions during 1995, 1994,
and 1993 were $8,500, $5,600 and $16,200 respectively, and the weighted average
interest rates, without giving effect to balance deficiency fees, were 7.0%,
6.3% and 6.6%, respectively. Computations of such rates were made based upon the
weighted average of outstanding loan balances during the respective years.
(3) INCOME TAXES
The Company and its subsidiaries file consolidated federal income tax
returns.
The components of the provision for income taxes consisted of the
following:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
------------------------------
1995 1994 1993
------- ------- --------
<S> <C> <C> <C>
Current --
Federal.............................................. $ 1,136 $ 730 $ 555
State................................................ 1,130 70 345
------- ------- --------
2,266 800 900
------- ------- --------
Deferred --
Federal.............................................. 18,653 16,866 9,078
State................................................ 1,233 2,031 1,056
------- ------- --------
19,886 18,897 10,134
------- ------- --------
Decrease in valuation allowance........................ -- -- (45,000)
------- ------- --------
Total provision.............................. $22,152 $19,697 $(33,966)
======= ======= ========
</TABLE>
Deferred income taxes are determined based upon the difference between the
financial statements and the tax basis of assets and liabilities and available
net operating loss carry forward ("NOL").
At December 31, 1995, the Company has a net deferred tax asset of $15,800,
which is comprised of deferred tax assets of $33,900 (including $15,800 relating
to land and housing reserves which were expensed for financial reporting
purposes but deferred for federal income tax reporting purposes and $2,900
relating to the Company's NOL) and deferred tax liabilities of $18,100
(including $14,800 relating to interest expense capitalized for financial
reporting purposes but expensed for federal income tax reporting purposes). At
December 31, 1994, deferred tax assets and deferred tax liabilities were $54,800
and $16,400, respectively, and were primarily attributable to the same items as
noted above. At December 31, 1995 and 1994, valuation allowances totaling
$21,600 and $22,200, respectively, had been provided against the remaining net
deferred tax asset. The valuation allowance will be removed and the associated
deferred tax asset recognized when it is realized for tax purposes unless the
valuation allowance is reduced at an earlier date due to a change in
circumstances. The Company's estimate of temporary differences and the NOL are
based in part upon certain assumptions which are subject to change. The
Company's federal income tax returns for the years ended December 31, 1993 and
1992 are currently being examined by the Internal Revenue Service.
At December 31, 1995, the Company has available an NOL of approximately
$7,400 which expires in 2008. In addition, the Company has a credit for
alternative minimum tax ("AMT") paid ($3,100 at December 31, 1995) which can be
carried forward and used to reduce regular taxes payable in excess of AMT in
future years.
Federal and state income taxes paid, net of refunds, was $2,159 in 1995. In
1994 and 1993, the amounts were not significant.
29
<PAGE> 30
U.S. HOME CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
When the Company adopted Statement of Financial Accounting Standards No.
109, "Accounting for Income Taxes", in 1992, a valuation allowance was provided
for the total amount of deferred tax assets attributable to the NOL because the
Company was precluded from recognizing the tax benefit of the NOL during the
pendency of the Cases. Subsequent to emerging from Chapter 11, the Company
concluded that it would, based on the Company's historical and then current
pretax earnings (adjusted for reorganization items) and business plans, more
likely than not be able to realize substantially all of the benefit associated
with deferred tax assets. Accordingly, during the six months ended December 31,
1993, the Company reduced its valuation allowance by $45,000 (based on 39.0%
effective tax rate), resulting in a reduction of the Company's provision for
income taxes and recognition of a deferred tax asset in the same amount, which
amount has been eliminated at December 31, 1995 as a result of pretax income
generated during 1995, 1994 and 1993. The decrease in the deferred tax asset
valuation allowance increased primary and fully diluted income per share in 1993
by $3.87 per share and $3.72 per share, respectively.
As a result of the Company's recognition of the deferred tax asset
attributable to its NOL, effective July 1, 1993 (and for all future periods),
the Company began providing income taxes based on its effective tax rate.
Excluding the decrease in deferred tax asset valuation allowance in 1993, the
following table reconciles the statutory federal income tax rate to the
effective income tax rate for:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER
31,
--------------------
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Tax provision at statutory rate.................................. 35.0% 35.0% 35.0%
Increases (decreases) in taxes resulting from --
State and local income taxes, net of federal income tax
provision................................................... 4.0 4.0 4.0
Utilization of net operating loss carry forward in first half
of 1993..................................................... -- -- (9.8)
Other, net..................................................... (1.5) (1.5) --
---- ---- ----
Effective rate................................................... 37.5% 37.5% 29.2%
==== ==== ====
</TABLE>
(4) STOCKHOLDERS' EQUITY
As of December 31, 1995, the Company's capital structure consisted of the
following:
Common Stock -- Authorized 50,000,000 shares, par value $.01 per share,
outstanding 11,243,147 shares.
<TABLE>
<S> <C>
Shares reserved for issuance -- Convertible subordinated debentures...... 2,253,521
Class B warrants....................................................... 1,885,392
Stock plans............................................................ 1,433,722
Convertible redeemable preferred stock................................. 403,597
---------
5,976,232
=========
</TABLE>
Preferred Stock -- Authorized 10,000,000 shares, par value $.10 per share,
including 403,597 convertible redeemable preferred shares and 9,596,403 shares
undesignated as to series.
(a) Convertible redeemable preferred stock -- $25 per share liquidation
preference and redemption value, outstanding 319,254 shares. The shares
may be redeemed at the option of the Company at any time at an amount
equal to the liquidation preference/redemption value ($25 per share)
plus any declared and unpaid dividends. Each share of convertible
redeemable preferred stock is convertible, subject to adjustment, into
one share of common stock at the option of the holder and at any time
prior to its redemption by the Company. As of December 31, 1995,
2,496,403 shares of convertible redeemable preferred stock had been
converted into an equal number of shares of common stock. If
30
<PAGE> 31
U.S. HOME CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
the closing price of the common stock is equal to or greater than $30
per share for 20 consecutive trading days, the convertible redeemable
preferred stock will automatically convert into common stock. Any shares
converted are restored to the status of authorized and unissued
preferred stock without designation as to series. The holders of the
convertible redeemable preferred stock are entitled to one vote for each
share of convertible redeemable preferred stock held by them.
The holders of the convertible redeemable preferred stock vote together
as a single class with the holders of the common stock on substantially
all matters requiring stockholder action.
(b) Undesignated as to series -- None outstanding. Shares may be issued in
one or more classes or series with preferences, limitations and relative
rights as determined by the Company's Board of Directors at the time of
issuance. Any shares issued will rank, as to dividends and liquidation
preference, junior to the convertible redeemable preferred stock, if any
shares are outstanding.
Class B Warrants -- In connection with the Plan of Reorganization (see Note
8), pre-Effective Date stockholders received Class B warrants to acquire an
aggregate of 1,904,757 shares of common stock for $20 per share, of which 4,130
warrants had been exercised at December 31, 1995. The warrants expire in June
1998.
The Credit Agreement and the senior note indenture contain restrictions on
the (i) payment of dividends on the Company's common and preferred stock and
(ii) purchase, redemption, retirement or other acquisition of the Company's
common and preferred stock, other than upon conversion of the convertible
redeemable preferred stock into common stock and upon exercise into the
Company's common stock of Class B warrants and options to acquire common stock
issued pursuant to stock options and stock payment plans.
(5) STOCK PLANS
Stock Option Plans
The Company has two stock option plans for key employees (the "1996
Employee Plan", which is subject to stockholder approval, and the "1993 Employee
Plan") to purchase a maximum of 1,000,000 shares (500,000 shares for each plan)
of the Company's common stock. Under both plans, the Company may grant incentive
and non-qualified stock options. The Company also has a stock option plan
whereby options may be granted to non-employee directors (the "Director Plan")
to purchase a maximum of 100,000 shares of the Company's common stock. Options
under the Director Plan are granted annually in a fixed amount.
Options granted under the 1996 and 1993 Employee Plans will be exercisable
at not less than the closing price of the common stock on date of grant. Options
granted under the Director Plan will be exercisable at not less than the average
closing price of the common stock for the ten consecutive trading days prior to
the date of grant; provided that the grant price will not be less than 95% of
the average closing price of the common stock for the 20 consecutive trading
days prior to the date of grant. The options are exercisable as specified in the
stock option agreements relating to the options and may not be exercised later
than ten years from the date of grant and, with respect to the 1996 Employee
Plan, no options may be exercised prior to stockholder approval.
In 1995, options for 131,000 shares were granted at exercise prices ranging
from $16.82 to $27.75 per share to certain key employees and non-employee
directors, options for an aggregate of 3,331 shares were cancelled and no
options were exercised.
In 1994, options for 104,000 shares were granted at exercise prices ranging
from $15.13 to $22.71 per share to certain key employees and non-employee
directors, options for an aggregate of 9,000 shares were cancelled and no
options were exercised.
31
<PAGE> 32
U.S. HOME CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
In 1993, options for 318,500 shares were granted at exercise prices ranging
from $23.29 to $26.50 per share to certain key employees and non-employee
directors, options for an aggregate of 10,000 shares were cancelled and no
options were exercised.
At December 31, 1995, options for 531,169 shares were outstanding at
exercise prices ranging from $15.13 to $27.75 per share, of which options for
365,537 shares were exercisable. As of December 31, 1995, 568,831 shares were
available for granting of options, including 29,500 shares to non-employee
directors.
Stock Payment Plan
The Company's employee stock payment plan (the "Payment Plan") provides
that up to 25% of a key employee's annual incentive pay (compensation other than
base salary), which is charged to expense when earned, may be payable in shares
of the Company's common stock as determined by the Company's Board of Directors,
of which up to 50% of the shares payable will vest to the employee not later
than two years after the end of the incentive compensation year and will expire
in the event the employee is not employed by the Company on the vesting date.
Shares to be issued under the Payment Plan will be valued at the average closing
price of the common stock for a ten consecutive trading day period as defined in
the Payment Plan. The Payment Plan has a five-year term and commenced on January
1, 1994. In 1995, 21,731 shares were issued to officers and key employees at
prices ranging from $16.74 to $17.99 per share. As of December 31, 1995, 228,269
shares were available for issuance under the Payment Plan.
Restricted Stock Plan
The Company has a restricted stock plan (the "Restricted Plan") for
officers and other key employees. Under the Restricted Plan, a maximum of
250,000 shares of the Company's common stock may be granted as restricted stock.
Shares granted under the Restricted Plan will be granted at the average closing
price of the common stock for a ten consecutive trading day period as defined in
the Restricted Plan. Participants in the Restricted Plan may not dispose of any
of the stock granted for five years from date of grant. Restrictions lapse at
the rate of 20% of the stock granted per year, commencing with the end of the
fifth year. The lapsing of the restrictions between the end of the fifth year
and the ninth year may be accelerated if certain stipulated improvements in the
Company's return on assets (as defined in the Restricted Plan) over the base
year are achieved.
As of January 1, 1995, a total of 144,547 restricted shares of the
Company's common stock were issued to officers and other key employees. The
market value of the shares issued of $2,600 has been charged to stockholders'
equity as Unearned Compensation on Restricted Stock and is being amortized to
expense over a nine-year period.
(6) PROFIT SHARING
The Company has a qualified profit sharing plan for the benefit of its
employees which may be terminated at any time at the option of the Company. The
annual contributions may be made in such amount as the Board of Directors of the
Company determines, limited to 15% of the total compensation (as defined in the
profit sharing plan) of all participating employees. The aggregate amounts
accrued for contribution to the profit sharing plan for distribution to
employees were $991 in 1995, $891 in 1994 and $546 in 1993.
(7) COMMITMENTS AND CONTINGENCIES
Housing
The Company is significantly affected by the cyclical nature of the home
building industry, which is sensitive to fluctuations in economic activity,
interest rates and the level of consumer confidence. The sale of new homes and
profitability from sales are heavily influenced by the level and expected
direction of interest
32
<PAGE> 33
U.S. HOME CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
rates. Increases in interest rates tend to have a depressing effect on the
market for new homes in view of increased monthly mortgage costs to potential
home buyers.
As of December 31, 1995, the Company had refundable and non-refundable
deposits outstanding totaling $63,375 for options and contracts to purchase
undeveloped land and finished lots having a total purchase price of
approximately $296,175. These options expire at various dates through 2001.
The Company is involved from time to time in litigation arising from the
normal course of business, none of which, in the opinion of the Company, are
expected to have a material adverse effect on the financial position or results
of operations of the Company.
Financial Services
At December 31, 1995, Mortgage, in connection with managing the interest
rate market risk on its inventory loans held for sale of $34,547 and Loan Quotes
of $11,680, had outstanding $33,262 (face amount of $33,500 and estimated fair
value of $33,631) of Forward Contracts and $10,015 of Forward Commitments which
expire over the next three months, when the inventory loans are expected to be
sold and Loan Quotes are expected to close. At December 31, 1995, the estimated
fair value of the inventory loans and Loan Quotes hedged by Forward Contracts
and not covered by the Forward Commitments was $36,063.
Mortgage reduces its risk of nonperformance under the Hedging Contracts by
entering into those contracts with reputable security dealers and investors and
evaluating their financial condition. However, there is a risk if certain of the
Loan Quotes do not close or are renegotiated in a declining interest rate market
and close at lower prices. Mortgage reduces this risk by collecting commitment
fees on certain of the Loan Quotes along with entering into Forward Commitments
to deliver loans to investors on a best efforts basis and adjusting, from time
to time, the estimate of loan closings covered by Forward Contracts.
(8) REORGANIZATION AND EMERGENCE FROM CHAPTER 11
On June 21, 1993 (the "Effective Date"), the Company and 46 of its
affiliates emerged from Chapter 11 pursuant to their Plan of Reorganization (the
"Plan"). Seven other affiliates were liquidated pursuant to their liquidation
plan. None of the financial services subsidiaries were a party to the Company's
reorganization.
Under the Plan, creditors received 4,873,650 shares of common stock and
2,816,762 shares of convertible redeemable preferred stock and pre-Effective
Date stockholders received 3,510,818 shares of common stock and warrants
(exercisable at $20 per share), which, if fully exercised, would result in the
issuance of an additional 1,904,757 shares of the Company's common stock.
In connection with the Plan, the Company issued 140,000 shares of common
stock to corporate officers and certain other key employees for services
rendered in connection with the reorganization of the Company. The Company has
reflected the issuance as an increase in stockholders' equity and an offsetting
charge to earnings (which charge has been included in the accompanying
consolidated statement of operations for 1993 as "reorganization items, net") of
$2,940 based upon the prevailing market price of the Company's common stock at
the Effective Date.
33
<PAGE> 34
U.S. HOME CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(9) UNAUDITED SUMMARIZED CONSOLIDATED QUARTERLY INFORMATION
Summarized quarterly financial information for the years ended December 31,
1995 and 1994 is as follows:
<TABLE>
<CAPTION>
THREE MONTHS ENDED
---------------------------------------------------------
MARCH 31, JUNE 30, SEPTEMBER 30, DECEMBER 31,
1995 1995 1995 1995
--------- -------- ------------- ------------
<S> <C> <C> <C> <C>
Housing --
Operating revenues................ $ 260,127 $255,564 $ 282,422 $294,170
Gross profit...................... $ 41,781 $ 39,900 $ 44,522 $ 47,432
Operating income.................. $ 12,639 $ 11,650 $ 14,602 $ 16,848
Financial Services --
Operating revenues................ $ 3,075 $ 3,714 $ 4,286 $ 4,587
Operating income.................. $ 385 $ 853 $ 1,141 $ 954
Net Income.......................... $ 8,140 $ 7,814 $ 9,839 $ 11,127
Income Per Common and Common
Equivalent Share --
Primary........................... $ .70 $ .67 $ .83 $ .92
Fully diluted..................... $ .62 $ .59 $ .72 $ .81
</TABLE>
<TABLE>
<CAPTION>
THREE MONTHS ENDED
---------------------------------------------------------
MARCH 31, JUNE 30, SEPTEMBER 30, DECEMBER 31,
1994 1994 1994 1994
--------- -------- ------------- ------------
<S> <C> <C> <C> <C>
Housing --
Operating revenues................ $ 222,000 $238,143 $ 252,553 $269,682
Gross profit...................... $ 36,196 $ 38,142 $ 40,956 $ 43,487
Operating income.................. $ 11,149 $ 11,712 $ 13,742 $ 14,442
Financial Services --
Operating revenues................ $ 3,300 $ 2,943 $ 3,287 $ 3,403
Operating income.................. $ 427 $ 44 $ 466 $ 544
Net Income.......................... $ 7,061 $ 7,172 $ 9,230 $ 9,366
Income Per Common and Common
Equivalent Share --
Primary........................... $ .60 $ .63 $ .81 $ .82
Fully diluted..................... $ .52 $ .55 $ .70 $ .72
</TABLE>
(10) RECEIVABLES
The Company had housing and financial services receivables of approximately
$6,574 in 1995 and $6,627 in 1994 that were due after one year. The 1995 balance
due after one year included notes and mortgage notes receivable of $4,583 with
interest notes ranging from 8.0% to 10.5%. A majority of the balance matures
within five years.
