<PAGE> 1
================================================================================
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, 1996
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>
<C> <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,
$.10 par value per share New York Stock Exchange
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, 1997, the number of shares outstanding of Registrant's
voting stock was 11,575,005 and the aggregate market value of the Registrant's
voting stock held by non-affiliates was $279,736,019.
DOCUMENTS INCORPORATED BY REFERENCE
<TABLE>
<CAPTION>
PART OF 10-K
WHERE INCORPORATED
------------------
<S> <C>
Proxy Statement dated March 17, 1997 for the III
Annual Meeting of Stockholders to be held on
April 23, 1997.
</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 215 new home communities
in 31 market areas in 12 states. Since its formation, the Company has delivered
more than 267,000 homes. In 1995, 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
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 1996, the Company's product mix
consisted of deliveries of approximately 28% affordable homes, 49% move-up homes
and 23% retirement and active adult homes. The Company has set a goal to
increase its retirement and active adult 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 18 retirement and active adult communities
in Arizona, California, Florida, Maryland, Nevada, New Jersey and Texas.
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, Corona, Palm Springs and Sacramento
Colorado............................. Colorado Springs, Denver and Fort Collins/Greeley/Loveland
Florida.............................. Bonita Springs, Clearwater/Palm Harbor/Tarpon Springs, Fort
Myers, Hernando County, Naples, Orlando, Pasco County,
Sarasota/ Bradenton 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................................ 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 1996 1995 1994
- ------ ---------- ---------- --------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
Arizona....................................... $ 137,606 $ 125,103 $128,343
California.................................... 92,193 89,662 107,625
Colorado...................................... 206,231 171,733 138,409
Florida....................................... 335,166 349,526 293,278
Indiana/Ohio.................................. 33,008 13,923 --
Maryland/Virginia............................. 72,914 69,944 67,689
Minnesota..................................... 64,129 55,746 67,496
Nevada........................................ 62,088 48,030 43,540
New Jersey.................................... 86,656 63,160 39,198
Texas......................................... 88,947 88,379 79,173
---------- ---------- --------
$1,178,938 $1,075,206 $964,751
========== ========== ========
</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 1996 1995 1994
- ------ ------ ------ ------
<S> <C> <C> <C>
Arizona..................................................... 832 1,015 845
California.................................................. 532 533 592
Colorado.................................................... 1,378 1,172 812
Florida..................................................... 2,173 2,081 2,127
Indiana/Ohio................................................ 178 118 10
Maryland/Virginia........................................... 353 400 333
Minnesota................................................... 294 322 339
Nevada...................................................... 371 335 308
New Jersey.................................................. 471 321 283
Texas....................................................... 824 662 585
----- ----- -----
7,406 6,959 6,234
===== ===== =====
</TABLE>
DELIVERIES
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
--------------------------
STATES 1996 1995 1994
- ------ ------ ------ ------
<S> <C> <C> <C>
Arizona..................................................... 948 893 970
California.................................................. 494 508 643
Colorado.................................................... 1,199 1,100 898
Florida..................................................... 2,126 2,241 1,948
Indiana/Ohio................................................ 156 66 --
Maryland/Virginia........................................... 366 369 382
Minnesota................................................... 306 290 396
Nevada...................................................... 356 306 299
New Jersey.................................................. 475 307 203
Texas....................................................... 673 699 648
----- ----- -----
7,099 6,779 6,387
===== ===== =====
</TABLE>
BACKLOG(1)
<TABLE>
<CAPTION>
AS OF DECEMBER 31,
-----------------------
STATES 1996 1995 1994
- ------ ----- ----- -----
<S> <C> <C> <C>
Arizona..................................................... 269 385 263
California.................................................. 149 111 86
Colorado.................................................... 641 462 390
Florida..................................................... 1,033 986 1,146
Indiana/Ohio................................................ 84 62 10
Maryland/Virginia........................................... 100 113 82
Minnesota................................................... 107 119 87
Nevada...................................................... 134 119 90
New Jersey.................................................. 179 183 169
Texas....................................................... 342 191 228
----- ----- -----
3,038 2,731 2,551
===== ===== =====
</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, 1996 will be completed and delivered during
1997. 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 1996, approximately 83% of the homes delivered were
single-family detached compared to 84% in 1995 and 85% in 1994. The number of
units and average sales prices of single-family homes delivered in 1996, 1995
and 1994 were as follows:
<TABLE>
<CAPTION>
SINGLE-FAMILY DETACHED SINGLE-FAMILY ATTACHED
------------------------- -------------------------
NUMBER AVERAGE NUMBER AVERAGE
OF UNITS SALES PRICE OF UNITS SALES PRICE
-------- ----------- -------- -----------
<S> <C> <C> <C> <C>
1996................................ 5,891 $170,500 1,208 $144,200
1995................................ 5,708 162,800 1,071 136,400
1994................................ 5,411 155,200 976 127,900
</TABLE>
The increases in the average sales prices of single-family detached and
attached homes in 1996 and 1995 were primarily due to price increases.
In 1996, 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 $165,800 compared with an average sales price of $166,100 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 home products during the last three years:
<TABLE>
<CAPTION>
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
Affordable.................................................. 28% 28% 34%
Move-up..................................................... 49% 50% 47%
Retirement and active adult................................. 23% 22% 19%
</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 83% of the homes delivered in 1996, and 82% delivered in 1995 and
85% delivered in 1994, 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 1996 and
1995, approximately 17% and during 1994 approximately 19% 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
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 1996, 55% of the Company's unit deliveries were from
lots owned by the Company and 45% 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 Senior
Vice President-Community Development and 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,
1996, the Company's land and finished lot inventories totaled $354.8 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, 1996, the Company had
refundable and nonrefundable deposits totaling $28.0 million for options and
contracts to purchase undeveloped land and finished lots for home building
operations for a total purchase price of approximately $267.0 million. The
Company has incurred pre-development costs of approximately $42.7 million
relating to these properties.
The following table sets forth as of December 31, 1996, 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 31, 1996(1)
BOOK COST ---------------------------------------
OF LAND UNDER
STATES OWNED OWNED OPTION TOTAL
- ------ --------- --------- --------- ---------
<S> <C> <C> <C> <C>
Arizona.................................. $ 24,442 1,154 1,728 2,882
California............................... 38,555 1,011 1,409 2,420
Colorado................................. 74,906 4,718 1,867 6,585
Florida.................................. 84,246 7,243 7,260 14,503
Indiana/Ohio............................. 7,167 179 861 1,040
Maryland/Virginia........................ 18,529 552 2,297 2,849
Minnesota................................ 16,456 760 484 1,244
Nevada................................... 25,344 632 130 762
New Jersey............................... 27,806 1,125 196 1,321
Texas.................................... 25,093 2,432 696 3,128
-------- ------ ------ ------
$342,544 19,806 16,928 36,734
======== ====== ====== ======
</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 and there can be no assurances that such lots will be used or as
to when they will be used. This table does not include commercial property
and other properties which the Company has no current plans to use, with an
aggregate cost of $12.3 million (including $6.5 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, 1996 (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 1996, the Company's revenues from the sale of developed and undeveloped
land amounted to $10.9 million, as compared to revenues of $16.1 million in 1995
and $16.2 million in 1994.
8
<PAGE> 9
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 "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.
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 or satellite
offices in the metropolitan areas of Phoenix and Tucson, Arizona; Bakersfield,
Palmdale, Palm Springs and Sacramento, California; Colorado Springs, Denver, and
Fort Collins, Colorado; Washington, D.C.; Clearwater, Fort Myers, Orlando, and
Sarasota, Florida; Indianapolis, Indiana; Minneapolis, Minnesota; Las Vegas,
Nevada; Cleveland, Ohio; and Dallas, and Houston, 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,
--------------------------------
1996 1995 1994
-------- -------- --------
<S> <C> <C> <C>
Residential mortgage loans
Number of loans originated....................... 3,786 3,367 2,987
Average amount of loan originated................ $ 134 $ 128 $ 122
Total amount of loans originated:
Funded by Mortgage............................ $466,000 $376,000 $308,000
Brokered by Mortgage.......................... 43,000 57,000 58,000
-------- -------- --------
Total.................................... $509,000 $433,000 $366,000
======== ======== ========
Company's homes delivered financed by Mortgage as a
percentage of Company's homes delivered which
were financed.................................... 61% 57% 50%
Company's homes delivered financed by Mortgage as a
percentage of Mortgage's total originations...... 95% 95% 92%
</TABLE>
9
<PAGE> 10
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.
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, 1996, the Company had 1,466 employees. 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 1996 and their respective ages and
positions are set forth below:
<TABLE>
<CAPTION>
NAME AGE POSITION AND OFFICE
---- --- -------------------
<S> <C> <C>
Robert J. Strudler.................... 54 Chairman and Co-Chief Executive Officer
Isaac Heimbinder...................... 53 President, Co-Chief Executive Officer and
Chief Operating Officer
Craig M. Johnson...................... 43 Senior Vice President -- Community
Development
Gary L. Frueh......................... 56 Vice President -- Tax and Audit
Thomas A. Napoli...................... 55 Vice President -- Corporate Finance and
Treasurer
Chester P. Sadowski................... 50 Vice President -- Controller and Chief
Accounting Officer
Richard G. Slaughter.................. 52 Vice President -- Planning and Secretary
Kelly F. Somoza....................... 43 Vice President -- Investor Relations
</TABLE>
No family relationship exists among any of the executive officers of the
Company.
10
<PAGE> 11
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.
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 -- Corporate Finance and Treasurer
since February 13, 1997; prior thereto, he had been 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 and Secretary since
December 18, 1986.
Ms. Somoza has served as Vice President -- Investor Relations since
December 6, 1996; prior thereto, she had been Vice President since June 11,
1992, and Director, Investor Relations since December 31, 1981. Ms. Somoza is
also 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 7, 1997, there were 3,430 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 calendar quarter
during 1996 and 1995 is set forth below:
<TABLE>
<CAPTION>
CALENDAR YEAR ENDED YEAR ENDED
QUARTER DECEMBER 31, 1996 DECEMBER 31, 1995
-------- ------------------ ------------------
HIGH LOW HIGH LOW
------- ------- ------- -------
<S> <C> <C> <C> <C>
First......................................... $29.38 $23.25 $18.25 $14.75
Second........................................ 26.13 22.75 25.38 16.13
Third......................................... 24.75 19.25 25.88 20.25
Fourth........................................ 26.00 19.50 29.25 23.25
</TABLE>
No dividends were paid by the Company during 1996 or 1995. 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 SELECTED FINANCIAL DATA
FOR THE FIVE YEARS ENDED DECEMBER 31, 1996
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
----------------------------------------------------------
1996 1995 1994 1993 1992
---------- ---------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Operating Revenues...................... $1,211,450 $1,107,945 $995,311 $812,077 $689,900
Operating Income........................ 55,901 59,072 52,526 44,640 29,349
Reorganization Items.................... -- -- -- 6,915 50,703
Income Taxes............................ 11,713 22,152 19,697 (33,966) --
---------- ---------- -------- -------- --------
Net Income (Loss)....................... $ 44,188 $ 36,920 $ 32,829 $ 71,691 $(21,354)
========== ========== ======== ======== ========
Net Income (Loss) Per Common And Common
Equivalent Share:
Primary............................... $ 3.70(1) $ 3.14 $ 2.89 $ 6.16(2) $ (1.89)(3)
Fully Diluted......................... $ 3.25(1) $ 2.68 $ 2.50 $ 5.93(2) $ (1.89)(3)
Dividends Per Common Share.............. $ -- $ -- $ -- $ -- $ --
BALANCE SHEET DATA
(at year end):
Total Assets............................ $ 947,411 $ 842,084 $753,203 $682,637 $545,110
========== ========== ======== ======== ========
Revolving Credit Facilities --
Housing............................... $ -- $ 24,000 $ 7,553 $ -- $172,373(4)
Financial Services.................... 42,414 35,371 10,014 20,566 14,079
---------- ---------- -------- -------- --------
$ 42,414 $ 59,371 $ 17,567 $ 20,566 $186,452
========== ========== ======== ======== ========
Senior And Convertible Subordinated Debt
And Notes Payable --
Housing............................ $ 362,887 $ 300,599 $304,327 $311,937 $161,736(4)
Financial Services................. -- -- 1,034 1,102 1,797
---------- ---------- -------- -------- --------
$ 362,887 $ 300,599 $305,361 $313,039 $163,533
========== ========== ======== ======== ========
</TABLE>
- ---------------
(1) Primary and fully diluted income per share in 1996 includes $.04 primary
income per share and $.03 fully diluted income per share, respectively, due
to the net effect of an $8,233, net of tax, provision for impairment of land
inventories and an $8,691 tax benefit.
(2) Primary and fully diluted income per share in 1993 were $2.29 and $2.21,
respectively, excluding $3.87 primary income per share and $3.72 fully
diluted income per share, respectively, due to a $45,000 decrease in the
deferred tax asset valuation allowance.
(3) 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 loss per common and common equivalent
share previously reported (based on the Company's former capital structure)
for the year ended December 31, 1992, of $.47. The Company believes that
earnings per common share information for 1992 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.
12
<PAGE> 13
(4) 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.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
RESULTS OF OPERATIONS
HOUSING
The following table, which excludes the provision for impairment of land
inventories recorded in the fourth quarter of 1996 (see Results of Operations
Other -- Impairment of Land Inventories below and Consolidated Statements of
Operations), 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,
------------------------------------
1996 1995 1994
---------- ---------- --------
<S> <C> <C> <C>
Revenues --
Single-family homes........................... $1,178,938 $1,075,206 $964,751
Land and other................................ 12,268 17,077 17,627
---------- ---------- --------
Total................................. $1,191,206 $1,092,283 $982,378
========== ========== ========
Single-family homes --
Gross margin amount........................... $ 217,461 $ 199,629 $184,265
Gross margin percentage....................... 18.4% 18.6% 19.1%
Units delivered............................... 7,099 6,779 6,387
Average sales price........................... $ 166,100 $ 158,600 $151,000
New orders taken.............................. 7,406 6,959 6,234
Backlog at end of year........................ 3,038 2,731 2,551
Selling, general and administrative expenses as
a percentage of housing revenues.............. 9.5% 9.7% 9.8%
Interest --
Paid or accrued............................... $ 33,484 $ 31,995 $ 30,820
Percentage capitalized........................ 100.0% 100.0% 100.0%
Previously capitalized interest included in
interest expense........................... $ 30,786 $ 27,555 $ 28,871
Percentage of housing revenues................ 2.6% 2.5% 2.9%
</TABLE>
Revenues and Gross Margin
Revenues from sales of single-family homes for 1996 increased 10% from
1995. The increase resulted from a 5% 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 1995 increased 11% from 1994, resulting primarily from a
6% increase in the number of housing units delivered and a 5% increase in the
average sales price.
The increases in the average sales prices in 1996 and 1995 were primarily
due to price increases.
The gross margin percentage for 1996 decreased from 1995 and the gross
margin percentage for 1995 decreased from 1994. These decreases resulted
primarily from cost increases which were not offset by increases in sales
prices.
New orders taken in 1996 increased 6% from 1995. New orders taken in 1995
increased 12% from 1994. The increase in new orders in 1996 reflects the
continued demand for new single-family homes which the Company believes was
brought about by strong consumer confidence, opening of new home communities and
stable mortgage interest rates. The increase in new orders in 1995 reflects the
demand for new single-family
13
<PAGE> 14
homes which the Company believes was brought about by the decrease in mortgage
interest rates starting in the second quarter of 1995.
Selling, General and Administrative Expenses
As a percentage of housing revenues, selling, general and administrative
expenses declined in 1996 as compared to both 1995 and 1994. Actual selling,
general and administrative expense for 1996 increased $7.3 million compared to
1995. This increase was attributable to increases in volume-related expenses
($4.1 million) resulting from the increase in deliveries in 1996 when compared
to 1995 and increases in other selling, general and administrative expenses
resulting from increased activities and earnings. Similarly, selling, general
and administrative expenses increased by $9.9 million in 1995 compared to 1994,
due to increases in volume-related expenses ($4.7 million) resulting from
increases in deliveries in 1995 when compared to 1994 and increases in other
selling, general and administrative expenses resulting from increased activities
and earnings.
Interest
Interest paid and accrued for 1996 increased approximately 5% compared to
1995 and increased approximately 4% in 1995 compared to 1994. The increase in
1996 was primarily due to the sale of the Company's 7.95% senior notes in
February 1996, offset in part by a decrease in the average borrowings under the
Company's Credit Facility (see Financial Condition and Liquidity -- Housing
below), while the increase in 1995 was primarily due to an increase in the
average borrowings under the Company's Credit Facility.
The Company capitalizes interest cost into housing inventories and charges
the previously capitalized interest to interest expense when the related
inventories are delivered. The amount of interest capitalized and previously
capitalized interest expensed in any one year is a function of the amount of
housing assets, land sales and the number of housing units delivered, average
outstanding debt levels and average interest rates. In addition, the amount of
previously capitalized interest charged to interest expense in 1995 and 1994 was
affected by the amount of interest capitalized prior to 1994 because interest on
a majority of the Company's debt was stayed during the period of the Company's
bankruptcy proceedings. Capitalized interest amounts charged to interest expense
in 1996 were greater than 1995 and 1994 primarily due to the increase in the
number of housing units delivered and higher average debt levels, offset in part
by an increase in the amount of housing assets qualifying for interest
capitalization.
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,
-----------------------------
1996 1995 1994
------- ------- -------
<S> <C> <C> <C>
U.S. Home Mortgage Corporation and Subsidiaries....... $16,363 $12,477 $ 9,885
Other financial services subsidiaries................. 3,881 3,185 3,048
------- ------- -------
$20,244 $15,662 $12,933
======= ======= =======
</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.
14
<PAGE> 15
The increase in Mortgage's revenues in 1996 from 1995 and 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.
OTHER
Impairment of Land Inventories
During the fourth quarter of 1996, in conjunction with the completion of
the 1997 business plan, the Company completed its annual detailed evaluation of
the intended use of its land inventories to insure that the primary and planned
use reflected the appropriate economic value for the Company's intended use.
Even though industry forecasts project a softening in housing demand in 1997, no
change in use was required for most of the Company's land inventories. However,
it was determined during the evaluation that based on economic forecasts for
1997 the current best use of certain land inventories located primarily in
Florida, Maryland and Texas had changed from the Company's previous intended
use. The change in intended use for these land inventories include land
previously held for long term development which will now be sold to other
builders in the near term to accelerate its disposition, land that has been
replanned for new products and land affected by changes in product pricing.
Based on the change in intended use, the Company revised its cash flow estimates
and determined the cash flow expected to be generated from the new intended use
would be less than the cost of the land. Accordingly, the Company recorded a
non-cash provision for impairment of approximately $13.0 million ($8.2 million,
net of income taxes) to reduce the carrying value of the land to its current
fair value, which amount has been included in "provision for impairment of land
inventories" in the Consolidated Statements of Operations. Fair value was
determined based on sales contracts or offers received on land being sold and by
evaluations of comparable market prices. The provision for impairment reduced
primary and fully diluted income per share in 1996 by $.69 per share and $.57
per share, respectively.
Corporate General and Administrative
Corporate general and administrative includes the operations of the
Company's corporate office. As a percentage of total revenues, such expenses
were 1.0%, 1.1% and 1.2% for 1996, 1995 and 1994, respectively. Actual corporate
overhead expenses for 1996 totaled $11.7 million compared with $11.8 million and
$11.3 million, respectively, for 1995 and 1994. The increase for 1995 over 1994
was primarily due to increased payroll expense.
Income Taxes
During the fourth quarter of 1996, the Internal Revenue Service (the "IRS")
completed an examination of the Company's federal income tax returns for the
years ended December 31, 1993 and 1992. The results of this examination allowed
certain previously reserved deductions taken by the Company in its 1993 tax
return. However, certain other deductions claimed by the Company in that year
were disallowed by the IRS. At the conclusion of this examination, the Company
reduced its deferred tax liability and recognized an income tax benefit totaling
$8.7 million related to the deductions allowed by the IRS. The Company plans to
appeal the IRS decision to disallow certain other deductions and these
deductions remain reserved as a deferred tax liability as of December 31, 1996.
The decrease in the deferred tax liability increased primary and fully diluted
income per share in 1996 by $.73 per share and $.60 per share, respectively.
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
Facility (see below).
15
<PAGE> 16
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 attempts to minimize its exposure to the cyclical nature of the
housing market and its use of working capital by employing rolling lot options,
primarily in its affordable and move-up home communities, 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 45% of
the units delivered have been on lots acquired under rolling lot option
agreements. The increase in land inventories in 1996 from 1995 and 1995 from
1994 was primarily the result of increased activities, including an increase in
the Company's retirement and active adult 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 Facility")
entered into in September 1995. The Credit Facility (and previous credit
facilities) have enabled the Company to meet peak operating needs. See Note 2 of
Notes to Consolidated Financial Statements. In February 1996, the Company sold
$75 million principal amount of its 7.95% senior notes due 2001. The net
proceeds thereof were used to repay the then outstanding balance under the
Credit Facility and for working capital and general corporate purposes. 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 ad valorem and assessment revenue bonds to fund improvements
and repay the bonds by annual tax 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. However, there can be no assurance
that it will do so.
The net cash provided or used by the operating, investing and financing
activities of the housing operations for the years ended December 31, 1996, 1995
and 1994 is summarized below (dollars in thousands):
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
--------------------------------
1996 1995 1994
-------- -------- --------
<S> <C> <C> <C>
Net cash provided (used by):
Operating activities.................. $(28,091) $(13,752) $(17,887)
Investing activities.................. (3,684) (2,041) (1,676)
Financing activities.................. 36,694 5,216 (3,445)
-------- -------- --------
Net increase (decrease) in cash......... $ 4,919 $(10,577) $(23,008)
======== ======== ========
</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 1996 over
1995 and in 1995 over 1994. Housing operating activities for 1996 used more cash
than in 1995 primarily due to an increase in these activities offset in part by
increased profitability and the timing of payments related to these activities.
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.
Cash flow from housing financing activities in 1996 provided cash
reflecting the sale of the Company's 7.95% senior notes, partially offset by the
repayment of the amounts outstanding under the Credit Facility. Cash flow from
housing financing activities increased in 1995 from 1994 primarily due to
increased net borrowings under the Company's revolving credit facilities.
The Company believes that cash flow from operations and amounts available
under the Credit Facility 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.
16
<PAGE> 17
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 the
volume of Mortgage's loan originations and the timing of the sale of mortgage
loans and related servicing rights to third party investors. Loans and servicing
rights are generally sold to investors within 30 days after homes are delivered.
In this regard, cash required by financial services operating activities for
1996 was higher compared to 1995 and 1995 was higher compared to 1994 primarily
due to an increase in residential mortgage loan receivables.
The Company finances its financial services operations primarily from
short-term debt which is repaid with internally generated funds, such as from
the origination and sale of residential mortgage loans and related servicing
rights. As more fully discussed in Notes 2 of Notes to Consolidated Financial
Statements, the short-term debt consists of a $55 million secured revolving line
of credit (the "Mortgage Credit Facility") which matures on August 31, 1997.
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.
Cautionary Disclosure Regarding Forward-Looking Statements
The Company desires to take advantage of the "safe harbor" provisions of
the Private Securities Litigation Reform Act of 1995 and is including this
disclosure in order to do so.
Certain statements in the Company's press releases, oral communications and
filings with the Securities and Exchange Commission that are not historical
facts are, or may be considered to be, forward-looking statements. Given the
risks, uncertainties and contingencies of the Company's business, the actual
results may differ materially from those expressed or implied by such
forward-looking statements. Further, certain forward-looking statements are
based on assumptions concerning future events which may not prove to be
accurate.
Forward-looking statements by the Company regarding results of operations
and, ultimately, financial condition, are subject to numerous risk and
assumptions, including the following:
- General economic and business conditions, the level and direction of
interest rates and the level of consumer confidence have significant
impact on the willingness and ability of purchasers to enter into
contracts for homes and to consummate purchases of such homes under
contract (backlog), as well as on the performance of Mortgage, the
Company's principal subsidiary.
- The development of many of the Company's communities, particularly its
retirement and active adult communities, result from a lengthy, complex
series of events involving land purchase, regulatory
17
<PAGE> 18
compliance, capital availability, marketing and sales, any of which can
materially affect the financial results for a community.
- The Company is in a highly competitive and fragmented industry, which
places constant pressure on price (including the ability of the Company
to respond to increases in prices from its suppliers), quality and
marketing and particularly challenges the Company upon any entry into new
geographic markets.
- The Company faces numerous regulatory hurdles in its development efforts,
such as laws and regulations regarding zoning, environmental protection,
building design and construction, density and rate of development.
- The Company's access to capital sufficient to fund its development
activities is affected by the Company's financial leverage and by the
willingness of the capital markets and banks to absorb equity or debt of
the Company.
- The Company may encounter other contingencies, including labor shortages,
work stoppages, product liability, litigation, natural risks such as
floods or hurricanes and other factors over which the Company has little
or no control.
18
<PAGE> 19
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
U.S. HOME CORPORATION AND SUBSIDIARIES
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<S> <C>
Financial Statements:
Report of Independent Public Accountants..................
Consolidated Balance Sheets -- December 31, 1996 and
1995...................................................
Consolidated Statements of Operations -- For the Years
Ended December 31, 1996, 1995 and 1994.................
Consolidated Statements of Cash Flows -- For the Years
Ended December 31, 1996, 1995 and 1994.................
Consolidated Statements of Stockholders' Equity -- For the
Years Ended December 31, 1996, 1995 and 1994...........
Notes to Consolidated Financial Statements................
</TABLE>
19
<PAGE> 20
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, 1996
and 1995, and the related consolidated statements of operations, stockholders'
equity and cash flows for each of the three years in the period ended December
31, 1996. 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, 1996 and 1995, and the results
of their operations and cash flows for each of the three years in the period
ended December 31, 1996, in conformity with generally accepted accounting
principles.
ARTHUR ANDERSEN LLP
Houston, Texas
February 12, 1997
20
<PAGE> 21
U.S. HOME CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1996 AND 1995
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
ASSETS
<TABLE>
<CAPTION>
1996 1995
-------- --------
<S> <C> <C>
HOUSING:
Cash (including restricted funds of $1,578 and $334)...... $ 8,786 $ 5,110
Receivables, net.......................................... 28,028 33,454
Single-Family Housing Inventories......................... 709,344 632,035
Option Deposits on Real Estate............................ 70,688 63,375
Other Assets.............................................. 49,036 43,437
-------- --------
865,882 777,411
-------- --------
FINANCIAL SERVICES:
Cash (including restricted funds of $3,533 and $4,004).... 4,463 5,456
Residential Mortgage Loans................................ 63,656 43,292
Other Assets.............................................. 13,410 15,925
-------- --------
81,529 64,673
-------- --------
$947,411 $842,084
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
HOUSING:
Accounts Payable.......................................... $ 96,594 $ 88,234
Accrued Expenses and Other Current Liabilities............ 50,972 46,070
Revolving Credit Facility................................. -- 24,000
Senior and Convertible Subordinated Debt and Notes
Payable................................................ 362,887 300,599
-------- --------
510,453 458,903
-------- --------
FINANCIAL SERVICES:
Accrued Expenses and Other Current Liabilities............ 20,854 18,818
Revolving Credit Facility................................. 42,414 35,371
-------- --------
63,268 54,189
-------- --------
Total Liabilities...................................... 573,721 513,092
-------- --------
STOCKHOLDERS' EQUITY:
Convertible Preferred Stock, $25 per share redemption
value, 117,863 and 319,254 shares outstanding at
December 31, 1996 and 1995............................. 2,947 7,981
Common Stock, 11,453,290 and 11,243,147 shares outstanding
at December 31, 1996 and 1995.......................... 114 112
Capital in Excess of Par Value............................ 353,830 348,577
Retained Earnings......................................... 18,821 (25,367)
Unearned Compensation on Restricted Stock................. (2,022) (2,311)
-------- --------
Total Stockholders' Equity............................. 373,690 328,992
-------- --------
$947,411 $842,084
======== ========
</TABLE>
The accompanying notes are an integral part of these balance sheets.
21
<PAGE> 22
U.S. HOME CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
1996 1995 1994
---------- ---------- ----------
<S> <C> <C> <C>
HOUSING:
Operating Revenues................................... $1,191,206 $1,092,283 $ 982,378
Operating Costs and Expenses --
Cost of products sold............................. 971,896 891,163 794,952
Selling, general and administrative............... 113,352 106,036 96,168
Interest.......................................... 30,786 27,555 28,871
---------- ---------- ----------
1,116,034 1,024,754 919,991
---------- ---------- ----------
75,172 67,529 62,387
Provision for Impairment of Land Inventories......... 12,965 -- --
---------- ---------- ----------
Housing Operating Income............................. 62,207 67,529 62,387
---------- ---------- ----------
FINANCIAL SERVICES:
Operating Revenues................................... 20,244 15,662 12,933
General, Administrative and Other Expenses........... 14,850 12,329 11,452
---------- ---------- ----------
Financial Services Operating Income.................. 5,394 3,333 1,481
---------- ---------- ----------
CORPORATE GENERAL AND ADMINISTRATIVE................... 11,700 11,790 11,342
---------- ---------- ----------
INCOME BEFORE INCOME TAXES............................. 55,901 59,072 52,526
---------- ---------- ----------
PROVISION FOR INCOME TAXES --
Federal and State Income Taxes....................... 20,404 22,152 19,697
Tax Benefit.......................................... (8,691) -- --
---------- ---------- ----------
11,713 22,152 19,697
---------- ---------- ----------
NET INCOME............................................. $ 44,188 $ 36,920 $ 32,829
========== ========== ==========
INCOME PER COMMON AND COMMON EQUIVALENT SHARE:
Primary........................................... $ 3.70 $ 3.14 $ 2.89
========== ========== ==========
Fully Diluted..................................... $ 3.25 $ 2.68 $ 2.50
========== ========== ==========
</TABLE>
The accompanying notes are an integral part of these statements.
22
<PAGE> 23
U.S. HOME CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
1996 1995 1994
--------- -------- --------
<S> <C> <C> <C>
Cash Flows From Operating Activities:
Net income................................................ $ 44,188 $ 36,920 $ 32,829
Adjustments to reconcile net income to net cash provided
(used) by operating activities --
Provision for impairment of land inventories........... 12,965 -- --
Provision for deferred income taxes.................... 635 19,886 18,897
Tax benefit............................................ (8,691) -- --
Other, net (principally depreciation and
amortization)........................................ 8,680 4,579 4,578
Changes in assets and liabilities --
Increase in receivables, inventories and other
assets............................................... (121,010) (80,610) (85,075)
Increase (decrease) in accounts payable and accrued
liabilities.......................................... 23,524 (4,963) 29,765
--------- -------- --------
Net cash provided (used) by operating activities.......... (39,709) (24,188) 994
--------- -------- --------
Cash Flows From Investing Activities:
Purchase of property, plant and equipment, net of
disposals.............................................. (2,657) (2,526) (2,034)
Decrease (increase) in restricted cash.................... (773) 327 436
Proceeds from investments in mortgages.................... 1,989 1,687 868
Other..................................................... (677) (661) 22
--------- -------- --------
Net cash used by investing activities..................... (2,118) (1,173) (708)
--------- -------- --------
Cash Flows From Financing Activities:
Repayment of revolving credit facilities, net of
proceeds............................................... (16,957) 41,804 (2,999)
Net proceeds from sale of 7.95% senior notes.............. 73,406 -- --
Long-term debt assumed.................................... -- -- 1,037
Repayment of notes and mortgages payable.................. (12,712) (12,265) (12,103)
--------- -------- --------
Net cash provided (used) by financing activities.......... 43,737 29,539 (14,065)
--------- -------- --------
Net Increase (Decrease) In Cash............................. 1,910 4,178 (13,779)
Cash At Beginning Of Year................................... 6,228 2,050 15,829
--------- -------- --------
Cash At End Of Year......................................... $ 8,138 $ 6,228 $ 2,050
========= ======== ========
Supplemental Disclosure:
Interest paid, before amount capitalized --
Housing................................................ $ 31,508 $ 31,761 $ 30,559
Financial Services..................................... 1,472 645 572
--------- -------- --------
$ 32,980 $ 32,406 $ 31,131
========= ======== ========
Income taxes paid......................................... $ 16,069 $ 2,159 $ --
========= ======== ========
</TABLE>
The accompanying notes are an integral part of these statements.
23
<PAGE> 24
U.S. HOME CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
UNEARNED
CONVERTIBLE CAPITAL IN COMPENSATION
COMMON PREFERRED EXCESS OF ON RESTRICTED RETAINED
STOCK STOCK PAR VALUE STOCK EARNINGS
------ ----------- ---------- ------------- --------
<S> <C> <C> <C> <C> <C>
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 -- --
Contribution of common stock to profit
sharing plan (55,000 shares)............ 1 -- 847 -- --
Other..................................... -- (3) 751 -- --
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 restricted
stock plan (144,547 shares)............. 1 -- 2,599 (2,600) --
Other..................................... -- (25) 344 289 --
Net income for the year................... -- -- -- -- 36,920
---- -------- -------- ------- --------
BALANCE AT DECEMBER 31, 1995.............. 112 7,981 348,577 (2,311) (25,367)
Conversion of convertible redeemable
preferred stock to common stock (201,391
shares)................................. 2 (5,034) 5,032 -- --
Other..................................... -- -- 221 289 --
Net income for the year................... -- -- -- -- 44,188
---- -------- -------- ------- --------
BALANCE AT DECEMBER 31, 1996.............. $114 $ 2,947 $353,830 $(2,022) $ 18,821
==== ======== ======== ======= ========
</TABLE>
The accompanying notes are an integral part of these statements.
24
<PAGE> 25
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 215 new home communities in 31 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 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 and expected market conditions, 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, 1996, 1995 and 1994 were insignificant.
New Pronouncement
Effective January 1, 1996, the Company adopted Statement of Financial
Accounting Standards No. 123, Accounting for Stock-Based Compensation ("SFAS No.
123"). SFAS No. 123 establishes a "fair value based method" of accounting for
all stock-based employee compensation plans, such as the Company's incentive
stock options, 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"). The Company will continue to value its stock
options using the guidance of APB 25 and, as required by SFAS No. 123, disclose
in the notes to the consolidated financial statements (See Note 5) what net
income and earnings per share would have been had the Company valued its stock
options using the fair value based method.
Income Per Share
The following weighted average number of common and common equivalent
shares were used to compute income per share:
<TABLE>
<CAPTION>
1996 1995 1994
---------- ---------- ----------
<S> <C> <C> <C>
Primary........................................ 11,958,439 11,773,099 11,366,810
Fully diluted.................................. 14,346,440 14,525,989 13,620,331
</TABLE>
25
<PAGE> 26
U.S. HOME CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
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. 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 1996 and 1995.
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 none of these instruments are actively traded on the
open market. The Company has been informed that the 9.75% senior notes are
currently trading at a nominal premium, the 7.95% senior notes are currently
trading at a nominal discount 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 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>
1996 1995
-------- --------
<S> <C> <C>
Housing completed and under construction.................... $280,390 $238,508
Models...................................................... 74,167 63,475
Finished lots............................................... 147,893 129,260
Land under development...................................... 59,840 50,714
Land held for development or sale........................... 147,054 150,078
-------- --------
$709,344 $632,035
======== ========
</TABLE>
26
<PAGE> 27
U.S. HOME CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
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. The Company measures any impairments
on land under development and to be developed at the lower of cost or fair value
and carries 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/net realizable value in 1996 (other than the $12,965 provision for
impairment of land inventories discussed below), 1995 and 1994 were not
significant. Total land and housing reserves were $40,236, $36,370 and $35,417
at December 31, 1996, 1995 and 1994, respectively.
During the fourth quarter of 1996, in conjunction with the completion of
the 1997 business plan, the Company completed its annual detailed evaluation of
the intended use of its land inventories to insure that the primary and planned
use reflected the appropriate economic value for the Company's intended use.
Even though industry forecasts project a softening in housing demand in 1997, no
change in use was required for most of the Company's land inventories. However,
it was determined during the evaluation that based on economic forecasts for
1997 the current best use of certain land inventories located primarily in
Florida, Maryland and Texas had changed from the Company's previous intended
use. The change in intended use for these land inventories include land
previously held for long term development which will now be sold to other
builders in the near term to accelerate its disposition, land that has been
planned for new products and land affected by changes in product pricing. Based
on the change in intended use, the Company determined the cash flow expected to
be generated from the new intended use would be less than the cost of the land.
Accordingly, the Company recorded a non-cash provision for impairment of $12,965
($8,233, net of income taxes) to reduce the carrying value of the land to its
current fair value, which amount has been included in "provision for impairment
of land inventories" in the accompanying consolidated statements of operations.
Fair value was determined based on sales contracts or offers received on land
being sold and by evaluations of comparable market prices. The provision for
impairment reduced primary and fully diluted income per share by $.69 per share
and $.57 per share, respectively.
During 1995, the Company acquired land assets in transactions with third
parties totaling approximately $14,832, 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.
Interest Capitalization
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 1996,
1995 and 1994 follows:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
--------------------------------
1996 1995 1994
-------- -------- --------
<S> <C> <C> <C>
Capitalized at beginning of year.................... $ 59,898 $ 56,082 $ 55,580
Capitalized......................................... 33,484 31,995 30,820
Previously capitalized interest included in interest
expense........................................... (30,786) (27,555) (28,871)
Included in provision for impaired land inventories
and other......................................... (4,030) (624) (1,447)
-------- -------- --------
Capitalized at end of year.......................... $ 58,566 $ 59,898 $ 56,082
======== ======== ========
</TABLE>
27
<PAGE> 28
U.S. HOME CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
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,
1996, 1995 and 1994, revenues included net losses from the sale of loans of
$976, $512 and $831, respectively, and net gains from the sale of servicing of
$7,294, $5,467 and $4,212, respectively.
Interest Expense
Interest expense relating to financial services for the years ended
December 31, 1996, 1995 and 1994 was $1,507, $692 and $537, respectively, and is
included in "general, administrative and other expenses" in the accompanying
consolidated statements of operations.
Residential Mortgage Loans
Residential mortgage loans held for sale ($38,491 at December 31, 1996) 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, 1996 approximated recorded value
based on quoted market prices 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 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,
--------------------
1996 1995
-------- --------
<S> <C> <C>
Revolving credit facility................................... $ -- $ 24,000
-------- --------
7.95% Senior notes due 2001................................. 75,000 --
9.75% Senior notes due 2003................................. 200,000 200,000
4.875% Convertible subordinated debentures due 2005......... 80,000 80,000
Notes and mortgage notes payable............................ 7,887 20,599
-------- --------
362,887 300,599
-------- --------
$362,887 $324,599
======== ========
</TABLE>
28
<PAGE> 29
U.S. HOME CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The Company has an unsecured revolving credit agreement (the "Credit
Facility") with a group of banks. The Credit Facility provides 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. The amount available for
borrowing under the Credit Facility is based on housing inventories, land,
finished lots and closing proceeds receivables less outstanding senior debt
borrowings (as defined), including amounts outstanding under the Credit
Facility; as the amount invested in these categories changes, the amount of
available borrowings will increase or decrease. At December 31, 1996, $124,403
of the Credit Facility commitment was available for borrowing. Borrowings bear
interest at a premium over the Eurodollar rate or the base rate announced by the
agent bank. The Credit Facility, as amended, expires on September 29, 1999, 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. In September 1996, the Company
amended the Credit Facility to, among other things, extend the expiration date
one year to September 29, 1999, and modify the borrowing base provisions to
increase the availability for borrowing and in November 1996, amended the Credit
Facility to increase to $20,000 the amount of convertible subordinated
debentures and/or capital stock which may be repurchased.
On February 16, 1996, the Company completed the sale of $75,000 principal
amount of its 7.95% senior notes due March 1, 2001. Interest is payable
semi-annually. The indenture relating to the 7.95% senior notes contains certain
covenants, including a minimum tangible net worth requirement, a limitation on
the incurrence of additional debt and the making of certain restricted payments.
The 9.75% senior notes are due June 15, 2003. Interest is payable
semi-annually. On or after June 15, 1998, the 9.75% 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 9.75% senior notes contains certain
covenants, including a minimum tangible net worth requirement, a limitation on
the incurrence of additional debt and the 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,
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 $42,590 at
December 31, 1996.
Upon a change of control of the Company, holders of both issues of 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 Facility prohibits the Company from repurchasing
more than $20,000 of the debentures and/or capital stock prior to the
termination of the Credit Facility. Moreover, the occurrence of a change of
control will trigger an event of default under the Credit Facility.
The maximum amounts of borrowings from banks and other financial
institutions outstanding at any time during 1996, 1995 and 1994 were $64,000,
$67,000 and $34,600, respectively. The average amounts of debt outstanding from
banks and other financial institutions during 1996, 1995 and 1994 were $15,800,
$42,400 and
29
<PAGE> 30
U.S. HOME CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
$10,700, respectively, and the weighted average interest rates, without giving
effect to commitment fees, were 8.4%, 9.7% and 9.2%, 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, 1996, housing notes and mortgages payable, senior debt and
convertible subordinated debt mature as follows: $5,243 in 1997, $1,821 in 1998,
$643 in 1999, $180 in 2000, $75,000 in 2001, $200,000 in 2003 and $80,000 in
2005.
Financial Services
Financial services revolving credit facility 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 $55,000 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 in August 1996 under
substantially the same terms and conditions as the previous agreement, matures
on August 31, 1997 and bears interest at a premium over the London Interbank
Offered Rate.
The maximum amounts of financial services borrowings from banks and other
financial institutions outstanding at any time during 1996, 1995 and 1994 were
$42,400, $35,400 and $21,600, respectively. The average amounts of short-term
debt outstanding from banks and other financial institutions during 1996, 1995
and 1994 were $22,300, $8,500 and $5,600, respectively, and the weighted average
interest rates, without giving effect to balance deficiency fees, were 6.6%,
7.0% and 6.3%, 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,
-----------------------------
1996 1995 1994
------- ------- -------
<S> <C> <C> <C>
Current --
Federal............................................. $16,943 $ 1,136 $ 730
State............................................... 2,826 1,130 70
------- ------- -------
19,769 2,266 800
------- ------- -------
Deferred --
Federal............................................. (8,147) 18,653 16,866
State............................................... 91 1,233 2,031
------- ------- -------
(8,056) 19,886 18,897
------- ------- -------
Total provision....................................... $11,713 $22,152 $19,697
======= ======= =======
</TABLE>
Deferred income taxes are determined based upon the difference between the
financial reporting and tax basis of assets and liabilities. At December 31,
1996, the Company has recorded a net deferred tax asset of $2,800 which is
comprised of deferred tax assets of $36,200 (including $17,400 relating to
housing reserves which were expensed for financial reporting purposes but
deferred for federal income tax purposes) and deferred tax liabilities of
$33,400 (including $14,000 relating to interest expense capitalized for
financial reporting purposes but expensed for federal income tax purposes and an
amount related to certain deductions taken in the Company's 1993 federal income
tax return). At December 31, 1995, deferred tax assets and
30
<PAGE> 31
U.S. HOME CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
deferred tax liability were $33,900 and $39,700, respectively, and were
primarily attributable to the same items noted above.
During the fourth quarter of 1996, the Internal Revenue Service (the "IRS")
completed an examination of the Company's federal income tax returns for the
years ended December 31, 1993 and 1992. The results of this examination allowed
certain previously reserved deductions taken by the Company in its 1993 tax
return. However, certain other deductions claimed by the Company in that year
were disallowed by the IRS. At the conclusion of this examination, the Company
reduced its deferred tax liability and recognized an income tax benefit totaling
$8,691 related to the deductions allowed by the IRS. The Company plans to appeal
the IRS decision to disallow certain other deductions, and these deductions
remain reserved as a deferred tax liability as of December 31, 1996. The
decrease in the deferred tax liability increased primary and fully diluted
income per share in 1996 by $.73 per share and $.60 per share, respectively.
The following table reconciles the statutory federal income tax rate to the
effective income tax rate for:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
------------------------
1996 1995 1994
------ ----- -----
<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
Tax benefit............................................... (15.5) -- --
Other, net................................................ (2.5) (1.5) (1.5)
----- ---- ----
Effective rate.............................................. 21.0% 37.5% 37.5%
===== ==== ====
</TABLE>
(4) STOCKHOLDERS' EQUITY
As of December 31, 1996, the Company's capital structure consisted of the
following:
Common Stock -- Authorized 50,000,000 shares, par value $.01 per
share, outstanding 11,453,290 shares.