34
<PAGE> 35
U.S. HOME CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(11) ACCRUED EXPENSES
At December 31, 1995 and 1994, accrued expenses and other current
liabilities consisted of the following:
<TABLE>
<CAPTION>
1995 1994
------- -------
<S> <C> <C>
Housing --
Customer deposits.............................................. $16,887 $19,112
Salaries and other compensation................................ 12,013 10,522
Income taxes................................................... 6,266 --
Interest....................................................... 2,206 1,972
Taxes, other than income taxes................................. 2,852 3,816
Other.......................................................... 5,846 5,075
------- -------
$46,070 $40,497
======= =======
Financial Services --
Accounts payable............................................... $12,935 $ 7,993
Other.......................................................... 5,883 4,740
------- -------
$18,818 $12,733
======= =======
</TABLE>
35
<PAGE> 36
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information relating to the directors of the Company is incorporated by
reference from the Nominees for Directors Section, pages 2 through 5, of the
Company's Proxy Statement, dated March 20, 1996, for the Annual Meeting of
Stockholders to be held on April 24, 1996, to be filed with the Securities and
Exchange Commission pursuant to Section 14 of the Securities Exchange Act of
1934 ("1996 Proxy Statement").
ITEM 11. EXECUTIVE COMPENSATION
The information is incorporated by reference from the Executive
Compensation Section, pages 6 and 7 of the 1996 Proxy Statement (see Part
I -- Item 4, Executive Officers of the Company).
ITEM 12. COMMON STOCK
The information relating to the security ownership of certain beneficial
owners and management is incorporated by reference from the Security Ownership
of Management and Certain Beneficial Owners Section, pages 16 and 17 of the 1996
Proxy Statement.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
None.
36
<PAGE> 37
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a) 1. and 2. The following financial statements and financial statement
schedules are filed as part of this Report:
See Index to Financial Statements -- Item 8.
(a) 3. Exhibits
<TABLE>
<S> <C>
2.1 -- First Amended Consolidated Plan of Reorganization of U.S. Home
Corporation and certain of its affiliates dated April 1, 1993.
Incorporated by reference from exhibit 2.1 to U.S. Home Corporation's
Current Report on Form 8-K filed June 9, 1993.
2.2 -- Modification to "USH Debtors' First Amended Consolidated Plan of
Reorganization." Incorporated by reference from exhibit 2.2 to U.S.
Home Corporation's Current Report on Form 8-K filed June 9, 1993.
2.3 -- First Amended Joint Plan of Reorganization of certain affiliates of
U.S. Home Corporation dated April 1, 1993. Incorporated by reference
from exhibit 2.3 to U.S. Home Corporation's Current Report on Form
8-K filed June 9, 1993.
2.4 -- Findings of Fact, Conclusions of Law and Order Confirming the First
Amended Consolidated Plan of Reorganization of U.S. Home Corporation
and certain of its affiliates. Incorporated by reference from exhibit
28.1 to U.S. Home Corporation's Current Report on Form 8-K filed June
9, 1993.
2.5 -- Findings of Fact, Conclusions of Law and Order Confirming the First
Amended Joint Plan of Reorganization of certain affiliates of U.S.
Home Corporation. Incorporated by reference from exhibit 28.2 to U.S.
Home Corporation's Current Report on Form 8-K filed June 9, 1993.
3.1 -- Restated Certificate of Incorporation of U.S. Home Corporation
effective on June 21, 1993. Incorporated by reference from exhibit
3.1 to Registration Statement on Form S-3 of U.S. Home Corporation
(Registration No. 33-68966).
3.1 (i) -- Certificate of Amendment of Restated Certificate of Incorporation as
filed with the State of Delaware on May 13, 1994. Incorporated by
reference from exhibit 3.1 to U.S. Home Corporation's Quarterly
Report on Form 10-Q for the period ended June 30, 1994.
3.2 -- Amended and Restated By-Laws of U.S. Home Corporation, dated as of
June 21, 1993. Incorporated by reference from exhibit 3.2 to
Registration Statement on Form S-3 of U.S. Home Corporation
(Registration No. 33-68966).
10.1 -- Credit Agreement, dated as of September 29, 1995, between U.S. Home
Corporation and The First National Bank of Chicago, as Agent.
Incorporated by reference from exhibit 10.1 to U.S. Home Corporations
Quarterly Report on Form 10-Q for period ended September 30, 1995.
10.2 -- Trust Indenture, dated as of June 21, 1993, by and between U.S. Home
Corporation and IBJ Schroder Bank & Trust Company, as trustee,
relating to U.S. Home Corporation's 9.75% Senior Notes due 2003.
Incorporated by reference from exhibit 10.2 to Registration Statement
on Form S-3 of U.S. Home Corporation (Registration No. 33-68966).
</TABLE>
37
<PAGE> 38
<TABLE>
<S> <C>
10.3 -- Trust Indenture, dated as of November 3, 1993, by and between U.S.
Home Corporation and Marine Midland Bank, N.A., as trustee, relating
to U.S. Home Corporation's 4.875% Convertible Subordinated
Debentures. Incorporated by reference from exhibit 4.1 to U.S. Home
Corporation's Current Report on Form 8-K filed November 3, 1993.
10.4 -- Warrant Agreement, dated as of June 21, 1993, between U.S. Home
Corporation and The First National Bank of Boston relating to U.S.
Home Corporation's Class B Warrants. Incorporated by reference from
exhibit 10.3 to Registration Statement on Form S-3 of U.S. Home
Corporation (Registration No. 33-68966).
10.5 -- U.S. Home Corporation 1996 Employees' Stock Option Plan.
10.6 -- U.S. Home Corporation's 1993 Stock Option Plan. Incorporated by
reference from exhibit 4.1 to Registration Statement on Form S-8 of
U.S. Home Corporation (Registration No. 33-64712).
10.7 -- U.S. Home Corporation's Non-Employee Directors' Stock Option Plan.
on Form S-3 of U.S. Home Corporation (Registration No. 33-68966).
10.8 -- U.S. Home Corporation's Employee Stock Payment Plan. Incorporated by
reference from exhibit B to U.S. Home Corporation's 1993 Proxy
Statement dated March 3, 1994.
10.9 -- U.S. Home Corporation's Corporate Officers and President of
Operations Restricted Stock Plan. Incorporated by reference from
exhibit 10.8 to U.S. Home Corporation's Annual Report on Form 10-K
for the year ended December 31, 1994.
10.10 -- U.S. Home Corporation's Corporate Officers Incentive Compensation
Program for the Incentive Period January 1, 1996 to December 31,
1996.
10.11 -- U.S. Home Corporation's Key Employees' Separation Pay Plan.
Incorporated by reference from exhibit 10.5 to Amendment No. 1 to
Registration Statement on Form S-1 of U.S. Home Corporation
(Registration No. 33-60638).
10.12 -- U.S. Home Corporation's Retirement Plan for Non-Employee Directors.
Incorporated by reference from exhibit 10 to U.S. Home Corporation's
Quarterly Report on Form 10-Q for the period ended September 30,
1994.
10.13 -- Amended and Restated Employment and Consulting Agreement, dated
October 17, 1995, between U.S. Home Corporation and Robert J.
Strudler.
10.14 -- Amended and Restated Employment and Consulting Agreement, dated
October 17, 1995, between U.S. Home Corporation and Isaac Heimbinder.
10.15 -- Registration Rights Agreement, dated as of June 21, 1993, between
U.S. Home Corporation and Loomis, Sayles & Company Incorporated, on
behalf of certain holders of the common stock of U.S. Home
Corporation. Incorporated by reference from exhibit 10.10 to
Registration Statement on Form S-3 of U.S. Home Corporation
(Registration No. 33-68966).
10.16 -- Trust Agreement, dated December 18, 1986, between U.S. Home
Corporation, as Grantor, and Kenneth J. Hanau, Jr., as Trustee, with
respect to retirement benefits for Isaac Heimbinder. Incorporated by
reference from exhibit 10.25 to U.S. Home Corporation's Annual Report
on Form 10-K for the year ended December 31, 1986.
10.17 -- Trust Agreement, dated December 18, 1986, between U.S. Home
Corporation, as Grantor, and Kenneth J. Hanau, Jr., as Trustee, with
respect to retirement benefits for Robert J. Strudler. Incorporated
by reference from exhibit 10.26 to U.S. Home Corporation's Annual
Report on Form 10-K for the year ended December 31, 1986.
</TABLE>
38
<PAGE> 39
<TABLE>
<S> <C>
10.18 -- Letter, dated as of March 20, 1990, between U.S. Home Corporation and
William E. Reichard, as Successor Trustee, with respect to Trust
Agreements dated December 18, 1986 between U.S. Home Corporation, as
Grantor, Kenneth J. Hanau, Jr., as Trustee, with respect to
retirement benefits for Robert J. Strudler and Isaac Heimbinder.
Incorporated by reference from exhibit 10.19 to U.S. Home
Corporation's Annual Report on Form 10-K for the year ended December
31, 1992.
10.19 -- First Amended and Restated Warehousing Credit and Security Agreement
(single-family mortgage loans), dated as of August 31, 1995, between
U.S. Home Mortgage Corporation and Residential Funding Corporation.
Incorporated by reference from exhibit 10.2 to U.S. Home
Corporation's Quarterly Report on Form 10-Q for the period ended
September 30, 1995.
10.19(i) -- First Amendment to First Amended Restricted Warehousing Credit and
Security Agreement (single-family mortgage loans, dated as of
December 27, 1995, between U.S. Home Mortgage Corporation and
Residential Funding Corporation.
10.20 -- U.S. Home Corporation's Amortizing Incentive Plan. Incorporated by
reference from exhibit 4.2 to Registration Statement on Form S-8 of
U.S. Home Corporation (Registration No. 33-64712).
10.21 -- Form of Indemnification Agreement for directors and executive
officers. Incorporated by reference from exhibit 10.15 to Amendment
No. 2 to Registration Statement on Form S-1 of U.S. Home Corporation
(Registration No. 33-60638).
11 -- Computation of earnings per share
22 -- Subsidiaries of U.S. Home Corporation
23 -- Consent of Independent Public Accountants
27 -- Financial Data Schedule
</TABLE>
(b) Report on Form 8-K
No Current Report on Form 8-K was filed by the Company during October,
November or December 1995.
39
<PAGE> 40
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
Date: February 9, 1996 U.S. HOME CORPORATION
By: /s/ ISAAC HEIMBINDER
--------------------------------
Isaac Heimbinder
President, Co-Chief Executive Officer
and Chief Operating Officer
By: /s/ CHESTER P. SADOWSKI
--------------------------------
Chester P. Sadowski
Vice President, Controller and
Chief Accounting Officer
(principal accounting officer)
By: /s/ THOMAS A. NAPOLI
--------------------------------
Thomas A. Napoli
Vice President, Finance and Chief Financial
Officer (principal financial officer)
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- --------------------------------------------- ------------------------------ -----------------
<S> <C> <C>
/s/ ROBERT J. STRUDLER Director, Chairman and February 9, 1996
- ----------------------------------------- Co-Chief Executive Officer
Robert J. Strudler (principal executive officer)
/s/ ISAAC HEIMBINDER Director, President, February 9, 1996
- ----------------------------------------- Co-Chief Executive Officer
Isaac Heimbinder and Chief Operating
Officer
/s/ GLEN ADAMS Director February 9, 1996
- -----------------------------------------
Glen Adams
/s/ STEVEN L. GERARD Director February 9, 1996
- -----------------------------------------
Steven L. Gerard
/s/ KENNETH J. HANAU, JR. Director February 9, 1996
- -----------------------------------------
Kenneth J. Hanau, Jr.
/s/ MALCOLM T. HOPKINS Director February 9, 1996
- -----------------------------------------
Malcolm T. Hopkins
/s/ JACK L. MCDONALD Director February 9, 1996
- -----------------------------------------
Jack L. McDonald
/s/ CHARLES A. MCKEE Director February 9, 1996
- -----------------------------------------
Charles A. McKee
/s/ GEORGE A. POOLE, JR. Director February 9, 1996
- -----------------------------------------
George A. Poole, Jr.
/s/ HERVE RIPAULT Director February 9, 1996
- -----------------------------------------
Herve Ripault
/s/ JAMES W. SIGHT Director February 9, 1996
- -----------------------------------------
James W. Sight
</TABLE>
40
<PAGE> 41
INDEX TO EXHIBITS
Exhibit
Number
- -------
10.5 U.S. Home Corporation Employees' 1996 Stock Option
Plan
10.9 U.S. Home Corporation Corporate Officers
Incentive Compensation Program for the Incentive
Period January 1, 1996 to December 31, 1996
10.13 Amended and Restated Employment and Consulting
Agreement dated October 17, 1995 between U.S. Home
Corporation and Robert J. Strudler
10.14 Amended and Restated Employment and Consulting
Agreement dated October 17, 1995 between U.S. Home
Corporation and Isaac Heimbinder
10.19(i) First Amendment to First Amended and Restated
Warehousing Credit and Security Agreement (single-
family mortgage loans), dated as of December 27,
1995, between U.S. Home Mortgage Corporation and
Residential Funding Corporation
11 Computation of earnings per share
22 Subsidiaries of U.S. Home Corporation
23 Consent of Independent Public Accountants
27 Financial Data Schedule
<PAGE> 1
EXHIBIT 10.5
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.
<PAGE> 2
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, (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.
2
<PAGE> 3
(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 New York Stock Exchange 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 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.
3
<PAGE> 4
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 from 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
4
<PAGE> 5
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.
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
5
<PAGE> 6
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.
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.
6
<PAGE> 7
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.
7
<PAGE> 8
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.
8
<PAGE> 9
EXHIBIT A
---------
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:
- ----------------------------------
* To be determined pursuant to Section 5 of the Stock Option Plan.
<PAGE> 10
(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 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
2
<PAGE> 11
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 from 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.
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<PAGE> 12
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.
12. GOVERNING LAW.
This Agreement will be governed by the laws of the State of
Delaware.
4
<PAGE> 13
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: ____________________
____________________
5
<PAGE> 14
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:
Number of Shares Exercise Price
Date of Option Subject to Option Per Share
- -------------- ----------------- --------------
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: ________________________
________________________
<PAGE> 15
EXHIBIT B
---------
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:
__________________________________
* To be determined pursuant to Section 5 of the Stock Option Plan.
<PAGE> 16
(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 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, (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
2
<PAGE> 17
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 from 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.
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
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<PAGE> 18
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.
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<PAGE> 19
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: ___________________
___________________
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<PAGE> 20
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:
Number of Shares Exercise Price
Date of Option Subject to Option Per Share
- -------------- ----------------- --------------
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:
__________________________
<PAGE> 1
(12/8/95)
EXHIBIT 10.9
U.S. HOME CORPORATION
CORPORATE OFFICERS'(1)
INCENTIVE COMPENSATION PROGRAM
FOR THE INCENTIVE PERIOD
JANUARY 1, 1996 TO DECEMBER 31, 1996
Set forth below is an outline of the Corporate Officers' Incentive
Compensation Program for the incentive period January 1, 1996 to December 31,
1996 ("Incentive 1996").
Corporate Officers who are employed by the Corporation as of
January 1, 1996 will be eligible to participate in the Corporate Officers'
Incentive Compensation Program for the period commencing January 1, 1996 and
ending December 31, 1996. Effective January 1, 1996, base salaries are
established as set forth in Exhibit A hereto.
Under this Program, an incentive compensation pool equal to the
lessor of $700,000 or 2% of the pre-tax profits of the Corporation earned in
fiscal 1996, shall be established to be distributed to the Corporate Officers
at the sole discretion and upon approval of a majority of the non-management
members of the Compensation Committee and of the Board of Directors of the
Corporation based on its evaluation of the following factors:
1. The Board of Directors shall review the profit and loss of the Company for
the fiscal year ended December 31, 1996 as compared to the projected
profit and loss for the period January 1, 1996 through December 31, 1996
as set forth in the 1996 Business Plan as presented to the Board of
Directors.
2. The Board of Directors shall review the cash flow of the Company as
compared to the projected cash flow for the period January 1, 1996 through
December 31, 1996 as set forth in the 1996 Business Plan as presented to
the Board of Directors.
3. The Board of Directors shall review 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 Board of Directors shall review incentive bonus payments by
competitors in relation to proposed payments to said officers to insure
that they are designed to retain and motivate executives.
5. All other actions by said Officers to maximize the value of shareholders'
equity.
Upon the recommendation of the Chairman and President of the
Company, the Board of Directors shall determine, in its sole discretion, the
amount each respective Officer shall receive from the said incentive
compensation pool, provided that the maximum incentive compensation payable to
any Officer shall not exceed 75% of the base compensation of such Officer.
_______________
(1) Excludes Chairman and President who are subject to Employment and
Consulting Agreements which govern payment of bonus.
<PAGE> 2
Corporate Officers' Incentive Compensation Program Page 2 of 2 pages
To be entitled to receive a bonus, a Corporate Officer must remain
in the employ of the Company for the entire fiscal year.
Notwithstanding the foregoing, the Corporation shall have the
right to terminate employment of any Corporate Officer covered under this
Program at will, without notice, and without cause, at any time.
The total bonus earned pursuant to the incentive program set forth
herein shall be paid upon approval of the Board of Directors of the Company as
follows:
A. 75% of the aggregate incentive bonus earned by the Corporate
Officer shall be paid in cash within 30 days following receipt
of 1996 audited financial statements.
B. 25% of the aggregate incentive bonus earned by the Corporate
Officer shall be paid in shares of U.S. Home Corporation's common
stock, with each share valued at the average market price of said
shares on the New York Stock Exchange, as of the close of trading
for the ten (10) trading days commencing the day following release
by the Company of its results for the fiscal year ended December
31, 1996. Said shares shall be held in escrow by the Company to
be delivered to the respective Corporate Officers as follows:
1. 1/2 of such shares shall be delivered to the Corporate
Officer within thirty (30) days of the determination of
the respective stock price.
2. 1/2 of such shares shall be delivered to the Corporate
Officer on or prior to January 31, 1999. However, in
order to receive such shares, the Corporate Officer must
remain in the employ of the Corporation as of December
31, 1998.
Notwithstanding the foregoing, in the event that said Corporate
Officer's employment with the Corporation is terminated by the Corporation
other than for "Cause", all remaining shares not previously delivered to the
Corporate Officer shall be delivered to said Corporate Officer within thirty
(30) days following termination. For purposes of this Program, the term
"Cause" shall mean (i) the Officer's continuing, willful failure to perform his
duties required of his position (other than as a result of total or partial
incapacity due to physical or mental illness), (ii) gross negligence or
malfeasance by the Officer in the performance of his duties hereunder, (iii) an
act or acts on the Officer'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 Officer at the
expense of the Company, or (iv) breach of the provisions of Exhibit B hereto
pertaining to confidentiality and competitive activities, but shall not mean
(A) the refusal to relocate to another city more than 50 miles from the
Officer's present place of business, nor (B) a refusal to perform the duties
required of his position as a result of either a material change in the scope
of his job responsibilities or a reduction in base compensation.
The transfer of said shares by such Corporate Officer shall be
required to conform to all applicable laws and regulations pertaining thereto.
<PAGE> 1
EXHIBIT 10.13
AMENDED AND RESTATED
EMPLOYMENT AND CONSULTING AGREEMENT
AMENDED AND RESTATED EMPLOYMENT AND CONSULTING AGREEMENT,
dated as of October 17, 1995, by and between U.S. Home Corporation (the
"Company"), and Robert J. Strudler (the "Executive").
WHEREAS, the Company and the Executive are parties to an
Employment and Consulting Agreement, dated May 12, 1986, as amended by (i) the
First Amendment to Employment and Consulting Agreement, dated February 8, 1990,
(ii) the Second Amendment to Employment and Consulting Agreement, dated
December 6, 1990, and (iii) the Third Amendment to Employment and Consulting
Agreement, dated May 25, 1993 (collectively, the "Agreement").
WHEREAS, the Company and the Executive desire to amend and
restate the Agreement as hereinafter provided.
WHEREAS, Section 7(c) of the Agreement permits such amendment
by written agreement of both parties.
NOW, THEREFORE, the Company and the Executive agree to amend
and restate the Agreement as follows:
<PAGE> 2
1. Employment and Duties. The Company shall employ the
Executive, and the Executive shall be employed by the Company, as Chairman and
Co-Chief Executive Officer, at the Company's headquarters in Houston, Texas (or
such other location as shall be mutually satisfactory to the Executive and the
Company) for the term of this Agreement. In these capacities, the Executive
shall devote substantially all of his business time and energies to the
business of the Company and shall perform such services as shall from time to
time be assigned to him by the Board of Directors of the Company.
2. Term. The term of the Executive's employment hereunder shall
continue until June 20, 1999; provided, however, that, unless either party
otherwise elects by notice in writing delivered to the other at least 90 days
prior to June 20, 1999, or any subsequent anniversary of June 20, 1999, such
term shall be automatically renewed for successive one-year terms unless sooner
terminated by the Executive's voluntary resignation or otherwise terminated
pursuant to the terms of this Agreement (the "Employment Term").
2
<PAGE> 3
3. Compensation and Benefits
(a). Compensation. During each calendar year of
the Employment Term, the Company shall pay the Executive: (i) a base salary at
a rate of $425,000 per year (the "Base Salary"), payable in substantially equal
biweekly installments, and (ii) any cash bonus to which he is entitled pursuant
to the provisions of Appendix A hereto, payable as promptly as practicable
after the end of each such calendar year, but in any event by April 15 of the
following year. Notwithstanding the foregoing, if the Executive's applicable
employee remuneration (as defined in Section 162(m) of the Internal Revenue
Code of 1986, as amended (the "Code")) for any taxable year would exceed
the higher of $1 million or the maximum amount deductible by the Company under
Section 162(m) for such taxable year, the amount otherwise payable shall be
reduced to the higher of $1 million or the maximum amount deductible under
Section 162(m) and the excess shall be deferred until the expiration of the
Employment Term and shall be payable in a cash lump sum on April 16 of the
first year of the Consultation Period. The deferred compensation shall accrue
interest at the same rate charged the Company from time to time under the
Credit Agreement, dated as of September 29, 1995,
3
<PAGE> 4
among the Company, the First National Bank of Chicago, as agent, and certain
lenders named therein, as amended, restated, supplemented or otherwise modified
from time to time, or any successor facility. The Executive's Base Salary and
bonus shall be reviewed at least annually by the Board of Directors of the
Company, or pursuant to its delegation, and (i) at a minimum, the Board shall
increase the Base Salary annually commencing with the 1996 calendar year by an
amount determined by multiplying the current Base Salary by the percentage
increase in the Consumer Price Index -- U.S. City Average published by the
Bureau of Labor Statistics of the United States Department of Labor (or if that
Index is no longer published by any substantially equivalent successor
thereto) (the "Consumer Price Index") in the preceding calendar year, and (ii)
the Board may increase the bonus from time to time.
(b). Stock Options. On October 17, 1995, the
Executive was granted an option (the "Option") to purchase 50,000 shares of the
Company's common stock, $.01 par value per share (the "Common Stock"), pursuant
to the Company's 1993 Employee's Stock Option Plan. Such Option shall be an
"incentive stock option" within the meaning of Section 422 of the Code to the
4
<PAGE> 5
extent permitted by Section 422(d) of the Code; to the extent not permitted by
Section 422(d), the remaining portion of the Option shall be a nonqualified
stock option. The Option shall be for a term of ten years from, and shall be
exercisable immediately at the fair market value of the Common Stock on, the
date of grant.
(c). Retirement Benefit.
(i). In consideration of the Executive's past
services to the Company, the Executive shall be entitled to a retirement
benefit, payable monthly for his life, in an amount equal to 50 percent of his
highest monthly Base Salary during the Employment Term. Such payments shall
commence on the first day of the month coincident with or next following the
later of the Executive's attainment of age 58 or the end of the Employment Term
(the "Commencement Date"); provided, however, that if the Employment Term
terminates prior to his attainment of age 58, the Executive may elect by
written notice to the Company to have such payments commence on the first day
of any month after such termination of employment (the "Early Commencement
Date") in a monthly amount equal to the monthly amount that the Executive would
have received at the Commencement Date, reduced by one-third of one percent
(.33%) per month for each month by which the
5
<PAGE> 6
Early Commencement Date precedes the Commencement Date. The amount of each
payment hereunder shall be increased on each January 1 following the Early
Commencement Date or Commencement Date, as applicable, by an amount determined
by multiplying the amount of each monthly payment made in the preceding year by
the percentage increase, if any, in the cost of living from the preceding
January 1, as reflected by the Consumer Price Index. The Executive's election
to have his retirement benefit payments commence on the Early Commencement Date
shall not affect the Company's obligation to pay consulting fees to the
Executive in accordance with Section 4 hereof.
The retirement benefit shall be an unconditional, but unsecured,
general credit obligation of the Company to the Executive, and nothing
contained in this Agreement, and no action taken pursuant to it, shall create
or be construed to create a trust of any kind between the Company and the
Executive. The Executive shall have no right, title or interest whatever in or
to any investments which the Company may make (including, but not limited to,
an insurance policy on the life of the Executive) to aid it in meeting its
obligations hereunder.
6
<PAGE> 7
(ii) From time to time, the Company shall make such
contributions to the trust established under the Trust Agreement dated as of
December 18, 1986 (the "1986 Trust") between the Company, as grantor, and
William E. Reichard, as successor trustee, to provide a sufficient reserve for
the discharge of its obligation to pay the retirement benefit to the Executive
as provided in clause (i) of this Section 3(c) and clauses (ii) and (iii) of
Section 5(a) hereof.
(d) Expense Reimbursement. The Company shall promptly
pay, or reimburse the Executive for, all ordinary and necessary business
expenses incurred by him in the performance of his duties hereunder, provided
that the Executive properly accounts for them in accordance with Company
policy.
(e) Other Benefit Plans, Fringe Benefits, and Vacations.
(i) The Executive shall be eligible to participate
in each of the Company's present employee benefit plans, policies or
arrangements and any such plans, policies or arrangements that the Company may
maintain or establish during the Employment Term and receive all fringe
benefits and vacations for which his position makes him eligible in accordance
with the
7
<PAGE> 8
Company's usual policies and the terms and provisions of such plans, policies
or arrangements.
(ii) The Company shall not terminate or change,
in such a way as to adversely affect the Executive's rights or reduce his
benefits, any employee benefit plan, policy or arrangement now in effect or
which may hereafter be established and in which the Executive is eligible to
participate, including, without limitation, the Company's profit sharing, life
insurance, disability and stock option plans, unless a plan, policy or
arrangement providing the Executive with at least equivalent rights and
benefits has been established.
(iii) From and after the last day of the Employment
Term, the Executive shall be entitled to participate in each of the Company's
employee benefit plans, policies or arrangements which provide medical coverage
and similar benefits to the Company's executive officers (the "Company Medical
Plan") on the same basis as the Company's other executive officers. The
Company shall bear the cost of medical coverage and benefits during the
Consultation Period (as defined below); thereafter, the Executive shall bear
such cost. After the Executive is eligible for Medicare and the Company
becomes a secondary payor
8
<PAGE> 9
(or its equivalent) pursuant to Medicare or other applicable law, the Company
shall provide secondary medical coverage and benefits. If continued coverage
under the Company Medical Plan is not possible under the terms of any insurance
policy or applicable law following the Employment Term, the Company shall
provide the Executive with coverage equivalent to that provided to the
Company's other executive officers under a policy or arrangement acceptable to
the Executive. In the event of the Executive's death before the end of the
Consultation Period, the Company shall continue to provide such primary and
secondary medical coverage, as applicable, and benefits to the Executive's
spouse and dependents for the remainder of the Consultation Period on the same
basis as provided to the Company's other executive officers.
4. Consultation Period. From and after the last day of
the Employment Term and for a period of five years thereafter (the
"Consultation Period"), the Executive shall serve as a consultant to the
Company with respect to such business matters and at such times (not more than
four days per month and not more than two consecutive days per week) as the
Company may reasonably request within Harris County, Texas; provided, however,
that if
9
<PAGE> 10
the Consultant does not reside in Harris County, he may perform his consulting
duties hereunder at his then place of residence and shall be required to come to
Harris County not more than one day in each calendar month. During the
Consultation Period, the Company shall pay the Executive (in addition to any
other amounts to which he is entitled pursuant to this Agreement) a consulting
fee, in substantially equal biweekly installments, at the rate of $139,854 per
year increased by an amount determined by multiplying $139,854 by the percentage
increase, if any, in the cost of living between January 1, 1995 and the January
1 immediately preceding the date of commencement of the Consultation Period, as
reflected by the Consumer Price Index. The amount of the consulting fee shall
be increased on each January 1 during the Consultation Period by an amount
determined by multiplying the amount of the consulting fee paid in the preceding
year by the percentage increase, if any, in the cost of living from the
preceding January 1, as reflected by the Consumer Price Index. During the
Consultation Period, the Executive shall be reimbursed up to an amount not to
exceed $50,000 during each year of the Consultation Period for any expenses
incurred by the Executive for (i) the maintenance of an office that shall be
10
<PAGE> 11
located other than at the Company's offices and (ii) secretarial assistance,
such expenses to be billed and paid monthly. During the Consultation Period,
the Executive shall not be required to undertake any assignment inconsistent
with the dignity, importance and scope of his prior positions or with his
physical and mental health at the time. It is expressly understood between the
parties that during the Consultation Period, the Executive shall be an
independent contractor and shall not be subject to the direction, control, or
supervision of the Company. The provisions of Sections 5, 6 and 7 hereof shall
continue to apply to the Executive during the Consultation Period.
5. Termination.
(a) Death and Disability.
(i) The Executive's employment hereunder
shall terminate upon his death or upon his becoming Totally Disabled. For
purposes of this Agreement, the Executive shall be "Totally Disabled" if he is
physically or mentally incapacitated so as to render him incapable of
performing his usual and customary duties as an executive (for the Company or
otherwise). The Executive's receipt of Social Security disability benefits
shall be deemed conclusive evidence of Total Disability for
11
<PAGE> 12
purposes of this Agreement; provided, however, that in the absence of his
receipt of such Social Security benefits, the Board of Directors of the Company
may, in its sole discretion, but based upon appropriate medical evidence,
determine that the Executive is Totally Disabled.
(ii) In the event that the Executive is Totally
Disabled before his retirement benefit pursuant to Section 3(c) hereof has
commenced to be distributed (whether or not he is in the employ of the Company
at the time he is so Totally Disabled), such benefit shall commence to be
distributed to him on the first day of the month next following his Total
Disability, as if such payments had commenced at his Commencement Date.
(iii) In the event of the Executive's death (while
Totally Disabled or otherwise) after his retirement benefit has commenced to be
distributed pursuant to Section 3(c) hereof or subparagraph (ii) above, as
applicable, the Company shall continue to pay such retirement benefit to his
Beneficiary for her life. If the Executive's retirement benefit pursuant to
Section 3(c) hereof has not commenced to be distributed on the date of his
death, such benefit shall commence to be distributed
12
<PAGE> 13
to his Beneficiary for her life on the first day of the month next following
his date of death, as if such payments had commenced at his Commencement Date.
For purposes of this Agreement, the Executive's "Beneficiary" shall be deemed
to be his spouse; if his spouse predeceases him (or if he is not married at the
time of his death), his Beneficiary shall be deemed to be his estate which
shall receive, in lieu of the payments otherwise payable to the Executive's
spouse hereunder, a lump sum cash payment equal to the actuarial present value
(determined on the basis of a 6 percent per annum interest rate assumption and
no decrement for mortality) of the payments that would have been made to a
spouse for her life, assuming that such spouse was three years younger than the
Executive on his date of death. If the Executive predeceases his spouse, upon
her death, a lump sum cash payment equal to the amount of any cash and present
value of all property (including any annuity contracts) owned by the 1986 Trust
as of the date of the Executive's death shall be paid by the Company to his
spouse's estate or any beneficiary or beneficiaries designated in her last will
and testament as soon as practicable after such calculation is completed. The
acturial present value of any annuity contracts shall be calculated by the
13
<PAGE> 14
insurance company that issued such contract or, if any such insurance company
cannot supply such present value, by an enrolled actuary.
(b) For Cause. The Executive's employment
hereunder may be terminated for Cause. For purposes of this Agreement, the
term "Cause" shall mean (i) the Executive's continuing willful failure to
perform his duties hereunder (other than as a result of total or partial
incapacity due to physical or mental illness), (ii) gross negligence or
malfeasance by the Executive in the performance of his duties hereunder, (iii)
an act or acts on the Executive'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 Executive at the
expense of the Company, or (iv) breach of the provisions of Section 6(b)
hereof.
(c) Without Cause. If the Executive's
employment or his retention as a consultant hereunder is terminated without
Cause, as soon as practicable (but not later than 30 days) after such
termination, he shall receive a lump sum cash payment equal to the sum of: (i)
an amount equal to his highest monthly Base Salary during the Employment Term
prior to such termination
14
<PAGE> 15
multiplied by the number of months remaining in the Employment Term (but by not
less than thirty-six months if such termination occurs during the Employment
Term); (ii) if such termination occurs during the Employment Term, an amount
equal to the bonuses paid pursuant to Section 3(a)(ii) hereof and Appendix A
hereto or otherwise, whether or not deferred, in respect of the most recently
completed three calendar years; (iii) an amount equal to the actuarial present
value (determined on the basis of a 6 percent per annum interest rate
assumption and no decrement for mortality) of the retirement benefit payments
payable to him under Section 3(c), commencing on the Commencement Date (or, if
such payments have commenced, such actuarial present value of the remaining
payments); and (iv) an amount equal to the consulting fees due him under
Section 4 for the term or remainder of the Consultation Period.
(d) Change in Control.