<TABLE>
<S> <C>
Shares reserved for issuance --
Convertible subordinated debentures....................... 2,253,521
Stock plans............................................... 1,925,817
Class B warrants.......................................... 1,899,897
Convertible redeemable preferred stock.................... 202,206
---------
6,281,441
=========
</TABLE>
Preferred Stock -- Authorized 10,000,000 shares, par value $.10 per
share, including 202,206 convertible redeemable preferred shares, 500,000
Series A junior non-cumulative preferred shares and 9,297,794 shares
undesignated as to series.
(a) Convertible redeemable preferred stock -- $25 per share
liquidation preference and redemption value, outstanding 117,863 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. On February 12, 1997, the Board
of Directors authorized the redemption of the remaining outstanding
shares of the Company's convertible preferred stock for $25 per share on
March 18, 1997. As of December 31, 1996, 2,697,794 shares of convertible
redeemable preferred stock had been converted into an equal number of
shares of
31
<PAGE> 32
U.S. HOME CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
common stock. If 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) Series A junior non-cumulative preferred stock -- Authorized
500,000 shares, par value $.10 per share. The shares are authorized for
issuance pursuant to certain rights that trade with the Company's common
stock and convertible redeemable preferred stock. There are no shares of
the Series A junior non-cumulative preferred stock outstanding; however,
all of the shares have been reserved for issuance upon the exercise of
the stock purchase rights as discussed in "Stockholder Rights Plan"
below.
(c) 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,
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
4,860 warrants had been exercised at December 31, 1996. The warrants expire
in June 1998.
Stockholder Rights Plan -- On November 7, 1996, the Company adopted a
rights plan and declared a dividend distribution of one preferred stock
purchase right for each outstanding share of the Company's common stock and
each outstanding share of the Company's convertible redeemable preferred
stock held of record on December 4, 1996. Under certain circumstances, each
right entitles the holder to purchase 1/100th of a share of the Company's
Series A junior non-cumulative preferred stock ("Series A Preferred Stock")
at a price of $80 ("Purchase Price"), subject to certain antidilution
provisions. The rights are not exercisable until the earlier to occur of
(i) 10 days following a public announcement that (a) a person or group has
acquired, or has the right to acquire, 15% or more of the outstanding
shares of the Company's common stock or (b) an institutional stockholder
has acquired or has the right to acquire 20% or more of the outstanding
shares of common stock, or (ii) 10 business days following the commencement
of, or announcement of an intention to make, a tender offer for 15% or more
of the then outstanding shares of common stock. In such event, each holder
of a right (other than the acquiring person) shall have the right to
receive, upon exercise, the number of shares of common stock or of 1/100th
of a share of Series A Preferred Stock having a value of equal to two times
the Purchase Price. In the event of any merger, consolidation or other
transaction in which the Company's common stock is exchanged, each holder
of a right, upon exercise, will be entitled to receive common stock of the
acquiring company equal to two times the Purchase Price. Unless and until
the rights become exercisable, they will be transferred with the Company's
common stock and convertible redeemable preferred stock. At the option of
the Company, the rights are redeemable prior to becoming exercisable at
$.01 per right. Unless earlier redeemed or exchanged by the Company, the
rights will expire on November 7, 2006. Until a right is exercised, the
holder will have no rights as a stockholder of the Company, including the
right to vote or receive dividends.
The Credit Facility and the senior note indentures 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
32
<PAGE> 33
U.S. HOME CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
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 three stock option plans for key employees (the "1997
Employee Plan", which is subject to stockholder approval which will be sought at
the 1997 annual meeting of stockholders, the "1996 Employee Plan" and the "1993
Employee Plan") to purchase a maximum of 1,500,000 shares (500,000 shares for
each plan) of the Company's common stock. Under all three 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 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. However under the Employee Plans and the Director Plan, 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 1997 Employee Plan, no options may be exercised prior to
stockholder approval.
As discussed in New Pronouncement in Note 1, the Company adopted SFAS No.
123 as of January 1, 1996. As permitted by SFAS No. 123, the Company has elected
to continue to account for its stock option plans under the accounting rules
prescribed by APB 25, under which no compensation costs are recognized as an
expense. Had compensation costs for the stock options been determined using the
fair value method of accounting as recommended by SFAS No. 123, net income and
earnings per share for 1996 and 1995 would have been reduced to the following
proforma amounts:
<TABLE>
<CAPTION>
1996 1995
------- -------
<S> <C> <C>
Net income --
As reported............................................... $44,188 $36,920
Proforma.................................................. $43,810 $36,434
Primary income per share --
As reported............................................... $ 3.70 $ 3.14
Proforma.................................................. $ 3.65 $ 3.07
Fully diluted income per share --
As reported............................................... $ 3.25 $ 2.68
Proforma.................................................. $ 3.22 $ 2.63
</TABLE>
Because the SFAS No. 123 method of accounting has not been applied to
options granted prior to January 1, 1995, the resulting proforma compensation
cost may not be representative of that to be expected in future years.
33
<PAGE> 34
U.S. HOME CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
A summary of the status of the stock option plans at December 31, 1996,
1995 and 1994 and changes during the years then ended is presented below:
<TABLE>
<CAPTION>
1996 1995 1994
------------------ ------------------ ------------------
WTD AVG WTD AVG WTD AVG
EXERCISE EXERCISE EXERCISE
SHARES PRICE SHARES PRICE SHARES PRICE
------- -------- ------- -------- ------- --------
<S> <C> <C> <C> <C> <C> <C>
Options outstanding at beginning of
year................................. 531,169 $22.65 403,500 $21.87 308,500 $23.98
Options granted:
Employee Plans....................... 102,000 $24.13 122,000 $25.70 95,000 $15.13
Director Plan........................ 9,000 $23.74 9,000 $16.82 9,000 $22.71
Options exercised...................... -- $ -- -- $ -- -- $ --
Options forfeited...................... (2,669) $24.09 (3,331) $24.57 (9,000) $23.65
------- ------- -------
Options outstanding at end of year..... 639,500 $22.89 531,169 $22.65 403,500 $21.87
======= ======= =======
Options exercisable at end of year..... 551,179 $23.12 365,537 $23.32 143,834 $23.74
======= ======= =======
Weighted average fair value per share
of option granted --
Employee Plans....................... $ 8.39 $ 7.87 N/A
Director Plan........................ $ 9.97 $ 7.96 N/A
</TABLE>
Options outstanding at December 31, 1996 had exercise prices ranging from
$15.13 to $27.75 per share and a weighted average remaining contractual life of
8.3 years. Options exercisable at December 31, 1996 had a weighted average
remaining contractual life of 8.3 years.
The fair value of each option granted in 1996 and 1995 was estimated on the
date of grant using the Black-Scholes option pricing model with the following
weighted average assumptions: risk-free interest of 6.6% for 1996 and 5.9% for
1995; expected lives of 7.1 years for 1996 and 6.1 years for 1995; and expected
volatility of 25.0% for both years.
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, but in no event will the average closing price be less than
95% of the average closing price of the common stock for the 20 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 1996, 7,905 shares were
issued to officers and key employees at prices ranging from $25.05 to $27.93 per
share and 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, 1996, 220,364
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
34
<PAGE> 35
U.S. HOME CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
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. As defined in the Restricted
Plan, the lapsing of the restrictions may be accelerated if certain stipulated
improvements in the Company's return on assets over the base year are achieved
or if a change in control occurs.
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 $1,051 in 1996, $991 in 1995 and $891 in 1994.
(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 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, 1996, the Company had refundable and nonrefundable
deposits totaling $28,035 for options and contracts to purchase undeveloped land
and finished lots having a total purchase price of approximately $267,000. The
Company had incurred pre-development costs of $42,653 relating to these
properties. These options expire at various dates through 2002.
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, 1996, Mortgage, in connection with managing the interest
rate market risk on its inventory loans held for sale of $38,833 and Loan Quotes
of $18,755, had outstanding $41,370 (face amount of $42,000 and estimated fair
value of $41,245) of Forward Contracts and $14,038 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, 1996, the estimated
fair value of the inventory loans and Loan Quotes hedged by Forward Contracts
and not covered by the Forward Commitments was $42,760.
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.
35
<PAGE> 36
U.S. HOME CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(8) UNAUDITED SUMMARIZED CONSOLIDATED QUARTERLY INFORMATION
Summarized quarterly financial information for the years ended December 31,
1996 and 1995 is as follows. See Notes 1 and 3 for discussions of 1996 fourth
quarter adjustments.
<TABLE>
<CAPTION>
THREE MONTHS ENDED
---------------------------------------------------
MARCH 31, JUNE 30, SEPTEMBER 30, DECEMBER 31,
1996 1996 1996 1996
--------- -------- ------------- ------------
<S> <C> <C> <C> <C>
Housing --
Operating revenues.................... $267,907 $288,428 $312,275 $322,596
Cost of products sold................. $218,350 $235,563 $253,756 $264,227
Operating income...................... $ 16,276 $ 17,348 $ 20,644 $ 7,939
Financial Services --
Operating revenues.................... $ 4,855 $ 4,808 $ 5,397 $ 5,184
Operating income...................... $ 1,154 $ 1,471 $ 1,427 $ 1,342
Corporate General and Administrative.... $ 2,754 $ 2,993 $ 2,945 $ 3,008
Net Income.............................. $ 9,319 $ 10,050 $ 12,145 $ 12,674
Income Per Common and Common Equivalent
Share --
Primary............................... $ .77 $ .84 $ 1.03 $ 1.07
Fully diluted......................... $ .69 $ .75 $ .91 $ .93
</TABLE>
<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
Cost of products sold................. $211,332 $208,985 $231,302 $239,544
Operating income...................... $ 15,726 $ 14,165 $ 17,575 $ 20,063
Financial Services --
Operating revenues.................... $ 3,075 $ 3,714 $ 4,286 $ 4,587
Operating income...................... $ 385 $ 853 $ 1,141 $ 954
Corporate General and Administrative.... $ 3,087 $ 2,515 $ 2,973 $ 3,215
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>
(9) RECEIVABLES
The Company had housing and financial services receivables of approximately
$1,973 in 1996 and $6,574 in 1995 that were due after one year. The 1996 balance
due after one year included notes and mortgage notes receivable of $151 with
interest rates ranging from 8.0% to 10.5%. A majority of the balance matures
within five years.
36
<PAGE> 37
U.S. HOME CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(10) ACCRUED EXPENSES
At December 31, 1996 and 1995, accrued expenses and other current
liabilities consisted of the following:
<TABLE>
<CAPTION>
1996 1995
------- -------
<S> <C> <C>
Housing --
Customer deposits..................... $18,762 $16,887
Salaries and other compensation....... 13,633 12,013
Interest.............................. 4,023 2,206
Taxes, other than income taxes........ 3,739 2,852
Income taxes.......................... 1,910 6,266
Other................................. 8,905 5,846
------- -------
$50,972 $46,070
======= =======
Financial Services --
Accounts payable...................... $14,621 $12,935
Other................................. 6,233 5,883
------- -------
$20,854 $18,818
======= =======
</TABLE>
37
<PAGE> 38
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 17, 1997, for the Annual Meeting of
Stockholders to be held on April 23, 1997, to be filed with the Securities and
Exchange Commission pursuant to Section 14 of the Securities Exchange Act of
1934 (the "1997 Proxy Statement").
ITEM 11. EXECUTIVE COMPENSATION
The information is incorporated by reference from the Executive
Compensation Section, pages 6 through 8 of the 1997 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 19 and 20 of the 1997
Proxy Statement.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
None.
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>
<CAPTION>
EXHIBIT NO. DESCRIPTION
----------- -----------
<C> <S>
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.
</TABLE>
38
<PAGE> 39
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
----------- -----------
<C> <S>
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.
3.1 (ii) -- Certificate of Retirement, dated as of September 11,
1995. Incorporated by reference from exhibit 3.1 to U.S.
Home Corporation's Quarterly Report on Form 10-Q for the
period ended September 30, 1996.
3.1 (iii) -- Certificate of Retirement, dated as of July 31, 1996.
Incorporated by reference from exhibit 3.2 to U.S. Home
Corporation's Quarterly Report on 10-Q for the period
ended September 30, 1996.
3.2 -- Certificate of Designation, Preferences and Rights of
Series A Junior Non-Cumulative Preferred Stock as filed
with the State of Delaware on December 2, 1996.
3.3 -- Amended and Restated By-Laws of U.S. Home Corporation,
dated as of October 17, 1996. Incorporated by reference
from exhibit 3.1 (ii) to U.S. Home Corporation's Current
Report on Form 8-K filed November 8, 1996.
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 Corporation's Quarterly Report on Form
10-Q for period ended September 30, 1995.
10.1 (i) -- Consent and First Amendment to Credit Agreement, dated as
of February 9, 1996, between U.S. Home Corporation and
the First National Bank of Chicago, as Agent.
Incorporated by reference from exhibit 10 to U.S. Home
Corporation's Current Report on Form 8-K filed February
12, 1996.
10.1 (ii) -- Second Amendment to Credit Agreement, dated as of
September 25, 1996, 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 Corporation's
Quarterly Report on Form 10-Q for period ended September
30, 1996.
10.1 (iii) -- Third Amendment to Credit Agreement, dated as of November
4, 1996, between U.S. Home Corporation and The First
National Bank of Chicago, as Agent. Incorporated by
reference from exhibit 10 to U.S. Home Corporation's
Current Report on Form 8-K filed November 8, 1996.
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>
39
<PAGE> 40
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
----------- -----------
<C> <S>
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 -- Senior Indenture, dated as of February 16, 1996, by and
between U.S. Home Corporation and IBJ Schroder Bank &
Trust Company, as Trustee, relating to U.S. Home
Corporation's 7.95% Senior Notes due 2001. Incorporated
by reference from exhibit 4.1 to U.S. Home Corporation's
Quarterly Report on Form 10-Q for the period ended March
31, 1996.
10.4 (i) -- Officers' Certificate, dated February 16, 1996,
establishing the form and terms of the $75 million
aggregate principal amount of 7.95% Senior Notes due
2001. Incorporated by reference from exhibit 4.2 to U.S.
Home Corporation's Quarterly Report on Form 10-Q for the
period ended March 31, 1996.
10.5 -- Rights Agreement, dated as of November 7, 1996, between
U.S. Home Corporation and First Chicago Trust Company of
New York, and exhibits thereto. Incorporated by reference
from exhibit 4 to U.S. Home Corporation's Current Report
on Form 8-K/A Amendment No. 1 filed November 18, 1996.
10.6 -- Warrant Agreement, dated as of June 21, 1993, between
U.S. Home Corporation and First Chicago Trust Company of
New York (as successor to 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).
10.7 -- U.S. Home Corporation 1997 Employees' Stock Option Plan.
10.8 -- U.S. Home Corporation Amended and Restated 1996
Employees' Stock Option Plan.
10.9 -- U.S. Home Corporation's Amended and Restated 1993
Employees' Stock Option Plan.
10.10 -- U.S. Home Corporation's Amended and Restated Non-Employee
Directors' Stock Option Plan.
10.11 -- U.S. Home Corporation's Amended and Restated Employee
Stock Payment Plan.
10.12 -- 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.
10.13 -- U.S. Home Corporation's Corporate Officers Incentive
Compensation Program for the Incentive Period January 1,
1997 to December 31, 1997.
10.14 -- U.S. Home Corporation's Key Employees' Severance Plan.
10.15 -- 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.
10.16 -- Corrected copy of Amended and Restated Employment and
Consulting Agreement, dated as of October 17, 1995,
between U.S. Home Corporation and Robert J. Strudler.
Incorporated by reference from exhibit 10.3 to U.S. Home
Corporation's Quarterly Report on Form 10-Q for the
period ended September 30, 1996.
10.16(i) -- First Amendment to Amended and Restated Employment and
Consulting Agreement, dated as of February 11, 1997,
between U.S. Home Corporation and Robert J. Strudler.
</TABLE>
40
<PAGE> 41
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
----------- -----------
<C> <S>
10.17 -- Corrected copy of Amended and Restated Employment and
Consulting Agreement, dated as of October 17, 1995,
between U.S. Home Corporation and Isaac Heimbinder.
Incorporated by reference from exhibit 10.4 to U.S. Home
Corporation's Quarterly Report on Form 10-Q for the
period ended September 30, 1996.
10.17(i) -- First Amendment to Amended and Restated Employment and
Consulting Agreement, dated as of February 11, 1997,
between U.S. Home Corporation and Isaac Heimbinder.
10.18 -- 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).
10.19 -- 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.
10.20 -- 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.
10.21 -- 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.
10.22 -- 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.
10.22(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.
Incorporated by reference from exhibit 10.19(I) to U.S.
Home Corporation's annual report on Form 10-K for the
year ended December 31, 1995.
10.22(ii) -- Second Amendment to First Amended and Restated
Warehousing Credit and Security Agreement (single-family
mortgage loans), dated as of August 30, 1996, 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, 1996.
10.22(iii) -- Third Amendment to First Amended and Restated Warehousing
Credit and Security Agreement (single-family mortgage
loans), dated as of January 2, 1997, between U.S. Home
Mortgage Corporation and Residential Funding Corporation.
10.23 -- 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).
</TABLE>
41
<PAGE> 42
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
----------- -----------
<C> <S>
10.24 -- 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
The Company filed a Current Report on Form 8-K, on November 8, 1996, as
amended on November 18, 1996, describing under Item 5 "Other Events" the terms
of the preferred stock purchase rights which the Company distributed to the
holders of the Company's Common Stock, $.01 par value per share, on December 4,
1996 by declaration of the Board of Directors of the Company on November 7,
1996.
No other Current Report on Form 8-K was filed by the Company during
October, November or December 1996.
42
<PAGE> 43
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 21, 1997
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-Corporate Finance and
Treasurer (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
--------- ----- ----
<C> <S> <C>
/s/ ROBERT J. STRUDLER Director, Chairman and February 21, 1997
- ----------------------------------------------------- Co-Chief Executive Officer
Robert J. Strudler (principal executive
officer)
/s/ ISAAC HEIMBINDER Director, President, February 21, 1997
- ----------------------------------------------------- Co-Chief Executive Officer
Isaac Heimbinder and Chief Operating
Officer
/s/ GLEN ADAMS Director February 21, 1997
- -----------------------------------------------------
Glen Adams
/s/ STEVEN L. GERARD Director February 21, 1997
- -----------------------------------------------------
Steven L. Gerard
/s/ KENNETH J. HANAU, JR. Director February 21, 1997
- -----------------------------------------------------
Kenneth J. Hanau, Jr.
/s/ MALCOLM T. HOPKINS Director February 21, 1997
- -----------------------------------------------------
Malcolm T. Hopkins
/s/ JACK L. MCDONALD Director February 21, 1997
- -----------------------------------------------------
Jack L. McDonald
</TABLE>
43
<PAGE> 44
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ CHARLES A. MCKEE Director February 21, 1997
- -----------------------------------------------------
Charles A. McKee
/s/ GEORGE A. POOLE, JR. Director February 21, 1997
- -----------------------------------------------------
George A. Poole, Jr.
/s/ HERVE RIPAULT Director February 21, 1997
- -----------------------------------------------------
Herve Ripault
/s/ JAMES W. SIGHT Director February 21, 1997
- -----------------------------------------------------
James W. Sight
</TABLE>
44
<PAGE> 45
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit
Number
-------
<S> <C>
3.2 Certificate of Designation, Preferences and
Rights of Series A Junior Non-Cumulative
Preferred Stock as filed with the State of
Delaware on December 2, 1996
10.7 U.S. Home Corporation 1997 Employees' Stock
Option Plan
10.8 U.S. Home Corporation Amended and Restated 1996
Employees' Stock Option Plan
10.9 U.S. Home Corporation's Amended and Restated 1993
Stock Option Plan
10.10 U.S. Home Corporation's Amended and Restated Non-
Employee Directors' Stock Option Plan
10.11 U.S. Home Corporations' Amended and Restated
Employee Stock Payment Plan
10.13 U.S. Home Corporation's Corporate Officers Incentive
Compensation Program for the Incentive Period January
1, 1997 to December 31, 1997
10.14 U.S. Home Corporation's Key Employee Severance Plan
10.16 (i) First Amendment to Amended and Restated Employment
and Consulting Agreement, dated as of February 11,
1997, between U.S. Home Corporation and Robert J.
Strudler
10.17 (i) First Amendment to Amended and Restated Employment
and Consulting Agreement, dated as of February 11,
1997, between U.S. Home Corporation and Isaac
Heimbinder
10.22 Third Amendment to First Amended and Restated
Warehousing Credit and Security Agreement (single-
family mortgage loans), dated as of January 2,
1997, 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
</TABLE>
<PAGE> 1
EXHIBIT 3.2
Exhibit A
FORM OF
CERTIFICATE OF DESIGNATION, PREFERENCES AND
RIGHTS OF SERIES A JUNIOR NON-CUMULATIVE PREFERRED STOCK
of
U.S. HOME CORPORATION
Pursuant to Section 151 of the General Corporation Law
of the State of Delaware
We, Robert J. Strudler, Chairman and Co-Chief Executive
Officer, and Richard G. Slaughter, Vice President - Planning and Secretary, of
U.S. Home Corporation, a corporation organized and existing under the General
Corporation Law of the State of Delaware (the "CORPORATION"), in accordance
with the provisions of Section 103 thereof, DO HEREBY CERTIFY:
That pursuant to the authority conferred upon the
Corporation's Board of Directors (the "BOARD OF DIRECTORS") by the Restated
Certificate of Incorporation, as amended, of the Corporation (the "CERTIFICATE
OF INCORPORATION"), the Board of Directors on November 7, 1996 adopted by
resolution this Certificate of Designation creating a series of 500,000 shares
of Preferred Stock designated as Series A Junior Non-Cumulative Preferred
Stock:
Pursuant to the authority vested in the Board of Directors in
accordance with the provisions of the Certificate of Incorporation, a series of
Preferred Stock of the Corporation be and it hereby is created, and that the
designation and amount thereof and the voting powers, preferences and relative,
participating, optional and other special rights of the shares of such series,
and the qualifications, limitations or restrictions thereof are as follows:
1. Designation and Amount. The shares of such series shall be designated
as "Series A Junior Non-Cumulative Preferred Stock," $.10 par value per share,
and the number of shares constituting such series shall be 500,000. Such
number of shares may be increased or decreased by the Board of Directors;
provided, that no decrease shall reduce the number of shares of Series A Junior
Non-Cumulative Preferred Stock to a number less than the number of shares
outstanding plus the number of shares reserved for issuance upon the exercise
of outstanding options, rights or warrants or upon the conversion of any
outstanding securities issued by the Corporation convertible into Series A
Junior Non-Cumulative Preferred Stock.