(i) If a Change in Control Event (as defined
in Appendix B hereto) occurs, the Executive shall (A) if he so elects by
written notice to the Company within 360 days after such Change in Control
Event, be entitled to terminate his employment, if not already terminated by
the Company, and, in
15
<PAGE> 16
either event, receive the amounts set forth in paragraph (c) above (excluding
the amount of the retirement benefit described in Section 5(c)(iii)) within the
time period specified in subparagraph (iii) below, as if the Company had
terminated his employment without Cause, and (B) if he so elects by written
notice to the Company within 360 days after the occurrence of such Change in
Control Event, cause the Company to purchase the Executive's principal
residence at its fair market value. For purposes of this Agreement, such fair
market value shall be determined by two independent real estate firms, one of
which shall be selected by the Executive and one by the Company. If such real
estate firms fail to agree on such fair market value, the two firms so selected
shall select a third firm mutually acceptable to them and such third firm's
determination of fair market value shall be binding for all purposes.
(ii) Notwithstanding anything to the
contrary herein, if the aggregate amounts payable pursuant to subparagraph (i)
of paragraph (d) hereof would cause any payment under such subparagraph (i) to
be subject to an excise tax as an "excess parachute payment" under Section 4999
of the Code, such aggregate amounts payable hereunder shall be reduced by the
smallest amount
16
<PAGE> 17
necessary to ensure that no payment hereunder shall be so treated under such
Section 4999. Prior to effecting such reduction, the Company shall give the
Executive 30 days' written notice of the fact, amount and basis of such
reduction, as well as a determination of the shortest period of time over which
such aggregate amounts may be paid and not be treated as "excess parachute
payments." The Executive shall then have 30 days within which to elect in
writing to (A) receive a lump sum payment, reduced pursuant to the first
sentence hereof, or (B) receive the aggregate amounts payable pursuant to
subparagraph (i) hereof in annual installments over the time period set forth
in the Company's notice. In making the determinations called for in this
subparagraph (ii), the parties hereto shall rely conclusively on (1) the
opinion of Hay-Huggins, or such other consulting firm as the Company shall
designate (with the written consent of the Executive) within one year of the
date hereof as to the amount of the Executive's compensation which constitutes
"reasonable compensation" for purposes of Section 280G of the Code, and (2) the
opinion of Kwasha Lipton, or such other actuarial firm as the Company shall
designate (with the written consent of the Executive) within one year of the
date
17
<PAGE> 18
hereof as to any present value calculations under Section 280G of the Code.
The Company shall bear all costs associated with obtaining such opinions.
(iii) The amounts payable pursuant to this
paragraph (d) shall be paid (or commence to be paid) to the Executive not later
than 10 days after he notifies the Company under subparagraph (ii) above
whether he wishes to receive such amounts in a lump sum or in installments or,
if no notice is given by the Company under subparagraph (ii) above, within 30
days after the Executive gives notice to the Company under subparagraph (i)
above.
(iv) In addition to all other rights granted
him under this paragraph (d), if a Control Change (as defined in paragraph (c)
of Appendix B hereto) occurs, the Executive shall be entitled to elect to
terminate his employment with the Company upon written notice to the Company,
effective not more than 10 days after such election. In such event, (A) the
Consultation Period shall commence immediately upon termination of employment
and shall cease five years thereafter, (B) the Executive shall be entitled to
elect at any time to have payment of his retirement benefit commence on the
Early Commencement Date in an amount
18
<PAGE> 19
determined in accordance with the provisions of Section 3(c) hereof, and (C)
the Company shall promptly, but not later than 10 days after such election,
transfer sufficient assets to the 1986 Trust so that the assets of the 1986
Trust are then sufficient to discharge the obligations for the consulting fees
and retirement benefits due him in full.
6. Covenants.
(a) Confidentiality. The Executive acknowledges
that he has acquired and will acquire confidential information respecting the
business of the Company. Accordingly, the Executive agrees that, without the
written consent of the Company as authorized by its Board of Directors, he will
not, at any time, willfully disclose any such confidential information to any
unauthorized third party with an intent that such disclosure will result in
financial benefit to the Executive or to any person other than the Company.
For this purpose, information shall be considered confidential only if such
information is uniquely proprietary to the Company and has not been made
publicly available prior to its disclosure by the Executive.
(b) Competitive Activity. Until the end of the
Consultation Period, the Executive shall not, without the consent
19
<PAGE> 20
of the Board of Directors of the Company, directly or indirectly, knowingly
engage or be interested in (as owner, partner, shareholder, employee, director,
officer, agent, consultant or otherwise), with or without compensation, any
business which (i) is in competition with any line of business being actively
conducted by the Company or any of its affiliates or subsidiaries during the
Employment Term or Consultation Period, or (ii) shall hire any person who was
employed by the Company or any of its affiliates or subsidiaries within the
six-month period preceding such hiring, except for any employee whose annual
rate of compensation is not in excess of $55,000. Nothing herein, however,
shall prohibit the Executive from acquiring or holding not more than one
percent of any class of publicly traded securities of any such business.
(c) Remedy for Breach. The Executive
acknowledges that the provisions of this Section 6 are reasonable and necessary
for the protection of the Company and that the Company will be irrevocably
damaged if such covenants are not specifically enforced. Accordingly, the
Executive agrees that, in addition to any other relief to which the Company may
be entitled, the Company shall be entitled to seek and obtain
20
<PAGE> 21
injunctive relief (without the requirement of any bond) from a court of
competent jurisdiction for the purposes of restraining the Executive from any
actual or threatened breach of such covenants. Notwithstanding anything to the
contrary herein, the provisions of this Section 6 shall cease to apply to the
Executive if his employment hereunder terminates without Cause or following a
Change in Control Event. In addition, in the event that the Executive breaches
the provisions of this Section 6 during the Consultation Period, the Company's
sole remedy shall be to terminate the Executive for Cause.
7. Miscellaneous.
(a) Governing Law. This Agreement shall be
governed by and construed in accordance with the laws of the State of Delaware
applicable to agreements made and to be performed in that State.
(b) Notices. Any notice, consent or other
communication made or given in connection with this Agreement shall be in
writing and shall be deemed to have been duly given when delivered by United
States registered or certified mail, return receipt requested, to the parties
at the following
21
<PAGE> 22
addresses or at such other address as a party may specify by notice to the
other.
To the Executive:
----------------
11110 Greenbay
Houston, Texas 77024
To the Company:
--------------
U.S. Home Corporation
1800 West Loop South
Houston, Texas 77252
Attention: Secretary
(c) Entire Agreement; Amendment. This Agreement
shall supersede any and all existing agreements between the Executive and the
Company or any of its affiliates or subsidiaries relating to the terms of his
employment. It may not be amended except by a written agreement signed by both
parties.
(d) Waiver. The failure of a party to insist
upon strict adherence to any term of this Agreement on any occasion shall not
be considered a waiver thereof or deprive that party of the right thereafter to
insist upon strict adherence to that term or any other term of this Agreement.
(e) Assignment. Except as otherwise provided in
this paragraph, this Agreement shall inure to the benefit of and be binding
upon the parties hereto and their respective heirs,
22
<PAGE> 23
representatives, successors and assigns. This Agreement shall not be
assignable by the Executive, and shall be assignable by the Company only to any
corporation or other entity resulting from the reorganization, merger or
consolidation of the Company with any other corporation or entity or any
corporation or entity to which the Company may sell all or substantially all of
its assets, and it must be so assigned by the Company to, and accepted as
binding upon it by, such other corporation or entity in connection with any
such reorganization, merger, consolidation or sale.
(f) Litigation Costs. In the event that the
Executive shall successfully prosecute a judicial proceeding to enforce any
provision of this Agreement, in addition to any other relief awarded the
Executive by the court in such action, the parties agree that the judgment
rendered shall award the Executive all of his attorneys' fees, disbursements and
other costs incurred by the Executive in prosecuting such suit.
(g) Separability. If any provision of this
Agreement is invalid or unenforceable, the balance of the Agreement shall
remain in effect, and if any provision is
23
<PAGE> 24
inapplicable to any person or circumstance, it shall nevertheless remain
applicable to all other persons and circumstances.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Amended and Restated Employment and Consulting Agreement and Appendices A and B
thereto as evidence of their adoption this 17th day of October, 1995.
U.S. HOME CORPORATION
By
---------------------------------
Name: Isaac Heimbinder
--------------------------
Title: President, Co-Chief
-----------------------
Executive Officer and
-----------------------
Chief Operating Officer
-----------------------
EXECUTIVE:
-----------------------------------
Name: Robert J. Strudler
24
<PAGE> 25
Appendix A
This Appendix A is attached to and shall form a part of the
Amended and Restated Employment and Consulting Agreement, dated October 17,
1995, by and between U.S. Home Corporation (the "Company"), and Robert J.
Strudler (the "Executive").
(a) The Executive's bonus, if any, for each calendar year
during the Employment Term commencing with the 1995 calendar year shall be an
amount equal to:
(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.
(b) In the event that the Executive's employment hereunder is
terminated for any reason prior to the end of a calendar year, including the
expiration of the Employment Term, his bonus for such year shall be an amount,
estimated in good faith by the Board of Directors of the Company based on
<PAGE> 26
reasonable assumptions and projections, but without the benefit of the report
referred to in paragraph (c) below, equal to the bonus otherwise determined
pursuant to this Appendix A, multiplied by a fraction, the numerator of which
is the number of calendar months during such year in which the Executive was
employed by the Company for at least one business day, and the denominator of
which is 12.
(c) For purposes of this Agreement, the Company's
"Pre-Tax Income" for any year shall mean the income of the Company and its
consolidated and unconsolidated subsidiaries for such year, as reported by the
Company and certified by its independent certified public accountants, except
that no deduction shall be made for the bonus payable pursuant to this Appendix
A and Section 3(a)(ii) hereof for such year or for Federal income and State and
local franchise, gross receipts, or income taxes.
U.S. HOME CORPORATION
By
---------------------------------
Name: Isaac Heimbinder
------------------------------
Title: President, Chief
---------------------------
Executive Officer and
---------------------------
Chief Operating Officer
---------------------------
EXECUTIVE:
-----------------------------------
Name: Robert J. Strudler
2
<PAGE> 27
Appendix B
This Appendix B is attached to and shall form a part of the
Amended and Restated Employment and Consulting Agreement, dated October 17,
1995, by and between U.S. Home Corporation (the "Company"), and Robert J.
Strudler (the "Executive").
(a) For purposes of this Agreement, a "Change in Control
Event" shall occur when a "Control Change" (as defined in paragraph (c) below)
is followed within two years by a "Material Change" (as defined in paragraph
(b) below).
(b) A "Material Change" shall occur if:
(i) the Executive's employment hereunder is terminated
without Cause;
(ii) the Company makes any change in the Executive's
functions, duties or responsibilities from the position that the Executive
occupied on the date hereof or, if this Agreement has been renewed or extended,
the date of the last renewal or extension, but only if such change would cause:
(A) the Executive to report to anyone other than
the Board of Directors of the Company,
<PAGE> 28
(B) the Executive to no longer be the Chairman of
the Board of Directors and Co-Chief Executive Officer of the Company,
(C) even if the Executive maintains the positions
of Chairman of the Board of Directors and Co-Chief Executive Officer, his
responsibilities to be reduced from those in effect on the date hereof or the
date of the last renewal or extension of this Agreement, as applicable, or to
no longer be commensurate with those of the Co-Chief Executive Officer of a
company with gross annual sales of at least $800 million, or
(D) the Executive's position with the Company to
become one of lesser importance or scope;
(iii) the Company assigns or reassigns the Executive
(without his written permission) to another place of employment which is more
than 10 miles from his place of employment on the date hereof or the date of
the last renewal or extension of this Agreement, as applicable, and which is
not the corporate headquarters of the Company; or
(iv) the Company reduces the Executive's Base Salary or
otherwise breaches the terms of this Agreement.
2
<PAGE> 29
(c) A "Control Change" shall occur if:
(i) a report on Schedule 13D is filed with the
Securities and Exchange Commission pursuant to Section 13(d) of the Securities
Exchange Act of 1934 (the "Exchange Act") disclosing that any person (within
the meaning of Section 13(d) of the Exchange Act), other than the Company (or
one of its subsidiaries) or any employee benefit plan sponsored by the Company
(or one of its subsidiaries), is the beneficial owner, directly or indirectly,
of 15 percent or more of the combined voting power of the then-outstanding
securities of the Company;
(ii) any person (within the meaning of Section 13(d) of
the Exchange Act), other than the Company (or one of its subsidiaries) or any
employee benefit plan sponsored by the Company (or one of its subsidiaries),
shall purchase securities pursuant to a tender offer or exchange offer to
acquire any common stock of the Company (or securities convertible into common
stock) for cash, securities or any other consideration, provided that after
consummation of the offer, the person in question is the beneficial owner (as
such term is defined in Rule 13d-3 under the Exchange Act), directly or
indirectly, of 15 percent or more of the combined voting power of
3
<PAGE> 30
the then-outstanding securities of the Company (as determined under paragraph
(d) of Rule 13d-3 under the Exchange Act, in the case of rights to acquire
common stock);
(iii) the stockholders of the Company shall approve (A) any
consolidation or merger of the Company (1) in which the Company is not the
continuing or surviving corporation, (2) pursuant to which shares of common
stock of the Company would be converted into cash, securities or other property,
or (3) with a corporation which prior to such consolidation or merger owned 15
percent or more of the cumulative voting power of the then-outstanding
securities of the Company, or (B) any sale, lease, exchange or other transfer
(in one transaction or a series of related transactions) of all or substantially
all the assets of the Company; or
(iv) there shall have been a change in a majority of the
members of the Board of Directors of the Company within a 12-month period,
unless the election or nomination for election by the Company's stockholders of
each new director during such 12-month period was approved by the vote of
two-thirds of the directors then still in office who were directors at the
beginning of such 12-month period.
4
<PAGE> 31
(d) Notwithstanding the foregoing, the issuance by the
Company of shares of Common Stock of the Company, $.01 par value per share,
convertible preferred stock of the Company, $.10 par value per share, and Class
B Warrants aggregating 15% or more of the combined voting power of the Company
to any one beneficial owner (as such term is used in Rule 13d-3 under the
Securities Exchange Act of 1934, as amended) who is a holder of claims or
interests pursuant to the First Amended Consolidated Plan of Reorganization of
the Company and certain of its affiliates, as modified, filed with the United
States Bankruptcy Court for the Southern District of New York (the "USH Plan")
in exchange for such claims or interests shall not be deemed to constitute a
Control Change unless such person subsequently increases its percentage
beneficial ownership above the percentage amount received pursuant to the USH
Plan. Shares of common stock, preferred stock and Class B Warrants acquired
pursuant to the USH Plan by creditors or stockholders for their claims or
interests, though less than 15% of the combined voting power of the Company,
shall be included in determining whether a person through acquisition of
additional shares, whether through purchase, exchange or otherwise, on or after
the Effective Date has
5
<PAGE> 32
subsequently become the beneficial owner of 15% or more of the combined voting
power of the Company, which shall, in such event, constitute a Control Change.
U.S. HOME CORPORATION
By
-----------------------------------
Name: Isaac Heimbinder
--------------------------
Title: President, Co-Chief
------------------------
Executive Officer and
------------------------
Chief Operating Officer
------------------------
EXECUTIVE:
--------------------------------------
Name: Robert J. Strudler
6
<PAGE> 1
AMENDED AND RESTATED EMPLOYMENT
AND CONSULTING AGREEMENT
AMENDED AND RESTATED EMPLOYMENT AND CONSULTING AGREEMENT, dated as of
October 17, 1995, by and between U.S. Home Corporation (the "Company"), and
Isaac Heimbinder (the "Executive").
WHEREAS, the Company and the Executive are parties to an Employment
and Consulting Agreement, dated May 12, 1986, as amended by (i) the First
Amendment to Employment and Consulting Agreement dated February 8, 1990, (ii)
the Second Amendment to Employment and Consulting Agreement, dated December 6,
1990, and (iii) the Third Amendment to Employment and Consulting Agreement,
dated May 25, 1993 (collectively, the "Agreement").
WHEREAS, the Company and the Executive desire to amend and restate the
Agreement as hereinafter provided.
WHEREAS, Section 7(c) of the Agreement permits such amendment by
written agreement of both parties.
NOW, THEREFORE, the Company and the Executive agree to amend and
restate the Agreement as follows:
1. Employment and Duties. The Company shall employ the Executive,
and the Executive shall be employed by the
<PAGE> 2
Company, as President, Co-Chief Executive Officer and Chief Operating Officer
at the Company's headquarters in Houston, Texas (or such other location as
shall be mutually satisfactory to the Executive and the Company) for the term
of this Agreement. In these capacities, the Executive shall devote
substantially all of his business time and energies to the business of the
Company and shall perform such services as shall from time to time be assigned
to him by the Board of Directors of the Company.
2. Term. The term of the Executive's employment hereunder shall
continue until June 20, 1999; provided, however, that, unless either party
otherwise elects by notice in writing delivered to the other at least 90 days
prior to June 20, 1999, or any subsequent anniversary of June 20, 1999, such
term shall be automatically renewed for successive one-year terms unless sooner
terminated by the Executive's voluntary resignation or otherwise terminated
pursuant to the terms of this Agreement (the "Employment Term").