<PAGE> 2
2. Dividends and Distributions.
(A) Subject to the prior and superior rights of the
holders of any shares of any series of Preferred Stock, including specifically
holders of shares of the Corporation's Convertible Redeemable Preferred Stock,
$.10 par value per share (the "CONVERTIBLE PREFERRED STOCK"), ranking prior and
superior to the shares of Series A Junior Non-Cumulative Preferred Stock with
respect to dividends, holders of record of the Series A Junior Non-Cumulative
Preferred Stock will be entitled to receive if, when, and as declared by the
Board of Directors, but only out of funds legally available for the payment of
cash dividends under the laws of the State of Delaware, quarterly dividends
payable on the last day of March, June, September and December in each year
(each such date being referred to herein as a "QUARTERLY DIVIDEND PAYMENT
DATE"), commencing on the first Quarterly Dividend Payment Date after the first
issuance of a share or fraction of a share of Series A Junior Non-Cumulative
Preferred Stock, in an amount per share (rounded to the nearest cent) equal to
the greater of (a) $1.00 or (b) subject to the provision for adjustment
hereinafter set forth, 100 times the aggregate per share amount of all cash
dividends, and 100 times the aggregate per share amount (payable in kind) of
all non-cash dividends or other distributions other than a dividend payable in
shares of Common Stock, $.01 par value per share ("COMMON STOCK"), or a
subdivision of the outstanding shares of Common Stock (by reclassification or
otherwise), to be declared on the Common Stock with respect to the immediately
preceding Quarterly Dividend Payment Date, or, in the case of the first
Quarterly Dividend Payment Date, since the first issuance of any share or
fraction of a share of Series A Junior Non-Cumulative Preferred Stock. In the
event the Corporation shall at any time after November 7, 1996 (the "RIGHTS
DECLARATION DATE") (i) declare any dividend on Common Stock payable in shares
of Common Stock, (ii) subdivide the outstanding Common Stock or (iii) combine
the outstanding Common Stock into a smaller number of shares, then in each such
case the amount to which holders of shares of Series A Junior Non-Cumulative
Preferred Stock were entitled immediately prior to such event under clause (b)
of the preceding sentence shall be adjusted by multiplying such amount by a
fraction, the numerator of which is the number of shares of Common Stock
outstanding immediately after such event and the denominator of which is the
number of shares of Common Stock that were outstanding immediately prior to
such event.
(B) The Corporation shall declare a dividend or
distribution on the Series A Junior Non-Cumulative Preferred Stock as provided
in paragraph (A) above immediately prior to the time when it declares a
dividend or distribution on the Common Stock (other than a dividend payable in
shares of Common Stock) and at no other time.
(C) Dividends on outstanding shares of Series A Junior
Non-Cumulative Preferred Stock will not be cumulative. Dividends paid on the
shares of Series A Junior Non-Cumulative Preferred Stock in an amount less than
the total amount of such dividends at the time declared on such shares shall be
allocated pro rata on a share-by-share basis among all such shares at the time
outstanding. Such dividends, if any, will be payable to holders of record on
the date fixed for such purpose by the Board of Directors in advance of the
payment of each such dividend.
2
<PAGE> 3
3. Voting Rights.
(A) The holders of the Series A Junior Non-Cumulative
Preferred Stock, voting together as a single class (except as otherwise
provided herein or by law) with the holders of the Convertible Preferred Stock
and the holders of the Common Stock, will have the right to vote on all matters
requiring action of the stockholders of the Corporation or submitted to such
stockholders for action, except when otherwise required by law.
(B) Subject to the provision for adjustment hereinafter
set forth, each share of Series A Junior Non-Cumulative Preferred Stock shall
entitle the holder thereof to 100 votes on all matters submitted to a vote of
the stockholders of the Corporation. In the event the Corporation shall at any
time after the Rights Declaration Date (i) declare any dividend on Common Stock
payable in shares of Common Stock, (ii) subdivide the outstanding Common Stock
or (iii) combine the outstanding Common Stock into a smaller number of shares,
then in each such case the number of votes per share to which holders of shares
of Series A Junior Non-Cumulative Preferred Stock were entitled immediately
prior to such event shall be adjusted by multiplying such number by a fraction
the numerator of which is the number of shares of Common Stock outstanding
immediately after such event and the denominator of which is the number of
shares of Common Stock that were outstanding immediately prior to such event.
(C) In the event the Board of Directors declares a
dividend on the Series A Junior Non-Cumulative Preferred Stock, and the
Corporation fails to pay such dividend for six consecutive fiscal quarters
("UNPAID DIVIDENDS") following the date of such declaration, the holders of the
outstanding shares of Series A Junior Non-Cumulative Preferred Stock, voting as
a single class, will be entitled, by written notice to the Corporation given by
the holders of a majority of the Series A Junior Non-Cumulative Preferred Stock
then outstanding or by ordinary resolution passed by the holders of a majority
of the Series A Junior Non-Cumulative Preferred Stock then outstanding present
in person or by proxy at a separate general meeting of such holders convened
for the purpose, to elect two additional directors to the Board of Directors,
to remove any such directors from office and to elect persons in place of such
directors. No later than 30 days after such entitlement arises, if written
notice by a majority of the holders of the Series A Junior Non- Cumulative
Preferred Stock then outstanding has not been given as provided for in the
preceding sentence, the Board of Directors, or an authorized committee thereof,
will convene a separate general meeting for the foregoing purpose. In the
event the Board of Directors or such authorized committee fails to convene such
meeting within such 30-day period, the holders of 10 percent of the shares of
the Series A Junior Non-Cumulative Preferred Stock then outstanding will be
entitled to convene such meeting. The provisions of the Certificate of
Incorporation relating to the convening and conduct of Special Meetings (as
defined therein) will apply with respect to any such separate general meeting.
Directors elected as aforesaid will serve until the next Annual Meeting (as
defined in the Certificate of Incorporation). Upon the Corporation having paid
all Unpaid Dividends in full, the term of any directors elected pursuant to
this Section 3(C) will cease, and the number of directors of the Corporation
will automatically be decreased by two.
3
<PAGE> 4
(D) With respect to all matters upon which the holders of
the Series A Junior Non-Cumulative Preferred Stock, the Convertible Preferred
Stock and Common Stock may be entitled to vote, voting together as a single
class, such matters will require the affirmative vote of the holders of a
majority of the votes cast by the holders of the Series A Junior Non-Cumulative
Preferred Stock, the Convertible Preferred Stock and Common Stock entitled to
vote, voting together as a single class, except where a higher or lower vote is
required by (i) the General Corporation Law of the State of Delaware, (ii) the
provisions of the Certificate of Incorporation, (iii) the provisions of the
Corporation's Amended and Restated By-Laws or (iv) the provisions of this
Certificate of Designation, Preferences and Rights.
(E) Except as set forth herein, holders of Series A
Junior Non-Cumulative Preferred Stock shall have no special voting rights and
their consent shall not be required (except to the extent they are entitled to
vote with holders of Convertible Preferred Stock and Common Stock as set forth
herein) for taking any corporate action.
4. Certain Restrictions.
For so long as any dividend declared on the Series A Junior
Non-Cumulative Preferred Stock is unpaid, the Corporation shall not
(i) declare or pay dividends on or make any other
distributions on any shares of stock ranking junior (either as
to dividends or upon liquidation, dissolution or winding up)
to the Series A Junior Non-Cumulative Preferred Stock;
(ii) declare or pay dividends on or make any other
distributions on any shares of stock ranking on a parity
(either as to dividends or upon liquidation, dissolution or
winding up) with the Series A Junior Non-Cumulative Preferred
Stock, except dividends paid ratably on the Series A Junior
Non-Cumulative Preferred Stock and all such parity stock on
which dividends are payable or in arrears in proportion to the
total amounts to which the holders of all such shares are then
entitled;
(iii) redeem or purchase or otherwise acquire for
consideration shares of any stock ranking junior (either as to
dividends or upon liquidation, dissolution or winding up) to
the Series A Junior Non-Cumulative Preferred Stock; provided
that the Corporation may at any time redeem, purchase or
otherwise acquire shares of any such junior stock in exchange
for shares of any stock of the Corporation ranking junior
(either as to dividends or upon dissolution, liquidation or
winding up) to the Series A Junior Non-Cumulative Preferred
Stock; or
(iv) redeem or purchase or otherwise acquire for
consideration any shares of Series A Junior Non-Cumulative
Preferred Stock, or any shares of stock ranking on a parity
with the Series A Junior Non-Cumulative Preferred Stock,
4
<PAGE> 5
except in accordance with a purchase offer made in writing or
by publication (as determined by the Board of Directors) to
all holders of such shares upon such terms as the Board of
Directors, after consideration of the respective annual
dividend rates and other relative rights and preferences of
the respective series and classes, shall determine in good
faith will result in fair and equitable treatment among the
respective series or classes.
5. Liquidation, Dissolution or Winding Up.
(A) Upon any liquidation (voluntary or otherwise),
dissolution or winding up of the Corporation, no distribution shall be made (i)
to the holders of shares of stock ranking junior (either as to dividends or
upon liquidation, dissolution or winding up) to the Series A Junior
Non-Cumulative Preferred Stock unless, prior thereto, the holders of shares of
Series A Junior Non-Cumulative Preferred Stock shall have received $100 per
share, plus an amount equal to declared and unpaid dividends and distributions
thereon to the date of such payment; provided, that the holders of shares of
Series A Junior Non-Cumulative Preferred Stock shall be entitled to receive an
aggregate amount per share, subject to the provision for adjustment as
hereinafter set forth, equal to 100 times the aggregate amount to be
distributed per share to holders of shares of Common Stock or (ii) to the
holders of shares of stock ranking on a parity (either as to dividends or upon
liquidation, dissolution or winding up) with the Series A Junior Non-Cumulative
Preferred Stock, except distributions made ratably on the Series A Junior
Non-Cumulative Preferred Stock and all such parity stock in proportion to the
total amounts to which the holders of all such shares are entitled upon such
liquidation, dissolution or winding up (the "SERIES A LIQUIDATION PREFERENCE").
(B) In the event the Corporation shall at any time after
the Rights Declaration Date (i) declare any dividend on Common Stock payable in
shares of Common Stock, (ii) subdivide the outstanding Common Stock or (iii)
combine the outstanding Common Stock into a smaller number of shares, then in
each such case the aggregate amount to which holders of shares of Series A
Junior Non-Cumulative Preferred Stock were entitled immediately prior to such
event under the proviso in clause (i) of Section 5(A) shall be adjusted by
multiplying such amount by a fraction the numerator of which is the number of
shares of Common Stock outstanding immediately after such event and the
denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
(C) In the event, however, that there are not sufficient
assets available to permit payment in full of the Series A Liquidation
Preference and the liquidation preferences of all other series of preferred
stock, if any, which rank on a parity with the Series A Junior Non-Cumulative
Preferred Stock, then such remaining assets shall be distributed ratably to the
holders of such parity shares in proportion to their respective liquidation
preferences.
(D) For the purpose hereof, the voluntary sale, lease,
exchange or transfer, whether for cash, stock, property or otherwise, of all or
substantially all or part of the Corporation's property or assets to, or a
consolidation or merger of the Corporation with or into,
5
<PAGE> 6
one or more other corporations or partnerships, or the reduction of the
Corporation's capital stock, will not be deemed to be a liquidation,
dissolution or winding up of the Corporation.
6. Ranking
The Series A Junior Non-Cumulative Preferred Stock shall rank
junior to all other series of the Corporation's Preferred Stock and senior to
the Common Stock, as to the payment of dividends and the distribution of
assets, unless the terms of any such other stock shall provide otherwise.
7. Consolidation, Merger, etc.
In case the Corporation shall enter into any consolidation,
merger, combination or other transaction in which the shares of Common Stock
are exchanged for or changed into other stock or securities, cash and/or any
other property, then in any such case the shares of Series A Junior
Non-Cumulative Preferred Stock shall at the same time be similarly exchanged or
changed in an amount per share (subject to the provision for adjustment
hereinafter set forth) equal to 100 times the aggregate amount of stock,
securities, cash and/or any other property (payable in kind), as the case may
be, into which or for which each share of Common Stock is changed or exchanged.
In the event the Corporation shall at any time after the Rights Declaration
Date (i) declare any dividend on Common Stock payable in shares of Common
Stock, (ii) subdivide the outstanding Common Stock, or (iii) combine the
outstanding Common Stock into a smaller number of shares, then in each such
case the amount set forth in the preceding sentence with respect to the
exchange or change of shares of Series A Junior Non-Cumulative Preferred Stock
shall be adjusted by multiplying such amount by a fraction the numerator of
which is the number of shares of Common Stock outstanding immediately after
such event and the denominator of which is the number of shares of Common Stock
that were outstanding immediately prior to such event.
8. No Redemption. The shares of Series A Junior Non-Cumulative Preferred
Stock shall not be redeemable.
9. Reacquired Shares.
Any shares of Series A Junior Non-Cumulative Preferred Stock
purchased or otherwise acquired by the Corporation in any manner whatsoever
shall be retired and cancelled promptly after the acquisition thereof. All
such shares shall upon their cancellation become authorized but unissued shares
of Preferred Stock and may be reissued as part of a new series of Preferred
Stock, subject to the conditions and restrictions on issuance set forth herein,
in the Certificate of Incorporation, or in any other Certificate of Designation
creating a series of Preferred Stock of the Corporation or any similar stock or
as otherwise required by law.
6
<PAGE> 7
10. No Preemptive Rights
Holders of Series A Junior Non-Cumulative Preferred Stock will
have no preemptive rights to subscribe for or purchase additional shares of any
class of stock or other security of the Corporation.
11. Legends
In addition to any other legend required to be set forth on
each certificate representing Series A Junior Non-Cumulative Preferred Stock
pursuant to the Certificate of Incorporation or by law, each such certificate
will bear the following legend:
"U.S. HOME CORPORATION WILL FURNISH WITHOUT CHARGE TO
EACH HOLDER OF THE SERIES A JUNIOR NON-CUMULATIVE PREFERRED
STOCK WHO SO REQUESTS THE POWERS, DESIGNATIONS, PREFERENCES
AND RELATIVE, PARTICIPATING, OPTIONAL, OR OTHER SPECIAL RIGHTS
OF EACH CLASS OF STOCK OF U.S. HOME CORPORATION OR SERIES
THEREOF AND THE QUALIFICATIONS, LIMITATIONS OR RESTRICTIONS OF
SUCH PREFERENCES AND/OR RIGHTS."
12. Amendment. The Certificate of Incorporation shall not be further
amended in any manner which would materially alter or change the powers,
preferences or special rights of the Series A Junior Non-Cumulative Preferred
Stock so as to affect them adversely without the affirmative vote of the
holders of a majority or more of the outstanding shares of Series A Junior
Non-Cumulative Preferred Stock, voting separately as a class.
13. Fractional Shares. Series A Junior Non-Cumulative Preferred Stock may
be issued in fractions of a share, which shall entitle the holder, in
proportion to such holder's fractional shares, to exercise voting rights,
receive dividends, participate in distributions and to have the benefit of all
other rights of holders of Series A Junior Non- Cumulative Preferred Stock.
7
<PAGE> 8
IN WITNESS WHEREOF, we have executed and subscribed this Certificate and do
affirm the foregoing as true under the penalties of perjury this 8th day of
November, 1996.
/s/ Robert J. Strudler
-------------------------
Robert J. Strudler
Chairman and Co-Chief
Executive Officer
(Corporate Seal)
Attest:
/s/ Richard G. Slaughter
- --------------------------
Richard G. Slaughter
Vice President - Planning
and Secretary
8
<PAGE> 1
EXHIBIT 10.7
U.S. HOME CORPORATION
1997 EMPLOYEES' STOCK OPTION PLAN
1. PURPOSES.
The 1997 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 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 non-employee directors (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 an outside director, or
the Committee, as applicable, will hereinafter be referred to as the
"Administrator."
(c) For the purposes hereof, (i) a "non-employee
director" is a director who, on a given date, is a non-employee director 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 after the date of such Holder's death or (ii) the termination date of the
option, to exercise such option, to the extent the right to exercise such
option shall have accrued at the date of death or disability, except to the
extent such option theretofore will have been exercised.
10. PAYMENT FOR STOCK.
(a) The purchase price of Stock issued upon exercise of
options granted hereunder will be paid in full on the date of purchase.
Payment will be made either in cash or such other consideration as the
Administrator deems appropriate, including, without limitation, Stock already
owned by the Holder or Stock to be acquired by the Holder upon exercise of the
option having a total fair market value, as determined by the Administrator,
equal to the purchase price, or a combination of cash and Stock having a total
fair market value, as so determined, equal to the purchase price.
(b) The Company may make loans to such Holders as the
Administrator, in its discretion, may determine in connection with the exercise
of options granted under the Stock Option Plan; provided, however, that the
Administrator will have no discretion to authorize the making of any loan where
the possession of such discretion or the making of such loan would result in a
"modification" (as defined in Section 424(h) of the IRC) of any Incentive Stock
Option. Such loans will be subject to the following terms and conditions and
such other terms and conditions as the Administrator will determine not
inconsistent with the Stock Option Plan. Such loans will bear interest at such
rates as the Administrator will determine from time to time, which rates may be
below then current market rates (except in the case of Incentive Stock
Options). In no event may any such loan exceed the fair market value, at the
date of exercise, of the shares covered by the option, or portion thereof,
exercised by the Holder. No loan will have an initial term exceeding five
years, but any such loan may be renewable at the discretion of the
Administrator. When a loan is made, the Holder will pledge to the Company
shares of Stock having a fair market value at least equal to the principal
amount of the loan. Every loan will
4
<PAGE> 5
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 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.
5
<PAGE> 6
(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.
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.
6
<PAGE> 7
16. FINALITY OF DETERMINATIONS.
Each determination, interpretation, or other action made or
taken pursuant to the provisions of the Stock Option Plan by the Administrator
will be final and be binding and conclusive for all purposes.
17. INDEMNIFICATION OF DIRECTORS.
Each director of the Company will be indemnified by the
Company against all costs and expenses reasonably incurred by such director in
connection with any action, suit or proceeding to which he or she or any of the
other directors may be a party by reason of any action taken or failure to act
under or in connection with the Stock Option Plan, or any option granted
thereunder, and against all amounts paid by the other directors in settlement
thereof (provided such settlement will be approved by independent legal
counsel) or paid by the other directors in satisfaction of a judgment in any
such action, suit or proceeding, except a judgment based upon a finding of bad
faith. Upon the institution of any such action, suit or proceeding, a director
of the Company will notify the Company in writing, giving the Company an
opportunity, at its own expense, to handle and defend the same before such
director undertakes to handle it on his or her own behalf.
18. SUBSIDIARY AND PARENT CORPORATIONS.
Unless the context requires otherwise, references under the
Stock Option Plan to the Company will be deemed to include any divisions of the
Company and any subsidiary corporations and parent corporations of the Company,
as those terms are defined in Section 424 of the IRC.
19. GOVERNING LAW.
The Stock Option Plan will be governed by the laws of the
State of Delaware.
20. EFFECTIVE DATE.
The Stock Option Plan will become effective upon the date of
its adoption by the Board and options may be granted on or subsequent to such
date but no option may be exercised under the Stock Option Plan unless and
until the Stock Option Plan shall have been approved by the stockholders of the
Company within 12 months after its adoption by the Board. If the Stock Option
Plan is not so approved by the stockholders, all options granted hereunder
shall be null and void.
21. OVERRIDE.
With respect to persons subject to Section 16 of the Exchange
Act, transactions under the Stock Option Plan are intended to comply with all
applicable conditions of Rule 16b-3
7
<PAGE> 8
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
1997 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 1997 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) 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 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
A-2
<PAGE> 11
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 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) If the Holder dies while in the employ of the Company
or within three months after termination of his or her employment with the
Company or any Subsidiary or division thereof because of his or her disability,
his personal representative or the person or persons to whom the Option will
have been transferred by will or by the laws of descent and distribution will
have the right, not later than the earlier of (i) one year after the date of
the Holder's death or (ii) the date 10 years from the date hereof, to exercise
the Option, to the extent the right to exercise the Option will have accrued at
the date of death or disability, except to the extent the Option theretofore
will have been exercised.
6. TRANSFERABILITY.
The Option will not be transferable by the Holder other than
by will or the laws of descent and distribution or pursuant to a qualified
domestic relations order as defined by the IRC or Title I of the Employee
Retirement Income Security Act of 1974, as amended. During the lifetime of the
Holder, the Option will be exercisable only by such Holder. If the Holder
acquires Stock hereunder, he or she will only transfer such Stock in compliance
with applicable federal and state securities laws.
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.
A-3
<PAGE> 12
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.
A-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: _____________________
_____________________
A-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") 1997 Employees' Stock
Option Plan:
<TABLE>
<CAPTION>
Number of Shares Exercise Price
Date of Option Subject to Option Per Share
<S> <C> <C>
</TABLE>
I hereby exercise my option to purchase ______ shares of the
common stock, $.01 par value per share, of the Company, reserving my right to
purchase any remaining shares subject to the option in accordance with its
terms.
Dated: ____________ __, ____
Very truly yours,
_________________________________
Signature
Name: ___________________________
Address: ________________________
________________________
<PAGE> 15
EXHIBIT B
U.S. HOME CORPORATION
1997 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 1997 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) 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, or (z) the
Holder's death or disability, the right to exercise the Option will thereupon
terminate.
(b) For purposes of this Agreement, the term "Cause" will
mean (i) the Holder's continuing willful failure to perform his duties with
respect to the Company (other than as a result of total or partial incapacity
due to physical or mental illness), (ii) gross negligence or malfeasance by the
Holder in the performance of his or her duties with respect to the Company,
(iii) an act or acts on the Holder's part constituting a felony under the laws
of the United States or any state thereof which results or was intended to
result directly or indirectly in gain or personal enrichment by the Holder at
the expense of the Company or (iv) any other circumstances set forth in an
employment agreement between the Company and the Holder which would constitute
grounds for the Company to terminate the employment of the Holder for Cause.