3. Compensation and Benefits.
(a) Compensation. During each calendar year of the Employment
Term, the Company shall pay the Executive: (i) a base salary at a rate of
$415,000 per year (the "Base Salary"),
2
<PAGE> 3
payable in substantially equal biweekly installments, and (ii) any cash bonus
to which he is entitled pursuant to the provisions of Appendix A hereto,
payable as promptly as practicable after the end of each such calendar year,
but in any event by April 15 of the following year. Notwithstanding the
foregoing, if the Executive's applicable employee remuneration (as defined in
Section 162(m) of the Internal Revenue Code of 1986, as amended (the "Code"))
for any taxable year would exceed the higher of $1 million or the maximum
amount deductible by the Company under Section 162(m) for such taxable year,
the amount otherwise payable shall be reduced to the higher of $1 million or
the maximum amount deductible under Section 162(m) and the excess shall be
deferred until the expiration of the Employment Term and shall be payable in a
cash lump sum on April 16 of the first year of the Consultation Period. The
deferred compensation shall accrue interest at the same rate charged the
Company from time to time under the Credit Agreement, dated as of September 29,
1995, among the Company, the First National Bank of Chicago, as agent, and
certain lenders named therein, as amended, restated, supplemented or otherwise
modified from time to time, or any successor facility. The Executive's Base
Salary and bonus shall
3
<PAGE> 4
be reviewed at least annually by the Board of Directors of the Company, or
pursuant to its delegation, and (i) at a minimum, the Board shall increase the
Base Salary annually commencing with the 1996 calendar year by an amount
determined by multiplying the current Base Salary by the percentage increase in
the Consumer Price Index -- U.S. City Average published by the Bureau of Labor
Statistics of the United States Department of Labor (or if that Index is no
longer published, by any substantially equivalent successor thereto) (the
"Consumer Price Index") in the preceding calendar year and (ii) the Board may
increase the bonus from time to time.
(b) Stock Options. On October 17, 1995, the Executive was granted
an option (the "Option") to purchase 50,000 shares of the Company's common
stock, $.01 par value per share (the "Common Stock"), pursuant to the Company's
1993 Employee's Stock Option Plan. Such Option shall be an "incentive stock
option" within the meaning of Section 422 of the Code to the extent permitted
by Section 422(d) of the Code; to the extent not permitted by Section 422(d),
the remaining portion of the Option shall be a nonqualified stock option. The
Option shall be for a
4
<PAGE> 5
term of ten years from, and shall be exercisable immediately at the fair market
value of the Common Stock on, the date of grant.
(c) Retirement Benefit.
(i) In consideration of the Executive's past services to the
Company, the Executive shall be entitled to a retirement benefit, payable
monthly for his life, in an amount equal to 50 percent of his highest monthly
Base Salary during the Employment Term. Such payments shall commence on the
first day of the month coincident with or next following the later of the
Executive's attainment of age 58 or the end of the Employment Term (the
"Commencement Date"); provided, however, that if the Employment Term terminates
prior to his attainment of age 58, the Executive may elect by written notice to
the Company to have such payments commence on the first day of any month after
such termination of employment (the "Early Commencement Date") in a monthly
amount equal to the monthly amount that the Executive would have received at
the Commencement Date, reduced by one-third of one percent (.33%) per month for
each month by which the Early Commencement Date precedes the Commencement Date.
The amount of each payment hereunder shall be increased on each January 1
following the Early Commencement Date or Commencement
5
<PAGE> 6
Date, as applicable, by an amount determined by multiplying the amount of each
monthly payment made in the preceding year by the percentage increase, if any,
in the cost of living from the preceding January 1, as reflected by the
Consumer Price Index. The Executive's election to have his retirement benefit
payments commence on the Early Commencement Date shall not affect the Company's
obligation to pay consulting fees to the Executive in accordance with Section 4
hereof.
The retirement benefit shall be an unconditional, but
unsecured, general credit obligation of the Company to the Executive, and
nothing contained in this Agreement, and no action taken pursuant to it, shall
create or be construed to create a trust of any kind between the Company and
the Executive. The Executive shall have no right, title or interest whatever
in or to any investments which the Company may make (including, but not limited
to, an insurance policy on the life of the Executive) to aid it in meeting its
obligations hereunder.
(ii) From time to time, the Company shall make such
contributions to the trust established under the Trust Agreement dated as of
December 18, 1986 (the "1986 Trust")
6
<PAGE> 7
between the Company, as grantor, and William E. Reichard, as successor trustee,
to provide a sufficient reserve for the discharge of its obligation to pay the
retirement benefit to the Executive as provided in clause (i) of this Section
3(c) and clauses (ii) and (iii) of Section 5(a) hereof.
(d) Expense Reimbursement. The Company shall promptly pay, or
reimburse the Executive for, all ordinary and necessary business expenses
incurred by him in the performance of his duties hereunder, provided that the
Executive properly accounts for them in accordance with Company policy.
(e) Other Benefit Plans, Fringe Benefits, and Vacations.
(i) The Executive shall be eligible to participate in each of
the Company's present employee benefit plans, policies or arrangements and any
such plans, policies or arrangements that the Company may maintain or establish
during the Employment Term and receive all fringe benefits and vacations for
which his position makes him eligible in accordance with the Company's usual
policies and the terms and provisions of such plans, policies or arrangements.
7
<PAGE> 8
(ii) The Company shall not terminate or change, in such a way
as to adversely affect the Executive's rights or reduce his benefits, any
employee benefit plan, policy or arrangement now in effect or which may
hereafter be established and in which the Executive is eligible to participate,
including, without limitation, the Company's profit sharing, life insurance,
disability and stock option plans, unless a plan, policy or arrangement
providing the Executive with at least equivalent rights and benefits has been
established.
(iii) From and after the last day of the Employment Term, the
Executive shall be entitled to participate in each of the Company's employee
benefit plans, policies or arrangements which provide medical coverage and
similar benefits to the Company's executive officers (the "Company Medical
Plan") on the same basis as the Company's other executive officers. The
Company shall bear the cost of medical coverage and benefits during the
Consultation Period (as defined below); thereafter, the Executive shall bear
such cost. After the Executive is eligible for Medicare and the Company
becomes a secondary payor (or its equivalent) pursuant to Medicare or other
applicable law, the Company shall provide secondary medical coverage and
8
<PAGE> 9
benefits. If coverage under the Company Medical Plan is not possible under
the terms of any insurance policy or applicable law following the Employment
Term, the Company shall provide the Executive with coverage equivalent to that
provided to the Company's other executive officers under a policy or
arrangement acceptable to the Executive. In the event of the Executive's death
before the end of the Consultation Period, the Company shall continue to
provide such primary and secondary medical coverage, as applicable, and
benefits to the Executive's spouse and dependents for the remainder of the
Consultation Period on the same basis as provided to the Company's other
executive officers.
4. Consultation Period. From and after the last day of the
Employment Term and for a period of five years thereafter (the "Consultation
Period"), the Executive shall serve as a consultant to the Company with respect
to such business matters and at such times (not more than four days per month
and not more than two consecutive days per week) as the Company may reasonably
request within Harris County, Texas, provided, however, that if the Consultant
does not reside in Harris County, he may perform his consulting duties
hereunder at his then place of residence
9
<PAGE> 10
and shall be required to come to Harris County not more than one day in each
calendar month. During the Consultation Period, the Company shall pay the
Executive (in addition to any other amounts to which he is entitled pursuant to
this Agreement) a consulting fee, in substantially equal biweekly installments,
at the rate of $134,260 per year increased by an amount determined by
multiplying $134,260 by the percentage increase, if any, in the cost of living
between January 1, 1995 and the January 1 immediately preceding the date of
commencement of the Consultation Period, as reflected by the Consumer Price
Index. The amount of the consulting fee shall be increased on each January 1
during the Consultation Period by an amount determined by multiplying the
amount of the consulting fee paid in the preceding year by the percentage
increase, if any, in the cost of living from the preceding January 1, as
reflected by the Consumer Price Index. During the Consultation Period, the
Executive shall not be required to undertake any assignment inconsistent with
the dignity, importance and scope of his prior positions or with his physical
and mental health at the time. It is expressly understood between the parties
that during the Consultation Period, the Executive shall be an independent
contractor and
10
<PAGE> 11
shall not be subject to the direction, control, or supervision of the Company.
The provisions of Sections 5, 6 and 7 hereof shall continue to apply to the
Executive during the Consultation Period.
5. Termination.
(a) Death and Disability.
(i) The Executive's employment hereunder shall terminate upon
his death or upon his becoming Totally Disabled. For purposes of this
Agreement, the Executive shall be "Totally Disabled" if he is physically or
mentally incapacitated so as to render him incapable of performing his usual
and customary duties as an executive (for the Company or otherwise). The
Executive's receipt of Social Security disability benefits shall be deemed
conclusive evidence of Total Disability for purposes of this Agreement;
provided, however, that in the absence of his receipt of such Social Security
benefits, the Board of Directors of the Company may, in its sole discretion,
but based upon appropriate medical evidence, determine that the Executive is
Totally Disabled.
(ii) In the event that the Executive is Totally Disabled
before his retirement benefit pursuant to
11
<PAGE> 12
Section 3(c) hereof has commenced to be distributed (whether or not he is in
the employ of the Company at the time he is so Totally Disabled), such benefit
shall commence to be distributed to him on the first day of the month next
following his Total Disability, as if such payments had commenced at his
Commencement Date. In the event of the Executive's death (while Totally
Disabled or otherwise) after his retirement benefit has commenced to be
distributed pursuant to Section 3(c) hereof or subparagraph (ii) above, as
applicable, the Company shall continue to pay such retirement benefit to his
Beneficiary for her life. If the Executive's retirement benefit pursuant to
Section 3(c) hereof has not commenced to be distributed on the date of his
death, such benefit shall commence to be distributed to his Beneficiary for her
life on the first day of the month next following his date of death, as if such
payments had commenced at his Commencement Date. For purposes of this
Agreement, the Executive's "Beneficiary" shall be deemed to be his spouse; if
his spouse predeceases him (or if he is not married at the time of his death),
his Beneficiary shall be deemed to be his estate which shall receive, in lieu
of the payments otherwise payable to the Executive's spouse hereunder, a lump
sum cash payment equal
12
<PAGE> 13
to the actuarial present value (determined on the basis of a 6 percent per
annum interest rate assumption and no decrement for mortality) of the payments
that would have been made to a spouse for her life, assuming that such spouse
was three years younger than the Executive on his date of death. If the
Executive predeceases his spouse, upon her death, a lump sum cash payment equal
to the amount of any cash and the present value of all property (including any
annuity contracts) owned by the 1986 Trust as of the date of the Executive's
death shall be paid by the Company to his spouse's estate or any beneficiary or
beneficiaries designated in her last will and testament as soon as practicable
after such calculation is completed. The actuarial present value of any
annuity contracts shall be calculated by the insurance company that issued such
contract or, if any such insurance company cannot supply such present value, by
an enrolled actuary.
(b) For Cause. The Executive's employment hereunder may be
terminated for Cause. For purposes of this Agreement, the term "Cause" shall
mean (i) the Executive's continuing willful failure to perform his duties
hereunder (other than as a result of total or partial incapacity due to
physical
13
<PAGE> 14
or mental illness), (ii) gross negligence or malfeasance by the Executive in
the performance of his duties hereunder, (iii) an act or acts on the
Executive'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 Executive at the expense of
the Company, or (iv) breach of the provisions of Section 6(b) hereof.
(c) Without Cause. If the Executive's employment or his retention
as a consultant hereunder is terminated without Cause, as soon as practicable
(but not later than 30 days) after such termination, he shall receive a lump
sum cash payment equal to the sum of: (i) an amount equal to his highest
monthly Base Salary during the Employment Term prior to such termination
multiplied by the number of months remaining in the Employment Term (but by not
less than thirty-six months if such termination occurs during the Employment
Term); (ii) if such termination occurs during the Employment Term, an amount
equal to the bonuses paid pursuant to Section 3(a)(ii) hereof and Appendix A
hereto or otherwise, whether or not deferred, in respect of the most recently
completed three calendar years; (iii) an amount equal to the actuarial present
value (determined on the basis of
14
<PAGE> 15
a 6 percent per annum interest rate assumption and no decrement for mortality)
of the retirement benefit payments payable to him under Section 3(c),
commencing on the Commencement Date (or if such payments have commenced, such
actuarial present value of the remaining payments); and (iv) an amount equal to
the consulting fees due him under Section 4 for the term or remainder of the
Consultation Period. For purposes of this Agreement, the Executive will be
deemed to be terminated without Cause upon the (i) failure to elect the
Executive to the office of chairman and chief executive officer of the Company
in the event of a vacancy in such office for any reason and (ii) resignation of
the Executive within 180 days of such vacancy.
(d) Change in Control.
(i) If a Change in Control Event (as defined in Appendix B
hereto) occurs, the Executive shall (A) if he so elects by written notice to
the Company within 360 days after such Change in Control Event, be entitled to
terminate his employment, if not already terminated by the Company, and, in
either event, receive the amounts set forth in paragraph (c) above (excluding
the amount of the retirement benefit described in Section 5(c)(iii)) within the
time period specified in
15
<PAGE> 16
subparagraph (iii) below, as if the Company had terminated his employment
without Cause, and (B) if he so elects by written notice to the Company within
360 days after the occurrence of such Change in Control Event, cause the
Company to purchase the Executive's principal residence at its fair market
value. For purposes of this Agreement, such fair market value shall be
determined by two independent real estate firms, one of which shall be selected
by the Executive and one by the Company. If such real estate firms fail to
agree on such fair market value, the two firms so selected shall select a third
firm mutually acceptable to them and such third firm's determination of fair
market value shall be binding for all purposes.
(ii) Notwithstanding anything to the contrary herein, if the
aggregate amounts payable pursuant to subparagraph (i) of paragraph (d) hereof
would cause any payment under such subparagraph (i) to be subject to an excise
tax as an "excess parachute payment" under Section 4999 of the Code, such
aggregate amounts payable hereunder shall be reduced by the smallest amount
necessary to ensure that no payment hereunder shall be so treated under such
Section 4999. Prior to effecting such reduction, the Company shall give the
Executive 30 days'
16
<PAGE> 17
written notice of the fact, amount and basis of such reduction, as well as a
determination of the shortest period of time over which such aggregate amounts
may be paid and not be treated as "excess parachute payments." The Executive
shall then have 30 days within which to elect in writing to (A) receive a lump
sum payment, reduced pursuant to the first sentence hereof, or (B) receive the
aggregate amounts payable pursuant to subparagraph (i) hereof in annual
installments over the time period set forth in the Company's notice. In making
the determinations called for in this subparagraph (ii), the parties hereto
shall rely conclusively on (1) the opinion of Hay-Huggins, or such other
consulting firm as the Company shall designate (with the written consent of the
Executive) within one year of the date hereof, as to the amount of the
Executive's compensation which constitutes "reasonable compensation" for
purposes of Section 280G of the Code, and (2) the opinion of Kwasha Lipton, or
such other actuarial firm as the Company shall designate (with the written
consent of the Executive) within one year of the date hereof, as to any present
value calculations under Section 280G of the Code. The Company shall bear all
costs associated with obtaining such opinions.
17
<PAGE> 18
(iii) The amounts payable pursuant to this paragraph (d)
shall be paid (or commence to be paid) to the Executive not later than 10 days
after he notifies the Company under subparagraph (ii) above whether he wishes
to receive such amounts in a lump sum or in installments or if no notice is
given by the Company under subparagraph (ii) above, within 30 days after the
Executive gives notice to the Company under subparagraph (i) above.
(iv) In addition to all other rights granted the Executive
under this paragraph (d), if a Control Change (as defined in paragraph (c) of
Appendix B hereto) occurs, the Executive shall be entitled to elect to
terminate his employment upon written notice to the Company, effective not more
than 10 days after such an election. In such event, (A) the Consultation
Period shall commence immediately upon termination of employment and shall
cease five years thereafter, (B) the Executive shall be entitled to elect at
any time to have payment of his retirement benefit commence on the Early
Commencement Date in an amount determined in accordance with the provisions of
Section 3(c) hereof, and (C) the Company shall promptly, but not later than 10
days after such election, transfer sufficient assets to the 1986
18
<PAGE> 19
Trust so that the assets of the 1986 Trust are then sufficient to discharge the
obligations for the consulting fees and retirement benefits due him in full.
6. Covenants.
(a) Confidentiality. The Executive acknowledges that he has
acquired and will acquire confidential information respecting the business of
the Company. Accordingly, the Executive agrees that, without the written
consent of the Company as authorized by its Board of Directors, he will not, at
any time, willfully disclose any such confidential information to any
unauthorized third party with an intent that such disclosure will result in
financial benefit to the Executive or to any person other than the Company.
For this purpose, information shall be considered confidential only if such
information is uniquely proprietary to the Company and has not been made
publicly available prior to its disclosure by the Executive.
(b) Competitive Activity. Until the end of the Consultation
Period, the Executive shall not, without the consent of the Board of Directors
of the Company, directly or indirectly, knowingly engage or be interested in
(as owner, partner, shareholder, employee, director, officer, agent, consultant
or
19
<PAGE> 20
otherwise), with or without compensation, any business which (i) is in
competition with any line of business being actively conducted by the Company
or any of its affiliates or subsidiaries during the Employment Term or
Consultation Period, or (ii) shall hire any person who was employed by the
Company or any of its affiliates or subsidiaries within the six-month period
preceding such hiring, except for any employee whose annual rate of
compensation is not in excess of $55,000. Nothing herein, however, shall
prohibit the Executive from acquiring or holding not more than one percent of
any class of publicly traded securities of any such business.