(c) For purposes of this Agreement, the term
"Constructively Terminated" means (i) a reduction in an amount equal to or
greater than 15 percent of the Holder's base salary, (ii) a material reduction
in the Holder's job function, duties or responsibilities or (iii) a required
relocation of the Holder of more than 50 miles from such Holder's current job
location; provided, however, that the employment with the Company will not be
deemed to be Constructively Terminated in the event he or she is required to be
a Division Chairman or Division President with the Company and has job
functions, duties or responsibilities of a Division Chairman or Division
President and/or is required to relocate in connection with such change in
position; provided, further, that the employment with the Company will not be
deemed to be Constructively Terminated in the event he or she is required to be
a Division Chairman or Division President of a division other than the division
he or she is currently employed by and has job functions, duties or
responsibilities of a Division Chairman or Division President and/or is
required to relocate in connection with such change in position; provided,
further, that the
B-2
<PAGE> 17
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 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) If the Holder dies while in the employ of the Company
or any subsidiary or division thereof or within three months after termination
of his or her employment with the Company because of his or her disability, his
or her personal representative or the person or persons to whom the Option will
have been transferred by will or by the laws of descent and distribution will
have the right, not later than the earlier of (i) one year after the date of
the Holder's death or (ii) the date 10 years from the date hereof, to exercise
the Option, to the extent the right to exercise the Option will have accrued at
the date of death or disability, except to the extent the Option theretofore
will have been exercised.
6. TRANSFERABILITY.
The Option will not be transferable by the Holder other than
by will or the laws of descent and distribution or pursuant to a qualified
domestic relations order as defined by the IRC or Title I of the Employee
Retirement Income Security Act of 1974, as amended. During the lifetime of the
Holder, the Option will be exercisable only by such Holder. If the Holder
acquires Stock hereunder, he or she will only transfer such Stock in compliance
with applicable federal and state securities laws.
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.
B-3
<PAGE> 18
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.
B-4
<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: _____________________
_____________________
B-5
<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") 1997 Employees'
Stock Option Plan:
<TABLE>
<CAPTION>
Number of Shares Exercise Price
Date of Option Subject to Option Per Share
<S> <C> <C>
</TABLE>
I hereby exercise my option to purchase ______ shares of the
common stock, $.01 par value per share, of the Company, reserving my right to
purchase any remaining shares subject to the option in accordance with its
terms.
Dated: ______________, ____
Very truly yours,
_________________________________
Signature
Name: ___________________________
Address:_________________________
_________________________________
<PAGE> 1
EXHIBIT 10.8
U.S. HOME CORPORATION
AMENDED AND RESTATED
1996 EMPLOYEES' STOCK OPTION PLAN
1. PURPOSES.
The Amended and Restated 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 non-employee directors (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 an outside director, or
the Committee, as applicable, will hereinafter be referred to as the
"Administrator."
(c) For the purposes hereof, (i) a "non-employee
director" is a director who, on a given date, is a non-employee director 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
<PAGE> 2
Stock which were the subject of unexercised portions of any terminated or
expired options may again be subject to the grant of options under the Stock
Option Plan.
4. AWARD OF OPTIONS.
(a) The Administrator may award options to those Officers
(as defined herein) selected by the Administrator in the amounts determined by
the Administrator, provided that the maximum number of shares of Stock which
may be the subject of options granted to any individual in any calendar year is
250,000. Such options will be exercisable in accordance with the terms hereof.
(b) The Administrator may, at any time prior to the
expiration of 10 years from the date on which the Stock Option Plan is adopted,
authorize the granting of options to such members of that class of the
Company's key employees consisting of the officers and managerial or
supervisory personnel, who are salaried employees of the Company (the
"Officers"), as it may select, and in such amounts and in such installments as
it will designate, subject to the provisions of this Section. The
Administrator, in its sole discretion, will designate such options as (i)
"Incentive Stock Options" within the meaning of Section 422 of the IRC, (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
2
<PAGE> 3
place on any such day on the NYSE, the average of the last reported closing bid
and asked prices on such day as officially quoted on the NYSE) for the 20
consecutive trading days immediately prior to the date such option is granted,
unless otherwise determined by the Administrator.
(b) The closing price of the Stock, as of any particular
day, will be as reported in The Wall Street Journal; provided, however, that if
the Stock is not listed on the 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,
3
<PAGE> 4
(y) such Holder's retirement in accordance with the Company's normal retirement
policy or with the consent of the Board or (z) such Holder's death or
disability, the right to exercise the option will thereupon terminate.
9. DEATH OR DISABILITY.
(a) Except to the extent otherwise specified by the
Administrator and as provided in paragraph (b) of this Section 9, if a Holder's
employment with the Company is terminated because of disability (within the
meaning of Section 22(e)(3) of the IRC), the disabled Holder will have the
right, not later than the earlier of (i) one year after such termination or
(ii) the termination date of the option, to exercise the option, to the extent
the right to exercise such option will have accrued at the date of such
termination of employment, except to the extent that such option theretofore
has been exercised.
(b) Except to the extent otherwise specified by the
Administrator, if a Holder dies while in the employ of the Company or within
three months after termination of employment with the Company because of
disability, such Holder's personal representative or the person or persons to
whom the option will have been transferred by will or by the laws of descent
and distribution will have the right, not later than the earlier of (i) one
year after the date of such Holder's death or (ii) the termination date of the
option, to exercise such option, to the extent the right to exercise such
option shall have accrued at the date of death or disability, except to the
extent such option theretofore will have been exercised.
10. PAYMENT FOR STOCK.
(a) The purchase price of Stock issued upon exercise of
options granted hereunder will be paid in full on the date of purchase.
Payment will be made either in cash or such other consideration as the
Administrator deems appropriate, including, without limitation, Stock already
owned by the Holder or Stock to be acquired by the Holder upon exercise of the
option having a total fair market value, as determined by the Administrator,
equal to the purchase price, or a combination of cash and Stock having a total
fair market value, as so determined, equal to the purchase price.
(b) The Company may make loans to such Holders as the
Administrator, in its discretion, may determine in connection with the exercise
of options granted under the Stock Option Plan; provided, however, that the
Administrator will have no discretion to authorize the making of any loan where
the possession of such discretion or the making of such loan would result in a
"modification" (as defined in Section 424(h) of the IRC) of any Incentive Stock
Option. Such loans will be subject to the following terms and conditions and
such other terms and conditions as the Administrator will determine not
inconsistent with the Stock Option Plan. Such loans will bear interest at such
rates as the Administrator will determine from time to time, which rates may be
below then current market rates (except in the case of Incentive Stock
4
<PAGE> 5
Options). In no event may any such loan exceed the fair market value, at the
date of exercise, of the shares covered by the option, or portion thereof,
exercised by the Holder. No loan will have an initial term exceeding five
years, but any such loan may be renewable at the discretion of the
Administrator. When a loan is made, the Holder will pledge to the Company
shares of Stock having a fair market value at least equal to the principal
amount of the loan. Every loan will comply with all applicable laws,
regulations and rules of the Federal Reserve Board and any other governmental
agency having jurisdiction over the Company.
(c) Stock will not be issued upon the exercise of options
unless and until the aggregate amount of federal, state or local taxes of any
kind required by law to be withheld with respect to the exercise of such
options have been paid or satisfied or provision for their payment and
satisfaction has been made upon such terms as the Administrator may prescribe,
including, without limitation, payment of any such taxes by exchanging shares
of Stock previously owned by the Holder or acquired upon the exercise of an
option.
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
5
<PAGE> 6
subsidiaries or divisions, commencing 10 days before the scheduled closing of
such event, and will terminate unless exercised at least one business day
before the scheduled closing of such event; provided, that any such exercise
will be conditioned on the closing of such transaction; and provided further,
that the Administrator may, in its discretion, require instead that all options
granted under the Stock Option Plan and not previously exercised will be
assumed by such other corporation on the basis provided in the preceding
paragraph.
(d) The adjustments described in this Section 11 and the
manner of application of the foregoing provisions will be determined by the
Administrator in its sole discretion. Any such adjustment may provide for the
elimination of any fractional share which might otherwise become subject to an
option.
12. RIGHTS AS A STOCKHOLDER.
A Holder or a transferee of an option will have no rights as a
stockholder with respect to any share of Stock covered by such Holder's option
until such Holder has become the Holder of record of such share of Stock, and,
except for stock dividends as provided in Section 11 hereof, no adjustment will
be made for dividends (ordinary or extraordinary, whether in cash, securities
or other property) or distributions or other rights in respect of such share
for which the record date is prior to the date on which he will become the
holder of record thereof.
13. AMENDMENT AND TERMINATION.
The Board may at any time terminate, amend or modify the Stock
Option Plan in any respect it deems suitable; provided, however, that no such
action of the Board, without the approval of the stockholders of the Company,
may (i) materially increase the benefits accruing to employees eligible to
receive options under the Stock Option Plan, (ii) materially increase the total
amount of Stock for which options may be granted under the Stock Option Plan or
(iii) materially modify the requirements for participation in the Stock Option
Plan; provided, further, that no amendment, modification or termination of the
Stock Option Plan may (A) in any manner affect any option theretofore granted
under the Stock Option Plan without the consent of the then Holder or (B)
modify the allocation of options to the persons designated by the
Administrator.
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.
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
7
<PAGE> 8
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
AMENDED AND RESTATED
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 Amended and
Restated 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 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
A-2
<PAGE> 11
has job functions, duties or responsibilities of a Division Chairman or
Division President and/or is required to relocate in connection with such
change in position; provided, further, that the employment of any person will
not be deemed Constructively Terminated unless the Holder actually terminates
his or her employment with the Company within 60 days after the occurrence of
an event specified in clauses (i), (ii) or (iii) above.
5. DEATH OR DISABILITY.
(a) Except to the extent otherwise specified by the
Administrator and as provided in paragraph (b) of this Section 5, if the
Holder's employment with the Company is terminated because of his or her
disability (within the meaning of Section 22(e)(3) of the IRC), the disabled
Holder will have the right, not later than the earlier of (i) one year after
such termination or (ii) the date 10 years from the date hereof, to exercise
the Option, to the extent the right to exercise the Option will have accrued
hereunder at the date of such termination of employment, except to the extent
the Option theretofore will have been exercised.
(b) Except to the extent otherwise specified by the
Administrator, if the Holder dies while in the employ of the Company or within
three months after termination of his or her employment with the Company or any
Subsidiary or division thereof because of his or her disability, his personal
representative or the person or persons to whom the Option will have been
transferred by will or by the laws of descent and distribution will have the
right, not later than the earlier of (i) one year after the date of the
Holder's death or (ii) the date 10 years from the date hereof, to exercise the
Option, to the extent the right to exercise the Option will have accrued at the
date of death or disability, except to the extent the Option theretofore will
have been exercised.
6. TRANSFERABILITY.
The Option will not be transferable by the Holder other than
by will or the laws of descent and distribution or pursuant to a qualified
domestic relations order as defined by the IRC or Title I of the Employee
Retirement Income Security Act of 1974, as amended. During the lifetime of the
Holder, the Option will be exercisable only by such Holder. If the Holder
acquires Stock hereunder, he or she will only transfer such Stock in compliance
with applicable federal and state securities laws.
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.
A-3
<PAGE> 12
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.
A-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: _____________________
_____________________
A-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") Amended and Restated
1996 Employees' Stock Option Plan:
<TABLE>
<S> <C> <C>
Number of Shares Exercise Price
Date of Option Subject to Option Per Share
</TABLE>
I hereby exercise my option to purchase ______ shares of the
common stock, $.01 par value per share, of the Company, reserving my right to
purchase any remaining shares subject to the option in accordance with its
terms.
Dated: ____________ __, ____
Very truly yours,
_________________________________
Signature
Name: ___________________________
Address: ________________________
________________________
<PAGE> 15
EXHIBIT B
U.S. HOME CORPORATION
AMENDED AND RESTATED
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 Amended and Restated 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, or (z) the Holder's death or disability, the
right to exercise the Option will thereupon terminate.
(b) For purposes of this Agreement, the term "Cause" will
mean (i) the Holder's continuing willful failure to perform his duties with
respect to the Company (other than as a result of total or partial incapacity
due to physical or mental illness), (ii) gross negligence or malfeasance by the
Holder in the performance of his or her duties with respect to the Company,
(iii) an act or acts on the Holder's part constituting a felony under the laws
of the United States or any state thereof which results or was intended to
result directly or indirectly in gain or personal enrichment by the Holder at
the expense of the Company or (iv) any other circumstances set forth in an
employment agreement between the Company and the Holder which would constitute
grounds for the Company to terminate the employment of the Holder for Cause.
(c) For purposes of this Agreement, the term
"Constructively Terminated" means (i) a reduction in an amount equal to or
greater than 15 percent of the Holder's base salary, (ii) a material reduction
in the Holder's job function, duties or responsibilities or (iii) a required
relocation of the Holder of more than 50 miles from such Holder's current job
location; provided, however, that the employment with the Company will not be
deemed to be Constructively Terminated in the event he or she is required to be
a Division Chairman or Division President with the Company and has job
functions, duties or responsibilities of a Division Chairman or Division
President and/or is required to relocate in connection with such change in
position; provided, further, that the employment with the Company will not be
deemed to be Constructively Terminated in the event he or she is required to be
a Division Chairman or Division President of a division other than the division
he or she is currently employed by and has job functions, duties or
responsibilities of a Division Chairman or Division President and/or
B-2
<PAGE> 17
is required to relocate in connection with such change in position; provided,
further, that the employment of any person will not be deemed Constructively
Terminated unless the Holder actually terminates his or her employment with the
Company within 60 days after the occurrence of an event specified in clauses
(i), (ii) or (iii) above.
5. DEATH OR DISABILITY.
(a) Except to the extent otherwise specified by the
Administrator and as provided in paragraph (b) of this Section 5, if the
Holder's employment with the Company is terminated because of his or her
disability (within the meaning of Section 22(e)(3) of the IRC), the disabled
Holder will have the right, not later than the earlier of (i) one year after
such termination or (ii) the date 10 years from the date hereof, to exercise
the Option, to the extent the right to exercise the Option will have accrued
hereunder at the date of such termination of employment, except to the extent
the Option theretofore will have been exercised.
(b) Except to the extent otherwise specified by the
Administrator, if the Holder dies while in the employ of the Company or any
subsidiary or division thereof or within three months after termination of his
or her employment with the Company because of his or her disability, his or her
personal representative or the person or persons to whom the Option will have
been transferred by will or by the laws of descent and distribution will have
the right, not later than the earlier of (i) one year after the date of the
Holder's death or (ii) the date 10 years from the date hereof, to exercise the
Option, to the extent the right to exercise the Option will have accrued at the
date of death or disability, except to the extent the Option theretofore will
have been exercised.
6. TRANSFERABILITY.
The Option will not be transferable by the Holder other than
by will or the laws of descent and distribution or pursuant to a qualified
domestic relations order as defined by the IRC or Title I of the Employee
Retirement Income Security Act of 1974, as amended. During the lifetime of the
Holder, the Option will be exercisable only by such Holder. If the Holder
acquires Stock hereunder, he or she will only transfer such Stock in compliance
with applicable federal and state securities laws.
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.
B-3
<PAGE> 18
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.
B-4
<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: _____________________
_____________________
B-5
<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") Amended and
Restated 1996 Employees' Stock Option Plan:
<TABLE>
<S> <C> <C>
Number of Shares Exercise Price
Date of Option Subject to Option Per Share
</TABLE>
I hereby exercise my option to purchase ______ shares of the
common stock, $.01 par value per share, of the Company, reserving my right to
purchase any remaining shares subject to the option in accordance with its
terms.
Dated: ______________, ____
Very truly yours,
_________________________________
Signature
Name: ___________________________
Address:_________________________
_________________________________
<PAGE> 1
EXHIBIT 10.9
U.S. HOME CORPORATION
AMENDED AND RESTATED
1993 EMPLOYEES' STOCK OPTION PLAN
1. PURPOSES.
The U.S. Home Corporation Amended and Restated 1993 Employees'
Stock Option Plan (the "Stock Option Plan") is intended to provide an incentive
to key employees of 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 non-employee 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 or the Committee, as applicable, will hereinafter be referred to as the
"Administrator."
(c) For the purposes of this Section 2, a "non-employee
director" is a director who, on a given date, is a non-employee director within
the meaning of Rule 16b-3 promulgated under the Securities Exchange Act of
1934, as amended (the "Exchange Act").
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 of the Company,
$.01 par value per share, authorized to be issued on and after the Effective
Date (as defined herein), 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 (of which no more
than 200,000 shares of Stock may be the subject of options granted on or prior
to June 21, 1993
<PAGE> 2
(the "Effective Date")), 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 options under the Stock Option Plan.
4. AWARD OF OPTIONS.
(a) Subject to the effectiveness of this Stock Option
Plan on the Effective Date, the Board may award options to those Officers (as
defined herein) selected by the Board in the amounts determined by the Board.
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 its key
employees consisting of the officers and managerial or supervisory personnel,
who are salaried employees of the Company and of its subsidiaries or divisions
(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
and Section 3 hereof. The Administrator, in its sole discretion, will
designate such options as (i) "Incentive Stock Options" within the meaning of
Section 422 of the Internal Revenue Code of 1986, as amended (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. Prior to the Effective Date, no options were
outstanding. Upon the Effective Date, the Company will issue 200,000 options
in accordance with the first amended consolidated plan of reorganization of the
Company.
(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 Incentive Stock Option
and/or a Nonqualified Stock Option will be the closing price of the Stock on
the New York Stock Exchange on the day that is granted if a sale is executed on
such Exchange on that day, and if there was no such sale,
2
<PAGE> 3
the price will be the closing price of the Stock on the last preceding day on
which a sale was executed.
(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 option 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. 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. Officers who are affiliates of the Company may
generally dispose of their shares in accordance with Rule 144 promulgated under
the Securities Act of 1933, as amended (the "Act").
8. TERMINATION OF EMPLOYMENT.
If, on or after the date an option is granted under the Stock
Option Plan, (i) (A) a Holder's employment with the Company or a subsidiary or
division thereof 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 or a subsidiary or division thereof
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
3
<PAGE> 4
normal retirement policy or with the consent of the Board or (z) such Holder's
death or disability, the right to exercise the option will thereupon terminate.
9. DEATH OR DISABILITY.
(a) Except as provided in paragraph (b) of this Section
10, 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, no 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) 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 425 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
4
<PAGE> 5
Administrator. When a loan is made, the Holder will pledge to the Company
shares of Stock having a fair market value at least equal to the principal
amount of the loan. Every loan will comply with all applicable laws,
regulations and rules of the Federal Reserve Board and any other governmental
agency having jurisdiction over the Company.
(c) Stock will not be issued upon the exercise of options
unless and until the aggregate amount of federal, state or local taxes of any
kind required by law to be withheld with respect to the exercise of such
options have been paid or satisfied or provision for their payment and
satisfaction has been made upon such terms as the Administrator may prescribe,
including, without limitation, payment of any such taxes by exchanging shares
of Stock previously owned by the Holder or acquired upon the exercise of an
option.
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 or other
securities 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;
5
<PAGE> 6
and provided further, that the Board may, in its discretion, require instead
that all options granted under the Stock Option Plan and not previously
exercised will be assumed by such other corporation on the basis provided in
the preceding paragraph.
(d) The adjustments described in this Section 11 and the
manner of application of the foregoing provisions will be determined by the
Board 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) increase the benefits accruing to employees eligible to receive options
under the Stock Option Plan, (ii) increase the total amount of Stock for which
options may be granted under the Stock Option Plan or (iii) change the class of
employees eligible to receive options; 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 Board.
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. FEDERAL INCOME TAX CONSEQUENCES.
Under the present provisions of the IRC, the Federal income
tax consequences of participating in the Stock Option Plan may be summarized as
follows. This summary is of general application only and its application to
any individual will depend on that individual's circumstances. The summary
does not address the affect of state and local income tax laws. The Stock
Option Plan is not subject to the provisions of Section 401(a) of the IRC or
the Employee Retirement Income Security Act of 1974, as amended.
Non-qualified Stock Options.
The recipient of a Nonqualified Stock Option will not
recognize income upon the grant of the Nonqualified Stock Option, but, upon
exercise, generally will recognize ordinary income in an amount equal to the
difference between the fair market value of the shares acquired on the exercise
date and the option price. The Company generally will be entitled to a tax
deduction at the same time and in the same amount as the income recognized.
7
<PAGE> 8
If a Nonqualified Stock Option is exercised within six months
of the date of grant and the holder thereof is restricted from selling the
shares acquired upon exercise because of the restrictions of Section 16(b) of
the Exchange Act, unless the holder elects under Section 83(b) of the IRC to be
taxed immediately, he or she will recognize ordinary income (and the Company
will be entitled to a deduction) at the end of the six-month holding period
imposed by Section 16(b) in an amount equal to the difference between the fair
market value of the shares at that time and the option price.
If the recipient pays the option price entirely in cash for
tax purposes, his or her basis in the shares received will be equal to their
fair market value on the exercise date (or the date on which the Section 16(b)
period expires, if applicable), and the holding period for tax purposes will
begin on the day following the exercise date.
Incentive Stock Options.
The recipient of an Incentive Stock Option will not be
required to recognize income upon either the grant or, if certain holding
period requirements are met, exercise of the Incentive Stock Option. If the
Incentive Stock Option is exercised during employment or within three months
after termination of employment (12 months in the case of permanent and total
disability) and the shares received on exercise are not disposed of until after
the later of (i) one year from the date of transfer of the shares to the
recipient, or (ii) two years from the date of grant of the Incentive Stock
Option, the recipient must then recognize taxable income in an amount equal to
the difference between the amount realized and the option price. If the amount
realized is less than the option price, the loss will be a long-term capital
loss. The Company will not receive a Federal income tax deduction in
connection with either the grant or exercise of the option.
If the shares are disposed of before the holding period
described above, the recipient generally must recognize ordinary income in the
year of disposition equal to the difference between the fair market value of
the shares received or the amount realized on the disposition (if the shares
are disposed of in a transaction on which loss would be recognized if
sustained) on the date of exercise and the option price. The Company would
then receive a Federal income tax deduction in an amount equal to any ordinary
income so recognized.