(c) Remedy for Breach. The Executive acknowledges that the
provisions of this Section 6 are reasonable and necessary for the protection of
the Company and that the Company will be irrevocably damaged if such covenants
are not specifically enforced. Accordingly, the Executive agrees that, in
addition to any other relief to which the Company may be entitled, the Company
shall be entitled to seek and obtain injunctive relief (without the requirement
of any bond) from a court of competent jurisdiction for the purposes of
restraining the Executive from any actual or threatened breach of such
20
<PAGE> 21
covenants. Notwithstanding anything to the contrary herein, the provisions of
this Section 6 shall cease to apply to the Executive if his employment
hereunder terminates without Cause or following a Change in Control Event. In
addition, in the event that the Executive breaches the provisions of this
Section 6 during the Consultation Period, the Company's sole remedy shall be to
terminate the Executive for Cause.
7. Miscellaneous.
(a) Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware applicable to
agreements made and to be performed in that State.
(b) Notices. Any notice, consent or other communication made or
given in connection with this Agreement shall be in writing and shall be deemed
to have been duly given when delivered by United States registered or certified
mail, return receipt requested, to the parties at the following addresses or at
such other address as a party may specify by notice to the other.
21
<PAGE> 22
To the Executive:
2 Glendennig
Houston, Texas 77252
To the Company:
U.S. Home Corporation
1800 West Loop South
Houston, Texas 77252
Attention: Secretary
(c) Entire Agreement; Amendment. This Agreement shall supersede
any and all existing agreements between the Executive and the Company or any of
its affiliates or subsidiaries relating to the terms of his employment. It may
not be amended except by a written agreement signed by both parties.
(d) Waiver. The failure of a party to insist upon strict
adherence to any term of this Agreement on any occasion shall not be considered
a waiver thereof or deprive that party of the right thereafter to insist upon
strict adherence to that term or any other term of this Agreement.
(e) Assignment. Except as otherwise provided in this paragraph,
this Agreement shall inure to the benefit of and be binding upon the parties
hereto and their respective heirs, representatives, successors and assigns.
This Agreement shall
22
<PAGE> 23
not be assignable by the Executive, and shall be assignable by the Company only
to any corporation or other entity resulting from the reorganization, merger or
consolidation of the Company with any other corporation or entity or any
corporation or entity to which the Company may sell all or substantially all of
its assets, and it must be so assigned by the Company to, and accepted as
binding upon it by, such other corporation or entity in connection with any
such reorganization, merger, consolidation or sale.
(f) Litigation Costs. In the event that the Executive shall
successfully prosecute a judicial proceeding to enforce any provision of this
Agreement, in addition to any other relief awarded the Executive by the court
in such action, the parties agree that the judgment rendered shall award the
Executive all of his attorneys' fees, disbursements and other costs incurred by
the Executive in prosecuting such suit.
(g) Separability. If any provision of this Agreement is invalid
or unenforceable, the balance of the Agreement shall remain in effect, and if
any provision is inapplicable to any person or circumstance, it shall
nevertheless remain applicable to all other persons and circumstances.
23
<PAGE> 24
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement and Appendices A and B thereto as evidence of their adoption this
17th day of October, 1995.
U.S. HOME CORPORATION
By -----------------------------
Name: Robert J. Strudler
------------------------
Title: Chairman and Co-Chief
------------------------
Executive Officer
------------------------
EXECUTIVE:
--------------------------------
Name: Isaac Heimbinder
24
<PAGE> 25
Appendix A
This Appendix A is attached to and shall form a part of the Amended
and Restated Employment and Consulting Agreement, dated October 17, 1995, by
and between U.S. Home Corporation (the "Company"), and Isaac Heimbinder (the
"Executive").
(a) The Executive's bonus, if any, for each calendar year during
the Employment Term commencing with the 1995 calendar year shall be an amount
equal to: 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
(i) 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
(ii) one percent (1%) of the Company's Pre-Tax Income for
such year in excess of $20,000,000.
(b) In the event that the Executive's employment hereunder is
terminated for any reason prior to the end of a calendar year, including the
expiration of the Employment Term, his bonus for such year shall be an amount,
estimated in good faith by the Board of Directors of the Company based on
1
<PAGE> 26
reasonable assumptions and projections, but without the benefit of the report
referred to in paragraph (c) below, equal to the bonus otherwise determined
pursuant to this Appendix A, multiplied by a fraction, the numerator of which
is the number of calendar months during such year in which the Executive was
employed by the Company for at least one business day, and the denominator of
which is 12.
(c) For purposes of this Agreement, the Company's "Pre-Tax Income"
for any year shall mean the income of the Company and its consolidated and
unconsolidated subsidiaries for such year, as reported by the Company and
certified by its independent certified public accountants, except that no
deduction shall be made for the bonus payable pursuant to this Appendix A and
Section 3(a)(ii) hereof for such year or for Federal income and State and local
franchise, gross receipts, or income taxes.
U.S. HOME CORPORATION
By ----------------------------
Name: Robert J. Strudler
-----------------------
Title: Chairman and Co-Chief
-----------------------
Executive Officer
-----------------------
EXECUTIVE:
-------------------------------
Name: Isaac Heimbinder
2
<PAGE> 27
Appendix B
This Appendix B is attached to and shall form a part of the Amended
and Restated Employment and Consulting Agreement, dated October 17, 1995, by
and between U.S. Home Corporation (the "Company"), and Isaac Heimbinder (the
"Executive").
(a) For purposes of this Agreement, a "Change in Control Event"
shall occur when a "Control Change" (as defined in paragraph (c) below) is
followed within two years by a "Material Change" (as defined in paragraph (b)
below).
(b) A "Material Change" shall occur if:
(i) the Executive's employment hereunder is terminated
without Cause;
(ii) the Company makes any change in the Executive's
functions, duties or responsibilities from the position that the Executive
occupied on the date hereof or, if this Agreement has been renewed or extended,
the date of the last renewal or extension, but only if such change would cause:
(A) the Executive to report to anyone other than the
Chairman of the Board of Directors who is also the Co-Chief Executive Officer,
1
<PAGE> 28
(B) the Executive to no longer be the President, Co-Chief
Executive Officer and Chief Operating Officer of the Company,
(C) even if the Executive maintains the positions of
President, Co-Chief Executive Officer and Chief Operating Officer, his
responsibilities to be reduced from those in effect on the date hereof or the
date of the last renewal or extension of this Agreement, as applicable, or to
be no longer commensurate with those of the Co-Chief Executive Officer and
Chief Operating Officer of a company with gross annual sales of at least $800
million, or
(D) the Executive's position with the Company to become
one of lesser importance or scope;
(iii) the Company assigns or reassigns the Executive
(without his written permission) to another place of employment which is more
than 10 miles from his place of employment on the date hereof or the date of
the last renewal or extension of this Agreement, as applicable, and which is
not the corporate headquarters of the Company; or
(iv) the Company reduces the Executive's Base Salary or
otherwise breaches the terms of this Agreement.
2
<PAGE> 29
(c) A "Control Change" shall occur if:
(i) a report on Schedule 13D is filed with the Securities and
Exchange Commission pursuant to Section 13(d) of the Securities Exchange Act of
1934 (the "Exchange Act") disclosing that any person (within the meaning of
Section 13(d) of the Exchange Act), other than the Company (or one of its
subsidiaries) or any employee benefit plan sponsored by the Company (or one of
its subsidiaries), is the beneficial owner, directly or indirectly, of 15
percent or more of the combined voting power of the then-outstanding securities
of the Company;
(ii) any person (within the meaning of Section 13(d) of the
Exchange Act), other than the Company (or one of its subsidiaries) or any
employee benefit plan sponsored by the Company (or one of its subsidiaries),
shall purchase securities pursuant to a tender offer or exchange offer to
acquire any common stock of the Company (or securities convertible into common
stock) for cash, securities or any other consideration, provided that after
consummation of the offer, the person in question is the beneficial owner (as
such term is defined in Rule 13d-3 under the Exchange Act), directly or
indirectly, of 15 percent or more of the combined voting power of
3
<PAGE> 30
the then-outstanding securities of the Company (as determined under paragraph
(d) of Rule 13d-3 under the Exchange Act, in the case of rights to acquire
common stock);
(iii) the stockholders of the Company shall approve (A) any
consolidation or merger of the Company (1) in which the Company is not the
continuing or surviving corporation, (2) pursuant to which shares of common
stock of the Company would be converted into cash, securities or other
property, or (3) with a corporation which prior to such consolidation or merger
owned 15 percent or more of the cumulative voting power of the then-outstanding
securities of the Company, or (B) any sale, lease, exchange or other transfer
(in one transaction or a series of related transactions) of all or
substantially all the assets of the Company; or
(iv) there shall have been a change in a majority of the
members of the Board of Directors of the Company within a 12-month period,
unless the election or nomination for election by the Company's stockholders of
each new director during such 12-month period was approved by the vote of
two-thirds of the directors then still in office who were directors at the
beginning of such 12-month period.
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<PAGE> 31
(d) Notwithstanding the foregoing, the issuance by the Company of
shares of common stock of the Company, $.01 par value per share, convertible
preferred stock of the Company, $.10 par value per share, and Class B Warrants
aggregating 15% or more of the combined voting power of the Company to any one
beneficial owner (as such term is used in Rule 13d-3 under the Securities
Exchange Act of 1934, as amended) who is a holder of claims or interests
pursuant to the First Amended Consolidated Plan of Reorganization of the
Company and certain of its affiliates, as modified, filed with the United
States Bankruptcy Court for the Southern District of New York (the "USH Plan")
in exchange for such claims or interests shall not be deemed to constitute a
Control Change unless such person subsequently increases its percentage
beneficial ownership above the percentage amount received pursuant to the USH
Plan. Shares of common stock, preferred stock and Class B Warrants acquired
pursuant to the USH Plan by creditors or stockholders for their claims or
interests, though less than 15% of the combined voting power of the Company,
shall be included in determining whether a person through acquisition of
additional shares, whether through purchase, exchange or otherwise, on or after
the Effective Date has
5
<PAGE> 32
subsequently become the beneficial owner of 15% or more of the combined voting
power of the Company, which shall, in such event, constitute a Control Change.
U.S. HOME CORPORATION
By -------------------------------
Name: Robert J. Strudler
---------------------------
Title: Chairman and
---------------------------
Co-Chief Executive
---------------------------
Officer
EXECUTIVE:
----------------------------------
Name: Isaac Heimbinder
6
<PAGE> 1
FIRST AMENDMENT TO FIRST AMENDED AND RESTATED
WAREHOUSING CREDIT AND SECURITY AGREEMENT
THIS FIRST AMENDMENT TO FIRST AMENDED AND RESTATED WAREHOUSING
CREDIT AND SECURITY AGREEMENT (this "Amendment") is entered into as
of this 27th day of December, 1995 by and between U.S. HOME MORTGAGE
CORPORATION, a Florida corporation (the "Company") and RESIDENTIAL
FUNDING CORPORATION, a Delaware corporation (the "Lender").
WHEREAS, the Company and the Lender have entered into a single
family revolving warehouse facility with a present Commitment
Amount of Thirty-Five Million Dollars ($35,000,000), to finance the
origination and acquisition of Mortgage Loans as evidenced by a
Warehousing Promissory Note in the principal sum of Thirty-Five
Million Dollars ($35,000,000), and a Construction Promissory Note
in the principal sum of Five Million Dollars ($5,000,000), each
dated as of August 31, 1995 (the "Notes"), and by a First Amended
and Restated Warehousing Credit and Security Agreement dated as of
August 31, 1995, as the same may have been amended or supplemented
(the "Agreement"); and
WHEREAS, the Company has requested the Lender to amend the
Agreement to provide for the warehousing of commercial mortgage
loans and to increase the Commitment Amount, and the Lender has
agreed to such amendment of the Agreement and increase of the
Commitment subject to the terms and conditions of this Amendment.
NOW, THEREFORE, for and in consideration of the foregoing and
of the mutual covenants, agreements and conditions hereinafter set
forth and for other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the parties
hereto hereby agree as follows:
1. All capitalized terms used herein and not otherwise
defined shall have their respective meanings set forth in the
Agreement.
2. The effective date ("Effective Date") of this Amendment
shall be 12/27/95, the date on which the Company has complied
with all the terms and conditions of this Amendment.
3. Section 1.1 of the Agreement shall be amended by adding
the following definitions in the appropriate alphabetical order:
"First Mortgage" means a Mortgage which constitutes a
first Lien on the property covered thereby.
"First Mortgage Loan" means a Mortgage Loan secured by a
First Mortgage.
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<PAGE> 2
"Unimproved Advance" means an Advance made against an
Unimproved Mortgage Loan and readvances of funds previously
advanced to the Company and repaid to the Lender.
"Unimproved Mortgage Loans" means a Mortgage Loan secured
by a First Mortgage on unimproved real property intended for
commercial or residential development and used by the
mortgagor to finance the acquisition of such real property.
"Unimproved Rate" means a floating rate of interest per
annum equal to two and one-half percent (2.50%) over LIBOR.
The Unimproved Rate shall be adjusted on and as of the
effective date of each weekly change in LIBOR. The Lender's
determination of the Unimproved Rate as of any date of
determination shall be conclusive and binding, absent manifest
error.
4. Section 1.1 of the Agreement is hereby amended to delete
the definition of "Commitment Amount" in its entirety and to
substitute the following in lieu thereof:
"Commitment Amount" means Forty-Five Million Dollars
($45,000,000).
5. Sections 2.1(b)(1) - (7) of the Agreement shall be
deleted in their entirety and the following shall be substituted in
lieu thereof:
(1) No Advance shall be made against a
Mortgage Loan other than a Single-family Mortgage
Loan, a Construction/Perm Mortgage Loan or an
Unimproved Mortgage Loan, no Construction Advance
shall be made against a Construction/Perm Mortgage
Loan which is not secured by a single-family
detached dwelling and no Unimproved Advance shall
be made against any Unimproved Mortgage Loan
without the prior approval of the Lender, which may
be given or withheld in its sole and absolute
discretion.
(2) No Advance shall be made against a
Mortgage Loan, other than an Unimproved Mortgage
Loan, which is not covered by a Purchase
Commitment.
(3) No Advance shall be made against a Home
Equity Mortgage Loan.
(4) The aggregate amount of Wet Settlement
Advances outstanding at any one time shall not
exceed thirty-five percent (35%) of the Commitment
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<PAGE> 3
Amount. No Wet Settlement Advance shall be made
against an Unimproved Mortgage Loan.
(5) The aggregate amount of Construction
Advances outstanding at any one time shall not
exceed Five Million Dollars ($5,000,000).
(6) The aggregate amount of Nonconforming
Advances outstanding at any one time shall not
exceed One Million Dollars ($1,000,000).
(6) The aggregate amount of Unimproved
Advances outstanding at any one time shall not
exceed Ten Million Dollars ($10,000,000).
(7) No Advance (other than a Construction
Advance or an Unimproved Advance) shall be made
against any Mortgage Loan which was closed more
than ninety (90) days prior to the date of the
requested Advance.
(8) No Advance shall be made against an
Unimproved Mortgage Loan (i) if the original
principal amount of such Unimproved Mortgage Loan
exceeded eighty percent (80%) of the purchase price
paid by the mortgage for the property securing such
Unimproved Mortgage Loan, (ii) in the case of an
Unimproved Mortgage Loan secured by property
intended for commercial development, if the
Mortgage Note Amount exceeds eighty percent (80%)
of the fair market value of such property as
determined by the Lender, in its reasonable
judgment, or (iii) unless all payments which were
due and payable under the related Unimproved
Mortgage Loan on or prior to the date of such
Advance have been made.
6. Section 2.1(c) of the Agreement is hereby amended by
adding the following Section immediately after Section 2.1(c)(3):
(4) For an Unimproved Mortgage Loan pledged
hereunder, seventy-five percent (75%) of the
Mortgage Note Amount.