19. SUBSIDIARY AND PARENT CORPORATIONS.
Unless the context requires otherwise, references under the
Stock Option Plan to the Company will be deemed to include any subsidiary
corporations and parent corporations of the Company, as those terms are defined
in Section 425 of the IRC.
8
<PAGE> 9
20. GOVERNING LAW.
The Stock Option Plan will be governed by the laws of the
State of Delaware.
21. EFFECTIVE DATE.
The Stock Option Plan will become effective upon the Effective
Date; however, options may be granted on or prior to such date but will not be
exercisable until the Effective Date in accordance with the terms hereof.
22. 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 its successors 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.
9
<PAGE> 10
EXHIBIT A
U.S. HOME CORPORATION
AMENDED AND RESTATED
1993 EMPLOYEES' STOCK OPTION PLAN
INCENTIVE STOCK OPTION AGREEMENT
OPTION AGREEMENT, dated as of ______________ __, 199_ 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 Amended and
Restated 1993 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 in the following cumulative installments and maximum amounts:
__________________________________
* To be determined pursuant to Section 5 of the Stock Option Plan.
<PAGE> 11
<TABLE>
<CAPTION>
Number of
Shares Period Exercisable
--------- ---------------------------
<S> <C>
1/3rd commencing one (1) year from the date hereof;
2/3rds commencing two (2) years from the date hereof, less any portion of the Option previously
exercised, until expiration of the Option; and
All commencing three (3) years from the date hereof, less any portion of the Option previously
exercised, until expiration of the Option.
</TABLE>
(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) If, on or after the date an Option is granted under
the Stock Option Plan, (i)(A) a Holder's employment with the Company or a
subsidiary or division thereof 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) such 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) a Holder's employment with the Company or a subsidiary or division thereof
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.
(b) For purposes of this Agreement, the term "Cause"
means (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 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 a Holder's base salary,
A-2
<PAGE> 12
(ii) a material reduction in a Holder's job function, duties or
responsibilities or (iii) a required relocation of a Holder of more than 50
miles from such Holder's current job location; provided, however, that the
employment with the Company or its subsidiaries or divisions of a President of
Operations 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 or its subsidiaries or divisions 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 or its subsidiaries or divisions
of a Division Chairman or Division President 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 such person
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 as provided in paragraph (b) of this Section
5, if the Holder's employment with the Company or any subsidiary or division
thereof 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) 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 employment with the Company or any Subsidiary or division thereof
because of his 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. During the lifetime of the
Holder, the Option will be exercisable only by such Holder. A Holder who
acquires Stock hereunder will only transfer such Stock in compliance with
applicable federal and state securities laws. Holders who are affiliates of
the Company may generally dispose of their shares in accordance with Rule 144
promulgated under the Securities Act of 1933, as amended (the "Act").
A-3
<PAGE> 13
7. PAYMENT OF EXERCISE PRICE.
Payment for shares of Stock issued upon exercise of the Option
will be paid in full on the date of purchase. Payment will be made either in
cash or in such other consideration as the Administrator (as defined in the
Stock Option Plan) deems appropriate. Notwithstanding the foregoing, shares of
Stock will not be issued upon exercise of the Option unless and until the
aggregate amount of federal, state and local taxes of any kind required to be
withheld with respect to such exercise have been paid or satisfied or provision
for their payment and satisfaction has been made upon such terms as the
Administrator may prescribe.
8. ADJUSTMENT TO OPTION.
The number of shares of Stock subject to the Option and the
Exercise Price will be adjusted, as necessary, in accordance with the
provisions of Section 11 of the Stock Option Plan.
9. NO RIGHTS AS STOCKHOLDER.
The Holder will have no rights as a stockholder with respect
to any Stock covered by the Option until such person has become the holder of
record of such Stock, and, except for stock dividends as provided in Section 11
of the Stock Option Plan, no adjustment will be made for dividends (ordinary or
extra-ordinary, whether in cash, securities or other property) or distributions
or other rights in respect of such Stock for which the record date is prior to
the date on which he or she will become the holder of record thereof.
10. NO RIGHT TO CONTINUED EMPLOYMENT.
Nothing contained herein will restrict any right of the
Company to terminate the employment of the Holder at any time, with or without
Cause.
11. REPRESENTATIONS.
At the time of any exercise of the Option, the Company may, if
it will deem it necessary or desirable for any reason, require the Holder (i)
to represent in writing to the Company that it is his then intention to acquire
the Stock for investment and not with a view to the distribution thereof or
(ii) to postpone the date of exercise until such time as the Company has
available for delivery to the Holder a prospectus meeting the requirements of
all applicable federal or state securities laws.
A-4
<PAGE> 14
12. GOVERNING LAW.
This Agreement will be governed by the laws of the State of
Delaware.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the date first above written.
U.S. HOME CORPORATION
By:_________________________
Name:
Title:
Holder
____________________________
Signature
Name: ______________________
Address: ____________________
____________________
A-5
<PAGE> 15
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") Amended and Restated
1993 Employees' Stock Option Plan:
<TABLE>
<CAPTION>
Number of Shares Exercise Price
Date of Option Subject to Option Per Share
- -------------- ----------------- ---------------
<S> <C> <C>
</TABLE>
I hereby exercise my option to purchase ______ shares of the
common stock, $.01 par value per share, of the Company, reserving my right to
purchase any remaining shares subject to the option in accordance with its
terms.
Dated: ____________ __, 199_
Very truly yours,
_________________________________
Signature
Name: ___________________________
Address:_________________________
_________________________
<PAGE> 16
EXHIBIT B
U.S. HOME CORPORATION
AMENDED AND RESTATED
1993 EMPLOYEES' STOCK OPTION PLAN
NONQUALIFIED STOCK OPTION AGREEMENT
OPTION AGREEMENT, dated as of ______________ __, 199_ 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 U.S. Home Corporation Amended and Restated 1993
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.
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.
__________________________________
* To be determined pursuant to Section 5 of the Stock Option Plan.
<PAGE> 17
4. TERMINATION OF EMPLOYMENT.
(a) If, on or after the date an Option is granted under
the Stock Option Plan, (i) (A) a Holder's employment with the Company or a
subsidiary or a division thereof 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) such 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) a Holder's employment with the Company or a subsidiary or
division thereof 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, (z) such 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 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 a Holder's base salary, (ii) a material reduction in
a Holder's job function, duties or responsibilities or (iii) a required
relocation of a Holder of more than 50 miles from such Holder's current job
location; provided, however, that the employment with the Company or its
subsidiaries or divisions of a President of Operations 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 or its subsidiaries or
divisions 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 or its subsidiaries or divisions of a Division Chairman or Division
President 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 such person actually terminates his or
her employment with
B-2
<PAGE> 18
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 as provided in paragraph (b) of this Section
5, if the Holder's employment with the Company or any subsidiary or division
thereof 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) 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 employment with the Company or any subsidiary or division thereof
because of his 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. During the lifetime of the
Holder, the Option will be exercisable only by such Holder. A Holder who
acquires Stock hereunder will only transfer such Stock in compliance with
applicable federal and state securities laws. Holders who are affiliates of
the Company may generally dispose of their shares in accordance with Rule 144
promulgated under the Securities Act of 1933, as amended (the "Act").
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.
B-3
<PAGE> 19
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.
B-4
<PAGE> 20
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:____________________
____________________
B-5
<PAGE> 21
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") Amended and
Restated 1993 Employees' Stock Option Plan:
<TABLE>
<CAPTION>
Number of Shares Exercise Price
Date of Option Subject to Option Per Share
- -------------- ----------------- ---------------
<S> <C> <C>
</TABLE>
I hereby exercise my option to purchase ______ shares of the
common stock, $.01 par value per share, of the Company, reserving my right to
purchase any remaining shares subject to the option in accordance with its
terms.
Dated: ____________ __, 199_
Very truly yours,
____________________________
Signature
Name: ______________________
Address:____________________
____________________
<PAGE> 1
EXHIBIT 10.10
U.S. HOME CORPORATION
AMENDED AND RESTATED
NON-EMPLOYEE DIRECTORS' STOCK OPTION PLAN
1. PURPOSES.
The purposes of the U.S. Home Corporation Amended and Restated
Non-Employee Directors' Stock Option Plan (the "Plan") are to attract and
retain qualified and competent persons for service as members of the board of
directors (the "Board") of U.S. Home Corporation (the "Company") by providing a
means whereby such persons acquire an equity interest in the Company and to
secure for the Company and its stockholders the benefit of the incentives
inherent in such equity ownership by persons whose advice and counsel are
important to the Company's future growth and continued success.
2. ADMINISTRATION.
(a) The Board shall (i) administer the Plan, (ii) establish,
subject to the provisions of the Plan, such rules and regulations as it may
deem appropriate for the proper administration of the Plan and (iii) make such
determinations under, and such interpretations of, and take such steps in
connection with, the 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 shall initially be the Nominating Committee of the Board,
which shall be comprised of at least three members of the Board, all of whom
are to be non-employee directors (within the meaning of Rule 16b-3 promulgated
under the Securities Act of 1934, as amended (the "Exchange Act")) 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 Plan, whether or not
the power and the authority of the Committee is hereinafter fully set forth.
The Board or the Committee, as applicable, shall hereinafter be referred to as
the "Administrator."
3. STOCK.
The stock (the "Stock") to be made the subject of an option under the
Plan shall be the shares of common stock of the Company, $.01 par value per
share, whether authorized and unissued or treasury stock. The total amount of
Stock for which options may be granted under the Plan shall not exceed, in the
aggregate, 100,000 shares, subject to adjustment in accordance with the
provisions of Section 12 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 Plan during the remaining term of the Plan.
<PAGE> 2
4. AWARD OF OPTIONS.
(a) Options shall be granted only to non-employee directors of the
Board. No individual who is, at the time of grant, an employee of the Company
shall be eligible to receive options under the Plan.
(b) All options granted under the Plan shall be non-qualified
options not entitled to special tax treatment under Section 422 of the Internal
Revenue Code of 1986, as amended (the "IRC").
(c) Any and all options granted under this Plan shall be granted
not later than 10 years from August 19, 1993, the date the Plan was adopted by
the Board.
(d) All options granted under the Plan shall be evidenced by a
written agreement substantially in the form of Exhibit A annexed hereto (each
an "Option Agreement").
5. NUMBER OF SHARES TO BE GRANTED.
(a) Each person who is a non-employee director of the Company at
the time of adoption of the Plan by the Board shall be granted an option for
5,000 shares of Stock (an "Initial Stock Option Grant") at the time of such
adoption. Each person who becomes a non-employee director of the Company after
the adoption of the Plan by the Board shall be granted an option for 5,000
shares of Stock at the time such person first becomes a non-employee director
of the Company (a "New Director Stock Option Grant"). On the date of each
annual meeting or special meeting in lieu of annual meeting of the stockholders
of the Company, each person who continues to serve as a non-employee director
of the Company immediately after such meeting shall be granted an option for
1,000 additional shares of Stock (an "Annual Stock Option Grant"); provided,
that he or she has served as a non-employee director for at least six months
prior to such meeting. The options shall be deemed automatically granted at
the times, in the amounts and at the option prices set forth herein without any
further action on the part of the Administrator, and the proper officers of the
Company are authorized, empowered and directed to execute and deliver an Option
Agreement to reflect each such grant at the times, in the amounts and at the
option prices determined in accordance with the Plan.
(b) Each person who (i) is a non-employee director of the Company
at the time of adoption of the Plan and (ii) has served as a non-employee
director of the Company prior to June 21, 1993 shall be granted an option for
2,500 shares of Stock, in addition to the option granted pursuant to paragraph
(a) of this Section 5, the aggregate of which shall be deemed an Initial Stock
Option Grant for such directors.
2
<PAGE> 3
6. PRICE.
(a) In the case of an Initial Stock Option Grant, the exercise
price of such Option shall be the greater of the (i) closing price of the Stock
on the New York Stock Exchange (the "NYSE") on June 21, 1993 and (ii) average
closing price of the Stock on the NYSE for the 10 consecutive trading days
ending August 20, 1993. Notwithstanding the foregoing, the exercise price of
such Option will in no event be less than 95% of the average closing price of
the Stock on the NYSE for the 20 consecutive trading days immediately prior to
August 19, 1993.
(b) In the case of a New Director Stock Option Grant, the exercise
price of such Option shall be the average closing price of the Stock on the
NYSE for the 10 consecutive trading days prior to the date of the New Director
Stock Option Grant. Notwithstanding the foregoing, the exercise price of such
Option will in no event be less than 95% of the average closing price of the
Stock on the NYSE for the 20 consecutive trading days immediately prior to the
date of the New Director Stock Option Grant.
(c) In the case of an Annual Stock Option Grant, the exercise
price of such Option shall be the average closing price of the Stock on the
NYSE for the 10 consecutive trading days prior to the date of the Annual Stock
Option Grant. Notwithstanding the foregoing, the exercise price of such Option
will in no event be less than 95% of the average closing price of the Stock on
the NYSE for the 20 consecutive trading days immediately prior to the date of
the Annual Stock Option Grant.
(d) The closing price of the Stock as of any particular day, shall
be as reported in The Wall Street Journal; provided, however, that if the Stock
is not listed on the NYSE on the dates the option price is to be determined,
the option price shall 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.
7. TERM.
Subject to Sections 9, 10 and 21 hereof, an option may be exercised by
the holder thereof (a "Holder") in whole at any time or in part from time to
time commencing with the date of grant of any option under the Plan, but no
option may be exercised in any amount later than 10 years from the date such
option was granted.
8. TRANSFERABILITY.
No option may be transferable by a Holder other than by will or the
laws of descent and distribution. During the lifetime of a Holder, the option
may be exercisable only by such Holder. A Holder who acquires Stock hereunder
may only transfer such Stock in compliance with applicable federal and state
securities laws.
3
<PAGE> 4
9. TERMINATION OF DIRECTORSHIP.
If, on or after the date an option is granted under the Plan, a Holder
(i) resigns as a director of the Company or (ii) is removed as a director of
the Company by the stockholders of the Company, with or without cause, the
Holder shall have the right, not later than the earlier of (A) three months
after such resignation or removal or (B) the termination date of the option as
set forth in the Option Agreement, to exercise such option, to the extent the
right to exercise such option shall have accrued at the date of such
resignation or removal, except to the extent that such option theretofore shall
have been exercised.
10. RETIREMENT, DEATH OR DISABILITY.
If a Holder retires at the age of 65 or above, dies, or becomes
disabled (within the meaning of Section 22(e) (3) of the IRC) while a director
of the Company, the Holder, the personal representative of the Holder or the
person or persons to whom the option shall have been transferred by will or by
the laws of descent and distribution, or the disabled Holder, shall have the
right, not later than the earlier of (i) three years from the date of the
Holder's retirement, death or disability or (ii) the termination date of the
option as set forth in the Option Agreement, to exercise such option to the
extent the right to exercise such option shall have accrued at the date of such
retirement, death or disability, except to the extent such option theretofore
shall have been exercised.
11. PAYMENT FOR STOCK.
(a) The purchase price of Stock issued upon exercise of options
granted hereunder shall be paid in full on the date of purchase. Payment shall
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) Stock shall 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, if any, 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.
4
<PAGE> 5
12. STOCK ADJUSTMENTS.
(a) The total amount of Stock for which options shall be granted
under the Plan and option terms (both as to the number of shares of Stock and
the price of the option) shall 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 shall be the surviving corporation, or after any
consolidation of the Company and one or more other corporations, each Holder
shall, 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 shall
then be so exercised, the number and class of shares of stock or other
securities 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 shall 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 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
Plan and not previously exercised shall terminate unless exercised at least one
business day before the scheduled closing of such event; provided, that any
such exercise or termination shall be conditioned on the closing of such
transaction; and provided further, that the Board may, in its discretion,
require instead that all options granted under the Plan and not previously
exercised shall be assumed by such other corporation on the basis provided in
the preceding paragraph to the extent possible or practical.
(d) The adjustments described in this Section 12 and the manner of
application of the foregoing provisions shall be determined by the Board in its
sole discretion. Any such adjustment may provide for the elimination of any
fractional share which might otherwise become subject to an option.
13. RIGHTS AS A STOCKHOLDER.
A Holder or a transferee of an option shall 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 12 hereof, no adjustment
shall be made for dividends (ordinary or extraordinary, whether in cash,
securities
5
<PAGE> 6
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 or she shall become
the holder of record thereof.
14. AMENDMENT AND TERMINATION.
The Board may at any time terminate, amend or modify the 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) increase the
total amount of Stock on which options may be granted under the Plan, (ii)
change the manner of determining the option price, (iii) change the class of
individuals eligible to receive options, (iv) change the number of options
which may be granted to each director, or (v) change the times when such
options are granted; provided, further, that no amendment, modification or
termination of the Plan may in any manner affect any option theretofore granted
under the Plan without the consent of the then Holder. Notwithstanding the
foregoing, the Plan may not be amended more than once in any six-month period
except to comply with changes in the IRC, the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), or any rules or regulations
promulgated under either the IRC or ERISA.
15. INVESTMENT PURPOSE.
At the time of exercise of any option, the Company may, if it shall
deem it necessary or desirable for any reason, require the Holder to (i) in the
absence of an effective registration statement under the Securities Act of
1933, as amended (the "Securities Act"), 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.
16. RIGHT TO REMOVE DIRECTOR.
Nothing contained herein or in any Option Agreement shall restrict the
right of the stockholders of the Company to remove any Holder as director at
any time, with or without cause, or shall constitute or be evidence of any
agreement or understanding, express or implied, that the Company shall retain a
director for any period of time, or at any particular rate of compensation.
17. FINALITY OF DETERMINATIONS.
Each determination, interpretation, or other action made or taken
pursuant to the provisions of the Plan by the Administrator shall be final and
be binding and conclusive for all purposes.
6
<PAGE> 7
18. INDEMNIFICATION OF DIRECTORS.
Each director of the Company, solely in his or her capacity as a
director, shall 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
Plan, or any option granted thereunder, and against all amounts paid in
settlement thereof (provided such settlement shall be approved by independent
legal counsel) or paid in satisfaction of a judgment in any such action, suit
or proceeding, to the extent permitted by Delaware law. Upon the institution
of any such action, suit or proceeding, a director of the Company shall 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.
19. FEDERAL INCOME TAX CONSEQUENCES.
Under the present provisions of the IRC, the federal income tax
consequences of participating in the Plan may be summarized as follows: This
summary is of general application only and its application to any individual
will depend on that individual's circumstances. The summary does not address
the effect of state and local income tax laws. The Plan is not subject to the
provisions of Section 401 (a) of the IRC or ERISA.
The recipient of an option shall not recognize income upon the grant
of the option, but, upon exercise, generally shall recognize ordinary income in
an amount equal to the difference between the fair market value of the Stock
acquired on the exercise date and the option price. The Company generally
shall be entitled to a tax deduction at the same time and in the same amount as
the income recognized.
If an option is exercised within six months of the date of grant and
the Holder is restricted from selling the Stock acquired upon exercise because
of the restrictions of Section 16(b) of the Exchange Act, unless the Holder
elects under Section 83(b) of the IRC to be taxed immediately, he or she shall
recognize ordinary income (and the Company shall be entitled to a deduction) at
the end of the restricted period imposed by Section 16(b) in an amount equal to
the difference between the fair market value of the Stock at that time and the
option price.
If the Holder pays the option price entirely in cash for tax purposes,
his or her basis in the shares of Stock received shall be equal to their fair
market value on the exercise date (or the date on which the Section 16(b)
period expires, if applicable), and the holding period for tax purposes shall
begin on the day following the exercise date.
7
<PAGE> 8
20. GOVERNING LAW.
The Plan shall be governed by the laws of the State of Delaware.
21. EFFECTIVE DATE.
The Plan shall become effective upon the date of its adoption by the
Board and options shall be deemed granted at the close of business that day to
all non-employee directors of the Company serving on the Board at that time,
but no option may be exercised under the Plan unless and until the Plan shall
have been approved by the stockholders of the Company within 12 months after
its adoption by the Board. If the Plan is not so approved by the stockholders,
all options granted hereunder shall be null and void.
22. OVERRIDE.
With respect to persons subject to Section 16 of the Exchange Act,
transactions under the Plan are intended to comply with all applicable
conditions of Rule 16b-3 or its successors under the Exchange Act. To the
extent any provision of the 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.
23. ADDITIONAL INFORMATION.
Additional information regarding the Plan and the Administrator may be
obtained by contacting Ms. Kelly Somoza, Vice President, U.S. Home Corporation,
1800 West Loop South, Houston, Texas 77027, telephone number (713) 877-2391.
The Company shall make available without charge to all Holders, upon written or
oral request to Ms. Somoza at the address and/or telephone number set forth
above, the following documents, each of which is incorporated by reference into
the Section 10(a) prospectus relating to the Plan:
(1) The Company's Annual Report on Form 10-K for the year
ended December 31, 1995.
(2) The Company's Current Report on Form 8-K dated
January 31, 1996 and filed with the Securities and
Exchange Commission on February 12, 1996.
(3) The Company's Quarterly Report on Form 10-Q for the
quarter ended March 31, 1996.
(4) The Company's Quarterly Report on Form 10-Q for the
quarter ended June 30, 1996.
(5) The Company's Quarterly Report on Form 10-Q for the
quarter ended September 30, 1996.
8
<PAGE> 9
(6) The Company's Current Report on Form 8-K dated
November 7, 1996 and filed with the Securities and
Exchange Commission on November 12, 1996.
(7) The description of the Stock is contained in the
Company's Prospectus, dated October 27, 1993, filed
with the Securities and Exchange Commission on
October 28, 1993 pursuant to Rule 424(b) promulgated
under the Securities Act, relating to the Company's
Amendment No. 3 to Registration Statement on Form S-3
under the Securities Act filed with the Securities
and Exchange Commission on October 26, 1993
(Registration No. 33-68966), under the headings
"Capital Stock and Class B Warrants - Common Stock"
on page 51 and "Capital Stock and Class B Warrants -
Certificate of Incorporation" on pages 54-55.
Information concerning the Company will be periodically updated by the
filing of reports by the Company pursuant to the Exchange Act. Such reports
were incorporated by reference to the Section 10(a) prospectus relating to the
Plan and will also be available to Holders upon written or oral request to the
Company's offices as indicated above.
ORIGINALLY APPROVED BY THE BOARD OF DIRECTORS
ON AUGUST 19, 1993 AND, AS AMENDED AND RESTATED, ON DECEMBER 6, 1996
9
<PAGE> 10
EXHIBIT A
(TO DIRECTORS' PLAN)
U.S. HOME CORPORATION
AMENDED AND RESTATED
NON-EMPLOYEE DIRECTORS' STOCK OPTION PLAN
STOCK OPTION AGREEMENT
OPTION AGREEMENT, dated as of , 199 between U.S. HOME
CORPORATION, a Delaware corporation (the "Company"), and (the
"Holder").
1. PURPOSE.
The purpose of this Stock Option Agreement (this "Agreement") is to
set forth the terms and conditions of the stock option granted to the Holder
under the Amended and Restated Non-Employee Directors' Stock Option Plan (the
"Plan"). The terms and conditions (including defined terms) of the 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 shall constitute acceptance of
and agreement with all of the terms and conditions contained in this Agreement
and the 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 [5,000] [7,500] [1,000] 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.
Subject to Sections 4, 5 and 13 hereof, the Option shall be
exercisable in whole or in part at any time on or after the date hereof;
provided, however, that the Option shall expire on the date 10 years from the
date hereof. Any exercise shall be accompanied by a written notice to the
Company in substantially the form attached hereto as Schedule 1.
__________________________________
*To be determined pursuant to Section 6 of the Stock Option Plan.
A-1
<PAGE> 11
4. TERMINATION OF DIRECTORSHIP.
If, on or after the date the Option is granted, the Holder (i) resigns
as a director of the Company or (ii) is removed as a director of the Company by
the stockholders of the Company, with or without cause, the Holder shall have
the right, not later than the earlier of (A) three months after such
resignation or removal or (B) the termination date of the Option set forth
herein, to exercise the Option, to the extent the right to exercise the Option
shall have accrued at the date of such resignation or removal, except to the
extent that the Option theretofore shall have been exercised.
5. RETIREMENT, DEATH OR DISABILITY.
If the Holder retires at the age of 65 or above, dies, or becomes
disabled (within the meaning of Section 22(e)(3) of the IRC) while a director
of the Company, the Holder, the personal representative of the Holder or the
person or persons to whom the Option shall have been transferred by will or by
the laws of descent and distribution, or the disabled Holder, will have the
right, not later than the earlier of (i) three years from the date of the
Holder's retirement, death or disability or (ii) the termination date of the
Option set forth herein, to exercise the Option to the extent the right to
exercise the Option shall have accrued at the date of such retirement, death or
disability, except to the extent the Option theretofore shall have been
exercised.
6. TRANSFERABILITY.
The Option shall not be transferable by the Holder other than by will
or the laws of descent and distribution. During the lifetime of the Holder,
the Option shall be exercisable only by such Holder. If the Holder acquires
Stock hereunder, the Holder shall 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 shall
be paid in full on the date of purchase. Payment shall be made either in cash
or in such other consideration as the Administrator (as defined in the Plan)
seems appropriate. Notwithstanding the foregoing, shares of Stock shall 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, if any,
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 shall be adjusted, as necessary, in accordance with the provisions of
Section 12 of the Plan.
A-2
<PAGE> 12
9. NO RIGHTS AS STOCKHOLDER.
The Holder shall 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 12 of the
Plan, no adjustment shall be made for dividends (ordinary or extraordinary,
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 shall become the holder of record thereof.
10. RIGHT TO REMOVE DIRECTOR.
Nothing contained herein or in any Option Agreement shall restrict the
right of the stockholders of the Company to remove any Holder as director at
any time, with or without cause, or shall constitute or be evidence of any
agreement or understanding, express or implied, that the Company shall retain a
director for any period of time, or at any particular rate of compensation.
11. REPRESENTATIONS.
At the time of any exercise of the Option, the Company may, if it
shall deem it necessary or desirable for any reason, require the Holder to (i)
in the absence of an effective registration statement under the Securities Act
of 1933, as amended, 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) 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 shall be governed by the laws of the State of Delaware.
A-3
<PAGE> 13
13. STOCKHOLDER APPROVAL.
Any Option granted under the Agreement shall not be exercisable unless
or until the Plan shall have been approved by the stockholders of the Company
in accordance with the provisions of Section 21 of the Plan.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the date first above written.
U.S. HOME CORPORATION
By:
-------------------------
Name:
Title:
Holder
----------------------------
Signature
Name:
-----------------------
Address:
--------------------
--------------------
A-4
<PAGE> 14
SCHEDULE 1
U.S. Home Corporation
1800 West Loop South
Houston, Texas 77252
Attention: Secretary
Re: Notice of Exercise of Stock Option
Dear Sir:
I am the holder of the below-described option to acquire
shares of common stock, $.01 par value per share (the "Common Stock"), of U.S.
Home Corporation (the "Company") granted under the U.S. Home Corporation
Amended and Restated Non-Employee Directors' Stock Option Plan:
<TABLE>
<CAPTION>
NUMBER OF SHARES EXERCISE PRICE
DATE OF OPTION SUBJECT TO OPTION PER SHARE
-------------- ----------------- --------------
<S> <C> <C>
</TABLE>
I hereby exercise my option to purchase shares of Common Stock
and tender the purchase price therefor, reserving my right to purchase any
remaining shares of Common Stock subject to the option in accordance with its
terms.
Dated:
Very truly yours,
----------------------------
Signature
Name:
-----------------------
Address:
--------------------
----------------------------
<PAGE> 1
EXHIBIT 10.11
U.S. HOME CORPORATION
AMENDED AND RESTATED
EMPLOYEE STOCK PAYMENT PLAN
1. PURPOSE.
The purpose of the U.S. Home Corporation Amended and Restated
Employee Stock Payment Plan (the "Plan") is to increase the ownership stake of
key employees of U.S. Home Corporation and its subsidiaries or divisions (the
"Company") by paying a percentage of such employees' annual incentive
compensation in shares of Stock (as defined herein) in lieu of cash.
2. ADMINISTRATION.
(a) The board of directors of the Company (the "Board") will
(i) administer the Plan, (ii) establish, subject to the provisions of the Plan,
such rules and regulations as it may deem appropriate for the proper
administration of the Plan and (iii) make such determinations under, and such
interpretations of, and take such steps in connection with, the Plan or the
Stock issued thereunder as it may deem necessary or advisable.
(b) The Board may from time to time appoint a Committee (the
"Committee"), which shall initially be the Compensation and Stock Option
Committee of the Board, which will be comprised of at least three members, all
of whom are non-employee 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 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 or the Committee, as applicable, will
hereinafter be referred to as the "Administrator."
(c) For the purposes of this Section 2, a "non-employee
director" is a director who, on a given date, is a non-employee director within
the meaning of Rule 16b-3 promulgated under the Securities Exchange Act of
1934, as amended (the "Exchange Act").
3. STOCK.
The stock (the "Stock") which is the subject of the Plan will
be the shares of common stock of the Company, $.01 par value per share, whether
authorized and unissued or treasury stock. The total number of shares of Stock
which may be issued under the Plan will not exceed, in the aggregate, 250,000,
subject to adjustment in accordance with the provisions of Section 7 hereof.
<PAGE> 2
4. AWARD OF STOCK.
(a) All employees of the Company, including, but not limited
to, corporate officers, presidents of operations and division presidents (each
an "Employee" and collectively, "Employees"), are eligible to receive Stock in
accordance with the terms hereof.
(b) Up to 25%, which amount may be subject to change from
time to time by the Administrator, of the annual incentive compensation (i.e.,
all amounts other than Base Salary (as defined herein)) payable to an Employee
pursuant to any incentive compensation plans or the incentive compensation
provisions of any employment or compensation agreement may be payable in shares
of Stock under the Plan.
(c) (i) Up to 50%, which amount may be subject to change from
time to time by the Administrator, of the annual amount of Stock awarded to an
Employee pursuant to Section 4(b) hereof may, at the sole discretion of the
Administrator, vest not later than two years after the end of the incentive
compensation year applicable to such award of Stock and, unless otherwise
specified by the Administrator, shall not vest and will expire in the event the
Employee is not employed by the Company on or prior to the date on which the
Stock vests with the Employee due to (A) voluntary termination by the Employee
or (B) termination by the Company for Cause (as defined herein).
Notwithstanding the foregoing, Stock awarded to an Employee which remains
subject to a vesting period hereunder will immediately vest upon the retirement
of such Employee after attaining the age of 65.
(ii) For purposes of the Plan, a voluntary
termination by an Employee will not be deemed to occur in the event such
Employee is Constructively Terminated (as defined herein).
(iii) In the event an Employee dies while in the
employ of the Company, all Stock awarded to such Employee which remains subject
to a vesting period hereunder will immediately vest and be delivered to such
Employee's estate as soon as practicable after such Employee's death.
(iv) For purposes of the Plan:
(A) "Cause" shall mean (1) an Employee'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), (2) gross negligence or malfeasance by an Employee in the
performance of his duties with respect to the Company, (3) an act or acts on an
Employee'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 such Employee at the expense of
the Company or (4) any other circumstances set forth in an employment agreement
between the Company and such Employee which would constitute
2
<PAGE> 3
grounds for the Company to terminate the employment of such Employee for cause
(as defined in the applicable employment agreement).
(B) "Constructively Terminated" shall mean (1)
a reduction in an amount equal to or greater than 15 percent of an Employee's
Base Salary (as defined herein), (2) a material reduction in an Employee's job
function, duties or responsibilities or (3) a required relocation of an
Employee of more than 50 miles from such Employee's current job location;
provided, however, that the employment with the Company or its divisions or
subsidiaries of a President of Operations 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 or its divisions or
subsidiaries 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 or its divisions or subsidiaries of a Division Chairman or Division
President 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 an Employee will not be
deemed Constructively Terminated unless such Employee actually terminates his
or her employment with the Company within 60 days after the occurrence of an
event specified in clause (1), (2) or (3) above.
(C) "Base Salary" shall mean an amount equal
to an Employee's maximum annual base salary in effect at any time after the
effective date of the Plan, excluding any incentive compensation or bonus
payable or paid to an Employee.
(d) (i) All Stock awarded to Employees hereunder but not
subject to vesting pursuant to Section 4(c) hereof shall be delivered to such
Employees within 30 days after the determination of the price of the Stock
pursuant to Section 5 hereof.
(ii) Subject to Section 4(c) hereof, all Stock
awarded to Employees hereunder which is subject to a vesting period hereunder
shall be delivered to such Employees within 31 days after the expiration of
such vesting period.
(e) In the event the Company is subject to an extraordinary
corporate transaction, including, without limitation, a merger, consolidation
or tender offer, the Administrator shall have the right, in its sole
discretion, to accelerate the vesting period of any or all Stock subject to
vesting hereunder.
3
<PAGE> 4
5. PRICE AND VALUATION.
(a) The Stock will be issued to Employees in consideration of
services rendered to the Company by such Employees as reflected in any
incentive compensation plans or the incentive compensation provisions of any
employment or compensation agreement.
(b) For purposes of determining the number of shares of Stock
to be issued to an Employee hereunder in lieu of cash compensation, the
Administrator shall divide the amount of cash that would otherwise be
distributed to such Employee by the following as determined by the
Administrator:
(i) with respect to the incentive compensation plans
of the Company or incentive agreements which are based on the
financial results of the Company's fiscal year, the average closing
price of the Stock on the New York Stock Exchange (the "NYSE") for the
10 consecutive trading days immediately following the date on which
the Company releases such financial results for such fiscal year, but
in no event will such average closing price of the Stock be less than
95% of the Current Market Price (as defined in the Warrant Agreement,
dated as of June 21, 1993, as amended (the "Warrant Agreement"),
between the Company and The First National Bank of Chicago, as Warrant
Agent);
(ii) with respect to any other incentive
compensation plans of the Company or incentive agreements, the average
closing price of the Stock on the NYSE for the later to occur of the
(A) last 10 trading days of the month immediately following the
conclusion of the specified period for such incentive compensation
program and (B) 10 consecutive trading days immediately following the
date on which the Company releases its financial results for its most
recent fiscal year, but in no event will such average closing price of
the Stock be less than 95% of the Current Market Price (as defined in
the Warrant Agreement); or
(iii) the closing price of the Stock on the NYSE on
the last trading day of the most recent fiscal year, but in no event
will such price of the Stock be less than 95% of the Current Market
Price (as defined in the Warrant Agreement).
(c) The closing price of the Stock, as of any particular day,
will be as reported in The Wall Street Journal; provided, however, that if the
Stock is not listed on the NYSE on any applicable day, the closing price for
such day will be not less than the fair market value of the Stock on such day,
as determined by the Administrator based on such empirical evidence as it deems
to be necessary under the circumstances.
4
<PAGE> 5
6. TERM AND EFFECTIVE DATE.
The Plan will become effective upon (i) approval by the
Board, and (ii) solely with respect to Employees subject to Section 16 of the
Exchange Act, approval by the affirmative vote of a majority of the shares of
voting capital stock of the Company present or represented and entitled to vote
at the 1994 annual meeting of the Company's stockholders. When so approved, the
Plan shall be deemed to have been in effect as of January 1, 1994 and shall
terminate on December 31, 1998.
7. STOCK ADJUSTMENTS.
(a) The total amount of Stock reserved and issuable under the
Plan and Stock awarded but not yet vested 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, a reclassification of the Stock, or 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 not be the surviving corporation, or after
any consolidation of the Company and one or more other corporations, each
Employee who is entitled to Stock hereunder will be entitled to receive, in
lieu of the number of shares of Stock as to which such Employee was previously
entitled, the number and class of shares of stock or other securities or other
consideration to which such Employee 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 Employee had been a holder of record of a
number of shares of Stock equal to the number of shares for which such Employee
was then entitled to receive subject to vesting. Comparable rights will accrue
to each Employee in the event of successive mergers or consolidations of the
character described above.
(c) The adjustments described in this Section 7 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 fractional shares.
8. TRANSFERABILITY.
An Employee who acquires Stock hereunder will only transfer
such Stock in compliance with applicable federal and state securities laws.
Employees who are affiliates of the Company may generally dispose of their
shares in accordance with Rule 144 promulgated under the Securities Act of
1933, as amended. Employees may not transfer or assign any interest in any
Stock awarded hereunder until such Stock is vested with such Employee other
than by will or the laws of descent and distribution.
5
<PAGE> 6
9. RIGHTS AS A STOCKHOLDER.
Any Employee entitled to receive Stock hereunder will have no
rights as a stockholder with respect to any share of Stock until such Employee
has become the holder of record of such share of Stock upon vesting, and,
except for stock dividends as provided in Section 7 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 Stock
for which the record date is prior to the date on which such Employee will
become the holder of record thereof.
10. INVESTMENT PURPOSE.
At the time of issuance of any Stock, the Company may, if it
will deem it necessary or desirable for any reason, require an Employee to
represent in writing to the Company that it is such Employee's then intention
to acquire the Stock for investment purposes and not with a view to the
distribution thereof.
11. RIGHT TO TERMINATE EMPLOYMENT.
Nothing contained herein will restrict the right of the
Company to terminate the employment of any Employee at any time.
12. FINALITY OF DETERMINATIONS.
Each determination, interpretation, or other action made or
taken pursuant to the provisions of the Plan by the Administrator will be final
and be binding and conclusive for all purposes.
13. SUBSIDIARY AND PARENT CORPORATIONS.
Unless the context requires otherwise, references under the
Plan to the Company will be deemed to include any subsidiary corporations and
parent corporations of the Company, as those terms are defined in Section 425
of the Internal Revenue Code, as amended.
14. GOVERNING LAW.
The Plan will be governed by the laws of the State of
Delaware.
15. AMENDMENT AND TERMINATION.
The Administrator may at any time terminate, amend or modify
the Plan in any respect it deems suitable; provided, however, that, solely with
respect to persons subject to
6
<PAGE> 7
Section 16 of the Exchange Act, no such action of the Administrator, without
the approval of the stockholders of the Company, may (i) materially increase
the benefits accruing to employees eligible to receive Stock under the Plan,
(ii) materially increase the total amount of Stock which may be awarded under
the Plan or (iii) materially modify the requirements for participation in the
Plan; provided, further, that no amendment, modification or termination of the
Plan may in any manner affect (A) any Stock (whether vested or not) theretofore
awarded under the Plan without the consent of the Employee to whom Stock has
been awarded or (B) modify the award of Stock to the Employee designated by the
Administrator.
16. OVERRIDE.
(a) With respect to persons subject to Section 16 of the
Exchange Act, transactions under the Plan are intended to comply with all
applicable conditions of Rule 16b-3 or its successors under the Exchange Act.
To the extent any provision of the 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.
(b) All transactions pursuant to terms of the Plan,
including, without limitation, awards and vesting of Stock, shall only be
effective at such time as counsel to the Company shall have determined that
such transaction will not violate federal or state securities or other laws.
The Administrator may, in its sole discretion, defer the effectiveness of such
transaction to pursue whatever actions may be required to ensure compliance
with such federal or state securities or other laws.
7
<PAGE> 1
EXHIBIT 10.13
U.S. HOME CORPORATION
CORPORATE OFFICERS'(1)
INCENTIVE COMPENSATION PROGRAM
FOR THE INCENTIVE PERIOD
JANUARY 1, 1997 TO DECEMBER 31, 1997
Set forth below is an outline of the Corporate Officers' Incentive
Compensation Program for the incentive period January 1, 1997 to December 31,
1997 ("Incentive 1997").
Corporate Officers who are employed by the Corporation as of January
1, 1997 will be eligible to participate in the Corporate Officers' Incentive
Compensation Program for the period commencing January 1, 1997 and ending
December 31, 1997. Effective January 1, 1997, base salaries are established as
set forth in Exhibit A hereto.
Under this Program, an incentive compensation pool equal to the lessor
of $800,000 or 2% of the pre-tax profits of the Corporation earned in fiscal
1997, 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, 1997 as compared to the
projected profit and loss for the period January 1, 1997 through
December 31, 1997 as set forth in the 1997 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, 1997
through December 31, 1997 as set forth in the 1997 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.
_______________
(1) Excludes Chairman and President who are subject to Employment and
Consulting Agreements which govern payment of bonus (see Exhibit A).
<PAGE> 2
Corporate Officers' Incentive Compensation Program Page 2 of 3 pages
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 Senior Vice
President and any Vice President shall not exceed 100% and 75%, respectively,
of the base compensation of such Officer.
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 1997 audited
financial statements.
B. The balance of the aggregate incentive bonus earned by the Corporate
Officer shall be paid as follows:
1. If the respective Corporate Officer shall own of record or
beneficially, as of the last trading day of December, 1997,
shares of common stock of the Corporation which shall have a
market value on such date equal to or in excess of his/her base
salary as of such date, the balance of such incentive bonus
shall be paid in cash within 30 days following receipt of the
1997 audited financial statements.
2. If the respective Corporate Officer shall not own of record
beneficially, as of the last trading day of December, 1997,
shares of common stock of the Corporation which shall have a
market value on such date(1) equal to or in excess of his/her
base salary as of such date, the balance of such incentive bonus
shall be paid in shares of stock as set forth below:
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 closing price of
said shares on the New York Stock Exchange, as of the last
trading day of December, 1997, but in no event will such price
of such said shares be less than 95% of the Current Market Price
(as defined in the Warrant Agreement, dated as of June 21, 1993,
as amended, between the Company and The First National Bank of
Chicago, as Warrant Agent). Said shares shall be held in escrow
by the Company to be delivered to the respective Corporate
Officers as follows:
_______________
(1) Shares earned as part of prior year bonus but not delivered shall be
included. Restricted shares not vested as of such date shall not be
included.
<PAGE> 3
Corporate Officers' Incentive Compensation Program Page 3 of 3 pages
i) 1/2 of such shares shall be delivered to the Corporate
Officer within thirty (30) days following receipt of the
1997 audited financial statements.
ii) 1/2 of such shares shall be delivered to the Corporate
Officer on or prior to January 31, 2000. However, in
order to receive such shares, the Corporate Officer must
remain in the employ of the Corporation as of December 31,
1999.
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/her duties required of his/her 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/her 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/her position as a result of either a material change in the
scope of his/her 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 10.14
U.S. HOME CORPORATION
KEY EMPLOYEES'
SEVERANCE PAY PLAN
1. PURPOSE
U.S. Home Corporation (the "COMPANY") Key Employees' Severance Pay Plan
(the "PLAN") is intended to encourage continuity of employment by key
employees by providing them with an incentive to remain in the employ of
the Company or its subsidiaries despite a potential for a change of
control of the Company.
2. ELIGIBILITY
The corporate officers, other than the Chairman and Co-Chief Executive
Officer and President, Co-Chief Executive Officer and Chief Operating
Officer, and the presidents of operations of the Company shall be eligible
for, and shall participate in, benefits provided under the Plan (each an
"ELIGIBLE EMPLOYEE"). Such individuals as of the Effective Date (as
defined below) are set forth on Schedule A attached hereto.
3. BENEFITS
An Eligible Employee whose employment with the Company or a subsidiary of
the Company is terminated by the Company other than for Cause (as defined
below) or whose employment is Constructively Terminated (as defined below)
within two (2) years after the occurrence of a Change of Control (as
defined below) shall be entitled to (A) receive an amount equal to the
greater of (x) twelve (12) months of such Eligible Employee's Base Salary
(as defined below) or (y) one (1) month of such Eligible Employee's Base
Salary (as defined below) for each full year during which such Eligible
Employee was employed by the Company or its subsidiaries, and (B) continue
to participate in each of the Company's employee benefit plans, policies
or arrangements, which provide insurance, including, without limitation,
life insurance and long-term disability insurance, and medical benefits
(the "COMPANY INSURANCE PLANS"), on the same basis as the Company's other
executive officers for one year after the date of termination of
employment (the "TERMINATION BENEFITS").