7. Sections 2.2(a) or 2.2(d) of the Agreement shall be
deleted in their entirety and the following shall be substituted in
lieu thereof:
(a) The Company may obtain an Advance hereunder,
subject to the satisfaction of the conditions set forth
in Sections 4.1 and 4.2 hereof, upon compliance with the
procedures set forth in this Section 2.2 and in
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<PAGE> 4
Exhibit D-SF with respect to Ordinary Warehousing
Advances and Nonconforming Advances, Exhibit
D/CONSTRUCTION with respect to Construction Advances, and
Exhibit D-UNI with respect to Unimproved Advances,
attached hereto and made a part hereof including the
delivery of all documents listed in Exhibit D-SF, Exhibit
D-SF/CONSTRUCTION or Exhibit D-UNI (the "Collateral
Documents") to the Lender. Requests for Advances (other
than Construction Advances and Unimproved Advances) shall
be initiated by the Company by delivering to the Lender,
no later than one (1) Business Day prior to any Business
Day that the Company desires to borrow hereunder, a
completed and signed request for an Advance (an "Advance
Request") on the then current form approved by the
Lender. Requests for Construction Advances shall be
initiated by the Company by delivering to the Lender, no
later than two (2) Business Days prior to any Business
Day that the Company desires to borrower hereunder, a
completed and signed request for a Construction Advance
(a "Construction Advance Request"). Requests for
Unimproved Advances shall be initiated by the Company by
delivering to the Lender, no later than (i) in the case
of the initial Unimproved Advances, one (1) Business Day,
and (ii) in the case of all subsequent Unimproved
Advances, five (5) Business Days, prior to any Business
Day that the Company desires to borrow hereunder, a
completed and signed request for an Unimproved Advance
(an "Unimproved Advance Request"). The current forms in
use by the Lender are Exhibit C-SF for Ordinary
Warehousing Advances and Nonconforming Advances, Exhibit
C-SF/CONSTRUCTION for Construction Advances and Exhibit
C-UNI for Unimproved Advances, attached hereto and made
a part hereof. The Lender shall have the right, on not
less than three (3) Business Days' prior Notice to the
Company, to modify any of said Exhibits to conform to
current legal requirements or Lender practices, and, as
so modified, said Exhibits shall be deemed a part hereof.
2.2(d) The Company shall hold in trust for the
Lender, and the Company shall deliver to the Lender
promptly upon request, or within one hundred twenty (120)
days from the date an Advance was made against such
Pledged Mortgage and the Pledged Mortgage is not being
held by an Investor for purchase or has not been redeemed
from pledge, the following: (1) the originals of the
Collateral Documents for which copies are required to be
delivered to the Lender pursuant to Exhibit D-SF, Exhibit
D-SF/CONSTRUCTION or Exhibit D-UNI, as the case may be,
(2) the original lender's ALTA Policy of Title Insurance
or an equivalent thereto, and (3) any other documents
relating to a Pledged Mortgage which the Lender may
request, including, without limitation, documentation
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<PAGE> 5
evidencing the following, if applicable: the FHA
Commitment to Insure or the VA Guaranty of any Pledged
Mortgage which is either FHA insured or VA guaranteed,
the appraisal, Private Mortgage Insurance Certificate,
the Regulation Z Statement, certificates of casualty or
hazard insurance, credit information on the maker of each
such Mortgage Note, a copy of a HUD-1 or corresponding
purchase advice and other documents of all kinds which are
customarily desired for inspection or transfer incidental
to the purchase of any Mortgage Note by an Investor and
any additional documents which are customarily executed
by the seller of a Mortgage Note to an Investor.
8. Section 2.3 of the Agreement shall be deleted in its
entirety and the following shall be substituted in lieu thereof:
2.3 Notes. The Company's Obligations in respect of
Ordinary Warehousing Advances and Nonconforming Advances shall
be evidenced by a Warehousing Promissory Note of the Company,
and the Company's Obligations in respect of Construction
Advances and Unimproved Advances shall be evidenced by a
Sublimit Promissory Note of the Company. Each note is dated
as of the date hereof (the Warehousing Promissory Note and
Sublimit Promissory Note are collectively referred to as the
"Notes"). The terms "Warehousing Promissory Note", "Sublimit
Promissory Note," "Note" or "Notes" shall include all
extensions, renewals and modifications of the Notes and all
substitutions therefor. All terms and provisions of the Notes
are hereby incorporated herein.
9. Section 2.4(c) of the Agreement shall be deleted in its
entirety and the following shall be substituted in lieu thereof:
(c) Prior to the occurrence of an Event of Default,
the unpaid amount of (i) each Construction Advance (net
of applicable Buydown) shall bear interest, from the date
of such Construction Advance until paid in full, at the
Construction Rate, and (ii) each Unimproved Advance (net
of applicable Buydown) shall bear interest, from the date
of such Unimproved Advance until paid in full, at the
Unimproved Rate.
10. Sections 2.5(d)(1), (6), (8) and (9) of the Agreement
shall be deleted in their entirety and the following shall be
substituted in lieu thereof:
(1) For a Mortgage Loan, other than a
Construction/Perm Mortgage Loan or an Unimproved
Mortgage Loan, one hundred twenty (120) days elapse
from the date of the initial Advance made by the
Lender against such Pledged Mortgage, whether or
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<PAGE> 6
not such Pledged Mortgage is included in an
Eligible Mortgage Pool.
(6) The Mortgage Loan is (i) in the case of
an Unimproved Mortgage Loan, delinquent (without
giving effect to any grace period) and remains
delinquent for a period of thirty (30) days or
more, and (ii) in all other cases, defaulted and
remains in default for a period of sixty (60) days
or more.
(8) If the outstanding Advances against
Pledged Mortgages of a specific Mortgage Loan type
(other than Unimproved Mortgage Loan) exceed the
aggregate Purchase Commitments for such Mortgage
Loan type.
(9) For a Mortgage Loan, other than a
Unimproved Mortgage Loan, three (3) Business Days
after the mandatory delivery date of the related
Purchase Commitment and the specific Pledged
Mortgage was not delivered under the Purchase
Commitment prior to such mandatory delivery date,
or the Purchase Commitment is terminated; unless in
each case, such Pledged Mortgage is eligible for
delivery to an Investor under a comparable Purchase
Commitment acceptable to the Lender.
11. Sections 2.5(f) and (h) of the Agreement shall be deleted
in their entirety and the following shall be substituted in lieu
thereof:
(f) In addition to the payments required pursuant
to Section 2.5(d), the Company shall be obligated to pay
to the Lender, without the necessity of prior demand or
notice from the Lender, and the Company authorizes the
Lender to cause the Funding Bank to charge the Company's
account if the principal amount of (i) any Unimproved
Mortgage Loan is paid or prepaid, or (ii) any other
Pledged Mortgage is prepaid, in either case in whole or
in part, while an Advance is outstanding against such
Pledged Mortgage, for the amount of such payment or
prepayment, to be applied to such Advance.
(h) The Company may, from time to time, prepay a
portion of the Advances pursuant to this Section 2.5(h)
(any such prepayment is hereafter referred to as a
"Buydown"). A Buydown shall not, except as set forth
below, be deemed a prepayment of any particular Advances,
and shall not entitle the Company to the release of any
Collateral. If a Default or an Event of Default has
occurred and is continuing, the Lender shall be entitled
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<PAGE> 7
to retain as additional Collateral any portion of the
Buydown which has been funded by the Company. Any portion
of the Buydown which has been funded to the Company by its
Parent and/or Affiliates shall be refunded to and at the
direction of the Company. All or any portion of a Buydown
may be reborrowed hereunder, provided no Default or Event
of Default has occurred and is continuing, upon written
notice to the Lender no later than 9:30 a.m. on the
Business Day that the Company desires to reborrow such
amount. The Lender shall use its best efforts to apply
Buydown to reduce the interest on Advances in the
following order: first, Unimproved Advances; second,
Construction Advances; third, Nonconforming Advances; and
fourth, Ordinary Warehousing Advances; provided, however,
that no portion of any Buydown may be or remain applied
to Unimproved Advances unless, after giving effect to
such application, the outstanding principal balance of
the Unimproved Advances (net of the portion of the
Buydown applied thereto) would be greater than or equal
to Two Million Five Hundred Thousand Dollars
($2,500,000). In the event the Lender receives a payment
of Advances that would, as a result of the Buydown,
reduce the outstanding principal balance of the
Unimproved Advances to an amount less than Two Million
Five Hundred Thousand Dollars ($2,500,000), or the
outstanding principal balance of the other Advances to an
amount less than zero, unless an Event of Default shall
have occurred, and be continuing, the Buydowns, or a
portion thereof equal to such excess, shall be readvanced
to the Company.
12. Section 2.9 of the Agreement shall be deleted in its
entirety and the following shall be substituted in lieu thereof:
2.9 Warehousing Fees. The Company agrees, at the time
of each Advance, to pay to the Lender a Warehousing Fee in the
amount of (i) Ten Dollars ($10.00) for each Mortgage Loan
(other than an Unimproved Mortgage Loan) pledged as Collateral
for such Advance, and (ii) One Hundred Dollars ($100.00) for
each Unimproved Mortgage Loan pledged as Collateral for such
Advance. Notwithstanding the foregoing, if the arithmetic
daily average of the Advances (net of Buydown) outstanding in
any month exceeds Fifteen Million Dollars ($15,000,000), no
Warehousing Fee shall be payable for such month, except with
respect to Unimproved Mortgage Loans. Warehousing Fees are
due when incurred, but shall not be delinquent if paid within
fifteen (15) days after receipt of an invoice or an account
analysis statement from the Lender.
13. Section 3.2(g) of the Agreement shall be deleted in its
entirety and the following shall be substituted in lieu thereof:
-7-
<PAGE> 8
3.2(g) The Release Amount in connection with any
Pledged Mortgage shall be (i) prior to the occurrence of
an Event of Default, the principal amount of the Advances
made against such Pledged Mortgage, and (ii) from and
after the occurrence and during the continuance of an
Event of Default, the Committed Purchase Price of such
Pledged Mortgage or, if there is no Purchase Commitment
therefor, the amount paid to the Lender in a commercially
reasonable disposition thereof or in connection with a
commercially reasonable disposition of the property
securing an Unimproved Mortgage Loan or other defaulted
Pledged Mortgage.
14. Sections 3.3 and 3.5 of the Agreement shall be deleted in
their entirety and the following shall be substituted in lieu
thereof:
3.3 Delivery of Additional Collateral or Mandatory
Prepayment. At any time that the aggregate Collateral Value
of the Pledged Mortgages (other than Unimproved Mortgage
Loans) and Pledged Securities then pledged hereunder is less
than the aggregate amount of the Advances (other than
Unimproved Advances) then outstanding hereunder, the Lender
may request, and the Company shall within two (2) Business
Days after Notice by the Lender (a) deliver to the Lender for
pledge hereunder additional Mortgage Loans (other than
Unimproved Mortgage Loans) and/or cash, with a Collateral
Value sufficient to cover the difference between the
Collateral Value of the Pledged Mortgages (other than
Unimproved Mortgage Loans) and Pledged Securities pledged and
the aggregate amount of Advances (other than Unimproved
Advances) outstanding hereunder, or (b) repay the Advances
(other than Unimproved Advances) in an amount sufficient to
reduce the aggregate balance thereof outstanding to or below
the Collateral Value of the Pledged Mortgages (other than
Unimproved Mortgage Loans) and Pledged Securities pledged
hereunder.
3.5 Collection and Servicing Rights. So long as no
Event of Default shall have occurred and be continuing, the
Company shall be entitled to service and receive and collect
directly all sums payable to the Company in respect of the
Collateral other than (a) proceeds of any Purchase Commitment
or proceeds of the sale of any Collateral and (b) payments and
prepayments on Pledged Mortgages required to be applied to
prepay Advances under Section 2.5(f) hereof. Following the
occurrence of any Event of Default, the Lender or its designee
shall thereafter be entitled to service and receive and
collect all sums payable to the Company in respect of the
Collateral, and in such case (a) the Lender or its designee in
its discretion may, in its own name, in the name of the
Company or otherwise, demand, sue for, collect or receive any
-8-
<PAGE> 9
money or property at any time payable or receivable on account
of or in exchange for any of the Collateral, but shall be
under no obligation to do so, (b) the Company shall, if the
Lender so requests, hold in trust for the benefit of the
Lender and forthwith pay to the Lender at its office
designated by Notice hereunder, all amounts thereafter
received by the Company upon or in respect of any of the
Collateral, advising the Lender as to the source of such
funds, and (c) all amounts so received and collected by the
Lender shall be held by it as part of the Collateral.
15. Sections 5.15(c) and (d) of the Agreement shall be
deleted in their entirety and the following shall be substituted in
lieu thereof:
5.15(c) Any Mortgage Loan and any related document
included in the Pledged Mortgages (1) other than a
Construction/Perm Mortgage Loan or an Unimproved Mortgage
Loan, has been duly executed and delivered by the parties
thereto at a closing held not more than ninety (90) days
prior to the date of the Advance Request for an Advance
against such Mortgage Loan, (2) has been made in
compliance with all applicable requirements of the Real
Estate Settlement Procedures Act, Equal Credit
Opportunity Act, the federal Truth-In-Lending Act and all
other applicable laws and regulations, (3) is and will
continue to be valid and enforceable in accordance with
its terms, without defense or offset, (4) has not been
modified or amended except in writing, which writing is
part of the Collateral Documents, nor any requirements
thereof waived, (5) other than an Unimproved Mortgage
Loan, has been evaluated or appraised in accordance with
Title XI of FIRREA, and (6) complies and will continue to
comply with the terms of this Agreement and, if
applicable, with the related Purchase Commitment held by
the Company. Each Mortgage Loan, other than a
Construction/Perm Mortgage Loan, has been fully advanced
in the face amount thereof and each First Mortgage is a
first Lien on the premises described therein, and has or
will have a title insurance policy, in American Land
Title Association form or equivalent thereof, from a
recognized title insurance company, insuring the priority
of the Lien of the Mortgage and meeting the usual
requirements of Investors purchasing such Mortgage Loans.
5.15(d) No default has occurred and is continuing
for more than (i) in the case of an Unimproved Mortgage
Loan included in the Pledged Mortgages, thirty (30) days,
or (ii) in the case of any other Mortgage Loan included
in the Pledged Mortgages, sixty (60) days, without the
Advance against such Pledged Mortgage having been repaid
in accordance with Section 2.5(d)(6) hereof, provided,
-9-
<PAGE> 10
however, that with respect to Pledged Mortgages which
have already been pledged as Collateral hereunder, if any
default has occurred, the Company will promptly notify
the Lender.
16. Section 6.13(d) of the Agreement shall be deleted in its
entirety and the following shall be substituted in lieu thereof:
6.13(d) Notify the Lender within (i) two (2)
Business Days of any default under, or of the termination
of, any Purchase Commitment relating to any Pledged
Mortgage, Eligible Mortgage Pool or Pledged Security, or
(ii) two (2) Business Days of any default (after expiration
of any grace period) under any Unimproved Mortgage Loan.
17. Section 7.7 of the Agreement shall be deleted in its
entirety and the following shall be substituted in lieu thereof:
7.7 Minimum Tangible Net Worth. Permit Tangible
Net Worth of the Company (and its Subsidiaries, on a
consolidated basis) at any time to be less than Six
Million Dollars ($6,000,000).
18. The Warehousing Promissory Note is amended and restated
in its entirety as set forth in the First Amended and Restated
Warehousing Promissory Note, in the form of Exhibit A-1 attached
to this Amendment. The Construction Promissory Note is amended and
restated in its entirety as set forth in the Sublimit Promissory
Note, in the form of Exhibit A-2 attached to this Amendment. All
references in this Amendment and in the Agreement to the Warehousing
Promissory Note and the Construction Promissory Note shall be deemed
to refer to the First Amended and Restated Warehousing Promissory
Note and the Sublimit Promissory Note, respectively, delivered in
connection with this Amendment.
19. New Exhibits C-UNI and D-UNI in the forms attached to
this Amendment are hereby added to the Agreement.
20. The Company shall deliver to the Lender (a) an executed
original of this Amendment; (b) executed originals of the First
Amended and Restated Warehousing Promissory Note and the Sublimit
Promissory Note; and (c) a Seven Hundred Fifty Dollar ($750) document
production fee.
21. The Company represents, warrants and agrees that (a)
there exists no Default or Event of Default under the Loan
Documents, (b) the Loan Documents continue to be the legal, valid
and binding agreements and obligations of the Company enforceable
in accordance with their terms, as modified herein, (c) the Lender
is not in default under any of the Loan Documents and the Company
has no offset or defense to its performance or obligations under
-10-
<PAGE> 11
any of the Loan Documents, (d) the representations contained in the
Loan Documents remain true and accurate in all respects, and (e)
there has been no material adverse change in the financial
condition of the Company from the date of the Agreement to the date
of this Amendment.
22. Except as hereby expressly modified, the Agreement shall
otherwise be unchanged and shall remain in full force and effect,
and the Company ratifies and reaffirms all of its obligations
thereunder.
23. This Amendment may be executed in any number of
counterparts and by the different parties hereto on separate
counterparts, each of which when so executed and delivered shall be
an original, but all of which shall together constitute one and the
same instrument.
IN WITNESS WHEREOF, the Company and the Lender have caused
this Amendment to be duly executed on their behalf by their duly
authorized officers as of the day and year above written.
U.S. HOME MORTGAGE CORPORATION
By: /s/ T.A. NAPOLI
----------------------------
Its: Vice President
---------------------------
RESIDENTIAL FUNDING CORPORATION,
a Delaware corporation
By: /s/ DONNA A. WEST
----------------------------
Its: Vice President
---------------------------
-11-
<PAGE> 12
STATE OF TEXAS )
) ss
COUNTY OF HARRIS )
On December 27, 1995, before me, a Notary Public, personally
appeared Thomas A. Napoli, the Vice President of U.S. HOME MORTGAGE
CORPORATION, a Florida corporation, personally known to me (or proved
to me on the basis of satisfactory evidence) to be the person whose
name is subscribed to the within instrument and acknowledged to me
that he/she executed the same in his/her authorized capacity, and
that by his/her signature on the instrument the person, or the entity
upon behalf of which the person acted, executed the instrument.