<PAGE> 2
4. PAYMENT OF BENEFITS
The Termination Benefits payable pursuant to Section 3(A) hereunder shall
be paid to an Eligible Employee in a single lump sum in cash as soon as
practicable (but in no event later than thirty (30) days) after such
Eligible Employee's employment is terminated pursuant to Section 3
hereunder. If continued coverage under any of the Company Insurance Plans
is not possible under the terms of any insurance policy or applicable law
following the date of termination of employment, the Company shall provide
the Eligible Employee with coverage equivalent to that provided to the
Company's other executive officers under a policy or arrangement
reasonably acceptable to the Eligible Employee. If an Eligible Employee
dies after becoming entitled to the Termination Benefits payable pursuant
to Section 3(A) hereunder but before payment thereof is made to such
Eligible Employee, such Termination Benefits shall be paid to the Eligible
Employee's estate in a single lump sum in cash as soon as practicable
after such Eligible Employee's death. If an Eligible Employee dies within
one year after becoming entitled to the Termination Benefits pursuant to
Section 3(B) hereunder, such Termination Benefits shall continue to be
provided for one year after the date of termination of the Eligible
Employee to the Eligible Employee's spouse and dependents on the same
basis as provided to the Company's other executive officers. The Company
may deduct from any Termination Benefit any federal, state or local taxes
required by law to be withheld.
5. DEFINITIONS
(a) "BASE SALARY" shall mean an amount equal to an Eligible Employee's
maximum annual base salary in effect at any time after the Effective
Date (as defined below), excluding any discretionary compensation or
bonus payable or paid to an Eligible Employee.
(b) "CHANGE OF CONTROL" shall mean any of the following: (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, as
amended (the "EXCHANGE ACT"), disclosing that any person or group of
persons (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
2
<PAGE> 3
owner (as such term is defined in Rule 13d-3 under the Exchange Act),
directly or indirectly, of fifty percent (50%) or more of the
combined voting power of the then outstanding equity of the Company
(as determined under paragraph (d) of Rule 13d-3 under the Exchange
Act, in the case of rights to acquire the common stock, $.01 par
value per share (the "COMMON STOCK"), of the Company); (ii) any
transaction or a series of related transactions (as a result of a
tender offer, merger, consolidation or otherwise whether or not the
Company is the continuing or surviving entity) that results in, or
that is in connection with, any person or group of persons (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), acquiring
beneficial ownership (as such term is defined in Rule 13d-3 under the
Exchange Act), directly or indirectly, of fifty percent (50%) or more
of the combined voting power of the then outstanding equity of the
Company (as determined under paragraph (d) of Rule 13d-3 under the
Exchange Act, in the case of rights to acquire the Common Stock) or
of any person or group of persons (within the meaning of Section
13(d) of the Exchange Act) that possesses beneficial ownership (as
such term is defined in Rule 13d-3 under the Exchange Act), directly
or indirectly, of fifty percent (50%) or more of the combined voting
power of the then outstanding equity of the Company; (iii) the sale,
lease, exchange or other transfer of all or substantially all of the
assets of the Company to any person or group of persons (within the
meaning of Section 13(d) of the Exchange Act) in one transaction or a
series of related transactions; provided, that a transaction where
the holders of all classes of the then outstanding equity of the
Company immediately prior to such transaction own, directly or
indirectly, fifty percent (50%) or more of the aggregate voting power
of all classes of equity of such person or group immediately after
such transaction will not be a Change of Control under this clause
(iii); (iv) the liquidation or dissolution of the Company; provided,
that a liquidation or dissolution of the Company which is part of a
transaction or series of related transactions that does not
constitute a Change of Control under the "provided" clause of clause
(iii) above will not constitute a Change of Control under this clause
(iv);
3
<PAGE> 4
or (v) 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.
(c) "CONSTRUCTIVELY TERMINATED" shall mean (i) a reduction in an amount
equal to or greater than fifteen percent (15%) of an Eligible
Employee's Base Salary, (ii) a material reduction in an Eligible
Employee's job function, duties or responsibilities or (iii) a
required relocation of an Eligible Employee of more than fifty (50)
miles from such Eligible Employee's current job location; provided,
however, that the employment with the Company or its subsidiaries of
a President of Operations who is an Eligible Employee 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 or its subsidiaries 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 an Eligible Employee will
not be deemed Constructively Terminated unless such Eligible Employee
actually terminates his or her employment with the Company within
sixty (60) days after the occurrence of an event specified in clause
(i), (ii) or (iii) above.
(d) "CAUSE" shall mean (i) an Eligible Employee's continuing willful
failure to perform his or her duties (other than as a result of total
or partial incapacity due to physical or mental illness), (ii) gross
negligence or malfeasance by an Eligible Employee in the performance
of his or her duties, (iii) an act or acts on the part of an Eligible
Employee constituting a felony under the laws of the United States of
America, or any state thereof that results or was intended to result
directly or indirectly in gain or personal enrichment by such
Eligible Employee at the expense of the Company or its subsidiaries
or (iv) breach of any of the provisions set forth on Schedule B
attached hereto pertaining to confidentiality and competitive
activities.
6. MISCELLANEOUS
(a) The Plan shall be effective as of December 6, 1996 (the "EFFECTIVE
DATE").
4
<PAGE> 5
(b) The Company reserves the right to modify or amend, in whole or in
part, the Plan; provided, however, that no such modification or
amendment shall be made within two (2) years following the occurrence
of a Change of Control.
(c) The compensation committee of the Board of Directors of the Company
(the "COMPENSATION COMMITTEE") shall respond to claims for benefits
under the Plan within thirty (30) days of their receipt and, if a
claim is wholly or partially denied, the Compensation Committee shall
provide the Eligible Employee with a written explanation of the
denial which shall state the specific reason or reasons the claim was
denied; the exact references to the Plan provisions that dealt with
the claim; a description of any additional material or information
necessary for him or her to revise and perfect the claim; an
explanation as to why such material or information is necessary; and
an explanation of the Plan's claims procedure. Within forty-five (45)
days after an Eligible Employee receives a denial of his or her
claim, such Eligible Employee may appeal his or her claim denial to
the Compensation Committee. The Eligible Employee or such Eligible
Employee's authorized representative may make a written request for a
review of the denial and to review applicable documents and may
submit comments and issues in writing. The Compensation Committee
shall decide an appeal within fifteen (15) days after receiving the
request for review. The Compensation Committee's decision on the
review shall be in writing, and shall include specific reasons for
the decision and references to the Plan provision upon which it was
based.
(d) The Company shall reimburse an Eligible Employee (or such Eligible
Employee's estate, as applicable) for any and all costs (including,
but not limited to, legal fees) incurred by such Eligible Employee
(or such Eligible Employee's estate, as applicable) in successfully
appealing (whether pursuant to paragraph 6(c) above, in a court of
competent jurisdiction or otherwise) a claim for benefits under the
Plan which was denied. Such Eligible Employee's benefits under the
Plan shall be paid to him or her (or to his or her estate, as
applicable) as soon as practicable (but not later than ten (10) days)
after such successful appeal, together with interest on such amount
from his or her date of termination of employment to the date of
payment at
5
<PAGE> 6
the average prime or base lending rate of interest published or
publicly announced by the financial institution then providing
financing to the Company under the Company's credit facility (whether
or not such rate is actually charged by such financial institution)
in effect on such termination date.
(e) The establishment of the Plan shall not be construed as conferring
any legal rights upon any Eligible Employee or other person for a
continuation of employment, nor will it interfere with the rights of
the Company or any of its subsidiaries to discharge any Eligible
Employee and to treat such Eligible Employee without regard to the
effect which such treatment might have upon such Eligible Employee as
an Eligible Employee under the Plan.
(f) In the event that the Company finds that an Eligible Employee is
unable to care for his or her affairs because of illness or accident,
the Compensation Committee may direct that any payment due such
Eligible Employee, unless claim has been made therefor by a duly
appointed legal representative, be paid to such Eligible Employee's
spouse, child, parent or other blood relative, or to a person with
whom such Eligible Employee resides, and any such payment so made
will be a complete discharge of the liabilities under the Plan
therefor.
(g) The Plan shall be construed, regulated and administered under the
internal laws of the State of Delaware without regard to principles
of conflicts of laws.
(h) The Company shall request and use its best efforts to require any
successor (whether direct or indirect, by purchase, merger,
consolidation or otherwise) to all or substantially all of the
business and/or assets of the Company or any of its subsidiaries
expressly to assume and agree to perform the obligations under the
Plan in the same manner and to the same extent that the Company would
be required to perform such obligations if no such succession had
taken place.
6
<PAGE> 7
SCHEDULE A
U.S. HOME CORPORATION
KEY EMPLOYEES
<TABLE>
<CAPTION>
Name Title
---- -----
<S> <C>
Corporate Officers:
Gary L. Frueh Vice President - Tax and Audit
Craig M. Johnson Senior Vice President - Community
Development
Thomas A. Napoli Vice President - Finance and Chief
Financial Officer
Chester P. Sadowski Vice President - Controller and Chief
Accounting Officer
Richard G. Slaughter Vice President - Planning and Secretary
Kelly F. Somoza Vice President
Presidents of Operations:
Sam B. Crimaldi President of Operations,
U.S. Home South Florida
James R. Petty President of Operations and Chief
Executive Officer,
U.S. Home Mortgage Corporation
Christopher B. Rediger President of Operations,
U.S. Home Mountain
Michael T. Richardson President of Operations,
U.S. Home South
Philip J. Walsh, III President of Operations,
U.S. Home North and California
</TABLE>
All capitalized terms used but not defined herein have the meaning
ascribed thereto in the U.S. Home Corporation Key Employees' Severance Plan.
<PAGE> 8
SCHEDULE B
All capitalized terms used but not defined herein have the meaning
ascribed thereto in the U.S. Home Corporation Key Employees' Severance Plan.
A. CONFIDENTIALITY.
The Eligible Employee has and will acquire confidential information with
respect to the business of the Company and its subsidiaries. The Eligible
Employee will not, without the written consent of the Company as
authorized by the Board of Directors of the Company, 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 Eligible Employee or to any person other than the Company
and its subsidiaries. For this purpose, information will be considered
confidential only if such information is uniquely proprietary to the
Company or any of its subsidiaries and has not been made publicly
available prior to its disclosure by the Eligible Employee.
B. COMPETITIVE ACTIVITY.
Until the end of his or her employment, the Eligible Employee will devote
full business time to the business of the Company or its subsidiaries and
will not, without the written 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 otherwise), with or without compensation, any business which
is in competition with any line of business being actively conducted by
the Company or its subsidiaries during his or her employment period.
Nothing herein, however, will prohibit the Eligible Employee from
acquiring or holding not more than one percent (1%) of any class of
publicly-traded securities of any such business.
<PAGE> 1
EXHIBIT 10.16(i)
FIRST AMENDMENT TO
AMENDED AND RESTATED
EMPLOYMENT AND CONSULTING AGREEMENT
FIRST AMENDMENT TO AMENDED AND RESTATED EMPLOYMENT AND
CONSULTING AGREEMENT, dated as of February 11, 1997, between U.S. Home
Corporation (the "Company") and Robert J. Strudler (the "Executive").
WHEREAS, the Company and the Executive are parties to an
Amended and Restated Employment and Consulting Agreement, dated as of October
17, 1995 (the "Agreement").
WHEREAS, the Company and the Executive intend to extend the
Employment Term (as defined in the Agreement) and, in consideration of such
extension, desire to amend 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
the Agreement as follows:
FIRST
Section 2 of the Agreement is hereby amended and restated in
its entirety, to read as follows:
"2. Term. The term of the Executive's employment
hereunder shall continue until June 20, 2000; provided,
however, that, unless either party otherwise elects by notice
in writing delivered to the other at least 90 days prior to
June 20, 1998, or any subsequent anniversary of June 20, 1998,
such term shall be automatically extended for one additional
year on June 20, 1998 (e.g., to June 20, 2001) and each
subsequent anniversary thereof,
<PAGE> 2
unless sooner terminated by the Executive's voluntary
resignation or otherwise terminated pursuant to the terms of
this Agreement (the "Employment Term")."
SECOND
Clause (ii) of Section 5(c) of the Agreement is hereby amended
and restated in its entirety, to read as follows:
"(ii) if such termination occurs during the
Employment Term, an amount equal to the bonuses earned,
including any amounts deferred, pursuant to Section 3(a)(ii)
hereof and Appendix A hereto or otherwise, in respect of the
most recently completed three calendar years;"
THIRD
Except as amended herein, the Agreement is hereby ratified and
confirmed and shall continue in full force and effect.
IN WITNESS WHEREOF, the parties hereto have executed this
First Amendment as of the date first written above.
U.S. HOME CORPORATION
By:
-------------------------------------
Isaac Heimbinder
President, Co-Chief Executive Officer
and Chief Operating Officer
EXECUTIVE
----------------------------------------
Robert J. Strudler
2
<PAGE> 1
EXHIBIT 10.17(i)
FIRST AMENDMENT TO
AMENDED AND RESTATED
EMPLOYMENT AND CONSULTING AGREEMENT
FIRST AMENDMENT TO AMENDED AND RESTATED EMPLOYMENT AND CONSULTING
AGREEMENT, dated as of February 11, 1997, between U.S. Home Corporation (the
"Company") and Isaac Heimbinder (the "Executive").
WHEREAS, the Company and the Executive are parties to an Amended
and Restated Employment and Consulting Agreement, dated as of October 17, 1995
(the "Agreement").
WHEREAS, the Company and the Executive intend to extend the
Employment Term (as defined in the Agreement) and, in consideration of such
extension, desire to amend 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 the
Agreement as follows:
FIRST
Section 2 of the Agreement is hereby amended and restated in its
entirety, to read as follows:
"2. Term. The term of the Executive's employment
hereunder shall continue until June 20, 2000; provided, however,
that, unless either party otherwise elects by notice in writing
delivered to the other at least 90 days prior to June 20, 1998,
or any subsequent anniversary of June 20, 1998, such term shall
be automatically extended for one additional year on June 20,
1998 (e.g., to June 20, 2001) and each subsequent anniversary
thereof,
<PAGE> 2
unless sooner terminated by the Executive's voluntary resignation
or otherwise terminated pursuant to the terms of this Agreement
(the "Employment Term")."
SECOND
Clause (ii) of Section 5(c) of the Agreement is hereby amended
and restated in its entirety, to read as follows:
"(ii) if such termination occurs during the Employment
Term, an amount equal to the bonuses earned, including any
amounts deferred, pursuant to Section 3(a)(ii) hereof and
Appendix A hereto or otherwise, in respect of the most recently
completed three calendar years;"
THIRD
Except as amended herein, the Agreement is hereby ratified and
confirmed and shall continue in full force and effect.
IN WITNESS WHEREOF, the parties hereto have executed this First
Amendment as of the date first written above.
U.S. HOME CORPORATION
By:
---------------------------------
Robert J. Strudler
Chairman and Co-Chief
Executive Officer
EXECUTIVE
-------------------------------------
Isaac Heimbinder
2
<PAGE> 1
EXHIBIT 10.22
THIRD AMENDMENT TO
WAREHOUSING CREDIT AND SECURITY AGREEMENT
THIS THIRD AMENDMENT TO FIRST AMENDED AND RESTATED WAREHOUSING CREDIT AND
SECURITY AGREEMENT (this "Amendment") is entered into as of this 2nd day of
January 1997, 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 Forty-Five
Million Dollars ($45,000,000), to finance the origination and acquisition of
Mortgage Loans as evidenced by a Warehousing Promissory Note in the principal
sum of Forty-Five Million Dollars ($45,000,000), dated as of December 27,1995,
a First Amended and Restated Sublimit Promissory Note in the principal sum of
Forty-Five Million Dollars ($45,000,000), dated as of August 29, 1996 (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 temporarily increase the
Commitment Amount, and the Lender has agreed to such increase 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
1/2/97, the date on which the Company has complied with all the terms and
conditions of this Amendment.
3. 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).
Notwithstanding the foregoing, during the period from the Effective Date
to and including April 15, 1997, the Commitment Amount shall be
temporarily increased to Fifty-Five Million Dollars ($55,000,000). On the
first Business Day following the expiration of the temporary increase of
the Commitment Amount, the Company shall repay to
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<PAGE> 2
the Lender the amount by which the outstanding Advances exceed the
Commitment Amount.
4. The Warehousing Promissory Note is amended and restated in its
entirety as set forth in the Second Amended and Restated Warehousing Promissory
Note, in the form of Exhibit A-1 attached to this Amendment. All references in
this Amendment and in the Agreement to the Warehousing Promissory Note shall be
deemed to refer to the Second Amended and Restated Warehousing Promissory Note
delivered in connection with this Amendment.
5. The First Amended and Restated Sublimit Promissory Note is amended
and restated in its entirety as set forth in the Second Amended and Restated
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 First
Amended and Restated Sublimit Promissory Note shall be deemed to refer to the
Second Amended and Restated Sublimit Promissory Note delivered in connection
with this Amendment.
6. Exhibits A-1 and A-2 to the Agreement are hereby deleted in their
entirety and replaced with the new Exhibits A-1 and A-2 attached to this
Amendment. All references in the Agreement to Exhibits A-1 and A-2 shall be
deemed to refer to the new Exhibits A-1 and A-2.
7. The Company shall deliver to the Lender (a) an executed original of
this Amendment; (b) an executed original of the Second Amended and Restated
Warehousing Promissory Note; (c) an executed original of the Second Amended and
Restated Sublimit Promissory Note; (d) a Certificate of Secretary with
Corporate Resolutions; and (e) a Two Hundred Fifty Dollar ($250) document
production fee.
8. 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, except as disclosed
to the Lender in the Company's letter dated August 16, 1996, and the Company
has no offset or defense to its performance or obligations under 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.
9. 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.
-2-
<PAGE> 3
10. 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/ THOMAS A. NAPOLI
-------------------------------
Its: Vice President
------------------------------
RESIDENTIAL FUNDING CORPORATION,
a Delaware corporation
By: /s/ DONNA A. WEST
-------------------------------
Its: Director
------------------------------
STATE OF TEXAS )
) ss
COUNTY OF HARRIS)
On January 6, 1997, 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
-3-
<PAGE> 4
STATE OF FLORIDA )
) ss
COUNTY OF BROWARD)
On January 10, 1997, before me, a Notary Public, personally appeared Donna
West, the Director 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
-4-
<PAGE> 5
EXHIBIT A-1
SECOND AMENDED AND RESTATED WAREHOUSING PROMISSORY NOTE
$55,000,000 Date: January 2, 1997
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 Fifty-Five Million Dollars
($55,000,000) or so much thereof as may be outstanding from time to time
pursuant to the First Amended and Restated 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 Warehousing Promissory Note referred to in that certain First
Amended and Restated Warehousing Credit and Security Agreement (the
"Agreement") dated August 31, 1995, between the Company and the Lender, as the
same may be amended or supplemented from time to time, 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 December 27, 1995, and issued by the
Company to evidence its Obligations under the Agreement (the "Existing Note").
All amounts owed by the
-1-
<PAGE> 6
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 __________, 1997, 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> 7
EXHIBIT A-2
SECOND AMENDED AND RESTATED SUBLIMIT PROMISSORY NOTE
$55,000,000 Date: January 2, 1997
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 Fifty-Five Million Dollars
($55,000,000) or so much thereof as may be outstanding from time to time
pursuant to the First Amended and Restated 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 (the
"Agreement") dated August 31, 1995, between the Company and the Lender, as the
same may be amended or supplemented from time to time, 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 princiapl amount of the Notes may exceed the Commitment Amount.
This Note is given in replacement for, and not in satisfaction of, that
certain First Amended and Restated Sublimit Promissory Note dated August 29,
1996, and issued by the Company to evidence its Obligations under the Agreement
(the "Existing Note"). All amounts owed by the Company under the Existing Note
(including,
-1-
<PAGE> 8
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 __________, 1997, 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> 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,
---------------------------------------------------
1996 1995 1994
----------- ----------- -----------
<S> <C> <C> <C>
Income per common and
common equivalent shares -
Net income $ 44,188 $ 36,920 $ 32,829
=========== =========== ===========
Weighted average common
shares outstanding 11,585,855 11,576,829 11,366,810
Effect of assumed exercise of
dilutive stock options
and warrants 372,584 196,270 -
----------- ----------- -----------
Total common and common
equivalent shares 11,958,439 11,773,099 11,366,810
=========== =========== ===========
Income per common and
common equivalent shares $ 3.70 $ 3.14 $ 2.89
=========== =========== ===========
Income per common share,
assuming full dilution -
Net income $ 44,188 $ 36,920 $ 32,829
Add interest applicable to
4.875% convertible
subordinated debentures,
net of income taxes 2,480 2,006 1,220
----------- ----------- -----------
Income per common share,
assuming full dilution $ 46,668 $ 38,926 $ 34,049
=========== =========== ===========
Total common and common
equivalent shares 11,958,439 11,773,099 11,366,810
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 134,480 499,369 -
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 2,253,521
----------- ----------- -----------
Common shares, assuming
full dilution 14,346,440 14,525,989 13,620,331
=========== =========== ===========
Income per common share
assuming full dilution $ 3.25 $ 2.68 $ 2.50
=========== =========== ===========
</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.
<TABLE>
<CAPTION>
Jurisdiction of
Incorporation
-----------------
<S> <C>
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
</TABLE>
<PAGE> 1
EXHIBIT 23
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the
incorporation of our report dated February 12, 1997 included in this Form 10-K,
into the Company's previously filed Registration Statements No. 33-64712,
33-52993, 33-00583 and 33-02775.
ARTHUR ANDERSEN LLP
Houston, Texas
February 21, 1997
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This Schedule Contains Summary Financial Information Extracted From The
Consolidated Condensed Financial Statements As Of December 31, 1996 And For The
Year Then Ended And Is Qualified In Its Entirety By Reference To Such Financial
Statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> DEC-31-1996
<CASH> 13,249
<SECURITIES> 0
<RECEIVABLES> 91,684
<ALLOWANCES> 0
<INVENTORY> 709,344
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 947,411
<CURRENT-LIABILITIES> 0
<BONDS> 362,887
0
2,947
<COMMON> 114
<OTHER-SE> 370,629
<TOTAL-LIABILITY-AND-EQUITY> 947,411
<SALES> 0
<TOTAL-REVENUES> 1,211,450
<CGS> 971,896
<TOTAL-COSTS> 1,123,256
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 32,293
<INCOME-PRETAX> 55,901
<INCOME-TAX> 11,713
<INCOME-CONTINUING> 44,188
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 44,188
<EPS-PRIMARY> 3.70
<EPS-DILUTED> 3.25
</TABLE>