WITNESS my hand and official seal.
/s/ BRENDA GRABLE
----------------------
Notary Public
(SEAL) My Commission Expires: 7-1-97
STATE OF FLORIDA )
) ss
COUNTY OF BROWARD )
On December 28, 1995, before me, a Notary Public, personally
appeared Donna A. West, the Vice President of RESIDENTIAL FUNDING
CORPORATION, a Delaware corporation, personally known to me (or
proved to me on the basis of satisfactory evidence) to be the
person whose name is subscribed to the within instrument and
acknowledged to me that he/she executed the same in his/her
authorized capacity, and that by his/her signature on the
instrument the person, or the entity upon behalf of which the
person acted, executed the instrument.
WITNESS my hand and official seal.
/s/ MARSHA S. GRABIN
----------------------
Notary Public
(SEAL) My Commission Expires: 9-15-98
-12-
<PAGE> 13
EXHIBIT A-1
WAREHOUSING PROMISSORY NOTE
$45,000,000 Date: December 27, 1995
FOR VALUE RECEIVED, the undersigned, U.S. HOME MORTGAGE CORPORATION, a
Florida corporation, (herein called the "Company"), hereby promises to pay to
the order of RESIDENTIAL FUNDING CORPORATION, a Delaware corporation (the
"Lender" or, together with its successors and assigns, the "Holder") whose
principal place of business is 8400 Normandale Lake Blvd., Suite 600,
Minneapolis, Minnesota 55437, or at such other place as the Holder may
designate from time to time, the principal sum of Forty-Five Million Dollars
($45,000,000) or so much thereof as may be outstanding from time to time
pursuant to the Warehousing Credit and Security Agreement described below, and
to pay interest on said principal sum or such part thereof as shall remain
unpaid from time to time, from the date of each Advance until repaid in full,
and all other fees and charges due under the Agreement, at the rate and at the
times set forth in the Agreement. All payments hereunder shall be made in
lawful money of the United States and in immediately available funds.
This Note is given to evidence an actual warehouse line of credit in
the above amount and is the Warehousing Promissory Note referred to in that
certain First Amended and Restated Warehousing Credit and Security Agreement
(as the same may have been and may hereafter be amended or supplemented from
time to time, the "Agreement") dated as of August 31, 1995, between the Company
and the Lender, and is entitled to the benefits thereof. Reference is hereby
made to the Agreement (which is incorporated herein by reference as fully and
with the same effect as if set forth herein at length) for a description of the
Collateral, a statement of the covenants and agreements, a statement of the
rights and remedies and securities afforded thereby and other matters contained
therein. Capitalized terms used herein, unless otherwise defined herein, shall
have the meanings given them in the Agreement. Without limiting the generality
of the foregoing, this Note, together with the Sublimit Promissory Note,
evidences a single line of credit, and the Lender has not committed to make
Advances with an aggregate principal amount exceeding the Commitment Amount,
notwithstanding the fact that the sum of the principal amount of the Notes may
exceed the Commitment Amount.
This Note is given in replacement for, and not in satisfaction of,
that certain Warehousing Promissory Note dated August 31, 1995, and issued by
the Company to evidence its obligations under the Agreement (the Existing
Note"). All amounts owed by the Company
1
<PAGE> 14
under the Existing Note (including, without limitation, the unpaid principal
thereunder, interest accrued thereon and fees accrued under the Agreement,
whether or not yet due and owing) as of the date hereof, shall be owed
hereunder.
This Note may be prepaid in whole or in part at any time without
premium or penalty.
Should this Note be placed in the hands of attorneys for collection,
the Company agrees to pay, in addition to principal and interest, fees and
charges due under the Agreement, any and all costs of collecting this Note,
including reasonable attorneys' fees and expenses.
The Company hereby waives demand, notice, protest and presentment.
This Note shall be construed and enforced in accordance with the laws
of the State of Minnesota, without reference to its principles of conflicts of
law.
IN WITNESS WHEREOF, the Company has executed this Note as of the day
and year first above written.
U.S. HOME MORTGAGE CORPORATION
By:
-------------------------------
Its:
------------------------------
STATE OF )
----------- ) ss
COUNTY OF )
-----------
On , 1995, before me, a Notary Public, personally appeared
, the of U.S. HOME MORTGAGE CORPORATION, a
Florida corporation, personally known to me (or proved to me on the basis of
satisfactory evidence) to be the person whose name is subscribed to the within
instrument and acknowledged to me that he/she executed the same in his/her
authorized capacity, and that by his/her signature on the instrument the
person, or the entity upon behalf of which the person acted, executed the
instrument.
WITNESS my hand and official seal.
[SEAL] ------------------------------
Notary Public
My Commission Expires:
2
<PAGE> 15
EXHIBIT A-2
SUBLIMIT PROMISSORY NOTE
$15,000,000 Date: December 27, 1995
FOR VALUE RECEIVED, the undersigned, U.S. HOME MORTGAGE
CORPORATION, a Florida corporation, (herein called the "Company"),
hereby promises to pay to the order of RESIDENTIAL FUNDING
CORPORATION, a Delaware corporation (the "Lender" or, together with
its successors and assigns, the "Holder") whose principal place of
business is 8400 Normandale Lake Blvd., Suite 600, Minneapolis,
Minnesota 55437, or at such other place as the Holder may
designate from time to time, the principal sum of Fifteen Million
Dollars ($15,000,000) or so much thereof as may be outstanding from
time to time pursuant to the Warehousing Credit and Security
Agreement described below, and to pay interest on said principal
sum or such part thereof as shall remain unpaid from time to time,
from the date of each Advance until repaid in full, and all other
fees and charges due under the Agreement, at the rate and at the
times set forth in the Agreement. All payments hereunder shall be
made in lawful money of the United States and in immediately
available funds.
This Note is given to evidence an actual warehouse facility in
the above amount and is the Sublimit Promissory Note referred to in
that certain First Amended and Restated Warehousing Credit and
Security Agreement (as the same may have been and may hereafter be
amended or supplemented from time to time, the "Agreement") dated as
of August 31, 1995, between the Company and the Lender, and is
entitled to the benefits thereof. Reference is hereby made to the
Agreement (which is incorporated herein by reference as fully and
with the same effect as if set forth herein at length) for a
description of the Collateral, a statement of the covenants and
agreements, a statement of the rights and remedies and securities
afforded thereby and other matters contained therein. Capitalized
terms used herein, unless otherwise defined herein, shall have the
meanings given them in the Agreement. Without limiting the generality
of the foregoing, this Note, together with the Warehousing Promissory
Note, evidences a single line of credit, and the Lender has not
committed to make Advances with an aggregate principal amount
exceeding the Commitment Amount, notwithstanding the fact that the
sum of the principal amount of the Notes may exceed the Commitment
Amount.
This Note is given in replacement for, and not in satisfaction
of, that certain Construction Promissory Note dated August 31,
1995, and issued by the Company to evidence its obligations under
the Agreement (the "Existing Note"). All amounts owed by the
-1-
<PAGE> 16
Company under the Existing Note (including, without limitation, the
unpaid principal thereunder, interest accrued thereon and fees
accrued under the Agreement, whether or not yet due and owing) as
of the date hereof, shall be owed hereunder.
This Note may be prepaid in whole or in part at any time
without premium or penalty.
Should this Note be placed in the hands of attorneys for
collection, the Company agrees to pay, in addition to principal and
interest, fees and charges due under the Agreement, any and all
costs of collecting this Note, including reasonable attorneys' fees
and expenses.
The Company hereby waives demand, notice, protest and
presentment.
This Note shall be construed and enforced in accordance with
the laws of the State of Minnesota, without reference to its
principles of conflicts of law.
IN WITNESS WHEREOF, the Company has executed this Note as of
the day and year first above written.
U.S. HOME MORTGAGE CORPORATION
By:
---------------------------
Its:
--------------------------
STATE OF )
) ss
COUNTY OF )
On , 1995, before me, a Notary Public, personally
appeared , the of U.S. HOME MORTGAGE
CORPORATION, a Florida corporation, personally known to me (or proved
to me on the basis of satisfactory evidence) to be the person whose
name is subscribed to the within instrument and acknowledged to me
that he/she executed the same in his/her authorized capacity, and
that by his/her signature on the instrument the person, or the entity
upon behalf of which the person acted, executed the instrument.
WITNESS my hand and official seal.
----------------------
Notary Public
(SEAL) My Commission Expires:
-2-
<PAGE> 17
EXHIBIT C-SF/UNI
REQUEST FOR ADVANCE UNIMPROVED MORTGAGE LOAN
Mortgage Company: U.S. HOME MORTGAGE CORPORATION
Mortgagor:___________________ Loan Number: _______________________________
___________________ Reviewed By: _______________________________
Address: ___________________ Warehouse Date:_______________________________
___________________
Property Type: Residential ____________________
Commercial ____________________
Original Mortgage Note Amount: _____________ Interest Rate: ________________
Mortgage Note Date: ________________________ Approved Warehouse Amt: _______
Current Mortgage Note Amount: ______________ Title Company: ________________
Purchase Price for Property: _______________
Company Valuation of Property:* ____________
METHOD OF ADVANCE
( ) Check Funding/Disbursement
Check No: ___________________________ Amount: __________________________
Checking Account No: ________________
( ) Wire Transfer
Amount of Wire: _____________________ Date of Wire: ____________________
Credit Acct. No. ____________________ Credit Acct. Name:________________
ABA No.: ____________________________ Bank Name: _______________________
Account to Debit: ___________________ City & State: ____________________
Ref: _____________ Advise: ___________________ Phone: __________________
REQUIRED DOCUMENTATION
Attached please find the following documents in connection with the above
request (Please check attached documents below):
Right
( ) Original and one copy of Mortgage Note
( ) Certified copy of Mortgage or Deed of Trust
Left
( ) Request for Advance (original and one (1) copy)
( ) Recorded assignment of Mortgage or Deed of Trust, or Certified True Copy
of assignment sent for recording
( ) Recordable assignments of Security Agreement/financing statement; if any
( ) Certified copies of interim assignments of Mortgage (if applicable)
Authorized Signature:
==============================================================================
FOR RFC INTERNAL USE ONLY
Repetitive Code:____________________ Date:_________________________
Wire Initiator's Initials:__________ Wire Verifier's Initials:_____
==============================================================================
*Unimproved Mortgage Loans secured by property intended for commercial
development only.
<PAGE> 18
EXHIBIT D/UNI
PROCEDURES AND DOCUMENTATION FOR WAREHOUSING
UNIMPROVED MORTGAGE LOANS
The following procedures and documentation requirements must be observed
in all respects by the Company. All documents must be satisfactory to the
Lender in its sole discretion. Terms used below, which are not otherwise
defined, shall have the meanings given them in the Agreement. All Requests for
Advance and Collateral Documents, should be submitted to the Lender in a top
tabbed, legal size manila file folder, hole-punched and acco-fastened in the
order specified in the Request for Advance. Each folder should be labelled
with the mortgagor name(s), Company loan number and Company name.
I. AT LEAST FIVE (5) BUSINESS DAYS PRIOR TO THE ADVANCE DATE
(except in the initial Unimproved Advances, in which case the following
documents must be received at least one (1) Business Days prior to the
Advance Date):
The Lender must receive a letter signed by the Company providing the
following information on the Pledged Mortgage:
(1) Mortgagor's name;
(2) Company's case/loan number;
(3) Expected Advance date;
(4) Original Mortgage Note Amount;
(5) Current Mortgage Note Amount;
(6) Purchase Price for Related Property;
(7) Estimation of Fair Market Value of Related Property, Prepared by the
Company (Properties Intended for Commercial Development only); and
(8) Original signed Request for Advance (Exhibit C-UNI).
II. AT LEAST ONE (1) BUSINESS DAY PRIOR TO THE DATE OF AN ADVANCE:
The Lender must receive the following:
(1) The original Mortgage Note, endorsed by the Company in blank and
without recourse. If the Company is not the named holder of the
Mortgage Note, the Mortgage Note must bear an endorsement from the
holder to the Company.
(2) If the Company is not the mortgagee on the Mortgage, a copy of the
assignment of Mortgage by the mortgagee to the Company which was sent
for recordation on or before the date of the Advance.
(3) Original recorded assignment of the Mortgage to the Lender or
certified true copy of assignment of the
1
<PAGE> 19
Mortgage sent for recording;
(4) Original assignment of the security agreement, if any, to the Lender
in recordable form but unrecorded;
(5) Original assignment of the UCC financing statements, if any, to the
Lender in recordable form but unrecorded;
(6) A copy of the title insurance commitment to issue a policy of title
insurance marked to show the final policy exceptions or, if
available, a copy of the title insurance policy; and
(7) Check payable to the Lender for the Warehousing Fee.
III. The Lender exclusively shall deliver the Mortgage Notes and
other original Collateral Documents in connection with any sale,
refinancing, foreclosure or other satisfaction of any Pledged Mortgage.
Such deliveries shall be made in accordance with procedures specified from
time to time by the Lender.
2
<PAGE> 1
EXHIBIT 11
U.S. HOME CORPORATION AND SUBSIDIARIES
INCOME PER COMMON SHARE FOR THE CONSOLIDATED STATEMENTS
INCOME HAS BEEN COMPUTED ON THE WEIGHTED AVERAGE NUMBER OF COMMON SHARES AND
COMMON SHARE EQUIVALENTS OUTSTANDING AS FOLLOWS:
(Dollars in Thousands, Except Per Share Data)
<TABLE>
<CAPTION>
Years Ended December 31,
-----------------------------------------------------------
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Income per common and
common equivalent shares -
Net income $ 36,914 $ 32,829 $ 71,691
============ ============ ============
Weighted average common
shares outstanding 11,576,829 11,366,810 11,259,262
Effect of assumed exercise of
dilutive stock options
and warrants 196,270 - 371,809
------------ ------------ ------------
Total common and common
equivalent shares 11,773,099 11,366,810 11,631,071
============ ============ ============
Income per common and
common equivalent shares $ 3.14 $ 2.89 $ 6.16
============ ============ ============
Income per common share,
assuming full dilution -
Net income $ 36,914 $ 32,829 $ 71,691
Add interest applicable to
4.875% convertible
subordinated debentures,
net of income taxes 2,006 1,220 174
------------ ------------ ------------
Income per common share,
assuming full dilution $ 38,920 $ 34,049 $ 71,865
============ ============ ============
Total common and common
equivalent shares 11,773,099 11,366,810 11,631,071
Assumed additional common shares
from exercise of dilutive stock
options and warrants resulting
from use of market price of
common stock at end of period 495,009 - 102,550
Assumed conversion of 4.875%
convertible subordinated
debentures at $35.50 per share
at date of issuance (see Note 2 of
Notes to Consolidated
Financial Statements) 2,253,521 2,253,521 376,616
------------ ------------ ------------
Common shares, assuming
full dilution 14,521,629 13,620,331 12,110,237
============ ============ ============
Income per common share
assuming full dilution $ 2.68 $ 2.50 $ 5.93
============ ============ ============
</TABLE>
NOTE A - SEE NOTE 1 OF NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
<PAGE> 1
EXHIBIT 22
Subsidiaries of the Company
The following table sets forth the names of U.S. Home's subsidiaries
and the state in which incorporated. All subsidiaries are directly or
indirectly wholly-owned by U.S. Home. Certain insignificant subsidiaries are
omitted.
Jurisdiction of
Incorporation
---------------
Fidelity Guaranty and Acceptance Corporation Delaware
U.S. Home Acceptance Corporation Delaware
U.S. Home Insurors, Inc. Florida
U.S.H. Indemnity Company, Ltd. Bermuda
San Felipe Indemnity Company, Ltd. Bermuda
U.S. Home Mortgage Corporation Florida
USH II Corporation Delaware
<PAGE> 1
EXHIBIT 23
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the
incorporation of our report dated February 1, 1996 included in this Form 10-K,
into the Company's previously filed Registration Statements No. 33-64712,
33-52993 and 33-00583.
ARTHUR ANDERSEN LLP
Houston, Texas
February 9, 1996
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This Schedule Contains Summary Financial Information Extracted From The
Consolidated Condensed Financial Statements As Of December 31, 1995 And For The
Year Then Ended And Is Qualified In Its Entirety By Reference To Such Financial
Statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> DEC-31-1995
<CASH> 10,556
<SECURITIES> 0
<RECEIVABLES> 76,746
<ALLOWANCES> 0
<INVENTORY> 632,035
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 842,084
<CURRENT-LIABILITIES> 0
<BONDS> 300,599
<COMMON> 112
0
7,981
<OTHER-SE> 320,899
<TOTAL-LIABILITY-AND-EQUITY> 842,084
<SALES> 0
<TOTAL-REVENUES> 1,107,945
<CGS> 918,645
<TOTAL-COSTS> 1,048,181
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 692
<INCOME-PRETAX> 59,072
<INCOME-TAX> 22,152
<INCOME-CONTINUING> 36,920
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 36,920
<EPS-PRIMARY> 3.14
<EPS-DILUTED> 2.68
</TABLE>
